(Mark One)

Securities registered pursuant to Section 12(b) of the Act:  None.

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a non-accelerated filer.smaller reporting company.  See definitiondefinitions of “large accelerated filer,” “accelerated filerfiler” and large accelerated filer”“smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):

The aggregate market value of the voting stock held by nonaffiliates of the registrant, as of June 30, 2007,28, 2008, was $1,321,130,331,$610,437,151, assuming all 5% holders are affiliates.

The number of shares outstanding of the registrant's common stock, as of February 1, 2008 was:  44,482,666.6, 2009 was 44,324,409.

Portions of the registrant's Proxy Statement dated March 19, 2008,30, 2009, for the May 6, 2008,12, 2009, Annual Meeting of Shareholders are incorporated by reference into Part III.

 

 

 

HNI Corporation (the “Corporation”, “we”, “us” or “our”) is an Iowa corporation incorporated in 1944.  The Corporation is a provider of office furniture and hearth products.  A broad office furniture product offering is sold to dealers, wholesalers, retail superstores, end-user customers, and federal, state and local governments.  Dealer, wholesaler,Dealers and retail superstoreswholesalers are the major channels based on sales.  Hearth products include a full array of gas, electric, wood and woodbiomass burning fireplaces, inserts, stoves, facings and accessories.  These products are sold through a national system of dealers and distributors, as well as Corporation-owned distribution and retail outlets.  In fiscal 2007,2008, the Corporation had net sales of $2.6$2.5 billion, of which approximately $2.1 billion or 82%83% was attributable to office furniture products and $0.5$0.4 billion or 18%17% was attributable to hearth products.  Please refer to Operating Segment Information in the Notes to Consolidated Financial Statements for further information about operating segments.

The Corporation is organized into a corporate headquarters and operating units with offices, manufacturing plants, distribution centers and sales showrooms in the United States, Canada, China, Hong Kong and Taiwan.  See Item 2. Properties later in this report for additional related discussion.

SevenEight operating units, marketing under various brand names, participate in the office furniture industry.  These operating units include:  The HON Company, Allsteel Inc., Maxon Furniture Inc., The Gunlocke Company L.L.C., Paoli Inc., Hickory Business Furniture, LLC (“HBF”), HNI Hong Kong Limited (Lamex),(“Lamex”) and Omni Workspace Company.  Each of these operating units provides products which are sold through various channels of distribution and segments of the industry.

The operating unit Hearth & Home Technologies Inc.(“Hearth & Home”) participates in the hearth products industry.  The retail and distribution brand for this operating unit is Fireside Hearth & Home.

During fiscal 2007,2008, the Corporation completed the acquisition of two smallHBF, a leading provider of premium upholstered seating, textiles, wood tables and wood case goods for the office furniture dealers andenvironment for a manufacturer of free-standing stoves and fireplace inserts.  The combined purchase price of these acquisitions less cash acquired was $40.9$75 million.

HNI International Inc. (“HNI International”) sells office furniture products manufactured by the Corporation’s operating units in select markets outside the United States and Canada.  With dealers and servicing partners located in more than fifty countries, HNI International provides project management services virtually anywhere in the world.

Since its inception, the Corporation has been committed to systematically eliminating waste and in 1992 introduced its process improvement approach known as Rapid Continuous Improvement (“RCI”), which focuses on streamlining design, manufacturing and administrative processes.  The Corporation's RCI program, in which most members participate, has contributed to increased productivity, lower manufacturing costs, improved product quality and workplace safety.  In addition, the Corporation's RCI efforts enable it to offer short average lead times, from receipt of order to delivery and installation, for most of its products.

The Corporation distributes its products through an extensive network of independent office furniture dealers, office products dealers, wholesalers and retailers.  The Corporation is a supplier of office furniture to the largest nationwide distributors of office products, including Corporate Express Inc., A Buhrmann Company; Office Depot, Inc.;, Office Max Incorporated;Incorporated and Staples, Inc.

The Corporation's product development efforts are focused on developing and providing solutions that are relevant and differentiated, and deliver quality, aesthetics and style.

An important element of the Corporation's success has been its member-owner culture, which has enabled it to attract, develop, retain and motivate skilled, experienced and efficient members (i.e., employees).  Each of the Corporation's eligible members own stock in the Corporation through a number of stock-based plans, including a member stock purchase plan and a profit-sharing retirement plan, which drives a unique level of commitment to the Corporation’s success throughout the entire workforce.

For further financial-related information with respect to acquisitions, restructuring and the Corporation’s operations in general, refer to Item“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,Operations” later in this report, and the following sections in the Notes to Consolidated Financial Statements:  Nature of Operations, Business Combinations and Operating Segment Information.

According to the Business and Institutional Furniture Manufacturer's Association (“BIFMA”), U.S. office furniture industry shipments were estimated to be $11.4$11.2 billion in 2007, an increase2008, a decrease of 6%2% compared to 2006,2007, which was a 7%6% increase from 20052006 levels.  The Corporation believes that the increasedecrease in 20072008 was due to growthweakness in the overall economy and declining white collar employment and corporate profitability.

The U.S. office furniture market consists of two primary segments—the project or contract segment and the commercial segment.  The project segment has traditionally been characterized by sales of office furniture and services to large corporations, primarily for new office facilities, relocations or department or office redesigns, which are frequently customized to meet specific client and designer preferences.  Project furniture is generally purchased through office furniture dealers who typically prepare a custom-designed office layout emphasizing image and design.  The selling process is often complex and lengthy and generally has several manufacturers competing for the same projects.

The commercial segment of the market, in which the Corporation is a leader, primarily represents smaller orders of office furniture purchased by businesses and home office users on the basis of price, quality, selection and speed and reliability of delivery.  Office products dealers, wholesalers and retailers, such as office products superstores, are the primary distribution channels in this market segment.  Office furniture and products dealers publish periodic catalogs that display office furniture and products from various manufacturers.

The Corporation also competes in the domestic hearth products industry, where it is a market leader.  Hearth products are typically purchased by builders during the construction of new homes and homeowners during the renovation of existing homes.  Both types of purchases involve seasonality with remodel/retrofit activity being concentrated in the September to December time-frame.  Distribution is primarily through independent dealers, who may buy direct from the manufacturer or from an intermediate distributor.  The Corporation sells approximately 70%50% of its hearth products to the new construction/builder channel.

The Corporation's strategy is to build on its position as a leading manufacturer of office furniture and hearth products in North America and pursue select global markets where opportunities exist to create value.  The components of this growth strategy are to introduce new products, build brand equity, provide outstanding customer satisfaction by focusing on the end-user, strengthen the distribution network, respond to global competition, pursue complementary strategic acquisitions, enter markets not currently served and continually reduce costs.

The Corporation’s strategy has a dual focus:  working continuously to extract new growth from its core markets while identifying and developing new, adjacent potential areas of growth.  The Corporation focuses on extracting new growth from each of its existing businesses by deepening its understanding of end users,end-users, using new insights gained to refine branding, selling and marketing and developing new products to serve them better.  The Corporation also pursues opportunities in potential growth drivers outside of, but related to, its core business, such as vertical markets or new distribution models, or a new business entirely.models.

As of December 29, 2007,January 3, 2009, the Corporation employed approximately 13,30012,200 persons, 12,60012,000 of whom were full-time and 700200 of whom were temporary personnel.  The Corporation employed approximately 300 persons who were members of unions.  The Corporation believes that its labor relations are good.

The following is a description of the Corporation's major product categories and product lines:

The Corporation offers a variety of storage options designed either to be integrated into the Corporation's office systems products or to function as freestanding furniture in office applications.  The Corporation sells most of its freestanding storage through independent office products and office furniture dealers, nationwide chains of office products dealers, wholesalers, office products superstores and mail order distributors.

The Corporation's seating line includes chairs designed for all types of office work.  The chairs are available in a variety of frame colors, coverings and a wide range of price points.  Key customer criteria in seating includes superior design, ergonomics, aesthetics, comfort and quality.

The Corporation offers a complete line of office panel system products in order to meet the needs of a wide spectrum of organizations.  Office panel systems may be used for team work settings, private offices and open floor plans.  They are typically modular and movable workspaces composed of adjustable partitions, work surfaces, desk extensions, storage cabinets and electrical lighting systems which can be moved, reconfigured and reused within the office.  Office panel systems offer a cost-effective and flexible alternative to traditional drywall office construction.  A typical installation of office panels often includes related sales of seating, storage and accessories.

The Corporation offers whole office solutions, movable panels, storage units and work surfaces that can be installed easily and reconfigured to accommodate growth and change in organizations.  The Corporation also offers consultative selling and design services for its office system products.

The Corporation's offering of desks and related products includes stand-alone steel, laminate and wood furniture items, such as desks, bookshelves, credenzas and mobile desking.  These products are available in a range of designs and price points.  The Corporation's desks and related products are sold to a wide variety of customers from those designing large office configurations to small retail and home office purchasers.  The Corporation offers a variety of tables designed for use in conference rooms, private offices, training areas, team work settings and open floor plans.

The Corporation manufactures office furniture in Alabama, California, Georgia, Indiana, Iowa, Kentucky, New York, North Carolina Virginia, and China.  The Corporation manufactures hearth products in Iowa, Maryland, Minnesota, Washington, California and Pennsylvania.

The Corporation purchases raw materials and components from a variety of suppliers, and generally most items are available from multiple sources.  Major raw materials and components include coil steel, aluminum, castings, lumber, veneer, particleboard, fabric, paint, lacquer, hardware, plastic products and shipping cartons.

Since its inception, the Corporation has focused on making its manufacturing facilities and processes more flexible while at the same time reducing cost, eliminating waste and improving product quality.  In 1992, the Corporation adopted the principles of RCI based on the Toyota Production System, which focus on developing flexible and efficient design, manufacturing and administrative processes that remove excess cost.  The Corporation’s lean manufacturing philosophy leverages the creativity of its members to eliminate and reduce costs.  To achieve flexibility and attain efficiency goals, the Corporation has adopted a variety of production techniques, including cellular manufacturing, focused factories, just-in-time inventory management, value engineering, business simplification and 80/20 principles.  The application of RCI has increased productivity by reducing set-up and processing times, square footage, inventory levels, product costs and delivery times, while improving quality and enhancing member safety.  The Corporation's RCI process involves production and administrative employees, management, customers and suppliers.  The Corporation has facilitators, coaches and consultants dedicated to the RCI process and strives to involve all members in the RCI process.  In addition, the Corporation has organized a group that designs, fabricates, tests, and installs proprietary manufacturing equipment.  Manufacturing also plays a key role in the Corporation's concurrent product development process that primarily seeks to design new products for ease of manufacturability.

The Corporation's product development efforts are primarily focused on developing end-user solutions that are relevant, differentiated and focused on quality, aesthetics, style, sustainable design and on reducing manufacturing costs.  The Corporation accomplishes this through improving existing products, extending product lines, applying ergonomic research, improving manufacturing processes, applying alternative materials and providing engineering support and training to its operating units.  The Corporation conducts its product development efforts at both the corporate and operating unit level.  At the corporate level, the staff at the Corporation's Stanley M. Howe Technical Center, working in conjunction with operating unit staff, seeks breakthrough developments in product design, manufacturability, and materials usage.  At the operating unit level, development efforts are focused on achieving improvements in product features and manufacturing processes.  The Corporation invested approximately $27.8 million, $24.0 million $27.6 million, and $27.3$27.6 million in product development during fiscal 2008, 2007 2006, and 2005,2006, respectively, and has budgeted in excess of $29$23 million for product development in fiscal 2008.2009.

As of December 29, 2007,January 3, 2009, the Corporation owned 357 U.S. and 315349 foreign patents and had applications pending for 6049 U.S. and 150100 foreign patents.  In addition, the Corporation holds 159176 U.S. and 337366 foreign trademark registrations and has applications pending for 5234 U.S. and 9170 foreign trademarks.

The Corporation's principal office furniture products do not require frequent technical changes.  The Corporation believes that neither any individual office furniture patent nor the Corporation's office furniture patents in the aggregate are material to the Corporation's business as a whole.

The Corporation’s patents covering its hearth products protect various technical innovations.  While the acquisition of patents reflects Hearth & Home Technologies Inc.’sHome’s position in the market as an innovation leader, the Corporation believes that neither any individual hearth product’sproduct patent nor the Corporation’s hearth products’product patents in the aggregate are material to the Corporation’s business as a whole.

The Corporation applies for patent protection when it believes the expense of doing so is justified, and the Corporation believes that the duration of its registered patents is adequate to protect these rights.  The Corporation also pays royalties in certain instances for the use of patents on products and processes owned by others.

The Corporation actively protects its trademarks that it believes have significant value.

In fiscal 2007,2008, the Corporation’s ten largest customers represented approximately 37%39% of its consolidated net sales.  One customer, United Stationers Inc., accounted for approximately 11%10% of the Corporation’s consolidated net sales in fiscal 2007, 12%2008, 11% in fiscal 2006,2007, and 12% in fiscal 2005.2006.  The substantial purchasing power exercised by large customers may adversely affect the prices at which the Corporation can successfully offer its products.  In addition, there can be no assurance that the Corporation will be able to maintain its customer relationships.

The Corporation today sells its office furniture products through five principal distribution channels.  The first channel, which consists of independent, local office furniture and office products dealers, specializes in the sale of a broad range of office furniture and office furniture systems to business, government, education, health care entities and home office owners.

The second distribution channel comprises national office product distributors including Office Max Incorporated; Corporate Express Inc., A Buhrmann Company;Incorporated, Office Depot, Inc.; and Staples, Inc.  These distributors sell furniture along with office supplies through a national network of dealerships and sales offices, which assist their customers with the evaluation of office space requirements, systems layout and product selection and design and office solution services provided by professional designers.  All of these distributors except for Corporate Express Inc., also sell through retail office products superstores.

The third distribution channel, comprising corporate accounts, is where the Corporation has the lead selling relationship with the end-user.  Installation and service are normally provided through a dealer.

The fourth distribution channel comprises wholesalers that serve as distributors of the Corporation's products to independent dealers, national supply dealers and superstores.  The Corporation sells to the nation's largest wholesalers, United Stationers Inc. and S.P. Richards Company, as well as to regional wholesalers.  Wholesalers maintain inventory of standard product lines for resale to the various dealers and retailers.  They also special order products from the Corporation in customer-selected models and colors.  The Corporation's wholesalers maintain warehouse locations throughout the United States, which enables the Corporation to make its products available for rapid delivery to retailers anywhere in the country.

The Corporation's office furniture sales force consists of regional sales managers, salespersons and firms of independent manufacturers' representatives who collectively provide national sales coverage.  Sales managers and salespersons are compensated by a combination of salary and incentive bonus.

Office products dealers, national wholesalers and retailers market their products over the Internet and through catalogs published periodically.  These catalogs are distributed to existing and potential customers.  The Corporation believes that the inclusion of the Corporation's product lines in customer catalogs and e-business listings offers strong potential for increased sales of the listed product lines due to the exposure provided.

The Corporation also makes export sales through HNI International to office furniture dealers and wholesale distributors serving select foreign markets.  Distributors are principally located in Latin America, the Caribbean and Middle East.  With the acquisition of Lamex in 2006 the Corporation manufactures and distributes office furniture directly to end usersend-users through independent dealers and distributors in Greater China and Asia.

Limited quantities of select finished goods inventories primarily built to order awaiting shipment are at the Corporation's principal manufacturing plants and at its various distribution centers.

Hearth & Home Technologies Inc. sells its fireplace and stove products through dealers, distributors and Corporation-owned distribution and retail outlets.  The Corporation has a field sales organization of regional sales managers, salespersons, and firms of independent manufacturers' representatives.

As of December 29, 2007,January 3, 2009, the Corporation had an order backlog of approximately $162.0$130.8 million, which will be filled in the ordinary course of business within the first few weeks of the current fiscal year.  This compares with $162.0 million as of December 29, 2007, and $182.7 million as of December 30, 2006, and $185.4 million as of December 31, 2005.2006.  Backlog, in terms of percentage of net sales, was 6.3%5.3%, 6.8%,6.3% and 7.6%6.8%, for fiscal 2008, 2007 2006, and 2005,2006, respectively.  The Corporation’s products are typically manufactured and shipped within a few weeks following receipt of order.  The dollar amount of the Corporation’s order backlog is, therefore, not considered by management to be a leading indicator of the Corporation’s expected sales in any particular fiscal period.

The Corporation is one of the largest office furniture manufacturers in the world and believes that it is the largest provider of furniture to small- and medium-sized workplaces.  The Corporation is the largest manufacturer and marketer of fireplaces in North America.

The office furniture industry is highly competitive, with a significant number of competitors offering similar products.  The Corporation competes by emphasizing its ability to deliver compelling value products, solutions and a high level of customer service.  The Corporation competes with the large office furniture manufacturers, which controlcover a substantial portion of the North America market share in the project-oriented office furniture market, such as Steelcase Inc.;, Haworth, Inc.;, Herman Miller, Inc.; and Knoll, Inc.  The Corporation also competes with a number of other office furniture manufacturers, including The Global Group (a Canadian company);, Kimball International, Inc.; KI;, KI and Teknion Corporation (a Canadian company), as well as global importers.  The Corporation faces significant price competition from its competitors and may encounter competition from new market entrants.

Hearth products, consisting of prefabricated fireplaces and related products, are manufactured by a number of national and regional competitors.  The Corporation competes primarily against other largea broad range of manufacturers, including Travis Industries, Inc., Lennox International Inc., Monessen Hearth Systems Company, DESA Fmi LLC, Wolf Steel Ltd. (Napolean) and CFM Corporation Inc. (a Canadian company).FPI Fireplace Products International Ltd.

Both office furniture and hearth products compete on the basis of performance, quality, price, complete and on-time delivery to the customer and customer service and support.  The Corporation believes that it competes principally by providing compelling value products designed to be among the best in their price range for product quality and performance, superior customer service and short lead-times.  This is made possible, in part, by the Corporation's on-going investment in product development, highly efficient and low cost manufacturing operations and an extensive distribution network.

For further discussion of the Corporation's competitive situation, refer to Item“Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.Operations” later in this report.

Certain business costs may, from time to time, increase at a rate exceeding the general rate of inflation.  The Corporation’s objective is to offset the effect of inflation on its costs primarily through productivity increases in combination with certain adjustments to the selling price of its products as competitive market and general economic conditions permit.

Investments are routinely made in modernizing plants, equipment, support systems and RCI programs.  These investments collectively focus on business simplification and increasing productivity which helps to offset the effect of rising material and labor costs.  OngoingThe Corporation also routinely employs ongoing cost control disciplines are also routinely employed.disciplines.  In addition, the last-in, first-out (LIFO) valuation method is used for most of the Corporation's inventories, which ensures that changing material and labor costs are recognized in reported income and, more importantly, these costs are recognized in pricing decisions.

The Corporation is subject to a variety of environmental laws and regulations governing dischargesuse of materials and substances intoin products, the air and water; the handling, storage, and disposalmanagement of hazardous or solid waste materials;wastes resulting from use of certain material and the remediation of contamination associated with releases of hazardous substances.substances used in the past.  Although the Corporation believes it is in material compliance with all of the various regulations applicable to its business, there can be no assurance that requirements will not change in the future or that the Corporation will not incur material costs to comply with such regulations.  The Corporation has trained staff responsible for monitoring compliance with environmental, health and safety requirements.  The Corporation’s environmental staff works with responsible personnel at each manufacturing facility, the Corporation’s environmental legal counsel and consultants on the management of environmental, health and safety issues.  The Corporation’s ultimate goal is to reduce and, when practical, eliminate the generation of environmental pollutants in its manufacturing processes.

The Corporation’s environmental management system has earned the recognition of numerous state and federal agencies as well as non-government organizations.  The Corporation’s lean manufacturing philosophy leverages the creativity of its members to eliminate waste and reduce cost.  Aligning these continuous improvement initiatives with the Corporation’s environmental objectives creates a model of the triple bottom line of sustainable development where members work toward shared goals of personal growth, economic reward and a healthy environment for the future.

Over the past year,several years, the Corporation has expanded its environmental management system and established metrics to influence product design and development, supplier and supply chain performance, energy and resource consumption and the impacts of its facilities.  In addition, the Corporation is providing sustainability training to senior decision makers and has assigned resources to documenting and communicating its progress to an evermore sophisticated market.  Integrating sustainable objectives into core business systems is consistent with the Corporation’s vision and ensures its commitment to being a sustainable enterprise remains a priority for all members.

Compliance with federal, state and local environmental regulations has not had a material effect on the capital expenditures, earnings or competitive position of the Corporation to date.  The Corporation does not anticipate that financially material capital expenditures will be required during fiscal 20082009 for environmental control facilities.  It is management’s judgment that compliance with current regulations should not have a material effect on the Corporation’s financial condition or results of operations.  However, there can be no assurance that new environmental legislation and technology in this area will not result in or require material capital expenditures.

The development of the Corporation's business during the fiscal years ended January 3, 2009, December 29, 2007, and December 30, 2006, and December 31, 2005, is discussed in Item“Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.Operations” later in this report.

Statements in this reportAnnual Report on Form 10-K (this “Report”) that are not strictly historical, including statements as to plans, outlook, objectives and future financial performance, are “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Words, such as “anticipate,” “believe,” “could,” “confident,” “estimate,” “expect,” “forecast,” “hope,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and variations of such words, and similar expressions identify forward-looking statements.

Forward-looking statements involve known and unknown risks and uncertainties.uncertainties, which may cause the Corporation’s actual results in the future to differ materially from expected results.  The most significant factors known to the Corporation that may adversely affect the Corporation’s business, operations, industries, financial position or future financial performance are described later in this reportReport under the heading entitled “Item 1A. Risk Factors.”  The Corporation cautions readers not to place undue reliance on any forward-looking statement which speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated.  Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report,Report, including under the heading entitled “Item 1A. Risk Factors,” as well as others that the Corporation may consider immaterial or does not anticipate at this time.  The risks and uncertainties described in this report,Report, including those under the heading entitled “Item 1A. Risk Factors,” are not exclusive and further information concerning the Corporation, including factors that potentially could materially affect the Corporation’s financial results or condition, may emerge from time to time.

The Corporation assumes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.  The Corporation does adviseadvises you, however, to consult any further disclosures made on related subjects in future quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the Securities and Exchange Commission.SEC.

The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered.  The risks and uncertainties described below are not the only ones we face.  Additional risks and uncertainties not presently known to us or that we presently deem less significant may also adversely affect our business, operating results, cash flows and financial condition.  If any of the following risks actually occur, our business, operating results, cash flows and financial condition could be materially adversely affected.

Both the office furniture and hearth products industries are highly competitive, with a significant number of competitors in both industries offering similar products.  While competitive factors vary geographically and between differing sales situations, typical factors for both industries include:  price; delivery and service; product design and features; product quality; strength of dealers and other distributors; and relationships with customers and key influencers, such as architects, designers, home-builders and facility managers.  Our principal competitors in the office furniture industry include The Global Group (a Canadian company), Haworth, Inc., Kimball International, Inc., Steelcase Inc., Herman Miller, Inc., Teknion Corporation (a Canadian company), KI, and Knoll, Inc.  Our principal competitors in the hearth products industry include Travis Industries, Inc., Lennox International Inc., Monessen Hearth Systems Company, DESA Fmi LLC, Wolf Steel Ltd. (Napolean) and CFM Corporation (a Canadian company).FPI Fireplace Products International Ltd..  In both industries, most of our top competitors have an installed base of products that can be a source of significant future sales through repeat and expansion orders.  These competitors manufacture products with strong acceptance in the marketplace and are capable of developing products that have a competitive advantage over our products.

Our continued success will depend on many things, including our ability to continue to manufacture and market high quality, high performance products at competitive prices and our ability to adapt our business model to effectively compete in the highly competitive environments of both the office furniture and hearth products industries.  Our success is also subject to our ability to sustain and grow our positive brand reputation and recognition among existing and potential customers and use our brands and trademarks effectively in entering new markets.

In both the office furniture and hearth products industries, we also face significant price competition from our competitors and from new market entrants who primarily manufacture and source products from lower-cost countries.  Such price competition impacts our ability to implement price increases or, in some cases, even maintain prices, which could lower our profit margins.  In addition, we may not be able to maintain or raise the prices of our products in response to rising raw material prices and other inflationary pressures.  Competition from low-cost Asian imports continues to represent a threat to our current market share in the office furniture industry.

There can be no assurance that we will be able to compete successfully in our various markets in the future.

We sell our products through multiple distribution channels.  These distribution channels have been consolidating in the past several years and may continue to consolidate in the future.  Such consolidation may result in a greater proportion of our sales being concentrated in fewer customers.  In fiscal 2007,2008, our ten largest customers represented approximately 37%39% of consolidated net sales.  The increased purchasing power exercised by larger customers may adversely affect the prices at which we can successfully offer our products.  As a result of this consolidation, changes in the purchase patterns or the loss of a single customer may have a greater impact on our business, operating results or financial condition than such events would have had prior to such consolidation.  There can be no assurance that we will be able to maintain our relationships with customers if this consolidation continues.

Private label products are products sold under the name of the distributor or retailer, but manufactured by another party.  Some of our largest customers have begun an aggressive private label initiative to increase sales of office furniture.  If these initiatives are successful, they may reduce our revenue and inhibit our ability to raise prices and may, in some cases, even force us to lower prices, which could result in an adverse effect on our business, operating results, or financial condition.

Fluctuations in the price, availability and quality of the commodities, raw materials and components used by us in manufacturing could have an adverse effect on our costs of sales, profitability and our ability to meet the demand of customers.  We are increasingly sourcingsource commodities, raw materials, and components from low-cost, international suppliers for both our office furniture and hearth products.  From both domestic and international suppliers, the cost, quality, and availability of commodities, raw materials and components, including steel, our largest raw material category, have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, natural disasters, labor disputes, terrorism and political unrest or instability.  These factors could lead to further price increases or supply interruptions in the future.  Our profit margins could be adversely affected if commodity, raw material and component costs remain high or escalate further, and we are either unable to offset such costs through strategic sourcing initiatives and continuous improvement programs or, as a result of competitive market dynamics, unable to pass along a portion of the higher costs to our customers.

Our gross margins and the profitability of our business operations are sensitive to the cost of energy because the cost of energy is reflected in our transportation costs, the cost of petroleum-based materials like plastics, and the cost of operating our manufacturing facilities.  If the price of petroleum-based products, the cost of operating our manufacturing facilities and our transportation costs continue to increase, it could adversely affect our gross margins and profitability.

As a part of our growth strategy, we seek to increase sales and market share by introducing new products, further enhancing our existing line of products and continuing to pursue complementary acquisitions.  This strategy depends on our ability to increase sales through our existing customer network, principally dealers, wholesalers and retailers.  Furthermore, the ability to effectuate and manage profitable growth will depend on our ability to contain costs, including costs associated with increased manufacturing, sales and marketing efforts, freight utilization, warehouse capacity, product development and acquisition efforts.

To keep pace with market trends in both the office furniture and hearth products industries, such as changes in workplace and home design and increases in the use of technology, and with evolving regulatory and industry requirements, including environmental, health, safety and similar standards for the workplace and home and for product performance, we must periodically introduce new products.  The introduction of new products in both industries requires the coordination of the design, manufacturing and marketing of such products, which may be affected by factors beyond our control.  The design and engineering of certain of our new products can take up to a year or more, and further time may be required to achieve client acceptance.  In addition, we may face difficulties in introducing new products if we cannot successfully align ourselves with independent architects, home-builders and designers who are able to design, in a timely manner, high quality products consistent with our image.  Accordingly, the launch of any particular product may be later or less successful than we originally anticipated.  Difficulties or delays in introducing new products or lack of customer acceptance of new products could limit our sales growth or cause our sales to decline, and may result in an adverse effect on our business, operating results or financial condition.

One of our growth strategies is to supplement our internal growth through acquisitions of, and alliances and joint venture arrangements with, businesses with technologies or products that complement or augment our existing products or distribution or add new products or distribution to our business.  The benefits of an acquisition, alliance, or joint venture may take more time than expected to develop or integrate into our operations, and we cannot guarantee that any completed or future acquisitions, alliances or joint ventures will in fact produce any benefits.  In addition, acquisitions, alliances and joint ventures involve a number of risks, including, without limitation:

Our ability to grow through acquisitions will depend, in part, on the availability of suitable acquisition candidates at an acceptable price, our ability to compete effectively for these acquisition candidates and the availability of capital to complete such acquisitions.  These risks could be heightened if we complete several acquisitions within a relatively short period of time.  In addition, there can be no assurance that we will be able to continue to identify attractive opportunities or enter into any such transactions with acceptable terms in the future.  If an acquisition is completed, there can be no assurance that we will be able to successfully integrate the acquired entity into our operations or that we will achieve sales and profitability that justify our investment in such businesses.  Any potential acquisition may not be successful and could adversely affect our business, operating results or financial condition.

The past and present operation and ownership by us of manufacturing facilities and real property are subject to extensive and changing federal, state and local environmental laws and regulations, including those relating to discharges in air, water and land, the handling and disposal of solid and hazardous waste and the remediation of contamination associated with releases of hazardous substances.  Compliance with environmental regulations has not had a material affect on our capital expenditures, earnings or competitive position to date; however, compliance with current laws or more stringent laws or regulations which may be imposed on us in the future, stricter interpretation of existing laws or discoveries of contamination at our real property sites which occurred prior to our ownership or the advent of environmental regulation may require us to incur additional expenditures in the future, some of which may be material.

Office furniture industry revenues are impacted by a variety of macroeconomic factors such as service-sector employment levels, corporate profits, non-residential fixed investment,commercial construction and commercial construction.office vacancy rates.  Industry factors, such as corporate restructuring, technology changes, corporate relocations, health and safety concerns, including ergonomic considerations and the globalization of companies also influence office furniture industry revenues.

Hearth products industry revenues are impacted by a variety of macroeconomic factors as well, including housing starts, overall employment levels, interest rates, consumer confidence, energy costs, disposable income and changing demographics.  Industry factors, such as technology changes, health and safety concerns and environmental regulation, including indoor air quality standards, also influence hearth products industry revenues.  The U.S. homebuilding industry is currently experiencing a significant downturn, the duration and ultimate severity of which are uncertain.  Further deterioration of the economic conditions in the homebuilding industry and the hearth products market could further decrease demand for our hearth products and have additional adverse effects on our operating results.

There can be no assurance that current or future economic or industry trends will not adversely affect our business, operating results or financial condition.

We provide healthcare benefits to the majority of our members.  Healthcare costs have continued to rise over time and could adversely affect our business, operating results or financial condition.

In both the office furniture and hearth products industries, we rely in large part on a network of independent dealers to market our products to customers.  We also rely upon these dealers to provide a variety of important specification, installation and after-market services to our customers.  Our dealers may terminate their relationships with us at any time and for any reason.  The loss or termination of a significant number of dealer relationships could cause difficulties for us in marketing and distributing our products, resulting in a decline in our sales, which may adversely affect our business, operating results or financial condition.

We primarily sell our products and report our financial results in U.S. Dollars;dollars; however, we have increasingly been conducting business in countries outside the United States, which exposes us to fluctuations in foreign currency exchange rates.  Paying our expenses in other currencies can result in a significant increase or decrease in the amount of those expenses in terms of U.S. Dollars,dollars, which may affect our profits.  In the future, any foreign currency appreciation relative to the U.S. Dollardollar would increase our expenses that are denominated in that currency.  Additionally, as we report currency in the U.S. Dollar,dollar, our financial position is affected by the strength of the currencies in countries where we have operations relative to the strength of the U.S. Dollar.dollar.

We periodically review our foreign currency exposure and evaluate whether we should enter into hedging transactions.

Our international sales and operations are subject to a number of additional risks, including, without limitation:

There can be no assurance that these and other factors will not have an adverse affect on our business, operating results or financial condition.

We may not be able to maintain our effective tax rate because:  (1) of future changes in tax laws or interpretations of such tax laws; (2) the losses incurred in certain jurisdictions may not offset the tax expense in profitable jurisdictions; (3) there are differences between foreign and U.S. income tax rates; and (4) many tax years are subject to audit by different tax jurisdictions, which may result in additional taxes payable.

Our existing credit facility, term loan credit agreement, dated as of June 30, 2008, pursuant to which we borrowed $50 million in the form of a term loan, and note purchase agreement, dated as of April 6, 2006, pursuant to which we issued $150 million of senior, unsecured notes designated as Series 2006-A Senior Notes, limit our ability to finance operations, service debt or engage in other business activities that may be in our interest.  Specifically, our credit facility restrictsand term loan restrict our ability to incur additional indebtedness, create or incur certain liens with respect to any of our properties or assets, engage in lines of business substantially different than those currently conducted by us, sell, lease, license, or dispose of any of our assets, enter into certain transactions with affiliates, make certain restricted payments or take certain restricted actions and enter into certain sale-leaseback arrangements.  Our note purchase agreement contains customary restrictive covenants that, among other things, place limits on our ability to incur liens on assets, incur additional debt, transfer or sell our assets, merge or consolidate with other persons or enter into material transactions with affiliates.  Both ourOur credit facility, term loan and note purchase agreement also require us to maintain certain financial covenants.

Our failure to comply with the obligations under our credit facility or term loan may result in an event of default, which, if not cured or waived, may permit accelerationcause accelerated repayment of the indebtedness under both the credit facility and term loan and could result in a cross default under our note purchase agreement.  We cannot be certain that we will have sufficient funds available to pay any accelerated indebtednessrepayments or that we will have the ability to refinance accelerated indebtednessrepayments on terms favorable to us or at all.

Our capital requirements depend on many factors, including capital improvements, tooling, new product development and acquisitions.  To the extent that our existing capital is insufficient to meet these requirements and cover any losses, we may need to raise additional funds through financings or curtail our growth and reduce our assets.  Our ability to generate cash depends on economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control.  Future borrowings or financings may not be available to us under our credit facility or otherwise in an amount sufficient to enable us to pay our debt or meet our liquidity needs.

Any equity or debt financing, if available at all, could have terms that are not favorable to us.  In addition, financings could result in dilution to our shareholders or the securities may have rights, preferences and privileges that are senior to those of our common stock.  If our need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital.

None.

The Corporation maintains its corporate headquarters in Muscatine, Iowa, and conducts its operations at locations throughout the United States, Canada, China, Hong Kong and Taiwan, which house manufacturing, distribution and retail operations and offices totaling an aggregate of approximately 12.011.5 million square feet.  Of this total, approximately 3.73.0 million square feet are leased, including approximately .3 million square feet under a capital lease.

Although the plants are of varying ages, the Corporation believes they are well maintained, equipped with modern and efficient equipment, in good operating condition and suitable for the purposes for which they are being used.  The Corporation has sufficient capacity to increase output at most locations by increasing the use of overtime or the number of production shifts employed.

The Corporation's principal manufacturing and distribution facilities (200,000 square feet in size or larger) are as follows:

Other Corporation facilities, under 200,000 square feet in size, are located in various communities throughout the United States, Canada, China, Hong Kong and Taiwan.  These facilities total approximately 3.6 million square feet with approximately 2.3 million square feet used for the manufacture and distribution of office furniture and approximately 1.3 million square feet for hearth products.  Of this total, approximately 2.52.4 million square feet are leased.  The Corporation also leases sales showroom space in office furniture market centers in several major metropolitan areas.

There are no major encumbrances on Corporation-owned properties.  Refer to Property, Plant, and Equipment in the Notes to Consolidated Financial Statements for related cost, accumulated depreciation and net book value data.

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the ordinary course of its business, including pending litigation, environmental remediation, taxes and other claims.  It is the Corporation’s opinion, after consultation with legal counsel, that additional liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation’s financial condition, although such matters could have a material effect on the Corporation’s quarterly or annual operating results and cash flows when resolved in a future period.

None.

The Corporation’s common stock is listed for trading on the New York Stock Exchange (“NYSE”), trading symbol HNI.  As of year-end 2007,2008, the Corporation had 7,6258,274 stockholders of record.

Computershare InvestorAs of February 2, 2009, Wells Fargo Shareowner Services, L.L.C., Chicago, Illinois,St. Paul, Minnesota, serves as the Corporation’s transfer agent and registrar of its common stock.  Shareholders may report a change of address or make inquiries by writing or calling:  Wells Fargo Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0874 or telephone 800/468-9716.  Prior to this date Computershare Investor Services, L.L.C., P.O. Box 1689, Chicago, IL 60690-1689 or telephone 312/588-4991. provided this service.

Common Stock Market Prices and Dividends (Unaudited) and Common Stock Market Price and Price/Earnings Ratio (Unaudited) are presented in the Investor Information section which follows the Notes to Consolidated Financial Statements filed as part of this report.

The Corporation expects to continue its policy of paying regular quarterly cash dividends.  Dividends have been paid each quarter since the Corporation paid its first dividend in 1955.  The average dividend payout percentage for the most recent three-year period has been 28%29% of prior year earnings.  Future dividends are dependent on future earnings, capital requirements and the Corporation’s financial condition.

The following is a summary of share repurchase activity during the fourth quarter ended December 29, 2007.January 3, 2009.

(1)  No shares were purchased outside of a publicly announced plan or program.

The Corporation repurchases shares under previously announced plans authorized by the Corporation’s Board of Directors as follows:

The following discussion of the Corporation’s historical results of operations and of its liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements of the Corporation and related notes.  Statements that are not historical are forward-looking and involve risks and uncertainties, including those discussed under the caption “Riskheading “Item 1A Risk Factors” in Item 1A of this Annual Report on Form 10-K and elsewhere in this report.

The Corporation has two reportable segments:  office furniture and hearth products.  The Corporation is the second largest office furniture manufacturer in the world and the nation’s leading manufacturer and marketer of gas and wood burning fireplaces.  The Corporation utilizes its split and focus, decentralized business model to deliver value to its customers with various brands and selling models.  The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.

During 2007,The Corporation’s results were negatively impacted by macroeconomic pressures during 2008.  Small business confidence, corporate profits and employment all decreased.  Instability in the global financial markets caused credit to become scarce and, when available, generally more expensive.  New housing starts continued to decline, reaching historic lows.  Steel and fuel costs experienced rapid, steep inflation before abating due to widespread economic weakness toward the end of the year.  These factors impacted the supplies-driven channel of the Corporation’s office furniture segment and the hearth segment dramatically during 2008.  The contract channel of the office furniture industry experienced solid growth.segment began to experience the impact in order trends at the end of 2008.  As a result the Corporation implemented actions to adjust to lower demand levels.  These included reductions in staffing, short work weeks and other actions to reduce labor costs.  The Corporation experienced softnesscompleted the complicated task of consolidating a manufacturing facility, closing two distribution centers and starting up a new distribution center in its office furniture segment in 2008.

Net sales during 2008 were $2.5 billion, a decrease of 3.6 percent, compared to net sales of $2.6 billion in 2007.  The sales decline was driven by lower volume in the supplies drivensupplies-driven channel and solid demand in its contract businesses inof the office furniture segment.  Sales benefited from price increases as well as acquisitions completed oversegment and the past two years.  The housing market continued to decline sharply, which negatively impactednew construction channel of the Corporation’s hearth products segment.

To support specific company strategiesThe Corporation completed the acquisition of HBF a leading provider of premium upholstered seating, textiles, wood tables and wood case goods for the office environment during 2008.  The Corporation recorded $21.8 million of goodwill and intangible impairment charges during 2008 related to reporting units acquired over the past five years in its office furniture segment due to current and projected market and economic conditions.

Management believes the volatile and uncertain economic outlook will negatively impact both segments of its business the Corporation completed the acquisition of Harman Stove Company, a privately held domestic manufacturer of free-standing stoves and fireplace inserts, as well as two small office furniture dealer acquisitions.in 2009.  The Corporation made the decisionis working to shut down one office furniture facilitymitigate substantial economic and completed the shutdown of another office furniture facility which had begun in 2006.  The Corporation also made the decision to sell several small non-core components ofmarket weakness by eliminating waste, attacking structural cost and streamlining its office furniture services business.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Consolidated Financial Statements, which have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of the Corporation’s Board of Directors.Directors (the “Board”).  Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.  Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

When the Corporation determines that a customer is unlikely to pay, a charge is recorded to bad debt expense in the income statement and the allowance for doubtful accounts is increased.  When the Corporation is reasonably certain the customer cannot pay, the receivable is written off by removing the accounts receivable amount and reducing the allowance for doubtful accounts accordingly.

As of December 29, 2007,January 3, 2009, there was approximately $300$247 million in outstanding accounts receivable and $11$9 million recorded in the allowance for doubtful accounts to cover potential future customer non-payments.  However, if economic conditions were to deteriorate significantly or one of the Corporation’s large customers declares bankruptcy, a larger allowance for doubtful accounts might be necessary.  The allowance for doubtful accounts was approximately $11 million at year end 2007 and $13 million at year end 2006 and $12 million at year end 2005.2006.

The Corporation’s continuous focus on improving the manufacturing process tends to increase the likelihood of assets being replaced; therefore, the Corporation is regularly evaluating the expected useful lives of its equipment which can result in accelerated depreciation.

As a result of the review performed in the fourth quarter of 2008, the Corporation determined the carrying amount of certain reporting units acquired over the past few years in the office furniture segment exceeded their fair value.  Management then compared the carrying value of goodwill to the implied fair value of the goodwill in each of these reporting units, and concluded that $17 million of impairment charges needed to be recognized.  The impacted reporting units included an office furniture services unit, dealer distribution unit, and a recent acquisition with goodwill charges of approximately $10 million, $5 million and $2 million, respectively.

The changes to fair value in continuing operations exceeded their carryingthe reporting units that triggered impairment charges in the fourth quarter were primarily attributable to the deterioration in market conditions experienced in late 2008 which also caused management to change its estimates of future results.  The Corporation factored these current market conditions and estimates into its projected forecasts of sales, operating income and cash flows of each reporting unit through the course of its strategic planning process completed in the fourth quarter.

The significant estimates and assumptions used in estimating future cash flows of its reporting units are based on management’s view of longer-term broad market trends.  Management combines this trend data with estimates of current economic conditions in the U.S., competitor behavior, the mix of product sales, commodity costs, wage rates, the level of manufacturing capacity, and the pricing environment.  In addition, estimates of fair value so no impairmentare impacted by estimates of goodwill was recognizedthe market participant derived weighted average cost of capital.  The Corporation’s cash flow projections in continuing operations forall of its reporting units assumed declining revenue and cash flows in 2009 and that significant recovery would not begin until after 2010.  As a reasonableness test, management also compared the period ending December 29, 2007.  market capitalization of the Corporation at January 3, 2009 to the aggregate fair value of the reporting units, resulting in an implied control premium of approximately 30 percent.  Management believes this implied control premium is reasonable, in light of the synergies across its operating units, lean manufacturing environment and strong position in the markets it serves.

Goodwill of approximately $257$268 million is shownremains on the consolidated balance sheet as of the end of fiscal 2007.  Management’s assumptions about future cash flows for the reporting units require significant judgment and actual cash flows in the future may differ significantly from those forecasted today.

The Corporation also determines the fair value of indefinite lived trademarkstrade names on an annual basis during the fourth quarter or whenever indication of impairment exists.  The Corporation has evaluatedperformed its trademarks for impairment and has determined thatfiscal 2008 assessment of indefinite lived trade names during the fourth quarter.  The estimate of the fair market value of the trademarks exceeds carrying value, so no impairmenttrade names was recognized.  Thebased on a discounted cash flow model using inputs which included:  projected revenues from management’s long term plan, assumed royalty rates that could be payable if the trade names were not owned and a discount rate.  As a result of the review the Corporation determined the carrying value of certain trade names acquired over the trademarks waspast few years in the office furniture segment exceeded their fair value and concluded that a $4.8 million impairment charge needed to be recognized.  A carrying value of trade names of approximately $43.5$61 million remains on the consolidated balance sheet at the end of fiscal 2007.2008.

The Corporation has definite lived intangibles that are amortized over their estimated useful lives.  Impairment losses are recognized if the carrying amount of an intangible, subject to amortization, is not recoverable from expected future cash flows and its carrying amount exceeds its fair value.  No impairment losses related to definite lived intangibles were recorded.  Intangibles, net of amortization, of approximately $74$79 million are included on the consolidated balance sheet as of the end of fiscal 2007.2008.

In July 2006, the FASBFinancial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.”  FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  This Interpretation is effective for fiscal years beginning after December 15, 2006.  The Corporation adopted the provision of FIN 48 on December 31, 2006, the beginning of fiscal 2007.  See “Income Taxes” footnoteIncome Taxes in the Notes to Consolidated Financial Statements for additional information.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS 157”) which provides enhanced guidance for using fair value to measure assets and liabilities.  The standard also expands the amount of disclosure regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings.  The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The Corporation partially adopted SFAS 157 on December 30, 2007, the beginning of its 2008 fiscal year.  The Corporation has not applied the provisions of SFAS 157 to goodwill and intangibles in accordance with Financial Accounting Standards Board Staff Position 157-2.  The Corporation will adopt the new standard on January 4, 2009, the beginning of its 2009 fiscal year.  The Corporation is still evaluating the impact but does not anticipate anyexpect the adoption to have a material impact toon its financial statements from the adoption of this standard.

In February, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”) which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value.  The objective of SFAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  This statement is effective as ofThe Corporation adopted SFAS 159 on December 30, 2007, the beginning of fiscal 2008.  As the Corporation did not elect to fair value any fiscal year beginning after November 15, 2007.  The Corporation doesadditional assets or liabilities it did not anticipate anyhave a material impact toon its financial statements from the adoption of this standard.statements.

In December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations” (“SFAS No. 141(R)”), replacing SFAS No. 141, “Business Combinations” (“SFAS No. 141”), and SFAS No. 160, “Noncontrolling Interests in ConsolidationConsolidated Financial Statements – An Amendment of ARB No. 51” (“SFAS No. 160”).  SFAS No. 141(R) retains the fundamental requirements of SFAS No. 141, broadens its scope by applying the acquisition method to all transactions and other events in which one entity obtains control over one or more other businesses, and requires, among other things, that assets acquired and liabilities assumed be measured at fair value as of the acquisition date, that liabilities related to contingent considerations be recognized at the acquisition date and remeasured at fair value in each subsequent reporting period, that acquisition-related costs be expensed as incurred and that income be recognized if the fair value of the net assets acquired exceeds the fair value of the consideration transferred.  SFAS No. 160 establishes accounting and reporting standards for noncontrolling interests (i.e., minority interests) in a subsidiary, including changes in a parent’s ownership interest in a subsidiary and requires, among other things, that noncontrolling interests in subsidiaries be classified as a separate component of equity.  Except for the presentation and disclosure requirements of SFAS No. 160, which are to be applied retrospectively for all periods presented, SFAS No. 141 (R)141(R) and SFAS No. 160 are to be applied prospectively in financial statements issued for fiscal years beginning after December 15, 2008.  The Corporation is not able to predict the impact this guidance will have on the accounting for acquisitions it may complete in future periods.  For acquisitions completed prior to January 3, 2009, the new standard requires that changes in deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period must be recognized in earnings rather than as an adjustment to the cost of the acquisition.  The Corporation does not anticipate any material impact to its financial statements fromexpect this new guidance or the adoption of FAS160 to have a significant impact on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 160.161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133 (“SFAS 161”).  SFAS 161 expends disclosures for derivative instruments by requiring entities to disclose the fair value of derivative instruments and their gains or losses in tabular format.  SFAS 161 also requires disclosures of information about credit risk-related contingent features in derivative agreements, counterparty credit risk and strategies and objectives for using derivative instruments.  SFAS 161 will become effective for fiscal years beginning after November 15, 2008.  The Corporation will adopt this new accounting standard on January 4, 2009, the beginning of its fiscal year.  The Corporation does not expect the adoption to have a material impact on its financial statements.

The following table sets forth the percentage of consolidated net sales represented by certain items reflected in the Corporation’s statements of income for the periods indicated.

Net sales during 2008 were $2.5 billion, a decrease of 3.6 percent, compared to net sales of $2.6 billion in 2007.   Acquisitions contributed $118 million or 4.6 percentage points of sales.  Higher price realization of $66 million was offset by continued softness in the supplies driven channel of the office furniture segment and lower volume in the hearth products segment driven by the continuing decline in the new construction channel.  Net sales during 2007 were $2.6 billion, a decrease of 4.1 percent, compared to net sales of $2.7 billion in 2006.  Acquisitions contributed $46 million or 1.7 percentage points of sales.  Higher price realization of $84 million was offset by softersoft demand in the supplies driven channel of the office furniture segment and lower volume in the hearth products segment.  Net sales during 2006 were $2.7 billion, an increase of 10.1 percent, compared to net sales of $2.4 billion in 2005.  The increase in 2006 was due to $113 million of incremental sales from acquisitions, $43 million in price increases implemented in 2005 and 2006, and solid growth across all brands in the office furniture segment offset by lower volume in the hearth products segment.

Gross profit as a percent of net sales decreased 1.8 percentage points in 2008 as compared to 2007 due to lower volume, higher material costs and restructuring and transition costs offset partially by better price realization.  Gross profit as a percent of net sales increased 0.6 percentage points in 2007 as compared to 2006 due to better price realization and increased cost control offset partially by lower volume.  Gross profit as a percent

Selling and administrative expenses increased 2.2 percent in 2008 and decreased 2.1 percent in 2007.  The increase in 2008 was due to increased freight and distribution costs due to freight increases and fuel surcharges, additional costs from acquisitions, increased costs related to new product development and gains recorded in 2007 from the sale of a facility and increased 8.1 percent in 2006.the corporate airplane.  These were offset partially by lower volume related expenses, lower incentive based compensation costs, favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions and cost control initiatives.  The decrease in 2007 was due to lower volume related expenses and cost containment measures offset partially by additional costs from acquisitions, increased costs related to brand building, new product and growth initiatives and higher incentive based compensation.  The increase in 2006 was due to additional costs from acquisitions; increased freight and distribution costs due to volume, rate increases and fuel surcharges; stock based compensation expense due to the adoption of SFAS 123(R), and costs to resize the hearth business.  These increases were partially offset by a gain on the sale of a vacated facility, lower incentive compensation expense, and cost containment measures.

Selling and administrative expenses include freight expense for shipments to customers, product development costs and amortization expense of intangible assets.  Refer to Selling and Administrative Expenses in the Notes to Consolidated Financial Statements for further information regarding the comparative expense levels for these major expense items.

As a resultDuring 2008, the Corporation completed the shutdown of the Corporation’s ongoing business simplification and cost reduction initiatives, management made the decision in 2007 to close an office furniture facility in Richmond, Virginia, and consolidateconsolidated production into other locations.manufacturing locations, closed two distribution centers and started up a new distribution center.  The Corporation announced and started these activities during third quarter 2007.   In connection with the shutdown of the Richmond facility, the Corporation recorded $4.4 million of pre-tax charges which included $0.6 million of accelerated depreciation of machinery and equipment recorded in cost of sales, and $3.8 million of severance recorded as restructuring costs.  The closurecosts during 2007.  During 2008, the Corporation incurred $4.2 million of current period charges which included $0.4 million of accelerated depreciation of machinery and consolidation will be completed duringequipment recorded in cost of sales and $3.8 million of other costs which were recorded as restructuring costs.

As part of the first halfCorporation’s annual impairment review, management concluded due to market and economic conditions that a portion of 2008.  The Corporation will incur additional restructuring chargesits goodwill and transition costsindefinite-lived intangibles had carrying values greater than their fair market value and recorded an impairment charge of approximately $9 to $11 million in connection with the closure.$21.8 million.

The Corporation made the decision in 2007 to sell several small non-core components of its office furniture services business and recorded $2.7 million of impairment charges, included in the restructuring related and impairment charges line item on the statement of income, to reflect the fair market value of the assets being held for sale.

The Corporation’s hearth product segment consolidated some of its service and distribution locations during 2007.  In connection with those consolidations, the Corporation recorded $1.1 million of severance and facility exit costs which were recorded as restructuring costs in 2007.  The Corporation incurred $0.3 million of current period charges during 2008 which were recorded as restructuring costs.

During 2007, the Corporation completed the shutdown of an office furniture facility, which began in the fourth quarter of 2006.  The facility was located in Monterrey, Mexico and production from this facility was consolidated into other locations.  In connection with this shutdown, the Corporation recorded $0.8 million of severance costs in 2006.  The Corporation incurred $2.1 million of current period charges during 2007.

Operating income was $84.9 million in 2008, a decrease of 56.2 percent compared to $194 million in 2007.  The decrease in 2008 was due to lower volume in the supplies-driven channel of the office furniture segment and the hearth products segment, higher material and freight and distribution costs, investments in product development, restructuring, transition and impairment charges, gains recorded in 2007 from the sale of a facility and a corporate airplane and severance costs.  These were offset partially by improved price realization, lower volume related and incentive based compensation expenses, favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions and cost control initiatives.  Operating income was $194 million in 2007, a decrease of 6.2 percent compared to $206 million in 2006.  The decrease in 2007 iswas due to lower volume in the hearth products segment, increased costs related to brand building, new product and growth initiatives, higher incentive based compensation and restructuring charges offset partially by improved price realization and cost containment measures.  Operating income was $206 million in 2006, a decrease of 4.8 percent compared to $217 million in 2005.  The decrease in 2006 is due to lower volume in the hearth products segment, broad based material cost increases, increased freight costs, and stock compensation expense due to the adoption of SFAS 123(R) offset by higher volume and price increases in the office furniture segment.

Income from continuing operations in 2007,2008, which excludes the Corporation’s discontinued business (see Discontinued Operations in the Notes to Consolidated Financial Statements), was $120$45.5 million compared with $130$119.9 million in 2007, a 62.1 percent decrease.  Income from continuing operations was positively impacted by decreased interest expense of $1.3 million on moderate debt levels due to lower average interest rates.  Income from continuing operations in 2007 was $119.9 million compared with $129.7 million in 2006, a 7.6 percent decrease.  Income from continuing operations was negatively impacted by increased interest expense of $4 million on moderate debt levels, consistent with the Corporation’s strategy of maintaining a more efficient capital structure.  Income from continuing operations in 2006 was $130 million compared with $138 million in 2005, a 6.1 percent decrease.  Income from continuing operations was negatively impacted by increased interest expense of approximately $12 million on moderate debt levels.  The Corporation completed a detailed analysis of all deferred tax accounts in 2006, and determined that net deferred income tax liabilities were overstated.  The overstatement primarily related to a deferred tax liability associated with property, plant and equipment, partially offset by an overstated deferred tax asset associated with inventory.  In analyzing the difference, the Corporation determined that the items originated primarily in fiscal years prior to 2002.  To correct this difference, the Corporation reduced income tax expense in the fourth quarter of 2006 by $4.1 million.  The effect of this adjustment was to reduce the effective income tax rate related to continuing operations by 2.1 percentage points for the year and increase earnings per share from continuing operations by $0.08.  Income from continuing operations per diluted share decreased by 60.0 percent to $1.02 in 2008 and decreased by 0.8 percent to $2.55 in 2007 and increased by 2.4 percent to $2.57 in 2006 including a positive tax adjustment of $0.08 per share.2007.

During December 2006, the Corporation committed to a plan to sell a small non-core component of its office furniture segment.  The Corporation reduced the assets to the fair market value and classified them as held for sale.  The sale was completed during the second quarter of 2007.  Revenues and expenses associated with this component are presented as discontinued operations for all periods presented.  This operation was formerly reported within the Office Furniture segment.  Refer to Discontinued Operations in the Notes to Consolidated Financial Statements for further information.

Net income decreased 2.462.2 percent to $120$45.5 million in 20072008 compared to $123$120.4 million in 20062007 which was a decrease of 10.22.4 percent compared to 2005.2006.  Net income per diluted share decreased by 60.3 percent to $1.02 in 2008 and increased by 4.9 percent to $2.57 in 2007 and decreased 2.0 percent to $2.45 in 2006.2007.  Net income per diluted share was positively impacted $0.05 per share in 2008 and $0.18 per share in 2007 and $0.21 per share in 2006 by the Corporation’s share repurchase program.

Office furniture comprised 83 percent, 82 percent 78 percent, and 7678 percent of consolidated net sales for 2008, 2007, and 2006, and 2005, respectively.  Net sales for office furniture decreased 3 percent in 2008 to $2.05 billion compared to $2.11 billion in 2007.  Acquisitions contributed $61 million of additional sales.  Organic sales decreased $115 million or 5 percent, including increased price realization of $50 million, due to continuing softness in the supplies-driven channel which was impacted by the current economic conditions.  Net sales for office furniture increased 2 percent in 2007 to $2.11 billion compared to $2.08 billion in 2006.  The increase in 2007 was due to approximately $37 million fromof net sales generated by the Corporation’s acquisitions.  Organic sales were virtually flat, including increased price realization of $78 million, due to softness in the supplies drivensupplies-driven channel of the business.  Net sales for office furniture increased 13BIFMA reported 2008 shipments down 2 percent in 2006 to $2.1 billion compared to $1.8 billion in 2005.  The increase in 2006 was due to approximately $95 million from the Corporation’s acquisitions2007 levels and organic growth of approximately $144 million or 7.8 percent, including increased price realization of $41 million.  The Business and Institutional Furniture Manufacturer’s Association (“BIFMA”) reported 2007 shipments up 6 percent andfrom 2006 shipments up 7 percent.levels.

Operating profit as a percent of net sales was 4.9 percent in 2008, 9.2 percent in 2007 and 8.8 percent in 2006,2006.  The decrease in operating margins in 2008 was due to additional restructuring and 9.7 percent in 2005.impairment charges of $17 million compared to 2007 as well as lower volume, higher material and fuel costs and severance expenses offset partially by better price realization, cost reduction initiatives, lower incentive based compensation and favorable adjustments to the current fair value of mandatorily redeemable liabilities from prior acquisitions.  The increase in operating margins in 2007 was due to better price realization and benefits of cost reduction initiatives partially offset by increased costs related to brand building, new product and growth initiatives, higher incentive based compensation and higher restructuring costs.  The decrease in operating margins in 2006 was due to higher material, transportation and other input costs offset partially by price realization, lower restructuring charges, and a gain on the sale of a vacant facility.  Acquisitions also negatively impacted profitability as anticipated.

Hearth products sales decreased 8 percent in 2008 to $424 million compared to $462 million in 2007.  New acquisitions contributed $57 million of net sales.  The decrease in organic sales was due to the continuing decline in new home construction which began in 2006 and has reached historic lows.  This was partially offset by the high demand for alternative fuel products.  Hearth products sales decreased 23 percent in 2007 to $462 million compared to $603 million in 2006.  New acquisitions contributed $9 million of sales.  The decrease in organic sales was a result of a severe and rapid two year decline in new home construction that created one of the worst housing markets on record.  Hearth products sales increased 1 percent in 2006 to $603 million compared to $595 million in 2005 due to the contribution from new acquisitions of $18 million.  The decrease in organic sales was due to a dramatic decline, which began in the second half of 2006 as a result of the decline in the housing market.construction.

Operating profit as a percent of sales in 20072008 was 2.8 percent compared to 7.9 percent compared toin 2007 and 9.7 percent in 2006, respectively.  The decrease in operating margins in 2008 was due to lower overall volume, rising material costs and 12.6 percent in 2005, respectively.increased mix of lower margin remodel/retrofit business offset partially by price increases, cost reduction initiatives and lower restructuring expenses.  The decrease in operating margins in 2007 was due to lower overall volume offset partially by cost reduction initiatives.  The decrease in operating margins in 2006 was due to lower overall volume, higher mix of lower margin remodel/retrofit business and increased material and transportation costs.

Cash cash equivalents, and short-term investmentsgenerated from operating activities in 2008 totaled $43.8$174.4 million at the end of 2007 compared to $37.3$291.2 million atgenerated in 2007.  Changes in working capital balances resulted in a $27.6 million source of cash in the endcurrent fiscal year compared to a $94.7 million source of cash in the prior year.

The source of cash related to working capital balances in 2007 was primarily driven by lower trade receivables of $39.9 million, lower inventory of $20.4 million and increased current liabilities of $32.1 million.  The increase in current liabilities was comprised of $30.9 million of increased trade accounts payable and $1.2 million in tax-related accruals.  The working capital investment in 2006 resulted principally from increases in trade receivables and $84.7 million at the end of 2005.  These funds, coupled with cash from future operations and additional debt, if needed, are expected to be adequate to finance operations, planned improvements, and internal growth.  The Corporation is not presently aware of any known trends or demands, commitments, events, or uncertainties that are reasonably likely to result in its liquidity increasing or decreasing in any material way.inventory.

The Corporation places special emphasis on the management and control of its working capital with a particular focus on trade receivables and inventory levels.  The success achieved in managing receivables is in large part a result of doing business with quality customers and maintaining close communication with them.  During these uncertain economic times management is placing additional emphasis on monitoring its trade receivables.  Management believes its recorded trade receivable valuation allowances at the end of 2008 are adequate to cover the risk of potential bad debts.  Allowances for non-collectible trade receivables, as a percent of gross trade receivables, totaled 3.6 percent, 3.8 percent and 3.9 percent at the end of fiscal years 2008, 2007 and 2006, respectively. The Corporation’s inventory turns were 17, 16 18, and 18, for 2008, 2007 2006, and 2005,2006, respectively.  The Corporation is increasingincreased its relative proportion of foreign-sourced raw materials and finished goods, which while reducing inventory turns does have a favorable impact on the overall total cost.

Capital expenditures were $70.1 million in 2008, $58.6 million in 2007, and $58.9 million in 2006, and $38.9 million in 2005.2006.  These expenditures have consistently focused on machinery and equipment and tooling required to support new products, continuous improvements in our manufacturing processes and cost savings initiatives.  The increase in capital expenditures in 2008 was due to the facility consolidations that were completed in 2008.  The Corporation anticipates capital expenditures for 20082009 to total $30 to $40 million and be $70primarily related to $75 million due to increased focus on new products and operational process improvement.

In 2008, the Corporation completed the acquisitionsale of four small office furniture services companies, three office furniture dealersa facility located in Richmond, Virginia.  In 2007, the Corporation completed the sale of a corporate airplane and three small hearth distributors for a total combined purchase pricefacility located in Monterrey, Mexico.  In 2006, the Corporation completed the sale of approximately $35 million.  Eacha facility located in Van Nuys, California.  The proceeds from these sales of the transactions was paid in cash$5 million, $11 million and the results of the acquired entities have been included$4 million are reflected in the Consolidated Financial Statements since the dateStatement of acquisition.Cash Flows as “Proceeds from sale of property, plant and equipment” for 2008, 2007 and 2006, respectively.

On June 30, 2006, and 15% as of December 31, 2005.  The increase in long-term debt during 2006 and 2005 was due to2008, the Corporation issuing $150 million of senior unsecured notes through the private placement debt market and utilizing its revolving credit facility to fund acquisitions and share repurchases in accordance with its strategy of operating with a more efficient capital structure.  On January 28, 2005, the Corporation replaced a $136 million revolving credit facility entered into on May 10, 2002 with a new revolvingterm loan credit facility that providedagreement which allowed for a maximumone-time borrowing of $150$50 million subject to increase (toin the form of a maximum amount of $300 million) or reduction from time to time accordingterm loan.  The term loan may not be repaid and reborrowed and must be fully repaid by June 30, 2011, unless extended pursuant to the terms of the agreement.  On December 22, 2005,The term loan can be partially or fully repaid prior to June 30, 2011 without penalty.  Interest payments are due quarterly and the principal is due in quarterly installments of $1.25 million with the balance due on the maturity date.

The Corporation increased thehas a revolving credit facility to thethat provides for a maximum amountborrowing of $300 million.  On April 6,Amounts borrowed under the revolving credit facility may be borrowed, repaid and reborrowed from time to time until January 28, 2011.  As of January 3, 2009, $35 million of the borrowings outstanding were classified as short-term as the Corporation expects to repay that portion of the borrowings within a year.

In 2006, the Corporation refinanced $150 million of borrowings outstanding under itsthe revolving credit facility with 5.54 percent, ten-year unsecured Senior Notes due in 2016 issued through the private placement debt market.  Interest payments are due semi-annually on April 1 and October 1 of each year and the principal is due in a lump sum in 2016.  The Corporation maintained the revolving credit facility with a maximum borrowing of $300 million.

Additional borrowing capacity of $172$192 million, less amounts used for designated letters of credit, is available through thisthe revolving bank credit agreementfacility in the event cash generated from operations should be inadequate to meet future needs.  The Corporation does not currently expect future capital resources to be a constraint on planned growth.  Certain of the Corporation’s credit agreements include covenants that limit the assumption of additional debt and lease obligations.  The Corporation has been,Long-term debt, including capital lease obligations, was 37% of total capitalization as of January 3, 2009, 38% as of December 29, 2007, and currently is, in compliance with the covenants related to the debt agreements.37% as of December 30, 2006.

The following table discloses the Corporation’s obligations and commitments to make future payments under contracts:

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the ordinary course of its business, including pending litigation, environmental remediation, taxes, and other claims.  It is the Corporation’s opinion, after consultation with legal counsel, that additional liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation’s financial condition, although such matters could have a material effect on the Corporation’s quarterly or annual operating results and cash flows when resolved in a future period.

Management believes that macroeconomic indicators point tothe volatile and uncertain economic outlook will result in continued slowing in the office furniture businessindustry during 2008.2009.  The Corporation expectswill leverage its split-and-focus model to increase its investmentadapt to market realities and identify future growth opportunities.  The Corporation will continue to invest in growth opportunitiesnew products and position for the market recovery by enhancing its selling capabilities and launching a significant number of new products.brand development.  The Corporation will work to offset thesubstantial market softnessweakness and increased investment by eliminating waste, attacking structural cost and streamlining its businesses.

The housing market isand demand for alternative fuel products are expected to continue to decline during 2008 and continue to significantly2009 putting pressure on both revenue and profit in the Corporation’s hearth products segment.  The Corporation intends to continue to profitably manage through and adapt to these conditions by streamlining its operations, however,conditions.  The Corporation’s strong brands, manufacturing capabilities and world-class service to builders on a national basis position it will continuewell when the housing market begins to position the business for long-term growth once conditions stabilize.recover.

The Corporation remains focused on creating long-term shareholder value by growing its business through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture and remaining focused on its long-standing rapid continuous improvement programs to build best total cost and a lean enterprise.

During the normal course of business, the Corporation is subjected to market risk associated with interest rate movements.  Interest rate risk arises from our variable interest debt obligations.  For information related to the Corporation’s long-term debt, refer to the Long-Term Debt disclosure in the Notes to Consolidated Financial Statements filed as part of this report.  As of January 3, 2009, the Corporation has one interest rate swap agreement.  Under the interest rate swap agreement, the Corporation pays a fixed rate of interest and receives a variable rate of interest equal to the one-month London Interbank Offered Rate (“LIBOR”) as determined on the last day of each monthly settlement period on an aggregated notational principal amount of $50 million.  The interest rate swap derivative instrument is held and used by the Corporation as a tool for managing interest rate risk.  It is not used for trading or speculative purposes.  The fair market value of the effective swap instrument was negative $3.1 million at January 3, 2009.  The impact of this swap instrument on total interest expense was an addition to interest expense of $0.1 million in 2008.  The Corporation does not currently have any significant foreign currency exposure.

The Corporation is exposed to risks arising from price changes for certain direct materials and assembly components used in its operations.  The most significant material purchases and cost for the Corporation are for steel, plastics, textiles, wood particleboard and cartoning.  Steel is the most significant raw material used in the manufacturing of products.  The market price of plastics and textiles in particular are sensitive to the cost of oil and natural gas.  Oil and natural gas prices have increased sharply in the last several years and as a result the cost of plastics and textiles have increased.  The cost of wood particleboard has been impacted by continued downsizing of production capacity in the wood market as well as increased cost in transportation related to oil increases.  All of these materials are impacted increasingly by global market pressure and impacts.  The Corporation works to offset these increased costs through global sourcing initiatives and price increases on its products, however, margins have been negatively impacted due to the lag between cost increases and the Corporation’s ability to increase its prices.  The Corporation believes future market price increases on its key direct materials and assembly components are likely.  Consequently, it views the prospect of such increases as an outlook risk to the business.

The Summary of Unaudited Quarterly Results of Operations follows the Notes to Consolidated Financial Statements filed as part of this report.Report.

None.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms.  Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of management, the Chief Executive Officer and Chief Financial Officer of the Corporation have evaluated the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures as defined in Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934.Act.  As of December 29, 2007,January 3, 2009, and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective.  There have not been any changes in the Corporation'sCorporation’s internal control over financial reporting that occurred during the fiscal quarter ended December 29, 2007January 3, 2009 that have materially affected, or are reasonably likely to materially affect, the Corporation'sCorporation’s internal control over financial reporting.

Management’s annual report on internal control over financial reporting and the attestation report of the Corporation’s independent registered public accounting firm are included in Item 1515. Exhibits, Financial Statement Schecules of this report under the headings “Management Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm,” respectively.

None.

The information under the caption "Election of Directors" of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.  For information with respect to executive officers of the Corporation, see Part I, Table I "Executive Officers of the Registrant."Registrant" included in this report.

Information relating to the identification of the audit committee, audit committee financial expert and director nomination procedures of the registrant is contained under the caption “Information Regarding the Board” of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, and is incorporated herein by reference.

The information under the caption “Code of Business Conduct and Ethics” of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.

The information under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.

The information under the captions “Executive Compensation” and “Director Compensation” of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.

The information under the captions “Security Ownership” and “Equity Compensation Plan Information” of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.

The information under the captions “Director“Information Regarding the Board - Director Independence,” “Certain Relationships and Related Transactions,” and “Review, Approval or Ratification of Transactions with Related Persons” of the Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.

The information under the caption “Fees Incurred for PricewaterhouseCoopers LLP” of the Corporation’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2008,12, 2009, is incorporated herein by reference.