UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | |
FORM 10-Q | |
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2018 | |
OR | |
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Commission File Number: 1-14225 | |
HNI Corporation | |
Iowa (State of Incorporation) | 42-0617510 (I.R.S. Employer No.) |
600 East Second Street P. O. Box 1109 Muscatine, Iowa 52761-0071 (563) 272-7400 | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | |
YES x NO o | |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). | |
YES x NO o | |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. | |
Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | |
YES o NO x | |
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. | |
Common Stock, $1 Par Value | Outstanding as of March 31, 2018 43,529,550 |
HNI Corporation and Subsidiaries | ||
Quarterly Report on Form 10-Q | ||
Table of Contents | ||
PART I. FINANCIAL INFORMATION | ||
Page | ||
Item 1. | Financial Statements (Unaudited) | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | Defaults Upon Senior Securities - None | - |
Item 4. | Mine Safety Disclosures - Not Applicable | - |
Item 5. | Other Information - None | - |
Item 6. | ||
HNI Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In thousands, except share and per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net sales | $ | 505,069 | $ | 477,667 | |||
Cost of sales | 328,150 | 303,944 | |||||
Gross profit | 176,919 | 173,723 | |||||
Selling and administrative expenses | 171,895 | 163,666 | |||||
Restructuring charges | 1,338 | 2,123 | |||||
Operating income | 3,686 | 7,934 | |||||
Interest income | 113 | 71 | |||||
Interest expense | 2,337 | 1,046 | |||||
Income before income taxes | 1,462 | 6,959 | |||||
Income tax expense (benefit) | (999 | ) | 2,178 | ||||
Net income | 2,461 | 4,781 | |||||
Less: Net income (loss) attributable to non-controlling interest | (49 | ) | (56 | ) | |||
Net income attributable to HNI Corporation | $ | 2,510 | $ | 4,837 | |||
Average number of common shares outstanding – basic | 43,359,971 | 44,050,040 | |||||
Net income attributable to HNI Corporation per common share – basic | $ | 0.06 | $ | 0.11 | |||
Average number of common shares outstanding – diluted | 44,134,142 | 45,452,664 | |||||
Net income attributable to HNI Corporation per common share – diluted | $ | 0.06 | $ | 0.11 | |||
Foreign currency translation adjustments | $ | 1 | $ | 345 | |||
Change in unrealized gains (losses) on marketable securities, net of tax | (79 | ) | 18 | ||||
Change in derivative financial instruments, net of tax | 1,027 | 264 | |||||
Other comprehensive income (loss), net of tax | 949 | 627 | |||||
Comprehensive income | 3,410 | 5,408 | |||||
Less: Comprehensive income (loss) attributable to non-controlling interest | (49 | ) | (56 | ) | |||
Comprehensive income attributable to HNI Corporation | $ | 3,459 | $ | 5,464 |
HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) | |||||||
(Unaudited) | |||||||
March 31, 2018 | December 30, 2017 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 28,813 | $ | 23,348 | |||
Short-term investments | 1,831 | 2,015 | |||||
Receivables | 223,043 | 258,551 | |||||
Inventories | 158,688 | 155,683 | |||||
Prepaid expenses and other current assets | 47,706 | 49,283 | |||||
Total Current Assets | 460,081 | 488,880 | |||||
Property, Plant, and Equipment: | |||||||
Land and land improvements | 28,437 | 28,593 | |||||
Buildings | 285,493 | 306,137 | |||||
Machinery and equipment | 550,565 | 556,571 | |||||
Construction in progress | 40,973 | 39,788 | |||||
905,468 | 931,089 | ||||||
Less accumulated depreciation | 530,528 | 540,768 | |||||
Net Property, Plant, and Equipment | 374,940 | 390,321 | |||||
Goodwill and Other Intangible Assets | 486,711 | 490,892 | |||||
Deferred Income Taxes | 193 | 193 | |||||
Other Assets | 23,214 | 21,264 | |||||
Total Assets | $ | 1,345,139 | $ | 1,391,550 |
HNI Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except par value) | |||||||
(Unaudited) | |||||||
March 31, 2018 | December 30, 2017 | ||||||
Liabilities and Equity | |||||||
Current Liabilities: | |||||||
Accounts payable and accrued expenses | $ | 347,029 | $ | 450,128 | |||
Current maturities of long-term debt | 78,964 | 36,648 | |||||
Current maturities of other long-term obligations | 1,862 | 2,927 | |||||
Total Current Liabilities | 427,855 | 489,703 | |||||
Long-Term Debt | 250,000 | 240,000 | |||||
Other Long-Term Liabilities | 77,112 | 70,409 | |||||
Deferred Income Taxes | 75,931 | 76,861 | |||||
Equity: | |||||||
HNI Corporation shareholders' equity: | |||||||
Capital Stock: | |||||||
Preferred stock - $1 par value, authorized 2,000 shares, no shares outstanding | — | — | |||||
Common stock - $1 par value, authorized 200,000 shares, outstanding: | |||||||
March 31, 2018 – 43,530 shares; | |||||||
December 30, 2017 – 43,354 shares | 43,530 | 43,354 | |||||
Additional paid-in capital | 20,124 | 7,029 | |||||
Retained earnings | 452,748 | 467,296 | |||||
Accumulated other comprehensive income (loss) | (2,662 | ) | (3,611 | ) | |||
Total HNI Corporation shareholders' equity | 513,740 | 514,068 | |||||
Non-controlling interest | 501 | 509 | |||||
Total Equity | 514,241 | 514,577 | |||||
Total Liabilities and Equity | $ | 1,345,139 | $ | 1,391,550 |
HNI Corporation and Subsidiaries Consolidated Statements of Equity (In thousands, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total Shareholders’ Equity | ||||||||||||||||||
Balance, December 30, 2017 | $ | 43,354 | $ | 7,029 | $ | 467,296 | $ | (3,611 | ) | $ | 509 | $ | 514,577 | ||||||||||
Comprehensive income: | |||||||||||||||||||||||
Net income (loss) | — | — | 2,510 | — | (49 | ) | 2,461 | ||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | 949 | — | 949 | |||||||||||||||||
Change in ownership of non-controlling interest | — | — | (41 | ) | — | 41 | — | ||||||||||||||||
Cash dividends; $0.285 per share | — | — | (12,381 | ) | — | — | (12,381 | ) | |||||||||||||||
Common shares – treasury: | |||||||||||||||||||||||
Shares purchased | (153 | ) | (1,175 | ) | (4,636 | ) | — | — | (5,964 | ) | |||||||||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 329 | 14,270 | — | — | — | 14,599 | |||||||||||||||||
Balance, March 31, 2018 | $ | 43,530 | $ | 20,124 | $ | 452,748 | $ | (2,662 | ) | $ | 501 | $ | 514,241 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total Shareholders’ Equity | ||||||||||||||||||
Balance, December 31, 2016 | $ | 44,079 | $ | — | $ | 461,524 | $ | (5,000 | ) | $ | 406 | $ | 501,009 | ||||||||||
Comprehensive income: | |||||||||||||||||||||||
Net income (loss) | — | — | 4,837 | — | (56 | ) | 4,781 | ||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | 627 | — | 627 | |||||||||||||||||
Change in ownership of non-controlling interest | — | — | — | — | — | — | |||||||||||||||||
Cash dividends; $0.275 per share | — | — | (12,132 | ) | — | — | (12,132 | ) | |||||||||||||||
Common shares – treasury: | |||||||||||||||||||||||
Shares purchased | (234 | ) | (6,602 | ) | (4,839 | ) | — | — | (11,675 | ) | |||||||||||||
Shares issued under Members' Stock Purchase Plan and stock awards, net of tax | 395 | 18,455 | — | — | — | 18,850 | |||||||||||||||||
Balance, April 1, 2017 | $ | 44,240 | $ | 11,853 | $ | 449,390 | $ | (4,373 | ) | $ | 350 | $ | 501,460 |
HNI Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net Cash Flows From (To) Operating Activities: | |||||||
Net income | $ | 2,461 | $ | 4,781 | |||
Non-cash items included in net income: | |||||||
Depreciation and amortization | 18,445 | 18,839 | |||||
Other post-retirement and post-employment benefits | 447 | 398 | |||||
Stock-based compensation | 3,712 | 4,671 | |||||
Deferred income taxes | (1,196 | ) | 646 | ||||
(Gain) loss on sale and retirement of long-lived assets, net | 808 | 784 | |||||
Amortization of deferred gain on sale leaseback transaction | (43 | ) | — | ||||
Other – net | (699 | ) | (1,890 | ) | |||
Net increase (decrease) in operating assets and liabilities, net of divestitures | (55,135 | ) | (57,899 | ) | |||
Increase (decrease) in other liabilities | 447 | (2,339 | ) | ||||
Net cash flows from (to) operating activities | (30,753 | ) | (32,009 | ) | |||
Net Cash Flows From (To) Investing Activities: | |||||||
Capital expenditures | (12,383 | ) | (25,072 | ) | |||
Proceeds from sale of property, plant, and equipment | 18,353 | 76 | |||||
Capitalized software | (3,948 | ) | (7,704 | ) | |||
Purchase of investments | (605 | ) | (1,539 | ) | |||
Sales or maturities of investments | 650 | 1,611 | |||||
Other – net | 794 | 1,510 | |||||
Net cash flows from (to) investing activities | 2,861 | (31,118 | ) | ||||
Net Cash Flows From (To) Financing Activities: | |||||||
Payments of long-term debt and other financing | (104,573 | ) | (68,579 | ) | |||
Proceeds from long-term debt | 155,047 | 146,331 | |||||
Dividends paid | (12,381 | ) | (12,132 | ) | |||
Purchase of HNI Corporation common stock | (7,345 | ) | (11,266 | ) | |||
Proceeds from sales of HNI Corporation common stock | 2,764 | 1,798 | |||||
Withholding related to net share settlements of equity based awards | (155 | ) | (209 | ) | |||
Net cash flows from (to) financing activities | 33,357 | 55,943 | |||||
Net increase (decrease) in cash and cash equivalents | 5,465 | (7,184 | ) | ||||
Cash and cash equivalents at beginning of period | 23,348 | 36,312 | |||||
Cash and cash equivalents at end of period | $ | 28,813 | $ | 29,128 |
Three Months Ended | ||||||||
Segment | March 31, 2018 | April 1, 2017 | ||||||
Supplies-driven channel | Office Furniture | $ | 191,228 | $ | 178,964 | |||
Contract channel | Office Furniture | 189,687 | 181,017 | |||||
Hearth | Hearth Products | 124,154 | 117,686 | |||||
Net sales | $ | 505,069 | $ | 477,667 |
March 31, 2018 | December 30, 2017 | ||||||
Trade receivables (1) | $ | 225,283 | $ | 260,455 | |||
Contract assets (current) (2) | $ | 483 | $ | 300 | |||
Contract assets (long-term) (3) | $ | 4,147 | $ | 2,350 | |||
Contract liabilities (4) | $ | 33,103 | $ | 54,295 |
Contract assets increase (decrease) | Contract liabilities (increase) decrease | ||||||
Contract assets recognized | $ | 2,100 | $ | — | |||
Reclassification of contract assets to contra revenue | (120 | ) | — | ||||
Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied | (28,153 | ) | |||||
Contract liabilities paid | — | 45,326 | |||||
Cash received in advance and not recognized as revenue | — | (20,806 | ) | ||||
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied | — | 24,179 | |||||
Impact of business combination | — | 646 | |||||
Net change | $ | 1,980 | $ | 21,192 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Cost of sales - accelerated depreciation | $ | — | $ | 4,199 | |||
Restructuring charges | 1,338 | 2,123 | |||||
Total restructuring costs | $ | 1,338 | $ | 6,322 |
Severance Costs | Facility Exit Costs & Other | Total | |||||||||
Restructuring allowance as of December 30, 2017 | $ | 1,343 | $ | 516 | $ | 1,859 | |||||
Restructuring charges | 74 | 1,264 | 1,338 | ||||||||
Cash payments | (1,333 | ) | (1,724 | ) | (3,057 | ) | |||||
Restructuring allowance as of March 31, 2018 | $ | 84 | $ | 56 | $ | 140 |
(In thousands) | March 31, 2018 | December 30, 2017 | |||||
Finished products | $ | 98,844 | $ | 101,715 | |||
Materials and work in process | 87,226 | 81,202 | |||||
LIFO allowance | (27,382 | ) | (27,234 | ) | |||
Total inventories | $ | 158,688 | $ | 155,683 |
March 31, 2018 | December 30, 2017 | ||||||
Goodwill | $ | 279,480 | $ | 279,505 | |||
Definite-lived intangible assets | 178,078 | 182,186 | |||||
Indefinite-lived intangible assets | 29,153 | 29,201 | |||||
Total goodwill and other intangible assets | $ | 486,711 | $ | 490,892 |
Office Furniture | Hearth Products | Total | |||||||||
Balance as of December 30, 2017 | |||||||||||
Goodwill | $ | 137,845 | $ | 183,199 | $ | 321,044 | |||||
Accumulated impairment losses | (41,396 | ) | (143 | ) | (41,539 | ) | |||||
Net goodwill balance as of December 30, 2017 | 96,449 | 183,056 | 279,505 | ||||||||
Foreign currency translation adjustment | (25 | ) | — | (25 | ) | ||||||
Balance as of March 31, 2018 | |||||||||||
Goodwill | 137,820 | 183,199 | 321,019 | ||||||||
Accumulated impairment losses | (41,396 | ) | (143 | ) | (41,539 | ) | |||||
Net goodwill balance as of March 31, 2018 | $ | 96,424 | $ | 183,056 | $ | 279,480 |
March 31, 2018 | December 30, 2017 | ||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Patents | $ | 40 | $ | 28 | $ | 12 | $ | 40 | $ | 26 | $ | 14 | |||||||||||
Software | 168,612 | 38,690 | 129,922 | 167,105 | 34,792 | 132,313 | |||||||||||||||||
Trademarks and trade names | 7,564 | 2,226 | 5,338 | 7,564 | 2,061 | 5,503 | |||||||||||||||||
Customer lists and other | 105,871 | 63,065 | 42,806 | 106,090 | 61,734 | 44,356 | |||||||||||||||||
Net definite-lived intangible assets | $ | 282,087 | $ | 104,009 | $ | 178,078 | $ | 280,799 | $ | 98,613 | $ | 182,186 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Capitalized software | $ | 4,167 | $ | 1,340 | |||
Other definite-lived intangibles | $ | 1,688 | $ | 1,774 |
2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||
Amortization expense | $ | 23.1 | $ | 22.1 | $ | 21.2 | $ | 20.2 | $ | 18.3 |
March 31, 2018 | December 30, 2017 | ||||||
Trademarks and trade names | $ | 29,153 | $ | 29,201 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Balance at beginning of period | $ | 15,388 | $ | 15,250 | |||
Accruals for warranties issued during period | 5,992 | 5,540 | |||||
Adjustments related to pre-existing warranties | 68 | (116 | ) | ||||
Settlements made during the period | (6,010 | ) | (5,548 | ) | |||
Balance at end of period | $ | 15,438 | $ | 15,126 |
March 31, 2018 | December 30, 2017 | ||||||
Current - in the next twelve months | $ | 9,512 | $ | 9,524 | |||
Long-term - beyond one year | 5,926 | 5,864 | |||||
Total estimated settlements | $ | 15,438 | $ | 15,388 |
March 31, 2018 | December 30, 2017 | ||||||
Revolving credit facility with interest at a variable rate (March 31, 2018 - 3.0%; December 30, 2017 - 2.7%) | $ | 328,000 | $ | 267,500 | |||
Other amounts | 964 | 9,148 | |||||
Total debt | 328,964 | 276,648 | |||||
Less: Current maturities of long-term debt | 78,964 | 36,648 | |||||
Long-term debt | $ | 250,000 | $ | 240,000 |
• | a consolidated interest coverage ratio (as defined in the credit agreement) of not less than 4.0 to 1.0, based upon the ratio of (a) consolidated EBITDA for the last four fiscal quarters to (b) the sum of consolidated interest charges; and |
• | a consolidated leverage ratio (as defined in the credit agreement) of not greater than 3.5 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness to (b) consolidated EBITDA for the last four fiscal quarters. |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Income before income taxes | $ | 1,462 | $ | 6,959 | |||
Income tax expense (benefit) | $ | (999 | ) | $ | 2,178 | ||
Effective tax rate | (66.1 | %) | 31.0 | % |
Fair value as of measurement date | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
Balance as of March 31, 2018 | |||||||||||||||
Cash and cash equivalents (including money market funds) (1) | $ | 28,813 | $ | 28,813 | $ | — | $ | — | |||||||
Government securities (2) | $ | 6,582 | $ | — | $ | 6,582 | $ | — | |||||||
Corporate bonds (2) | $ | 5,757 | $ | — | $ | 5,757 | $ | — | |||||||
Derivative financial instruments (3) | $ | 4,715 | $ | — | $ | 4,715 | $ | — | |||||||
Variable-rate debt obligations (4) | $ | 328,000 | $ | — | $ | 328,000 | $ | — | |||||||
Deferred stock-based compensation (5) | $ | 8,649 | $ | — | $ | 8,649 | $ | — | |||||||
Balance as of December 30, 2017 | |||||||||||||||
Cash and cash equivalents (including money market funds) (1) | $ | 23,348 | $ | 23,348 | $ | — | $ | — | |||||||
Government securities (2) | $ | 6,345 | $ | — | $ | 6,345 | $ | — | |||||||
Corporate bonds (2) | $ | 6,149 | $ | — | $ | 6,149 | $ | — | |||||||
Derivative financial instruments (3) | $ | 3,354 | $ | — | $ | 3,354 | $ | — | |||||||
Variable-rate debt obligations (4) | $ | 267,500 | $ | — | $ | 267,500 | $ | — | |||||||
Deferred stock-based compensation (5) | $ | 8,885 | $ | — | $ | 8,885 | $ | — |
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Pension and Post-retirement Liabilities | Derivative Financial Instruments | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||
Balance as of December 30, 2017 | $ | 31 | $ | (132 | ) | $ | (5,630 | ) | $ | 2,120 | $ | (3,611 | ) | |||||||
Other comprehensive income (loss) before reclassifications | 1 | (100 | ) | — | 1,476 | 1,377 | ||||||||||||||
Tax (expense) or benefit | — | 21 | — | (362 | ) | (341 | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | — | — | — | (87 | ) | (87 | ) | |||||||||||||
Balance as of March 31, 2018 | $ | 32 | $ | (211 | ) | $ | (5,630 | ) | $ | 3,147 | $ | (2,662 | ) |
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Pension and Post-retirement Liabilities | Derivative Financial Instruments | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||
Balance as of December 31, 2016 | $ | (1,188 | ) | $ | (105 | ) | $ | (5,167 | ) | $ | 1,460 | $ | (5,000 | ) | ||||||
Other comprehensive income (loss) before reclassifications | 345 | 27 | — | 226 | 598 | |||||||||||||||
Tax (expense) or benefit | — | (9 | ) | — | (83 | ) | (92 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | — | — | — | 121 | 121 | |||||||||||||||
Balance as of April 1, 2017 | $ | (843 | ) | $ | (87 | ) | $ | (5,167 | ) | $ | 1,724 | $ | (4,373 | ) |
Three Months Ended | ||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | Affected Line Item in the Statement Where Net Income is Presented | March 31, 2018 | April 1, 2017 | |||||
Derivative financial instruments | ||||||||
Interest rate swap | Interest (expense) or income | $ | 115 | $ | (192 | ) | ||
Tax (expense) or benefit | (28 | ) | 71 | |||||
Net of tax | $ | 87 | $ | (121 | ) |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Shares repurchased | 152,822 | 234,375 | |||||
Cash purchase price | $ | (5,964 | ) | $ | (11,675 | ) | |
Purchases unsettled as of quarter end | — | 409 | |||||
Prior year purchases settled in current year | (1,381 | ) | — | ||||
Shares repurchased per cash flow | $ | (7,345 | ) | $ | (11,266 | ) |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Common shares | $ | 0.285 | $ | 0.275 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Numerator: | |||||||
Numerator for both basic and diluted EPS attributable to HNI Corporation net income | $ | 2,510 | $ | 4,837 | |||
Denominators: | |||||||
Denominator for basic EPS weighted-average common shares outstanding | 43,360 | 44,050 | |||||
Potentially dilutive shares from stock-based compensation plans | 774 | 1,403 | |||||
Denominator for diluted EPS | 44,134 | 45,453 | |||||
Earnings per share – basic | $ | 0.06 | $ | 0.11 | |||
Earnings per share – diluted | $ | 0.06 | $ | 0.11 |
Three Months Ended | |||||
March 31, 2018 | April 1, 2017 | ||||
Common stock equivalents excluded because their inclusion would be anti-dilutive | 1,226 | 616 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Compensation cost | $ | 3,712 | $ | 4,671 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Stock options | $ | 6,611 | $ | 7,206 |
Unrecognized Compensation Expense (in thousands) | Weighted-Average Remaining Service Period (years) | ||||
Non-vested stock options | $ | 5,543 | 1.3 | ||
Non-vested restricted stock units | $ | 238 | 0.7 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Service cost | $ | 213 | $ | 185 | |||
Interest cost | 197 | 206 | |||||
Amortization of net (gain) loss | 37 | 7 | |||||
Net periodic post-retirement benefit cost | $ | 447 | $ | 398 |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net Sales: | |||||||
Office furniture | $ | 380,915 | $ | 359,981 | |||
Hearth products | 124,154 | 117,686 | |||||
Total | $ | 505,069 | $ | 477,667 | |||
Income Before Income Taxes: | |||||||
Office furniture | $ | (387 | ) | $ | 6,444 | ||
Hearth products | 17,114 | 11,811 | |||||
General corporate | (15,265 | ) | (11,296 | ) | |||
Total | $ | 1,462 | $ | 6,959 | |||
Depreciation and Amortization Expense: | |||||||
Office furniture | $ | 10,986 | $ | 12,885 | |||
Hearth products | 1,962 | 3,488 | |||||
General corporate | 5,497 | 2,466 | |||||
Total | $ | 18,445 | $ | 18,839 | |||
Capital Expenditures (including capitalized software): | |||||||
Office furniture | $ | 11,577 | $ | 21,020 | |||
Hearth products | 2,938 | 2,078 | |||||
General corporate | 1,816 | 9,678 | |||||
Total | $ | 16,331 | $ | 32,776 | |||
As of March 31, 2018 | As of December 30, 2017 | ||||||
Identifiable Assets: | |||||||
Office furniture | $ | 787,106 | $ | 821,767 | |||
Hearth products | 344,653 | 347,189 | |||||
General corporate | 213,380 | 222,594 | |||||
Total | $ | 1,345,139 | $ | 1,391,550 |
Three Months Ended | ||||||||||
March 31, 2018 | April 1, 2017 | Percent Change | ||||||||
Net sales | $ | 505,069 | $ | 477,667 | 5.7 | % | ||||
Cost of sales | 328,150 | 303,944 | 8.0 | % | ||||||
Gross profit | 176,919 | 173,723 | 1.8 | % | ||||||
Selling and administrative expenses | 171,895 | 163,666 | 5.0 | % | ||||||
Restructuring charges | 1,338 | 2,123 | (37.0 | )% | ||||||
Operating income | 3,686 | 7,934 | (53.5 | )% | ||||||
Interest expense, net | 2,224 | 975 | 128.1 | % | ||||||
Income before income taxes | 1,462 | 6,959 | (79.0 | )% | ||||||
Income tax expense (benefit) | (999 | ) | 2,178 | (145.9 | )% | |||||
Net income (loss) attributable to non-controlling interest | (49 | ) | (56 | ) | 12.5 | % | ||||
Net income attributable to HNI Corporation | $ | 2,510 | $ | 4,837 | (48.1 | )% |
Three Months Ended | ||||||||||
March 31, 2018 | April 1, 2017 | Percent Change | ||||||||
Net sales | $ | 380,915 | $ | 359,981 | 5.8 | % | ||||
Operating profit (loss) | $ | (387 | ) | $ | 6,444 | (106.0 | )% |
Three Months Ended | ||||||||||
March 31, 2018 | April 1, 2017 | Percent Change | ||||||||
Net sales | $ | 124,154 | $ | 117,686 | 5.5 | % | ||||
Operating profit | $ | 17,114 | $ | 11,811 | 44.9 | % |
Three Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Common shares | $ | 0.285 | $ | 0.275 |
Period | Total Number of Shares (or Units) Purchased (1) | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs | ||||||||||
12/31/17 – 01/27/18 | 126,000 | $ | 39.02 | 126,000 | $ | 73,092,067 | ||||||||
01/28/18 – 02/24/18 | 26,822 | $ | 39.03 | 26,822 | $ | 72,045,172 | ||||||||
02/25/18 – 03/31/18 | — | $ | — | — | $ | 72,045,172 | ||||||||
Total | 152,822 | 152,822 |
• | Corporation's share purchase program ("Program") announced November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date, with an increase announced November 7, 2014, providing additional share repurchase authorization of $200,000,000 with no specific expiration date. |
• | No repurchase plans expired or were terminated during the first quarter of fiscal 2018, nor do any plans exist under which the Corporation does not intend to make further purchases. The Program does not obligate the Corporation to purchase any shares and the authorization for the Program may be terminated, increased, or decreased by the Board at any time. |
(3.1) | |
(10.1) | |
(10.2) | |
(10.3) | |
(31.1) | |
(31.2) | |
(32.1) | |
101 | The following materials from HNI Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018 are formatted in XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) Condensed Consolidated Statements of Comprehensive Income; (ii) Condensed Consolidated Balance Sheets; (iii) Consolidated Statements of Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements |
HNI Corporation | |||
Date: May 1, 2018 | By: | /s/ Marshall H. Bridges | |
Marshall H. Bridges | |||
Senior Vice President and Chief Financial Officer |
Date: May 1, 2018 | By: | /s/ Stan A. Askren |
Name: Stan A. Askren | ||
Title: Chairman and Chief Executive Officer |
Date: May 1, 2018 | By: | /s/ Marshall H. Bridges |
Name: Marshall H. Bridges | ||
Title: Senior Vice President and Chief Financial Officer |
Date: May 1, 2018 | By: | /s/ Stan A. Askren |
Name: Stan A. Askren | ||
Title: Chairman and Chief Executive Officer |
Date: May 1, 2018 | By: | /s/ Marshall H. Bridges |
Name: Marshall H. Bridges | ||
Title: Senior Vice President and Chief Financial Officer |
DOCUMENT AND ENTITY INFORMATION |
3 Months Ended |
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Mar. 31, 2018
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | HNI CORP |
Entity Central Index Key | 0000048287 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2018 |
Amendment Flag | false |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q1 |
Current Fiscal Year End Date | --12-29 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 43,529,550.00 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares outstanding (in shares) | 43,530,000 | 43,354,000 |
CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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Statement of Stockholders' Equity [Abstract] | ||
Cash dividends (in dollars per share) | $ 0.285 | $ 0.275 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The December 30, 2017 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three-month period ended March 31, 2018 are not necessarily indicative of the results expected for the fiscal year ending December 29, 2018. For further information, refer to the consolidated financial statements and accompanying notes included in HNI Corporation's (the "Corporation") Annual Report on Form 10-K for the fiscal year ended December 30, 2017. |
Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Corporation implemented ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), in the first quarter of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018. Disaggregation of Revenue Revenue from contracts with customers disaggregated by sales channel and by segment is as follows (in thousands):
The majority of revenue presented as "Net sales" in the Condensed Consolidated Statements of Comprehensive Income is the result of contracts with customers. All other sources of revenue are not material to the Corporation's results of operations. Sales by channel type are subject to similar economic factors and market conditions regardless of the channel the product is sold under. See “Note 17. Reportable Segment Information” in the Notes to Condensed Consolidated Financial Statements for further information about operating segments. Contract Assets and Contract Liabilities In addition to trade receivables, the Corporation has contract assets consisting of funds paid to certain office furniture dealers in exchange for their multi-year commitment to market and sell the Corporation’s product. These dealer investments are amortized over the term of the contract. For contracts less than one year, the Corporation has elected the practical expedient to recognize incremental costs to obtain a contract as an expense when incurred. The Corporation has contract liabilities consisting of deferred revenue and rebate and marketing program liabilities. Contract assets and liabilities were as follows (in thousands):
The index below indicates the line item in the Condensed Consolidated Balance Sheets where contract assets and contract liabilities are reported: (1) "Receivables" (2) "Prepaid expenses and other current assets" (3) "Other Assets" (4) "Accounts payable and accrued expenses" Changes in contract asset and contract liability balances during the three months ended March 31, 2018 were as follows (in thousands):
Performance Obligations The Corporation recognizes revenue for sales of office furniture and hearth products at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment of the product. In certain circumstances, transfer of control to the customer does not occur until the goods are received by the customer or upon installation and/or customer acceptance, depending on the terms of the underlying contracts. Contracts typically have a duration of less than one year and normally do not include a significant financing component. Generally, payment is due within 30 days of invoicing. See “Note 7. Product Warranties” in the Notes to Condensed Consolidated Financial Statements for additional information on warranty obligations. Significant Judgments The Corporation uses significant judgment throughout the year in estimating the reduction in net sales driven by rebate and marketing programs. Judgments made include expected sales levels and utilization of funds. However, this judgment factor is significantly reduced at the end of each year when sales volumes and the impact to rebate and marketing programs are known and recorded. Accounting Policies and Practical Expedients Elected The Corporation elected to use the modified-retrospective method of adopting the new standard on revenue recognition. It has been applied to all contracts not completed as of December 30, 2017, the end of the Corporation’s fiscal 2017. The impact of the Corporation's transition adjustment for the new revenue recognition guidance was not material to the Corporation's results of operations or financial position. The additional disclosures required as a result of adopting the new revenue recognition guidance were material to the Corporation's financial statements. The Corporation elected the following accounting policies as a result of adopting the new standard on revenue recognition: Shipping and Handling Activities - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities when the activities are performed after a customer obtains control of the good. The Corporation accrues for shipping and handling costs at the same time revenue is recognized, which is in accordance with the policy election. When shipping and handling activities occur prior to the customer obtaining control of the good, they are considered fulfillment activities rather than a promised good or service. Sales Taxes - The Corporation has elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows the Corporation to present revenue net of these certain types of taxes. These policies have been applied consistently to all revenue transactions. The Corporation has elected the following practical expedients as a result of adopting the new standard on revenue recognition: Incremental Costs of Obtaining a Contract - The Corporation has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. The Corporation will apply this practical expedient when the requirements to apply it are met. Significant Financing Component - The Corporation has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Corporation's contracts are typically less than one year in length, consideration will not be adjusted. These accounting policies and practical expedients have been applied consistently to all revenue transactions. |
Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring Restructuring costs recorded in the Condensed Consolidated Statements of Comprehensive Income are as follows (in thousands):
Restructuring costs in 2018 were primarily incurred as part of the previously announced closure of the office furniture manufacturing facility in Orleans, Indiana. Restructuring costs in 2017, which include accelerated depreciation recorded in "Cost of sales" in the Condensed Consolidated Statements of Comprehensive Income, were primarily incurred as part of the previously announced closures of the hearth manufacturing facilities in Paris, Kentucky and Colville, Washington and the office furniture manufacturing facility in Orleans, Indiana. The accrued restructuring expenses are expected to be paid in the next twelve months and are included in "Accounts payable and accrued expenses" in the Condensed Consolidated Balance Sheets. The following is a summary of changes in restructuring accruals during the three months ended (in thousands):
Real Estate Transaction As part of the Corporation's continued efforts to drive efficiency and simplification, the Corporation entered into a sale-leaseback transaction in the first quarter of 2018, selling a manufacturing facility and subsequently leasing back a portion of the facility for a term of 10 years. The net proceeds from the sale of the facility of $16.9 million are reflected in "Proceeds from sale of property, plant, and equipment" in the Condensed Consolidated Statements of Cash Flows. In accordance with ASC 840, Leases, the $5.1 million gain on the sale of the facility is deferred and will be amortized as a reduction to rent expense evenly over the term of the lease. The current portion of the deferred gain is $0.5 million and included within "Accounts payable and accrued expenses" and the long-term portion of the deferred gain is $4.6 million and included within "Other Long-Term Liabilities", both in the Condensed Consolidated Balance Sheets. The transaction did not have a material impact to the Condensed Consolidated Statements of Comprehensive Income. |
Acquisitions and Divestitures |
3 Months Ended |
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Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Office Furniture Dealerships As part of the Corporation's ongoing business strategy, it continues to acquire and divest small office furniture dealerships, for which the impact is not material to the Corporation's financial statements. |
Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories The Corporation values its inventory at the lower of cost or net realizable value with approximately 86 percent valued by the last-in, first-out ("LIFO") costing method.
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):
Goodwill The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands):
Definite-lived intangible assets The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
Amortization expense is reflected in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income and was as follows (in thousands):
Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows (in millions):
The occurrence of events such as acquisitions, dispositions, or impairments in the future may result in changes to amounts. Indefinite-lived intangible assets The Corporation also owns certain intangible assets, which are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
Impairment Analysis The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter or whenever indicators of impairment exist. |
Product Warranties |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties | Product Warranties The Corporation issues certain warranty policies on its office furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design, materials, or workmanship. Allowances have been established for the anticipated future costs associated with the Corporation's warranty programs. A warranty allowance is determined by recording a specific allowance for known warranty issues and an additional allowance for unknown claims expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the allowance. Activity associated with warranty obligations was as follows (in thousands):
The current and long-term portions of the allowance for estimated settlements are included within "Accounts payable and accrued expenses" and "Other Long-Term Liabilities", respectively, in the Condensed Consolidated Balance Sheets. The following table summarizes when these estimated settlements are expected to be paid (in thousands):
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Long-Term Debt Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt is as follows (in thousands):
As of March 31, 2018, the Corporation’s revolving credit facility borrowings were under the credit agreement entered into January 6, 2016 with a scheduled maturity of January 6, 2021. The Corporation deferred the debt issuance costs related to the credit agreement, which are classified as assets, and is amortizing them over the term of the credit agreement. The current portion of $0.4 million is the amount to be amortized over the next twelve months based on the current credit agreement and is reflected in "Prepaid expenses and other current assets" in the Condensed Consolidated Balance Sheets. The long-term portion of $0.6 million is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets. As of March 31, 2018, there was $328 million outstanding under the $400 million revolving credit facility of which $250 million was classified as long-term since the Corporation does not expect to repay the borrowings within a year. Because the Corporation expects, but is not required, to repay the remaining $78 million in the next twelve months, it was classified as current. The revolving credit facility under the credit agreement is the primary source of committed funding from which the Corporation finances its planned capital expenditures and strategic initiatives, such as acquisitions, repurchases of common stock, and certain working capital needs. The credit agreement contains a number of covenants. Non-compliance with covenants in the credit agreement could prevent the Corporation from being able to access further borrowings under the revolving credit facility, require immediate repayment of all amounts outstanding with respect to the revolving credit facility, and/or increase the cost of borrowing. Certain covenants require maintenance of financial ratios as of the end of any fiscal quarter, including:
The most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.5 to 1.0. Under the credit agreement, consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, and depreciation and amortization of intangibles, as well as non-cash, nonrecurring charges, and all non-cash items increasing net income. As of March 31, 2018, the Corporation was below the maximum allowable ratio and was in compliance with all of the covenants and other restrictions in the credit agreement. The Corporation expects to remain in compliance with all of the covenants and other restrictions in the credit agreement over the next twelve months. Subsequent to quarter end, on April 20, 2018, the Corporation entered into a Third Amended and Restated Credit Agreement. This amendment to the credit agreement extends the maturity of the facility to April 20, 2023, with the option for two additional one-year extensions, and increases the maximum borrowing capacity to $450 million. All other terms and conditions of the agreement were substantially unchanged. |
Income Taxes |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Corporation's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The following table summarizes the Corporation's income tax provision (dollars in thousands):
The Corporation's effective tax rate was lower in the three months ended March 31, 2018 principally due to the release of a valuation allowance for certain foreign jurisdictions and the enactment of the Tax Cuts and Jobs Act in 2017 (the "Act"). On December 22, 2017, the Act was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as a period cost are both acceptable methods subject to an accounting policy election. Effective in the first quarter of fiscal 2018, the Corporation is electing to treat any potential GILTI inclusions as a period cost, as no material impact is projected from GILTI inclusions and any deferred taxes related to any inclusion are not material. Also under the Act, a corporation's foreign earnings accumulated under legacy tax laws are deemed repatriated. The Corporation will continue to evaluate its ability to assert indefinite reinvestment to determine recognition of a deferred tax liability for other items such as Section 986(c) currency gain/loss, foreign withholding, and state taxes. Additionally, under the Act and for purposes of Internal Revenue Code Section 162(m) Excessive Executive Compensation Limit, the Corporation is electing to allocate deductible compensation to cash compensation first, then to share-based compensation. |
Fair Value Measurements of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements of Financial Instruments | Fair Value Measurements of Financial Instruments For recognition purposes, on a recurring basis, the Corporation is required to measure at fair value its marketable securities, derivative financial instruments, variable-rate debt obligations, and deferred stock-based compensation. The marketable securities are comprised of money market funds, government securities, and corporate bonds. When available, the Corporation uses quoted market prices to determine fair value and classifies such measurements within Level 1. Where market prices are not available, the Corporation makes use of observable market-based inputs (prices or quotes from published exchanges and indexes) to calculate fair value using the market approach, in which case the measurements are classified within Level 2. Financial instruments measured at fair value were as follows (in thousands):
The index below indicates the line item in the Condensed Consolidated Balance Sheets where the financial instruments are reported: (1) "Cash and cash equivalents" (2) Current portion - "Short-term investments"; Long-term portion - "Other Assets" (3) Current portion - "Prepaid expenses and other current assets"; Long-term portion - "Other Assets" (4) Current portion - "Current maturities of long-term debt"; Long-term portion - "Long-Term Debt" (5) Current portion - "Current maturities of other long-term obligations"; Long-term portion - "Other Long-Term Liabilities" |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity | Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity The following tables summarize the components of accumulated other comprehensive income (loss) and the changes in accumulated other comprehensive income (loss), net of tax, as applicable for the three months ended (in thousands):
Amounts in parentheses indicate reductions to equity.
Amounts in parentheses indicate reductions to equity. Interest Rate Swap In March 2016, the Corporation entered into an interest rate swap transaction to hedge $150 million of outstanding variable rate revolver borrowings against future interest rate volatility. Under the terms of the interest rate swap, the Corporation pays a fixed rate of 1.29 percent and receives one month LIBOR on a $150 million notional value expiring January 2021. As of March 31, 2018, the fair value of the Corporation's interest rate swap was an asset of $4.7 million, which is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets. The unrecognized change in value of the interest rate swap is reported net of tax as $3.1 million in "Accumulated other comprehensive income (loss)" in the Condensed Consolidated Balance Sheets. The following table details the reclassifications from accumulated other comprehensive income (loss) (in thousands):
Amounts in parentheses indicate reductions to profit. Stock Repurchase The following table summarizes shares repurchased and settled by the Corporation (in thousands, except share data):
As of March 31, 2018, approximately $72.0 million of the Corporation's Board of Directors' ("Board") current repurchase authorization remained unspent. Dividend The Corporation declared and paid cash dividends per share as follows (in dollars):
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Earnings Per Share |
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Earnings Per Share | Earnings Per Share The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share ("EPS") (in thousands, except per share data):
The weighted-average common stock equivalents presented above do not include the effect of the common stock equivalents in the table below because their inclusion would be anti-dilutive.
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Corporation measures stock-based compensation expense at grant date, based on the fair value of the award, and recognizes expense over the employees' requisite service periods. Stock-based compensation expense is the cost of stock options and time-based restricted stock units issued under the approved stock-based compensation plans and shares issued under the approved member stock purchase plans. The following table summarizes expense associated with these plans (in thousands):
The options and units granted by the Corporation had fair values as follows (in thousands):
The following table summarizes unrecognized compensation expense and the weighted-average remaining service period for non-vested stock options and restricted stock units as of March 31, 2018:
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Post-Retirement Health Care |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Post-Retirement Health Care | Post-Retirement Health Care The following table sets forth the components of net periodic benefit costs included in the Condensed Consolidated Statements of Comprehensive Income (in thousands):
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Recently Adopted Accounting Standards |
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Mar. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard replaces most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU requires companies to reevaluate when revenue is recorded on a transaction based upon newly defined criteria, either at a point in time or over time as goods or services are delivered. The ASU requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The FASB has issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients to provide further clarification and guidance. The Corporation implemented the new standard in the first quarter of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018. See "Note 2. Revenue from Contracts with Customers" in the Notes to Condensed Consolidated Financial Statements for further information. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. The new standard provides classification guidance on eight cash flow issues including debt prepayment, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlements of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The new standard requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires an entity with defined benefit and postretirement benefit plans to present the service cost component of the net periodic benefit cost in the same income statement line item or items as other compensation costs arising from services rendered by employees during the period. All other components of net periodic benefit cost will be presented outside of operating income, if a subtotal is presented. The Corporation implemented the new standard in the first quarter of fiscal 2018 and it was applied retrospectively to each period presented. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. |
Guarantees, Commitments and Contingencies |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees, Commitments and Contingencies | Guarantees, Commitments, and Contingencies The Corporation utilizes letters of credit and surety bonds in the amount of $18 million to back certain insurance policies and payment obligations. The Corporation utilizes trade letters of credit and banker's acceptances in the amount of $4 million to guarantee certain payments to overseas suppliers. The letters of credit, bonds, and banker's acceptances reflect fair value as a condition of their underlying purpose and are subject to competitively determined fees. The Corporation initiated litigation in Iowa on August 15, 2017 against the purchasers of Artcobell for amounts owed in connection with the sale of Artcobell. Artcobell initiated litigation against the Corporation in Texas on June 14, 2017 regarding a dispute arising after the sale of Artcobell, for which the Corporation believes it has strong legal and factual defenses. The Corporation intends to vigorously prosecute the Iowa action and defend the Texas action. The Corporation has contingent liabilities which have arisen in the ordinary course of its business, including liabilities relating to pending litigation, environmental remediation, taxes, and other claims. It is the Corporation's opinion, after consultation with legal counsel, that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation's financial condition, cash flows, or on the Corporation's quarterly or annual operating results when resolved in a future period. |
Reportable Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segment Information | Reportable Segment Information Management views the Corporation as being in two reportable segments based on industries: office furniture and hearth products, with the former being the principal segment. The aggregated office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth products segment manufactures and markets a broad line of gas, electric, wood, and biomass burning fireplaces, inserts, stoves, facings, and accessories, principally for the home. For purposes of segment reporting, intercompany sales between segments are not material, and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net costs of the Corporation's corporate operations, interest income, and interest expense. Management views interest income and expense as corporate financing costs and not as a reportable segment cost. In addition, management applies an effective income tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis. Identifiable assets by segment are those assets applicable to the respective industry segments. Corporate assets consist principally of cash and cash equivalents, short-term investments, long-term investments, and corporate office real estate and related equipment. No geographic information for revenues from external customers or for long-lived assets is disclosed since the Corporation's primary market and capital investments are concentrated in the United States. Reportable segment data reconciled to the Corporation's condensed consolidated financial statements was as follows (in thousands):
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Subsequent Events |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent to quarter end, on April 20, 2018, the Corporation entered into a Third Amended and Restated Credit Agreement. This amendment to the credit agreement extends the maturity of the facility to April 20, 2023, with the option for two additional one-year extensions, and increases the maximum borrowing capacity to $450 million. All other terms and conditions of the agreement were substantially unchanged. |
Basis of Presentation (Policies) |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventories | The Corporation values its inventory at the lower of cost or net realizable value with approximately 86 percent valued by the last-in, first-out ("LIFO") costing method. |
Goodwill and Other Intangible Assets | The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter or whenever indicators of impairment exist. |
Product Warranties | The Corporation issues certain warranty policies on its office furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design, materials, or workmanship. Allowances have been established for the anticipated future costs associated with the Corporation's warranty programs. A warranty allowance is determined by recording a specific allowance for known warranty issues and an additional allowance for unknown claims expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the allowance. |
Fair Value Measurements | For recognition purposes, on a recurring basis, the Corporation is required to measure at fair value its marketable securities, derivative financial instruments, variable-rate debt obligations, and deferred stock-based compensation. The marketable securities are comprised of money market funds, government securities, and corporate bonds. When available, the Corporation uses quoted market prices to determine fair value and classifies such measurements within Level 1. Where market prices are not available, the Corporation makes use of observable market-based inputs (prices or quotes from published exchanges and indexes) to calculate fair value using the market approach, in which case the measurements are classified within Level 2. |
Stock-Based Compensation | The Corporation measures stock-based compensation expense at grant date, based on the fair value of the award, and recognizes expense over the employees' requisite service periods. Stock-based compensation expense is the cost of stock options and time-based restricted stock units issued under the approved stock-based compensation plans and shares issued under the approved member stock purchase plans. |
Recently Adopted Accounting Standards | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard replaces most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU requires companies to reevaluate when revenue is recorded on a transaction based upon newly defined criteria, either at a point in time or over time as goods or services are delivered. The ASU requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The FASB has issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, and ASU No. 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients to provide further clarification and guidance. The Corporation implemented the new standard in the first quarter of fiscal 2018 using the modified-retrospective method, which required the new guidance to be applied prospectively to revenue transactions completed on or after the effective date. Given the nature of the Corporation's revenue transactions, the new guidance did not have a material impact on the Corporation's results of operations or financial position. All necessary changes required by the new standard, including those to the Corporation's accounting policies, controls, and disclosures, have been identified and implemented as of the beginning of fiscal 2018. See "Note 2. Revenue from Contracts with Customers" in the Notes to Condensed Consolidated Financial Statements for further information. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. The new standard provides classification guidance on eight cash flow issues including debt prepayment, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlements of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The new standard requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. The Corporation implemented the new standard in the first quarter of fiscal 2018. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires an entity with defined benefit and postretirement benefit plans to present the service cost component of the net periodic benefit cost in the same income statement line item or items as other compensation costs arising from services rendered by employees during the period. All other components of net periodic benefit cost will be presented outside of operating income, if a subtotal is presented. The Corporation implemented the new standard in the first quarter of fiscal 2018 and it was applied retrospectively to each period presented. This standard did not have a material effect on the condensed consolidated financial statements or related disclosures. |
Business Segment Information | Management views the Corporation as being in two reportable segments based on industries: office furniture and hearth products, with the former being the principal segment. The aggregated office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems, and other related products. The hearth products segment manufactures and markets a broad line of gas, electric, wood, and biomass burning fireplaces, inserts, stoves, facings, and accessories, principally for the home. For purposes of segment reporting, intercompany sales between segments are not material, and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net costs of the Corporation's corporate operations, interest income, and interest expense. Management views interest income and expense as corporate financing costs and not as a reportable segment cost. In addition, management applies an effective income tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis. Identifiable assets by segment are those assets applicable to the respective industry segments. Corporate assets consist principally of cash and cash equivalents, short-term investments, long-term investments, and corporate office real estate and related equipment. No geographic information for revenues from external customers or for long-lived assets is disclosed since the Corporation's primary market and capital investments are concentrated in the United States. |
Revenue from Contracts with Customers (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Revenue from contracts with customers disaggregated by sales channel and by segment is as follows (in thousands):
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Contract with Customer, Asset and Liability | Contract assets and liabilities were as follows (in thousands):
The index below indicates the line item in the Condensed Consolidated Balance Sheets where contract assets and contract liabilities are reported: (1) "Receivables" (2) "Prepaid expenses and other current assets" (3) "Other Assets" (4) "Accounts payable and accrued expenses" Changes in contract asset and contract liability balances during the three months ended March 31, 2018 were as follows (in thousands):
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Restructuring (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restructuring Costs | Restructuring costs recorded in the Condensed Consolidated Statements of Comprehensive Income are as follows (in thousands):
The following is a summary of changes in restructuring accruals during the three months ended (in thousands):
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Inventories (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | The Corporation values its inventory at the lower of cost or net realizable value with approximately 86 percent valued by the last-in, first-out ("LIFO") costing method.
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill | Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):
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Schedule of Goodwill | The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands):
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Schedule of Finite-Lived Intangible Assets by Major Class | The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
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Finite-lived Intangible Assets Amortization Expense | Amortization expense is reflected in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income and was as follows (in thousands):
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Schedule of Expected Amortization Expense Table | Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows (in millions):
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Schedule of Indefinite Lived Intangible Assets and Goodwill | These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
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Product Warranties (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Associated with Warranty Obligations | The following table summarizes when these estimated settlements are expected to be paid (in thousands):
Activity associated with warranty obligations was as follows (in thousands):
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Long-Term Debt (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Long-term debt is as follows (in thousands):
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Income Taxes Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Provision | The following table summarizes the Corporation's income tax provision (dollars in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Measured at Fair Value | Financial instruments measured at fair value were as follows (in thousands):
The index below indicates the line item in the Condensed Consolidated Balance Sheets where the financial instruments are reported: (1) "Cash and cash equivalents" (2) Current portion - "Short-term investments"; Long-term portion - "Other Assets" (3) Current portion - "Prepaid expenses and other current assets"; Long-term portion - "Other Assets" (4) Current portion - "Current maturities of long-term debt"; Long-term portion - "Long-Term Debt" (5) Current portion - "Current maturities of other long-term obligations"; Long-term portion - "Other Long-Term Liabilities" |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Accumulated Other Comprehensive Income and Changes in Accumulated Other Comprehensive Income, Net of Tax | The following tables summarize the components of accumulated other comprehensive income (loss) and the changes in accumulated other comprehensive income (loss), net of tax, as applicable for the three months ended (in thousands):
Amounts in parentheses indicate reductions to equity.
Amounts in parentheses indicate reductions to equity. |
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Schedule of Reclassification from Accumulated Other Comprehensive Income | The following table details the reclassifications from accumulated other comprehensive income (loss) (in thousands):
Amounts in parentheses indicate reductions to profit. |
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Schedule of Dividends Declared and Paid Per Share | The Corporation declared and paid cash dividends per share as follows (in dollars):
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Schedule of Share Repurchases | The following table summarizes shares repurchased and settled by the Corporation (in thousands, except share data):
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Earnings Per Share (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share Basic and Diluted | The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share ("EPS") (in thousands, except per share data):
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Schedule of Weighted Average Number of Shares | The weighted-average common stock equivalents presented above do not include the effect of the common stock equivalents in the table below because their inclusion would be anti-dilutive.
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Stock-Based Compensation (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Based Compensation Expense | The following table summarizes expense associated with these plans (in thousands):
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period | The options and units granted by the Corporation had fair values as follows (in thousands):
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Schedule of Unrecognized Compensation Cost, Nonvested Awards | The following table summarizes unrecognized compensation expense and the weighted-average remaining service period for non-vested stock options and restricted stock units as of March 31, 2018:
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Post-Retirement Health Care (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | The following table sets forth the components of net periodic benefit costs included in the Condensed Consolidated Statements of Comprehensive Income (in thousands):
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Reportable Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segment Data | Reportable segment data reconciled to the Corporation's condensed consolidated financial statements was as follows (in thousands):
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Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue from contracts with customers | $ 505,069 | $ 477,667 |
Office Furniture | Supplies-driven channel | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contracts with customers | 191,228 | 178,964 |
Office Furniture | Contract channel | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contracts with customers | 189,687 | 181,017 |
Hearth Products | Hearth | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contracts with customers | $ 124,154 | $ 117,686 |
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Trade receivables | $ 225,283 | $ 260,455 |
Contract assets (current) | 483 | 300 |
Contract assets (long-term) | 4,147 | 2,350 |
Contract liabilities | $ 33,103 | $ 54,295 |
Revenue from Contracts with Customers - Change in Contract Assets and Liabilities (Details) $ in Thousands |
3 Months Ended |
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Mar. 31, 2018
USD ($)
| |
Change in Contract with Customer, Asset [Abstract] | |
Contract assets recognized | $ 2,100 |
Reclassification of contract assets to contra revenue | (120) |
Impact of business combination | 0 |
Net change | 1,980 |
Change in Contract with Customer, Liability [Abstract] | |
Reclassification of contract assets to contra revenue | 0 |
Contract liabilities recognized and recorded to contra revenue as a result of performance obligations satisfied | (28,153) |
Contract liabilities paid | 45,326 |
Cash received in advance and not recognized as revenue | (20,806) |
Reclassification of cash received in advance to revenue as a result of performance obligations satisfied | 24,179 |
Impact of business combination | 646 |
Net change | $ 21,192 |
Restructuring Costs Expensed (Details) - Realignment of Office Furniture Facilities and Exit of Business Line - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs | $ 1,338 | $ 6,322 |
Cost of sales - accelerated depreciation | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs | 0 | 4,199 |
Restructuring charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs | $ 1,338 | $ 2,123 |
Restructuring (Changes in Restructuring Accruals) (Details) - Realignment of Office Furniture Facilities and Exit of Business Line $ in Thousands |
3 Months Ended |
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Mar. 31, 2018
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Restructuring allowance as of December 30, 2017 | $ 1,859 |
Restructuring charges | 1,338 |
Cash payments | (3,057) |
Restructuring allowance as of March 31, 2018 | 140 |
Severance Costs | |
Restructuring Reserve [Roll Forward] | |
Restructuring allowance as of December 30, 2017 | 1,343 |
Restructuring charges | 74 |
Cash payments | (1,333) |
Restructuring allowance as of March 31, 2018 | 84 |
Facility Exit Costs & Other | |
Restructuring Reserve [Roll Forward] | |
Restructuring allowance as of December 30, 2017 | 516 |
Restructuring charges | 1,264 |
Cash payments | (1,724) |
Restructuring allowance as of March 31, 2018 | $ 56 |
Restructuring (Narrative) (Details) - Manufacturing Facility $ in Millions |
3 Months Ended |
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Mar. 31, 2018
USD ($)
| |
Sale Leaseback Transaction [Line Items] | |
Term of lease | 10 years |
Net proceeds from sale of facility | $ 16.9 |
Deferred gain | 5.1 |
Deferred gain, current | 0.5 |
Deferred gain, noncurrent | $ 4.6 |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Percentage of LIFO Inventory | 86.00% | |
Inventories | ||
Finished products | $ 98,844 | $ 101,715 |
Materials and work in process | 87,226 | 81,202 |
LIFO allowance | (27,382) | (27,234) |
Total inventories | $ 158,688 | $ 155,683 |
Goodwill and Other Intangible Assets Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 279,480 | $ 279,505 |
Definite-lived intangible assets | 178,078 | 182,186 |
Indefinite-lived intangible assets | 29,153 | 29,201 |
Total goodwill and intangible assets | $ 486,711 | $ 490,892 |
Goodwill and Other Intangible Assets (Indefinite Lived Intangible Assets) (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 29,153 | $ 29,201 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 29,153 | $ 29,201 |
Product Warranties (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
Dec. 30, 2017 |
|
Product Warranty Accrual [Roll Forward] | |||
Balance at beginning of period | $ 15,388 | $ 15,250 | |
Accruals for warranties issued during period | 5,992 | 5,540 | |
Adjustments related to pre-existing warranties | 68 | (116) | |
Settlements made during the period | (6,010) | (5,548) | |
Balance at end of period | 15,438 | $ 15,126 | |
Current - in the next twelve months | 9,512 | $ 9,524 | |
Long-term - beyond one year | $ 5,926 | $ 5,864 |
Long-Term Debt Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 328,964 | $ 276,648 |
Current maturities of long-term debt | 78,964 | 36,648 |
Long-term debt | 250,000 | 240,000 |
Revolving credit facility with interest at a variable rate (March 31, 2018 - 3.0%; December 30, 2017 - 2.7%) | ||
Debt Instrument [Line Items] | ||
Total debt | $ 328,000 | $ 267,500 |
Stated Interest Rate Percentage | 3.00% | 2.70% |
Other amounts | ||
Debt Instrument [Line Items] | ||
Total debt | $ 964 | $ 9,148 |
Long-Term Debt Narrative (Details) |
Apr. 20, 2018
USD ($)
extension
|
Mar. 31, 2018
USD ($)
|
---|---|---|
Debt Instrument [Line Items] | ||
Deferred debt issuance costs, current | $ 400,000 | |
Deferred debt issuance costs, noncurrent | 600,000 | |
Revolving credit facility with interest at a variable rate (March 31, 2018 - 3.0%; December 30, 2017 - 2.7%) | ||
Debt Instrument [Line Items] | ||
Long-term line of credit outstanding | 328,000,000 | |
Line of credit maximum borrowing capacity | 400,000,000 | |
Long-term line of credit, noncurrent | 250,000,000 | |
Line of credit, current | $ 78,000,000 | |
Ratio of interest coverage to earnings for the last four fiscal quarters | 4.0 | |
Ratio of leverage to earnings for the last four fiscal quarters | 3.5 | |
Subsequent Event | Revolving credit facility with interest at a variable rate (March 31, 2018 - 3.0%; December 30, 2017 - 2.7%) | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | $ 450,000,000 | |
Number of optional extensions | extension | 2 | |
Optional extension period | 1 year |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Income before income taxes | $ 1,462 | $ 6,959 |
Income tax expense (benefit) | $ (999) | $ 2,178 |
Effective tax rate | (66.10%) | 31.00% |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Narrative) (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
Mar. 31, 2016 |
---|---|---|---|
Class of Stock [Line Items] | |||
Accumulated other comprehensive income (loss) | $ (2,662) | $ (3,611) | |
Common Stock | |||
Class of Stock [Line Items] | |||
Stock repurchase program, remaining authorized repurchase amount | 72,000 | ||
Interest rate swap | |||
Class of Stock [Line Items] | |||
Derivative, notional amount | $ 150,000 | ||
Derivative, fixed interest rate | 1.29% | ||
Derivative liability | 4,700 | ||
Accumulated other comprehensive income (loss) | $ 3,100 |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Reclassification) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest (expense) or income | $ (2,337) | $ (1,046) |
Tax (expense) or benefit | 999 | (2,178) |
Net income attributable to HNI Corporation | 2,510 | 4,837 |
Interest rate swap | Reclassifications from accumulated other comprehensive income (loss) | Derivative Financial Instruments | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest (expense) or income | 115 | (192) |
Tax (expense) or benefit | (28) | 71 |
Net income attributable to HNI Corporation | $ 87 | $ (121) |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity (Share Repurchases) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Shares repurchased per cash flow | $ (7,345) | $ (11,266) |
Common Stock | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Repurchased common stock (in shares) | 152,822 | 234,375 |
Cash purchase price | $ (5,964) | $ (11,675) |
Purchases unsettled as of quarter end | 0 | 409 |
Prior year purchases settled in current year | (1,381) | 0 |
Shares repurchased per cash flow | $ (7,345) | $ (11,266) |
Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity - Dividends Declared (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Equity [Abstract] | ||
Cash dividends per common share (in dollars per share) | $ 0.285 | $ 0.275 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Numerator: | ||
Numerator for both basic and diluted EPS attributable to HNI Corporation net income | $ 2,510 | $ 4,837 |
Denominators: | ||
Denominator for basic EPS weighted-average common shares outstanding (in shares) | 43,359,971 | 44,050,040 |
Potentially dilutive shares from stock-based compensation plans (in shares) | 774,000 | 1,403,000 |
Denominator for diluted EPS (in shares) | 44,134,142 | 45,452,664 |
Earnings per share - basic (in dollars per share) | $ 0.06 | $ 0.11 |
Earnings per share - diluted (in dollars per share) | $ 0.06 | $ 0.11 |
Earnings Per Share Antidilutive Securities Excluded from Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Common stock equivalents excluded because their inclusion would be anti-dilutive | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,226 | 616 |
Stock-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | $ 3,712 | $ 4,671 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value of granted stock options | 6,611 | $ 7,206 |
Unrecognized compensation cost | $ 5,543 | |
Weighted-Average Remaining Service Period (years) | 1 year 3 months 26 days | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation cost | $ 238 | |
Weighted-Average Remaining Service Period (years) | 7 months 25 days |
Post-Retirement Health Care (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Retirement Benefits [Abstract] | ||
Service cost | $ 213 | $ 185 |
Interest cost | 197 | 206 |
Amortization of net (gain) loss | 37 | 7 |
Net periodic post-retirement benefit cost | $ 447 | $ 398 |
Guarantees, Commitments and Contingencies (Details) $ in Millions |
Mar. 31, 2018
USD ($)
|
---|---|
Letter of Credit | |
Line of Credit Facility [Line Items] | |
Letters of credit | $ 18 |
Trade Letters Of Credit And Bankers Acceptances | |
Line of Credit Facility [Line Items] | |
Letters of credit | $ 4 |
Subsequent Events - Narrative (Details) - Revolving credit facility |
Apr. 20, 2018
USD ($)
extension
|
Mar. 31, 2018
USD ($)
|
---|---|---|
Subsequent Event [Line Items] | ||
Line of credit maximum borrowing capacity | $ 400,000,000 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Number of optional extensions | extension | 2 | |
Optional extension period | 1 year | |
Line of credit maximum borrowing capacity | $ 450,000,000 |
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