DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended |
Sep. 29, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | HNI CORP |
Entity Central Index Key | 48,287 |
Document Type | 10-Q |
Document Period End Date | Sep. 29, 2018 |
Amendment Flag | false |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --12-29 |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Entity Common Stock, Shares Outstanding | 43,819,664 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net sales | $ 611,120 | $ 599,455 | $ 1,659,803 | $ 1,591,607 |
Cost of sales | 377,789 | 378,211 | 1,048,683 | 1,011,888 |
Gross profit | 233,331 | 221,244 | 611,120 | 579,719 |
Selling and administrative expenses | 179,577 | 169,547 | 524,445 | 495,897 |
Gain on sale and license of assets | 0 | (6,805) | 0 | (6,805) |
Restructuring and impairment charges | 128 | 783 | 2,303 | 3,325 |
Operating income | 53,626 | 57,719 | 84,372 | 87,302 |
Interest income | 80 | 71 | 282 | 467 |
Interest expense | 2,602 | 1,835 | 7,657 | 4,228 |
Income before income taxes | 51,104 | 55,955 | 76,997 | 83,541 |
Income taxes | 11,197 | 18,624 | 16,033 | 27,573 |
Net income | 39,907 | 37,331 | 60,964 | 55,968 |
Less: Net income (loss) attributable to non-controlling interest | 0 | 60 | (50) | 12 |
Net income attributable to HNI Corporation | $ 39,907 | $ 37,271 | $ 61,014 | $ 55,956 |
Average number of common shares outstanding – basic (in shares) | 43,822,757 | 43,682,805 | 43,616,046 | 43,970,377 |
Net income attributable to HNI Corporation per common share – basic (in dollars per share) | $ 0.91 | $ 0.85 | $ 1.40 | $ 1.27 |
Average number of common shares outstanding – diluted (in shares) | 44,678,824 | 44,479,117 | 44,349,456 | 45,078,719 |
Net income attributable to HNI Corporation per common share – diluted (in dollars per share) | $ 0.89 | $ 0.84 | $ 1.38 | $ 1.24 |
Foreign currency translation adjustments | $ (817) | $ 320 | $ (1,944) | $ 779 |
Change in unrealized gains (losses) on marketable securities, net of tax | (6) | 7 | (99) | 44 |
Change in derivative financial instruments, net of tax | 106 | 38 | 1,459 | (90) |
Other comprehensive income (loss), net of tax | (717) | 365 | (584) | 733 |
Comprehensive income | 39,190 | 37,696 | 60,380 | 56,701 |
Less: Comprehensive income (loss) attributable to non-controlling interest | 0 | 60 | (50) | 12 |
Comprehensive income attributable to HNI Corporation | $ 39,190 | $ 37,636 | $ 60,430 | $ 56,689 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 43,738 | $ 23,348 |
Short-term investments | 1,880 | 2,015 |
Receivables | 254,898 | 258,551 |
Inventories | 174,551 | 155,683 |
Prepaid expenses and other current assets | 38,839 | 49,283 |
Total Current Assets | 513,906 | 488,880 |
Property, Plant, and Equipment: | ||
Land and land improvements | 28,120 | 28,593 |
Buildings | 292,048 | 306,137 |
Machinery and equipment | 553,236 | 556,571 |
Construction in progress | 31,243 | 39,788 |
Property plant and equipment, at cost | 904,647 | 931,089 |
Less accumulated depreciation | 525,316 | 540,768 |
Net Property, Plant, and Equipment | 379,331 | 390,321 |
Goodwill and Other Intangible Assets | 480,812 | 490,892 |
Deferred Income Taxes | 193 | 193 |
Other Assets | 21,504 | 21,264 |
Total Assets | 1,395,746 | 1,391,550 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 430,723 | 450,128 |
Current maturities of long-term debt | 720 | 36,648 |
Current maturities of other long-term obligations | 4,518 | 2,927 |
Total Current Liabilities | 435,961 | 489,703 |
Long-Term Debt | 249,334 | 240,000 |
Other Long-Term Liabilities | 77,628 | 70,409 |
Deferred Income Taxes | 79,749 | 76,861 |
Capital Stock: | ||
Preferred stock - $1 par value, authorized 2,000 shares, no shares outstanding | 0 | 0 |
Common stock - $1 par value, authorized 200,000 shares, outstanding: September 29, 2018 - 43,820 shares; December 30, 2017 - 43,354 shares | 43,820 | 43,354 |
Additional paid-in capital | 27,517 | 7,029 |
Retained earnings | 485,432 | 467,296 |
Accumulated other comprehensive income (loss) | (4,195) | (3,611) |
Total HNI Corporation shareholders' equity | 552,574 | 514,068 |
Non-controlling interest | 500 | 509 |
Total Equity | 553,074 | 514,577 |
Total Liabilities and Equity | $ 1,395,746 | $ 1,391,550 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 29, 2018 | Dec. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares outstanding (in shares) | 43,820,000 | 43,354,000 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest |
Beginning balance at Dec. 31, 2016 | $ 501,009 | $ 44,079 | $ 0 | $ 461,524 | $ (5,000) | $ 406 |
Comprehensive income: | ||||||
Net income (loss) | 55,968 | 55,956 | 12 | |||
Other comprehensive income (loss), net of tax | 733 | 733 | ||||
Change in ownership of non-controlling interest | 0 | 0 | 0 | |||
Cash dividends | (37,175) | (37,175) | ||||
Common shares – treasury: | ||||||
Shares purchased | (52,850) | (1,301) | (21,333) | (30,216) | ||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 28,196 | 649 | 27,547 | |||
Ending balance at Sep. 30, 2017 | 495,881 | 43,427 | 6,214 | 450,089 | (4,267) | 418 |
Beginning balance at Jul. 01, 2017 | 494,349 | 44,056 | 5,438 | 449,130 | (4,633) | 358 |
Comprehensive income: | ||||||
Net income (loss) | 37,331 | 37,271 | 60 | |||
Other comprehensive income (loss), net of tax | 365 | 365 | ||||
Change in ownership of non-controlling interest | 0 | 0 | 0 | |||
Cash dividends | (12,448) | (12,448) | ||||
Common shares – treasury: | ||||||
Shares purchased | (29,022) | (779) | (4,379) | (23,864) | ||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 5,305 | 150 | 5,155 | |||
Ending balance at Sep. 30, 2017 | 495,881 | 43,427 | 6,214 | 450,089 | (4,267) | 418 |
Beginning balance at Dec. 30, 2017 | 514,577 | 43,354 | 7,029 | 467,296 | (3,611) | 509 |
Comprehensive income: | ||||||
Net income (loss) | 60,964 | 61,014 | (50) | |||
Other comprehensive income (loss), net of tax | (584) | (584) | ||||
Change in ownership of non-controlling interest | 0 | (41) | 41 | |||
Cash dividends | (38,201) | (38,201) | ||||
Common shares – treasury: | ||||||
Shares purchased | (14,884) | (369) | (9,879) | (4,636) | ||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 31,202 | 835 | 30,367 | |||
Ending balance at Sep. 29, 2018 | 553,074 | 43,820 | 27,517 | 485,432 | (4,195) | 500 |
Beginning balance at Jun. 30, 2018 | 525,294 | 43,736 | 26,077 | 458,458 | (3,477) | 500 |
Comprehensive income: | ||||||
Net income (loss) | 39,907 | 39,907 | 0 | |||
Other comprehensive income (loss), net of tax | (717) | (717) | ||||
Change in ownership of non-controlling interest | 0 | 0 | 0 | |||
Cash dividends | (12,933) | (12,933) | ||||
Common shares – treasury: | ||||||
Shares purchased | (6,921) | (163) | (6,758) | 0 | ||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 8,445 | 247 | 8,198 | |||
Ending balance at Sep. 29, 2018 | $ 553,074 | $ 43,820 | $ 27,517 | $ 485,432 | $ (4,195) | $ 500 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends (in dollars per share) | $ 0.295 | $ 0.285 | $ 0.875 | $ 0.845 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Net Cash Flows From (To) Operating Activities: | ||
Net income | $ 60,964 | $ 55,968 |
Non-cash items included in net income: | ||
Depreciation and amortization | 55,887 | 54,524 |
Other post-retirement and post-employment benefits | 1,325 | 1,194 |
Stock-based compensation | 6,215 | 6,759 |
Deferred income taxes | 2,733 | 8,128 |
(Gain) loss on sale, retirement, license, and impairment of long-lived assets and intangibles, net | 1,283 | (5,085) |
Amortization of deferred gain on sale leaseback transaction | (285) | 0 |
Other – net | 2,599 | (1,649) |
Net increase (decrease) in operating assets and liabilities, net of divestitures | (16,533) | (53,096) |
Increase (decrease) in other liabilities | 849 | (9,399) |
Net cash flows from (to) operating activities | 115,037 | 57,344 |
Net Cash Flows From (To) Investing Activities: | ||
Capital expenditures | (39,887) | (87,142) |
Proceeds from sale and license of property, plant, equipment, and intangibles | 22,686 | 8,646 |
Capitalized software | (7,092) | (16,749) |
Acquisition spending, net of cash acquired | (2,850) | (898) |
Purchase of investments | (2,471) | (2,874) |
Sales or maturities of investments | 2,375 | 2,678 |
Other – net | 1,135 | 1,511 |
Net cash flows from (to) investing activities | (26,104) | (94,828) |
Net Cash Flows From (To) Financing Activities: | ||
Payments of long-term debt and other financing | (352,795) | (185,390) |
Proceeds from long-term debt | 322,755 | 287,188 |
Dividends paid | (38,201) | (37,175) |
Purchase of HNI Corporation common stock | (16,043) | (52,850) |
Proceeds from sales of HNI Corporation common stock | 15,896 | 12,024 |
Withholding related to net share settlements of equity based awards | (155) | (209) |
Net cash flows from (to) financing activities | (68,543) | 23,588 |
Net increase (decrease) in cash and cash equivalents | 20,390 | (13,896) |
Cash and cash equivalents at beginning of period | 23,348 | 36,312 |
Cash and cash equivalents at end of period | $ 43,738 | $ 22,416 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 29, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 30, 2017 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 period ended September 29, 2018 are not necessarily indicative of the results expected for the fiscal year ending December 29, 2018 . 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 30, 2017 . |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Corporation implemented ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), at the beginning of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018. Disaggregation of Revenue Revenue from contracts with customers disaggregated by sales channel and by segment is as follows (in thousands): Three Months Ended Nine Months Ended Segment September 29, September 30, September 29, September 30, Supplies-driven channel Office Furniture $ 265,971 $ 238,542 $ 680,656 $ 620,602 Contract channel Office Furniture 205,716 226,770 595,824 611,135 Hearth Hearth Products 139,433 134,143 383,323 359,870 Net sales $ 611,120 $ 599,455 $ 1,659,803 $ 1,591,607 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 17. 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 product. These dealer investments are amortized over the term of the contract. For contracts less than one year, the Corporation has elected the practical expedient to recognize incremental costs to obtain a contract as an expense when incurred. The Corporation has contract liabilities consisting of deferred revenue and rebate and marketing program liabilities. Contract assets and contract liabilities were as follows (in thousands): September 29, December 30, Trade receivables (1) $ 257,191 $ 260,455 Contract assets (current) (2) $ 483 $ 300 Contract assets (long-term) (3) $ 3,905 $ 2,350 Contract liabilities (4) $ 53,495 $ 54,527 The index below indicates the line item in the Condensed Consolidated Balance Sheets where contract assets and contract liabilities are reported: (1) "Receivables" (2) "Prepaid expenses and other current assets" (3) "Other Assets" (4) "Accounts payable and accrued expenses" Changes in contract asset and contract liability balances during the nine months ended September 29, 2018 were as follows (in thousands): Contract assets increase (decrease) Contract liabilities (increase) decrease Contract assets recognized $ 2,100 $ — Reclassification of contract assets to contra revenue (362 ) — Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied — (87,674 ) Contract liabilities paid — 86,329 Cash received in advance and not recognized as revenue — (43,878 ) Reclassification of cash received in advance to revenue as a result of performance obligations satisfied — 46,178 Impact of business combination — 77 Net change $ 1,738 $ 1,032 For the three months ended September 29, 2018 , no revenue was recognized in the Condensed Consolidated Statements of Comprehensive Income related to contract liabilities as of December 30, 2017 , as the entire liability was recognized as revenue during the three months ended March 31, 2018 . For the nine months ended September 29, 2018 , the Corporation recognized revenue of $12.5 million in the Condensed Consolidated Statements of Comprehensive Income related to contract liabilities as of December 30, 2017 . 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. See “Note 7. Product Warranties” in the Notes to Condensed Consolidated Financial Statements for additional information on warranty obligations. Significant Judgments The Corporation uses significant judgment throughout the year in estimating the reduction in net sales driven by rebate and marketing programs. Judgments made include expected sales levels and utilization of funds. However, this judgment factor is significantly reduced at the end of each year when sales volumes and the impact to rebate and marketing programs are known and recorded. Accounting Policies and Practical Expedients Elected The Corporation elected to use the modified-retrospective method of adopting the new standard on revenue recognition. The new standard has been applied to all contracts not completed as of December 30, 2017, the end of the Corporation’s fiscal 2017. The impact of the Corporation's transition adjustment for the new revenue recognition guidance was not material to the Corporation's results of operations or financial position. The additional disclosures required as a result of adopting the new revenue recognition guidance were material to the Corporation's financial statements. The Corporation elected the following accounting policies as a result of adopting the new standard on revenue recognition: Shipping and Handling Activities - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities. The Corporation accrues for shipping and handling costs at the same time revenue is recognized, which is in accordance with the policy election. When shipping and handling activities occur prior to the customer obtaining control of the good(s), they are considered fulfillment activities rather than a performance obligation and the costs are accrued for as incurred. Sales Taxes - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes assessed by a governmental authority associated with the transaction, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows the Corporation to present revenue net of these certain types of taxes. These policies have been applied consistently to all revenue transactions. The Corporation has elected the following practical expedients as a result of adopting the new standard on revenue recognition: Incremental Costs of Obtaining a Contract - The Corporation has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. The Corporation will apply this practical expedient when the requirements to apply it are met. Significant Financing Component - The Corporation has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Corporation's contracts are typically less than one year in length, consideration will not be adjusted. These accounting policies and practical expedients have been applied consistently to all revenue transactions. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 29, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring Restructuring costs recorded in the Condensed Consolidated Statements of Comprehensive Income are as follows (in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Cost of sales - accelerated depreciation $ — $ 1,552 $ — $ 8,711 Restructuring and impairment charges 128 783 2,303 3,325 Total restructuring costs $ 128 $ 2,335 $ 2,303 $ 12,036 Restructuring costs in the third quarter of 2018 were primarily incurred as part of the previously announced closure of the hearth manufacturing facility in Paris, Kentucky. Restructuring costs in the year-to-date period for 2018 also include an impairment charge from the sale of the closed manufacturing facility in Paris, Kentucky and costs incurred as part of the previously announced closure of the office furniture manufacturing facility in Orleans, Indiana. Restructuring costs in both the quarter and year-to-date periods for 2017 , which include accelerated depreciation recorded in "Cost of sales" in the Condensed Consolidated Statements of Comprehensive Income, were primarily incurred as part of the previously announced closures of the hearth manufacturing facilities in Paris, Kentucky and Colville, Washington 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 included 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 30, 2017 $ 1,343 $ 516 $ 1,859 Restructuring charges 350 1,953 2,303 Cash payments (1,573 ) (2,469 ) (4,042 ) Restructuring allowance as of September 29, 2018 $ 120 $ — $ 120 Real Estate Transaction 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 are reflected in "Proceeds from sale and license of property, plant, equipment, and intangibles" in the Condensed Consolidated Statements of Cash Flows. In accordance with ASC 840, Leases , the $5.1 million gain on the sale of the facility was deferred and is being amortized as a reduction to rent expense evenly over the term of the lease. As of September 29, 2018 , the current portion of the deferred gain is $0.5 million and included within "Accounts payable and accrued expenses" and the long-term portion of the deferred gain is $4.4 million and included within "Other Long-Term Liabilities" in the Condensed Consolidated Balance Sheets. The transaction did not have a material impact to the Condensed Consolidated Statements of Comprehensive Income. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 29, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures On September 21, 2018, the Corporation acquired a small hearth products company at a purchase price of approximately $3 million , resulting in a preliminary goodwill valuation of $3.4 million . The remaining assets and liabilities recorded in the third quarter of 2018 were not material to the Corporation's financial statements. The Corporation will finalize the allocation of the purchase price over the next few quarters based on the final purchase price and fair value adjustments. As part of the Corporation's ongoing business strategy, it continues to acquire and divest small office furniture dealerships, for which the impact is not material to the Corporation's financial statements. |
Inventories
Inventories | 9 Months Ended |
Sep. 29, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The Corporation values its inventory at the lower of cost or net realizable value with approximately 83 percent valued by the last-in, first-out ("LIFO") costing method. Inventories included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands): September 29, December 30, Finished products $ 106,349 $ 101,715 Materials and work in process 95,584 81,202 LIFO allowance (27,382 ) (27,234 ) Total inventories $ 174,551 $ 155,683 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 29, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands): September 29, December 30, Goodwill $ 282,939 $ 279,505 Definite-lived intangible assets 168,692 182,186 Indefinite-lived intangible assets 29,181 29,201 Total goodwill and other intangible assets $ 480,812 $ 490,892 Goodwill The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands): Office Furniture Hearth Products Total Balance as of December 30, 2017 Goodwill $ 128,657 $ 183,199 $ 311,856 Accumulated impairment losses (32,208 ) (143 ) (32,351 ) Net goodwill balance as of December 30, 2017 96,449 183,056 279,505 Goodwill acquired during the year — 3,444 3,444 Foreign currency translation adjustment (10 ) — (10 ) Balance as of September 29, 2018 Goodwill 128,647 186,643 315,290 Accumulated impairment losses (32,208 ) (143 ) (32,351 ) Net goodwill balance as of September 29, 2018 $ 96,439 $ 186,500 $ 282,939 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 29, 2018 December 30, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Patents $ 40 $ 32 $ 8 $ 40 $ 26 $ 14 Software 169,915 46,110 123,805 167,105 34,792 132,313 Trademarks and trade names 7,564 2,556 5,008 7,564 2,061 5,503 Customer lists and other 105,946 66,075 39,871 106,090 61,734 44,356 Net definite-lived intangible assets $ 283,465 $ 114,773 $ 168,692 $ 280,799 $ 98,613 $ 182,186 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 September 29, September 30, September 29, September 30, Capitalized software $ 4,290 $ 2,658 $ 12,734 $ 5,225 Other definite-lived intangibles $ 1,642 $ 1,746 $ 4,972 $ 5,267 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): 2018 2019 2020 2021 2022 Amortization expense $ 23.6 $ 22.9 $ 22.0 $ 20.7 $ 18.5 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 29, December 30, Trademarks and trade names $ 29,181 $ 29,201 Sale and License of an Intangible Asset In the third quarter of 2017, the Corporation recorded a $6.0 million nonrecurring gain from the sale and license of an intangible asset, which had a zero carrying value. This nonrecurring gain is reflected in "Gain on sale and license of assets" in the Condensed Consolidated Statements of Comprehensive Income. 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. During the third quarter of 2018 , the Corporation determined a triggering event occurred for one of the Corporation's reporting units within the office furniture segment due to lower projected operating results for the year. Accordingly, interim quantitative impairment tests were performed for goodwill and an indefinite-lived intangible asset. The tests indicated no impairment. In conjunction with the interim impairment tests, the Corporation also tested the recoverability of the remaining long-lived assets for the reporting unit and found no impairments. The projections used in the impairment model reflected management's assumptions regarding revenue growth rates, economic and market trends, cost structure, investments required for operational transformation, and other expectations about the anticipated short-term and long-term operating results of the reporting unit. The Corporation assumed a discount rate of 13.5 percent , near term growth rates ranging from 3 percent to 12 percent , and a terminal growth rate of 3 percent . Holding other assumptions constant, a 100 basis point increase in the discount rate would result in a $3.8 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 $1.8 million decrease in the estimated fair value of the reporting unit. Neither of these scenarios individually would result in an impairment of the reporting unit's goodwill. There is $19.6 million of goodwill associated with this reporting unit as of September 29, 2018 . |
Product Warranties
Product Warranties | 9 Months Ended |
Sep. 29, 2018 | |
Product Warranties Disclosures [Abstract] | |
Product Warranties | 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 claims expected to be incurred based on historical claims experience. Actual claims 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 September 29, September 30, Balance at beginning of period $ 15,388 $ 15,250 Accruals for warranties issued during period 22,130 15,197 Adjustments related to pre-existing warranties 116 (298 ) Settlements made during the period (22,203 ) (15,424 ) Balance at end of period $ 15,431 $ 14,725 The current and long-term portions of the allowance for estimated settlements are 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 settlements are expected to be paid (in thousands): September 29, December 30, Current - in the next twelve months $ 9,372 $ 9,524 Long-term - beyond one year 6,059 5,864 Total estimated settlements $ 15,431 $ 15,388 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 29, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt is as follows (in thousands): September 29, December 30, Revolving credit facility with interest at a variable rate (September 29, 2018 - 3.4%; December 30, 2017 - 2.7%) $ 150,000 $ 267,500 Fixed rate notes due in 2025 with an interest rate of 4.22% 50,000 — Fixed rate notes due in 2028 with an interest rate of 4.40% 50,000 — Other amounts 720 9,148 Deferred debt issuance costs (666 ) — Total debt 250,054 276,648 Less: Current maturities of long-term debt 720 36,648 Long-term debt $ 249,334 $ 240,000 As of September 29, 2018 , the Corporation’s revolving credit facility borrowings were under the credit agreement entered into on April 20, 2018 with a scheduled maturity of April 20, 2023. The Corporation deferred the debt issuance costs related to the credit agreement, which are classified as assets, and is amortizing them over the term of the credit agreement. The current portion of $0.4 million is the amount to be amortized over the next twelve months based on the current credit agreement and is reflected in "Prepaid expenses and other current assets" in the Condensed Consolidated Balance Sheets. The long-term portion of $1.6 million is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets. As of September 29, 2018 , there was $150 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. 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. The current portion of $0.1 million is the amount to be amortized over the next twelve months based on the private placement note agreements and is reflected in "Current maturities of long-term debt" in the Condensed Consolidated Balance Sheets. The long-term portion of $0.6 million is reflected in "Long-Term Debt" in the Condensed Consolidated Balance Sheets. In addition to cash flows from operations, the revolving credit facility under the credit agreement is the primary source of daily operating capital for the Corporation and provides additional financial capacity for capital expenditures and strategic initiatives, such as acquisitions and repurchases of common stock. 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 29, 2018 , 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 September 29, September 30, September 29, September 30, Income before income taxes $ 51,104 $ 55,955 $ 76,997 $ 83,541 Income taxes $ 11,197 $ 18,624 $ 16,033 $ 27,573 Effective tax rate 21.9 % 33.3 % 20.8 % 33.0 % The Corporation's effective tax rate was lower in the three and nine months ended September 29, 2018 compared to the same periods last year primarily due to the enactment of the Tax Cuts and Jobs Act in 2017 (the "Act"). An additional driver of the change in the effective tax rate for the first nine months of 2018 was the release of a valuation allowance for certain foreign jurisdictions. On December 22, 2017, the Act was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35 percent to 21 percent effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in the reporting period that includes December 22, 2017 in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Corporation determined as of the end of fiscal 2017, the $45.4 million of the deferred tax benefit recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the $0.1 million of current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate as of December 30, 2017. Additional work was necessary to complete a more detailed analysis of historical foreign earnings as well as potential correlative adjustments. Subsequent adjustments to these amounts, which were not material, were recorded to current tax expense in the third quarter of 2018 when the analysis was completed. During the third quarter of 2018, the 2017 federal income tax return was completed resulting in a $0.5 million detriment related to the reversal of net deferred tax liabilities based on the rates at which they are expected to reverse in the future as a result of tax reform rate changes. The Corporation finalized its calculation of the full impact of the Act on its 2017 federal income tax return during the third quarter of 2018. |
Fair Value Measurements of Fina
Fair Value Measurements of Financial Instruments | 9 Months Ended |
Sep. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Financial Instruments | 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 29, 2018 Cash and cash equivalents (including money market funds) (1) $ 43,738 $ 43,738 $ — $ — Government securities (2) $ 7,094 $ — $ 7,094 $ — Corporate bonds (2) $ 5,341 $ — $ 5,341 $ — Derivative financial instruments (3) $ 5,286 $ — $ 5,286 $ — Variable-rate debt obligations (4) $ 150,000 $ — $ 150,000 $ — Fixed-rate debt obligations (4) $ 100,000 $ — $ 100,000 $ — Deferred stock-based compensation (5) $ 10,665 $ — $ 10,665 $ — Balance as of December 30, 2017 Cash and cash equivalents (including money market funds) (1) $ 23,348 $ 23,348 $ — $ — Government securities (2) $ 6,345 $ — $ 6,345 $ — Corporate bonds (2) $ 6,149 $ — $ 6,149 $ — Derivative financial instruments (3) $ 3,354 $ — $ 3,354 $ — Variable-rate debt obligations (4) $ 267,500 $ — $ 267,500 $ — Deferred stock-based compensation (5) $ 8,885 $ — $ 8,885 $ — 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) Current portion - "Current maturities of long-term debt"; Long-term portion - "Long-Term Debt" (5) Current portion - "Current maturities of other long-term obligations"; Long-term portion - "Other Long-Term Liabilities" |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity | 9 Months Ended |
Sep. 29, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity | 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) Balance as of December 30, 2017 $ 31 $ (132 ) $ (5,630 ) $ 2,120 $ (3,611 ) Other comprehensive income (loss) before reclassifications (1,944 ) (125 ) — 2,593 524 Tax (expense) or benefit — 26 — (635 ) (609 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax — — — (499 ) (499 ) Balance as of September 29, 2018 $ (1,913 ) $ (231 ) $ (5,630 ) $ 3,579 $ (4,195 ) 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) Balance as of December 31, 2016 $ (1,188 ) $ (105 ) $ (5,167 ) $ 1,460 $ (5,000 ) Other comprehensive income (loss) before reclassifications 779 68 — (471 ) 376 Tax (expense) or benefit — (24 ) — 174 150 Amounts reclassified from accumulated other comprehensive income (loss), net of tax — — — 207 207 Balance as of September 30, 2017 $ (409 ) $ (61 ) $ (5,167 ) $ 1,370 $ (4,267 ) 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 pays a fixed rate of 1.29 percent and receives one month LIBOR on a $150 million notional value expiring January 2021. As of September 29, 2018 , the fair value of the Corporation's interest rate swap was an asset of $5.3 million , which is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets. The unrecognized change in value of the interest rate swap is reported net of tax as $3.6 million in "Accumulated other comprehensive income (loss)" in the Condensed Consolidated Balance Sheets. The following table details the reclassifications from accumulated other comprehensive income (loss) (in thousands): Three Months Ended Nine Months Ended Details about Accumulated Other Comprehensive Income (Loss) Components Affected Line Item in the Statement Where Net Income is Presented September 29, September 30, September 29, September 30, Derivative financial instruments Interest rate swap Interest (expense) or income $ 305 $ (27 ) $ 661 $ (328 ) Tax (expense) or benefit (75 ) 10 (162 ) 121 Net of tax $ 230 $ (17 ) $ 499 $ (207 ) Amounts in parentheses indicate reductions to profit. Stock Repurchase The following table summarizes shares repurchased and settled by the Corporation (in thousands, except share data): Nine Months Ended September 29, September 30, Shares repurchased 368,822 1,300,936 Cash purchase price $ (14,884 ) $ (52,850 ) Purchases unsettled as of quarter end 222 — Prior year purchases settled in current year (1,381 ) — Shares repurchased per cash flow $ (16,043 ) $ (52,850 ) As of September 29, 2018 , approximately $63.1 million of the Corporation's Board of Directors' ("Board") current repurchase authorization remained unspent. Dividend The Corporation declared and paid cash dividends per share as follows (in dollars): Nine Months Ended September 29, September 30, Common shares $ 0.875 $ 0.845 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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 September 29, September 30, September 29, September 30, Numerator: Numerator for both basic and diluted EPS attributable to HNI Corporation net income $ 39,907 $ 37,271 $ 61,014 $ 55,956 Denominators: Denominator for basic EPS weighted-average common shares outstanding 43,823 43,683 43,616 43,970 Potentially dilutive shares from stock-based compensation plans 856 796 733 1,109 Denominator for diluted EPS 44,679 44,479 44,349 45,079 Earnings per share – basic $ 0.91 $ 0.85 $ 1.40 $ 1.27 Earnings per share – diluted $ 0.89 $ 0.84 $ 1.38 $ 1.24 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. Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Common stock equivalents excluded because their inclusion would be anti-dilutive (in thousands) 1,273 1,111 1,474 788 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Corporation measures stock-based compensation expense at grant date, based on the fair value of the award, and recognizes expense over the employees' requisite service periods. Stock-based compensation expense is the cost of stock options and time-based restricted stock units issued under the shareholder approved stock-based compensation plans and shares issued under the shareholder approved member stock purchase plans. The following table summarizes expense associated with these plans (in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Compensation cost $ 1,307 $ 956 $ 6,215 $ 6,759 The options and units granted by the Corporation had fair values as follows (in thousands): Nine Months Ended September 29, September 30, Stock options $ 7,200 $ 7,206 Restricted stock units $ 76 $ — 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 29, 2018 : Unrecognized Compensation Expense (in thousands) Weighted-Average Remaining Service Period (years) Non-vested stock options $ 4,419 1.2 Non-vested restricted stock units $ 980 1.1 |
Post-Retirement Health Care
Post-Retirement Health Care | 9 Months Ended |
Sep. 29, 2018 | |
Retirement Benefits [Abstract] | |
Post-Retirement Health Care | 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 September 29, September 30, September 29, September 30, Service cost $ 213 $ 185 $ 639 $ 556 Interest cost 197 206 591 619 Amortization of net (gain) loss 32 6 95 19 Net periodic post-retirement benefit cost $ 442 $ 397 $ 1,325 $ 1,194 |
Recently Adopted Accounting Sta
Recently Adopted Accounting Standards | 9 Months Ended |
Sep. 29, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The new standard replaces most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU requires companies to reevaluate when revenue is recorded on a transaction based upon newly defined criteria, either at a point in time or over time as goods or services are delivered. The ASU requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The FASB has issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations , ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , and ASU No. 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients to provide further clarification and guidance. The Corporation implemented the new standard in the first quarter of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018. See "Note 2. Revenue from Contracts with Customers" in the Notes to Condensed Consolidated Financial Statements for further information. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. The new standard provides classification guidance on eight cash flow issues including debt prepayment, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlements of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory . The new standard requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost . The new standard requires an entity with defined benefit and post-retirement benefit plans to present the service cost component of the net periodic benefit cost in the same income statement line item or items as other compensation costs arising from services rendered by employees during the period. All other components of net periodic benefit cost will be presented outside of operating income, if a subtotal is presented. The Corporation implemented the new standard in the first quarter of fiscal 2018 and it was applied retrospectively to each period presented. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. |
Guarantees, Commitments and Con
Guarantees, Commitments and Contingencies | 9 Months Ended |
Sep. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees, Commitments and Contingencies | Guarantees, Commitments, and Contingencies The Corporation utilizes letters of credit and surety bonds in the amount of approximately $19 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 $3 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 initiated litigation in Iowa on August 15, 2017 against the purchasers of Artcobell for amounts owed in connection with the sale of Artcobell. Artcobell initiated litigation against the Corporation in Texas on June 14, 2017 regarding a dispute arising after the sale of Artcobell. On October 9, 2018, the Corporation resolved all claims related to the disputes. The Corporation is not required to make any payments and expects to record an immaterial recovery in the fourth quarter of 2018. 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. |
Reportable Segment Information
Reportable Segment Information | 9 Months Ended |
Sep. 29, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segment Information | Reportable Segment Information Management views the Corporation as being in two 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 storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth products segment manufactures and markets a broad line of gas, electric, wood, and biomass burning fireplaces, inserts, stoves, facings, and accessories, principally for the home. 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. Reportable segment data reconciled to the Corporation's condensed consolidated financial statements was as follows (in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Net Sales: Office furniture $ 471,687 $ 465,312 $ 1,276,480 $ 1,231,737 Hearth products 139,433 134,143 383,323 359,870 Total $ 611,120 $ 599,455 $ 1,659,803 $ 1,591,607 Income Before Income Taxes: Office furniture $ 46,075 $ 39,729 $ 66,207 $ 65,856 Hearth products 21,824 28,737 55,250 52,651 General corporate (14,273 ) (10,747 ) (37,085 ) (31,205 ) Operating income 53,626 57,719 84,372 87,302 Interest expense, net 2,522 1,764 7,375 3,761 Total $ 51,104 $ 55,955 $ 76,997 $ 83,541 Depreciation and Amortization Expense: Office furniture $ 11,012 $ 12,132 $ 33,202 $ 37,515 Hearth products 2,026 1,973 6,080 8,167 General corporate 5,569 3,955 16,605 8,842 Total $ 18,607 $ 18,060 $ 55,887 $ 54,524 Capital Expenditures (including capitalized software): Office furniture $ 10,324 $ 27,102 $ 35,321 $ 64,467 Hearth products 2,150 5,606 6,317 12,818 General corporate 2,181 7,095 5,341 26,606 Total $ 14,655 $ 39,803 $ 46,979 $ 103,891 As of As of Identifiable Assets: Office furniture $ 817,753 $ 821,767 Hearth products 360,609 347,189 General corporate 217,384 222,594 Total $ 1,395,746 $ 1,391,550 |
Recently Adopted Accounting S_2
Recently Adopted Accounting Standards (Policies) | 9 Months Ended |
Sep. 29, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Revenue | 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. See “Note 7. Product Warranties” in the Notes to Condensed Consolidated Financial Statements for additional information on warranty obligations. Significant Judgments The Corporation uses significant judgment throughout the year in estimating the reduction in net sales driven by rebate and marketing programs. Judgments made include expected sales levels and utilization of funds. However, this judgment factor is significantly reduced at the end of each year when sales volumes and the impact to rebate and marketing programs are known and recorded. Accounting Policies and Practical Expedients Elected The Corporation elected to use the modified-retrospective method of adopting the new standard on revenue recognition. The new standard has been applied to all contracts not completed as of December 30, 2017, the end of the Corporation’s fiscal 2017. The impact of the Corporation's transition adjustment for the new revenue recognition guidance was not material to the Corporation's results of operations or financial position. The additional disclosures required as a result of adopting the new revenue recognition guidance were material to the Corporation's financial statements. The Corporation elected the following accounting policies as a result of adopting the new standard on revenue recognition: Shipping and Handling Activities - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities. The Corporation accrues for shipping and handling costs at the same time revenue is recognized, which is in accordance with the policy election. When shipping and handling activities occur prior to the customer obtaining control of the good(s), they are considered fulfillment activities rather than a performance obligation and the costs are accrued for as incurred. Sales Taxes - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes assessed by a governmental authority associated with the transaction, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows the Corporation to present revenue net of these certain types of taxes. These policies have been applied consistently to all revenue transactions. The Corporation has elected the following practical expedients as a result of adopting the new standard on revenue recognition: Incremental Costs of Obtaining a Contract - The Corporation has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. The Corporation will apply this practical expedient when the requirements to apply it are met. Significant Financing Component - The Corporation has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Corporation's contracts are typically less than one year in length, consideration will not be adjusted. These accounting policies and practical expedients have been applied consistently to all revenue transactions. |
Inventories | The Corporation values its inventory at the lower of cost or net realizable value with approximately 83 percent valued by the last-in, first-out ("LIFO") costing method. |
Goodwill and Other Intangible Assets | 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. |
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 claims expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the allowance. |
Fair Value Measurements | 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. |
Share-based Compensation, Option and Incentive Plans | The Corporation measures stock-based compensation expense at grant date, based on the fair value of the award, and recognizes expense over the employees' requisite service periods. Stock-based compensation expense is the cost of stock options and time-based restricted stock units issued under the shareholder approved stock-based compensation plans and shares issued under the shareholder approved member stock purchase plans. |
Recently Adopted Accounting Standards | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . The new standard replaces most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU requires companies to reevaluate when revenue is recorded on a transaction based upon newly defined criteria, either at a point in time or over time as goods or services are delivered. The ASU requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The FASB has issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations , ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , and ASU No. 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients to provide further clarification and guidance. The Corporation implemented the new standard in the first quarter of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018. See "Note 2. Revenue from Contracts with Customers" in the Notes to Condensed Consolidated Financial Statements for further information. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. The new standard provides classification guidance on eight cash flow issues including debt prepayment, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlements of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory . The new standard requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost . The new standard requires an entity with defined benefit and post-retirement benefit plans to present the service cost component of the net periodic benefit cost in the same income statement line item or items as other compensation costs arising from services rendered by employees during the period. All other components of net periodic benefit cost will be presented outside of operating income, if a subtotal is presented. The Corporation implemented the new standard in the first quarter of fiscal 2018 and it was applied retrospectively to each period presented. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. |
Business Segment Information | Management views the Corporation as being in two 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 storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth products segment manufactures and markets a broad line of gas, electric, wood, and biomass burning fireplaces, inserts, stoves, facings, and accessories, principally for the home. 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. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
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 Segment September 29, September 30, September 29, September 30, Supplies-driven channel Office Furniture $ 265,971 $ 238,542 $ 680,656 $ 620,602 Contract channel Office Furniture 205,716 226,770 595,824 611,135 Hearth Hearth Products 139,433 134,143 383,323 359,870 Net sales $ 611,120 $ 599,455 $ 1,659,803 $ 1,591,607 |
Contract with Customer, Asset and Liability | Contract assets and contract liabilities were as follows (in thousands): September 29, December 30, Trade receivables (1) $ 257,191 $ 260,455 Contract assets (current) (2) $ 483 $ 300 Contract assets (long-term) (3) $ 3,905 $ 2,350 Contract liabilities (4) $ 53,495 $ 54,527 The index below indicates the line item in the Condensed Consolidated Balance Sheets where contract assets and contract liabilities are reported: (1) "Receivables" (2) "Prepaid expenses and other current assets" (3) "Other Assets" (4) "Accounts payable and accrued expenses" Changes in contract asset and contract liability balances during the nine months ended September 29, 2018 were as follows (in thousands): Contract assets increase (decrease) Contract liabilities (increase) decrease Contract assets recognized $ 2,100 $ — Reclassification of contract assets to contra revenue (362 ) — Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied — (87,674 ) Contract liabilities paid — 86,329 Cash received in advance and not recognized as revenue — (43,878 ) Reclassification of cash received in advance to revenue as a result of performance obligations satisfied — 46,178 Impact of business combination — 77 Net change $ 1,738 $ 1,032 |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Costs | Restructuring costs recorded in the Condensed Consolidated Statements of Comprehensive Income are as follows (in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Cost of sales - accelerated depreciation $ — $ 1,552 $ — $ 8,711 Restructuring and impairment charges 128 783 2,303 3,325 Total restructuring costs $ 128 $ 2,335 $ 2,303 $ 12,036 The following is a summary of changes in restructuring accruals (in thousands): Severance Costs Facility Exit Costs & Other Total Restructuring allowance as of December 30, 2017 $ 1,343 $ 516 $ 1,859 Restructuring charges 350 1,953 2,303 Cash payments (1,573 ) (2,469 ) (4,042 ) Restructuring allowance as of September 29, 2018 $ 120 $ — $ 120 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands): September 29, December 30, Finished products $ 106,349 $ 101,715 Materials and work in process 95,584 81,202 LIFO allowance (27,382 ) (27,234 ) Total inventories $ 174,551 $ 155,683 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands): September 29, December 30, Goodwill $ 282,939 $ 279,505 Definite-lived intangible assets 168,692 182,186 Indefinite-lived intangible assets 29,181 29,201 Total goodwill and other intangible assets $ 480,812 $ 490,892 |
Schedule of Goodwill | The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands): Office Furniture Hearth Products Total Balance as of December 30, 2017 Goodwill $ 128,657 $ 183,199 $ 311,856 Accumulated impairment losses (32,208 ) (143 ) (32,351 ) Net goodwill balance as of December 30, 2017 96,449 183,056 279,505 Goodwill acquired during the year — 3,444 3,444 Foreign currency translation adjustment (10 ) — (10 ) Balance as of September 29, 2018 Goodwill 128,647 186,643 315,290 Accumulated impairment losses (32,208 ) (143 ) (32,351 ) Net goodwill balance as of September 29, 2018 $ 96,439 $ 186,500 $ 282,939 |
Schedule of Finite-Lived Intangible Assets by Major Class | 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 29, 2018 December 30, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Patents $ 40 $ 32 $ 8 $ 40 $ 26 $ 14 Software 169,915 46,110 123,805 167,105 34,792 132,313 Trademarks and trade names 7,564 2,556 5,008 7,564 2,061 5,503 Customer lists and other 105,946 66,075 39,871 106,090 61,734 44,356 Net definite-lived intangible assets $ 283,465 $ 114,773 $ 168,692 $ 280,799 $ 98,613 $ 182,186 |
Finite-lived Intangible Assets Amortization Expense | 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 September 29, September 30, September 29, September 30, Capitalized software $ 4,290 $ 2,658 $ 12,734 $ 5,225 Other definite-lived intangibles $ 1,642 $ 1,746 $ 4,972 $ 5,267 |
Schedule of Expected Amortization Expense Table | 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): 2018 2019 2020 2021 2022 Amortization expense $ 23.6 $ 22.9 $ 22.0 $ 20.7 $ 18.5 |
Schedule of Indefinite Lived Intangible Assets and Goodwill | These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands): September 29, December 30, Trademarks and trade names $ 29,181 $ 29,201 |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Product Warranties Disclosures [Abstract] | |
Activity Associated with Warranty Obligations | The following table summarizes when these estimated settlements are expected to be paid (in thousands): September 29, December 30, Current - in the next twelve months $ 9,372 $ 9,524 Long-term - beyond one year 6,059 5,864 Total estimated settlements $ 15,431 $ 15,388 Activity associated with warranty obligations was as follows (in thousands): Nine Months Ended September 29, September 30, Balance at beginning of period $ 15,388 $ 15,250 Accruals for warranties issued during period 22,130 15,197 Adjustments related to pre-existing warranties 116 (298 ) Settlements made during the period (22,203 ) (15,424 ) Balance at end of period $ 15,431 $ 14,725 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt is as follows (in thousands): September 29, December 30, Revolving credit facility with interest at a variable rate (September 29, 2018 - 3.4%; December 30, 2017 - 2.7%) $ 150,000 $ 267,500 Fixed rate notes due in 2025 with an interest rate of 4.22% 50,000 — Fixed rate notes due in 2028 with an interest rate of 4.40% 50,000 — Other amounts 720 9,148 Deferred debt issuance costs (666 ) — Total debt 250,054 276,648 Less: Current maturities of long-term debt 720 36,648 Long-term debt $ 249,334 $ 240,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | The following table summarizes the Corporation's income tax provision (dollars in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Income before income taxes $ 51,104 $ 55,955 $ 76,997 $ 83,541 Income taxes $ 11,197 $ 18,624 $ 16,033 $ 27,573 Effective tax rate 21.9 % 33.3 % 20.8 % 33.0 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets Measured at Fair Value | 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 29, 2018 Cash and cash equivalents (including money market funds) (1) $ 43,738 $ 43,738 $ — $ — Government securities (2) $ 7,094 $ — $ 7,094 $ — Corporate bonds (2) $ 5,341 $ — $ 5,341 $ — Derivative financial instruments (3) $ 5,286 $ — $ 5,286 $ — Variable-rate debt obligations (4) $ 150,000 $ — $ 150,000 $ — Fixed-rate debt obligations (4) $ 100,000 $ — $ 100,000 $ — Deferred stock-based compensation (5) $ 10,665 $ — $ 10,665 $ — Balance as of December 30, 2017 Cash and cash equivalents (including money market funds) (1) $ 23,348 $ 23,348 $ — $ — Government securities (2) $ 6,345 $ — $ 6,345 $ — Corporate bonds (2) $ 6,149 $ — $ 6,149 $ — Derivative financial instruments (3) $ 3,354 $ — $ 3,354 $ — Variable-rate debt obligations (4) $ 267,500 $ — $ 267,500 $ — Deferred stock-based compensation (5) $ 8,885 $ — $ 8,885 $ — 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) Current portion - "Current maturities of long-term debt"; Long-term portion - "Long-Term Debt" (5) Current portion - "Current maturities of other long-term obligations"; Long-term portion - "Other Long-Term Liabilities" |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Equity [Abstract] | |
Schedule of Components of Accumulated Other Comprehensive Income and Changes in Accumulated Other Comprehensive Income, Net of Tax | 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) Balance as of December 30, 2017 $ 31 $ (132 ) $ (5,630 ) $ 2,120 $ (3,611 ) Other comprehensive income (loss) before reclassifications (1,944 ) (125 ) — 2,593 524 Tax (expense) or benefit — 26 — (635 ) (609 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax — — — (499 ) (499 ) Balance as of September 29, 2018 $ (1,913 ) $ (231 ) $ (5,630 ) $ 3,579 $ (4,195 ) 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) Balance as of December 31, 2016 $ (1,188 ) $ (105 ) $ (5,167 ) $ 1,460 $ (5,000 ) Other comprehensive income (loss) before reclassifications 779 68 — (471 ) 376 Tax (expense) or benefit — (24 ) — 174 150 Amounts reclassified from accumulated other comprehensive income (loss), net of tax — — — 207 207 Balance as of September 30, 2017 $ (409 ) $ (61 ) $ (5,167 ) $ 1,370 $ (4,267 ) Amounts in parentheses indicate reductions to equity. |
Schedule of Reclassification from Accumulated Other Comprehensive Income | The following table details the reclassifications from accumulated other comprehensive income (loss) (in thousands): Three Months Ended Nine Months Ended Details about Accumulated Other Comprehensive Income (Loss) Components Affected Line Item in the Statement Where Net Income is Presented September 29, September 30, September 29, September 30, Derivative financial instruments Interest rate swap Interest (expense) or income $ 305 $ (27 ) $ 661 $ (328 ) Tax (expense) or benefit (75 ) 10 (162 ) 121 Net of tax $ 230 $ (17 ) $ 499 $ (207 ) Amounts in parentheses indicate reductions to profit. |
Schedule of Share Repurchases | The following table summarizes shares repurchased and settled by the Corporation (in thousands, except share data): Nine Months Ended September 29, September 30, Shares repurchased 368,822 1,300,936 Cash purchase price $ (14,884 ) $ (52,850 ) Purchases unsettled as of quarter end 222 — Prior year purchases settled in current year (1,381 ) — Shares repurchased per cash flow $ (16,043 ) $ (52,850 ) |
Schedule of Dividends Declared and Paid Per Share | The Corporation declared and paid cash dividends per share as follows (in dollars): Nine Months Ended September 29, September 30, Common shares $ 0.875 $ 0.845 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Basic and Diluted | 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 September 29, September 30, September 29, September 30, Numerator: Numerator for both basic and diluted EPS attributable to HNI Corporation net income $ 39,907 $ 37,271 $ 61,014 $ 55,956 Denominators: Denominator for basic EPS weighted-average common shares outstanding 43,823 43,683 43,616 43,970 Potentially dilutive shares from stock-based compensation plans 856 796 733 1,109 Denominator for diluted EPS 44,679 44,479 44,349 45,079 Earnings per share – basic $ 0.91 $ 0.85 $ 1.40 $ 1.27 Earnings per share – diluted $ 0.89 $ 0.84 $ 1.38 $ 1.24 |
Schedule of Weighted Average Number of Shares | 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. Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Common stock equivalents excluded because their inclusion would be anti-dilutive (in thousands) 1,273 1,111 1,474 788 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Based Compensation Expense | The following table summarizes expense associated with these plans (in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Compensation cost $ 1,307 $ 956 $ 6,215 $ 6,759 |
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period | The options and units granted by the Corporation had fair values as follows (in thousands): Nine Months Ended September 29, September 30, Stock options $ 7,200 $ 7,206 Restricted stock units $ 76 $ — |
Schedule of Unrecognized Compensation Cost, Nonvested Awards | 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 29, 2018 : Unrecognized Compensation Expense (in thousands) Weighted-Average Remaining Service Period (years) Non-vested stock options $ 4,419 1.2 Non-vested restricted stock units $ 980 1.1 |
Post-Retirement Health Care (Ta
Post-Retirement Health Care (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | 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 September 29, September 30, September 29, September 30, Service cost $ 213 $ 185 $ 639 $ 556 Interest cost 197 206 591 619 Amortization of net (gain) loss 32 6 95 19 Net periodic post-retirement benefit cost $ 442 $ 397 $ 1,325 $ 1,194 |
Reportable Segment Information
Reportable Segment Information (Tables) | 9 Months Ended |
Sep. 29, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segment Data | Reportable segment data reconciled to the Corporation's condensed consolidated financial statements was as follows (in thousands): Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Net Sales: Office furniture $ 471,687 $ 465,312 $ 1,276,480 $ 1,231,737 Hearth products 139,433 134,143 383,323 359,870 Total $ 611,120 $ 599,455 $ 1,659,803 $ 1,591,607 Income Before Income Taxes: Office furniture $ 46,075 $ 39,729 $ 66,207 $ 65,856 Hearth products 21,824 28,737 55,250 52,651 General corporate (14,273 ) (10,747 ) (37,085 ) (31,205 ) Operating income 53,626 57,719 84,372 87,302 Interest expense, net 2,522 1,764 7,375 3,761 Total $ 51,104 $ 55,955 $ 76,997 $ 83,541 Depreciation and Amortization Expense: Office furniture $ 11,012 $ 12,132 $ 33,202 $ 37,515 Hearth products 2,026 1,973 6,080 8,167 General corporate 5,569 3,955 16,605 8,842 Total $ 18,607 $ 18,060 $ 55,887 $ 54,524 Capital Expenditures (including capitalized software): Office furniture $ 10,324 $ 27,102 $ 35,321 $ 64,467 Hearth products 2,150 5,606 6,317 12,818 General corporate 2,181 7,095 5,341 26,606 Total $ 14,655 $ 39,803 $ 46,979 $ 103,891 As of As of Identifiable Assets: Office furniture $ 817,753 $ 821,767 Hearth products 360,609 347,189 General corporate 217,384 222,594 Total $ 1,395,746 $ 1,391,550 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 611,120 | $ 599,455 | $ 1,659,803 | $ 1,591,607 |
Office Furniture | Supplies-driven channel | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 265,971 | 238,542 | 680,656 | 620,602 |
Office Furniture | Contract channel | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 205,716 | 226,770 | 595,824 | 611,135 |
Hearth Products | Hearth | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 139,433 | $ 134,143 | $ 383,323 | $ 359,870 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Revenue from Contract with Customer [Abstract] | ||
Trade receivables | $ 257,191 | $ 260,455 |
Contract assets (current) | 483 | 300 |
Contract assets (long-term) | 3,905 | 2,350 |
Contract liabilities | $ 53,495 | $ 54,527 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Change in Contract Assets and Liabilities (Details) $ in Thousands | 9 Months Ended |
Sep. 29, 2018USD ($) | |
Contract assets increase (decrease) | |
Contract assets recognized | $ 2,100 |
Reclassification of contract assets to contra revenue | (362) |
Impact of business combination | 0 |
Net change | 1,738 |
Contract liabilities (increase) decrease | |
Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied | (87,674) |
Contract liabilities paid | 86,329 |
Cash received in advance and not recognized as revenue | (43,878) |
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied | 46,178 |
Impact of business combination | 77 |
Net change | $ 1,032 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 29, 2018 | Sep. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized | $ 0 | $ 12,500,000 |
Restructuring Costs Expensed (D
Restructuring Costs Expensed (Details) - Realignment of Office Furniture Facilities and Exit of Business Line - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 128 | $ 2,335 | $ 2,303 | $ 12,036 |
Cost of sales - accelerated depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | 0 | 1,552 | 0 | 8,711 |
Restructuring and impairment charges | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ 128 | $ 783 | $ 2,303 | $ 3,325 |
Restructuring (Changes in Restr
Restructuring (Changes in Restructuring Accruals) (Details) - Realignment of Office Furniture Facilities and Exit of Business Line $ in Thousands | 9 Months Ended |
Sep. 29, 2018USD ($) | |
Restructuring Reserve [Roll Forward] | |
Restructuring allowance as of December 30, 2017 | $ 1,859 |
Restructuring charges | 2,303 |
Cash payments | (4,042) |
Restructuring allowance as of September 29, 2018 | 120 |
Severance Costs | |
Restructuring Reserve [Roll Forward] | |
Restructuring allowance as of December 30, 2017 | 1,343 |
Restructuring charges | 350 |
Cash payments | (1,573) |
Restructuring allowance as of September 29, 2018 | 120 |
Facility Exit Costs & Other | |
Restructuring Reserve [Roll Forward] | |
Restructuring allowance as of December 30, 2017 | 516 |
Restructuring charges | 1,953 |
Cash payments | (2,469) |
Restructuring allowance as of September 29, 2018 | $ 0 |
Restructuring (Narrative) (Deta
Restructuring (Narrative) (Details) - Manufacturing Facility - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Sep. 29, 2018 | |
Sale Leaseback Transaction [Line Items] | ||
Term of lease | 10 years | |
Net proceeds from sale of facility | $ 16.9 | |
Deferred gain | $ 5.1 | |
Deferred gain, current | 0.5 | |
Deferred gain, noncurrent | $ 4.4 |
Acquisitions and Divestitures N
Acquisitions and Divestitures Narrative (Details) - USD ($) $ in Thousands | Sep. 21, 2018 | Sep. 29, 2018 | Dec. 30, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 282,939 | $ 279,505 | |
Small Hearth Products Company | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 3,000 | ||
Goodwill | $ 3,400 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Percentage of LIFO Inventory | 83.00% | |
Inventories | ||
Finished products | $ 106,349 | $ 101,715 |
Materials and work in process | 95,584 | 81,202 |
LIFO allowance | (27,382) | (27,234) |
Total inventories | $ 174,551 | $ 155,683 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 282,939 | $ 279,505 |
Definite-lived intangible assets | 168,692 | 182,186 |
Indefinite-lived intangible assets | 29,181 | 29,201 |
Total goodwill and other intangible assets | $ 480,812 | $ 490,892 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Goodwill) (Details) $ in Thousands | 9 Months Ended |
Sep. 29, 2018USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | $ 311,856 |
Accumulated impairment losses, beginning balance | (32,351) |
Goodwill, net, beginning balance | 279,505 |
Goodwill acquired during the year | 3,444 |
Foreign currency translation adjustments | (10) |
Goodwill, gross, ending balance | 315,290 |
Accumulated impairment losses, ending balance | (32,351) |
Goodwill, net, ending balance | 282,939 |
Office Furniture | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 128,657 |
Accumulated impairment losses, beginning balance | (32,208) |
Goodwill, net, beginning balance | 96,449 |
Goodwill acquired during the year | 0 |
Foreign currency translation adjustments | (10) |
Goodwill, gross, ending balance | 128,647 |
Accumulated impairment losses, ending balance | (32,208) |
Goodwill, net, ending balance | 96,439 |
Hearth Products | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 183,199 |
Accumulated impairment losses, beginning balance | (143) |
Goodwill, net, beginning balance | 183,056 |
Goodwill acquired during the year | 3,444 |
Foreign currency translation adjustments | 0 |
Goodwill, gross, ending balance | 186,643 |
Accumulated impairment losses, ending balance | (143) |
Goodwill, net, ending balance | $ 186,500 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 283,465 | $ 280,799 |
Accumulated Amortization | 114,773 | 98,613 |
Net | 168,692 | 182,186 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 40 | 40 |
Accumulated Amortization | 32 | 26 |
Net | 8 | 14 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 169,915 | 167,105 |
Accumulated Amortization | 46,110 | 34,792 |
Net | 123,805 | 132,313 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 7,564 | 7,564 |
Accumulated Amortization | 2,556 | 2,061 |
Net | 5,008 | 5,503 |
Customer lists and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 105,946 | 106,090 |
Accumulated Amortization | 66,075 | 61,734 |
Net | $ 39,871 | $ 44,356 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Capitalized software | $ 4,290 | $ 2,658 | $ 12,734 | $ 5,225 |
Other definite-lived intangibles | $ 1,642 | $ 1,746 | $ 4,972 | $ 5,267 |
Goodwill and Other Intangible_7
Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Millions | Sep. 29, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 23.6 |
2,019 | 22.9 |
2,020 | 22 |
2,021 | 20.7 |
2,022 | $ 18.5 |
Goodwill and Other Intangible_8
Goodwill and Other Intangible Assets (Indefinite Lived Intangible Assets) (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 29,181 | $ 29,201 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 29,181 | $ 29,201 |
Goodwill and Other Intangible_9
Goodwill and Other Intangible Assets - Narrative (Details) | 3 Months Ended | ||
Sep. 29, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 30, 2017USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||
Gain on sale and license of intangible asset | $ 6,000,000 | ||
Carrying value | $ 0 | ||
Goodwill | $ 282,939,000 | $ 279,505,000 | |
Office Furniture | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | 96,439,000 | $ 96,449,000 | |
One Reporting Unit | Office Furniture | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill increase (decrease) for 100 basis point increase in discount rate | 3,800,000 | ||
Goodwill increase (decrease) for 100 basis point decrease in terminal growth rate | 1,800,000 | ||
Goodwill | $ 19,600,000 | ||
Discount Rate | One Reporting Unit | Office Furniture | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment test measurement input | 0.135 | ||
Terminal Growth Rate | One Reporting Unit | Office Furniture | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment test measurement input | 0.03 | ||
Minimum | Near Term Growth Rate | One Reporting Unit | Office Furniture | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment test measurement input | 0.03 | ||
Maximum | Near Term Growth Rate | One Reporting Unit | Office Furniture | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment test measurement input | 0.12 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 15,388 | $ 15,250 |
Accruals for warranties issued during period | 22,130 | 15,197 |
Adjustments related to pre-existing warranties | 116 | (298) |
Settlements made during the period | (22,203) | (15,424) |
Balance at end of period | $ 15,431 | $ 14,725 |
Product Warranties - Current an
Product Warranties - Current and Long Term Warranty (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Product Warranties Disclosures [Abstract] | ||||
Current - in the next twelve months | $ 9,372 | $ 9,524 | ||
Long-term - beyond one year | 6,059 | 5,864 | ||
Total estimated settlements | $ 15,431 | $ 15,388 | $ 14,725 | $ 15,250 |
Long-Term Debt Schedule of Long
Long-Term Debt Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | May 31, 2018 | Dec. 30, 2017 |
Debt Instrument [Line Items] | |||
Total debt | $ 250,054 | $ 276,648 | |
Deferred debt issuance costs | (666) | 0 | |
Current maturities of long-term debt | 720 | 36,648 | |
Long-term debt | $ 249,334 | $ 240,000 | |
Revolving credit facility with interest at a variable rate (September 29, 2018 - 3.4%; December 30, 2017 - 2.7%) | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.40% | 2.70% | |
Total debt | $ 150,000 | $ 267,500 | |
Fixed rate notes due in 2025 with an interest rate of 4.22% | |||
Debt Instrument [Line Items] | |||
Total debt | 50,000 | 0 | |
Fixed rate notes due in 2028 with an interest rate of 4.40% | |||
Debt Instrument [Line Items] | |||
Total debt | 50,000 | 0 | |
Other amounts | |||
Debt Instrument [Line Items] | |||
Total debt | $ 720 | $ 9,148 | |
Fixed rate notes due in 2025 with an interest rate of 4.22% | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.22% | 4.22% | |
Fixed rate notes due in 2028 with an interest rate of 4.40% | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.40% | 4.40% |
Long-Term Debt Narrative (Detai
Long-Term Debt Narrative (Details) | May 31, 2018USD ($) | Sep. 29, 2018USD ($) |
Debt Instrument [Line Items] | ||
Deferred debt issuance costs, current | $ 400,000 | |
Deferred debt issuance costs, noncurrent | 1,600,000 | |
Revolving credit facility with interest at a variable rate (September 29, 2018 - 3.4%; December 30, 2017 - 2.7%) | ||
Debt Instrument [Line Items] | ||
Long-term line of credit outstanding | 150,000,000 | |
Line of credit maximum borrowing capacity | $ 450,000,000 | |
Ratio of interest coverage to earnings for the last four fiscal quarters | 4 | |
Ratio of leverage to earnings for the last four fiscal quarters | 3.5 | |
Private Placement | ||
Debt Instrument [Line Items] | ||
Deferred debt issuance costs, current | $ 100,000 | |
Deferred debt issuance costs, noncurrent | 600,000 | |
Borrowings | 100,000,000 | |
Fixed rate notes due in 2025 with an interest rate of 4.22% | ||
Debt Instrument [Line Items] | ||
Borrowings | $ 50,000,000 | |
Note term | 7 years | |
Interest rate | 4.22% | 4.22% |
Fixed rate notes due in 2028 with an interest rate of 4.40% | ||
Debt Instrument [Line Items] | ||
Borrowings | $ 50,000,000 | |
Note term | 10 years | |
Interest rate | 4.40% | 4.40% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income before income taxes | $ 51,104 | $ 55,955 | $ 76,997 | $ 83,541 |
Income taxes | $ 11,197 | $ 18,624 | $ 16,033 | $ 27,573 |
Effective tax rate | 21.90% | 33.30% | 20.80% | 33.00% |
Income Taxes Narrative (Details
Income Taxes Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Sep. 29, 2018 | Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax benefit from remeasurement of deferred taxes | $ 45.4 | |
Transition tax | $ 0.1 | |
Adjustment to deferred taxes | $ 0.5 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets) (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents (including money market funds) | $ 43,738 | $ 23,348 | $ 22,416 | $ 36,312 |
Fair value, measurements, recurring | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents (including money market funds) | 43,738 | 23,348 | ||
Derivative financial instruments | 5,286 | 3,354 | ||
Deferred stock-based compensation | 10,665 | 8,885 | ||
Fair value, measurements, recurring | Quoted prices in active markets for identical assets (Level 1) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents (including money market funds) | 43,738 | 23,348 | ||
Derivative financial instruments | 0 | 0 | ||
Deferred stock-based compensation | 0 | 0 | ||
Fair value, measurements, recurring | Significant other observable inputs (Level 2) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents (including money market funds) | 0 | 0 | ||
Derivative financial instruments | 5,286 | 3,354 | ||
Deferred stock-based compensation | 10,665 | 8,885 | ||
Fair value, measurements, recurring | Significant unobservable inputs (Level 3) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents (including money market funds) | 0 | 0 | ||
Derivative financial instruments | 0 | 0 | ||
Deferred stock-based compensation | 0 | 0 | ||
Fair value, measurements, recurring | Government securities | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 7,094 | 6,345 | ||
Fair value, measurements, recurring | Government securities | Quoted prices in active markets for identical assets (Level 1) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 0 | 0 | ||
Fair value, measurements, recurring | Government securities | Significant other observable inputs (Level 2) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 7,094 | 6,345 | ||
Fair value, measurements, recurring | Government securities | Significant unobservable inputs (Level 3) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 0 | 0 | ||
Fair value, measurements, recurring | Corporate Bonds | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 5,341 | 6,149 | ||
Fair value, measurements, recurring | Corporate Bonds | Quoted prices in active markets for identical assets (Level 1) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 0 | 0 | ||
Fair value, measurements, recurring | Corporate Bonds | Significant other observable inputs (Level 2) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 5,341 | 6,149 | ||
Fair value, measurements, recurring | Corporate Bonds | Significant unobservable inputs (Level 3) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale debt securities | 0 | 0 | ||
Variable Rate Debt Obligation | Fair value, measurements, recurring | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 150,000 | 267,500 | ||
Variable Rate Debt Obligation | Fair value, measurements, recurring | Quoted prices in active markets for identical assets (Level 1) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 0 | 0 | ||
Variable Rate Debt Obligation | Fair value, measurements, recurring | Significant other observable inputs (Level 2) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 150,000 | 267,500 | ||
Variable Rate Debt Obligation | Fair value, measurements, recurring | Significant unobservable inputs (Level 3) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 0 | $ 0 | ||
Fixed Rate Debt Obligation | Fair value, measurements, recurring | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 100,000 | |||
Fixed Rate Debt Obligation | Fair value, measurements, recurring | Quoted prices in active markets for identical assets (Level 1) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 0 | |||
Fixed Rate Debt Obligation | Fair value, measurements, recurring | Significant other observable inputs (Level 2) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | 100,000 | |||
Fixed Rate Debt Obligation | Fair value, measurements, recurring | Significant unobservable inputs (Level 3) | ||||
Fair Value Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value of debt obligations | $ 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Components) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | $ 514,577 | $ 501,009 |
Other comprehensive income (loss) before reclassifications | 524 | 376 |
Tax (expense) or benefit | (609) | 150 |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | (499) | 207 |
Ending balance | 553,074 | 495,881 |
Foreign Currency Translation Adjustment | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | 31 | (1,188) |
Other comprehensive income (loss) before reclassifications | (1,944) | 779 |
Tax (expense) or benefit | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 0 | 0 |
Ending balance | (1,913) | (409) |
Unrealized Gains (Losses) on Marketable Securities | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | (132) | (105) |
Other comprehensive income (loss) before reclassifications | (125) | 68 |
Tax (expense) or benefit | 26 | (24) |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 0 | 0 |
Ending balance | (231) | (61) |
Pension and Post-retirement Liabilities | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | (5,630) | (5,167) |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Tax (expense) or benefit | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 0 | 0 |
Ending balance | (5,630) | (5,167) |
Derivative Financial Instruments | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | 2,120 | 1,460 |
Other comprehensive income (loss) before reclassifications | 2,593 | (471) |
Tax (expense) or benefit | (635) | 174 |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | (499) | 207 |
Ending balance | 3,579 | 1,370 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | (3,611) | (5,000) |
Ending balance | $ (4,195) | $ (4,267) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Narrative) (Details) - USD ($) $ in Thousands | Sep. 29, 2018 | Dec. 30, 2017 | Mar. 31, 2016 |
Class of Stock [Line Items] | |||
Accumulated other comprehensive income (loss) | $ (4,195) | $ (3,611) | |
Common Stock | |||
Class of Stock [Line Items] | |||
Stock repurchase program, remaining authorized repurchase amount | 63,100 | ||
Interest rate swap | |||
Class of Stock [Line Items] | |||
Derivative, notional amount | $ 150,000 | ||
Derivative, fixed interest rate | 1.29% | ||
Derivative liability | 5,300 | ||
Accumulated other comprehensive income (loss) | $ 3,600 |
Accumulated Other Comprehensi_5
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Reclassification) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest (expense) or income | $ (2,602) | $ (1,835) | $ (7,657) | $ (4,228) |
Tax (expense) or benefit | (11,197) | (18,624) | (16,033) | (27,573) |
Net income attributable to HNI Corporation | 39,907 | 37,271 | 61,014 | 55,956 |
Interest rate swap | Reclassifications from accumulated other comprehensive income (loss) | Derivative Financial Instruments | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest (expense) or income | 305 | (27) | 661 | (328) |
Tax (expense) or benefit | (75) | 10 | (162) | 121 |
Net income attributable to HNI Corporation | $ 230 | $ (17) | $ 499 | $ (207) |
Accumulated Other Comprehensi_6
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Stock Repurchases) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Shares repurchased per cash flow | $ (16,043) | $ (52,850) |
Common Stock | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Repurchased common stock (in shares) | 368,822 | 1,300,936 |
Cash purchase price | $ (14,884) | $ (52,850) |
Purchases unsettled as of quarter end | 222 | 0 |
Prior year purchases settled in current year | (1,381) | 0 |
Shares repurchased per cash flow | $ (16,043) | $ (52,850) |
Accumulated Other Comprehensi_7
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity - Dividends Declared (Details) - $ / shares | 9 Months Ended | |
Sep. 29, 2018 | Sep. 30, 2017 | |
Equity [Abstract] | ||
Cash dividends per common share (in dollars per share) | $ 0.875 | $ 0.845 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Numerator for both basic and diluted EPS attributable to HNI Corporation net income | $ 39,907 | $ 37,271 | $ 61,014 | $ 55,956 |
Denominators: | ||||
Denominator for basic EPS weighted-average common shares outstanding (in shares) | 43,822,757 | 43,682,805 | 43,616,046 | 43,970,377 |
Potentially dilutive shares from stock-based compensation plans (in shares) | 856,000 | 796,000 | 733,000 | 1,109,000 |
Denominator for diluted EPS (in shares) | 44,678,824 | 44,479,117 | 44,349,456 | 45,078,719 |
Earnings per share - basic (in dollars per share) | $ 0.91 | $ 0.85 | $ 1.40 | $ 1.27 |
Earnings per share - diluted (in dollars per share) | $ 0.89 | $ 0.84 | $ 1.38 | $ 1.24 |
Earnings Per Share Antidilutive
Earnings Per Share Antidilutive Securities Excluded from Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Common stock equivalents excluded because their inclusion would be anti-dilutive (in thousands) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,273 | 1,111 | 1,474 | 788 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation cost | $ 1,307 | $ 956 | $ 6,215 | $ 6,759 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value | 7,200 | 7,206 | ||
Unrecognized compensation cost | 4,419 | $ 4,419 | ||
Weighted-Average Remaining Service Period (years) | 1 year 2 months 4 days | |||
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value | $ 76 | $ 0 | ||
Unrecognized compensation cost | $ 980 | $ 980 | ||
Weighted-Average Remaining Service Period (years) | 1 year 1 month 9 days |
Post-Retirement Health Care (De
Post-Retirement Health Care (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2018 | Sep. 30, 2017 | Sep. 29, 2018 | Sep. 30, 2017 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 213 | $ 185 | $ 639 | $ 556 |
Interest cost | 197 | 206 | 591 | 619 |
Amortization of net (gain) loss | 32 | 6 | 95 | 19 |
Net periodic post-retirement benefit cost | $ 442 | $ 397 | $ 1,325 | $ 1,194 |
Guarantees, Commitments and C_2
Guarantees, Commitments and Contingencies (Details) $ in Millions | Sep. 29, 2018USD ($) |
Letter of Credit | |
Line of Credit Facility [Line Items] | |
Letters of credit | $ 19 |
Trade Letters Of Credit And Bankers Acceptances | |
Line of Credit Facility [Line Items] | |
Letters of credit | $ 3 |
Reportable Segment Informatio_2
Reportable Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 29, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 29, 2018USD ($)Segment | Sep. 30, 2017USD ($) | Dec. 30, 2017USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | Segment | 2 | ||||
Net sales | $ 611,120 | $ 599,455 | $ 1,659,803 | $ 1,591,607 | |
Operating income | 53,626 | 57,719 | 84,372 | 87,302 | |
Interest expense, net | 2,522 | 1,764 | 7,375 | 3,761 | |
Income before income taxes | 51,104 | 55,955 | 76,997 | 83,541 | |
Depreciation and amortization | 18,607 | 18,060 | 55,887 | 54,524 | |
Capital Expenditures (including capitalized software) | 14,655 | 39,803 | 46,979 | 103,891 | |
Identifiable assets | 1,395,746 | 1,395,746 | $ 1,391,550 | ||
Operating segments | Office Furniture | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 471,687 | 465,312 | 1,276,480 | 1,231,737 | |
Operating income | 46,075 | 39,729 | 66,207 | 65,856 | |
Depreciation and amortization | 11,012 | 12,132 | 33,202 | 37,515 | |
Capital Expenditures (including capitalized software) | 10,324 | 27,102 | 35,321 | 64,467 | |
Identifiable assets | 817,753 | 817,753 | 821,767 | ||
Operating segments | Hearth Products | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 139,433 | 134,143 | 383,323 | 359,870 | |
Operating income | 21,824 | 28,737 | 55,250 | 52,651 | |
Depreciation and amortization | 2,026 | 1,973 | 6,080 | 8,167 | |
Capital Expenditures (including capitalized software) | 2,150 | 5,606 | 6,317 | 12,818 | |
Identifiable assets | 360,609 | 360,609 | 347,189 | ||
General corporate | |||||
Segment Reporting Information [Line Items] | |||||
Operating income | (14,273) | (10,747) | (37,085) | (31,205) | |
Depreciation and amortization | 5,569 | 3,955 | 16,605 | 8,842 | |
Capital Expenditures (including capitalized software) | 2,181 | $ 7,095 | 5,341 | $ 26,606 | |
Identifiable assets | $ 217,384 | $ 217,384 | $ 222,594 |