Company Quick10K Filing
Quick10K
HNI
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$36.57 43 $1,580
10-Q 2019-03-30 Quarter: 2019-03-30
10-K 2018-12-29 Annual: 2018-12-29
10-Q 2018-09-29 Quarter: 2018-09-29
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-30 Annual: 2017-12-30
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-07-01 Quarter: 2017-07-01
10-Q 2017-04-01 Quarter: 2017-04-01
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-10-01 Quarter: 2016-10-01
10-Q 2016-07-02 Quarter: 2016-07-02
10-Q 2016-04-02 Quarter: 2016-04-02
10-K 2016-01-02 Annual: 2016-01-02
10-Q 2015-10-03 Quarter: 2015-10-03
10-Q 2015-07-04 Quarter: 2015-07-04
10-Q 2015-04-04 Quarter: 2015-04-04
10-K 2015-01-03 Annual: 2015-01-03
10-Q 2014-09-27 Quarter: 2014-09-27
10-Q 2014-06-28 Quarter: 2014-06-28
10-Q 2014-03-29 Quarter: 2014-03-29
10-K 2013-12-28 Annual: 2013-12-28
8-K 2019-07-11 Officers, Exhibits
8-K 2019-06-01 Officers
8-K 2019-05-07 Officers, Shareholder Vote
8-K 2019-04-22 Earnings, Exhibits
8-K 2019-02-25 Earnings, Exhibits
8-K 2019-02-13 Other Events
8-K 2018-11-07 Officers, Regulation FD, Exhibits
8-K 2018-10-22 Earnings, Exhibits
8-K 2018-08-07 Amend Bylaw, Exhibits
8-K 2018-07-23 Earnings, Exhibits
8-K 2018-06-28 Officers, Regulation FD, Exhibits
8-K 2018-05-31 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-05-08 Officers, Shareholder Vote
8-K 2018-04-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-20 Officers, Exhibits
8-K 2018-02-14 Amend Bylaw, Exhibits
8-K 2018-02-08 Earnings, Exhibits
8-K 2018-01-09 Officers
ABT Abbott 134,820
NTG Natco Group 879
RTRX Retrophin 744
STML Stemline Therapeutics 700
MGTA Magenta Therapeutics 605
LSBK Lake Shore Bancorp 91
TLF Tandy Leather Factory 52
CCT C&C Tours 0
XCO Exco Resources 0
DDR DDR 0
HNI 2019-03-30
Part I. Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. Revenue From Contracts with Customers
Note 3. Restructuring
Note 4. Acquisitions and Divestitures
Note 5. Inventories
Note 6. Leases
Note 7. Goodwill and Other Intangible Assets
Note 8. Product Warranties
Note 9. Long-Term Debt
Note 10. Income Taxes
Note 11. Fair Value Measurements of Financial Instruments
Note 12. Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity
Note 13. Earnings per Share
Note 14. Stock-Based Compensation
Note 15. Post-Retirement Health Care
Note 16. Recently Adopted Accounting Standards
Note 17. Guarantees, Commitments, and Contingencies
Note 18. Reportable Segment Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 ex311q12019.htm
EX-31.2 ex312q12019.htm
EX-32.1 ex321q12019.htm

HNI Earnings 2019-03-30

HNI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
false--12-28Q120192019-03-3010-Q000004828743339040.00falseLarge Accelerated FilerHNI CORPfalse0.2850.2951120000000020000000043582000433390000.0350.04220.0440.036P7YP10YP1Y00112000000200000000 0000048287 2018-12-30 2019-03-30 0000048287 2019-03-30 0000048287 2017-12-31 2018-03-31 0000048287 2018-12-29 0000048287 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-29 0000048287 us-gaap:RetainedEarningsMember 2018-12-30 2019-03-30 0000048287 us-gaap:AdditionalPaidInCapitalMember 2018-12-30 2019-03-30 0000048287 us-gaap:NoncontrollingInterestMember 2018-12-30 2019-03-30 0000048287 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-30 2019-03-30 0000048287 us-gaap:RetainedEarningsMember 2018-12-29 0000048287 us-gaap:NoncontrollingInterestMember 2018-12-29 0000048287 us-gaap:AccountingStandardsUpdate201602Member us-gaap:RetainedEarningsMember 2018-12-30 0000048287 us-gaap:CommonStockMember 2018-12-30 2019-03-30 0000048287 us-gaap:CommonStockMember 2019-03-30 0000048287 us-gaap:AccountingStandardsUpdate201602Member 2018-12-30 0000048287 us-gaap:AdditionalPaidInCapitalMember 2018-12-29 0000048287 us-gaap:RetainedEarningsMember 2019-03-30 0000048287 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-30 0000048287 us-gaap:AdditionalPaidInCapitalMember 2019-03-30 0000048287 us-gaap:NoncontrollingInterestMember 2019-03-30 0000048287 us-gaap:CommonStockMember 2018-12-29 0000048287 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000048287 us-gaap:RetainedEarningsMember 2017-12-31 2018-03-31 0000048287 us-gaap:CommonStockMember 2017-12-31 2018-03-31 0000048287 us-gaap:NoncontrollingInterestMember 2018-03-31 0000048287 us-gaap:RetainedEarningsMember 2017-12-30 0000048287 us-gaap:RetainedEarningsMember 2018-03-31 0000048287 us-gaap:NoncontrollingInterestMember 2017-12-30 0000048287 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 2018-03-31 0000048287 us-gaap:CommonStockMember 2017-12-30 0000048287 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 2018-03-31 0000048287 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000048287 us-gaap:CommonStockMember 2018-03-31 0000048287 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-30 0000048287 us-gaap:NoncontrollingInterestMember 2017-12-31 2018-03-31 0000048287 us-gaap:AdditionalPaidInCapitalMember 2017-12-30 0000048287 2017-12-30 0000048287 2018-03-31 0000048287 hni:SalesChannelSuppliesDrivenMember hni:OfficeFurnitureMember 2017-12-31 2018-03-31 0000048287 hni:SalesChannelHearthMember hni:HearthProductsMember 2018-12-30 2019-03-30 0000048287 hni:SalesChannelContractMember hni:OfficeFurnitureMember 2017-12-31 2018-03-31 0000048287 hni:SalesChannelSuppliesDrivenMember hni:OfficeFurnitureMember 2018-12-30 2019-03-30 0000048287 hni:SalesChannelContractMember hni:OfficeFurnitureMember 2018-12-30 2019-03-30 0000048287 hni:SalesChannelHearthMember hni:HearthProductsMember 2017-12-31 2018-03-31 0000048287 us-gaap:FacilityClosingMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-30 2019-03-30 0000048287 us-gaap:EmployeeSeveranceMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-29 0000048287 hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2019-03-30 0000048287 us-gaap:EmployeeSeveranceMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-30 2019-03-30 0000048287 us-gaap:FacilityClosingMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2019-03-30 0000048287 us-gaap:FacilityClosingMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-29 0000048287 hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-30 2019-03-30 0000048287 hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-29 0000048287 us-gaap:EmployeeSeveranceMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2019-03-30 0000048287 us-gaap:RestructuringChargesMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2017-12-31 2018-03-31 0000048287 us-gaap:RestructuringChargesMember hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2018-12-30 2019-03-30 0000048287 hni:RealignmentofOfficeFurnitureFacilitiesandExitofBusinessLineMember 2017-12-31 2018-03-31 0000048287 us-gaap:ManufacturingFacilityMember 2017-12-31 2018-03-31 0000048287 hni:LeasedAssetsMember us-gaap:EquipmentMember 2018-12-30 2019-03-30 0000048287 srt:MaximumMember us-gaap:RealEstateMember 2019-03-30 0000048287 us-gaap:AccountingStandardsUpdate201602Member us-gaap:ManufacturingFacilityMember 2018-12-30 0000048287 us-gaap:ManufacturingFacilityMember 2018-12-29 0000048287 2017-12-31 2018-12-29 0000048287 us-gaap:RealEstateMember 2018-12-30 2019-03-30 0000048287 hni:LeasedAssetsMember us-gaap:RealEstateMember 2018-12-30 2019-03-30 0000048287 2017-01-01 2017-12-30 0000048287 2016-01-03 2016-12-31 0000048287 hni:SellingAndAdministrativeExpenseMember 2018-12-30 2019-03-30 0000048287 us-gaap:CostOfSalesMember 2018-12-30 2019-03-30 0000048287 srt:MinimumMember us-gaap:RealEstateMember 2019-03-30 0000048287 us-gaap:ComputerSoftwareIntangibleAssetMember 2019-03-30 0000048287 hni:CustomerListsandOtherIntangibleAssetsMember 2019-03-30 0000048287 us-gaap:TrademarksAndTradeNamesMember 2019-03-30 0000048287 us-gaap:TrademarksAndTradeNamesMember 2018-12-29 0000048287 us-gaap:PatentsMember 2018-12-29 0000048287 us-gaap:PatentsMember 2019-03-30 0000048287 us-gaap:ComputerSoftwareIntangibleAssetMember 2018-12-29 0000048287 hni:CustomerListsandOtherIntangibleAssetsMember 2018-12-29 0000048287 hni:OfficeFurnitureMember 2018-12-29 0000048287 hni:HearthProductsMember 2019-03-30 0000048287 hni:HearthProductsMember 2018-12-29 0000048287 hni:OfficeFurnitureMember 2019-03-30 0000048287 hni:HearthProductsMember 2018-12-30 2019-03-30 0000048287 hni:OfficeFurnitureMember 2018-12-30 2019-03-30 0000048287 us-gaap:TrademarksAndTradeNamesMember 2019-03-30 0000048287 us-gaap:TrademarksAndTradeNamesMember 2018-12-29 0000048287 hni:OtherNotesMember 2019-03-30 0000048287 us-gaap:RevolvingCreditFacilityMember 2018-12-29 0000048287 us-gaap:RevolvingCreditFacilityMember 2019-03-30 0000048287 hni:SevenYearFourPointTwoTwoPercentPrivatePlacementNotesMember 2019-03-30 0000048287 hni:TenYearFourPointFourZeroPercentPrivatePlacementNotesMember 2019-03-30 0000048287 hni:SevenYearFourPointTwoTwoPercentPrivatePlacementNotesMember 2018-12-29 0000048287 hni:OtherNotesMember 2018-12-29 0000048287 hni:TenYearFourPointFourZeroPercentPrivatePlacementNotesMember 2018-12-29 0000048287 hni:TenYearFourPointFourZeroPercentPrivatePlacementNotesMember 2018-05-31 0000048287 us-gaap:RevolvingCreditFacilityMember 2019-03-30 0000048287 hni:PrivatePlacementNotesMember 2018-05-31 0000048287 hni:SevenYearFourPointTwoTwoPercentPrivatePlacementNotesMember 2018-05-31 0000048287 hni:PrivatePlacementNotesMember 2019-03-30 0000048287 hni:SevenYearFourPointTwoTwoPercentPrivatePlacementNotesMember 2018-05-31 2018-05-31 0000048287 hni:TenYearFourPointFourZeroPercentPrivatePlacementNotesMember 2018-05-31 2018-05-31 0000048287 hni:SevenYearFourPointTwoTwoPercentPrivatePlacementNotesMember 2019-03-30 0000048287 hni:TenYearFourPointFourZeroPercentPrivatePlacementNotesMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2018-12-29 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-30 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-30 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2018-12-29 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-30 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 hni:VariableRateDebtObligationMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000048287 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-03-30 0000048287 hni:FixedRateDebtObligationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-29 0000048287 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2019-03-30 0000048287 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-29 0000048287 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-29 0000048287 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-29 0000048287 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AgencySecuritiesMember 2018-12-29 0000048287 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 2018-03-31 0000048287 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-30 0000048287 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-03-31 0000048287 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 2018-03-31 0000048287 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-31 2018-03-31 0000048287 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-03-31 0000048287 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-12-31 2018-03-31 0000048287 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-03-31 0000048287 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-12-30 0000048287 us-gaap:AccumulatedTranslationAdjustmentMember 2018-03-31 0000048287 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-30 0000048287 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-30 0000048287 us-gaap:InterestRateSwapMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-31 2018-03-31 0000048287 us-gaap:InterestRateSwapMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-12-30 2019-03-30 0000048287 us-gaap:InterestRateSwapMember 2016-03-31 0000048287 us-gaap:CommonStockMember 2019-03-30 0000048287 us-gaap:InterestRateSwapMember 2019-03-30 0000048287 us-gaap:CommonStockMember 2018-12-30 2019-03-30 0000048287 us-gaap:CommonStockMember 2017-12-31 2018-03-31 0000048287 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-30 2019-03-30 0000048287 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-30 2019-03-30 0000048287 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-30 2019-03-30 0000048287 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-29 0000048287 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-29 0000048287 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-30 2019-03-30 0000048287 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-29 0000048287 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-30 0000048287 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-30 0000048287 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-29 0000048287 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-03-30 0000048287 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-30 0000048287 us-gaap:StockCompensationPlanMember 2018-12-30 2019-03-30 0000048287 us-gaap:StockCompensationPlanMember 2017-12-31 2018-03-31 0000048287 us-gaap:RestrictedStockUnitsRSUMember 2018-12-30 2019-03-30 0000048287 us-gaap:RestrictedStockUnitsRSUMember 2017-12-31 2018-03-31 0000048287 us-gaap:EmployeeStockOptionMember 2017-12-31 2018-03-31 0000048287 us-gaap:EmployeeStockOptionMember 2018-12-30 2019-03-30 0000048287 us-gaap:EmployeeStockOptionMember 2019-03-30 0000048287 us-gaap:RestrictedStockUnitsRSUMember 2019-03-30 0000048287 us-gaap:LetterOfCreditMember 2019-03-30 0000048287 hni:TradeLettersOfCreditAndBankersAcceptancesMember 2019-03-30 0000048287 us-gaap:OperatingSegmentsMember hni:OfficeFurnitureMember 2017-12-31 2018-03-31 0000048287 us-gaap:OperatingSegmentsMember hni:HearthProductsMember 2017-12-31 2018-03-31 0000048287 us-gaap:OperatingSegmentsMember hni:OfficeFurnitureMember 2019-03-30 0000048287 us-gaap:OperatingSegmentsMember hni:HearthProductsMember 2018-12-29 0000048287 us-gaap:OperatingSegmentsMember hni:HearthProductsMember 2018-12-30 2019-03-30 0000048287 us-gaap:OperatingSegmentsMember hni:HearthProductsMember 2019-03-30 0000048287 us-gaap:OperatingSegmentsMember hni:OfficeFurnitureMember 2018-12-29 0000048287 us-gaap:OperatingSegmentsMember hni:OfficeFurnitureMember 2018-12-30 2019-03-30 0000048287 us-gaap:CorporateNonSegmentMember 2018-12-30 2019-03-30 0000048287 us-gaap:CorporateNonSegmentMember 2018-12-29 0000048287 us-gaap:CorporateNonSegmentMember 2017-12-31 2018-03-31 0000048287 us-gaap:CorporateNonSegmentMember 2019-03-30 hni:Segment xbrli:pure iso4217:USD iso4217:USD xbrli:shares xbrli:shares hni:capital_lease hni:lease_extension


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
 
 
 
 
FORM 10-Q
 
 
 
 
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
For the quarterly period ended March 30, 2019
 
 
 
 
OR
 
 
 
 
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
 
 
 
 
Commission File Number: 1-14225
 
 
 
 
HNI Corporation
Iowa
(State of Incorporation)
 
 
42-0617510
(I.R.S. Employer No.)
 
 
 
 
600 East Second Street
P. O. Box 1109
Muscatine, Iowa 52761-0071
(563) 272-7400
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
HNI
New York Stock Exchange
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       
YES       x                     NO     o             
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
YES       x                     NO     o             
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o  Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                      
YES       o                     NO     x             
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Common Stock, $1 Par Value
Outstanding as of March 30, 2019 43,339,040
 




HNI Corporation and Subsidiaries
Quarterly Report on Form 10-Q
 
 
 
Table of Contents
 
 
 
PART I.  FINANCIAL INFORMATION
 
 
Page
Item 1.
Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.  OTHER INFORMATION
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
Defaults Upon Senior Securities - None
-
 
 
 
Item 4.
Mine Safety Disclosures - Not Applicable
-
 
 
 
Item 5.
Other Information - None
-
 
 
 
Item 6.
 
 
 
 
  

2




PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except share and per share data)
(Unaudited)
 
 
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
 
 
Net sales
$
479,456

 
$
505,069

Cost of sales
309,842

 
328,150

Gross profit
169,614

 
176,919

Selling and administrative expenses
165,937

 
171,895

Restructuring charges

 
1,338

Operating income
3,677

 
3,686

Interest income
356

 
113

Interest expense
2,467

 
2,337

Income before income taxes
1,566

 
1,462

Income tax expense (benefit)
546

 
(999
)
Net income
1,020

 
2,461

Less: Net income (loss) attributable to non-controlling interest
(2
)
 
(49
)
Net income attributable to HNI Corporation
$
1,022

 
$
2,510

 
 
 
 
Average number of common shares outstanding – basic
43,533,527

 
43,359,971

Net income attributable to HNI Corporation per common share – basic
$
0.02

 
$
0.06

Average number of common shares outstanding – diluted
44,088,784

 
44,134,142

Net income attributable to HNI Corporation per common share – diluted
$
0.02

 
$
0.06

 
 
 
 
 
 
 
 
Foreign currency translation adjustments
$
963

 
$
1

Change in unrealized gains (losses) on marketable securities, net of tax
90

 
(79
)
Change in pension and post-retirement liability, net of tax
(1,185
)
 

Change in derivative financial instruments, net of tax
(309
)
 
1,027

Other comprehensive income (loss), net of tax
(441
)
 
949

Comprehensive income
579

 
3,410

Less: Comprehensive income (loss) attributable to non-controlling interest
(2
)
 
(49
)
Comprehensive income attributable to HNI Corporation
$
581

 
$
3,459


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


3




HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

(In thousands)
(Unaudited)
 
 
 
 
 
March 30,
2019
 
December 29,
2018
Assets
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
47,872

 
$
76,819

Short-term investments
1,705

 
1,327

Receivables
224,650

 
255,207

Inventories
170,589

 
157,178

Prepaid expenses and other current assets
39,192

 
41,352

Total Current Assets
484,008

 
531,883

 
 
 
 
Property, Plant, and Equipment:
 
 
 

Land and land improvements
29,110

 
28,377

Buildings
291,005

 
290,263

Machinery and equipment
570,121

 
565,884

Construction in progress
32,132

 
28,443

 
922,368

 
912,967

Less accumulated depreciation
534,439

 
528,034

Net Property, Plant, and Equipment
387,929

 
384,933

 
 
 
 
Right-of-use Operating / Finance Leases
72,925

 

 
 
 
 
Goodwill and Other Intangible Assets
458,550

 
463,290

 
 
 
 
Deferred Income Taxes
1,569

 
1,569

 
 
 
 
Other Assets
18,415

 
20,169

 
 
 
 
Total Assets
$
1,423,396

 
$
1,401,844


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


4




HNI Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
 
 
 
 
 
March 30,
2019
 
December 29,
2018
Liabilities and Equity
 
 
 
Current Liabilities:
 
 
 
Accounts payable and accrued expenses
$
346,185

 
$
428,865

Current maturities of long-term debt
478

 
679

Current maturities of other long-term obligations
3,478

 
4,764

Current lease obligations - Operating / Finance
22,719

 

Total Current Liabilities
372,860

 
434,308

 
 
 
 
Long-Term Debt
295,876

 
249,355

 
 
 
 
Long-Term Lease Obligations - Operating / Finance
58,688

 

 
 
 
 
Other Long-Term Liabilities
67,650

 
72,767

 
 
 
 
Deferred Income Taxes
83,071

 
82,155

 
 
 
 
Equity:
 

 
 

HNI Corporation shareholders' equity:
 

 
 

 Capital Stock:
 

 
 

     Preferred stock - $1 par value, authorized 2,000 shares, no shares outstanding

 

 
 
 
 
    Common stock - $1 par value, authorized 200,000 shares, outstanding:
 
 
 
March 30, 2019 – 43,339 shares
 
 
 
December 29, 2018 – 43,582 shares
43,339

 
43,582

 
 
 
 
Additional paid-in capital
15,921

 
18,041

Retained earnings
489,707

 
504,909

Accumulated other comprehensive income (loss)
(4,040
)
 
(3,599
)
Total HNI Corporation shareholders' equity
544,927

 
562,933

 
 
 
 
Non-controlling interest
324

 
326

 
 
 
 
Total Equity
545,251

 
563,259

 
 
 
 
Total Liabilities and Equity
$
1,423,396

 
$
1,401,844


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


5




HNI Corporation and Subsidiaries
Consolidated Statements of Equity
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended - March 30, 2019
 
Common Stock

 
Additional Paid-in Capital

 
Retained Earnings

 
Accumulated Other Comprehensive Income (Loss)

 
Non-controlling Interest

 
Total Shareholders’ Equity

Balance, December 29, 2018
$
43,582

 
$
18,041

 
$
504,909

 
$
(3,599
)
 
$
326

 
$
563,259

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)

 

 
1,022

 

 
(2
)
 
1,020

Other comprehensive income (loss), net of tax

 

 

 
298

 

 
298

Reclassification of Stranded Tax Effects (ASU 2018-02)

 

 
739

 
(739
)
 

 

Impact of Implementation of Lease Guidance

 

 
2,999

 

 

 
2,999

Cash dividends; $0.295 per share

 

 
(12,872
)
 

 

 
(12,872
)
Common shares – treasury:
 
 
 
 
 
 
 
 
 
 
 
Shares purchased
(647
)
 
(16,948
)
 
(7,090
)
 

 

 
(24,685
)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax
404

 
14,828

 

 

 

 
15,232

Balance, March 30, 2019
$
43,339

 
$
15,921

 
$
489,707

 
$
(4,040
)
 
$
324

 
$
545,251


 
Three Months Ended - March 31, 2018
 
Common Stock

 
Additional Paid-in Capital

 
Retained Earnings

 
Accumulated Other Comprehensive Income (Loss)

 
Non-controlling Interest

 
Total Shareholders’ Equity

Balance, December 30, 2017
$
43,354

 
$
7,029

 
$
467,296

 
$
(3,611
)
 
$
509

 
$
514,577

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)

 

 
2,510

 

 
(49
)
 
2,461

Other comprehensive income (loss), net of tax

 

 

 
949

 

 
949

Change in ownership of non-controlling interest

 

 
(41
)
 

 
41

 

Cash dividends; $0.285 per share

 

 
(12,381
)
 

 

 
(12,381
)
Common shares – treasury:
 
 
 
 
 
 
 
 
 
 
 
Shares purchased
(153
)
 
(1,175
)
 
(4,636
)
 

 

 
(5,964
)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax
329

 
14,270

 

 

 

 
14,599

Balance, March 31, 2018
$
43,530

 
$
20,124

 
$
452,748

 
$
(2,662
)
 
$
501

 
$
514,241


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


6




HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Net Cash Flows From (To) Operating Activities:
 
 
 
Net income
$
1,020

 
$
2,461

Non-cash items included in net income:
 
 
 
Depreciation and amortization
19,040

 
18,445

Other post-retirement and post-employment benefits
369

 
447

Stock-based compensation
2,451

 
3,712

Operating / finance lease interest and amortization
5,559

 

Deferred income taxes
1,119

 
(1,196
)
(Gain) loss on sale and retirement of long-lived assets, net
334

 
808

Other – net
1,704

 
(742
)
Net increase (decrease) in operating assets and liabilities, net of divestitures
(55,038
)
 
(55,135
)
Increase (decrease) in other liabilities
(4,832
)
 
447

Net cash flows from (to) operating activities
(28,274
)
 
(30,753
)
 
 
 
 
Net Cash Flows From (To) Investing Activities:
 

 
 

Capital expenditures
(17,575
)
 
(12,383
)
Proceeds from sale of property, plant, and equipment
68

 
18,353

Capitalized software
(1,521
)
 
(3,948
)
Purchase of investments

 
(605
)
Sales or maturities of investments
450

 
650

Other – net

 
794

Net cash flows from (to) investing activities
(18,578
)
 
2,861

 
 
 
 
Net Cash Flows From (To) Financing Activities:
 

 
 

Payments of long-term debt
(606
)
 
(102,693
)
Proceeds from long-term debt
46,897

 
155,047

Dividends paid
(12,872
)
 
(12,381
)
Purchase of HNI Corporation common stock
(23,869
)
 
(7,345
)
Proceeds from sales of HNI Corporation common stock
5,413

 
2,764

Other – net
2,942

 
(2,035
)
Net cash flows from (to) financing activities
17,905

 
33,357

 
 
 
 
Net increase (decrease) in cash and cash equivalents
(28,947
)
 
5,465

Cash and cash equivalents at beginning of period
76,819

 
23,348

Cash and cash equivalents at end of period
$
47,872

 
$
28,813

 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

7




HNI Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)
March 30, 2019

Note 1.  Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.  The December 29, 2018 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three-month period ended March 30, 2019 are not necessarily indicative of the results expected for the fiscal year ending December 28, 2019.  For further information, refer to the consolidated financial statements and accompanying notes included in HNI Corporation's (the "Corporation") Annual Report on Form 10-K for the fiscal year ended December 29, 2018.

Note 2. Revenue from Contracts with Customers

The Corporation implemented ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), at the beginning of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018.

Disaggregation of Revenue
Revenue from contracts with customers disaggregated by sales channel and by segment is as follows (in thousands):
 
 
Three Months Ended
 
Segment
March 30,
2019
 
March 31,
2018
Supplies-driven channel
Office Furniture
$
176,693

 
$
191,228

Contract channel
Office Furniture
176,818

 
189,687

Hearth
Hearth Products
125,945

 
124,154

Net sales
 
$
479,456

 
$
505,069



The majority of revenue presented as "Net sales" in the Condensed Consolidated Statements of Comprehensive Income is the result of contracts with customers. All other sources of revenue are not material to the Corporation's results of operations.

Sales by channel type are subject to similar economic factors and market conditions regardless of the channel under which the product is sold. See “Note 18. Reportable Segment Information” in the Notes to Condensed Consolidated Financial Statements for further information about operating segments.

Contract Assets and Contract Liabilities
In addition to trade receivables, the Corporation has contract assets consisting of funds paid to certain office furniture dealers in exchange for their multi-year commitment to market and sell the Corporation’s products. These dealer investments are amortized over the term of the contracts and recognized as a reduction of revenue. For contracts less than one year, the Corporation has elected the practical expedient to recognize incremental costs to obtain a contract as an expense when incurred. The Corporation has contract liabilities consisting of deferred revenue and rebate and marketing program liabilities.

8




Contract assets and contract liabilities were as follows (in thousands):
 
March 30,
2019
 
December 29,
2018
Trade receivables (1)
$
228,674

 
$
259,075

Contract assets (current) (2)
$
544

 
$
529

Contract assets (long-term) (3)
$
2,091

 
$
2,188

Contract liabilities (4)
$
31,129

 
$
44,858


The index below indicates the line item in the Condensed Consolidated Balance Sheets where contract assets and contract liabilities are reported:

(1)     "Receivables"
(2)     "Prepaid expenses and other current assets"
(3)     "Other Assets"
(4)     "Accounts payable and accrued expenses"

Changes in contract asset and contract liability balances during the three months ended March 30, 2019 were as follows (in thousands):
 
Contract assets increase (decrease)
 
Contract liabilities (increase) decrease
Reclassification of contract assets to contra revenue
$
(82
)
 
$

Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied

 
(28,567
)
Contract liabilities paid

 
41,368

Cash received in advance and not recognized as revenue

 
(24,185
)
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied

 
25,113

Net change
$
(82
)
 
$
13,729



For the three months ended March 30, 2019, the Corporation recognized revenue of $8.3 million in the Condensed Consolidated Statements of Comprehensive Income related to contract liabilities as of December 29, 2018.

Performance Obligations
The Corporation recognizes revenue for sales of office furniture and hearth products at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment of the product. In certain circumstances, transfer of control to the customer does not occur until the goods are received by the customer or upon installation and/or customer acceptance, depending on the terms of the underlying contracts. Contracts typically have a duration of less than one year and normally do not include a significant financing component. Generally, payment is due within 30 days of invoicing.

Significant Judgments
The Corporation uses significant judgment throughout the year in estimating the reduction in net sales driven by rebate and marketing programs. Judgments made include expected sales levels and utilization of funds. However, this judgment factor is significantly reduced at the end of each year when sales volumes and the impact to rebate and marketing programs are known and recorded as the programs typically do not extend multiple years.

Accounting Policies and Practical Expedients Elected
The Corporation elected to use the modified-retrospective method of adopting the new standard on revenue recognition. The new standard has been applied to all contracts not completed as of December 30, 2017, the end of the Corporation’s fiscal 2017. The impact of the Corporation's transition adjustment for the new revenue recognition guidance was not material to the Corporation's results of operations or financial position. The additional disclosures required as a result of adopting the new revenue recognition guidance were material to the Corporation's financial statements.


9




The Corporation elected the following accounting policies as a result of adopting the new standard on revenue recognition:

Shipping and Handling Activities - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities that occur after control is transferred as fulfillment activities. The Corporation accrues for shipping and handling costs at the same time revenue is recognized, which is in accordance with the policy election. When shipping and handling activities occur prior to the customer obtaining control of the good(s), they are considered fulfillment activities rather than a performance obligation and the costs are accrued for as incurred.

Sales Taxes - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes assessed by a governmental authority associated with the transaction, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows the Corporation to present revenue net of these certain types of taxes.

The Corporation has elected the following practical expedients as a result of adopting the new standard on revenue recognition:

Incremental Costs of Obtaining a Contract - The Corporation has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. The Corporation will apply this practical expedient when the requirements to apply it are met.

Significant Financing Component - The Corporation has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Corporation's contracts are typically less than one year in length, consideration will not be adjusted.

Remaining Performance Obligation - The Corporation's backlog orders are typically cancelable for a period of time and almost all contracts have an original duration of one year or less. As a result, the Corporation has elected the practical expedient permitted in 606-10-50-14 not to disclose the remaining performance obligation. The backlog disclosed is typically fulfilled within one or two quarters.

These accounting policies and practical expedients have been applied consistently to all revenue transactions.

Note 3.  Restructuring

Restructuring costs recorded in the Condensed Consolidated Statements of Comprehensive Income are as follows (in thousands):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Restructuring and impairment charges
$

 
$
1,338

Total restructuring costs
$

 
$
1,338



Restructuring costs in 2018 were primarily incurred as part of the previously announced closures of the office furniture manufacturing facility in Orleans, Indiana and the hearth manufacturing facility in Paris, Kentucky.

The accrued restructuring expenses are expected to be paid in the next twelve months and are reflected in "Accounts payable and accrued expenses" in the Condensed Consolidated Balance Sheets. The following is a summary of changes in restructuring accruals (in thousands):
 
Severance Costs
 
Facility Exit Costs & Other
 
Total
Restructuring allowance as of December 29, 2018
$
136

 
$
150

 
$
286

Cash payments
(35
)
 
(28
)
 
(63
)
Restructuring allowance as of March 30, 2019
$
101

 
$
122

 
$
223




10




Note 4. Acquisitions and Divestitures

As part of the Corporation's ongoing business strategy, it continues to acquire and divest small office furniture dealerships, for which the impact is not material to the Corporation's financial statements.

Note 5.  Inventories

The Corporation values its inventory at the lower of cost or net realizable value with approximately 83 percent valued by the last-in, first-out ("LIFO") costing method. Inventories included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):
 
March 30,
2019
 
December 29,
2018
 
Finished products
$
108,590

 
$
97,398

Materials and work in process
95,927

 
94,161

LIFO allowance
(33,928
)
 
(34,381
)
Total inventories
$
170,589

 
$
157,178



Note 6.  Leases

The Corporation implemented ASU No. 2016-02, Leases (Topic 842), at the beginning of fiscal 2019 using the modified-retrospective transition approach. The new standard requires lessees to recognize most leases, including operating leases, on-balance sheet via a right of use asset and lease liability. The Corporation selected a technology tool to assist with the accounting and disclosure requirements of the new standard. All necessary changes required by the new standard, including those to the Corporation's accounting policies, business process, systems, controls, and disclosures, were identified and are now implemented as of the first quarter 2019.

Implementation of ASU No. 2016-02 increased retained earnings by $3.0 million. This included an increase of $3.3 million driven by the recognition of the remaining deferred gain on a 2018 sale-leaseback directly into retained earnings partially offset by a decrease of $0.3 million driven by the calculation of beginning right of use assets and lease liabilities. The Corporation recognized $73.8 million in right of use assets and $82.0 million in lease liabilities as a result of the implementation of this standard.

The Corporation leases certain showrooms, office space, manufacturing facilities, distribution centers, retail stores and equipment and determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets; expense for these leases is recognized on a straight-line basis over the lease term.

As none of the leases provide an implicit rate, the Corporation uses a secured incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Corporation uses separate discount rates for its U.S. operations and overseas operations.

Certain real estate leases include one or more options to renew with renewal terms that can extend the lease term from one to ten years. The exercise of lease renewal options is at the Corporation's sole discretion. Certain real estate leases include an option to terminate the lease term earlier than the specified lease term for a fee. These options are not included as part of the lease term unless they are reasonably certain to be exercised.

Many of the Corporation's real estate lease agreements include periods of rent holidays and payments that escalate over the lease term by specified amounts. While not significant, certain equipment leases have variable lease payments based on machine hours and certain real estate leases have rate changes based on Consumer Price Index(CPI). The Corporation's lease agreements do not contain any material residual value guarantees.

The Corporation has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.

On occasion, the Corporation rents or subleases certain real estate to third parties. This sublease portfolio consists mainly of operating leases for office furniture showrooms and is not significant.

11





Leases included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):
 
Classification
March 30,
2019
Assets
 
 
Operating
Operating lease assets
$
72,875

Finance
Finance lease assets
50

Total leased assets
 
$
72,925

 
 
 
Liabilities
 
 
Current
 
 
Operating
Current maturities of other long-term liabilities
$
22,698

Finance
Current maturities of long-term debt and other liabilities
21

Non-current
 
 
Operating
Non-current operating lease liabilities
58,660

Finance
Long-term debt and other borrowings
28

Total leased liabilities
 
$
81,407



Approximately 85 percent of the value of the leased assets is for real estate. The remaining 15 percent of the value of the leased assets is for equipment.

Lease costs included in the Condensed Consolidated Statements on Comprehensive Income consisted of the following (in thousands):
 
 
Three Months Ended
 
Classification
March 30,
2019
Operating lease costs
 
 
Fixed
Cost of sales
$
518

 
Selling and administrative expenses
6,092

Short-term / variable
Cost of sales
83

 
Selling and administrative expenses
215

Finance lease costs
 
 
Amortization
Cost of sales, selling and administrative, and interest expenses
4

Less: Sublease income (a)
 
38

Total lease costs
 
$
6,874


(a)
Excludes rental income from owned properties of $0.0 million for the three months ended March 30, 2019, which is reflected in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income.


12




Maturity of lease liabilities is as follows (in thousands):
Operating leases (a)
 Maturity of lease liabilities
2019 (remaining portion of year)
$
19,805

2020
22,176

2021
15,382

2022
10,301

2023
8,298

Thereafter
15,150

Total lease payments
91,112

Less: Interest
9,755

Present value of operating lease liabilities
81,357

Finance leases 2019 (remaining portion of year) - 2023 (b)
50

Total leases
$
81,407


(a)
Operating lease payments include $1.6 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $0.7 million of legally binding minimum lease payments for leases signed but not yet commenced.
(b)
At this time there are no finance lease options to extend lease terms that are reasonably certain of being exercised. Currently the Corporation has $0.1 million of legally binding minimum lease payments for leases signed but not yet commenced.

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases as of March 30, 2019:
 
Weighted-Average Discount Rate (percent)
 
Weighted-Average Remaining Lease Term
 (years)
Operating leases
4.50
%
 
5.0
Finance leases
4.42
%
 
2.7


The following table summarizes cash paid for amounts included in the measurements of lease liabilities and the leased assets obtained in exchange for new operating and finance lease liabilities (in thousands):
 
Three Months Ended
 
March 30, 2019
Cash paid for amounts included in the measurements of lease liabilities
 
Operating cash flows from operating / finance leases
$
6,411

Financing cash flows from finance leases
$
4

Leased assets obtained in exchange for new operating / finance lease liabilities
$
4,652



Accounting Policies and Practical Expedients Elected

The Corporation elected to use the modified-retrospective method of adopting the new standard on leases. It has been applied to all leases active on or after December 31, 2018, the start of the Corporation's fiscal year.

The Corporation elected the following practical expedients as a result of adopting the new standard on leases:

The Corporation has made an accounting election by class of underlying assets to not separate non-lease components of a contract from the lease components to which they relate for all classes of assets except for embedded leases.

13




The Corporation has elected not to restate 2017 and 2018 for the effects of the new standard. Required ASC 840 disclosures for periods prior to 2019 have been provided.
The Corporation has elected not to use hindsight in determining the lease term and in assessing the likelihood that a lessee purchase option will be exercised.
The Corporation has elected for all asset classes to not recognize ROU assets and lease liabilities for leases that at the acquisition date have a remaining lease term of twelve months or less.

Presented below are the final disclosures utilizing ASC 840 treatment which was provided in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 29, 2018:

Commitments for minimum rentals under non-cancelable leases were as follows (in thousands):
 
Operating Leases
2019
$
24,387

2020
18,250

2021
13,324

2022
9,082

2023
6,228

Thereafter
10,469

Total minimum lease payments
$
81,740



There were no capitalized leases as of December 29, 2018 and December 30, 2017.

Rent expense under ASC 840 was as follows (in thousands):
 
2018

 
2017

 
2016

Rent expense
$
31,027

 
$
32,158

 
$
35,288



There was no contingent rent expense under operating leases for the years 2018, 2017, and 2016.

As part of the Corporation's continued efforts to drive efficiency and simplification, the Corporation entered into a sale-leaseback transaction in the first quarter of 2018, selling a manufacturing facility and subsequently leasing back a portion of the facility for a term of 10 years. The net proceeds from the sale of the facility of $16.9 million were reflected in "Proceeds from sale and license of property, plant, equipment, and intangibles" in the Consolidated Statements of Cash Flows in 2018. In accordance with ASC 840, Leases, the $5.1 million gain on the sale of the facility was deferred and was being amortized as a reduction to rent expense evenly over the term of the lease.

In accordance with ASC 842, Lease Accounting, the remaining unamortized deferred gain related to the sale-leaseback as of December 29, 2018 was recognized directly in "Retained earnings" in the Condensed Consolidated Balance Sheets in the first quarter of 2019 as a cumulative-effect adjustment as the Corporation transferred control of the asset.

Note 7. Goodwill and Other Intangible Assets

Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):
 
March 30,
2019
 
December 29,
2018
Goodwill
$
270,774

 
$
270,788

Definite-lived intangible assets
159,014

 
163,714

Indefinite-lived intangible assets
28,762

 
28,788

Total goodwill and other intangible assets
$
458,550

 
$
463,290




14




Goodwill
The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands):
 
Office Furniture
 
Hearth Products
 
Total
Balance as of December 29, 2018
 
 
 
 
 
Goodwill
$
128,645

 
$
186,662

 
$
315,307

Accumulated impairment losses
(44,376
)
 
(143
)
 
(44,519
)
Net goodwill balance as of December 29, 2018
84,269

 
186,519

 
270,788

 
 
 
 
 
 
Foreign currency translation adjustment
(14
)
 

 
(14
)
 
 
 
 
 
 
Balance as of March 30, 2019
 

 
 

 
 
Goodwill
128,631

 
186,662

 
315,293

Accumulated impairment losses
(44,376
)
 
(143
)
 
(44,519
)
Net goodwill balance as of March 30, 2019
$
84,255

 
$
186,519

 
$
270,774



Definite-lived intangible assets
The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
 
March 30, 2019
 
December 29, 2018
 
Gross
 
Accumulated Amortization
 
Net
 
Gross
 
Accumulated Amortization
 
Net
Patents
$
40

 
$
36

 
$
4

 
$
40

 
$
34

 
$
6

Software
171,756

 
54,156

 
117,600

 
170,274

 
49,561

 
120,713

Trademarks and trade names
7,564

 
2,886

 
4,678

 
7,564

 
2,721

 
4,843

Customer lists and other
103,768

 
67,036

 
36,732

 
103,840

 
65,688

 
38,152

Net definite-lived intangible assets
$
283,128

 
$
124,114

 
$
159,014

 
$
281,718

 
$
118,004

 
$
163,714



Amortization expense is reflected in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income and was as follows (in thousands):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Capitalized software
$
4,595

 
$
4,167

Other definite-lived intangibles
$
1,574

 
$
1,688



The occurrence of events such as acquisitions, dispositions, or impairments may impact future amortization expense. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows (in millions):
 
 
2019
 
2020
 
2021
 
2022
 
2023
Amortization expense
 
$
24.1

 
$
22.8

 
$
21.6

 
$
19.2

 
$
16.9




15




Indefinite-lived intangible assets
The Corporation also owns certain intangible assets, which are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
 
March 30,
2019
 
December 29,
2018
Trademarks and trade names
$
28,762

 
$
28,788



The immaterial change in the indefinite-lived intangible assets balances shown above is related to foreign currency translation impacts.

Impairment Analysis
The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter or whenever indicators of impairment exist.

Note 8.  Product Warranties

The Corporation issues certain warranty policies on its office furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design, materials, or workmanship. Allowances have been established for the anticipated future costs associated with the Corporation's warranty programs.

A warranty allowance is determined by recording a specific allowance for known warranty issues and an additional allowance for unknown issues expected to be incurred based on historical experience.  Actual costs incurred could differ from the original estimates, requiring adjustments to the allowance.  Activity associated with warranty obligations was as follows (in thousands):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Balance at beginning of period
$
15,450

 
$
15,388

Accruals for warranties issued during period
5,718

 
5,992

Adjustments related to pre-existing warranties
89

 
68

Warranty issues resolved during the period
(5,746
)
 
(6,010
)
Balance at end of period
$
15,511

 
$
15,438



The current and long-term portions of the allowance for estimated warranty issues are reflected within "Accounts payable and accrued expenses" and "Other Long-Term Liabilities", respectively, in the Condensed Consolidated Balance Sheets. The following table summarizes when these estimated warranty issues are expected to be paid (in thousands):
 
March 30,
2019
 
December 29,
2018
Current - in the next twelve months
$
9,355

 
$
9,455

Long-term - beyond one year
6,156

 
5,995

 
$
15,511

 
$
15,450




16




Note 9.  Long-Term Debt

Long-term debt is as follows (in thousands):
 
March 30,
2019
 
December 29,
2018
Revolving credit facility with interest at a variable rate
(March 30, 2019 - 3.6%; December 29, 2018 - 3.5%)
$
196,500

 
$
150,000

Fixed rate notes due in 2025 with an interest rate of 4.22%
50,000

 
50,000

Fixed rate notes due in 2028 with an interest rate of 4.40%
50,000

 
50,000

Other amounts
478

 
679

Deferred debt issuance costs
(624
)
 
(645
)
Total debt
296,354

 
250,034

Less: Current maturities of long-term debt
478

 
679

Long-term debt
$
295,876

 
$
249,355



As of March 30, 2019, the Corporation’s revolving credit facility borrowings were under the credit agreement entered into on April 20, 2018 with a scheduled maturity of April 20, 2023. The Corporation deferred the debt issuance costs related to the credit agreement, which are classified as assets, and is amortizing them over the term of the credit agreement. The current portion of $0.4 million is the amount to be amortized over the next twelve months based on the current credit agreement and is reflected in "Prepaid expenses and other current assets" in the Condensed Consolidated Balance Sheets. The long-term portion of $1.3 million is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets.

As of March 30, 2019, there was $197 million outstanding under the $450 million revolving credit facility. The entire amount drawn under the revolving credit facility is considered long-term as the Corporation assumes no obligation to repay any of the amounts borrowed in the next twelve months. Based on current earnings before interest, taxes, depreciation and amortization generation, the Corporation can access the full remaining $253 million of borrowing capacity available under the revolving credit facility and maintain compliance with applicable covenants.

In addition to cash flows from operations, the revolving credit facility under the credit agreement is the primary source of daily operating capital for the Corporation and provides additional financial capacity for capital expenditures and strategic initiatives, such as acquisitions and repurchases of common stock.

In addition to the revolving credit facility, the Corporation also has $100 million of borrowings outstanding under private placement note agreements entered into on May 31, 2018. Under the agreements, the Corporation issued $50 million of seven-year fixed rate notes with an interest rate of 4.22 percent, due May 31, 2025, and $50 million of ten-year fixed rate notes with an interest rate of 4.40 percent, due May 31, 2028. The Corporation deferred the debt issuance costs related to the private placement note agreements, which are classified as a reduction of long-term debt in accordance with ASU No. 2015-03, and is amortizing them over the terms of the private placement note agreements. The deferred debt issuance costs do not reduce the amount owed by the Corporation under the terms of the private placement note agreements. As of March 30, 2019 the debt issuance costs balance of $0.6 million is reflected in "Long-Term Debt" in the Condensed Consolidated Balance Sheets.

The credit agreement and private placement notes both contain financial and non-financial covenants. The covenants under both are substantially the same. Non-compliance with covenants under the agreements could prevent the Corporation from being able to access further borrowings, require immediate repayment of all amounts outstanding, and/or increase the cost of borrowing.

Covenants require maintenance of financial ratios as of the end of any fiscal quarter, including:

a consolidated interest coverage ratio (as defined in the credit agreement) of not less than 4.0 to 1.0, based upon the ratio of (a) consolidated EBITDA for the last four fiscal quarters to (b) the sum of consolidated interest charges; and
a consolidated leverage ratio (as defined in the credit agreement) of not greater than 3.5 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness to (b) consolidated EBITDA for the last four fiscal quarters.

The most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.5 to 1.0.  Under the credit agreement, consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, and depreciation and amortization of intangibles, as well as non-cash items that increase or decrease net income.  As of March 30, 2019, the Corporation was below the maximum allowable ratio and was in compliance with all of the covenants and other restrictions in

17




the credit agreement.  The Corporation expects to remain in compliance with all of the covenants and other restrictions in the credit agreement over the next twelve months.

Note 10.  Income Taxes

The Corporation's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The following table summarizes the Corporation's income tax provision (dollars in thousands):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Income before income taxes
$
1,566

 
$
1,462

Income taxes
$
546

 
$
(999
)
Effective tax rate
34.8
%
 
(66.1
%)


The Corporation's effective tax rate was higher in the three months ended March 30, 2019 compared to the same period last year primarily due to the release of a valuation allowance for certain foreign jurisdictions for the first three months of 2018.

On February 14, 2018 the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides entities an option to reclassify stranded tax effects related to the Tax Cuts and Jobs Act (the "Act") within accumulated other comprehensive income ("AOCI") to retained earnings for each period in which the effects of the Act is recorded. The ASU 2018-02 does not modify the existing requirement to allocate the income tax effects of changes in tax laws or rates directly to continuing operations as a component of income tax expense (benefit). The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted.

The Corporation adopted in Q1 2019 and applied the portfolio approach of accounting related to releasing income tax effects from AOCI. During the three months ended, March 30, 2019 the Corporation reclassified $0.7 million of federal income taxes that were stranded in AOCI due to the Act to retained earnings. No other income tax effects were reclassified.


18




Note 11.  Fair Value Measurements of Financial Instruments

For recognition purposes, on a recurring basis, the Corporation is required to measure at fair value its marketable securities, derivative financial instruments, variable-rate and fixed-rate debt obligations, and deferred stock-based compensation.  The marketable securities are comprised of money market funds, government securities, and corporate bonds. When available, the Corporation uses quoted market prices to determine fair value and classifies such measurements within Level 1.  Where market prices are not available, the Corporation makes use of observable market-based inputs (prices or quotes from published exchanges and indexes) to calculate fair value using the market approach, in which case the measurements are classified within Level 2.

Financial instruments measured at fair value were as follows (in thousands):
 
Fair value as of measurement date
 
Quoted prices in active markets for identical assets
(Level 1)
 
Significant other observable inputs
(Level 2)
 
Significant unobservable inputs
(Level 3)
Balance as of March 30, 2019
 
 
 
 
 
 
 
Cash and cash equivalents (including money market funds) (1)
$
47,872

 
$
47,872

 
$

 
$

Government securities (2)
$
7,447

 
$

 
$
7,447

 
$

Corporate bonds (2)
$
4,218

 
$

 
$
4,218

 
$

Derivative financial instruments (3)
$
2,810

 
$

 
$
2,810

 
$

Variable-rate debt obligations (4)
$
196,500

 
$

 
$
196,500

 
$

Fixed-rate debt obligations (4)
$
100,000

 
$

 
$
100,000

 
$

Deferred stock-based compensation (5)
$
8,915

 
$

 
$
8,915

 
$

 
 
 
 
 
 
 
 
Balance as of December 29, 2018
 
 
 
 
 
 
 
Cash and cash equivalents (including money market funds) (1)
$
76,819

 
$
76,819

 
$

 
$

Government securities (2)
$
7,384

 
$

 
$
7,384

 
$

Corporate bonds (2)
$
4,620

 
$

 
$
4,620

 
$

Derivative financial instruments (3)
$
3,797

 
$

 
$
3,797

 
$

Variable-rate debt obligations (4)
$
150,000

 
$

 
$