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Acquisitions and Divestitures | 6 Months Ended
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Jun. 29, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisition - Kimball International On June 1, 2023, the Corporation completed its acquisition of Kimball International, a leading commercial furnishings company with expertise in workplace, health, and hospitality, resulting in Kimball International becoming a wholly-owned subsidiary of the Corporation. The Corporation has incurred aggregate acquisition-related expenses of $41.1 million to date, of which $28.6 million were incurred as corporate costs and $12.5 million were recorded in the workplace furnishings segment. Of these expenses, corporate costs of $24.4 million and workplace furnishings costs of $10.3 million were incurred in the six-month period ended July 1, 2023, and are included in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income. Additionally, acquisition-related financing costs of $2.8 million and $0.2 million were recorded to the Condensed Consolidated Balance Sheets in "Long-term Debt" and "Other Assets," respectively, while $0.3 million of acquisition-related stock issuance costs were recorded to "Additional paid-in capital." The acquired assets and assumed liabilities and results of Kimball International's operations are included in the Corporation's workplace furnishings reportable segment. The acquisition was accounted for using the acquisition method pursuant to ASC 805, with goodwill being recorded as a result of the purchase price exceeding the fair value of identifiable tangible and intangible assets and liabilities. Goodwill, which is not tax-deductible, is primarily attributable to the assembled workforce of Kimball International and anticipated synergies. The total fair market value of consideration was approximately $503.7 million, which is allocated as follows:
| Kimball International Shares |  | HNI Shares Exchanged |  | Fair Value |  |
Cash Consideration: |  |  |  |  |  |  |
Shares of Kimball International common stock issued and outstanding as of June 1, 2023 | 36.4 |  |  |  | $ | 327.8 |  |  |
Kimball International equivalent shares | 0.2 |  |  |  | 2.3 |  |  |
Total number of Kimball International shares for cash consideration | 36.6 |  |  |  | 330.0 |  |  |
Consideration for payment to settle Kimball International's outstanding debt |  |  |  |  | 50.2 |  |  |
Share Consideration: |  |  |  |  |  |  |
Shares of Kimball International common stock issued and outstanding as of June 1, 2023 | 36.4 |  | 4.7 |  | 120.8 |  |  |
Replacement Share-Based Awards: |  |  |  |  |  |  |
Outstanding awards of Kimball International restricted stock units relating to Kimball International common stock as of June 1, 2023 | 0.5 |  | 0.2 |  | 2.6 |  |  |
Total acquisition date fair value of purchase consideration |  |  |  |  | $ | 503.7 |  |  |
Consideration provided in the form of HNI Corporation shares and HNI Corporation replacement share-based awards represents non-cash consideration. The purchase price allocation at the date of acquisition, including measurement period adjustments made in the first quarter of 2024, is shown below. The one-year accounting measurement period closed in the second quarter of 2024, and the purchase price allocation was finalized with no additional adjustments recorded.
| Preliminary at December 30, 2023 |  | Measurement period adjustments |  | Final
Goodwill | $ | 162.7 |  |  | $ | 1.1 |  |  | $ | 163.8 |
Intangible assets | 110.1 |  |  | — |  |  | 110.1 |
Other assets acquired and liabilities assumed, net | 231.0 |  |  | (1.1) |  |  | 229.9 |
Net Assets and Liabilities | $ | 503.7 |  |  | $ | — |  |  | $ | 503.7 |
The following table summarizes the acquired identified intangible assets and weighted average useful lives:
Category |  | Weighted-average useful life |  | Fair Value
Software |  | 3 years |  | $ | 5.6 |
Customer lists and other |  | 12 years |  | 47.2 |
Acquired technology |  | 18 years |  | 16.5 |
Trademarks and trade names - Definite-lived |  | 17 years |  | 3.8 |
Trademarks and trade names - Indefinite-lived |  | Indefinite-lived |  | 37.0 |
Total intangible assets |  |  |  | $ | 110.1 |
The following table summarizes the results of Kimball International operations that are included in the Corporation's Condensed Consolidated Statement of Comprehensive Income for the three- and six-month periods ended June 29, 2024 and July 1, 2023. These amounts include the results of Poppin Furniture, Inc. ("Poppin") for the prior-year period during which it was owned by the Corporation. Poppin was determined not to require discontinued operations presentation as this entity was not material to the consolidated results of the prior periods presented.
| Three Months Ended |  | Six Months Ended
| June 29, 2024 | July 1, 2023 |  | June 29, 2024 | July 1, 2023
Net sales | $ | 139.6 |  | $ | 56.0 |  |  | $ | 287.1 |  | $ | 56.0 |
Net income (loss) | $ | 10.1 |  | $ | (21.3) |  |  | $ | 16.3 |  | $ | (21.3) |
Pro Forma Results of Operations The following table provides, on a pro forma basis, the combined results of operations of HNI Corporation and Kimball International for the three- and six-month periods ended July 1, 2023, as though the acquisition and related financing had occurred as of January 2, 2022, the first day of the Corporation's 2022 fiscal year. The pro forma results include certain purchase accounting adjustments such as: reclassifications to conform Kimball International's results to the Corporation's financial statement presentation; estimated depreciation and amortization expense on acquired tangible and intangible assets; estimated share-based compensation expense for Kimball International equity awards converted to the Corporation's equity awards; interest associated with additional borrowings to finance the acquisition; non-recurring transaction costs as outlined above; and the impact to income tax expense. This pro forma information is not necessarily reflective of what the Corporation's results would have been had the acquisition occurred on the date indicated, nor is it indicative of future results.
|  |  | Three Months Ended |  |  |  | Six Months Ended
|  |  | July 1, 2023 |  |  |  | July 1, 2023
Net sales |  |  | $ | 666.3 |  |  |  |  | $ | 1,306.6 |
Net income |  |  | $ | 10.4 |  |  |  |  | $ | 14.7 |
Divestiture - Poppin On September 12, 2023, the Corporation closed on the sale of substantially all of the assets of Poppin for $2.7 million in cash, net of selling costs, which transaction was structured as an asset sale. Poppin had been acquired as part of the Kimball International transaction in June 2023 and was a component of the workplace furnishings segment. Balances divested include $9.7 million of inventory, $3.1 million of various other assets, $7.0 million of accounts payable and accrued expenses, and $3.0 million of operating lease obligations.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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