Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity

12 Months Ended

Dec. 28, 2019

Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity

Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity

The following table summarizes the components of accumulated other comprehensive income (loss) and the changes in accumulated other comprehensive income (loss), net of tax, as applicable (in thousands):



	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Debt 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	1,219			(6		)	(733		)	714			1,194
Tax (expense) or benefit	—			(21		)	270			(263		)	(14		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			—			—			209			209
Balance as of December 30, 2017	$	31		$	(132	)	$	(5,630	)	$	2,120		$	(3,611	)
Other comprehensive income (loss) before reclassifications	(3,004		)	(31		)	3,531			1,488			1,984
Tax (expense) or benefit	—			7			(830		)	(350		)	(1,173		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			—			—			(799		)	(799		)
Balance as of December 29, 2018	$	(2,973	)	$	(156	)	$	(2,929	)	$	2,459		$	(3,599	)
Other comprehensive income (loss) before reclassifications	61			318			(2,254		)	(1,739		)	(3,614		)
Tax (expense) or benefit	—			(67		)	606			403			942
Reclassification of stranded tax impact	—			—			(1,185		)	446			(739		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			—			—			(1,063		)	(1,063		)
Balance as of December 28, 2019	$	(2,912	)	$	95		$	(5,762	)	$	506		$	(8,073	)

Amounts in parentheses indicate reductions to equity.

Interest Rate Swap

In March 2016, the Corporation entered in to 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 paid a fixed rate of 1.29 percent and received one month LIBOR on a $150 million notational value. In August 2019, the agreement governing this interest rate swap was terminated and the Corporation received cash proceeds of $0.5 million, the fair value of the interest rate swap on the termination date. The proceeds were recorded as cash provided by operating activities in the Consolidated Statement of Cash Flows. The $0.5 million gain from the termination of this interest rate swap agreement was recorded to "Accumulated other comprehensive income (loss)" and will be amortized as an offset to interest expense through January 2021, the remaining term of the original interest rate swap agreement.

In August 2019, concurrent with the termination of the previous interest rate swap, the Corporation entered into a new interest rate swap transaction to hedge $75 million of outstanding variable rate revolver borrowings against future interest rate volatility. Under the terms of this interest rate swap, the Corporation pays a fixed rate of 1.42 percent and receives one month LIBOR on a $75 million notional value expiring August 2023. As of December 28, 2019, the fair value of the Corporation's interest rate swap asset was $0.3 million. The unrecognized change in value of the interest rate swap, which includes the unamortized gain on the termination of the 2016 interest rate swap, is reported net of tax as $0.5 million in "Accumulated other comprehensive income (loss)" in the Consolidated Balance Sheets.

The following table details the reclassifications from accumulated other comprehensive income (loss) (in thousands):



Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income is Presented	2019			2018			2017
Derivative financial instruments
Interest rate swap	Interest expense, net	$	1,392		$	1,045		$	(330	)
	Income tax expense	(329		)	(246		)	121
	Net of tax	$	1,063		$	799		$	(209	)

Amounts in parentheses indicate reductions to profit.

In May 2017, the Corporation registered 300,000 shares of its common stock under its 2017 Equity Plan for Non-Employee Directors of HNI Corporation (the "2017 Director Plan"). The 2017 Director Plan replaced the 2007 Equity Plan for Non-Employee Directors of HNI Corporation (the "2007 Director Plan" and together with the 2017 Director Plan, the "Director Plans"). After approval of the 2017 Director Plan, no awards were granted under the 2007 Director Plan. The 2017 Director Plan permits the Corporation to issue to its non-employee directors options to purchase shares of Corporation common stock, restricted stock or restricted stock units of the Corporation, and awards of Corporation common stock. The 2017 Director Plan also permits non-employee directors to elect to receive all or a portion of their annual retainers and other compensation in the form of shares of Corporation common stock.

Common stock was issued under the Director Plans as follows:



	2019	2018	2017
Director Plan issued shares of common stock	37,269	27,745	27,196

Dividend

The Corporation declared and paid cash dividends per common share as follows (in dollars):



	2019		2018		2017
Dividends per common shares	$	1.21	$	1.17	$	1.13

During 2017, shareholders approved the HNI Corporation Members' Stock Purchase Plan (the "2017 MSPP") to replace the expired 2007 Members' Stock Purchase Plan (the "2007 MSPP" and together with the 2017 MSPP, the "MSPPs"). Under the 2017 MSPP, 800,000 shares of common stock were registered for issuance to participating members. After approval of the 2017 MSPP, no awards were granted under the 2007 MSPP. Under the 2017 MSPP, rights to purchase stock are granted on a quarterly basis to all participating members who customarily work 20 hours or more per week and for five months or more in any calendar year. The price of the stock purchased under the MSPP is 85 percent of the closing price on the exercise date. No member may purchase stock under the MSPP in an amount which exceeds a maximum fair value of $25,000 in any calendar year. The following table provides the details of stock under the MSPPs:



	2019		2018		2017
Shares of common stock issued	76,041		74,020		74,694
Average price per share	$	30.67	$	32.19	$	35.22

An additional 593,223 shares were available for issuance under the 2017 MSPP as of December 28, 2019.

The Corporation has entered into change in control employment agreements with certain officers. According to the agreements, a change in control occurs when a third person or entity becomes the beneficial owner of 20 percent or more of the Corporation’s common stock, when more than one-third of the Board is composed of persons not recommended by at least three-fourths of the incumbent Board, upon certain business combinations involving the Corporation, or upon approval by the Corporation’s shareholders of a complete liquidation or dissolution. Upon a change in control, a key member is deemed to have a two-year employment agreement with the Corporation, and all of his or her benefits vest under the Corporation’s compensation plans. If, at any time within two years of the change in control, his or her employment is terminated by the Corporation for any reason other than cause or disability, or by the key member for good reason, as such terms are defined in the agreement, then the key member is entitled to receive, among other benefits, a severance payment equal to two times (three times for the Corporation’s Chairman, President, and CEO) annual salary and the average of the prior two years' bonuses.

Stock Repurchase

The par value method of accounting is used for common stock repurchases. The following table summarizes shares repurchased and settled by the Corporation (in thousands, except share and per share data):



	2019			2018			2017
Shares repurchased	2,286,200			755,221			1,462,936
Average price per share	$	36.70		$	38.96		$	40.25

Cash purchase price	$	(83,907	)	$	(29,424	)	$	(58,887	)
Purchases unsettled as of quarter end	374			354			1,382
Prior year purchases settled in current year	(354		)	(1,382		)	—
Shares repurchased per cash flow	$	(83,887	)	$	(30,452	)	$	(57,505	)

As of December 28, 2019, approximately $164.7 million of the Board's current repurchase authorization remained unspent.