

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October 3, 2015~~July 2, 2016

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission File Number: 1-14225

HNI Corporation (Exact name of registrant as specified in its charter)

Iowa (State or other jurisdiction of incorporation or organization)	42-0617510 (I.R.S. Employer Identification Number)

P. O. Box 1109, 408 East Second Street Muscatine, Iowa 52761-0071 (Address of principal executive offices)	52761-0071 (Zip Code)

Registrant's telephone number, including area code: 563/272-7400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Class Common Shares, $1 Par Value	Outstanding at ~~October 3, 2015 44,180,895~~July 2, 2016 44,454,811



HNI CORPORATION AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION
	Page

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets - ~~October 3, 2015~~July 2, 2016 and January ~~3, 2015~~2, 2016	3

Condensed Consolidated Statements of Comprehensive Income - Three Months and ~~Nine~~Six Months Ended ~~October 3,~~July 2, 2016 and July 4, 2015 ~~and September 27, 2014~~	5

Consolidated Statements of Equity - ~~October 3,~~July 2, 2016 and July 4, 2015 ~~and September 27, 2014~~	6

Condensed Consolidated Statements of Cash Flows - ~~Nine~~Six Months Ended ~~October 3,~~July 2, 2016 and July 4, 2015 ~~and September 27, 2014~~	7

Notes to Condensed Consolidated Financial Statements	8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1716

Item 3. Quantitative and Qualitative Disclosures About Market Risk	2322

Item 4. Controls and Procedures	2322

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	2423

Item 1A. Risk Factors	2423

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2423

Item 3. Defaults Upon Senior Securities - None	-

Item 4. Mine Safety Disclosures - Not Applicable	-

Item 5. Other Information - None	-

Item 6. Exhibits	2423

SIGNATURES	2524

EXHIBIT INDEX	2625

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

									HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	October 3, 2015		January 3, 2015		July 2, 2016		January 2, 2016

ASSETS	(In thousands)				(In thousands)
CURRENT ASSETS
Cash and cash equivalents	$	24,616	$	34,144	$	24,441	$	28,548
Short-term investments	6,352		3,052		6,800		4,252
Receivables	280,091		240,053		242,849		243,409
Inventories	145,196		121,791		170,083		125,228
Deferred income taxes	14,964		17,310
Prepaid expenses and other current assets	29,751		39,210		31,896		36,933
Total Current Assets	500,970		455,560		476,069		438,370

PROPERTY, PLANT, AND EQUIPMENT
Land and land improvements	28,861		27,329		29,279		28,801
Buildings	299,310		298,170		302,023		298,516
Machinery and equipment	507,326		492,646		530,504		515,131
Construction in progress	33,547		27,704		29,872		31,986
	869,044		845,849		891,678		874,434
Less accumulated depreciation	535,132		534,841		536,583		533,275

Net Property, Plant, and Equipment	333,912		311,008		355,095		341,159

GOODWILL	280,612		279,310		293,009		277,650

DEFERRED INCOME TAXES					904		—

OTHER ASSETS	206,939		193,456		229,653		206,746

Total Assets	$	1,322,433	$	1,239,334	$	1,354,730	$	1,263,925

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

													HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	October 3, 2015			January 3, 2015			July 2, 2016			January 2, 2016

LIABILITIES AND EQUITY	(In thousands, except share and per share value data)						(In thousands, except share and per share value data)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	427,502		$	453,753		$	395,430		$	424,405
Note payable and current maturities of long-term debt and capital lease obligations	257,244			160
Current maturities of long-term debt							83,241			5,477
Current maturities of other long-term obligations	5,606			3,419			4,600			6,018
Total Current Liabilities	690,352			457,332			483,271			435,900

LONG-TERM DEBT	—			197,736			193,000			185,000

OTHER LONG-TERM LIABILITIES	80,551			80,354			77,528			76,792

DEFERRED INCOME TAXES	95,721			89,411			95,045			88,934

COMMITMENTS AND CONTINGENCIES							—			—

EQUITY
HNI Corporation shareholders' equity:
Capital Stock:
Preferred, $1 par value, authorized 2,000,000 shares, no shares outstanding	—			—			—			—

Common, $1 par value, authorized 200,000,000 shares, outstanding -
October 3, 2015 – 44,180,895 shares;
January 3, 2015 – 44,165,676 shares	44,181			44,166
July 2, 2016 – 44,454,811 shares;
January 2, 2016 – 44,158,256 shares							44,455			44,158

Additional paid-in capital	4,536			867			17,890			4,407
Retained earnings	413,044			374,929			450,463			433,575
Accumulated other comprehensive income	(6,297		)	(5,375		)
Accumulated other comprehensive income (loss)							(7,264		)	(5,186		)
Total HNI Corporation shareholders' equity	455,464			414,587			505,544			476,954

Noncontrolling interest	345			(86		)	342			345

Total Equity	455,809			414,501			505,886			477,299

Total Liabilities and Equity	$	1,322,433		$	1,239,334		$	1,354,730		$	1,263,925

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)	HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)														HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended							Nine Months Ended							Three Months Ended								Six Months Ended
	October 3, 2015			September 27, 2014				October 3, 2015				September 27, 2014			July 2, 2016				July 4, 2015				July 2, 2016				July 4, 2015
	October 3, 2015											September 27, 2014			July 2, 2016				July 4, 2015				July 2, 2016				July 4, 2015
	(In thousands, except share and per share data)							October 3, 2015		(In thousands, except share and per share data)							(In thousands, except share and per share data)								(In thousands, except share and per share data)
Net sales	$	615,850		September 27, 2014		$	614,690			$	1,707,553			$	1,576,034		$	536,538			$	568,226			$	1,037,575			$	1,091,703
Cost of sales	384,219			394,758				1,085,298				1,019,797			327,618				362,102				642,944				701,079
Gross profit	231,631			219,932				622,255				556,237			208,920				206,124				394,631				390,624
Selling and administrative expenses	170,365			166,201				506,336				466,693			162,319				167,278				327,425				335,982
(Gain)/loss on sale of assets	6			15				18				(9,725		)
Restructuring and impairment	172			987				(12		)		11,241
Restructuring charges															572				(560		)		1,658				(183		)
Operating income	61,088			52,729				115,913				88,028			46,029				39,406				65,548				54,825
Interest income	110			110				318				326			63				119				141				209
Interest expense	1,733			1,971				5,689				6,360			1,131				1,968				3,005				3,957
Income before income taxes	59,465			50,868				110,542				81,994			44,961				37,557				62,684				51,077
Income taxes	18,619			17,372				37,367				27,817			15,934				13,680				21,815				18,748
Net income	40,846			33,496				73,175				54,177			29,027				23,877				40,869				32,329
Less: Net (loss) attributable to the noncontrolling interest	(2		)	(92		)		(30		)		(212		)
Less: Net loss attributable to the noncontrolling interest															(2		)		(2		)		(3		)		(28		)
Net income attributable to HNI Corporation	$	40,848		$	33,588			$	73,205			$	54,389		$	29,029			$	23,879			$	40,872			$	32,357

Net income attributable to HNI Corporation per common share – basic	$	0.92		$	0.75			$	1.65			$	1.21		$	0.65			$	0.54			$	0.92			$	0.73
Average number of common shares outstanding – basic	44,263,027			44,689,819				44,327,608				44,916,038			44,431,198				44,416,008				44,344,778				44,359,898
Net income attributable to HNI Corporation per common share – diluted	$	0.90		$	0.74			$	1.61			$	1.19		$	0.64			$	0.52			$	0.90			$	0.71
Average number of common shares outstanding – diluted	45,402,537			45,611,099				45,516,521				45,758,502			45,632,284				45,620,984				45,308,306				45,573,952
Cash dividends per common share	$	0.265		$	0.25			$	0.780			$	0.74		$	0.275			$	0.265			$	0.54			$	0.515


Other comprehensive income/(loss), net of tax: three months 2015 $(151); 2014 $(197); nine months 2015 $168; 2014 $(216)	(1,637		)	(825		)		(922		)		(427		)
Other comprehensive income/(loss), net of tax: three months 2016 $(587); 2015 $185; six months 2016 $(868); 2015 $319															(1,762		)		396				(2,078		)		715
Comprehensive income	39,209			32,671				72,253				53,750			27,265				24,273				38,791				33,044
Less: Comprehensive (loss) attributable to noncontrolling interest	(2		)	(92		)		(30		)		(212		)	(2		)		(2		)		(3		)		(28		)
Comprehensive income attributable to HNI Corporation	$	39,211		$	32,763			$	72,283			$	53,962		$	27,267			$	24,275			$	38,794			$	33,072

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HNI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)	HNI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)																		HNI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

(In thousands)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Non- controlling Interest			Total Shareholders’ Equity			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Non- controlling Interest			Total Shareholders’ Equity
Balance, January 3, 2015	$	44,166		$	867		$	374,929		$	(5,375	)	$	(86	)	$	414,501
Balance, January 2, 2016																			$	44,158		$	4,407		$	433,575		$	(5,186	)	$	345		$	477,299
Comprehensive income:
Net income (loss)	—			—			73,205			—			(30		)	73,175			—			—			40,872			—			(3		)	40,869
Other comprehensive (loss) (net of tax)	—			—			—			(922		)	—			(922		)	—			—			—			(2,078		)	—			(2,078		)
Change in ownership of noncontrolling interest	—			—			(461		)	—			461			—			—			—			—			—						—
Cash dividends; $0.78 per share	—			—			(34,629		)	—			—			(34,629		)
Cash dividends; $0.54 per share																			—			—			(23,984		)	—			—			(23,984		)
Common shares – treasury:
Shares purchased	(506		)	(24,273		)	—			—			—			(24,779		)	(208		)	(8,537		)	—			—			—			(8,745		)
Shares issued under Members’ Stock Purchase Plan and stock awards	521			27,942			—			—			—			28,463			505			22,020			—			—			—			22,525
Balance, October 3, 2015	$	44,181		$	4,536		$	413,044		$	(6,297	)	$	345		$	455,809
Balance, July 2, 2016																			$	44,455		$	17,890		$	450,463		$	(7,264	)	$	342		$	505,886


(In thousands)	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Non- controlling Interest			Total Shareholders’ Equity			Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Non- controlling Interest			Total Shareholders’ Equity
Balance, December 28, 2013	$	44,982		$	16,729		$	373,652		$	965		$	89		$	436,417
Balance, January 3, 2015																			$	44,166		$	867		$	374,929		$	(5,375	)	$	(86	)	$	414,501
Comprehensive income:
Net income (loss)	—			—			54,389			—			(212		)	54,177			—			—			32,357			—			(28		)	32,329
Other comprehensive (loss) (net of tax)	—			—			—			(427		)	—			(427		)	—			—			—			715			—			715
Distributions to noncontrolling interest	—			—			—			—			(5		)	(5		)
Change in ownership of noncontrolling interest	—			—			(146		)	—			146			—			—			—			(462		)	—			462			—
Cash dividends; $0.74 per share	—			—			(33,208		)	—			—			(33,208		)
Cash dividends; $0.515 per share																			—			—			(22,893		)	—			—			(22,893		)
Common shares – treasury:
Shares purchased	(963		)	(33,479		)	(888		)	—			—			(35,330		)	(305		)	(14,897		)	—			—			—			(15,202		)
Shares issued under Members’ Stock Purchase Plan and stock awards	376			17,547			—			—			—			17,923			489			25,197			—			—			—			25,686
Balance, September 27, 2014	$	44,395		$	797		$	393,799		$	538		$	18		$	439,547
Balance, July 4, 2015																			$	44,350		$	11,167		$	383,931		$	(4,660	)	$	348		$	435,136

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)						HNI CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Nine Months Ended						Six Months Ended
	October 3, 2015			September 27, 2014			July 2, 2016			July 4, 2015
	(In thousands)						(In thousands)
Net Cash Flows From (To) Operating Activities:
Net income	$	73,175		$	54,177		$	40,869		$	32,329
Noncash items included in net income:
Depreciation and amortization	42,299			41,764			31,631			27,795
Other postretirement and post employment benefits	1,392			930			821			881
Stock-based compensation	7,953			6,879			6,441			6,262
Excess tax benefits from stock compensation	(1,581		)	(198		)	(485		)	(1,552		)
Deferred income taxes	8,411			2,982			6,442			3,437
(Gain) loss on sale, retirement and impairment of long-lived assets and intangibles, net	349			(570		)	130			183
Other – net	(239		)	1,058			5,921			2,012
Net increase (decrease) in operating assets and liabilities	(75,857		)	(34,896		)	(53,949		)	(106,618		)
Increase (decrease) in other liabilities	2,500			2,681			(5,997		)	3,367
Net cash flows from (to) operating activities	58,402			74,807			31,824			(31,904		)

Net Cash Flows From (To) Investing Activities:
Capital expenditures	(58,029		)	(51,201		)	(42,422		)	(33,732		)
Proceeds from sale of property, plant and equipment	783			13,629			499			124
Capitalized software	(23,544		)	(30,547		)	(13,434		)	(16,150		)
Acquisition spending, net of cash acquired							(34,064		)	—
Purchase of investments	(2,861		)	(1,298		)	(4,875		)	(798		)
Sales or maturities of investments	2,750			5,270			4,758			1,550
Other – net	—			(5		)	501			—
Net cash flows from (to) investing activities	(80,901		)	(64,152		)	(89,037		)	(49,006		)

Net Cash Flows From (To) Financing Activities:
Proceeds from sales of HNI Corporation common stock	11,548			4,270			5,401			10,457
Withholdings related to net share settlements of equity based awards	(171		)	(79		)	—			(171		)
Purchase of HNI Corporation common stock	(24,779		)	(35,329		)	(8,745		)	(15,203		)
Proceeds from note and long-term debt	400,979			161,052			506,359			347,929
Payments of note and long-term debt and other financing	(341,558		)	(142,911		)	(426,410		)	(241,467		)
Excess tax benefits from stock compensation	1,581			198			485			1,552
Dividends paid	(34,629		)	(33,208		)	(23,984		)	(22,893		)
Net cash flows from (to) financing activities	12,971			(46,007		)	53,106			80,204

Net increase (decrease) in cash and cash equivalents	(9,528		)	(35,352		)	(4,107		)	(706		)
Cash and cash equivalents at beginning of period	34,144			65,030			28,548			34,144
Cash and cash equivalents at end of period	$	24,616		$	29,678		$	24,441		$	33,438

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

HNI CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~October 3, 2015~~July 2, 2016

Note A.1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The January ~~3, 2015~~2, 2016 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the ~~nine~~six-month period ended ~~October 3, 2015~~July 2, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending ~~January 2,~~December 31, 2016. For further information, refer to the consolidated financial statements and accompanying notes included in HNI Corporation's (the "Corporation") Annual Report on Form 10-K for the fiscal year ended January ~~3, 2015~~2, 2016. ~~Certain reclassifications have been made to the condensed consolidated financial statements of prior periods to conform to the current period presentation.~~

Note B.2. Stock-Based Compensation

The Corporation measures stock-based compensation expense at grant date, based on the fair value of the award, and recognizes expense over the ~~employee~~employees' requisite service ~~period.~~periods. For the three months and ~~nine~~six months ended ~~October 3, 2015~~July 2, 2016, the Corporation recognized ~~$1.7~~$1.1 million and ~~$8.0~~$6.4 million, respectively, of stock based compensation expense. For the three months and ~~nine~~six months ended ~~September 27, 2014~~July 4, 2015, the Corporation recognized ~~$2.1~~$2.8 million and ~~$6.9~~$6.3 million, respectively, of stock based compensation expense. Stock-based compensation expense is the cost of stock options and time-based restricted stock units issued under the HNI Corporation 2007 Stock-Based Compensation Plan and shares issued under the HNI Corporation 2002 Members' Stock Purchase Plan. The Corporation granted stock options with fair values of $7.7 million and $6.5 million and time-based restricted stock units with adjusted fair values of $0.7 million and $1.1 million in the six months ended July 2, 2016 and July 4, 2015, respectively.

At ~~October 3, 2015~~July 2, 2016, there was $~~3.9~~4.3 million of unrecognized compensation cost related to nonvested stock options, which the Corporation expects to recognize over a weighted-average remaining service period of ~~1.3~~1.4 years and ~~$1.1~~$1.3 million of unrecognized compensation cost related to nonvested restricted stock units, which the Corporation expects to recognize over a weighted-average remaining service period of ~~0.6~~1.1 years.

Note C.3. Inventories

The Corporation values its inventory at the lower of cost or market with approximately ~~74%~~75 percent valued by the last-in, first-out ("LIFO") costing method.


(In thousands)	October 3, 2015			January 3, 2015			July 2, 2016			January 2, 2016
(In thousands)	October 3, 2015			January 3, 2015			July 2, 2016			January 2, 2016
Finished products	$	86,731		$	65,126		$	109,068		$	68,478
Materials and work in process	86,477			84,677			86,125			81,860
LIFO allowance	(28,012		)	(28,012		)	(25,110		)	(25,110		)
	$	145,196		$	121,791		$	170,083		$	125,228

Note D.4. Accumulated Other Comprehensive Income (Loss) and Shareholders' Equity

The following table summarizes the components of accumulated other comprehensive income (loss) and the changes in accumulated other comprehensive income (loss), net of tax, as applicable for the ~~nine~~six months ended ~~October 3, 2015~~July 2, 2016:

(In thousands)
Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Marketable Securities

Pension Postretirement Liability

Derivative Financial Instruments
Accumulated Other Comprehensive Income (Loss)
Balance at January 3, 2015 $ 2,223
$ 37
$ (6,763 ) $ (872 ) $ (5,375 )
Other comprehensive income (loss) before reclassifications (1,242 ) 22
—
(1,004 ) (2,224 )
Amounts reclassified from accumulated other comprehensive income

1,302
1,302
Balance at October 3, 2015 $ 981
$ 59
$ (6,763 ) $ (574 ) $ (6,297 )



(In thousands)	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Marketable Securities			Pension Postretirement Liability			Derivative Financial Instruments			Accumulated Other Comprehensive Income (Loss)
Balance at January 2, 2016	$	322		$	(2	)	$	(5,506	)	$	—		$	(5,186	)
Other comprehensive income (loss) before reclassifications	(598		)	73			—			(1,815		)	(2,340		)
Amounts reclassified from accumulated other comprehensive (income) loss	—			—			—			262			262
Balance at July 2, 2016	$	(276	)	$	71		$	(5,506	)	$	(1,553	)	$	(7,264	)

All amounts are net-of tax. Amounts in parentheses indicate debits.

In March 2016, the Corporation entered into an interest rate swap transaction to hedge $150 million of outstanding variable rate revolver borrowings against future interest rate volatility. Under the terms of the interest rate swap, the Corporation pays a fixed rate of 1.29 percent and receives one month LIBOR on a $150 million notional value expiring January 2021. As of July 2, 2016, the fair value of the Corporation's interest rate swap was a liability of $2.5 million, reported net of tax as $1.6 million in accumulated other comprehensive income.

The following table details the reclassifications from accumulated other comprehensive income (loss) for the three months and ~~nine~~six months ended ~~October 3,~~July 2, 2016 and July 4, 2015 ~~and September 27, 2014~~ (in thousands):


		Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014			Affected Line Item in the Statement Where Net Income Is Presented	July 2, 2016			July 4, 2015			July 2, 2016			July 4, 2015
Derivative financial instruments
Interest rate swap														Selling and administrative expenses	$	(322	)	$	—		$	(415	)	$	—
														Tax (expense) or benefit	119			—			153			—
														Net of tax	$	(203	)	$	—		$	(262	)	$	—

Diesel hedge	Selling and administrative expenses	$	(680	)	$	(38	)	$	(1,987	)	$	49		Selling and administrative expenses	$	—		$	(612	)	$	—		$	(1,307	)
	Tax (expense) or benefit	255			14			685			(18		)	Tax (expense) or benefit	—			229			—			470
	Net of tax	$	(425	)	$	(24	)	$	(1,302	)	$	31		Net of tax	$	—		$	(383	)	$	—		$	(837	)
Net															$	(203	)	$	(383	)	$	(262	)	$	(837	)

Amounts in parentheses indicate reductions to profit.

During the ~~nine~~six months ended ~~October 3, 2015~~July 2, 2016, the Corporation repurchased ~~506,300~~208,000 shares of its common stock at a cost of approximately $~~24.8~~8.7 million. As of ~~October 3, 2015~~July 2, 2016, $~~194.6~~184.0 million of the Corporation's Board of Directors' ("Board") current repurchase authorization remained unspent.

During the ~~nine~~six months ended ~~October 3, 2015~~July 2, 2016, the Corporation paid dividends to shareholders of ~~$0.78~~$0.54 per share.

Note E.5. Earnings Per Share

The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share ("EPS"):


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(In thousands, except per share data)	October 3, 2015		September 27, 2014		October 3, 2015		September 27, 2014		July 2, 2016		July 4, 2015		July 2, 2016		July 4, 2015
Numerators:
Numerator for both basic and diluted EPS attributable to HNI Corporation net income	$	40,848	$	33,588	$	73,205	$	54,389	$	29,029	$	23,879	$	40,872	$	32,357
Denominators:
Denominator for basic EPS weighted-average common shares outstanding	44,263		44,690		44,328		44,916		44,431		44,416		44,345		44,360
Potentially dilutive shares from stock-based compensation plans	1,140		921		1,189		843		1,201		1,205		963		1,214
Denominator for diluted EPS	45,403		45,611		45,517		45,759		45,632		45,621		45,308		45,574
Earnings per share – basic	$	0.92	$	0.75	$	1.65	$	1.21	$	0.65	$	0.54	$	0.92	$	0.73
Earnings per share – diluted	$	0.90	$	0.74	$	1.61	$	1.19	$	0.64	$	0.52	$	0.90	$	0.71

The weighted average common stock equivalents presented above do not include the effect of ~~536,814~~444,723 and ~~634,757~~441,211 common stock equivalents for the three months ended ~~October 3,~~July 2, 2016 and July 4, 2015, ~~and September 27, 2014,~~ respectively, and ~~383,600~~730,884 and ~~987,251~~945,338 common stock equivalents for the ~~nine~~six months ended ~~October 3,~~July 2, 2016 and July 4, 2015, ~~and~~ ~~September 27, 2014~~, respectively, because their inclusion would be anti-dilutive.

Note F.6. Restructuring ~~and Impairment~~

~~As a result of~~Restructuring costs during the Corporation's ongoing business simplification and cost reduction strategies, the Corporation has closed, consolidated, and realigned a number of its office furniture facilities and made the decision to exit a line of business within our hearth products segment. During the quarterthree months ended ~~October 3, 2015, the Corporation incurred $1.0~~July 2, 2016 were $2.0 million, of ~~restructuring costs of~~ which ~~$0.8~~$1.4 million were included in "Cost of sales" in the Condensed Consolidated Statements of Comprehensive Income. For the nine months ended October 3, 2015, the Corporation incurred $0.8 million of restructuring costs of which $0.8 million were includedwas recorded in cost of ~~sales. Severance and facility exit~~goods sold. Restructuring costs ~~not included~~during the six months ended July 2, 2016 were $3.1 million, of which $1.4 million was recorded in cost of ~~sales~~goods sold. These costs in both the quarter and year to date periods were ~~offset by lower than anticipated post employment costs.~~primarily incurred as part of the previously announced closure of the Paris, Kentucky, hearth manufacturing facility.

During the ~~quarter~~three months and six months ended ~~September 27, 2014~~July 4, 2015, the Corporation recorded ~~$3.4~~a $0.6 million ~~of pre-tax charges of which $2.4~~reduction and $0.2 million ~~were included in cost of sales. For the nine months ended September 27, 2014 the Corporation recorded $16.2 million~~reduction, respectively, of restructuring costs due primarily to lower than anticipated postemployment costs related to previously announced closures of ~~which $5.0 million were included~~the Midwest Folding Products business located in ~~cost of sales. The pre-tax charges included $5.0 million of accelerated depreciation on machinery~~Chicago, Illinois and ~~equipment, $2.4 million of severance and~~an office furniture manufacturing facility ~~exit costs and $8.9 million of goodwill impairment.~~in Florence, Alabama.

The following is a summary of changes in restructuring accruals during the ~~nine~~six months ended ~~October 3, 2015~~July 2, 2016.


(In thousands)	Severance			Facility Exit Costs & Other			Total			Severance			Facility Exit Costs & Other			Total
Balance as of January 3, 2015	$	1,213		$	—		$	1,213
Balance as of January 2, 2016										$	206		$	15		$	221
Restructuring charges	(655		)	643			(12		)	1,196			462			1,658
Cash payments	(311		)	(628		)	(939		)	(360		)	(464		)	(824		)
Balance as of October 3, 2015	$	247		$	15		$	262
Balance as of July 2, 2016										$	1,042		$	13		$	1,055

The portion of the restructuring reserve expected to be paid in the next twelve months was $1.1 million as of July 2, 2016 and is included in "Accounts payable and accrued expenses" in the Condensed Consolidated Balance Sheets.

Note G.7. Goodwill and Other Intangible Assets

The table below summarizes amortizable definite-lived intangible assets as of ~~October 3, 2015~~July 2, 2016 and January ~~3, 2015~~2, 2016, which are reflected in the "Other Assets" line item in the Corporation's Condensed Consolidated Balance Sheets:


	October 3, 2015						January 3, 2015						July 2, 2016						January 2, 2016
(In thousands)	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Patents	$	18,945	$	18,758	$	187	$	18,945	$	18,724	$	221	$	18,645	$	18,619	$	26	$	18,645	$	18,615	$	30
Software	115,454		20,246		95,208		93,343		17,711		75,632		137,442		23,219		114,223		122,892		21,193		101,699
Trademarks and trade names	11,464		2,512		8,952		11,424		1,724		9,700		7,564		1,058		6,506		6,564		753		5,811
Customer lists and other	115,286		62,916		52,370		113,671		58,019		55,652		117,084		61,592		55,492		105,586		60,063		45,523
Net definite lived intangible assets	$	261,149	$	104,432	$	156,717	$	237,383	$	96,178	$	141,205	$	280,735	$	104,488	$	176,247	$	253,687	$	100,624	$	153,063

Aggregate amortization expense for the three months ended ~~October 3,~~July 2, 2016 and July 4, 2015 ~~and September 27, 2014~~ was ~~2.7~~$2.9 million and ~~2.4~~$2.7 million, respectively. Aggregate amortization expense for the ~~nine~~six months ended ~~October 3,~~July 2, 2016 and July 4, 2015 was $5.3 million and ~~September 27, 2014~~ ~~was~~ ~~$8.2~~$5.5 million, ~~and~~ ~~$7.5 million~~, respectively. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows:


(In millions)	2015		2016		2017		2018		2019		2016		2017		2018		2019		2020
Amortization expense	$	11.0	$	11.5	$	21.1	$	21.7	$	21.3	$	11.3	$	17.8	$	18.0	$	17.1	$	16.7

As events such as ~~potential~~ acquisitions, dispositions or impairments occur in the future, these amounts may change.

The Corporation also owns certain trademarks and trade names with a net carrying amount of $~~41.0~~40.9 million and $41.0 million as of ~~October 3, 2015~~July 2, 2016 and January ~~3, 2015.~~2, 2016, respectively. These trademarks and trade names, which are reflected in the "Other Assets" line item in the Corporation's Condensed Consolidated Balance Sheets, are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely.

The changes in the carrying amount of goodwill since January ~~3, 2015~~2, 2016 are as follows by reporting segment:


(In thousands)	Office Furniture			Hearth Products			Total			Office Furniture			Hearth Products			Total
Balance as of January 3, 2015
Balance as of January 2, 2016
Goodwill	$	149,713		$	181,901		$	331,614		$	149,718		$	183,199		$	332,917
Accumulated impairment losses	(52,161		)	(143		)	(52,304		)	(55,124		)	(143		)	(55,267		)
Net goodwill balance as of January 3, 2015	97,552			181,758			279,310
Net goodwill balance as of January 2, 2016										94,594			183,056			277,650
Goodwill acquired	—			1,298			1,298			15,365			—			15,365
Foreign currency translation adjustments	4			—			4			(6		)	—			(6		)
Balance as of October 3, 2015
Balance as of July 2, 2016
Goodwill	149,717			183,199			332,916			165,077			183,199			348,276
Accumulated impairment losses	(52,161		)	(143		)	(52,304		)	(55,124		)	(143		)	(55,267		)
Net goodwill balance as of October 3, 2015	$	97,556		$	183,056		$	280,612
Net goodwill balance as of July 2, 2016										$	109,953		$	183,056		$	293,009

The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter, or whenever indicators of impairment exist. The Corporation estimates the fair value of its reporting units using various valuation techniques, with the primary technique being a discounted cash flow method. This method employs market participant based assumptions. The increase in the hearth segment relates to a purchase price allocation adjustment for an acquisition completed during the fourth quarter of 2014. Final purchase price allocation adjustments were made in the third quarter of 2015. The purchase price allocation adjustments did not have a significant impact on the Corporation's Condensed Consolidated Balance Sheet as of October 3, 2015 or its Condensed Consolidated Statement of Comprehensive Income for the three months and nine months ended October 3, 2015. Therefore, the Corporation has not retrospectively adjusted this financial information.

Note H.8. Product Warranties

The Corporation issues certain warranty policies on its office furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design or workmanship. Reserves have been established for the various costs associated with the Corporation's warranty programs.

A warranty reserve is determined by recording a specific reserve for known warranty issues and an additional reserve for unknown claims that are expected to be incurred based on historical claims experience. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Activity associated with warranty obligations was as follows during the periods noted:


	Nine Months Ended
(In thousands)	October 3, 2015			September 27, 2014			July 2, 2016			July 4, 2015
Balance at beginning of period	$	16,719		$	13,840		$	16,227		$	16,719
Accruals for warranties issued during period	14,764			11,577			10,159			10,535
Adjustments related to pre-existing warranties	(230		)	(54		)	276			349
Settlements made during the period	(15,372		)	(10,901		)	(10,586		)	(11,139		)
Balance at end of period	$	15,881		$	14,462		$	16,076		$	16,464

The portion of the reserve for estimated settlements expected to be paid in the next twelve months was $7.9 million and ~~$7.0~~$8.2 million as of ~~October 3, 2015~~July 2, 2016 and ~~September 27, 2014,~~January 2, 2016, respectively, and is included in "Accounts payable and accrued expenses" in the Condensed Consolidated Balance Sheets. The portion of the reserve for settlements expected to be paid beyond one year was ~~$8.0~~$8.1 million and ~~$7.4~~$8.0 million as of ~~October 3, 2015~~July 2, 2016 and ~~September 27, 2014,~~January 2, 2016, respectively, and is included in "Other Long-Term Liabilities" in the Condensed Consolidated Balance Sheets.

Note I.9. Postretirement Health Care

The following table sets forth the components of net periodic benefit ~~cost~~costs included in the Corporation's Condensed Consolidated Statements of Comprehensive Income for:


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(In thousands)	October 3, 2015		September 27, 2014		October 3, 2015		September 27, 2014		July 2, 2016		July 4, 2015		July 2, 2016		July 4, 2015
Service cost	$	201	$	126	$	603	$	378	$	184	$	201	$	369	$	402
Interest cost	204		184		612		552		211		204		422		408
Amortization of (gain)/loss	59		—		177		—		15		12		30		71
Net periodic benefit cost	$	464	$	310	$	1,392	$	930	$	410	$	417	$	821	$	881

Note J.10. Income Taxes

The Corporation's income tax provision for the three months ended ~~October 3, 2015~~July 2, 2016 was ~~$18.6~~$15.9 million on pre-tax income of ~~$59.5~~$45.0 million or an effective tax rate of ~~31.3% compared to an~~35.4 percent. For the three months ended July 4, 2015, the Corporation's income tax provision ~~of $17.4~~was $13.7 million on pre-tax income of ~~$50.9~~$37.6 million or an effective tax rate of ~~34.1% for the three months ended September 27, 2014. Our~~36.4 percent. The effective tax rate was lower in the three months ended ~~October 3, 2015~~July 2, 2016 principally due to atiming of the enactment of the R&D tax credit and change in ~~estimate for the U.S. Manufacturing Deduction and~~mix related to foreign ~~taxes.~~

earnings. The provision for income taxes for the ~~nine~~six months ended ~~October 3, 2015~~July 2, 2016 reflects an effective tax rate of ~~33.8%~~34.8 percent compared to ~~33.9%~~36.7 percent for the same period last year. The drivers of the change in effective tax rate for the first six months were the same as those for the quarter.

Note ~~K. Derivative Financial Instruments~~

The Corporation uses derivative financial instruments to reduce its exposure to adverse fluctuations in diesel fuel prices. On the date a derivative is entered into, the Corporation designates the derivative as (i) a fair value hedge, (ii) a cash flow hedge, (iii) a

hedge of a net investment in a foreign operation or (iv) a risk management instrument not designated for hedge accounting. The Corporation recognizes all derivatives on its Condensed Consolidated Balance Sheets at fair value.

~~Diesel Fuel Risk~~

Independent freight carriers, used by the Corporation to deliver its products, charge the Corporation a basic rate per mile that is subject to a mileage surcharge for diesel fuel price increases. The Corporation enters into variable to fixed rate commodity swap agreements with two financial counterparties to manage fluctuations in fuel costs. The Corporation hedges approximately ~~50%~~ of its diesel fuel surcharge exposure for the next twelve months. The Corporation uses the hedge agreements to mitigate the volatility of diesel fuel prices and related fuel surcharges, and not to speculate on the future price of diesel fuel. The hedge agreements are designed to add stability to the Corporation's costs, enabling the Corporation to make pricing decisions and lessen the economic impact of abrupt changes in diesel fuel prices over the term of the contract. The hedging instruments consist of a series of financially settled fixed forward contracts with expiration dates ranging up to twelve months. The contracts have been designated as cash flow hedges of future diesel purchases, and as such, the net amount paid or received upon monthly settlements is recorded as an adjustment to Selling and administrative expenses in the Corporation's Condensed Consolidated Statements of Comprehensive Income) while the effective change in fair value is recorded as a component of Accumulated other comprehensive income ("AOCI") in the equity section of the Corporation's Condensed Consolidated Balance Sheets.

~~As of~~ ~~October 3, 2015~~, $0.6 million of deferred net losses, net of tax, included in equity ("Accumulated other comprehensive income") in the Corporation's Condensed Consolidated Balance Sheets) related to the diesel hedge agreements are expected to be reclassified to current earnings ("Selling and administrative expenses" in the Corporation's Condensed Consolidated Statements of Comprehensive Income) over the next twelve months.

~~The location and fair value of derivative instruments reported in the Corporation's Condensed Consolidated Balance Sheets are as follows (in thousands):~~

Asset (Liability) Fair Value
Balance Sheet Location October 3, 2015 January 3, 2015
Diesel fuel swap Accounts payable and accrued expenses $ (920 ) $ (1,374 )
Diesel fuel swap Prepaid expenses and other current assets —
—
Net balance at end of period $ (920 ) $ (1,374 )

~~The effect of derivative instruments on the Corporation's Condensed Consolidated Statements of Comprehensive Income for the~~ ~~three~~ ~~months ended~~ ~~October 3, 2015~~ ~~was as follows (in thousands):~~

Derivatives in Cash Flow Hedge Relationship Before-tax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion) Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Diesel fuel swap $ (1,117 ) Selling and administrative expenses $ (680 ) Selling and administrative expenses $ —
Total $ (1,117 ) $ (680 ) $ —

~~The effect of derivative instruments on the Corporation's Condensed Consolidated Statements of Comprehensive Income for the nine months ended October 3, 2015 was as follows (in thousands):~~

Derivatives in Cash Flow Hedge Relationship Before-tax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion) Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Diesel fuel swap $ (1,533 ) Selling and administrative expenses $ (1,987 ) Selling and administrative expenses $ —
Total $ (1,533 ) $ (1,987 ) $ —

~~The effect of derivative instruments on the Corporation's Condensed Consolidated Statements of Comprehensive Income for the~~ ~~three~~ ~~months ended~~ ~~September 27, 2014~~ ~~was as follows (in thousands):~~

Derivatives in Cash Flow Hedge Relationship Before-tax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion) Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Diesel fuel swap $ (542 ) Selling and administrative expenses $ (38 ) Selling and administrative expenses $ —
Total $ (542 ) $ (38 ) $ —

~~The effect of derivative instruments on the Corporation's Condensed Consolidated Statements of Comprehensive Income for the nine months ended September 27, 2014 was as follows (in thousands):~~

Derivatives in Cash Flow Hedge Relationship Before-tax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion) Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Diesel fuel swap $ (487 ) Selling and administrative expenses $ 49
Selling and administrative expenses $ (4 )
Total $ (487 ) $ 49
$ (4 )

The Corporation entered into master netting agreements with the two financial counterparties where they entered into commodity swap agreements that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event is allowed. The amounts under the master netting agreement are considered immaterial.

~~Note L.~~11. Fair Value Measurements

For recognition purposes, on a recurring basis the Corporation is required to measure at fair value its marketable securities and derivative instruments. The marketable securities are comprised of government securities, corporate bonds and money market funds. When available the Corporation uses quoted market prices to determine fair value and classifies such measurements within Level 1. Where market prices are not available, the Corporation makes use of observable market-based inputs (prices or quotes from published ~~exchanges/~~exchanges and indexes) to calculate fair value using the market approach, in which case the measurements are classified within Level 2.

Assets measured at fair value as of ~~October 3, 2015~~July 2, 2016 were as follows:


(In thousands)	Fair value as of measurement date			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)		Fair value as of measurement date			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Government securities	$	9,946		$	—	$	9,946		$	—	$	8,846		$	—	$	8,846		$	—
Corporate bonds	$	2,219		$	—	$	2,219		$	—	$	3,696		$	—	$	3,696		$	—
Derivative financial instruments	$	(920	)	$	—	$	(920	)	$	—	$	(2,582	)	$	—	$	(2,582	)	$	—

Assets measured at fair value as of January ~~3, 2015~~2, 2016 were as follows:


(In thousands)	Fair value as of measurement date			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)		Fair value as of measurement date			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Government securities	$	9,835		$	—	$	9,835		$	—	$	9,663		$	—	$	9,663		$	—
Corporate bonds	$	2,205		$	—	$	2,205		$	—	$	2,405		$	—	$	2,405		$	—
Derivative financial instruments	$	(1,374	)	$	—	$	(1,374	)	$	—	$	(1,252	)	$	—	$	(1,252	)	$	—

In addition to the methods and assumptions the Corporation uses to record the fair value of financial instruments as discussed above in ~~the~~this section, ~~above,~~ it uses the following methods and assumptions to estimate the fair value of its financial instruments.

Cash and cash equivalents - Level 1

The carrying amount approximated fair value and includes money market funds.

Long-term debt (including current portion) - Level 2

The carrying value of the Corporation's outstanding variable-rate ~~long-term~~ debt obligations at ~~October 3, 2015~~July 2, 2016 and January ~~3, 2015~~,2, 2016, the end of the Corporation's ~~2014~~2015 fiscal year, was ~~$107~~$276 million and ~~$48~~$40 million, respectively, which approximated the fair value. The ~~fair value of the Corporation's~~Corporation paid off its outstanding fixed-rate, long-term debt obligations ison April 6, 2016 with revolving credit facility borrowings. The value of these senior notes was estimated based on a discounted cash flow method to be ~~$148~~$148 million at ~~October 3, 2015~~ ~~and~~ ~~$154 million~~ at January ~~3, 2015~~,2, 2016, compared to the carrying value of ~~$150 million. This debt is classified as current on the Condensed Consolidated Balance Sheet as of October 3, 2015 due to the timing of maturity.~~$150 million.

The Corporation, ~~plans~~certain domestic subsidiaries of the Corporation, the lenders and Wells Fargo Bank, National Association, as administrative agent, entered into the First Amendment to Second Amended and Restated Credit Agreement (the "Credit Agreement") on January 6, 2016. The Credit Agreement amends the Second Amended and Restated Credit Agreement dated as of June 9, 2015.

The Credit Agreement was amended to increase the revolving commitment of the lenders from $250 million to $400 million (while retaining the Corporation's option under the Credit Agreement to increase its borrowing capacity ~~(while preserving~~by an additional $150 million) in order to provide funding for the ~~existing $150~~pay off of its maturing senior notes on April 6, 2016 and to extend the maturity date of the Credit Agreement from June 2020 to January 2021. The Corporation deferred the debt issuance costs related to the Credit Agreement, which were classified as assets, and is amortizing them over the term of the Credit Agreement.

As of July 2, 2016, there was $276 million ~~accordion feature)~~outstanding under the $400 million revolving credit facility ~~by January 6, 2016~~of which $193 million was classified as long-term since the Corporation does not expect to repay the borrowings within a year and ~~use~~ the ~~additional borrowings to settle the Corporation's senior notes due April 6, 2016. The debt classification will move back to long-term if the increase occurs on or prior to January 6, 2016.~~remaining $83 million was classified as current.

Note M.12. Commitments and Contingencies

The Corporation utilizes letters of credit in the amount of $109 million to back certain insurance policies and payment obligations. The Corporation utilizes trade letters of credit and bankers acceptances in the amount of $5 million to guarantee certain payments to overseas suppliers. The letters of credit and bankers acceptances reflect fair value as a condition of their underlying purpose and are subject to competitively determined fees.

The Corporation has contingent liabilities which have arisen in the ordinary course of its business, including liabilities relating to pending litigation, environmental remediation, taxes, and other claims. It is the Corporation's opinion 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.

Note N.13. New Accounting Standards

In April ~~2014,~~2015, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2015-05, Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The ASU applies to cloud computing arrangements including software as a service, platform as a service, infrastructure as a service, and other similar hosting arrangements, and was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The ASU provides guidance ~~which changes~~about whether the ~~criteria~~arrangement includes a software license. The core principle of the ASU is that if a cloud computing arrangement includes a software license, then the customer should account for ~~determining which disposals can be presented~~the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as ~~discontinued operations and modifies related disclosure requirements.~~a service contract. The guidance ~~is effective~~did not change U.S. GAAP for ~~fiscal years beginning on or after December 15, 2014 and interim periods within those annual periods with early adoption allowed.~~a customer’s accounting for service contracts. The Corporation adopted the guidance effective January ~~4, 2015,~~3, 2016, the beginning of the Corporation's ~~2015~~2016 fiscal year. The guidance did not have a material impact on the Corporation's financial statements.

The FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) - Simplifying Presentation of Debt Issuance Costs in April 2015, which was further clarified by ASU No. 2015-15 in August 2015. The core principle of the ASUs is that an entity should present debt issuance costs as a direct deduction from the face amount of that debt in the balance sheet similar to the manner in which a debt discount or premium is presented, and not reflected as a deferred charge or deferred credit. The ASU requires additional disclosure about the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line item (that is, the debt issuance cost asset and the debt liability). Debt issuance costs related to line-of-credit arrangements can still be presented as assets and subsequently amortized. The Corporation adopted the guidance effective January 3, 2016, the beginning of the Corporation's 2016 fiscal year. The guidance did not have an impact on the Corporation's financial statements.

Note O.14. Business Segment Information

Management views the Corporation as being in two reportable segments based on industries: office furniture and hearth products, with the former being the principal business segment.

The aggregated office furniture segment manufactures and markets a broad line of ~~metal and wood~~ office furniture which includes storage products, desks, credenzas, chairs, tables, bookcases, classroom solutions, freestanding office partitions and panel systems and other related products. The hearth products segment manufactures and markets a broad line of manufactured gas, electric, wood and ~~biomass burning~~pellet fireplaces, inserts and stoves, facings and ~~accessories, principally for the home.~~accessories.

For purposes of segment reporting, intercompany sales ~~transfers~~ between segments are not material and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net cost of the Corporation's corporate operations, interest income and interest expense. Management views interest income and expense as corporate financing costs and not as a reportable segment cost. In addition, management applies an effective income tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis. Identifiable assets by segment are those assets applicable to the respective industry segments. Corporate assets consist principally of cash and cash equivalents, short-term investments, long-term investments and corporate office real estate and related equipment.

No geographic information for revenues from external customers or for long-lived assets is disclosed since the Corporation's primary market and capital investments are concentrated in the United States.

Reportable segment data reconciled to the Corporation's condensed consolidated financial statements for the three months and ~~nine month periods~~six months ended ~~October 3,~~July 2, 2016 and July 4, 2015, ~~and September 27, 2014,~~ is as follows:


	October 3, 2015						Nine Months Ended						Three Months Ended						Six Months Ended
(In thousands)	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014			July 2, 2016			July 4, 2015			July 2, 2016			July 4, 2015
Net Sales:
Office Furniture	$	475,960		$	488,612		$	1,334,013		$	1,270,404		$	428,113		$	450,624		$	815,452		$	858,053
Hearth Products	139,890			126,078			373,540			305,630			108,425			117,602			222,123			233,650
	$	615,850		$	614,690		$	1,707,553		$	1,576,034		$	536,538		$	568,226		$	1,037,575		$	1,091,703
Operating Profit:
Office furniture	48,389			42,753			108,332			77,488			$	43,367		$	39,791		$	64,667		$	59,943
Hearth products	23,498			23,785			47,161			43,974			9,954			11,162			22,515			23,663
Total operating profit	71,887			66,538			155,493			121,462			53,321			50,953			87,182			83,606
Unallocated corporate expense	(12,422		)	(15,670		)	(44,951		)	(39,468		)	(8,360		)	(13,396		)	(24,498		)	(32,529		)
Income before income taxes	$	59,465		$	50,868		$	110,542		$	81,994		$	44,961		$	37,557		$	62,684		$	51,077

Depreciation & Amortization Expense:
Office furniture	$	10,644		$	12,427		$	31,284		$	34,398		$	11,127		$	10,263		$	21,820		$	20,640
Hearth products	2,166			1,121			6,171			3,455			3,322			2,047			5,978			4,005
General corporate	1,694			1,264			4,844			3,911			1,931			1,625			3,833			3,150
	$	14,504		$	14,812		$	42,299		$	41,764		$	16,380		$	13,935		$	31,631		$	27,795

Capital Expenditures (including capitalized software):
Office furniture	$	19,590		$	13,542		$	45,989		$	43,378		$	13,580		$	11,848		$	30,048		$	26,399
Hearth products	2,798			1,691			7,195			4,389			4,459			1,993			7,012			4,397
General corporate	9,303			15,394			28,389			33,981			10,360			7,818			18,796			19,086
	$	31,691		$	30,627		$	81,573		$	81,748		$	28,399		$	21,659		$	55,856		$	49,882

							As of			As of			As of			As of
(In thousands)							October 3, 2015			January 3, 2015			July 2, 2016			January 2, 2016
Identifiable Assets:
Office furniture							$	769,641		$	724,293		$	804,955		$	739,915
Hearth products							374,716			341,315			356,142			341,813
General corporate							178,076			173,726			193,633			182,197
							$	1,322,433		$	1,239,334		$	1,354,730		$	1,263,925

Note 15. Business Combinations

On January 29, 2016, the Corporation acquired a small office furniture company with annual sales of approximately $30 million at a purchase price of approximately $34 million, net of cash acquired. The Corporation will finalize the allocation of purchase price during 2016 based on final purchase price and fair value adjustments. Based on the preliminary allocation, there are approximately $14 million of intangible assets other than goodwill associated with this acquisition with estimated useful lives ranging from three to twelve years with amortization recorded on a straight line basis based on the projected cash flow associated with the respective intangible assets. There was approximately $15 million of goodwill associated with this acquisition.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Corporation is a leading global provider and designer of office furniture ~~manufacturer~~ and ~~North America's~~the nation's leading manufacturer and marketer of ~~gas and wood-burning fireplaces.~~hearth products. The Corporation has two reportable segments: office furniture and hearth products. The Corporation utilizes a split and ~~focus,~~focused, decentralized business model to deliver value to customers through various brands and selling models. ~~The Corporation is focused on growing existing businesses while seeking out and developing new opportunities for growth.~~

Net sales for the ~~third~~second quarter of fiscal 2016 decreased 5.6 percent to $536.5 million when compared to the second quarter of fiscal 2015 ~~increased~~ ~~0.2~~ ~~percent to~~ ~~$615.9 million~~ ~~when compared to the~~ ~~third~~ ~~quarter of fiscal~~ ~~2014~~. The change was driven ~~by acquisition impact in the hearth products segment partially offset~~ by a decrease in organic sales across both the office furniture and hearth products ~~segments primarily~~segments. The office furniture segment sales are down due to strong prior year comparisons and a ~~softening economy.~~softer market environment. The hearth segment saw continued growth in the new construction channel offset by a decline in the retail channel due to inventory timing, warm weather, and low oil prices. The acquisition and divestitures of small office furniture related companies resulted in a net increase in sales of $6.5 million compared to the prior year. Gross margin for the quarter increased from prior year levels due to strong operational performance, ~~lower~~favorable material ~~costs,~~productivity, and ~~better~~ price realization partially offset by lower ~~volume and unfavorable product mix.~~volume. Total selling and administrative expenses increased as a percentage of sales due to higher incentive based compensation and strategic investments ~~and acquisition impact in the hearth products segment~~ partially offset by cost ~~management actions.~~reductions at the operating segments and corporate.

~~In conjunction~~The Corporation recorded $2.0 million of restructuring costs and $3.5 million of transition costs in the second quarter 2016 in connection with the previously announced closure of the Paris, Kentucky, hearth manufacturing facility and structural realignments among office furniture facilities in Muscatine, Iowa. $4.9 million of these charges were included in cost of sales. Specific items incurred include severance, accelerated depreciation, and production move costs. The Corporation also recorded a $2.0 million nonrecurring gain on a litigation settlement. Restructuring charges for the prior year quarter were favorable $0.6 million due to lower than anticipated post-employment costs. The Corporation also recorded $1.3 million of transition costs in the prior year quarter in connection with previously announced closures, ~~consolidation,~~acquisition integration and ~~realignments, the Corporation recorded $2.3 million of restructuring and~~structural realignment. These transition costs ~~of which $2.1 million~~ were included in cost of sales.

Results of Operations

The following table presents certain key highlights from the results of operations for the periods indicated:


	Three Months Ended						Nine Months Ended								Three Months Ended							Six Months Ended
(In thousands)	October 3, 2015		September 27, 2014		Percent Change		October 3, 2015			September 27, 2014			Percent Change		July 2, 2016		July 4, 2015			Percent Change		July 2, 2016		July 4, 2015			Percent Change
Net sales	$	615,850	$	614,690	0.2	%	$	1,707,553		$	1,576,034		8.3	%	$	536,538	$	568,226		(5.6	)%	$	1,037,575	$	1,091,703		(5.0	)%
Cost of sales	384,219		394,758		(2.7	)%	1,085,298			1,019,797			6.4	%	327,618		362,102			(9.5	)%	642,944		701,079			(8.3	)%
Gross profit	231,631		219,932		5.3	%	622,255			556,237			11.9	%	208,920		206,124			1.4	%	394,631		390,624			1.0	%
Selling and administrative expenses	170,365		166,201		2.5	%	506,336			466,693			8.5	%	162,319		167,278			(3.0	)%	327,425		335,982			(2.5	)%
(Gain) loss on sale of assets	6		15		NM		18			(9,725		)	NM
Restructuring and impairment charges	172		987		NM		(12		)	11,241			NM
Restructuring charges															572		(560		)	202.1	%	1,658		(183		)	NM
Operating income	61,088		52,729		15.9	%	115,913			88,028			31.7	%	46,029		39,406			16.8	%	65,548		54,825			19.6	%
Interest expense, net	1,623		1,861		(12.8	)%	5,371			6,034			(11.0	)%	1,068		1,849			(42.2	)%	2,864		3,748			(23.6	)%
Income before income taxes	59,465		50,868		16.9	%	110,542			81,994			34.8	%	44,961		37,557			19.7	%	62,684		51,077			22.7	%
Income taxes	18,619		17,372		7.2	%	37,367			27,817			34.3	%	15,934		13,680			16.5	%	21,815		18,748			16.4	%
Net income	$	40,846	$	33,496	21.9	%	$	73,175		$	54,177		35.1	%	$	29,027	$	23,877		21.6	%	$	40,869	$	32,329		26.4	%

Consolidated net sales for the ~~third~~second quarter of ~~2015~~2016 ~~increased~~decreased ~~0.2~~5.6 percent ~~percent~~ or $~~1.2~~31.7 million compared to the same quarter last year. The change was driven by ~~acquisition impact partially offset by~~ a decrease in organic sales across both the office furniture and hearth products segments. The office furniture segment sales are down due to strong prior year comparisons and a softer market environment. The hearth segment saw continued growth in the new construction channel offset by a decline in the retail channel due to inventory timing, warm weather, and low oil prices. The acquisition and divestitures of small office furniture related companies resulted in a net increase in sales of $6.5 million compared to the prior year quarter.

Gross margin for the ~~third~~second quarter of ~~2015~~2016 increased to ~~37.6~~38.9 percent ~~percent~~ compared to ~~35.8~~36.3 percent ~~percent~~ for the same quarter last year. ~~The increase in gross~~Gross margin ~~was driven by~~for the quarter improved from prior year levels due to strong operational performance, ~~lower~~favorable material ~~costs,~~productivity, and ~~better~~ price realization partially offset by lower ~~volume~~volume.

Second quarter 2016 cost of sales included $1.4 million of restructuring costs and ~~unfavorable product mix. Third~~$3.5 million of transitions costs related to the previously announced closure of the hearth manufacturing facility in Paris, Kentucky and structural realignments among office furniture facilities in Muscatine, Iowa. Specific items incurred include accelerated depreciation and production move costs. Second quarter 2015 cost of sales included ~~$2.1~~$1.3 million of transition ~~and restructuring~~ costs related to previously announced closures, acquisition integration and structural realignment. Third quarter 2014 included $3.9 million of accelerated depreciation and transition costs related to previously announced closures on the "Cost of sales" line on the Condensed Consolidated Statements of Comprehensive Income. Transition costs include items such as equipment

~~moves and outsourced processing.~~

Total selling and administrative expenses as a percentage of net sales increased to ~~27.7~~30.3 percent compared to ~~27.0~~29.4 percent for the same quarter last year driven by ~~strategic investments~~lower volume and ~~acquisition impact~~higher incentive based compensation partially offset by cost ~~management actions.~~ reductions at the operating segments and corporate.

In the ~~third~~second quarter of ~~2015,~~2016, the Corporation recorded ~~$0.2~~$0.6 million in restructuring costs as part of selling and administrative costs due to the previously announced closure of the Paris, Kentucky, hearth manufacturing facility. The Corporation also recorded a $2.0 million nonrecurring gain on a litigation settlement. Second quarter 2015 restructuring costs were favorable $0.6 million primarily due to lower than anticipated post-employment costs incurred for the previously announced closures ~~consolidations,~~of the Midwest Folding Products business located in Chicago, Illinois and ~~realignments. Third quarter 2014 included $1.0 million of restructuring costs on these closures.~~an office furniture manufacturing facility in Florence, Alabama.

Net income attributable to the Corporation was $~~40.8~~29.0 million or $~~0.90~~0.64 per diluted share in the ~~third~~second quarter of ~~2015~~2016 compared to $~~33.6~~23.9 million or $~~0.74~~0.52 per diluted share in the ~~third~~second quarter of ~~2014~~2015.

For the first ~~nine~~six months of ~~2015,~~2016, consolidated net sales ~~increased $131.5~~decreased $54.1 million, or ~~8.3~~5.0 percent, to ~~$1.7~~$1.0 billion from ~~$1.6 billion for the first nine months of 2014~~$1.1 billion. The change was driven by ~~an increase~~a decrease in ~~office furniture~~organic sales across both the ~~supplies-driven~~office furniture and ~~contract channels as well as an~~hearth products segments. The acquisition and divestitures of small office furniture related companies resulted in a net increase in ~~hearth product~~ sales ~~driven by growth~~$11.2 million compared to the same period in the ~~new construction channel, the retail gas portion of the remodel/retrofit channel, and acquisition impact.~~prior year. Gross margins increased to ~~36.4~~38.0 percent from ~~35.3~~35.8 percent ~~for~~from the same period last ~~year~~year. The improvement was driven by ~~higher volume, increased price realization, and~~ strong operational performance, favorable material productivity, and price realization partially offset by ~~unfavorable product mix.~~lower volume.

During the first half of 2016, the Corporation recorded as part of cost of sales $1.4 million of restructuring costs and $5.3 million of transition costs related to the previously announced closure of the hearth manufacturing facility in Paris, Kentucky and structural realignments among office furniture facilities in Muscatine, Iowa. Specific items incurred include accelerated depreciation and production move costs. For the first six months of 2015, the Corporation recorded $2.5 million of transition costs in cost of sales related to previously announced closures, acquisition integration and structural realignment.

For the first ~~nine~~six months of ~~2015,~~2016, total selling and administrative expenses as a percentage of net sales increased to ~~29.7~~31.6 percent compared to ~~29.6~~30.8 percent for the same period last year. ~~The benefit of~~This increase was driven by lower volume and higher ~~volume was~~incentive based compensation partially offset by ~~strategic investments, freight costs, incentive based compensation~~cost reductions at the operating segments and ~~acquisition impact. In 2015, the~~corporate.

The Corporation recorded ~~minimal~~$1.7 million of restructuring costs in the first six months of 2016 as ~~restructuring costs from~~part of selling and administrative expenses due primarily to the previously announced ~~closures were offset by lower than anticipated postemployment costs.~~closure of the hearth manufacturing facility in Paris, Kentucky. The Corporation also recorded a $2.0 million nonrecurring gain on a litigation settlement. In the same period last year, the Corporation recorded ~~$2.3~~a $0.2 million ofreduction in restructuring ~~expenses~~costs associated with ~~facility~~expense from previously announced closures, ~~a goodwill impairment of $8.9 million and $9.7 million in gains on the sale of assets.~~which was more than offset by lower than anticipated post-employment costs.

Net income attributable to HNI Corporation was ~~$73.2~~$40.9 million for the first ~~nine~~six months of ~~2015~~2016 compared to ~~$54.2~~$32.4 million for the first ~~nine~~six months of ~~2014.~~2015. Earnings per share increased to ~~$1.61~~$0.90 per diluted share compared to ~~$1.19~~$0.71 per diluted share for the same period last year.

Office Furniture

~~Third~~Second quarter ~~2015~~2016 net sales for the office furniture segment decreased ~~2.6~~5.0 percent or ~~$12.6~~$22.5 million to $~~476.0~~428.1 million from ~~$488.6~~$450.6 million for the same quarter last year. Sales for the quarter decreased ~~across both~~in our North America contract and International businesses partially offset by an increase in our supplies driven business. The acquisition and divestitures of small office furniture related companies resulted in a net increase in sales of $6.5 million compared to the ~~supplies-driven and contract channels. Third~~prior year quarter. Second quarter ~~2015~~2016 operating profit ~~prior to unallocated corporate expenses~~ increased ~~13.2~~9.0 percent or ~~$5.6~~$3.6 million to ~~$48.4~~$43.4 million from ~~$42.8~~$39.8 million in the prior year quarter as a result of strong operational performance, favorable material productivity, price realization and cost ~~management, and increased price realization.~~reductions. These factors were partially offset by lower volume, higher ~~freight costs~~incentive based compensation, and ~~unfavorable product mix.~~ strategic investments.

In the ~~third~~second quarter of 2016, the office furniture segment recorded $2.5 million of transition costs as part of cost of sales primarily associated with structural realignments among office furniture facilities in Muscatine, Iowa. In the second quarter of 2015, the office furniture segment recorded ~~$0.7~~$0.8 million of ~~restructuring and~~ transition costs ~~associated with~~in cost of sales for previously announced ~~facility~~closures and realignments. Specific transition items incurred in both years include production move costs. The Corporation also recorded a reduction in restructuring costs in second quarter 2015 of $0.6 million due primarily to lower than anticipated post-employment costs incurred for the previously announced closures. ~~In the third quarter of 2014, the office furniture segment recorded $4.9 million of restructuring and transition costs for these closures.~~

Net sales for the first ~~nine~~six months of ~~2015 increased~~2016 decreased $42.6 million, or 5.0 percent, ~~or $63.6 million~~ to ~~$1,334.0~~$815.5 million compared to ~~$1,270.4 million~~

for the same period in 2014 driven by increased price realization and growth in both the supplies driven and contract channels. Operating profit for the first nine months of 2015 increased 39.8 percent or $30.8 million to $108.3 million compared to $77.5$858.1 million for the same period in ~~2014~~2015 driven by a decrease in both channels. The acquisition and divestitures of small office furniture related companies resulted in a net increase in sales of $11.2 million compared to the same period in the prior year. Operating profit for the first six months of 2016 increased $4.7 million, or 7.9 percent, to $64.7 million compared to $59.9 million for the same period in 2015 driven by strong operational performance, ~~cost management, and increased~~favorable material productivity, price realization and cost reductions. These factors were partially offset by lower volume, higher ~~freight costs, unfavorable product mix~~incentive based compensation, and ~~an $8.4 million gain on the sale of a vacated facility during~~strategic investments.

For the first ~~quarter~~six months of ~~2014.~~2016, the office furniture segment recorded $4.0 million of transition costs as part of cost of sales and $0.2 million of restructuring costs. These charges were primarily associated with structural realignments among office furniture facilities in Muscatine, Iowa. Specific transition costs incurred include production move costs. In the same period last year, the office furniture segment recorded $1.9 million of transition costs in cost of sales related to production moves and a $0.2 million reduction of restructuring costs due to lower than anticipated post-employment costs incurred for the previously announced closures.

Hearth Products

~~Third~~Second quarter ~~2015~~2016 net sales for the hearth products segment ~~increased 11.0~~decreased 7.8 percent or ~~$13.8~~$9.2 million to ~~$139.9~~$108.4 million from ~~$126.1~~$117.6 million for the same quarter last year. ~~The change~~A decline in the retail channel due to inventory timing, warm weather, and low oil prices was ~~driven~~partially offset by ~~acquisition impact combined with~~ continued growth in the new construction ~~channel along with growth in the retail gas portion of the remodel/retrofit channel partially offset by decline in the biomass~~ channel. ~~The Vermont Castings Group acquisition increased sales $18.7~~Operating profit decreased 10.8 percent or $1.2 million to $10.0 million compared to ~~the prior year quarter. Operating profit prior to unallocated corporate expenses decreased 1.2 percent or $0.3 million to $23.5 million compared to $23.8~~$11.2 million in the prior year quarter due to ~~the~~ impact ~~of acquisition integration~~from previously announced closures, lower volume, and higher incentive based compensation. These were partially offset by ~~cost management actions, better price realization, and~~strong operational performance, favorable material ~~costs.~~ productivity, and cost reductions.

In the second quarter of 2016, the hearth segment recorded $2.0 million of restructuring costs and $1.0 million of transition costs, of which $2.4 million was included in cost of sales. These costs were incurred as part of the previously announced closure of the Paris, Kentucky, hearth manufacturing facility. Specific items incurred include severance, accelerated depreciation and production move costs. In the same period last year, the hearth segment recorded $0.5 million of transition costs in cost of sales related to acquisition integration.

Net sales for the first ~~nine~~six months of ~~2015 increased 22.2~~2016 decreased $11.5 million, or 4.9 percent, ~~or $67.9 million~~ to ~~$373.5~~$222.1 million compared to ~~$305.6 million~~

for the same period in 2014. The Vermont Castings Group acquisition increased sales $62.7 million compared to prior year. Operating profit for the first nine months of 2015 increased $3.2 million to $47.2 million compared to $44.0$233.7 million for the same period in ~~2014.~~2015. Operating profit for the first six months of 2016 decreased $1.1 million to $22.5 million compared to $23.7 million for the same period in 2015. The year-to-date ~~increases~~decreases in sales and operating ~~profit~~profits were driven by the same drivers experienced in the current quarter.

For the first six months of 2016, the hearth segment recorded $2.9 million of restructuring costs and $1.3 million of transition costs, of which $2.7 million was included in cost of sales. These costs were incurred as part of the previously announced closure of its manufacturing facility in Paris, Kentucky. Specific items incurred include severance, accelerated depreciation, and production move costs. In the same period last year, the hearth segment recorded $0.5 million of transition costs in cost of sales related to acquisition integration.

Liquidity and Capital Resources

Cash Flow – Operating Activities

Operating activities ~~provided~~were a source of $~~58.4~~31.8 million of cash in the first ~~nine~~six months of 2016 compared to $31.9 million used in the first six months of 2015 ~~compared to~~ ~~$74.8 million~~ ~~in the first~~ ~~nine~~ ~~months of~~ ~~2014~~. Working capital resulted in a $~~75.9~~53.9 million use of cash in the first ~~nine~~six months of the current fiscal year compared to a $~~34.9~~106.6 million use of cash in the same period of the prior year. The ~~increased~~decreased use of cash compared to the prior year is primarily due to ~~timing of expenses and inventory purchases resulting in~~ lower Accounts ~~Payable~~Receivable and ~~Accruals.~~Accrued Expenses as a result of timing and lower sales. Cash flow from operating activities is expected to be positive for the year.

Cash Flow – Investing Activities

Capital expenditures, including capitalized software, for the first ~~nine~~six months of fiscal ~~2015~~2016 were $~~81.6~~55.9 million compared to $~~81.7~~49.9 million in the same period of fiscal ~~2014~~2015 and were primarily for building reconfiguration, tooling ~~equipment~~ and ~~capacity~~equipment for new products, continuous improvements in manufacturing processes and the on-going implementation of ~~new~~an integrated information ~~systems~~system to support business process transformation. For the full year ~~2015~~2016, capital expenditures are expected to be approximately ~~$110~~$125 to ~~$115 million, primarily related to new products, operational process improvements and capabilities and the business process transformation project referred to above.~~$130 million.

During the first quarter of 2014 the Corporation completed the sale of a facility located in South Gate, California. The proceeds from the sale of $12.0 million are reflected in the Condensed Consolidated Statement of Cash Flows as "Proceeds from sale of property, plant and equipment".

Cash Flow – Financing Activities

~~Financing activities provided $13 million of cash in the first nine months of 2015 compared to a $46 million use of cash in 2014. The year over year difference was mainly caused by debt activity.~~ The Corporation, certain domestic subsidiaries of the Corporation, the lenders and Wells Fargo Bank, National Association, as administrative agent, entered into ~~a second~~the First Amendment to Second Amended and Restated Credit Agreement (the "Credit Agreement") on ~~June 9, 2015.~~January 6, 2016. The Credit Agreement amends the Second Amended and ~~restates the Corporation's existing revolving credit facility~~Restated Credit Agreement dated ~~September 28, 2011 (the"Prior Facility").~~as of June 9, 2015.

The ~~Corporation’s borrowing capacity under the~~ Credit Agreement is $250 million with the option to increase its borrowing capacity under an accordion feature by an additional $150 million, subject to certain approval rights of the existing lenders to upsize their commitments. If an existing lender does not approve the up-size of its pro rata commitment, the Corporation expects to first seek incremental credit commitments from existing lenders and then add new lenders if required.

~~Additionally, the Corporation currently plans~~was amended to increase the ~~borrowing capacity under~~revolving commitment of the ~~Credit Agreement (while preserving the existing $150 million accordion feature)~~lenders from $250 million to $400 million ~~by January 6, 2016 and use the additional borrowings to settle~~(while retaining the Corporation's ~~senior notes due April 6, 2016. Debt~~option under the Credit Agreement ~~will be~~to increase its borrowing capacity by an additional $150 million) in order to provide funding for the pay off of its maturing senior notes on April 6, 2016 and to extend the maturity date of the Credit Agreement from June 2020 to January 2021. The Corporation deferred the debt issuance costs related to the Credit Agreement, which were classified as assets, and is amortizing them over the term of the Credit Agreement.

As of July 2, 2016, there was $276 million outstanding under the $400 million revolving credit facility of which $193 million was classified as long-term ifsince the ~~planned increase occurs on or prior~~Corporation does not expect to ~~January 6, 2016.~~repay the borrowings within a year and the remaining $83 million was classified as current.

The ~~net~~revolving credit facility under the Credit Agreement is the primary source of committed funding from which the Corporation finances its planned capital expenditures and strategic initiatives, such as acquisitions, repurchases of common stock and certain working capital needs. Non-compliance with the various financial covenant ratios in the Credit Agreement could prevent the Corporation from being able to access further borrowings under the revolving credit ~~agreement at the end~~facility, require immediate repayment of ~~the third quarter were $107 million of which~~ all ~~are classified as current. The Corporation also extended the term of the Prior Facility under the Credit Agreement from September 28, 2016~~amounts outstanding with respect to the ~~earlier~~revolving credit facility and/or increase the cost of June 9, 2020 or 90 days prior to the maturity date of the Corporation's senior notes (April 6, 2016), unless the Corporation’s senior notes are refinanced by January 6, 2016 or the Corporation has $225 million in liquidity available (as defined in the Credit Agreement) as of that date.borrowing.

The Credit Agreement ~~governing the Corporation's revolving credit facility~~ contains a number of covenants, including covenants requiring maintenance of the following financial ratios as of the end of any fiscal quarter:

a consolidated interest coverage ratio of not less than 4.0 to 1.0, based upon the ratio of (a) consolidated EBITDA (as defined in the Credit Agreement) for the last four fiscal quarters to (b) the sum of consolidated interest charges; and

a consolidated leverage ratio of not greater than 3.5 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness (as defined in the Credit Agreement) to (b) consolidated EBITDA for the last four fiscal quarters.

The note purchase agreement pertaining to the Corporation's senior notes also contains a number of covenants, including a covenant requiring maintenance of consolidated debt to consolidated EBITDA (as defined in the note purchase agreement) of not greater than 3.5 to 1.0, based upon the ratio of (a) the quarter-end consolidated funded indebtedness (as defined in the note purchase agreement) to (b) consolidated EBITDA for the last four fiscal quarters.

Additional borrowing capacity of $143 million is available, excluding the accordion option, through the revolving credit facility. The revolving credit facility is the primary source of committed funding from which the Corporation finances its planned capital expenditures and strategic initiatives, such as acquisitions, repurchases of common stock and certain working capital needs. Non-compliance with the various financial covenant ratios in the revolving credit facility or the senior notes could prevent the Corporation from being able to access further borrowings under the revolving credit facility, increase the revolving credit facility, require immediate repayment of all amounts outstanding with respect to the revolving credit agreement and senior notes and/or increase the cost of borrowing.

The most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.5 to ~~1.0 included in the Credit Agreement.~~1.0. Under the Credit Agreement, consolidated EBITDA is defined as consolidated net income before interest expense, income taxes and depreciation and amortization of intangibles, as well as non-cash, nonrecurring charges and all non-cash items increasing net income. At ~~October 3, 2015,~~July 2, 2016, the Corporation was ~~well~~ below the maximum allowable ratio and was in compliance with all of the covenants and other restrictions in the Credit ~~Agreement and the note purchase agreement.~~Agreement. The Corporation ~~currently~~ expects to remain in compliance over the next twelve months.

In 2006, the Corporation refinanced $150 million of borrowings outstanding under its prior revolving credit facility with 5.54 percent, ten-year unsecured senior notes ("Senior Notes") due April 6, 2016 issued through the private placement debt market. Interest payments were due semi-annually on April 6 and October 6 of each year. The Corporation paid off the Senior Notes on April 6, 2016 with revolving credit facility borrowings.

In March 2016, the Corporation entered in to an interest rate swap transaction to hedge $150 million of outstanding variable rate revolver borrowings against future interest rate volatility. Under the terms of the interest rate swap, the Corporation pays a fixed rate of 1.29 percent and receives one month LIBOR on a $150 million notional value expiring January 2021. As of July 2, 2016, the fair value of the Corporation's interest rate swap was a liability of $2.5 million reported net of tax as $1.6 million in accumulated other comprehensive income.

On May 10, 2016, the Corporation's Board of Directors (the "Board") ~~declared~~approved a ~~regular~~3.8 percent increase in the common stock quarterly ~~cash~~ dividend offrom $0.265 per share ~~on the Corporation's common stock on August 4, 2015,~~ to ~~shareholders of record at the close of business on August 14, 2015.~~$0.275 per share. The dividend was paid on ~~September~~June 1, ~~2015.~~2016 to shareholders of record on May 20, 2016.

During the ~~nine~~six months ended ~~October 3, 2015,~~July 2, 2016, the Corporation repurchased ~~506,300~~208,000 shares of common stock at a cost of ~~$24.8~~$8.7 million, or an average price of ~~$48.94~~$42.04 per share. As of ~~October 3, 2015, $194.6~~July 2, 2016, $184.0 million of the Board's current repurchase authorization remained unspent.

Cash, cash equivalents and short-term investments, coupled with cash flow from future operations, borrowing capacity under the existing ~~credit agreement~~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.

Off-Balance Sheet Arrangements

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.

Contractual Obligations

Contractual obligations associated with ongoing business and financing activities will result in cash payments in future periods. A table summarizing the amounts and estimated timing of these future cash payments was provided in the Corporation's Annual Report on Form 10-K for the year ended January ~~3, 2015~~2, 2016. ~~During~~With the ~~first~~ ~~nine~~ ~~months~~exception of ~~fiscal~~ ~~2015~~,the debt refinancing as described in Note 11 of the Notes to the Condensed Consolidated Financial Statements, there were no material changes outside the ordinary course of business in the Corporation's contractual obligations or the estimated timing of the future cash ~~payments.~~payments for the first six months of fiscal 2016.

Commitments and Contingencies

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the ordinary course of business, including pending litigation, environmental remediation, taxes and other claims. It is the Corporation's opinion, after consultation with legal counsel, that additional 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.

Critical Accounting Policies and Estimates

The preparation of the financial statements requires the Corporation to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Corporation continually evaluates its accounting policies and estimates. The Corporation bases its estimates on historical experience and on a variety of other assumptions believed by management to be reasonable in order to make judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Corporation's Annual Report on Form 10-K for the year ended January ~~3, 2015~~2, 2016.

New Accounting Standards

In May 2014, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU requires companies to reevaluate when revenue is recorded on a transaction based upon newly defined criteria, either at a point in time or over time as goods or services are delivered. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The new standard becomes effective for usthe Corporation in fiscal 2018, and allows for both retrospective and modified-retrospective

methods of adoption. ~~We are~~The Corporation is currently evaluating the effect, if any, that the updated standard will have on ~~our~~consolidated financial statements and related disclosures. The Company anticipates more information on the potential impact, if any, of the new standard will be available by the end of 2016.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires lesees to recognize most leases, including operating leases, on-balance sheet via a right of use asset and lease liability. Changes to the lessee accounting model may change key balance sheet measures and ratios, potentially affecting analyst expectations and compliance with financial covenants. The new standard becomes effective for the Corporation in fiscal 2019, but may be adopted at any time, and requires a modified retrospective transition. The Corporation is currently evaluating the effect the standard will have on consolidated financial statements and related disclosures.

In ~~April 2015,~~March 2016, the FASB issued ASU No. ~~2015-03,~~2016-07, ~~Interest - Imputation~~Simplifying the Transition to the Equity Method of ~~Interest (Subtopic 835-30) - Simplifying Presentation of Debt Issuance Costs~~Accounting. The ~~core principle of~~new standard eliminates the ~~ASU is that~~requirement for an ~~entity should present debt issuance costs as a direct deduction from~~investor to retroactively apply the ~~face amount of that debt~~equity method when an increase in ~~the balance sheet similar to the manner~~ownership interest in which a debt discount or premium is presented, and not reflected as a deferred charge or deferred credit. The ASU requires additional disclosure about the nature of and reason for the change in accounting principle, the transitionan investee triggers equity method a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line item (that is, the debt issuance cost asset and the debt liability).accounting. The new standard becomes effective for usthe Corporation in fiscal ~~2016, and requires retrospective implementation in which~~2017. The Corporation anticipates the balance sheet of each individual period presented is to be adjusted to reflect the period-specific effects of applying the new guidance, early adoption is permitted. Subsequent to the issuance of ASU 2015-03 the SEC staff made an announcement regarding the presentation of debt issuance costs associated with line-of-credit arrangements, which was codified by the FASB in ASU 2015-15. This guidance, which clarifies the exclusion of line-of-credit arrangements from the scope of ASU 2015-03, is effective upon adoption of ASU 2015-03. We are currently evaluating the effect, if any, that the updated standard will have an immaterial effect on ~~our~~ consolidated financial statements and related disclosures.

In ~~April 2015,~~March 2016, the FASB issued ASU No. ~~2015-05,~~2016-09, ~~Internal-Use Software (Subtopic 350-40) - Customer’s Accounting~~Improvements to Employee Share-Based Payment Accounting. The new standard is intended to simplify accounting for ~~Fees Paid in a Cloud Computing Arrangement. The ASU applies~~share based employment awards to ~~cloud computing arrangements including software~~employees. Changes include: all excess tax benefits/deficiencies should be recognized as income tax expense/benefit; entities can make elections on how to account for forfeitures; and cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a ~~service, platform as a service, infrastructure as a service, and other similar hosting arrangements, and was issued to help entities evaluate~~financing activity on the ~~accounting for fees paid by a customer in a cloud computing arrangement.~~cash flow statement. The ASU provides guidance about whether the arrangement includes a software license. The core principle of the ASU is that if a cloud computing arrangement includes a software license, then the customer should accountnew standard becomes effective for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract.Corporation in fiscal 2017. The ~~guidance will not change U.S. GAAP for a customer’s accounting for service contracts. The ASU~~Corporation is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015. The company anticipates the adoption in the effective period and we are currently evaluating the ~~effect, if any, that~~impact to the ~~ASU will have on our~~ consolidated financial statements and related disclosures.

~~In September 2015, the FASB issued ASU No. 2015-16,~~ ~~Simplifying the Accounting for Measurement-Period Adjustments.~~ The ASU eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. The core principle of the ASU is that entities will be required to recognize the cumulative impact of a measurement period adjustment (including the impact on prior periods) in the reporting period in which the adjustment is identified. The ASU is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015. However early adoption is permitted. The company anticipates the adoption for fiscal 2016.

Looking Ahead

Management remains optimistic about the long term prospects in the office furniture and hearth products markets. Management believes the Corporation iscontinues to compete well ~~positioned~~and remains confident the investments made in the business will continue to ~~increase profits in 2015.~~generate strong returns for shareholders.

The Corporation continues to focus on creating long-term shareholder value by growing its businesses through investment in building brands, product solutions and selling models, enhancing its strong member-owner culture and continuing to execute its long-standing continuous improvement discipline to build best total cost and a lean enterprise.

Forward-Looking Statements

Statements in this report that are not strictly historical, including statements as to plans, outlook, objectives and future financial performance, are "forward-looking" statements, within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "could," "confident," "estimate," "expect," "forecast," "hope," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and variations of such words and similar expressions identify forward-looking statements. Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual results in the future to differ materially from expected results. These risks include, without limitation: the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives, including its business system transformation, (c) investments in strategic acquisitions, production capacity, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) ability to maintain its effective tax rate, (f) repurchases of common stock and (g) closing, consolidation and logistical realignment initiatives; uncertainty related to the availability of cash and credit, and the terms and interest rates on which credit would be available, to fund operations and future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions, slow or negative growth rates in global and domestic economies or in the domestic housing market; lower industry growth than expected; major disruptions at our key facilities or in the supply of any key raw materials, components or finished goods; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials; higher costs for energy and fuel; changes in the mix of products sold and of customers purchasing; relationships with distribution channel partners, including the financial viability of distributors and dealers; restrictions imposed by the terms of the Corporation's revolving credit ~~facility and note purchase agreement;~~facility; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q. The Corporation undertakes no obligation to update, amend, or clarify forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of ~~October 3, 2015~~July 2, 2016, there were no material changes to the financial market risks that affect the quantitative and qualitative disclosures presented in Item 7A of the Corporation's Annual Report on Form 10-K for the year ended January ~~3, 2015~~2, 2016.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Under the supervision and with the participation of management, the chief executive officer and chief financial officer of the Corporation carried out an evaluation of the Corporation's disclosure controls and procedures pursuant to Exchange Act Rules 13a – 15(e) and 15d – 15(e). As of ~~October 3, 2015~~July 2, 2016, based on this evaluation, the chief executive officer and chief financial officer have concluded these disclosure controls and procedures are effective.

Changes in Internal Controls

There have been no changes in the Corporation's internal control over financial reporting during the fiscal quarter covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. On January 29, 2016, the Corporation completed the acquisition of a small office furniture company. In conducting our evaluation of the effectiveness of internal control over financial reporting, we have elected to exclude the acquisition from our evaluation as of July 2, 2016, as permitted by the Securities and Exchange Commission guidelines.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no ~~new~~material legal ~~proceedings or material developments to report other than ordinary routine litigation incidental to the business.~~proceedings.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the "Risk Factors" section of the Corporation's Annual Report on Form 10-K for the year ended January ~~3, 2015~~2, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities:

The following is a summary of share repurchase activity during the quarter ended ~~October 3, 2015~~July 2, 2016.

Period
(a) Total Number of Shares (or Units) Purchased (1)
(b) Average
Price Paid
per Share or
Unit

(c) Total Number of
Shares (or Units)
Purchased as Part of Publicly Announced
Plans or Programs

(d) Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet be
Purchased Under
the Plans or
Programs
07/05/15 – 08/01/15 6,100
$ 48.77
6,100
$ 203,878,364
08/02/15 – 08/29/15 122,000
$ 48.85
122,000
$ 197,918,516
08/30/15 – 10/03/15 73,200
$ 45.35
73,200
$ 194,599,105
Total 201,300
201,300



Period	(a) Total Number of Shares (or Units) Purchased (1)	(b) Average Price Paid per Share or Unit		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
04/03/16 – 04/30/16	2,600	$	43.63	2,600	$	190,916,092
05/01/16 – 05/28/16	93,600	$	43.14	93,600	$	186,877,807
05/29/16 – 07/02/16	62,400	$	46.49	62,400	$	183,976,906
Total	158,600			158,600

(1) No shares were purchased outside of a publicly announced plan or program.

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

~~Plan~~Corporation's share purchase program ("Program") announced November 9, 2007, providing share repurchase authorization of $200,000,000 with no specific expiration date, with an increase announced November 7, 2014, providing additional share repurchase authorization of $200,000,000 with no specific expiration date.

No repurchase plans expired or were terminated during the ~~third~~second quarter of fiscal ~~2015~~2016, nor do any plans exist under which the Corporation does not intend to make further purchases. The Program does not obligate the Corporation to purchase any shares and the authorization for the Program may be terminated, increased or decreased by the Board at any time.

Item 6. Exhibits

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	HNI Corporation

Date: ~~November 3, 2015~~August 2, 2016	By:	/s/ Kurt A. Tjaden
		Kurt A. Tjaden
		Senior Vice President and Chief Financial Officer



EXHIBIT INDEX
(3.1)	Amended and Restated Bylaws of the Corporation, as amended on May 10, 2016 (incorporated herein by reference to Exhibit 3.1 to the Corporation's Current Report on Form 8-K filed with the SEC on May 13, 2016)
(31.1)	Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31.2)	Certification of the CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32.1)	Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from HNI Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended ~~October 3, 2015~~July 2, 2016 are formatted in XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Consolidated Statements of Equity; (iv) Condensed Consolidated Statements of Cash Flows; and ~~(iv)~~(v) Notes to Condensed Consolidated Financial Statements

2625



		Asset (Liability) Fair Value
	Balance Sheet Location	October 3, 2015			January 3, 2015
Diesel fuel swap	Accounts payable and accrued expenses	$	(920	)	$	(1,374	)
Diesel fuel swap	Prepaid expenses and other current assets	—			—
Net balance at end of period		$	(920	)	$	(1,374	)



Derivatives in Cash Flow Hedge Relationship	Before-tax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)			Locations of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Before-Tax Gain (Loss) Reclassified from AOCI Into Income (Effective Portion)			Locations of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)	Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Diesel fuel swap	$	(1,117	)	Selling and administrative expenses	$	(680	)	Selling and administrative expenses	$	—
Total	$	(1,117	)		$	(680	)		$	—