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Summary of Significant Accounting Policies | 12 Months Ended
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Jan. 02, 2016
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts and transactions of the Corporation and its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Cash, Cash Equivalents and Investments Cash and cash equivalents generally consist of cash and money market accounts. The fair value approximates the carrying value due to the short duration of the securities. These securities have original maturity dates not exceeding three months. The Corporation has short-term investments with maturities of less than one year and also has investments with maturities greater than one year included in Other Assets on the Consolidated Balance Sheets. Management classifies investments in marketable securities at the time of purchase and reevaluates such classification at each balance sheet date. Debt securities including government and corporate bonds are classified as available-for-sale and stated at current market value with unrealized gains and losses included as a separate component of equity, net of any related tax effect. The specific identification method is used to determine realized gains and losses on the trade date. At January 2, 2016 and January 3, 2015, cash, cash equivalents and investments consisted of the following:
Year-End 2015 (In thousands) | Cash and cash equivalents |  | Short-term investments |  | Long-term investments
Held-to-maturity securities |  |  |  |  |
Certificates of deposit | $ | — |  |  | $ | 252 |  |  | $ | — |
Available-for-sale securities |  |  |  |  |
Debt securities | — |  |  | 4,000 |  |  | 8,067 |
Cash and money market accounts | 28,548 |  |  | — |  |  | — |
Total | $ | 28,548 |  |  | $ | 4,252 |  |  | $ | 8,067 |
The amortized cost basis of the debt securities as of January 2, 2016 was $12.1 million. Immaterial unrealized gains are recorded in accumulated other comprehensive income as of January 2, 2016 for these debt securities.
Year-End 2014 (In thousands) | Cash and cash equivalents |  | Short-term investments |  | Long-term investments
Held-to-maturity securities |  |  |  |  |
Certificates of deposit | $ | — |  |  | $ | 252 |  |  | $ | — |
Available-for-sale securities |  |  |  |  |
Debt securities | — |  |  | 2,800 |  |  | 9,240 |
Cash and money market accounts | 34,144 |  |  | — |  |  | — |
Total | $ | 34,144 |  |  | $ | 3,052 |  |  | $ | 9,240 |
The amortized cost basis of the debt securities as of January 3, 2015 was $12.0 million. Unrealized gains of $0.1 million and unrealized losses of $0.0 million are recorded in accumulated other comprehensive income as of January 3, 2015 for these debt securities. Receivables Accounts receivable are presented net of allowance for doubtful accounts of $4.3 million and $5.1 million for 2015 and 2014, respectively. The allowance is developed based on several factors including overall customer credit quality, historical write-off experience, and specific account analyses projecting the ultimate collectability of the account. As such, these factors may change over time causing the reserve level to adjust accordingly.
Allowance for doubtful accounts | Balance at beginning of period |  | Charged to costs and expenses |  | Amounts written off, net of recoveries and other adjustments |  | Balance at end of period
Year ended January 2, 2016 | 5,096 |  |  | 1,394 |  |  | 2,203 |  |  | 4,287 |
Year ended January 3, 2015 | 6,208 |  |  | 343 |  |  | 1,455 |  |  | 5,096 |
Year ended December 28, 2013 | 5,151 |  |  | 2,590 |  |  | 1,533 |  |  | 6,208 |
Inventories The Corporation valued 78 percent and 71 percent of its inventory by the LIFO method at January 2, 2016 and January 3, 2015, respectively. During 2014 and 2013, inventory quantities were reduced at certain reporting units. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of current year purchases, the effect of which decreased cost of goods sold by approximately $0.03 million and $0.2 million in 2014 and 2013, respectively. If the FIFO method had been in use, inventories would have been $25.1 million and $28.0 million higher than reported at January 2, 2016 and January 3, 2015, respectively. Property, Plant and Equipment Property, plant and equipment are carried at cost. Expenditures for repairs and maintenance are expensed as incurred. Major improvements that materially extend the useful lives of the assets are capitalized. Depreciation has been computed using the straight-line method over estimated useful lives: land improvements, 10 – 20 years; buildings, 10 – 40 years; and machinery and equipment, 3 – 12 years. Long-Lived Assets Long-lived assets are reviewed for impairment as events or changes in circumstances occur indicating the amount of the asset reflected in the Corporation’s balance sheet may not be recoverable. An estimate of undiscounted cash flows produced by the asset, or the appropriate group of assets, is compared to the carrying value to determine whether impairment exists. The estimates of future cash flows involve considerable management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions. Asset impairment charges recorded in connection with the Corporation’s restructuring activities are discussed in Restructuring Related Charges. These assets included real estate, manufacturing equipment and certain other fixed assets. The Corporation’s continuous focus on improving the manufacturing process tends to increase the likelihood of assets being replaced; therefore, the Corporation is regularly evaluating the expected lives of its equipment and accelerating depreciation where appropriate. Goodwill and Other Intangible Assets See Goodwill and Other Intangible Assets note to consolidated financial statements. Product Warranties The Corporation issues certain warranty policies on its furniture and hearth products that provide for repair or replacement of any covered product or component failing during normal use because of a defect in design, materials 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 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:
(In thousands) | 2015 |  |  | 2014 |  |  | 2013 |
Balance at the beginning of the period | $ | 16,719 |  |  | $ | 13,840 |  |  | $ | 13,055 |
Accrual assumed from acquisition | — |  |  | 1,100 |  |  | — |
Accruals for warranties issued during the period | 19,995 |  |  | 18,951 |  |  | 21,878 |
Accrual(Recovery) related to pre-existing warranties | (334 | ) |  | 172 |  |  | 106 |
Settlements made during the period | (20,153 | ) |  | (17,344 | ) |  | (21,199 | )
Balance at the end of the period | $ | 16,227 |  |  | $ | 16,719 |  |  | $ | 13,840 |
The portion of the reserve for estimated settlements expected to be paid in the next twelve months was $8.2 million and $8.5 million as of January 2, 2016 and January 3, 2015, respectively, and is included in "Accounts payable and accrued expenses" in the Consolidated Balance Sheets. The portion of the reserve for settlements expected to be paid beyond one year was $8.0 million and $8.2 million, as of January 2, 2016 and January 3, 2015, respectively, and are included in "Other Long-Term Liabilities" in the Consolidated Balance Sheets. Revenue Recognition Sales of office furniture and hearth products are generally recognized when title transfers and the risks and rewards of ownership have passed to customers. Typically title and risk of ownership transfer when the product is shipped. In certain circumstances, title and risk of ownership do not transfer until the goods are received by the customer or upon installation and customer acceptance. Revenue includes freight charged to customers; related costs are recorded in selling and administrative expense. Rebates, discounts and other marketing program expenses directly related to the sale are recorded as a reduction to net sales. Marketing program accruals require the use of management estimates and the consideration of contractual arrangements subject to interpretation. Customer sales that achieve or do not achieve certain award levels can affect the amount of such estimates and actual results could differ from these estimates. Product Development Costs Product development costs relating to development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. These costs include salaries, contractor fees, building costs, utilities and administrative fees. The amounts charged against income were $31.1 million in 2015, $29.7 million in 2014 and $27.3 million in 2013 and were recorded in "Selling and Administrative Expenses" on the Consolidated Statements of Income. Freight Expense The Corporation records freight expense on shipments to customers in "Selling and Administrative Expenses" on the Consolidated Statements of Income. Amounts recorded were $133.4 million in 2015, $131.0 million in 2014 and $123.8 million in 2013. Stock-Based Compensation The Corporation measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes cost over the requisite service period. See the Stock-Based Compensation note to consolidated financial statements for further information. Income Taxes The Corporation uses an asset and liability approach that takes into account guidance related to uncertain tax positions and requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Corporation’s financial statements or tax returns. Deferred income taxes are provided to reflect differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. The Corporation provides for taxes that may be payable if undistributed earnings of overseas subsidiaries were to be remitted to the United States, except for those earnings it considers to be permanently reinvested. There were approximately $33.9 million of accumulated earnings considered permanently reinvested in China, Hong Kong and India as of January 2, 2016. The Corporation believes the U.S. tax cost on unremitted foreign earnings would be approximately $10.3 million if the amounts were not considered permanently reinvested. See the Income Tax note to consolidated financial statements for further information. Earnings Per Share Basic earnings per share are based on the weighted-average number of common shares outstanding during the year. Shares potentially issuable under stock options, restricted stock units and common stock equivalents under the Corporation's deferred compensation plans have been considered outstanding for purposes of the diluted earnings per share calculation. The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share (EPS):
(In thousands, except per share data) | 2015 |  |  | 2014 |  |  | 2013 |
Numerators: |  |  |  |  |
Numerators for both basic and diluted EPS net income attributable to parent company | $ | 105,436 |  |  | $ | 61,471 |  |  | $ | 63,683 |
Denominators: |  |  |  |  |
Denominator for basic EPS weighted- average common shares outstanding | 44,285 |  |  | 44,760 |  |  | 45,251 |
Potentially dilutive shares from stock option plans | 1,156 |  |  | 819 |  |  | 706 |
Denominator for diluted EPS | 45,441 |  |  | 45,579 |  |  | 45,956 |
Earnings per share – basic | $ | 2.38 |  |  | $ | 1.37 |  |  | $ | 1.41 |
Earnings per share – diluted | $ | 2.32 |  |  | $ | 1.35 |  |  | $ | 1.39 |
Certain exercisable and non-exercisable stock options were not included in the computation of diluted EPS for fiscal years 2015, 2014 and 2013 because inclusion would have been anti-dilutive. The number of stock options outstanding which met this criterion was 493,202; 500,058 and 769,394 for 2015, 2014 and 2013, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The more significant areas requiring use of management estimates relate to allowance for doubtful accounts, inventory reserves, marketing program accruals, warranty accruals, accruals for self-insured medical claims, workers’ compensation, legal contingencies, general liability and auto insurance claims, valuation of long-lived assets, and useful lives for depreciation and amortization. Actual results could differ from those estimates. Self-Insurance The Corporation is primarily self-insured for general, auto and product liability, workers’ compensation, and certain employee health benefits. The general, auto, product and workers’ compensation liabilities are managed using a wholly owned insurance captive and the related liabilities are included in the accompanying consolidated financial statements. As of January 2, 2016, these liabilities totaled $27.7 million. The Corporation’s policy is to accrue amounts in accordance with the actuarially determined liabilities. The actuarial valuations are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as legal actions, medical cost inflation and magnitude of change in actual experience development could cause these estimates to change in the future. Foreign Currency Translations Foreign currency financial statements of foreign operations where the local currency is the functional currency are translated using exchange rates in effect at period end for assets and liabilities and average exchange rates during the period for results of operations. Related translation adjustments are reported as a component of Shareholders’ Equity. Gains and losses on foreign currency transactions are included in the “Selling and administrative expenses” caption of the Consolidated Statements of Income. Reclassifications Certain reclassifications have been made within the financial statements to conform to the current year presentation. Recently Adopted Accounting Pronouncements In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016, with early adoption permitted. The new guidance has been adopted on a prospective basis by the Company for the fiscal year ended January 2, 2016.

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