EX-99.1 2 r8kexh99292010.htm EXHIBIT 99.1 - FINANCIALS r8kexh99292010.htm
EXHIBIT 99.1
 
                                 News Release
 

 
For Information Contact:
Kelly McGriff, Treasurer and Vice President, Investor Relations (563) 272-7967
Kurt A. Tjaden, Vice President and Chief Financial Officer (563) 272-7400
 

HNI CORPORATION ANNOUNCES RESULTS FOR
FOURTH QUARTER AND YEAR-END – FISCAL 2009
 

MUSCATINE, Iowa (February 9, 2010) – HNI Corporation (NYSE: HNI) today announced sales of $413.7 million and a net loss of $10.8 million for the fourth quarter ending January 2, 2010.  Net income per diluted share for the quarter was ($0.24) or $0.26 on a non-GAAP basis when excluding restructuring and impairment charges and transition costs.  For fiscal year 2009, the Corporation reported sales of $1.7 billion and a net loss of $6.4 million.  Net income per diluted share for the year was ($0.14) or $0.70 on a non-GAAP basis when excluding restructuring and impairment charges, transition costs, and non-operating gains.

Fourth Quarter and FY'09 Summary Comments
"We continued to confront highly challenging market conditions with focused and strong actions during the quarter, aligning our businesses with current demand and investing in long-term growth initiatives.  Cost reductions, material favorability and freight efficiencies allowed us to modestly exceed our fourth quarter non-GAAP profit and cash flow expectations.

"We ended the year financially strong and competitively well positioned despite unprecedented challenges.  We achieved these results due to the hard work and commitment of our members," said Stan Askren, HNI Corporation Chairman, President and Chief Executive Officer.

 
 

 


Fourth Quarter
Dollars in millions
 
Three Months Ended
   
Percent
 
except per share data
 
1/02/2010
   
1/03/2009
   
Change
 
                   
Net Sales
  $ 413.7     $ 637.9       -35.2 %
Gross Margin
  $ 150.0     $ 210.4       -28.7 %
Gross Margin %
    36.3 %     33.0 %        
SG&A
  $ 162.5     $ 194.6       -16.5 %
SG&A %
    39.3 %     30.5 %        
Operating Income (Loss)
  $ (12.5 )   $ 15.8       -179.0 %
Operating Income (Loss) %
    -3.0 %     2.5 %        
Net income (loss) attributable to Parent Company
  $ (10.8 )   $ 8.5       -226.5 %
                         
Earnings per share attributable to Parent Company – Diluted
  $ (0.24 )   $ 0.19       -226.3 %

 
Fourth Quarter Results – Continuing Operations
·  Consolidated net sales decreased $224.3 million or 35.2 percent from the prior year quarter to $413.7 million.
·  Gross margins were 3.3 percentage points higher than prior year primarily due to lower material costs and cost reduction initiatives partially offset by lower volume.
·  Total selling and administrative expenses, including restructuring and impairment charges, decreased $32.1 million or 16.5 percent due to cost control actions, lower volume related costs and improved distribution efficiencies.  These were offset by increased restructuring and impairment charges and transition costs.
·  The Corporation recorded $31.6 million of restructuring and impairment charges and transition costs during the fourth quarter.  These charges included goodwill and intangible impairment charges of $25.0 million related to various office furniture reporting units, $2.8 million related to cost associated with shutdown and consolidation of office furniture facilities of which $1.3 million were included in cost of sales and $3.8 million related to restructuring of hearth operations of which $0.9 million were included in cost of sales.  Included in 2008 were $21.5 million of restructuring and impairment charges.  These charges included goodwill and intangible impairment charges of $21.8 million related to various office furniture reporting units offset partially by a favorable adjustment of $0.3 million related to previously announced facility shutdowns.


 
 

 



Fourth Quarter – Non-GAAP Financial Measures
(Reconciled with Most Comparable GAAP Financial Measures)
 
Dollars in millions
except per share data
 
Three Months Ended 1/02/2010
   
Three Months Ended 1/03/2009
 
   
Gross
Profit
   
 
SG&A
   
Operating
Income (Loss)
   
 
EPS
   
Gross
Profit
   
 
SG&A
   
Operating
Income
   
 
EPS
 
As Reported (GAAP)
  $ 150.0     $ 162.5     $ (12.5 )   $ (0.24 )   $ 210.4     $ 194.6     $ 15.8     $ 0.19  
  % of Net Sales
    36.3 %     39.3 %     -3.0 %             33.0 %     30.5 %     2.5 %        
                                                                 
Restructuring and impairment
  $ 1.2     $ (27.0 )   $ 28.2     $ 0.45       -     $ (21.5 )   $ 21.5     $ 0.35  
Transition costs
  $ 1.0     $ (2.4 )   $ 3.4     $ 0.05       -       -       -       -  
Redeemable liability adjustments
    -       -       -               -     $ 5.7     $ (5.7 )   $ (0.09 )
                                                                 
Results (non-GAAP)
  $ 152.1     $ 133.0     $ 19.1     $ 0.26     $ 210.4     $ 178.8     $ 31.6     $ 0.45  
  % of Net Sales
    36.8 %     32.2 %     4.6 %             33.0 %     28.0 %     5.0 %        



 
 

 


Full Year
Dollars in millions
 
Twelve Months Ended
   
Percent
 
except per share data
 
1/02/2010
   
1/03/2009
   
Change
 
                   
Net Sales
  $ 1,656.3     $ 2,477.6       -33.1 %
Gross Margin
  $ 570.8     $ 828.6       -31.1 %
Gross Margin %
    34.5 %     33.4 %        
SG&A
  $ 566.8     $ 743.7       -23.8 %
SG&A %
    34.2 %     30.0 %        
Operating Income
  $ 4.0     $ 84.9       -95.3 %
Operating Income %
    0.2 %     3.4 %        
Net income (loss) attributable to Parent Company
  $ (6.4 )   $ 45.5       -114.2 %
                         
Earnings per share attributable to Parent Company – Diluted
  $ (0.14 )   $ 1.02       -113.7 %

Full Year Results – Continuing Operations
·  Net sales decreased $821.3 million, or 33.1 percent, to $1.7 billion compared to $2.5 billion in the prior year.  Acquisitions added $10 million or 0.4 percentage points of sales.
·  Gross margins increased to 34.5 percent compared to 33.4 percent last year due to increased price realization, lower material costs and cost reduction initiatives partially offset by lower volume.
·  Total selling and administrative expenses, including restructuring charges, decreased $176.9 million or 23.8 percent due to cost control actions, lower volume related costs and improved distribution efficiencies.  These were partially offset by increased restructuring and impairment charges and transition costs.  Included in 2009 were $40.4 million of restructuring and impairment charges compared to $25.9 million in 2008.
·  The Corporation's effective tax rate for 2009 was 18.4% compared to 34.1% in 2008 primarily as a result of lower pre-tax income.

Cash flow from operations for the year was $193.2 million compared to $174.4 million last year.  The increase was driven by strong working capital management offset partially by lower earnings.  Capital expenditures were $17.6 million in 2009 compared to $71.5 million in 2008.  The Corporation reduced total debt $122 million during 2009 using cash flow from operations and proceeds from the sale of long-term investments.



Full Year – Non-GAAP Financial Measures
(Reconciled with Most Comparable GAAP Financial Measures)
 
Dollars in millions
except per share data
 
Twelve Months Ended 1/02/2010
   
Twelve Months Ended 1/03/2009
 
   
Gross
Profit
   
SG&A
   
Operating
Income
   
EPS
   
Gross
Profit
   
SG&A
   
Operating
Income
   
EPS
 
As Reported (GAAP)
  $ 570.8     $ 566.8     $ 4.0     $ (0.14 )   $ 828.6     $ 743.7     $ 84.9     $ 1.02  
  % of Net Sales
    34.5 %     34.2 %     0.2 %             33.4 %     30.0 %     3.4 %        
                                                                 
Restructuring and impairment
  $ 3.9     $ (40.4 )   $ 44.4     $ 0.80     $ 0.4     $ (25.9 )   $ 26.3     $ 0.39  
Transition costs
  $ 1.3     $ (2.6 )   $ 3.9     $ 0.07     $ 5.3     $ (3.5 )   $ 8.8     $ 0.13  
Non-operating gains
    -     $ 1.6     $ (1.6 )   $ (0.03 )     -       -       -       -  
Redeemable liability adjustments
    -               -       -       -     $ 5.7     $ (5.7 )   $ (0.08 )
                                                                 
Results (non-GAAP)
  $ 576.0     $ 525.4     $ 50.6     $ 0.70     $ 834.4     $ 720.1     $ 114.2     $ 1.46  
  % of Net Sales
    34.8 %     31.7 %     3.1 %             33.7 %     29.1 %     4.6 %        


 
 

 



Office Furniture
 
 
Three Months Ended
   
Percent
   
Twelve Months Ended
   
Percent
 
Dollars in millions
 
01/02/2010
   
01/03/2009
   
Change
   
01/02/2010
   
01/03/2009
   
Change
 
Sales
  $ 328.5     $ 512.8       -36.0 %   $ 1,370.2     $ 2,054.0       -33.3 %
Operating Profit (Loss)
  $ (5.4 )   $ 12.9       -141.5 %   $ 50.4     $ 101.4       -50.3 %
Operating Profit
    -1.6 %     2.5 %             3.7 %     4.9 %        

Non-GAAP Financial Measures
(Reconciled with Most Comparable GAAP Measures)
 
   
Three Months Ended
   
Percent Change
   
Twelve Months Ended
   
Percent Change
 
Dollars in millions
 
1/02/2010
   
1/03/2009
   
1/02/2010
   
1/03/2009
 
Operating Profit (Loss) as Reported (GAAP)
  $ (5.4 )   $ 12.9       -141.5 %   $ 50.4     $ 101.4       -50.3 %
% of Net Sales
    -1.6 %     2.5 %             3.7 %     4.9 %        
                                                 
Restructuring and impairment
  $ 27.1     $ 21.6             $ 37.6     $ 26.0          
Transition costs
  $ 0.6     $ -             $ 1.0     $ 8.8          
Redeemable liability adjustments
    -     $ (5.7 )             -     $ (5.7 )        
                                                 
Operating Profit (non-GAAP)
  $ 22.4     $ 28.8       -22.1 %   $ 89.0     $ 130.4       -31.8 %
% of Net Sales
    6.8 %     5.6 %             6.5 %     6.4 %        

·  Fourth quarter and full year sales for the office furniture segment decreased $184.4 million and $683.8 million, respectively.  The decrease was driven by substantial weakness in both the supplies driven and contract channels of the office furniture industry.  Acquisitions contributed $10 million or 0.5 percentage points for the full year.
·  Fourth quarter and full year operating profit decreased $18.3 million and $51.1 million, respectively.  Operating profit was negatively impacted by increased restructuring, transition and impairment expenses, lower volume and the impact of prior year gains related to the change in fair value of mandatorily redeemable liabilities from prior acquisitions.  These were partially offset by increased price realization, lower material costs, improved distribution efficiencies and cost control initiatives.



 
 

 
 
Hearth Products
   
Three Months Ended
   
Percent
   
Twelve Months Ended
   
Percent
 
Dollars in millions
 
1/02/2010
   
1/03/2009
   
         Change
   
1/02/2010
   
1/03/2009
   
         Change
 
Sales
  $ 85.2     $ 125.1       -31.9 %   $ 286.1     $ 423.6       -32.5 %
Operating Profit (Loss)
  $ 1.5     $ 9.3       -84.0 %   $ (17.2 )   $ 11.8       -246.2 %
Operating Profit %
    1.7 %     7.4 %             -6.0 %     2.8 %        
 
 
Non-GAAP Financial Measures
(Reconciled with Most Comparable GAAP Measures)
 
   
Three Months Ended
   
Percent Change
   
Twelve Months Ended
   
Percent Change
 
Dollars in millions
 
1/02/2010
   
1/03/2009
   
1/02/2010
   
1/03/2009
 
Operating Profit (Loss) as Reported (GAAP)
  $ 1.5     $ 9.3       -84.0 %   $ (17.2 )   $ 11.8       -246.2 %
% of Net Sales
    1.7 %     7.4 %             -6.0 %     2.8 %        
                                                 
Restructuring and impairment
  $ 1.0     $ (0.1 )           $ 6.7     $ 0.3          
Transition costs
  $ 2.1     $ -             $ 2.2     $ -          
Non-operating gains
  $ -     $ -             $ (0.3 )   $ -          
                                                 
Operating Profit (Loss) (non-GAAP)
  $ 4.6     $ 9.2       -49.8 %   $ (8.6 )   $ 12.1       -171.5 %
% of Net Sales
    5.4 %     7.4 %             -3.0 %     2.9 %        

·  Fourth quarter and full year sales for the hearth product segment decreased $39.9 million and $137.5 million, respectively driven by significant declines in both the new construction and remodel-retrofit channels.
·  Fourth quarter and full year operating profit decreased $7.8 million and $29.0 million, respectively.  Operating profit was negatively impacted due to lower volume and higher restructuring and transition costs partially offset by cost reduction initiatives and lower incentive based compensation.

Outlook
"Our markets continue to be dynamic and volatile and are not yet showing signs of near-term improvement.  Our office furniture businesses remain uncertain and difficult with competitive
 
 

 


pricing pressure and weakness in day-to-day activity.  Hearth demand remains at historically low levels but we are seeing indications of improving market trends.  We will continue to reset our cost structure to market conditions while investing for the future," said Mr. Askren.

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


Conference Call
HNI Corporation will host a conference call on Wednesday, February 10, 2010 at 10:00 a.m. (Central) to discuss fourth quarter and year-end 2009 results.  To participate, call the conference call line at 1-800-230-1951.  A replay of the conference call will be available until Wednesday, February 17, 2010, 11:59 p.m. (Central).  To access this replay, dial 1-800-475-6701 – Access Code:  142150.  A link to the simultaneous web cast can be found on the Corporation's website at www.hnicorp.com.





Non-GAAP Financial Measures
 
 
This earnings release contains certain non-GAAP financial measures.  A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the company.  Pursuant to the requirements of Regulation G, the Corporation has provided a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure.
 
 
The non-GAAP financial measures used within this earnings release are:  gross profit, selling and administrative expense, operating income, operating profit and net income per diluted share (i.e., EPS), excluding restructuring and impairment charges, transition costs, redeemable liability adjustments and non-operating gains.  These measures are presented because management uses this information to monitor and evaluate financial results and trends.  Management believes this information is also useful for investors.




 
 

 


HNI Corporation is a NYSE traded company (ticker symbol: HNI) providing products and solutions for the home and workplace environments.  HNI Corporation is the second largest office furniture manufacturer in the world and is also the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces.  The Corporation's strong brands, including HON®, Allsteel®, Gunlocke®, Paoli®, Maxon®, Lamex®, HBF® , Heatilator®, Heat & Glo, Quadra-Fire® and Harman Stovehave leading positions in their markets.  HNI Corporation is committed to maintaining its long-standing corporate values of integrity, financial soundness and a culture of service and responsiveness.  More information can be found on the Corporation's website at www.hnicorp.com.

Statements in this release that are not strictly historical, including statements as to plans, outlook, objectives and future financial performance, are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Words such as "anticipate," "believe," "could," "confident," "estimate," "expect," "forecast," "hope," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and variations of such words and similar expressions identify forward-looking statements.  Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual results in the future to differ materially from expected results.  These risks include, without limitation:  the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives for the entire Corporation, (c) investments in strategic acquisitions, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) ability to maintain its effective tax rate and (f) consolidation and logistical realignment initiatives; uncertainty related to the availability of cash and credit, and the terms and interest rates on which credit would be available, to fund operations and future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions, including the recent credit crisis, slow or negative growth rates in global and domestic economies and the protracted decline in the domestic housing market; lower industry growth than expected; major disruptions at key facilities or in the supply of any key raw materials, components or finished goods; uncertainty related to disruptions of business by terrorism, military action, epidemic, acts of God or other Force Majeure events; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials (including steel and petroleum based materials); higher than expected costs for energy and fuel; changes in the mix of products sold and of customers purchasing; relationships with distribution channel partners, including the financial viability of distributors and dealers; restrictions imposed by the terms of the Corporation's revolving credit facility and note purchase agreement; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q.  The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

###

 
 

 


HNI CORPORATION

Condensed Consolidated Statement of Operations

   
Three Months Ended
   
Twelve Months Ended
 
(Dollars in thousands, except per share data)
 
Jan. 2, 2010
   
Jan. 3, 2009
   
Jan. 2, 2010
   
Jan. 3, 2009
 
Net sales
  $ 413,677     $ 637,949     $ 1,656,289     $ 2,477,587  
Cost of products sold
    263,716       427,536       1,085,508       1,648,975  
Gross profit
    149,961       210,413       570,781       828,612  
Selling and administrative expenses
    135,426       173,065       526,346       717,870  
Restructuring and impairment charges
    27,040       21,515       40,443       25,859  
Operating income (loss)
    (12,505 )     15,833       3,992       84,883  
Interest income
    104       326       415       1,172  
Interest expense
    2,666       4,384       12,080       16,865  
Earnings (loss) before income taxes
    (15,067 )     11,775       (7,673 )     69,190  
Income taxes
    (4,297 )     3,254       (1,414 )     23,583  
Net income (loss)
    (10,770 )     8,521       (6,259 )     45,607  
Less: Net income attributable to the noncontrolling interest
    3       6       183       157  
Net income (loss) attributable to Parent Company
  $ (10,773 )   $ 8,515     $ (6,442 )   $ 45,450  
Net income (loss) attributable to Parent Company common shareholders – basic
  $ (0.24 )   $ 0.19     $ (0.14 )   $ 1.03  
Average number of common shares outstanding – basic
    45,054,103       44,259,137       44,888,809       44,309,765  
Net income (loss) attributable to Parent Company common shareholders – diluted
  $ (0.24 )   $ 0.19     $ (0.14 )   $ 1.02  
Average number of common shares outstanding - diluted
    45,054,103       44,386,092       44,888,809       44,433,945  


Condensed Consolidated Balance Sheet

Assets
 
Liabilities and Shareholders' Equity
 
   
As of
     
As of
 
   
Jan. 2,
   
Jan. 3,
     
Jan. 2,
   
Jan. 3,
 
(Dollars in thousands)
 
2010
   
2009
     
2010
   
2009
 
Cash and cash equivalents
  $ 87,374     $ 39,538  
     Accounts payable and
           
Short-term investments
    5,994       9,750  
        accrued expenses
  $ 299,718     $ 313,431  
Receivables
    163,732       238,327  
     Note payable and current
               
Inventories
    65,144       84,290  
       maturities of long-term debt
    39       54,494  
Deferred income taxes
    20,299       16,313  
     Current maturities of other
               
Prepaid expenses and
               
       long-term obligations
    385       5,700  
  other current assets
    17,728       29,623                    
      Current assets
    360,271       417,841  
          Current liabilities
    300,142       373,625  
                                   
                 
     Long-term debt
    200,000       267,300  
                 
     Capital lease obligations
    -       43  
Property and equipment  - net
    260,102       315,606  
     Other long-term liabilities
    50,332       50,399  
Goodwill
    261,114       268,392  
     Deferred income taxes
    24,227       25,271  
Other assets
    112,839       163,790                    
                 
     Parent Company shareholders'
        equity
    419,283       448,833  
                 
     Noncontrolling interest
    342       158  
                 
     Shareholders' equity
    419,625       448,991  
                 
          Total liabilities and
               
     Total assets
  $ 994,326     $ 1,165,629  
            shareholders' equity
  $ 994,326     $ 1,165,629  
                                   

 
 

 

Condensed Consolidated Statement of Cash Flows

   
Twelve Months Ended
 
(Dollars in thousands)
 
Jan. 2, 2010
   
Jan. 3, 2009
 
Net cash flows from (to) operating activities
  $ 193,205     $ 174,369  
Net cash flows from (to) investing activities:
               
     Capital expenditures
    (17,554 )     (71,496 )
     Acquisition spending
    (500 )     (75,479 )
     Other
    31,335       15,449  
Net cash flows from (to) financing activities
    (158,650 )     (37,186 )
Net increase (decrease) in cash and cash equivalents
    47,836       5,657  
Cash and cash equivalents at beginning of period
    39,538       33,881  
Cash and cash equivalents at end of period
  $ 87,374     $ 39,538  


Business Segment Data

   
Three Months Ended
   
Twelve Months Ended
 
(Dollars in thousands)
 
Jan. 2, 2010
   
Jan. 3, 2009
   
Jan. 2, 2010
   
Jan. 3, 2009
 
Net sales:
                       
  Office furniture
  $ 328,450     $ 512,830     $ 1,370,197     $ 2,054,037  
  Hearth products
    85,227       125,119       286,092       423,550  
    $ 413,677     $ 637,949     $ 1,656,289     $ 2,477,587  
                                 
Operating profit (loss):
                               
  Office furniture
                               
     Operations before restructuring and impairment charges
  $ 21,139     $ 34,513     $ 85,320     $ 126,991  
     Restructuring and impairment charges
    (26,493 )     (21,601 )     (34,944 )     (25,544 )
        Office furniture  - net
    (5,354 )     12,912       50,376       101,447  
  Hearth products
                               
    Operations before restructuring and impairment charges
    2,036       9,231       (11,695 )     12,074  
    Restructuring and impairment charges
    (547 )     86       (5,499 )     (315 )
      Hearth products - net
    1,489       9,317       (17,194 )     11,759  
  Total operating profit (loss)
    (3,865 )     22,229       33,182       113,206  
      Unallocated corporate expense
    (11,202 )     (10,454 )     (40,855 )     (44,016 )
  Income before income taxes
  $ (15,067 )   $ 11,775     $ ( 7,673 )   $ 69,190  
                                 
Depreciation and amortization expense:
                               
  Office furniture
  $ 12,280     $ 12,928     $ 52,137     $ 50,511  
  Hearth products
    5,924       3,733       19,041       15,212  
  General corporate
    948       1,087       3,689       4,432  
    $ 19,152     $ 17,748     $ 74,867     $ 70,155  
                                 
Capital expenditures – net:
                               
  Office furniture
  $ 5,255     $ 14,128     $ 13,482     $ 59,101  
  Hearth products
    1,247       2,180       3,484       10,530  
  General corporate
    178       598       588       1,865  
    $ 6,680     $ 16,906     $ 17,554     $ 71,496  
                                 
                   
As of
   
As of
 
                   
Jan. 2, 2010
   
Jan. 3, 2009
 
Identifiable assets:
                               
  Office furniture
                  $ 579,187     $ 730,348  
  Hearth products
                    291,518       326,168  
  General corporate
                    123,621       109,013  
                    $ 994,326     $ 1,165,629  
 
                               

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