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What changed in HNI CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HNI CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+257 added−279 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in HNI CORP's 2025 10-K

257 paragraphs added · 279 removed · 203 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

54 edited+5 added−8 removed18 unchanged
Biggest changeThe Corporation sells its products through various distribution channels, including the following: • Independent, local office products dealers that specialize in the sale of office furniture and/or office products to business, government, education, and health care entities. • National office product distributors that sell furniture and office supplies through a national network of dealerships and sales offices.
Biggest changeTo meet the demands of various markets, the Corporation’s products are sold primarily under the Corporation’s brands: HON ® Allsteel ® Beyond ® Gunlocke ® HBF ® HBF Textiles ® HNI India ® Kimball ® National ® Etc. ® Interwoven ® David Edward ® Kimball ® Hospitality D’style ® The Corporation sells its products through various distribution channels, including the following: • Independent, local office products dealers that specialize in the sale of office furniture and/or office products to business, government, education, and health care entities. • National office product distributors that sell furniture and office supplies through a national network of dealerships and sales offices, as well as through online and retail office products stores. • eCommerce–focused resellers that sell a wide array of business and consumer products to commercial and non-commercial customers, with orders fulfilled both by the Corporation and/or directly by the eCommerce reseller from inventory held in their facilities. • Wholesalers that serve as distributors of the Corporation’s products to independent dealers and national office products distributors and maintain inventories of standard product lines for quick delivery to customers. • Direct sales of products to federal, state, and local government offices, or in certain circumstances a lead selling relationship with an end-user.
This focus on RCI benefits stakeholders as the Corporation consistently delivers productivity and cost savings that allow it to grow earnings and invest in the future. Management believes that the skillful execution of these strategic initiatives will support robust organic sales growth, margin expansion, improved returns, strong free cash flow, and position the Corporation for continued success.
This focus on RCI benefits stakeholders as the Corporation consistently delivers productivity and cost savings that allow it to grow earnings and invest in the future. Management believes that the skillful execution of these strategic initiatives will support strong organic sales growth, margin expansion, improved returns, strong free cash flow, and position the Corporation for continued success.
Both types of purchases involve seasonality with remodel/retrofit activity being particularly concentrated in the September to December timeframe. Distribution is primarily through independent and company-owned installing distributors and retail outlets. The hearth products market is highly competitive with products manufactured by a number of national and regional competitors.
Both types of purchases involve seasonality with remodel/retrofit activity being particularly concentrated in the September to December timeframe. Distribution is primarily effected through independent and company-owned installing distributors and retail outlets. The hearth products market is highly competitive with products manufactured by a number of national and regional competitors.
Environmental Regulations and Sustainability The Corporation is subject to a variety of environmental laws and regulations governing the use of materials and substances in products, the management of wastes resulting from use of certain material, the emission of pollutants from its operations, and the remediation of contamination associated with past releases of hazardous substances.
Environmental Regulation and Sustainability The Corporation is subject to a variety of environmental laws and regulations governing the use of materials and substances in products, the management of wastes resulting from use of certain material, the emission of pollutants from its operations, and the remediation of contamination associated with past releases of hazardous substances.
Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report, including but not limited to: the Corporation’s ultimate realization of the anticipated benefits of the acquisition of Kimball International and the sale of Poppin; disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; the levels of office furniture needs and housing starts; overall demand for the Corporation’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation’s customers; the Corporation’s reliance on its network of independent dealers; changes in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation’s new products; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation’s financing activities; an inability to protect the Corporation’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; force majeure events outside the Corporation’s control, including those that may result from the effects of climate change; and other risks as described under the heading "Item 1A.
Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report, including but not limited to: the Corporation’s ultimate realization of the anticipated benefits of the acquisition of Kimball International; disruptions in the global supply chain; the effects of prolonged periods of inflation and rising interest rates; labor shortages; the levels of office furniture needs and housing starts; overall demand for the Corporation’s products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of the Corporation’s customers; the Corporation’s reliance on its network of independent dealers; changes in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for the Corporation’s new products; changing legal, regulatory, environmental, and health care conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on the Corporation’s financing activities; an inability to protect the Corporation’s intellectual property; cybersecurity threats, including those posed by potential ransomware attacks; impacts of tax legislation; force majeure events outside the Corporation’s control, including those that may result from the effects of climate change; and other risks as described under the heading "Item 1A.
It is organized into a corporate headquarters and operating units with offices, manufacturing plants, distribution centers, and sales showrooms primarily in the United States, India, and Mexico. See "Item 2. Properties" for additional related discussion. On June 1, 2023, the Corporation acquired Kimball International, Inc. ("Kimball International") in a cash and stock transaction valued at $503.7 million.
It is organized into operating units with offices, manufacturing plants, distribution centers, and sales showrooms primarily in the United States, India, and Mexico. See "Item 2. Properties" for additional related discussion. On June 1, 2023, the Corporation acquired Kimball International, Inc. ("Kimball International") in a cash and stock transaction valued at $503.7 million.
Integrating these sustainable objectives into core business systems is consistent with the Corporation’s vision, ensures its commitment to being a sustainable enterprise, and remains a priority for members. For more detailed information regarding its environmental and social goals, priorities, accomplishments, and initiatives, please refer to the Corporation’s Corporate Social Responsibility report available on its website.
Integrating these sustainable objectives into core business systems is consistent with the Corporation’s vision, ensures its commitment to being a sustainable enterprise, and remains a priority for members. For more detailed information regarding its sustainability goals, priorities, accomplishments, and initiatives, please refer to the Corporation’s Corporate Social Responsibility report available on its website.
These products are primarily for the home and are sold under the following widely recognized brands: Heatilator ® Heat & Glo ® Majestic ® Monessen ® Quadra-Fire ® Harman ® Vermont Castings ® PelPro ® Stellar TM SimpliFire ® The Outdoor GreatRoom Company ® Forge & Flame TM The Corporation’s line of hearth products includes a full array of gas, wood, electric, and pellet-fueled fireplaces, inserts, stoves, facings, outdoor fire pits and fire tables, and accessories.
These products are primarily for the home and are sold under the following widely recognized brands: Heatilator ® Heat & Glo ® Majestic ® Monessen ® 6 Table of Contents Quadra-Fire ® Harman ® Vermont Castings ® PelPro ® Stellar TM SimpliFire ® The Outdoor GreatRoom Company ® Forge & Flame TM The Corporation’s line of hearth products includes a full array of gas, wood, electric, and pellet-fueled fireplaces, inserts, stoves, facings, outdoor fire pits and fire tables, and accessories.
End-users across both channels are a mix of commercial, financial, healthcare, government, and education customers. The contract channel has traditionally been characterized by sales of office furniture and services to large corporations and organizations, primarily for new office facilities, relocations, and/or office redesigns. Sales made through the contract channel are frequently customized to meet specific client and architect/designer preferences.
End-users across both channels are a mix of commercial, financial, health care, government, and education customers. The contract channel has traditionally been characterized by sales of office furniture and services to large corporations and organizations, primarily for new office facilities, relocations, and/or office redesigns. Sales made through the contract channel are frequently customized to meet specific client and architect/designer preferences.
Sales Workplace Furnishings The Corporation designs, manufactures, and markets a broad range of workplace furnishings. The Corporation offers a complete line of panel-based and freestanding office furniture systems, seating, benching, tables, architectural products, storage, ancillary 5 Table of Contents products, hospitality products, and social collaborative items in order to meet the needs of a wide spectrum of organizations.
Sales Workplace Furnishings The Corporation designs, manufactures, and markets a broad range of workplace furnishings. The Corporation offers a complete line of panel-based and freestanding office furniture systems, seating, benching, tables, architectural products, storage, ancillary products, hospitality products, and social collaborative items in order to meet the needs of a wide spectrum of organizations.
This customer-first mindset will allow the Corporation to identify and take advantage of new and developing market dynamics. • Effortless Winning Experiences (simplify the buying process) – Customers continue to raise their expectations and demand more effortless experiences. Buying office furniture and hearth products can be complicated and time-consuming.
This customer-first mindset allows the Corporation to identify and take advantage of new and developing market dynamics. • Effortless Winning Experiences (simplify the buying process) – Customers continue to raise their expectations and demand more effortless experiences. Buying office furniture and hearth products can be complicated and time-consuming.
Through its broad product offerings the Corporation is able to service business furniture needs in virtually any setting, including private office, open plan, conference rooms, training areas, cafes, lounges, collaborative spaces, healthcare, and hospitality spaces, among many others.
Through its broad product offerings the Corporation is able to service business furniture needs in virtually any setting, including private office, open plan, conference rooms, training areas, cafes, lounges, collaborative spaces, health care, and hospitality spaces, among many others.
While the acquisition of patents reflects Hearth & Home’s position in the market as an innovation leader, the Corporation believes neither any individual residential building product patent nor the Corporation’s residential building product patents in the aggregate are material to the Corporation’s business as a whole.
While the acquisition of patents reflects Hearth & Home’s 7 Table of Contents position in the market as an innovation leader, the Corporation believes neither any individual residential building product patent nor the Corporation’s residential building product patents in the aggregate are material to the Corporation’s business as a whole.
Reportable Segment Information." Markets The Corporation competes in the workplace furnishings and residential building products markets principally by providing compelling value products designed to be among the best in their price range for product quality and performance, along with superior customer service and short lead-times.
Acquisitions and Divestitures," and "Note 16. Reportable Segment Information." Markets The Corporation competes in the workplace furnishings and residential building products markets principally by providing compelling value products designed to be among the best in their price range for product quality and performance, along with superior customer service and short lead-times.
Serving the hospitality market includes partnering with the most recognized hotel brands to meet their specific requirements for properties throughout the world by working with worldwide manufacturing partners to offer the best solution to fulfill the project. 4 Table of Contents The workplace furnishings industry is highly competitive, with a significant number of competitors offering similar products.
Serving the hospitality market includes partnering with the most recognized hotel brands to meet their specific requirements for properties throughout the world by working with global manufacturing partners to offer the best solution to fulfill the project. The workplace furnishings industry is highly competitive, with a significant number of competitors offering similar products.
The Corporation possesses significant expertise and vertical manufacturing capabilities allowing it the flexibility to design and manufacture new products in-house to meet changing market needs.
The Corporation possesses significant expertise and vertical manufacturing capabilities that afford it the flexibility to design and manufacture new products in-house to meet changing market needs.
The Corporation is a leader in 6 Table of Contents "direct vent" fireplaces, which replaces the chimney-venting system used in traditional fireplaces with a less expensive vent through the roof or an outer wall.
The Corporation is a leader in "direct vent" fireplaces, which replaces the chimney-venting system used in traditional fireplaces with a less expensive vent through the roof or an outer wall.
The Corporation advises you, however, to consult any further disclosures made on related subjects in future quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC. 9 Table of Contents
The Corporation advises you, however, to consult any further disclosures made on related subjects in future annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC.
Forward-Looking Statements Statements in this report to the extent they are not statements of historical or present fact, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.
Forward-Looking Statements Statements in this report to the extent they are not statements of historical or present fact, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, within the meaning of Section 21 of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933.
Through HNI India, the Corporation manufactures and distributes office furniture directly to end-users and through independent dealers and distributors primarily in India. Residential Building Products The Corporation’s residential building products segment includes the Hearth & Home Technologies LLC ("Hearth & Home") operating unit.
Distributors are principally located in the Caribbean, Latin America, and Mexico. Through HNI India, the Corporation manufactures and distributes office furniture directly to end-users and through independent dealers and distributors primarily in India. Residential Building Products The Corporation’s residential building products segment includes the Hearth & Home Technologies LLC ("Hearth & Home") operating unit.
This is made possible, in part, by the Corporation’s ongoing investment in its brands, research and development efforts, efficient manufacturing operations, and extensive distribution network. Workplace Furnishings The North American workplace furnishings market consists of two primary channels — the contract channel and the small and medium-sized business ("SMB") channel.
These competitive advantages reflect the Corporation’s ongoing investment in its brands, research and development efforts, efficient manufacturing operations, and extensive distribution network. Workplace Furnishings The North American workplace furnishings market consists of two primary channels — the contract channel and the small and medium-sized business ("SMB") channel.
To support these goals, the Corporation has established metrics to divert waste from landfill, reduce energy use, and lower greenhouse gas emissions from its operations. The Corporation also has committed to reducing the impacts of its products through evaluations of design and development, suppliers, and supply chain performance.
HNI has established metrics to measure its progress in diverting waste from landfill, reducing energy use, and lowering greenhouse gas emissions from its operations. The Corporation also has committed to reducing the impacts of its products through evaluations of design and development, suppliers, and supply chain performance.
The Corporation believes neither the loss of any individual trademark nor the loss of the Corporation’s trademarks in the aggregate would materially adversely affect the Corporation’s business as a whole, except for HON ® , Allsteel ® , Kimball ® , National ® , Heat & Glo ® , and Heatilator ® .
The Corporation believes that the HON ® , Allsteel ® , Kimball ® , National ® , Heat & Glo ® , and Heatilator ® trademarks are material to its business and that, other than with respect to those trademarks, neither the loss of any individual trademark nor the loss of the Corporation’s trademarks in the aggregate would materially adversely affect the Corporation’s business as a whole.
Independent dealers, national office product distributors, eCommerce retailers, and wholesalers are the primary distribution channels in this market. In addition to the above channels, the Corporation sells direct into the hospitality market through the Kimball Hospitality brand.
Sales in this channel are driven on the basis of price, product quality, selection, and the speed and reliability of delivery. Independent dealers, national office product distributors, eCommerce retailers, and wholesalers are the primary distribution channels in this market. In addition to the above channels, the Corporation sells direct into the hospitality market through the Kimball Hospitality brand.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this report and the following sections in the Notes to Consolidated Financial Statements: "Note 1. Nature of Operations," "Note 4. Acquisitions and Divestitures," and "Note 16.
For further information with respect to acquisitions, divestitures, operating segment information, and the Corporation’s operations in general, refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this report and the following sections in the Notes to Consolidated Financial Statements: "Note 1. Nature of Operations," "Note 4.
In addition, the Corporation is a market leader in wood and pellet-burning stoves with its Quadra-Fire ® , Harman ® , Vermont Castings ® , and PelPro ® product lines, which provide home heating solutions using renewable fuels. Hearth & Home sells its products through independent dealers, distributors, and 28 Corporation-owned installing distribution and retail outlets.
In addition, the Corporation is a market leader in wood and pellet-burning stoves with its Forge & Flame TM , Quadra-Fire ® , Harman ® , Vermont Castings ® , and PelPro ® product lines, which provide home heating solutions using renewable fuels.
The Corporation applies for patent protection when it believes the expense of doing so is justified and the duration of its registered patents is adequate to protect these rights.
The Corporation applies for patent protection when it believes the expense of doing so is justified and the duration of its registered patents is adequate to protect these rights. The Corporation also pays royalties in certain instances for the use of patents on products and processes owned by others.
Members utilize Rapid Continuous Improvement (RCI), which scrutinizes every facet of the business to identify areas of waste, and then refines and streamlines. RCI can be seen in action throughout the Corporation’s value chain from the manufacturing floor to the administrative offices to customer interactions, as members always look to find a better, more efficient, and more environmentally-friendly approach.
RCI can be seen in action throughout the Corporation’s value chain from the manufacturing floor to the administrative offices to customer interactions, as members always look to find 5 Table of Contents a better, more efficient, and more environmentally-friendly approach.
Sales managers and salespeople are compensated by a combination of salary and variable performance compensation. The Corporation also makes export sales through HNI International to independent office furniture dealers and wholesale distributors serving select foreign markets. Distributors are principally located in the Caribbean, Latin America, and Mexico.
The Corporation’s workplace furnishings sales force consists of sales managers, salespeople, and independent manufacturers’ representatives who collectively provide national sales coverage. Sales managers and salespeople are compensated by a combination of salary and variable performance compensation. The Corporation also makes export sales through HNI International to independent office furniture dealers and wholesale distributors serving select foreign markets.
Member Developmen t All members have the opportunity to achieve and succeed in their careers. The Corporation invests in apprenticeships, on-the-job training, robust performance and talent-management processes, and leadership development programs. 8 Table of Contents Member Compensation and Benefits The Corporation’s compensation and benefits programs are competitive and equitable, designed to attract, retain, and motivate its members.
The Corporation invests in apprenticeships, on-the-job training, robust performance and talent-management processes, and leadership development programs. 8 Table of Contents Member Compensation and Benefits The Corporation’s compensation and benefits programs are competitive and equitable, designed to attract, retain, and motivate its members. Through stock-based plans and profit sharing, most members benefit from the success of the Corporation as a whole.
The Corporation also pays royalties in certain instances for the use of patents on products and processes owned by others. 7 Table of Contents The Corporation applies for trademark protection for brands and products when it believes the expense of doing so is justified. The Corporation actively protects trademarks it believes have significant value.
The Corporation applies for trademark protection for brands and products when it believes the expense of doing so is justified. The Corporation actively protects trademarks it believes have significant value.
Through stock-based plans and profit sharing, most members benefit from the success of the Corporation as a whole. This creates a strong culture of shared responsibility, empowered accountability for all outcomes, and an ongoing enthusiasm for improvement. The Corporate Social Responsibility report does not form a part of and is not incorporated into this Annual Report on Form 10-K.
This creates a strong culture of shared responsibility, empowered accountability for all outcomes, and an ongoing enthusiasm for improvement. The Corporate Social Responsibility report does not form a part of and is not incorporated into this Annual Report on Form 10-K. Available Information The Corporation's website address is www.hnicorp.com.
In fiscal 2023, the Corporation had net sales of $2.4 billion, of which $1.7 billion or 71 percent was attributable to the workplace furnishings segment and $0.7 billion or 29 percent was attributable to the residential building products segment. The Corporation is an Iowa corporation incorporated in 1944.
In fiscal 2024, the Corporation had net sales of $2.5 billion, of which $1.9 billion or 75 percent was attributable to the workplace furnishings segment and $0.6 billion or 25 percent was attributable to the residential building products segment. Incorporated in 1944, HNI maintains its corporate headquarters in Muscatine, Iowa.
The Corporation applies the principles of RCI and a lean manufacturing philosophy to leverage the creativity of its members to reduce and/or eliminate costs. The application of RCI has increased productivity by reducing set-up, processing times, square footage, inventory levels, product costs, and delivery times, while improving quality and enhancing member safety.
The application of RCI has increased productivity by reducing set-up, processing times, square footage, inventory levels, product costs, and delivery times, while improving quality and enhancing member safety. The Corporation’s RCI process involves members, customers, and suppliers.
End users generally purchase through independent office furniture dealers who prepare a custom-designed office layout emphasizing image and design. The selling process is complex, lengthy, and generally has several manufacturers competing for the same projects.
End users generally purchase through independent office furniture dealers who prepare a custom-designed office layout emphasizing image and design.
Human Capital As of December 30, 2023, the Corporation employed approximately 8,200 persons, including fewer than 100 temporary personnel. Diversity, Equity, and Inclusion The Corporation’s goal is for every member to always feel represented, included, and heard. The Corporation believes in: • Unique perspectives .
Human Capital As of December 28, 2024, the Corporation employed approximately 7,700 persons, including fewer than 100 temporary personnel. The Corporation’s goal is for every member to always feel included and heard. The Corporation believes in: • Unique perspectives . Diverse backgrounds bring unique perspectives, helping to drive innovation and growth. • Fair and inclusive treatment .
No single customer accounted for 10 percent or more of the Corporation’s consolidated net sales in fiscal 2023, and management does not consider the Corporation’s operations or financial performance to be materially dependent on any individual customer. The substantial purchasing power exercised by large customers may adversely affect the prices at which the Corporation can successfully offer its products.
Largest Customers In fiscal 2024, the Corporation’s five largest customers represented approximately 15 percent of its consolidated net sales. No single customer accounted for 10 percent or more of the Corporation’s consolidated net sales in fiscal 2024, and management does not consider the Corporation’s operations or financial performance to be materially dependent on any individual customer.
These products are sold primarily through a national system of independent dealers, office product distributors, eCommerce retailers, and wholesalers but also directly to end-user customers and federal, state, and local governments. Residential building products include a full array of gas, wood, electric, and pellet-fueled fireplaces, inserts, stoves, facings, outdoor fire pits and fire tables, and accessories.
Residential building products include a full array of gas, wood, electric, and pellet-fueled fireplaces, inserts, stoves, facings, outdoor fire pits and fire tables, and accessories. These products are sold through a national system of independent dealers and distributors, as well as Corporation-owned installing distribution and retail outlets.
Available Information Information regarding the Corporation’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, will be made available, free of charge, on the Corporation’s website at www.hnicorp.com , as soon as reasonably practicable after the Corporation electronically files such reports with or furnishes them to the Securities and Exchange Commission ("SEC").
HNI's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to those reports, are made available free of charge through its website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).
The Corporation’s staff works with responsible personnel at each manufacturing facility, the Corporation’s legal counsel, and consultants on the management of environmental, health, and safety issues. The Corporation’s environmental objective is to reduce and, when practicable, eliminate the human and ecosystem impacts of materials and manufacturing processes.
The Corporation has trained staff responsible for monitoring compliance with environmental, health, and safety requirements. The Corporation’s staff works with responsible personnel at each manufacturing facility, the Corporation’s legal counsel, and consultants on the management of environmental, health, and safety issues.
The Corporation included the financial results of Kimball International in the Consolidated Financial Statements starting as of the date of acquisition. References to "legacy" herein exclude the impact of Kimball International. For further information with respect to acquisitions, divestitures, operating segment information, and the Corporation’s operations in general, refer to "Item 7.
The Corporation included the financial results of Kimball International in the Consolidated Financial Statements starting as of the date of acquisition. References to "legacy" businesses in this report exclude the acquisition of Kimball International and its impact on the Corporation's businesses.
The distribution and retail brand of this operating unit is Fireside Hearth & Home. The business has a field sales organization of sales managers, salespeople, and independent manufacturers’ representatives. Largest Customers In fiscal 2023, the Corporation’s five largest customers represented approximately 17 percent of its consolidated net sales.
Hearth & Home sells its products through independent dealers, distributors, and 28 Corporation-owned installing distribution and retail outlets. The distribution and retail brand of this operating unit is Fireside Hearth & Home. The business has a field sales organization of sales managers, salespeople, and independent manufacturers’ representatives.
However, there is no assurance environmental requirements or technology will not change or the Corporation will not incur material costs to comply with such regulations.
However, there is no assurance that environmental regulations will not change in future periods or that the Corporation will not incur material additional costs to comply with such regulations. The Corporation maintains its Corporate Social Responsibility commitment to lessen the impact of its operations and products.
The SMB channel, in which the Corporation is a market leader, primarily represents smaller orders of office furniture that are less likely to involve an architect and/or designer. Sales in this channel are driven on the basis of price, product quality, selection, and the speed and reliability of delivery.
The selling process is complex, lengthy, and generally has several manufacturers competing for the same projects. 4 Table of Contents The SMB channel, in which the Corporation is a market leader, primarily represents smaller orders of office furniture that are less likely to involve an architect and/or designer.
The Corporation’s RCI process involves members, customers, and suppliers. Manufacturing also plays a key role in the Corporation’s concurrent research and development process in order to design new products for ease of manufacturability.
Manufacturing also plays a key role in the Corporation’s concurrent research and development process in order to design new products for ease of manufacturability. Research and Development The Corporation’s research and development efforts are primarily focused on developing relevant and differentiated end-user solutions emphasizing quality, aesthetics, style, sustainable design, and reduced manufacturing costs.
Members at every level have frequent opportunities to raise and address concerns with company leaders and attend meetings to learn and ask questions about the business. For further information regarding its member-owner culture, initiatives, and goals, including in the areas of diversity, equity, and inclusion, please refer to the Corporation’s Corporate Social Responsibility report available on its website.
For further information regarding its member-owner culture, initiatives, and goals, please refer to the Corporation’s Corporate Social Responsibility report available on its website. Member Developmen t All members have the opportunity to achieve and succeed in their careers.
The acquisition of Kimball International in 2023 included a number of patents and trademarks. The Corporation believes neither any individual workplace furnishings patent nor the Corporation’s workplace furnishings patents in the aggregate are material to the Corporation’s business as a whole. The Corporation’s patents covering its residential building products protect various technical innovations.
In addition, as of the same date, the Corporation held 283 United States and 437 foreign trademark registrations and had applications pending for 28 United States and 56 foreign trademarks. The Corporation believes that neither any individual workplace furnishings patent nor the Corporation’s workplace furnishings patents in the aggregate are material to the Corporation’s business as a whole.
Intellectual Property As of December 30, 2023, the Corporation owned 183 United States and 127 foreign patents with expiration dates through 2042 and had applications pending for 41 United States and 23 foreign patents. In addition, the Corporation holds 281 United States and 420 foreign trademark registrations and has applications pending for 48 United States and 58 foreign trademarks.
Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements for amounts that the Corporation has invested in research and development. Intellectual Property As of December 28, 2024, the Corporation owned 181 United States and 122 foreign patents with expiration dates through 2042 and had applications pending for 40 United States and 24 foreign patents.
Major raw materials include steel, aluminum, zinc, lumber, veneer, particleboard, textiles, paint, hardware, glass, plastic products, packaging, foam, and fiberglass. Since its inception, the Corporation has focused on making its manufacturing facilities and processes more flexible while reducing cost, eliminating waste, and improving product quality.
Since its inception, the Corporation has focused on making its manufacturing facilities and processes more flexible while reducing cost, eliminating waste, and improving product quality. The Corporation applies the principles of RCI and a lean manufacturing philosophy to leverage the creativity of its members to reduce and/or eliminate costs.
Diverse backgrounds bring unique perspectives, helping to drive innovation and growth. • Fair and inclusive treatment . The Corporation seeks to treat all members with fairness and respect, ensuring all voices are heard, and allowing everyone to make meaningful contributions. • Accountability . Through regular training and everyday business practices, the Corporation promotes accountability for diversity. • Transparent communication .
The Corporation seeks to treat all members with fairness and respect, ensuring all voices are heard, and allowing everyone to make meaningful contributions. • Transparent communication . Members at every level have frequent opportunities to raise and address concerns with company leaders and attend meetings to learn and ask questions about the business.
Resources Manufacturing The Corporation manufactures workplace furnishings in Georgia, Indiana, Iowa, Kentucky, New York, North Carolina, India, and Mexico. The Corporation manufactures hearth products in Iowa, Minnesota, Pennsylvania, and Vermont. The Corporation purchases raw materials, components, and finished goods from a variety of suppliers, and most items are generally available from multiple sources.
The substantial purchasing power exercised by large customers may adversely affect the prices at which the Corporation can successfully offer its products. Resources Manufacturing As of December 28, 2024, the Corporation manufactured workplace furnishings at facilities in Georgia, Indiana, Iowa, Kentucky, New York, North Carolina, India, and Mexico, and hearth products at facilities in Iowa, Minnesota, Pennsylvania, and Vermont.
Item 1. Business General HNI Corporation (the "Corporation," "we," "us," or "our") is a provider of workplace furnishings and residential building products, which are its two reportable segments. Workplace furnishings include furniture systems, seating, storage, tables, architectural products, ancillary products, and hospitality products.
The Corporation's two reportable segments are workplace furnishings and residential building products. Workplace furnishings include furniture systems, seating, storage, tables, architectural products, ancillary products, and hospitality products. These products are sold primarily through a national system of independent dealers, office product distributors, eCommerce retailers, and wholesalers but also directly to end-user customers and federal, state, and local governments.
The Corporation conducts its research and development efforts at both the corporate and operating unit levels. See "Note 2. Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements for amounts that the Corporation has invested in research and development.
The Corporation seeks to accomplish these objectives through improving existing products, extending product lines, applying ergonomic research, improving manufacturing processes, and leveraging alternative materials. The Corporation conducts its research and development efforts at both the corporate and operating unit levels. See "Note 2.
The information on the Corporation’s website is not, and shall not be, deemed to be a part hereof or incorporated into this or any of the Corporation’s other filings with the SEC. The Corporation’s SEC filings are also available on the SEC website at www.sec.gov.
The information on or accessible through HNI's website is not a part of, or incorporated by reference into, this report.
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These products are sold through a national system of independent dealers and distributors, as well as Corporation-owned installing distribution and retail outlets.
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Item 1. Business General HNI Corporation is a leading global designer and provider of commercial furnishings, and a leading manufacturer and marketer of hearth products. The Corporation utilizes a multi-faceted go-to-market model to deliver value to customers via various brands and selling models. HNI is focused on growing its existing businesses while seeking out and developing new opportunities for expansion.
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To meet the demands of various markets, the Corporation’s products are sold primarily under the Corporation’s brands: HON ® Allsteel ® Beyond ® Gunlocke ® HBF ® HBF Textiles ® HNI India ® Kimball ® National ® Etc. ® Interwoven ® David Edward ® Kimball ® Hospitality D’style ® In 2023, the Corporation completed the previously announced exit of its OFM and Respawn brands.
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Members utilize Rapid Continuous Improvement (RCI), which scrutinizes every facet of the business to identify areas of waste, and then refines and streamlines.
Removed
These distributors also sell through on-line and retail office products stores. • eCommerce–focused resellers that sell a wide array of business and consumer products to commercial and non-commercial customers.
Added
The Corporation purchases raw materials, components, and finished goods from a variety of suppliers, most of which are generally available from multiple sources. Major raw materials and components include steel, aluminum, zinc, lumber, veneer, particleboard, textiles, paint, hardware, glass, plastic products, packaging, foam, and fiberglass.
Removed
Orders are fulfilled both by the Corporation and/or directly by the eCommerce reseller from inventory held in their facilities. • Wholesalers that serve as distributors of the Corporation’s products to independent dealers and national office products distributors.
Added
The Corporation’s patents covering its residential building products protect various technical innovations.
Removed
These wholesalers maintain inventories of standard product lines for quick delivery to customers. • Direct sales of products to federal, state, and local government offices, or in certain circumstances a lead selling relationship with an end-user. The Corporation’s workplace furnishings sales force consists of sales managers, salespeople, and independent manufacturers’ representatives who collectively provide national sales coverage.
Added
The Corporation’s environmental objective is to reduce and, when practicable, eliminate the human and ecosystem impacts of materials and manufacturing processes.
Removed
Research and Development The Corporation’s research and development efforts are primarily focused on developing relevant and differentiated end-user solutions emphasizing quality, aesthetics, style, sustainable design, and reduced manufacturing costs. The Corporation accomplishes this through improving existing products, extending product lines, applying ergonomic research, improving manufacturing processes, and leveraging alternative materials.
Removed
Although the Corporation believes it is compliant with the various regulations applicable to its business, there can be no assurance requirements will not change in the future or the Corporation will not incur material costs to comply with such regulations. The Corporation has trained staff responsible for monitoring compliance with environmental, health, and safety requirements.
Removed
The Corporation has expanded its Corporate Social Responsibility commitment and has become a signatory to the UN Global Compact, joined RE100, committed to 100 percent renewable electricity annually by 2030, and set aggressive science-based carbon emission reduction goals aligned with the 2015 Paris Agreement.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese incremental transaction- and merger-related costs may exceed the savings the combined company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs. 14 Table of Contents Uncertainties associated with the merger with Kimball International may cause a loss of management personnel and other key employees, and the Corporation may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the future business and operations of the Corporation after the completion of the merger.
Biggest changeThese incremental transaction- and merger-related costs may exceed the savings the combined company expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs.
Acquisitions and alliances involve a number of risks, including: 13 Table of Contents • diversion of management’s attention from operations; • difficulties in assimilating the operations and products of an acquired business or in realizing projected efficiencies, cost savings and revenue synergies; • potential loss of key employees or customers of the acquired businesses or adverse effects on existing business relationships with suppliers and customers; • negative impact on member morale and performance as a result of job changes and reassignments; • reallocation of amounts of capital from other operating initiatives or an increase in leverage and debt service requirements to pay the acquisition purchase prices, which could in turn restrict the ability to access additional capital when needed or to pursue other important elements of the business strategy; • inaccurate assessment of undisclosed, contingent, or other liabilities or problems and unanticipated costs associated with the acquisition; • possible tax costs or inefficiencies associated with integrating the operations of a combined company; and • incorrect estimates made in accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill that could adversely affect the financial results.
Acquisitions and alliances involve a number of risks, including: • diversion of management’s attention from operations; • difficulties in assimilating the operations and products of an acquired business or in realizing projected efficiencies, cost savings and revenue synergies; • potential loss of key employees or customers of the acquired businesses or adverse effects on existing business relationships with suppliers and customers; • negative impact on member morale and performance as a result of job changes and reassignments; 13 Table of Contents • reallocation of amounts of capital from other operating initiatives or an increase in leverage and debt service requirements to pay the acquisition purchase prices, which could in turn restrict the ability to access additional capital when needed or to pursue other important elements of the business strategy; • inaccurate assessment of undisclosed, contingent, or other liabilities or problems and unanticipated costs associated with the acquisition; • possible tax costs or inefficiencies associated with integrating the operations of a combined company; and • incorrect estimates made in accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill that could adversely affect the financial results.
In addition, not all of the Corporation’s products are covered by patents or similar intellectual property protections. It is also possible that patents, copyrights, trademarks, and service marks may be challenged, invalidated, canceled, narrowed, or circumvented. In the past, certain products have been copied and sold by others.
In addition, not all of the Corporation’s products are covered by patents or similar intellectual property protections. It is also possible that patents, copyrights, trademarks, and service marks may be challenged, invalidated, canceled, narrowed, or circumvented. In the past, certain of the Corporation's products have been copied and sold by others.
Deteriorating economic conditions, which may be caused by uncertainties and volatility in the financial markets, rising or sustained inflation and interest rates, and potential economic recessions, could affect the Corporation’s business significantly, including reduced demand for products, insolvency of independent dealers resulting in increased provisions for credit losses, insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of products, and decreased customer demand, including order delays or cancellations.
Deteriorating economic conditions, which may be caused by uncertainties and volatility in the financial markets, rising or sustained inflation and interest rates, and potential economic recessions, could affect the Corporation’s business significantly by contributing to reduced demand for the Corporation's products, insolvency of independent dealers resulting in increased provisions for credit losses, insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of products, and decreased customer demand, including order delays or cancellations.
Specifically, the debt agreements restrict the Corporation’s ability to incur additional indebtedness, create or incur certain liens with respect to any properties or assets, engage in lines of business substantially different than those currently conducted, sell, lease, license, or dispose of certain assets, enter into certain transactions with affiliates, make certain restricted payments or take certain restricted actions, and enter into certain sale-leaseback arrangements.
The debt agreements restrict the Corporation’s ability to incur additional indebtedness, create or incur certain liens with respect to any properties or assets, engage in lines of business substantially different than those currently conducted, sell, lease, license, or dispose of certain assets, enter into certain transactions with affiliates, make certain restricted payments or take certain restricted actions, and enter into certain sale-leaseback arrangements.
In both the workplace furnishings and residential building products industries, the Corporation faces price competition from competitors and from new market entrants who may manufacture and source products from lower cost countries. Price competition impacts the Corporation’s ability to implement price increases or, in some cases, even maintain prices, which could lower profit margins and adversely affect future financial performance.
In both the workplace furnishings and residential building products industries, the Corporation faces price competition from competitors and from new market entrants who may manufacture and source products from lower cost countries. Price competition impacts the Corporation’s ability to implement price increases or, in some cases, maintain prices, which could lower profit margins and adversely affect future financial performance.
Because of the differences in foreign trademark, copyright, patent, and other laws concerning proprietary rights, intellectual property rights do not generally receive the same degree of protection in foreign countries as they do in the United States. In some countries, the Corporation has limited protections, if any, for its intellectual property.
Because of the differences in foreign trademark, copyright, patent, and other laws concerning proprietary rights, intellectual property rights do not generally receive the same degree of protection in foreign countries as in the United States. In some countries, the Corporation has limited protections, if any, for its intellectual property.
Future borrowings or financings may not be available under the credit facility or otherwise in an amount sufficient to enable the Corporation to pay its debt or meet its liquidity needs. Any equity or debt financing, if available, could have unfavorable terms.
Future borrowings or financings may not be available under the Corporation's credit facility or otherwise in an amount sufficient to enable the Corporation to pay its debt or meet its liquidity needs. Any equity or debt financing, if available, could have unfavorable terms.
Any claims of patent or other intellectual property infringement, even those without merit, could be expensive and time consuming to defend, cause the Corporation to cease making, licensing, or using products that incorporate the challenged intellectual property, require the Corporation to redesign, re-engineer, or re-brand the 18 Table of Contents products or packaging, if feasible, or require the Corporation to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.
Any claims of patent or other intellectual property infringement, even 17 Table of Contents those without merit, could be expensive and time consuming to defend, cause the Corporation to cease making, licensing, or using products that incorporate the challenged intellectual property, require the Corporation to redesign, re-engineer, or re-brand the products or packaging, if feasible, or require the Corporation to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.
The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for products, costs, customers, suppliers, and the United States economy, which in turn could have a material adverse effect on the Corporation’s business, operating results, and financial condition.
The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for products, costs, customers, suppliers, and the United States economy, which could have a material adverse effect on the Corporation’s business, operating results, and financial condition.
These risks may be elevated given the current uncertainties around the impact of the conflicts in Europe and the Middle East, ongoing disputes and increased tensions related to global trade, and complexities with foreign regulatory environments including the decreased ability of United States regulators to exercise oversight of subsidiaries of United States companies based in certain international jurisdictions.
These risks may be elevated given the current uncertainties regarding the impact of the conflicts in Europe and the Middle East, ongoing disputes and increased tensions related to global trade, and complexities with foreign regulatory environments including the decreased ability of United States regulators to exercise oversight of subsidiaries of United States companies based in certain international jurisdictions.
There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, potentially including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. The substantial majority of these costs are non-recurring expenses related to the merger (including financing of the merger), facilities and systems consolidation.
There are a large number of processes, policies, procedures, operations, technologies, and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. The substantial majority of these costs are non-recurring expenses related to the merger (including financing of the transaction), facilities and systems consolidation.
Additionally, the Corporation has facilities located in areas that may be impacted by the physical risks of climate change, including flooding, and faces the risk of losses incurred as a result of physical damage to its facilities and inventory as well as business interruption caused by such events.
Additionally, the Corporation has manufacturing and distribution facilities located in areas that may be impacted by the physical risks of climate change, including flooding, and faces the risk of losses incurred as a result of physical damage to its facilities and inventory as well as business interruption caused by such events.
From both domestic and international suppliers, the cost and availability of commodities, raw materials, components, and finished goods including steel have been significantly affected in recent years by, among other things, changes in global supply and demand, the COVID-19 pandemic, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, inflationary forces, natural disasters, labor disputes, military action, terrorism, and political unrest or instability.
From both domestic and international suppliers, the cost and availability of commodities, raw materials, components, and finished goods including steel have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, inflationary forces, natural disasters, labor disputes, military action, terrorism, and political unrest or instability.
The Corporation attempts to protect its intellectual property rights, both in the United States and in foreign countries, through a combination of patent, trademark, copyright, and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements.
The Corporation attempts to protect its intellectual property rights, both in the United States and in other countries, through a combination of patent, trademark, copyright, and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements.
Furthermore, periods of extended inclement weather or 12 Table of Contents associated flooding may inhibit construction activity utilizing the Corporation’s products and delay shipments of products to customers. The Corporation uses natural gas, diesel fuel, gasoline and electricity in its operations, all of which could face increased regulation as a result of climate change or other environmental concerns.
Furthermore, periods of extended inclement weather or associated flooding may inhibit construction activity utilizing the Corporation’s products and delay shipments of products to customers. The Corporation uses natural gas, diesel fuel, gasoline, and electricity in its operations, all of which could face increased regulation as a result of climate change or other environmental concerns.
The Corporation’s international sales and operations are subject to a number of additional risks, including: • social and political turmoil, official corruption, and civil and labor unrest; • restrictive government actions, including the imposition of trade quotas and tariffs and restrictions on transfers of funds; • changes in labor laws and regulations affecting the ability to hire, retain, or dismiss employees; • the need to comply with multiple and potentially conflicting laws and regulations, including environmental and corporate laws and regulations; • the failure of the Corporation’s compliance programs and internal training to prevent violations of the United States Foreign Corrupt Practices Act and similar anti-bribery laws; • preference for locally branded products and laws and business practices favoring local competition; • less effective protection of intellectual property and increased possibility of loss due to cyber-theft and ransomware attacks; • unfavorable business conditions or economic instability in any country or region; • infrastructure disruptions; • potentially conflicting cultural and business practices; • difficulty in obtaining distribution and support; and • changes to border taxes or other international tax reforms.
Its international sales and operations are subject to a number of additional risks, including: 14 Table of Contents • social and political turmoil, official corruption, and civil and labor unrest; • restrictive government actions, including the imposition of trade quotas and tariffs and restrictions on transfers of funds; • changes in labor laws and regulations affecting the ability to hire, retain, or dismiss members; • the need to comply with multiple and potentially conflicting laws and regulations, including environmental and corporate laws and regulations; • the failure of the Corporation’s compliance programs and internal training to prevent violations of the United States Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws; • preference for locally branded products and laws and business practices favoring local competition; • less effective protection of intellectual property and increased possibility of loss due to cyber-theft and ransomware attacks; • unfavorable business conditions or economic instability in any country or region; • infrastructure disruptions; • potentially conflicting cultural and business practices; • difficulty in obtaining distribution and support; and • changes to border taxes or other international tax reforms.
This government business is highly sensitive to 16 Table of Contents changes in procurement laws, national, international, state, and local public priorities, and budgets at all levels of government, which frequently experience downward pressure and are subject to uncertainty, including the potential for a temporary shutdown of the United States federal government.
This government business is highly sensitive to changes in procurement laws, national, international, state, and local public priorities, and budgets at all levels of government, which frequently experience downward pressure and are subject to uncertainty, including the potential for a temporary shutdown of the United States federal government.
The Corporation’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity.
The Corporation’s ability to successfully manage this expanded business depends, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity.
The Corporation’s contracts with government entities are subject to various statutes and regulations that apply to companies doing business with the government. The United States government, as well as state and local governments, can typically terminate or modify their contracts either for their convenience or if the Corporation defaults by failing to perform under the terms of the applicable contract.
The Corporation’s contracts with government entities are subject to various statutes and regulations that apply to companies doing business with the government. The United States government, as well as state and local governments, can typically terminate or modify their contracts either for their convenience or if the Corporation fails to perform under the terms of the applicable contract.
The Corporation’s ability to comply with such covenants will depend on its ongoing financial and operating performance, which in turn will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond the Corporation’s control.
The Corporation’s ability to continue to comply with these financial covenants will depend on its ongoing financial and operating performance, which in turn will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond the Corporation’s control.
The ability to comply with these covenants will also depend on the Corporation’s ability to successfully implement its overall business strategy and realize the anticipated benefits of the merger, including synergies, cost savings, innovation and operational efficiencies. Various risks, uncertainties and events beyond the Corporation’s control could affect its ability to comply with the covenants contained in its financing agreements.
The ability to comply with these covenants will also depend on the Corporation’s ability to successfully implement its overall business strategy and realize anticipated synergies, cost savings, innovation, and operational efficiencies. Various risks, uncertainties and events beyond the Corporation’s control could affect its ability to comply with the covenants contained in its financing agreements.
A shortage of qualified labor in certain geographies, particularly with plant production workers, could result in increased costs from certain temporary wage actions, such as hiring and referral bonus programs. Such shortages for a prolonged period of time could have a material adverse effect on the Corporation’s operating results.
A shortage of qualified labor in certain geographies, particularly where plant production workers are employed, could result in increased costs from certain temporary wage actions, such as hiring and referral bonus programs. Such shortages for a prolonged period could have a material adverse effect on the Corporation’s operating results.
If the Corporation were found to not be a responsible supplier or to have committed fraud or certain criminal offenses, it could be suspended or debarred from all further federal, state, or local government contracting.
If the Corporation 15 Table of Contents were found to not be a responsible supplier or to have committed fraud or certain criminal offenses, it could be suspended or debarred from all further federal, state, or local government contracting.
The increased prevalence of global climate issues may result in new regulations that negatively impact the Corporation, including regulations limiting emissions from, or restricting the use of wood, coal, natural gas, or other fuel sources in, fireplaces and heating appliances, which may impair the Corporation’s ability to market and sell those products.
The increased prevalence of global climate issues may result in new regulations that could negatively impact the Corporation, including regulations limiting emissions from, or restricting the use of wood, coal, natural gas, or other fuel sources in, fireplaces and heating appliances, which 12 Table of Contents may impede the Corporation’s ability to market and sell those products.
Consolidation among the Corporation’s customers may result in a smaller number of total customers, but an increase in large customers whose size and purchasing power give them increased leverage that may result in, among other things, decreases in average selling prices.
Consolidation among the Corporation’s customers may result in a smaller number of total customers and an increase in large customers whose size and purchasing power give them increased bargaining power that may result in, among other impacts, decreases in average selling prices.
An acquisition or alliance could also adversely impact the Corporation’s operating performance or cash flow due to, among other things, the issuance of acquisition-related debt, pre-acquisition assumed liabilities, undisclosed facts about the business, or acquisition expense.
An acquisition or alliance could also adversely impact the Corporation’s operating performance or cash flow due to, among other things, the issuance of acquisition-related debt, pre-acquisition assumed liabilities, undisclosed facts about the business, or acquisition expense. Any of such risks could adversely affect the Corporation’s business, operating results, or financial condition.
The Corporation may not achieve the intended benefits of its recent merger with Kimball International. There can be no assurance that the Corporation will be able to successfully integrate Kimball International’s assets or otherwise realize the expected benefits of the transaction (including operating and other cost synergies).
The Corporation may not achieve the intended benefits of its merger with Kimball International. The Corporation may not be able to successfully integrate Kimball International’s assets or otherwise realize the expected benefits of the merger transaction (including operating and other cost synergies).
Industry factors, such as technology changes, health and safety concerns, and environmental regulation, including indoor air quality standards, also influence residential building products industry revenues. Deterioration of economic conditions or a slowdown in the homebuilding industry and the hearth products market could decrease demand for residential building products and have additional adverse effects on operating results.
Such sales are also subject to risks associated with industry factors such as technology changes, health and safety concerns, and environmental regulation, including indoor air quality standards. Deterioration of economic conditions or a slowdown in the homebuilding industry and the hearth products market could decrease demand for the Corporation's residential building products and have additional adverse effects on operating results.
Through the past and present operation and ownership of manufacturing facilities and real property, the Corporation is subject to extensive and changing federal, state, and local environmental laws and regulations, both domestic and abroad, including those relating to discharges in air, water, and land, the handling and disposal of solid and hazardous waste, and the remediation of contamination associated with releases of hazardous substances.
Through the past and present operation and ownership of manufacturing facilities and real property, the Corporation is subject to extensive and changing federal, state, and local environmental laws and regulations, in the United States and other countries where it operates, including those relating to discharges in air, water, and land, the handling and disposal of solid and hazardous waste, and the remediation of contamination associated with releases of hazardous substances.
Failure to properly identify, value, and manage acquisitions or alliances may negatively affect the Corporation’s business, results of operations and financial condition.
Failure to properly identify, value, and manage acquisitions or strategic alliances in accordance with the Corporation's strategy may negatively affect the Corporation’s business, results of operations and financial condition.
The agreements governing the indebtedness that the Corporation incurred in connection with the merger and otherwise, including, but not limited to, the Term Loan Credit Agreement, contain interest rates tied to various benchmark rates in effect at any given time, so as interest rates have increased, so has the Corporation’s interest costs for any new debt assumed in connection with the merger and in the normal course of our operations and any additional increases could further increase these costs.
The agreements governing the indebtedness of the Corporation contain interest rates tied to various benchmark rates in effect at any given time, so as interest rates have increased, so has the Corporation’s interest costs for any new debt assumed in connection with the merger and in the normal course of our operations and any additional increases could further increase these costs.
Additionally, although the Corporation primarily sells products and reports the financial results in United States dollars, increased business in countries outside the United States creates exposure to fluctuations in foreign currency exchange rates.
The Corporation is subject to currency risk in its international operations. Although the Corporation primarily sells products and reports the financial results in United States dollars, increased business in countries outside the United States creates exposure to fluctuations in foreign currency exchange rates.
Compliance with environmental regulations has not had a material effect on capital expenditures, earnings, or competitive position to date, but compliance with current laws or more stringent laws or regulations which may be imposed in the future, stricter interpretation of existing laws or discoveries of contamination at the Corporation’s real property sites which occurred prior to ownership, or the advent of environmental regulation may require additional expenditures in the future, some of which may be material. 17 Table of Contents Costs related to product defects could adversely affect the Corporation’s profitability.
Compliance with environmental regulations has not had a material effect on capital expenditures, earnings, or competitive position to date, but compliance with current laws or more stringent laws or regulations which may be imposed in the future, stricter interpretation of existing laws or discoveries of contamination at the Corporation’s real property sites which occurred prior to ownership may require additional expenditures in the future, some of which may be material.
Profit margins could be adversely affected if commodity, raw material, component, and finished good costs increase and the Corporation is either unable to offset such costs through strategic sourcing initiatives and continuous improvement programs or, as a result of competitive market dynamics, unable to pass along a portion of the higher costs to customers. 11 Table of Contents The Corporation relies primarily on third-party freight and transportation providers to deliver products to customers.
Profit margins could be adversely affected if commodity, raw material, component, and finished good costs increase and the Corporation is either unable to offset such costs through strategic sourcing initiatives and continuous improvement programs or, as a result of competitive market dynamics, unable to pass along a portion of the higher costs to customers.
Changes in United States trade policy could result in one or more foreign governments adopting trade policies that make it more difficult or costly for the Corporation to do business in those countries.
Certain foreign governments have imposed tariffs on goods that their countries import from the United States. Changes in United States trade policy could result in one or more foreign governments adopting trade policies that make it more difficult or costly for the Corporation to do business in those countries.
The Corporation focuses on continuous training, motivation, and development of its members, and it strives to attract and retain qualified personnel. Failure to retain the Corporation’s executive officers and retain and attract other key personnel could adversely affect the Corporation’s business. The Corporation’s strategy is partially based on growth through acquisitions or strategic alliances.
The Corporation focuses on continuous training, motivation, and development of its members, and it strives to attract and retain qualified personnel. Failure to retain the Corporation’s executive officers and retain and attract other key personnel could adversely affect the Corporation’s business.
The success of the Corporation’s operations depends on its ability, and the ability of third parties upon which the Corporation relies, to identify, recruit, develop, and retain qualified and talented individuals in order to supply and deliver the Corporation’s products. A shortage of qualified labor could have a negative effect on the Corporation’s business.
The success of the Corporation’s operations depends on its ability, and the ability of third parties upon which the Corporation relies, to identify, recruit, develop, and retain qualified and talented individuals in order to supply and deliver the Corporation’s products. The Corporation has experienced shortages of qualified labor across its operations.
Industry factors, including corporate restructuring, technology changes, corporate relocations, health and safety concerns, including ergonomic considerations, and the globalization of companies also influence workplace furnishings industry revenues. In addition, adoption of hybrid working models following the COVID-19 pandemic has resulted in a significant decrease in worker attendance at their office location.
Industry factors, including corporate restructuring, technology changes, corporate relocations, health and safety concerns, including ergonomic considerations, and the globalization of companies also influence workplace furnishings industry revenues. In addition, adoption of hybrid working models has resulted in a significant decrease in worker attendance at their office locations. Despite office re-entry in many markets, office occupancy levels remain below historic levels.
Any such events could have a material adverse effect on the Corporation’s costs or results of operations. A continued shortage of qualified labor could negatively affect the Corporation’s business and materially reduce earnings. The Corporation has experienced shortages of qualified labor across its operations. Outside suppliers that the Corporation relies upon have also experienced shortages of qualified labor.
Any such events could have a material adverse effect on the Corporation’s costs or results of operations. A continued shortage of qualified labor could negatively affect the Corporation’s business and materially reduce earnings.
Actions taken by the United States government to apply tariffs on certain products could have long-term impacts on existing supply chains. The situation could impact the competitive environment depending on the severity and duration of current and future policy changes. This may manifest in additional costs on the business, including costs with respect to products upon which the business depends.
Actions taken by the United States government to impose tariffs on certain products could have long-term impacts on existing supply chains. The situation could impact the competitive environment depending on the severity and duration of current and future policy changes.
Harmful effects, however, may later become known, which could subject the Corporation to litigation and significant losses. The Corporation maintains reserves for product defect-related costs but these reserves may not be adequate to cover actual claims. Incorrect estimates or any significant increase in the rate of product defect expenses could have a material adverse effect on operations.
The Corporation maintains reserves for product defect-related costs but these reserves may not be adequate to cover actual claims. Incorrect estimates or any significant increase in the rate of product defect expenses could have a material adverse effect on operations. An inability to protect the Corporation’s intellectual property could have a significant impact on the business.
Residential building products industry sales are impacted by a variety of macroeconomic factors including housing starts, housing inventory, home sales, overall employment levels, interest rates, home affordability, consumer confidence, energy costs, disposable income, and changing demographics.
Lower office occupancy levels have had and could continue to have an adverse impact on the demand for workplace furnishings. Residential building products industry sales are impacted by a variety of macroeconomic factors including housing starts, housing inventory, home sales, overall employment levels, interest rates, home affordability, consumer confidence, energy costs, disposable income, and changing demographics.
In certain parts of the market, promotion and enhancement of the Corporation’s name and brands will depend on the effectiveness of marketing and advertising efforts and on successfully providing design-driven, innovative, and high-quality products and superior services.
The Corporation believes that establishing and maintaining good brand and name recognition and a good reputation is critical to its business. In certain parts of the market, promotion and enhancement of the Corporation’s name and brands will depend on the effectiveness of marketing and advertising efforts and on successfully providing design-driven, innovative, and high-quality products and superior services.
Additionally, as the Corporation reports currency in the United States dollar, the financial position is affected by the strength of the currencies in countries where the Corporation has operations relative to the strength of the United States dollar.
Additionally, as the Corporation reports currency in the United States dollar, the financial position is affected by the strength of the currencies in countries where the Corporation has operations relative to the strength of the United States dollar. The Corporation periodically reviews foreign currency exposure and evaluates whether it should enter into hedging transactions.
INDUSTRY AND ECONOMIC RISKS Unfavorable economic and industry factors could adversely affect the Corporation’s business, operating results, or financial condition. Workplace, health care, and hospitality furnishings industry sales are impacted by a variety of macroeconomic factors including service-sector employment levels, corporate profits, business confidence, commercial construction, office vacancy rates, and new hospitality refurbishment rates.
Workplace, health care, and hospitality furnishings industry sales are subject to risks resulting from a variety of macroeconomic factors including service-sector employment levels, corporate profits, business confidence, commercial construction, office vacancy rates, and new hospitality refurbishment rates.
The Corporation periodically reviews foreign currency exposure and evaluates whether it should enter into hedging transactions. As of the date of this report and for the period presented, the Corporation has not utilized any currency hedging instruments.
As of the date of this report and for the period presented, the Corporation has not utilized any currency hedging instruments.
The debt agreements also require the Corporation to maintain certain financial covenants. Rising interest rates and future increases will likely increase interest cost on the Corporation’s debt and could materially adversely impact the Corporation’s ability to refinance existing debt and limit its acquisition and development activities going forward. The U.S.
Fluctuating interest rates including potential future increases may raise the interest cost on the Corporation’s debt and could materially adversely impact the Corporation’s ability to refinance existing debt and limit its acquisition and development activities going forward. The U.S.
FINANCING RISKS The financing arrangements that the Corporation entered into in connection with the merger with Kimball International contain restrictions and limitations that may, under certain circumstances, significantly impact the Corporation’s ability to operate its business. The Corporation incurred significant new indebtedness in connection with its merger with Kimball International.
Financing Risks The financing arrangements of the Corporation contain restrictions and limitations that may, under certain circumstances, significantly impact the Corporation’s ability to operate its business. The agreements governing the indebtedness of the Corporation may, under certain circumstances, impose significant operating and financial restrictions on the Corporation.
Increasing demand for freight providers and a shortage of qualified drivers has caused delays and may cause future delays in shipments and increase the cost to ship its products, which may adversely affect profitability. The Corporation also imports and exports products and components, primarily using container ships, which load and unload through North American ports.
The Corporation relies primarily on third-party freight and transportation providers to deliver products to customers. Increasing demand for freight providers and a shortage of qualified drivers have caused delays and may cause future delays in shipments and increase the cost to ship its products, which may adversely affect profitability.
In addition, further consolidations may lead to fluctuations in revenue, increases in costs to meet demands 10 Table of Contents of large customers, and pressure to accept onerous contract terms, and the Corporation’s business, financial condition, and operating results could be harmed.
In addition, the Corporation’s business, financial condition, and operating results could be harmed by further consolidations, which may lead to fluctuations in revenue, increases in costs to meet demands of large customers, and pressure to accept disadvantageous contract terms. The Corporation sells products through multiple distribution channels, which primarily include independent dealers, national dealers, wholesalers, sales representatives, and eCommerce.
Difficulties in integrating Kimball International into the Corporation may result in the Corporation performing differently than expected, in operational challenges, in the failure to realize anticipated run-rate cost synergies and efficiencies in the expected time frame or at all, or in the difficulty or failure of utilizing available U.S. tax attributes, in which case the merger may not be accretive to earnings per share, may not improve the Corporation’s balance sheet position, may not enhance the Corporation’s ability to de-lever and may not generate additional free cash flow due to reduced cash tax payments.
Difficulties in integrating Kimball International into the Corporation may result in the Corporation performing differently than expected, in operational challenges, in the failure to realize anticipated run-rate cost synergies and efficiencies in the expected periods or at all, or in the difficulty or failure of utilizing available U.S. tax attributes.
Such a shortage would also likely lead to higher wages for employees (or higher costs to purchase the services of such third parties) and a corresponding reduction in the Corporation’s results of operations.
Any such shortage could decrease the Corporation’s ability to effectively produce workplace furnishings and residential building products and meet customer demand. Such a shortage would also likely lead to higher wages for members (or higher costs to purchase the services of such third parties) and a corresponding reduction in the Corporation’s profitability.
Capacity-related and/or port-caused delays in the shipment or receipt of products and components, including labor disputes, have caused and could cause delayed receipt of products and components, which may adversely affect sales and profitability.
Capacity-related and/or port-caused delays in the shipment or receipt of products and components, including labor disputes, have caused and could cause delayed receipt of products and components, which may adversely affect sales and profitability. 11 Table of Contents Strategic and Operational Risks If customers do not perceive the Corporation’s products and services to be of good value, the Corporation’s brand and name recognition and reputation could suffer.
Increased costs could further lower profit margins as the Corporation may be challenged in effectively increasing the prices of its products, and its business and results of operations may be adversely affected. Certain foreign governments have imposed tariffs on goods that their countries import from the United States.
The imposition of tariffs may result in additional costs on the business, including costs with respect to products upon which the business depends. Increased costs could further lower profit margins as the Corporation may be challenged in effectively increasing the prices of its products, and its business and results of operations may be adversely affected.
Healthcare costs have continued to rise over time, which increases the annual spending on healthcare and could adversely affect the Corporation’s business, operating results, and financial condition. The Corporation’s international operations expose it to risks related to conducting business in multiple jurisdictions outside the United States. The Corporation manufactures, markets, and sells products in international markets.
The Corporation’s international operations expose it to risks related to conducting business in multiple jurisdictions outside the United States. The Corporation manufactures, markets, and sells products in international markets.
Some distribution partners may terminate their relationship with the Corporation at any time and for any reason. Loss or termination of a significant number of reseller relationships could cause difficulties in marketing and distributing products, resulting in a decline in sales, which may adversely affect the Corporation’s business, operating results, or financial condition.
Loss or termination of a significant number of reseller relationships could cause difficulties in marketing and distributing products, resulting in a decline in sales, which may adversely affect the Corporation’s business, operating results, or financial condition. In addition, individual dealers may not continue to be viable and profitable and may suffer from a lack of available credit.
In addition, financings could result in dilution to shareholders or the securities may have rights, preferences, and privileges senior to those of the Corporation’s common stock. If 19 Table of Contents the need for capital arises because of significant losses, the occurrence of these losses may make it more difficult to raise the necessary capital. Item 1B.
In addition, financings could result in dilution to shareholders or the securities may have rights, preferences, and privileges senior to those of the Corporation’s common stock.
Following the transaction, the Corporation faces additional risks and uncertainties that the Corporation or Kimball International may not have previously been exposed to as independent companies. Goodwill and other intangible assets represent a significant amount of the Corporation’s total assets, and an impairment charge would adversely affect the Corporation’s financial results.
Goodwill and other intangible assets represent a significant amount of the Corporation’s total assets, and an impairment charge would adversely affect the Corporation’s financial results.
See "Note 6. Goodwill and Other Intangible Assets" for information on impairment charges. 15 Table of Contents Increasing healthcare costs could adversely affect the Corporation’s business, operating results, and financial condition. The Corporation provides healthcare benefits to the majority of its members and is self-insured.
Increasing health care costs could adversely affect the Corporation’s business, operating results, and financial condition. The Corporation provides health care benefits to the majority of its members and is self-insured. Health care costs have continued to rise over time, which increases the annual spending on health care and could adversely affect the Corporation’s business, operating results, and financial condition.
The Corporation incurs various expenses related to product defects, including product warranty costs, product recall and retrofit costs, and product liability costs. These expenses relative to product sales vary and could increase. The Corporation uses chemicals and materials in products and includes components in products from external suppliers, which it believes to be safe and appropriate for their designated use.
Costs related to product defects could adversely affect the Corporation’s profitability. The Corporation incurs various expenses related to product defects, including product warranty costs, product recall and retrofit costs, and product liability costs. These expenses relative to product sales vary and could increase.
The future results of the Corporation may be adversely impacted if the Corporation does not effectively manage its expanded operations following the completion of the merger with Kimball International. The Corporation’s business is significantly larger than the pre-merger size of either the Corporation’s or Kimball International’s respective businesses.
The Corporation’s business is significantly larger than the pre-merger size of either the Corporation’s or Kimball International’s respective businesses.
The combined company incurred substantial expenses related to the completion of the merger of the Corporation with Kimball International and expects to continue to incur substantial expenses relating to their integration. In connection with the merger and ongoing integration efforts, the combined company incurred and is expected to continue to incur substantial expenses.
The Corporation's financial performance may be adversely affected if the combined company does not effectively manage its expanded operations. In connection with the merger and ongoing integration efforts, the combined company incurred and is expected to continue to incur substantial expenses.
Federal Reserve has raised the benchmark interest rate multiple times during 2023, and there can be no assurances that the rate will not further increase in the future.
Federal Reserve has raised the benchmark interest rate multiple times in recent years, and may increase the rate or slow reductions in the rate in future periods.
Member recruitment, development, and retention efforts may not be successful, which could result in a shortage of qualified individuals in future periods. Any such shortage could decrease the Corporation’s ability to effectively produce workplace furnishings and residential building products and meet customer demand.
Outside suppliers that the Corporation relies upon have also experienced shortages of qualified labor. Current and future shortages of qualified labor could have a negative effect on the Corporation’s business. Member recruitment, development, and retention efforts may not be successful, which could result in a shortage of qualified individuals in future periods.
These measures may be adopted without any further vote or action by the shareholders. An inability to protect the Corporation’s intellectual property could have a significant impact on the business.
These measures may be adopted without any further vote or action by the shareholders. Item 1B. Unresolved Staff Comments None.
The Corporation sells products through multiple distribution channels, which primarily include independent dealers, national dealers, wholesalers, sales representatives, and eCommerce. Within these distribution channels, there has been, and may continue to be, consolidation. The Corporation relies on distribution partners to provide a variety of important specification, installation, and after-market services to customers.
These distribution channels have experienced significant consolidation, which may continue in future periods. The Corporation relies on distribution partners to provide a variety of 10 Table of Contents important specification, installation, and after-market services to customers. Some distribution partners may terminate their relationship with the Corporation at any time and for any reason.
Removed
Despite office re-entry in many markets, office occupancy levels remain below historic levels. Lower office occupancy levels have had and could continue to have an adverse impact on the demand for workplace furnishings.
Added
Other factors not currently known to the Corporation or that it currently considers to be immaterial also may adversely affect its business, operating results, cash flows, or financial condition. 9 Table of Contents Industry and Economic Risks Unfavorable economic and industry factors could adversely affect the Corporation’s business, operating results, or financial condition.
Removed
In addition, individual dealers may not continue to be viable and profitable and may suffer from a lack of available credit.
Added
The Corporation also imports and exports products and components, primarily using container ships, which load and unload their cargoes through North American ports.
Removed
STRATEGIC AND OPERATIONAL RISKS If customers do not perceive the Corporation’s products and services to be of good value, the Corporation’s brand and name recognition and reputation could suffer. The Corporation believes that establishing and maintaining good brand and name recognition and a good reputation is critical to its business.
Added
In such a case, the acquisition may not be accretive to earnings per share, may not improve the Corporation’s balance sheet position, may not enhance the Corporation’s ability to de-lever and may not generate additional free cash flow due to reduced cash tax payments.
Removed
The Corporation’s ability to grow through future acquisitions will depend, in part, on the availability of suitable acquisition candidates at an acceptable price, the ability to compete effectively for these acquisition candidates, and the availability of capital to complete the acquisitions. Any potential acquisition may not be successful and could adversely affect the Corporation’s business, operating results, or financial condition.
Added
The Corporation's information technology systems, processes, and sites may suffer interruptions, security incidents, or failures that may affect its ability to conduct its business and cause significant damage to its reputation.
Removed
The integration of the two companies may result in material challenges, including the diversion of management’s attention from ongoing business concerns; retaining key management and other employees; retaining or attracting business and operational relationships; the possibility of faulty assumptions underlying expectations regarding the integration process and associated expenses; consolidating corporate and administrative infrastructures and eliminating duplicative operations; coordinating geographically separate organizations; unanticipated issues in integrating information technology, communications and other systems; as well as potential unknown liabilities, or unforeseen expenses relating to integration.
Added
The Corporation’s operations rely upon certain key information technology systems, which are dependent on services provided by third parties and provide critical data connectivity, information, and services for internal and external users.
Removed
There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the merger.
Added
These interactions include, among others, ordering and managing materials from suppliers, risk management activities, converting raw materials to finished products, inventory management, shipping products to customers, processing transactions, summarizing and reporting results of operations, human resources benefits and payroll management, complying with regulatory, legal and tax requirements, and other processes necessary to manage the business.
Removed
The Corporation may incur additional costs to maintain employee morale and to attract, motivate or retain management personnel and other key employees. The Corporation and Kimball International also incurred transaction fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors - STRATEGIC AND OPERATIONAL RISKS - The Corporation relies on information technology systems to manage numerous aspects of the business and a disruption or failure of these systems could adversely affect business, operating results, and financial condition. " which is incorporated by reference into this Item 1C.
Biggest changeRisk Factors - Strategic and Operational Risks - The Corporation's information technology systems, processes, and sites may suffer interruptions, security incidents, or failures that may affects its ability to conduct its business and cause significant damage to its reputation. " which is incorporated by reference into this Item 1C.
The Corporation has not identified cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to affect the Corporation. There can be no assurance that this will continue to be the case.
Cybersecurity Threats The Corporation has not identified cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to affect the Corporation. There can be no assurance that this will continue to be the case.
Management provides the Audit Committee with quarterly cybersecurity reports that cover, among other topics, third-party assessments of the Corporation’s cybersecurity risk management program, developments in cybersecurity, and updates to the Company’s cybersecurity risk management program and mitigation strategies. Cybersecurity Threats.
Management provides the Audit Committee with quarterly cybersecurity reports that cover, among other topics, third-party assessments of the Corporation’s cybersecurity risk management program, developments in cybersecurity, and updates to the Company’s cybersecurity risk management program and mitigation strategies.
Additionally, security and data-focused contract provisions are incorporated where necessary in supplier and other service provider agreements to include industry-standard security and resiliency requirements that include timely reporting of cybersecurity incidents. The Corporation periodically reviews independent assessments of major service providers. Governance. The Board of Directors has overall oversight responsibility for risk management.
Additionally, security and data-focused contract provisions are incorporated where necessary in supplier and other 19 Table of Contents service provider agreements to include industry-standard security and resiliency requirements that include timely reporting of cybersecurity incidents. The Corporation periodically reviews independent assessments of major service providers. Governance The Board of Directors has overall oversight responsibility for risk management.
Notwithstanding the Corporation’s investment in cybersecurity, it may not be successful in 20 Table of Contents preventing or mitigating a cybersecurity incident that could have a material adverse effect on its business, results of operations or financial condition. For a discussion of cybersecurity risks affecting the Corporation’s business, see "Item 1A.
Notwithstanding the Corporation’s investment in cybersecurity, it may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on its business, results of operations or financial condition. For a discussion of cybersecurity risks affecting the Corporation’s business, see "Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Corporation’s principal manufacturing and distribution facilities (100,000 square feet or larger in size) are as follows: Number of Facilities Square Feet (in thousands) Location Workplace Furnishings Residential Building Products Owned Leased Muscatine, IA 6 — 2,211 — Jasper, IN 5 — 1,223 — Santa Claus, IN 2 — 684 — Lake City, MN — 2 342 — Other U.S. 11 6 2,669 1,554 Outside U.S. 2 — 355 540 There are no major third-party encumbrances on Corporation-owned properties.
Biggest changeThe Corporation has sufficient capacity to increase output at most locations by increasing the use of overtime or the number of production shifts employed. 20 Table of Contents The Corporation’s principal manufacturing and distribution facilities (100,000 square feet or larger in size) are as follows: Number of Facilities Square Feet (in thousands) Location Workplace Furnishings Residential Building Products Owned Leased Muscatine, IA 6 — 2,211 — Jasper, IN 5 — 1,223 — Santa Claus, IN 2 — 684 — Lake City, MN — 2 342 — Other U.S. 11 6 2,669 1,550 Outside U.S. 2 — 355 540 There are no major third-party encumbrances on Corporation-owned properties.
Item 2. Properties The Corporation maintains its corporate headquarters in Muscatine, Iowa, and conducts operations at locations throughout the United States as well as in India and Mexico, which house manufacturing, distribution, and retail operations and offices totaling an aggregate of approximately 11.6 million square feet. Of this total, approximately 3.2 million square feet are leased.
Item 2. Properties The Corporation maintains its corporate headquarters in Muscatine, Iowa, and conducts operations at locations throughout the United States as well as in India and Mexico, which house manufacturing, distribution, and retail operations and offices totaling an aggregate of approximately 11.5 million square feet. Of this total, approximately 3.2 million square feet are leased.
Refer to the Property, Plant, and Equipment section in the "Consolidated Balance Sheets" for related cost, accumulated depreciation, and net book value data.
Refer to "Property, Plant, and Equipment" in the Consolidated Balance Sheets in this report for cost, accumulated depreciation, and net book value data.
Removed
The Corporation has sufficient capacity to increase output at most locations by increasing the use of overtime or the number of production shifts employed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIt is the Corporation’s opinion, after consultation with legal counsel, that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation’s financial condition, cash flows, or on the Corporation’s quarterly or annual operating results when resolved in a future period. For more information regarding legal proceedings, see "Note 15.
Biggest changeAfter consultation with legal counsel, the Corporation does not expect that liabilities, if any, resulting from these matters will have a material adverse effect on the Corporation’s financial condition, cash flows, or on the Corporation’s quarterly or annual operating results when resolved in a future period. For more information regarding legal proceedings, see "Note 15.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeLorenger 58 None Chairman President and Chief Executive Officer 2020 2018 Donna D. Meade 58 None Vice President, Member and Community Relations 2014 Gregory A. Meunier 54 None Executive Vice President, Global Operations, Kimball International 2020 Vice President, Global Operations, National Office Furniture (a subsidiary of Kimball International) (2016-2020) Radhakrishna S.
Biggest changeMeunier 55 Executive Vice President, Global Operations, Kimball International 2020 Vice President, Global Operations, National Office Furniture (a subsidiary of Kimball International) (2016-2020) Jennifer S. Petersen 52 Vice President, Member and Community Relations 2024 Vice President, Marketing, HNI Workplace Furnishings (2022-2024); Vice President, Brand and Members, The HON Company (2019-2022) Radhakrishna S.
Item 4. Mine Safety Disclosures Not applicable. 21 Table of Contents Table I Information about our Executive Officers Name Age Family Relationship Position Position Held Since Other Business Experience During Past Five Years Vincent P. Berger 51 None Executive Vice President, HNI Corporation President, Hearth & Home Technologies 2018 2016 Steven M.
Item 4. Mine Safety Disclosures Not applicable. 21 Table of Contents Table I Information about our Executive Officers Name Age Position Position Held Since Other Business Experience During Past Five Years Vincent P. Berger 52 Chief Financial Officer Executive Vice President 2024 2018 President, Hearth & Home Technologies (2016-2024) Steven M.
Rao 58 None Vice President, Chief Information & Digital Officer 2019 Vice President & Chief Information Officer at Ricoh Americas (2016-2019) Michael J. Roch 46 None Chief Customer Officer, Kimball International 2021 Senior Vice President, Sales, Kimball International (2020-2021); Vice President, Sales, National Office Furniture (a subsidiary of Kimball International) (2014-2020) Kourtney L.
Rao 59 Vice President, Chief Information & Digital Officer 2019 Michael J. Roch 47 Chief Customer Officer, Kimball International 2021 Senior Vice President, Sales, Kimball International (2020-2021); Vice President, Sales, National Office Furniture (a subsidiary of Kimball International) (2014-2020) Brian S.
Bradford 66 None Senior Vice President, General Counsel and Secretary 2015 Marshall H. Bridges 54 None Senior Vice President and Chief Financial Officer 2018 B. Brandon Bullock 47 None President, The HON Company 2018 Jason D. Hagedorn 51 None President, Allsteel LLC 2020 Vice President & General Manager, Product Strategy and Finance, HNI Corporation (2017-2020) Jeffrey D.
Bradford 67 Senior Vice President, General Counsel and Secretary 2015 B. Brandon Bullock 48 President, The HON Company 2018 Jason D. Hagedorn 52 President, Allsteel LLC 2020 Vice President & General Manager, Product Strategy and Finance, HNI Corporation (2017-2020) Jeffrey D. Lorenger 59 Chairman President and Chief Executive Officer 2020 2018 Gregory A.
Smith 54 None Chief Operating Officer, Kimball International 2023 Chief Operating Officer Kimball Workplace & Health (2021-2023); President, Kimball Workplace (2020-2021); President, National Office Furniture (a subsidiary of Kimball International) (2018-2020) 22 Table of Contents PART II
Smith 59 President, Hearth & Home Technologies 2024 Senior Vice President, Finance and Strategy, Hearth & Home Technologies (2018-2024) Kourtney L. Smith 55 Chief Operating Officer, Kimball International 2023 Chief Operating Officer, Kimball Workplace & Health (2021-2023); President, Kimball Workplace (2020-2021); President, National Office Furniture (a subsidiary of Kimball International) (2018-2020) 22 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following is a summary of share repurchase activity during the fourth quarter of fiscal 2023: Period Total Number of Shares (or Units) Purchased (in thousands) (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (in thousands) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs (in millions) 10/01/23 - 10/28/23 — $ — — $ 234.0 10/29/23 - 11/25/23 — $ — — $ 234.0 11/26/23 - 12/30/23 10.0 $ 41.98 10.0 $ 233.5 Total 10.0 10.0 (1) No shares were purchased outside of a publicly announced plan or program.
Biggest changeThe following is a summary of share repurchase activity during the fourth quarter of fiscal 2024: Period Total Number of Shares (or Units) Purchased (in thousands) (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (in thousands) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs (in millions) 09/29/24 - 10/26/24 259.4 $ 53.28 259.4 $ 194.3 10/27/24 - 11/23/24 264.5 $ 53.69 264.5 $ 180.1 11/24/24 - 12/28/24 227.0 $ 55.33 227.0 $ 167.6 Total 750.9 750.9 (1) No shares were purchased outside of a publicly announced plan or program.
Paul, Minnesota, serves as the Corporation’s transfer agent and registrar of its common stock. Shareholders may report a change of address or make inquiries by writing or calling: EQ Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0854, or 800-468-9716. The Corporation expects to continue its policy of paying regular quarterly cash dividends.
Paul, Minnesota, serves as the Corporation’s transfer agent and registrar of its common stock. Shareholders may report a change of address or make inquiries by writing or calling: EQ Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0854, or 800-468-9716. Dividends The Corporation expects to continue its policy of paying regular quarterly cash dividends.
Dividends have been paid each quarter since the Corporation paid its first dividend in 1955. The average dividend payout percentage for the most recent three-year period has been 73 percent of prior year earnings or 39 percent of prior year cash flow from operating activities.
Dividends have been paid each quarter since the Corporation paid its first dividend in 1955. The average dividend payout percentage for the most recent three-year period has been 74 percent of prior year earnings or 36 percent of prior year cash flow from operating activities.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities The Corporation’s common stock is listed for trading on the New York Stock Exchange (NYSE) under the trading symbol HNI. As of December 30, 2023, the Corporation had approximately 6,588 shareholders of record. EQ Shareowner Services, St.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Holders The Corporation’s common stock is listed for trading on the New York Stock Exchange (NYSE) under the trading symbol HNI. As of December 28, 2024, the Corporation had approximately 6,500 shareholders of record. EQ Shareowner Services, St.
The Corporation’s most recent share purchase authorization from May 17, 2022, authorized repurchase of $200 million of shares in addition to the previously available amount, with no specific expiration date. As of December 30, 2023, $233.5 million was authorized and available for the repurchase of shares by the Corporation.
The Corporation’s most recent share purchase authorization from May 17, 2022, authorized repurchase of $200 million of shares in addition to the previously available amount, with no specific expiration date. As of December 28, 2024, $167.6 million was authorized and available for the repurchase of shares by the Corporation.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+23 added−39 removed16 unchanged
Biggest changeRestructuring and Impairment" in the Notes to Consolidated Financial Statements for further information regarding restructuring and impairment charges. 24 Table of Contents Results of Operations The following table presents certain results of operations: 2023 2022 Change Net sales $ 2,434.0 $ 2,361.8 3.1 % Cost of sales 1,485.7 1,526.9 (2.7) % Gross profit 948.3 834.9 13.6 % Selling and administrative expenses 813.2 723.4 12.4 % Gain on sale of subsidiary — (50.4) (100) % Restructuring and impairment charges 44.8 6.7 572 % Operating income 90.3 155.2 (41.8) % Interest expense, net 25.5 8.8 189 % Income before income taxes 64.8 146.4 (55.7) % Income tax expense 15.6 22.5 (30.7) % Net income (loss) attributable to non-controlling interest 0.0 (0.0) NM Net income attributable to HNI Corporation $ 49.2 $ 123.9 (60.3) % As a Percentage of Net Sales: Net sales 100.0 % 100.0 % Gross profit 39.0 35.4 360 bps Selling and administrative expenses 33.4 30.6 280 bps Gain on sale of subsidiary — 2.1 -210 bps Restructuring and impairment charges 1.8 0.3 150 bps Operating income 3.7 6.6 -290 bps Income tax expense 0.6 1.0 -40 bps Net income attributable to HNI Corporation 2.0 5.2 -320 bps Net Sales Consolidated net sales for 2023 increased 3.1 percent compared to the prior year.
Biggest changeExcluding these items, net income increased in the current year driven by improved net productivity, favorable price-cost, and the full year benefit of the Kimball International acquisition, partially offset by lower sales volume in the legacy HNI businesses. 24 Table of Contents Results of Operations The following table presents certain results of operations: 2024 2023 Change Net sales $ 2,526.4 $ 2,434.0 3.8 % Cost of sales 1,493.0 1,485.7 0.5 % Gross profit 1,033.4 948.3 9.0 % Selling and administrative expenses 820.7 813.2 0.9 % Restructuring and impairment charges 6.2 44.8 (86.2) % Operating income 206.5 90.3 129 % Interest expense, net 27.2 25.5 6.9 % Income before income taxes 179.3 64.8 177 % Income tax expense 39.8 15.6 155 % Net income attributable to non-controlling interest 0.0 0.0 NM Net income attributable to HNI Corporation $ 139.5 $ 49.2 183 % As a Percentage of Net Sales: Net sales 100.0 % 100.0 % Gross profit 40.9 39.0 190 bps Selling and administrative expenses 32.5 33.4 -90 bps Restructuring and impairment charges 0.2 1.8 -160 bps Operating income 8.2 3.7 450 bps Income tax expense 1.6 0.6 100 bps Net income attributable to HNI Corporation 5.5 2.0 350 bps Net Sales Consolidated net sales for 2024 increased 3.8 percent compared to the prior year.
In the income approach, the estimate of fair value of each reporting unit is based on management’s projection of revenues, gross margin, operating costs, and cash flows considering historical and estimated future results, general economic and market conditions, as well as the impact of planned business and operational strategies.
In the income approach, the estimate of fair value of each reporting unit is based on management’s projection of revenues, gross margin, operating costs, and cash flows considering historical and estimated 29 Table of Contents future results, general economic and market conditions, as well as the impact of planned business and operational strategies.
Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other 29 Table of Contents sources.
Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
These funds, coupled with cash flow from future operations, borrowings expected to be available under the Corporation’s existing credit agreements, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy cash flow needs for at least the next twelve months.
These funds, coupled with cash flow from future operations, borrowing capacity expected to be available under the Corporation’s existing credit agreements, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy the Corporation's cash flow needs for at least the next twelve months.
Management bases its fair value estimates on assumptions they believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates. Assessing the fair value of goodwill includes, among other things, making key assumptions for estimating future cash flows and appropriate market multiples.
Management bases its fair value estimates on assumptions they believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ from those estimates. Assessing the fair value of a reporting unit includes, among other things, making key assumptions for estimating future cash flows and appropriate market multiples.
In the near term, as management monitors the above factors, it is possible it may change the revenue and cash flow projections of certain reporting units, which may require the recording of additional goodwill impairment charges.
In the near term, as management monitors the above factors, it is possible it may change the revenue and cash flow projections of certain reporting units, which may require the recording of additional goodwill impairment charges. As described in "Note 4.
Cash Requirements As of December 30, 2023, the Corporation has the following obligations and commitments to make future payments: Purchase Obligations - The Corporation’s purchase obligations include agreements to purchase goods or services that are enforceable, legally binding, and specify all significant terms, including the quantity to be purchased, the price to be paid, and the timing of the purchase.
Cash Requirements As of December 28, 2024, the Corporation has the following obligations and commitments to make future payments: Purchase Obligations - The Corporation’s purchase obligations include agreements to purchase goods or services that are enforceable, legally binding, and specify all significant terms, including the quantity to be purchased, the price to be paid, and the timing of the purchase.
Cash dividends declared and paid per share are as follows: 2023 2022 Dividends per common share $ 1.28 $ 1.27 The last quarterly dividend increase was from $0.31 to $0.32 per common share effective with the June 8, 2022 dividend payment for shareholders of record at the close of business on May 27, 2022.
Cash dividends declared and paid per share are as follows: 2024 2023 Dividends per common share $ 1.31 $ 1.28 The last quarterly dividend increase was from $0.32 to $0.33 per common share effective with the June 12, 2024 dividend payment for shareholders of record at the close of business on May 24, 2024.
The Corporation follows a 52/53-week fiscal year, which ends on the Saturday nearest December 31. Fiscal year 2023 ended on December 30, 2023, fiscal year 2022 ended on December 31, 2022, and fiscal year 2021 ended on January 1, 2022. The financial statements for fiscal years 2023, 2022, and 2021 are on a 52-week basis.
The Corporation follows a 52/53-week fiscal year, which ends on the Saturday nearest December 31. Fiscal year 2024 ended on December 28, 2024, fiscal year 2023 ended on December 30, 2023, and fiscal year 2022 ended on December 31, 2022. The financial statements for fiscal years 2024, 2023, and 2022 are on a 52-week basis.
The average dividend payout percentage for the most recent three-year period has been 73 percent of prior year earnings or 39 percent of prior year cash flow from operating activities. Stock Repurchase - The Corporation’s capital strategy related to stock repurchase is focused on offsetting the dilutive impact of issuances for various compensation-related matters.
The average dividend payout percentage for the most recent three-year period has been 74 percent of prior-year earnings or 36 percent of prior-year cash flow from operating activities. Stock Repurchase - The Corporation’s capital strategy related to stock repurchase is focused on offsetting the dilutive impact of issuances of common stock pursuant to equity awards granted for various compensation-related matters.
Guarantees, Commitments, and Contingencies" in the Notes to Consolidated Financial Statements for further information. Looking Ahead The Corporation continues to navigate near-term uncertainty driven by macroeconomic conditions, including the recent dynamics around housing, cost inflation, and interest rates. However, management remains optimistic about the long-term prospects in the workplace furnishings and residential building products markets.
Looking Ahead The Corporation continues to navigate near-term uncertainty driven by macroeconomic conditions, including the recent dynamics around housing, cost inflation, and interest rates. However, management remains optimistic about the long-term prospects in the workplace furnishings and residential building products markets.
Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements. The Corporation reviews goodwill at the reporting unit level, which refers to components for which discrete financial information is available and regularly reviewed by segment management.
The Corporation reviews goodwill at the reporting unit level, which refers to components for which discrete financial information is available and regularly reviewed by segment management.
In addition, estimates of fair value are impacted by estimates of the market-participant derived weighted average cost of capital. The key to recoverability of goodwill is the forecast of economic conditions and its impact on future revenues, operating profit, and cash flows.
In addition, estimates of fair value are impacted by estimates of the market-participant derived weighted average cost of capital. Changes in this assumption could have a significant effect on the estimated fair value of the reporting unit. The key to recoverability of goodwill is the forecast of economic conditions and its impact on future revenues, operating profit, and cash flows.
Operating and Finance Leases - Operating and finance lease obligations are expected to be approximately $36 million during 2024 and $148 million thereafter. There were no material commitments related to leases which had been signed but not commenced as of the end of 2023. Refer to "Note 14. Leases" in the Notes to Consolidated Financial Statements for additional information.
Post-Retirement Health Care" in the Notes to Consolidated Financial Statements for additional information. Operating and Finance Leases - Operating and finance lease obligations are expected to be approximately $41 million during 2025 and $152 million thereafter. There were no material commitments related to leases which had been signed but not commenced as of the end of 2024.
The decrease was driven by lower volume, partially offset by favorable price-cost, improved net productivity, lower core SG&A, and lower variable compensation. Liquidity and Capital Resources Cash, cash equivalents, and short-term investments totaled $34.5 million at the end of 2023, compared to $19.5 million at the end of 2022.
The increase was driven by improved net productivity, favorable price-cost, lower variable compensation, and favorable product mix, partially offset by lower sales volume. Liquidity and Capital Resources Cash, cash equivalents, and short-term investments totaled $28.9 million at the end of 2024, compared to $34.5 million at the end of 2023.
The prior year included a pre-tax gain of $50.4 million on the sale of Lamex, while the current year included $41.2 million of acquisition costs associated with the Kimball International transaction and $31.0 million of goodwill and intangible asset impairment charges at small workplace furnishings business units.
The prior year included $41.2 million of acquisition costs associated with the Kimball International transaction and $31.0 million of goodwill and intangible asset impairment charges at small workplace furnishings business units.
The current year included $31.0 million in goodwill and intangible asset impairment charges at small workplace furnishings business units and $12.5 million in transaction-related fees and expenses associated with the acquisition of Kimball International.
The prior year included $31.0 million in goodwill and intangible asset impairment charges at small workplace furnishings business units, $12.5 million in Kimball International acquisition-related expenses, and $9.0 million of restructuring costs in connection with the exit of Poppin.
Gross Profit Gross profit as a percentage of net sales increased 360 basis points in 2023 compared to 2022, driven by favorable price-cost, improved net productivity, and the impact of the Kimball International acquisition, partially offset by lower volume in legacy HNI businesses.
Gross Profit Gross profit as a percentage of net sales increased 190 basis points in 2024 compared to 2023, driven by improved net productivity and favorable price-cost, partially offset by lower volume in the legacy HNI businesses. Selling and Administrative Expenses Selling and administrative expenses as a percentage of net sales decreased 90 basis points in 2024 compared to 2023.
Post-Retirement Benefit Plan - Post-retirement benefit plan payments are expected to be approximately $1 million during 2024 and $11 million in aggregate from 2025 through 2033. Refer to "Note 13. Post-Retirement Health Care" in the Notes to Consolidated Financial Statements for additional information.
Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements for additional information. 28 Table of Contents Post-Retirement Benefit Plan - Post-retirement benefit plan payments are expected to be approximately $1 million during 2025 and $11 million in aggregate from 2026 through 2034. Refer to "Note 13.
Sales of Stock - The Corporation records cash flows received from the sale of its common stock held in treasury, primarily in connection with stock option exercises and the HNI Corporation Members’ Stock Purchase Plan. See "Note 10. Accumulated 28 Table of Contents Other Comprehensive Income (Loss) and Shareholders’ Equity" and "Note 11.
Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Consolidated Financial Statements for further information. Sales of Stock - The Corporation records cash flows received from the sale of its common stock held in treasury, primarily in connection with stock option exercises and the HNI Corporation Members’ Stock Purchase Plan.
Additionally, in the current year, the Corporation borrowed $300 million in connection with a term loan agreement entered into on March 31, 2023, as further amended on May 25, 2023, to support funding of the acquisition of Kimball International that closed in June 2023. See "Note 7. Debt" in the Notes to Consolidated Financial Statements for further information.
Additionally, in the prior year, the Corporation borrowed $300 million in connection with a term loan agreement entered into on March 31, 2023, as further amended on May 25, 2023 to support funding of the acquisition of Kimball International.
Estimated purchase obligations total $137 million during 2024 and $30 million thereafter. Debt - Debt principal obligations are approximately $8 million during 2024 and $431 million thereafter. Interest obligations from debt are estimated to be approximately $28 million during 2024 and $74 million thereafter. Refer to "Note 7. Debt" in the Notes to Consolidated Financial Statements for additional information.
Estimated purchase obligations total $116 million during 2025 and $2 million thereafter. Debt - Debt principal obligations are approximately $50 million during 2025 and $296 million thereafter. Interest obligations from debt are estimated to be approximately $18 million during 2025 and $36 million thereafter. Refer to "Note 7. Debt" in the Notes to Consolidated Financial Statements for additional information.
Deferred Compensation - Deferred compensation cash obligations related to legacy HNI plans are expected to be approximately $0.3 million during 2024 and $2.1 million thereafter. Refer to "Note 11. Stock-Based Compensation" in the Notes to Consolidated Financial Statements for additional information. The Corporation also acquired a supplemental employee retirement plan in connection with the Kimball International transaction.
Deferred Compensation - Deferred compensation cash obligations related to legacy HNI plans are expected to be approximately $0.3 million during 2025 and $3.0 million thereafter. Refer to "Note 11. Stock-Based Compensation" in the Notes to Consolidated Financial Statements for additional information.
The project is currently estimated to commence in 2025 with the Corporation’s future commitment totaling approximately $13 million. For the Corporation’s estimated future obligations related to product warranties and self-insured liabilities, refer to "Note 2. Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements. Litigation and Uncertainties See "Note 15.
For the Corporation’s estimated future obligations related to product warranties and self-insured liabilities, refer to "Note 2. Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements. Litigation and Uncertainties See "Note 15. Guarantees, Commitments, and Contingencies" in the Notes to Consolidated Financial Statements for further information.
The Corporation is currently evaluating the impact on the notes to the consolidated financial statements, and expects additional disclosures will be required on adoption. 31 Table of Contents
The ASU will not impact the financial condition, results of operations, or cash flows of the Corporation. The Corporation is currently evaluating the impact to the notes to the consolidated financial statements, and expects additional disclosures will be required on adoption.
Restructuring and Impairment Charges In the current year the Corporation recorded restructuring and impairment charges primarily comprised of $31.0 million of impairments of goodwill and intangible assets at small business units in the workplace furnishings segment as well as $9.8 million of restructuring charges associated with the divestiture of Poppin.
Prior-year charges primarily consisted of $31.0 million of goodwill and intangible asset impairments at small business units in the workplace furnishings segment and $9.8 million of restructuring charges associated with the divestiture of Poppin. See "Note 6. Goodwill and Other Intangible Assets" and "Note 17.
Cash Flow – Financing Activities Debt - The Corporation maintains a revolving credit facility as the primary source of committed funding from which the Corporation finances its planned capital expenditures, strategic initiatives, and seasonal working capital needs. Cash flows included in financing activities represent periodic borrowings and repayments under the revolving credit facility.
Acquisitions and Divestitures" in the Notes to the Consolidated Financial Statements for further information. 27 Table of Contents Cash Flow – Financing Activities Debt - The Corporation maintains a revolving credit facility as the primary source of committed funding from which the Corporation finances its planned capital expenditures, strategic initiatives, and seasonal working capital needs.
Income Taxes The following table summarizes the Corporation’s income tax provision: 2023 2022 Income before income taxes $ 64.8 $ 146.4 Income tax expense $ 15.6 $ 22.5 Effective tax rate 24.1 % 15.4 % The income tax provision reflects a higher rate in 2023 compared to 2022, primarily due to the sale of the Lamex business in the prior year.
Income Taxes The following table summarizes the Corporation’s income tax provision: 2024 2023 Income before income taxes $ 179.3 $ 64.8 Income tax expense $ 39.8 $ 15.6 Effective tax rate 22.2 % 24.1 % The income tax provision reflects a lower rate in 2024 compared to the prior year, primarily due to the impact of non-deductible transaction costs incurred in 2023 in connection with the acquisition of Kimball International.
Finally, the ASU removes the requirement of certain disclosures related to unrecognized tax benefits. The ASU becomes effective for the Corporation beginning with its annual period ending December 2025. The ASU will not impact the financial condition, results of operations, or cash flows of the Corporation.
Additionally, the ASU requires disclosure of pretax income (or loss) and income tax (or benefit) disaggregated by domestic and foreign. Finally, the ASU removes the requirement of certain disclosures related to unrecognized tax benefits. The ASU becomes effective for the Corporation beginning with its annual period ending December 2025.
Dividend - The Corporation is committed to maintaining or modestly growing the quarterly dividend.
Debt" in the Notes to Consolidated Financial Statements for further information. Dividend - The Corporation is committed to maintaining or modestly growing the quarterly dividend.
The prior year included a pre-tax gain of $50.4 million on the sale of Lamex, while the current year included $41.2 million of acquisition costs associated with the Kimball International transaction and $31.0 million of goodwill and intangible asset impairment charges at small workplace furnishings business units.
Net income attributable to the Corporation in 2024 was $139.5 million compared to net income of $49.2 million in 2023. The prior year included $41.2 million of acquisition costs associated with the Kimball International transaction and $31.0 million of goodwill and intangible asset impairment charges at small workplace furnishings business units.
Comparison of Fiscal Year Ended December 31, 2022 with the Fiscal Year Ended January 1, 2022 To review discussion and analysis of the consolidated and segment-level results of operations for the fiscal year ended December 31, 2022 compared with the fiscal year ended January 1, 2022, refer to "Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on February 28, 2023. 26 Table of Contents Workplace Furnishings The following table presents certain results of operations in the workplace furnishings segment: 2023 2022 Change Net sales $ 1,740.3 $ 1,486.2 17.1 % Operating profit $ 68.6 $ 3.4 NM Operating profit % 3.9 % 0.2 % 370 bps Net sales in 2023 for the workplace furnishings segment increased 17.1 percent compared to 2022.
To review discussion and analysis of the consolidated and segment-level results of operations for the fiscal year ended December 30, 2023 compared with the fiscal year ended December 31, 2022, refer to "Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, as filed with the Securities and Exchange Commission on February 27, 2024.
Based on current earnings before interest, taxes, depreciation and amortization, the Corporation can access the full $425 million of borrowing capacity available under the revolving credit facility, which includes the $38.5 million currently outstanding, and maintain compliance with financial covenants under the facility. As of the end of 2023, $4.0 million of cash was held overseas and considered permanently reinvested.
As of December 28, 2024, the Corporation can access the full $425 million of borrowing capacity available under the revolving credit facility, which includes the $45.7 million outstanding as of that date, and maintain compliance with applicable covenants. As of the end of 2024, an immaterial amount of cash was held overseas and considered permanently reinvested.
The Corporation anticipates capital expenditures for 2024 in an estimated range of $90 million to $100 million. Acquisitions and Divestitures - Investing activities in the current year include $369.7 million spent related to the acquisition of Kimball International, and $2.7 million received from the sale of Poppin (net of costs to sell).
The Corporation expects capital expenditures for 2025 to be in the range of $75 million to $85 million. Acquisitions and Divestitures - Investing activities in 2023 included expenditures of $369.7 million to acquire Kimball International, and $2.7 million received from the sale of Poppin (net of costs to sell). See "Note 4.
Cash Flow – Operating Activities Operating activities were a source of $267.5 million of cash in 2023, compared to a source of $81.2 million cash in 2022. The higher cash generation compared to the prior year was primarily due to changes in working capital.
Cash Flow – Operating Activities Operating cash flows were $226.7 million in 2024, compared to $267.5 million cash in 2023. The decrease was driven by higher usage of working capital in the current year. Working capital was a use of cash in 2024, compared to a source of cash in 2023.
The Corporation may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. As of December 30, 2023, $233.5 million was authorized and available for repurchase of shares by the Corporation. See "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Consolidated Financial Statements for further information.
The Corporation may elect to opportunistically purchase additional shares based on excess cash generation and/or share price considerations. In 2024, the Corporation spent $65.8 million to repurchase 1.3 million shares of its common stock. As of December 28, 2024, $167.6 million was authorized and available for repurchase of shares by the Corporation. See "Note 10.
A 53-week year occurs approximately every sixth year. Overview The Corporation has two reportable segments: workplace furnishings and residential building products. The Corporation is a leading global designer and provider of commercial furnishings, and a leading manufacturer and marketer of hearth products. The Corporation utilizes a multi-faceted go-to-market model to deliver value to customers via various brands and selling models.
Overview HNI Corporation is a leading global designer and provider of commercial furnishings, and a leading manufacturer and marketer of hearth products. The Corporation utilizes a multi-faceted go-to-market model to deliver value to customers via various brands and selling models. The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for expansion.
Excluding these items, operating profit as a percentage of sales increased driven by favorable price-cost, favorable impacts from the acquisition of Kimball International, improved net productivity, lower core SG&A, and lower restructuring costs, partially offset by lower volume in the legacy HNI businesses and higher variable compensation.
Excluding these items, operating margin increased year-over-year driven by improved net productivity, favorable price-cost, the benefit of a full year of ownership of Kimball International, and lower restructuring costs, partially offset by lower sales volume in the legacy HNI businesses. Interest Expense, Net Interest expense, net was $27.2 million and $25.5 million in 2024 and 2023, respectively.
Goodwill and Intangible Assets The Corporation evaluates its goodwill for impairment on an annual basis during the fourth quarter (using a valuation date as of the start of the Corporation's fourth quarter) or whenever indicators of impairment exist. Asset impairment charges associated with the Corporation’s goodwill and intangible assets impairment testing are discussed in "Note 6.
Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements. Goodwill The Corporation evaluates its goodwill for impairment on an annual basis during the fourth quarter (using a valuation date as of the start of the Corporation's fourth quarter) or whenever indicators of impairment exist.
Net Income Attributable to HNI Corporation Net income attributable to the Corporation was $49.2 million or $1.09 per diluted share in 2023 compared to $123.9 million or $2.94 per diluted share in 2022.
See "Note 8. Income Taxes" in the Notes to Consolidated Financial Statements for further information relating to income taxes. Net Income Attributable to HNI Corporation Net income attributable to the Corporation was $139.5 million or $2.88 per diluted share in 2024 compared to $49.2 million or $1.09 per diluted share in 2023.
Other Obligations - Other long-term obligations of approximately $18 million are primarily comprised of a put option, interest rate swap, and uncertain tax liabilities. Additionally, in 2022 the Corporation entered into a long-term commitment to purchase solar energy from a local utility to satisfy a portion of the Corporation’s electricity demand in the Muscatine, Iowa area.
Additionally, in 2022 the Corporation entered into a long-term commitment to purchase solar energy from a local utility to satisfy a portion of the Corporation’s electricity demand in the Muscatine, Iowa area. The Corporation’s future commitment to the project totals approximately $13 million. The commencement of the project was initially estimated to be in 2025, but has been delayed.
Interest Expense, Net Interest expense, net was $25.5 million and $8.8 million in 2023 and 2022, respectively. The increase was driven by higher average outstanding borrowings resulting from indebtedness incurred to fund the acquisition of Kimball International and higher interest rates in 2023 on the Corporation’s variable-rate revolving credit facility.
The increase was driven by higher average outstanding borrowings resulting from indebtedness incurred to fund the acquisition of Kimball International.
ASU 2023-09 enhances transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and disaggregation of income taxes paid by jurisdiction. Additionally, the ASU requires disclosure of pretax income (or loss) and income tax (or benefit) disaggregated by domestic and foreign.
Recently Issued Accounting Standards Not Yet Adopted In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 enhances transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and disaggregation of income taxes paid by jurisdiction.
The change was driven by the acquisition of Kimball International, which increased year-over-year sales by $361.4 million and price realization in both the residential building products and workplace furnishings segments, partially offset by lower volume in the legacy HNI businesses due to continued headwinds from macroeconomic conditions.
The change was driven by $228.0 million of favorable impact from the full year of Kimball International sales in 2024 and price realization in both the residential building products and workplace furnishings segments.
Obligations related to this plan are expected to be $4 million during 2024 and $7 million thereafter. Refer to "Note 2. Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements for additional information.
Obligations related to the Kimball International supplemental employee retirement plan are expected to be $4 million during 2025 and $7 million thereafter. Refer to "Note 2.
Management believes recorded trade receivable valuation allowances at the end of 2023 are adequate to cover the risk of potential bad debts. Allowances for non-collectible trade receivables, as a percent of gross trade receivables, totaled 1.4 percent and 1.5 percent at the end of 2023 and 2022, respectively.
Allowances for non-collectible trade receivables, as a percent of gross trade receivables, totaled 0.8 percent and 1.4 percent at the end of 2024 and 2023, respectively. The Corporation’s inventory turns were 7.6 and 7.9 for 2024 and 2023, respectively.
The change was driven by 17.1 percent year-over-year sales growth in the workplace furnishings segment, partially offset by a 20.8 percent decrease in the residential building products segment. The acquisition of Kimball International increased year-over-year sales by $361.4 million and the acquisition of a residential building products company in 2022 increased year-over-year sales by $2.4 million.
Consolidated net sales for 2024 were $2.526 billion, an increase of 3.8 percent compared to net sales of $2.434 billion in the prior year. The change was driven by 8.5 percent year-over-year sales growth in the workplace furnishings segment, partially offset by an 8.0 percent decrease in the residential building products segment.
The impact of the acquisition of Kimball International increased net sales by $361.4 million, while the sale of Lamex in the third quarter of 2022 decreased net sales by $46.9 million compared to the prior year.
The full year of Kimball International sales in 2024 increased net sales by $228.0 million over the prior year, while the divestiture of Poppin in the third quarter of 2023 decreased net sales by $11.1 million year-over-year.
Goodwill and 25 Table of Contents Other Intangible Assets" in the Notes to Consolidated Financial Statements for further information regarding the comparative expense levels for these items. Gain on Sale of Subsidiary In the prior year, the Corporation recorded a pre-tax gain of $50.4 million as a result of the divestiture of Lamex in July 2022.
Summary of Significant Accounting Policies" and "Note 6. Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements for further information regarding the comparative expense levels for these items.
Residential Building Products The following table presents certain results of operations in the residential building products segment: 2023 2022 Change Net sales $ 693.7 $ 875.6 (20.8 %) Operating profit $ 116.6 $ 158.7 (26.5 %) Operating profit % 16.8 % 18.1 % -130 bps Net sales in 2023 for the residential building products segment decreased 20.8 percent compared to 2022, driven by lower volume in both the new construction and existing home channels as a result of housing market weakness and reduced home remodeling activity due to higher interest rates and broader macroeconomic concerns, partially offset by price realization.
Excluding these items, operating income as a percentage of sales increased driven by improved net productivity, the benefit of a full year of Kimball International ownership in 2024, and favorable price-cost, partially offset by lower sales volume in the legacy HNI businesses. 26 Table of Contents Residential Building Products The following table presents certain results of operations in the residential building products segment: 2024 2023 Change Net sales $ 638.4 $ 693.7 (8.0 %) Operating income $ 110.8 $ 116.6 (5.0 %) Operating income % 17.4 % 16.8 % 60 bps Net sales in 2024 for the residential building products segment decreased 8.0 percent compared to 2023.
The prior year also included expenses of $8.0 million associated with a company-wide cost reduction initiative. Selling and administrative expenses include freight expense for shipments to customers, research and development costs, and amortization of intangible assets. Refer to "Note 2. Summary of Significant Accounting Policies" and "Note 6.
The decrease was driven by $41.2 million of acquisition-related expenses incurred in the prior year and acquisition-related cost synergies in 2024, partially offset by lower sales volume in the legacy HNI businesses. Selling and administrative expenses include freight expense for shipments to customers, research and development costs, and amortization of intangible assets. Refer to "Note 2.
Excluding the effects of these transactions, segment sales were down 4.2 percent, with lower volume across most customer segments in the legacy HNI workplace businesses, partially offset by price realization.
Excluding the impact of these transactions, segment sales were down 4.0 percent driven by lower demand across most customer channels, partially offset by improved volume in the hospitality sector and price realization. Operating income as a percentage of net sales increased 510 basis points in 2024 compared to 2023.
Acquisitions and Divestitures" to the consolidated financial statements, on June 1, 2023, the Corporation completed its acquisition of Kimball International in a transaction valued at $503.7 million, resulting in the recognition of intangible assets with aggregate value of approximately $110 million. The largest intangible asset acquired was customer lists valued at $47 million.
Acquisitions and Divestitures" in the Notes to Consolidated Financial Statements, in 2023 the Corporation acquired Kimball International in a transaction valued at $504 million, resulting in the addition of $164 million of goodwill. Of this goodwill, $156 million was assigned to the new Kimball Workplace & Health reporting unit.
The Corporation’s inventory turns were 7.9 and 8.4 for 2023 and 2022, respectively. Cash Flow – Investing Activities Capital Expenditures - Capital expenditures, including capitalized software, were $79.1 million in 2023 and $68.4 million in 2022. The increase in capital expenditures over the prior year was driven by the addition of Kimball International.
Cash Flow – Investing Activities Capital Expenditures - Capital expenditures, including capitalized software, were $52.9 million in 2024 and $79.1 million in 2023. In the prior year, the Corporation had higher expenditures related to a manufacturing facility expansion, which did not recur in the current year.
The ASU becomes effective for the Corporation beginning with its annual period ending December 2024, and interim periods beginning with first quarter of 2025. The ASU will not impact the financial condition, results of operations, or cash flows of the Corporation.
Disclosures are required to be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. The ASU becomes effective for the Corporation for its fiscal year ending December 2027, and for interim periods beginning with the first fiscal quarter of 2028, and may be applied either prospectively or retrospectively.
Removed
The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for expansion. In 2023, significant developments included the second quarter acquisition of Kimball International in a cash and stock transaction valued at approximately $503.7 million, and the subsequent divestiture of Poppin Furniture, Inc, a business unit of Kimball International ("Poppin"), during the third quarter.
Added
A 53-week year occurs approximately every sixth year.
Removed
In 2022, the Corporation completed its divestiture of its China- and Hong Kong-based Lamex office furniture business ("Lamex"), which was a component of the workplace furnishings segment. See "Note 4. Acquisitions and Divestitures" in the Notes to Consolidated Financial Statements for more details on the Kimball International acquisition, the Poppin divestiture, the Lamex divestiture, and other related information.
Added
The Corporation has two reportable segments: workplace furnishings and residential building products. In 2024, the Corporation maintained focus on its strategic priorities. In workplace furnishings, ongoing integration of the Kimball International business and related synergies, expanded utilization of the new factory in Mexico, and the previously announced manufacturing optimization initiative are enabling the segment's profit transformation plan.
Removed
These acquisition and divestiture transactions affect the comparability of results between years. Consolidated net sales for 2023 were $2.434 billion, an increase of 3.1 percent compared to net sales of $2.362 billion in the prior year.
Added
These actions drove strong growth in workplace furnishings operating margin for the year, despite demand variability driven by macroeconomic conditions and U.S. election ambiguity that particularly impacted the latter portion of the year.
Removed
The divestiture of Lamex in 2022 reduced year-over-year sales by $46.9 million. Net income attributable to the Corporation in 2023 was $49.2 million compared to net income of $123.9 million in 2022.
Added
The residential business products business continued to navigate cyclical housing market softness and inconsistent demand trends resulting from interest rate volatility, cost inflation, and overall consumer affordability issues. In spite of market headwinds, the business remained solidly profitable and committed to investing in capabilities to support long-term growth.
Removed
Excluding these items, net income increased in the current year driven by favorable price-cost, improved net productivity, favorable impacts from the acquisition of Kimball International, and lower core selling and administrative expenses ("SG&A"), partially offset by lower volume in the legacy HNI businesses (excluding Kimball International), higher variable compensation, and increased interest expense. See "Note 6.
Added
The full year of Kimball International sales in 2024 increased year-over-year sales by $228.0 million. The divestiture of Poppin, Inc. ("Poppin") in 2023 reduced year-over-year sales by $11.1 million. Poppin had been acquired in the prior year as part of the Kimball International transaction and was a component of the workplace furnishings segment. See "Note 4.
Removed
Goodwill and Other Intangible Assets" and "Note 17.
Added
Acquisitions and Divestitures" in the Notes to Consolidated Financial Statements for more details on the Kimball International acquisition and the Poppin divestiture. These transactions affect the comparability of results between years. The references below to "legacy" HNI businesses refer to the Corporation's businesses excluding the acquisition and impact of Kimball International.
Removed
Also included in the sales results for the current year is a $46.9 million unfavorable impact from the divestiture of Lamex in 2022, and a $2.4 million favorable impact from the acquisition of a residential building products business in 2022.
Added
These factors were partially offset by lower volume in the legacy HNI businesses due to soft market conditions and an $11.1 million decrease in net sales from the divestiture of Poppin in the third quarter of 2023.
Removed
Favorable price-cost was attributable to the Corporation’s ability to implement price increases over the past several quarters in response to inflationary pressures.
Added
Restructuring and Impairment Charges In the current year the Corporation recorded restructuring charges of $6.2 million primarily in connection with factory consolidation initiatives in the workplace furnishings segment and reorganization efforts in the residential building products 25 Table of Contents segment.
Removed
Selling and Administrative Expenses Selling and administrative expenses as a percentage of net sales increased 280 basis points in 2023 compared to 2022, driven by $41.2 million of acquisition-related fees and expenses along with lower volume in legacy HNI businesses and higher variable compensation, partially offset by lower core SG&A and dilution from price realization.
Added
Restructuring and Impairment" in the Notes to Consolidated Financial Statements for further information regarding restructuring and impairment charges. Operating Income For 2024, operating margin increased 450 basis points compared to 2023.
Removed
In the prior year, the Corporation recorded restructuring and impairment charges of $6.7 million primarily related to efforts to drive business simplification and improve long-term profitability in the workplace furnishings segment, including the restructuring of an eCommerce business. See "Note 17. Restructuring and Impairment" in the Notes to Consolidated Financial Statements for further information relating to these costs.
Added
Workplace Furnishings The following table presents certain results of operations in the workplace furnishings segment: 2024 2023 Change Net sales $ 1,888.0 $ 1,740.3 8.5 % Operating income $ 169.1 $ 68.6 146 % Operating income % 9.0 % 3.9 % 510 bps Net sales in 2024 for the workplace furnishings segment increased 8.5 percent compared to 2023.
Removed
Operating Income For 2023, operating income as a percentage of net sales decreased 290 basis points compared to 2022.
Added
Remodel/retrofit sales volume decreased at a higher rate than new construction, with both channels adversely impacted by housing market weakness and broader macroeconomic volatility. Operating income as a percentage of net sales increased 60 basis points in 2024 compared to 2023.
Removed
Excluding these items, operating income as a percentage of net sales increased year-over-year driven by favorable price-cost, improved net productivity, favorable impacts from the acquisition of Kimball International, and lower core selling, general, and administrative expenses, partially offset by lower volume at legacy HNI businesses and higher variable compensation.
Added
The current year working capital cash usage was consistent with normal historical patterns, while working capital activity in 2023 did not adhere to this pattern due to the impact and timing of the acquisition of Kimball International.
Removed
This transaction created valuation allowance adjustment tax benefits related to existing deferred tax assets, as well as basis differences, which significantly reduced the Corporation’s effective tax rate in the prior year. See "Note 8. Income Taxes" in the Notes to Consolidated Financial Statements for further information relating to income taxes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe market price of plastics and textiles, in particular, are sensitive to the cost of oil and natural gas. All of these materials are increasingly impacted by global market conditions. The Corporation works to offset these increased costs through global sourcing initiatives, product re-engineering, and price increases on its products.
Biggest changeThe most significant material purchases and cost for the Corporation are for steel, plastics, textiles, wood particleboard, and cartoning. The market price of plastics and textiles, in particular, are sensitive to the cost of oil and natural gas. All of these materials are increasingly impacted by global market conditions.
Based on the Corporation’s variable-rate debt balance outstanding at December 30, 2023, a hypothetical 100 basis point change in the applicable interest rates would not have a material impact on the interest expense incurred by the Corporation. For information related to the Corporation’s long-term debt, refer to "Note 7. Debt" in the Notes to Consolidated Financial Statements.
Based on the Corporation’s variable-rate debt balance outstanding at December 28, 2024, a hypothetical 100 basis point change in the applicable interest rates would not have a material impact on the interest expense incurred by the Corporation. For information related to the Corporation’s long-term debt, refer to "Note 7. Debt" in the Notes to Consolidated Financial Statements.
Under the terms of this interest rate swap, the Corporation pays a fixed rate of 4.7 percent instead of SOFR. As of December 30, 2023, the Corporation had $200 million of borrowings under the term loan which were not covered by the interest rate swap agreement.
Under the terms of this interest rate swap, the Corporation pays a fixed rate of 4.7 percent instead of SOFR. As of December 28, 2024, the Corporation had $100 million of borrowings under the term loan which were not covered by the interest rate swap agreement.
As of December 30, 2023, the Corporation had $39 million of debt outstanding under the Corporation’s $425 million revolving credit facility, and $300 million of debt outstanding under a term loan agreement, both of which bore variable interest based on the Secured Overnight Financing Rate ("SOFR") and are subject to market risk from interest rate fluctuations.
As of December 28, 2024, the Corporation had $46 million of debt outstanding under the Corporation’s $425 million revolving credit facility, and $200 million of debt outstanding under a term loan agreement, both of which bore variable interest based on the Secured Overnight Financing Rate ("SOFR") and are subject to market risk from interest rate fluctuations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk During the normal course of business, the Corporation is subjected to market risk associated with interest rate movements. Interest rate risk arises from variable interest debt obligations. The Corporation terminated its prior interest rate swap agreement during 2022, and entered into a new interest rate swap agreement in November 2023.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk During the normal course of business, the Corporation is subject to market risk associated with interest rate movements. Interest rate risk arises from variable interest debt obligations.
Periodically margins are negatively impacted due to the lag between cost increases and the Corporation’s ability to increase its prices. The Corporation believes future market price increases on its key direct materials and assembly components are likely. Consequently, it views the prospect of such increases as a risk to the business.
The Corporation works to offset these increased costs through global sourcing initiatives, product re-engineering, and price increases on its products. Periodically margins are negatively impacted due to the lag between cost increases and the Corporation’s ability to increase its prices. The Corporation believes future market price increases on its key direct materials and assembly components are likely.
For information related to the Corporation’s interest rate swap activity, refer to "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Consolidated Financial Statements. The Corporation currently does not have significant foreign currency exposure.
For information related to the Corporation’s interest rate swap activity, refer to "Note 10. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Consolidated Financial Statements. The Corporation's results of operations may be affected by foreign currency exchange fluctuations related to its business conducted in countries other than the U.S.
The Corporation is exposed to risks arising from price changes and/or tariffs for certain direct materials and assembly components used in its operations. The most significant material purchases and cost for the Corporation are for steel, plastics, textiles, wood particleboard, and cartoning.
As a result, HNI has not historically hedged its foreign currency risk, but continues to prospectively monitor the potential exposure. The Corporation is exposed to risks arising from price changes and/or tariffs for certain direct materials and assembly components used in its operations.
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The primary currency exposure involves the Mexican peso against the U.S. dollar. Changes in foreign currency rates have not historically had a material effect on HNI's consolidated financial results due to the relative size and scale of foreign operations compared to the Corporation's business as a whole.
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Consequently, it views the prospect of such increases as a risk to the business.

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