Analysis on Md&a of Hni Corporation and Outerwall Inc.

Analysis on MD&A of HNI Corporation and Outerwall Inc.

HNI Corporation (ticker: HNI) is one of the world’s largest office furniture and fireplace manufacturer. Its brands include HON, Allsteel, Gunlocke, maxon, Paoli, bpergo, LAMEX, Hearth Home, and so on. Its net sales and net income have steadily grown in recent three years (shown in graph 1&2) as well as its stock price (shown in graph 3).

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            Graph 1                              Graph 2

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Graph 3: Stock Price of HNI Corporation from 2010 to 2014 (from Yahoo Finance)

Outerwall Inc (ticker: outr, formerly Coinstar Inc., ticker: cstr) is an American company with a network of movie rental kiosks and coin exchange machines in the U.S. and other countries. Its main business segments include Redbox, where customers can rent or purchase movies and video games from self-service kiosks, Coinstar, where customers can convert their coins into cash and gift card with self-service machines, and ecoATM, where customers can sell their old phones, tablets, and mp3s. Its revenue and net income have steadily grown in recent three years (shown in graph 4&5), but its stock price has fluctuated (shown in graph 6).

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Graph 4                              Graph 5

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Graph 6: Stock Price of Outerwall Inc. from 2010 to 2014 (from Yahoo Finance)

As a typical manufacture company, HNI Corporation tends to be more conservative, mentioning challenging market condition and slow economy in the Overview of MD&A. It also makes a special mention about a steep decline in sales to the federal government, which offsets the increase in sales from supplies-driven and contract channels.

Unlike HNI Corporation, Outerwall Inc. holds a more confident tone. This may result from its bold and innovative brand image. However, the company may also show this confidence to investors intentionally to put off their doubts about fluctuated stock price. Outerwall then reports its business model in details including its new venture, ecoATM, and joint venture, Redbox Instant by Verizon. It also mentions that the company will continue to develop innovative automated retail solutions by its expertise. Outerwall then reports some significant events in the year 2013, including updated services, which would be redundant for investors.

Neither business model nor significant events does HNI disclose. HNI may choose not to report business model for two reasons. First, as a typical manufacture company, it does not have a business model that needs to be explained to understand. Second, while it is significant for Outerwall to report its new venture and joint venture, HNI did not have new venture or joint venture in 2013. HNI may choose not to report significant events because it considers this information irrelevant to investors.

Two companies both report Results from Operations, but Outerwall discloses it in a much greater level. It explains reasons for increases and decreases in details, and reports operation results from Redbox, Coinstar, and new venture separately. Compared to Outerwall, HNI would have too many sections to report if it separates every business segment. But the separate reports make it easier for investors to estimate return on every segment, thus making better decision if they want to invest more on or close one segment.