Hni Corp 8-K/A, filed Jul 6, 2023

Hni Corp (HNI)

8-K/A 2023-07-06 For: 2023-06-01

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Added on April 10, 2026

About this 8-K/A

Hni Corp filed this 8-K/A on July 6, 2023, reporting on events of June 1, 2023.

Items reported

Item 9.01: Financial statements and exhibits

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Iowa		001-14225		42-0617510
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(IRS Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HNI		New York Stock Exchange

Exhibit No.		Description

2.1*†		Agreement and Plan of Merger, by and among HNI Corporation, Ozark Merger Sub, Inc. and Kimball International, Inc., dated as of March 7, 2023 (incorporated by reference herein by reference to Exhibit 2.1 to HNI Corporation’s Current Report on Form 8-K, filed on March 10, 2023).
10.1*		First Additional Loan Amendment to Term Loan Credit Agreement, by and among HNI Corporation, certain domestic subsidiaries of HNI, as guarantors, certain lenders and Wells Fargo Bank, National Association, as administrative agent, dated as of May 25, 2023.
10.2*		First Additional Loan Amendment to Fourth Amended and Restated Credit Agreement, by and among HNI Corporation, certain domestic subsidiaries of HNI, as guarantors, certain lenders and Wells Fargo Bank, National Association, as administrative agent, dated as of June 1, 2023.
99.1*		Joint Press Release issued by HNI and Kimball, dated June 1, 2023.
99.2		The unaudited pro forma combined condensed statements of income for the year ended December 31, 2022 and the three months ended April 1, 2023 and the unaudited pro forma condensed combined balance sheet as of April 1, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).


Date: July 6, 2023	HNI Corporation

	By:	/s/ Marshall H. Bridges
	Name:	Marshall H. Bridges
	Title:	Senior Vice President and Chief Financial Officer


(in millions, except per share data)							Reclassification Adjustments (Note 3)				Transaction Accounting Adjustments (Note 5)
	HNI Corporation			Kimball International, Inc.												Pro Forma Combined
	HNI Corporation			Kimball International, Inc.						Note				Note		Pro Forma Combined			Note
Net sales	$	2,361.8		$	718.6		$	(22.4	)	C, E	$	-				$	3,058.0
Cost of sales		1,526.9			477.1			(47.4	)	A, B, D, E		-					1,956.6
Gross profit		834.9			241.5			25.0				-					1,101.4
Selling and administrative expenses		723.4			210.4			25.0		A, B, C, D		39.5			A, B, D		998.3
Other operating (income) expense		-			(6.8	)		-				-					(6.8	)
Gain on sale of subsidiary		(50.4	)		-			-				-					(50.4	)
Restructuring and impairment charges		6.7			46.8			-				-					53.4
Operating income (loss)		155.2			(8.8	)		-				(39.5	)				106.9
Interest expense and other, net		8.8			4.4			-				12.7			C		25.9
Income (loss) before income taxes		146.4			(13.3	)		-				(52.2	)				80.9
Income tax expense		22.5			5.6			-				(12.5	)		E		15.6
Net income (loss)		123.9			(18.9	)		-				(39.7	)				65.4
Less: Net income (loss) attributable to non-controlling interest		(0.0	)		-			-				-					(0.0	)
Net income attributable to HNI Corporation	$	123.9		$	(18.9	)	$	-			$	(39.7	)			$	65.4

Average number of common shares outstanding – basic		41.7															46.5			F
Net income attributable to HNI Corporation per common share – basic	$	2.97														$	1.41

Average number of common shares outstanding – diluted		42.2															47.2			F
Net income attributable to HNI Corporation per common share – diluted	$	2.94														$	1.39


(in millions)							Reclassification Adjustments (Note 3)		Transaction Accounting Adjustments (Note 4)
	HNI Corporation			Kimball International, Inc.									Pro Forma Combined
	HNI Corporation			Kimball International, Inc.								Note	Pro Forma Combined
Assets
Current Assets:
Cash and cash equivalents	$	16.8		$	18.8		$	-	$	(3.6	)	A	$	31.9
Receivables, net		187.5			49.5			-		-				237.0
Inventories, net		191.1			89.6			-		-		F		280.7
Prepaid expenses and other current assets		51.8			15.7			-		(0.4	)	C		67.1
Total Current Assets		447.1			173.7			-		(4.0	)			616.7

Net property, plant, and equipment		354.8			96.7			-		-		F		451.5
Right-of-use lease assets		95.7			17.3			-		-		F		113.0
Goodwill and other intangible assets, net		432.6			62.4					320.7		B		815.7
Other assets		52.6			32.7			-		-				85.3
Total Assets	$	1,382.8		$	382.8		$	-	$	316.7			$	2,082.3

Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses	$	326.3		$	113.3		$	-	$	-			$	439.5
Other current liabilities		26.4			9.6			-		-				35.9
Total Current Liabilities		352.6			122.8			-		-				475.5

Long-term debt		206.3			50.0			-		356.6		C		612.9
Long-term lease obligations		82.7			16.3			-		-				99.0
Other long-term liabilities		128.0			14.2			-		43.3		D		185.4

Equity:
Capital Stock:
Preferred stock		-			-			-		-				-
Common stock		41.7			2.1			-		2.6		E		46.4
Treasury stock		-			(71.3	)		-		71.3		E		-

Additional paid-in capital		57.1			8.9			-		107.2		E		173.2
Retained earnings		522.0			235.9			-		(260.4	)	E		497.5
Accumulated other comprehensive loss		(7.9	)		3.9			-		(3.9	)	E		(7.9	)
Total Shareholders’ Equity		612.8			179.5			-		(83.2	)			709.1

Non-controlling interest		0.3			-			-		-				0.3

Total Equity		613.2			179.5			-		(83.2	)			709.5

Total Liabilities and Equity	$	1,382.8		$	382.8		$	-	$	316.7			$	2,082.3


Assumptions:
HNI Stock price	$	25.50
Cash consideration per share per merger agreement	$	9.00
Equivalent share amount per merger agreement		0.1301

			HNI shares
	Kimball shares		exchanged		Fair value		Consideration
Cash Consideration:
Shares of Kimball common stock issued and outstanding		36,417,749			$	327.8
Kimball equivalent shares		176,044				2.2
Total number of Kimball shares for cash consideration		36,593,793			$	330.0	Cash


Share Consideration:
Shares of Kimball common stock issued and outstanding		36,417,749		4,737,949	$	120.8	HNI common stock


Replacement Share-Based Awards:
Outstanding awards of Kimball restricted stock units relating to Kimball common stock		467,639		228,387	$	2.6	HNI restricted stock units

Other Consideration:
Consideration for payment to settle Kimball’s outstanding debt					$	50.2

Total estimated preliminary purchase consideration					$	503.6

Assets acquired
Cash and cash equivalents	$	18.8
Accounts receivable		49.5
Inventories		89.6
Other current assets		15.7
Property and equipment		96.7
Right-of-use assets		17.3
Intangible assets		194.0
Other noncurrent assets		32.7
Total assets acquired	$	514.4

Liabilities assumed
Accounts payable	$	46.8
Other current liabilities		76.1
Lease liabilities		16.3
Other liabilities		14.2
Total liabilities assumed		153.3
Net assets acquired, excluding goodwill		361.1
Deferred tax liability adjustment on the fair value of purchased intangibles, net		(46.6	)
Total estimated preliminary purchase consideration		503.6
Goodwill	$	189.1

A.	Represents adjustments to the combined company cash balance to complete and fund the merger, including (i) net proceeds from HNI’s new debt and subsequent Kimball debt payoff, (ii) estimate of the cash consideration paid at the closing of the merger, and (iii) estimate of HNI and Kimball transaction costs paid:

		As of April 1, 2023
	Net proceeds from HNI’s new debt	$	409.0
	Cash consideration paid upon merger		(330.0	)
	HNI and Kimball transaction cash costs		(32.5	)
	Extinguishment of certain existing indebtedness of Kimball		(50.2	)
	Net adjustment to cash and cash equivalents	$	(3.6	)

B.	Represents the net adjustment to goodwill, as well as the adjustment to record net intangible assets to estimated fair value based on preliminary purchase price allocation, as follows:

		As of April 1, 2023
	Elimination of Kimball’s historical goodwill	$	(11.2	)
	Goodwill to be recorded based on the estimated preliminary purchase price allocation		189.1
	Net adjustment to goodwill	$	177.9

		As of April 1, 2023			Estimated remaining useful life (years)
	Estimated fair value of identifiable intangible assets acquired		194.0			10
	Elimination of Kimball’s historical intangible assets		(51.3	)
	Net adjustment to intangible assets	$	142.8

	Net adjustment to goodwill and intangible assets	$	320.7

C.	In March 2023, in connection with the pending acquisition of Kimball, HNI entered into a First Amendment to Fourth Amended and Restated Credit Agreement (the “First Amendment”), which amends the Fourth Amended & Restated Credit Agreement (the “Revolving Credit Agreement”) among HNI, as borrower, certain domestic subsidiaries of HNI, as guarantors, certain lenders and Wells Fargo Bank, National Association, as administrative agent. The First Amendment amends the Revolving Credit Agreement to, among other things, make $160.0 million of the commitments under the Revolving Credit Agreement (the “Revolving Facility”, and the loans thereunder, the “Revolving Loans”) available for, subject to the satisfaction of certain limited conditions (including the consummation of the merger in accordance with the merger agreement), the consummation of the merger. Also in March 2023, HNI entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”), by and among HNI, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. The Term Loan Credit Agreement provides for an unsecured delayed draw term loan facility in the aggregate principal amount of $280.0 million (the “Term Loan Facility”, and the loans thereunder, the “Term Loans”). Subject to the satisfaction of certain limited conditions (including the consummation of the merger in accordance with the merger agreement), the loans under the Term Loan Credit Agreement may be borrowed and the proceeds used by HNI solely for the consummation of the merger. HNI funded the cash portion of the merger with a combination of cash on hand and debt financing sourced from the Revolving Loans and Term Loans. In connection with the merger, HNI terminated Kimball’s existing credit facility with JPMorgan Chase Bank, National Association. Adjustments to long-term debt and related balances, including unamortized debt issuance costs, include the following:

		As of April 1, 2023
	HNI proceeds from issuance of new debt, net of issuance costs	$	406.6
	Extinguishment of existing indebtedness of Kimball		(50.0	)
	Net adjustment to debt	$	356.6

	Deduct existing unamortized debt issuance costs of Kimball	$	(0.4	)

D.	Represents the adjustment to long-term deferred income tax liabilities, as follows:

		As of April 1, 2023
	Deferred tax liability adjustment on the fair value of purchased intangibles	$	46.6
	Deferred tax asset on the pro forma adjustment for transaction costs		(3.3	)
	Net adjustment to long-term deferred income tax liabilities	$	43.3

	Goodwill arising from the acquisition is not expected to be deductible for tax reporting purposes and no deferred taxes have been provided. Additional adjustments to Kimball’s historical deferred tax balance may be necessary and those adjustments may be material.

E.	Represents adjustments to shareholders’ equity accounts to eliminate historical Kimball balances, increase common stock and additional paid-in capital of the combined company for the estimated fair value of HNI stock consideration, and adjust retained earnings of the combined company as a result of pro forma adjustments to net income incurred at closing.
		As of April 1, 2023
	Elimination of Kimball’s historical retained earnings	$	(235.9	)
	Effect of transaction costs and other adjustments to net income		(24.5	)
	Net adjustment to retained earnings	$	(260.4	)

	Elimination of Kimball’s historical common stock	$	(2.2	)
	Estimated HNI common stock issued for purchase consideration		4.7
	Net adjustment to common stock	$	2.6

	Elimination of Kimball’s historical treasury stock	$	(71.3	)

	Elimination of Kimball’s historical AOCI balance	$	(3.9	)

	Elimination of Kimball’s historical APIC balance	$	(8.9	)
	Estimated APIC recorded for HNI common stock issued for purchase consideration		116.1
	Net adjustment to APIC	$	107.2

A.	Reflects share-based compensation expense related to unvested Kimball equity awards that were converted into an award in respect of a number of shares of HNI at close, as described within the merger agreement. Unvested Kimball equity awards converted to HNI equity awards have been remeasured, with a portion of the value attributed to purchase consideration and a portion attributed to expense over the remaining post-close service period. The estimated pro forma adjustment to share-based compensation is as follows:

		Twelve months			Three months
		ended December 31, 2022			ended April 1, 2023
	Selling and administrative expense	$	2.1		$	0.3

B.	Represents the elimination of historical amortization expense related to Kimball International intangible assets and the addition of amortization expense form the acquired intangible assets based on the preliminary estimate fair values and useful lives as discussed in Note 2 - Estimated Purchase Consideration and Preliminary Purchase Price Allocation and Note 4 - Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments:

		Twelve months			Three months
		ended December 31, 2022			ended April 1, 2023
	Elimination of Kimball International historical Intangible assets, net amortization expense	$	(6.9	)	$	(1.6	)
	New amortization expense for newly acquired intangible assets		14.6			3.6
	Total pro forma amortization expense adjustment	$	7.6		$	2.0

C.	HNI funded the cash portion of the merger consideration with a combination of cash on hand, new debt, and borrowings from its existing revolving credit line. See Note 4.C for additional information. Adjustments to interest expense include the following:

		Twelve months			Three months
		ended December 31, 2022			ended April 1, 2023
	Interest expense related to new debt used to finance merger	$	14.8		$	5.9
	Amortization of new debt issuance costs to interest expense		0.6			0.2
	Pro forma adjustment to reflect repayment of Kimball International debt		(2.7	)		(1.1	)
	Net pro forma impact to interest expense		12.7			5.0

D.	Adjustment to reflect estimated non-recurring acquisition-related transaction costs, including severance, acceleration of stock compensation expense for awards that vested as a result of change-in-control provisions being triggered, investment banking, advisory, legal, valuation, and other professional fees:

		Twelve months
		ended December 31, 2022
	Transaction costs not expected to recur beyond twelve months	$	29.8

E.	Represents the impact to income tax expense of pro forma adjustments, as follows:

		Twelve months			Three months
		ended December 31, 2022			ended April 1, 2023
	Income tax impact of transaction costs	$	(7.2	)	$	-
	Income tax impact of the net increase in interest expense		(3.0	)		(1.2	)
	Income tax impact of the net increase in amortization expense		(1.8	)		(0.5	)
	Income tax impact of the share-based compensation expense adjustment		(0.5	)		(0.1	)
	Total pro forma adjustments for Income tax expense	$	(12.5	)	$	(1.8	)


	The net pro forma adjustments to income tax expense reflects the tax effect of the pro forma adjustments using the blended statutory rate of 24% for the year ended December 31, 2022 and the three months ended April 1, 2023.

F.	The unaudited pro forma condensed combined basic and diluted earnings per share calculations are based on the estimated weighted-average number of common shares outstanding on a pro forma basis, as illustrated below. The pro forma weighted-average shares outstanding have been calculated as if the HNI shares issued as merger consideration had been issued and outstanding, and outstanding Kimball shares canceled as of the start of the earliest pro forma period presented. Also considered is the dilutive impact of HNI stock awards issued to Kimball employees and which vest post-close. Amounts below are in millions except per share data.

		Twelve months			Three months
		ended December 31, 2022			ended April 1, 2023
	Pro Forma Weighted Average Shares (Basic)
	HNI historical weighted average shares outstanding (basic)		41.7			41.5
	Shares issued as consideration for outstanding shares of Kimball common stock		4.7			4.7
	Pro Forma Weighted Average Shares (Basic)		46.5			46.3

	Pro Forma Weighted Average Shares (Diluted)
	HNI historical weighted average shares outstanding (diluted)		42.2			42.1
	Shares issued as consideration for outstanding shares of Kimball common stock		4.7			4.7
	Dilutive impact of HNI awards issued to Kimball employees vesting post-close		0.2			0.2
	Pro Forma Weighted Average Shares (Diluted)		47.2			47.0

	Pro Forma Basic Earnings Per Share
	Pro forma net earnings	$	65.4		$	1.6
	Pro forma weighted average shares (basic)		46.5			46.3
	Pro Forma Basic Earnings Per Share	$	1.41		$	0.04

	Pro Forma Diluted Earnings Per Share
	Pro forma net earnings	$	65.4		$	1.6
	Pro forma weighted average shares (diluted)		47.2			47.0
	Pro Forma Diluted Earnings Per Share	$	1.39		$	0.03