The aggregate market value of the voting stock held by non-affiliates of the Registrant as of July 1, 2017June 29, 2019 was $1,434,431,574$1,090,014,357 based on the New York Stock Exchange closing price for such shares on that date, assuming for purposes of this calculation that all 10 percent holders and all directors and executive officers of the Registrant are affiliates.

The number of shares outstanding of the Registrant's common stock, as of February 2, 2018,January 31, 2020, was 43,246,359.42,554,705.

HNI Corporation (the ''Corporation'', ''we'', ''us'', or ''our'') is an Iowa corporation incorporated in 1944.  The Corporation is a provider of office furniture and hearth products.  Office furniture products include panel-based and freestanding furniture systems, seating, storage, tables, and tables.architectural products. These products are sold primarily through a national system of independent dealers, wholesalers, and office product distributors but also directly to end-user customers and federal, state, and local governments.  Hearth products include a full array of gas, wood, electric, and pellet burningfueled fireplaces, inserts, stoves, facings, and accessories.  These products are sold through a national system of independent dealers and distributors, as well as Corporation-owned distribution and retail outlets.  In fiscal 2017,2019, the Corporation had net sales of $2.2 billion, of which $1.7 billion or 76 percent was attributable to office furniture products and $0.5 billion or 24 percent was attributable to hearth products.  See "Note 16.17. Reportable Segment Information" in the Notes to Consolidated Financial Statements for further information about operating segments.

The Corporation is organized into a corporate headquarters and operating units with offices, manufacturing plants, distribution centers, and sales showrooms in the United States, Canada, China, Hong Kong, India, Mexico, Dubai, Taiwan, Mexico, and Dubai.Singapore.  See "Item 2. Properties" for additional related discussion.

EightSeveral operating units, marketed under various brand names, participate in the office furniture industry.  These operating units include:  

Each of these operating units provides products, which are sold through various channels of distribution and segments of the industry.

The operating unit Hearth & Home Technologies LLC (''Hearth & Home'') participates in the hearth products industry.  The retail and distribution brand for this operating unit is Fireside Hearth & Home.

The Corporation has been committed to systematically eliminating waste through its process improvement approach known as Rapid Continuous Improvement (''RCI''), which focuses on streamlining design, manufacturing, and administrative processes.  The Corporation's RCI program has contributed to increased productivity, lower costs, improved product quality, enhanced workplace safety, and shorter averageimproved lead times.

The Corporation's productresearch and development efforts are focused on developing and providing relevant and differentiated solutions, delivering quality, aesthetics, and style.

An important element of the Corporation's success has been its member-owner culture, which has enabled it to attract, develop, retain, and motivate skilled, experienced, and efficient members (i.e., employees).  Each of the Corporation's eligible members has the opportunity to own stock in the Corporation through a number of stock-based plans, including a member stock purchase plan and a profit-sharing retirement plan. These ownership opportunities drive a unique level of commitment to the Corporation’s success throughout the workforce. Member'sMembers own approximately 6 percent of the Corporation's stock.

For further financial-related information with respect to acquisitions, divestitures, operating segment information, restructuring, and the Corporation’s operations in general, refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this report and the following sections in the Notes to Consolidated Financial Statements: "Note 1. Nature of Operations", "Note 4. Restructuring and Impairment Charges", "Note 5. Acquisitions and Divestitures", and "Note 16.17. Reportable Segment Information".

The U.S.United States office furniture market consists of two primary channels—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, primarily for new office facilities, relocations, or office redesigns. Sales to the contract channel are frequently customized to meet

specific client and designer preferences.  Contract furniture is generally purchased through independent office furniture dealers who prepare a custom-designed office layout emphasizing image and design.  The selling process is complex, lengthy, and generally has several manufacturers competing for the same projects.

The supplies-driven channel, in which the Corporation is a market leader, primarily represents smaller orders of office furniture purchased by small/medium businesses. Sales in this channel are driven on the basis of price, quality, selection, speed, and reliability of delivery.  Office productsproduct dealers, wholesalers, and national office product distributors, e-Commerce retailers, and wholesalers are the primary distribution channels in this market.

The Corporation also competes in the hearth products industry, where it is a market leader.  Hearth products are typically purchased by builders during the construction of new homes and homeowners during the renovation of existing homes.  Both types of purchases involve seasonality with remodel/retrofit activity being particularly concentrated in the September to December time-frame.  Distribution is primarily through independent dealers, who may buy direct from the manufacturer or from an intermediate distributor.

The Corporation's strategy is to build on its position as a leading manufacturer of office furniture and hearth products in North America and pursue select global markets where opportunities exist to create shareholder value.  The components of this growth strategy are to introduce new products, build brand equity, provide outstanding customer satisfaction, strengthen the distribution network, pursue complementary strategic acquisitions, enter markets not currently served, and continually reduce costs.

The Corporation’s strategy has a dual focus: working continuously to extract new growth from its core markets while identifying and developing new, adjacent potential areas of growth.  The Corporation focuses on extracting new growth from each of its existing businesses by deepening its understanding of end-users and using the insights gained to refine branding, selling, marketing, and productresearch and development.  The Corporation also pursues opportunities in potential growth drivers related to its core business, such as vertical markets or new distribution models.

As of December 30, 2017,28, 2019, the Corporation employed approximately 9,6008,500 persons, 9,1008,400 of whom were full-time and 500100 of whom were temporary personnel.  The Corporation believes its labor relations are good.

The Corporation designs, manufactures, and markets a broad range of office furniture systems and seatingworkplace furnishings across a range of price points. The Corporation's portfolio includes panel-based and freestanding furniture systems and complementary products such as seating, storage, tables, and relocatable architectural walls.products. The Corporation offers a complete line of office panel system products, benching, freestanding tables, storage, and freestanding desks, bookshelves, and credenzassocial collaborative products in order to meet the needs of a wide spectrum of organizations. The Corporation offers a variety of storage options designed either to be integrated into the Corporation's office systems products or to function as freestanding furniture in office applications. The Corporation's seating line includes chairs designed for all types of office work.work, including task seating, multi-purpose seating, and soft upholstery lounge.  The chairs are available in a variety of frame colors, coverings, and a wide range of price points.

To meet the demands of various markets, the Corporation's products are sold primarily under the Corporation's brands:

The Corporation is North America’s largest manufacturer and marketer of prefabricated fireplaces, hearth stoves, and related products. These products are primarily for the home and are sold under the following widely recognized brands:

The Corporation manufactures office furniture in Georgia, Iowa, New York, North Carolina, China, and India.  The Corporation manufactures hearth products in Iowa, Minnesota, Pennsylvania, and Vermont.

The Corporation purchases raw materials and components from a variety of suppliers and generally, most items are available from multiple sources.  Major raw materials and components include coil steel, aluminum, zinc, castings, lumber, veneer, particleboard, fabric,textiles, paint, lacquer, hardware, glass, plastic products, shipping cartons, foam, and shipping cartons.fiberglass.

Since its inception, the Corporation has focused on making its manufacturing facilities and processes more flexible while reducing cost, eliminating waste, and improving product quality.  The Corporation applies the principles of RCI and a lean manufacturing philosophy leveraging the creativity of its members to eliminate and reduce costs.  To achieve flexibility and attain efficiency goals, the Corporation has adopted a variety of production techniques, including cellular manufacturing, focused factories, just-in-time inventory management, value engineering, business simplification, and 80/20 principles.  The application of RCI has increased productivity by reducing set-up, processing times, square footage, inventory levels, product costs, and delivery times, while improving quality and enhancing member safety.  The Corporation's RCI process involves members, customers, and suppliers.  Manufacturing also plays a key role in the Corporation's concurrent productresearch and development process in order to design new products for ease of manufacturability.

The Corporation's productresearch and development efforts are primarily focused on developing relevant and differentiated end-user solutions focused on quality, aesthetics, style, sustainable design, and reduced manufacturing costs.  The Corporation accomplishes this through improving existing products, extending product lines, applying ergonomic research, improving manufacturing processes, leveraging alternative materials, and providing engineering support to its operating units.  The Corporation conducts its productresearch and development efforts at both the corporate and operating unit levels.  The Corporation invested in productresearch and development as follows (in thousands):

As of December 30, 2017,28, 2019, the Corporation owned 181 U.S.141 United States and 187138 foreign patents with expiration dates through 20402042 and had applications pending for 20 U.S.25 United States and 5945 foreign patents.  In addition, the Corporation holds 169 U.S.183 United States and 446411 foreign trademark registrations and has applications pending for 28 U.S.14 United States and 1512 foreign trademarks.

The Corporation’s patents covering its hearth products protect various technical innovations.  While the acquisition of patents reflects Hearth & Home’s position in the market as an innovation leader, the Corporation believes neither any individual hearth product patent nor the Corporation’s hearth product patents in the aggregate are material to the Corporation’s business as a whole.

The Corporation applies for patent protection when it believes the expense of doing so is justified and the duration of its registered patents is adequate to protect these rights.  The Corporation also pays royalties in certain instances for the use of patents on products and processes owned by others.

The Corporation applies for trademark protection for brands and products when it believes the expense of doing so is justified. The Corporation actively protects trademarks it believes have significant value. The Corporation believes neither the loss of any individual trademark nor the loss of the Corporation's trademarks in the aggregate would materially or adversely affect the Corporation's business as a whole, except for HON, Allsteel, Heat & Glo, and Heatilator.

The Corporation sells its office furniture products through five principalvarious distribution channels.  The firstA summary of each channel consisting of independent,is as follows:

The Corporation's office furniture sales force consists of regional sales managers, salespersons, and firms of independent manufacturers' representatives who collectively provide national sales coverage.  Sales managers and salespersons are compensated by a combination of salary and variable performance compensation.

The Corporation also makes export sales through HNI ExportInternational to independent office furniture dealers and wholesale distributors serving select foreign markets.  Distributors are principally located in the Middle East, Mexico, Latin America, and the Caribbean.  Through Lamex and HNI India, the Corporation manufactures and distributes office furniture directly to end-users and through independent dealers and distributors in Asia, primarily China and India.

Hearth & Home sells its fireplace and stovehearth products through independent dealers, distributors, and Corporation-owned distribution and retail outlets.  The Corporation has a field sales organization of regional sales managers, salespersons, and firms of independent manufacturers' representatives.

In fiscal 2017,2019, the Corporation's five largest customers represented approximately 2421 percent of its consolidated net sales. No single customer accounted for 10 percent or more of the Corporation’s consolidated net sales in fiscal 2017.2019.  The substantial purchasing power exercised by large customers may adversely affect the prices at which the Corporation can successfully offer its products.

The Corporation has an order backlog, which will be filled in the ordinary course of business. The Corporation's backlog orders are typically cancelable for a period of time and the backlog is typically fulfilled within a quarter. Order backlog in dollars and in terms of percentage of net sales was as follows (in thousands):

The Corporation’s products are typically manufactured and shipped within a few weeks following receipt of order or later upon customer request.  Therefore, the dollar amount of the Corporation’s order backlog is not considered by management to be a leading indicator of the Corporation’s expected sales in any particular fiscal period.

The Corporation is a leading global office furniture manufacturer and marketer, and is North America's largest manufacturer and marketer of fireplaces.

The office furniture industry is highly competitive, with a significant number of competitors offering similar products.  The Corporation competes by emphasizing its ability to deliver compelling value products, solutions, and a high level of tailored customer service.  The Corporation competes with large office furniture manufacturers, which cover a substantial portion of the North America market share in the contract-oriented office furniture market, including manufacturers such as Steelcase Inc., Haworth, Inc., Herman Miller, Inc., and Knoll, Inc.  The Corporation also competes with a number of other office furniture manufacturers, including, The Global Group, (a Canadian company), Kimball International, Inc., Krueger International Inc. (KI), and Teknion Corporation, (a Canadian company), as well as global importers.  The Corporation faces significant price competition from its competitors and may encounter competition from new market entrants.

HearthThe hearth products consisting of prefabricated fireplaces and relatedindustry is also highly competitive. Hearth products are manufactured by a number of national and regional competitors.  The Corporation competes against a broad range of manufacturers, including Travis Industries Inc., Innovative Hearth Products, Wolf Steel Ltd. (Napoleon), and FPI Fireplace Products International Ltd. (Regency).

Both office furniture and hearth products compete on the basis of performance, quality, price, customer service, and complete and on-time delivery.  The Corporation believes it competes principally by providing compelling value products designed to be among the best in their price range for product quality, performance, superior customer service, and short lead-times.  This is made possible, in part, by the Corporation's on-going investment in brands, productresearch and development, low costefficient manufacturing operations, and extensive distribution network.

Certain business costs may, from time to time, increase at a rate exceeding the general rate of inflation.  The Corporation’s objective is to offset the effect of normal inflation primarily through productivity improvements combined with certain adjustments to the selling price of its products as competitive market and general economic conditions permit.

Investments are routinely made in modernizing plants, equipment, information technology, and RCI programs.  These investments collectively focus on business simplification and increasing productivity, which help to offset the effect of rising material and labor costs. The Corporation also routinely employs ongoing cost control disciplines.  In addition, the last-in, first-out ("LIFO") valuation method is used for most of the Corporation's inventories. The use of LIFO ensures changing material and labor costs are recognized in reported income and pricing decisions.

The Corporation is subject to a variety of environmental laws and regulations governing the use of materials and substances in products, the management of wastes resulting from use of certain material, and the remediation of contamination associated with releases of hazardous substances used in the past.  Although the Corporation believes it is substantially compliant with all of the various regulations applicable to its business, there can be no assurance requirements will not change in the future or the Corporation will not incur material costs to comply with such regulations.  The Corporation has trained staff responsible for monitoring compliance with environmental, health, and safety requirements.  The Corporation’s staff works with responsible personnel at each manufacturing facility, the Corporation’s environmental legal counsel, and consultants on the management of environmental, health, and safety issues.  The Corporation’s environmental objective is to reduce and, when practical, eliminate the human and ecosystem impacts of materials and manufacturing processes.

Over the past several years, the Corporation has expanded its environmental management system and established metrics to influence product design and development, supplier and supply chain performance, energy and resource consumption, and the impacts of its facilities.  In addition, the Corporation is providingprovides sustainability training to senior decision makers and has assigned resources to documenting and communicating its progress to an increasingly knowledgeable market.  Integrating sustainable objectives into core business systems is consistent with the Corporation’s vision, and ensures its commitment to being a sustainable enterprise, and remains a priority for all members.

Compliance with federal, state, and local environmental regulations has not had a material effect on the capital expenditures, earnings, or competitive position of the Corporation to date.  The Corporation does not anticipate financially material capital expenditures will be required during fiscal 20182020 for environmental control facilities.  In management’s judgment, compliance with current regulations should not have a material effect on the Corporation’s financial condition or results of operations.  However, there can be no assurance new environmental legislation, material science, or technology in this area will not result in or require material capital expenditures.

The development of the Corporation's business during the fiscal years ended December 28, 2019, December 29, 2018, and December 30, 2017 December 31, 2016, and January 2, 2016 is discussed in ''Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this report.

Statements in this report to the extent they are not statements of historical or present fact, including statements as to plans, outlook, objectives, and future financial performance, are "forward-looking" statements, within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.  Words such as "anticipate," "believe,"

Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Corporation’s actual results in the future to differ materially from expected results.  The most significant factors known to the Corporation that may adversely affect the Corporation’s business, operations, industries, financial position, or future financial performance are described later in this report under the heading "Item 1A. Risk Factors."  The Corporation cautions readers not to place undue reliance on any forward-looking statement, which speaks only as of the date made, and to recognize forward-looking statements are predictions of future results, which may not occur as anticipated.  Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the risks and uncertainties described elsewhere in this report, including but not limited to: the levels of office furniture needs and housing starts; overall demand for ourthe Corporation's products; general economic and market conditions in the United States and internationally; industry and competitive conditions; the consolidation and concentration of ourthe Corporation's customers; ourthe Corporation's reliance on ourits network of independent dealers; changes in trade policy; changes in raw material, component, or commodity pricing; market acceptance and demand for ourthe Corporation's new products; our ability to successfully execute our business software system implementation; our ability to achieve desired results from closures and structural cost reduction initiatives; our ability to achieve the anticipated benefits from integrating our acquired businesses and alliances; changing legal, regulatory, environmental, and healthcare conditions; the risks associated with international operations; the potential impact of product defects; the various restrictions on ourthe Corporation's financing activities; an inability to protect ourthe Corporation's intellectual property; the impactimpacts of recent tax legislation; force majeure events outside the Corporation’s control; and other risks as described under the heading "Item 1A. Risk Factors," as well as others that the Corporation may consider not material or does not anticipate at this time.  The risks and uncertainties described in this report, including those under the heading "Item 1A. Risk Factors," are not exclusive and further information concerning the Corporation, including factors that potentially could have a material effect on the Corporation’s financial results or condition, may emerge from time to time.

The Corporation assumes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.  The Corporation advises you, however, to consult any further disclosures made on related subjects in future quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC.

The following risk factors and other information included in this report should be carefully considered.  If any of the following risks occur, ourthe Corporation's business, operating results, cash flows, or financial condition could be materially adversely affected.

Office furniture industry sales are impacted by a variety of macroeconomic factors including service-sector employment levels, corporate profits, small business confidence, commercial construction, and office vacancy rates. Industry factors, including corporate restructuring, technology changes, corporate relocations, health and safety concerns, including ergonomic considerations, and the globalization of companies also influence office furniture industry revenues.

Hearth products industry sales are impacted by a variety of macroeconomic factors including housing starts, overall employment levels, interest rates, home affordability, consumer confidence, energy costs, disposable income, and changing demographics. Industry factors, such as technology changes, health and safety concerns, and environmental regulation, including indoor air quality standards, also influence hearth products industry revenues. Deterioration of economic conditions or a slowdown in the recovery in the homebuilding industry and the hearth products market could decrease demand for our hearth products and have additional adverse effects on our operating results. Additionally, the decline in oil and other fuel prices has negatively impacted demand for pellet stoves and we expect demand to remain soft

A deterioration of economic conditions in the pellet business while oil and other fuel prices remain low.

Deteriorating economic conditions could affect ourthe Corporation's business significantly, including: reduced demand for products; insolvency of our independent dealers resulting in increased provisions for credit losses; insolvency of our key suppliers resulting in product delays; inability of customers to obtain credit to finance purchases of our products; and decreased customer demand, including order delays or cancellations. In a recessionary economy, business confidence, service-sector employment, corporate cash flows and residential and non-residential commercial construction often decrease, which typically leads to a decrease in demand for office furniture and hearth products.

Both the office furniture and hearth products industries are highly competitive. Many of ourthe Corporation's competitors in both industries offer similar products.  Competitive factors include price, delivery and service, brand recognition, product design, product quality, strength of dealers and other distributors, and relationships with customers and key influencers, including architects, designers, home-builders, and facility managers.  In both industries, most of ourthe top competitors have an installed base of products that can be a source of significant future sales through repeat and expansion orders.  OurThe Corporation's main competitors manufacture products with strong acceptance in the marketplace and are capable of developing products that have a competitive advantage, over our products, which could make it difficult for us to win new business.

In both the office furniture and hearth products industries, we facethe Corporation faces price competition from our competitors and from new market entrants who primarilymay manufacture and source products from lower cost countries.  Price competition impacts ourthe ability to implement price increases or, in some cases, even maintain prices, which could lower our profit margins and adversely affect our future financial performance.

We sell ourThe Corporation sells products through multiple distribution channels, which primarily includesinclude independent dealers, national dealers, wholesalers, and wholesalers.e-Commerce.  Within these distribution channels, there has been, and may continue to be, consolidation. We relyThe Corporation relies on distribution partners to provide a variety of important specification, installation, and after-market services to our customers.  Some of our distribution partners may terminate their relationshipsrelationship with usthe Corporation at any time and for any reason.  We haveThe Corporation has experienced demand shift to direct fulfillment, reducing two-step distribution that was previously provided by wholesale partners. Our abilityThe inability to provide increased direct fulfillment and/or the loss or termination of a significant number of reseller relationships could cause difficulties for us in marketing and distributing our products, resulting in a decline in our sales, which may adversely affect ourthe business, operating results, or financial condition.

Fluctuations in the price, availability, and quality of the commodities, raw materials, and components used in manufacturing could have an adverse effect on our costs of sales, profitability, and our ability to meet customers' demand.  We sourceThe Corporation sources commodities, raw materials, and components from domestic and international suppliers for both ourthe office furniture and hearth products.  From both domestic and international suppliers, the cost, quality, and availability of commodities, raw materials, and components, including steel, have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws

and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, natural disasters, labor disputes, terrorism, and political unrest or instability.  These factors could lead to further price increasesvolatility or supply interruptions in the future.  Our profitProfit margins could be adversely affected if commodity, raw material, and component costs remain high or escalate further, and we arethe Corporation is either unable to offset such costs through strategic sourcing initiatives and continuous improvement programs or, as a result of competitive market dynamics, unable to pass along a portion of the higher costs to our customers.

We relyThe Corporation relies primarily on third-party freight and transportation providers to deliver our products to customers. Increasing demand for freight providers and a shortage of qualified drivers may cause delays in our shipments and increase the cost to ship ourits products, which may adversely affect our profitability. Additionally, we importthe Corporation imports and exportexports products and components, primarily using container ships, which load and unload through North American ports. Port-caused delays in the shipment or receipt of products and components, including labor disputes, could cause delayed receipt of our products and components. These delays could cause manufacturing disruptions, increased expense resulting from alternate shipping methods, or the inability to meet customer delivery expectations, which may adversely affect our sales and profitability.

To meet the changing needs of our customers and keep pace with market trends weand evolving regulatory and industry requirements, including environmental, health, safety, and similar standards for the workplace and for product performance, the Corporation regularly introduceintroduces new office furniture and hearth products.  The introduction of new products requires the coordination of the design, manufacturing, and marketing of the products, which may be affected by factors beyond our control.uncontrollable factors.  The design and engineering of certain new products varies but can take up toextend beyond a year or more, andyear; further time may be required to achieve client acceptance.  WeThe Corporation may face difficulties if weit cannot successfully align ourselvesitself with independent architects, home-builders, and designers who are able to design, in a timely manner, high quality products consistent with ourthe Corporation's image and our customers' needs.  Accordingly, the launch of a product may be later or less successful than we originally anticipated, limiting our sales growth or causing our sales to decline.

One of ourthe Corporation's growth strategies is to supplement ourits organic growth through acquisitions and strategic alliances. The benefits of acquisitions or alliances may take more time than expected to develop or integrate into our operations. In addition, acquisitions and alliances involve a number of risks, including:

OurThe Corporation's ability to grow through future acquisitions will depend, in part, on the availability of suitable acquisition candidates at an acceptable price, ourthe ability to compete effectively for these acquisition candidates, and the availability of capital to complete the acquisitions.  Any potential acquisition may not be successful and could adversely affect ourthe business, operating results, or financial condition.

Goodwill and other acquired intangible assets with indefinite lives are recorded at fair value at the time of acquisition and are not amortized, but are testedreviewed for impairment annually and whenor more frequently if an event occurs or circumstances change making it reasonably

possible an impairment may exist.  Poor performance in portionsIn evaluating the potential for impairment of our business where we have goodwill orand other intangible assets, orthe Corporation makes assumptions regarding future operating performance, business trends and market and economic performance, and the Corporation’s sales, operating margins, growth rates and discount rates. There are inherent uncertainties related to these factors. If the Corporation experiences disruptions in its business, unexpected significant declines in operating results, a divestiture of a significant component of its business, declines in the market value of our equity, may result inor other factors causing the Corporation's goodwill or intangible assets to be impaired, the Corporation could be required to recognize a non-cash impairment charges,charge, which would adversely affect ourthe results of operations.

Through ourthe past and present operation and ownership by us of manufacturing facilities and real property, we arethe Corporation is subject to extensive and changing federal, state, and local environmental laws and regulations, both domestic and abroad, including those relating to discharges in air, water, and land, the handling and disposal of solid and hazardous waste, and the remediation of contamination associated with releases of hazardous substances.  In addition, the increased prevalence of global climate issues may result in new regulations that may negatively impact the Corporation. Compliance with environmental regulations has not had a material effect on our capital expenditures, earnings, or competitive position to date; however, compliance with current laws or more stringent laws or regulations which may be imposed on us in the future, stricter interpretation of existing laws or discoveries of contamination at ourthe Corporation's real property sites which occurred prior to our ownership, or the advent of environmental regulation may require us to incur additional expenditures in the future, some of which may be material.

 

We provideThe Corporation provides healthcare benefits to the majority of ourits members and areis self-insured.  Healthcare costs have continued to rise over time, which increases ourthe annual spending on healthcare and could adversely affect ourthe Corporation's business, operating results, and financial condition.

We manufacture, market,The Corporation manufactures, markets, and sell oursells products in international markets, including China and India. We planIndia and plans to continue to grow internationally. WeThe Corporation primarily sell oursells products and report ourreports the financial results in U.S.United States dollars; however, our increased business in countries outside the United States exposes uscreates exposure to fluctuations in foreign currency exchange rates.  Paying our expenses in other currencies can result in a significant increase or decrease in the amount of those expenses in terms of U.S.United States dollars, which may affect our profits.  In the future, any foreign currency appreciation relative to the U.S.United States dollar would increase our expenses that are denominated in that currency.  Additionally, as we reportthe Corporation reports currency in the U.S.United States dollar, ourthe financial position is affected by the strength of the currencies in countries where we havethe Corporation has operations relative to the strength of the U.S.United States dollar.

Further, certain countries have complex regulatory systems that impose administrative and legal requirements, which make managing international operations more difficult, including approvals to transfer funds intoamong certain countries. If we arethe Corporation is unable to provide financial support to ourthe international operations in a timely manner, our business, operating results, and financial condition could be adversely affected.

WeThe Corporation periodically review ourreviews foreign currency exposure and evaluateevaluates whether weit should enter into hedging transactions.

OurThe Corporation's international sales and operations are subject to a number of additional risks, including:

OurThe Corporation's credit facility and other financing arrangements may limit ourlimits the ability of the Corporation to finance operations, service debt, or engage in other business activities that may be in ourits interests.  Specifically, our credit facility maythe debt agreements restrict ourits ability to incur additional indebtedness, create or incur certain liens with respect to any of our properties or assets, engage in lines of business substantially different than those currently conducted by us, sell, lease, license, or dispose of any of our assets, enter into certain transactions with affiliates, make certain restricted payments or take certain restricted actions, and enter into certain sale-leaseback arrangements.  Our credit facilityThe debt agreements also requires usrequire the Corporation to maintain certain financial covenants.

OurThe failure to comply with the obligations under our credit facilitythe debt agreements may result in an event of default, which, if not cured or waived, may cause accelerated repayment of the indebtedness under the credit facility.  Weagreements.  The Corporation cannot be certain weit will have sufficient funds available to pay any accelerated repayments or we will have the ability to refinance accelerated repayments on terms favorable to usterms or at all.

We incurThe Corporation incurs various expenses related to product defects, including product warranty costs, product recall and retrofit costs, and product liability costs.  These expenses relative to product sales vary and could increase.  We useThe Corporation uses chemicals and materials in our products and includeincludes components in our products from external suppliers, which we believe are believed to be safe and appropriate for their designated use; however, harmful effects may become known, which could subject usthe Corporation to litigation and significant losses. We maintainThe Corporation maintains reserves for product defect-related costs but cannotthere can be certainno certainty these reserves will be adequate to cover actual claims.  We also purchase insurance coverage and maintain a reserve for our self-insured losses based upon estimates and actuarial assumptions, but we cannot be certain insurance would cover all losses related to product claims.  Incorrect estimates or any significant increase in the rate of our product defect expenses could have a material adverse effect on operations.

OurThe Corporation's capital requirements depend on many factors, including ourits need for capital improvements, tooling, new productresearch and development, and acquisitions.  To the extent our existing capital is insufficient to meet these requirements and cover any losses, wethe Corporation may need to raise additional funds through financings or curtail ourits growth and reduce ourthe Corporation's assets.  Future borrowings or financings may not be available to us under ourthe credit facility or otherwise in an amount sufficient to enable usthe Corporation to pay ourits debt or meet ourits liquidity needs.

Any equity or debt financing, if available, could have terms unfavorable to us.terms.  In addition, financings could result in dilution to our shareholders or the securities may have rights, preferences, and privileges senior to those of ourthe Corporation's common stock.  If ourthe need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital.

We deriveThe Corporation derives a portion of ourits revenue from sales to various U.S.United States federal, state, and local government agencies and departments.  OurThe ability to compete successfully for and retain business with the U.S.United States government, as well as with state and local governments, is highly dependent on cost-effective performance.  OurThis government business is highly sensitive to

changes in procurement laws; national, international, state, and local public priorities; and budgets at all levels of government, which have recently experiencedfrequently experience downward pressure and, in the case of the federal budget, are subject to uncertainty.

OurThe Corporation's contracts with government entities are subject to various statutes and regulations that apply to companies doing business with the government.  The U.S.United States government, as well as state and local governments, can typically terminate or modify their contracts with us either for their convenience or if we defaultthe Corporation defaults by failing to perform under the terms of the applicable contract.  A termination arising out of our default could expose usthe Corporation to liability and impede ourits ability to compete in the future for contracts and orders with agencies and departments at all levels of government.  Moreover, we arethe Corporation is subject to investigation and audit for compliance with the requirements governing government contracts, including requirements related to procurement integrity, export controls, employment practices, the accuracy of records, and reporting of costs.  If wethe Corporation were found to not be a responsible supplier or to have committed fraud or certain criminal offenses, weit could be suspended or debarred from all further federal, state, or local government contracting.

We relyThe Corporation relies upon information technology networks and systems to process, transmit, and store electronic information, as well as to manage numerous aspects of ourthe business and provide information to management.  Additionally, we collectthe Corporation collects and storestores sensitive data of ourits customers, suppliers, and employees in data centers and on information technology networks. The secure operation of these information technology networks and the processing and maintenance of this information is critical to our business operations and strategy. These networks and systems, despite security and precautionary measures, are vulnerable to natural events and malicious activity. Though we attemptthe Corporation attempts to detect and prevent these incidents, weit may not be successful.  In addition, the Corporation is subject to data privacy and other similar laws in various jurisdictions. If the Corporation is the target of a cybersecurity attack, computer virus, physical or electronic break-in or similar disruption resulting in unauthorized disclosure of sensitive data of customers, suppliers, and employees, the Corporation may be required to undertake costly notification procedures. The Corporation may also be required to expend significant additional resources to protect against the threat of security breaches or to alleviate problems, including reputational harm and litigation, caused by any breaches. Any disruption of our information technology networks or systems, or access to or disclosure of information stored in or transmitted by our systems, could result in legal claims and damages and loss of intellectual property or other proprietary information.

We provideThe Corporation provides public guidance on ourthe expected results of operations for future periods. This guidance is comprised of forward-looking statements subject to risks and uncertainties, including the risks and uncertainties described in this Annual Report on Form 10-K and in our other public filings and public statements, and is based necessarily on assumptions we makemade at the time we providethe Corporation provides such guidance. OurThe guidance may not always be accurate. If, in the future, ourthe results of operations for a particular period do not meet ourits guidance or the expectations of investment analysts or if we reduce ourthe Corporation reduces its guidance for future periods, the market price of our common stock could decline significantly.

Natural disasters, acts of God, force majeure events, or other catastrophic events, including severe weather, military action, terrorist attacks, power interruptions, and fires, could disrupt operations and likewise, the ability to produce or deliver our products. Several of ourthe Corporation's production facilities, members, and key management are located within a small geographic area in eastern Iowa located near the Mississippi River and a natural disaster or catastrophe in the area, such as flooding or severe storms, could have a significant adverse effect on ourthe results of operations and business conditions. Further, several of ourthe Corporation's production facilities are single-site manufacturers of certain products, and an adverse event affecting any of those facilities could significantly delay production of certain products and adversely affect ourthe operations and business conditions. Members are an integral part of ourthe business and events including an epidemic could reduce the availability of members reporting for work. In the event we experiencethe Corporation experiences a temporary or permanent interruption in ourits ability to produce or deliver product, revenues could be reduced, and business could be materially adversely affected. In addition, any continuing disruption in ourthe Corporation's computer system could adversely affect ourthe ability to receive and process customers' orders, procure materials, manufacture products and ship products on a timely basis, and could adversely affect relations with customers, potentially resulting in reduction in orders from customers or loss of customers. We maintain insurance

The Corporation maintains its corporate headquarters in Muscatine, Iowa, and conducts operations at locations throughout the United States, Canada, China, Hong Kong, India, Mexico, Dubai, Taiwan, and Taiwan,Singapore, which house manufacturing, distribution, and retail operations and offices, totaling an aggregate of approximately 10.08.6 million square feet.  Of this total, approximately 2.9 million square feet are leased.

Although the plants are of varying ages, the Corporation believes they are well maintained, equipped with modern and efficient equipment, in good operating condition, and suitable for the purposes for which they are being used.  The Corporation has sufficient capacity to increase output at most locations by increasing the use of overtime or the number of production shifts employed.

The Corporation's principal manufacturing and distribution facilities (200,000 square feet in size or larger) are as follows:

Other facilities total approximately 3.83.3 million square feet, of which approximately 2.51.9 million square feet are leased. Approximately 2.22.0 million square feet are used for the selling, manufacturing, and distribution of office furniture, approximately 1.41.1 million square feet are used for the selling, manufacturing, and distribution of hearth products, and approximately 0.2 million square feet are used for corporate administration.

There are no major encumbrances on Corporation-owned properties.  Refer to the Property, Plant, and Equipment section in "Note 2. Summary of Significant Accounting Policies" for related cost, accumulated depreciation, and net book value data.

The Corporation is involved in various disputes and legal proceedings that have arisen in the ordinary course of its business, including pending litigation, environmental remediation, taxes, and other claims.  It is the Corporation’s opinion, after consultation with legal counsel, that liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation’s financial condition, cash flows, or on the Corporation’s quarterly or annual operating results when resolved in a future period. For more information regarding legal proceedings, see "Note 16. Guarantees, Commitments, and Contingencies" in the Notes to Consolidated Financial Statements, which information is incorporated herein by reference.

The Corporation’s common stock is listed for trading on the New York Stock Exchange (NYSE) under the trading symbol HNI.  As of year-end 2017,December 28, 2019, the Corporation had 6,2205,487 shareholders of record.

EQ Shareowner Services, St. Paul, Minnesota, serves as the Corporation’s transfer agent and registrar of its common stock.  Shareholders may report a change of address or make inquiries by writing or calling: EQ Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0854, or 800-468-9716.

The Corporation expects to continue its policy of paying regular quarterly cash dividends.  Dividends have been paid each quarter since the Corporation paid its first dividend in 1955.  The average dividend payout percentage for the most recent three-year period has been 57 percent of prior year earnings.  Future dividends are dependent on future earnings, capital requirements, and the Corporation’s financial condition, and are declared in the sole discretion of the Corporation’s Board of Directors.Board.

The following is a summary of share repurchase activity during the fourth quarter of fiscal 2017:2019:

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

The following discussion of the Corporation’s historical results of operations and of its liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements of the Corporation and related notes.  Statements that are not historical are forward-looking and involve risks and uncertainties. See "Item 1A. Risk Factors" and the Forward-Looking Statements section within "Item 1. Business" for further information.

The Corporation has two reportable segments: office furniture and hearth products.  The Corporation is a leading global office furniture manufacturer and themarketer, and a leading manufacturer and marketer of hearth products.  The Corporation utilizes a split and focus, decentralized business model to deliver value to customers via various brands and selling models.  The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.

Net income attributable to the Corporation in 20172019 was $89.8$110.5 million an increase of 4.9 percent, compared to net income of $85.6$93.4 million in 2016.2018. The increasechange was primarily driven by the one-time tax benefit of $44.8 million related to new tax legislation, lower incentive based compensation,restructuring, transition, and the impact of stockimpairment charges, price change on deferred compensation.realization, net productivity and improved SG&A efficiency. These factors were partially offset by strategic investments,lower volume and higher input cost inflation, unfavorable product mix, higher restructuring and transition costs, $20.9 million of goodwill and intangible impairment charges primarily due to the closure of the Paoli office furniture brand, and a $10.3 million valuation allowance of a long-term note receivable.costs.

The following table presents certain key highlights from the results of operations (in thousands):

For 2017, consolidatedConsolidated net sales for 2019 decreased 1.30.5 percent or $27.6 million to $2,175.9$10.9 million compared to $2,203.5 million in 2016.the prior year.  The change was driven by a decrease in both the office furniture and hearth products segments. The decrease in office furniture was driven by lower sales in the office furniture segment,supplies-driven business, partially offset by ana small increase in salesthe office furniture contract business. Included in the hearth products segment. Officesales results for the office furniture segment sales were down due tocontract business was a decline in the supplies-driven business combined with a $92.2$23.1 million negative net impact of acquisitionsfrom closing and divestitures ofdivesting small office furniture companies. This decrease in office furniture was partially offset by an increase in the North American contract business. The hearth products segment saw an increasedecreases in both the new construction business due to growth in single family housing and an increase in the retail business due to growth in pellet appliance demand.businesses.

For 2016, consolidatedConsolidated net sales decreased 4.4for 2018 increased 3.8 percent or $100.9 million to $2,203.5$82.0 million compared to $2,304.4 million in 2015.2017.  The change was driven by a decreasean increase in sales across both the office furniture and hearth products segments. Office furniture segment sales were down due to strategic portfolio movesincreased in both the supplies-driven and a challenging market environment,contract businesses which were partially offset by a $27.2$57.6 million positivenegative net impact of acquisitionsclosing and divestitures ofdivesting small office furniture companies. The hearth products segment saw mixed results as solid growthincreases in both the new construction was more than offset by declines in theand retail business due to comparatively low energy prices and unseasonably warm weather.businesses.

Gross profit as a percentage of net sales decreased 190increased 10 basis points in 20172019 compared to 20162018 primarily driven by input cost inflation, unfavorable product mix,price realization and net productivity, offset by lower volume and higher restructuring and transition costs, partially offset by higher sales volume and the impact of divestitures. input costs.

Gross profit as a percentage of net sales increased 110100 basis points in 20162018 compared to 20152017 primarily driven by strong operational performance, favorable material costlower restructuring and transition costs, price realization, net productivity and price realization,cost savings, partially offset by lower volume.higher input costs.

Cost of sales in 2017 included $10.3 million of restructuring costs and $17.0 million of transition costs related to the previously announced closures of the hearth manufacturing facilities in Paris, Kentucky and Colville, Washington and the office furniture manufacturing facility in Orleans, Indiana and structural realignments in China and between office furniture facilities in Muscatine, Iowa. Specific items incurred include accelerated depreciation and production move costs.

Selling and administrative expenses increasedas a percentage of net sales decreased 30 basis points in 20172019 compared to 20162018 primarily driven by strategic investments, partially offsetimproved SG&A efficiency.

Selling and administrative expenses as a percentage of net sales decreased 30 basis points in 2018 compared to 2017 primarily driven by lower incentive based compensation, the impact of divestitures,increased efficiency and the impact of stock price change on deferred compensation. In 2016,closing and divesting small office furniture companies, partially offset by the Corporation also recorded a $2.0 million nonrecurring gain on a litigation settlementamortization and $4.4 million of accelerated depreciation in conjunction withimplementation costs from the charitable donation of a building. Selling and administrative expenses increased in 2016 compared to 2015 due toBusiness System Transformation initiative, strategic investments, and higher incentive basedvariable compensation.

Selling and administrative expenses include freight expense for shipments to customers, productresearch and development costs, and amortization expense of intangible assets.  Refer to "Note 2. Summary of Significant Accounting Policies" and "Note 6.7. Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements for further information regarding the comparative expense levels for these items.

The Corporation recorded a net $1.9 million gain in 2017, which included a $6.0 million nonrecurring gain from the sale and license of an intangible asset, a $0.8 million gain on the sale of a closed facility, and a $4.8 million loss on the disposal of a manufacturing facility, in addition to other gains and losses incurred in the ordinary course of business. The Corporation realized a non-cash loss of $22.6 million in 2016 related to the sale of Artcobell, a K-12 education furniture company, in addition to other gains and losses incurred in the ordinary course of business.

In 2017, the Corporation recorded $6.2 million of restructuring costs due to 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 Corporation recorded $20.9 million, $5.8$14.9 million and $11.2$20.9 million of goodwill, intangible and intangiblelong-lived asset impairments in 2017, 2016,2018 and 2015,2017, respectively, related to reporting units in the office furniture segment. These impairment charges arewere the result of current and projected market conditions and product and operational transformation. The impairment charge in 2017 also includes the impact of closing the Paoli office furniture brand. See "Note 6.7. Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements for more information on goodwill and intangible asset impairments.

For 2017,2019, operating income decreased 42.6increased 18.1 percent or $57.0$23.2 million to $76.7$151.3 million compared to $133.7$128.2 million in 2016.2018. The change was primarily driven by thelower restructuring, transition, and impairment charges, recorded in conjunction with the closure of the Paoli office furniture brand, the valuation allowance recorded against a long-term note receivable, strategic investments,price realization, net productivity and input cost inflation,improved SG&A efficiency. These factors were partially offset by lower volume and higher sales volume, lower incentive based compensation, and the impact of stock price change on deferred compensation.input costs.

For 2016,2018, operating income decreased 18.3increased 67.1 percent or $30.0$51.5 million to $133.7$128.2 million compared to $163.7$76.7 million in 2015.2017. The change was primarily driven by lower restructuring, transition, and impairment charges, price realization, net productivity and cost savings, and the non-cash loss on the saleimpact of Artcobellclosing and lower volume,divesting small office furniture companies. These factors were partially offset by strong operational performancehigher input costs, the amortization and cost reductions.implementation costs from the Business System Transformation initiative, strategic investments, and higher variable compensation.

The following table summarizes the Corporation's income tax provision for(in thousands):

The income taxes reflected antax provision reflects a higher rate in 2019 compared to 2018 primarily due to increased worldwide income resulting in a lower rate benefit on tax credits, increased foreign income and state taxes. The increase in the effective tax rate as follows:

Net income attributable to the Corporation was $110.5 million or $2.54 per diluted share in 2019 compared to $93.4 million or $2.11 per diluted share in 2018 and $89.8 million or $2.00 per diluted share in 2017 compared to $85.6 million or $1.88 per diluted share in 2016 and $105.4 million or $2.32 per diluted share in 2015.2017.

The following table presents certain key highlights from the results of operations in the office furniture segment (in thousands):

Net sales in 20172019 for the office furniture segment decreased 2.50.5 percent or $43.2 million to $1,660.7$8.9 million compared to $1,703.9 million2018. The change was driven by a decrease in 2016. Sales were down due to a declineboth the office furniture and hearth products segments. The decrease in office furniture was driven by lower sales in the office furniture supplies-driven business, combined withpartially offset by a small increase in the netoffice furniture contract business. Included in the sales results for the office furniture contract business was a $23.1 million negative impact of acquisitionsfrom closing and divestitures ofdivesting small office furniture companies, which was a net decrease in sales of $92.2 million. This decrease was partially offset by an increase in the North American contract business.companies.

Net sales in 20162018 for the office furniture segment decreased 4.2increased 2.7 percent or $73.9 million to $1,703.9$45.4 million compared to $1,777.8 million2017. Sales increased in 2015. The Corporation experienced a decline in the contract business whileboth the supplies-driven business remained flat due to strategic portfolio moves and a soft market. This decreasecontract businesses. The sales increase was partially offset by a decrease of $57.6 million from the net impact of acquisitionsclosing and divestitures ofdivesting small office furniture companies, which was a net increase in sales of $27.2 million.companies.

Operating profit as a percentage of net sales was 3.0 percentincreased 160 basis points in 2017, 6.9 percent in 2016, and 7.7 percent in 2015.  The decrease in operating margin for 20172019 compared to 20162018.  The increase was primarily driven by unfavorable productlower restructuring, impairment and business mix, input cost inflation, strategic investments,transition charges, along with price realization, net productivity, and improved SG&A efficiency. These factors were partially offset by lower volume and higher input costs.

Operating profit as a percentage of net sales increased 150 basis points in 2018 compared to 2017. The increase was primarily driven by lower restructuring, impairment and transition costs, includingcharges, along with price realization, net productivity and cost savings, and the impairmentimpact of goodwillclosing and intangible assets primarily relating to the closure of the Paolidivesting small office furniture brand.companies. These factors were partially offset by higher sales volume, lower incentive based compensation,input costs, amortization and implementation costs from the impactBusiness Systems Transformation initiative, and strategic investments.

In 2019, the office furniture segment recorded $2.4 million of divestitures. The decreaserestructuring costs and $0.2 million of transition costs primarily associated with structural realignments in operating margin for 2016 compared to 2015 wasthe office furniture segment. Specific items incurred include severance and member relocation costs.

In 2018, the office furniture segment recorded $1.5 million of restructuring costs and $1.6 million of transition costs primarily driven by lower volume, strategic investments, andassociated with the impactspreviously announced closure of the saleoffice furniture manufacturing facility in Orleans, Indiana and structural realignments in China. Specific items incurred include severance, production move costs, and final facility closing costs. Of these charges, $1.6 million was included in cost of Artcobell, previously announced closures, andsales. The office furniture segment also recorded impairments of $14.9 million of goodwill and other intangibles. These factors were partially offset by strong operational performance, favorable material costs and productivity, and cost reductions.long-lived assets related to reporting units in the segment.

In 2017, the office furniture segment recorded $11.6 million of restructuring costs and $13.7 million of transition costs associated with the previously announced closure of the office furniture manufacturing facility in Orleans, Indiana and structural realignments in China and between office furniture facilities in Muscatine, Iowa. Specific items incurred include severance, accelerated depreciation, and production move costs. Of these charges, $21.5 million was included in cost of sales. The office furniture segment also recorded a loss of $4.8 million related to the disposal of a manufacturing facility and $20.9 million of goodwill and intangible asset impairments related to reporting units in the office furniture segment, of which $16.1 million of the goodwill and intangible asset impairment charges related to the closure of the Paoli office furniture brand.

The following table presents certain key highlights from the results of operations in the hearth products segment (in thousands):

Net sales in 20172019 for the hearth products segment decreased 0.4 percent or $2.0 million compared to 2018. The change was driven by decreases in both the new construction and retail businesses.

Net sales in 2018 for the hearth products segment increased 3.17.1 percent or $15.6 million to $515.2$36.6 million compared to $499.6 million in 2016.2017. The change was driven by an increase in both the new construction business due to growth in single family housing and an increase in the retail business due to an increase in pellet appliance demand.businesses.

Operating profit as a percentage of net sales was 16.2 percentincreased 60 basis points in 2017, 14.0 percent in 2016, and 14.8 percent in 2015.2019 compared to 2018. The increase in operating margin in 2017 compared to 2016profit was primarily driven by structural cost reductions,price realization, lower variable compensation, and improved SG&A efficiency. These factors were partially offset by lower volume and higher input costs.

Operating profit as a percentage of net sales increased 40 basis points in 2018 compared to 2017. The increase in operating profit was primarily driven by higher volume, net productivity and nonrecurring gains.cost savings, and price realization. These factors were partially offset by higher input costs and higher variable compensation.

In 2018, the hearth products segment recorded $0.8 million of restructuring and transition costs. The decrease in operating margin in 2016 compared to 2015 was primarily driven by restructuring and$0.4 million of impairment charges along with $0.6 million of transition costs related toassociated with the previously announced closureclosures of the hearth manufacturing facilities in Paris, Kentucky and Colville, Washington. Specific items incurred include an impairment charge from the sale of the closed manufacturing facility in Paris, Kentucky, lower volume,severance, production move costs, and higher freightfinal facility closing costs. These factors were partially offset by price realization, strong operational performance, favorable materialOf these charges, $0.6 million was included in cost and productivity, and cost reductions.of sales.

In 2017, the hearth products segment recorded $4.9 million of restructuring costs and $3.3 million of transition costs associated with the previously announced closures of the hearth manufacturing facilities in Paris, Kentucky and Colville, Washington. Specific items incurred include severance, accelerated depreciation, and production move costs. Of these charges, $5.8 million was included in cost of sales. The hearth products segment also recorded a $6.0 million nonrecurring gain from the sale and license of an intangible asset and a $0.8 million gain on the sale of a closed facility.

Cash, cash equivalents, and short-term investments totaled $53.2 million at the end of 2019 compared to $78.1 million at the end of 2018 and $25.4 million at the end of 2017 compared to $38.6 million at the end of 2016 and $32.8 million at the end of 2015.2017.  These funds, coupled with cash flow from future operations, borrowing capacity under the existing credit agreement, and the ability to access capital markets, are expected to be adequate to fund operations and satisfy cash flow needs for at least the next twelve months.  Additionally, based on current earnings before interest, taxes, depreciation and amortization generation, the Corporation can access the full remaining $375 million of borrowing capacity available under the revolving credit facility and maintain compliance with applicable covenants. As of the end of 2017, $6.12019, $12.3 million of cash was held overseas and considered permanently reinvested. If such amounts were repatriated, it could result in additional foreign withholding and state tax expense to the Corporation. The Corporation does not believe treating this cash as permanently reinvested will have any impact on the ability of the Corporation to meet its obligations as they come due.

The following table discloses the Corporation's obligations and commitments to make future payments, by period, under contracts (in thousands):

See "Note 15.16. Guarantees, Commitments, and Contingencies" in the Notes to Consolidated Financial Statements for further information.

Management remains optimistic about the long-term prospects in the office furniture and hearth marketsmarkets. Management believes the Corporation continues to compete well and remains confident the Corporation's long-term prospects.investments made in the business will continue to generate strong returns for shareholders.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Consolidated Financial Statements, prepared in accordance with Generally Accepted Accounting Principles ("GAAP").  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Senior management has discussed the development, selection, and disclosure of these estimates with the Audit Committee of the Board. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.  Management believes the following critical accounting policies reflectpolicy reflects its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

The Corporation evaluates its goodwill for impairment on an annual basis during the fourth quarter or whenever indicators of impairment exist.  Asset impairment charges associated with the Corporation’s goodwill impairment testing are discussed in "Note 6.7. Goodwill and Other Intangible Assets" in the Notes to Consolidated Financial Statements.

The Corporation reviews goodwill at the reporting unit level within its office furniture and hearth products operating segments.  These reporting units constitute components for which discrete financial information is available and regularly reviewed by segment management. The accounting standards for goodwill permit entities to first assess qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the quantitative test is required, the Corporation estimates the fair value of its reporting units. In estimating the fair value, the Corporation relies on an average of the income approach and the market approach. In the income approach, the estimate of fair value of each reporting unit is based on management’s projection of revenues, gross margin, operating costs, and cash flows considering historical and estimated future results, general economic and market conditions, as well as the impact of planned business and operational strategies.  The valuations employ present value techniques to measure fair value and consider market factors.  In the market approach, the Corporation utilizes the guideline company method, which involves calculating valuation multiples based on operating data from guideline publicly-traded companies. These multiples are then applied to the operating data for the reporting units and adjusted for factors similar to those used in the discounted cash flow analysis. Management believes the assumptions used for the impairment test are consistent with those utilized by a market participant in performing similar valuations of its reporting units.  Management bases its fair value estimates on assumptions they believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty.  Actual results may differ from those estimates. Additionally, the Corporation compares the estimated aggregate fair value of its reporting units to its overall market capitalization.

Assessing the fair value of goodwill includes, among other things, making key assumptions for estimating future cash flows and appropriate market multiples. These assumptions are subject to a high degree of judgment and complexity. The Corporation makes every effort to estimate future cash flows as accurately as possible with the information available at the time the forecast is developed. However, changes in assumptions and estimates may affect the estimated fair value of the reporting unit, and could result in an impairment charge in future periods. Factors that have the potential to create variances in the estimated fair value of the reporting unit include, but are not limited to, economic conditions in the U.S.United States and other countries where the Corporation has a presence, competitor behavior, the mix of product sales, commodity costs, wage rates, the level of manufacturing capacity, the pricing environment, and currency exchange fluctuations. In addition, estimates of fair value are impacted by estimates of the market-participant derived weighted average cost of capital.

The key to recoverability of goodwill indefinite-lived intangibles, and long-lived assets is the forecast of economic conditions and its impact on future revenues, operating margins,profit, and cash flows.  Management’s projection for the U.S.United States office furniture and domestic hearth markets and global economic conditions is inherently subject to a number of uncertain factors, such as global economic improvement, the U.S housing market, credit availability and borrowing rates, and overall consumer confidence.  In the near term, as management monitors the above factors, it is possible it may change the revenue and cash flow projections of certain reporting units, which may require the recording of additional assetgoodwill impairment charges.

During the normal course of business, the Corporation is subjected to market risk associated with interest rate movements.  Interest rate risk arises from variable interest debt obligations. The interest rate swap derivative instrument isinstruments are held and used by the Corporation as a tool for managing interest rate risk. It isThey are not used for trading or speculative purposes.

As of December 30, 2017,28, 2019, the Corporation had $267.5$75 million of debt outstanding under the Corporation's $400$450 million revolving credit facility, which bore variable interest based on one month LIBOR. As of December 30, 2017,28, 2019, the Corporation had an interest rate swap agreement in place to fix the interest rate on $150$75 million of the Corporation's revolving credit facility. The Corporation'sUnder the terms of this interest rate risk notswap, the Corporation pays a fixed rate of 1.42 percent. As of December 28, 2019 the Corporation had no borrowings on the revolving credit facility in excess of the amount covered by the interest rate swap agreement was $117.5 millionagreement. The Corporation expects to utilize additional borrowings over the course of the year which will be subject to the variable borrowings rate debt outstanding as of December 30, 2017.defined.

The Corporation monitors market interest rate risk exposures using a sensitivity analysis. The Corporation's sensitivity analysis estimatesexposures. As the exposureCorporation holds no borrowings subject to marketvariable interest rate risk sensitive instruments assuming aexposure as of December 28, 2019 there is not current exposure given the current borrowings outstanding. The impacts of any hypothetical 1 percent changechanges in interest rates on $117.5 million unhedged variable rate debt. If interest rates werewill be directly correlated to increase or decrease by 1 percent,any necessary future borrowings above the corresponding increase or decrease, as applicable, in interest expense on variable rate debt would increase or decrease, as applicable, future earnings and cash flows by approximately $1.2 million per year.current levels outstanding.

For information related to the Corporation’s long-term debt, refer to "Note 7.8. Long-Term Debt" in the Notes to Consolidated Financial Statements.  For information related to the Corporation's interest rate swap activity, refer to "Note 10.11. Accumulated Other Comprehensive Income (Loss) and Shareholders’ Equity" in the Notes to Consolidated Financial Statements.

The Corporation currently does not have any significant foreign currency exposure.

The Corporation is exposed to risks arising from price changes and/or tariffs for certain direct materials and assembly components used in its operations.  The most significant material purchases and cost for the Corporation are for steel, plastics, textiles, wood particleboard, and cartoning.  The market price of plastics and textiles, in particular, are sensitive to the cost of oil and natural gas.  The cost of wood particleboard has been impacted by continued industry downsizing of production capacity as well as increased volatility in input and transportation costs.  All of these materials are impacted increasingly by global market pressure.  The Corporation works to offset these increased costs through global sourcing initiatives, product re-engineering, and price increases on its products. Margins have been negatively impacted in the past due to the lag between cost increases and the Corporation’s ability to increase its prices.  The Corporation believes future market price increases on its key direct materials and assembly components are likely.  Consequently, it views the prospect of such increases as an outlooka risk to the business.

The financial statements listed under Item 15(a)(1) and (2) are filed as part of this report and are incorporated herein by reference.

The Summary of Quarterly Results of Operations (Unaudited) follows the Notes to Consolidated Financial Statements filed as part of this report and are incorporated herein by reference.

None.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Corporation in the reports it files or submits under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized, and reported within the time periods specified in the SEC’sSecurities and Exchange Commission's rules and forms.  Disclosure controls and procedures are also designed to ensure information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.disclosure.

Under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of the Corporation, the Corporation's management has evaluated the effectiveness of the design and operationcarried out an evaluation of the Corporation’s disclosure controls and procedures as defined inpursuant to Exchange Act Rules 13a – 15(e) and 15d – 15(e) under the Exchange Act as of the end of the period covered by this Annual Report on Form 10-K.  As of December 30, 2017, and,28, 2019, based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded these disclosure controls and procedures are effective.  There

Management’s annual report on internal control over financial reporting and the attestation report of the Corporation’s independent registered public accounting firm are included in Item 15. Exhibits, Financial Statement Schedules of this report under the headings "Management Report on Internal Control Over Financial Reporting" and "Report of Independent Registered Public Accounting Firm," respectively, and management's annual report is incorporated herein by reference.

Information relating to the identification of the audit committee and audit committee financial expert of the Corporation is contained under the caption "Board Committees""Directors" of the 20182020 Proxy Statement and is incorporated herein by reference.

The information under the caption "Code of Business Conduct and Ethics" of the 20182020 Proxy Statement is incorporated herein by reference.

The information under the captions "Executive Compensation" and "Director Compensation" of the 20182020 Proxy Statement is incorporated herein by reference.

The information under the captions "Security Ownership""Beneficial Ownership of the Corporation's Stock" and "Equity Compensation Plan Information" of the 20182020 Proxy Statement is incorporated herein by reference.

The information under the captionscaption "Corporate Governance and Board Matters" and ''Policy for Review of Related Person Transactions'' of the 20182020 Proxy Statement is incorporated herein by reference.

The information under the caption "Fees Incurred for KPMG LLP""Audit and Non-Audit Fees" of the 20182020 Proxy Statement is incorporated herein by reference.

The following consolidated financial statements of the Corporation and its subsidiaries included in the Corporation's 20172019 Annual Report on Form 10-K are filed as a part of this Report pursuant to Item 8:

All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.