UNITED STATES SECURITIES AND EXCHANGE COMMISSION

0000048287-04-000174.txt : 20041105 0000048287-04-000174.hdr.sgml : 20041105 20041105101135 ACCESSION NUMBER: 0000048287-04-000174 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041105 FILED AS OF DATE: 20041105 DATE AS OF CHANGE: 20041105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HNI CORP CENTRAL INDEX KEY: 0000048287 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE FURNITURE (NO WOOD) [2522] IRS NUMBER: 420617510 STATE OF INCORPORATION: IA FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14225 FILM NUMBER: 041121330 BUSINESS ADDRESS: STREET 1: 414 EAST THIRD STREET - PO BOX 1109 CITY: MUSCATINE STATE: IA ZIP: 52761-7109 BUSINESS PHONE: 5632647400 MAIL ADDRESS: STREET 1: 414 EAST THIRD STREET STREET 2: P O BOX 1109 CITY: MUSCATINE STATE: IA ZIP: 52761 FORMER COMPANY: FORMER CONFORMED NAME: HON INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HOME O NIZE CO DATE OF NAME CHANGE: 19681001 10-Q 1 r10q304.htm 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended October 2, 2004

OR

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

For the transition period from ____________________ to ____________________

Commission File Number 0-2648

HNI Corporation (Exact name of Registrant as specified in its charter)

Iowa (State or other jurisdiction of incorporation or organization)	42-0617510 (I.R.S. Employer Identification Number)

P. O. Box 1109, 414 East Third Street Muscatine, Iowa 52761-0071 (Address of principal executive offices)	52761-0071 (Zip Code)

Registrant's telephone number, including area code: 563/264-7400

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES X NO

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Class Common Shares, $1 Par Value	Outstanding at October 2, 2004 56,175,183

HNI Corporation and SUBSIDIARIES


INDEX

PART I. FINANCIAL INFORMATION
	Page

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets October 2, 2004, and January 3, 2004	3-4

Condensed Consolidated Statements of Income Three Months Ended October 2, 2004, and October 4, 2003	5

Condensed Consolidated Statements of Income Nine Months Ended October 2, 2004, and October 4, 2003	6

Condensed Consolidated Statements of Cash Flows Nine Months Ended October 2, 2004, and October 4, 2003	7

Notes to Condensed Consolidated Financial Statements	8-17


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	18-23

Item 4. Controls and Procedures	24

PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds	25

Item 6. Exhibits and Reports on Form 8-K	26

SIGNATURES	27

EXHIBIT INDEX	28

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

	Oct. 2, 2004 (Unaudited)	Jan. 3, 2004
ASSETS	(In thousands)

CURRENT ASSETS
Cash and cash equivalents Short-term investments Receivables Inventories (Note C) Deferred income taxes Prepaid expenses and other current assets	$ 2,678 6,710 265,489 81,651 14,959 14,803	$ 138,982 65,208 181,459 49,830 14,329 12,314
Total Current Assets	386,290	462,122

PROPERTY, PLANT, AND EQUIPMENT, at cost
Land and land improvements Buildings Machinery and equipment Construction in progress	24,938 232,119 507,952 13,723	23,065 211,005 495,901 9,865
Less accumulated depreciation	778,732 462,726	739,836 427,468

Net Property, Plant, and Equipment	316,006	312,368

GOODWILL	223,251	192,086

OTHER ASSETS	111,877	55,250

Total Assets	$ 1,037,424	$ 1,021,826

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

	Oct. 2, 2004 (Unaudited)	Jan. 3, 2004
LIABILITIES AND SHAREHOLDERS' EQUITY	(In thousands, except share and per share value data)

CURRENT LIABILITIES
Accounts payable and accrued expenses Income taxes Note payable and current maturities of long-term debt Current maturities of other long-term obligations	$ 243,467 21,253 642 5,238	$ 211,236 5,958 26,658 1,964
Total Current Liabilities	270,600	245,816

LONG-TERM DEBT	2,689	2,690

CAPITAL LEASE OBLIGATIONS	1,161	1,436

OTHER LONG-TERM LIABILITIES	33,362	24,262

DEFERRED INCOME TAXES	43,052	37,733

SHAREHOLDERS' EQUITY
Capital Stock: Preferred, $1 par value, authorized 2,000,000 shares, no shares outstanding	-	-

Common, $1 par value, authorized 200,000,000 shares, outstanding - 2004 - 56,175,183 shares; 2003 - 58,238,519 shares	56,175	58,239

Paid-in capital Retained earnings Accumulated other comprehensive income	664 629,719 2	10,324 641,732 (406)

Total Shareholders' Equity	686,560	709,889

Total Liabilities and Shareholders' Equity	$ 1,037,424	$ 1,021,826

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	Three Months Ended
	Oct. 2, 2004	Oct. 4, 2003
	(In thousands, except share and per share data)

Net Sales Cost of products sold Gross Profit Selling and administrative expenses Restructuring and impairment charges Operating Income Interest income Interest expense Income Before Income Taxes Income taxes Net Income	$ 573,457 367,835 205,622 147,594 135 57,893 131 160 57,864 21,120 $ 36,744	$ 500,091 316,412 183,679 127,472 3,881 52,326 1,148 531 52,943 18,530 $ 34,413
Net income per common share - basic	$0.65	$0.59
Average number of common shares outstanding - basic	56,191,547	58,043,055
Net income per common share - diluted	$0.65	$0.59
Average number of common shares outstanding - diluted	56,635,074	58,447,954
Cash dividends per common share	$0.14	$0.13

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Nine Months Ended
	Oct. 2, 2004	Oct. 4, 2003
	(In thousands, except share and per share data)

Net Sales	$ 1,546,099	$ 1,298,855
Cost of products sold	987,094	829,620
Gross Profit	559,005	469,235
Selling and administrative expenses	424,753	354,877
Restructuring and impairment charges	870	6,146
Operating Income	133,382	108,212
Interest income	1,180	2,532
Interest expense	734	2,329
Income Before Income Taxes	133,828	108,415
Income taxes	48,847	37,945
Net Income	$84,981	$ 70,470
Net income per common share - basic	$1.48	$1.21
Average number of common shares outstanding - basic	57,458,319	58,164,638
Net income per common share - diluted	$1.47	$1.21
Average number of common shares outstanding - diluted	57,893,214	58,470,659
Cash dividends per common share	$0.42	$0.39

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Nine Months Ended
	Oct. 2, 2004	Oct. 4, 2003
	(In thousands)
Net Cash Flows From (To) Operating Activities: Net income Noncash items included in net income: Depreciation and amortization Other post-retirement and post-employment benefits Deferred income taxes Loss on sales, retirements and impairments of property, plant and equipment Stock issued to retirement plan Other - net Net increase (decrease) in non-cash operating assets and liabilities Increase (decrease) in other liabilities Net cash flows from (to) operating activities	$ 84,981 49,614 1,406 885 1,412 5,990 1,588 (41,965) 6,168 110,079	$ 70,470 56,394 1,670 (1,119) 3,951 4,678 434 (45,110) 3,310 94,678

Net Cash Flows From (To) Investing Activities: Capital expenditures Proceeds from sale of property, plant and equipment Capitalized software Acquisition spending Additional purchase consideration Short-term investments - net Long-term investments - net Other - net Net cash flows from (to) investing activities	(21,066) 465 (3,324) (131,931) - 58,497 (6,416) (350) (104,125)	(29,554) 1,597 (2,570) - (5,710) (78,643) 5,545 - (109,335)

Net Cash Flows From (To) Financing Activities: Purchase of HNI Corporation common stock Proceeds from long-term debt Payments of note and long-term debt Proceeds from sales of HNI Corporation common stock Dividends paid Net cash flows from (to) financing activities	(97,664) - (26,593) 6,262 (24,263) (142,258)	(21,512) 761 (18,825) 11,441 (22,728) (50,863)

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period	(136,304) 138,982	(65,520) 139,165
Cash and cash equivalents at end of period	$ 2,678	$ 73,645

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
October 2, 2004

Note A. Basis of Presentation

The Company changed its name, with the approval of its shareholders, from HON INDUSTRIES Inc. to HNI Corporation effective May 5, 2004. The Company believes that changing its name will allow it to accomplish three important goals as it moves forward with its strategy of managing multiple distinct and independent brands: 1) create a corporate identity that clearly represents who it is today - the parent company for many of the leading brand name companies in the office furniture and hearth markets; 2) establish a corporate brand that better reflects the Corporation's strategic growth program - - product line extensions, market expansion, and strategic acquisitions; and 3) eliminate the confusion in the marketplace, resulting from the use of "HON" in both the corporate name and in the name of its largest operating company, and clarify the ownership of our other operating companies and their relationship with The HON Company.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended October 2, 2004 are not necessarily indicative of the results that may be expected for the year ending January 1, 2005. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended January 3, 2004.

Note B. Summary of Significant Accounting Policies

Investments - The Company made an investment at the end of the second quarter of 2004 which is excluded from the scope of SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" due to the fact that the investment's per unit value in a Master Fund is not readily available. Therefore this investment is recorded at cost. The weighted average cost method is used to determine realized gains and losses on the trade date.

Stock based compensation - The Company accounts for its stock option plan using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which results in no charge to earnings when options are issued at fair market value. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," to stock-based employee compensation.

	Three Months Ended		Nine Months Ended
(In thousands except per share data)	Oct. 2, 2004	Oct. 4, 2003	Oct. 2, 2004	Oct. 4, 2003
Net income, as reported	$ 36,744	$ 34,413	$ 84,981	$ 70,470
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(827)	(794)	(2,183)	(2,315)
Pro forma net income	$ 35,917	$ 33,619	$ 82,798	$ 68,155
Earnings per share: Basic - as reported Basic - pro forma Diluted - as reported Diluted - pro forma	$0.65 0.64 0.65 0.63	$0.59 $0.58 $0.59 $0.58	$1.48 1.44 1.47 1.43	$1.21 $1.17 $1.21 $1.17

Note C. Inventories

The Company values approximately 78% of its inventory at the lower of cost or market by the last-in, first-out (LIFO) method.

(In thousands)	Oct. 2, 2004 (Unaudited)	Jan. 3, 2004
Finished products	$ 55,848	$ 31,407
Materials and work in process	39,008	28,287
LIFO allowance	(13,205)	(9,864)
	$ 81,651	$ 49,830

Note D. Comprehensive Income and Shareholders' Equity

The Company's comprehensive income for the first nine months of 2004 was $408,000 and consisted of changes in unrealized holding gains or losses on equity securities available-for-sale under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities".

Note E. Earnings Per Share

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

	Three Months Ended		Nine Months Ended
	Oct. 2, 2004	Oct. 4, 2003	Oct. 2, 2004	Oct. 4, 2003
Numerators: Numerator for both basic and diluted EPS net income (in thousands)	$ 36,744	$ 34,413	$84,981	$70,470
Denominators: Denominator for basic EPS weighted-average common shares outstanding	56,191,547	58,043,055	57,458,319	58,164,638
Potentially dilutive shares from stock option plans	443,527	404,899	434,895	306,021
Denominator for diluted EPS	56,635,074	58,447,954	57,893,214	58,470,659
Earnings per share - basic	$0.65	$0.59	$1.48	$1.21
Earnings per share - diluted	$0.65	$0.59	$1.47	$1.21

Certain exercisable and non-exercisable stock options were not included in the computation of diluted EPS at October 2, 2004 and October 4, 2003, because the option prices were greater than the average market prices for the applicable periods. The number of stock options outstanding, which met this criterion for both the three and nine months ended October 2, 2004, was 20,000 with a range of per share exercise prices of $42.49 - $42.98. The number of stock options outstanding, which met this criterion for the three and nine months ended October 4, 2003, was zero and 30,000 with a range of per share exercise prices of $32.22 - $32.93, respectively.

Note F. Restructuring Reserve

During 2003 the Company closed two office furniture facilities located in Milan, Tennessee and Hazleton, Pennsylvania and consolidated production into other U.S. manufacturing locations. In connection with those shutdowns, the Company incurred $0.1 million of current period charges during the quarter ended October 2, 2004. The Company reduced a previously recorded restructuring reserve for the shutdown of its Milan, Tennessee facility by approximately $0.3 million during the second quarter 2004. The reduction was due to the fact that the Company was able to exit a lease with the lessor at more favorable terms than previously estimated. The following is a summary of changes in restructuring accruals during the third quarter of 2004:

(In thousands)	Severance	Facility Exit Costs & Other	Total
Accrual balance, July 3, 2004	$ 93	$ -	$ 93
Restructuring charges	-	166	166
Restructuring credit	(31)	-	(31)
Cash payments	(14)	(166)	(180)
Accrual balance, October 2, 2004	$ 48	$ -	$ 48

Note G. Business Combinations

On January 5, 2004, the Company acquired certain assets of Paoli, Inc., a subsidiary of Klaussner Furniture Industries, Inc. The results of Paoli's operations have been included in the consolidated financial statements since that date. Paoli is a leading provider of wood case goods and seating with well-known brands, broad product offering, and strong independent representative sales and dealer networks.

The aggregate purchase price was $81.1 million and was paid in cash. The Company has completed the allocation of the purchase price. The following table summarizes (in thousands) the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

            Current assets                                      $ 27,304
            Property, plant and equipment                 26,455
            Intangible assets                                    26,330
            Goodwill                                                   9,188
            Total assets acquired                             89,277
            Current liabilities                                        8,147
            Net assets acquired                            $ 81,130

Of the $26.3 million of acquired intangible assets, $18.3 million was assigned to registered trademarks that are not subject to amortization. The remaining $8.0 million of acquired intangible assets have a weighted-average useful life of approximately 15 years with amortization recorded based on the projected cash flow associated with the respective intangible assets existing relationships. The intangible assets that make up that amount include customer relationships of $5.4 million (19-year weighted-average useful life), patents and proprietary technology of $2.4 million (8-year weighted-average useful life), and other assets of $0.2 million (3-year weighted-average useful life).

The $9.2 million of goodwill was assigned to the office furniture segment and is all deductible for income tax purposes.

Assuming the acquisition of Paoli Inc. had occurred on December 29, 2002, the beginning of the Company's 2003 fiscal year, instead of the actual date reported above, the Company's pro forma consolidated net sales would have been $523 million for the third quarter of 2003 and $1.4 billion for the nine months ended October 4, 2003. Pro forma consolidated net income for third quarter 2003 and for the nine months ended October 4, 2003 would have been $35.1 million or $0.60 per diluted share and $74.0 million or $1.27 per diluted share, respectively.

The Company also completed the acquisition of Hearth and Home Distributors of Delaware, Inc., a small hearth distributor, on January 5, 2004 for a purchase price of $4.5 million, which was paid in cash. The Company has completed the allocation of the purchase price. The following table summarizes (in thousands) the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

            Current assets                                       $   526
            Property, plant and equipment                      91
            Intangible assets                                    2,554
            Goodwill                                                 1,330
            Total assets acquired                             4,501
            Current liabilities                                             1
            Net assets acquired                             $4,500

The intangible assets primarily are customer relationships and have an estimated useful life of 10 years. The $1.3 million of goodwill was assigned to the hearth products segment and is all deductible for income tax purposes.

On July 6, 2004, the Company acquired a controlling interest in Omni Remanufacturing, Inc. The results of Omni's operations have been included in the consolidated financial statements since that date. Omni is comprised of two division - IntraSpec Solutions, a panel systems re-manufacturer, and A&M Business Interior Services, an office furniture services company.

The Company acquired 80% of the common stock and the ability to call the remaining 20% of the shares on or after the fiscal year end 2009. The Company must exercise its Call on or before the end of fiscal year end 2014. SFAS No. 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" requires a mandatorily redeemable financial instrument to be classified as a liability unless the redemption is required to occur only upon the liquidation or termination of the reporting entity. It also requires that mandatorily redeemable financial instruments be measured at fair value. Therefore the Company has recorded a liability for the remaining 20% of the shares at fair value.

The aggregate purchase price of the 80% interest net of cash acquired was $18.6 million and was paid in cash. The Company is in the process of finalizing the allocation of the purchase price. Any modification is not expected to be significant. The following table summarizes (in thousands) the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

            Current assets, other than cash                      $ 5,414
            Property, plant and equipment                           1,881
            Other assets                                                             8
            Intangible assets                                              12,680
            Goodwill                                                       11,567
               Total assets acquired                                    31,550
            Current liabilities                                                4,492
            Deferred tax liability                                         3,636
            Liability for right to call remaining 20%              4,800
            Net assets acquired                                   $ 18,622

Of the $12.7 million of acquired intangible assets, $2.8 million was assigned to registered trademarks that are not subject to amortization. The remaining $9.9 million of acquired intangible assets have a weighted-average useful life of approximately 9 years with amortization recorded based on the projected cash flow associated with the respective intangible assets existing relationships. The intangible assets that make up that amount include customer relationships of $6.9 million (10-year weighted-average useful life), computer software of $1.6 million (7-year weighted-average useful life), and other assets of $1.4 million (6-year weighted-average useful life).

The $11.6 million of goodwill was assigned to the office furniture segment and is not deductible for income tax purposes.

On July 19, 2004, the Company completed the acquisitions of Edward George Company, a distributor of fireplaces, stone products, barbecues, and other building materials throughout Illinois, Indiana, and Kentucky; and an affiliate, Wisconsin Fireplace Systems with locations in Wisconsin for a purchase price of $27.7 million, which was paid in cash. The Company is in the process of finalizing the allocation of the purchase price. Any modification is not expected to be significant. The following table summarizes (in thousands) the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

            Current assets, other than cash            $ 12,534
            Property, plant and equipment                     831
            Intangible assets                                       9,270
            Goodwill                                                  9,079
             Total assets acquired                           31,714
            Current liabilities                                       4,036
             Net assets acquired                        $ 27,678

The acquired intangible assets of $9.3 million have a weighted-average useful life of approximately 13 years with amortization recorded based on the projected cash flow associated with the respective intangible assets existing relationships. The intangible assets that make up that amount include customer relationships of $8.8 million (14-year weighted-average useful life) and other assets of $0.5 million (2-year weighted-average useful life).

The $9.1 million of goodwill was assigned to the hearth products segment and is deductible for income tax purposes.

Note H. Goodwill and Other Intangible Assets

The following table summarizes amortizable definite-lived intangible assets as of October 2, 2004 and January 3, 2004, which are reflected in Other Assets in the Company's condensed consolidated balance sheets:

(In thousands)	Oct. 2, 2004	Jan. 3, 2004
Patents	$ 18,820	$ 16,450
Customer relationships and other	51,840	26,076
Less: accumulated amortization	(19,828)	(16,671)
	$ 50,832	$ 25,855

Aggregate amortization expense for the three and nine months ended October 2, 2004 and October 4, 2003 was $1.2 million and $3.2 million, and $0.7 million and $2.0 million, respectively. Amortization expense is estimated to range between $3.6 and $5.7 million per year over the next five years.

The Company also owns trademarks with a net carrying amount of $29.2 million and $8.1 million as of October 2, 2004 and January 3, 2004, respectively. The trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely.

The changes in the carrying amount of goodwill since January 3, 2004, are as follows by reporting segment:

(In thousands)	Office Furniture	Hearth Products	Total
Balance as of January 3, 2004	$43,611	$148,475	$192,086
Goodwill acquired during period	20,755	10,410	31,165
Balance as of October 2, 2004	$ 64,366	$ 158,885	$ 223,251

In accordance with SFAS No. 142 "Goodwill and Other Intangible Assets", the Company evaluates its goodwill for impairment on an annual basis based on values at the end of third quarter or whenever indicators of impairment exist. The Company has evaluated its goodwill for impairment and has determined that the fair value of the reporting unit exceeds their carrying value so no impairment of goodwill was recognized. The increase in goodwill of $31.2 million relates to the acquisitions completed during the first and third quarters. See Business Combination footnote for further information.

Note I. Product Warranties

The Company issues certain warranty policies on its furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design, or workmanship.

A warranty reserve is determined by recording a specific reserve for known warranty issues and an additional reserve for unknown claims that are expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Activity associated with warranty obligations was as follows during the period:

Nine Months Ended

(In thousands)	Oct. 2, 2004	Oct. 4, 2003
Balance at beginning of period Accrual assumed from acquisition Accruals for warranties issued during the period Accrual related to pre-existing warranties Settlements made during the period	$ 8,926 688 7,959 753 (7,947)	$ 8,405 - 5,928 109 (6,017)
Balance at end of period	$ 10,379	$ 8,425

Note J. Postretirement Health Care

In accordance with the interim disclosure requirements of revised SFAS No. 132, "Employers' Disclosures about Pensions and other Postretirement Benefits," the following table sets forth the components of net periodic benefit cost included in the Company's income statement for:

	Nine Months Ended
(In thousands)	Oct. 2, 2004	Oct. 4, 2003
Service cost	$ 213	$ 187
Interest cost	799	829
Expected return on plan assets	(218)	-
Amortization of transition obligation	436	436
Amortization of prior service cost	173	173
Net periodic benefit cost	$ 1,403	$1,625

Note K. Commitments and Contingencies

During the second quarter ended June 28, 2003, the Company entered into a one-year financial agreement for the benefit of one of its distributor chain partners, which has been extended. The maximum financial exposure assumed by the Company as a result of this arrangement is currently $2.6 million of which over 89% is secured by collateral. In accordance with the provisions of FIN 45, the Company has recorded the fair value of this guarantee, which is estimated to be less than $0.1 million.

The Company utilizes letters of credit in the amount of $19.5 million to back certain financing instruments, insurance policies and payment obligations. The letters of credit reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined.

The Company is contingently liable for future minimum payments totaling $6.1 million under a transportation service contract. The transportation agreement is for a three-year period and is automatically renewable for periods of one year unless either party gives sixty days written notice of its intent to terminate at the end of the original three-year term or any subsequent term. The minimum payments remaining are $1.2 million in 2004, and $4.9 million in 2005.

The Company has guaranteed a contractual lease obligation of an independent contract furniture dealership. The lease term expires in the fourth quarter of 2004. As of October 2, 2004, the remaining unpaid lease payments subject to this guarantee totaled approximately $12,000. In accordance with the provisions of FIN 45 no liability has been recorded, as the Company entered into this agreement prior to December 31, 2002.

The Company has contingent liabilities, which have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, environmental remediation, taxes, and other claims. The Company currently has a claim for approximately $7.6 million pending against it arising out of the bankruptcy of a customer filed in 2001. The Company was named a critical vendor by the bankruptcy court and, accordingly, was paid in full for all outstanding receivables. The claim alleges that the Company received preferential payments from the customer during the ninety days before the customer filed for bankruptcy protection. The claim was brought in February 2003. The Company has recorded an accrual with respect to this contingency, in an amount substantially less than the full amount of the claim, which represents the best estimate within the range of likely exposure and intends to vigorously defend against the claim. Given the nature of this claim, it is possible that the ultimate outcome could differ from the recorded amount.

Note L. New Accounting Standards

In December 2003, the Financial Accounting Standards Board issued Interpretation 46R (FIN 46R), a revision to Interpretation 46 (FIN 46), "Consolidation of Variable Interest Entities." FIN 46R clarifies some of the provisions of FIN 46 and exempts certain entities from its requirements. FIN 46R was effective at the end of the first interim period ending after March 15, 2004. The Company adopted FIN 46R on April 3, 2004, and it did not have an impact on the Company's financial statements.

In May 2004, the FASB issued FASB Staff Position No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" ("FSP 106-2"). FSP 106-2 is effective for the first interim or annual period beginning after June 15, 2004. The Company adopted FSP 106-2 on July 4, 2004. The Company has determined that the benefits provided by the plan are not actuarially equivalent to the Medicare Part D benefit under the Act based on percentage of the cost of the plan that the Company provides. Therefore, the adoption of FSP 106-2 did not have an impact on the Company's financial statements during the current period. The Company will continue to monitor the effect as regulations evolve regarding actuarial equivalency.

Note M. Business Segment Information

Management views the Company as being in two business segments: office furniture and hearth products with the former being the principal business segment.

The office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes file cabinets, desks, credenzas, chairs, storage cabinets, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth product segment manufactures and markets a broad line of manufactured gas-, pellet- and wood-burning fireplaces and stoves, fireplace inserts, and chimney systems principally for the home.

For purposes of segment reporting, intercompany sales transfers between segments are not material and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net cost of the Company's corporate operations, interest income, and interest expense. The increase in unallocated corporate expenses compared to prior year is due to costs and investment in corporate resources related to the Company's strategy and growth initiatives. Management views interest income and expense as corporate financing costs and not as a business segment cost. In addition, management applies one effective tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis.

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

Reportable segment data reconciled to the consolidated financial statements for the three and nine month periods ended October 2, 2004, and October 4, 2003, is as follows:

	Three Months Ended		Nine Months Ended
(In thousands)	Oct. 2, 2004	Oct. 4, 2003		Oct. 2, 2004	Oct. 4, 2003
Net Sales: Office furniture Hearth products	$ 435,696 137,761	$ 378,356 121,735		$ 1,170,045 376,054	$ 977,182 321,673
	$ 573,457	$ 500,091		$1,546,099	$ 1,298,855
Operating Profit: Office furniture Operations before restructuring charges Restructuring and impairment charges Office Furniture - net Hearth products Total operating profit Unallocated corporate expense Income before income taxes	$ 48,130 (135) 47,995 17,499 65,494 (7,630) $ 57,864	$ 49,123 (3,881) 45,242 17,452 62,694 (9,751) $ 52,943		$ 117,713 (870) 116,843 43,702 160,545 (26,717) $ 133,828	$ 103,897 (6,146) 97,751 33,820 131,571 (23,156) $ 108,415

Depreciation & Amortization Expense: Office furniture Hearth products General corporate	$ 11,701 3,588 861 $ 16,150	$ 17,978 3,309 1,378 $ 22,665		$ 34,543 11,219 3,852 $ 49,614	$ 42,465 10,266 3,663 $ 56,394

Capital Expenditures (including capitalized software): Office furniture Hearth products General corporate	$ 4,572 3,421 628 $ 8,621	$ 4,555 1,629 1,587 $ 7,771		$ 12,111 9,964 2,315 $ 24,390	$ 14,481 11,303 6,340 $ 32,124

				As of Oct. 2, 2004	As of Oct. 4, 2003
Identifiable Assets: Office furniture Hearth products General corporate				$ 570,725 363,580 103,119 $1,037,424	$ 478,299 316,508 230,606 $1,025,413

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

Overview

The Company has two reportable core operating segments: office furniture and hearth products. The Company is the second largest office furniture manufacturer in the United States and the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces.

During the third quarter, the Company continued to experience strong growth in both its office furniture and hearth products segment. In July 2004 the Company completed the acquisition of Omni Remanufacturing, Inc., a panel systems re-manufacturer and office furniture services company and Edward George Company, a distributor of fireplaces and other building materials. Sales from the Company's acquisition of Paoli, Inc. in January 2004, along with the acquisitions completed during third quarter 2004, accounted for approximately $40 million of third quarter sales. The Company also benefited from increases in price of approximately $14 million during third quarter.

The Company's net income increased to $36.7 million for third quarter 2004 compared to $34.4 million for the same period last year. Net income per share was $0.65 per diluted share compared to $0.59 per diluted share in the third quarter of 2003, an increase of 10.2 percent. The third quarter 2003 represented a 14-week period rather than the normal 13-week period as a result of the Company's 52/53-week fiscal year. Net income per share was positively impacted by the Company's share repurchase program.

The Company experienced increased steel costs of approximately $22 million and other material costs of approximately $4 million during the third quarter, which more than offset productivity improvements and other cost reductions from the Company's rapid continuous improvement initiatives, benefit of the price increases and leveraging of fixed costs over higher volume.

Critical Accounting Policies

The preparation of the financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our accounting policies and estimates. We base our estimates on historical experience and on a variety of other assumptions believed to be reasonable in order to make judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Company's 10-K report for the year ended January 3, 2004. During the first nine months of fiscal 2004, there was no material change in the accounting estimates and assumptions previously disclosed.

Results of Operations

The following table presents changes in the results of operations for the periods indicated.

	Three Months Ended		Nine Months Ended
(In thousands)	Oct. 2, 2004 & Oct. 4, 2003		Oct. 2 2004 & Oct. 4, 2003
Net Sales	$ 73,366	14.7%	$ 247,244	19.0 %
Cost of products sold	51,423	16.3	157,474	19.0
Selling & administrative expenses	20,122	15.8	69,876	19.7
Restructuring & impairment charges	(3,746)	(96.5)	(5,276)	(85.8)
Interest Income	(1,017)	(88.6)	(1,352)	(53.4)
Interest Expense	(371)	(69.9)	(1,595)	(68.5)
Income Taxes	2,590	14.0	10,902	28.7
Net Income	2,331	6.8	14,511	20.6

Net sales for the third quarter increased 14.7 percent to $573.5 million, compared to $500.1 million for the same quarter last year. The third quarter 2003 represented a 14-week period rather than the normal 13-week period as a result of the Company's 52/53-week fiscal year. Excluding the extra week in third quarter 2003 net sales, on a comparative basis, increased approximately 23.5 percent. In July 2004 the Company completed the acquisition of Omni Remanufacturing, Inc., a panel systems re-manufacturer and office furniture services company and Edward George Company, a distributor of fireplaces and other building materials. Sales from the Company's acquisition of Paoli, Inc. in January 2004, along with the acquisitions completed during third quarter 2004, accounted for approximately $40 million of third quarter sales. The Company also benefited from increases in price of approximately $14 million during third quarter.

Gross margins for the third quarter were 35.9 percent compared to 36.7 percent for the same quarter last year. While the Company continued to experience productivity improvements and other cost reductions from its rapid continuous improvement initiatives, the impact of approximately $22 million in increased steel costs and $4 million of other material costs, more than offset the benefit of price increases and leveraging of fixed costs over higher volumes. The increased steel and material costs, net of price increases, reduced gross margins approximately 2.0 percentage points for the quarter. Included in gross margin for the third quarter 2003 was $5.1 million of accelerated depreciation of machinery and equipment related to the shutdown of two facilities reducing margins by 1.0 percentage points.

Total selling and administrative expenses, excluding restructuring charges, for the quarter were 25.7 percent of net sales compared to 25.5 percent for the same quarter last year. Included in third quarter 2004 were incremental investments of approximately $3 million in brand building and selling initiatives, increased freight and distribution costs of $5 million due to volume, rate increases and fuel surcharges, and additional selling and administrative costs of $11 million associated with the new acquisitions.

During the third quarter of 2003, the Company closed two office furniture facilities and consolidated production into other U.S. manufacturing locations to increase efficiencies, streamline processes, and reduce overhead costs. The two facilities were located in Hazleton, Pennsylvania, and Milan, Tennessee. In connection with those shutdowns, the Company incurred $0.1 million of net restructuring charges during the third quarter of 2004 and $3.9 million of restructuring charges during the same quarter last year.

The Company's annual effective tax rate for 2004 increased to 36.5 percent during second quarter 2004 and remained at that level for the third quarter compared to 35.0 percent for 2003. The increase in the effective tax rate was due to increased state taxes and a reduced benefit from federal and state tax credits. Effective October 4, 2004, as part of the Working Families Tax Relief Act of 2004, the research tax credit that expired on June 30, 2004 was reinstated. The Company does not anticipate that this will have a material impact. The Company currently expects the effective tax rate to remain at 36.5 percent in 2004.

Net income was $36.7 million compared to $34.4 million in the same period in 2003, an increase of 6.8 percent. Net income per share was $0.65 per diluted share compared to $0.59 per diluted share in third quarter 2003, an increase of 10.2 percent. Net income per share was positively impacted $0.02 by the Company's share repurchase program.

For the first nine months of 2004, consolidated net sales increased 19.0 percent to $1.5 billion compared to $1.3 billion in 2003. Sales from the Company's acquisitions during 2004 accounted for approximately $91 million of the sales increase. Approximately $16 million was due to price increases. Gross margins year-to-date increased to 36.2 percent compared to 36.1 percent last year. Included in 2004 gross margins is approximately $36 million of increased steel costs and $7 million of additional other material costs. Included in 2003 gross margins was $6.7 million of accelerated depreciation related to facility shutdowns, which reduced margins 0.5 percentage points. Net income was $85.0 million or $1.47 per diluted share compared to $70.5 million or $1.21 per diluted share in 2003, an increase of 21.5 percent.

Office Furniture

For the quarter, net sales for the office furniture segment increased 15.2 percent to $435.7 million from $378.4 million for the same quarter last year. Adjusting for the extra week in third quarter 2003, net sales, on a comparative basis, increased approximately 24 percent. Sales from the Company's acquisition of Paoli and Omni Remanufacturing accounted for approximately $32 million of the increase while approximately $9.5 million was due to price increases. Operating profit prior to unallocated corporate expenses increased to $48.0 million compared to $45.2 million in 2003. Operating profit as a percent of net sales decreased to 11.0 percent compared to 12.0 percent in 2003 due to higher steel, other material and freight costs. Included in third quarter 2003 results were $5.1 million of accelerated depreciation and $3.9 million of restructuring charges related to plant shutdowns. Net sales on a year-to-date basis increased 19.7 percent to $1.2 billion compared to $1.0 billion in 2003. Operating profit as a percent of sales was flat at 10.0 percent for both years.

Hearth Products

For the quarter, net sales for the hearth products segment increased 13.2 percent to $137.8 million from $121.7 million for the same quarter last year. Adjusting for the extra week in third quarter 2003, net sales, on a comparative basis, increased approximately 22 percent. Sales from the Company's acquisition of Edward George Company accounted for approximately $7.8 million of the increase while approximately $4.4 million was due to price increases. Operating profit prior to unallocated corporate expenses remained flat at $17.5 million. Operating profit as a percent of sales decreased to 12.7 percent compared to 14.3 percent for the same quarter last year due to increased steel and freight costs and realization of lower margin on the initial of inventory at Edward George which was acquired during the third quarter. Net sales on a year-to-date basis increased 16.9 percent to $376.1 million compared to $321.7 million. Operating profit as a percent of sales increased to 11.6 percent compared to 10.5 percent in 2003. Improved profitability on a year-to-date basis is a result of leveraging fixed costs over a higher sales volume, a stronger mix of sales through owned distribution, and price increases partially offset by higher steel and freight costs.

Liquidity and Capital Resources

As of October 2, 2004, cash and short-term investments were $9.4 million compared to $204.2 million at year-end 2003. Cash flow from operations for the first nine months increased to $110.1 million compared to $94.7 million last year due to improved operating results. Trade receivables and inventory levels have increased from year-end due to the Company's acquisitions and increased volume. Inventory turns have also been negatively impacted by an increase in foreign sourcing which will reduce the Company's overall costs. Cash flow and working capital management continue to be a major focus of management to ensure the Company is poised for growth. The Company has sufficient liquidity to manage its operations and maintains borrowing capacity of $136 million, less amounts for designated letters of credit through a revolving bank credit agreement.

Net capital expenditures, including capitalized software, for the first nine months of 2004 were $24.4 million versus $32.1 million in 2003 and were primarily for tooling and equipment for new products. The first nine months of 2003 included funding for the purchase of a previously leased hearth products plant. Cash from operations funded these investments.

The Company completed the acquisitions of Paoli Inc., Omni Remanufacturing Inc., Edward George Company, and a small hearth distributor for a total of $131.9 million during 2004. The Company paid off $26.1 million of convertible debentures related to a previous hearth acquisition during the first quarter of 2004. The Company has received approximately $6.3 million of proceeds from issuance of its stock due to the exercise of previously vested stock options and the Company's member stock ownership plan.

The Board of Directors declared a regular quarterly cash divided of $0.14 per share on its common stock on August 2, 2004, to shareholders of record at the close of business on August 12, 2004. It was paid on September 1, 2004.

For the nine months ended October 2, 2004, the Company repurchased 2,469,800 shares of its common stock at a cost of approximately $97.7 million. As of October 2, 2004, $43.6 million of the Board's current repurchase authorization remained unspent.

Commitments and Contingencies

During the second quarter ended June 28, 2003, the Company entered into a one-year financial agreement for the benefit of one of its distributor chain partners, which was extended. The maximum financial exposure assumed by the Company as a result of this arrangement totals $2.6 million of which over 89% is secured by collateral. In accordance with the provisions of FIN 45, the Company has recorded the fair value of this guarantee, which is estimated to be less than $0.1 million.

Looking Ahead

Management believes that moderate growth trends in the overall office furniture and hearth products markets will continue. The Company's core businesses have been performing well but have been negatively impacted by increased steel costs and oil based material prices. The Company continues to look at price increases driven by material costs, but due to the competitive environment and a timing lag of price effectivity, the Company anticipates it will continue to experience a lag between price increases and steel costs through the remainder of the year.

The Company continues its focus on creating long-term shareholder value by growing its businesses through aggressive investments in building brands, enhancing its strong member-owner culture and remaining focused on its rapid continuous improvement programs to build best total cost.

Forward-Looking Statements

Statements in this report that are not strictly historical, including statements as to plans, objectives, and future financial performance, are "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, which may cause the Company's actual results in the future to differ materially from expected results. These risks include, among others: the Company's ability to realize financial benefits (a) from its price increases, (b) from its cost containment and business simplification initiatives, (c) from its investments in strategic acquisitions, new products and brand building, (d) from its investments in distribution and rapid continuous improvement and (e) from its repurchases of common stock; uncertainty related to the availability of cash to fund future growth; lower than expected demand for the Company's products due to uncertain political and economic conditions; lower industry growth than expected; uncertainty related to disruptions of business by terrorism or military action; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials (including steel and petroleum based materials); and other factors described in the Company's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q.

Item 4. Controls and Procedures

Under the supervision and with the participation of management, the chief executive officer and chief financial officer of the Company have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of October 2, 2004, and, based on their evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures are effective. There were no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.

Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

(E) Issuer Purchases of Equity Securities

The following is a summary of share repurchase activity during the third quarter ended October 2, 2004.

Period	(a) Total Number of Shares (or Units) Purchased ⁽¹⁾	(b) Average price Paid per Share or Unit	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
7/4/04 - 7/31/04	439,700	$41.01	439,700	$79,526,566.29
8/1/04 - 8/28/04	415,800	$39.03	415,800	$63,299,274.49
8/29/04- 10/2/04	490,000	$40.11	490,000	$43,643,848.41
Total	1,345,500	$40.07	1,345,500	$43,643,848.41

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

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

Plan announced May 4, 2004, providing share repurchase authorization of $100,000,000 with no specified expiration date.

No repurchase plans expired or were terminated during the third quarter, nor do any plans exist under which the company does not intend to make further purchases.

Item 6. Exhibits and Reports on Form 8-K

Exhibits. See Exhibit Index.

Reports on Form 8-K:

The Company filed a periodic report on Form 8-K dated July 19, 2004, to furnish the Company's press release relating to the acquisition of Edward George Company and its affiliate Wisconsin Fireplace Systems.

The Company filed a periodic report on Form 8-K dated July 22, 2004, to furnish the Company's earnings release for the second quarter ended July 3, 2004.

The Company filed a periodic report on Form 8-K dated August 3, 2004, to furnish the Company's press releases announcing the election of Larry B. Porcellato and Miguel M. Calado as members of the Company's Board of Directors.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: November 5, 2004	HNI Corporation By: /s/ Jerald K. Dittmer Jerald K. Dittmer Vice President and Chief Financial Officer


EXHIBIT INDEX
(3ii)	By-laws of the Registrant, as amended
(10xv)	HNI Corporation Long-Term Performance Plan of the Registrant, as amended and restated on August 2, 2004, effective as of January 1, 2004
(31.1)	Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31.2)	Certification of the CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32.1)	Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(99A)	Executive Bonus Plan of the Registrant as amended and restated on August 2, 2004, effective as of January 1, 2004

Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER Sarbanes-Oxley Act Section 302
I, Stan A. Askren, President and Chief Executive Officer of HNI Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of HNI Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; and 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly, during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: November 5, 2004	/s/ Stan A. Askren
	Name: Stan A. Askren Title: President and Chief Executive Officer

Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER Sarbanes-Oxley Act Section 302
I, Jerald K. Dittmer, Vice President and Chief Financial Officer of HNI Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of HNI Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; and 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly, during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: November 5, 2004	/s/ Jerald K. Dittmer
	Name: Jerald K. Dittmer Title: Vice President and Chief Financial Officer

(EXHIBIT 32.1)

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of HNI Corporation (the "Company") for the quarterly period ended October 2, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Stan A. Askren, as President and Chief Executive Officer of the Company, and Jerald K. Dittmer, as Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
	/s/ Stan A. Askren
	Name: Stan A. Askren Title: President and Chief Executive Officer Date: November 5, 2004
	/s/ Jerald K. Dittmer
	Name: Jerald K. Dittmer Title: Vice President and Chief Financial Officer Date: November 5, 2004
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-3 2 rhnibylaws1.htm EXHIBIT 3II - BY-LAWS HON BYLAWS [BYLAWS]

(Exhibit 3ii)

BY-LAWS

HNI CORPORATION

Adopted on September 7, 1960.
Amended on April 23, 1964, April 28, 1966, August 13, 1969, April 15, 1970,
February 12, 1976, July 23, 1976, January 11, 1977, February 13, 1977, April 18, 1977,
July 28, 1977, July 29, 1977, October 27, 1977, February 27, 1978, February 19, 1979,
August 1, 1979, March 3, 1980, April 30, 1980, October 29, 1980,
August 3, 1982, January 31, 1983, October 31, 1983, October 30, 1984,
February 5, 1985, May 6, 1985, February 4, 1986, August 5, 1986,
February 15, 1988, July 7, 1988, March 13, 1990, February 11, 1991, April 29, 1991,
July 29, 1991, May 5, 1992, November 2, 1992, May 11, 1993, February 14, 1994,
May 10, 1994, November 13, 1995, May 14, 1996, May 12, 1997,
March 4, 1998, July 29, 1998, November 10, 2000, November 7, 2002,
February 12, 2003, May 5, 2003, November 7, 2003, February 11, 2004 and August 2, 2004

ARTICLE 1. OFFICES AND PLACES OF BUSINESS

	Section 1.01. Principal Place of Business. The principal place of business of the
Corporation shall be located in such place, within or without the State of Iowa, as shall be fixed by or pursuant to authority granted by the Board of Directors from time to time.
	Section 1.02. Registered Office. The registered office of the Corporation required
by the Iowa Business Corporation Act to be maintained in the State of Iowa may be, but need not be, the same as its principal place of business. The registered office may be changed from time to time by the Board of Directors as provided by law.
	Section 1.03. Other Places. The Corporation may conduct its business, carry on its
operations, have offices, carry out any or all of its purposes, and exercise any or all of its powers anywhere in the world, within or without the State of Iowa.

ARTICLE 2. SHAREHOLDERS
	Section 2.01. Annual Meeting. The annual meeting of the shareholders shall be held
in each year at such time and place as shall be fixed by the Board of Directors or by the Chairman of the Board of Directors; provided, however, that the annual meeting shall not be scheduled on a legal holiday in the state where held. Any previously scheduled annual meeting may be postponed by resolution of the Board of Directors and on public notice given prior to the date previously scheduled for such annual meeting. At the annual meeting, the shareholders shall elect Directors as provided in Section 3.02 and may conduct any other business properly brought before the meeting. (As amended 4/23/64, 8/1/79, 10/31/83, and 4/29/91.)
	Section 2.02. Special Meetings. Special meetings of the shareholders, for any purpose
or purposes, may be called, and the time and place thereof fixed by the Board of Directors or by the holders of not less than 50 percent of all votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. Business conducted at any special meeting of shareholders shall be limited to the purposes stated in the notice of the meeting. Any previously scheduled special meeting of shareholders may be postponed by resolution of the Board of Directors and public notice given prior to the date previously scheduled for such special meeting of shareholders. (As amended 4/23/64, 8/1/79, 4/29/91 and 11/7/03.)
	Section 2.03. Place of Shareholders' Meetings. Any annual meeting or special meeting
of shareholders may be held at any place, either within or without the State of Iowa. The place of each meeting of shareholders shall be fixed as provided in these By-laws, or by a waiver or waivers of notice fixing the place of such meeting and signed by all shareholders entitled to vote at such meeting. If no designation is made of the place of a meeting of shareholders, the place of meeting shall be the registered office of the Corporation in the State of Iowa.
	Section 2.04. Notice of Shareholders' Meetings. Written or printed notice stating the
place, day, and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days (unless a longer period shall be required by law) nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. (As amended 4/29/91.)
	Section 2.05. Closing of Transfer Books; Fixing of Record Date. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, seventy days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least fifteen days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than fifteen days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the Board of Directors does not provide that the stock transfer books shall be closed and does not fix a record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the record date for such determination of shareholders shall be seventy days prior to the date fixed for such meeting or seventy days prior to the date of payment of such dividend, as the case may be. When any record date is fixed for any determination of shareholders such determination of shareholders shall be made as of the close of business on the record date. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof. (As amended 4/30/80, 8/3/82 and 4/29/91.)
	Section 2.06. Voting List. The officer or agent having charge of the stock transfer
books for shares of the Corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting. (As amended 4/29/91.)
		Section 2.07. Quorum of Shareholders. Except as otherwise expressly provided by the
Articles of Incorporation or these By-laws, a majority of the outstanding common shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders.
		Section 2.08. Adjourned Meetings. Any meeting of shareholders may be adjourned
from time to time and to any place, without further notice, by the chairman of the meeting or by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote and represented at the meeting, even if less than a quorum. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. (As amended 4/29/91.)
	Section 2.09. Vote Required for Action. The vote required for the adoption of any
motion or resolution or the taking of any action at any meeting of shareholders shall be as provided in the Articles of Incorporation. However, action may be taken on the following procedural matters by the affirmative vote of the holders of a majority of the outstanding common shares entitled to vote and represented at the meeting, even if less than a quorum: election or appointment of a Chairman or temporary Secretary of the meeting (if necessary), or adoption of any motion to adjourn or recess the meeting or any proper amendment of any such motion. Whenever the minutes of any meeting of shareholders shall state that any motion or resolution was adopted or that any action was taken at such meeting of shareholders, such minutes shall be prima facie evidence that such motion or resolution was duly adopted or that such action was duly taken by the required vote, and such minutes need not state the number of shares voted for and against such motion, resolution, or action.
	Section 2.10. Proxies. At all meetings of shareholders, a shareholder entitled to vote
may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Each such proxy shall be filed with the Secretary of the Corporation or the person acting as Secretary of the meeting, before or during the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.
	Section 2.11. Shareholders' Voting Rights. Each outstanding share entitled to vote
shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except as otherwise provided in the Articles of Incorporation. Voting rights for the election of Directors shall be as provided in Section 3.02 and in the Articles of Incorporation. (As amended 2/12/76.)
	Section 2.12. Voting of Shares by Certain Holders. Shares standing in the name
of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the By-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Treasury shares shall not be voted at any meeting or counted in determining the total number of outstanding shares at any given time.
	Section 2.13. Organization. The Chairman of the Board of Directors or the
Vice-Chairman or the President or a Vice-President, as provided in these By-laws, shall preside at each meeting of shareholders; but if the Chairman of the Board of Directors, the Vice-Chairman, the President, and each Vice-President shall be absent or refuse to act, the shareholders may elect or appoint a Chairman to preside at the meeting. The Secretary or an Assistant Secretary, as provided in these By-laws, shall act as Secretary of each meeting of shareholders; but if the Secretary and each Assistant Secretary shall be absent or refuse to act, the shareholders may elect or appoint a temporary Secretary to act as Secretary of the meeting. (As amended 4/23/64 and 8/1/79.)
	Section 2.14. Waiver of Notice by Shareholders. Whenever any notice whatsoever
is required to be given to any shareholder of the Corporation under any provision of law or the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before or after the time of the meeting or event of which notice is required, shall be deemed equivalent to the giving of such notice. Neither the business to be conducted at, nor the purpose of, any annual or special meeting of shareholders need be specified in any waiver of notice of such meeting. The attendance of any shareholder, in person or by proxy, at any meeting of shareholders shall constitute a waiver by such shareholder of any notice of such meeting to which such shareholder would otherwise be entitled, and shall constitute consent by such shareholder to the place, day, and hour of such meeting and all business which may be conducted at such meeting, unless such shareholder attends such meeting and objects at such meeting to any business conducted because the meeting is not lawfully called or convened. (As amended 4/29/91.)
	Section 2.15. Postponement of Shareholders' Meetings. Any meeting of the
shareholders may be postponed prior to the record date by the Board of Directors or by the Chairman. Written or printed notice of the postponement shall be delivered not less than 10 days nor more than 60 days before the date set for the meeting, either personally or by mail to each shareholder of record entitled to vote. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. (As adopted 2/11/91.)
	Section 2.16. Notice of Shareholder Business and Nominations.
	(a)		Annual Meeting of Shareholders.
			(1)		Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-law, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this By-law.
			(2)		For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to Subsection 2.16(a)(1)(iii), the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than sixty days nor more than ninety days prior to the first anniversary of the preceding year's annual meeting of shareholders; provided, however, that, if the date of the annual meeting is advanced by more than thirty days or delayed by more than sixty days from such anniversary date, notice by the shareholder, to be timely, must be so delivered not earlier than ninety days prior to such annual meeting and not later than the close of business on the later of the sixtieth day prior to such annual meeting or the tenth day following the date on which public announcement of the date of such meeting is first made. Such shareholder's notice shall set forth:
					(i)	as to each person whom the shareholder proposes to nominate for
election or reelection as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected);
					(ii)	as to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of such shareholder in such business and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, the name and address of such shareholder and of such beneficial owner as they appear on the Corporation's books, and the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.
			(3)		Notwithstanding anything in the second sentence of Subsection
2.16(a)(2) to the contrary, if the number of Directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all the nominees for Director or specifying the size of the increased Board of Directors at least seventy days prior to the first anniversary of the preceding year's annual meeting of shareholders, a shareholder's notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the date on which such public announcement is first made by the Corporation.
	(b)		Special Meetings of Shareholders. Nominations of persons for election to the
Board of Directors may be made at a special meeting of shareholders at which Directors are to be elected pursuant to the Corporation's notice of meeting (1) by or at the direction of the Board of Directors or (2) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-law, who is entitled to vote at the meeting, and who complies with the notice procedures set forth in this By-law. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder's notice required by Subsection 2.16(a)(2) is delivered to the Secretary at the principal executive offices of the Corporation no earlier than ninety days prior to such special meeting and not later than the close of business on the later of the sixtieth day prior to such special meeting or the tenth day following the date on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
	(c)		Appointment of Inspectors. The Chairman shall appoint one or more inspectors
to act at a meeting of Shareholders and make a written report of the inspectors' determinations. Each inspector shall sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector's ability. The inspector or inspectors shall: (1) ascertain the number of shares outstanding and the voting power of each, (2) determine the shares represented at the meeting, (3) determine the validity of proxies and ballots, (4) count all votes, and (5) determine the results. (As adopted 2/12/03.)
	(d)		General.
			(1)		Only persons who are nominated in accordance with the procedures
set forth in this By-law shall be eligible to serve as Directors, and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in these By-laws. Except as otherwise provided by law, the Articles of Incorporation, or the By-laws of the Corporation, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these By-laws and, if any proposed nomination or business is not in compliance with these By-laws, to declare that such defective proposal or nomination shall be disregarded. (As adopted 2/12/03).
			(2)		The Chairman shall determine the order of business for the meeting and
Shall have the authority to establish rules for the conduct of the meeting. Such rules and the conduct of any meeting of shareholders shall be fair to the shareholders. When elections are conducted at the meeting, the Chairman shall announce the meeting when the polls close for each matter upon which a vote is taken; if no such announcement is made, the polls will be deemed to have closed at the final adjournment of the meeting. No ballots, proxies, votes or revocations or changes to any ballots, proxies or votes will be accepted after the polls have closed. (As adopted 2/12/03.)
			(3)		For purposes of this By-law, "public announcement" means disclosure
in a press release reported by the Dow Jones News Service, Associated Press, or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.
			(4)		Notwithstanding the foregoing provisions of this By-law, a shareholder
shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law. Nothing in this By-law shall be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. (As adopted 4/19/91.)
ARTICLE 3. BOARD OF DIRECTORS
	Section 3.01. General Powers. The business and affairs of the Corporation shall be
managed by its Board of Directors. The Board of Directors may exercise all such powers of the Corporation and may do all such lawful acts and things as are not by law or the Articles of Incorporation or these By-laws expressly required to be exercised or done by the shareholders.
	Section 3.02. Election of Directors. Subject to the Articles of Incorporation, the
common shareholders shall elect one class of Directors at each annual meeting of shareholders. At each election of Directors, each common shareholder entitled to vote shall have the right to vote, in person or by proxy, the number of common shares owned by him and entitled to vote, for as many persons as the number of the class to be elected. Cumulative voting shall not be permitted. The election of Directors may be conducted by written ballot, but need not be conducted by written ballot unless required by a rule or motion adopted by the shareholders. (As amended 2/12/76.)
	Section 3.03. Number, Terms, Classification, and Qualifications. Subject to the
Articles of Incorporation:
	(a)		The number of Directors shall be thirteen. (As amended 10/29/80, 1/31/83,
2/5/85, 8/5/86, 3/13/90, 5/5/92, 11/2/92, 5/11/93, 2/14/94, 5/10/94, 11/13/95, 5/14/96, 3/4/98, 7/29/98, 11/7/02, 2/12/03, 5/05/03, 11/07/03 and 8/2/04.)
	(b)		The Directors shall be divided into three classes, each of which shall be as nearly
equal in number as possible. The term of office of one class shall expire in each year. At each annual meeting of the shareholders a number of Directors equal to the number of the class whose term expires at the annual meeting shall be elected for a term ending when Directors are elected at the third succeeding annual meeting. Section 6.03 of the Articles of Incorporation shall apply if there is a failure in any one or more years to elect one or more Directors or to elect any class of Directors. (As amended 2/4/86.)
	(c)		The number of Directors may be increased or decreased from time to time by
amendment of this Section, but no decrease shall have the effect of shortening the term of any incumbent Director. Any new Directorships shall be assigned to classes, and any decrease in the number of Directors shall be scheduled, in such a manner that the three classes of Directors shall be as nearly equal in number as possible.
	(d)		The term of each Director shall begin at the time of his election. Unless sooner
removed as provided in the Articles of Incorporation or elected to fill a vacancy with a shorter unexpired term pursuant to Section 3.04, each Director shall serve for a term ending when Directors are elected at the third succeeding annual meeting of shareholders. However, any Director may resign at any time by delivering his written resignation to the Chairman, Vice-Chairman, President, or Secretary of the Corporation. The resignation shall take effect immediately upon delivery, unless it states a later effective date. (As amended 8/1/79.)
	(e)		Directors need not be residents of the State of Iowa or shareholders of the
Corporation. (As amended 4/23/64, 4/15/70, 2/12/76, 7/23/76, 1/11/77, 4/18/77, 7/28/77, 7/29/77, 2/27/78, and 2/4/86.)
	Section 3.04. Vacancies in Board. Any vacancy occurring in the Board of Directors
for any reason, and any Directorship to be filled by reason of an increase in the number of Directors, may be filled by the affirmative vote of a majority of the Directors then in office even if less than a quorum (notwithstanding Sections 3.09 and 3.11). Except as otherwise provided in Section 6.03 of the Articles of Incorporation, a Director elected as provided in this Section shall be elected for the unexpired term of his predecessor in office or the unexpired term of the class of Directors to which his new Directorship is assigned. However, if a Director is elected to fill a vacancy caused by the resignation of a predecessor whose resignation has not yet become effective, the new Director's term shall begin when his predecessor's resignation becomes effective. (As amended 4/23/64 and 2/12/76.)
	Section 3.05. Regular Meetings. A regular meeting of the Board of Directors may
be held without notice other than this Section, promptly after and at the same place as each annual meeting of shareholders. Other regular meetings of the Board of Directors may be held at such time and at such places as shall be fixed by (or pursuant to authority granted by) resolution or motion adopted by the Board of Directors from time to time, without notice other than such resolution or motion. However, unless both the time and place of a regular meeting shall be fixed by the Board of Directors, notice of such meeting shall be given as provided in Section 3.08.
	Section 3.06. Special Meetings. Special meetings of the Board of Directors may be
called, and the time and place thereof fixed, by the Chairman of the Board of Directors or the Vice-Chairman or the President or the Secretary or by a majority of the Directors then in office. (As amended 4/23/64 and 8/1/79.)
	Section 3.07. Place of Meetings. Any regular meeting or special meeting of the Board
of Directors may be held at any place, either within or without the State of Iowa. The place of each meeting of the Board of Directors shall be fixed as provided in these By-laws, or by waiver or waivers of notice fixing the place of such meeting and signed by all Directors then in office. If no designation is made of the place of a meeting of the Board of Directors, the place of meeting shall be the registered office of the Corporation in the State of Iowa.
	Section 3.08. Notice of Special Meetings. Written or printed notice stating the place,
day, and hour of a special meeting of the Board of Directors shall be delivered before the time of the meeting, either personally or by mail or by telegram, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Director at his address as it appears on the records of the Corporation, with postage thereon prepaid. If given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company, addressed to the Director at his address as it appears on the records of the Corporation. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice of such meeting. (As amended 7/7/88.)
	Section 3.09. Quorum. Except as otherwise expressly provided by the Articles of
Incorporation or these By-laws, a majority of the number of Directors fixed by these By-laws shall constitute a quorum at any meeting of the Board of Directors.
	Section 3.10. Adjourned Meetings. Any meeting of the Board of Directors may be
adjourned from time to time and to any place, without further notice, by the affirmative vote of a majority of the Directors present at the meeting, even if less than a quorum. At any adjourned meeting at which a quorum shall be present, any business may be conducted which might have been transacted at the meeting as originally notified. (As amended 4/29/91.)
	Section 3.11. Vote Required for Action. Except as otherwise provided in these
By-laws, the affirmative vote of a majority of the number of Directors fixed by these By-laws shall be required for and shall be sufficient for the adoption of any motion or resolution or the taking of any action at any meeting of the Board of Directors. However, the following actions may be taken by the affirmative vote of a majority of the Directors present at the meeting, even if less than a quorum: election or appointment of a Chairman or temporary Secretary of the meeting (if necessary), or adoption of any motion to adjourn or recess the meeting or any proper amendment of any such motion. Whenever the minutes of any meeting of the Board of Directors shall state that any motion or resolution was adopted or that any action was taken at such meeting of the Board of Directors, such minutes shall be prima facie evidence that such motion or resolution was duly adopted or that such action was duly taken by the required vote, and such minutes need not state the number of Directors voting for and against such motion, resolution, or action.
	Section 3.12. Voting. Each Director (including, without limiting the generality of the
foregoing, any Director who is also an officer of the Corporation and any Director presiding at a meeting) may vote on any question at any meeting of the Board of Directors, except as otherwise expressly provided in these By-laws. (As amended 4/23/64.)
	Section 3.13. Organization. The Chairman of the Board of Directors or the
Vice-Chairman or the President or a Vice-President, as provided in these By-laws, shall preside at each meeting of the Board of Directors; but if the Chairman of the Board of Directors, the Vice-Chairman, the President, and each Vice-President shall be absent or refuse to act, the Board of Directors may elect or appoint a Chairman to preside at the meeting. The Secretary or an Assistant Secretary, as provided in these By-laws, shall act as Secretary of each meeting of the Board of Directors; but if the Secretary and each Assistant Secretary shall be absent or refuse to act, the Board of Directors may elect or appoint a temporary Secretary to act as Secretary of the meeting. (As amended 4/23/64 and 8/1/79.)
	Section 3.14. Rules and Order of Business. The Board of Directors may adopt such
rules and regulations, not inconsistent with applicable law or the Articles of Incorporation or these By-laws, as the Board of Directors deems advisable for the conduct of its meetings. Except as otherwise expressly required by law or the Articles of Incorporation or these By-laws or such rules or regulations, meetings of the Board of Directors shall be conducted in accordance with Robert's Rules of Order, Revised (as further revised from time to time). Unless otherwise determined by the Board of Directors, the order of business at the first meeting of the Board of Directors held after each annual meeting of shareholders, and at other meetings of the Board of Directors to the extent applicable, shall be as follows:
			(1)		Roll call or other determination of attendance and quorum.
			(2)		Proof of notice of meeting.
			(3)		Reading and action upon minutes of preceding meeting and any other
unapproved minutes.
			(4)		Report of President.
			(5)		Reports of other officers and committees.
			(6)		Election of officers.
			(7)		Unfinished business.
			(8)		New business.
			(9)		Adjournment.
Failure to comply with the requirements of this Section shall not affect the validity of any action taken at any meeting unless (a) specific and timely objection is made at the meeting and (b) the person complaining thereto sustains direct and material damage by reason of such failure.
	Section 3.15. Presumption of Assent. A Director of the Corporation who is present at
a meeting of the Board of Directors or a committee thereof at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered or certified mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.
	Section 3.16. Waiver of Notice by Directors. Whenever any notice whatsoever
is required to be given to any Director of the Corporation under any provision of law or the Articles of Incorporation or these By-laws, a waiver thereof in writing signed by the Director or Directors entitled to such notice, whether signed before or after the time of the meeting or event of which notice is required, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in any waiver of notice of such meeting. The attendance of any Director at any meeting of the Board of Directors shall constitute a waiver by such Director of any notice of such meeting to which such Director would otherwise be entitled, and shall constitute consent by such Director to the place, day, and hour of such meeting and all business which may be conducted at such meeting, unless such Director attends such meeting and objects at such meeting to any business conducted because the meeting is not lawfully called or convened. (As amended 4/29/91.)
	Section 3.17. Informal Action by Directors. Any action required by law or the Articles
of Incorporation or these By-laws to be taken by vote of or at a meeting of the Board of Directors, or any action which may or could be taken at a meeting of the Board of Directors (or of a committee of Directors), may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the Directors then in office (or all of the members of such committee, as the case may be). Such consent shall have the same force and effect as unanimous vote. The signing by each such Director (or by each member of such committee) of any one of several duplicate originals or copies of the instrument evidencing such consent shall be sufficient. The written instrument or instruments evidencing such consent shall be filed with the Secretary, and shall be kept by the Secretary as part of the minutes of the Corporation. Such action shall be deemed taken on the date of such written instrument or instruments as stated therein, or on the date of such filing with the Secretary, whichever of such two dates occurs first. (As amended 4/23/64.)
	Section 3.18. Committees. The Board of Directors, by resolution adopted by the
affirmative vote of a majority of the number of Directors fixed by Section 3.03, may designate one or more committees (including, without limiting the generality of the foregoing, an Executive Committee). Each committee shall consist of two or more Directors elected or appointed by the Board of Directors. To the extent provided in such resolution as initially adopted and as thereafter supplemented or amended by further resolution adopted by a like vote, any such committee shall have and may exercise, when the Board of Directors is not in session, all the authority and powers of the Board of Directors. However, no committee shall have or exercise any authority prohibited by law. No member of any committee shall continue to be a member thereof after he ceases to be a Director of the Corporation. Unless otherwise ordered by the Board of Directors, the affirmative vote or consent in writing of all members of a committee shall be required for the adoption of any motion or resolution or the taking of any action by any such committee, except that an alternate member may take the place of any absent member to the extent hereinafter provided. The Board of Directors may elect or appoint one or more Directors as alternate members of any such committee. Any such alternate member may take the place of any absent member, upon request by the Chairman of the Board of Directors or the Vice-Chairman or the President or the Chairman of such committee. The vote or consent in writing of such alternate member in the absence of such member shall have the same effect as the vote or consent in writing of such member. (As amended 8/1/79.) The Board of Directors may at any time increase or decrease the number of members of any committee, fill vacancies therein, remove any member thereof, adopt rules and regulations therefor, or change the functions or terminate the existence thereof. The designation of any committee and the delegation thereto of authority shall not operate to relieve the Board of Directors or any Director of any responsibility imposed by law. (As amended 4/23/64.)
	Section 3.19. Compensation. The Board of Directors may fix or provide for reasonable
compensation of any or all Directors for services rendered to the Corporation as Directors, including, without limiting the generality of the foregoing, payment of expenses of attendance at meetings of the Board of Directors or committees, payment of a fixed sum for attendance at each meeting of the Board of Directors or a committee, salaries, bonuses, pensions, pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans (subject to approval of the shareholders if required by law), and other incentive, insurance, and welfare plans, whether or not on account of prior services rendered to the Corporation. No such compensation shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefore. (As amended 2/11/04.)
ARTICLE 4. OFFICERS
	Section 4.01. Number and Designation. The officers of the Corporation shall be a
Chairman of the Board of Directors, a Vice-Chairman, a Chief Executive Officer, a President, one or more Vice-Presidents, a Secretary, a Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as the Board of Directors deems advisable. (As amended 4/23/64, 8/1/79 and 2/11/04.)
	Section 4.02. Election or Appointment of Officers. At the first meeting of the Board of
Directors held after each annual meeting of shareholders, the Board of Directors shall elect the officers specifically referred to in Section 4.01, and shall elect or appoint such other officers and agents as the Board deems advisable. If in any year the election of officers does not take place at such meeting, such election shall be held as soon thereafter as may be convenient. In addition, the Board of Directors may from time to time elect, appoint, or authorize any officer to appoint such other officers and agents as the Board deems advisable. Any election may be conducted by ballot, but need not be conducted by ballot unless required by a rule, regulation, or motion adopted by the Board of Directors. (As amended 3/3/80 and 2/11/04.)
	Section 4.03. Tenure and Qualifications. Each officer, unless sooner removed as
provided in Section 4.04, shall hold office until his successor shall be elected or appointed and shall qualify. However, any officer may resign at any time by filing his written resignation with the President or Secretary of the Corporation; and such resignation shall take effect immediately upon such filing, unless a later effective date is stated therein. Officers need not be residents of the State of Iowa or Directors or shareholders of the Corporation. Any two or more offices may be held by the same person.
	Section 4.04. Removal. Any officer or agent of the Corporation may be removed by the
Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.
	Section 4.05. Vacancies. Any vacancy occurring in any office for any reason may be
filled by the Board of Directors.
	Section 4.06. Duties and Powers of Officers. Except as otherwise expressly provided
by law or the Articles of Incorporation or these By-laws, the duties and powers of all officers and agents of the Corporation shall be determined and defined from time to time by the Board of Directors. Unless otherwise determined by the Board of Directors, the officers referred to in the following Sections shall have the duties and powers set forth in the following Sections, in addition to all duties and powers of such officers prescribed by law or by the Articles of Incorporation or other provisions of these By-laws. However, the Board of Directors may from time to time alter, add to, limit, transfer to another officer or agent, or abolish any or all of the duties and powers of any officer or agent of the Corporation (including, without limiting the generality of the foregoing, the duties and powers set forth in the following Sections and in other provisions of these By-laws). Any person who holds two or more offices at the same time may perform or exercise any or all of the duties and powers of either or both of such offices in either or both of such capacities.
	Section 4.07. Chairman of the Board of Directors; Vice-Chairman; Chief Executive
Officer; President.
	(a)		The Chairman of the Board of Directors shall preside at all meetings of
shareholders and of the Board of Directors. He shall be responsible for making recommendations concerning Board policies and committees, shall maintain Board liaison with the Chief Executive Officer and the President, and, when required, because of the inability of the Chief Executive Officer to act or otherwise, shall have the same powers as the Chief Executive Officer on behalf of the Corporation. He may from time to time, unless otherwise ordered by the Board, authorize or direct the Vice-Chairman, Chief Executive Officer or President to perform any of the duties or exercise any of the powers of the Chairman. (As amended 10/27/77, 10/30/84, 2/15/88, 7/29/91 and 2/12/03.)
	(b)		The Vice-Chairman shall preside at meetings of the shareholders or of the
Board in the absence of the Chairman. He shall also perform such other duties as the Chairman may authorize or direct. (As amended 7/29/91.)
	(c)		The Chief Executive Officer shall be the principal executive officer of the
Corporation. Subject only to the Board of Directors, he shall be in charge of the business of the Corporation; he shall see that all Corporation policies and all orders and resolutions of the Board are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the Board of Directors; and, in general, he shall discharge all duties incident to the office of the chief executive officer of the Corporation and such other duties as may be prescribed by the Board from time to time. In the absence of the Chairman and Vice-Chairman, the Chief Executive Officer shall preside at meetings of shareholders and of the Board. (As amended 2/12/03.)
	(d)		The President shall be the principal operating officer of the Corporation and,
subject only to the Board of Directors and to the Chief Executive Officer, he shall have the general authority over and general management and control of the property, business and affairs of the Corporation. In general, he shall discharge all duties incident to the office of the principal operating officer of the Corporation and such other duties as may be prescribed by the Board of Directors and the Chief Executive Officer from time to time. In the absence of the Chairman, Vice-Chairman, and Chief Executive Officer, the President shall preside at all meetings of shareholders and Board of Directors. In the absence of the Chairman and the Chief Executive Officer or in the event of their disability, or inability to act, or to continue to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all of the powers of and be subject to all of the restrictions upon the office of the Chief Executive Officer. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation or a different mode of execution is expressly prescribed by the Board of Directors or these By-laws, he may employ, appoint and discharge such employees, agents, attorneys and accountants (except the certified public accountants appointed by the Audit Committee of the Board as the independent auditor for the Corporation) for the Corporation as he deems necessary or advisable, and shall prescribe their authority, duties, powers, and compensation, including, if appropriate, the authority to perform some or all of the duties or exercise some or all of the powers of the President; and may make and enter into on behalf of the Corporation all deeds, conveyances, mortgages, leases, contracts, agreements, bonds, reports, releases, and other documents or instruments which may in his judgment be necessary or advisable in the ordinary course of the Corporation's business or which shall be authorized by the Board. (As amended 7/29/91, 2/12/03 and 2/11/04.)
	Section 4.08. Vice-Presidents. Two or more Vice Presidents, one or more of whom
may also be designated as Executive Vice President or Senior Vice President, each of whom shall have such duties and powers as may be prescribed from time to time by the President or the Board of Directors. (As amended 4/23/64, 10/27/77 and 11/10/00.)
	Section 4.09. Secretary. The Secretary:
	(a)		shall, when present, act as Secretary of each meeting of the shareholders and of
the Board of Directors;
	(b)		shall keep as permanent records the minutes of the meetings of the shareholders
and the Board of Directors, a record of all actions taken by the shareholders and the Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation in one or more books provided for that purpose; (As amended 2/12/03.)
	(c)		shall see that all notices are duly given and that lists of shareholders are made
and filed as required by law or the Articles of Incorporation or these By-laws;
	(d)		shall be custodian of and authenticate the corporate records of the Corporation as
required by the Iowa Business Corporation Act and the seal of the Corporation and shall, when duly authorized, see that the seal is affixed to any instrument requiring it; (As amended 2/12/03.)
	(e)		shall keep a record of the Directors, giving the names and business addresses of
all Directors; and (As amended 4/23/64, 2/19/79 and 2/12/03.)
	(f)		shall have all the usual duties and powers of the Secretary of a corporation and
such duties and powers as may be prescribed from time to time by the Chief Executive Officer, the President or the Board of Directors. (As amended 2/19/79 and 2/12/03.)
	Section 4.10. Treasurer. The Treasurer:
	(a)		shall have charge and custody of and be responsible for all funds, securities, and
Evidences of indebtedness belonging to the Corporation;
	(b)		shall receive and give receipts for moneys due and payable to the Corporation
from any source whatever;
	(c)		shall see that all such moneys are deposited in the name of and to the credit of
the Corporation in such depositories as shall be designated by or pursuant to authority granted by the Board of Directors;
	(d)		shall cause the funds of the Corporation to be disbursed when and as duly
authorized to do so;
	(e)		shall see that correct and complete books of account and financial statements
are kept and prepared in accordance with generally accepted accounting principles except to the extent such duties are assigned by the President to other officers or employees of the Corporation; (As amended 2/13/77.)
	(f)		shall have all the usual duties and powers of the Treasurer of a corporation and
such duties and powers as may be prescribed from time to time by the President or the Board of Directors; (As amended 2/13/77.)
	(g)		shall keep at the registered office or principal place of business of the
Corporation a record of its shareholders (which shall be part of the stock transfer books of the Corporation), giving the names and addresses of all shareholders and the number and class of the shares held by each; and (As amended 2/19/79.)
	(h)		shall have charge of the stock transfer books of the Corporation, and shall
record the issuance and transfer of shares, except to the extent that such duties shall be delegated by the Board of Directors to a transfer agent or registrar. (As amended 2/19/79.)
	Section 4.11. Assistant Secretaries. In the absence of the Secretary or in the event of his
death or inability or refusal to act, the Assistant Secretary (or, if there shall be more than one, the Assistant Secretaries in the order designated by the Board of Directors from time to time, or, in the absence of any such designation, in the order in which their names shall appear in the minutes showing their election) shall perform the duties and exercise the powers of the Secretary. Each Assistant Secretary shall also have such duties and powers as may be prescribed from time to time by the Secretary or the President or the Board of Directors. (As amended 4/23/64.)
	Section 4.12. Assistant Treasurers. In the absence of the Treasurer or in the event of his
death or inability or refusal to act, the Assistant Treasurer (or, if there shall be more than one, the Assistant Treasurers in the order designated by the Board of Directors from time to time, or, in the absence of any such designation, in the order in which their names shall appear in the minutes showing their election) shall perform the duties and exercise the powers of the Treasurer. Each Assistant Treasurer shall also have such duties and powers as may be prescribed from time to time by the Treasurer or the President or the Board of Directors. (As amended 4/23/64.)
	Section 4.13. Compensation. The Board of Directors may fix or provide for, or may
authorize any officer to fix or provide for, reasonable compensation of any or all of the officers, except the Chief Executive Officer, and agents of the Corporation, including, without limiting the generality of the foregoing, salaries, bonuses, payment of expenses, pensions, pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans (subject to approval of the shareholders if required by law), and other incentive, insurance, and welfare plans, whether or not on account of prior services rendered to the Corporation. The compensation of the Chief Executive Officer shall be set by the Human Resources and Compensation Committee in connection with the independent directors who are not members of that Committee. (As amended 4/23/64 and 2/11/04.)
	Section 4.14. Bond. The Board of Directors may require an officer or agent to give a
bond for the faithful performance of his duties, in such amount and with such surety or sureties as the Board of Directors deems advisable.
ARTICLE 5. SHARES AND CERTIFICATES
	Section 5.01. Issuance of and Consideration for Shares. Shares and securities
convertible into shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, and may be issued to such persons as may be designated from time to time by or pursuant to authority granted by the Board of Directors, except as otherwise required by law or the Articles of Incorporation or these By-laws. (As amended 5/12/97.)
	Section 5.02. Restrictions on Issuance of Shares and Certificates. No share of the
Corporation shall be issued until such share is fully paid as provided by law. (As amended 5/12/97.)
No fractional share or certificate representing any fractional share shall be issued unless expressly authorized by the Board of Directors. No new certificate shall be issued in place of any certificate until the old certificate for a like number of shares shall have been surrendered and cancelled, except as otherwise provided in Section 5.04.
	Section 5.03. Certificates Representing Shares. Each shareholder shall be entitled to a
certificate or certificates representing the shares of the Corporation owned by him. Certificates representing shares of the Corporation shall be in such form as shall be determined by or pursuant to authority granted by the Board of Directors. Each certificate shall be signed by the President or a Vice-President and by the Secretary or an Assistant Secretary, and the corporate seal may be affixed thereto. All certificates shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, and the number and class of shares and date of issuance, shall be entered on the stock transfer books of the Corporation.
	Section 5.04. Lost, Destroyed, Stolen, or Mutilated Certificates. The Board of
Directors may authorize a new certificate to be issued in place of any certificate alleged to have been lost, destroyed, or stolen, or which shall have been mutilated, upon production of such evidence and upon compliance with such conditions as the Board of Directors may prescribe.
	Section 5.05. Transfer of Shares. Shares of the Corporation shall be transferable only
on the stock transfer books of the Corporation, by the holder of record thereof or by his duly authorized attorney or legal representative (who shall furnish such evidence of authority to transfer as the Corporation or its agent may reasonably require), upon surrender to the Corporation for cancellation of the certificate representing such shares, duly endorsed or with a proper written assignment or power of attorney duly executed and attached thereto, and with such proof of the authenticity of signatures as the Corporation or its agent may reasonably require. The Corporation shall cancel the old certificate, issue a new certificate to the person entitled thereto, and record the transaction on its stock transfer books. However, if the applicable law permits shares to be transferred in a different manner, then to the extent required to comply with such law all references in this Section to "shares" shall mean the rights against the Corporation inherent in or arising out of such shares.
	Section 5.06. Shareholders of Record; Change of Name or Address. The Corporation
shall be entitled to recognize the exclusive right of a person shown on its stock transfer books as the holder of shares to receive notices and dividends, to vote as such holder, and to have and exercise all other rights deriving from such shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have actual or constructive notice thereof. Unless the context or another provision of these By-laws clearly indicates otherwise, all references in these By-laws to "shareholders" and "holders" shall mean the shareholders of record as shown on the stock transfer books of the Corporation. Each shareholder and each Director shall promptly notify the Secretary in writing of his correct address and any change in his name or address from time to time. If any shareholder or Director fails to give such notice, neither the Corporation nor any of its Directors, officers, agents, or employees shall be liable or responsible to such shareholder or Director for any error or loss which might have been prevented if such notice had been given. (As amended 4/23/64.)
	Section 5.07. Regulations. The Board of Directors may adopt such rules and
regulations, not inconsistent with applicable law or the Articles of Incorporation or these By-laws, as it deems advisable concerning the issuance, transfer, conversion, and registration of certificates representing shares of the Corporation.
ARTICLE 6. GENERAL PROVISIONS
	Section 6.01. Seal. The corporate seal shall be circular in form and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal" and "Iowa". The seal may be affixed by causing it or a facsimile thereof to be impressed or reproduced or otherwise.
	Section 6.02. Fiscal Year. The fiscal year of the Corporation shall be fixed by the
Board of Directors from time to time.
	Section 6.03. Dividends. The Board of Directors may from time to time declare, and
the Corporation may pay, dividends on the outstanding shares in the manner and upon the terms and conditions provided by law and the Articles of Incorporation.
	Section 6.04. Execution of Documents and Instruments. All deeds and conveyances
of real estate, mortgages of real estate, and leases of real estate (for an initial term of five years or more) to be executed by the Corporation shall be signed in the name of the Corporation by the Chairman of the Board of Directors or the Vice-Chairman or the Chief Executive Officer or the President or a Vice-President and signed or attested by the Secretary or an Assistant Secretary, and the corporate seal shall be affixed thereto. All other documents or instruments to be executed by the Corporation (including, without limiting the generality of the foregoing, contracts, agreements, bonds, reports, notices, releases, promissory notes, and evidences of indebtedness; and deeds, conveyances, mortgages, and leases other than those referred to in the preceding sentence) shall be signed in the name of the Corporation by any one or more of the officers of the Corporation, with or without the corporate seal. However, from time to time the Board of Directors or the Chairman of the Board of Directors or the Vice-Chairman or the Chief Executive Officer or the President may alter, add to, limit, transfer to another officer or agent, or abolish the authority of any officer or officers to sign any or all documents or instruments, or may authorize the execution of any document or instrument by any person or persons, with or without the corporate seal, and such action may be either general or confined to specific instances. (As amended 4/23/64, 8/1/79 and 2/11/04.)
	Section 6.05. Loans. No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness shall be issued in its name unless authorized by or pursuant to authority granted by the Board of Directors. Such authorization may be either general or confined to specific instances.
	Section 6.06. Checks and Drafts. All checks and drafts issued in the name of the
Corporation shall be signed by such person or persons and in such manner as shall be authorized by or pursuant to authority granted by the Board of Directors.
	Section 6.07. Voting of Shares Owned by Corporation. Any shares or securities of
any other corporation or company owned by this Corporation may be voted at any meeting of shareholders or security holders of such other corporation or company by the Chairman of the Board of Directors of this Corporation. Whenever in the judgment of the Chairman of the Board of Directors it shall be advisable for the Corporation to execute a proxy or waiver of notice or to give a consent with respect to any shares or securities of any other corporation or company owned by this Corporation, such proxy, waiver, or consent shall be executed in the name of this Corporation, as directed by the Chairman of the Board of Directors, without necessity of any authorization by the Board of Directors. Any person or persons so designated as the proxy or proxies of this Corporation shall have full right, power, and authority to vote such shares or securities on behalf of this Corporation. In the absence of the Chairman of the Board of Directors or in the event of his death or inability to act, the Vice-Chairman may perform the duties and exercise the powers of the Chairman of the Board of Directors under this Section. The provisions of this Section shall be subject to any specific directions by the Board of Directors. (As amended 4/23/64 and 8/1/79.)
	Section 6.08. Director Conflict of Interest.
	(a) A conflict of interest transaction is a transaction with the corporation in which a Director of the Corporation has a direct or indirect interest. A conflict of interest transaction is not voidable by the Corporation solely because of the Director's interest in the transaction if any one of the following is true:
				(1) The material facts of the transaction and the Director's interest were disclosed or known to the Board of Directors or a committee of the Board of Directors and the Board of Directors or committee authorized, approved or ratified the transaction. (2) The material facts of the transaction and the Director's interest were disclosed or known to the shareholders entitled to vote and the shareholders authorized, approved or ratified the transaction. (3) The transaction was fair to the Corporation.
	(b) For purposes of these By-laws, a Director of the Corporation has an indirect interest in a transaction if either of the following is true:
				(1) Another entity in which the Director has a material financial interest or in which the Director is a general partner is a party to the transaction. (2) Another entity of which the Director is a director, officer or trustee is a party to the transaction and the transaction is or should be considered by the Board of Directors of the Corporation.
	(c) For purposes of subsection a(1), a conflict of interest transaction is authorized, approved or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors or on the committee, who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved or ratified under this section by a single Director. If a majority of the Directors who have no direct or indirect interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action. The presence of, or a vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection (a)(1), if the transaction is otherwise authorized, approved or ratified as provided in that subsection. (d) For purposes of subsection (a)(2), a conflict of interest is authorized, approved or ratified if it receives the vote of a majority of the shares entitled to be counted under this subsection. Shares owned by or voted under the control of a Director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in subsection (b)(1) shall not be counted in a vote of shareholders to determine whether to authorize, approve or ratify a conflict of interest transaction under subsection (a)(2). The vote of those shares, however, is counted in determining whether the transaction is approved under other sections of these By-laws. A majority of the shares, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section. (As adopted 2/12/03.)
	Section 6.09. Limitation of Officers' Liability. An officer shall not be liable as an
officer to the Corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, if the duties of the officer are performed in compliance with the standards of conduct for officers prescribed in the Iowa Business Corporation Act. (As amended 2/12/03.)
	Section 6.10. Indemnification. The Corporation may indemnify a Director or officer of
the Corporation who is a party to a proceeding against liability incurred by such Director or officer in the proceeding to the maximum extent now or hereafter permitted by and in the manner prescribed by the Iowa Business Corporation Act, including the advancement of expenses. Without limiting the generality of the foregoing, the Corporation may enter into indemnification agreements consistent with the Iowa Business Corporation Act with each Director of the Corporation and such officers of the Corporation as the Board of Directors deems appropriate from time to time. (As amended 2/12/03.)
	Section 6.11. Reliance on Documents. Each Director and officer shall, in the
performance of his duties, be fully protected in relying and acting in good faith upon the books of account or other records of the Corporation, or reports made or financial statements presented by any officer of the Corporation or by an independent public or certified public accountant or firm of such accountants or by an appraiser selected with reasonable care by the Board of Directors or by any committee thereof; and each Director and officer is hereby expressly relieved from any liability which might otherwise exist or arise from or in connection with any such action.
	Section 6.12. Effect of Partial Invalidity. If a court of competent jurisdiction shall
adjudge to be invalid any clause, sentence, paragraph, section, or part of the Articles of Incorporation or these By-laws, such judgment or decree shall not affect, impair, invalidate, or nullify the remainder of the Articles of Incorporation or these By-laws, but the effect thereof shall be confined to the clause, sentence, paragraph, section, or part so adjudged to be invalid.
	Section 6.13. Definitions. Any word or term which is defined in the Iowa Business
Corporation Act shall have the same meaning wherever used in the Articles of Incorporation or in these By-laws, unless the context or another provision of the Articles of Incorporation or these By-laws clearly indicates otherwise. Wherever used in the Articles of Incorporation or in these By-laws, unless the context or another provision of the Articles of Incorporation or these By-laws clearly indicates otherwise, the use of the singular shall include the plural, and vice versa; and the use of any gender shall be applicable to any other gender. Wherever used in the Articles of Incorporation or in these By-laws, the word "written" shall mean written, typed, printed, duplicated, or reproduced by any process. (As amended 4/23/64.)
	Section 6.14. Authority to Carry Out Resolutions and Motions. Each resolution or
motion adopted by the shareholders or by the Board of Directors shall be deemed to include the following provision, unless the resolution or motion expressly negates this provision: The officers of the Corporation are severally authorized on behalf of the Corporation to do all acts and things which may be necessary or convenient to carry out this resolution (motion), including, without limitation, the authority to make, execute, seal, deliver, file, and perform all appropriate contracts, agreements, certificates, documents, and instruments.
The foregoing provision shall automatically be a part of the resolution or motion even though not stated in the minutes; and any officer may state or certify that the foregoing provision is included in the resolution or motion. (Added entire section 8/3/82.)
ARTICLE 7. AMENDMENTS
	Section 7.01. Reservation of Right to Amend. The Corporation expressly reserves the
right from time to time to amend these By-laws, in the manner now or hereafter permitted by the provisions of the Articles of Incorporation and these By-laws, whether or not such amendment shall constitute or result in a fundamental change in the purposes or structures of the Corporation or in the rights or privileges of shareholders or others or in any or all of the foregoing. All rights and privileges of shareholders or others shall be subject to this reservation. Wherever used in these By-laws with respect to the By-laws, the word "amend," "amended," or "amendment" includes and applies to the amendment, alteration, or repeal of any or all provisions of the By-laws or the adoption of new By-laws. (As amended 4/28/66.)
	Section 7.02. Procedure to Amend. Any amendment to these By-laws may be
adopted at any meeting of the Board of Directors by the affirmative vote of a majority of the number of Directors fixed by Section 3.03. No notice of any proposed amendment to the By-laws shall be required. (As amended 4/28/66.)

EX-10 3 rlongterm1.htm EXHIBIT 10XV - LONG-TERM PERFORMANCE DRAFT OF 1/18/00

(Exhibit 10xv)

HNI CORPORATION

LONG-TERM PERFORMANCE PLAN

HNI Corporation, an Iowa corporation (the "Company") hereby establishes this Long-Term Performance Plan (the "Performance Plan") effective as of January 1, 2003, and amended on January 1, 2004.

1. Purpose. The purpose of this Performance Plan is to promote the attainment of the Company's performance goals by providing incentive compensation for certain designated key executives and employees of the Company and its Subsidiaries.

2. Definitions. As used in this Performance Plan, the following terms have the following meanings when used herein with initial capital letters:

(a) "Board" means the Board of Directors of the Company or, pursuant to any delegation by the Board to the Committee pursuant to Section 13, the Committee.

(b) "Code" means the Internal Revenue Code of 1986, as amended from time to time.

(c) "Committee" means the Human Resources and Compensation Committee of the Board as constituted at the relevant time, which shall consist of two or more "outside directors" within the meaning of Section 162(m) of the Code who are not eligible for participation in the Plan.

(d) "Disability or Disabled," means with respect to a Participant, means that the Participant satisfies the requirements to receive long-term disability benefits under the Company-sponsored group long-term disability plan in which the Participant participates without regard to any waiting periods, or that the Participant has been determined by the Social Security Administration to be eligible to receive Social Security disability benefits. A Participant shall not be considered to be Disabled unless the Participant furnishes proof of the Disability to the Company in such form and manner as the Company may require.

(e) "Earned Performance Award" means the award, if any, payable to a Participant at the end of the Performance Period.

(f) "162(m) Employee" for any calendar year, means an employee of the Company who, as of the close of the calendar year, is: (a) the CEO (or an individual acting in such capacity); or (b) among the four highest compensated officers of the Company (other than the CEO). Whether an employee is the CEO or one of the four highest compensated officers of the Company is determined pursuant to the executive compensation rules of the Securities Exchange Act of 1934.

(g) "Operating Unit" means either the (i) the Company as a whole, (ii) an individual subsidiary, division, store, or other business unit of the Company, or (iii) a grouping of business units, in which individuals employed thereby or therein have been approved to participate in this Performance Plan by the Board.

(h) "Participant" means a person who is designated by the Board to receive benefits under this Performance Plan and who is at the time an officer, executive, or other employee of the Company or any one or more of its Subsidiaries, or who has agreed to commence serving in any of such capacities.

(i) "Performance Measure" means the level of performance for the Operating Unit; a division or other business unit of an operating unit, or any of them, for each Performance Period, in each case as established pursuant to Section 6. A Performance Measure may take into account such criteria as the Board determines to be appropriate.

(j) "Performance Period" means a period of three consecutive fiscal years of the Company commencing on the first day of a fiscal year of the Company or other period as selected by the Board.

(k) "Retirement" means a Participant's voluntary termination of employment with the Company on or after attainment of age 65, or when the Participant is at least 55 years old and the sum of a Participant's age and service equals at least 65.

(l) "Target Performance Award" shall mean the dollar award established for a Participant if the Performance Measure applicable to the Participant is achieved.

(m) " Subsidiary" has the meaning specified in Rule 405 promulgated under the Securities Act of 1933, as amended (or under any successor rule substantially to the same effect).

3. Eligibility.

(a) Except as otherwise provided in this Section 3, an employee of the Company or one of its Subsidiaries will become a Participant for a particular Performance Period to the extent designated by the Board.

(b) An employee who first becomes eligible to participate after the beginning of a particular Performance Period will become a Participant for such Performance Period only in accordance with this Section 3(b). The Board may allow participation for a portion of such Performance Period for such employee on such terms and conditions as the Board may determine.

4. Earned Performance Award. Unless changed by the Board, each eligible Participant may earn an Earned Performance Award as hereinafter provided. The performance of the Operating Unit, during a particular Performance Period will be measured using the Performance Measure established for that Performance Period by the Board in accordance with Section 6. In the event such performance for such Performance Period is below the minimum Performance Measure established therefore, no Earned Performance Award would be paid to Participants in respect thereof. In no event shall an Earned Performance Award exceed $3 million dollars.

5. Target Performance Award. Each Participant shall be granted a Target Performance Award at the beginning of the Performance Period, as determined by the Board. The Target Performance Award will be expressed as a percentage of the Participant's base pay. The actual award payable to a Participant at the end of the Performance Period will be determined by applying the percentage achievement of the Performance Measure and multiplying that result against the Target Performance Award to determine the Earned Performance Award.

6. Performance Measure.

(a) The Board will approve for each Performance Period the applicable Performance Measure. Such Performance Measure may be adjusted during a Performance Period to prevent dilution or enlargement of award as a result of extraordinary events or circumstances as determined by the Board or to exclude the effects of extraordinary, unusual or nonrecurring events, changes in accounting principles, discontinued operations, acquisitions, divestitures and material restructuring charges.

(b) The Company will (i) notify each eligible employee who has been selected to participate in this Performance Plan that he or she is a Participant under this Performance Plan for such Performance Period and (ii) communicate in writing to each Participant the Target Performance Award granted to such Participant pursuant to Section 5 and the Performance Measure applicable to such Participant for such Performance Period.

(c) In the case of a Participant who is a 162(m) Employee, a Performance Measure must be pre-established by the Committee, must be objective, and must state, in terms of an objective formula or standard, the method for computing the amount of compensation payable if the Performance Measure is attained. A Performance Measure is considered "pre-established" for purposes of this paragraph if it is established in writing by the Committee no later than 90 days after the commencement of a Performance Period, provided that the outcome is substantially uncertain at the time the Committee actually establishes the Performance Measure. However, in no event will a Performance Measure be considered to be pre-established if it is established after 25% of a Performance Period has elapsed. A Performance Measure is considered "objective" if a third party having knowledge of the relevant facts could determine whether the Performance Measure is met. A formula or standard is considered "objective" if a third party having knowledge of the relevant performance results could calculate the amount to be paid to the Participant.

The Performance Measure may be based on one or more of the following criteria and may be based on attainment of a particular level of, or on a positive change in, a factor: revenue, revenue per employee, earnings before income tax (profit before taxes), earnings before interest and income tax, net earnings (profit after taxes), earnings per employee, tangible, controllable or total asset turnover, earnings per share, operating income, total shareholder return, market share, return on equity, return on invested capital, growth in earnings , before-tax return on net assets, after-tax return on net assets, distribution expense, inventory turnover, economic value added (economic profit).

7. Payment of Awards.

(a) Subject to Sections 8 and 9, the value of the Earned Performance Award with respect to a Performance Period will be paid as soon as practicable after the end of such Performance Period, provided the Participant is employed by the Operating Unit as of the last day of such Performance Period, and such payment, if any is earned, shall be made in the following form: (i) 50% of the value thereof in the form of cash, and (ii) 50% of the value thereof in the form of common stock of HNI Corporation as Bonus Stock or deferred shares, as elected by the Participant, and as granted by the Board under the 1995 Stock-Based Compensation Plan. All Earned Performance Awards that are paid in cash will be paid in U.S. dollars. The Company may deduct from any payment such amounts as may be required to be withheld under any federal, state, or local tax laws. In the case of a Participant who is a 162(m) Employee, the Committee shall certify the extent to which the Participant has satisfied each of his or her Performance Measure. (As amended January 1, 2004.)

(b) All Earned Performance Awards paid to the Chief Executive Officer and Chief Financial Officer of the Company under this Plan are subject to forfeiture as provided in Section 304 of the Sarbanes-Oxley Act of 2002, and the implementing rules and regulations. Notwithstanding anything in the Plan to the contrary, the Board, may reduce the amount of, or completely eliminate, an Earned Performance Award otherwise payable to a Participant for a Performance Period if the Board determines that due to the Participant's performance or behavior during or immediately following such Performance Period the Participant should not be entitled to the Earned Performance Award.

8. Termination of Employment.

(a) If a Participant terminates employment with the Company and its Subsidiaries due to death, Disability, or Retirement occurring before the date that a Earned Performance Award for a Performance Period is paid, the Participant's Earned Performance Award, if any, will be payable as soon as practicable after the end of such Performance Period, and the value of such Award shall be equal to a value, determined using the Performance Measure as of the end of the Performance Period, equal to the product of (i) the number of the Target Performance Award, multiplied by (ii) a fraction, the numerator of which is the number of months in the Performance Period that occurred prior to such termination of employment, and the denominator of which is the total number of months in such Performance Period.

(b) Except as provided in Section 9, if a Participant's employment with the Company and its Subsidiaries terminates before the date and Earned Performance Award is paid for any reason other than death, Disability or Retirement the Participant will not be entitled to any payment or award under this Performance Plan unless otherwise determined by the Board.

9. Change in Control of the Company.

(a) In connection with a Change in Control of the Company, the value of each Target Performance Award shall be determined by the Board prior to the effective date of the Change in Control, and each Participant's Target Performance Award will become payable without proration prior to such date.

(b) A "Change in Control of the Company" shall mean:

i) the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (a) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of Directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (a) any acquisition directly from the Company, (b) any acquisition by the Company, (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (d) any acquisition by any corporation pursuant to a transaction which complies with clauses (a), (b) and (c) of subsection (iii) of this paragraph; or

ii) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least two-thirds of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least three-quarters of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (a) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (b) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (c) at least a majority of the members of the board of directors of the corporation resulting from such Business combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

10. Sale of Operating Unit. Except as provided in paragraph 9, in the event of the sale of substantially all of the stock or assets of an Operating Unit, with respect to each Participant employed by such Operating Unit on the date of such sale, the value of each Award shall be determined as of the date of such sale by the Board based on the percentage of the Performance Measure completed as to the date of sale, the number of months of the Performance Period completed at the time of sale, the actual purchase price of the Operating Unit and such other factors as the Board deems relevant in light of the circumstances of the sale.

11. Transfers and Changes in Responsibilities.

(a) If a Participant's responsibilities materially change or the Participant is transferred during a Performance Period to another Operating Unit or to a position that is not designated or eligible to participate in this Performance Plan, the Company may, as determined by the Board, either (i) continue the Participant's participation in this Performance Plan and, establish a new Target Performance Award and Performance Measure for the Participant with respect to his or her new position, or (ii) terminate the Participant's participation in this Performance Plan and, as of the date of such change or transfer, prorate the Participant's Target Performance Award on the basis of the ratio of the number of months of the Participant's participation during the Performance Period to which such Target Performance Award relates to the aggregate number of months in such Performance Period.

(b) If in the event of such a change or transfer the Participant's participation in this Performance Plan in is not terminated pursuant to Section 11(a)(ii), then the Participant's Earned Performance Award will be prorated on the basis of the number of months of service by the Participant at each Operating Unit during the Performance Period.

12. Security of Payment of Benefits. Unless otherwise determined by the Board, all Earned Performance Awards will be paid from the Company's general assets, and nothing contained in this Performance Plan will require the Company to set aside or hold in trust any funds for the benefit of any Participant, who will have the status of a general unsecured creditor of the Company.

13. Administration of the Plan.

(a) This Performance Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Performance Plan to the Committee. Notwithstanding the forgoing, in the case of any 162(m) Employees, the Committee shall sole and exclusive authority to (i) establish the Performance Measures for all 162(m) Employees, (ii) determine and certify the achievement of the Performance Measures for all 162(m) Employees, and (iii) making any other discretionary decision affecting 162(m) Employees under the Plan.

(b) The Board will take such actions as are required to be taken by it hereunder, may take the actions permitted to be taken by it hereunder, and will have the authority from time to time to interpret this Performance Plan and to adopt, amend, and rescind rules and regulations for implementing and administering this Performance Plan. All such actions will be in the sole discretion of the Board and, when taken, will be final, conclusive, and binding. Without limiting the generality or effect of the foregoing, the interpretation and construction by the Board of any provision of this Performance Plan or of any agreement, notification, or document evidencing the grant of benefits payable to Participants and any determination by the Board in its sole discretion pursuant to any provision of this Performance Plan or any provision of such agreement, notification, or document will be final and conclusive.

(c) The existence of this Performance Plan or any right granted or other action taken pursuant hereto will not affect the authority of the Board or the Company to take any other action, including in respect of the grant or award of any annual or long-term incentive or other right or benefit, whether or not authorized by this Performance Plan, subject only to limitations imposed by other benefit plans of the Company and by applicable law.

14. Miscellaneous.

(a) This Performance Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant's employment or other service at any time.

(b) Except as otherwise provided in this Performance Plan, no right or benefit under this Performance Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge such right or benefit will be void. No such right or benefit will in any manner be liable for or subject to the debts, liabilities, or torts of a Participant.

(c) This Performance Plan may be amended or terminated from time to time by the Board. In the event this Performance Plan is terminated before the last day of a Performance Period, the Earned Performance Award otherwise payable for such Performance Period will be prorated on the basis of the ratio of the number of months in such Performance Period prior to such termination to the aggregate number of months in such Performance Period and will be paid only after the end of such Performance Period, which will be deemed to continue until the expiration thereof as if this Performance Plan had not been terminated.

(d) If any provision in this Performance Plan is held to be invalid or unenforceable, no other provision of this Performance Plan will be affected thereby.

(e) This Performance Plan will be governed by and construed in accordance with applicable United States federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Iowa, without giving effect to the principles of conflict of laws thereof.

15. Effective Date. The amendment and restatement of this Performance Plan set forth herein will become effective as of January 1, 2004.

EX-99 4 rexbonusplan1.htm EXHIBIT 99A - EXECUTIVE BONUS PLAN EXECUTIVE BONUS PLAN

(Exhibit 99A)

EXECUTIVE BONUS PLAN
HNI CORPORATION

As adopted on May 1, 1974, and amended on
April 20, 1976, April 19, 1977, January 31, 1983,
February 5, 1985, November 4, 1986, July 7, 1988
May 4, 1992, November 2, 1992, February 8, 1993,
February 14, 1994, November 14, 1994, May 8, 1995,
November 11, 1996, January 1, 2000, January 1, 2004

1. Purpose. The purpose of the Executive Bonus Plan (the "Plan") is to encourage a consistently high standard of excellence and continued employment by officers and selected other executives of the Corporation and any subsidiary, which elects to participate in the Plan (an "electing Subsidiary"). The Plan shall be operated at all times in conformance with applicable government regulations. (As amended January 31, 1983, May 4, 1992, and November 11, 1996.)

2. Participants. For any fiscal year, each person who is an officer as of the end of such fiscal year of HNI Corporation (the "Corporation") or any electing Subsidiary, and each other executive of the Corporation or any electing Subsidiary as is selected by the Board of Directors of the Corporation ("Board") as of the end of such fiscal year, shall be eligible to be Participants in the Plan. (As amended April 20, 1976, April 19, 1977 and November 11, 1996.)

3. Payment. Upon final determination of bonus awards by the Board or, to the extent delegated by the Board for a fiscal year, the Human Resources and Compensation Committee of the Board ("Committee"), the bonus awards shall be paid in full in cash, subject to Section 3(c), as follows:

a. Any bonus award for a fiscal year ending prior to December 28, 1996, to the extent not already paid to the Participant, shall be paid to the Participant (or, as applicable, the Participant's estate) in a single sum payment not later than March 14, 1997, provided that (A) the Participant is employed by the Corporation or an electing Subsidiary on the date of payment or (B) the Participant's employment with the Corporation and each electing Subsidiary terminated due to death, disability, retirement after age 55 pursuant to established retirement policies of the Corporation (a "Retirement"), or for any other reason (except a termination for cause, as determined by the Committee) after a Change in Control (as defined below).

b. Effective for each fiscal year ending on or after December 28, 1996, each bonus award for such fiscal year shall be paid not later than the last day of the Corporation's February fiscal month following the end of the Corporation's fiscal year for which the bonus award is made, provided, subject to Section 4, that the Participant is employed by the Corporation or an electing Subsidiary on the last day of the fiscal year for which a bonus, if any, is to be paid. (As amended January 1, 2004.)

c. The Committee may require payment of any bonus award (or portion thereof) for a fiscal year under Section 3(a) or 3(b) in the form of shares of Bonus Stock issued pursuant to (and as defined in) the Corporation's Stock-Based Compensation Plan (1) at the Participant's request, in the amount indicated by such Participant, subject to the Committee's approval, or (2) in the amount of up to 50% of such bonus award in the event that the Committee determines, in its sole discretion, that the Participant's respective stock ownership level under the Executive Stock Ownership Policy does not reflect appropriate progress toward such Participant's five-year goal thereunder. The number of shares of Bonus Stock to be paid shall be determined by dividing the cash amount of the bonus award under the Plan (or, portion thereof, as elected by the Participant) for a fiscal year by the average closing prices of a share of the Corporation's common stock for the 20 trading days immediately preceding the date of such payment, with cash paid in lieu of any fractional share. All Federal, state and local income tax and other employment tax withholding shall be made pursuant to Section 5.5 of the Stock-Based Compensation Plan.

(As amended January 31, 1983, May 8, 1995, November 11, 1996 and January 1, 2000.)

d. As used in the Plan, "Change in Control" means (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (a) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock") or (b) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 3(d); or (ii) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least two-thirds of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation.

(As amended November 4, 1986, July 7, 1988, November 14, 1994 and November 11, 1996.)

4. Termination of Employment. The following provisions shall apply for any fiscal year commencing after December 28, 1996:

a. If a Participant's employment with the Corporation and each electing Subsidiary is terminated during a fiscal year by reason of death, disability or Retirement, the Participant, or the Participant's estate, shall receive a bonus award for such fiscal year, determined as if the Participant had remained employed for such entire fiscal year, prorated for the number of days during such fiscal year that have elapsed as of the Participant's termination, and subject to the first sentence of Section 4(b).

b. If a Participant's employment with the Corporation and each electing Subsidiary is terminated during a fiscal year for any reason other than death, disability or Retirement, the Participant's rights to any bonus award for such fiscal year will be forfeited. However, the Committee may, in its discretion, determine to pay a prorated bonus award for the portion of such fiscal year during which the Participant was employed by the Corporation or an electing Subsidiary, except that in no event shall any such prorated bonus award be paid in the event of termination for cause, as determined by the Committee. (As amended November 11, 1996.)

5. Change in Control. For fiscal years commencing after December 28, 1996, in the event of a Change in Control (as defined above), the maximum bonus award for the fiscal year then in progress, prorated for the number of days in such fiscal year that have elapsed as of the date of the Change in Control, shall be paid immediately in cash, without regard to Section 3(c). Any adjustment or termination of a Participant's participation in the Plan that occurs at any time on or after the 90th day preceding a Change in Control shall be of no effect. (As amended November 11, 1996.)

6. Administration. The Board shall have full power to interpret and administer this Plan from time to time in accordance with the By-laws of the Corporation, except to the extent provided in the Corporation's Stock-Based Compensation Plan or to the extent that the Board may have delegated its powers to the Committee. Decisions of the Board or the Committee shall be final, conclusive and binding upon all parties. The Committee shall consist of two or more "non-employee directors" within the meaning of Rule 16b-3 as promulgated pursuant to Section 16 of the Securities Exchange Act of 1934. (As amended May 8, 1995, and November 11, 1996.)

7. Cost. Each electing Subsidiary shall reimburse the Corporation for the amount of such bonus awards, which shall be awarded and paid to Participants for services to such electing Subsidiary, as determined by the Board.

8. Amount of Individual Bonus. For fiscal years beginning after December 28, 1996, the bonus award for each fiscal year for any Participant shall be determined by the Board, or, to the extent delegated by the Board for a fiscal year, by the Committee, no later than the first meeting of the Board that occurs during the fiscal year following the year for which the bonus award is made. (As amended April 20, 1976 and November 11, 1996.)

9. General Provisions.

a. The Company shall have the right to deduct any Federal, state or local taxes applicable to payments under the Plan. The Committee may permit Participants to satisfy withholding obligations by electing to have shares of Bonus Stock withheld.

b. Except as otherwise determined by the Committee, no right or interest of any Participant in this Plan shall be assignable or transferable except by will or the laws of descent and distribution, nor shall any such right or interest, be subject to any lien, directly, by operation of law or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy.

c. Except as provided in Sections 4 and 5, the Board may terminate or amend the Plan at any time.

10. Special Provision for Qualifying Participants.

a. This Section 10 shall apply with respect to any bonus award made under the Plan with respect to the Chief Executive Officer of the Corporation and any other Participant designated by the Board from time to time (each a "Qualifying Participant"). Not later than the 90th day after the commencement of the fiscal year for which the bonus award is made, in addition to any other performance criteria established by the Committee, the Committee shall establish in writing Profit Achievement Factors and Personal Objective Achievement Factors (collectively, "Qualifying Factors") for each Qualifying Participant. The maximum bonus award payable to a Qualifying Participant for such fiscal year based on the degree of attainment of such Qualifying Factors shall not exceed $2 million. Subject to Sections 4 and 5, the Committee may adjust any Qualifying Factor that has been established for any fiscal year, provided that no such adjustment shall be permitted if it would cause the Award based on such Qualifying Factor to fail to satisfy the requirements for performance-based compensation under Code Section 162(m). Subject to Sections 4 and 5, the Committee may adjust any other performance criteria established for any fiscal year, provided that no such adjustment may be based upon the failure, or the expected failure, to attain or exceed a Qualifying Factor. In no event shall any bonus award relating to performance criteria other than Qualifying Factors be dependent upon the attainment of, or failure to obtain, a bonus award based on Qualifying Factors.

b. The administration of all aspects of the Plan applicable to bonus awards relating to Qualifying Factors is intended to comply with the exception from Section 162(m) of the Internal Revenue Code of 1986, as amended, for qualified performance-based compensation and shall be construed, applied and administered accordingly.

c. For purposes of this Section, (1) "Profit Achievement Factors" shall mean an objective performance goal based on one or more of the following: operating expense ratios, total stockholder return, return on sales, operating income, operating profit, return on equity, return on capital, return on assets, return on investment, net income, operating income, earnings per share, improved asset management, improved gross margins, generation of free cash, revenues, market share, stock price, cash flow, retained earnings, aggregate product price and other product price measures, and (2) "Personal Objective Achievement Factors" shall mean an objective performance goal based on one or more of the following: results of customer satisfaction surveys, results of employee surveys, employee turnover, safety record, management of acquisitions, increased inventory turns, product development and liability, research and development integration, proprietary protections, legal effectiveness, handling Federal securities law or environmental issues, manufacturing efficiencies, distribution efficiencies, member productivity, system review and improvement, service reliability, cost management.

d. This Section 10 shall become effective as of January 1, 2000, provided, however, that no bonus award relating to Qualifying Factors shall be paid under the Plan to any Qualifying Participant unless, prior to such payment, the provisions of this Section 10 are approved by the holders of a majority of the securities of the Company present, or represented, and entitled to vote at a meeting of stockholders duly held in accordance with the laws of the State of Iowa.

(Adopted as of January 1, 2004.)

Exhibit 31.1