

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549


		FORM				10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended							~~September~~March 28, ~~2019~~2020

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:							1-14225

HNI Corporation
Iowa								42-0617510
(State of Incorporation)								(I.R.S. Employer No.)
		600 East Second Street
		P.O. Box 1109
	Muscatine			,	Iowa		52761-0071
		(	563	)	272-7400


Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Trading Symbol(s)						Name of each exchange on which registered
Common Stock		HNI						New York Stock Exchange


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes	☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes	☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer		☒			Accelerated filer			☐
Smaller reporting company		☐			Non-accelerated filer			☐
Emerging growth company							☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes				☐		No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Common Stock, $1 Par Value		Outstanding as of					~~September~~March 28, ~~2019~~2020	~~42,823,501~~42,647,398



HNI Corporation and Subsidiaries
Quarterly Report on Form 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 28, 2020 and ~~Nine Months Ended September 28,~~March 30, 2019 ~~and September 29, 2018~~	3

	Condensed Consolidated Balance Sheets - ~~September~~March 28, ~~2019~~2020 and December ~~29, 2018~~28, 2019	4

	Condensed Consolidated Statements of Equity - Three Months Ended March 28, 2020 and ~~Nine Months Ended September 28,~~March 30, 2019 ~~and September 29, 2018~~	6

	Condensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September~~March 28, ~~2019~~2020 and ~~September 29, 2018~~March 30, 2019	87

	Notes to Condensed Consolidated Financial Statements	98

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2622

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3327

Item 4.	Controls and Procedures	3327

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3428

Item 1A.	Risk Factors	3428

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3428

Item 3.	Defaults Upon Senior Securities - None	-

Item 4.	Mine Safety Disclosures - Not Applicable	-

Item 5.	Other Information - None	-

Item 6.	Exhibits	3530

Signatures		3631

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


HNI Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data)	HNI Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data)														HNI Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In thousands, except per share data)
(Unaudited)

	Three Months Ended							Nine Months Ended							Three Months Ended
	September 28, 2019			September 29, 2018				September 28, 2019				September 29, 2018			March 28, 2020				March 30, 2019

Net sales	$	625,386				$	611,120			$	1,630,868			$	1,659,803		$	468,704			$	479,456
Cost of sales	387,715			377,789				1,030,993				1,048,683			292,686				309,842
Gross profit	237,671			233,331				599,875				611,120			176,018				169,614
Selling and administrative expenses	176,731			179,577				511,080				524,445			167,085				165,937
Restructuring and impairment charges	284			128				1,214				2,303
Operating income	60,656			53,626				87,581				84,372
Impairment charges															32,661				—
Operating income (loss)															(23,728		)		3,677
Interest expense, net	2,205			2,522				6,795				7,375			1,811				2,111
Income before income taxes	58,451			51,104				80,786				76,997
Income (loss) before income taxes															(25,539		)		1,566
Income taxes	12,375			11,197				17,878				16,033			(1,643		)		546
Net income	46,076			39,907				62,908				60,964
Less: Net loss attributable to non-controlling interest	(2		)	0				(2		)		(50		)
Net income attributable to HNI Corporation	$	46,078		$	39,907			$	62,910			$	61,014
Net income (loss)															(23,896		)		1,020
Less: Net income (loss) attributable to non-controlling interest															(1		)		(2		)
Net income (loss) attributable to HNI Corporation															$	(23,895	)		$	1,022

Average number of common shares outstanding – basic	42,899			43,823				43,217				43,616			42,628				43,534
Net income attributable to HNI Corporation per common share – basic	$	1.07		$	0.91			$	1.46			$	1.40
Net income (loss) attributable to HNI Corporation per common share – basic															$	(0.56	)		$	0.02
Average number of common shares outstanding – diluted	43,186			44,679				43,620				44,349			42,628				44,089
Net income attributable to HNI Corporation per common share – diluted	$	1.07		$	0.89			$	1.44			$	1.38
Net income (loss) attributable to HNI Corporation per common share – diluted															$	(0.56	)		$	0.02


Foreign currency translation adjustments	$	(1,035	)	$	(817	)		$	(406	)		$	(1,944	)	$	(600	)		$	963
Change in unrealized gains (losses) on marketable securities, net of tax	36			(6		)		252				(99		)	59				90
Change in pension and post-retirement liability, net of tax	—			—				(1,185		)		—			—				(1,185		)
Change in derivative financial instruments, net of tax	(477		)	106				(2,112		)		1,459			(2,216		)		(309		)
Other comprehensive loss, net of tax	(1,476		)	(717		)		(3,451		)		(584		)
Comprehensive income	44,600			39,190				59,457				60,380
Other comprehensive income (loss), net of tax															(2,757		)		(441		)
Comprehensive income (loss)															(26,653		)		579
Less: Comprehensive loss attributable to non-controlling interest	(2		)	0				(2		)		(50		)	(1		)		(2		)
Comprehensive income attributable to HNI Corporation	$	44,602		$	39,190			$	59,459			$	60,430
Comprehensive income (loss) attributable to HNI Corporation															$	(26,652	)		$	581

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


HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands)	HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands)				HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands)
(Unaudited)

	September 28, 2019		December 29, 2018		March 28, 2020			December 28, 2019
Assets
Current Assets:
Cash and cash equivalents	$	53,013	$	76,819	$	35,413		$	52,073
Short-term investments	848		1,327		835			1,096
Receivables	271,960		255,207		235,617			278,124
Allowance for doubtful accounts					(5,170		)	(3,559		)
Inventories	181,922		157,178		170,522			163,465
Prepaid expenses and other current assets	36,824		41,352		44,170			37,635
Total Current Assets	544,567		531,883		481,387			528,834

Property, Plant, and Equipment:
Land and land improvements	29,306		28,377		29,776			29,394
Buildings	292,902		290,263		294,903			295,517
Machinery and equipment	574,130		565,884		579,958			581,225
Construction in progress	22,046		28,443		21,284			20,881
	918,384		912,967		925,921			927,017
Less accumulated depreciation	538,303		528,034		551,335			545,510
Net Property, Plant, and Equipment	380,081		384,933		374,586			381,507

Right-of-use Operating / Finance Leases	74,244		—
Right-of-use Finance Leases					2,032			2,129

Right-of-use Operating Leases					71,625			72,883

Goodwill and Other Intangible Assets	449,288		463,290		418,770			445,709

Deferred Income Taxes	286		1,569

Other Assets	22,010		20,169		21,499			21,450

Total Assets	$	1,470,476	$	1,401,844	$	1,369,899		$	1,452,512

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


HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except par value)	HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except par value)						HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except par value)
(Unaudited)

	September 28, 2019			December 29, 2018			March 28, 2020			December 28, 2019
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses	$	435,103		$	428,865		$	338,954		$	453,202
Current maturities of long-term debt	1,440			679			1,830			790
Current maturities of other long-term obligations	1,876			4,764			2,975			1,931
Current lease obligations - operating / finance	21,007			—
Current lease obligations - finance							577			564
Current lease obligations - operating							21,279			22,218
Total Current Liabilities	459,426			434,308			365,615			478,705

Long-Term Debt	239,418			249,355			228,460			174,439

Long-Term Lease Obligations - Operating / Finance	61,143			—
Long-Term Lease Obligations - Finance							1,479			1,581

Long-Term Lease Obligations - Operating							57,585			58,233

Other Long-Term Liabilities	64,356			72,767			66,397			67,990

Deferred Income Taxes	85,788			82,155			98,708			87,196

Equity:
HNI Corporation shareholders' equity:
Capital Stock:
Preferred stock - $1 par value, authorized 2,000 shares, no shares outstanding	—			—			—			—

Common stock - $1 par value, authorized 200,000 shares, outstanding:
September 28, 2019 – 42,824 shares; December 29, 2018 – 43,582 shares	42,824			43,582
March 28, 2020 – 42,647 shares; December 28, 2019 – 42,595 shares							42,647			42,595

Additional paid-in capital	18,534			18,041			28,086			19,799
Retained earnings	505,714			504,909			491,429			529,723
Accumulated other comprehensive income (loss)	(7,050		)	(3,599		)	(10,830		)	(8,073		)
Total HNI Corporation shareholders' equity	560,022			562,933			551,332			584,044

Non-controlling interest	323			326			323			324

Total Equity	560,345			563,259			551,655			584,368

Total Liabilities and Equity	$	1,470,476		$	1,401,844		$	1,369,899		$	1,452,512

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



HNI Corporation and Subsidiaries Condensed Consolidated Statements of Equity (In thousands, except per share data)
(Unaudited)

	Three Months Ended - March 28, 2020
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest			Total Shareholders’ Equity
Balance, December 28, 2019	$	42,595		$	19,799		$	529,723		$	(8,073	)	$	324		$	584,368
Comprehensive income:
Net income (loss)	—			—			(23,895		)	—			(1		)	(23,896		)
Other comprehensive income (loss), net of tax	—			—			—			(2,757		)	—			(2,757		)
Impact of new accounting standard related to credit losses	—			—			(131		)	—			—			(131		)
Dividends payable	—			—			(46		)	—			—			(46		)
Cash dividends; $0.305 per share	—			—			(13,033		)	—			—			(13,033		)
Common shares – treasury:
Shares purchased	(187		)	(4,365		)	(1,189		)	—			—			(5,741		)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax	239			12,652			—			—			—			12,891
Balance, March 28, 2020	$	42,647		$	28,086		$	491,429		$	(10,830	)	$	323		$	551,655



	Three Months Ended - March 30, 2019
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest			Total Shareholders’ Equity
Balance, December 29, 2018	$	43,582		$	18,041		$	504,909		$	(3,599	)	$	326		$	563,259
Comprehensive income:
Net income (loss)	—			—			1,022			—			(2		)	1,020
Other comprehensive income (loss), net of tax	—			—			—			298			—			298
Reclassification of Stranded Tax Effects (ASU 2018-02)	—			—			739			(739		)	—			—
Impact of Implementation of Lease Guidance	—			—			2,999			—			—			2,999
Cash dividends; $0.295 per share	—			—			(12,872		)	—			—			(12,872		)
Common shares – treasury:
Shares purchased	(647		)	(16,948		)	(7,090		)	—			—			(24,685		)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax	404			14,828			—			—			—			15,232
Balance, March 30, 2019	$	43,339		$	15,921		$	489,707		$	(4,040	)	$	324		$	545,251

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



HNI Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands)
(Unaudited)

	Three Months Ended
	March 28, 2020			March 30, 2019
Net Cash Flows From (To) Operating Activities:
Net income	$	(23,896	)	$	1,020
Non-cash items included in net income:
Depreciation and amortization	19,487			19,040
Other post-retirement and post-employment benefits	364			369
Stock-based compensation	4,358			2,451
Reduction in carrying amount of right-of-use assets	5,599			5,559
Deferred income taxes	12,258			1,119
Impairment of goodwill and intangible assets	32,661			—
Other – net	(2,252		)	2,038
Net increase (decrease) in operating assets and liabilities, net of divestitures	(81,573		)	(55,038		)
Increase (decrease) in other liabilities	(312		)	(4,832		)
Net cash flows from (to) operating activities	(33,306		)	(28,274		)

Net Cash Flows From (To) Investing Activities:
Capital expenditures	(8,488		)	(17,575		)
Proceeds from sale of property, plant, and equipment	49			68
Capitalized software	(4,671		)	(1,521		)
Acquisition spending, net of cash acquired	(9,321		)	—
Purchase of investments	(1,456		)	—
Sales or maturities of investments	996			450
Net cash flows from (to) investing activities	(22,891		)	(18,578		)

Net Cash Flows From (To) Financing Activities:
Payments of long-term debt	(15,000		)	(606		)
Proceeds from long-term debt	70,129			46,897
Dividends paid	(13,033		)	(12,872		)
Purchase of HNI Corporation common stock	(5,839		)	(23,869		)
Proceeds from sales of HNI Corporation common stock	722			5,413
Other – net	2,558			2,942
Net cash flows from (to) financing activities	39,537			17,905

Net increase (decrease) in cash and cash equivalents	(16,660		)	(28,947		)
Cash and cash equivalents at beginning of period	52,073			76,819
Cash and cash equivalents at end of period	$	35,413		$	47,872

HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Equity
(In thousands, except per share data)
(Unaudited)

Three Months Ended - September 28, 2019
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non-controlling Interest
Total Shareholders’ Equity
Balance, June 29, 2019 $ 42,875
$ 17,364
$ 474,519
$ (5,574 ) $ 325
$ 529,509
Comprehensive income:
Net income (loss) —
—
46,078
—
(2 ) 46,076
Other comprehensive income (loss), net of tax —
—
—
(1,476 ) —
(1,476 )
Cash dividends; $0.305 per share —
—
(13,088 ) —
—
(13,088 )
Common shares – treasury:
Shares purchased (221 ) (5,175 ) (1,795 ) —
—
(7,191 )
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax 170
6,345
—
—
—
6,515
Balance, September 28, 2019 $ 42,824
$ 18,534
$ 505,714
$ (7,050 ) $ 323
$ 560,345

Nine Months Ended - September 28, 2019
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non-controlling Interest
Total Shareholders’ Equity
Balance, December 29, 2018 $ 43,582
$ 18,041
$ 504,909
$ (3,599 ) $ 326
$ 563,259
Comprehensive income:
Net income (loss) —
—
62,910
—
(2 ) 62,908
Other comprehensive income (loss), net of tax —
—
—
(2,712 ) —
(2,712 )
Reclassification of Stranded Tax Effects (ASU 2018-02) —
—
739
(739 ) —
—
Impact of Implementation of Lease Guidance —
—
2,999
—
—
2,999
Cash dividends; $0.905 per share —
—
(39,164 ) —
—
(39,164 )
Common shares – treasury:
Shares purchased (1,797 ) (36,401 ) (26,679 ) —
—
(64,877 )
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax 1,039
36,893
—
—
—
37,932
Balance, September 28, 2019 $ 42,824
$ 18,534
$ 505,714
$ (7,050 ) $ 323
$ 560,345

HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Equity
(In thousands, except per share data)
(Unaudited)

Three Months Ended - September 29, 2018
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non-controlling Interest
Total Shareholders’ Equity
Balance, June 30, 2018 $ 43,736
$ 26,077
$ 458,458
$ (3,477 ) $ 500
$ 525,294
Comprehensive income:
Net income (loss) —
—
39,907
—
0
39,907
Other comprehensive income (loss), net of tax —
—
—
(717 ) —
(717 )
Cash dividends; $0.295 per share —
—
(12,933 ) —
—
(12,933 )
Common shares – treasury:
Shares purchased (163 ) (6,758 ) —
—
—
(6,921 )
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax 247
8,198
—
—
—
8,445
Balance, September 29, 2018 $ 43,820
$ 27,517
$ 485,432
$ (4,195 ) $ 500
$ 553,074

Nine Months Ended - September 29, 2018
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non-controlling Interest
Total Shareholders’ Equity
Balance, December 30, 2017 $ 43,354
$ 7,029
$ 467,296
$ (3,611 ) $ 509
$ 514,577
Comprehensive income:
Net income (loss) —
—
61,014
—
(50 ) 60,964
Other comprehensive income (loss), net of tax —
—
—
(584 ) —
(584 )
Change in ownership of non-controlling interest —
—
(41 ) —
41
—
Cash dividends; $0.875 per share —
—
(38,201 ) —
—
(38,201 )
Common shares – treasury:
Shares purchased (369 ) (9,879 ) (4,636 ) —
—
(14,884 )
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax 835
30,367
—
—
—
31,202
Balance, September 29, 2018 $ 43,820
$ 27,517
$ 485,432
$ (4,195 ) $ 500
$ 553,074

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

HNI Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Nine Months Ended
September 28,
2019 September 29,
2018
Net Cash Flows From (To) Operating Activities:
Net income $ 62,908
$ 60,964
Non-cash items included in net income:
Depreciation and amortization 57,838
55,887
Other post-retirement and post-employment benefits 1,106
1,325
Stock-based compensation 5,408
6,215
Operating / finance lease interest and amortization 17,252
—
Deferred income taxes 4,798
2,733
Loss on sale and retirement of long-lived assets, net 1,609
1,283
Other – net 2,864
2,314
Net decrease in operating assets and liabilities, net of divestitures (28,359 ) (16,533 )
Increase (decrease) in other liabilities (9,802 ) 849
Net cash flows from (to) operating activities 115,622
115,037

Net Cash Flows From (To) Investing Activities:

Capital expenditures (46,093 ) (39,887 )
Proceeds from sale of property, plant, and equipment 247
22,686
Capitalized software (4,098 ) (7,092 )
Acquisition spending, net of cash acquired —
(2,850 )
Purchase of investments (6,140 ) (2,471 )
Sales or maturities of investments 3,889
2,375
Other – net 2,327
1,135
Net cash flows from (to) investing activities (49,868 ) (26,104 )

Net Cash Flows From (To) Financing Activities:

Payments of long-term debt (125,039 ) (352,795 )
Proceeds from long-term debt 115,775
322,755
Dividends paid (39,164 ) (38,201 )
Purchase of HNI Corporation common stock (65,106 ) (16,043 )
Proceeds from sales of HNI Corporation common stock 22,338
15,896
Other – net 1,636
(155 )
Net cash flows from (to) financing activities (89,560 ) (68,543 )

Net increase (decrease) in cash and cash equivalents (23,806 ) 20,390
Cash and cash equivalents at beginning of period 76,819
23,348
Cash and cash equivalents at end of period $ 53,013
$ 43,738

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

HNI Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~September~~March 28, ~~2019~~2020

Note 1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The December ~~29, 2018~~28, 2019 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the ~~nine-month~~three-month period ended ~~September~~March 28, ~~2019~~2020 are not necessarily indicative of the results expected for the fiscal year ending ~~December 28, 2019.~~January 2, 2021. For further information, refer to the consolidated financial statements and accompanying notes included in HNI Corporation's (the "Corporation") Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019. Certain reclassifications have been made within the interim financial information to conform to the current presentation.

Note 2. Revenue from Contracts with Customers

Disaggregation of Revenue

Revenue from contracts with customers disaggregated by sales channel and by segment is as follows (in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended
	Segment	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		Segment	March 28, 2020		March 30, 2019
Supplies-driven channel	Office furniture	$	260,359	$	265,971	$	649,380	$	680,656	Office furniture	$	175,925	$	176,693
Contract channel	Office furniture	224,396		205,716		598,398		595,824		Office furniture	162,461		176,818
Hearth	Hearth products	140,631		139,433		383,090		383,323		Hearth products	130,318		125,945
Net sales		$	625,386	$	611,120	$	1,630,868	$	1,659,803		$	468,704	$	479,456

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

Sales by channel type are subject to similar economic factors and market conditions regardless of the channel under which the product is sold. See “Note ~~18.~~16. Reportable Segment Information” in the Notes to Condensed Consolidated Financial Statements for further information about operating segments.

Contract Assets and Contract Liabilities

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

Contract assets and contract liabilities were as follows (in thousands):


	September 28, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Trade receivables (1)	$	275,738	$	259,075	$	235,617	$	278,124
Other contract assets (current) (2)	$	837	$	529
Other contract assets (long-term) (3)	$	2,865	$	2,188
Contract assets (current) (2)					$	872	$	857
Contract assets (long-term) (3)					$	2,521	$	2,700
Contract liabilities (4)	$	44,463	$	44,858	$	38,028	$	54,972

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

(1) "Receivables"

(2) "Prepaid expenses and other current assets"

(3) "Other Assets"

(4) "Accounts payable and accrued expenses"

Changes in ~~other~~ contract asset and contract liability balances during the ~~nine~~three months ended ~~September~~March 28, 2020 were as follows (in thousands):



	Contract assets increase (decrease)			Contract liabilities (increase) decrease
Reclassification of contract assets to contra-revenue	$	(164	)	$	—
Contract liabilities recognized and recorded to contra-revenue as a result of performance obligations satisfied	—			(24,610		)
Contract liabilities paid	—			39,064
Cash received in advance and not recognized as revenue	—			(19,220		)
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied	—			21,710
Net change	$	(164	)	$	16,944

Changes in contract asset and contract liability balances during the three months ended March 30, 2019 were as follows (in thousands):


	Contract assets increase (decrease)			Contract liabilities (increase) decrease			Contract assets increase (decrease)			Contract liabilities (increase) decrease
Contract assets recognized	$	1,313		$	—
Reclassification of contract assets to contra revenue	(328		)	—
Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied	—			(110,789		)
Reclassification of contract assets to contra-revenue							$	(82	)	$	—
Contract liabilities recognized and recorded to contra-revenue as a result of performance obligations satisfied							—			(28,567		)
Contract liabilities paid	—			109,592			—			41,368
Cash received in advance and not recognized as revenue	—			(49,962		)	—			(24,185		)
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied	—			51,554			—			25,113
Net change	$	985		$	395		$	(82	)	$	13,729

Contract liabilities for customer deposits paid to the Corporation prior to the satisfaction of performance obligations are recognized as revenue upon completion of the performance obligations. The amount of revenue recognized during the three ~~and nine~~ months ended ~~September~~March 28, ~~2019~~2020 that was included in the December ~~29, 2018~~28, 2019 contract liabilities balance was ~~$0.0 million and $8.3 million, respectively.~~$8.6 million.

Performance Obligations

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

The Corporation's backlog orders are typically cancelable for a period of time and almost all contracts have an original duration of one year or less. As a result, the Corporation has elected the practical expedient permitted in the revenue accounting standard not to disclose the unsatisfied performance obligation as of ~~September 28, 2019.~~period end. The backlog is typically fulfilled within a quarter.

Significant Judgments

The amount of consideration the Corporation receives and revenue recognized varies with changes in rebate and marketing program incentives, as well as early pay discounts, offered to customers. The Corporation uses significant judgment throughout the year in estimating the reduction in net sales driven by variable consideration for rebate and marketing programs. Judgments made include expected sales levels and utilization of funds. However, this judgment factor is significantly reduced at the end of each year when sales volumes and the impact to rebate and marketing programs are known and recorded as the programs typically end near the Corporation's fiscal year end.

~~Note 3. Restructuring and Impairment Charges~~

~~Restructuring costs recorded in the Condensed Consolidated Statements of Comprehensive Income are as follows (in thousands):~~

Three Months Ended Nine Months Ended
September 28,
2019 September 29,
2018 September 28,
2019 September 29,
2018
Restructuring and impairment charges $ 284
$ 128
$ 1,214
$ 2,303

Restructuring costs in 2019 related to a structural realignment in the office furniture segment and were primarily comprised of severance costs. Restructuring and impairment costs in 2018 were primarily incurred as part of the previously announced closure of the hearth manufacturing facility in Paris, Kentucky and the office furniture manufacturing facility in Orleans, Indiana.

The accrued restructuring expenses are expected to be paid in the next twelve months and are reflected in "Accounts payable and accrued expenses" in the Condensed Consolidated Balance Sheets. The following is a summary of changes in restructuring accruals (in thousands):

Severance Costs Facility Exit Costs & Other Total
Restructuring allowance as of December 29, 2018 $ 136
$ 150
$ 286
Restructuring charges 899
315
1,214
Cash payments (640 ) (99 ) (739 )
Restructuring allowance as of September 28, 2019 $ 395
$ 366
$ 761

Note 4.3. Acquisitions and Divestitures

~~As part~~During the first quarter, the Corporation acquired 2 small hearth companies, in January 2020 and March 2020. Both transactions were asset acquisitions and were consummated entirely in cash. The aggregate purchase price was approximately $10 million, and the preliminary allocation includes $8.9 million of goodwill, which is tax deductible. The remaining assets and liabilities acquired are not material. The Corporation will finalize the allocation of the ~~Corporation's ongoing business strategy, it continues to acquire~~purchase price during 2020 based on the final purchase price and ~~divest small office furniture dealerships, for which~~any adjustments required over the ~~impact is not material to the Corporation's financial statements.~~remaining measurement period.

Note 5.4. Inventories

The Corporation values its inventory at the lower of cost or net realizable ~~value with approximately 73 percent valued by the last-in, first-out ("LIFO") costing method.~~value. Inventories included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):


	September 28, 2019			December 29, 2018			March 28, 2020			December 28, 2019

Finished products	$	138,767			$	97,398		$	128,584		$	118,633
Materials and work in process	77,269			94,161			72,632			75,526
LIFO allowance	(34,114		)	(34,381		)
Last-in, first-out ("LIFO") allowance							(30,694		)	(30,694		)
Total inventories	$	181,922		$	157,178		$	170,522		$	163,465


Inventory valued by the LIFO costing method							72		%	65		%

~~Note 6. Leases~~

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

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

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

As the rates implicit in its leases cannot be readily determined, the Corporation uses a secured incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Corporation uses separate discount rates for its U.S. operations and overseas operations.

Certain real estate leases include 1 or more options to renew with renewal terms that can extend the lease term from one to ten years. The exercise of lease renewal options is at the Corporation's sole discretion. Certain real estate leases include an option to terminate the lease term earlier than the specified lease term for a fee. These options are not included as part of the lease term unless they are reasonably certain to be exercised.

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

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

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

~~Leases included in the Condensed Consolidated Balance Sheet consisted of the following (in thousands):~~

Classification September 28,
2019
Assets
   Right-of-use operating leases $ 72,087
   Right-of-use finance leases 2,157
      Total Right-of-use operating / finance leases $ 74,244

Liabilities
   Current lease obligations - operating $ 20,506
   Current lease obligations - finance 501
      Total Current lease obligations - operating / finance 21,007

   Long-term lease obligations - operating 59,474
   Long-term lease obligations - finance 1,669
      Total Long-term lease obligations - operating / finance 61,143

         Total lease obligations - operating / finance $ 82,150

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

~~Lease costs included in the Condensed Consolidated Statements of Comprehensive Income consisted of the following (in thousands):~~

Three Months Ended Nine Months Ended
Classification September 28,
2019 September 28,
2019
Operating lease costs
Fixed Cost of sales $ 438
$ 1,366
Selling and administrative expenses 5,913
18,212
Short-term / variable Cost of sales 317
635
Selling and administrative expenses 385
807
Finance lease costs
Amortization Cost of sales, selling and administrative, and interest expense 154
307
Less: Sublease income 48
133
Total lease costs $ 7,159
$ 21,194

~~Maturity of lease liabilities as of September 28, 2019 is as follows (in thousands):~~

Operating Leases (a) Finance Leases (a) Total
2019 (remaining portion of year) $ 6,590
$ 143
$ 6,733
2020 23,521
593
24,114
2021 16,792
564
17,356
2022 11,332
488
11,820
2023 9,388
436
9,824
Thereafter 22,531
112
22,643
Total lease payments 90,154
2,336
92,490
Less: Interest 10,177
163
10,340
Present value of lease liabilities $ 79,977
$ 2,173
$ 82,150


~~(a)~~	At this time there are 0 operating or finance lease options to extend lease terms that are reasonably certain of being exercised, 0r are there any legally binding minimum lease payments for operating or finance leases signed, but not yet commenced.

~~The following table summarizes the weighted-average discount rates and weighted-average remaining lease terms for operating and finance leases as of September 28, 2019:~~

Weighted-Average Discount Rate (percent)
Weighted-Average Remaining Lease Term
(years)
Operating leases 4.2 % 5.5
Finance leases 3.6 % 4.3

The following table summarizes cash paid for amounts included in the measurements of lease liabilities and the leased assets obtained in exchange for new operating and finance lease liabilities (in thousands):

Nine Months Ended
September 28,
2019
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating / finance leases $ 20,072
Financing cash flows from finance leases $ 262
Leased assets obtained in exchange for new operating / finance lease liabilities $ 18,387

~~Accounting Policies and Practical Expedients Elected~~

The Corporation elected to use the modified-retrospective method of adopting ASU 2016-02. It has been applied to all leases active on or after December 30, 2018, the start of the Corporation's fiscal year.

~~The Corporation elected the following practical expedients as a result of adopting ASU 2016-02:~~

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

~~The Corporation has elected not to restate prior period financial statements for the effects of the new standard. Required ASC 840 disclosures for periods prior to 2019 have been provided.~~

~~The Corporation has elected not to use hindsight in determining the lease term and in assessing the likelihood that a lessee purchase option will be exercised.~~

~~The Corporation has elected for all asset classes to not recognize ROU assets and lease liabilities for leases that at the acquisition date have a remaining lease term of twelve months or less.~~

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

~~Commitments for minimum rentals under non-cancelable leases were as follows (in thousands):~~

Operating Leases
2019 $ 24,387
2020 18,250
2021 13,324
2022 9,082
2023 6,228
Thereafter 10,469
Total minimum lease payments $ 81,740

~~There were 0 capitalized leases as of December 29, 2018 and December 30, 2017.~~

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

2018
2017
2016
Rent expense $ 31,027
$ 32,158
$ 35,288

~~There was 0 contingent rent expense under operating leases for the years 2018, 2017, and 2016.~~

As part of the Corporation's continued efforts to drive efficiency and simplification, the Corporation entered into a sale-leaseback transaction in the first quarter of 2018, selling a manufacturing facility and subsequently leasing back a portion of the facility for a term of 10 years. The net proceeds from the sale of the facility of $16.9 million were reflected in "Proceeds from sale and license

of property, plant, equipment, and intangibles" in the Consolidated Statements of Cash Flows in 2018. In accordance with ASC 840, the $5.1 million gain on the sale of the facility was deferred and was being amortized as a reduction to rent expense evenly over the term of the lease. In accordance with the ASU No. 2016-02 adoption, the remaining unamortized deferred gain related to the sale-leaseback as of December 29, 2018 was recognized directly in "Retained earnings" in the Condensed Consolidated Balance Sheets in the first quarter of 2019 as a cumulative-effect adjustment as the Corporation transferred control of the asset.

Note 7.5. Goodwill and Other Intangible Assets

Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):


	September 28, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Goodwill	$	270,781	$	270,788	$	258,174	$	270,820
Definite-lived intangible assets	149,732		163,714		133,996		146,040
Indefinite-lived intangible assets	28,775		28,788		26,600		28,849
Total goodwill and other intangible assets	$	449,288	$	463,290	$	418,770	$	445,709

Goodwill

The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands):


	Office Furniture			Hearth Products			Total			Office Furniture			Hearth Products			Total
Balance as of December 29, 2018
Balance as of December 28, 2019
Goodwill	$	128,645		$	186,662		$	315,307		$	128,677		$	186,662		$	315,339
Accumulated impairment losses	(44,376		)	(143		)	(44,519		)	(44,376		)	(143		)	(44,519		)
Net goodwill balance as of December 29, 2018	84,269			186,519			270,788
Net goodwill balance as of December 28, 2019										84,301			186,519			270,820

Goodwill acquired										—			8,935			8,935
Impairment losses										(21,607		)	—			(21,607		)
Foreign currency translation adjustment	(7		)	—			(7		)	26			—			26

Balance as of September 28, 2019
Balance as of March 28, 2020
Goodwill	128,638			186,662			315,300			128,703			195,597			324,300
Accumulated impairment losses	(44,376		)	(143		)	(44,519		)	(65,983		)	(143		)	(66,126		)
Net goodwill balance as of September 28, 2019	$	84,262		$	186,519		$	270,781
Net goodwill balance as of March 28, 2020										$	62,720		$	195,454		$	258,174

See "Note 3. Acquisitions and Divestitures" for additional information regarding goodwill acquired in the current period; see Impairment Analysis section below for additional information regarding goodwill impairment recorded in the current period.

Definite-lived intangible assets

The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):


	September 28, 2019						December 29, 2018						March 28, 2020						December 28, 2019
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Patents	$	40	$	40	$	—	$	40	$	34	$	6	$	40	$	40	$	—	$	40	$	40	$	—
Software	174,550		63,097		111,453		170,274		49,561		120,713		179,560		72,046		107,514		176,836		67,541		109,295
Trademarks and trade names	7,564		3,216		4,348		7,564		2,721		4,843		6,564		3,134		3,430		7,564		3,381		4,183
Customer lists and other	103,803		69,872		33,931		103,840		65,688		38,152		90,239		67,187		23,052		104,004		71,442		32,562
Net definite-lived intangible assets	$	285,957	$	136,225	$	149,732	$	281,718	$	118,004	$	163,714	$	276,403	$	142,407	$	133,996	$	288,444	$	142,404	$	146,040

At the end of the first quarter of 2020, the Corporation recorded impairment charges of $0.6 million and $8.2 million related to definite-lived tradenames and customer lists, respectively, in the office furniture segment. See Impairment Analysis section below for additional information.

Amortization expense is reflected in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income and was as follows (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		March 28, 2020		March 30, 2019
Capitalized software	$	4,479	$	4,290	$	13,686	$	12,734	$	4,550	$	4,595
Other definite-lived intangibles	$	1,571	$	1,642	$	4,716	$	4,972	$	1,523	$	1,574

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

2019 2020 2021 2022 2023
Amortization expense $ 24.4
$ 23.4
$ 22.3
$ 19.6
$ 17.2



	2020		2021		2022		2023		2024
Amortization expense	$	23.3	$	22.1	$	19.0	$	16.4	$	15.1

Indefinite-lived intangible assets

The Corporation also owns certain intangible assets, which are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):

September 28,
2019 December 29,
2018
Trademarks and trade names $ 28,775
$ 28,788



	March 28, 2020		December 28, 2019
Trademarks and trade names	$	26,600	$	28,849

At the end of the first quarter of 2020, the Corporation recorded an impairment charge of $2.3 million related to an indefinite-lived tradename in the office furniture segment. See Impairment Analysis section below for additional information. The remaining immaterial change in the indefinite-lived intangible assets balances shown above is related to foreign currency translation impacts.

Impairment Analysis

The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter, or whenever indicators of impairment exist. The Corporation also evaluates long-lived assets (which include definite-lived intangible assets) for impairment if indicators exist. At the end of the first quarter of 2020, the Corporation determined that a triggering event occurred, resulting in quantitative impairment tests performed over the goodwill, indefinite-lived intangible assets, and long-lived asset groups related to three reporting units in the office furniture segment. This determination was made considering the reduced sales and profitability projections for these reporting units, driven by the COVID-19 pandemic and related economic disruption. Management also considered the relative difference between the fair values and carrying values of the respective reporting units and indefinite-lived intangible assets in the most recent annual test performed during the fourth quarter of 2019. For the Corporation's remaining reporting units, management determined that the likelihood of the current fair value being less than the current carrying value was remote, and thus no quantitative impairment testing was performed.

As a result of the long-lived asset impairment testing, it was determined the carrying value of one long-lived asset group was not recoverable based on an analysis of the undiscounted estimated future cash flows of the group. Consequently, the Corporation recorded charges of $0.6 million and $8.2 million to fully impair the carrying values of a definite-lived tradename and customer list, respectively, within this asset group.

As a result of the indefinite-lived intangible asset impairment testing, it was determined the carrying value of one of the Corporation's indefinite-lived tradenames exceeded the estimated fair value. Therefore, a $2.3 million impairment charge was recorded to reduce the carrying value to estimated fair value of $5.3 million. The fair value of this tradename is considered a Level 3 measurement which utilizes a relief-from-royalty discounted cash flows approach. Key inputs and assumptions involved include the estimated near-term revenue growth (ranging from -28 percent to +12 percent), long-term growth rate (3 percent), royalty rate (2 percent), and discount rate (16 percent).

For the goodwill impairment testing, management utilized a combination of both a discounted cash flows approach and market approach. Projections used in the impairment models reflected management's assumptions regarding revenue growth rates, economic and market trends including deterioration from the current COVID-19 pandemic, cost structure, investments required for product enhancements, and other expectations about the anticipated short-term and long-term operating results of the reporting units. As a result of the impairment testing, two reporting units were determined to have carrying values in excess of their fair values, resulting in goodwill impairment charges of $14.1 million and $7.5 million, respectively. These two reporting units have 0 remaining goodwill. The third reporting unit, which has goodwill of $6.9 million, was determined to have a fair value that exceeded carrying value by approximately 21 percent. For this reporting unit, the Corporation assumed a discount rate of 15.5 percent, near-term growth rates ranging from -24 percent to +17 percent, and a terminal growth rate of 4 percent. Holding other assumptions constant, a 100 basis point increase in the discount rate would result in a $3.7 million decrease in the estimated fair value of the reporting unit. Holding other assumptions constant, a 100 basis point decrease in the long-term growth rate would result in a $1.9 million decrease in the estimated fair value of the reporting unit. Both of these scenarios individually would result in the estimated fair value exceeding the carrying value.

All impairment charges described above are reflected in "Impairment charges" in the Condensed Consolidated Statements of Comprehensive Income.

Note 8.6. Product Warranties

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

A warranty allowance is determined by recording a specific allowance for known warranty issues and an additional allowance for unknown ~~issues~~claims expected to be incurred based on historical claims experience. Actual costs incurred could differ from the original estimates, requiring adjustments to the allowance. Activity associated with warranty obligations was as follows (in thousands):


	Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Balance at beginning of period	$	15,450		$	15,388		$	15,865		$	15,450
Accruals for warranties issued during period	15,406			22,130			4,778			5,718
Adjustments related to pre-existing warranties	127			116			514			89
Warranty issues resolved during the period	(15,377		)	(22,203		)
Settlements made during the period							(4,936		)	(5,746		)
Balance at end of period	$	15,606		$	15,431		$	16,221		$	15,511

The current and long-term portions of the allowance for estimated ~~warranty issues~~settlements are ~~reflected~~included within "Accounts payable and accrued expenses" and "Other Long-Term Liabilities", respectively, in the Condensed Consolidated Balance Sheets.

The following table summarizes when these estimated ~~warranty issues~~settlements are expected to be paid (in thousands):


	September 28, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Current - in the next twelve months	$	9,538	$	9,455	$	8,280	$	7,940
Long-term - beyond one year	6,068		5,995		7,941		7,925
Total	$	15,606	$	15,450	$	16,221	$	15,865

Note 9.7. Long-Term Debt

Long-term debt is as follows (in thousands):


	September 28, 2019			December 29, 2018			March 28, 2020			December 28, 2019
Revolving credit facility with interest at a variable rate (September 28, 2019 - 3.2%; December 29, 2018 - 3.5%)	$	140,000		$	150,000
Revolving credit facility with interest at a variable rate (March 28, 2020 - 2.0%; December 28, 2019 - 2.8%)							$	129,000		$	75,000
Fixed rate notes due in 2025 with an interest rate of 4.22%	50,000			50,000			50,000			50,000
Fixed rate notes due in 2028 with an interest rate of 4.40%	50,000			50,000			50,000			50,000
Other amounts	1,440			679			1,830			790
Deferred debt issuance costs	(582		)	(645		)	(540		)	(561		)
Total debt	240,858			250,034			230,290			175,229
Less: Current maturities of long-term debt	1,440			679			1,830			790
Long-term debt	$	239,418		$	249,355		$	228,460		$	174,439

The carrying value of the Corporation's outstanding variable-rate, long-term debt obligations at March 28, 2020 was $129 million, which approximated fair value. The fair value of the fixed rate notes was estimated based on a discounted cash flow method (Level 2) to be $125 million at March 28, 2020.

As of ~~September~~March 28, ~~2019,~~2020, the Corporation’s revolving credit facility borrowings were under the credit agreement entered into on April 20, 2018 with a scheduled maturity of April 20, 2023. The Corporation deferred the debt issuance costs related to the credit

agreement, which are classified as assets, and is amortizing them over the term of the credit agreement. The current portion of debt issuance costs of $0.4 million is the amount to be amortized over the next twelve months based on the current credit agreement and is reflected in "Prepaid expenses and other current assets" in the Condensed Consolidated Balance Sheets. The long-term portion of debt issuance costs of ~~$1.1~~$0.9 million is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets.

As of ~~September~~March 28, ~~2019,~~2020, there was ~~$140~~$129 million outstanding under the $450 million revolving credit facility. The entire amount drawn under the revolving credit facility is considered long-term as the Corporation assumes no obligation to repay any of the amounts borrowed in the next twelve months. Based on current earnings before interest, taxes, depreciation and amortization, the Corporation can access the full remaining ~~$310~~$321 million of borrowing capacity available under the revolving credit facility and maintain compliance with applicable covenants.

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

In addition to the revolving credit facility, the Corporation also has $100 million of borrowings outstanding under private placement note agreements entered into on May 31, 2018. Under the agreements, the Corporation issued $50 million of seven-year fixed rate notes with an interest rate of 4.22 percent, due May 31, 2025, and $50 million of ten-year fixed rate notes with an interest rate of 4.40 percent, due May 31, 2028. The Corporation deferred the debt issuance costs related to the private placement note agreements, which are classified as a reduction of long-term debt in accordance with ASU No. 2015-03, and is amortizing them over the terms of the private placement note agreements. The deferred debt issuance costs do not reduce the amount owed by the Corporation under the terms of the private placement note agreements. As of ~~September~~March 28, ~~2019~~2020, the debt issuance costs balance of ~~$0.6~~$0.5 million related to the private placement note agreements is reflected in "Long-Term Debt" in the Condensed Consolidated Balance Sheets.

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

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

a consolidated interest coverage ratio (as defined in the credit agreement) of not less than 4.0 to 1.0, based upon the ratio of (a) consolidated EBITDA for the last four fiscal quarters to (b) the sum of consolidated interest charges; and

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

The most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.5 to 1.0. Under the credit agreement, consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, and depreciation and amortization of intangibles, as well as non-cash items that increase or decrease net income. As of ~~September~~March 28, ~~2019,~~2020, the Corporation was below the maximum allowable ratio and was in compliance with all of the covenants and other restrictions in the credit agreement. The Corporation expects to remain in compliance with all of the covenants and other restrictions in the credit agreement over the next twelve months.

Note ~~10.~~8. Income Taxes

The Corporation's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The following table summarizes the Corporation's income tax provision (dollars in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Income before income taxes	$	58,451		$	51,104		$	80,786		$	76,997
Income (loss) before income taxes													$	(25,539	)	$	1,566
Income taxes	$	12,375		$	11,197		$	17,878		$	16,033		$	(1,643	)	$	546
Effective tax rate	21.2		%	21.9		%	22.1		%	20.8		%	6.4		%	34.8		%

The Corporation's effective tax rate was lower in the three months ended ~~September~~March 28, ~~2019~~2020 compared to the same period last year primarily due to ~~reduced foreign taxes~~lower current quarter income and the release of tax reserves due to statute of limitations in the current year. The effective tax rate was higher in the nine months ended September 28, 2019 compared to the same period last year primarilylower expected income due to the ~~release of~~COVID-19 pandemic, resulting in a ~~valuation allowance for certain foreign jurisdictions in 2018.~~greater benefit from tax credits.

On ~~February 14, 2018~~March 27, 2020, the ~~FASB issued ASU 2018-02,~~ ~~Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides entities an option to reclassify stranded tax effects related~~Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted in response to the ~~Tax Cuts~~COVID-19 pandemic crisis. The CARES Act contains provisions relating to refundable payroll tax credits, deferment of certain social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and ~~Jobs Act (the "Act") within accumulated other comprehensive income ("AOCI")~~technical corrections to ~~retained earnings~~tax depreciation methods for ~~each period in which~~qualified improvement property. The Corporation is currently evaluating the ~~effects~~impact of ~~the Act is recorded. ASU 2018-02~~this legislation on its consolidated financial position, results of operations, and cash flows and does not ~~modify the existing requirement to allocate the income tax effects of changes~~estimate a material impact; however, future evaluation and planning may result in ~~tax laws or rates directly to continuing operations as~~ a component of income tax expense (benefit). The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted.

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

Note ~~11.~~9. Fair Value Measurements of Financial Instruments

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

Financial instruments measured at fair value were as follows (in thousands):

Fair value as of measurement date
Quoted prices in active markets for identical assets
(Level 1)

Significant other observable inputs
(Level 2)

Significant unobservable inputs
(Level 3)
Balance as of September 28, 2019
Cash and cash equivalents (including money market funds) (1) $ 53,013
$ 53,013
$ —
$ —
Government securities (2) $ 6,580
$ —
$ 6,580
$ —
Corporate bonds (2) $ 6,474
$ —
$ 6,474
$ —
Derivative financial instruments - asset (3) $ 166
$ —
$ 166
$ —
Derivative financial instruments - liability (4) $ 341
$ —
$ 341
$ —
Variable-rate debt obligations (5) $ 140,000
$ —
$ 140,000
$ —
Fixed-rate debt obligations (5) $ 100,000
$ —
$ 100,000
$ —
Deferred stock-based compensation (6) $ 7,057
$ —
$ 7,057
$ —

Balance as of December 29, 2018
Cash and cash equivalents (including money market funds) (1) $ 76,819
$ 76,819
$ —
$ —
Government securities (2) $ 7,384
$ —
$ 7,384
$ —
Corporate bonds (2) $ 4,620
$ —
$ 4,620
$ —
Derivative financial instruments (3) $ 3,797
$ —
$ 3,797
$ —
Variable-rate debt obligations (5) $ 150,000
$ —
$ 150,000
$ —
Fixed-rate debt obligations (5) $ 100,000
$ —
$ 100,000
$ —
Deferred stock-based compensation (6) $ 7,857
$ —
$ 7,857
$ —



	Fair value as of measurement date		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Balance as of March 28, 2020
Cash and cash equivalents (including money market funds) (1)	$	35,413	$	35,413	$	—	$	—
Government securities (2)	$	6,797	$	—	$	6,797	$	—
Corporate bonds (2)	$	6,395	$	—	$	6,395	$	—
Derivative financial instruments - liability (4)	$	2,504	$	—	$	2,504	$	—
Deferred stock-based compensation (5)	$	5,065	$	—	$	5,065	$	—

Balance as of December 28, 2019
Cash and cash equivalents (including money market funds) (1)	$	52,073	$	52,073	$	—	$	—
Government securities (2)	$	6,339	$	—	$	6,339	$	—
Corporate bonds (2)	$	6,323	$	—	$	6,323	$	—
Derivative financial instruments - asset (3)	$	276	$	—	$	276	$	—
Deferred stock-based compensation (5)	$	7,503	$	—	$	7,503	$	—

The index below indicates the line item in the Condensed Consolidated Balance Sheets where the financial instruments are reported:

(1) "Cash and cash equivalents"

(2) Current portion - "Short-term investments"; Long-term portion - "Other Assets"

(3) Current portion - "Prepaid expenses and other current assets"; Long-term portion - "Other Assets"

(4) "Other Long-Term Liabilities"

(5) Current portion - "Current maturities of ~~long-term debt"; Long-term portion - "Long-Term Debt"~~

~~(6) Current portion - "Current maturities of~~ other long-term obligations"; Long-term portion - "Other Long-Term Liabilities"

1915

Note ~~12.~~10. Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity

The following tables summarize the components of accumulated other comprehensive income (loss) and the changes in accumulated other comprehensive income (loss), net of tax, as applicable (in thousands):


	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Marketable Securities			Pension and Post-retirement Liabilities			Derivative Financial Instruments			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Debt Securities			Pension and Post-retirement Liabilities			Derivative Financial Instruments			Accumulated Other Comprehensive Income (Loss)
Balance as of December 29, 2018	$	(2,973	)	$	(156	)	$	(2,929	)	$	2,459		$	(3,599	)
Balance as of December 28, 2019																$	(2,912	)	$	95		$	(5,762	)	$	506		$	(8,073	)
Other comprehensive income (loss) before reclassifications	(406		)	319			—			(2,272		)	(2,359		)	(600		)	75			—			(2,756		)	(3,281		)
Tax (expense) or benefit	—			(67		)	—			661			594			—			(16		)	—			648			632
Reclassification of stranded tax impact	—			—			(1,185		)	446			(739		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			—			—			(947		)	(947		)	—			—			—			(108		)	(108		)
Balance as of September 28, 2019	$	(3,379	)	$	96		$	(4,114	)	$	347		$	(7,050	)
Balance as of March 28, 2020																$	(3,512	)	$	154		$	(5,762	)	$	(1,710	)	$	(10,830	)

Amounts in parentheses indicate reductions to equity.


	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Marketable Securities			Pension and Post-retirement Liabilities			Derivative Financial Instruments			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Debt Securities			Pension and Post-retirement Liabilities			Derivative Financial Instruments			Accumulated Other Comprehensive Income (Loss)
Balance as of December 30, 2017	$	31		$	(132	)	$	(5,630	)	$	2,120		$	(3,611	)
Balance as of December 29, 2018																$	(2,973	)	$	(156	)	$	(2,929	)	$	2,459		$	(3,599	)
Other comprehensive income (loss) before reclassifications	(1,944		)	(125		)	—			2,593			524			963			114			—			(527		)	550
Tax (expense) or benefit	—			26			—			(635		)	(609		)	—			(24		)	—			124			100
Reclassification of stranded tax impact																—			—			(1,185		)	446			(739		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			—			—			(499		)	(499		)	—			—			—			(352		)	(352		)
Balance as of September 29, 2018	$	(1,913	)	$	(231	)	$	(5,630	)	$	3,579		$	(4,195	)
Balance as of March 30, 2019																$	(2,010	)	$	(66	)	$	(4,114	)	$	2,150		$	(4,040	)

Amounts in parentheses indicate reductions to equity.

Interest Rate Swap

In March 2016, the Corporation entered into an interest rate swap transaction to hedge $150 million of outstanding variable rate revolver borrowings against future interest rate volatility. Under the terms of the interest rate swap, the Corporation paid a fixed rate of 1.29 percent and received one month LIBOR on a $150 million notional value. In August 2019, the agreement governing this interest rate swap was terminated, and the Corporation received cash proceeds of $0.5 million, the fair value of the interest rate swap on the termination date. The proceeds were recorded as cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows. The $0.5 million gain from the termination of this interest rate swap agreement was recorded to "Accumulated other comprehensive income (loss)" and will be amortized to interest expense through January 2021, the remaining term of the original interest rate swap agreement.

In August 2019, concurrent with the termination of the previous interest rate swap, the Corporation entered into a new interest rate swap transaction to hedge $75 million of outstanding variable rate revolver borrowings against future interest rate volatility. Under the terms of this interest rate swap, the Corporation pays a fixed rate of 1.42 percent and receives one month LIBOR on a $75 million notional value expiring August 2023. As of ~~September~~March 28, ~~2019,~~2020, the fair value of the Corporation's interest rate swap ~~asset and~~ liability was ~~$0.2 million and $0.3 million, respectively.~~$2.5 million. The unrecognized change in value of the interest rate swap, which includes the unamortized gain on the termination of the 2016 interest rate swap, is reported net of tax as ~~$0.3~~$(1.7) million in "Accumulated other comprehensive income (loss)" in the Condensed Consolidated Balance Sheets.

2016

The following table details the reclassifications from accumulated other comprehensive income (loss) (in thousands):


		Three Months Ended						Nine Months Ended							Three Months Ended
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income is Presented	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			Affected Line Item in the Statement Where Net Income is Presented	March 28, 2020			March 30, 2019
Derivative financial instruments	Derivative financial instruments													Derivative financial instruments
Interest rate swap	Interest (expense) or income	$	315		$	305		$	1,220		$	661		Interest expense, net	$	114		$	460
	Tax (expense) or benefit	(60		)	(75		)	(273		)	(162		)	Income tax expense	(6		)	(108		)
	Net of tax	$	255		$	230		$	947		$	499		Net of tax	$	108		$	352

Amounts in parentheses indicate reductions to profit.

Dividend

The Corporation declared and paid cash dividends per common share as follows (in dollars):

Nine Months Ended
September 28,
2019 September 29,
2018
Dividends per common share $ 0.905
$ 0.875



	Three Months Ended
	March 28, 2020		March 30, 2019
Dividends per common share	$	0.305	$	0.295

Stock Repurchase

The following table summarizes shares repurchased and settled by the Corporation (in thousands, except share and per share data):


	Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Shares repurchased	1,797			369			186,700			647,290
Average price per share	$	36.09		$	40.36		$	30.75		$	38.14

Cash purchase price	$	(64,877	)	$	(14,884	)	$	(5,741	)	$	(24,685	)
Purchases unsettled as of quarter end	125			222			276			1,170
Prior year purchases settled in current year	(354		)	(1,381		)	(374		)	(354		)
Shares repurchased per cash flow	$	(65,106	)	$	(16,043	)	$	(5,839	)	$	(23,869	)

As of ~~September~~March 28, ~~2019,~~2020, approximately ~~$183.7~~$158.9 million of the Corporation's Board of Directors' ("Board") current repurchase authorization remained unspent. In its COVID-19 response update on April 6th, the Corporation announced plans to temporarily suspend share repurchase activity to support free cash flow.

Note ~~13.~~11. Earnings Per Share

The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share ("EPS") (in thousands, except per share data):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		March 28, 2020			March 30, 2019
Numerator:
Numerator for both basic and diluted EPS attributable to HNI Corporation net income	$	46,078	$	39,907	$	62,910	$	61,014	$	(23,895	)	$	1,022
Denominators:
Denominator for basic EPS weighted-average common shares outstanding	42,899		43,823		43,217		43,616		42,628			43,534
Potentially dilutive shares from stock-based compensation plans	287		856		403		733		—			555
Denominator for diluted EPS	43,186		44,679		43,620		44,349		42,628			44,089
Earnings per share – basic	$	1.07	$	0.91	$	1.46	$	1.40	$	(0.56	)	$	0.02
Earnings per share – diluted	$	1.07	$	0.89	$	1.44	$	1.38	$	(0.56	)	$	0.02

The weighted-average common stock equivalents presented above do not include the effect of the common stock equivalents in the table below because their inclusion would be ~~anti-dilutive.~~anti-dilutive (in thousands):

Three Months Ended Nine Months Ended
September 28,
2019 September 29,
2018 September 28,
2019 September 29,
2018
Common stock equivalents excluded because their inclusion would be anti-dilutive (in thousands) 2,731
1,273
2,118
1,474



	Three Months Ended
	March 28, 2020	March 30, 2019
Common stock equivalents excluded because their inclusion would be anti-dilutive	2,841	1,937

Note ~~14.~~12. Stock-Based Compensation

The Corporation measures stock-based compensation expense at grant date, based on the fair value of the ~~award,~~award. Forms of awards issued under shareholder approved plans include stock options, restricted stock units based on a service condition ("restricted stock units"), restricted stock units based on both performance and ~~recognizes~~service conditions ("performance stock units"), and shares issued under member stock purchase plans. Stock-based compensation expense related to stock options, restricted stock units, and performance stock units is recognized over the employees' requisite service periods. ~~Stock-based~~However, expense related to performance stock units is adjusted for the probability that the Corporation will perform within an established target range of cumulative profitability over a multi-year period. The Corporation has not accrued compensation expense ~~is the cost of stock options and time-based restricted~~for performance stock units ~~issued under~~granted to date, based on the ~~shareholder approved stock-based compensation plans and shares issued under~~current determination that it is not probable that the ~~shareholder approved member stock purchase plans.~~ minimum cumulative profitability target will be achieved.

The following table summarizes expense associated with these plans (in thousands):

Three Months Ended Nine Months Ended
September 28,
2019 September 29,
2018 September 28,
2019 September 29,
2018
Compensation cost $ 1,336
$ 1,307
$ 5,408
$ 6,215



	Three Months Ended
	March 28, 2020		March 30, 2019
Compensation cost	$	4,358	$	2,451

The options and units granted by the Corporation had fair values as follows (in thousands):


	Nine Months Ended				Three Months Ended
	September 28, 2019		September 29, 2018		March 28, 2020		March 30, 2019
Stock options	$	6,211	$	7,200	$	—	$	6,211
Restricted stock units	$	361	$	76	$	5,777	$	361
Performance stock units					$	5,777	$	—

2218

The following table summarizes unrecognized compensation expense and the weighted-average remaining service period for non-vested stock options and restricted stock units as of ~~September~~March 28, ~~2019:~~2020:


	Unrecognized Compensation Expense (in thousands)		Weighted-Average Remaining Service Period (years)	Unrecognized Compensation Expense (in thousands)		Weighted-Average Remaining Service Period (years)
Non-vested stock options	$	4,237	1.1	$	2,173	1.2
Non-vested restricted stock units	$	516	1.1	$	2,632	0.9

Note ~~15.~~13. Post-Retirement Health Care

The following table sets forth the components of net periodic benefit costs included in the Condensed Consolidated Statements of Comprehensive Income (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		March 28, 2020		March 30, 2019
Service cost	$	170	$	213	$	510	$	639	$	195	$	170
Interest cost	199		197		596		591		169		199
Amortization of net (gain) loss	—		32		—		95
Net periodic post-retirement benefit cost	$	369	$	442	$	1,106	$	1,325	$	364	$	369

Note ~~16.~~14. Recently Adopted Accounting Standards

In ~~February~~June 2016, the FASB issued ASU No. ~~2016-02,~~2016-13, ~~Leases~~Measurement of Credit Losses on Financial Instruments and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, Topic 326). Topic 326 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses by requiring consideration of a broader range of reasonable and supportable information and is intended to provide financial statement users with more useful information about expected credit losses on financial instruments.

The ~~new standard requires lessees to recognize most leases, including operating leases, on-balance sheet via a right~~Corporation adopted Topic 326 in the first quarter of ~~use asset and lease liability. The new standard became effective for the Corporation in~~ fiscal ~~2019 and was implemented~~2020 using a ~~modified-retrospective~~modified retrospective transition approach. The ~~Corporation selected~~adoption resulted in a ~~technology tool~~cumulative effect decrease to ~~assist with~~retained earnings of $0.1 million to reflect a change in the ~~accounting~~allowance for doubtful accounts. Additionally, Topic 326 requires the allowance for doubtful accounts balance (contra-asset) to be presented separately in the Condensed Consolidated Balance Sheets. No other financial statement line items were materially impacted by the adoption.

The Corporation's allowance for doubtful accounts is developed based on several factors, including overall customer credit quality, historical write-off experience, and ~~disclosure requirements~~specific account analyses projecting the ultimate collectability of the ~~new standard. All necessary changes required by the new standard, including those to~~account. The adoption of Topic 326 did not significantly impact the Corporation's accounting policies ~~business process, systems, controls,~~or estimation methods related to the allowance for doubtful accounts.

Topic 326 also introduced new accounting and ~~disclosures, were identified~~reporting requirements related to available-for-sale debt securities, including consideration of whether an allowance for credit losses should be established. The Corporation has determined that such an allowance is not required with respect to its available-for-sale debt security portfolio. See "Note 9. Fair Value Measurements" for fair value information of the Corporation's available-for-sale debt securities and ~~implemented~~where such are recorded in the Condensed Consolidated Balance Sheets. The amortized cost of this portfolio was $13.0 million and $12.5 million as of ~~the first quarter 2019. See "Note 6. Leases" in the Notes to Condensed Consolidated Financial Statements for financial impacts, accounting elections,~~March 28, 2020 and ~~further information.~~

~~In February 2018, the FASB issued ASU No. 2018-02,~~ ~~Reclassification~~December 28, 2019, respectively. Immaterial amounts of ~~Certain Tax Effects from Accumulated Other Comprehensive Income~~. The new standard allows entities to reclassify certain stranded tax effects from accumulated other comprehensive income to retained earnings resulting from the Tax Cuts and Jobs Act of 2017 (the "Act"). The standard also requires certain disclosures about stranded tax effects. The new standard became effective for the Corporation in fiscal 2019. See "Note 10. Income Taxes" in the Notes to Condensed Consolidated Financial Statements for further information.

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities~~. The new standard improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The new standard became effective for the Corporation in fiscal 2019. The standard requires a cumulative effect adjustmentaccrued interest receivable related to the ~~opening balance of retained earnings as of the beginning of the fiscal year of adoption for the previously~~Corporation's portfolio are recorded ~~ineffectiveness included~~ in retained earnings related to existing net investment hedges as of the date of adoption. The Corporation did not record a cumulative effect adjustment to retained earnings as no net investment hedges existed as of the ASU adoption date. New hedging relationships entered after the adoption date have been presented in the financial statements using the guidance of the ASU. The standard did not have a material effect on consolidated financial statements"Prepaid expenses and ~~related disclosures.~~other current assets" and "Other assets".

Note ~~17.~~15. Guarantees, Commitments, and Contingencies

The Corporation utilizes letters of credit and surety bonds in the amount of approximately ~~$25~~$24 million to back certain insurance policies and payment obligations. The Corporation utilizes trade letters of credit and banker's acceptances in the amount of approximately $2$1 million to guarantee certain payments to overseas suppliers. The letters of credit, bonds, and banker's acceptances 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 ordinary course of its business, including liabilities relating to pending litigation, environmental remediation, taxes, and other claims. It is the Corporation's opinion, after consultation with legal counsel, that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation's financial condition, cash flows, or on the Corporation's quarterly or annual operating results when resolved in a future period.

Note ~~18.~~16. Reportable Segment Information

Management views the Corporation as being in 2 reportable segments based on industries: office furniture and hearth products, with the former being the principal segment.

The aggregated office furniture segment manufactures and markets a broad line of commercial and home office furniture which includes panel-based and freestanding furniture systems, seating, storage, ~~products, desks, credenzas, chairs,~~ tables, ~~bookcases, freestanding office partitions~~ and ~~panel systems, and other related~~architectural products. The hearth products segment manufactures and markets a ~~broad line~~full array of gas, wood, electric, ~~wood,~~ and ~~biomass burning~~pellet fueled fireplaces, inserts, stoves, facings, and ~~accessories, principally for the home.~~accessories.

For purposes of segment reporting, intercompany sales between segments are not material, and operating profit is income before income taxes exclusive of certain unallocated general corporate expenses. These unallocated general corporate expenses include the net costs of the Corporation's corporate operations. Management views interest income and expense as corporate financing costs and not as a reportable segment cost. In addition, management applies an effective income tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis. Identifiable assets by segment are those assets applicable to the respective industry segments. Corporate assets consist principally of cash and cash equivalents, short-term investments, long-term investments, IT infrastructure, and corporate office real estate and related equipment.

No geographic information for revenues from external customers or for long-lived assets is disclosed since the Corporation's primary market and capital investments are concentrated in the United States.

2420

Reportable segment data reconciled to the Corporation's condensed consolidated financial statements was as follows (in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			March 28, 2020			March 30, 2019
Net Sales:
Office furniture	$	484,755		$	471,687		$	1,247,778		$	1,276,480		$	338,386		$	353,511
Hearth products	140,631			139,433			383,090			383,323			130,318			125,945
Total	$	625,386		$	611,120		$	1,630,868		$	1,659,803		$	468,704		$	479,456

Income Before Income Taxes:
Income (Loss) Before Income Taxes:
Office furniture	$	51,162		$	45,721		$	68,180		$	64,898		$	(33,231	)	$	(1,731	)
Hearth products	23,772			21,824			54,743			55,250			20,671			17,609
General corporate	(14,278		)	(13,919		)	(35,342		)	(35,776		)	(11,168		)	(12,201		)
Operating income	60,656			53,626			87,581			84,372
Operating income (loss)													(23,728		)	3,677
Interest expense, net	2,205			2,522			6,795			7,375			1,811			2,111
Total	$	58,451		$	51,104		$	80,786		$	76,997		$	(25,539	)	$	1,566

Depreciation and Amortization Expense:
Office furniture	$	11,232		$	11,012		$	33,540		$	33,202		$	11,332		$	11,060
Hearth products	2,291			2,026			6,521			6,080			2,306			2,056
General corporate	5,863			5,569			17,777			16,605			5,849			5,924
Total	$	19,386		$	18,607		$	57,838		$	55,887		$	19,487		$	19,040

Capital Expenditures (including capitalized software):
Office furniture	$	6,524		$	10,324		$	29,190		$	35,321		$	7,101		$	10,319
Hearth products	3,204			2,150			10,779			6,317			2,973			4,998
General corporate	2,856			2,181			10,222			5,341			3,085			3,779
Total	$	12,584		$	14,655		$	50,191		$	46,979		$	13,159		$	19,096

							As of September 28, 2019			As of December 29, 2018			As of March 28, 2020			As of December 28, 2019
Identifiable Assets:
Office furniture							$	872,501		$	797,574		$	785,063		$	874,913
Hearth products							379,534			352,060			376,862			364,653
General corporate							218,441			252,210			207,974			212,946
Total							$	1,470,476		$	1,401,844		$	1,369,899		$	1,452,512

2521

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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 Unaudited Condensed Consolidated Financial Statements of the Corporation and related notes. Statements that are not historical are forward-looking and involve risks and uncertainties. See "Forward-Looking Statements" at the end of this section for further information.

Overview

The Corporation has two reportable segments: office furniture and hearth products. The Corporation is a leading global office furniture manufacturer and ~~the~~marketer, and a leading manufacturer and marketer of hearth products. The Corporation utilizes a decentralized business model to deliver value to customers via various brands and selling models. The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.

~~Net~~Consolidated net sales for the ~~third~~first quarter of ~~2019 were $625.4 million, an increase of 2.3~~2020 decreased 2.2 percent compared to ~~net sales of $611.1 million in~~ the ~~third quarter of 2018.~~prior-year quarter. The change was driven by a ~~2.8 percent increase~~decrease in the office furniture segment ~~along with a 0.9 percent~~partially offset by an increase in the hearth products segment. ~~Divestitures of~~Included in the sales results for the hearth products segment was a $1.1 million impact from acquiring small ~~office furniture companies resulted in a net decrease in sales of $4.5 million compared to the third quarter of 2018.~~hearth products businesses.

Net ~~income~~loss attributable to the Corporation in the ~~third~~first quarter of ~~2019~~2020 was ~~$46.1~~$23.9 million compared to net income of ~~$39.9~~$1.0 million in the ~~third~~first quarter of ~~2018.~~2019. The ~~increase~~change was primarily driven by $37.7 million of impairments and costs related to the COVID-19 pandemic and related economic disruption. Aside from these charges, the business results improved compared to the prior-year quarter primarily due to price realization, net productivity, and ~~productivity, net of investments,~~lower core SG&A spend, partially offset by lower ~~sales~~office furniture volume and ~~higher input~~increased tariff expense.

Impact of COVID-19 Pandemic Crisis

The COVID-19 pandemic crisis has adversely impacted the Corporation's financial performance for the quarter and is expected to have an adverse impact on the results of the Corporation's operations in future periods. The extent to which the Corporation's operations may be impacted by the COVID-19 pandemic crisis will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the pandemic.

The Corporation's primary focus continues to be the health and safety of its members. The Corporation has implemented workplace health and safety measures consistent with guidelines from the Centers for Disease Control and Prevention and is taking strong measures to create social distancing and keep members safe. All members able to work remotely are currently doing so. In addition, the Corporation has reorganized production facilities to protect members and increased the frequency and depth of cleanings, among other measures. To support local communities and health providers, the Corporation is producing, donating, and supporting the production of personal protective equipment (PPE) to first responders, healthcare systems, and hospitals utilizing HNI’s facilities in Iowa, New York, and North Carolina. These efforts include the manufacture of washable cloth facemasks, washable cloth facemask coverings, and washable and disposable protective gowns. Further, the Corporation is loaning equipment processing time to support local vendors’ PPE production efforts.

The Corporation has implemented a number of measures to reduce operating costs, lower capital expenditures, and maintain liquidity. These actions include temporarily suspending the Corporation's share repurchase activity, furloughing its members to better match staffing levels with demand activity, and reducing the Corporation's capital expenditure budget. Base salaries for salaried exempt members were reduced by 10 percent, executive base salaries were reduced by 15 percent, and the CEO base salary was reduced by 25 percent. In addition, the Corporation's Board of Directors reduced its cash and equity retainers by 25 percent. The reductions in salaries and Board of Directors compensation will be reassessed in six months. The Corporation continues to evaluate further measures to manage costs.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic crisis. The CARES Act contains provisions relating to refundable payroll tax credits, deferment of certain social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Corporation is currently evaluating the impact of this legislation on its consolidated financial position, results of operations, and cash flows.

Results of Operations

The following table presents certain key highlights from the results of operations (in thousands):

Three Months Ended Nine Months Ended
September 28,
2019 September 29,
2018 Change September 28,
2019 September 29,
2018 Change
Net sales $ 625,386
$ 611,120
2.3 % $ 1,630,868
$ 1,659,803
(1.7 %)
Cost of sales 387,715
377,789
2.6 % 1,030,993
1,048,683
(1.7 %)
Gross profit 237,671
233,331
1.9 % 599,875
611,120
(1.8 %)
Selling and administrative expenses 176,731
179,577
(1.6 %) 511,080
524,445
(2.5 %)
Restructuring and impairment charges 284
128
121.9 % 1,214
2,303
(47.3 %)
Operating income 60,656
53,626
13.1 % 87,581
84,372
3.8 %
Interest expense, net 2,205
2,522
(12.6 %) 6,795
7,375
(7.9 %)
Income before income taxes 58,451
51,104
14.4 % 80,786
76,997
4.9 %
Income taxes 12,375
11,197
10.5 % 17,878
16,033
11.5 %
Net loss attributable to non-controlling interest (2 ) 0
(100.0 %) (2 ) (50 ) 96.0 %
Net income attributable to HNI Corporation $ 46,078
$ 39,907
15.5 % $ 62,910
$ 61,014
3.1 %

As a Percentage of Net Sales:
Net sales 100.0 % 100.0 %

100.0 % 100.0 %

Gross profit 38.0
38.2
-20 bps 36.8
36.8
—
Selling and administrative expenses 28.3
29.4
-110 bps 31.3
31.6
-30 bps
Restructuring and impairment charges 0.0
0.0
—
0.1
0.1
—
Operating income 9.7
8.8
90 bps 5.4
5.1
30 bps
Income taxes 2.0
1.8
20 bps 1.1
1.0
10 bps
Net income attributable to HNI Corporation 7.4
6.5
90 bps 3.9
3.7
20 bps

~~Results of Operations - Three Months Ended~~



	Three Months Ended
	March 28, 2020			March 30, 2019			Change
Net sales	$	468,704		$	479,456		(2.2	%)
Cost of sales	292,686			309,842			(5.5	%)
Gross profit	176,018			169,614			3.8	%
Selling and administrative expenses	167,085			165,937			0.7	%
Impairment charges	32,661			—			NM
Operating income (loss)	(23,728		)	3,677			NM
Interest expense, net	1,811			2,111			(14.2	%)
Income (loss) before income taxes	(25,539		)	1,566			NM
Income taxes	(1,643		)	546			NM
Net loss attributable to non-controlling interest	(1		)	(2		)	50.0	%
Net income (loss) attributable to HNI Corporation	$	(23,895	)	$	1,022		NM


As a Percentage of Net Sales:
Net sales	100.0		%	100.0		%
Gross profit	37.6			35.4			220	bps
Selling and administrative expenses	35.6			34.6			100	bps
Impairment charges	7.0			—
Operating income (loss)	(5.1		)	0.8			-590	bps
Income taxes	(0.4		)	0.1			-50	bps
Net income (loss) attributable to HNI Corporation	(5.1		)	0.2			-530	bps

Net Sales

Consolidated net sales for the ~~third~~first quarter of ~~2019 increased 2.3~~2020 decreased 2.2 percent compared to the same quarter last year. The change was driven by a ~~2.8 percent increase~~decrease in the office furniture segment ~~along with a 0.9 percent~~partially offset by an increase in the hearth products segment. ~~Office furniture segment sales increased driven by growth~~Included in the ~~contract business, partially offset by a decrease of $4.5 million from~~sales results for the ~~net impact of divesting small office furniture companies. Hearth~~hearth products segment ~~sales increased in the new construction business.~~was a $1.1 million impact from acquiring small hearth products businesses.

Gross Profit

Gross profit as a percentage of net sales ~~decreased 20~~increased 220 basis points in the ~~third~~first quarter of ~~2019~~2020 compared to the same quarter last year primarily driven by ~~lower sales volume~~price realization and ~~higher input costs,~~net productivity, partially offset by ~~price realization and productivity, net of investments.~~

~~Selling and Administrative Expenses~~

Selling and administrative (SG&A) expenses as a percentage of net sales decreased 110 basis points in the third quarter of 2019 compared to the same quarter last year primarily driven by higher net sales and lower ~~core spend.~~

~~Restructuring Charges~~

~~In the third quarter of 2019, the Corporation recorded $0.3 million of restructuring costs in connection with a structural realignment in the~~ office furniture ~~segment.~~

In the third quarter of 2018, the Corporation recorded $0.1 million of restructuring costs primarily associated with the previously announced closure of the hearth manufacturing facility in Paris, Kentucky.

~~Interest Expense, Net~~

Interest expense, net for the third quarter of 2019 was $2.2 million, compared to $2.5 million in the same quarter last year. The decrease was driven by higher interest income in the current period, as the Corporation held a larger average balance of excess cash in interest-bearing accounts.

~~Income Taxes~~

The Corporation's income tax provision for the third quarter of 2019 was an expense of $12.4 million on income before taxes of $58.5 million, or an effective tax rate of 21.2 percent. For the third quarter of 2018, the Corporation's income tax provision was an expense of $11.2 million on income before taxes of $51.1 million, or an effective tax rate of 21.9 percent. Refer to "Note 10. Income Taxes" for further information.

~~Net Income Attributable to HNI Corporation~~

~~Net income attributable to the Corporation was $46.1 million or $1.07 per diluted share in the third quarter of 2019 compared to $39.9 million or $0.89 per diluted share in the third quarter of 2018.~~

~~Results of Operations - Nine Months Ended~~

~~Net Sales~~

For the first nine months of 2019, consolidated net sales decreased 1.7 percent compared to the same period last year. The change was driven by a 2.2 percent decrease in the office furniture segment. Office furniture segment sales decreased primarily due to a decrease in the supplies-driven business, along with a decrease of $18.0 million from the net impact of closing and divesting small office furniture companies. Hearth products segment sales decreased 0.1 percent compared to the same period last year.

~~Gross Profit~~

~~Gross profit as a percentage of net sales was flat in the first nine months of 2019 compared to the same period last year. A decrease of 10 basis points was driven primarily by lower~~ volume and ~~higher input costs, partially offset by price realization. An offsetting increase of 10 basis points was due to transition costs incurred in the prior year period.~~

During the first nine months of 2018, the Corporation recorded $1.7 million of transition costs in cost of sales primarily related to structural realignment in China and the previously announced closure of the office furniture manufacturing facility in Orleans, Indiana.increased tariff expense.

Selling and Administrative Expenses

Selling and administrative expenses as a percentage of net sales ~~decreased 30~~increased 100 basis points in the first ~~nine months~~quarter of ~~2019~~2020 compared to the same ~~period~~quarter last year due to $5.0 million of one-time costs related to the COVID-19 pandemic. Lower office furniture volume was fully offset by lower core SG&A spend and reduced variable compensation.

Impairment Charges

In the first quarter of 2020, the Corporation recorded $32.7 million of impairment charges on goodwill and intangible assets related to the COVID-19 pandemic and related economic disruption.

Operating Income (Loss)

In the first quarter of 2020, operating loss was $23.7 million compared to operating income of $3.7 million in the same quarter last year. The change was primarily driven by $37.7 million of impairments and costs related to the COVID-19 pandemic and related economic disruption. Aside from these charges, the business results improved compared to the prior-year quarter primarily due to price realization, net productivity, and lower ~~business system implementation costs and~~ core SG&A spend, partially offset by ~~higher investments and cost inflation.~~

~~Restructuring and Impairment Charges~~

~~During the first nine months of 2019, the Corporation recorded $1.2 million of restructuring costs in connection with a structural realignment in the~~lower office furniture ~~segment.~~

~~During the first nine months of 2018, the Corporation recorded $2.3 million of restructuring~~volume and impairment charges primarily associated with the previously announced closures of the office furniture manufacturing facility in Orleans, Indiana and the hearth manufacturing facility in Paris, Kentucky. These costs include an impairment charge due to an updated valuation of the closed manufacturing facility held for sale.increased tariff expense.

Interest Expense, Net

Interest expense, net for the first ~~nine months~~quarter of ~~2019~~2020 was ~~$6.8~~$1.8 million, compared to ~~$7.4~~$2.1 million in the same ~~period~~quarter last year. ~~The decrease was driven by higher interest income in the current period, as the Corporation held a larger average balance of excess cash in interest-bearing accounts.~~

Income Taxes

The Corporation's income tax provision for the first ~~nine months~~quarter of ~~2019~~2020 was ~~an expense~~a benefit of ~~$17.9~~$1.6 million on ~~income~~loss before taxes of ~~$80.8~~$25.5 million, or an effective tax rate of ~~22.1~~6.4 percent. For the first ~~nine months~~quarter of ~~2018,~~2019, the Corporation's income tax provision was an expense of ~~$16.0~~$0.5 million on income before taxes of ~~$77.0~~$1.6 million, or an effective tax rate of ~~20.8~~34.8 percent. The ~~income~~Corporation's effective tax ~~provision reflects a higher~~ rate was lower in ~~2019~~the three months ended March 28, 2020 compared to the ~~prior~~same period last year ~~period~~ primarily due to lower current quarter income and lower expected income due to the ~~release of~~COVID-19 pandemic, resulting in a ~~valuation allowance for certain foreign jurisdictions in 2018.~~greater benefit from tax credits. Refer to "Note ~~10.~~8. Income Taxes" for further information.

Net Income (Loss) Attributable to HNI Corporation

Net loss attributable to the Corporation was $23.9 million, or $0.56 per diluted share in the first quarter of 2020, compared to net income attributable to the Corporation ~~was $62.9~~of $1.0 million or ~~$1.44~~$0.02 per diluted share ~~for~~in the first ~~nine months~~quarter of ~~2019 compared to $61.0 million or $1.38 per diluted share for the first nine months of 2018.~~2019.

Office Furniture

The following table presents certain key highlights from the results of operations in the office furniture segment (in thousands):

Three Months Ended Nine Months Ended
September 28,
2019 September 29,
2018 Change September 28,
2019 September 29,
2018 Change
Net sales $ 484,755
$ 471,687
2.8 % $ 1,247,778
$ 1,276,480
(2.2 %)
Operating profit $ 51,162
$ 45,721
11.9 % $ 68,180
$ 64,898
5.1 %
Operating profit % 10.6 % 9.7 % 90 bps 5.5 % 5.1 % 40 bps



	Three Months Ended
	March 28, 2020			March 30, 2019			Change
Net sales	$	338,386		$	353,511		(4.3	%)
Operating loss	$	(33,231	)	$	(1,731	)	NM
Operating loss %	(9.8		%)	(0.5		%)	-930	bps

~~Three Months Ended~~

~~Third~~First quarter ~~2019~~2020 net sales for the office furniture segment ~~increased 2.8~~decreased 4.3 percent compared to the same quarter last year. Sales increased primarily due to an increase in the contract business, partially offset by a decrease in the supplies-driven business, along with a decrease of $4.5 million due to the net impact of divesting small office furniture companies.

Operating ~~profit~~loss as a percentage of net sales ~~increased 90~~decreased 930 basis points in the ~~third~~first quarter of ~~2019~~2020 compared to the same quarter last year. ~~This increase was~~The office furniture segment recorded charges of $32.7 million related to the impairment of goodwill and intangible assets and $3.4 million of other costs related to the COVID-19 pandemic and related economic disruption. Aside from these charges, the office furniture segment results improved compared to the prior-year quarter driven by price realization, net productivity, and ~~productivity, net of investments,~~lower core SG&A spend, partially offset by lower ~~sales volume, higher input costs, and higher restructuring and transition costs.~~

~~Nine Months Ended~~

Net sales for the first nine months of 2019 for the office furniture segment decreased 2.2 percent compared to the same period last year. Sales decreased primarily due to a decrease in the supplies-driven business, along with a decrease of $18.0 million due to the net impact of closing and divesting small office furniture companies.

Operating profit as a percentage of net sales increased 40 basis points for the first nine months of 2019 compared to the same period last year. Of this increase, 30 basis points were driven primarily by price realization, lower business system implementation costs, and improved productivity, net of investments, partially offset by lower sales volume and higher ~~input costs. The remaining 10 basis points increase was due to lower restructuring and transition costs.~~

During the first nine months of 2019, the Corporation recorded $1.2 million of restructuring costs and $0.2 million of transition costs in connection with a structural realignment in the office furniture segment.

During the first nine months of 2018, the office furniture segment recorded $1.3 million of restructuring costs and $1.2 million of transition costs primarily associated with the previously announced closure of the office furniture manufacturing facility in Orleans, Indiana and structural realignments in China. Of these charges, $1.2 million was included in cost of sales.tariff expense.

Hearth Products

The following table presents certain key highlights from the results of operations in the hearth products segment (in thousands):


	Three Months Ended								Nine Months Ended								Three Months Ended
	September 28, 2019			September 29, 2018			Change		September 28, 2019			September 29, 2018			Change		March 28, 2020			March 30, 2019			Change
Net sales	$	140,631		$	139,433		0.9	%	$	383,090		$	383,323		(0.1	%)	$	130,318		$	125,945		3.5	%
Operating profit	$	23,772		$	21,824		8.9	%	$	54,743		$	55,250		(0.9	%)	$	20,671		$	17,609		17.4	%
Operating profit %	16.9		%	15.7		%	120	bps	14.3		%	14.4		%	-10	bps	15.9		%	14.0		%	190	bps

~~Three Months Ended~~

~~Third~~

First quarter ~~2019~~2020 net sales for the hearth products segment increased ~~0.9~~3.5 percent compared to the same quarter last year. ~~Sales increased~~Included in the ~~new construction business, but were partially offset by~~sales results was a ~~decrease in the retail business.~~$1.1 million impact from acquiring small hearth products businesses.

Operating profit as a percentage of net sales increased ~~120~~190 basis points in the ~~third~~first quarter of ~~2019~~2020 compared to the same quarter last year. ~~This~~The increase was primarily driven by price realization and ~~one-time restructuring and transition costs incurred in the prior year quarter,~~higher volume, partially offset by ~~lower sales volume and higher input costs.~~

~~Nine Months Ended~~

Net sales for the first nine months of 2019 for the hearth products segment decreased 0.1 percent compared to the same period last year. The decrease was driven by the retail business, partially offset by an increase in the new construction business.

Operating profit as a percentage of net sales decreased 10 basis points for the first nine months of 2019 compared to the same period last year. Of this decrease, 50 basis points were primarily driven by lower sales volume, higher input costs, and investments, partially offset by price realization, and lower core SG&A spend and incentive compensation. This decline was partially offset by a 40 basis points increase due to restructuring and impairment charges, and transition costs, incurred in the prior year period.

During the first nine months of 2018, the hearth products segment recorded $1.0 million of restructuring and impairment charges and $0.5 million of transition costs primarily associated with the previously announced closures of the hearth manufacturing facilities in Paris, Kentucky and Colville, Washington. Of these charges, $0.5 million was included in cost of sales.

increased tariff expense.

Liquidity and Capital Resources

Cash, cash equivalents, and short-term investments, coupled with cash flow from future operations, borrowing capacity under the existing credit agreement, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy cash flow needs for at least the next twelve months. Additionally, based on current earnings before interest, taxes, depreciation and amortization generation, the Corporation can access the full remaining $321 million of borrowing capacity available under the revolving credit facility and maintain compliance with applicable covenants.

Cash Flow – Operating Activities

Operating activities were a ~~source~~use of ~~$115.6~~$33.3 million of cash in the first ~~nine~~three months of ~~2019~~2020 compared to a ~~source~~use of ~~$115.0~~$28.3 million of cash in the first ~~nine~~three months of ~~2018.~~2019. An increase in ~~non-cash items is primarily attributable to amortization~~seasonal outflows of ~~lease costs~~annual payments drove a decrease in ~~accordance with ASU No. 2016-02, mostly offset by related lease outflows and other smaller~~ working capital balance changes.

Cash Flow – Investing Activities

Capital expenditures, including capitalized software, for the first ~~nine~~three months of ~~2019~~2020 were ~~$50.2~~$13.2 million compared to ~~$47.0~~$19.1 million in the same period last year. These expenditures are primarily focused on machinery, equipment, and tooling required to support new products, continuous improvements, and cost savings initiatives in manufacturing processes. For the full year ~~2019,~~2020, capital expenditures are now expected to be approximately ~~$60 to $70~~$35 million.

~~Real Estate Transaction~~ ~~- In the first quarter of 2018, the Corporation entered into a sale-leaseback transaction, selling a manufacturing facility and subsequently leasing back a portion of the facility~~Current year investing activities also include acquisition spending for a term of 10 years. The net proceeds from the sale of the facility of $16.9 million are reflected in "Proceeds from sale of property, plant, equipment" in the Condensed Consolidated Statements of Cash Flows. See "Note 6. Leases" in the Notes to Condensed Consolidated Financial Statements for further information.small hearth products companies.

Cash Flow – Financing Activities

Long-Term Debt - The Corporation maintains a revolving credit facility as the primary source of committed funding from which the Corporation finances its planned capital expenditures, strategic initiatives, and seasonal working capital needs. Cash flows included in financing activities represent periodic borrowings and repayments under the revolving credit facility. ~~During the second quarter of 2018, the Corporation issued $100 million of private placement notes. The proceeds were used to repay outstanding borrowings under the revolving credit facility.~~ See "Note 9.7. Long-Term Debt" in the Notes to Condensed Consolidated Financial Statements for further information.

Dividend - The Corporation is committed to maintaining or modestly growing the quarterly dividend. Cash dividends declared and paid per common share were as follows (in dollars):

Three Months Ended Nine Months Ended
September 28,
2019 September 29,
2018 September 28,
2019 September 29,
2018
Dividends per common share $ 0.305
$ 0.295
$ 0.905
$ 0.875



	Three Months Ended
	March 28, 2020		March 30, 2019
Dividends per common share	$	0.305	$	0.295

During the ~~third~~first quarter, the Board declared the regular quarterly cash dividend on ~~August 6, 2019.~~February 12, 2020. The dividend was paid on ~~September 3, 2019~~March 2, 2020 to shareholders of record on ~~August 16, 2019.~~February 24, 2020. This was a 3.4 percent per share increase over the comparable prior year quarterly dividend paid on ~~September~~March 4, ~~2018.~~2019.

Stock Repurchase - The Corporation’s capital strategy related to stock repurchase is focused on offsetting the dilutive impact of issuances for various compensation related matters. The Corporation may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. The Board authorized $200 million on November 9, 2007 and an additional $200 million each on November 7, 2014 and February 13, 2019 for repurchases of the Corporation’s common stock. ~~As of September 28, 2019, approximately $183.7 million of~~In its COVID-19 response update on April 6th, the ~~authorizations remain unspent.~~Corporation announced plans to temporarily suspend share repurchase activity to support free cash flow. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity" in the Notes to Condensed Consolidated Financial Statements for further information.

~~The following table summarizes shares repurchased and settled by the Corporation (in thousands, except per share data):~~

Nine Months Ended
September 28,
2019 September 29,
2018
Shares repurchased 1,797
369
Average price per share $ 36.09
$ 40.36

Cash purchase price $ (64,877 ) $ (14,884 )
Purchases unsettled as of quarter end 125
222
Prior year purchases settled in current year (354 ) (1,381 )
Shares repurchased per cash flow $ (65,106 ) $ (16,043 )

Cash, cash equivalents, and short-term investments, coupled with cash flow from future operations, borrowing capacity under the existing credit agreement, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy cash flow needs for at least the next twelve months. Additionally, based on current earnings before interest, taxes, depreciation and amortization generation, the Corporation can access the full remaining $310 million of borrowing capacity available under the revolving credit facility and maintain compliance with applicable covenants.

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 the Corporation's 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 fiscal year ended December ~~29, 2018.~~28, 2019. 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 during the first ~~nine~~three months of ~~2019.~~2020.

Commitments and Contingencies

See "Note ~~17.~~15. Guarantees, Commitments, and Contingencies" in the Notes to Condensed Consolidated Financial Statements for further information.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon the Consolidated Financial Statements, prepared in accordance with Generally Accepted Accounting Principles ("GAAP"). The preparation of ~~the~~these financial

statements requires ~~the Corporation~~management to make estimates and ~~judgments affecting~~assumptions that affect the reported ~~amount~~amounts of assets, liabilities, ~~revenues,~~revenue, and expenses, and related disclosure of contingent assets and liabilities. ~~The Corporation continually evaluates its accounting policies and estimates. The Corporation~~Management bases its estimates on historical experience and on a variety of other assumptions that are believed ~~by management~~ to be reasonable ~~in order to make~~under the circumstances, the results of which form the basis for making judgments about the carrying ~~value~~values of assets and ~~liabilities.~~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 Board. Actual results may differ from these estimates under different assumptions or conditions. A summary of the more significant accounting policies requiring the use of estimates and ~~judgments~~assumptions in preparing the financial statements is provided in the Corporation's Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019.

Recently Issued Accounting Standards Not Yet Adopted

In ~~June 2016,~~December 2019, the FASB issued ASU No. ~~2016-13,~~2019-12, ~~Measurement of Credit Losses on Financial Instruments~~Simplifying the Accounting for Income Taxes. ~~and also issued subsequent amendments~~This update simplifies various aspects related to accounting for income taxes, removes certain exceptions to the ~~initial guidance: ASU 2018-19, ASU 2019-04,~~general principles in ASC 740, and ASU 2019-05 (collectively, Topic 326). Topic 326 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses by requiring consideration of a broader range of reasonableclarifies and ~~supportable information and is intended~~amends existing guidance to ~~provide financial statement users with more useful information about expected credit losses on financial instruments. Topic 326~~improve consistent application. The new standard becomes effective for the Corporation in fiscal ~~2020 and requires a cumulative effect adjustment in retained earnings as of the beginning of the year~~

~~of adoption.~~2021. The Corporation is currently evaluating the effect ~~Topic 326~~the standard will have on ~~the~~ consolidated financial statements and related disclosures.

Looking Ahead

Management anticipates near-term challenges in both volume and profit levels as the Corporation navigates the COVID-19 pandemic and related economic disruption. Management remains optimistic about the long-term prospects in the office furniture and hearth ~~products~~ markets. Management believes the Corporation continues to compete well and remains confident the investments made in the business will continue to generate strong returns for shareholders.

Forward-Looking Statements

Statements in this report to the extent they are not statements of historical or present fact, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and 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, 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 within Item 1A of the Corporation's Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019 and Part II, Item 1A of this report. 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 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, including but not limited to: the duration and scope of the COVID-19 pandemic and its effect on people and the economy; the levels of office furniture needs and housing starts; overall demand for the Corporation's products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation's customers; the Corporation's reliance on its network of independent dealers; changes in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation's new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation's financing activities; an inability to protect the Corporation's intellectual property; impacts of tax legislation; force majeure events outside the Corporation's control; and other risks described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q, as well as others the Corporation may consider not material or does not anticipate at this time. The risks and uncertainties described in this report, as well as those described within Item 1A of the Corporation's Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018,~~28, 2019 and Part II, Item 1A of this report, are not exclusive and further information concerning the Corporation, including factors that potentially could have a material effect on 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 advises 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 SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of ~~September~~March 28, ~~2019,~~2020, there were no material changes to the financial market risks affecting the quantitative and qualitative disclosures presented in Item 7A of the Corporation's Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Corporation in the reports 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's rules and forms. Disclosure controls and procedures are also designed to ensure information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of the Corporation, the Corporation's management carried out an evaluation of the Corporation's disclosure controls and procedures pursuant to Exchange Act Rules 13a – 15(e) and 15d – 15(e). As of ~~September~~March 28, ~~2019,~~2020, based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded these disclosure controls and procedures are effective.

Changes in Internal Controls

There have been no changes in the Corporation's internal controls over financial reporting during the fiscal quarter covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

3327

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal proceedings, see "Note ~~17.~~15. Guarantees, Commitments, and Contingencies" in the Notes to Condensed Consolidated Financial Statements, which information is incorporated herein by reference.

Item 1A. Risk Factors

~~There~~The Corporation’s financial condition and results of operation have been and are expected to continue to be adversely affected by the recent coronavirus outbreak.

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization. To date, the COVID-19 pandemic has surfaced in nearly all regions around the world, and preventative measures taken to contain or mitigate the outbreak have caused, and are continuing to cause, business slowdown or shutdown in affected areas and significant economic disruption both globally and in the United States. Such economic disruption has resulted and is expected to continue to result in a decrease in demand for office furniture and hearth products, and in turn negatively impact, possibly materially, the Corporation’s business, sales, financial condition and results of operations. Other impacts of the COVID-19 pandemic may include, but are not limited to:

disruptions to our manufacturing facilities and distribution centers, including through the effects of facility closures, reductions in operating hours, labor shortages, and real time changes in operating procedures, including for additional cleaning and disinfection procedures;

the inability or impairment of independent dealers, wholesalers, and office product distributors to sell the Corporation’s products; and

adverse impacts to the Corporation's supply chain, which may increase operating costs and result in supply disruptions.

In addition, the impact of the COVID-19 pandemic on the Corporation’s members could adversely impact the Corporation’s sales and operations. At this point, the extent to which the COVID-19 pandemic will continue to impact the Corporation’s results is uncertain and depends on future developments, which are highly uncertain, cannot be predicted and could be material.

Outside of the COVID-19 pandemic, there have been no additional material changes from the risk factors disclosed in the "Risk Factors" section of the Corporation's Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019.

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 quarter:

Period Total Number of Shares (or Units) Purchased (1)
Average Price
Paid per Share
(or Unit)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
06/30/19 – 07/27/19 22,000
$ 33.96
22,000
$ 190,152,818
07/28/19 – 08/24/19 95,440
$ 31.94
95,440
$ 187,104,103
08/25/19 – 09/28/19 103,400
$ 32.84
103,400
$ 183,708,380
Total 220,840
220,840



Period	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
12/29/19 – 01/25/20	35,200	$	37.37	35,200	$	163,362,140
01/26/20 – 02/22/20	38,100	$	37.84	38,100	$	161,920,456
02/23/20 – 03/28/20	113,400	$	26.31	113,400	$	158,936,908
Total	186,700			186,700

(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:

Corporation's share purchase program ("Program") announced November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date, with increases announced November 7, 2014 and February 13, 2019, providing additional share repurchase authorizations each of $200,000,000 with no specific expiration date.

No repurchase plans expired or were terminated during the ~~third~~first quarter of ~~2019,~~2020, nor do any plans exist under which the Corporation does not intend to make further purchases. The Program does not obligate the Corporation to purchase any shares and the authorization for the Program may be terminated, increased, or decreased by the Board at any time. In its COVID-19 response update on April 6th, the Corporation announced plans to temporarily suspend share repurchase activity to support free cash flow.

3429

Item 6. Exhibits



~~(31.1)~~31.1	Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+
~~(31.2)~~31.2	Certification of the CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+
~~(32.1)~~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+
101	The following materials from HNI Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended ~~September~~March 28, ~~2019~~2020 are formatted in Inline XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) Condensed Consolidated Statements of Comprehensive Income; (ii) Condensed Consolidated Balance Sheets; (iii) Condensed Consolidated Statements of Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

⁺ Filed or furnished herewith.

3530

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

Date: ~~October 29, 2019~~April 28, 2020	By:	/s/ Marshall H. Bridges
		Marshall H. Bridges
		Senior Vice President and Chief Financial Officer

3631



HNI Corporation and Subsidiaries Condensed Consolidated Statements of Equity (In thousands, except per share data)
(Unaudited)

	Three Months Ended - September 28, 2019
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest			Total Shareholders’ Equity
Balance, June 29, 2019	$	42,875		$	17,364		$	474,519		$	(5,574	)	$	325		$	529,509
Comprehensive income:
Net income (loss)	—			—			46,078			—			(2		)	46,076
Other comprehensive income (loss), net of tax	—			—			—			(1,476		)	—			(1,476		)
Cash dividends; $0.305 per share	—			—			(13,088		)	—			—			(13,088		)
Common shares – treasury:
Shares purchased	(221		)	(5,175		)	(1,795		)	—			—			(7,191		)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax	170			6,345			—			—			—			6,515
Balance, September 28, 2019	$	42,824		$	18,534		$	505,714		$	(7,050	)	$	323		$	560,345

	Nine Months Ended - September 28, 2019
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest			Total Shareholders’ Equity
Balance, December 29, 2018	$	43,582		$	18,041		$	504,909		$	(3,599	)	$	326		$	563,259
Comprehensive income:
Net income (loss)	—			—			62,910			—			(2		)	62,908
Other comprehensive income (loss), net of tax	—			—			—			(2,712		)	—			(2,712		)
Reclassification of Stranded Tax Effects (ASU 2018-02)	—			—			739			(739		)	—			—
Impact of Implementation of Lease Guidance	—			—			2,999			—			—			2,999
Cash dividends; $0.905 per share	—			—			(39,164		)	—			—			(39,164		)
Common shares – treasury:
Shares purchased	(1,797		)	(36,401		)	(26,679		)	—			—			(64,877		)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax	1,039			36,893			—			—			—			37,932
Balance, September 28, 2019	$	42,824		$	18,534		$	505,714		$	(7,050	)	$	323		$	560,345



HNI Corporation and Subsidiaries Condensed Consolidated Statements of Equity (In thousands, except per share data)
(Unaudited)


	Three Months Ended - September 29, 2018
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest			Total Shareholders’ Equity
Balance, June 30, 2018	$	43,736		$	26,077		$	458,458		$	(3,477	)	$	500		$	525,294
Comprehensive income:
Net income (loss)	—			—			39,907			—			0			39,907
Other comprehensive income (loss), net of tax	—			—			—			(717		)	—			(717		)
Cash dividends; $0.295 per share	—			—			(12,933		)	—			—			(12,933		)
Common shares – treasury:
Shares purchased	(163		)	(6,758		)	—			—			—			(6,921		)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax	247			8,198			—			—			—			8,445
Balance, September 29, 2018	$	43,820		$	27,517		$	485,432		$	(4,195	)	$	500		$	553,074

	Nine Months Ended - September 29, 2018
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non-controlling Interest			Total Shareholders’ Equity
Balance, December 30, 2017	$	43,354		$	7,029		$	467,296		$	(3,611	)	$	509		$	514,577
Comprehensive income:
Net income (loss)	—			—			61,014			—			(50		)	60,964
Other comprehensive income (loss), net of tax	—			—			—			(584		)	—			(584		)
Change in ownership of non-controlling interest	—			—			(41		)	—			41			—
Cash dividends; $0.875 per share	—			—			(38,201		)	—			—			(38,201		)
Common shares – treasury:
Shares purchased	(369		)	(9,879		)	(4,636		)	—			—			(14,884		)
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax	835			30,367			—			—			—			31,202
Balance, September 29, 2018	$	43,820		$	27,517		$	485,432		$	(4,195	)	$	500		$	553,074



	Severance Costs			Facility Exit Costs & Other			Total
Restructuring allowance as of December 29, 2018	$	136		$	150		$	286
Restructuring charges	899			315			1,214
Cash payments	(640		)	(99		)	(739		)
Restructuring allowance as of September 28, 2019	$	395		$	366		$	761



Classification	September 28, 2019
Assets
Right-of-use operating leases	$	72,087
Right-of-use finance leases	2,157
Total Right-of-use operating / finance leases	$	74,244

Liabilities
Current lease obligations - operating	$	20,506
Current lease obligations - finance	501
Total Current lease obligations - operating / finance	21,007

Long-term lease obligations - operating	59,474
Long-term lease obligations - finance	1,669
Total Long-term lease obligations - operating / finance	61,143

Total lease obligations - operating / finance	$	82,150



	Operating Leases (a)		Finance Leases (a)		Total
2019 (remaining portion of year)	$	6,590	$	143	$	6,733
2020	23,521		593		24,114
2021	16,792		564		17,356
2022	11,332		488		11,820
2023	9,388		436		9,824
Thereafter	22,531		112		22,643
Total lease payments	90,154		2,336		92,490
Less: Interest	10,177		163		10,340
Present value of lease liabilities	$	79,977	$	2,173	$	82,150



	Weighted-Average Discount Rate (percent)		Weighted-Average Remaining Lease Term (years)
Operating leases	4.2	%	5.5
Finance leases	3.6	%	4.3



	Nine Months Ended
	September 28, 2019
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating / finance leases	$	20,072
Financing cash flows from finance leases	$	262
Leased assets obtained in exchange for new operating / finance lease liabilities	$	18,387



	Operating Leases
2019	$	24,387
2020	18,250
2021	13,324
2022	9,082
2023	6,228
Thereafter	10,469
Total minimum lease payments	$	81,740