[ X ]
|
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[__]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For Fiscal Year Ended June 3, 2017
|
Commission File No. 001-15141
|
|
Michigan
|
|
38-0837640
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
|
|
855 East Main Avenue
|
|
|
|
|
PO Box 302
|
|
|
|
|
Zeeland, Michigan
|
|
49464-0302
|
|
|
(Address of principal
executive offices)
|
|
(Zip Code)
|
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
|
|
|
Yes [ X ] No [__]
|
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
|
|
|
Yes [__] No [ X ]
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
|
|
Yes [ X ] No [__]
|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
|
|
Yes [ X ] No [__]
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
|
|
Yes [__] No [ X ]
|
|
Page No.
|
Part I
|
|
Item 1 Business
|
|
Item 1A Risk Factors
|
|
Item 1B Unresolved Staff Comments
|
|
Item 2 Properties
|
|
Item 3 Legal Proceedings
|
|
Additional Item: Executive Officers of the Registrant
|
|
Item 4 Mine Safety Disclosures
|
|
Part II
|
|
Item 5 Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
|
|
Item 6 Selected Financial Data
|
|
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 7A Quantitative and Qualitative Disclosures about Market Risk
|
|
Item 8 Financial Statements and Supplementary Data
|
|
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
|
|
Item 9A Controls and Procedures
|
|
Item 9B Other Information
|
|
Part III
|
|
Item 10 Directors, Executive Officers, and Corporate Governance
|
|
Item 11 Executive Compensation
|
|
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13 Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14 Principal Accountant Fees and Services
|
|
Part IV
|
|
Item 15 Exhibits and Financial Statement Schedule
|
|
Signatures
|
|
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule
|
|
Schedule II Valuation and Qualifying Accounts
|
|
Exhibit Index
|
•
|
Political, social, and economic conditions
|
•
|
Legal and regulatory requirements
|
•
|
Labor and employment practices
|
•
|
Cultural practices and norms
|
•
|
Natural disasters
|
•
|
Security and health concerns
|
•
|
Protection of intellectual property
|
•
|
Changes in foreign currency exchange rates
|
•
|
General economic conditions
|
•
|
Identification and availability of suitable studio locations
|
•
|
Success in negotiating new leases and amending or terminating existing leases on acceptable terms
|
•
|
The success of other retailers in and around our retail locations
|
•
|
Ability to secure required governmental permits and approvals
|
•
|
Hiring and training skilled studio operating personnel
|
•
|
Landlord financial stability
|
Owned Locations
|
Square
Footage
|
|
|
Use
|
Zeeland, Michigan
|
750,800
|
|
|
Manufacturing, Warehouse, Office
|
Spring Lake, Michigan
|
582,700
|
|
|
Manufacturing, Warehouse, Office
|
Holland, Michigan
|
357,400
|
|
|
Warehouse
|
Holland, Michigan
|
293,100
|
|
|
Manufacturing, Office
|
Holland, Michigan
|
238,200
|
|
|
Office, Design
|
Dongguan, China
|
431,600
|
|
|
Manufacturing, Office
|
Sheboygan, Wisconsin
|
207,700
|
|
|
Manufacturing, Warehouse, Office
|
Melksham, United Kingdom
|
170,000
|
|
|
Manufacturing, Warehouse, Office
|
Hildebran, North Carolina
|
93,000
|
|
|
Manufacturing, Office
|
|
|
|
|
|
Leased Locations
|
Square
Footage
|
|
|
Use
|
Hebron, Kentucky
|
316,800
|
|
|
Warehouse
|
Atlanta, Georgia
|
180,200
|
|
|
Manufacturing, Warehouse, Office
|
Bangalore, India
|
104,800
|
|
|
Manufacturing, Warehouse
|
Ningbo, China
|
185,100
|
|
|
Manufacturing, Warehouse, Office
|
Yaphank, New York
|
92,000
|
|
|
Warehouse, Office
|
New York City, New York
|
59,000
|
|
|
Office, Retail
|
Hong Kong, China
|
54,400
|
|
|
Warehouse
|
Brooklyn, New York
|
39,400
|
|
|
Warehouse, Retail
|
Stamford, Connecticut
|
35,300
|
|
|
Office, Retail
|
Name
|
Age
|
Year Elected an Executive Officer
|
Position with the Company
|
Brian C. Walker
|
55
|
1996
|
President and Chief Executive Officer
|
Andrew J. Lock
|
63
|
2003
|
President, Herman Miller International
|
Gregory J. Bylsma
|
52
|
2009
|
President, North America Contract
|
Steven C. Gane
|
62
|
2009
|
President, Specialty Brands
|
Jeffrey M. Stutz
|
46
|
2009
|
Executive Vice President, Chief Financial Officer
|
B. Ben Watson
|
52
|
2010
|
Chief Creative Officer
|
Michael F. Ramirez
|
52
|
2011
|
Executive Vice President, People, Places & Administration
|
H. Timothy Lopez
|
46
|
2014
|
Senior Vice President of Legal Services, General Counsel and Secretary
|
John McPhee
|
54
|
2015
|
President, Herman Miller Consumer
|
John Edelman
|
50
|
2015
|
Chief Executive Officer, Herman Miller Consumer
|
Kevin Veltman
|
42
|
2015
|
Vice President, Investor Relations & Treasurer
|
Jeremy Hocking
|
56
|
2017
|
Executive Vice President, Strategy and Business Development
|
Per Share and Unaudited
|
Market
Price
High
(at close)
|
|
|
Market
Price
Low
(at close)
|
|
|
Market
Price
Close
|
|
|
Earnings
Per Share-
Diluted
|
|
|
Dividends
Declared Per
Share
|
|
|||||
Year ended June 3, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
36.46
|
|
|
$
|
27.87
|
|
|
$
|
35.94
|
|
|
$
|
0.60
|
|
|
$
|
0.1700
|
|
Second quarter
|
36.14
|
|
|
26.99
|
|
|
32.65
|
|
|
0.53
|
|
|
0.1700
|
|
|||||
Third quarter
|
36.45
|
|
|
29.75
|
|
|
30.45
|
|
|
0.37
|
|
|
0.1700
|
|
|||||
Fourth quarter
|
34.05
|
|
|
28.55
|
|
|
32.70
|
|
|
0.55
|
|
|
0.1700
|
|
|||||
Year
|
$
|
36.46
|
|
|
$
|
26.99
|
|
|
$
|
32.70
|
|
|
$
|
2.05
|
|
|
$
|
0.6800
|
|
Year ended May 28, 2016:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
30.50
|
|
|
$
|
26.75
|
|
|
$
|
26.99
|
|
|
$
|
0.56
|
|
|
$
|
0.1475
|
|
Second quarter
|
32.69
|
|
|
26.28
|
|
|
32.14
|
|
|
0.57
|
|
|
0.1475
|
|
|||||
Third quarter
|
32.11
|
|
|
22.92
|
|
|
26.29
|
|
|
0.46
|
|
|
0.1475
|
|
|||||
Fourth quarter
|
31.64
|
|
|
26.09
|
|
|
31.64
|
|
|
0.67
|
|
|
0.1475
|
|
|||||
Year
|
$
|
32.69
|
|
|
$
|
22.92
|
|
|
$
|
31.64
|
|
|
$
|
2.26
|
|
|
$
|
0.5900
|
|
Period
|
(a) Total Number of
Shares (or Units) Purchased
|
|
|
(b) Average Price Paid
per Share or Unit
|
|
|
(c) Total Number of Share (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
|
(d) Maximum Number (or Approximate Dollar Value) of Shares(or Units) that May Yet be Purchased Under the Plans or Programs
(1)
|
|
|
3/5/17 - 4/1/17
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
115,162,898
|
|
4/2/17 - 4/29/17
|
146,255
|
|
|
32.17
|
|
|
146,255
|
|
|
$
|
110,457,467
|
|
4/30/17 - 6/3/17
|
58,697
|
|
|
33.04
|
|
|
58,697
|
|
|
$
|
108,517,876
|
|
Total
|
204,952
|
|
|
|
|
|
204,952
|
|
|
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
||||||||||||
Herman Miller, Inc.
|
$
|
100
|
|
|
$
|
159
|
|
|
$
|
180
|
|
|
$
|
163
|
|
|
$
|
189
|
|
|
$
|
199
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
128
|
|
|
$
|
151
|
|
|
$
|
165
|
|
|
$
|
164
|
|
|
$
|
191
|
|
NASD Non-Financial
|
$
|
100
|
|
|
$
|
128
|
|
|
$
|
159
|
|
|
$
|
192
|
|
|
$
|
189
|
|
|
$
|
240
|
|
Review of Operations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(In millions, except key ratios and per share data)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
Operating Results
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
$
|
2,142.2
|
|
|
$
|
1,882.0
|
|
|
$
|
1,774.9
|
|
|
Gross margin
|
864.2
|
|
|
874.2
|
|
|
791.4
|
|
|
631.0
|
|
|
605.2
|
|
|
|||||
Selling, general, and administrative
(8)
|
600.3
|
|
|
585.6
|
|
|
556.6
|
|
|
590.8
|
|
|
430.4
|
|
|
|||||
Design and research
|
73.1
|
|
|
77.1
|
|
|
71.4
|
|
|
65.9
|
|
|
59.9
|
|
|
|||||
Operating earnings (loss)
|
190.8
|
|
|
211.5
|
|
|
163.4
|
|
|
(25.7
|
)
|
|
114.9
|
|
|
|||||
Earnings (loss) before income taxes
|
177.6
|
|
|
196.6
|
|
|
145.2
|
|
|
(43.4
|
)
|
|
97.2
|
|
|
|||||
Net earnings (loss)
|
124.1
|
|
|
137.5
|
|
|
98.1
|
|
|
(22.1
|
)
|
|
68.2
|
|
|
|||||
Cash flow from operating activities
|
202.1
|
|
|
210.4
|
|
|
167.7
|
|
|
90.1
|
|
|
136.5
|
|
|
|||||
Cash flow used in investing activities
|
(116.3
|
)
|
|
(80.8
|
)
|
|
(213.6
|
)
|
|
(48.2
|
)
|
|
(209.7
|
)
|
|
|||||
Cash flow (used in) provided by financing activities
|
(74.6
|
)
|
|
(106.5
|
)
|
|
6.8
|
|
|
(22.4
|
)
|
|
(16.0
|
)
|
|
|||||
Depreciation and amortization
|
58.9
|
|
|
53.0
|
|
|
49.8
|
|
|
42.4
|
|
|
37.5
|
|
|
|||||
Capital expenditures
|
87.3
|
|
|
85.1
|
|
|
63.6
|
|
|
40.8
|
|
|
50.2
|
|
|
|||||
Common stock repurchased plus cash dividends paid
|
63.2
|
|
|
49.0
|
|
|
37.0
|
|
|
43.0
|
|
|
22.7
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Key Ratios
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales growth
|
0.6
|
%
|
|
5.7
|
%
|
|
13.8
|
%
|
|
6.0
|
%
|
|
2.9
|
%
|
|
|||||
Gross margin
(1)
|
37.9
|
|
|
38.6
|
|
|
36.9
|
|
|
33.5
|
|
|
34.1
|
|
|
|||||
Selling, general, and administrative
(1) (8)
|
26.3
|
|
|
25.9
|
|
|
26.0
|
|
|
31.4
|
|
|
24.3
|
|
|
|||||
Design and research
(1)
|
3.2
|
|
|
3.4
|
|
|
3.3
|
|
|
3.5
|
|
|
3.4
|
|
|
|||||
Operating earnings
(1)
|
8.4
|
|
|
9.3
|
|
|
7.6
|
|
|
(1.4
|
)
|
|
6.5
|
|
|
|||||
Net earnings growth (decline)
|
(9.7
|
)
|
|
40.2
|
|
|
543.9
|
|
|
(132.4
|
)
|
|
(9.3
|
)
|
|
|||||
After-tax return on net sales
(4)
|
5.4
|
|
|
6.1
|
|
|
4.6
|
|
|
(1.2
|
)
|
|
3.8
|
|
|
|||||
After-tax return on average assets
(5)
|
9.8
|
|
|
11.3
|
|
|
9.0
|
|
|
(2.3
|
)
|
|
7.6
|
|
|
|||||
After-tax return on average equity
(6)
|
22.3
|
%
|
|
29.1
|
%
|
|
25.0
|
%
|
|
(6.5
|
)%
|
|
24.7
|
%
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share and Per Share Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share-diluted
|
$
|
2.05
|
|
|
$
|
2.26
|
|
|
$
|
1.62
|
|
|
$
|
(0.37
|
)
|
|
$
|
1.16
|
|
|
Cash dividends declared per share
|
0.68
|
|
|
0.59
|
|
|
0.56
|
|
|
0.53
|
|
|
0.43
|
|
|
|||||
Book value per share at year end
(9)
|
9.82
|
|
|
8.76
|
|
|
7.04
|
|
|
6.14
|
|
|
5.31
|
|
|
|||||
Market price per share at year end
|
32.70
|
|
|
31.64
|
|
|
27.70
|
|
|
31.27
|
|
|
28.11
|
|
|
|||||
Weighted average shares outstanding-diluted
|
60.6
|
|
|
60.5
|
|
|
60.1
|
|
|
59.0
|
|
|
58.8
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Condition
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
1,306.3
|
|
|
$
|
1,235.2
|
|
|
$
|
1,192.7
|
|
|
$
|
995.6
|
|
|
$
|
951.2
|
|
|
Working capital
(3)
|
106.2
|
|
|
90.5
|
|
|
110.1
|
|
|
83.2
|
|
|
96.8
|
|
|
|||||
Current ratio
(2)
|
1.3
|
|
|
1.2
|
|
|
1.3
|
|
|
1.2
|
|
|
1.3
|
|
|
|||||
Interest-bearing debt and related swap agreements
(10)
|
197.8
|
|
|
221.9
|
|
|
290.0
|
|
|
250.0
|
|
|
250.0
|
|
|
|||||
Stockholders' equity
|
587.7
|
|
|
524.7
|
|
|
420.3
|
|
|
364.3
|
|
|
311.7
|
|
|
|||||
Total capital
(7)
|
785.5
|
|
|
746.6
|
|
|
710.3
|
|
|
614.3
|
|
|
561.7
|
|
|
Review of Operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(In millions, except key ratios and per share data)
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||||
Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
1,724.1
|
|
|
$
|
1,649.2
|
|
|
$
|
1,318.8
|
|
|
$
|
1,630.0
|
|
|
$
|
2,012.1
|
|
|
$
|
1,918.9
|
|
Gross margin
|
590.6
|
|
|
538.1
|
|
|
428.5
|
|
|
527.7
|
|
|
698.7
|
|
|
645.9
|
|
||||||
Selling, general, and administrative
(8)
|
400.3
|
|
|
369.0
|
|
|
334.4
|
|
|
359.2
|
|
|
400.9
|
|
|
395.8
|
|
||||||
Design and research
|
52.7
|
|
|
45.8
|
|
|
40.5
|
|
|
45.7
|
|
|
51.2
|
|
|
52.0
|
|
||||||
Operating earnings
|
137.6
|
|
|
123.3
|
|
|
53.6
|
|
|
122.8
|
|
|
246.6
|
|
|
198.1
|
|
||||||
Earnings before income taxes
|
119.5
|
|
|
102.5
|
|
|
34.8
|
|
|
98.9
|
|
|
230.4
|
|
|
187.0
|
|
||||||
Net earnings
|
75.2
|
|
|
70.8
|
|
|
28.3
|
|
|
68.0
|
|
|
152.3
|
|
|
129.1
|
|
||||||
Cash flow from operating activities
|
90.1
|
|
|
89.0
|
|
|
98.7
|
|
|
91.7
|
|
|
213.6
|
|
|
137.7
|
|
||||||
Cash flow used in investing activities
|
(58.4
|
)
|
|
(31.4
|
)
|
|
(77.6
|
)
|
|
(29.5
|
)
|
|
(51.0
|
)
|
|
(37.4
|
)
|
||||||
Cash flow used in financing activities
|
(1.6
|
)
|
|
(50.2
|
)
|
|
(78.9
|
)
|
|
(16.5
|
)
|
|
(86.5
|
)
|
|
(131.5
|
)
|
||||||
Depreciation and amortization
|
37.2
|
|
|
39.1
|
|
|
42.6
|
|
|
41.7
|
|
|
43.2
|
|
|
41.2
|
|
||||||
Capital expenditures
|
28.5
|
|
|
30.5
|
|
|
22.3
|
|
|
25.3
|
|
|
40.5
|
|
|
41.3
|
|
||||||
Common stock repurchased plus cash dividends paid
|
7.9
|
|
|
6.0
|
|
|
5.7
|
|
|
19.5
|
|
|
287.9
|
|
|
185.6
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Key Ratios
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales growth (decline)
|
4.5
|
%
|
|
25.1
|
%
|
|
(19.1
|
)%
|
|
(19.0
|
)%
|
|
4.9
|
%
|
|
10.5
|
%
|
||||||
Gross margin
(1)
|
34.3
|
|
|
32.6
|
|
|
32.5
|
|
|
32.4
|
|
|
34.7
|
|
|
33.7
|
|
||||||
Selling, general, and administrative
(1) (8)
|
23.2
|
|
|
22.4
|
|
|
25.4
|
|
|
22.0
|
|
|
19.9
|
|
|
20.6
|
|
||||||
Design and research
(1)
|
3.1
|
|
|
2.8
|
|
|
3.1
|
|
|
2.8
|
|
|
2.5
|
|
|
2.7
|
|
||||||
Operating earnings
(1)
|
8.0
|
|
|
7.5
|
|
|
4.1
|
|
|
7.5
|
|
|
12.3
|
|
|
10.3
|
|
||||||
Net earnings growth (decline)
|
6.2
|
|
|
150.2
|
|
|
(58.4
|
)
|
|
(55.4
|
)
|
|
18.0
|
|
|
30.1
|
|
||||||
After-tax return on net sales
(4)
|
4.4
|
|
|
4.3
|
|
|
2.1
|
|
|
4.2
|
|
|
7.6
|
|
|
6.7
|
|
||||||
After-tax return on average assets
(5)
|
9.0
|
|
|
8.9
|
|
|
3.7
|
|
|
8.7
|
|
|
20.9
|
|
|
19.2
|
|
||||||
After-tax return on average equity
(6)
|
34.4
|
%
|
|
52.5
|
%
|
|
78.1
|
%
|
|
860.8
|
%
|
|
186.4
|
%
|
|
92.7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Share and Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings per share-diluted
|
$
|
1.29
|
|
|
$
|
1.06
|
|
|
$
|
0.43
|
|
|
$
|
1.25
|
|
|
$
|
2.56
|
|
|
$
|
1.98
|
|
Cash dividends declared per share
|
0.09
|
|
|
0.09
|
|
|
0.09
|
|
|
0.29
|
|
|
0.35
|
|
|
0.33
|
|
||||||
Book value per share at year end
(9)
|
4.13
|
|
|
3.42
|
|
|
1.27
|
|
|
—
|
|
|
0.28
|
|
|
2.35
|
|
||||||
Market price per share at year end
|
17.87
|
|
|
24.56
|
|
|
19.23
|
|
|
14.23
|
|
|
24.80
|
|
|
36.53
|
|
||||||
Weighted average shares outstanding-diluted
|
58.5
|
|
|
57.7
|
|
|
57.5
|
|
|
54.5
|
|
|
59.6
|
|
|
65.1
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Condition
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
843.8
|
|
|
$
|
819.1
|
|
|
$
|
775.3
|
|
|
$
|
772.0
|
|
|
$
|
787.9
|
|
|
$
|
670.9
|
|
Working capital
(3)
|
189.1
|
|
|
193.4
|
|
|
69.2
|
|
|
155.2
|
|
|
170.2
|
|
|
87.7
|
|
||||||
Current ratio
(2)
|
1.7
|
|
|
1.7
|
|
|
1.2
|
|
|
1.5
|
|
|
1.5
|
|
|
1.3
|
|
||||||
Interest-bearing debt and related swap agreement
(10)
|
250.0
|
|
|
250.0
|
|
|
301.2
|
|
|
377.4
|
|
|
375.5
|
|
|
176.2
|
|
||||||
Stockholders' equity
|
240.5
|
|
|
197.2
|
|
|
72.3
|
|
|
0.2
|
|
|
15.6
|
|
|
147.8
|
|
||||||
Total capital
(7)
|
490.5
|
|
|
447.2
|
|
|
373.5
|
|
|
377.6
|
|
|
391.1
|
|
|
324.0
|
|
•
|
North American Furniture Solutions
— Includes the operations associated with the design, manufacture, and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States and Canada.
|
•
|
ELA Furniture Solution
s — ELA Furniture Solutions includes the operations associated with the design, manufacture and sale of furniture products, primarily for work-related settings, in the Europe, Middle East and Africa
(
EMEA), Latin America and Asia-Pacific geographic regions.
|
•
|
Specialty
— Includes the operations associated with design, manufacture and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles and Herman Miller Collection products.
|
•
|
Consumer
— Includes the operations associated with the sale of modern design furnishings and accessories to third party retail distributors, as well as direct to consumer sales through e-commerce, direct mailing catalogs and Design Within Reach (DWR) studios.
|
•
|
Portfolio of Leading Brands -
Herman Miller is a globally-recognized, authentic brand known for working with some of the most outstanding designers in the world. Within the industries in which the company operates, Herman Miller, DWR, Geiger, Maharam, POSH, Nemschoff, Colbrook Bosson Saunders ("CBS") and Naughtone are acknowledged as leading brands that inspire architects and designers to create their best design solutions. This portfolio has enabled Herman Miller to connect with new audiences, channels, geographies and product categories. Leveraging the company's brand equity across the lines of business is an important element of the company's business strategy.
|
•
|
Problem-Solving Design and Innovation
- The company is committed to developing research-based functionality and aesthetically innovative new products and has a history of doing so, in collaboration with a global network of leading independent designers. The company believes its skills and experience in matching problem-solving design with the workplace needs of customers provide the company with a competitive advantage in the marketplace. An important component of the company's business strategy is to actively pursue a program of new product research, design and development. The company accomplishes this through the use of an internal research and engineering staff that engages with third party design resources generally compensated on a royalty basis.
|
•
|
Operational Excellence
- The company was among the first in the industry to embrace the concepts of lean manufacturing. HMPS provides the foundation for all of the company's manufacturing operations. The company is committed to continuously improving both product quality and production and operational efficiency. The company has extended this lean process work to its non-manufacturing processes as well as externally to its manufacturing supply chain and distribution channel. The company believes these concepts hold significant promise for further gains in reliability, quality and efficiency.
|
•
|
Leading Networks
- The company values relationships in all areas of the business. The company considers its network of innovative designers, owned and independent dealers and suppliers to be among the most important competitive factors and vital to the long-term success of the business.
|
•
|
Multi-Channel Reach
- The company has built a unique, multi-channel distribution capability that it considers unique. Through contract furniture dealers, direct customer sales, retail studios, e-Commerce, catalogs and independent retailers, the company serves contract and residential customers across a range of channels and geographies.
|
•
|
Independent and Owned Contract Furniture Dealers
- Most of the company's product sales are made to a network of independently owned and operated contract furniture dealerships doing business in many countries around the world. These dealers purchase the company's products and distribute them to end customers. The company recognizes revenue on product sales through this channel once products are shipped and title passes to the dealer. Many of these dealers also offer furniture-related services, including product installation.
|
•
|
Direct Customer Sales
- The company also sells products and services directly to end customers without an intermediary (e.g., sales to the U.S. federal government). In most of these instances, the company contracts separately with a dealership or third-party installation company to provide sales-related services. The company recognizes revenue on these sales once the related product is shipped to the end customer and installation, if applicable, is substantially complete.
|
•
|
DWR Retail Studios
- At the end of fiscal 2017, the Consumer business unit included 31 retail studios (including 30 operating under the DWR brand and a Herman Miller Flagship store in New York City). This business also operates one outlet studio. These studios are located in metropolitan areas throughout North America. Revenue on sales from these studios is recognized upon shipment and transfer to the customer of both title and risk of loss.
|
•
|
E-Commerce
- The company sells products through its online stores, in which products are available for sale via the company's website, hermanmiller.com as well as through the DWR online store, dwr.com. These sites complement our existing methods of distribution and extend the company's brand to new customers. The company recognizes revenue on these sales upon shipment and transfer to the customer of both title and risk of loss.
|
•
|
DWR Direct-Mail Catalogs
- The company’s consumer business unit utilizes a direct-mail catalog program through its DWR subsidiary. A regular schedule of catalog mailings is maintained throughout the fiscal year and these serve as a key driver of sales across each of DWR’s channels, including retail studios and e-commerce websites. Revenue on sales transacted through this catalog program is recognized upon shipment and transfer to the customer of both title and risk of loss.
|
•
|
Independent Retailers
- Certain products are sold to end customers through independent retail operations. Revenue is recognized on these sales once products are shipped and title and risk of loss passes to the independent retailer.
|
|
Fiscal Year Ended
|
Fiscal Year Ended
|
||||||||||||||||||||||||||||
|
May 28, 2016
|
May 30, 2015
|
||||||||||||||||||||||||||||
|
North America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North America
|
ELA
|
Specialty
|
Consumer
|
Total
|
||||||||||||||||||||
Net sales, as reported
|
$
|
1,331.8
|
|
$
|
412.6
|
|
$
|
231.8
|
|
$
|
288.7
|
|
$
|
2,264.9
|
|
$
|
1,241.9
|
|
$
|
409.9
|
|
$
|
219.9
|
|
$
|
270.5
|
|
$
|
2,142.2
|
|
% change from PY
|
7.2
|
%
|
0.7
|
%
|
5.4
|
%
|
6.7
|
%
|
5.7
|
%
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Adjustments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Currency translation effects
(1)
|
12.5
|
|
26.1
|
|
0.6
|
|
0.8
|
|
40.0
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Acquisition
|
—
|
|
—
|
|
—
|
|
(30.2
|
)
|
(30.2
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Organic net sales
|
$
|
1,344.3
|
|
$
|
438.7
|
|
$
|
232.4
|
|
$
|
259.3
|
|
$
|
2,274.7
|
|
$
|
1,241.9
|
|
$
|
409.9
|
|
$
|
219.9
|
|
$
|
270.5
|
|
$
|
2,142.2
|
|
% change from PY
|
8.2
|
%
|
7.0
|
%
|
5.7
|
%
|
(4.1
|
)%
|
6.2
|
%
|
|
|
|
|
|
|
Fiscal Year Ended
|
Fiscal Year Ended
|
||||||||||||||||||||||||||||||||||
|
June 3, 2017
|
May 28, 2016
|
||||||||||||||||||||||||||||||||||
|
North America
|
ELA
|
Specialty
|
Consumer
|
Corporate
|
Total
|
North America
|
ELA
|
Specialty
|
Consumer
|
Corporate
|
Total
|
||||||||||||||||||||||||
Operating earnings (loss)
|
$
|
137.7
|
|
$
|
30.8
|
|
$
|
17.7
|
|
$
|
5.3
|
|
$
|
(0.7
|
)
|
$
|
190.8
|
|
$
|
152.0
|
|
$
|
35.3
|
|
$
|
16.4
|
|
$
|
8.1
|
|
$
|
(0.3
|
)
|
$
|
211.5
|
|
% Net sales
|
10.3
|
%
|
8.0
|
%
|
7.6
|
%
|
1.7
|
%
|
n/a
|
|
8.4
|
%
|
11.4
|
%
|
8.6
|
%
|
7.1
|
%
|
2.8
|
%
|
n/a
|
|
9.3
|
%
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Less: Non-recurring gain
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6.1
|
)
|
—
|
|
—
|
|
—
|
|
(6.1
|
)
|
||||||||||||
Less: Gain on sale of dealer
|
(0.7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Add: Restructuring and impairment expenses
|
10.3
|
|
1.0
|
|
0.6
|
|
0.6
|
|
—
|
|
12.5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Adjusted operating earnings (loss)
|
$
|
147.3
|
|
$
|
31.8
|
|
$
|
18.3
|
|
$
|
5.9
|
|
$
|
(0.7
|
)
|
$
|
202.6
|
|
$
|
152.0
|
|
$
|
29.2
|
|
$
|
16.4
|
|
$
|
8.1
|
|
$
|
(0.3
|
)
|
$
|
205.4
|
|
|
Fiscal Year Ended
|
|||||
|
June 3, 2017
|
May 28, 2016
|
||||
Earnings per Share - Diluted
|
$
|
2.05
|
|
$
|
2.26
|
|
|
|
|
||||
After Tax Adjustments
|
|
|
||||
Less: Non-recurring gain
|
—
|
|
(0.09
|
)
|
||
Less: Gain on sale of dealer
|
(0.02
|
)
|
—
|
|
||
Add: Restructuring and impairment expenses
|
0.13
|
|
—
|
|
||
Adjusted Earnings per Share - Diluted
|
$
|
2.16
|
|
$
|
2.17
|
|
|
|
|
||||
Weighted Average Shares Outstanding (used for Calculating Adjusted Earnings per Share) – Diluted
|
60,554,589
|
|
60,529,269
|
|
(Dollars In millions)
|
Fiscal 2017
|
|
% Change from 2016
|
|
Fiscal 2016
|
|
% Change from 2015
|
|
Fiscal 2015
|
||||||||
53 weeks
|
|
|
52 weeks
|
|
|
52 weeks
|
|||||||||||
Net sales
|
$
|
2,278.2
|
|
|
0.6
|
%
|
|
$
|
2,264.9
|
|
|
5.7
|
%
|
|
$
|
2,142.2
|
|
Cost of sales
|
1,414.0
|
|
|
1.7
|
%
|
|
1,390.7
|
|
|
3.0
|
%
|
|
1,350.8
|
|
|||
Gross margin
|
864.2
|
|
|
(1.1
|
)%
|
|
874.2
|
|
|
10.5
|
%
|
|
791.4
|
|
|||
Operating expenses
|
673.4
|
|
|
1.6
|
%
|
|
662.7
|
|
|
5.5
|
%
|
|
628.0
|
|
|||
Operating earnings
|
190.8
|
|
|
(9.8
|
)%
|
|
211.5
|
|
|
29.4
|
%
|
|
163.4
|
|
|||
Net other expenses
|
13.2
|
|
|
(11.4
|
)%
|
|
14.9
|
|
|
(18.1
|
)%
|
|
18.2
|
|
|||
Earnings before income taxes
|
177.6
|
|
|
(9.7
|
)%
|
|
196.6
|
|
|
35.4
|
%
|
|
145.2
|
|
|||
Income tax expense
|
55.1
|
|
|
(7.4
|
)%
|
|
59.5
|
|
|
26.1
|
%
|
|
47.2
|
|
|||
Equity income from nonconsolidated affiliates, net of tax
|
1.6
|
|
|
300.0
|
%
|
|
0.4
|
|
|
300.0
|
%
|
|
0.1
|
|
|||
Net earnings
|
124.1
|
|
|
(9.7
|
)%
|
|
137.5
|
|
|
40.2
|
%
|
|
98.1
|
|
|||
Net earnings attributable to noncontrolling interests
|
0.2
|
|
|
(75.0
|
)%
|
|
0.8
|
|
|
33.3
|
%
|
|
0.6
|
|
|||
Net earnings attributable to Herman Miller, Inc.
|
$
|
123.9
|
|
|
(9.4
|
)%
|
|
$
|
136.7
|
|
|
40.2
|
%
|
|
$
|
97.5
|
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
Fiscal 2015
|
|||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
62.1
|
|
|
61.4
|
|
|
63.1
|
|
Gross margin
|
37.9
|
|
|
38.6
|
|
|
36.9
|
|
Selling, general, and administrative expenses
|
25.8
|
|
|
25.9
|
|
|
25.4
|
|
Restructuring and impairment expenses
|
0.5
|
|
|
—
|
|
|
0.6
|
|
Design and research expenses
|
3.2
|
|
|
3.4
|
|
|
3.3
|
|
Total operating expenses
|
29.6
|
|
|
29.3
|
|
|
29.3
|
|
Operating earnings
|
8.4
|
|
|
9.3
|
|
|
7.6
|
|
Net other expenses
|
0.6
|
|
|
0.7
|
|
|
0.8
|
|
Earnings before income taxes
|
7.8
|
|
|
8.7
|
|
|
6.8
|
|
Income tax expense
|
2.4
|
|
|
2.6
|
|
|
2.2
|
|
Equity income from nonconsolidated affiliates, net of tax
|
0.1
|
|
|
—
|
|
|
—
|
|
Net earnings
|
5.4
|
|
|
6.1
|
|
|
4.6
|
|
Net earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
Net earnings attributable to Herman Miller, Inc.
|
5.4
|
|
|
6.0
|
|
|
4.6
|
|
•
|
Fiscal 2017 had 53 weeks as compared to the same period of fiscal 2016, which had 52 weeks. The impact of this additional week increased net sales by approximately
$37 million
.
|
•
|
Incremental sales volumes within the Consumer segment of approximately
$25 million
were due mainly to improvements across several Consumer sales channels, including studios, contract, e-commerce and direct-mail catalogs.
|
•
|
Increased sales volumes within the North American segment of approximately
$23 million
resulted primarily from increased demand within the company's Healthcare business unit, along with growth late in the fiscal year in the North America office furniture business.
|
•
|
Increased sales volumes within the ELA segment of approximately
$17 million
were driven by increases within the Europe, Latin America and Asia regions. The largest increases were due to larger project activity in mainland Europe, Mexico, Brazil, Japan and China.
|
•
|
The impact of the divestiture of the company's dealerships in Australia in fiscal 2016 and Philadelphia, Pennsylvania in fiscal 2017 had the effect of reducing net sales by
$39.6 million
in fiscal 2017 as compared to the prior fiscal year.
|
•
|
Deeper discounting, net of incremental price increases, reduced net sales in fiscal 2017 by roughly
$32 million
as compared to the prior year. Of this change, $26 million related to the North American operating segment.
|
•
|
Foreign currency translation had a negative impact on net sales of approximately
$15 million
.
|
•
|
Increased sales volumes within the North American segment of approximately $108.0 million were driven by a combination of general market growth and company-specific actions taken to improve selling capacity, launch innovative products and refresh showrooms.
|
•
|
Increased sales volumes within the ELA segment of $30.4 million were driven by increases within the Asia region. The largest increases were due to larger project activity in Australia and China.
|
•
|
Incremental sales volume within the Consumer segment related to the acquisition of DWR, which increased sales by $30.2 million. This increase was due the fact that 52 weeks of DWR results were included in our consolidated results for fiscal 2016 as compared to 44 weeks in fiscal 2015.
|
•
|
Increased sales volumes within the Specialty segment of $10.9 million were driven principally by Geiger and the Herman Miller Collection.
|
•
|
Foreign currency translation had a negative impact on sales of $40.0 million.
|
•
|
Incremental price discounting, net of price increases, reduced the company's consolidated gross margin by approximately 90 basis points relative to fiscal 2016.
|
•
|
Higher commodity costs within the North American operating segment in the current fiscal year drove an unfavorable year-over-year margin impact of approximately 40 basis points.
|
•
|
The divestiture of the company's dealerships in Australia and Philadelphia, Pennsylvania in fiscal 2016 and 2017, respectively, resulted in a favorable impact of approximately 30 basis points relative to fiscal 2016.
|
•
|
A decrease in employee incentive costs increased our consolidated gross margin by 30 basis points relative to fiscal 2016. The decrease reflects lower employee incentive costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.
|
•
|
Improved material cost performance at the company's West Michigan manufacturing facilities driven by process engineering initiatives increased gross margin by approximately 20 basis points as compared to fiscal 2016.
|
•
|
Product mix at the company's West Michigan manufacturing facilities and material usage efficiencies at various international locations had a favorable impact on gross margin.
|
•
|
Lower commodity costs within the North American operating segment in the current fiscal year drove a favorable year-over-year margin impact of approximately 90 basis points.
|
•
|
A decrease in freight expenses, due primarily to lower fuel costs and improved leverage of fixed product distribution costs, drove a favorable impact to gross margin of approximately 40 basis points compared to fiscal 2015.
|
•
|
Inventory-related purchase accounting adjustments related to the acquisition of DWR unfavorably impacted gross margin in the prior year by approximately 30 basis points.
|
•
|
Improved production volume leverage at the company's West Michigan manufacturing facilities increased gross margin by approximately 30 basis points as compared to fiscal 2015.
|
•
|
We estimate that relative changes in foreign currency exchange rates had a negative impact on our consolidated gross margin of approximately 30 basis points relative to last fiscal year.
|
•
|
Improved operating efficiencies at certain international and domestic subsidiaries also provided a favorable impact to gross margin compared to last fiscal year.
|
•
|
Fiscal 2017 results reflected restructuring and impairment expenses of $12.5 million. Restructuring charges related to targeted workforce reductions increased operating expenses by $5.4 million, while the impairment of the Nemschoff trade name increased operating expenses by $7.1 million.
|
•
|
Marketing and selling expenses increased approximately $10 million relative to last fiscal year.
|
•
|
The impact of an extra week in fiscal 2017 increased operating expenses by approximately $9 million.
|
•
|
Incremental costs related to the continued growth and expansion of DWR retail studios of approximately $8 million for the twelve month comparative period.
|
•
|
Increased costs within the company's DWR subsidiary of approximately $5 million as a result of increased investment in information technology, infrastructure to support the contract channel and other business support functions.
|
•
|
Lower employee incentive costs decreased operating expenses by $8.8 million compared to prior fiscal year. The decrease reflects lower incentive compensation costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.
|
•
|
The divestiture of the company's dealerships in Australia and Philadelphia in fiscal 2016 and 2017, respectively, resulted in a decrease in operating expenses of $14.2 million for the twelve month comparative period.
|
•
|
The remainder of the change was driven mainly by company-wide cost savings initiatives, decreases in stock-based compensation, research and development expenses and changes in foreign currency exchange rates.
|
•
|
Employee incentive costs increased by $14.7 million relative to fiscal 2015. The increase reflects higher incentive compensation costs that are tied to increased earnings for the comparative periods.
|
•
|
Marketing and selling expenses increased $14.5 million relative to fiscal 2015. The increase resulted from new marketing initiatives, particularly within the Consumer segment, as well as increases in selling capacity and sales growth during fiscal
2016
.
|
•
|
Fiscal 2016 included a full 52 weeks of DWR results whereas fiscal 2015 included only 44 weeks. This difference accounts for approximately $13.7 million of the year-over-year increase in consolidated operating expenses.
|
•
|
Design and research expenses increased $5.7 million in fiscal 2016 as compared to the prior year.
|
•
|
Year-over-year changes in currency exchange rates decreased operating expenses by an estimated $10 million.
|
•
|
Fiscal 2015 results reflected restructuring and impairment expenses of $12.7 million.
|
•
|
The remaining change relates to various contributing factors, including but not limited to higher costs for information technology initiatives, wage and benefit inflation, and general variability with higher net sales.
|
◦
|
North American Furniture Solutions
— Includes the operations associated with the design, manufacture and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States and Canada.
|
◦
|
ELA Furniture Solutions
— Includes EMEA, Latin America, and Asia-Pacific operations associated with the design, manufacture and sale of furniture products, primarily for work-related settings.
|
◦
|
Specialty
— Includes operations associated with the design, manufacture, and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles and Herman Miller Collection products.
|
◦
|
Consumer
— Includes operations associated with the sale of modern design furnishings and accessories to third party retail distributors, as well as direct to consumer sales through e-commerce, direct mailing catalogs and DWR retail studios.
|
•
|
The impact of the extra week increased net sales by an estimated $23 million and increased orders by $21 million for fiscal 2017 as compared to the prior year.
|
•
|
Incremental price discounting, net of price increases, in fiscal 2017 decreased net sales by approximately $26 million compared to the prior year.
|
•
|
Sales volumes within the North American segment increased by approximately
$23 million
resulting primarily from increased demand within the company's Healthcare business unit, along with growth late in the year in the North America office furniture business.
|
•
|
The impact of the divestiture of the company's dealership in Philadelphia, Pennsylvania in fiscal 2017 had the effect of reducing net sales by approximately $9 million as compared to fiscal 2016.
|
•
|
Commodity price increases and incremental discounting drove a decrease in gross margins and operating earnings.
|
•
|
Decreased employee incentive costs recorded in operating expenses and cost of goods sold increased operating earnings by $14.1 million compared to prior fiscal year. The decrease reflects lower incentive compensation costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.
|
•
|
Restructuring charges related to targeted workforce reductions increased operating expenses by $5.4 million, while the impairment of the Nemschoff trade name increased operating expenses by $7.1 million as compared to the prior year.
|
•
|
Operating expenses within the North American segment were higher than the prior year due to the extra week of operations.
|
•
|
Company-wide cost savings initiatives resulted in a decrease in operating expenses relative to the prior year period.
|
•
|
Sales volumes within the North American segment increased by approximately $108 million. This was driven by a combination of general market growth and company-specific actions taken to improve selling capacity, launch innovative products and refresh showrooms.
|
•
|
The impact of foreign currency translation decreased net sales and operating earnings by approximately $13 million and $7 million, respectively.
|
•
|
Changes in pricing, net of incremental discounting, decreased fiscal 2016 net sales by approximately $6 million compared to the prior year.
|
•
|
Operating earnings increased mainly due to improvements in gross margin that were driven by increased sales volumes, improved production volume leverage, a decrease in commodity costs and improved operational efficiency.
|
•
|
Higher incentive compensation expenses had an unfavorable impact on operating earnings of $18.6 million.
|
•
|
Fiscal 2016 included the results of the company’s dealership in Australia that was divested at the end of the fourth quarter of fiscal 2016. Accordingly, net sales for the ELA segment decreased by $30.8 million due to the divestiture. The divestiture also decreased orders by $32.8 million year-over-year.
|
•
|
Increased sales volumes within the ELA segment of approximately
$17 million
were driven by increases within the Europe, Latin America and Asia regions. The largest increases were due to larger project activity in mainland Europe, Mexico, Brazil, Japan and China.
|
•
|
Deeper discounting, net of incremental price increases, decreased fiscal 2017 net sales by an estimated $6 million.
|
•
|
Foreign currency translation decreased net sales by approximately $13.9 million.
|
•
|
The impact of the extra week increased net sales by $6.3 million in fiscal 2017.
|
•
|
The divestiture of the company’s dealership in Australia decreased operating earnings by $1.6 million.
|
•
|
Operating earnings were also reduced in fiscal 2017 by $1.0 million due to restructuring expenses, related primarily to severance costs.
|
•
|
Fiscal 2016 included nonrecurring gains related to the sale of a former manufacturing facility in the United Kingdom and the divestiture of the company’s dealership in Australia. Accordingly, the operating earnings for the ELA segment decreased by $6.1 million due to the nonrecurring gains recorded in fiscal 2016.
|
•
|
Improved sales volumes within Australia, Mexico and China increased in net sales by approximately $31 million.
|
•
|
Changes in pricing, net of incremental discounting, decreased fiscal 2016 net sales by about $2 million compared to the prior year.
|
•
|
The impact of foreign currency translation decreased net sales by approximately $26.1 million.
|
•
|
Gross margin improvements driven by increased sales volumes, manufacturing efficiency as well as decreased material and freight costs provided a favorable impact on operating earnings.
|
•
|
Nonrecurring gains related to the sale of a former manufacturing facility in the United Kingdom and the divestiture of the company’s dealership in Australia increased operating earnings by $6.1 million.
|
•
|
The impact of foreign currency changes decreased fiscal 2015 operating earnings for ELA by approximately $7 million.
|
•
|
The impact of an extra week in fiscal 2017 increased net sales by approximately $3.0 million as compared to the prior year.
|
•
|
Sales volumes within the Specialty segment decreased by approximately $2.0 million. This decrease was driven by lower sales volumes within the Geiger and Maharam subsidiaries, offset by an increase in sales within the Herman Miller Collection business.
|
•
|
Improved operational efficiencies and lower benefit costs had a favorable impact on operating earnings, which was partially offset by increased marketing and selling costs.
|
•
|
Improved sales volumes increased net sales by $10.9 million, which was driven by increases within the Herman Miller Collection and Geiger subsidiary.
|
•
|
Changes in pricing, net of incremental discounting, increased fiscal 2016 net sales by an estimated $2 million compared to the prior year.
|
•
|
Increased sales volumes and improved operational efficiencies had a favorable impact on operating earnings.
|
•
|
Higher incentive compensation expenses and increased marketing and selling costs had an unfavorable impact on operating earnings of $2.3 million and $1.9 million, respectively.
|
•
|
Increased sales volumes of approximately $29.4 million were due to improvements across several Consumer sales channels, including studios, e-commerce, contract and direct-mail catalogs.
|
•
|
The impact of the extra week increased net sales by $4.7 million in fiscal 2017 as compared to prior year.
|
•
|
Operating expenses within the Consumer segment were higher than the prior year primarily as a result of increased investments in information technology, marketing and investments in personnel supporting the contract and e-commerce channels.
|
•
|
Incremental pre-opening costs related to non-comparable studios increased operating expenses relative to the prior year and had a negative impact on operating earnings of approximately $8 million compared to fiscal 2016.
|
•
|
The fiscal year ended May 30, 2015 included 44 weeks of DWR operations (as the acquisition of DWR was completed on July 28, 2014). Accordingly, approximately $30.2 million of the year-over-year net sales increase for this segment is due to the inclusion of DWR operations for the full twelve months of fiscal year 2016.
|
•
|
Adjusted for the impact of this partial period consolidation during fiscal 2015 and the impact of foreign currency translation, which increased net sales by $0.8 million, net sales for the Consumer segment decreased $11.2 million as compared to fiscal 2015. This
|
•
|
The decrease in operating earnings was driven by a reduction in the gross margin percentage at DWR due to a shift in mix to lower margin channels, the impact of promotional activity related to shipping and certain period costs associated with an ERP implementation.
|
•
|
An increase in DWR operating expenses of $8.2 million decreased operating earnings. The increase in operating expenses was due to increased marketing investment, higher staffing levels and incremental occupancy costs that were driven by studio opening costs and double rent associated with new studio openings. These factors were partially offset by inventory-related purchase accounting adjustments that reduced prior year operating earnings by approximately $7.8 million.
|
|
Fiscal Year Ended
|
||||||||||
(In millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Cash and cash equivalents, end of period
|
$
|
96.2
|
|
|
$
|
84.9
|
|
|
$
|
63.7
|
|
Marketable securities, end of period
|
$
|
8.6
|
|
|
$
|
7.5
|
|
|
$
|
5.7
|
|
Cash provided by operating activities
|
$
|
202.1
|
|
|
$
|
210.4
|
|
|
$
|
167.7
|
|
Cash used for investing activities
|
$
|
(116.3
|
)
|
|
$
|
(80.8
|
)
|
|
$
|
(213.6
|
)
|
Cash provided by (used for) financing activities
|
$
|
(74.6
|
)
|
|
$
|
(106.5
|
)
|
|
$
|
6.8
|
|
Pension and post-retirement benefit plan contributions
|
$
|
(1.1
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
1.4
|
|
Capital expenditures
|
$
|
(87.3
|
)
|
|
$
|
(85.1
|
)
|
|
$
|
(63.6
|
)
|
Stock repurchased
|
$
|
(23.7
|
)
|
|
$
|
(14.1
|
)
|
|
$
|
(3.7
|
)
|
Interest-bearing debt, end of period
|
$
|
199.9
|
|
|
$
|
221.9
|
|
|
$
|
289.8
|
|
Available unsecured credit facilities, end of period
(1)
|
$
|
391.7
|
|
|
$
|
232.1
|
|
|
$
|
164.5
|
|
(In millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Naughtone Holdings Limited
|
$
|
11.6
|
|
|
|
|
|
||||
George Nelson Bubble Lamp Product Line
|
|
|
$
|
3.6
|
|
|
|
||||
Design Within Reach (DWR)
|
|
|
|
|
$
|
154.0
|
|
(In millions, )
|
June 3, 2017
|
|
May 28, 2016
|
||||
Cash and cash equivalents
|
$
|
96.2
|
|
|
$
|
84.9
|
|
Marketable securities
|
$
|
8.6
|
|
|
$
|
7.5
|
|
Availability under revolving lines of credit
|
$
|
391.7
|
|
|
$
|
232.1
|
|
(In millions)
|
Payments due by fiscal year
|
||||||||||||||||||
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
Thereafter
|
||||||||||
Long-term debt
(1)
|
$
|
199.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
$
|
149.9
|
|
Estimated interest on debt obligations
(2)
|
83.3
|
|
|
11.4
|
|
|
19.3
|
|
|
15.5
|
|
|
37.1
|
|
|||||
Operating leases
|
329.2
|
|
|
47.0
|
|
|
77.5
|
|
|
63.2
|
|
|
141.5
|
|
|||||
Purchase obligations
(3)
|
45.4
|
|
|
35.2
|
|
|
6.2
|
|
|
1.0
|
|
|
3.0
|
|
|||||
Pension plan funding
(4)
|
0.9
|
|
|
0.4
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|||||
Stockholder dividends
(5)
|
10.2
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
(6)
|
18.9
|
|
|
1.7
|
|
|
3.3
|
|
|
3.1
|
|
|
10.8
|
|
|||||
Total
|
$
|
687.8
|
|
|
$
|
105.9
|
|
|
$
|
106.4
|
|
|
$
|
132.9
|
|
|
$
|
342.6
|
|
(In millions)
|
|
Retention Level (per occurrence)
|
||
General liability and auto liability/physical damage
|
|
$
|
1.00
|
|
Workers' compensation and property
|
|
$
|
0.75
|
|
•
|
Discount Rate
— This assumption is established at the end of the fiscal year based on high-quality corporate bond yields. The company utilizes the services of an independent actuarial firm to assist in determining the rate. Future expected actuarially determined cash flows for the company's domestic pension, international pension and post-retirement medical plans are individually discounted at the spot rates under the Mercer Yield Curve to arrive at the plan’s obligations as of the measurement date.
|
•
|
Expected Long-Term Rate of Return
—
The
company bases this assumption on our long-term assumed rates of return for equities and fixed income securities, weighted by the allocation of the invested assets of the pension plan. The company considers likely returns and risk factors specific to the various classes of investments and advice from independent actuaries in establishing this rate. Changes in the investment allocation of plan assets would impact this assumption. A shift to a higher relative percentage of fixed income securities, for example, would result in a lower assumed rate.
|
•
|
Expected Volatility
— This represents a measure, expressed as a percentage, of the expected fluctuation in the market price of the company's common stock. As a point of reference, a high volatility percentage would assume a wider expected range of market returns for a particular security. All other assumptions held constant, this would yield a higher stock option valuation than a calculation using a lower measure of volatility. In measuring the fair value of the majority of stock options issued during
fiscal 2017
, we utilized an expected volatility of
26 percent
. Certain options related to the Herman Miller Consumer Holdings (HMCH) Stock Option Plan are classified as a liability within the Consolidated Balance Sheets. As of
June 3, 2017
, an expected volatility of
35 percent
was used in the year end liability valuation.
|
•
|
Expected Term of Options
— This assumption represents the expected length of time between the grant date of a stock option and the date at which it is exercised (option life). The company assumed an average expected term of
4.0 years
in calculating the fair values of the majority of stock options issued during
fiscal 2017
, except for the HMCH Stock Option Plan, where we utilized an average expected term of
2.1 years
.
|
(In millions)
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
(1)
|
||||||||||||||
Long-Term Debt - Fixed rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest rate = 6.42%
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
149.9
|
|
|
$
|
149.9
|
|
Interest rate = 6.00%
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
Fiscal Years Ended
|
||||||||||
(In millions, except per share data)
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Net sales
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
$
|
2,142.2
|
|
Cost of sales
|
1,414.0
|
|
|
1,390.7
|
|
|
1,350.8
|
|
|||
Gross margin
|
864.2
|
|
|
874.2
|
|
|
791.4
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
587.8
|
|
|
585.6
|
|
|
543.9
|
|
|||
Restructuring and impairment expenses
|
12.5
|
|
|
—
|
|
|
12.7
|
|
|||
Design and research
|
73.1
|
|
|
77.1
|
|
|
71.4
|
|
|||
Total operating expenses
|
673.4
|
|
|
662.7
|
|
|
628.0
|
|
|||
Operating earnings
|
190.8
|
|
|
211.5
|
|
|
163.4
|
|
|||
Other expenses (income):
|
|
|
|
|
|
||||||
Interest expense
|
15.2
|
|
|
15.4
|
|
|
17.5
|
|
|||
Interest and other investment income
|
(2.2
|
)
|
|
(0.8
|
)
|
|
(0.6
|
)
|
|||
Other, net
|
0.2
|
|
|
0.3
|
|
|
1.3
|
|
|||
Net other expenses
|
13.2
|
|
|
14.9
|
|
|
18.2
|
|
|||
Earnings before income taxes
|
177.6
|
|
|
196.6
|
|
|
145.2
|
|
|||
Income tax expense
|
55.1
|
|
|
59.5
|
|
|
47.2
|
|
|||
Equity earnings from nonconsolidated affiliates, net of tax
|
1.6
|
|
|
0.4
|
|
|
0.1
|
|
|||
Net earnings
|
124.1
|
|
|
137.5
|
|
|
98.1
|
|
|||
Net earnings attributable to noncontrolling interests
|
0.2
|
|
|
0.8
|
|
|
0.6
|
|
|||
Net earnings attributable to Herman Miller, Inc.
|
$
|
123.9
|
|
|
$
|
136.7
|
|
|
$
|
97.5
|
|
|
|
|
|
|
|
||||||
Earnings per share — basic
|
$
|
2.07
|
|
|
$
|
2.28
|
|
|
$
|
1.64
|
|
Earnings per share — diluted
|
$
|
2.05
|
|
|
$
|
2.26
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
$
|
(7.2
|
)
|
|
$
|
(8.8
|
)
|
|
$
|
(9.7
|
)
|
Pension and post-retirement liability adjustments
|
(12.7
|
)
|
|
0.5
|
|
|
(8.6
|
)
|
|||
Unrealized gains on interest rate swap agreement
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
Unrealized holding gain on available for sale securities
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive loss
|
(17.7
|
)
|
|
(8.3
|
)
|
|
(18.3
|
)
|
|||
Comprehensive income
|
106.4
|
|
|
129.2
|
|
|
79.8
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
0.2
|
|
|
0.8
|
|
|
0.6
|
|
|||
Comprehensive income attributable to Herman Miller, Inc.
|
$
|
106.2
|
|
|
$
|
128.4
|
|
|
$
|
79.2
|
|
(In millions, except share and per share data)
|
June 3, 2017
|
|
May 28, 2016
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
96.2
|
|
|
$
|
84.9
|
|
Marketable securities
|
8.6
|
|
|
7.5
|
|
||
Accounts and notes receivable, less allowances of $3.3 in 2017 and $4.3 in 2016
|
186.6
|
|
|
211.0
|
|
||
Inventories, net
|
152.4
|
|
|
128.2
|
|
||
Prepaid taxes
|
17.7
|
|
|
20.4
|
|
||
Other
|
30.4
|
|
|
28.5
|
|
||
Total Current Assets
|
491.9
|
|
|
480.5
|
|
||
|
|
|
|
||||
Property and Equipment:
|
|
|
|
||||
Land and improvements
|
24.0
|
|
|
24.1
|
|
||
Buildings and improvements
|
229.0
|
|
|
205.7
|
|
||
Machinery and equipment
|
662.4
|
|
|
645.3
|
|
||
Construction in progress
|
53.3
|
|
|
53.9
|
|
||
Gross Property and Equipment
|
968.7
|
|
|
929.0
|
|
||
Less: Accumulated depreciation
|
(654.1
|
)
|
|
(648.9
|
)
|
||
Net Property and Equipment
|
314.6
|
|
|
280.1
|
|
||
Goodwill
|
304.5
|
|
|
305.3
|
|
||
Indefinite-lived intangibles
|
78.1
|
|
|
85.2
|
|
||
Other amortizable intangibles, net
|
45.4
|
|
|
50.8
|
|
||
Other assets
|
71.8
|
|
|
33.3
|
|
||
Total Assets
|
$
|
1,306.3
|
|
|
$
|
1,235.2
|
|
|
|
|
|
||||
Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
148.4
|
|
|
$
|
165.6
|
|
Accrued compensation and benefits
|
79.7
|
|
|
85.2
|
|
||
Accrued warranty
|
47.7
|
|
|
43.9
|
|
||
Unearned revenue
|
33.2
|
|
|
35.4
|
|
||
Other accrued liabilities
|
76.7
|
|
|
59.9
|
|
||
Total Current Liabilities
|
385.7
|
|
|
390.0
|
|
||
|
|
|
|
||||
Long-term debt
|
199.9
|
|
|
221.9
|
|
||
Pension and post-retirement benefits
|
38.5
|
|
|
25.8
|
|
||
Other liabilities
|
69.9
|
|
|
45.8
|
|
||
Total Liabilities
|
694.0
|
|
|
683.5
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests
|
24.6
|
|
|
27.0
|
|
||
Stockholders' Equity:
|
|
|
|
||||
Preferred stock, no par value (10,000,000 shares authorized, none issued)
|
—
|
|
|
—
|
|
||
Common stock, $0.20 par value (240,000,000 shares authorized, 59,715,824 and
59,868,276
shares issued and outstanding in 2017 and 2016, respectively)
|
11.9
|
|
|
12.0
|
|
||
Additional paid-in capital
|
139.3
|
|
|
142.7
|
|
||
Retained earnings
|
519.5
|
|
|
435.3
|
|
||
Accumulated other comprehensive loss
|
(82.2
|
)
|
|
(64.5
|
)
|
||
Key executive deferred compensation
|
(1.0
|
)
|
|
(1.1
|
)
|
||
Herman Miller, Inc. Stockholders' Equity
|
587.5
|
|
|
524.4
|
|
||
Noncontrolling interests
|
0.2
|
|
|
0.3
|
|
||
Total Stockholders' Equity
|
587.7
|
|
|
524.7
|
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
|
$
|
1,306.3
|
|
|
$
|
1,235.2
|
|
|
Fiscal Years Ended
|
||||||||||
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
|||||||
Preferred Stock
|
|
|
|
|
|
||||||
Balance at beginning of year and end of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common Stock
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
12.0
|
|
|
$
|
11.9
|
|
|
$
|
11.9
|
|
Repurchase and retirement of common stock
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
Restricted stock units released
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Balance at end of year
|
$
|
11.9
|
|
|
$
|
12.0
|
|
|
$
|
11.9
|
|
Additional Paid-in Capital
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
142.7
|
|
|
$
|
135.1
|
|
|
$
|
122.4
|
|
Exercise of stock options
|
9.4
|
|
|
6.6
|
|
|
5.7
|
|
|||
Repurchase and retirement of common stock
|
(23.7
|
)
|
|
(14.1
|
)
|
|
(3.7
|
)
|
|||
Employee stock purchase plan issuances
|
1.9
|
|
|
1.7
|
|
|
1.6
|
|
|||
Stock-based compensation expense
|
9.1
|
|
|
11.9
|
|
|
8.6
|
|
|||
Excess tax benefit for stock-based compensation
|
(0.6
|
)
|
|
0.8
|
|
|
0.4
|
|
|||
Restricted stock units released
|
0.3
|
|
|
0.2
|
|
|
0.2
|
|
|||
Deferred compensation plan
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|||
Directors' fees
|
0.3
|
|
|
0.6
|
|
|
0.4
|
|
|||
Balance at end of year
|
$
|
139.3
|
|
|
$
|
142.7
|
|
|
$
|
135.1
|
|
Retained Earnings
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
435.3
|
|
|
$
|
330.2
|
|
|
$
|
269.6
|
|
Net income attributable to Herman Miller, Inc.
|
123.9
|
|
|
136.7
|
|
|
97.5
|
|
|||
Dividends declared on common stock (per share - 2017: $0.68; 2016: $0.59; 2015: $0.56)
|
(40.9
|
)
|
|
(35.6
|
)
|
|
(33.6
|
)
|
|||
Noncontrolling interests redemption value adjustment
|
1.2
|
|
|
4.0
|
|
|
(3.3
|
)
|
|||
Balance at end year
|
$
|
519.5
|
|
|
$
|
435.3
|
|
|
$
|
330.2
|
|
Accumulated Other Comprehensive Loss
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(64.5
|
)
|
|
$
|
(56.2
|
)
|
|
$
|
(37.9
|
)
|
Other comprehensive loss
|
(17.7
|
)
|
|
(8.3
|
)
|
|
(18.3
|
)
|
|||
Balance at end of year
|
$
|
(82.2
|
)
|
|
$
|
(64.5
|
)
|
|
$
|
(56.2
|
)
|
Key Executive Deferred Compensation
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(1.1
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(1.7
|
)
|
Deferred compensation plan
|
0.1
|
|
|
0.1
|
|
|
0.5
|
|
|||
Balance at end of year
|
$
|
(1.0
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(1.2
|
)
|
Herman Miller, Inc. Stockholders' Equity
|
$
|
587.5
|
|
|
$
|
524.4
|
|
|
$
|
419.8
|
|
Noncontrolling Interests
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
Initial origination of noncontrolling interests
|
—
|
|
|
—
|
|
|
6.0
|
|
|||
Net income attributable to noncontrolling interests
|
—
|
|
|
0.3
|
|
|
0.1
|
|
|||
Deconsolidation of entity with noncontrolling interests
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|||
Stock-based compensation expense
|
(0.1
|
)
|
|
—
|
|
|
0.2
|
|
|||
Purchase of noncontrolling interests
|
—
|
|
|
—
|
|
|
(5.8
|
)
|
|||
Balance at end of year
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
Total Stockholders' Equity
|
$
|
587.7
|
|
|
$
|
524.7
|
|
|
$
|
420.3
|
|
|
Fiscal Years Ended
|
||||||||||
(In millions)
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
124.1
|
|
|
$
|
137.5
|
|
|
$
|
98.1
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation expense
|
52.9
|
|
|
47.0
|
|
|
44.2
|
|
|||
Amortization expense
|
6.0
|
|
|
6.0
|
|
|
5.6
|
|
|||
Provision for losses on accounts receivable and notes receivable
|
—
|
|
|
2.2
|
|
|
1.8
|
|
|||
Earnings from nonconsolidated affiliates net of dividends received
|
(1.5
|
)
|
|
—
|
|
|
0.3
|
|
|||
Gain on sales of property and dealers
|
—
|
|
|
(5.8
|
)
|
|
—
|
|
|||
Deferred taxes
|
14.8
|
|
|
10.4
|
|
|
(8.8
|
)
|
|||
Pension and post-retirement expenses
|
0.5
|
|
|
1.4
|
|
|
0.8
|
|
|||
Restructuring and impairment expenses
|
12.5
|
|
|
—
|
|
|
12.7
|
|
|||
Stock-based compensation
|
8.7
|
|
|
11.9
|
|
|
10.0
|
|
|||
Excess tax benefits from stock-based compensation
|
(0.5
|
)
|
|
(1.4
|
)
|
|
(0.7
|
)
|
|||
Increase (decrease) in long-term liabilities
|
6.2
|
|
|
6.7
|
|
|
(1.2
|
)
|
|||
Changes in current assets and liabilities:
|
|
|
|
|
|
||||||
Decrease (Increase) in accounts receivable
|
17.3
|
|
|
(30.5
|
)
|
|
7.8
|
|
|||
Increase in inventories
|
(29.9
|
)
|
|
(6.0
|
)
|
|
(9.0
|
)
|
|||
Increase in prepaid expenses and other
|
(0.5
|
)
|
|
(11.7
|
)
|
|
(2.5
|
)
|
|||
(Decrease) increase in accounts payable
|
(11.2
|
)
|
|
8.7
|
|
|
1.1
|
|
|||
Increase in accrued liabilities
|
0.8
|
|
|
33.5
|
|
|
6.1
|
|
|||
Other
|
1.9
|
|
|
0.5
|
|
|
1.4
|
|
|||
Net Cash Provided by Operating Activities
|
202.1
|
|
|
210.4
|
|
|
167.7
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Net receipts from notes receivable
|
2.4
|
|
|
0.2
|
|
|
0.9
|
|
|||
Marketable securities purchases
|
(2.0
|
)
|
|
(7.8
|
)
|
|
—
|
|
|||
Marketable securities sales
|
0.9
|
|
|
6.1
|
|
|
5.3
|
|
|||
Capital expenditures
|
(87.3
|
)
|
|
(85.1
|
)
|
|
(63.6
|
)
|
|||
Proceeds from sales of property and dealers
|
—
|
|
|
10.7
|
|
|
0.6
|
|
|||
Payments of loans on cash surrender value of life insurance
|
(15.3
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisitions, net of cash received
|
—
|
|
|
(3.6
|
)
|
|
(154.0
|
)
|
|||
Equity investment in non-controlled entities
|
(13.1
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(1.9
|
)
|
|
(1.3
|
)
|
|
(2.8
|
)
|
|||
Net Cash Used for Investing Activities
|
(116.3
|
)
|
|
(80.8
|
)
|
|
(213.6
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(50.0
|
)
|
|||
Proceeds from credit facility
|
794.4
|
|
|
800.8
|
|
|
796.7
|
|
|||
Repayments of credit facility
|
(816.4
|
)
|
|
(868.8
|
)
|
|
(706.7
|
)
|
|||
Dividends paid
|
(39.4
|
)
|
|
(34.9
|
)
|
|
(33.3
|
)
|
|||
Common stock issued
|
11.7
|
|
|
9.2
|
|
|
7.8
|
|
|||
Common stock repurchased and retired
|
(23.7
|
)
|
|
(14.1
|
)
|
|
(3.7
|
)
|
|||
Excess tax benefits from stock-based compensation
|
0.5
|
|
|
1.4
|
|
|
0.7
|
|
|||
Payment of contingent consideration obligation
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of noncontrolling interests
|
(1.5
|
)
|
|
—
|
|
|
(5.8
|
)
|
|||
Other, net
|
1.8
|
|
|
(0.1
|
)
|
|
1.1
|
|
|||
Net Cash Provided by (Used for) Financing Activities
|
(74.6
|
)
|
|
(106.5
|
)
|
|
6.8
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
0.1
|
|
|
(1.9
|
)
|
|
1.3
|
|
|||
Net Increase (Decrease) in Cash and Cash Equivalents
|
11.3
|
|
|
21.2
|
|
|
(37.8
|
)
|
|||
Cash and cash equivalents, Beginning of Year
|
84.9
|
|
|
63.7
|
|
|
101.5
|
|
|||
Cash and Cash Equivalents, End of Year
|
$
|
96.2
|
|
|
$
|
84.9
|
|
|
$
|
63.7
|
|
|
|
|
|
|
|
||||||
Other Cash Flow Information
|
|
|
|
|
|
||||||
Interest paid
|
$
|
13.4
|
|
|
$
|
13.4
|
|
|
$
|
16.9
|
|
Income taxes paid, net of cash received
|
$
|
35.6
|
|
|
$
|
57.6
|
|
|
$
|
48.5
|
|
|
Page No.
|
|
|
||
|
Note 2 -
Acquisitions and Divestitures
|
|
|
Note 3 -
Inventories
|
|
|
||
|
Note 5 -
Long-Term Debt
|
|
|
Note 6 -
Operating Leases
|
|
|
Note 7 -
Employee Benefit Plans
|
|
|
||
|
Note 9 -
Stock-Based Compensation
|
|
|
Note 10 -
Income Taxes
|
|
|
Note 11 -
Fair Value of Financial Instruments
|
|
|
||
|
Note 13 -
Operating Segments
|
|
|
Note 14 -
Accumulated Other Comprehensive Loss
|
|
|
Note 15 -
Redeemable Noncontrolling Interests
|
|
|
Note 16 -
Restructuring and Impairment Activities
|
|
|
Note 17 -
Subsequent Event
|
|
|
Note 18 -
Quarterly Financial Data (Unaudited)
|
(In millions)
|
|
Goodwill
|
|
Indefinite-lived Intangible Assets
|
|
Total Goodwill and Indefinite-lived Intangible Assets
|
||||||
Balance, May 30, 2015
|
|
$
|
303.1
|
|
|
$
|
85.2
|
|
|
$
|
388.3
|
|
Foreign currency translation adjustments
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||
Acquisition of George Nelson Bubble Lamp product line
|
|
3.2
|
|
|
—
|
|
|
3.2
|
|
|||
Sale of owned dealer
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
|||
Balance, May 28, 2016
|
|
$
|
305.3
|
|
|
$
|
85.2
|
|
|
$
|
390.5
|
|
Foreign currency translation adjustments
|
|
(0.7
|
)
|
|
—
|
|
|
(0.7
|
)
|
|||
Sale of owned dealer
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||
Impairment charges
|
|
—
|
|
|
(7.1
|
)
|
|
(7.1
|
)
|
|||
Balance, June 03, 2017
|
|
$
|
304.5
|
|
|
$
|
78.1
|
|
|
$
|
382.6
|
|
|
June 3, 2017
|
||||||||||||||
(In millions)
|
Patent and Trademarks
|
|
Customer Relationships
|
|
Other
|
|
Total
|
||||||||
Gross carrying value
|
$
|
20.5
|
|
|
$
|
55.3
|
|
|
$
|
7.5
|
|
|
$
|
83.3
|
|
Accumulated amortization
|
13.3
|
|
|
19.7
|
|
|
4.9
|
|
|
37.9
|
|
||||
Net
|
$
|
7.2
|
|
|
$
|
35.6
|
|
|
$
|
2.6
|
|
|
$
|
45.4
|
|
|
|
|
|
|
|
|
|
||||||||
|
May 28, 2016
|
||||||||||||||
|
Patent and Trademarks
|
|
Customer Relationships
|
|
Other
|
|
Total
|
||||||||
Gross carrying value
|
$
|
19.8
|
|
|
$
|
55.7
|
|
|
$
|
7.5
|
|
|
$
|
83.0
|
|
Accumulated amortization
|
12.3
|
|
|
15.9
|
|
|
4.0
|
|
|
32.2
|
|
||||
Net
|
$
|
7.5
|
|
|
$
|
39.8
|
|
|
$
|
3.5
|
|
|
$
|
50.8
|
|
(In millions)
|
|
Retention Level (per occurrence)
|
||
General liability and auto liability/physical damage
|
|
$
|
1.00
|
|
Workers' compensation and property
|
|
$
|
0.75
|
|
•
|
Level 1 — Financial instruments with unadjusted, quoted prices listed on active market exchanges.
|
•
|
Level 2 — Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. Financial instrument values are determined using prices for recently traded financial instruments with similar underlying terms and direct or indirect observational inputs, such as interest rates and yield curves at commonly quoted intervals.
|
•
|
Level 3 — Financial instruments not actively traded on a market exchange and there is little, if any, market activity. Values are determined using significant unobservable inputs or valuation techniques.
|
Recently Issued Accounting Standards Not Yet Adopted
|
||||||
Standard
|
|
Description
|
|
Date of Adoption
|
|
Effect on the Financial Statements or Other Significant Matters
|
Simplifying the Measurement of Inventory
|
|
Under the updated standard, an entity should measure inventory that is measured using either the first-in, first-out ("FIFO") or average cost methods at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The updated standard should be applied prospectively.
|
|
June 4, 2017
|
|
The company has evaluated the impact of the update and its expected to be immaterial.
|
|
|
|
|
|
|
|
Improvements to Employee Share-Based Payment Accounting
|
|
The standard simplifies several aspects of the accounting for share-based payment awards to employees, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows. Different adoption methodologies exist (retrospectively, modified-retrospectively, or prospectively) for the various different features of the standard being updated.
|
|
June 4, 2017
|
|
The company expects the most significant impact from the share-based compensation standard to be driven by the treatment of excess tax benefits/deficiencies and expects the other impacts from the standard to be nominal. The company intends to adopt an entity-wide accounting policy election to account for forfeitures in compensation cost when they occur.
|
|
|
|
|
|
|
|
Recently Issued Accounting Standards Not Yet Adopted (continued)
|
||||||
Standard
|
|
Description
|
|
Date of Adoption
|
|
Effect on the Financial Statements or Other Significant Matters
|
|
|
|
|
|
|
|
Revenue from Contracts with Customers
|
|
The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The standard allows for two adoption methods, a full retrospective or modified retrospective approach.
|
|
June 3, 2018
|
|
The company has completed a preliminary review of the impact of the new standard and expects changes in how the company’s performance obligations around product and service revenue are accounted for. Additionally, the company expects changes in the way it recognizes certain pricing elements of its commercial contracts. These changes are not expected to be material to the financial statements. The company expects to adopt the standard in fiscal 2019 using the modified-retrospective approach.
|
|
|
|
|
|
|
|
Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities
|
|
The standard provides guidance for the measurement, presentation and disclosure of financial assets and liabilities. The standard requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any change in fair value in net income. The standard does not permit early adoption and at adoption a cumulative-effect adjustment to beginning retained earnings should be recorded.
|
|
June 3, 2018
|
|
The company is currently evaluating the impact of adopting this guidance.
|
|
|
|
|
|
|
|
Leases
|
|
Under the updated standard a lessee's rights and obligations under most leases, including existing and new arrangements, would be recognized as assets and liabilities, respectively, on the balance sheet. The standard must be adopted under a modified retrospective approach and early adoption is permitted.
|
|
June 2, 2019
|
|
The standard is expected to have a significant impact on our Consolidated Financial Statements, however the company is currently evaluating the impact.
|
(In millions)
|
|
June 3, 2017
|
|
May 28, 2016
|
||||
Finished goods and work in process
|
|
$
|
119.0
|
|
|
$
|
102.1
|
|
Raw materials
|
|
33.4
|
|
|
26.1
|
|
||
Total
|
|
$
|
152.4
|
|
|
$
|
128.2
|
|
(in millions)
|
June 3, 2017
|
May 28, 2016
|
||||
Investments in nonconsolidated affiliates
|
$
|
16.2
|
|
$
|
4.2
|
|
(in millions)
|
June 3, 2017
|
May 28, 2016
|
May 30, 2015
|
||||||
Equity earnings from nonconsolidated affiliates
|
$
|
1.6
|
|
$
|
0.4
|
|
$
|
0.1
|
|
Ownership Interest
|
June 3, 2017
|
May 28, 2016
|
Kvadrat Maharam Arabia DMCC
|
50.0%
|
50.0%
|
Kvadrat Maharam Pty Limited
|
50.0%
|
50.0%
|
Kvadrat Maharam Turkey JSC
|
50.0%
|
50.0%
|
Danskina B.V.
|
50.0%
|
50.0%
|
Naughtone Holdings Limited
|
50.0%
|
—%
|
(in millions)
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
|
|||
Sales to nonconsolidated affiliates
|
$
|
4.0
|
|
$
|
2.5
|
|
$
|
2.5
|
|
Purchases from nonconsolidated affiliates
|
$
|
4.2
|
|
$
|
0.9
|
|
$
|
0.5
|
|
(in millions)
|
June 3, 2017
|
May 28, 2016
|
||||
Receivables from nonconsolidated affiliates
|
$
|
0.8
|
|
$
|
0.4
|
|
Payables to nonconsolidated affiliates
|
$
|
0.5
|
|
$
|
0.1
|
|
(In millions)
|
June 3, 2017
|
|
May 28, 2016
|
||||
Series B Senior Notes, 6.42%, due January 3, 2018
|
$
|
149.9
|
|
|
$
|
149.9
|
|
Debt securities, 6.0%, due March 1, 2021
|
50.0
|
|
|
50.0
|
|
||
Syndicated Revolving Line of Credit, due September 2021
|
—
|
|
|
22.0
|
|
||
Total
|
$
|
199.9
|
|
|
$
|
221.9
|
|
Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income:
|
|||||||||||||||||||||||
|
Pension Benefits
|
|
Post-Retirement Benefits
|
||||||||||||||||||||
(In millions)
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest cost
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Net periodic benefit cost
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
International:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest cost
|
$
|
2.7
|
|
|
$
|
3.8
|
|
|
$
|
4.3
|
|
|
|
|
|
|
|
||||||
Expected return on plan assets
|
(4.7
|
)
|
|
(5.4
|
)
|
|
(5.5
|
)
|
|
|
|
|
|
|
|||||||||
Net amortization
|
2.2
|
|
|
2.8
|
|
|
1.8
|
|
|
|
|
|
|
|
|||||||||
Net periodic benefit cost
|
$
|
0.2
|
|
|
$
|
1.2
|
|
|
$
|
0.6
|
|
|
|
|
|
|
|
The weighted-average used in the determination of net periodic benefit cost:
|
|||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(Percentages)
|
Domestic
|
|
International
|
|
Domestic
|
|
International
|
|
Domestic
|
|
International
|
Discount rate
|
3.51
|
|
3.43
|
|
3.41
|
|
3.50
|
|
3.44
|
|
4.40
|
Compensation increase rate
|
n/a
|
|
2.95
|
|
n/a
|
|
3.20
|
|
n/a
|
|
3.35
|
Expected return on plan assets
|
n/a
|
|
6.10
|
|
n/a
|
|
6.10
|
|
n/a
|
|
6.10
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average used in the determination of the projected benefit obligations:
|
|||||||||||
Discount rate
|
3.53
|
|
2.49
|
|
3.51
|
|
3.43
|
|
3.41
|
|
3.50
|
Compensation increase rate
|
n/a
|
|
3.25
|
|
n/a
|
|
2.95
|
|
n/a
|
|
3.20
|
(In millions)
|
1 Percent Increase
|
|
1 Percent Decrease
|
||||
Effect on total fiscal 2017 service and interest cost components
|
$
|
—
|
|
|
$
|
—
|
|
Effect on post-retirement benefit obligation at June 3, 2017
|
$
|
0.2
|
|
|
$
|
(0.2
|
)
|
Asset Category
|
|
Targeted Asset Allocation Percentage
|
|
Percentage of Plan Assets at Year End
|
||||||||
|
|
2017
|
|
2016
|
||||||||
Fixed income
|
|
20
|
|
27
|
|
|
24
|
|
||||
Common collective trusts
|
|
80
|
|
73
|
|
|
76
|
|
||||
Total
|
|
|
|
100
|
|
|
100
|
|
||||
|
|
|
|
|
|
|
||||||
(In millions)
|
|
International Plan as of June 3, 2017
|
||||||||||
Asset Category
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash and cash equivalents
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
Foreign government obligations
|
|
—
|
|
|
21.4
|
|
|
21.4
|
|
|||
Common collective trusts-balanced
|
|
—
|
|
|
58.9
|
|
|
58.9
|
|
|||
Total
|
|
$
|
0.2
|
|
|
$
|
80.3
|
|
|
$
|
80.5
|
|
|
|
|
|
|
|
|
||||||
(In millions)
|
|
International Plan as of May 28, 2016
|
||||||||||
Asset Category
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash and cash equivalents
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
Foreign government obligations
|
|
—
|
|
|
20.5
|
|
|
20.5
|
|
|||
Common collective trusts-balanced
|
|
—
|
|
|
64.3
|
|
|
64.3
|
|
|||
Total
|
|
$
|
0.2
|
|
|
$
|
84.8
|
|
|
$
|
85.0
|
|
(In millions)
|
Pension Benefits Domestic
|
|
Pension Benefits International
|
|
Post-Retirement Benefits
|
||||||
2018
|
$
|
0.1
|
|
|
$
|
1.7
|
|
|
$
|
0.7
|
|
2019
|
$
|
0.1
|
|
|
$
|
2.1
|
|
|
$
|
0.6
|
|
2020
|
$
|
0.1
|
|
|
$
|
2.1
|
|
|
$
|
0.6
|
|
2021
|
$
|
0.1
|
|
|
$
|
2.1
|
|
|
$
|
0.5
|
|
2022
|
$
|
0.1
|
|
|
$
|
2.6
|
|
|
$
|
0.5
|
|
2023-2027
|
$
|
0.3
|
|
|
$
|
15.5
|
|
|
$
|
1.7
|
|
(In millions, except shares)
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Numerator for both basic and diluted EPS, Net earnings attributable to Herman Miller, Inc.
|
$
|
123.9
|
|
|
$
|
136.7
|
|
|
$
|
97.5
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Denominator for basic EPS, weighted-average common shares outstanding
|
59,871,805
|
|
|
59,844,540
|
|
|
59,475,297
|
|
|||
Potentially dilutive shares resulting from stock plans
|
682,784
|
|
|
684,729
|
|
|
649,069
|
|
|||
Denominator for diluted EPS
|
60,554,589
|
|
|
60,529,269
|
|
|
60,124,366
|
|
(In millions)
|
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Employee stock purchase program
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Stock option plans
|
|
2.0
|
|
|
1.9
|
|
|
2.6
|
|
|||
Restricted stock grants
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Restricted stock units
|
|
3.6
|
|
|
3.2
|
|
|
3.7
|
|
|||
Performance share units
|
|
2.8
|
|
|
6.5
|
|
|
3.3
|
|
|||
Total
|
|
$
|
8.7
|
|
|
$
|
11.9
|
|
|
$
|
10.0
|
|
|
|
|
|
|
|
|
||||||
Tax benefit
|
|
$
|
3.1
|
|
|
$
|
4.3
|
|
|
$
|
3.6
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Risk-free interest rates
(1)
|
1.01
|
%
|
|
1.51
|
%
|
|
1.46
|
%
|
|||
Expected term of options
(2)
|
4.0 years
|
|
|
4.0 years
|
|
|
4.0 years
|
|
|||
Expected volatility
(3)
|
26
|
%
|
|
33
|
%
|
|
36
|
%
|
|||
Dividend yield
(4)
|
2.13
|
%
|
|
2.03
|
%
|
|
1.85
|
%
|
|||
Weighted-average grant-date fair value of stock options:
|
|
|
|
|
|
||||||
Granted with exercise prices equal to the fair market value of the stock on the date of grant
|
$
|
5.50
|
|
|
$
|
6.73
|
|
|
$
|
7.74
|
|
|
|
Shares Under Option
|
|
Weighted-Average Exercise Prices
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(In millions)
|
|||||
Outstanding at May 28, 2016
|
|
921,380
|
|
|
$
|
25.80
|
|
|
4.20
|
|
$
|
5.5
|
|
Granted at market
|
|
745,141
|
|
|
$
|
31.86
|
|
|
|
|
|
||
Exercised
|
|
(327,299
|
)
|
|
$
|
28.84
|
|
|
|
|
|
||
Forfeited or expired
|
|
(9,520
|
)
|
|
$
|
38.11
|
|
|
|
|
|
||
Outstanding at June 3, 2017
|
|
1,329,702
|
|
|
$
|
28.36
|
|
|
7.26
|
|
$
|
5.8
|
|
Ending vested + expected to vest
|
|
1,325,647
|
|
|
$
|
28.35
|
|
|
7.25
|
|
$
|
5.8
|
|
Exercisable at end of period
|
|
498,522
|
|
|
$
|
22.95
|
|
|
4.37
|
|
$
|
4.9
|
|
|
|
2017
|
|||||
|
|
Shares
|
|
Weighted Average Grant-Date Fair Value
|
|||
Outstanding at May 28, 2016
|
|
20,823
|
|
|
$
|
21.35
|
|
Vested
|
|
(20,323
|
)
|
|
$
|
21.38
|
|
Forfeited
|
|
(500
|
)
|
|
$
|
20.17
|
|
Outstanding at June 3, 2017
|
|
—
|
|
|
$
|
—
|
|
|
Share
Units
|
|
Weighted Average
Grant-Date
Fair Value
|
|
Aggregate Intrinsic Value in Millions
|
|
Weighted-Average
Remaining Contractual
Term (Years)
|
|||||
Outstanding at May 28, 2016
|
377,861
|
|
|
$
|
27.83
|
|
|
$
|
12.0
|
|
|
1.40
|
Granted
|
114,778
|
|
|
$
|
31.83
|
|
|
|
|
|
||
Forfeited
|
(12,951
|
)
|
|
$
|
29.25
|
|
|
|
|
|
||
Released
|
(94,736
|
)
|
|
$
|
28.70
|
|
|
|
|
|
||
Outstanding at June 3, 2017
|
384,952
|
|
|
$
|
28.73
|
|
|
$
|
12.6
|
|
|
1.14
|
Ending vested + expected to vest
|
379,037
|
|
|
29.30
|
|
|
$
|
12.4
|
|
|
1.13
|
|
Share
Units
|
|
Weighted Average Grant-Date Fair Value
|
|
Aggregate Intrinsic
Value in Millions
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|||||
Outstanding at May 28, 2016
|
433,714
|
|
|
$
|
31.74
|
|
|
$
|
13.7
|
|
|
1.20
|
Granted
|
141,218
|
|
|
$
|
29.40
|
|
|
|
|
|
||
Forfeited
|
(43,945
|
)
|
|
$
|
35.75
|
|
|
|
|
|
||
Released
|
(113,040
|
)
|
|
$
|
29.34
|
|
|
|
|
|
||
Outstanding at June 3, 2017
|
417,947
|
|
|
$
|
31.18
|
|
|
$
|
13.7
|
|
|
1.03
|
Ending vested + expected to vest
|
413,358
|
|
|
$
|
31.23
|
|
|
$
|
13.5
|
|
|
1.03
|
|
|
2017
|
|
2016
|
|||
Risk-free interest rates
(1)
|
|
1.29
|
%
|
|
1.07
|
%
|
|
Expected term of options
(2)
|
|
2.1 years
|
|
|
3.1 years
|
|
|
Expected volatility
(3)
|
|
35
|
%
|
|
35
|
%
|
|
Dividend yield
|
|
not applicable
|
|
|
not applicable
|
|
|
Strike price
|
|
$
|
24.39
|
|
|
24.39
|
|
Per share value
(4)
|
|
$
|
3.24
|
|
|
6.52
|
|
|
|
Shares Under Option
|
|
Weighted-Average Exercise Prices
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (In millions)
|
|||||
Outstanding at May 28, 2016
|
|
500,376
|
|
|
$
|
24.07
|
|
|
3.20
|
|
$
|
0.4
|
|
Granted
|
|
40,425
|
|
|
$
|
24.63
|
|
|
|
|
|
||
Exercised
|
|
(2,957
|
)
|
|
$
|
6.40
|
|
|
|
|
|
||
Forfeited
|
|
(11,600
|
)
|
|
$
|
24.39
|
|
|
|
|
|
||
Outstanding at June 3, 2017
|
|
526,244
|
|
|
$
|
24.20
|
|
|
2.20
|
|
$
|
0.1
|
|
Exercisable at end of period
|
|
46,758
|
|
|
$
|
22.30
|
|
|
2.20
|
|
$
|
0.1
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Shares of common stock
|
|
9,982
|
|
|
21,988
|
|
|
13,752
|
|
Shares through the deferred compensation program
|
|
2,582
|
|
|
3,118
|
|
|
—
|
|
(In millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
$
|
131.4
|
|
|
$
|
154.9
|
|
|
$
|
142.5
|
|
Foreign
|
46.2
|
|
|
41.7
|
|
|
2.7
|
|
|||
Total
|
$
|
177.6
|
|
|
$
|
196.6
|
|
|
$
|
145.2
|
|
(In millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Current: Domestic - Federal
|
$
|
28.7
|
|
|
$
|
36.4
|
|
|
$
|
43.6
|
|
Domestic - State
|
2.3
|
|
|
6.4
|
|
|
6.3
|
|
|||
Foreign
|
11.1
|
|
|
6.3
|
|
|
6.1
|
|
|||
|
42.1
|
|
|
49.1
|
|
|
56.0
|
|
|||
Deferred: Domestic - Federal
|
9.2
|
|
|
7.5
|
|
|
(5.9
|
)
|
|||
Domestic - State
|
2.8
|
|
|
0.2
|
|
|
(0.6
|
)
|
|||
Foreign
|
1.0
|
|
|
2.7
|
|
|
(2.3
|
)
|
|||
|
13.0
|
|
|
10.4
|
|
|
(8.8
|
)
|
|||
Total income tax provision
|
$
|
55.1
|
|
|
$
|
59.5
|
|
|
$
|
47.2
|
|
(In millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income taxes computed at the United States Statutory rate of 35%
|
|
$
|
62.2
|
|
|
$
|
68.8
|
|
|
$
|
50.8
|
|
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
|
||||||
Foreign statutory rate differences
|
|
(5.7
|
)
|
|
(4.3
|
)
|
|
(1.0
|
)
|
|||
Manufacturing deduction under the American Jobs Creation Act of 2004
|
|
(3.4
|
)
|
|
(4.8
|
)
|
|
(4.8
|
)
|
|||
State taxes
|
|
3.8
|
|
|
5.2
|
|
|
4.2
|
|
|||
Tax on undistributed foreign earnings
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|||
United Kingdom patent box deduction for research and development
|
|
(2.6
|
)
|
|
(1.7
|
)
|
|
(0.3
|
)
|
|||
Sale of manufacturing facility in the United Kingdom
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|||
Other, net
|
|
0.8
|
|
|
(2.1
|
)
|
|
2.2
|
|
|||
Income tax expense
|
|
$
|
55.1
|
|
|
$
|
59.5
|
|
|
$
|
47.2
|
|
Effective tax rate
|
|
31.1
|
%
|
|
30.3
|
%
|
|
32.6
|
%
|
(In millions)
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Compensation-related accruals
|
|
$
|
22.7
|
|
|
$
|
23.2
|
|
Accrued pension and post-retirement benefit obligations
|
|
10.9
|
|
|
9.2
|
|
||
Deferred revenue
|
|
5.3
|
|
|
5.6
|
|
||
Inventory related
|
|
4.1
|
|
|
3.8
|
|
||
Reserves for uncollectible accounts and notes receivable
|
|
1.0
|
|
|
1.2
|
|
||
Other reserves and accruals
|
|
6.1
|
|
|
3.0
|
|
||
Warranty
|
|
17.0
|
|
|
15.7
|
|
||
State and local tax net operating loss carryforwards and credits
|
|
2.7
|
|
|
5.7
|
|
||
Federal net operating loss carryforward
|
|
5.0
|
|
|
7.1
|
|
||
Foreign tax net operating loss carryforwards and credits
|
|
10.0
|
|
|
14.6
|
|
||
Accrued step rent and tenant reimbursements
|
|
4.7
|
|
|
1.9
|
|
||
Other
|
|
4.2
|
|
|
2.8
|
|
||
Subtotal
|
|
93.7
|
|
|
93.8
|
|
||
Valuation allowance
|
|
(10.0
|
)
|
|
(10.6
|
)
|
||
Total
|
|
$
|
83.7
|
|
|
$
|
83.2
|
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Book basis in property in excess of tax basis
|
|
$
|
(37.4
|
)
|
|
$
|
(24.8
|
)
|
Intangible assets
|
|
(47.3
|
)
|
|
(47.4
|
)
|
||
Other
|
|
(3.2
|
)
|
|
(2.2
|
)
|
||
Total
|
|
$
|
(87.9
|
)
|
|
$
|
(74.4
|
)
|
(In millions)
|
|
|
||
Balance at May 30, 2015
|
|
$
|
1.8
|
|
Increases related to current year income tax positions
|
|
0.4
|
|
|
Increases related to prior year income tax positions
|
|
0.1
|
|
|
Decreases related to prior year income tax positions
|
|
(0.1
|
)
|
|
Decreases related to lapse of applicable statute of limitations
|
|
(0.1
|
)
|
|
Decreases related to settlements
|
|
(0.4
|
)
|
|
Balance at May 28, 2016
|
|
1.7
|
|
|
Increases related to current year income tax positions
|
|
0.3
|
|
|
Increases related to prior year income tax positions
|
|
1.1
|
|
|
Decreases related to prior year income tax positions
|
|
(0.1
|
)
|
|
Decreases related to lapse of applicable statute of limitations
|
|
(0.1
|
)
|
|
Decreases related to settlements
|
|
(0.1
|
)
|
|
Balance at June 3, 2017
|
|
$
|
2.8
|
|
(In millions)
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Interest and penalty expense (income)
|
$
|
0.2
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.4
|
|
|
|
|
|
|
|
||||||
Liability for interest and penalties
|
$
|
0.8
|
|
|
$
|
0.7
|
|
|
|
(In millions)
|
|
June 3, 2017
|
|
May 28, 2016
|
||||
Carrying value
|
|
$
|
199.9
|
|
|
$
|
221.9
|
|
Fair value
|
|
$
|
213.0
|
|
|
$
|
241.7
|
|
(In millions)
|
Fair Value Measurements
|
||||||||||||
|
June 3, 2017
|
|
May 28, 2016
|
||||||||||
Financial Assets
|
Quoted Prices With Other Observable Inputs (Level 2)
|
Management Estimates (Level 3)
|
|
Quoted Prices With Other Observable Inputs (Level 2)
|
Management Estimates (Level 3)
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
||||||||
Mutual funds - fixed income
|
$
|
7.7
|
|
$
|
—
|
|
|
$
|
6.4
|
|
$
|
—
|
|
Mutual funds - equity
|
0.9
|
|
—
|
|
|
0.7
|
|
—
|
|
||||
Government obligations
|
—
|
|
—
|
|
|
0.4
|
|
—
|
|
||||
Foreign currency forward contracts
|
0.5
|
|
—
|
|
|
0.5
|
|
—
|
|
||||
Interest rate swap agreement
|
3.3
|
|
—
|
|
|
—
|
|
—
|
|
||||
Deferred compensation plan
|
12.8
|
|
—
|
|
|
7.9
|
|
—
|
|
||||
Total
|
$
|
25.2
|
|
$
|
—
|
|
|
$
|
15.9
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
0.6
|
|
$
|
—
|
|
|
$
|
0.8
|
|
$
|
—
|
|
Contingent consideration
|
—
|
|
0.5
|
|
|
—
|
|
2.7
|
|
||||
Total
|
$
|
0.6
|
|
$
|
0.5
|
|
|
$
|
0.8
|
|
$
|
2.7
|
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||||||||||||||||||||||||
(In millions)
|
Cost
|
|
Unrealized Gain
|
|
Unrealized Loss
|
|
Market Value
|
|
Cost
|
|
Unrealized Gain
|
|
Unrealized Loss
|
|
Market Value
|
||||||||||||||||
Mutual funds - fixed income
|
$
|
7.6
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
7.7
|
|
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
Mutual funds - equity
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||||
Government obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||||
Total
|
$
|
8.5
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
8.6
|
|
|
$
|
7.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7.5
|
|
(In millions)
|
Balance Sheet Location
|
|
June 3, 2017
|
|
May 28, 2016
|
||||
Designated derivatives:
|
|
|
|
|
|
||||
Interest rate swap
|
Long-term assets: Other assets
|
|
$
|
3.3
|
|
|
$
|
—
|
|
Non-designated derivatives:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Current assets: Other
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
Foreign currency forward contracts
|
Current liabilities: Other accrued liabilities
|
|
$
|
0.6
|
|
|
$
|
0.8
|
|
(In millions)
|
|
|
Fiscal Year
|
||||||||||
|
Statement of Comprehensive Income Location
|
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Gain recognized on foreign currency forward contracts
|
Other expenses (income): Other, net
|
|
$
|
(1.2
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(2.1
|
)
|
(In millions)
|
|
Fiscal Year
|
||||||||||
|
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Interest rate swap
|
|
$
|
2.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Accrual balance, beginning
|
|
$
|
43.9
|
|
|
$
|
39.3
|
|
|
$
|
37.7
|
|
Accrual for warranty matters
|
|
22.8
|
|
|
25.5
|
|
|
25.0
|
|
|||
Settlements
|
|
(19.0
|
)
|
|
(20.9
|
)
|
|
(23.4
|
)
|
|||
Accrual balance, ending
|
|
$
|
47.7
|
|
|
$
|
43.9
|
|
|
$
|
39.3
|
|
(In millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
Net Sales:
|
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
|
$
|
1,342.2
|
|
|
$
|
1,331.8
|
|
|
$
|
1,241.9
|
|
ELA Furniture Solutions
|
|
385.5
|
|
|
412.6
|
|
|
409.9
|
|
|||
Specialty
|
|
232.4
|
|
|
231.8
|
|
|
219.9
|
|
|||
Consumer
|
|
318.1
|
|
|
288.7
|
|
|
270.5
|
|
|||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
$
|
2,142.2
|
|
|
|
|
|
|
|
|
||||||
Depreciation and Amortization:
|
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
|
$
|
32.0
|
|
|
$
|
27.9
|
|
|
$
|
26.5
|
|
ELA Furniture Solutions
|
|
8.8
|
|
|
8.5
|
|
|
8.2
|
|
|||
Specialty
|
|
7.5
|
|
|
7.4
|
|
|
7.4
|
|
|||
Consumer
|
|
10.2
|
|
|
8.6
|
|
|
7.3
|
|
|||
Corporate
|
|
0.4
|
|
|
0.6
|
|
|
0.4
|
|
|||
Total
|
|
$
|
58.9
|
|
|
$
|
53.0
|
|
|
$
|
49.8
|
|
|
|
|
|
|
|
|
||||||
Operating Earnings (Losses):
|
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
|
$
|
137.7
|
|
|
$
|
152.0
|
|
|
$
|
125.2
|
|
ELA Furniture Solutions
|
|
30.8
|
|
|
35.3
|
|
|
25.9
|
|
|||
Specialty
|
|
17.7
|
|
|
16.4
|
|
|
13.5
|
|
|||
Consumer
|
|
5.3
|
|
|
8.1
|
|
|
14.7
|
|
|||
Corporate
|
|
(0.7
|
)
|
|
(0.3
|
)
|
|
(15.9
|
)
|
|||
Total
|
|
$
|
190.8
|
|
|
$
|
211.5
|
|
|
$
|
163.4
|
|
|
|
|
|
|
|
|
||||||
Capital Expenditures:
|
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
|
$
|
47.1
|
|
|
$
|
56.8
|
|
|
$
|
31.7
|
|
ELA Furniture Solutions
|
|
8.5
|
|
|
15.0
|
|
|
20.3
|
|
|||
Specialty
|
|
9.7
|
|
|
3.1
|
|
|
3.7
|
|
|||
Consumer
|
|
22.0
|
|
|
10.2
|
|
|
7.9
|
|
|||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
$
|
87.3
|
|
|
$
|
85.1
|
|
|
$
|
63.6
|
|
|
|
|
|
|
|
|
||||||
Total Assets:
|
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
|
$
|
533.6
|
|
|
$
|
531.7
|
|
|
$
|
504.5
|
|
ELA Furniture Solutions
|
|
230.3
|
|
|
218.4
|
|
|
235.4
|
|
|||
Specialty
|
|
157.9
|
|
|
147.3
|
|
|
151.6
|
|
|||
Consumer
|
|
276.4
|
|
|
245.3
|
|
|
231.8
|
|
|||
Corporate
|
|
108.1
|
|
|
92.5
|
|
|
69.4
|
|
|||
Total
|
|
$
|
1,306.3
|
|
|
$
|
1,235.2
|
|
|
$
|
1,192.7
|
|
|
|
|
|
|
|
|
||||||
Goodwill:
|
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
|
$
|
135.8
|
|
|
$
|
135.8
|
|
|
$
|
135.8
|
|
ELA Furniture Solutions
|
|
40.1
|
|
|
40.9
|
|
|
41.9
|
|
|||
Specialty
|
|
49.8
|
|
|
49.8
|
|
|
49.8
|
|
|||
Consumer
|
|
78.8
|
|
|
78.8
|
|
|
75.6
|
|
|||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
$
|
304.5
|
|
|
$
|
305.3
|
|
|
$
|
303.1
|
|
(In millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net Sales:
|
|
|
|
|
|
|
||||||
Systems
|
|
$
|
639.0
|
|
|
$
|
656.8
|
|
|
$
|
563.4
|
|
Seating
|
|
894.8
|
|
|
855.5
|
|
|
805.5
|
|
|||
Freestanding and storage
|
|
428.8
|
|
|
456.9
|
|
|
484.1
|
|
|||
Other
(1)
|
|
315.6
|
|
|
295.7
|
|
|
289.2
|
|
|||
Total
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
$
|
2,142.2
|
|
(In millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net Sales:
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
1,690.1
|
|
|
$
|
1,757.0
|
|
|
$
|
1,640.6
|
|
International
|
|
588.1
|
|
|
507.9
|
|
|
501.6
|
|
|||
Total
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
$
|
2,142.2
|
|
(In millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Long-lived assets:
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
328.6
|
|
|
$
|
254.8
|
|
|
$
|
224.2
|
|
International
|
|
45.3
|
|
|
48.1
|
|
|
53.8
|
|
|||
Total
|
|
$
|
373.9
|
|
|
$
|
302.9
|
|
|
$
|
278.0
|
|
|
Year Ended
|
||||||||||
(In millions)
|
June 3, 2017
|
|
May 28, 2016
|
|
May 30, 2015
|
||||||
Cumulative translation adjustments at beginning of period
|
$
|
(29.6
|
)
|
|
$
|
(20.8
|
)
|
|
$
|
(11.1
|
)
|
Translation adjustments (net of tax of $ - , ($0.3) and $0.3)
|
(7.2
|
)
|
|
(8.8
|
)
|
|
(9.7
|
)
|
|||
Balance at end of period
|
(36.8
|
)
|
|
(29.6
|
)
|
|
(20.8
|
)
|
|||
Pension and other post-retirement benefit plans at beginning of period
|
(34.9
|
)
|
|
(35.4
|
)
|
|
(26.8
|
)
|
|||
Adjustments to pension and other post-retirement benefit plans (net of tax of $3.7, ($0.7) and $2.6)
|
(14.5
|
)
|
|
(2.0
|
)
|
|
(10.0
|
)
|
|||
Reclassification to earnings - operating expenses (net of tax of ($0.4), ($0.7) and ($0.4))
|
1.8
|
|
|
2.5
|
|
|
1.4
|
|
|||
Balance at end of period
|
(47.6
|
)
|
|
(34.9
|
)
|
|
(35.4
|
)
|
|||
Interest rate swap agreement at beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Valuation adjustments (net of tax of ($1.2), $ - and $ -)
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of period
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
Available-for-sale Securities at beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Unrealized holding gain (net of tax of $ - , $ - and $ -)
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of period
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Total accumulated other comprehensive loss
|
$
|
(82.2
|
)
|
|
$
|
(64.5
|
)
|
|
$
|
(56.2
|
)
|
|
|
Year Ended
|
||||||
(In millions)
|
|
June 3, 2017
|
|
May 28, 2016
|
||||
Balance at beginning of period
|
|
$
|
27.0
|
|
|
$
|
30.4
|
|
Purchase of redeemable noncontrolling interests
|
|
(1.5
|
)
|
|
—
|
|
||
Net income attributable to redeemable noncontrolling interests
|
|
0.2
|
|
|
0.5
|
|
||
Redemption value adjustment
|
|
(1.2
|
)
|
|
(4.0
|
)
|
||
Other adjustments
|
|
0.1
|
|
|
0.1
|
|
||
Balance at end of period
|
|
$
|
24.6
|
|
|
$
|
27.0
|
|
|
|
Year Ended
|
||
(In millions)
|
|
June 3, 2017
|
||
Beginning Balance
|
|
$
|
0.4
|
|
Restructuring expenses
|
|
5.4
|
|
|
Payments
|
|
(3.4
|
)
|
|
Ending Balance
|
|
$
|
2.4
|
|
(In millions, except per share data)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|||||||||
2017
|
Net sales
|
$
|
598.6
|
|
|
$
|
577.5
|
|
|
$
|
524.9
|
|
|
$
|
577.2
|
|
|
Gross margin
(1)
|
230.0
|
|
|
218.0
|
|
|
195.5
|
|
|
220.9
|
|
||||
|
Net earnings attributable to Herman Miller, Inc.
|
36.3
|
|
|
31.7
|
|
|
22.5
|
|
|
33.4
|
|
||||
|
Earnings per share-basic
(1)
|
0.61
|
|
|
0.53
|
|
|
0.38
|
|
|
0.56
|
|
||||
|
Earnings per share-diluted
|
0.60
|
|
|
0.53
|
|
|
0.37
|
|
|
0.55
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
2016
|
Net sales
|
$
|
565.4
|
|
|
$
|
580.4
|
|
|
$
|
536.5
|
|
|
$
|
582.6
|
|
|
Gross Margin
|
216.8
|
|
|
224.4
|
|
|
207.8
|
|
|
225.2
|
|
||||
|
Net earnings attributable to Herman Miller, Inc.
(1)
|
33.5
|
|
|
34.7
|
|
|
27.9
|
|
|
40.7
|
|
||||
|
Earnings per share-basic
|
0.56
|
|
|
0.58
|
|
|
0.46
|
|
|
0.68
|
|
||||
|
Earnings per share-diluted
|
0.56
|
|
|
0.57
|
|
|
0.46
|
|
|
0.67
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
2015
|
Net sales
|
$
|
509.7
|
|
|
$
|
565.4
|
|
|
$
|
516.4
|
|
|
$
|
550.7
|
|
|
Gross margin
|
185.6
|
|
|
205.7
|
|
|
190.5
|
|
|
209.6
|
|
||||
|
Net earnings attributable to Herman Miller, Inc.
(1)
|
25.2
|
|
|
27.8
|
|
|
21.0
|
|
|
23.4
|
|
||||
|
Earnings per share-basic
|
0.43
|
|
|
0.47
|
|
|
0.35
|
|
|
0.39
|
|
||||
|
Earnings per share-diluted
|
0.42
|
|
|
0.46
|
|
|
0.35
|
|
|
0.39
|
|
(a)
|
Disclosure Controls and Procedures.
Under the supervision and with the participation of management, the company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 3, 2017 and have concluded that as of that date, the company's disclosure controls and procedures were effective.
|
(b)
|
Management's Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Independent Registered Public Accounting Firm.
Refer to Item 8 for “Management's Report on Internal Control Over Financial Reporting.” The effectiveness of the company's internal control over financial reporting has been audited by Ernst and Young LLP, an independent registered accounting firm, as stated in its report included in Item 8.
|
(c)
|
Changes in Internal Control Over Financial Reporting.
There were no changes in the company's internal control over financial reporting during the fourth quarter ended June 3, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
HERMAN MILLER, INC.
|
|
|
|
|
||
|
/s/ Jeffrey M. Stutz
|
|
|
|
|
|
By
|
Jeffrey M. Stutz
Chief Financial Officer (Principal Accounting Officer and Duly Authorized Signatory for Registrant) |
|
|
|
|
|
|
/s/ Michael A. Volkema
|
|
/s/ Lisa Kro
|
|
|
Michael A. Volkema
(Chairman of the Board)
|
|
Lisa Kro
(Director)
|
|
|
|
|
|
|
|
/s/ David O. Ulrich
|
|
/s/ Mary Vermeer Andringa
|
|
|
David O. Ulrich
(Director)
|
|
Mary Vermeer Andringa
(Director)
|
|
|
|
|
|
|
|
/s/ Dorothy A. Terrell
|
|
/s/ John R. Hoke III
|
|
|
Dorothy A. Terrell
(Director)
|
|
John R. Hoke III
(Director)
|
|
|
|
|
|
|
|
/s/ David A. Brandon
|
|
/s/ J. Barry Griswell
|
|
|
David A. Brandon
(Director)
|
|
J. Barry Griswell
(Director)
|
|
|
|
|
|
|
|
/s/ Douglas D. French
|
|
/s/ Brian C. Walker
|
|
|
Douglas D. French
(Director)
|
|
Brian C. Walker
(President, Chief Executive Officer, and Director)
|
|
|
|
|
|
|
|
/s/ Heidi Manheimer
|
|
/s/ Jeffrey M. Stutz
|
|
|
Heidi Manheimer
(Director) |
|
Jeffrey M. Stutz
(Chief Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Brenda Freeman
|
|
|
|
|
Brenda Freeman (Director)
|
|
|
|
Column A
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
||||||||
Description
|
Balance at beginning of period
|
|
Charges to expenses or net sales
|
|
Deductions
(3)
|
|
Balance at end of period
|
||||||||
Year ended June 3, 2017:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — uncollectible accounts
(1)
|
$
|
3.4
|
|
|
$
|
—
|
|
|
$
|
(1.1
|
)
|
|
$
|
2.3
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — credit memo
(2)
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
|
|
|
|
|
|
|
||||||||
Allowance for possible losses on notes receivable
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
|
|
|
|
|
|
|
||||||||
Valuation allowance for deferred tax asset
|
$
|
10.6
|
|
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
|
$
|
10.0
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended May 28, 2016:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — uncollectible accounts
(1)
|
$
|
2.4
|
|
|
$
|
2.3
|
|
|
$
|
(1.3
|
)
|
|
$
|
3.4
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — credit memo
(2)
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
|
|
|
|
|
|
|
||||||||
Allowance for possible losses on notes receivable
|
$
|
1.0
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
|
|
|
|
|
|
|
||||||||
Valuation allowance for deferred tax asset
|
$
|
11.1
|
|
|
$
|
(1.5
|
)
|
|
$
|
1.0
|
|
|
$
|
10.6
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended May 30, 2015:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — uncollectible accounts
(1)
|
$
|
3.4
|
|
|
$
|
0.9
|
|
|
$
|
(1.9
|
)
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — credit memo
(2)
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.4
|
|
|
|
|
|
|
|
|
|
||||||||
Allowance for possible losses on notes receivable
|
$
|
0.1
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
||||||||
Valuation allowance for deferred tax asset
|
$
|
8.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
3.2
|
|
|
$
|
11.1
|
|
|
(3)
|
Articles of Incorporation and Bylaws
|
|
|
|
|
|
|
|
(a)
|
Restated Articles of Incorporation, dated October 4, 2013, is incorporated by reference from Exhibit 3(a) of Registrant's 2014 Form 10-K Annual Report (Commission File No. 001-15141).
|
|
|
|
|
|
|
(b)
|
Amended and Restated Bylaws, dated July 13, 2015, is incorporated by reference from Exhibit 3 of the Registrant's Form 8-K dated July 17, 2015 (Commission File No. 001-15141).
.
|
|
(4)
|
Instruments Defining the Rights of Security Holders
|
|
|
|
|
|
|
|
(a)
|
Specimen copy of Herman Miller, Inc., common stock is incorporated by reference from Exhibit 4(a) of Registrant's 1981 Form 10-K Annual Report (Commission File No. 001-15141).
.
|
|
|
|
|
|
|
(b)
|
Other instruments which define the rights of holders of long-term debt individually represent debt of less than 10% of total assets. In accordance with item 601(b)(4)(iii)(A) of regulation S-K, the Registrant agrees to furnish to the Commission copies of such agreements upon request.
|
|
|
|
|
|
|
(c)
|
Dividend Reinvestment Plan for Shareholders of Herman Miller, Inc., dated January 6, 1997, is incorporated by reference from Exhibit 4(d) of the Registrant's 1997 Form 10-K Annual Report (Commission File No. 000-05813).
|
|
|
|
|
|
|
(d)
|
Third Amended and Restated Credit agreement dated as of July 21, 2014 among Herman Miller, Inc. and various lenders is incorporated by reference from Exhibit 10.1 of the Registrant's Current Report on Form 8-K dated July 22, 2014 (Commission File No. 001-15141).
|
|
(10)
|
Material Contracts
|
|
|
(a)
|
Herman Miller, Inc. 2011 Long-Term Incentive Plan is incorporated by reference from Appendix I of the Registrant's Definitive Proxy Statement dated August 26, 2014, as amended, filed with the Commission as of August 26, 2014 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(b)
|
Herman Miller, Inc. Nonemployee Officer and Director Deferred Compensation Plan is incorporated by reference to Exhibit 10(b) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(c)
|
Form of Change in Control Agreement of the Registrant and James E. Christenson.
|
|
|
(d)
|
Herman Miller, Inc. Executive Equalization Retirement Plan is incorporated by reference from Exhibit 10 (d) of the Registrant's Form 10-K dated July 28, 2015 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(e)
|
Herman Miller, Inc. Executive Incentive Cash Bonus Plan dated April 24, 2006.
(1)
|
|
|
|
|
|
|
(f)
|
Form of Herman Miller, Inc., Long-Term Incentive Plan Stock Option Agreement is incorporated by reference to Exhibit 10(f) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(g)
|
Form of Herman Miller, Inc., Long-Term Incentive Restricted Stock Unit Award is incorporated by reference to Exhibit 10(g) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(h)
|
Form of Herman Miller, Inc., Long-Term Incentive Performance Stock Unit EBITDA Award.
(1)
|
|
|
|
|
|
|
(i)
|
Second Amendment to the Herman Miller, Inc. 2011 Long-Term Incentive Plan is incorporated by reference to Exhibit 10(i) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(j)
|
Form of Herman Miller, Inc. 2011 Long-Term Incentive Plan Performance Share Unit Award is incorporated by reference to Exhibit 10(j) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
|
(k)
|
Employment Agreement between John Edelman and Design Within Reach is incorporated by reference from Exhibit 10(b) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(l)
|
Employment Agreement between John McPhee and Design Within Reach is incorporated by reference from Exhibit 10(c) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(m)
|
Stockholders' Agreement between HM Springboard, Inc., Herman Miller, Inc., John Edelman, and John McPhee is incorporated by reference from Exhibit 10(d) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).
(1)(3)
|
|
|
|
|
|
|
(n)
|
HM Springboard, Inc. Stock Option Plan is incorporated by reference from Exhibit 10(e) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).
(1)(3)
|
|
|
|
|
|
|
(o)
|
Third Amendment to the Herman Miller, Inc. 2011 Long-Term Incentive Plan is incorporated by reference to Exhibit 10(o) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(p)
|
Form of Herman Miller, Inc. 2011 Long-Term Incentive Plan Conditional Stock Option Award is incorporated by reference from Exhibit 10 (p) of the Registrant's Form 10-K dated July 28, 2015 (Commission File No. 001-15141).
(1)
|
|
|
|
|
|
|
(q)
|
Trust Under the Herman Miller, Inc. Nonemployee Officer and Director Compensation Plan is incorporated by reference to Exhibit 10(q) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141).
(1)
|
|
(21)
|
Subsidiaries
|
|
(23)(a)
|
Consent of Independent Registered Public Accounting Firm
|
|
(24)
|
Power of Attorney (included on the signature page to this Registration Statement)
|
|
(31)(a)
|
Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
(31)(b)
|
Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
(32)(a)
|
Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
(32)(b)
|
Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document
(2)
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
(2)
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
(2)
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
(2)
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
(2)
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
(2)
|
1.
|
Definitions
. As used in this Agreement, the following terms shall have the respective meanings set forth below:
|
(a)
|
“Board” means the Board of Directors of the Company.
|
(b)
|
“Bonus Reserve Account” has the meaning stated in the Incentive Cash Bonus Plan.
|
(c)
|
“Cause” means (1) a material breach by the Executive of those duties and responsibilities of the Executive which do not differ in any material respect from the duties and responsibilities of the Executive during the ninety (90) day period immediately prior to a Change in Control (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on the Executive’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach or (2) the commission by the Executive of a felony involving moral turpitude.
|
(d)
|
“Change in Control” means:
|
(1)
|
the acquisition by any Person of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 35 percent or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);
provided, however
, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities unless such outstanding convertible or exchangeable securities were acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a reorganization, merger or consolidation involving the Company, if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (i), (ii) and (iii) of subsection (3) of this Section (1)(d) shall be satisfied; and
provided further
that, for purposes of clause (B), (i) a Change in Control shall not occur solely because any Person becomes the beneficial owner of 35 percent or more of the Outstanding Company Common Stock or 35 percent or more of the Outstanding Company Voting Securities by reason of an acquisition by the Company of Outstanding Company Common Stock or Outstanding Company Voting Securities that reduces the number of outstanding shares of Outstanding Company Common Stock or Outstanding Company Voting Securities and (ii) if, after such acquisition by the Company, such Person becomes the beneficial owner of any additional shares of Outstanding Company Common Stock or any additional Outstanding Company Voting Securities, such additional beneficial ownership shall constitute a Change in Control;
|
(2)
|
individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason within any 24-month period to constitute at least a majority of such Board;
provided, however
, that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed to have been a member of the
|
(3)
|
consummation of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation, (i) more than 60 percent of (A) the then outstanding securities of the entity resulting from such reorganization, merger or consolidation (the “Surviving Entity”) (or, if applicable, the ultimate parent entity that beneficially owns all or substantially all of the outstanding voting securities entitled to vote generally in the election of directors of the Surviving Entity), and (B) the combined voting power of the then outstanding securities of the Surviving Entity (or such ultimate parent entity) entitled to vote generally in the election of directors is represented by the shares of Outstanding Company Common Stock and the Outstanding Company Voting Securities, respectively, that were outstanding immediately prior to such reorganization, merger or consolidation (or, if applicable, is represented by securities into which such Outstanding Company Common Stock and Outstanding Company Voting Securities were converted pursuant to such reorganization, merger or consolidation) and such ownership of securities and voting power among the holders thereof is in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than the Company, any employee benefit plan or related trust sponsored or maintained by the Company or the Surviving Entity) or any entity controlled by the Company beneficially owns, directly or indirectly, 35 percent or more of (A) the then outstanding securities of the Surviving Entity or (B) the combined voting power of the then outstanding securities of the Surviving Entity entitled to vote generally in the election of directors, except to the extent that the ownership in excess of 35 percent or more existed prior to such reorganization, merger or consolidation, and (iii) at least a majority of the members of the board of directors of the Surviving Entity were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation; or
|
(4)
|
consummation of (i) a plan of complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company other than to an entity with respect to which, immediately after such sale or other disposition, (A) more than 60 percent of (x) the then outstanding securities of that entity (the “Surviving Entity”) (or, if applicable, the ultimate parent entity that beneficially owns all or substantially all of the outstanding voting securities entitled to vote generally in the election of directors of the Surviving Entity), and (y) the combined voting power of the then outstanding securities of the Surviving Entity (or such ultimate parent entity ) entitled to vote generally in the election of directors is represented by the shares of Outstanding Company Common Stock and the Outstanding Company Voting Securities, respectively, that were outstanding immediately prior to sale or disposition (or, if applicable, is represented by shares into which such Outstanding Company Common Stock and Outstanding Company Voting Securities were converted pursuant to such sale or disposition and such ownership of securities and voting power among the holders thereof is in substantially the same proportions as their ownership, immediately prior to such sale or disposition of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan or related trust sponsored or maintained by the Company or the Surviving Entity or any entity controlled by the Company beneficially owns, directly or indirectly, 35 percent or more of (x) the then outstanding securities of the Surviving Entity or (y) the combined voting power of the then outstanding securities of the Surviving Entity entitled to vote generally in the election of directors, except to the extent that the ownership in excess of 35 percent or more existed prior to such sale or other disposition and (C) at least a majority of the members of the board of directors thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale of other disposition.
|
(e)
|
“Company” means Herman Miller, Inc., a Michigan corporation.
|
(f)
|
“Date of Termination” means (1) except as otherwise provided in Section 1(p), the effective date on which the Executive’s employment by the Company terminates as specified in a prior written notice by the Company or the Executive, as the case may be, to the other, delivered pursuant to Section 10 or (2) if the Executive’s employment by the Company terminates by reason of death, the date of death of the Executive.
|
(g)
|
“Deferred Compensation Plan” means the Herman Miller, Inc. Key Executive Deferred Compensation Plan.
|
(h)
|
“Earned Bonus” has the meaning stated in the Incentive Cash Bonus Plan.
|
(i)
|
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
|
(j)
|
“Good Reason” means, without the Executive’s express written consent, the occurrence of any of the following events after a Change in Control:
|
(1)
|
any of (i) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive’s position(s), duties, responsibilities or status with the Company immediately prior to such Change in Control, (ii) a change in any material adverse respect in the Executive’s reporting responsibilities, titles or offices with the Company as in effect immediately prior to such Change in Control or (iii) any removal or involuntary termination of the Executive from any position held by the Executive with the Company immediately prior to such Change in Control otherwise than as expressly permitted by this Agreement or any failure to re-elect the Executive to any position with the Company held by the Executive immediately prior to such Change in Control;
|
(2)
|
a reduction by the Company in the Executive’s rate of annual base salary or annual Target Bonus as in effect immediately prior to such Change in Control or as the same may be increased from time to time thereafter
;
|
(3)
|
any requirement of the Company that the Executive be based at a location in excess of 50 miles from the facility which is the Executive’s principal business office at the time of the Change in Control;
|
(4)
|
a reduction of at least 5% in the aggregate benefits provided to the Executive and the Executive’s dependents under the Company’s employee benefit plans (including, without limitation, retirement, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) in which the Executive is participating immediately prior to such Change in Control; or
|
(5)
|
the failure of the Company to obtain the assumption agreement from any successor as contemplated in Section 9(b).
|
(k)
|
“Incentive Cash Bonus Plan” means the Herman Miller, Inc. Incentive Cash Bonus Plan which became effective September 29, 1998 or any replacement thereof.
|
(l)
|
“Nonqualifying Termination” means a termination of the Executive’s employment (1) by the Company for Cause, (2) by the Executive during the first 180 days following a Change in Control for any reason other than the Good Reason specified in Section 1(j)(2) or Section 1(j)(3); (3) by the Executive after the first 180 days following a Change in Control for any reason other than any Good Reason, (4) as a result of the Executive’s death or (5) by the Company due to the Executive’s absence from his duties with the Company on a full-time basis for at least 180 consecutive days as a result of the Executive’s incapacity due to physical or mental illness.
|
(m)
|
“Person” means any individual, entity or group including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
|
(n)
|
“Target Bonus” has the meaning stated in the Incentive Cash Bonus Plan.
|
(o)
|
“Termination Period” means the period of time beginning with a Change in Control and ending on the earlier to occur of (1) 24 months following such Change in Control and (2) the Executive’s death. Notwithstanding anything in this Agreement to the contrary, if (i) the Executive’s employment terminates prior to a Change in Control for a reason that would have entitled the Executive to payments and benefits from the Company under Sections 3(a) and (b) if it had occurred following a Change in Control; (ii) the Executive reasonably demonstrates that such termination (or Good Reason event) was at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control; and (iii) a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur, then for purposes of this Agreement, the date immediately prior to the date of such termination of employment or event constituting Good Reason shall be treated as a Change in Control. For purposes of determining the timing of payments and benefits to the Executive under Section 3, the date of the actual Change in Control shall be treated as the Executive’s Date of Termination under Section 1(f), and for purposes of determining the amount of payments and benefits to the Executive under Section 3, the date the Executive’s employment is actually terminated shall be treated as the Executive’s Date of Termination under Section 1(f).
|
2.
|
Obligations of the Executive
.
|
(a)
|
The Executive agrees that in the event any Person attempts a Change in Control, he shall not voluntarily leave the employ of the Company without a Good Reason specified in Section 1(j)(2) or Section 1(j)(3) until (1) such attempted Change in Control terminates or (2) if a Change in Control shall occur, 180 days following such Change in Control. For purposes of clause (1) of the preceding sentence, Good Reason shall be determined as if a Change in Control had occurred when such attempted Change in Control became known to the Board.
|
(b)
|
The following definitions apply to the remainder of this Section 2:
|
(1)
|
“Affiliate” means and includes any person or entity which controls a party, which such party controls or which is under common control with such party.
|
(2)
|
“Competing Business” means a business which engages or is making plans to engage, in whole or in part, in the manufacturing, marketing, distribution or sale of products which are competitive with any products manufactured, distributed, marketed or sold by the Company during the Restricted Period.
|
(3)
|
“Competing Products” means products manufactured by a Competing Business.
|
(4)
|
“Control” means the power, direct or indirect, to direct or cause the direction of the management and policies of a person or entity through voting securities, contract or otherwise.
|
(5)
|
“Restricted Period” means the period of the Executive’s employment with the Company and a period of two years after the Date of Termination.
|
(c)
|
Executive acknowledges and agrees that (i) through his continuing services to the Company, he will learn valuable trade secrets and other proprietary information relating to the Company’s business, (ii) the Executive’s services to the Company are unique in nature, (iii) the Company’s business is international in scope and (iv) the Company would be irreparably damaged if the Executive were to provide services to any person or entity in violation of the restrictions contained in this Section 2(c). Accordingly, as an inducement to the Company to enter into this Agreement, Executive agrees that if the Executive is entitled to and does receive a payment pursuant to Section 3(a)(2) of this Agreement, neither Executive nor any Affiliate of the Executive shall during the Restricted Period, directly or indirectly, either for himself or for any other person or entity:
|
(1)
|
anywhere in the world in which the Company is then doing business, engage or participate in, or assist, advise or be connected with (including as an employee, owner, partner, shareholder, officer, director, advisor, consultant, agent or [without limitation by the specific enumeration of the foregoing] otherwise), or permit his name to be used by or render services for, any person or entity engaged in a Competing Business; provided, however, that nothing in this Agreement shall prevent Executive from acquiring or owning, as a passive investment, up to two percent (2%) of the outstanding voting securities of an entity engaged in a Competing Business which are publicly traded in any recognized national securities market;
|
(2)
|
take any action, in connection with a Competing Business, which might divert from the Company or an Affiliate of the Company any opportunity which would be within the scope of the Company’s or such Affiliate’s then business;
|
(3)
|
solicit or attempt to solicit any person or entity who is or has been (A) a customer of the Company at any time during the Restricted Period to purchase Competing Products from any person or entity (other than the Company) or (B) a customer, supplier, licensor, licensee or other business relation of the Company at any time during the Restricted Period to cease doing business with the Company; or
|
(4)
|
solicit or hire any person or entity who is a director, officer, employee or agent of the Company or any Affiliate of the Company to perform services for any entity other than the Company and its Affiliates.
|
(d)
|
Executive agrees that any violation by the Executive of Section 2(c) of this Agreement would be highly injurious to the Company and would cause irreparable harm to the Company. By reason of the foregoing, Executive consents and agrees that if the Executive violates any provision of Section 2(c) of this Agreement, the Company shall be entitled, in addition to any other rights and remedies that it may have, to apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any continuing violation of, the provisions of such section. In the event Executive breaches a covenant contained in Section 2(c) of this Agreement, the Restricted Period applicable to Executive with respect to such breached covenant shall be extended for the period of such breach. Executive also recognizes that the territorial, time and scope limitations set forth in Sections 2(c), are reasonable and are properly required for the protection of the Company and in the event that any such territorial, time or scope limitation is deemed to be unreasonable, by a court of competent jurisdiction, the Company and Executive agree, and Executive submits, to the reduction of any or all of said territorial, time or scope limitations to such an area, period or scope as said court shall deem reasonable under the circumstances.
|
(e)
|
Termination of the Executive’s employment shall have no effect on the continuing operation and enforceability of Sections 2(b), 2(c) or 2(d) and each such section shall continue to be fully effective and enforceable after any such termination.
|
3.
|
Obligations of the Company Upon Termination of Employment
.
|
(a)
|
If during the Termination Period the employment of the Executive shall terminate, other than by reason of a Nonqualifying Termination, then the Company shall pay to the Executive (or the Executive’s beneficiary or estate) within thirty (30) days following the Date of Termination, as compensation for services to the Company;
|
(1)
|
a cash amount equal to the sum of (i) the Executive’s base salary from the Company and its affiliated companies through the Date of Termination, to the extent not theretofore paid, (ii) the Executive’s Target Bonus for the Company’s fiscal year in which the Date of Termination occurs multiplied by a fraction, the numerator of which is the number of days in that fiscal year through the Date of Termination and the denominator of which is 365 or 366, as applicable, and (iii) any compensation previously deferred by the Executive other than pursuant to the Deferred Compensation Plan or any tax qualified plan (together
|
(2)
|
a lump-sum cash amount (subject to any applicable payroll or other taxes required to be withheld pursuant to Section 4) in an amount equal to (i) two times the Executive’s highest annual base salary from the Company and its affiliated companies in effect during the twelve (12) month period prior to the Date of Termination, plus (ii) two times the higher of (a) the average of the Executive’s Earned Bonus for the three fiscal years of the Company preceding the fiscal year in which the Change in Control occurs, or (b) the Executive’s Target Bonus for the fiscal year of the Company in which the Change in Control occurs;
provided, however
, that any amount to be paid pursuant to this Section 3(a)(2) shall be reduced by any other amount of severance relating to salary or bonus continuation to be received by the Executive upon termination of employment of the Executive under any severance plan, policy or arrangement of the Company and any severance payments the Company is required to make pursuant to the requirements of any U.S. or foreign law or regulation. For purposes of the preceding sentence any amount received by the Executive on account of the termination of the Incentive Cash Bonus Plan will be treated as an amount paid on account of the termination of Executive’s employment.
|
(b)
|
If during the Termination Period the employment of the Executive shall terminate, other than by reason of a Nonqualifying Termination:
|
(1)
|
In addition to the payments to be made pursuant to Section 3(a), for a period of two years commencing on the Date of Termination, the Company shall continue to keep in full force and effect all policies of medical, accident, disability and life insurance with respect to the Executive and his dependents with the same level of coverage, upon the same terms and otherwise to the same extent as such policies shall have been in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as provided generally with respect to other peer executives of the Company and its affiliated companies, and the Company and the Executive shall share the costs of the continuation of such insurance coverage in the same proportion as such costs were shared immediately prior to the Date of Termination; provided that, if the Executive cannot continue to participate in the Company plans providing such benefits, the Company shall otherwise provide such benefits on the same after-tax basis as if continued participation had been permitted. Notwithstanding the foregoing, in the event the Executive becomes reemployed with another employer and becomes eligible to receive welfare benefits from such employer, the welfare benefits described herein shall be secondary to such benefits during the period of the Executive’s eligibility, but only to the extent that the Company reimburses the Executive for any increased cost and provides additional benefits necessary to give the Executive the benefits provided hereunder.
|
(2)
|
All stock options, restricted awards, other equity based awards and all stock units credited to the Executive’s account under the Deferred Compensation Plan shall be fully vested. All stock options shall remain exercisable for a period of ninety days from the Date of Termination or the earlier expiration of their initial term; provided, that, if the Executive would be prohibited from exercising any stock option due to restraints imposed under applicable accounting rules or securities laws, such option shall remain exercisable for thirty days after such restriction ceases to apply.
|
(3)
|
To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).
|
(c)
|
If during the Termination Period the employment of the Executive shall terminate by reason of a Nonqualifying Termination, then the Company shall pay to the Executive within thirty (30) days following the Date of Termination, a cash amount equal to the sum of (1) the Executive’s full annual base salary from the Company through the Date of Termination, to the extent not theretofore paid, and (2) the Other Benefits.
|
4.
|
Withholding Taxes
. The Company may withhold from all payments due to the Executive (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.
|
5.
|
Reimbursement of Expenses
. If any contest or dispute shall arise under this Agreement involving termination of the Executive’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Executive, on a current basis, for all reasonable legal fees and expenses, if any, incurred by the Executive in connection with such contest or dispute, together with interest thereon at a rate equal to the prime rate, as published under “Money Rates” in
The
Wall Street Journal
from time to time, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company receives the Executive’s statement for such fees and expenses through the date of payment thereof;
provided, however
, that in the event the resolution of any such contest or dispute includes a finding denying, in total, the Executive’s claims in such contest or dispute, the Executive shall be required to reimburse the Company, over a period of twelve (12) months from the date of such resolution, for all sums advanced to the Executive pursuant to this Section 6.
|
6.
|
Operative Event
. Notwithstanding any provision herein to the contrary, no amounts shall be payable hereunder unless and until there is a Change in Control at a time when the Executive is employed by the Company.
|
7.
|
Amendment or Termination of Agreement
.
|
(a)
|
This Agreement shall be effective on the date hereof and shall continue until terminated by the Company as provided in Section 8(b);
provided, however
, that this Agreement shall terminate in any event upon the earlier to occur of (i) termination of the Executive’s employment with the Company prior to a Change in Control, other than pursuant to Section 1(p), and (ii) the Executive’s death.
|
(b)
|
The Company shall have the right prior to a Change in Control, in its sole discretion, pursuant to action by the Board, to approve the amendment or termination of this Agreement, which amendment or termination shall not become effective until the date fixed by the Board therefor, which date shall be at least 180 days after notice thereof is given by the Company to the Executive in accordance with Section 10;
provided, however
, that no such action shall be taken by the Board, without the written consent of the Executive, (i) during any period of time when the Board has knowledge that any Person has taken steps reasonably calculated to effect a Change in Control until, in the opinion of the Board, such Person has abandoned or terminated its efforts to effect a Change in Control or (ii) following a Change in Control.
|
8.
|
Scope of Agreement
. Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the Company or its subsidiaries and, except as provided in Section 1(p), if the Executive’s employment with the Company shall terminate prior to a Change in Control, then the Executive shall have no further rights under this Agreement;
provided, however
, that any termination of the Executive’s employment following a Change in Control shall be subject to all of the provisions of this Agreement. This Agreement shall supersede in its entirety the Severance Agreement between the Company and the Executive dated May 15, 2001, which shall terminate and have no further effect as of the date of this Agreement.
|
9.
|
Successors; Binding Agreement
.
|
(a)
|
This Agreement shall not be terminated by any merger or consolidation of the Company whether the Company is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of the Company. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.
|
(b)
|
The Company agrees that concurrently with any merger, consolidation or transfer of assets referred to in Section 9(a), it will cause any successor or transferee unconditionally to assume, by written instrument delivered to the Executive (or his beneficiary or estate), all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such merger, consolidation or transfer of assets shall be a breach of this Agreement and shall entitle the Executive to compensation and other benefits from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if the Executive’s employment were terminated following a Change in Control other than by reason of a Nonqualifying Termination. For purposes of implementing the foregoing, the date on which any such merger, consolidation or transfer becomes effective shall be deemed the Date of Termination.
|
(c)
|
This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amounts would be payable to the Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by the Executive to receive such amounts or, if no person is so appointed, to the Executive’s estate.
|
10.
|
Notices
.
|
(a)
|
For purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered or five days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed (1) if to the Executive, to 915 San Jose, S.E. Grand Rapids, Michigan 49506, and if to the Company, to 855 East Main Avenue, Zeeland, MI 49464, attention General Counsel, with a copy to the Secretary, or (2) to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
|
(b)
|
A written notice of the Executive’s Date of Termination by the Company or the Executive, as the case may be, to the other shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) specify the termination date (which date shall be not less than fifteen (15) days after the giving of such notice). The failure by the Executive or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
|
11.
|
Full Settlement; Resolution of Disputes
.
|
(a)
|
The Company’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment except to the extent provided in Section 3(b)(1).
|
(b)
|
If there shall be any dispute between the Company and the Executive in the event of any termination of the Executive’s employment, then, unless and until there is a final, nonappealable judgment by a court of competent jurisdiction declaring that such termination was for Cause, that the Executive terminated his employment without Good Reason, or that the Company is not otherwise obligated to pay any amount or provide any benefit to the Executive and his dependents or other beneficiaries, as the case may be, under Sections 3(a), 3(b) and 4, the Company shall pay all amounts, and provide all benefits, to the Executive and his dependents or other beneficiaries, as the case may be, that the Company would be required to pay or provide pursuant to Sections 3(a), 3(b) and 4 as though such termination were by the Company without Cause or by the Executive with Good Reason;
provided, however
, that the Company shall not be required to pay any disputed amounts pursuant to this Section 11(b) except upon receipt of an undertaking by or on behalf of the Executive to repay all such amounts to which the Executive is ultimately adjudged by such court not to be entitled.
|
12.
|
Employment with Subsidiaries
. Employment with the Company for purposes of this Agreement shall include employment with any corporation or other entity in which the Company has a direct or indirect ownership interest of 50 percent or more of the total combined voting power of the then outstanding securities of such corporation or other entity entitled to vote generally in the election of directors.
|
13.
|
Compliance with Section 409A
. It is intended that any amounts payable under this Agreement will comply with Section 409A of the Code and treasury regulations relating thereto so as not to subject the Executive to the payment of any interest and tax penalty which may be imposed under Section 409A of the Code, and the Agreement shall be interpreted and construed in accordance with such intention. Any provision of the Agreement that would cause the Executive to be subject to the payment of any such interest or tax penalty shall be disregarded, and the timing of the payments or benefits provided herein shall be modified accordingly.
|
14.
|
Governing Law; Validity
. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Michigan without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which other provisions shall remain in full force and effect.
|
15.
|
Counterparts
. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall constitute one and the same instrument.
|
16.
|
Miscellaneous
. Except as provided in Section 7, no provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by the Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Failure by the Executive or the Company to insist upon strict compliance with any provisions of this Agreement or to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. Except as otherwise expressly set forth in this Agreement, the rights of, and benefits payable to, the Executive, his estate or his beneficiaries pursuant to this Agreement are in addition to any rights of, or benefits payable to, the Executive, his estate or his beneficiaries under any other employee benefit plan or compensation plan, policy practice or program of the Company or any other contract or agreement with the Company.
|
a.
|
Stock Acquisition
. Any “person,” as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Act”), other than the Company or a Subsidiary, or a trustee of any employee benefit plan sponsored solely by the Company or a Subsidiary is or becomes, other than by purchase from the Company, the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of shares of Common Stock or other securities of the Company representing 20 percent or more of the combined voting power of the Company’s then-outstanding voting securities.
|
b.
|
Change in Board
. During any period of two (2) consecutive years, individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority of the Board, unless each new director was nominated or elected by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.
|
a.
|
The Committee
. The Committee shall be responsible for administering the Plan. The Committee shall be comprised of three or more members of the Board, each of whom shall be an “outside director” as that term is used in Section 162(m) of the Code and the regulations promulgated thereunder.
|
b.
|
Powers
. The Committee shall have full and exclusive discretionary power to interpret the Plan, to determine those employees of the Company and its Subsidiaries who are eligible to participate in the Plan, and adopt such rules, regulations, and guidelines for administering the Plan as the Committee may deem necessary or proper. The Committee may employ attorneys, consultants, accountants, and other persons. The Board, Committee, the Company, and its officers shall be entitled to rely upon the advice or opinion of such persons.
|
c.
|
Binding Effect of Committee Actions
. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Participants, the Company, and all other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan. All members of the Committee shall be fully protected and indemnified by the Company, to the fullest extent permitted by applicable law, in respect of any such action, determination, or interpretation.
|
d.
|
Annual Determine
. Each year prior to payment of a Bonus Amount, the Committee shall determine that the performance requirements of the Plan have been satisfied in accordance with Section 4(a)(2) of the Plan and Section 162(m) of the Code.
|
a.
|
Determination of EVA and Actual Improvement
.
|
1)
|
Beginning of Year Determinations
. Prior to or within ninety (90) days of the commencement of each Plan Year, the following determinations shall be made in accordance with the Manual:
|
(i)
|
The Committee shall approve the calculation the Company’s EVA as of the beginning of the Plan Year and the Company’s Cost of Capital for the Plan Year.
|
(ii)
|
The Committee shall approve the calculation of the EVA Carryover Amount, if any, from the previous Plan Year. In no event will the cumulative EVA Carryovers exceed a Bonus Interval of one, whether positive or negative.
|
(iii)
|
The Committee shall determine or approve Target Bonus Percentages for each Participant.
|
(iv)
|
The Committee shall establish the Expected Improvement and the Bonus Interval for each Plan Year, which standards may each be set by the Committee for one to three Plan Years.
|
2)
|
Year-End Determinations
. As of the end of each Plan Year, the following determinations shall be made:
|
(i)
|
The Committee shall approve the calculation of the Company’s EVA as of the end of the Plan Year.
|
(ii)
|
The Committee shall approve the calculation of Actual Improvement.
|
(iii)
|
The Committee shall approve the determination of the EVA Bonus Factor for each Plan Year, consistent with the terms of the Plan and the Manual.
|
b.
|
Determination of Bonus Amount
. Each Participant shall be entitled to a Bonus Amount, if any, for a Plan Year according to the following:
|
1)
|
The Actual Improvement in EVA for a Plan Year shall be determined by adding any EVA Carryover Amount (either positive or negative) to the EVA as of the end of Plan Year and then subtracting from it the EVA as of the beginning of the Plan Year.
|
2)
|
The EVA Bonus Factor shall be determined by comparing the Excess Improvement or Shortfall to the Expected Improvement and Bonus Interval, according to the following:
|
(i)
|
If the Actual Improvement equals the Expected Improvement, the EVA Bonus Factor shall equal one (1).
|
(ii)
|
If the Actual Improvement exceeds the Expected Improvement, the EVA Bonus Factor shall equal (a) the Excess Improvement divided by the Bonus Interval, plus (b) one (1), but in no event shall the EVA Bonus Factor be greater than two.
|
(iii)
|
If the Actual Improvement is less than the Expected Improvement, the EVA Bonus Factor shall equal (a) the Shortfall (expressed as a negative number) divided by the Bonus Interval, plus (b) one (1), but in no event shall the EVA Bonus Factor be less than 0. .
|
3)
|
The Bonus Amount for each Participant shall equal the Participant’s Target Bonus, multiplied by the EVA Bonus Factor, and shall be payable by the Company in accordance with Section 5 of this Plan.
|
a.
|
Payment of Bonus Amount
. The Bonus Amount shall be paid by the Company within thirty (30) days following the Committee’s certification of the EVA Bonus Factor.
|
b.
|
Allocation of EVA Bonus Factor
. A Participant’s Bonus Amount may be based upon the EVA Bonus Factor for the Company only, or at the discretion of the Committee, a Participant’s Bonus Amount may be based upon the EVA Bonus Factor or other bonus factor for a particular division, operation, or subsidiary of the Company, or combination thereof as determined by the Committee, in which case the Committee shall establish an Expected Improvement and Bonus Interval with respect thereto.
|
c.
|
Payment Upon Death, Retirement, or Disability
. In the event of a Participant’s termination of employment by the Company due to death, Retirement, or Disability, the Participant shall be credited as of the end of the Plan Year in which termination occurs (the “Termination Year”), with a Bonus Amount determined in accordance with Section 4 of the Plan, multiplied by a fraction (the “Completion Multiple”), the numerator of which shall equal the total number of days during the Termination Year in which the Participant was employed by the Company, and the denominator of which shall be 365. The Participant’s Bonus Amount shall be paid by the Company
|
d.
|
Termination of Employment for Reasons Other Than Death, Retirement, or Disability
. If a Participant’s employment by the Company is terminated for reasons other than death, Retirement or Disability before the end of a Plan Year, the Participant will not be entitled to any Bonus Amount.
|
e.
|
Leave of Absence; Ineligibility
. If during any Plan Year a Participant has an authorized leave of absence, the amount of his or her Bonus Amount shall be determined in accordance with Section 4 of the Plan and multiplied by a fraction, the numerator of which shall equal the total number of days of the Plan Year a Participant is not on leave of absence, and the denominator of which shall equal 365.
|
f.
|
Ineligibility
. If an employee’s participation in the Plan is terminated for reasons other than set forth in Section 5(c) through 5(d), whether due to employment with an affiliate of the Company that is not a Subsidiary or inclusion in a different bonus plan, (i) the amount of his or her Bonus Amount shall be determined in accordance with Section 5(c) of the Plan, whereby the Termination Year shall be the Plan Year in which participation in the Plan terminates and the numerator of the Completion Multiple shall equal the total number of days during the Termination Year in which the employee was a Participant in the Plan.
|
a.
|
No Right to Employment
. No Participant or other person shall have any claim or right to be retained in the employment of the Company or a Subsidiary by reason of the Plan or any Bonus Amount or Bonus Reserve Account.
|
b.
|
Plan Expenses
. The expenses of the Plan and its administration shall be borne by the Company.
|
c.
|
Plan Not Funded
. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Bonus Amount or Bonus Reserve Account under the Plan.
|
d.
|
Reports
. The appropriate officers of the Company shall cause to be filed any reports, returns, or other information regarding the Plan, as may be required by any applicable statute, rule, or regulation.
|
e.
|
Governing Law
. The validity, construction, and effect of the Plan, and any actions relating to the Plan, shall be determined in accordance with the laws of the State of Michigan and applicable federal law.
|
a.
|
No amendment, discontinuance, or termination of the Plan shall alter or otherwise affect the amount of a Bonus Amount earned through the date of termination;
|
b.
|
Without the approval of the Company’s shareholders, no amendment shall be made which would replace the EVA performance measurement system for purposes of determining Bonus Amounts under the Plan, provided that the Board or Committee shall have the authority to adjust and establish Expected Improvement, Bonus Intervals, Target Bonus Percentages, and other criteria utilized in the EVA performance measurement system whether for the Company or for a particular division, operation or subsidiary of the Company or a combination thereof ; and
|
c.
|
In the event of the termination of this Plan, the full amount, if any, Participant’s Bonus Amount shall be paid in full within ninety (90) days following the effective date of termination. If the Plan is terminated prior to the end of a Plan Year, Bonus Amounts for that Plan Year shall be determined and paid in accordance with Section 5(f) of the Plan, but with the Bonus Amount computed at the date of the termination of the Plan with the Expected Improvement, Bonus Interval and EVA Carryover Amount prorated for the percentage of the Plan Year completed. In the event the Plan is terminated following a Change in Control, Bonus Amounts shall be determined as provided in the previous sentence with Section 5(f) of the Plan, except that the Completion Multiple shall be one (1) and the Bonus Amounts shall be paid at the effective time of the Change in Control.
|
Name
|
Ownership
|
Jurisdiction of Incorporation
|
Colebrook Bosson Saunders, Inc.
|
100% Company
|
Michigan
|
Colebrook Bosson Saunders, Ltd.
|
100% Company
|
England, U.K.
|
Colebrook Bosson Saunders, Pty. Ltd.
|
100% Company
|
Australia
|
Convia, Inc.
|
100% Company
|
Delaware
|
Coro Acquisition Corporation-California
|
100% Company
|
California
|
Geiger International, Inc.
|
100% Company
|
Delaware
|
Herman Miller Accessories, LLC
|
100% Company
|
Michigan
|
Herman Miller Asia (PTE.) Ltd.
|
100% Company
|
Singapore
|
Herman Miller (Australia) Pty., Ltd.
|
100% Company
|
Australia
|
Herman Miller Canada
|
100% Company
|
Canada
|
Herman Miller (Dongguan) Furniture Co., Ltd.
|
100% Company
|
China
|
Herman Miller Furniture (India) Pvt. Ltd.
|
100% Company
|
India
|
Herman Miller Global Customer Solutions (Hong Kong) Limited
|
100% Company
|
Hong Kong
|
Herman Miller Global Customer Solutions, Inc.
|
100% Company
|
Michigan
|
Herman Miller Global Holdings Luxembourg S.à r.l.
|
100% Company
|
Luxembourg
|
Herman Miller Holdings Limited
|
100% Company
|
England, U.K.
|
Herman Miller Japan, Ltd.
|
100% Company
|
Japan
|
Herman Miller, Ltd.
|
100% Company
|
England, U.K.
|
Herman Miller Mexico S.A. de C.V.
|
100% Company
|
Mexico
|
Herman Miller (Ningbo) Furniture Co. Ltd.
|
100% Company
|
China
|
Integrated Metal Technologies, Inc.
|
100% Company
|
Michigan
|
Maharam Fabric Corporation
|
100% Company
|
New York
|
Milcare, Inc.
|
100% Company
|
Michigan
|
Milsure Insurance, Ltd.
|
100% Company
|
Barbados
|
Meridian, Inc.
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100% Company
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Michigan
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Nemschoff Chairs, Inc.
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100% Company
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Wisconsin
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POSH Office Systems (Hong Kong) Limited
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100% Company
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Hong Kong
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Steeline (Hong Kong) Limited
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100% Company
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Hong Kong
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Sun Hing POSH Holdings Limited
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100% Company
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Hong Kong
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Design Within Reach, Inc.
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93% Company
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Delaware
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Herman Miller Consumer Co. Holdings
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93% Company
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Delaware
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Naughtone (Holdings) Limited
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50% Company
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England, U.K.
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Naughtone Manufacturing Ltd
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50% Company
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England, U.K.
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1.
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I have reviewed this annual report on Form 10-K for the period ended June 3, 2017, of Herman Miller, Inc;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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1.
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I have reviewed this annual report on Form 10-K for the period ended June 3, 2017, of Herman Miller, Inc;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Annual Report on Form 10-K for the period ended June 3, 2017, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the company.
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(1)
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The Annual Report on Form 10-K for the period ended June 3, 2017, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the company.
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