HNI Corporation to discontinue the Paoli office furniture brand

On December 6, 2017, HNI Corporation in a filing with the SEC, made the decision to discontinue the Paoli office furniture brand. The manufacturing of Paoli branded products will cease in the first quarter of 2018. The Corporation is making this decision as part of continued efforts to drive efficiency and simplification, delivering increased value to its shareholders. The Corporation will continue to effectively and efficiently serve Paoli’s market through product offerings within the broader family of HNI brands.

HNI (then know as HON Industries Inc.)  announced the purchase of Paoli Inc., then a subsidiary of Klaussner Furniture Industries Inc., in December of 2003. At the time of the purchase, Paoli had sales of over $80 million. According to the HON Industries Inc. annual report for 2004, the company paid $81 million for Paoli.

"The acquisition supports our strategy of operating through decentralized businesses, focusing on distinct markets, building strong brands, while emphasizing operational excellence," said Jack D. Michaels, Chairman and CEO, HON INDUSTRIES at the time of the purchase. "We are pleased to add Paoli to the HON INDUSTRIES family."

At the time of the acquisition the Paoli facility employed 650 people in Orleans, Ind.

The Corporation estimates the discontinuation will generate a cash payback in less than one year and save $7.0 million annually beginning in the first quarter of 2018. Estimated cash restructuring and other cash costs associated with these actions total approximately $4.0 million, with $0.7 million related to workforce reductions and approximately $3.3 million related to costs associated with production ramp-down and brand discontinuation.

When considering both cash and non-cash costs, the Corporation anticipates charges related to the discontinuation will impact pre-tax earnings an estimated $25.4 million. Included in the estimated total cost of $25.4 million are the expected impairments of goodwill and other intangibles of approximately $16 million associated with this brand closure.