HNI Corp has two reportable core operating segments: office furniture and hearth products. They are the second largest office furniture manufacturer in the United States and the nation\'s leading manufacturer and marketer of gas- and wood-burning fireplaces. HNI Corp. has a market cap of $992.8 million; its shares were traded at around $22.12 with a P/E ratio of 29.9 and P/S ratio of 0.4. The dividend yield of HNI Corp. stocks is 3.9%. HNI Corp. had an annual average earning growth of 5.7% over the past 10 years. Highlight of Business Operations:As a result of challenging market conditions and the Corporation\'s ongoing business simplification and cost reduction strategies, management made the decision to close an additional office furniture manufacturing facility located in Louisburg, North Carolina and consolidate production into other locations. In connection with the shutdown of the Louisburg facility, the Corporation recorded $0.8 million of severance costs for approximately 90 members during the quarter ended July 4, 2009. In connection with the shutdown of the South Gate office furniture manufacturing facility announced earlier this year, the Corporation recorded $2.9 million of current period charges, which included $1.2 million of accelerated depreciation of machinery and equipment recorded in cost of sales and $1.7 million of other costs, which were recorded as restructuring costs during the quarter. The Corporation had previously recorded $3.0 million of severance costs for approximately 250 members during the first quarter in connection with the shutdown of the South Gate facility. The closure and consolidation of both facilities will be substantially complete by the end of 2009. The Corporation\'s hearth product segment disposed and closed several locations during the quarter ended July 4, 2009. The Corporation recorded $1.5 million of charges, which included $0.2 million of accelerated depreciation recorded in cost of sales and $1.3 million of other costs which were recorded as restructuring costs during the quarter. The Corporation anticipates additional restructuring charges of approximately $4.6 million related to the various shutdowns during the remainder of 2009.
For the first six months of 2009, consolidated net sales decreased $0.4 billion, or 33.0 percent, to $0.8 billion compared to $1.2 billion in 2008. Acquisitions added $10.2 million or 0.9 percentage points of sales. Gross margins decreased to 32.2 percent compared to 33.4 percent for the same period last year. The operating loss was $15.8 million for the first six months of 2009 compared to income of $35.4 million for the first six months of 2008. Earnings per share decreased to ($0.30) per diluted share compared to $0.39 per diluted share for the same period last year.
Net sales for the first six months of 2009 decreased 32.5 percent or $318.7 million to $661.8 million compared to $980.5 million for the same period in 2008. Acquisitions added $10.2 million or 1.0 percentage points of sales. Operating profit decreased 64.3 percent or $31.4 million to $17.5 million.
Second quarter net sales for the hearth products segment decreased 40.1 percent or $39.6 million to $59.0 million from $98.6 million for the same quarter last year driven by significant declines in both the new construction and remodel-retrofit channels. Operating profit prior to unallocated corporate expenses decreased $10.6 million to a $9.1 million loss due to lower volume and higher restructuring expenses partially offset by cost reduction initiatives and lower incentive based compensation costs.
Net sales for the first six months of 2009 decreased 35.5 percent or $69.1 million to $126.8 million compared to $196.0 million for the same period in 2008. Operating profit decreased $19.2 million to a $20.5 million loss.
During the first six months of fiscal 2009, net borrowings under the Corporation\'s revolving credit facility decreased $51 million. As of July 4, 2009, $56.5 million of the revolving credit facility was outstanding with $6.5 million classified as short-term. Also included in current liabilities is $33.5 million of the $45.0 million outstanding on the Corporation\'s term loan as of July 4, 2009. The Corporation expects to repay that portion of the borrowings within the next twelve months.
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