HNI CORPHNI
HNI CORP Leases Disclosure
Leases
Of the $185.2 million new lease assets, $170.3 million were acquired as part of the Steelcase acquisition on December 10, 2025.
The Corporation leases certain showrooms, office space, manufacturing facilities, distribution centers, retail stores, and equipment and determines if an arrangement is a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets; expense for these leases is recognized on a straight-line basis over the lease term. As of January 3, 2026, approximately 92 percent of the value of the Corporation’s leased assets is for real estate. The remaining 8 percent of the value of the Corporation’s leased assets is for equipment.
As the rates implicit in its leases cannot be readily determined, the Corporation estimates secured incremental borrowing rates based on the information available at the commencement date in determining the present value of lease payments. The Corporation uses separate discount rates for its United States operations and international operations.
Certain real estate leases include one or more options to renew with renewal terms that can extend the lease term from to ten years. The exercise of lease renewal options is at the Corporation’s sole discretion. Certain real estate leases include an option to terminate the lease term earlier than the specified lease term for a fee. These options are not included as part of the lease term unless they are reasonably certain to be exercised.
Many of the Corporation’s real estate lease agreements include periods of rent holidays and payments that escalate over the lease term by specified amounts or indices. While not significant, certain equipment leases have variable lease payments based on machine hours and certain real estate leases have rate changes based on the Consumer Price Index. The Corporation’s lease agreements do not contain any material residual value guarantees.
The Corporation has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component.
On occasion, the Corporation rents or subleases certain real estate to third parties. This sublease portfolio consists mainly of operating leases for office furniture showrooms and is not significant.
Lease costs included in the Consolidated Statements of Comprehensive Income consisted of the following:
| Classification | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Operating lease costs | |||||||||||||||||||||||
| Fixed | Cost of sales | $ | 6.4 | $ | 6.3 | $ | 5.4 | ||||||||||||||||
| Selling and administrative expenses | 27.9 | 25.2 | 24.3 | ||||||||||||||||||||
| Short-term / variable | Cost of sales | 1.4 | 1.5 | 1.4 | |||||||||||||||||||
| Selling and administrative expenses | 1.7 | 1.6 | 1.7 | ||||||||||||||||||||
| Finance lease costs | |||||||||||||||||||||||
| Amortization | Cost of sales | 1.5 | 1.3 | 1.4 | |||||||||||||||||||
| Selling and administrative, and interest expense | 5.3 | 4.2 | 3.1 | ||||||||||||||||||||
| Less: Sublease income | |||||||||||||||||||||||
| Cost of sales | (0.0) | (0.0) | (0.0) | ||||||||||||||||||||
| Selling and administrative expenses | (1.0) | (1.0) | (0.5) | ||||||||||||||||||||
| Total lease costs | $ | 43.1 | $ | 39.0 | $ | 37.0 | |||||||||||||||||
Maturity of lease liabilities as of January 3, 2026 is as follows:
| Operating Leases | Finance Leases | Total | |||||||||||||||
| 2026 | $ | 85.1 | $ | 4.7 | $ | 89.9 | |||||||||||
| 2027 | 69.4 | 3.4 | 72.8 | ||||||||||||||
| 2028 | 50.2 | 2.7 | 52.9 | ||||||||||||||
| 2029 | 41.4 | 1.5 | 42.9 | ||||||||||||||
| 2030 | 30.9 | 0.2 | 31.1 | ||||||||||||||
| Thereafter | 73.4 | — | 73.4 | ||||||||||||||
| Total lease payments | 350.4 | 12.6 | 363.0 | ||||||||||||||
| Less: Interest | (61.4) | (1.1) | (62.6) | ||||||||||||||
| Present value of lease liabilities | $ | 289.0 | $ | 11.5 | $ | 300.5 | |||||||||||
As of January 3, 2026, there were $0.3 million and $1.2 million of legally binding minimum lease payments for operating leases and finance leases, respectively, that were signed but not yet commenced and thus excluded from lease liabilities. Additionally, there were no operating or finance lease options to extend lease terms that were reasonably certain of being exercised as of current fiscal year end. The increase in lease assets in the current year was driven by the acquisition of Steelcase as described in "Note 4. Acquisitions and Divestitures." Leases included in the Steelcase acquisition are recorded at their preliminary value and are subject to change, which may be material.
The following table summarizes the weighted-average discount rates and weighted-average remaining lease terms for operating and finance leases as of January 3, 2026:
| Weighted-Average Discount Rate | Weighted-Average Remaining Lease Term (years) | ||||||||||
| Operating leases | 6.1 | % | 5.6 | ||||||||
| Finance leases | 5.9 | % | 3.2 | ||||||||
The following table summarizes cash paid for amounts included in the measurements of lease liabilities and the leased assets obtained in exchange for new operating and finance lease liabilities:
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash paid for amounts included in the measurements of lease liabilities | |||||||||||||||||
| Operating cash flows from operating / finance leases | $ | 36.1 | $ | 31.9 | $ | 29.7 | |||||||||||
| Financing cash flows from finance leases | $ | 6.0 | $ | 4.8 | $ | 4.2 | |||||||||||
| Leased assets obtained in exchange for new operating / finance lease liabilities | $ | 185.2 | $ | 38.3 | $ | 62.3 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 3, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2022 | |
| 2021 | Mar 2, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 29, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.