HNI Corporation 2011 Annual Report
Financial Highlights
(Amounts in thousands, except for per share and member data)
2011
2010
Income Statement Data
Net sales
Gross profit
Selling and administrative expenses
Restructuring related and impairment charges
Operating income
Net income attributable to HNI Corporation
Net income attributable to HNI Corporation as a % of:
Net sales
Average shareholders’ equity
Per common share:
$1,833,450
$1,686,728
639,063
554,315
3,261
81,487
45,986
2.5%
11.1%
585,616
518,257
9,449
57,910
26,941
1.6%
6.5%
Net income attributable to HNI Corporation – basic
$÷« 1.03
$÷« 0.60
Net income attributable to HNI Corporation – diluted
Cash dividends
Balance Sheet Data
Total assets
Long-term debt and capital lease obligations
Debt/capitalization ratio
HNI Corporation’s shareholders’ equity
Working capital
Other Data
1.01
0.92
0.59
0.86
$«1,054,258
$ 997,880
150,540
26.4%
150,111
26.9%
$«÷419,057
$÷«407,985
45,130
46,810
Capital expenditures (including capitalized software)
$«÷÷31,143
$÷÷«26,722
Cash flow from operations
Weighted-average shares outstanding – basic
Weighted-average shares outstanding – diluted
Share repurchases
Number of shareholders at year-end
Members (employees) at year-end
Net
Sales
(in millions)
3
2
6
,
1
$
09
3
3
8
,
1
$
7
8
6
,
1
$
10
11
HNI Corporation 2011 Annual Report
Net
Income
(in millions)
6
4
$
7
2
$
10
11
6
$
-
09
134,278
44,803,248
45,694,278
÷÷$ ÷÷10,000
7,259
9,490
94,384
44,993,934
45,808,704
$««« 17,817
7,866
8,470
Diluted
Earnings
per Share
(dollars)
4
1
.
0
$
-
09
1
0
.
1
$
9
5
.
0
$
10
11
Dear Shareholders:
Stan A. Askren
Chairman, President
and Chief Executive Officer
2011 was a year of strong performance for
Growth in our supplies-driven business was modest
HNI Corporation. All businesses achieved solid
as employment and broader economic concerns
growth and corporate profits improved by over
weighed on small business confidence. We performed
70 percent. We made significant progress on our
well relative to the market as investments in new
strategies, and our growth investments are yielding
products and selling initiatives are paying off.
attractive returns. The continued improvement in
HNI is the leader in the supplies-driven office furniture
the economy is encouraging, and we are determined
channel, and we continue to invest to strengthen
to build on our momentum in 2012. We are compet-
our competitive position.
itively well positioned in our markets, and the
prospects for our businesses are excellent.
Hearth Business—Strong Profit Improvement
Despite challenging market conditions and declining
Office Furniture—Encouraging Growth
housing starts, our hearth business leveraged its
Our overall market position in office furniture is
leading market position to increase sales and drive
strong with the broadest and deepest product offering
significant profit improvement. We are investing in
and distribution. We are investing to keep our brands
new products and expanding our selling and marketing
relevant and to help our partners compete more
capabilities to enhance our competitive advantage.
effectively and profitably.
With the hearth industry’s strongest brands, best
products, and superior manufacturing and distribution
Growth in our corporate projects-driven office
capabilities, we are well positioned for continued
furniture businesses was robust, particularly in
strong profitable growth.
the first half of the year. Business spending
increased as the economy improved, and demand
Strong Cash Generation—Focused Capital Deployment
benefited from corporate investment in real estate
Our operating cash flow remained strong at over
strategies to reduce lease and occupancy costs.
$130 million. We grew our businesses without adding
working capital, which allowed us to reinvest for
Our international business delivered exceptional
growth and generate attractive free cash flow. We are
performance, especially in China where we are
committed to an industry-leading dividend, which we
a market leader. We are investing aggressively to
increased by 7 percent in 2011. We reduced debt,
expand within our existing international markets
strengthened our balance sheet and increased our
and pursue new growth frontiers.
financial flexibility.
HNI Corporation 2011 Annual Report
We continue investing to build strong businesses
and drive long-term shareholder value-creation.
Value-enhancing acquisitions remain a priority. We
reach more customers and make it easier for our partners
bolstered our growing position in the education mar-
to do business with HNI. Our investments in industry-
ket with the acquisition of Sagus, a leading provider
leading selling programs and processes are designed
of high-quality and well-priced educational furniture
to make HNI the preferred choice—the first time, every
solutions. HNI Corporation is now the industry leader
time for our partners and customers. We are adding sell-
in the K–12 education market and offers the most
ing and marketing capabilities to deeply penetrate our
extensive line of products.
existing markets and extend the reach of HNI into new
markets. We are building for the future, today.
Competitive Advantage
HNI’s split-and-focus business model is core to our
Looking Forward With Confidence
success and competitive advantage. Our decentralized
Looking forward, I am optimistic about the future despite
structure enables our businesses to operate close
an uncertain economy. HNI is well positioned for long-
to the markets they serve, deeply understand custom-
term profitable growth given our leadership in attractive
ers and create tailored selling and fulfillment models
markets. Our businesses are strong, competitive and
to serve them. Our management teams are equipped
agile. Our strategies are focused, and we have solid,
to rapidly respond to emerging opportunities and
executable plans to capture the growth potential
generate new sources of growth.
created by our strategies. Our members are engaged
We know how to compete, manufacture and execute.
Our principles and values are enduring and will guide
We have a strong culture of lean thinking, and our
the company forward to continued success.
and empowered to make a positive difference.
pursuit of performance improvement is relentless.
Our members continuously collaborate across our
Thank You
businesses to identify opportunities to fully leverage
I would like to thank our members for their dedication
the scale of HNI in core functions such as purchasing,
and passion. They make HNI a great place to work.
information technology, logistics, product develop-
Finally, thank you to our customers and partners
ment and manufacturing.
for their loyalty, and to our shareholders for their
investment and continued trust.
Investing for Profitable Growth
We continue investing to build strong businesses and
drive long-term shareholder value-creation. In 2011
we launched 51 new product series, a reflection of our
Stan A. Askren
commitment to build market leadership with innovative
Chairman, President and Chief Executive Officer
products. We are building e-business capabilities to
HNI Corporation
HNI Corporation 2011 Annual Report
Office
Furniture
HNI Corporation is the second-largest office furniture manufacturer in the
world. Our office furniture businesses compete in two primary channels: the
contract channel and the supplies-driven channel. The contract channel has
traditionally been characterized by sales of office furniture and services to
large corporations, frequently customized to meet specific client and designer
preferences. The supplies-driven channel represents primarily smaller orders
of office furniture purchased by small businesses and home office users.
Our office furniture sales are similar in both channels.
Hearth
Net Sales
(in millions)
Operating Profit
(in millions)
8
2
5
,
1
$
5
0
4
,
1
$
5
4
3
,
1
$
8
8
$
0
0
1
$
3
5
$
09
10
11
09
10
11
HNI Corporation is the nation’s leading manufacturer and marketer of gas- and
wood-burning fireplaces. Our hearth business competes in two primary
channels: new construction and remodel/retrofit. Hearth products sold in the
new construction channel typically are purchased by builders during the construc-
tion of new homes, and remodel/retrofit channel sales traditionally are homeowner
purchases of an additional heating source during the renovation of existing
homes. The corporation sells approximately 65 percent of its hearth products
in the remodel/retrofit channel.
Net Sales
(in millions)
Operating Profit
(in millions)
5
0
3
$
8
7
2
$
2
8
2
$
09
10
11
5
1
$
3
$
5
1
$
-
09
10
11
HNI Corporation 2011 Annual Report
®
Allsteel designs, builds and delivers relevant
innovation in workplace furniture.
®
Inspired by practicality, offering a full line
of high-quality solutions serving
the small and medium-size workplace.
Innovative brands that offer the best of style,
®
An industry leader in the design,
manufacture and marketing of premium
wood office furniture.
®
A leading provider of high-quality and
well-priced wood office furniture.
HNI Corporation 2011 Annual Report
®
China’s leading manufacturer and marketer
of a full range of office furniture solutions.
®
Award-winning design and superior craftsmanship
in wood furniture and fabrics created for
demanding clients worldwide.
functionality, durability and price in today’s marketplace.
®
Office furniture systems for small to
medium-size workplace solutions.
™
Industry leader for K–12 educational furniture.
HNI Corporation 2011 Annual Report
®
The number-one preferred fireplace
brand among homebuilders
since 1927.
®
The innovation and design leader in gas
hearth systems – the industry’s most
award-winning brand.
Brands that make a house feel more like a home.
®
Renowned for performance, durability
and control in wood, pellet and gas-fueled
hearth products.
®
America’s largest network
of hearth product and service outlets
for consumers and homebuilders.
The hearth industry’s foremost producer
of precision quality-crafted wood
and pellet stoves.
™
HNI Corporation 2011 Annual Report
A Unique Culture
Members Make a Difference
Every member has the opportunity to participate in HNI Corporation’s unique
and powerful member-owner culture and to share in the company’s success.
Our culture is built around Rapid Continuous Improvement (RCI) and the
belief every member has something valuable to contribute. We know when
our people share their ideas, and management acts on those ideas,
we achieve something powerful: 9,000-plus individuals working actively
to make the corporation better.
HNI Corporation 2011 Annual Report
Our Vision
We, the members of HNI Corporation,
We will be profitable.
are dedicated to creating long-term value
We pursue mutually profitable relationships with customers and suppliers.
for all of our stakeholders, to exceeding
Only when our company achieves an adequate profit can the other
our customers’ expectations and to
making our company a great place to
work. We will always treat each other,
as well as customers, suppliers,
shareholders and our communities,
with fairness and respect. Our success
depends upon business simplification,
rapid continuous improvement and
elements of this Vision be realized.
We will create long-term value for shareholders.
We create long-term value for shareholders by earning financial returns
significantly greater than our cost of capital and pursuing profitable growth
opportunities. We will safeguard our shareholders’ equity by maintaining a
strong balance sheet to allow flexibility in responding to a continuously
changing market and business environment.
innovation in everything we do, individual
We will pursue profitable growth.
and collective integrity, and the relent-
We pursue profitable growth on a global basis in order to provide continued
job opportunities for members and financial success for all stakeholders.
We will be a supplier of quality products and services.
We provide reliable products and services of high quality and brand value to
our end-users. Our products and services exceed our customers’ expectations
and enable our distributors and our company to make a fair profit.
We will be a great place to work.
We pursue a participative environment and support a culture that encourages
and recognizes excellence, active involvement, ongoing learning and
contributions of each member; that seeks out and values diversity; and that
attracts and retains the most capable people who work safely, are motivated
and are devoted to making our company and our members successful.
We will be a responsible corporate citizen.
We conduct our business in a way that sustains the well-being of society,
our environment and the economy in which we live and work. We follow
ethical and legal business practices. Our company supports our volunteer
efforts and provides charitable contributions so that we can actively participate
in the civic, cultural, educational, environmental and governmental affairs
of our society.
To our stakeholders:
When our company is appreciated by its members, favored by its
customers, supported by its suppliers, respected by the public and admired
by its shareholders, this Vision is fulfilled.
less pursuit of the following
long-standing beliefs:
HNI Corporation 2011 Annual Report
Financial Information
2011
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End of 10-K
Board of Directors
Stan A. Askren
Chairman, President and
Chief Executive Officer,
HNI Corporation
Mary H. Bell
Vice President,
Building Construction
Products Division,
Caterpillar Inc.
Miguel M. Calado
Director and Chief
Financial Officer,
Hovione SA
Gary M. Christensen
Executive Advisor Partner,
Wind Point Partners
Cheryl A. Francis
Co-Chairman,
Corporate Leadership Center
James R. Jenkins
Senior Vice President
and General Counsel,
Deere & Company
Dennis J. Martin
President and
Chief Executive Officer,
Federal Signal Corporation
Larry B. Porcellato
Chief Executive Officer,
The Homax Group, Inc.
Abbie J. Smith
Chaired Professor,
University of Chicago
Booth School of Business
Brian E. Stern
Director, Starboard Capital
Partners, LLC
Ronald V. Waters, III*
Independent Business
Consultant,
Former Director,
President and
Chief Executive Officer,
LoJack Corporation
Committees
of the Board
Audit
Miguel M. Calado,
Chairperson
Mary H. Bell
James R. Jenkins
Human Resources
and Compensation
Abbie J. Smith,
Chairperson
Cheryl A. Francis
Dennis J. Martin
Brian E. Stern
HNI Corporation Officers
Operating Companies
Public Policy and
Corporate Governance
Larry B. Porcellato,
Chairperson
Gary M. Christensen
Ronald V. Waters, III
* Lead Director
Stan A. Askren
Chairman, President and
Chief Executive Officer
Steven M. Bradford
Vice President, General
Counsel and Secretary
Gary L. Carlson
Vice President, Member
and Community Relations
Tamara S. Feldman
Vice President,
Financial Reporting
Derek P. Schmidt
Treasurer and
Vice President,
Corporate Finance
Alan R. Moorhead
Vice President,
Internal Audit
Kurt A. Tjaden
Vice President and
Chief Financial Officer
Charles C. Bell
President,
HBF
Redus W. Brooks
President,
Maxon Furniture
Peter C. M. Chu
President,
Lamex
Bradley D. Determan
Executive Vice President,
HNI Corporation
President,
Hearth & Home Technologies
Jerald K. Dittmer
Executive Vice President,
HNI Corporation
President,
HON Company
Eric F. Jackson
President,
Sagus
Jeffrey D. Lorenger
Executive Vice President,
HNI Corporation
President,
Allsteel
Donald T. Mead
Executive Vice President,
HNI Corporation
President,
Gunlocke
Marco V. Molinari
Executive Vice President,
HNI Corporation
President,
HNI International
Brandon T. Sieben
President,
Paoli
Investor Information
Fiscal 2012 Quarter-End Dates
1st Quarter: Saturday, March 31
2nd Quarter: Saturday, June 30
3rd Quarter: Saturday, September 29
4th Quarter: Saturday, December 29
Annual Meeting
The Corporation’s annual shareholders’ meeting will be held at
10:30 a.m. on Tuesday, May 8, 2012, at the Clarion Hotel, 2915 North
Highway 61, Muscatine, Iowa. Shareholders and other interested
investors are encouraged to attend the meeting.
Form 10-K Report
All financial information, including the Corporation’s annual report
on Form 10-K, can be accessed on the Corporation’s website at
www.hnicorp.com.
Corporate Headquarters and Investor Relations
HNI Corporation
408 East Second Street
P.O. Box 1109
Muscatine, IA 52761-0071
Telephone: 563.272.7400
Company Fax: 563.272.7114
Investor Relations Fax: 563.272.7655
Investor Relations Email: investorrelations@hnicorp.com
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
One North Wacker Drive
Chicago, IL 60606
Common Stock
HNI Corporation common stock trades on the New York Stock Exchange
(NYSE) under the symbol: HNI.
Transfer Agent
Shareholders may report a change of address or make inquiries
by writing or calling:
Wells Fargo Shareowner Services
161 North Concord Exchange
South Saint Paul, MN 55075
Telephone: 800.468.9716
HNI Corporation 408 East Second Street, Muscatine, Iowa 52761 hnicorp.com