UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 |
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FORM 10-Q |
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(MARK ONE) | |
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/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended SeptemberMarch 29, 20072008 |
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OR |
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ____________________ to ____________________ |
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Commission File Number 1-14225 |
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HNI Corporation (Exact name of Registrant as specified in its charter) |
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Iowa (State or other jurisdiction of incorporation or organization) | 42-0617510 (I.R.S. Employer Identification Number) |
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P. O. Box 1109, 408 East Second Street Muscatine, Iowa 52761-0071 (Address of principal executive offices) | 52761-0071 (Zip Code) |
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Registrant's telephone number, including area code: 563/272-7400 |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer"in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer X Accelerated filer Non-accelerated filer Smaller reporting company |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO X |
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Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. |
Class Common Shares, $1 Par Value | Outstanding at SeptemberMarch 29, 20072008 46,004,80644,439,553
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HNI Corporation and SUBSIDIARIES |
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INDEX |
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements (Unaudited) | |
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Condensed Consolidated Balance Sheets September March 29, 2007,2008, and December 30, 2006 29, 2007 | 3 |
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Condensed Consolidated Statements of Income Three Months Ended SeptemberMarch 29, 2007,2008, and September 30, 2006 March 31, 2007 | 5 |
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Condensed Consolidated Statements of Income
Nine Months Ended September 29, 2007, and September 30, 2006
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Condensed Consolidated Statements of Cash Flows Nine Three Months Ended SeptemberMarch 29, 2007,2008, and September 30, 2006 March 31, 2007 | 76 |
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Notes to Condensed Consolidated Financial Statements | 87 |
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Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations | 1615 |
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Item 3. Quantitative and Qualitative Disclosure about Market Risk | 2120 |
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Item 4. Controls and Procedures | 2120 |
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PART II. OTHER INFORMATION |
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Item 1. Legal Proceedings | 2221 |
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Item 1A. Risk Factors | 2221 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 2221 |
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Item 3. Defaults Upon Senior Securities - None | - |
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Item 4. Submission of Matters to a Vote of Security Holders - None | - |
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Item 5. Other Information - None | -22 |
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Item 6. Exhibits | 22 |
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SIGNATURES | 23 |
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EXHIBIT INDEX | 24 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | Sep. 29, 2007 (Unaudited) | | | Dec. 30, 2006 | |
ASSETS | | (In thousands) | |
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CURRENT ASSETS | | | | | | |
Cash and cash equivalents | | $ | 27,343 | | | $ | 28,077 | |
Short-term investments | | | 8,669 | | | | 9,174 | |
Receivables | | | 318,263 | | | | 316,568 | |
Inventories (Note C) | | | 100,983 | | | | 105,765 | |
Deferred income taxes | | | 18,907 | | | | 15,440 | |
Prepaid expenses and other current assets | | | 24,372 | | | | 29,150 | |
Total Current Assets | | | 498,537 | | | | 504,174 | |
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PROPERTY, PLANT, AND EQUIPMENT, at cost | | | | | |
Land and land improvements | | | 23,706 | | | | 27,700 | |
Buildings | | | 267,572 | | | | 266,801 | |
Machinery and equipment | | | 496,281 | | | | 550,979 | |
Construction in progress | | | 25,571 | | | | 12,936 | |
| | | 813,130 | | | | 858,416 | |
Less accumulated depreciation | | | 511,234 | | | | 548,464 | |
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Net Property, Plant, and Equipment | | | 301,896 | | | | 309,952 | |
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GOODWILL | | | 252,912 | | | | 251,761 | |
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OTHER ASSETS | | | 158,834 | | | | 160,472 | |
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Total Assets | | $ | 1,212,179 | | | $ | 1,226,359 | |
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See accompanying Notes to Condensed Consolidated Financial Statements.
HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | Sep. 29, 2007 (Unaudited) | | | Dec. 30, 2006 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | (In thousands, except share data) | |
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CURRENT LIABILITIES | | | | | | |
Accounts payable and accrued expenses | | $ | 364,328 | | | $ | 328,882 | |
Note payable and current maturities of long-term debt and capital lease obligations | | | 14,427 | | | | 26,135 | |
Current maturities of other long-term obligations | | | 1,670 | | | | 3,525 | |
Total Current Liabilities | | | 380,425 | | | | 358,542 | |
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LONG-TERM DEBT | | | 277,800 | | | | 285,300 | |
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CAPITAL LEASE OBLIGATIONS | | | 569 | | | | 674 | |
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OTHER LONG-TERM LIABILITIES | | | 58,629 | | | | 56,103 | |
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DEFERRED INCOME TAXES | | | 23,325 | | | | 29,321 | |
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MINORITY INTEREST IN SUBSIDIARY | | | 238 | | | | 500 | |
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SHAREHOLDERS' EQUITY | | | | | | | | |
Capital Stock: | | | | | | | | |
Preferred, $1 par value, authorized 2,000,000 shares, no shares outstanding | | | - | | | | - | |
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Common, $1 par value, authorized 200,000,000 shares, outstanding - | | | 46,005 | | | | 47,906 | |
Sep. 29, 2007 – 46,004,806 shares; | | | | | | | | |
Dec. 30, 2006 – 47,905,351 shares | | | | | | | | |
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Paid-in capital | | | 3,398 | | | | 2,807 | |
Retained earnings | | | 423,494 | | | | 448,268 | |
Accumulated other comprehensive income | | | (1,704 | ) | | | (3,062 | ) |
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Total Shareholders' Equity | | | 471,193 | | | | 495,919 | |
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Total Liabilities and Shareholders' Equity | | $ | 1,212,179 | | | $ | 1,226,359 | |
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| | Mar. 29, 2008 (Unaudited) | | | Dec. 29, 2007 | |
ASSETS | | (In thousands) | |
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CURRENT ASSETS | | | | | | |
Cash and cash equivalents | | $ | 30,310 | | | $ | 33,881 | |
Short-term investments | | | 9,750 | | | | 9,900 | |
Receivables | | | 251,902 | | | | 288,777 | |
Inventories (Note C) | | | 111,239 | | | | 108,541 | |
Deferred income taxes | | | 18,817 | | | | 17,828 | |
Prepaid expenses and other current assets | | | 29,475 | | | | 30,145 | |
Total Current Assets | | | 451,493 | | | | 489,072 | |
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PROPERTY, PLANT, AND EQUIPMENT, at cost | | | | | |
Land and land improvements | | | 24,088 | | | | 23,805 | |
Buildings | | | 260,476 | | | | 268,650 | |
Machinery and equipment | | | 510,330 | | | | 501,950 | |
Construction in progress | | | 29,184 | | | | 25,858 | |
| | | 824,078 | | | | 820,263 | |
Less accumulated depreciation | | | 515,690 | | | | 514,832 | |
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Net Property, Plant, and Equipment | | | 308,388 | | | | 305,431 | |
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GOODWILL | | | 316,700 | | | | 256,834 | |
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OTHER ASSETS | | | 156,643 | | | | 155,639 | |
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Total Assets | | $ | 1,233,224 | | | $ | 1,206,976 | |
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See accompanying Notes to Condensed Consolidated Financial Statements.
HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEBALANCE SHEETS
(Unaudited) | | Mar. 29, 2008 (Unaudited) | | | Dec. 29, 2007 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | (In thousands, except share and per share value data) | |
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CURRENT LIABILITIES | | | | | | |
Accounts payable and accrued expenses | | $ | 295,238 | | | $ | 367,320 | |
Note payable and current maturities of long-term debt and capital lease obligations | | | 50,660 | | | | 14,715 | |
Current maturities of other long-term obligations | | | 329 | | | | 2,426 | |
Total Current Liabilities | | | 346,227 | | | | 384,461 | |
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LONG-TERM DEBT | | | 286,300 | | | | 280,315 | |
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CAPITAL LEASE OBLIGATIONS | | | 666 | | | | 776 | |
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OTHER LONG-TERM LIABILITIES | | | 130,836 | | | | 55,843 | |
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DEFERRED INCOME TAXES | | | 27,774 | | | | 26,672 | |
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MINORITY INTEREST IN SUBSIDIARY | | | 144 | | | | 1 | |
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SHAREHOLDERS' EQUITY | | | | | | | | |
Capital Stock: | | | | | | | | |
Preferred, $1 par value, authorized 2,000,000 shares, no shares outstanding | | | - | | | | - | |
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Common, $1 par value, authorized 200,000,000 shares, outstanding - | | | 44,440 | | | | 44,835 | |
Mar. 29, 2008 – 44,439,553 shares; | | | | | | | | |
Dec. 29, 2007 – 44,834,519 shares | | | | | | | | |
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Additional paid-in capital | | | 3,808 | | | | 3,152 | |
Retained earnings | | | 391,462 | | | | 410,075 | |
Accumulated other comprehensive income | | | 1,567 | | | | 846 | |
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Total Shareholders' Equity | | | 441,277 | | | | 458,908 | |
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Total Liabilities and Shareholders' Equity | | $ | 1,233,224 | | | $ | 1,206,976 | |
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See accompanying Notes to Condensed Consolidated Financial Statements.
| | Three Months Ended | |
| | Sep. 29, 2007 | | | Sep. 30, 2006 | |
| | (In thousands, except share and per share data) | |
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Net sales | | $ | 674,628 | | | $ | 684,317 | |
Cost of sales | | | 434,385 | | | | 447,587 | |
Gross profit | | | 240,243 | | | | 236,730 | |
Selling and administrative expenses | | | 176,904 | | | | 176,134 | |
Restructuring and impairment | | | 4,264 | | | | (27 | ) |
Operating income | | | 59,075 | | | | 60,623 | |
Interest income | | | 326 | | | | 339 | |
Interest expense | | | 4,815 | | | | 4,450 | |
Earnings from continuing operations before income taxes and minority interest | | | 54,586 | | | | 56,512 | |
Income taxes | | | 19,342 | | | | 20,627 | |
Earnings from continuing operations before minority interest | | | 35,244 | | | | 35,885 | |
Minority interest in earnings of subsidiary | | | (63 | ) | | | (24 | ) |
Income from continuing operations | | | 35,307 | | | | 35,909 | |
Discontinued operations, less applicable taxes | | | - | | | | (147 | ) |
Net income | | $ | 35,307 | | | $ | 35,762 | |
Net income from continuing operations – basic | | $ | 0.76 | | | $ | 0.73 | |
Net income from discontinued operations – basic | | | - | | | $ | (0.00 | ) |
Net income per common share – basic | | $ | 0.76 | | | $ | 0.73 | |
Average number of common shares outstanding – basic | | | 46,256,366 | | | | 49,323,698 | |
Net income from continuing operations – diluted | | $ | 0.76 | | | $ | 0.72 | |
Net income from discontinued operations – diluted | | | - | | | $ | (0.00 | ) |
Net income per common share – diluted | | $ | 0.76 | | | $ | 0.72 | |
Average number of common shares outstanding – diluted | | | 46,486,724 | | | | 49,591,889 | |
Cash dividends per common share | | $ | 0.195 | | | $ | 0.18 | |
See accompanying Notes to Condensed Consolidated Financial Statements. | |
HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | Nine Months Ended | | Three Months Ended |
| | Sep. 29, 2007 | | | Sep. 30, 2006 | | Mar. 29, 2008 | Mar. 31, 2007 |
| | (In thousands, except share and per share data) | | (In thousands, except share and per share data) |
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Net sales | | $ | 1,901,988 | | | $ | 1,997,588 | | $563,383 | $609,200 |
Cost of sales | | | 1,239,408 | | | | 1,298,257 | | 379,345 | 402,500 |
Gross profit | | | 662,580 | | | | 699,331 | | 184,038 | 206,700 |
Selling and administrative expenses | | | 517,277 | | | | 542,128 | | 172,555 | 170,814 |
Restructuring and impairment | | | 4,856 | | | | 1,920 | | 818 | (136) |
Operating income | | | 140,447 | | | | 155,283 | | 10,665 | 36,022 |
Interest income | | | 774 | | | | 810 | | 463 | 252 |
Interest expense | | | 13,877 | | | | 9,454 | | 3,877 | 4,288 |
Earnings from continuing operations before income taxes and minority interest | | | 127,344 | | | | 146,639 | | 7,251 | 31,986 |
Income taxes | | | 45,109 | | | | 53,523 | | 3,180 | 11,363 |
Earnings from continuing operations before minority interest | | | 82,235 | | | | 93,116 | | 4,071 | 20,623 |
Minority interest in earnings of subsidiary | | | (116 | ) | | | (85 | ) | 94 | (28) |
Income from continuing operations | | | 82,351 | | | | 93,201 | | 3,977 | 20,651 |
Discontinued operations, less applicable taxes | | | 514 | | | | (317 | ) | - | 30 |
Net income | | $ | 82,865 | | | $ | 92,884 | | $3,977 | $ 20,681 |
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Net income from continuing operations – basic | | $ | 1.75 | | | $ | 1.84 | | $0.09 | $0.43 |
Net income from discontinued operations – basic | | $ | 0.01 | | | $ | (0.01 | ) | |
Net income from discontinued operations - basic | | - | $0.00 |
Net income per common share – basic | | $ | 1.76 | | | $ | 1.83 | | $0.09 | $0.43 |
Average number of common shares outstanding – basic | | | 47,062,887 | | | | 50,722,997 | | 44,537,399 | 47,995,728 |
Net income from continuing operations – diluted | | $ | 1.74 | | | $ | 1.83 | | $0.09 | $0.43 |
Net income from discontinued operations – diluted | | $ | 0.01 | | | $ | (0.01 | ) | - | $0.00 |
Net income per common share – diluted | | $ | 1.75 | | | $ | 1.82 | | $0.09 | $0.43 |
Average number of common shares outstanding – diluted | | | 47,298,590 | | | | 51,051,237 | | 44,705,603 | 48,278,102 |
Cash dividends per common share | | $ | 0.585 | | | $ | 0.54 | | $0.215 | $0.195 |
See accompanying Notes to Condensed Consolidated Financial Statements. | See accompanying Notes to Condensed Consolidated Financial Statements. | | See accompanying Notes to Condensed Consolidated Financial Statements. |
HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended | |
| | Mar. 29, 2008 | | | Mar. 31, 2007 | |
| | (In thousands) | |
Net Cash Flows From (To) Operating Activities: | | | | | | |
Net income | | $ | 3,977 | | | $ | 20,681 | |
Noncash items included in net income: | | | | | | | | |
Depreciation and amortization | | | 17,021 | | | | 17,182 | |
Other postretirement and post employment benefits | | | 377 | | | | 533 | |
Stock-based compensation | | | 285 | | | | 1,017 | |
Excess tax benefits from stock compensation | | | (11 | ) | | | (602 | ) |
Deferred income taxes | | | 159 | | | | (7,532 | ) |
Loss on sale, retirement and impairment of long-lived assets and intangibles | | | 619 | | | | 918 | |
Stock issued to retirement plan | | | 6,592 | | | | 6,611 | |
Other – net | | | 837 | | | | 696 | |
Net increase (decrease) in non-cash operating assets and liabilities | | | (25,484 | ) | | | 2,810 | |
Increase (decrease) in other liabilities | | | (2,398 | ) | | | (1,469 | ) |
Net cash flows from (to) operating activities | | | 1,974 | | | | 40,845 | |
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Net Cash Flows From (To) Investing Activities: | | | | | | | | |
Capital expenditures | | | (17,624 | ) | | | (13,325 | ) |
Proceeds from sale of property, plant and equipment | | | 278 | | | | 229 | |
Acquisition spending, net of cash acquired | | | - | | | | (782 | ) |
Short-term investments – net | | | (250 | ) | | | - | |
Purchase of long-term investments | | | (381 | ) | | | (13,902 | ) |
Sales or maturities of long-term investments | | | 2,275 | | | | 12,288 | |
Other – net | | | - | | | | 100 | |
Net cash flows from (to) investing activities | | | (15,702 | ) | | | (15,392 | ) |
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Net Cash Flows From (To) Financing Activities: | | | | | | | | |
Proceeds from sales of HNI Corporation common stock | | | 1,402 | | | | 3,961 | |
Purchase of HNI Corporation common stock | | | (22,076 | ) | | | (13,119 | ) |
Excess tax benefits from stock compensation | | | 11 | | | | 602 | |
Proceeds from long-term debt | | | 117,000 | | | | 69,416 | |
Payments of note and long-term debt and other financing | | | (76,599 | ) | | | (80,453 | ) |
Dividends paid | | | (9,581 | ) | | | (9,376 | ) |
Net cash flows from (to) financing activities | | | 10,157 | | | | (28,969 | ) |
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Net increase (decrease) in cash and cash equivalents | | | (3,571 | ) | | | (3,516 | ) |
Cash and cash equivalents at beginning of period | | | 33,881 | | | | 28,077 | |
Cash and cash equivalents at end of period | | $ | 30,310 | | | $ | 24,561 | |
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See accompanying Notes to Condensed Consolidated Financial Statements. | |
| | Nine Months Ended | |
| | Sep. 29, 2007 | | | Sep. 30, 2006 | |
| | (In thousands) | |
Net Cash Flows From (To) Operating Activities: | | | | | | |
Net income | | $ | 82,865 | | | $ | 92,884 | |
Noncash items included in net income: | | | | | | | | |
Depreciation and amortization | | | 50,796 | | | | 52,044 | |
Other postretirement and post employment benefits | | | 1,599 | | | | 1,582 | |
Stock-based compensation | | | 2,784 | | | | 2,412 | |
Excess tax benefits from stock compensation | | | (816 | ) | | | (742 | ) |
Deferred income taxes | | | (7,711 | ) | | | (4,725 | ) |
(Gain)/Loss on sale, retirement and impairment of long-lived assets and intangibles | | | (2,027 | ) | | | (2,878 | ) |
Stock issued to retirement plan | | | 6,611 | | | | 7,948 | |
Other – net | | | 209 | | | | 2,248 | |
Net increase (decrease) in non-cash operating assets and liabilities | | | 44,770 | | | | (76,530 | ) |
Increase (decrease) in other liabilities | | | (821 | ) | | | (3,094 | ) |
Net cash flows from (to) operating activities | | | 178,259 | | | | 71,149 | |
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Net Cash Flows From (To) Investing Activities: | | | | | | | | |
Capital expenditures | | | (41,699 | ) | | | (47,443 | ) |
Proceeds from sale of property, plant and equipment | | | 11,957 | | | | 5,266 | |
Capitalized software | | | (48 | ) | | | (903 | ) |
Acquisition spending, net of cash acquired | | | (4,266 | ) | | | (78,292 | ) |
Short-term investments – net | | | - | | | | 926 | |
Purchase of long-term investments | | | (20,517 | ) | | | (9,600 | ) |
Sales or maturities of long-term investments | | | 17,467 | | | | 6,100 | |
Other – net | | | 294 | | | | - | |
Net cash flows from (to) investing activities | | | (36,812 | ) | | | (123,946 | ) |
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Net Cash Flows From (To) Financing Activities: | | | | | | | | |
Proceeds from sales of HNI Corporation common stock | | | 8,396 | | | | 4,291 | |
Purchase of HNI Corporation common stock | | | (102,045 | ) | | | (170,309 | ) |
Excess tax benefits from stock compensation | | | 816 | | | | 742 | |
Proceeds from long-term debt | | | 174,569 | | | | 497,531 | |
Payments of note and long-term debt and other financing | | | (196,394 | ) | | | (293,605 | ) |
Dividends paid | | | (27,523 | ) | | | (27,409 | ) |
Net cash flows from (to) financing activities | | | (142,181 | ) | | | 11,241 | |
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Net increase (decrease) in cash and cash equivalents | | | (734 | ) | | | (41,556 | ) |
Cash and cash equivalents at beginning of period | | | 28,077 | | | | 75,707 | |
Cash and cash equivalents at end of period | | $ | 27,343 | | | $ | 34,151 | |
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See accompanying Notes to Condensed Consolidated Financial Statements. | |
HNI Corporation and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SeptemberMarch 29, 20072008
Note A. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The December 30, 200629, 2007 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periodsperiod ended SeptemberMarch 29, 20072008 are not necessarily indicative of the results that may be expected for the year ending December 29, 2007.January 3, 2009. For further information, refer to the audited consolidated financial statements and footnotes included in HNI Corporation’sCorporation's (the "Corporation") annual report on Form 10-K for the year ended December 30, 2006.29, 2007.
Note B. Stock-Based Compensation
Effective January 1, 2006, the Corporation adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment." Accordingly, stock-based compensation expense is measured at grant date, based on the fair value of the award and is recognized as expense over the employee requisite service period. For the three and nine months ended SeptemberMarch 29, 2007,2008, and September 30, 2006,March 31, 2007, the Corporation recognized $0.9$0.3 million and $2.8 million, and $0.8 million and $2.4$1.0 million, respectively, of stock-based compensation for the cost of stock options and shares issued under the HNI Corporation 2002Corporation's Members' Stock Purchase Plan.
At SeptemberMarch 29, 2007, the Corporation had $4.92008, there was $5.3 million of unrecognized compensation cost related to nonvested awards, which the Corporation expects to recognize over a weighted-average period of 1.41.6 years.
Note C. Inventories
The Corporation values its inventory at the lower of cost or market with approximately 84%81% valued by the last-in, first-out (LIFO)("LIFO") method.
(In thousands) | | Sep. 29, 2007 (Unaudited) | | | Dec. 30, 2006 | | | Mar. 29, 2008 (Unaudited) | | | Dec. 29, 2007 | |
Finished products | | $ | 68,848 | | | $ | 66,238 | | | $ | 71,999 | | | $ | 76,804 | |
Materials and work in process | | | 51,381 | | | | 58,789 | | | | 60,149 | | | | 52,641 | |
LIFO allowance | | | (19,246 | ) | | | (19,262 | ) | | | (20,909 | ) | | | (20,904 | ) |
| | $ | 100,983 | | | $ | 105,765 | | | $ | 111,239 | | | $ | 108,541 | |
Note D. Comprehensive Income and Shareholders' Equity
The Corporation's comprehensive income for the three-month period ended September 29, 2007first three months of 2008 consisted of net income, adjustments to net periodic benefit costs of $0.1 million, and foreign currency adjustmentsunrealized holding gains or losses on marketable securities of $0.2 million.
The Corporation's comprehensive income for the nine-month period ended September 29, 2007 consisted of net income, adjustments to net periodic benefit costs of $0.4($0.2) million, and foreign currency adjustments of $1.0$0.8 million.
For the nine-month periodthree months ended SeptemberMarch 29, 2007,2008, the Corporation repurchased 2,370,748704,700 shares of its common stock at a cost of approximately $102.0$22.1 million. As of SeptemberMarch 29, 2007, $37.82008, $170.1 million of the Corporation’sCorporation's Board of Directors' current repurchase authorization remained unspent.
Note E. Earnings Per Share
The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share (EPS)("EPS"):
| | Three Months Ended | | | Nine Months Ended | | Three Months Ended | |
(In thousands, except per share data) | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Sep. 29, 2007 | | | Sep. 30, 2006 | | Mar. 29, 2008 | | | Mar. 31, 2007 | |
Numerators: | | | | | | | | | | | | | | | | | |
Numerator for both basic and diluted EPS net income | | $ | 35,307 | | | $ | 35,762 | | | $ | 82,865 | | | $ | 92,884 | | $ | 3,977 | | | $ | 20,681 | |
Denominators: | | | | | | | | | | | | | | | | | | | | | | | |
Denominator for basic EPS weighted-average common shares outstanding | | | 46,256 | | | | 49,324 | | | | 47,063 | | | | 50,723 | | | 44,537 | | | | 47,996 | |
Potentially dilutive shares from stock option plans | | | 231 | | | | 268 | | | | 236 | | | | 328 | | | 169 | | | | 282 | |
Denominator for diluted EPS | | | 46,487 | | | | 49,592 | | | | 47,299 | | | | 51,051 | | | 44,706 | | | | 48,278 | |
Earnings per share – basic | | $ | 0.76 | | | $ | 0.73 | | | $ | 1.76 | | | $ | 1.83 | | $ | 0.09 | | | $ | 0.43 | |
Earnings per share – diluted | | $ | 0.76 | | | $ | 0.72 | | | $ | 1.75 | | | $ | 1.82 | | $ | 0.09 | | | $ | 0.43 | |
Certain exercisable and non-exercisable stock options were not included in the computation of diluted EPS at SeptemberMarch 29, 2007,2008, and September 30, 2006,March 31, 2007, because their inclusion would have been anti-dilutive. The number of stock options outstanding, which met this anti-dilutive criterion for the three and nine months ended SeptemberMarch 29, 2008, and March 31, 2007, was 424,584774,983 and 419,584,320,509, respectively. The number of stock options outstanding, which met this anti-dilutive criterion for the three and nine months ended September 30, 2006, was 300,466 and 290,366, respectively.
Note F. Restructuring Reserve and Plant Shutdowns
As a result of the Corporation's ongoing business simplification and cost reduction strategies, management made the decision in the third quarter 2007 to close an office furniture facility, in Richmond, Virginia and consolidate production into other manufacturing locations. In connection withlocations, close two distribution centers and start up a new distribution center. The Corporation expects that the shutdown of the Richmond facility, the Corporation recorded $3.5 million of severance costs for approximately 370 members during the quarter ended September 29, 2007. The closureclosures and consolidationconsolidations will be substantially completed duringearly in the first halfthird quarter of 2008.
The Corporation anticipates additional restructuring charges and transition costs of approximately $4 to $6 million.
The Corporation also recorded $0.8 million of current period charges during the quarter ended September 29, 2007 in connection with a previously announced office furniture facility shutdown substantially completed during the quarter. (In thousands) | | Severance | | | Facility Exit Costs & Other | | | Total | |
Balance as of December 29, 2007 | | $ | 3,858 | | | $ | 990 | | | $ | 4,848 | |
Restructuring charges | | | 67 | | | | 751 | | | | 818 | |
Cash payments | | | (2,874 | ) | | | (1,329 | ) | | | (4,203 | ) |
Balance as of March 29, 2008 | | $ | 1,051 | | | $ | 412 | | | $ | 1,463 | |
The following is a summary of changes in restructuring accruals during the nine months ended September 29, 2007:
(In thousands) | | Severance | | | Facility Exit Costs & Other | | | Total | |
Balance as of December 30, 2006 | | $ | 841 | | | $ | - | | | $ | 841 | |
Restructuring charges | | | 3,097 | | | | 1,759 | | | | 4,856 | |
Cash payments | | | (487 | ) | | | (1,759 | ) | | | (2,246 | ) |
Balance as of September 29, 2007 | | $ | 3,451 | | | $ | - | | | $ | 3,451 | |
Note G. Business Combinations
The Corporation completed the acquisition of two smallHickory Business Furniture ("HBF"), a leading provider of premium upholstered seating, textiles, wood tables and wood case goods for the office furniture dealers during the first nine months of 2007environment on March 29, 2008 for a combined purchase price of approximately $4.0$75 million. The Corporation acquired the entire interest for onefunding of the acquisitions and a controlling interest and the ability to call the remaining interest on or after fiscal year-end 2012 for the other acquisition.transaction did not occur until March 31, 2008. The Corporation must exercisedid fund the acquisition with its call right on or beforerevolving credit facility and therefore the end of fiscal 2017. SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilitiespurchase price liability is recorded as long-term and Equity," requires a mandatorily redeemable financial instrument to be classified as a liability unless the redemption is required to occur only upon the liquidation or termination of the reporting entity. It also requires that mandatorily redeemable financial instruments be measured at fair value. Therefore, the Corporation has recorded a liability for the remaining interestincluded in the dealer at fair valueother long-term liabilities as of the acquisition date.March 29, 2008. The Corporation is in the process of finalizing the allocation of the purchase price, with valuations and determination of these acquisitions.working capital adjustments to be completed. There are approximately $64 million of intangibles associated with this acquisition, which have all been currently classified as goodwill and will be reclassified based on final valuations.
Note H. Discontinued Operations
The Corporation completed the sale of a previously announced small non-core component of its office furniture segment.segment during the second quarter of 2007. Revenues and expenses associated with this component are presented as discontinued operations for the periods presented.
Summarized financial information for discontinued operations is as follows:
| | Three Months Ended | | | Nine Months Ended | | | Three Months Ended | |
(In thousands) | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Mar. 29, 2008 | | | Mar. 31, 2007 | |
Discontinued operations: | | | | | | | | | | | | | | | | | | |
Operating income/(loss) before tax | | $ | - | | | $ | (232 | ) | | $ | 796 | | | $ | (500 | ) | | $ | - | | | $ | 47 | |
Tax impact | | | - | | | | 85 | | | | (282 | ) | | | 183 | | | | - | | | | 17 | |
Income/(loss) from discontinued operations, net of income tax | | $ | - | | | $ | (147 | ) | | $ | 514 | | | $ | (317 | ) | | $ | - | | | $ | 30 | |
Note I. Goodwill and Other Intangible Assets
The table below summarizes amortizable definite-lived intangible assets as of SeptemberMarch 29, 20072008 and December 30, 2006,29, 2007, which are reflected in the "Other Assets" line item in the Corporation's condensed consolidated balance sheets:
(In thousands) | | Sep. 29, 2007 | | | Dec. 30, 2006 | | Mar. 29, 2008 | | | Dec. 29, 2007 | |
Patents | | $ | 18,780 | | | $ | 18,780 | | $ | 19,325 | | | $ | 18,780 | |
Customer relationships and other | | | 104,677 | | | | 103,492 | | | 103,489 | | | | 101,320 | |
Less: accumulated amortization | | | 45,556 | | | | 39,796 | | | 47,993 | | | | 45,833 | |
Balance at end of period | | $ | 77,901 | | | $ | 82,476 | |
| | | $ | 74,821 | | | $ | 74,267 | |
Aggregate amortization expense for the three months ended March 29, 2008 and nine month periods ended September 29,March 31, 2007 and September 30, 2006 was $2.4$2.2 million and $7.1 million, and $2.9 million and $8.1$2.4 million, respectively. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows:
(In millions) | | 2007 | | | 2008 | | | 2009 | | | 2010 | | | 2011 | | 2008 | | | 2009 | | | 2010 | | | 2011 | | | 2012 | |
Amortization Expense | | $ | 9.4 | | | $ | 8.6 | | | $ | 7.3 | | | $ | 6.9 | | | $ | 5.9 | | $ | 8.5 | | | $ | 7.2 | | | $ | 6.9 | | | $ | 5.9 | | | $ | 5.1 | |
As events such as potential acquisitions, dispositions or impairments occur in the future, these amounts may change.
The Corporation also owns trademarks and trade names with a net carrying amount of $43.4$45.7 million. The trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely.
The changes in the carrying amount of goodwill since December 30, 2006,29, 2007, are as follows by reporting segment:
(In thousands) | | Office Furniture | | | Hearth Products | | | Total |
Balance as of December 30, 2006 | | $ | 84,815 | | | $ | 166,946 | | | $ | 251,761 |
Goodwill change during period | | | 1,540 | | | | (389 | ) | | | 1,151 |
Balance as of September 29, 2007 | | $ | 86,355 | | | $ | 166,557 | | | $ | 252,912 |
(In thousands) | | Office Furniture | | | Hearth Products | | | Total | |
Balance as of December 29, 2007 | | $ | 85,274 | | | $ | 171,560 | | | $ | 256,834 | |
Goodwill increase during period | | | 64,374 | | | | (4,508 | ) | | | 59,866 | |
Balance as of March 29, 2008 | | $ | 149,648 | | | $ | 167,052 | | | $ | 316,700 | |
In accordance with SFAS No. 142 "Goodwill and Other Intangible Assets," the Corporation evaluates its goodwill for impairment on an annual basis duringbased on values at the fourthend of the third quarter, or whenever indicators of impairment exist. The Corporation has previously evaluated its goodwill for impairment and has determined that the fair value of the reporting unit exceedunits exceeds their
carrying value so no impairment of goodwill was recognized.recognized in the quarter. The increase in the office furniture segment goodwill relates to the acquisitionsHBF acquisition completed during the first and third quarters and final purchase price adjustments related to prior acquisitions.quarter. The decrease in the hearth products segment relates to final purchase price allocations for a previous acquisition and the sale of a few small retaildistribution and service locations.
Note J. Product Warranties
The Corporation issues certain warranty policies on its office furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design or workmanship.
A warranty reserve is determined by recording a specific reserve for known warranty issues and an additional reserve for unknown claims that are expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Activity associated with warranty obligations was as follows during the period:
| | Nine Months Ended | | | Three Months Ended | |
(In thousands) | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Mar. 29, 2008 | | | Mar. 31, 2007 | |
Balance at beginning of period | | $ | 10,624 | | | $ | 10,157 | | | $ | 12,123 | | | $ | 10,624 | |
Accrual assumed for acquisition | | | - | | | | 125 | | |
Accruals for warranties issued during period | | | 10,424 | | | | 8,642 | | | | 4,442 | | | | 3,797 | |
Adjustments related to pre-existing warranties | | | - | | | | 366 | | | | 526 | | | | (127 | ) |
Settlements made during the period | | | (10,295 | ) | | | (9,242 | ) | | | (4,612 | ) | | | (3,832 | ) |
Balance at end of period | | $ | 10,753 | | | $ | 10,048 | | | $ | 12,479 | | | $ | 10,462 | |
Note K. Postretirement Health Care
In accordance with the interim disclosure requirements of revised SFAS No. 132, "Employers'"Employers’ Disclosures about Pensions and other Postretirement Benefits," the following table sets forth the components of net periodic benefit cost included in the Corporation's income statement for:
| | Nine Months Ended | | | Three Months Ended | |
(In thousands) | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Mar. 29, 2008 | | | Mar. 31, 2007 | |
Service cost | | $ | 360 | | | $ | 245 | | | $ | 99 | | | $ | 120 | |
Interest cost | | | 800 | | | | 789 | | | | 241 | | | | 267 | |
Expected return on plan assets | | | (180 | ) | | | (131 | ) | | | (90 | ) | | | (60 | ) |
Amortization of transition obligation | | | 436 | | | | 436 | | | | 127 | | | | 145 | |
Amortization of prior service cost | | | 173 | | | | 173 | | | | - | | | | 58 | |
Amortization of (gain)/loss | | | 10 | | | | 70 | | | | - | | | | 3 | |
Net periodic benefit cost | | $ | 1,599 | | | $ | 1,582 | | | $ | 377 | | | $ | 533 | |
Note L. Income Taxes
In June 2006, the Financial Accounting Standards Board (the "FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 addressesfirst quarter of 2008, the determinationCorporation completed a detailed analysis and reconciliation of whethera fixed asset system conversion and determined that net deferred income tax benefits claimed or expectedliabilities were understated by $0.6 million. This understatement primarily related to be claimed on a deferred tax return should be recordedliability associated with computer software. To correct this difference, the Corporation increased income tax expense in the financial statements. Under FIN 48,first quarter of 2008 by $0.6 million. The effect of this adjustment is to increase the Corporation may recognizeeffective income tax rate related to continuing operations by 0.6 percentage points for the full year and decrease earnings per share from continuing operations by $0.01.
tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures.
The Corporation adopted the provisions of FIN 48 on December 31, 2006, the beginning of fiscal 2007. As a result of the implementation of FIN 48, the Corporation recognized a $1.7 million increase in the liability for unrecognized benefits. This increase in liability resulted in a decrease to the December 31, 2006 retained earnings balance in the amount of $0.5 million and a reduction in deferred tax liabilities of $1.2 million. The amount of unrecognized tax benefits at December 31, 2006 was $3.9 million of which $2.7 million would impact the Corporation's effective tax rate, if recognized.
The Corporation recognized interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses which is consistent with the recognition of these items in prior reporting. As of December 31, 2006, the Corporation had recorded a liability for interest and penalties related to unrecognized tax benefits of $0.5 million and $0.4 million, respectively.
The Internal Revenue Service (the "IRS") has completed the examination of all federal income tax returns through 2003 with no issues pending or unresolved. The years 2004 through 2006 remain open for examination by the IRS. The years 2002 through 2006 are currently under examination or remain open to examination by several states.
As of December 31, 2006 it is reasonably possible that the amounts of several of the unrecognized tax benefits may increase or decrease within the twelve months following the reporting date. It is not expected that any of the changes will be significant individually or in total to the results or financial position of the Corporation. As of September 29, 2007 there have been no material changes to the information included in this footnote.
Note M. Commitments and Contingencies
The Corporation utilizes letters of credit in the amount of $28.1$25.2 million to back certain financing instruments, insurance policies and payment obligations. The letters of credit reflect fair value as a condition of their underlying purpose and are subject to competitively determined fees.
The Corporation has contingent liabilities, which have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, 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.
Note N. New Accounting Standards
In September 2006, the FASB issuedThe Corporation partially adopted SFAS No. 157 "Fair Value Measurements" ("SFAS No. 157"), which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS 157liabilities on December 30, 2007, the beginning of its 2008 fiscal year. The standard also expands the amount of required 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. The Corporation has not applied the provisions of SFAS No. 157 to goodwill and intangibles in accordance with Financial Accounting Standards Board Staff Position 157-2.
For recognition purposes, on a recurring basis the Corporation is effectiverequired to measure at fair value its marketable securities, which are classified as available-for-sale, and its investment in target funds. The marketable securities were comprised of investments in money market funds. They are reported as noncurrent assets as they are not anticipated to be used for financial statements issuedcurrent operations. The target funds are reported as both current and noncurrent assets based on the portion that is anticipated to be used for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. current operations.
Assets measured at fair value during the three months ended March 29, 2008 were as follows:
(in thousands) | | Fair value as of measurement date | | | Quoted prices in active markets for identical assets (Level 1) | | | Significant other observable inputs (Level 2) | | | Significant unobservable inputs (Level 3) | |
Marketable securities | | $ | 4,791 | | | $ | 4,791 | | | $ | - | | | $ | - | |
Investment in target funds | | | 33,938 | | | | - | | | | 33,938 | | | | - | |
The Corporation does not anticipate any material impact to its financial statements from the adoption of this standard.
In February, 2007, the FASB issuedadopted 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.value on December 30, 2007, the beginning of its 2008 fiscal year. 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 effectiveThe adoption of this Statement did not have a material impact on its financial statements.
In December 2007, the FASB issued SFAS No. 141(Revised), "Business Combinations" ("SFAS No. 141(R)"), replacing SFAS No. 141, "Business Combinations" and SFAS No. 160, "Noncontrolling Interests in Consolidation 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 beginningacquisition 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 anythe 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) and SFAS No. 160 are to be applied prospectively in financial statements issued for fiscal yearyears beginning after NovemberDecember 15, 2007.2008. The Corporation is currently reviewingdoes not anticipate any material impact to its financial statements from the impact, if any, thatadoption of SFAS 159 will have on its consolidated financial statements.No. 160.
Note O. Business Segment Information
Management views the Corporation as operating in two business segments: office furniture and hearth products with the former being the principal business segment.
The office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes file cabinets, desks, credenzas, chairs, storage cabinets, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth productproducts segment manufactures and markets a broad line of manufactured gas-, pellet- and wood-burning fireplaces and stoves, fireplace inserts, and direct vent chimney systems principally for the home.
For purposes of segment reporting, intercompany sales transfers between segments are not material and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net cost of the Corporation's corporate operations, interest income, and interest expense. The increasedecrease in unallocated corporate expenses as compared to the same period in the prior year is due to increaseddecreased interest expense and group medical and incentive compensation costs. Management views interest income and expense as corporate financing costs rather than a business segment cost. In addition, management applies one effective tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis.
The Corporation's primary marketsmarket and capital investments are concentrated in the United States.
Reportable segment data reconciled to the consolidated financial statements for the three and nine month periods ended SeptemberMarch 29, 20072008, and September 30, 2006,March 31, 2007, is as follows:
| | Three Months Ended | | | Nine Months Ended | | | Three Months Ended | |
(In thousands) | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Mar. 29, 2008 | | | Mar. 31, 2007 | |
Net Sales: | | | | | | | | | | | | | | | | | | |
Office Furniture | | $ | 558,787 | | | $ | 536,045 | | | $ | 1,560,225 | | | $ | 1,534,392 | | | $ | 466,025 | | | $ | 497,851 | |
Hearth Products | | | 115,841 | | | | 148,272 | | | | 341,763 | | | | 463,196 | | | | 97,358 | | | | 111,349 | |
| | $ | 674,628 | | | $ | 684,317 | | | $ | 1,901,988 | | | $ | 1,997,588 | | | $ | 563,383 | | | $ | 609,200 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating Profit: | | | | | | | | | | | | | | | | | | | | | | | | |
Office furniture (1) | | | | | | | | | | | | | | | | | | | | | | | | |
Operations before restructuring charges | | $ | 62,366 | | | $ | 50,401 | | | $ | 146,609 | | | $ | 131,348 | | | $ | 19,550 | | | $ | 38,926 | |
Restructuring and impairment charges | | | (4,264 | ) | | | 27 | | | | (4,856 | ) | | | (1,920 | ) | | | (799 | ) | | | 136 | |
Office Furniture – net | | | 58,102 | | | | 50,428 | | | | 141,753 | | | | 129,428 | | |
Office furniture – net | | | | 18,751 | | | | 39,062 | |
Hearth products | | | 8,650 | | | | 18,524 | | | | 26,094 | | | | 48,463 | | | | | | | | | |
Operations before restructuring charges | | | | (2,847 | ) | | | 7,721 | |
Restructuring and impairment charges | | | | (19 | ) | | | - | |
Hearth products – net | | | | (2,866 | ) | | | 7,721 | |
Total operating profit | | | 66,752 | | | | 68,952 | | | | 167,847 | | | | 177,891 | | | | 15,885 | | | | 46,783 | |
Unallocated corporate expense | | | (12,068 | ) | | | (12,402 | ) | | | (40,323 | ) | | | (31,119 | ) | | | (8,778 | ) | | | (14,753 | ) |
Income before income taxes | | $ | 54,684 | | | $ | 56,550 | | | $ | 127,524 | | | $ | 146,772 | | | $ | 7,107 | | | $ | 32,030 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation & Amortization Expense: | | | | | | | | | | | | | | | | | | | | | | | | |
Office furniture | | $ | 12,131 | | | $ | 12,149 | | | $ | 36,408 | | | $ | 36,276 | | | $ | 12,076 | | | $ | 12,354 | |
Hearth products | | | 3,829 | | | | 3,992 | | | | 11,046 | | | | 12,689 | | | | 3,846 | | | | 3,688 | |
General corporate | | | 1,106 | | | | 1,045 | | | | 3,342 | | | | 3,079 | | | | 1,099 | | | | 1,140 | |
| | $ | 17,066 | | | $ | 17,186 | | | $ | 50,796 | | | $ | 52,044 | | | $ | 17,021 | | | $ | 17,182 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Capital Expenditures: | | | | | | | | | | | | | | | | | | | | | | | | |
Office furniture | | $ | 11,396 | | | $ | 11,478 | | | $ | 33,489 | | | $ | 33,337 | | | $ | 13,912 | | | $ | 10,825 | |
Hearth products | | | 913 | | | | 3,047 | | | | 7,292 | | | | 8,491 | | | | 2,844 | | | | 2,207 | |
General corporate | | | 290 | | | | 648 | | | | 966 | | | | 6,518 | | | | 868 | | | | 293 | |
| | $ | 12,599 | | | $ | 15,173 | | | $ | 41,747 | | | $ | 48,346 | | | $ | 17,624 | | | $ | 13,325 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | As of Sep. 29, 2007 | | | As of Sep. 30, 2006 | | | As of Mar. 29, 2008 | | | As of Mar. 31, 2007 | |
Identifiable Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Office furniture | | | | | | | | | | $ | 745,025 | | | $ | 746,007 | | | $ | 776,650 | | | $ | 706,275 | |
Hearth products | | | | | | | | | | | 355,845 | | | | 396,733 | | | | 339,552 | | | | 356,638 | |
General corporate | | | | | | | | | | | 111,309 | | | | 114,872 | | | | 117,022 | | | | 110,297 | |
| | | | | | | | | | $ | 1,212,179 | | | $ | 1,257,612 | | | $ | 1,233,224 | | | $ | 1,173,210 | |
(1) Includes minority interest.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Corporation has two reportable core operating 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 its various brands and selling models. The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.
Net sales for the thirdfirst quarter of 20072008 decreased 1.47.5 percent to $674.6$563.4 million. The decrease was driven primarily by thea decline in the new construction channel of the hearth business and substantial weakness in the supplies driven channel of the office furniture business. Gross margins for the quarter increaseddecreased from prior year levels due primarily to increased cost controldecreased volume and better price realization offset partially by lower volume.accelerated depreciation and transition costs related to consolidation of office furniture facilities. Selling and administrative expenses increased primarily due to higher non-volume related freight costs, increased restructuring expenses.costs and transitional costs associated with the plant consolidation and costs associated with new acquisitions.
The Corporation recently announcedcompleted the decision to shutdown anpurchased of HBF, a leading provider of premium upholstered seating, textiles, wood tables, and wood case goods for the office furniture facility as a result of its ongoing business simplification and cost reduction strategies. The Corporation recorded $3.5 million of severance costs in connection with the shutdown in the third quarter and an additional $0.8 million of expense associated with a previously announced facility shutdown which was substantially completed in the quarter.environment on March 29, 2008.
Critical Accounting Policies
The preparation of the financial statements requires the Corporation to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Corporation continually evaluates its accounting policies and estimates. The Corporation bases its estimates on historical experience and on a variety of other assumptions believed to be reasonable in order to make judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Corporation's Annual Report on Form 10-K for the year ended December 30, 2006. As of December 31, 2006, the Corporation adopted FIN 48, which 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."29, 2007. During the first ninethree months of 2007,2008, there were no material changes in the accounting policies and assumptions previously disclosed, except for the Corporation's adoption of FIN 48.SFAS No. 157.
Recent Accounting Pronouncements
The Corporation partially adopted SFAS No. 157 "Fair Value Measurements," which provides enhanced guidance for using fair value to measure assets and liabilities on December 30, 2007, the beginning of its 2008 fiscal year. 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. The Corporation has not applied the provisions of SFAS No. 157 to goodwill and intangibles in accordance with FASB Staff Position 157-2.
Results of Operations
The following table presents certain key highlights from the results of operations for the periods indicated:
| | Three Months Ended | | | Nine Months Ended | | | Three Months Ended | |
(In thousands) | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Percent Change | | | Sep. 29, 2007 | | | Sep. 30, 2006 | | | Percent Change | | | Mar. 29, 2008 | | | Mar. 31, 2007 | | | Percent Change | |
Net sales | | $ | 674,628 | | | $ | 684,317 | | | | -1.4 | % | | $ | 1,901,988 | | | $ | 1,997,588 | | | | -4.8 | % | | $ | 563,383 | | | $ | 609,200 | | | | -7.5 | % |
Cost of sales | | | 434,385 | | | | 447,587 | | | | -2.9 | | | | 1,239,408 | | | | 1,298,257 | | | | -4.5 | | | | 379,345 | | | | 402,500 | | | | -5.8 | |
Gross profit | | | 240,243 | | | | 236,730 | | | | 1.5 | | | | 662,580 | | | | 699,331 | | | | -5.3 | | | | 184,038 | | | | 206,700 | | | | -11.0 | |
Selling & administrative expenses | | | 176,904 | | | | 176,134 | | | | 0.4 | | | | 517,277 | | | | 542,128 | | | | -4.6 | | | | 172,555 | | | | 170,814 | | | | 1.0 | |
Restructuring & impairment charges | | | 4,264 | | | | (27 | ) | | N/M | | | | 4,856 | | | | 1,920 | | | | 152.9 | | | | 818 | | | | (136 | ) | | | -701.5 | |
Operating income | | | 59,075 | | | | 60,623 | | | | -2.6 | | | | 140,447 | | | | 155,283 | | | | -9.6 | | | | 10,665 | | | | 36,022 | | | | -70.4 | |
Interest expense, net | | | (4,489 | ) | | | (4,111 | ) | | | 9.2 | | | | (13,103 | ) | | | (8,644 | ) | | | 51.6 | | | | 3,414 | | | | 4,036 | | | | -15.4 | |
Earnings from continuing operations before income taxes and minority interest | | | 54,586 | | | | 56,512 | | | | -3.4 | | | | 127,344 | | | | 146,639 | | | | -13.2 | | | | 7,251 | | | | 31,986 | | | | -77.3 | |
Income taxes | | | 19,342 | | | | 20,627 | | | | -6.2 | | | | 45,109 | | | | 53,523 | | | | -15.7 | | | | 3,180 | | | | 11,363 | | | | -72.0 | |
Minority interest in earnings of a subsidiary | | | (63 | ) | | | (24 | ) | | | 162.5 | | | | (116 | ) | | | (85 | ) | | | 36.5 | | | | 94 | | | | (28 | ) | | | -435.7 | |
Income from continuing operations | | $ | 35,307 | | | $ | 35,909 | | | | -1.7 | % | | $ | 82,351 | | | $ | 93,201 | | | | -11.6 | % | | $ | 3,977 | | | $ | 20,651 | | | | -80.7 | |
Consolidated net sales for the thirdfirst quarter decreased 1.47.5 percent or $9.7$45.8 million compared to the same quarter last year. Acquisitions contributed $9.3$20.2 million or 1.43.3 percentage points of sales. Organic sales growth was down due primarily to the decline in the new construction channel of the hearth business and substantial weakness in the supplies driven channel of the office furniture business.
Gross margins for the thirdfirst quarter increaseddecreased to 35.632.7 percent compared to 34.633.9 percent for the same quarter last year. The increasereduction in gross margin was primarily due to increased cost controldecreased volume as well as accelerated depreciation and better price realization offset partially by lower volume.
The Corporation continues to implement its business simplification and cost reduction strategies. As a result, the Corporation made the decision to close its office furniture facility in Richmond, Virginia and consolidate production into other locations. The Corporation's third quarter 2007 results include $3.5 million of severancetransition costs in connection with the Richmond shutdown and an additional $0.8 million of current period charges associated with a previously announced facility shutdown substantially completed in the quarter. The Corporation anticipates additional restructuring charges related to the Richmond shutdownconsolidation of $2.5 - $3.5 million during the fourth quarter of 2007 and $8 - $9 million in 2008.office furniture facilities.
Total selling and administrative expenses, for the quarterincluding restructuring charges, as a percent of sales increased by $5.1 millionto 30.8 percent compared to 28.0 percent in the sameprior year quarter. The increase was driven by higher freight costs, increased investment in product development and selling initiatives, increased restructuring costs and transitional costs associated with plant consolidation and costs associated with new acquisitions.
The Corporation continued its plan of a facility shutdown, a facility ramp-up, closure of two distribution centers and consolidation and start-up of a new distribution center that was announced in 2007. First quarter
last year. Included in third quarter 2007 are $4.32008 included $8.5 million of restructuring charges
and transition costs in connection with this project. These included $0.4 million of accelerated depreciation and $3.9 million of other transition costs recorded in cost of sales, $0.8 million of costs recorded as
described aboverestructuring costs, and
an additional $3.2$3.4 million
associated with new acquisitions. Theseof other transition costs
were offset by gains on the sale of a vacant office furniture facilityrecorded in selling and
a corporate aircraft totaling $5.0 million. Third quarter 2006 included a gain on the sale of a vacant office furniture facility of $3.4 million.administrative expenses.
Income from continuing operations decreased 1.780.7 percent whileand income from continuing operations per diluted share increased 5.6decreased 79.1 percent compared to the same quarter in 2006 due to a $0.05 per share positive impact of the Corporation's share repurchase program. 2007.
Interest expense increaseddecreased $0.4 million during the quarter on moderate debt levels, consistent with the Corporation's capital structure strategy.
The annualized effective tax rate for third quarter 2007 decreased to 35.4 percent compared to 36.5 percent in third quarter 2006 due to additional benefits from the U.S. manufacturing deduction and the reinstatement of the research tax creditlower average interest rates partially offset by higher state taxes.
For the first nine months of 2007, consolidated net sales decreased $95.6 million, or 4.8 percent, to $1.9 billion compared to $2.0 billion in 2006. Acquisitions added $30.9 million, or 1.5 percentage points of sales. Gross margins decreased to 34.8 percent compared to 35.0 percent last year.increased borrowings. Income from continuing operations was $82.4 million compared to $93.2 million in 2006, a decrease of 11.6 percent. Earnings per share from continuing operations decreased 4.9 percent to $1.74 per diluted share compared to $1.83 per diluted share last year. Earnings per share was positively impacted $0.13$0.01 per share as a result of the Corporation's share repurchase program.
The effective tax rate for first quarter 2008 was 43.9 percent compared to 35.5 percent in first quarter 2007 due to a deferred tax adjustment. In the first quarter of 2008, the Corporation completed a detailed analysis and reconciliation of a fixed asset system conversion and determined that net deferred income tax liabilities were understated by $0.6 million. This understatement primarily related to a deferred tax liability associated with computer software. To correct this difference, the Corporation increased income tax expense in the first quarter of 2008 by $0.6 million. The effect of this adjustment is to increase the effective income tax rate related to continuing operations by 0.6 percentage points for the full year and decrease earnings per share from continuing operations by $0.01. The Corporation anticipates the annualized tax rate for 2008 to be approximately 35.6 percent including the adjustment.
The Corporation completed the salepurchase of HBF, a previously announced small, non-core componentleading provider of premium upholstered seating, textiles, wood tables, and wood case goods for the office furniture segment duringenvironment on March 29, 2008. The funding of the second quarter of 2007. Revenues and expenses associated with the business operations are presented as discontinued operations for all periods presented in the financial statements.transaction did not occur until March 31, 2008.
Office Furniture
ThirdFirst quarter net sales for the office furniture segment increased 4.2decreased 6.4 percent or $22.7$31.8 million to $558.8$466.0 million from $536.0$497.9 million for the same quarter last year including $6.1 million of incrementaldue to lower sales from acquisitions. The Corporation continued to experience softness in the suppliessupplies-driven channel driven channelby low consumer and solid demand in its contract businesses.small business confidence. Acquisitions contributed $6.9 million or 1.4 percentage points of sales. Operating profit prior to unallocated corporate expenses increased 15.2 percent or $7.7decreased $20.3 million to $58.1$18.8 million compared to third quarter 2006 primarily as a result of price increaseslower volume, increased non-volume related freight, restructuring and cost improvement initiatives. Operating profit was negatively impacted during the quarter by $4.3 million in incremental restructuringtransition costs related costs. Operating profit for third quarter 2007 includedto a $2.0 million gain on the saleplant shutdown, a facility ramp-up, closure of two distribution centers and start-up of a vacated facility while third quarter 2006 included a $3.4 million gain on the sale of a vacated facility.new distribution center, and increased investments in growth initiatives and selling capabilities.
Net sales for the first nine months of 2007 increased 1.7 percent or $25.8 million to $1.6 billion compared to $1.5 million in 2006. Operating profit increased 9.5 percent or $12.3 million to $141.8 million compared to 2006 as a result of price increases and cost improvement initiatives.Hearth Products
Hearth Products
ThirdFirst quarter net sales for the hearth products segment decreased 21.912.6 percent or $32.4$14.0 million to $115.8$97.4 million from $148.3$111.3 million for the same quarter last year. The Corporation's acquisitions completed during 2007 contributed $13.3 million or 11.9 percentage points. Excluding acquisitions, sales declined 24.5 percent driven by a 34 percent decrease in new construction channel revenue. The Corporation continued to be negatively impacted by housing market conditions. Operating profit prior to unallocated corporate expenses decreased 53.3 percent or $9.9$10.6 million to $8.7a $2.9 million compared to third quarter 2006loss due to lower volume offset partially by cost reduction initiatives.
Net sales for the first nine monthsand a larger mix of 2007 decreased 26.2 percent to $341.8 million compared to $463.2 million in 2006. Operating profit decreased 46.2 percent or $22.4 million to $26.1 million compared to 2006 due to the same factors as described for the third quarter.
lower margin remodel/retrofit business.
Liquidity and Capital Resources
As of SeptemberMarch 29, 2007,2008, cash and short-term investments were $36.0$40.1 million compared to $37.3$43.8 million at year-end 2006.2007. Cash flow from operations for the first ninethree months of 2007fiscal 2008 was $178.3$2.0 million compared to $71.1$40.8 million for the first nine months of 2006in 2007 due to broad-based improvementslower net income and the timing of working capital requirements in working capital. Management is focused on cashthe current year. Cash flow and working capital management.management continue to be a major focus of management to ensure the Corporation is poised for growth. The Corporation has sufficient liquidity to manage its operations and as of SeptemberMarch 29, 20072008 maintained additional borrowing capacity of $146$105 million, net of amounts designated for letters of credit, through a $300 million revolving bank credit facility.agreement.
Capital expenditures for the first ninethree months of 2007fiscal 2008 were $41.7$17.6 million compared to $48.3$13.3 million for the first nine months of 2006in 2007 and were primarily for tooling and equipment for new products and efficiency initiatives.the plant consolidation. For the full year 2007,2008, capital expenditures are expected to be $55$65 to $60$70 million due to new product development and related tooling and other infrastructure efficiencies.
The Corporation completed the acquisition of two small office furniture dealersHBF during the first nine months of 2007quarter ended March 29, 2008 for a combined purchase price of approximately $4.0 million.$75 million, however, the funding of the transaction did not occur until March 31, 2008. During the first ninethree months of 2007,2008, net borrowings under the Corporation'sCorporation’s revolving credit facility decreased $18.5increased $42 million as excess cash was utilized to pay down the revolver borrowings.fund capital expenditures and share repurchase. As of SeptemberMarch 29, 2007, $125.52008, $170 million of the revolving credit facility was outstanding with the entire portion$36 million classified as long-termshort-term as the Corporation does not expectexpects to repay anythat portion of the remaining outstanding amountborrowings within the next twelve months. The Corporation did fund the HBF acquisition with its revolving credit facility and therefore the purchase price liability is recorded as long-term and included in other long-term liabilities as of March 29, 2008.
TheOn February 13, 2008, the Corporation's Board of Directors (the "Board") declaredapproved a regular10.3 percent increase in the common stock quarterly cash dividend offrom $0.195 per share to $0.215 per share. The dividend was paid on the Corporation's common stock on August 7, 2007,February 29, 2008, to shareholders of record at the close of business on August 17, 2007. It was paid on August 31, 2007.February 22, 2008. This was the 210th212th consecutive quarterly dividend paid by the Corporation.
For the ninethree months ended SeptemberMarch 29, 2007,2008, the Corporation repurchased 2,370,748704,700 shares of its common stock at a cost of approximately $102.0$22.1 million, or an average price of $43.04$31.33 per share. As of SeptemberMarch 29, 2007,2008, approximately $37.8$170.1 million of the Board’s current repurchase authorization remained unspent.
Off-Balance Sheet Arrangements
The Corporation does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
Contractual obligations associated with ongoing business and financing activities will result in cash payments in future
periods. A table summarizing the amounts and estimated timing of these future cash payments was provided in the Corporation's Annual Report on Form 10-K for the year ended December 30, 2006.29, 2007. During the first ninethree months of fiscal 20072008 there were no material changes outside the ordinary course of business in the Corporation's contractual obligations or the estimated timing of the future cash payments.
Commitments and Contingencies
The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, 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.
Looking Ahead
TheManagement expects the economy to continue to be difficult. Weakness in the supplies-driven channel of the office furniture industry continuedbusiness is expected to show moderate growth incontinue. Management also anticipates that the third quarter.project business will soften some with the economy as organizations reduce or defer
capital spending. The Corporation has experienced softnessexpects to continue its investment in the supplies driven channel. Management anticipates similar market conditionsgrowth opportunities and position for the remaindermarket recovery by enhancing its selling capabilities and launching a significant number of 2007. Management is actively identifying and implementing structural and operating cost reductions in responsenew products. The Corporation will work to offset the market conditions while continuing to focus on accelerating growth.softness and rising fuel and material costs by eliminating waste, attacking structural cost and streamlining its businesses.
The hearth business continues to decline with the generalbe negatively impacted by housing market. Management believes themarket conditions. The timing of any housing market recovery remains uncertain. Sales and profitability will be challenged through 2008. The Corporation will continue to reduce structuraltightly manage its costs and properly align expensesimprove its competitive position with anticipated demand levels.an eye on a mid-term housing market recovery.
The Corporation continues to focus on creating long-term shareholder value by growing its businesses through investment in building brands, product solutions, and selling models, enhancing its strong member-owner culture and remaining focused on its long-standing continuous improvement programs to build best total cost and a lean enterprise.
Forward-Looking Statements
Statements in this report that are not strictly historical, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, that arewithin 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," and variations of such words, and similar expressions identify forward-looking statements. Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual results in the future to differ materially from expected results. These risks include, without limitation: the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives for the entire Corporation, (c) investments in strategic acquisitions, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) repurchases of common stock, (f) ability to maintain its effective tax rate, and (g) consolidation and logistical realignment initiatives; uncertainty related to the availability of cash to fund future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions, including, with respect to the Corporation's hearth products, the protracted decline in the housing market; lower industry growth than expected; major disruptions at our key facilities or in the supply of any key raw materials, components or finished goods; uncertainty related to disruptions of business by terrorism, military action, acts of God or other force majeureForce Majeure events; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials (including steel and petroleum based materials); higher than expected costs for energy and fuel; changes in the mix of products sold and of customers purchasing; restrictions imposed by the terms of the Corporation’s revolving credit facility and note purchase agreement; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of SeptemberMarch 29, 2007,2008, there were no material changes to the financial market risks that affect the quantitative and qualitative disclosures presented in itemItem 7A of the Corporation's Annual Report on Form 10-K for the year ended December 30, 2006.29, 2007.
Item 4. Controls and Procedures
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, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission'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 acting chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of management, the chief executive officer and acting chief financial officer of the Corporation havehas evaluated the effectiveness of the design and operation of the Corporation's disclosure controls and procedures as of SeptemberMarch 29, 2007,2008, and, based on theirhis evaluation, the chief executive officer and acting chief financial officer havehas concluded that these controls and procedures are effective.
Furthermore, there have been no changes in the Corporation's internal control over financial reporting during the fiscal quarter covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no new legal proceedings or material developments to report from the proceedings discussed in the "Legal Proceedings" section of the Corporation's Annual Report on Form 10-K for the year ended December 30, 2006.report.
Item 1A. Risk Factors
There have been no material changes from the risk factors disclosed in the "Risk Factors" section of the Corporation's Annual Report on Form 10-K for the year ended December 30, 2006.29, 2007.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following is a summary of share repurchase activity during the thirdfirst quarter ended SeptemberMarch 29, 2007.2008.
Period | | (a) Total Number of Shares (or Units) Purchased (1) | | | (b) Average price Paid per Share or Unit | | | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | | | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs | |
7/1/07 – 7/28/07 | | | - | | | | - | | | | - | | | $ | 54,840,239 | |
7/29/07 – 8/25/07 | | | 149,653 | | | $ | 39.78 | | | | 149,653 | | | $ | 48,887,066 | |
8/26/07 – 9/29/07 | | | 287,200 | | | $ | 38.62 | | | | 287,200 | | | $ | 37,795,326 | |
Total | | | 436,853 | | | $ | 39.02 | | | | 436,853 | | | $ | 37,795,326 | |
Period | | (a) Total Number of Shares (or Units) Purchased (1) | | | (b) Average Price Paid per Share or Unit | | | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | | | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |
12/30/07 – 1/26/08 | | | 282,600 | | | $ | 31.50 | | | | 282,600 | | | | 183,262,679 | |
1/27/08 – 2/23/08 | | | 257,800 | | | $ | 32.13 | | | | 257,800 | | | | 174,979,872 | |
2/24/08 – 3/29/08 | | | 164,300 | | | $ | 29.77 | | | | 164,300 | | | | 170,089,128 | |
Total | | | 704,700 | | | | | | | | 704,700 | | | | | |
(1) No shares were purchased outside of a publicly announced plan or program.
The Corporation repurchases shares under previously announced plans authorized by the Board as follows:
· | Plan announced August 8, 2006,November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date. |
· | No repurchase plans expired or were terminated during the thirdfirst quarter of 2007,2008, nor do any plans exist under which the Corporation does not intend to make further purchases. |
Item 5. Other Information
Effective as of July 2, 2007, David C. Burdakin, Executive Vice President, HNI Corporation, resigned.
Item 6. Exhibits
See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. |
| HNI Corporation | |
| | | |
Dated: November 1, 2007April 30, 2008 | By: | /s/ Jerald K. DittmerStan A. Askren | |
| | Jerald K. DittmerStan A. Askren | |
| | ViceChairman, President and Chief FinancialExecutive Officer and | |
| | Acting Chief Financial Officer | |
EXHIBIT INDEX
|
(10.1) | HNI Corporation 2007 Stock-Based Compensation Plan
|
(10.2) | 2007 Equity Plan for Non-Employee Directors of HNI Corporation
|
(10.3) | HNI Corporation ERISA Supplemental Retirement Plan
|
(10.4) | HNI Corporation Executive Bonus Plan
|
(10.5) | HNI Corporation Executive Deferred Compensation Plan
|
(10.6) | HNI Corporation Long-Term Performance Plan
|
(10.7) | HNI Corporation Directors Deferred Compensation PlanEXHIBIT INDEX
|
(31.1) | Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
(31.2) | Certification of theand CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
(32.1) | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |