-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JhqIAEOWtZfJvAjIMgFbyuhVvfF2nLoZi2JfMYWReicSbo8R26D8wgl7j3xZcmq1 qkFh/jpzh0/BANO/6sH6rQ== 0000048287-10-000035.txt : 20100805 0000048287-10-000035.hdr.sgml : 20100805 20100805094003 ACCESSION NUMBER: 0000048287-10-000035 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20100703 FILED AS OF DATE: 20100805 DATE AS OF CHANGE: 20100805 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: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14225 FILM NUMBER: 10992955 BUSINESS ADDRESS: STREET 1: 408 EAST SECOND STREET - PO BOX 1109 CITY: MUSCATINE STATE: IA ZIP: 52761-7109 BUSINESS PHONE: 5632727400 MAIL ADDRESS: STREET 1: 408 EAST SECOND 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 r10q2q2010.htm FORM 10-Q r10q2q2010.htm



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 July 3, 2010.
   
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: 1-14225
   
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, 408 East Second Street
Muscatine, Iowa 52761-0071
(Address of principal executive offices)
52761-0071
(Zip Code)
   
Registrant's telephone number, including area code:  563/272-7400
   
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES       x                    NO     o               
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                                              0;                                                                                                                                                                          YES 60;      x                    NO     o  
   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer      x                                                                                                       Accelerated filer     &# 160; o     
Non-accelerated filer        o   (Do not check if a smaller reporting company)                    Smaller reporting company     o       
   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                            YES        o                   NO      x< /font>        
 
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 July 3, 2010
45,040,418
 


 
 

 
 
HNI Corporation and SUBSIDIARIES
   
INDEX
   
PART I.    FINANCIAL INFORMATION
 
Page
   
Item 1.    Financial Statements
 
   
Condensed Consolidated Balance Sheets July 3, 2010, and January 2, 2010
3
   
Condensed Consolidated Statements of Income Three Months Ended July 3, 2010, and July 4, 2009
5
   
Condensed Consolidated Statements of Income Six Months Ended July 3, 2010, and July 4, 2009
6
   
Condensed Consolidated Statements of Cash Flows Three Months Ended July 3, 2010, and July 4, 2009
7
   
Notes to Condensed Consolidated Financial Statements
8
   
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
20
   
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
26
   
Item 4.    Controls and Procedures
26
   
PART II.    OTHER INFORMATION
   
Item 1.    Legal Proceedings
27
   
Item 1A. Risk Factors
27
   
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
27
   
Item 3.    Defaults Upon Senior Securities - None
-
   
Item 5.    Other Information - None
-
   
Item 6.    Exhibits
28
   
SIGNATURES
29
   
EXHIBIT INDEX
30


 

 

PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements

HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
             
   
July 3,
2010
(Unaudited)
   
Jan. 2,
2010
 
ASSETS
 
(In thousands)
 
             
CURRENT ASSETS
           
  Cash and cash equivalents
  $ 44,323     $ 87,374  
  Short-term investments
    8,397       5,994  
  Receivables
    182,882       163,732  
  Inventories (Note C)
    82,714       65,144  
  Deferred income taxes
    19,253       20,299  
  Prepaid expenses and other current assets
    24,570       17,728  
     Total Current Assets
    362,139       360,271  
                 
PROPERTY, PLANT, AND EQUIPMENT, at cost
         
  Land and land improvements
    21,378       21,815  
  Buildings
    259,335       267,596  
  Machinery and equipment
    482,806       490,287  
  Construction in progress
    11,597       8,377  
      775,116       788,075  
  Less accumulated depreciation
    531,390       527,973  
                 
     Net Property, Plant, and Equipment
    243,726       260,102  
                 
GOODWILL
    260,628       261,114  
                 
OTHER ASSETS
    106,313       112,839  
                 
     Total Assets
  $ 972,806     $ 994,326  
                 
See accompanying Notes to Condensed Consolidated Financial Statements.

 

 


HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
             
   
July 3,
2010
(Unaudited)
   
Jan. 2,
2010
 
LIABILITIES AND  EQUITY
 
(In thousands, except share and per share value data)
 
             
CURRENT LIABILITIES
           
  Accounts payable and accrued expenses
  $ 303,251     $ 299,718  
  Note payable and current maturities of long-term
    debt and capital lease obligations
    50,002       39  
  Current maturities of other long-term obligations
    343       385  
    Total Current Liabilities
    353,596       300,142  
                 
LONG-TERM DEBT
    150,000       200,000  
                 
CAPITAL LEASE OBLIGATIONS
    -       -  
                 
OTHER LONG-TERM LIABILITIES
    48,255       50,332  
                 
DEFERRED INCOME TAXES
    21,244       24,227  
                 
EQUITY
               
  HNI Corporation 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 -
               
    July 3, 2010 – 45,040,418 shares;
               
    January 2, 2010 – 45,093,504 shares
    45,040       45,093  
                 
    Additional paid-in capital
    20,226       19,695  
    Retained earnings
    334,514       355,270  
    Accumulated other comprehensive income
    (606 )     (774 )
      Total HNI Corporation shareholders' equity
    399,174       419,284  
                 
  Noncontrolling interest
    537       341  
                 
    Total  Equity
    399,711       419,625  
                 
    Total Liabilities and  Equity
  $ 972,806     $ 994,326  
                 
See accompanying Notes to Condensed Consolidated Financial Statements.

 

 


HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
   
Three Months Ended
   
July 3,
2010
   
July 4,
2009
(As Adjusted)
   
(In thousands, except share and per share data)
Net sales
  $ 398,222     $ 374,773  
Cost of sales
    256,905       247,215  
  Gross profit
    141,317       127,558  
Selling and administrative expenses
    128,032       122,637  
Restructuring and impairment
    1,238       3,878  
  Operating income (loss)
    12,047       1,043  
Interest income
    92       125  
Interest expense
    3,054       3,049  
  Earnings (loss) before income taxes
    9,085       (1,881 )
Income taxes
    3,493       (635 )
  Income (loss) from continuing operations, less applicable
  income taxes
    5,592       (1,246 )
Discontinued operations, less applicable income taxes
    (827 )     (144 )
  Net income (loss)
    4,765       (1,390 )
Less: Net income attributable to the noncontrolling interest
    62       7  
  Net income (loss) attributable to HNI Corporation
  $ 4,703     $ (1,397 )
                 
Income (loss) from continuing operations attributable to HNI Corporation per common share – basic
  $ 0.12     $ (0.03 )
Discontinued operations attributable to HNI Corporation per common share – basic
  $ (0.02 )   $ (0.00 )
Net income (loss) attributable to HNI Corporation per common share – basic
  $ 0.10     $ (0.03 )
Average number of common shares outstanding – basic
    45,193,336       44,894,656  
Income (loss) from continuing operations attributable to HNI Corporation per common share – diluted
  $ 0.12     $ (0.03 )
Discontinued operations attributable to HNI Corporation per common share – diluted
  $ (0.02 )   $ (0.00 )
Net income (loss) attributable to HNI Corporation per common share – diluted
  $ 0.10     $ (0.03 )
Average number of common shares outstanding – diluted
    46,011,691       44,894,656  
Cash dividends per common share
  $ 0.215     $ 0.215  
 
See accompanying Notes to Condensed Consolidated Financial Statements.


 

 


HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
   
Six Months Ended
   
July 3,
2010
   
July 4,
2009
(As Adjusted)
   
(In thousands, except share and per share data)
Net sales
  $ 761,728     $ 771,602  
Cost of sales
    501,231       521,398  
  Gross profit
    260,497       250,204  
Selling and administrative expenses
    250,832       256,575  
Restructuring and impairment
    3,072       8,963  
  Operating income (loss)
    6,593       (15,334 )
Interest income
    180       260  
Interest expense
    5,777       6,247  
  Earnings (loss) before income taxes
    996       (21,321 )
Income taxes
    (454 )     (8,377 )
  Income (loss) from continuing operations, less applicable income taxes
    1,450       (12,944 )
Discontinued operations, less applicable income taxes
    (2,538 )     (305 )
  Net income (loss)
    (1,088 )     (13,249 )
Less: Net income attributable to the noncontrolling interest
    195       34  
  Net income (loss) attributable to HNI Corporation
  $ (1,283 )   $ (13,283 )
                 
Income (loss) from continuing operations attributable to HNI Corporation per common share – basic
  $ 0.03     $ (0.29 )
Discontinued operations attributable to HNI Corporation per common share – basic
  $ (0.06 )   $ (0.01 )
Net income (loss) attributable to HNI Corporation per common share – basic
  $ (0.03 )   $ (0.30 )
Average number of common shares outstanding – basic
    45,179,893       44,753,368  
Income (loss) from continuing operations attributable to HNI Corporation per common share – diluted
  $ 0.03     $ (0.29 )
Discontinued operations attributable to HNI Corporation per common share – diluted
  $ (0.06 )   $ (0.01 )
Net income (loss) attributable to HNI Corporation per common share – diluted
  $ (0.03 )   $ (0.30 )
Average number of common shares outstanding – diluted
    45,179,893       44,753,368  
Cash dividends per common share
  $ 0.43     $ 0.43  
 
See accompanying Notes to Condensed Consolidated Financial Statements.




 

 


HNI Corporation and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Six Months Ended
 
   
July 3, 2010
   
July 4, 2009
 
   
(In thousands)
 
Net Cash Flows From (To) Operating Activities:
           
  Net income (loss)
  $ (1,088 )   $ (13,249 )
  Noncash items included in net income:
               
    Depreciation and amortization
    31,105       37,782  
    Other postretirement and post employment benefits
    846       924  
    Stock-based compensation
    3,081       1,859  
    Deferred income taxes
    (1,950 )     1,307  
    (Gain)/Loss on sale, retirement and impairment of
      long-lived assets and intangibles
    3,495       118  
    Stock issued to retirement plan
    5,400       6,565  
    Other – net
    292       232  
  Net increase (decrease) in operating assets and liabilities
    (38,833 )     18,683  
  Increase (decrease) in other liabilities
    (807 )     (4,775 )
    Net cash flows from (to) operating activities
    1,541       49,446  
                 
Net Cash Flows From (To) Investing Activities:
               
  Capital expenditures
    (12,300 )     (6,958 )
  Proceeds from sale of property, plant and equipment
    1,669       1,938  
  Acquisition spending, net of cash acquired
    -       (500 )
  Capitalized software
    (128 )     (795 )
  Purchase of long-term investments
    (4,805 )     (2,810 )
  Sales or maturities of long-term investments
    2,570       26,601  
  Other - Net
    603       -  
    Net cash flows from (to) investing activities
    (12,391 )     17,476  
                 
Net Cash Flows From (To) Financing Activities:
               
  Proceeds from sales of HNI Corporation common stock
    1,651       1,265  
  Purchase of HNI Corporation common stock
    (10,297 )     -  
  Proceeds from long-term debt
    50,000       77,000  
  Payments of note and long-term debt and other financing
    (54,081 )     (145,797 )
  Dividends paid
    (19,474 )     (19,303 )
     Net cash flows from (to) financing activities
    (32,201 )     (86,835 )
                 
Net increase (decrease) in cash and cash equivalents
    (43,051 )     (19,913 )
Cash and cash equivalents at beginning of period
    87,374       39,538  
Cash and cash equivalents at end of period
  $ 44,323     $ 19,625  
   
See accompanying Notes to Condensed Consolidated Financial Statements.
 

 

 

HNI Corporation and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
July 3, 2010

Note A.  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  The January 2, 2010 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for th e six-month period ended July 3, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending January 1, 2011.  For further information, refer to the consolidated financial statements and accompanying notes included in HNI Corporation's (the "Corporation") Annual Report on Form 10-K for the fiscal year ended January 2, 2010.


Note B. Stock-Based Compensation

The Corporation measures stock-based compensation expense at grant date, based on the fair value of the award and recognizes expense over the employee requisite service period.  For the three and six months ended July 3, 2010, and July 4, 2009, the Corporation recognized $1.6 million and $3.1 million, and $1.1 million and $1.9 million, respectively, of stock-based compensation expense for the cost of stock options and time-based restricted stock units issued under the HNI Corporation 2007 Stock-Based Compensation Plan and shares issued under the HNI Corporation 2002 Members' Stock Purchase Plan.

At July 3, 2010, there was $12.4 million of unrecognized compensation cost related to nonvested stock-based compensation awards, which the Corporation expects to recognize over a weighted-average remaining requisite service period of 1.4 years.


Note C.  Inventories

The Corporation values its inventory at the lower of cost or market with approximately 84% valued by the last-in, first-out ("LIFO") method.

 
(In thousands)
 
July 3, 2010
(Unaudited)
   
Jan. 2, 2010
 
Finished products
  $ 61,970     $ 48,198  
Materials and work in process
    44,120       40,322  
LIFO allowance
    (23,376 )     (23,376 )
    $ 82,714     $ 65,144  
 
 


 

 

Note D.  Comprehensive Income and Shareholders' Equity

The following table reconciles net income to comprehensive income attributable to HNI Corporation:
   
Three Months Ended
   
Six Months Ended
 
 
(In thousands)
 
July 3,
2010
   
July 4,
2009
   
July 3,
2010
   
July 4,
2009
 
Net income (loss)
  $ 4,765     $ (1,390 )   $ (1,088 )   $ (13,249 )
Other comprehensive income, net of income tax as applicable:
                               
  Foreign currency translation adjustments
    151       (10 )     146       (101 )
  Change in unrealized gains (losses) on marketable securities
    -       267       -       134  
  Change in pension and postretirement liability
    79       79       158       158  
  Change in derivative financial instruments
    (310 )     113       (136 )     102  
Comprehensive income (loss)
    4,685       (941 )     (920 )     (12,956 )
Comprehensive income attributable to noncontrolling interest
    62       7       195       34  
Comprehensive income (loss) attributable to HNI Corporation
  $ 4,623     $ (948 )   $ (1,115 )   $ (12,990 )

The following table summarizes the components of accumulated other comprehensive loss and the changes in accumulated other comprehensive loss, net of tax, as applicable for the six months ended July 3, 2010:
 
 
 
 
(in thousands)
 
Foreign Currency Translation Adjustment
   
 
Pension Postretirement Liability
   
 
Derivative Financial Instruments
   
Accumulated Other Comprehensive Loss
 
Balance at January 2, 2010
  $ 3,526     $ (2,710 )   $ (1,590 )   $ (774 )
Year-to date change
    146       158       (136 )     168  
Balance at July 3, 2010
  $ 3,672     $ (2,552 )   $ (1,726 )   $ (606 )


During the six months ended July 3, 2010, the Corporation repurchased 372,822 shares of its common stock at a cost of approximately $10.3 million.  As of July 3, 2010, $153.3 million of the Corporation's Board of Directors' current repurchase authorization remained unspent.










 

 

Note E.  Earnings Per Share

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

   
Three Months Ended
   
Six Months Ended
 
(In thousands, except per share data)
 
July 3,
2010
   
July 4,
2009
   
July 3,
2010
   
July 4,
2009
 
Numerators:
                       
Numerator for both basic and diluted EPS attributable to Parent Company net income (loss)
  $ 4,703     $ (1,397 )   $ (1,283 )   $ (13,283 )
Denominators:
                               
Denominator for basic EPS weighted-average common shares outstanding
    45,193       44,895       45,180       44,753  
Potentially dilutive shares from stock-based compensation plans
    819       -       -       -  
Denominator for diluted EPS
    46,012       44,895       45,180       44,753  
Earnings per share – basic
  $ 0.10     $ (0.03 )   $ (0.03 )   $ (0.30 )
Earnings per share – diluted
  $ 0.10     $ (0.03 )   $ (0.03 )   $ (0.30 )

Certain exercisable and non-exercisable stock options totaling 1,752,242 were not included in the computation of diluted EPS for the three months ended July 3, 2010 because their inclusion would have been anti-dilutive.  None of the outstanding stock options or restricted stock units were included in the computation of diluted EPS for the three-month and six-month computation of diluted EPS at July 4, 2009 or the six-month computation of diluted EPS at July 3, 2010, as all would be anti-dilutive due to the current period loss.


Note F.  Restructuring Reserve and Plant Closures

As a result of challenging market conditions and the Corporation's ongoing business simplification and cost reduction strategies, management made the decision in the first quarter of fiscal 2010 to close an office furniture manufacturing facility located in Salisbury, North Carolina and consolidate production into existing office furniture manufacturing facilities.  In connection with the closure of the Salisbury location and other office furniture plant closures announced in 2009, the Corporation recorded $2.1 million of charges during the quarter ended July 3, 2010 which included $0.9 million of accelerated depreciation recorded in cost of sales and $1.2 million of other costs which were recorded as restructuring costs.  The Corporation had previously recorded $1.3 million of severance costs for approximately 125 members during the first quarter in connection with the closure of the Salisbury facility.  The closure and consolidation of the Salisbury facility is expected to be substantially completed by the end of 2010.

The following is a summary of changes in restructuring accruals during the six months ended July 3, 2010.  This summary does not include accelerated depreciation as this item was not accounted for through the restructuring accrual on the Condensed Consolidated Balance Sheets but is included as a component of "Restructuring and Impairment" in the Condensed Consolidated Statements of Income.



 
10 

 


 
(In thousands)
 
Severance
   
Facility Exit Costs & Other
   
Total
 
Balance as of January 2, 2010
  $ 4,389     $ 1,569     $ 5,958  
Restructuring charges
    1,440       1,633       3,072  
Cash payments
    (2,360 )     (2,487 )     (4,847 )
Balance as of July 3, 2010
  $ 3,469     $ 714     $ 4,183  


Note G.  Discontinued Operations

During the first quarter of fiscal 2010, the Corporation committed to a plan to sell a small non-core business of its office furniture segment.  The Corporation also sold a small non-core component of its hearth product segment during the first quarter.  Revenues and expenses associated with these business operations are presented as discontinued operations for all periods presented.

During the first quarter of fiscal 2010, the Corporation recorded a pre-tax charge of $1.0 million to reduce the assets of the office furniture business to fair market value.  During the fiscal quarter ended July 3, 2010, the Corporation recorded an additional charge of $1.7 million to reduce the assets held for sale to the current fair market value based on changes in negotiations with prospective buyers.  The charges were principally due to the write-down of intangibles not deductible for tax purposes.  A pre-tax loss of $0.4 million was recorded at the time of sale of the hearth products component referred to above.

Summarized financial information for discontinued operations is as follows:

   
Three Months Ended
   
Six Months Ended
 
(in thousands)
 
July 3,
2010
   
July 4,
2009
   
July 3,
2010
   
July 4,
2009
 
Discontinued operations:
                       
  Operating profit (loss) before tax
  $ 296     $ (204 )   $ (994 )   $ (434 )
  Benefit for income tax
    118       (60 )     (353 )     (129 )
Net profit (loss) from discontinued
  operations, net of income tax
    178       (144 )     (641 )     (305 )
Impairment loss and loss on sale of
  discontinued operations:
                               
Impairment loss and loss on sale of
  discontinued operations before tax
    (1,673 )     -       (3,076 )     -  
Benefit for income tax
    (668 )     -       (1,179 )     -  
Net impairment loss and loss on sale
  of discontinued operations
    (1,005 )     -       (1,897 )     -  
Loss from discontinued operations, net
of income tax benefit
  $ (827 )   $ (144 )   $ (2,538 )   $ (305 )




 
11 

 


Assets to be disposed of as of July 3, 2010 are recorded as follows:

(in thousands)
 
July 3, 2010
 
Prepaid Expenses and Other Current Assets
     
  Receivables
  $ 3,918  
  Prepaid expenses
    346  
      4,264  
Other Assets
       
  Property and equipment
    454  
  Intangible assets
    -  
      454  
Accounts Payable and Accrued Expenses
       
  Accounts Payable
    340  
  Accrued Expenses
    1,628  
      1,968  
  Total net assets held for sale
  $ 2,750  


Note H. Goodwill and Other Intangible Assets

The table below summarizes amortizable definite-lived intangible assets as of July 3, 2010 and January 2, 2010, which are reflected in the "Other Assets" line item in the Corporation's Condensed Consolidated Balance Sheets:

(In thousands)
 
July 3, 2010
   
Jan. 2, 2010
 
Patents
  $ 19,325     $ 19,325  
Customer relationships and other
    108,464       115,451  
Less:  accumulated amortization
    67,696       68,004  
    $ 60,093     $ 66,772  

Aggregate amortization expense for the six months ended July 3, 2010 and July 4, 2009 was $4.9 million and $4.9 million, respectively.  Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows:

(In millions)
 
2010
   
2011
   
2012
   
2013
   
2014
 
Amortization Expense
  $ 8.5     $ 6.3     $ 5.7     $ 5.3     $ 4.7  

As events such as potential acquisitions, dispositions or impairments occur in the future, these amounts may change.

The Corporation also owns trademarks and trade names with a net carrying amount of $41.0 million.  The trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely.


 
12 

 


The changes in the carrying amount of goodwill since January 2, 2010, are as follows by reporting segment:

 
(In thousands)
 
Office
Furniture
   
Hearth
Products
   
Total
 
Balance as of January 2, 2010
                 
Goodwill
  $ 123,948     $ 166,525     $ 290,473  
Accumulated impairment losses
    (29,359 )     -       (29,359 )
      94,589       166,525       261,114  
Goodwill acquired during the quarter
    -       -       -  
Impairment losses
    -       -       -  
Goodwill related to the sale of business units
    -       (486 )     (486 )
Balance as of July 3, 2010
                       
Goodwill
    123,948       166,039       289,987  
Accumulated impairment losses
    (29,359 )     -       (29,359 )
    $ 94,589     $ 166,039     $ 260,628  

The Corporation evaluates its goodwill for impairment on an annual basis during the fourth quarter, or whenever indicators of impairment exist.  The Corporation estimates the fair value of its reporting units using various valuation techniques, with the primary technique being a discounted cash flow method.  This method employs assumptions that are market participant based.  The decrease in the hearth products segment related to the sale of a non-core component during the first quarter.


Note I.  Product Warranties

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

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

   
Six Months Ended
 
(In thousands)
 
July 3, 2010
   
July 4, 2009
 
Balance at beginning of period
  $ 12,684     $ 13,948  
Accruals for warranties issued during period
    7,913       7,093  
Adjustments related to pre-existing warranties
    750       13  
Settlements made during the period
    (8,582 )     (7,790 )
Balance at end of period
  $ 12,765     $ 13,264  






 
13 

 

Note J.  Postretirement Health Care

The following table sets forth the components of net periodic benefit cost included in the Corporation's income statement for:

   
Six Months Ended
 
(In thousands)
 
July 3, 2010
   
July 4, 2009
 
Service cost
  $ 181     $ 195  
Interest cost
    420       480  
Amortization of transition obligation
    254       254  
Amortization of (gain)/loss
    (9 )     (5 )
Net periodic benefit cost
  $ 846     $ 924  
 
 

Note K.  Income Taxes

The provision for income taxes in the second quarter of 2010 reflects an actual effective tax rate of 38.5 percent, compared to a discrete period effective tax rate of 33.3 percent for the second quarter 2009.  The 2010 estimated annual effective tax rate including discontinued operations is expected to be 36 percent, slightly higher than the U.S. tax rate of 35 percent, primarily due to increased profitability and the lack of U.S. research and development tax credits which have not been extended past 2009.  A discrete calculation was used to report the 2009 second quarter tax provision rather than an estimated annual tax rate as uncertainty in the full year outlook produced significant variability and made it difficult to reasonably estimate the 2009 annual effective tax rate.


Note L.  Derivative Financial Instruments

The Corporation uses derivative financial instruments to reduce its exposure to adverse fluctuations in interest rates and diesel fuel.  On the date a derivative is entered into, the Corporation designates the derivative as (i) a fair value hedge, (ii) a cash flow hedge, (iii) a hedge of a net investment in a foreign operation, or (iv) a risk management instrument not designated for hedge accounting.  The Corporation recognizes all derivatives on its consolidated balance sheet at fair value.

Interest Rate Risk
In June 2008, the Corporation entered into an interest rate swap agreement, designated as a cash flow hedge, for purposes of managing its benchmark interest rate fluctuation risk.  Under the interest rate swap agreement, the Corporation pays a fixed rate of interest and receives a variable rate of interest equal to the one-month London Interbank Offered Rate (LIBOR) as determined on the last day of each monthly settlement period on an aggregated notional principal amount of $50 million.  The net amount paid or received upon monthly settlements is recorded as an adjustment to interest expense, while the effective change in fair value is recorded as a component of accumulated other comprehensive income in the equity section of the Corporation's consolidated balance sheet.  The interest rate swap agreement ma tures on May 27, 2011.



 
14 

 

As of July 3, 2010, $1,145,506 of deferred net losses, net of tax, included in equity ("Accumulated other comprehensive income (loss)" in the Condensed Consolidated Balance Sheet) related to this interest rate swap, are expected to be reclassified to current earnings ("Interest expense" in the Condensed Consolidated Statements of Income) over the next twelve months.

Diesel Fuel Risk
The Corporation uses independent freight carriers to deliver its products.  These carries charge the Corporation a basic rate per mile that is subject to a mileage surcharge for diesel fuel price increases.  The Corporation entered into variable to fixed rate commodity swap agreements beginning in April 2010 with two financial counterparties to manage fluctuations in fuel costs.  The Corporation will hedge approximately 40% of its diesel fuel requirements for the next twelve months.  The Corporation uses the hedge agreements to mitigate the volatility of diesel fuel prices and related fuel surcharges, and not to speculate the future price of diesel fuel.  The hedge agreements are designed to add stability to the Corporation's costs, enabling the Corporation to make pricing decisions and lessen the economic impact of abrupt changes in diesel fuel prices over the term of the contract.  The hedging instruments consist of a series of financially settled fixed forward contracts with expiration dates ranging up to twelve months.  The contracts have been designated as cash flow hedges of future diesel purchases, and as such, the net amount paid or received upon monthly settlements is recorded as an adjustment to freight expense, while the effective change in fair value is recorded as a component of accumulated other comprehensive income in the equity section of the Corporation's consolidated balance sheet.

As of July 3, 2010, $580,838 of deferred net losses, net of tax, included in equity ("Accumulated other comprehensive income (loss)" in the Condensed Consolidated Balance Sheet) related to the diesel hedge agreements, are expected to be reclassified to current earnings ("Selling and administrative expense" in the Condensed Consolidated Statements of Income) over the next twelve months.

The location and fair value of derivative instruments reported in the Condensed Consolidated Balance Sheet are as follows (in thousands):

 
Balance Sheet Location
 
Jul. 3, 2010
   
Jan. 2, 2010
 
Interest rate swap
Accounts payable and accrued expenses
  $ 1,836     $ 1,922  
Interest rate swap
Other long-term liabilities
    -     $ 626  
Diesel fuel swap
Accounts payable and accrued expenses
  $ 931       -  
      $ 2,767     $ 2,548  

 
15 

 

The effect of derivative instruments on the Condensed Consolidated Statements of Income for the six months ended July 3, 2010 was as follows (in thousands):

Derivatives in Cash Flow Hedge Relationship
 
Before-tax Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
 
Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
 
Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion)
 
Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
 
Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
 
Interest rate swap
  $ (333 )
Interest expense
  $ (1,045 )
None
    -  
Diesel fuel swap
    (931 )
Selling and administrative expense
    (82 )
None
      -  
Total
  $ (1,263 )     $ (1,127 )       -  
                             
 
 
The effect of derivative instruments on the Condensed Consolidated Statements of Income for the six months ended July 4, 2009 was as follows (in thousands):

Derivatives in Cash Flow Hedge Relationship
 
Before-tax Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
 
Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
 
Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion)
 
Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
 
Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
 
Interest rate swap
  $ (644 )
Interest expense
  $ (807 )
None
    -  
Diesel fuel swap
      -  
Selling and administrative expense
      -  
None
      -  
Total
  $ (644 )     $ (807 )       -  
                             


Note M.  Fair Value Measurements

For recognition purposes, on a recurring basis the Corporation is required to measure at fair value its investment in target funds.  The target funds are reported as both current and noncurrent assets based on the portion that is anticipated to be used for current operations.  When available the Corporation uses quoted market prices to determine fair value and classify such measurements within Level 1.  In some cases where market prices are not available, the Corporation makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified within Level 2.

On a nonrecurring basis, during the three month period ended July 3, 2010 the Corporation measured the fair value of assets held for sale using the market approach.  The Corporation used

 
16 

 

comparable prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities, thus classified the measurements as Level 2.

Assets measured at fair value during the three months ended July 3, 2010 were as follows:

 
 
 
 
(in thousands)
 
 
Fair value as of measurement date
   
Quoted prices in active markets for identical assets
(Level 1)
   
Significant other observable inputs
(Level 2)
   
Significant unobservable inputs
(Level 3)
 
Investment in target funds
  $ 8,142       -     $ 8,142       -  
Derivative financial instrument
  $ (2,767 )     -     $ (2,767 )     -  
Assets held for sale
  $ 2,750       -     $ 2,750       -  


Assets measured at fair value for the year ended January 2, 2010 were as follows:

 
 
 
 
(in thousands)
 
 
Fair value as of measurement date
   
Quoted prices in active markets for identical assets
(Level 1)
   
Significant other observable inputs
(Level 2)
   
Significant unobservable inputs
(Level 3)
 
Investment in target funds
  $ 5,744     $ -     $ 5,744     $ -  
Derivative financial instrument
  $ (2,548 )   $ -     $ (2,548 )   $ -  

In addition to the methods and assumptions the Corporation uses to record the fair value of financial instruments as discussed in the section above, it uses the following methods and assumptions to estimate the fair value of its financial instruments.

Cash and cash equivalents
The carrying amount approximated fair value.

Long-term debt (including current portion)
The carrying value of the Corporation's outstanding variable-rate, long-term debt obligations at July 3, 2010 and January 2, 2010, the end of the Corporation's 2009 fiscal year, approximates the fair value.  The fair value of the Corporation's outstanding fixed-rate, long-term debt obligations is estimated to be $155 million at July 3, 2010 and $151 million at January 2, 2010, compared to the carrying value of $150 million.


Note N.  Commitments and Contingencies

The Corporation utilizes letters of credit in the amount of $18.4 million to back certain insurance policies and payment obligations.  The letters of credit reflect fair value as a condition of their underlying purpose and are subject to competitively determined fees.


 
17 

 

The Corporation has contingent liabilities which have arisen in the ordinary course of its business, including pending litigation, environmental remediation, taxes, and other claims.  It is the Corporation's opinion that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation's financial condition, although such matters could have a material effect on the Corporation's quarterly or annual operating results and cash flows when resolved in a future period.


Note O.  New Accounting Standards

There were no new accounting standards issued during the quarter that the Corporation expects to have a material impact on the financial statements.


Note P.  Business Segment Information

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

The office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems and other related products.  The hearth products segment manufactures and markets a broad line of manufactured gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories, principally for the home.

For purposes of segment reporting, intercompany sales transfers between segments are not material and operating profit is income before income taxes exclusive of certain unallocated corporate expenses.  These unallocated corporate expenses include the net cost of the Corporation's corporate operations, interest income and interest expense.  Management views interest income and expense as corporate financing costs rather than a business segment cost.  In addition, management applies one effective tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis.

The Corporation's primary market and capital investments are concentrated in the United States.


 
18 

 

Reportable segment data reconciled to the consolidated financial statements for the three- and six-month periods ended July 3, 2010, and July 4, 2009, is as follows:

   
Three Months Ended
   
Six Months Ended
 
(In thousands)
 
July 3,
2010
   
July 4,
2009
   
July 3,
2010
   
July 4,
2009
 
Net Sales:
                       
  Office Furniture
  $ 342,698     $ 317,955     $ 642,730     $ 648,755  
  Hearth Products
    55,524       56,818       118,998       122,847  
      398,222       374,773       761,728       771,602  
                                 
Operating Profit (Loss):
                               
  Office furniture
                               
    Operations before restructuring charges
  $ 23,945     $ 19,608     $ 31,925     $ 23,260  
    Restructuring and impairment charges
    (1,238 )     (2,508 )     (2,971 )     (5,497 )
      Office furniture – net
    22,707       17,100       28,954       17,763  
  Hearth products
                               
    Operations before restructuring charges
    (2,633 )     (7,637 )     (5,438 )     (16,873 )
    Restructuring and impairment charges
    -       (1,370 )     (101 )     (3,466 )
      Hearth products – net
    (2,633 )     (9,006 )     (5,539 )     (20,339 )
    Total operating profit
    20,074       8,094       23,415       (2,577 )
  Unallocated corporate expense
    (10,989 )     (9,975 )     (22,419 )     (18,745 )
    Income (loss) before income taxes
  $ 9,085     $ (1,881 )   $ 996     $ (21,321 )
                                 
Depreciation & Amortization Expense:
                               
  Office furniture
  $ 11,731     $ 13,734     $ 23,372     $ 26,899  
  Hearth products
    2,714       3,866       6,493       8,880  
  General corporate
    599       942       1,239       2,003  
    $ 15,044     $ 18,542     $ 31,104     $ 37,782  
                                 
Capital Expenditures:
                               
  Office furniture
  $ 7,046     $ 2,819     $ 10,607     $ 5,729  
  Hearth products
    387       231       829       1,700  
  General corporate
    196       87       992       324  
    $ 7,629     $ 3,137     $ 12,428     $ 7,753  
                                 
                   
As of
July 3,
2010
   
As of
July 4,
2009
 
Identifiable Assets:
                               
  Office furniture
                  $ 603,106     $ 633,693  
  Hearth products
                    286,072       308,437  
  General corporate
                    83,628       76,966  
                    $ 972,806     $ 1,019,096  


 
19 

 

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

Overview

The Corporation has two reportable segments:  office furniture and hearth products.  The Corporation is the second largest office furniture manufacturer in the world and the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces.  The Corporation utilizes its split and focus, decentralized business model to deliver value to its customers with its various brands and selling models.  The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.

Net sales for the second quarter of fiscal 2010 increased 6.3 percent to $398.2 million when compared to the second quarter of fiscal 2009.  The increase was driven by the office furniture segment and the new construction channel of the hearth products segment.  Gross margins for the quarter increased from prior year levels due to higher volume and cost reduction initiatives partially offset by decreased price realization and higher mix of lower margin product in the office furniture segment.  Selling and administrative expenses, as a percent of sales, decreased due to higher volume and cost control initiatives partially offset by investments in selling initiatives and incentive based compensation.

The Corporation recorded $2.4 million of restructuring and transition costs in the second quarter in connection with office furniture plant closures announced in first quarter 2010 and 2009.

The Corporation made a decision to sell a non-core business of the office furniture segment and sold a non-core component of the hearth products segment during the first quarter of 2010.  Revenues and expenses associated with these business operations are presented as discontinued operations for all periods presented in the condensed consolidated financial statements.

Critical Accounting Policies

The preparation of the financial statements requires the Corporation to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  The Corporation continually evaluates its accounting policies and estimates.  The Corporation bases its estimates on historical experience and on a variety of other assumptions believed by management to be reasonable in order to make judgments about the carrying value of assets and liabilities.  Actual results may differ from these estimates under different assumptions or conditions.  A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Corporation's Annu al Report on Form 10-K for the year ended January 2, 2010.  During the first six months of fiscal 2010, there were no material changes in the accounting policies and assumptions previously disclosed.

New Accounting Standards

There were no new accounting standards issued during the quarter that the Corporation expects to have a material impact on the financial statements.

 
20 

 

Results of Operations

The following table presents certain key highlights from the results of operations for the periods indicated:

   
Three Months Ended
   
Six Months Ended
 
 
(In thousands)
 
July 3,
2010
   
July 4,
2009
   
Percent
Change
   
July 3,
2010
   
July 4,
2009
   
Percent
Change
 
Net sales
  $ 398,222     $ 374,773       6.3 %   $ 761,728     $ 771,602       (1.3 )%
Cost of sales
    256,905       247,215       3.9 %     501,231       521,398       (3.9 )%
Gross profit
    141,317       127,558       10.8 %     260,497       250,204       4.1 %
Selling & administrative expenses
    128,032       122,637       4.4 %     250,832       256,575       (2.2 )%
Restructuring & impairment charges
    1,238       3,878       (68.1 )%     3,072       8,963       (65.7 )%
Operating income (loss)
    12,047       1,043    
NM*
      6,593       (15,334 )     143.0 %
Interest expense, net
    2,962       2,924       1.3 %     5,597       5,987       (6.5 )%
Earnings (loss) before income taxes
    9,085       (1,881 )     583.0 %     996       (21,321 )     104.7 %
Income taxes
    3,493       (635 )     650.1 %     (454 )     (8,377 )     94.6 %
Income (loss) from continuing operations
  $ 5,592     $ (1,246 )     548.8 %   $ 1,450     $ (12,944 )     111.2 %
*NM=Not Meaningful
                                               

Consolidated net sales for the second quarter increased 6.3 percent or $23.5 million compared to the same quarter last year.  The increase occurred in the office furniture segment offset by a small decline in the hearth products segment.

Gross margin for the second quarter increased to 35.5 percent compared to 34.0 percent for the same quarter last year.  The improvement in gross margin was driven by higher volume and cost reduction initiatives offset partially by decreased price realization and higher mix of lower margin products in the office furniture segment.  Second quarter 2010 included $1.1 million of accelerated depreciation and transition costs related to the closure and consolidation of office furniture manufacturing facilities.

As a result of challenging market conditions and the Corporation's ongoing business simplification and cost reduction strategies, management made the decision in the first quarter of fiscal 2010 to close an office furniture manufacturing facility located in Salisbury, North Carolina and consolidate production into existing office furniture manufacturing facilities.  In connection with the closure of the Salisbury location and other office furniture plant closures announced in 2009, the Corporation recorded $2.1 million of charges during the quarter ended July 3, 2010 which included $0.9 million of accelerated depreciation recorded in cost of sales and $1.2 million of other costs which were recorded as restructuring costs.  The Corporation had previously recorded $1.3 million of severance costs for approximately 125 members during the first quarter in connection with the closure of the Salisbury facility.  The closure and consolidation of the Salisbury facility is expected to be substantially completed by the end of 2010.  The Corporation anticipates additional restructuring and transition costs of approximately $2.6 million related to the various closures over the remainder of 2010.

Total selling and administrative expenses, including restructuring charges, as a percent of sales decreased to 32.5 percent compared to 33.8 percent for the same quarter last year due to higher volume and cost reduction initiatives partially offset by investments in selling initiatives and increased incentive based compensation.  Second quarter 2009 included $3.9 million of restructuring charges associated with plant consolidations.

 
21 

 

Income from continuing operations for the second quarter of 2010 was $5.6 million or $0.12 per diluted share in the second quarter of 2010 compared to a net loss of ($1.2) million or ($0.03) per diluted share in the second quarter of 2009.

The provision for income taxes in the second quarter of 2010 reflects an actual effective tax rate of 38.5 percent, compared to a discrete period effective tax rate of 33.3 percent for the second quarter of 2009.   The 2010 estimated annual effective tax rate including discontinued operations is expected to be 36 percent, slightly higher than the U.S. tax rate of 35 percent, primarily due to increased profitability and the lack of U.S. research and development tax credits which have not been extended past 2009.  A discrete calculation was used to report the 2009 second quarter tax provision rather than an estimated annual tax rate as uncertainty in the full year outlook produced significant variability and made it difficult to reasonably estimate the 2009 annual effective tax rate.

The Corporation made a decision to sell a small, non-core business of the office furniture segment during the first quarter of 2010.  A pre-tax charge of $1.0 million was recorded during the first quarter to reduce the assets held for sale to fair market value.  An additional pre-tax charge of $1.7 million was recorded in second quarter of 2010 to reduce the assets held for sale to the current fair market value based on changes in negotiations with prospective buyers.  In addition, the Corporation sold a small non-core component of its hearth products segment during the first quarter.  A pre-tax charge of $0.4 million was recorded at the time of the sale.  Revenues and expenses associated with these business operations are presented as discontinued operations for all periods presented i n the financial statements.

For the first six months of 2010, consolidated net sales decreased $9.9 million, or 1.3 percent, to $761.7 million compared to $771.6 million in 2009.  Gross margins increased to 34.2 percent compared to 32.4 percent for the same period last year.  Income from continuing operations was $1.5 million for the first six months of 2009 compared to a loss of $12.9 million for the first six months of 2009.  Earnings per share from continuing operations increased to $0.03 per diluted share compared to ($0.29) per diluted share for the same period last year.

Office Furniture

Second quarter 2010 sales for the office furniture segment increased 7.8 percent or $24.7 million to $342.7 million from $318.0 million for the same quarter last year driven by growth in all channels of the office furniture industry.  Operating profit prior to unallocated corporate expenses increased $5.6 million to $22.7 million as a result of higher volume, improved distribution efficiencies, cost reduction initiatives and lower restructuring and transition costs.  These were partially offset by lower price realization, higher mix of lower margin products, increased fuel costs, investments in selling initiatives and higher incentive based compensation.  Second quarter 2010 included $2.4 million of restructuring and transition costs including accelerated depreciation compared to $3.7 million of restructur ing costs in second quarter 2009.

Net sales for the first six months of 2010 decreased 0.9 percent or $6.0 million to $642.7 million compared to $648.8 million for the same period in 2009.  Operating profit increased 63.0 percent or $11.2 million to $29.0 million.


 
22 

 

Hearth Products

Second quarter 2010 net sales for the hearth products segment decreased 2.3 percent or $1.3 million to $55.5 million from $56.8 million for the same quarter last year driven by a decline in the remodel-retrofit channel partially offset by an increase in the new construction channel.  Operating profit prior to unallocated corporate expenses increased $6.4 million to a $2.6 million loss due to cost reduction initiatives and lower restructuring costs partially offset by lower volume and higher material costs.  Second quarter 2009 included $1.5 million of restructuring and transition costs.

Net sales for the first six months of 2010 decreased 3.0 percent or $3.8 million to $119.0 million compared to $122.8 million for the same period in 2009.  Operating profit increased $14.8 million to a $5.5 million loss when compared to the same period last year.

Liquidity and Capital Resources

Cash Flow – Operating Activities
Cash generated from operating activities for the first six months of 2010 totaled $1.5 million compared to $49.4 million generated in the first six months of 2009.  Changes in working capital performance resulted in a $38.8 million use of cash in the current fiscal year compared to $18.7 million source of cash in the prior year.  Working capital in the first six months of 2009 was positively impacted by reductions in accounts receivable due to a significant decrease in revenue.

Cash Flow – Investing Activities
Capital expenditures including capitalized software for the first six months of fiscal 2010 were $12.4 million compared to $7.8 million in the same period of fiscal 2009 and were primarily for tooling and equipment for new products.  For the full year 2010, capital expenditures are expected to be $25 to $30 million primarily focused on new product development and related tooling.

Cash Flow – Financing Activities
On June 11, 2010, the Corporation replaced a $300 million revolving credit facility entered into on January 28, 2005 with a new revolving credit facility that provided for a maximum borrowing of $150 million subject to increase (to a maximum amount of $250 million) or reduction from time to time according to the terms of the underlying credit agreement.  Amounts borrowed under the Credit Agreement may be borrowed, repaid and reborrowed from time to time until June 11, 2014.  The Corporation paid approximately $1.6 million of debt issuance costs that are being amortized straight-line over the term of the credit agreement.  As of July 3, 2010, net borrowings under the revolving credit facility are at $50 million and are classified as short-term as the Corporation expects to repay the borrowings within a year .

The credit agreement governing the Corporation's revolving credit facility contains a number of covenants, including covenants requiring maintenance of the following financial ratios as of the end of any fiscal quarter:

 
·
a consolidated interest coverage ratio of not less than 4.0 to 1.0, based upon the ratio of (a) consolidated EBITDA (as defined in the credit agreement) for the last four fiscal quarters to (b) the sum of consolidated interest charges; and
 
·
a consolidated leverage ratio of not greater than 3.0 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness (as defined in the credit agreement) to (b) consolidated EBITDA for the last four fiscal quarters.

 
23 

 

The note purchase agreement pertaining to the Corporation's Senior Notes also contains a number of covenants, including a covenant requiring maintenance of consolidated debt to consolidated EBITDA (as defined in the note purchase agreement) of not greater than 3.5 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness (as defined in the note purchase agreement) to (b) consolidated EBITDA for the last four fiscal quarters.

The revolving credit facility and Senior Notes are the primary sources of committed funding from which the Corporation finances its planned capital expenditures, strategic initiatives, such as acquisitions, repurchases of common stock and certain working capital needs.  Non-compliance with the various financial covenant ratios could prevent the Corporation from being able to access further borrowings under the revolving credit facility, require immediate repayment of all amounts outstanding with respect to the revolving credit facility and Senior Notes and/or increase the cost of borrowing.

The most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.0 to 1.0 included in the credit agreement governing the revolving credit facility.  Under that credit agreement, adjusted EBITDA is defined as consolidated net income before interest expense, income taxes and depreciation and amortization of intangibles, as well as non-cash, nonrecurring charges and all non-cash items increasing net income.  At July 3, 2010, the Corporation was well below this ratio and was in compliance with all of the covenants and other restrictions in the credit agreements and note purchase agreement.  The Corporation currently expects to remain in compliance over the next twelve months.

The Corporation's Board of Directors (the "Board") declared a regular quarterly cash dividend of $0.215 per share on the Corporation's common stock on May 11, 2010, to shareholders of record at the close of business on May 21, 2010.  It was paid on June 1, 2010.

During the six months ended July 3, 2010, the Corporation repurchased 372,822 shares of common stock at a cost of approximately $10.3 million, or an average price of $27.62 per share.  For the six months ended July 4, 2009, the Corporation did not repurchase any shares of common stock.  As of July 3, 2010, approximately $153.3 million of the Board's current repurchase authorization remained unspent.

Off-Balance Sheet Arrangements

The Corporation does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Corporation's financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

Contractual obligations associated with ongoing business and financing activities will result in cash payments in future periods.  A table summarizing the amounts and estimated timing of these future cash payments was provided in the Corporation's Annual Report on Form 10-K for the year ended January 2, 2010.  During the first six months of fiscal 2010 there were no material changes outside the ordinary course of business in the Corporation's contractual obligations or the estimated timing of the future cash payments.





 
24 

 

Commitments and Contingencies

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the ordinary course of its business, including pending litigation, environmental remediation, taxes and other claims.  It is the Corporation's opinion that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation's financial condition, although such matters could have a material effect on the Corporation's quarterly or annual operating results and cash flows when resolved in a future period.

Looking Ahead

Management is encouraged by the strengthened demand in both the hearth and office furniture businesses despite the ongoing economic uncertainty.  The Corporation is accelerating investments in core selling, marketing and product initiatives to strengthen its multiple platforms for growth.  Management believes the Corporation is financially strong and well positioned for the future.

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

Forward-Looking Statements

Statements in this report that are not strictly historical, including statements as to plans, outlook, objectives and future financial performance, are "forward-looking" statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are 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, (f) repurchases of common stock, and (g) 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 housing market; lower industry grow th than expected; major disruptions at our key facilities or in the supply of any key raw materials, components or finished goods; uncertainty related to disruptions of business by terrorism, military action, 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,

 
25 

 

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.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

As of July 3, 2010, there were no material changes to the financial market risks that affect the quantitative and qualitative disclosures presented in Item 7A of the Corporation's Annual Report on Form 10-K for the year ended January 2, 2010.


Item 4.  Controls and Procedures

Disclosure controls and procedures are designed to ensure information required to be disclosed by the Corporation in the reports it files or submits under the Securities Exchange Act of 1934 (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures are also designed to ensure 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.

Under the supervision and with the participation of management, the chief executive officer and chief financial officer of the Corporation carried out an evaluation of the Corporation's disclosure controls and procedures pursuant to Exchange Act Rules 13a – 15(e) and 15d – 15(e).   As of July 3, 2010, and, based on this evaluation, the chief executive officer and chief financial officer have concluded these disclosure controls and procedures are effective.

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

 
26 

 

PART II.     OTHER INFORMATION


Item 1.  Legal Proceedings

There are no new legal proceedings or material developments to report other than ordinary routine litigation incidental to the business.


Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the "Risk Factors" section of the Corporation's Annual Report on Form 10-K for the year ended January 2, 2010 and the Corporation's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010 except for the item listed below.

The Corporation's ability to realize financial benefits from its repurchases of common stock.


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

Directors and members (i.e., employees) of the Corporation receive common stock equivalents pursuant to the HNI Corporation Executive Deferred Compensation Plan and the HNI Corporation Directors Deferred Compensation Plan, respectively (collectively, the "Deferred Plans").  Common stock equivalents are hypothetical shares of common stock having a value on any given date equal to the value of a share of common stock.  Common stock equivalents earn dividend equivalents that are converted into additional common stock equivalents but carry no voting rights or other rights afforded to a holder of common stock.  The common stock equivalents credited to members and directors under the Deferred Plans are exempt from registration under Section 4(2) of the Securities Act of 1933 as private offerings made only to dir ectors and members of the Corporation in accordance with the provisions of the Deferred Plans.

Under the Deferred Plans, each director or member participating in the Deferred Plans, may elect to defer the receipt of all or any portion of the compensation paid to such director or member by the Corporation to a cash or stock sub-account.  All deferred payments to the stock sub-account are held in the form of common stock equivalents.  Payments out of the deferred stock sub-accounts are made in the form of common stock of the Corporation (and cash as to any fractional common stock equivalent).  In the second quarter of 2010, the directors and members, as a group, were credited with 6,905 common stock equivalents under the Deferred Plans.  The value of each common stock equivalent, when credited, ranged from $27.59 to $31.04.










 
27 

 

Issuer Purchases of Equity Securities:

The following is a summary of share repurchase activity during the quarter ended July 3, 2010.
 
 
 
 
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
 
04/04/10 – 05/01/10
                    $ 160,320,828  
05/02/10 – 05/29/10
    84,285     $ 29.83       84,285     $ 157,806,607  
05/30/10 – 07/03/10
    153,537     $ 29.25       153,537     $ 153,315,195  
Total
    237,822               237,822          

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

The Corporation repurchases shares under previously announced plans authorized by the Board as follows:

·
Plan announced November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date.
·
No repurchase plans expired or were terminated during the second quarter of fiscal 2010, nor do any plans exist under which the Corporation does not intend to make further purchases.


Item 6.     Exhibits

See Exhibit Index.



 
 
28 

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
  HNI Corporation  
       
Date:  August 5, 2010
By:
/s/ Kurt A. Tjaden  
    Kurt A. Tjaden  
    Vice President and Chief Financial Officer  
       
 
 
 


29 
 

 
 
 
EXHIBIT INDEX
 
(3.1)
By-laws of HNI Corporation, as amended +
   
(10.1)
Credit Agreement, dated as of June 11, 2010, by and among HNI Corporation, as Borrower, certain domestic subsidiaries of HNI Corporation from time to time party thereto, as Guarantors, certain lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed June 16, 2010
   
(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

+ Filed herewith.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
 
 
 
 




 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 

EX-3.1 2 rex32bylaws2.htm BY-LAWS rex32bylaws2.htm
EXHIBIT 3.1                   

BY-LAWS

OF

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, August 2, 2004,
May 3, 2005, November 11, 2005, November 10, 2006, May 8, 2007, August 7, 2007, November 7, 2008, November 19, 2009 and May 11, 2010.


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 shareholder s. (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 there on 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 tran sfer 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 dat e.  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 Lead Director 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 Lead Director, 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 S ecretary of the meeting. (As amended 4/23/64, 8/1/79 and 5/3/05.)

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 late r 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 re-election as a Director, (A) 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), and (B) a statement whether such person, if elected, intends to tender, promptly following such person's election or re-election and in accordance with Section 3.02 of these By-laws and the Corporation's Corporate Governance Guidelines, an irrevocable resignation that is effective ninety (90) days after the date

 

 

of the certification of the election results upon such person's failure to receive the required vote for re-election at any future meeting at which such person would face re-election; and (As amended 5/08/07 and 11/7/08.)
 
(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 i s 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.
 
(a)           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 and 5/08/07.)
 
 (b)           In an Uncontested Election, a nominee for Director who receives a greater number of votes "AGAINST" his or her election than votes "FOR" such election shall, to the extent permitted by law, resign no later than ninety (90) days after the date of the certification of the election results.  "Uncontested Election" shall mean any election of Directors of the Corporation other than a Contested Election.  "Contested Election" shall mean any election of Directors of the Corporation in which (i) the Secretary of the Corporation has received a notice that a shareholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for shareholder nominees for Director set forth in Section 2.16 of these By-laws and (ii) such nominati on has not been withdrawn by such shareholder on or prior to the day next preceding the date the Corporation first mails its notice of meeting for its meeting of shareholders. (As amended 5/08/07.)

Section 3.03.  Number, Terms, Classification, and Qualifications.  Subject to the Articles of Incorporation:
 
(a)           The number of Directors shall be eleven.  (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, 8/2/04, 5/3/05, 11/11/05, 11/10/06, 11/19/09 and 5/11/10.)
 
(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 5.03 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, Lead Director, 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 and 5/3/05.)
 
(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 5.03 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 Lead Director or the President or the Secretary or by a majority of the Directors then in office.  (As amended 4/23/64, 8/1/79 and 5/3/05.)



 

 

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 Corpor ation.  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.)



 
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Section 3.13.  Organization.  The Chairman of the Board of Directors or the Lead Director 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 Lead Director, 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, 8/1/79 and 5/3/05.)
 
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 ext ent 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.


 
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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.



 
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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 Lead Director 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 and 5/3/05.)

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 prec lude any Director from serving the Corporation in any other capacity and receiving compensation therefor.  (As amended 2/11/04.)







 
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ARTICLE 4.  OFFICERS

 
Section 4.01.  Number and Designation.  The officers of the Corporation shall be a Chairman of the Board of Directors, a Lead Director of the Board of Directors, 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, 2/11/04 and 5/3/05.)
 
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, o r 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

 
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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; Lead Director; 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 Lead Director, 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, 2/12/03 and 5/3/05.)
 
(b)           The Lead Director 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 and 5/3/05.)
 
(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 Lead Director, the Chief Executive Officer shall preside at meetings of shareholders and of the Board.  (As amended 2/12/ 03 and 5/3/05.)
 
(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, Lead Director, 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 d isability, 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

 
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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, 2/11/04 and 5/3/05.)
 
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;

 
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(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 independe nt directors who are not members of that Committee.  (As amended 4/23/64 and 2/11/04.)

 
17 

 

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.




 
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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.  (As amended 8/7/07.)

With respect to certificated shares, if any, 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 and a new certificate requested, except as otherwise provided in Section 5.04.  (As amended 8/7/07.)

Section 5.03.  Certificates Representing Shares.  

(a)At the election of the Board of Directors, ownership of shares may be evidenced by 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 trans fer books of the Corporation.  (As amended 8/7/07.)

(b)Notwithstanding Section 5.03(a) hereof, the Board of Directors may authorize the issuance of some or all shares without certificates.  The authorization does not affect the shares already represented by certificates until they are surrendered to the Corporation.  At the time of issuance or transfer of shares without certificates, the Corporation shall send the shareholders a written statement of the information required under the Iowa Business Corporations Act.  (As amended 8/7/07.)

Section 5.04.  Lost, Destroyed, Stolen, or Mutilated Certificates.  With respect to certificated shares, if any, 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.  (As amended 8/7/07.)

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

 
19 

 

authorized attorney or legal representative (who shall furnish such evidence of authority to transfer as the Corporation or its agent may reasonably require), upon compliance with the customary procedures for transferring shares in uncertificated form or 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 th e 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.  (As amended 8/7/07.)
 
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, if any, representing shares of the Corporation.  (As amended 8/7/07.)

 
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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 Lead Director 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 Lead Director 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, 2/11/04 and 5/3/05.)

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.


 
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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.& #160; 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 Lead Director 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, 8/1/79 and 5/3/05.)

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.


 
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(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 af fect 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 unde r 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

 
23 

 

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, o r 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.)

 
24 

 


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 ad option 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.)



 
25 

 

EX-31.1 3 rex311ceocert2.htm CEO CERTIFICATION rex311ceocert2.htm
 
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Sarbanes-Oxley Act Section 302
 
I, Stan A. Askren, certify that:
 
1.  I have reviewed this quarterly report on Form 10-Q of HNI Corporation;
 
2.  Based on my knowledge, this 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 report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this 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 report;
 
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and 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 report is being prepared;
    b.  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;    
    c.  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 
    d.  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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 (or persons performing the equivalent function):
    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 control over financial reporting.
 
    
Date:  August 5, 2010
By:
/s/ Stan A. Askren  
    Name:  Stan A. Askren  
    Title:    Chairman, President and Chief Executive Officer  
       


EX-31.2 4 rex312cfocert2.htm CFO CERTIFICATION rex312cfocert2.htm
EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
Sarbanes-Oxley Act Section 302
 
I, Kurt A. Tjaden, certify that:
 
1.  I have reviewed this quarterly report on Form 10-Q of HNI Corporation;
 
2.  Based on my knowledge, this 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 report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this 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 report;
 
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d) - 15(f)) for the registrant and 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 report is being prepared;
    b.  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;    
    c.  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 
    d.  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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 (or persons performing the equivalent function):
    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 control over financial reporting.
 
 
Date:  August 5, 2010
By:
/s/   Kurt A. Tjaden  
    Name:  Kurt A. Tjaden  
    Title:    Vice President and Chief Financial Officer  
       

 

EX-32.1 5 rex321ceocfocert2.htm CEO CFO CERTIFICATION rex321ceocfocert2.htm

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 "Corporation") for the quarterly period ended April 4, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Stan A. Askren, as Chairman, President and Chief Executive Officer and Kurt A. Tjaden as Vice President and Chief Financial Officer of the Corporation, 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 Corporation as of the dates and for the periods expressed in the Report.
 
 
By:
/s/    Stan A. Askren  
    Name:  Stan A. Askren  
    Title:    Chairman, President and Chief Executive Officer  
    Date:    August 5, 2010  
 
 

 
By:
/s/     Kurt A. Tjaden  
    Name:   Kurt A. Tjaden   
    Title:     Vice President and Chief Financial Officer  
    Date:     August 5, 2010  
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Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subjec t to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each g oodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables. 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This may include the value of stock options, amortization of restricted stock, and adjustment for officers compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. 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Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased th ree years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents. 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It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased th ree years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Sum of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longerand aggregate carrying amount, as of the balance sheet date, of current assets not separately disclosed in the balance sheet due to materiality considerations. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer). No authoritative reference available. No authoritative reference available. 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Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the Company is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risk is are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. 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