[ 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 2, 2018
|
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)
|
|
Registrant's telephone number, including area code: (616) 654 3000
|
|
Securities registered pursuant to Section 12(b) of the Act: None
|
|
Securities registered pursuant to Section 12(g) of the Act:
|
|
Common Stock, $.20 Par Value
(Title of Class)
|
Name of exchange on which registered
NASDAQ Stock Market LLC |
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
|
|
Exhibit Index
|
|
Signatures
|
|
Schedule II Valuation and Qualifying Accounts
|
•
|
Political, social, and economic conditions
|
•
|
Global trade conflicts and trade policies
|
•
|
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
|
423,700
|
|
|
Warehouse
|
Dongguan, China*
|
422,600
|
|
|
Manufacturing, Office
|
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
|
56
|
1996
|
President and Chief Executive Officer
|
Andrew J. Lock
|
64
|
2003
|
President, Herman Miller International
|
Gregory J. Bylsma
|
53
|
2009
|
President, North America Contract
|
Steven C. Gane
|
63
|
2009
|
President, Specialty Brands
|
Jeffrey M. Stutz
|
47
|
2009
|
Executive Vice President, Chief Financial Officer
|
B. Ben Watson
|
53
|
2010
|
Chief Creative Officer
|
H. Timothy Lopez
|
47
|
2014
|
Senior Vice President of Legal Services, General Counsel and Secretary
|
John McPhee
|
55
|
2015
|
President, Herman Miller Consumer
|
John Edelman
|
51
|
2015
|
Chief Executive Officer, Herman Miller Consumer
|
Kevin Veltman
|
43
|
2015
|
Vice President, Investor Relations & Treasurer
|
Jeremy Hocking
|
57
|
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 2, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
First quarter
|
$
|
35.30
|
|
|
$
|
29.25
|
|
|
$
|
34.00
|
|
|
$
|
0.55
|
|
|
$
|
0.1800
|
|
Second quarter
|
37.00
|
|
|
32.05
|
|
|
34.55
|
|
|
0.55
|
|
|
0.1800
|
|
|||||
Third quarter
|
41.84
|
|
|
33.65
|
|
|
36.75
|
|
|
0.49
|
|
|
0.1800
|
|
|||||
Fourth quarter
|
39.20
|
|
|
29.95
|
|
|
32.85
|
|
|
0.53
|
|
|
0.1800
|
|
|||||
Year
|
$
|
41.84
|
|
|
$
|
29.25
|
|
|
$
|
32.85
|
|
|
$
|
2.12
|
|
|
$
|
0.7200
|
|
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
|
|
Period
|
Total Number of
Shares (or Units) Purchased
|
|
|
Average Price Paid per Share or Unit
|
|
|
Total Number of Share (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
|
Maximum Number (or Approximate Dollar Value) of Shares(or Units) that May Yet be Purchased Under the Plans or Programs
(1)
|
|
|
3/4/18 - 3/31/18
|
65,767
|
|
|
32.24
|
|
|
65,767
|
|
|
$
|
76,324,290
|
|
4/1/18 - 4/28/18
|
301,500
|
|
|
32.10
|
|
|
301,500
|
|
|
$
|
66,647,521
|
|
4/29/18 - 6/2/18
|
143,566
|
|
|
31.75
|
|
|
143,566
|
|
|
$
|
62,088,967
|
|
Total
|
510,833
|
|
|
|
|
|
510,833
|
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
Herman Miller, Inc.
|
$
|
100
|
|
|
$
|
113
|
|
|
$
|
102
|
|
|
$
|
119
|
|
|
$
|
125
|
|
|
$
|
129
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
118
|
|
|
$
|
129
|
|
|
$
|
129
|
|
|
$
|
150
|
|
|
$
|
168
|
|
NASD Non-Financial
|
$
|
100
|
|
|
$
|
124
|
|
|
$
|
150
|
|
|
$
|
148
|
|
|
$
|
192
|
|
|
$
|
228
|
|
Review of Operations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(In millions, except key ratios and per share data)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
||||||||||
Operating Results
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
2,381.2
|
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
$
|
2,142.2
|
|
|
$
|
1,882.0
|
|
|
Gross margin
|
873.0
|
|
|
864.2
|
|
|
874.2
|
|
|
791.4
|
|
|
631.0
|
|
|
|||||
Selling, general, and administrative
(8)
|
622.4
|
|
|
600.3
|
|
|
585.6
|
|
|
556.6
|
|
|
590.8
|
|
|
|||||
Design and research
|
73.1
|
|
|
73.1
|
|
|
77.1
|
|
|
71.4
|
|
|
65.9
|
|
|
|||||
Operating earnings (loss)
|
177.5
|
|
|
190.8
|
|
|
211.5
|
|
|
163.4
|
|
|
(25.7
|
)
|
|
|||||
Earnings (loss) before income taxes
|
168.1
|
|
|
177.6
|
|
|
196.6
|
|
|
145.2
|
|
|
(43.4
|
)
|
|
|||||
Net earnings (loss)
|
128.7
|
|
|
124.1
|
|
|
137.5
|
|
|
98.1
|
|
|
(22.1
|
)
|
|
|||||
Cash flow from operating activities
|
166.5
|
|
|
202.1
|
|
|
210.4
|
|
|
167.7
|
|
|
90.1
|
|
|
|||||
Cash flow used in investing activities
|
(62.7
|
)
|
|
(116.3
|
)
|
|
(80.8
|
)
|
|
(213.6
|
)
|
|
(48.2
|
)
|
|
|||||
Cash flow (used in) provided by financing activities
|
2.5
|
|
|
(74.6
|
)
|
|
(106.5
|
)
|
|
6.8
|
|
|
(22.4
|
)
|
|
|||||
Depreciation and amortization
|
66.9
|
|
|
58.9
|
|
|
53.0
|
|
|
49.8
|
|
|
42.4
|
|
|
|||||
Capital expenditures
|
70.6
|
|
|
87.3
|
|
|
85.1
|
|
|
63.6
|
|
|
40.8
|
|
|
|||||
Common stock repurchased plus cash dividends paid
|
88.9
|
|
|
63.2
|
|
|
49.0
|
|
|
37.0
|
|
|
43.0
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Key Ratios
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales growth
|
4.5
|
%
|
|
0.6
|
%
|
|
5.7
|
%
|
|
13.8
|
%
|
|
6.0
|
%
|
|
|||||
Gross margin
(1)
|
36.7
|
|
|
37.9
|
|
|
38.6
|
|
|
36.9
|
|
|
33.5
|
|
|
|||||
Selling, general, and administrative
(1) (8)
|
26.1
|
|
|
26.3
|
|
|
25.9
|
|
|
26.0
|
|
|
31.4
|
|
|
|||||
Design and research
(1)
|
3.1
|
|
|
3.2
|
|
|
3.4
|
|
|
3.3
|
|
|
3.5
|
|
|
|||||
Operating earnings
(1)
|
7.5
|
|
|
8.4
|
|
|
9.3
|
|
|
7.6
|
|
|
(1.4
|
)
|
|
|||||
Net earnings growth (decline)
|
3.7
|
|
|
(9.7
|
)
|
|
40.2
|
|
|
543.9
|
|
|
(132.4
|
)
|
|
|||||
After-tax return on net sales
(4)
|
5.4
|
|
|
5.4
|
|
|
6.1
|
|
|
4.6
|
|
|
(1.2
|
)
|
|
|||||
After-tax return on average assets
(5)
|
9.2
|
|
|
9.8
|
|
|
11.3
|
|
|
9.0
|
|
|
(2.3
|
)
|
|
|||||
After-tax return on average equity
(6)
|
20.5
|
%
|
|
22.3
|
%
|
|
29.1
|
%
|
|
25.0
|
%
|
|
(6.5
|
)%
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share and Per Share Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share-diluted
|
$
|
2.12
|
|
|
$
|
2.05
|
|
|
$
|
2.26
|
|
|
$
|
1.62
|
|
|
$
|
(0.37
|
)
|
|
Cash dividends declared per share
|
0.72
|
|
|
0.68
|
|
|
0.59
|
|
|
0.56
|
|
|
0.53
|
|
|
|||||
Book value per share at year end
(9)
|
11.22
|
|
|
9.82
|
|
|
8.76
|
|
|
7.04
|
|
|
6.14
|
|
|
|||||
Market price per share at year end
|
32.85
|
|
|
32.70
|
|
|
31.64
|
|
|
27.70
|
|
|
31.27
|
|
|
|||||
Weighted average shares outstanding-diluted
|
60.3
|
|
|
60.6
|
|
|
60.5
|
|
|
60.1
|
|
|
59.0
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Condition
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
1,479.5
|
|
|
$
|
1,306.3
|
|
|
$
|
1,235.2
|
|
|
$
|
1,192.7
|
|
|
$
|
995.6
|
|
|
Working capital
(3)
|
231.6
|
|
|
106.2
|
|
|
90.5
|
|
|
110.1
|
|
|
83.2
|
|
|
|||||
Current ratio
(2)
|
1.6
|
|
|
1.3
|
|
|
1.2
|
|
|
1.3
|
|
|
1.2
|
|
|
|||||
Interest-bearing debt and related swap agreements
(10)
|
265.1
|
|
|
197.8
|
|
|
221.9
|
|
|
290.0
|
|
|
250.0
|
|
|
|||||
Stockholders' equity
|
664.8
|
|
|
587.7
|
|
|
524.7
|
|
|
420.3
|
|
|
364.3
|
|
|
|||||
Total capital
(7)
|
929.9
|
|
|
785.5
|
|
|
746.6
|
|
|
710.3
|
|
|
614.3
|
|
|
Review of Operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(In millions, except key ratios and per share data)
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||||
Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
1,774.9
|
|
|
$
|
1,724.1
|
|
|
$
|
1,649.2
|
|
|
$
|
1,318.8
|
|
|
$
|
1,630.0
|
|
|
$
|
2,012.1
|
|
Gross margin
|
605.2
|
|
|
590.6
|
|
|
538.1
|
|
|
428.5
|
|
|
527.7
|
|
|
698.7
|
|
||||||
Selling, general, and administrative
(8)
|
430.4
|
|
|
400.3
|
|
|
369.0
|
|
|
334.4
|
|
|
359.2
|
|
|
400.9
|
|
||||||
Design and research
|
59.9
|
|
|
52.7
|
|
|
45.8
|
|
|
40.5
|
|
|
45.7
|
|
|
51.2
|
|
||||||
Operating earnings
|
114.9
|
|
|
137.6
|
|
|
123.3
|
|
|
53.6
|
|
|
122.8
|
|
|
246.6
|
|
||||||
Earnings before income taxes
|
97.2
|
|
|
119.5
|
|
|
102.5
|
|
|
34.8
|
|
|
98.9
|
|
|
230.4
|
|
||||||
Net earnings
|
68.2
|
|
|
75.2
|
|
|
70.8
|
|
|
28.3
|
|
|
68.0
|
|
|
152.3
|
|
||||||
Cash flow from operating activities
|
136.5
|
|
|
90.1
|
|
|
89.0
|
|
|
98.7
|
|
|
91.7
|
|
|
213.6
|
|
||||||
Cash flow used in investing activities
|
(209.7
|
)
|
|
(58.4
|
)
|
|
(31.4
|
)
|
|
(77.6
|
)
|
|
(29.5
|
)
|
|
(51.0
|
)
|
||||||
Cash flow used in financing activities
|
(16.0
|
)
|
|
(1.6
|
)
|
|
(50.2
|
)
|
|
(78.9
|
)
|
|
(16.5
|
)
|
|
(86.5
|
)
|
||||||
Depreciation and amortization
|
37.5
|
|
|
37.2
|
|
|
39.1
|
|
|
42.6
|
|
|
41.7
|
|
|
43.2
|
|
||||||
Capital expenditures
|
50.2
|
|
|
28.5
|
|
|
30.5
|
|
|
22.3
|
|
|
25.3
|
|
|
40.5
|
|
||||||
Common stock repurchased plus cash dividends paid
|
22.7
|
|
|
7.9
|
|
|
6.0
|
|
|
5.7
|
|
|
19.5
|
|
|
287.9
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Key Ratios
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales growth (decline)
|
2.9
|
%
|
|
4.5
|
%
|
|
25.1
|
%
|
|
(19.1
|
)%
|
|
(19.0
|
)%
|
|
4.9
|
%
|
||||||
Gross margin
(1)
|
34.1
|
|
|
34.3
|
|
|
32.6
|
|
|
32.5
|
|
|
32.4
|
|
|
34.7
|
|
||||||
Selling, general, and administrative
(1) (8)
|
24.3
|
|
|
23.2
|
|
|
22.4
|
|
|
25.4
|
|
|
22.0
|
|
|
19.9
|
|
||||||
Design and research
(1)
|
3.4
|
|
|
3.1
|
|
|
2.8
|
|
|
3.1
|
|
|
2.8
|
|
|
2.5
|
|
||||||
Operating earnings
(1)
|
6.5
|
|
|
8.0
|
|
|
7.5
|
|
|
4.1
|
|
|
7.5
|
|
|
12.3
|
|
||||||
Net earnings growth (decline)
|
(9.3
|
)
|
|
6.2
|
|
|
150.2
|
|
|
(58.4
|
)
|
|
(55.4
|
)
|
|
18.0
|
|
||||||
After-tax return on net sales
(4)
|
3.8
|
|
|
4.4
|
|
|
4.3
|
|
|
2.1
|
|
|
4.2
|
|
|
7.6
|
|
||||||
After-tax return on average assets
(5)
|
7.6
|
|
|
9
|
|
|
8.9
|
|
|
3.7
|
|
|
8.7
|
|
|
20.9
|
|
||||||
After-tax return on average equity
(6)
|
24.7
|
%
|
|
34.4
|
%
|
|
52.5
|
%
|
|
78.1
|
%
|
|
860.8
|
%
|
|
186.4
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Share and Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings per share-diluted
|
$
|
1.16
|
|
|
$
|
1.29
|
|
|
$
|
1.06
|
|
|
$
|
0.43
|
|
|
$
|
1.25
|
|
|
$
|
2.56
|
|
Cash dividends declared per share
|
0.43
|
|
|
0.09
|
|
|
0.09
|
|
|
0.09
|
|
|
0.29
|
|
|
0.35
|
|
||||||
Book value per share at year end
(9)
|
5.31
|
|
|
4.13
|
|
|
3.42
|
|
|
1.27
|
|
|
—
|
|
|
0.28
|
|
||||||
Market price per share at year end
|
28.11
|
|
|
17.87
|
|
|
24.56
|
|
|
19.23
|
|
|
14.23
|
|
|
24.80
|
|
||||||
Weighted average shares outstanding-diluted
|
58.8
|
|
|
58.5
|
|
|
57.7
|
|
|
57.5
|
|
|
54.5
|
|
|
59.6
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Condition
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
951.2
|
|
|
$
|
843.8
|
|
|
$
|
819.1
|
|
|
$
|
775.3
|
|
|
$
|
772.0
|
|
|
$
|
787.9
|
|
Working capital
(3)
|
96.8
|
|
|
189.1
|
|
|
193.4
|
|
|
69.2
|
|
|
155.2
|
|
|
170.2
|
|
||||||
Current ratio
(2)
|
1.3
|
|
|
1.7
|
|
|
1.7
|
|
|
1.2
|
|
|
1.5
|
|
|
1.5
|
|
||||||
Interest-bearing debt and related swap agreement
(10)
|
250.0
|
|
|
250.0
|
|
|
250.0
|
|
|
301.2
|
|
|
377.4
|
|
|
375.5
|
|
||||||
Stockholders' equity
|
311.7
|
|
|
240.5
|
|
|
197.2
|
|
|
72.3
|
|
|
0.2
|
|
|
15.6
|
|
||||||
Total capital
(7)
|
561.7
|
|
|
490.5
|
|
|
447.2
|
|
|
373.5
|
|
|
377.6
|
|
|
391.1
|
|
•
|
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, Nemschoff 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 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 2018
, the Consumer business unit included 32 retail studios (including 31 operating under the DWR brand and a Herman Miller Flagship store in New York City). This business also operates two outlet studios. The retail 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, global e-commerce platforms, 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.
|
|
June 2, 2018
|
June 3, 2017
|
||||||||||||||||||||||||||||
|
North America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North America
|
ELA
|
Specialty
|
Consumer
|
Total
|
||||||||||||||||||||
Net Sales, as reported
|
$
|
1,284.4
|
|
$
|
434.5
|
|
$
|
305.4
|
|
$
|
356.9
|
|
$
|
2,381.2
|
|
$
|
1,276.6
|
|
$
|
385.5
|
|
$
|
298.0
|
|
$
|
318.1
|
|
$
|
2,278.2
|
|
% change from PY
|
0.6
|
%
|
12.7
|
%
|
2.5
|
%
|
12.2
|
%
|
4.5
|
%
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Proforma Adjustments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Dealer Divestitures
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(25.8
|
)
|
—
|
|
—
|
|
—
|
|
(25.8
|
)
|
||||||||||
Currency Translation Effects
(1)
|
(3.9
|
)
|
(12.6
|
)
|
(0.1
|
)
|
(0.2
|
)
|
(16.8
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Impact of Extra Week in FY17
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(21.7
|
)
|
(6.3
|
)
|
(4.3
|
)
|
(4.7
|
)
|
(37.0
|
)
|
||||||||||
Impact of Change in DWR Shipping Terms
|
—
|
|
—
|
|
—
|
|
(5.0
|
)
|
(5.0
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Organic net sales
|
$
|
1,280.5
|
|
$
|
421.9
|
|
$
|
305.3
|
|
$
|
351.7
|
|
$
|
2,359.4
|
|
$
|
1,229.1
|
|
$
|
379.2
|
|
$
|
293.7
|
|
$
|
313.4
|
|
$
|
2,215.4
|
|
% change from PY
|
4.2
|
%
|
11.3
|
%
|
3.9
|
%
|
12.2
|
%
|
6.5
|
%
|
|
|
|
|
|
|
June 3, 2017
|
May 28, 2016
|
||||||||||||||||||||||||||||
|
North America
|
ELA
|
Specialty
|
Consumer
|
Total
|
North America
|
ELA
|
Specialty
|
Consumer
|
Total
|
||||||||||||||||||||
Net Sales, as reported
|
$
|
1,276.6
|
|
$
|
385.5
|
|
$
|
298.0
|
|
$
|
318.1
|
|
$
|
2,278.2
|
|
$
|
1,269.4
|
|
$
|
412.6
|
|
$
|
294.2
|
|
$
|
288.7
|
|
$
|
2,264.9
|
|
% change from PY
|
0.6
|
%
|
(6.6
|
)%
|
1.3
|
%
|
10.2
|
%
|
0.6
|
%
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Adjustments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Dealer Divestitures
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8.8
|
)
|
(30.8
|
)
|
—
|
|
—
|
|
(39.6
|
)
|
||||||||||
Currency Translation Effects
(1)
|
0.7
|
|
13.9
|
|
—
|
|
—
|
|
14.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Impact of Extra Week in FY17
|
(21.7
|
)
|
(6.3
|
)
|
(4.3
|
)
|
(4.7
|
)
|
(37.0
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Organic net sales
|
$
|
1,255.6
|
|
$
|
393.1
|
|
$
|
293.7
|
|
$
|
313.4
|
|
$
|
2,255.8
|
|
$
|
1,260.6
|
|
$
|
381.8
|
|
$
|
294.2
|
|
$
|
288.7
|
|
$
|
2,225.3
|
|
% change from PY
|
(0.4)%
|
3.0%
|
(0.2)%
|
8.6%
|
1.4%
|
|
|
|
|
|
|
June 2, 2018
|
June 3, 2017
|
||||||||||||||||||||||||||||||||||
|
North America
|
ELA
|
Specialty
|
Consumer
|
Corporate
|
Total
|
North America
|
ELA
|
Specialty
|
Consumer
|
Corporate
|
Total
|
||||||||||||||||||||||||
Operating Earnings (Loss)
|
$
|
166.3
|
|
$
|
35.5
|
|
$
|
8.9
|
|
$
|
13.9
|
|
$
|
(47.1
|
)
|
$
|
177.5
|
|
$
|
176.0
|
|
$
|
35.9
|
|
$
|
8.1
|
|
$
|
4.8
|
|
$
|
(34.0
|
)
|
$
|
190.8
|
|
% Net Sales
|
12.9
|
%
|
8.2
|
%
|
2.9
|
%
|
3.9
|
%
|
n/a
|
|
7.5
|
%
|
13.8
|
%
|
9.3
|
%
|
2.7
|
%
|
1.5
|
%
|
n/a
|
|
8.4
|
%
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Add: Special charges
|
—
|
|
2.5
|
|
—
|
|
—
|
|
11.3
|
|
13.8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Add: Impairment charges
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7.1
|
|
—
|
|
—
|
|
7.1
|
|
||||||||||||
Less: Gain on sale of dealer
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.7
|
)
|
||||||||||||
Add: Restructuring expenses
|
1.8
|
|
3.9
|
|
—
|
|
—
|
|
—
|
|
5.7
|
|
2.9
|
|
1.0
|
|
0.9
|
|
0.6
|
|
—
|
|
5.4
|
|
||||||||||||
Adjusted Operating Earnings (Loss)
|
$
|
168.1
|
|
$
|
41.9
|
|
$
|
8.9
|
|
$
|
13.9
|
|
$
|
(35.8
|
)
|
$
|
197.0
|
|
$
|
178.2
|
|
$
|
36.9
|
|
$
|
16.1
|
|
$
|
5.4
|
|
$
|
(34.0
|
)
|
$
|
202.6
|
|
|
June 2, 2018
|
June 3, 2017
|
||||
Earnings per Share - Diluted
|
$
|
2.12
|
|
$
|
2.05
|
|
|
|
|
||||
Add: Other special charges
|
0.16
|
|
—
|
|
||
Add: Impairment charges
|
—
|
|
0.07
|
|
||
Less: Gain on sale of dealer
|
—
|
|
(0.02
|
)
|
||
Add: Restructuring expenses
|
0.07
|
|
0.06
|
|
||
Less: One-time impact of adopting U.S. Tax Cuts and Jobs Act
|
(0.05
|
)
|
—
|
|
||
Adjusted Earnings per Share - Diluted
|
$
|
2.30
|
|
$
|
2.16
|
|
|
|
|
||||
Weighted Average Shares Outstanding (used for Calculating Adjusted Earnings per Share) – Diluted
|
60,311,305
|
|
60,554,589
|
|
(Dollars In millions)
|
Fiscal 2018
|
|
% Change from 2017
|
|
Fiscal 2017
|
|
% Change from 2016
|
|
Fiscal 2016
|
||||||||
52 weeks
|
|
|
53 weeks
|
|
|
52 weeks
|
|||||||||||
Net sales
|
$
|
2,381.2
|
|
|
4.5
|
%
|
|
$
|
2,278.2
|
|
|
0.6
|
%
|
|
$
|
2,264.9
|
|
Cost of sales
|
1,508.2
|
|
|
6.7
|
%
|
|
1,414.0
|
|
|
1.7
|
%
|
|
1,390.7
|
|
|||
Gross margin
|
873.0
|
|
|
1.0
|
%
|
|
864.2
|
|
|
(1.1
|
)%
|
|
874.2
|
|
|||
Operating expenses
|
695.5
|
|
|
3.3
|
%
|
|
673.4
|
|
|
1.6
|
%
|
|
662.7
|
|
|||
Operating earnings
|
177.5
|
|
|
(7.0
|
)%
|
|
190.8
|
|
|
(9.8
|
)%
|
|
211.5
|
|
|||
Net other expenses
|
9.4
|
|
|
(28.8
|
)%
|
|
13.2
|
|
|
(11.4
|
)%
|
|
14.9
|
|
|||
Earnings before income taxes
|
168.1
|
|
|
(5.3
|
)%
|
|
177.6
|
|
|
(9.7
|
)%
|
|
196.6
|
|
|||
Income tax expense
|
42.4
|
|
|
(23.0
|
)%
|
|
55.1
|
|
|
(7.4
|
)%
|
|
59.5
|
|
|||
Equity income from nonconsolidated affiliates, net of tax
|
3.0
|
|
|
87.5
|
%
|
|
1.6
|
|
|
300.0
|
%
|
|
0.4
|
|
|||
Net earnings
|
128.7
|
|
|
3.7
|
%
|
|
124.1
|
|
|
(9.7
|
)%
|
|
137.5
|
|
|||
Net earnings attributable to noncontrolling interests
|
0.6
|
|
|
200.0
|
%
|
|
0.2
|
|
|
(75.0
|
)%
|
|
0.8
|
|
|||
Net earnings attributable to Herman Miller, Inc.
|
$
|
128.1
|
|
|
3.4
|
%
|
|
$
|
123.9
|
|
|
(9.4
|
)%
|
|
$
|
136.7
|
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
63.3
|
|
|
62.1
|
|
|
61.4
|
|
Gross margin
|
36.7
|
|
|
37.9
|
|
|
38.6
|
|
Selling, general, and administrative expenses
|
25.9
|
|
|
25.8
|
|
|
25.9
|
|
Restructuring and impairment expenses
|
0.2
|
|
|
0.5
|
|
|
—
|
|
Design and research expenses
|
3.1
|
|
|
3.2
|
|
|
3.4
|
|
Total operating expenses
|
29.2
|
|
|
29.6
|
|
|
29.3
|
|
Operating earnings
|
7.5
|
|
|
8.4
|
|
|
9.3
|
|
Net other expenses
|
0.4
|
|
|
0.6
|
|
|
0.7
|
|
Earnings before income taxes
|
7.1
|
|
|
7.8
|
|
|
8.7
|
|
Income tax expense
|
1.8
|
|
|
2.4
|
|
|
2.6
|
|
Equity income from nonconsolidated affiliates, net of tax
|
0.1
|
|
|
0.1
|
|
|
—
|
|
Net earnings
|
5.4
|
|
|
5.4
|
|
|
6.1
|
|
Net earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
Net earnings attributable to Herman Miller, Inc.
|
5.4
|
|
|
5.4
|
|
|
6.0
|
|
•
|
Sales volumes within the North American segment increased by approximately $61 million, resulting from increased demand within the company's North America office furniture businesses.
|
•
|
Increased sales volumes within the ELA segment of approximately $54 million were driven by broad-based growth, primarily within the Latin America and EMEA regions.
|
•
|
Incremental sales volumes within the Consumer segment of approximately $44 million were driven by growth across the DWR studio, e-commerce and contract channels and by a change in shipping terms at Design Within Reach that resulted in approximately $5 million of net sales being accelerated into the first quarter of fiscal 2018.
|
•
|
Foreign currency translation had a positive impact on net sales of approximately $16 million.
|
•
|
Increased sales volumes within the Specialty segment of approximately $12 million due primarily to increased sales volumes for the Herman Miller Collection and Geiger subsidiary.
|
•
|
Deeper contract price discounting, net of incremental price increases, reduced net sales in fiscal 2018 by roughly $21 million as compared to the prior year. Of this change, approximately $11 million related to the ELA operating segment and approximately $10 million related to the North American operating segment.
|
•
|
The impact of the divestiture of the company's dealerships in Vancouver, Canada in the first quarter of fiscal 2018 and Philadelphia, Pennsylvania in the third quarter of fiscal 2017 had the effect of reducing sales by $26 million as compared to the prior fiscal year.
|
•
|
Fiscal 2018 had 52 weeks as compared to fiscal 2017, which had 53 weeks. The impact of one less week in the current year decreased net sales by approximately $37 million compared to the prior fiscal year.
|
•
|
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 $21 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.
|
•
|
Foreign currency translation had a negative impact on net sales of approximately $15 million.
|
•
|
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.
|
•
|
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.
|
•
|
Incremental price discounting, net of price increases, reduced the company's consolidated gross margin by approximately 100 basis points relative to the same period of last fiscal year.
|
•
|
Material cost performance was impacted favorably as a result of value engineering, insourcing and supplier cost reductions at the company's West Michigan manufacturing facilities, which increased gross margin by approximately 60 basis points as compared to the same period of the prior fiscal year.
|
•
|
An unfavorable change in product mix that was driven by a shift out of seating and into lower margin product categories, as well as a move from higher margin seating to lower margin seating, drove a decrease of approximately 40 basis points as compared to last fiscal year.
|
•
|
Higher commodity costs drove an unfavorable year-over-year margin impact of approximately 40 basis points.
|
•
|
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 fiscal 2017 drove an unfavorable impact of approximately 40 basis points relative to fiscal 2016.
|
•
|
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 in fiscal 2017 relative to fiscal 2016.
|
•
|
A decrease in employee incentive costs increased consolidated gross margin by 30 basis points in fiscal 2017 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 in fiscal 2017 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 in fiscal 2017 as compared to fiscal 2016.
|
•
|
Restructuring and special charges, primarily associated with the planned CEO transition, consulting fees related to the company's profit optimization initiatives and costs related to the International facilities consolidation plan increased operating expenses by $7.7 million compared to last fiscal year.
|
•
|
Compensation and benefit costs increased approximately $8 million relative to last fiscal year due to headcount increases, wage inflation and higher employee incentive costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.
|
•
|
Sales volume based costs, such as sales commissions and royalties, drove an increase in operating expenses of approximately $7 million.
|
•
|
Incremental costs related to the continued growth and expansion of DWR retail studios increased operating expenses by approximately $5 million.
|
•
|
Foreign currency translation had an incremental unfavorable impact on operating expenses of approximately $3 million.
|
•
|
Depreciation expense increased by approximately $2 million and was driven primarily by investment in facilities.
|
•
|
The divestiture of the company's dealerships in Vancouver and Philadelphia in fiscal 2018 and 2017, respectively, resulted in a decrease in operating expenses of $5.4 million.
|
•
|
Operating expenses were approximately $9 million lower in the current year due to the extra week of operations included in the results of the prior 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 during fiscal 2017, relative to fiscal 2016.
|
•
|
The impact of an extra week in fiscal 2017 increased operating expenses by approximately $9 million.
|
•
|
Incremental costs of approximately $8 million related to the continued growth and expansion of DWR retail studios increased operating expenses in fiscal 2017 as compared to fiscal 2016.
|
•
|
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 in fiscal 2017 as compared to fiscal 2016. 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 during fiscal 2017 as compared to fiscal 2016.
|
•
|
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.
|
•
|
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, Nemschoff 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.
|
•
|
Corporate
—
C
onsists primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs.
|
•
|
Sales volumes within the North America segment increased by approximately $61 million, resulting from increased demand within the company's North America office furniture businesses.
|
•
|
Fiscal 2017 included the full results of operations for the company’s dealership in Vancouver, Canada that was divested in the first quarter of fiscal 2018. Fiscal 2017 also included seven months of operations for the company's dealership in Philadelphia, Pennsylvania that was divested in the third quarter of fiscal 2017. Accordingly, the increase in sales volumes for the North American segment for fiscal 2018 was partially offset by a $25.8 million decrease in net sales due to these divestitures. The sale of these dealerships also decreased consolidated orders for the North American segment in fiscal 2018 as compared to fiscal 2017 by $24.2 million.
|
•
|
The impact of an extra week in fiscal 2017 caused net sales and orders in fiscal 2018 to be lower than the prior year by approximately
$21.7 million
and
$20.0 million
, respectively.
|
•
|
Incremental price discounting, net of price increases, in fiscal 2018 decreased net sales by approximately $10 million compared to the prior year.
|
•
|
Operating earnings decreased in fiscal 2018 relative to the prior fiscal year due to the following items: incremental price discounting of roughly $10 million, increased commodity costs of approximately $10 million, a change in product mix with an unfavorable impact to earnings of an estimated $7 million, higher outsourcing costs of approximately $4 million and the impact of an extra week in fiscal 2017 which generated approximately $3 million of additional earnings in the prior fiscal year. These decreases were partially offset by increased operating earnings of an estimated $14 million from incremental sales volumes and the benefit of improved material cost performance of $11 million from value engineering, insourcing and supplier cost reductions.
|
•
|
The impact of the extra week increased net sales by an estimated
$21.7 million
and increased orders by
$20.0 million
for fiscal 2017 as compared to fiscal 2016.
|
•
|
Incremental price discounting, net of price increases, in fiscal 2017 decreased net sales by approximately $26 million compared to fiscal 2016.
|
•
|
Sales volumes within the North American segment increased by approximately $21 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 $10.8 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.
|
•
|
Restructuring charges related to targeted workforce reductions increased operating expenses by $2.9 million.
|
•
|
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.
|
•
|
Increased sales volumes within the ELA segment of approximately $54 million were driven by broad-based growth across all regions, most significantly within the Latin America and EMEA regions.
|
•
|
Deeper contract price discounting, net of incremental price increases, reduced net sales in fiscal 2018 by roughly $11 million as compared to the prior year.
|
•
|
Foreign currency translation had a positive impact on net sales of approximately $13 million.
|
•
|
The impact of an extra week in fiscal 2017 caused net sales and orders in fiscal 2018 to be lower than the prior year by approximately
$6.3 million
and
$8.1 million
, respectively.
|
•
|
Operating earnings were reduced in fiscal 2018 by roughly $11 million due to incremental price discounting and by $5.4 million due to restructuring and other special charges that were driven mainly by the consolidation of manufacturing facilities in China. These decreases were partially offset by increased operating earnings of an estimated $17 million from incremental sales volumes.
|
•
|
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
$16 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 and orders by
$6.3 million
and
$8.1 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.
|
•
|
Net sales increased in fiscal 2018 as compared to the prior fiscal year due primarily to increased sales volumes of approximately $12 million, which was driven primarily by the company's Herman Miller Collection and Geiger businesses.
|
•
|
The impact of an extra week in fiscal 2017 caused net sales and orders in fiscal 2018 to be lower than the prior year by approximately $4.3 million and $4.8 million, respectively.
|
•
|
Excluding the favorable year-over-year impact of $8.0 million of restructuring and impairment expenses that were recorded in fiscal 2017, operating earnings decreased in fiscal 2018 as compared to fiscal 2017. Operating earnings were adversely impacted by the company's Nemschoff subsidiary, which experienced a decrease driven by unfavorable product mix, the negative impact on operating earnings from decreased sales volumes and higher warranty costs.
|
•
|
The impact of an extra week in fiscal 2017 increased net sales and orders by approximately $4.3 million and $4.8 million, respectively, as compared to the prior year.
|
•
|
The decrease in operating earnings in fiscal 2017 relative to fiscal 2016 was driven mainly by impairment and restructuring expenses totaling $8.0 million that were primarily attributable to the impairment of the Nemschoff tradename.
|
•
|
Incremental sales volumes of approximately $44 million were driven by growth across the DWR studio, e-commerce and contract channels and by a change in shipping terms at Design Within Reach that resulted in approximately $5 million of net sales being accelerated into the first quarter of fiscal 2018.
|
•
|
The impact of the extra week in fiscal 2017 caused net sales and orders in fiscal 2018 to be lower than the prior year by approximately $4.7 million and $4.0 million, respectively.
|
•
|
Operating earnings were higher in fiscal 2018 relative to the prior fiscal year due to an estimated $14 million benefit from increased sales volumes and an estimated $2 million benefit from the company's profit enhancement initiatives; partially offset by increased employee incentive costs of $2.6 million, increased compensation and benefits costs of $2.3 million and increased depreciation costs of approximately $2 million.
|
•
|
Increased sales volumes of approximately $25 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.
|
|
Fiscal Year Ended
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash and cash equivalents, end of period
|
$
|
203.9
|
|
|
$
|
96.2
|
|
|
$
|
84.9
|
|
Marketable securities, end of period
|
$
|
8.6
|
|
|
$
|
8.6
|
|
|
$
|
7.5
|
|
Cash provided by operating activities
|
$
|
166.5
|
|
|
$
|
202.1
|
|
|
$
|
210.4
|
|
Cash used for investing activities
|
$
|
(62.7
|
)
|
|
$
|
(116.3
|
)
|
|
$
|
(80.8
|
)
|
Cash provided by (used for) financing activities
|
$
|
2.5
|
|
|
$
|
(74.6
|
)
|
|
$
|
(106.5
|
)
|
Pension and post-retirement benefit plan contributions
|
$
|
(13.4
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(1.2
|
)
|
Capital expenditures
|
$
|
(70.6
|
)
|
|
$
|
(87.3
|
)
|
|
$
|
(85.1
|
)
|
Stock repurchased
|
$
|
(46.5
|
)
|
|
$
|
(23.8
|
)
|
|
$
|
(14.1
|
)
|
Interest-bearing debt, end of period
|
$
|
275.0
|
|
|
$
|
199.9
|
|
|
$
|
221.9
|
|
Available unsecured credit facilities, end of period
(1)
|
$
|
166.8
|
|
|
$
|
391.7
|
|
|
$
|
232.1
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Naughtone Holdings Limited
|
$
|
—
|
|
|
$
|
11.6
|
|
|
$
|
—
|
|
George Nelson Bubble Lamp Product Line
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
||||
Cash and cash equivalents
|
$
|
203.9
|
|
|
$
|
96.2
|
|
Marketable securities
|
$
|
8.6
|
|
|
$
|
8.6
|
|
Availability under revolving lines of credit
|
$
|
166.8
|
|
|
$
|
391.7
|
|
(In millions)
|
Payments due by fiscal year
|
||||||||||||||||||
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
||||||||||
Long-term debt
(1)
|
$
|
275.0
|
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
$
|
225.0
|
|
|
$
|
—
|
|
Estimated interest on debt obligations
(1)
|
71.9
|
|
|
9.6
|
|
|
18.5
|
|
|
13.3
|
|
|
30.5
|
|
|||||
Operating leases
|
328.5
|
|
|
45.8
|
|
|
83.3
|
|
|
75.6
|
|
|
123.8
|
|
|||||
Purchase obligations
(2)
|
93.5
|
|
|
88.1
|
|
|
2.9
|
|
|
0.4
|
|
|
2.1
|
|
|||||
Pension and other post employment benefit plans funding
(3)
|
0.9
|
|
|
0.4
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|||||
Stockholder dividends
(4)
|
10.7
|
|
|
10.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
(5)
|
15.3
|
|
|
1.3
|
|
|
2.5
|
|
|
2.3
|
|
|
9.2
|
|
|||||
Total
|
$
|
795.8
|
|
|
$
|
155.9
|
|
|
$
|
157.3
|
|
|
$
|
316.7
|
|
|
$
|
165.9
|
|
(In millions)
|
|
Retention Level (per occurrence)
|
||
General liability
|
|
$
|
1.00
|
|
Auto liability
|
|
$
|
1.00
|
|
Workers' compensation
|
|
$
|
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.
|
(In millions)
|
|
|
|
|||||||
Assumption
|
2019 Expense
|
|
June 2, 2018 Obligation
|
|||||||
|
U.S.
|
|
International
|
|
U.S.
|
|
International
|
|||
Discount rate
|
—
|
|
|
$(1.4) / 1.7
|
|
$(0.3) / 0.3
|
|
$(18.4) / 24.6
|
||
Expected return on assets
|
—
|
|
|
$(1.0) / 1.0
|
|
—
|
|
|
—
|
|
•
|
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 2018
, 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 2, 2018
, 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
4.6 years
in calculating the fair values of the majority of stock options issued during
fiscal 2018
, except for the HMCH Stock Option Plan, where we utilized an average expected term of
1.1 years
.
|
|
Fiscal Years Ended
|
||||||||||
(In millions, except per share data)
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Net sales
|
$
|
2,381.2
|
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
Cost of sales
|
1,508.2
|
|
|
1,414.0
|
|
|
1,390.7
|
|
|||
Gross margin
|
873.0
|
|
|
864.2
|
|
|
874.2
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
616.7
|
|
|
587.8
|
|
|
585.6
|
|
|||
Restructuring and impairment expenses
|
5.7
|
|
|
12.5
|
|
|
—
|
|
|||
Design and research
|
73.1
|
|
|
73.1
|
|
|
77.1
|
|
|||
Total operating expenses
|
695.5
|
|
|
673.4
|
|
|
662.7
|
|
|||
Operating earnings
|
177.5
|
|
|
190.8
|
|
|
211.5
|
|
|||
Other expenses (income):
|
|
|
|
|
|
||||||
Interest expense
|
13.5
|
|
|
15.2
|
|
|
15.4
|
|
|||
Interest and other investment income
|
(4.4
|
)
|
|
(2.2
|
)
|
|
(0.8
|
)
|
|||
Other, net
|
0.3
|
|
|
0.2
|
|
|
0.3
|
|
|||
Net other expenses
|
9.4
|
|
|
13.2
|
|
|
14.9
|
|
|||
Earnings before income taxes
|
168.1
|
|
|
177.6
|
|
|
196.6
|
|
|||
Income tax expense
|
42.4
|
|
|
55.1
|
|
|
59.5
|
|
|||
Equity earnings from nonconsolidated affiliates, net of tax
|
3.0
|
|
|
1.6
|
|
|
0.4
|
|
|||
Net earnings
|
128.7
|
|
|
124.1
|
|
|
137.5
|
|
|||
Net earnings attributable to noncontrolling interests
|
0.6
|
|
|
0.2
|
|
|
0.8
|
|
|||
Net earnings attributable to Herman Miller, Inc.
|
$
|
128.1
|
|
|
$
|
123.9
|
|
|
$
|
136.7
|
|
|
|
|
|
|
|
||||||
Earnings per share — basic
|
$
|
2.15
|
|
|
$
|
2.07
|
|
|
$
|
2.28
|
|
Earnings per share — diluted
|
$
|
2.12
|
|
|
$
|
2.05
|
|
|
$
|
2.26
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
$
|
2.7
|
|
|
$
|
(7.2
|
)
|
|
$
|
(8.8
|
)
|
Pension and post-retirement liability adjustments
|
10.4
|
|
|
(12.7
|
)
|
|
0.5
|
|
|||
Unrealized gains on interest rate swap agreement
|
7.8
|
|
|
2.1
|
|
|
—
|
|
|||
Unrealized holding gain on available for sale securities
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Total other comprehensive income (loss)
|
20.9
|
|
|
(17.7
|
)
|
|
(8.3
|
)
|
|||
Comprehensive income
|
149.6
|
|
|
106.4
|
|
|
129.2
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
0.6
|
|
|
0.2
|
|
|
0.8
|
|
|||
Comprehensive income attributable to Herman Miller, Inc.
|
$
|
149.0
|
|
|
$
|
106.2
|
|
|
$
|
128.4
|
|
(In millions, except share and per share data)
|
June 2, 2018
|
|
June 3, 2017
|
||||
Assets
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
203.9
|
|
|
$
|
96.2
|
|
Marketable securities
|
8.6
|
|
|
8.6
|
|
||
Accounts and notes receivable, less allowances of $3.1 in 2018 and $3.3 in 2017
|
219.3
|
|
|
186.6
|
|
||
Inventories, net
|
162.4
|
|
|
152.4
|
|
||
Prepaid taxes
|
9.9
|
|
|
17.7
|
|
||
Other
|
41.3
|
|
|
30.4
|
|
||
Total Current Assets
|
645.4
|
|
|
491.9
|
|
||
|
|
|
|
||||
Property and Equipment:
|
|
|
|
||||
Land and improvements
|
24.4
|
|
|
24.0
|
|
||
Buildings and improvements
|
238.6
|
|
|
229.0
|
|
||
Machinery and equipment
|
700.0
|
|
|
662.4
|
|
||
Construction in progress
|
57.8
|
|
|
53.3
|
|
||
Gross Property and Equipment
|
1,020.8
|
|
|
968.7
|
|
||
Less: Accumulated depreciation
|
(689.4
|
)
|
|
(654.1
|
)
|
||
Net Property and Equipment
|
331.4
|
|
|
314.6
|
|
||
Goodwill
|
304.1
|
|
|
304.5
|
|
||
Indefinite-lived intangibles
|
78.1
|
|
|
78.1
|
|
||
Other amortizable intangibles, net
|
41.3
|
|
|
45.4
|
|
||
Other assets
|
79.2
|
|
|
71.8
|
|
||
Total Assets
|
$
|
1,479.5
|
|
|
$
|
1,306.3
|
|
|
|
|
|
||||
Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
171.4
|
|
|
$
|
148.4
|
|
Accrued compensation and benefits
|
86.3
|
|
|
79.7
|
|
||
Accrued warranty
|
51.5
|
|
|
47.7
|
|
||
Unearned revenue
|
30.4
|
|
|
33.2
|
|
||
Other accrued liabilities
|
74.2
|
|
|
76.7
|
|
||
Total Current Liabilities
|
413.8
|
|
|
385.7
|
|
||
|
|
|
|
||||
Long-term debt, less current portion
|
275.0
|
|
|
199.9
|
|
||
Pension and post-retirement benefits
|
15.6
|
|
|
38.5
|
|
||
Other liabilities
|
79.8
|
|
|
69.9
|
|
||
Total Liabilities
|
784.2
|
|
|
694.0
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests
|
30.5
|
|
|
24.6
|
|
||
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,
59,230,974
and 59,715,824 shares issued and outstanding in 2018 and 2017, respectively)
|
11.7
|
|
|
11.9
|
|
||
Additional paid-in capital
|
116.6
|
|
|
139.3
|
|
||
Retained earnings
|
598.3
|
|
|
519.5
|
|
||
Accumulated other comprehensive loss
|
(61.3
|
)
|
|
(82.2
|
)
|
||
Key executive deferred compensation
|
(0.7
|
)
|
|
(1.0
|
)
|
||
Herman Miller, Inc. Stockholders' Equity
|
664.6
|
|
|
587.5
|
|
||
Noncontrolling interests
|
0.2
|
|
|
0.2
|
|
||
Total Stockholders' Equity
|
664.8
|
|
|
587.7
|
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
|
$
|
1,479.5
|
|
|
$
|
1,306.3
|
|
(In millions)
|
Fiscal Years Ended
|
||||||||||
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
|||||||
Preferred Stock
|
|
|
|
|
|
||||||
Balance at beginning of year and end of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common Stock
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
11.9
|
|
|
$
|
12.0
|
|
|
$
|
11.9
|
|
Repurchase and retirement of common stock
|
(0.3
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||
Restricted stock units released
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
Balance at end of year
|
$
|
11.7
|
|
|
$
|
11.9
|
|
|
$
|
12.0
|
|
Additional Paid-in Capital
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
139.3
|
|
|
$
|
142.7
|
|
|
$
|
135.1
|
|
Cumulative effect of accounting change
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|||
Exercise of stock options
|
14.6
|
|
|
9.4
|
|
|
6.6
|
|
|||
Repurchase and retirement of common stock
|
(46.2
|
)
|
|
(23.7
|
)
|
|
(14.1
|
)
|
|||
Employee stock purchase plan issuances
|
2.0
|
|
|
1.9
|
|
|
1.7
|
|
|||
Stock-based compensation expense
|
7.0
|
|
|
9.1
|
|
|
11.9
|
|
|||
Excess tax benefit for stock-based compensation
|
—
|
|
|
(0.6
|
)
|
|
0.8
|
|
|||
Restricted stock units released
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|||
Deferred compensation plan
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Directors' fees
|
0.4
|
|
|
0.3
|
|
|
0.6
|
|
|||
Balance at end of year
|
$
|
116.6
|
|
|
$
|
139.3
|
|
|
$
|
142.7
|
|
Retained Earnings
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
519.5
|
|
|
$
|
435.3
|
|
|
$
|
330.2
|
|
Cumulative effect of accounting change
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Net income attributable to Herman Miller, Inc.
|
128.1
|
|
|
123.9
|
|
|
136.7
|
|
|||
Dividends declared on common stock (per share - 2018: $0.72; 2017: $0.68; 2016: $0.59)
|
(43.2
|
)
|
|
(40.9
|
)
|
|
(35.6
|
)
|
|||
Noncontrolling interests redemption value adjustment
|
(6.2
|
)
|
|
1.2
|
|
|
4.0
|
|
|||
Balance at end year
|
$
|
598.3
|
|
|
$
|
519.5
|
|
|
$
|
435.3
|
|
Accumulated Other Comprehensive Loss
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(82.2
|
)
|
|
$
|
(64.5
|
)
|
|
$
|
(56.2
|
)
|
Other comprehensive income (loss)
|
20.9
|
|
|
(17.7
|
)
|
|
(8.3
|
)
|
|||
Balance at end of year
|
$
|
(61.3
|
)
|
|
$
|
(82.2
|
)
|
|
$
|
(64.5
|
)
|
Key Executive Deferred Compensation
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
(1.0
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(1.2
|
)
|
Deferred compensation plan
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|||
Balance at end of year
|
$
|
(0.7
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(1.1
|
)
|
Herman Miller, Inc. Stockholders' Equity
|
$
|
664.6
|
|
|
$
|
587.5
|
|
|
$
|
524.4
|
|
Noncontrolling Interests
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
0.3
|
|
|||
Deconsolidation of entity with noncontrolling interests
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||
Stock-based compensation expense
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Balance at end of year
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
Total Stockholders' Equity
|
$
|
664.8
|
|
|
$
|
587.7
|
|
|
$
|
524.7
|
|
|
Fiscal Years Ended
|
||||||||||
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
128.7
|
|
|
$
|
124.1
|
|
|
$
|
137.5
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation expense
|
60.9
|
|
|
52.9
|
|
|
47.0
|
|
|||
Amortization expense
|
6.0
|
|
|
6.0
|
|
|
6.0
|
|
|||
Provision for losses on accounts receivable and notes receivable
|
0.9
|
|
|
—
|
|
|
2.2
|
|
|||
Earnings from nonconsolidated affiliates net of dividends received
|
(0.2
|
)
|
|
(1.5
|
)
|
|
—
|
|
|||
Gain on sales of property and dealers
|
(0.5
|
)
|
|
—
|
|
|
(5.8
|
)
|
|||
Deferred taxes
|
(0.8
|
)
|
|
14.8
|
|
|
10.4
|
|
|||
Pension contributions
|
(13.4
|
)
|
|
(1.1
|
)
|
|
(1.2
|
)
|
|||
Pension and post-retirement expenses
|
2.9
|
|
|
0.5
|
|
|
1.4
|
|
|||
Restructuring and impairment expenses
|
5.7
|
|
|
12.5
|
|
|
—
|
|
|||
Stock-based compensation
|
7.7
|
|
|
8.7
|
|
|
11.9
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
(0.5
|
)
|
|
(1.4
|
)
|
|||
Increase in long-term liabilities
|
3.4
|
|
|
6.2
|
|
|
6.7
|
|
|||
Changes in current assets and liabilities:
|
|
|
|
|
|
||||||
(Increase) decrease in accounts receivable
|
(33.1
|
)
|
|
17.3
|
|
|
(30.5
|
)
|
|||
Increase in inventories
|
(12.4
|
)
|
|
(29.9
|
)
|
|
(6.0
|
)
|
|||
Increase in prepaid expenses and other
|
(3.0
|
)
|
|
(0.5
|
)
|
|
(11.7
|
)
|
|||
Increase (decrease) in accounts payable
|
16.0
|
|
|
(11.2
|
)
|
|
8.7
|
|
|||
(Decrease) increase in accrued liabilities
|
(0.3
|
)
|
|
0.8
|
|
|
33.5
|
|
|||
Other
|
(2.0
|
)
|
|
3.0
|
|
|
1.7
|
|
|||
Net Cash Provided by Operating Activities
|
166.5
|
|
|
202.1
|
|
|
210.4
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Net (advances) receipts from notes receivable
|
(1.1
|
)
|
|
2.4
|
|
|
0.2
|
|
|||
Marketable securities purchases
|
(1.0
|
)
|
|
(2.0
|
)
|
|
(7.8
|
)
|
|||
Marketable securities sales
|
1.0
|
|
|
0.9
|
|
|
6.1
|
|
|||
Capital expenditures
|
(70.6
|
)
|
|
(87.3
|
)
|
|
(85.1
|
)
|
|||
Proceeds from sales of property and dealers
|
2.1
|
|
|
—
|
|
|
10.7
|
|
|||
Payments of loans on cash surrender value of life insurance
|
—
|
|
|
(15.3
|
)
|
|
—
|
|
|||
Proceeds from life insurance policy
|
8.1
|
|
|
—
|
|
|
—
|
|
|||
Acquisitions, net of cash received
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|||
Equity investment in non-controlled entities
|
—
|
|
|
(13.1
|
)
|
|
—
|
|
|||
Other, net
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(1.3
|
)
|
|||
Net Cash Used for Investing Activities
|
(62.7
|
)
|
|
(116.3
|
)
|
|
(80.8
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Repayments of long-term debt
|
(150.0
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from credit facility
|
340.4
|
|
|
794.4
|
|
|
800.8
|
|
|||
Repayments of credit facility
|
(115.4
|
)
|
|
(816.4
|
)
|
|
(868.8
|
)
|
|||
Dividends paid
|
(42.4
|
)
|
|
(39.4
|
)
|
|
(34.9
|
)
|
|||
Common stock issued
|
17.0
|
|
|
11.7
|
|
|
9.2
|
|
|||
Common stock repurchased and retired
|
(46.5
|
)
|
|
(23.8
|
)
|
|
(14.1
|
)
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
0.5
|
|
|
1.4
|
|
|||
Payment of contingent consideration obligation
|
(0.1
|
)
|
|
(2.0
|
)
|
|
—
|
|
|||
Purchase of noncontrolling interests
|
(1.0
|
)
|
|
(1.5
|
)
|
|
—
|
|
|||
Other, net
|
0.5
|
|
|
1.9
|
|
|
(0.1
|
)
|
|||
Net Cash Provided by (Used for) Financing Activities
|
2.5
|
|
|
(74.6
|
)
|
|
(106.5
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
1.4
|
|
|
0.1
|
|
|
(1.9
|
)
|
|||
Net Increase In Cash and Cash Equivalents
|
107.7
|
|
|
11.3
|
|
|
21.2
|
|
|||
Cash and cash equivalents, Beginning of Year
|
96.2
|
|
|
84.9
|
|
|
63.7
|
|
|||
Cash and Cash Equivalents, End of Year
|
$
|
203.9
|
|
|
$
|
96.2
|
|
|
$
|
84.9
|
|
|
|
|
|
|
|
||||||
Other Cash Flow Information
|
|
|
|
|
|
||||||
Interest paid
|
$
|
16.4
|
|
|
$
|
13.4
|
|
|
$
|
13.4
|
|
Income taxes paid, net of cash received
|
$
|
34.2
|
|
|
$
|
35.6
|
|
|
$
|
57.6
|
|
|
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 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
|
|
Foreign currency translation adjustments
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||
Sale of owned dealer
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||
Balance, June 02, 2018
|
|
$
|
304.1
|
|
|
$
|
78.1
|
|
|
$
|
382.2
|
|
|
June 2, 2018
|
||||||||||||||
(In millions)
|
Patent and Trademarks
|
|
Customer Relationships
|
|
Other
|
|
Total
|
||||||||
Gross carrying value
|
$
|
22.4
|
|
|
$
|
55.3
|
|
|
$
|
7.5
|
|
|
$
|
85.2
|
|
Accumulated amortization
|
14.7
|
|
|
23.5
|
|
|
5.7
|
|
|
43.9
|
|
||||
Net
|
$
|
7.7
|
|
|
$
|
31.8
|
|
|
$
|
1.8
|
|
|
$
|
41.3
|
|
|
|
|
|
|
|
|
|
||||||||
|
June 3, 2017
|
||||||||||||||
|
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
|
|
(In millions)
|
|
Retention Level (per occurrence)
|
||
General liability
|
|
$
|
1.00
|
|
Auto liability
|
|
$
|
1.00
|
|
Workers' compensation
|
|
$
|
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 Adopted Accounting Standards
|
||||||
Standard
|
|
Description
|
|
Date of Adoption
|
|
Effect on the Financial Statements or Other Significant Matters
|
|
|
|
|
|
|
|
Improvements to Employee Share-Based Payment Accounting
|
|
Under the new guidance, all excess tax benefits/deficiencies should be recognized as income tax expense/benefit, entities may elect how to account for forfeitures and cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity on the cash flow.
|
|
June 4, 2017
|
|
The company adopted the accounting standard in the first quarter of fiscal 2018. As a result, the company elected to change its policy from estimating forfeitures to recognizing forfeitures when they occur, which resulted in an increase in Retained earnings of $0.1 million, a decrease in Additional paid in capital of $0.3 million and an increase in Other noncurrent assets of $0.2 million in the Condensed Consolidated Balance Sheets. The other impacts resulting from adoption did not have a material impact on the company's Financial Statements.
|
|
|
|
|
|
|
|
Recently Issued Accounting Standards Not Yet Adopted
|
||||||
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 its review of the impact of the new standard and has identified changes in the determination of performance obligations around product and service revenue. For commercial contracts in which the company sells directly to end customers, in most cases, the company currently delays revenue recognition until the products are shipped and installed and records third-party installation and certain other fees net. However, under the new standard, in most cases, the company will recognize product revenue when title and risk of loss have transferred and will recognize service revenue as the services are performed. Additionally, the company will record certain product pricing elements related to its direct customer sales within Cost of Sales rather than net within revenue as is current practice. The company has determined that these elements relate to the product performance obligation which the company is considered to control under the new standard. The company has implemented changes to its business processes, systems and controls to support recognition and disclosure under the new standard. The company is adopting the standard in fiscal 2019 using the modified-retrospective approach and as a result expects to record an accumulative catch up adjustment of approximately $2 million increase to fiscal 2019 beginning retained earnings.
|
|
|
|
|
|
|
|
Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
|
This standard changes the rules related to the income statement presentation of the components of net periodic benefit cost for defined benefit pension and other postretirement benefit plans. Under the new guidance, entities must present the service cost component of net periodic benefit cost in the same income statement line items as other employee compensation costs related to services rendered during the period. Other components of net periodic benefit cost will be presented separately from the line items that include the service cost. Early adoption is permitted.
|
|
June 3, 2018
|
|
The standard is expected to impact the classification of certain costs within the company's Consolidated Statements of Comprehensive Income. No impact to the company's Consolidated Balance Sheets or Consolidated Statements of Cash Flow are expected as a result of the standard.
|
|
|
|
|
|
|
|
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
|
This update allows for the reclassification to retained earnings of the tax effects stranded in Accumulated Other Comprehensive Income resulting from The Tax Cuts and Jobs Act. Early adoption is permitted.
|
|
June 2, 2019
|
|
The company is still evaluating these amendments and has not determined its accounting policy and whether or not an election will be made to reclassify the stranded effects.
|
|
|
|
|
|
|
|
Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities
|
|
This update amends the hedge accounting recognition and presentation with the objectives of improving the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities and simplifying the application of hedge accounting. The update expands the strategies eligible for hedge accounting, relaxes the timing requirements of hedge documentation and effectiveness assessments and permits the use of qualitative assessments on an ongoing basis to assess hedge effectiveness. The new guidance also requires new disclosures and presentation.
|
|
June 2, 2019
|
|
The company is currently evaluating the impact of adopting this guidance.
|
Recently Issued Accounting Standards Not Yet Adopted (continued)
|
||||||
Standard
|
|
Description
|
|
Date of Adoption
|
|
Effect on the Financial Statements or Other Significant Matters
|
|
|
|
|
|
|
|
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 2, 2018
|
|
June 3, 2017
|
||||
Finished goods and work in process
|
|
$
|
124.2
|
|
|
$
|
119.0
|
|
Raw materials
|
|
38.2
|
|
|
33.4
|
|
||
Total
|
|
$
|
162.4
|
|
|
$
|
152.4
|
|
(in millions)
|
June 2, 2018
|
June 3, 2017
|
||||
Investments in nonconsolidated affiliates
|
$
|
16.8
|
|
$
|
16.2
|
|
(in millions)
|
June 2, 2018
|
June 3, 2017
|
May 28, 2016
|
||||||
Equity earnings from nonconsolidated affiliates
|
$
|
3.0
|
|
$
|
1.6
|
|
$
|
0.4
|
|
Ownership Interest
|
June 2, 2018
|
June 3, 2017
|
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%
|
50.0%
|
(in millions)
|
June 2, 2018
|
June 3, 2017
|
May 28, 2016
|
||||||
Sales to nonconsolidated affiliates
|
$
|
4.3
|
|
$
|
4.0
|
|
$
|
2.5
|
|
Purchases from nonconsolidated affiliates
|
$
|
6.8
|
|
$
|
4.2
|
|
$
|
0.9
|
|
(in millions)
|
June 2, 2018
|
June 3, 2017
|
||||
Receivables from nonconsolidated affiliates
|
$
|
0.9
|
|
$
|
0.8
|
|
Payables to nonconsolidated affiliates
|
$
|
1.0
|
|
$
|
0.5
|
|
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
||||
Series B Senior Notes, 6.42%, due January 3, 2018
|
$
|
—
|
|
|
$
|
149.9
|
|
Debt securities, 6.0%, due March 1, 2021
|
50.0
|
|
|
50.0
|
|
||
Syndicated Revolving Line of Credit, due September 2021
|
225.0
|
|
|
—
|
|
||
Construction-Type Lease
|
7.0
|
|
|
7.0
|
|
||
Supplier financing program
|
3.8
|
|
|
3.2
|
|
||
Total debt
|
$
|
285.8
|
|
|
$
|
210.1
|
|
Less: Current debt
|
(10.8
|
)
|
|
(10.2
|
)
|
||
Long-term debt
|
$
|
275.0
|
|
|
$
|
199.9
|
|
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Income):
|
|||||||||||||||
|
Pension Benefits
|
|
Post-Retirement Benefits
|
||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Domestic:
|
|
|
|
|
|
|
|
||||||||
Net actuarial gain
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
|
$
|
(0.4
|
)
|
Total recognized in other comprehensive loss
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
|
$
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
||||||||
International:
|
|
|
|
|
|
|
|
||||||||
Net actuarial (gain) loss
|
$
|
(7.7
|
)
|
|
$
|
18.6
|
|
|
|
|
|
||||
Net amortization
|
(4.2
|
)
|
|
(2.2
|
)
|
|
|
|
|
||||||
Total recognized in other comprehensive loss
|
$
|
(11.9
|
)
|
|
$
|
16.4
|
|
|
|
|
|
The weighted-average used in the determination of net periodic benefit cost:
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
(Percentages)
|
Domestic
|
|
International
|
|
Domestic
|
|
International
|
|
Domestic
|
|
International
|
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
|
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
|
3.99
|
|
2.87
|
|
3.53
|
|
2.49
|
|
3.51
|
|
3.43
|
Compensation increase rate
|
n/a
|
|
3.10
|
|
n/a
|
|
3.25
|
|
n/a
|
|
2.95
|
(In millions)
|
1 Percent Increase
|
|
1 Percent Decrease
|
||||
Effect on total fiscal 2018 service and interest cost components
|
$
|
—
|
|
|
$
|
—
|
|
Effect on post-retirement benefit obligation at June 2, 2018
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
Asset Category
|
Targeted Asset Allocation Percentage
|
|
Percentage of Plan Assets at Year End
|
||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||
Fixed income
|
35
|
|
20
|
|
36
|
|
|
27
|
|
||||
Common collective trusts
|
65
|
|
80
|
|
64
|
|
|
73
|
|
||||
Total
|
|
|
|
|
100
|
|
|
100
|
|
||||
|
|
|
|
|
|
|
|
||||||
(In millions)
|
|
|
International Plan as of June 2, 2018
|
||||||||||
Asset Category
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash and cash equivalents
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
Foreign government obligations
|
|
|
—
|
|
|
33.4
|
|
|
33.4
|
|
|||
Common collective trusts-balanced
|
|
|
—
|
|
|
61.0
|
|
|
61.0
|
|
|||
Total
|
|
|
$
|
0.2
|
|
|
$
|
94.4
|
|
|
$
|
94.6
|
|
|
|
|
|
|
|
|
|
||||||
(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)
|
Pension Benefits Domestic
|
|
Pension Benefits International
|
|
Post-Retirement Benefits
|
||||||
2019
|
$
|
0.1
|
|
|
$
|
2.0
|
|
|
$
|
0.6
|
|
2020
|
$
|
0.1
|
|
|
$
|
2.0
|
|
|
$
|
0.5
|
|
2021
|
$
|
0.1
|
|
|
$
|
2.1
|
|
|
$
|
0.5
|
|
2022
|
$
|
0.1
|
|
|
$
|
2.5
|
|
|
$
|
0.4
|
|
2023
|
$
|
0.1
|
|
|
$
|
2.4
|
|
|
$
|
0.4
|
|
2024-2028
|
$
|
0.3
|
|
|
$
|
16.5
|
|
|
$
|
1.4
|
|
(In millions, except shares)
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Numerator for both basic and diluted EPS, Net earnings attributable to Herman Miller, Inc.
|
$
|
128.1
|
|
|
$
|
123.9
|
|
|
$
|
136.7
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Denominator for basic EPS, weighted-average common shares outstanding
|
59,681,268
|
|
|
59,871,805
|
|
|
59,844,540
|
|
|||
Potentially dilutive shares resulting from stock plans
|
630,037
|
|
|
682,784
|
|
|
684,729
|
|
|||
Denominator for diluted EPS
|
60,311,305
|
|
|
60,554,589
|
|
|
60,529,269
|
|
(In millions)
|
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Employee stock purchase program
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Stock option plans
|
|
2.6
|
|
|
2.0
|
|
|
1.9
|
|
|||
Restricted stock units
|
|
3.9
|
|
|
3.6
|
|
|
3.2
|
|
|||
Performance share units
|
|
0.9
|
|
|
2.8
|
|
|
6.5
|
|
|||
Total
|
|
$
|
7.7
|
|
|
$
|
8.7
|
|
|
$
|
11.9
|
|
|
|
|
|
|
|
|
||||||
Tax benefit
|
|
$
|
2.3
|
|
|
$
|
3.1
|
|
|
$
|
4.3
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Risk-free interest rates
(1)
|
1.79
|
%
|
|
1.01
|
%
|
|
1.51
|
%
|
|||
Expected term of options
(2)
|
4.6 years
|
|
|
4.0 years
|
|
|
4.0 years
|
|
|||
Expected volatility
(3)
|
26
|
%
|
|
26
|
%
|
|
33
|
%
|
|||
Dividend yield
(4)
|
2.23
|
%
|
|
2.13
|
%
|
|
2.03
|
%
|
|||
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
|
$
|
6.39
|
|
|
$
|
5.50
|
|
|
$
|
6.73
|
|
|
|
Shares Under Option
|
|
Weighted-Average Exercise Prices
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(In millions)
|
|||||
Outstanding at June 3, 2017
|
|
1,329,702
|
|
|
$
|
28.36
|
|
|
7.26
|
|
$
|
5.8
|
|
Granted at market
|
|
323,412
|
|
|
$
|
33.75
|
|
|
|
|
|
||
Exercised
|
|
(538,259
|
)
|
|
$
|
27.28
|
|
|
|
|
|
||
Forfeited or expired
|
|
(51,606
|
)
|
|
$
|
32.83
|
|
|
|
|
|
||
Outstanding at June 2, 2018
|
|
1,063,249
|
|
|
$
|
30.33
|
|
|
7.45
|
|
$
|
2.9
|
|
Ending vested + expected to vest
|
|
1,063,249
|
|
|
$
|
30.33
|
|
|
7.45
|
|
$
|
2.9
|
|
Exercisable at end of period
|
|
265,519
|
|
|
$
|
23.96
|
|
|
4.78
|
|
$
|
2.4
|
|
|
Share
Units
|
|
Weighted Average
Grant-Date
Fair Value
|
|
Aggregate Intrinsic Value in Millions
|
|
Weighted-Average
Remaining Contractual
Term (Years)
|
|||||
Outstanding at June 3, 2017
|
384,952
|
|
|
$
|
28.73
|
|
|
$
|
12.6
|
|
|
1.14
|
Granted
|
242,012
|
|
|
$
|
35.28
|
|
|
|
|
|
||
Forfeited
|
(19,233
|
)
|
|
$
|
30.86
|
|
|
|
|
|
||
Released
|
(126,704
|
)
|
|
$
|
27.75
|
|
|
|
|
|
||
Outstanding at June 2, 2018
|
481,027
|
|
|
$
|
32.20
|
|
|
$
|
15.8
|
|
|
1.28
|
Ending vested + expected to vest
|
481,027
|
|
|
32.20
|
|
|
$
|
15.8
|
|
|
1.28
|
|
Share
Units
|
|
Weighted Average Grant-Date Fair Value
|
|
Aggregate Intrinsic
Value in Millions
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|||||
Outstanding at June 3, 2017
|
417,947
|
|
|
$
|
31.18
|
|
|
$
|
13.7
|
|
|
1.03
|
Granted
|
129,131
|
|
|
$
|
31.28
|
|
|
|
|
|
||
Forfeited
|
(42,339
|
)
|
|
$
|
34.27
|
|
|
|
|
|
||
Released
|
(130,179
|
)
|
|
$
|
31.47
|
|
|
|
|
|
||
Outstanding at June 2, 2018
|
374,560
|
|
|
$
|
30.76
|
|
|
$
|
12.3
|
|
|
1.01
|
Ending vested + expected to vest
|
374,560
|
|
|
$
|
30.76
|
|
|
$
|
12.3
|
|
|
1.01
|
|
|
2018
|
|
2017
|
|||
Risk-free interest rates
(1)
|
|
2.29
|
%
|
|
1.29
|
%
|
|
Expected term of options
(2)
|
|
1.1 years
|
|
|
2.1 years
|
|
|
Expected volatility
(3)
|
|
35
|
%
|
|
35
|
%
|
|
Dividend yield
|
|
not applicable
|
|
|
not applicable
|
|
|
Strike price
|
|
$
|
30.64
|
|
|
24.39
|
|
Per share value
(4)
|
|
$
|
8.24
|
|
|
3.24
|
|
|
|
Shares Under Option
|
|
Weighted-Average Exercise Prices
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (In millions)
|
|||||
Outstanding at June 3, 2017
|
|
526,244
|
|
|
$
|
24.20
|
|
|
2.20
|
|
$
|
0.1
|
|
Granted
|
|
28,810
|
|
|
$
|
21.08
|
|
|
|
|
|
||
Forfeited
|
|
(10,928
|
)
|
|
$
|
24.39
|
|
|
|
|
|
||
Outstanding at June 2, 2018
|
|
544,126
|
|
|
$
|
24.04
|
|
|
1.20
|
|
$
|
3.6
|
|
Exercisable at end of period
|
|
75,568
|
|
|
$
|
21.83
|
|
|
1.20
|
|
$
|
0.6
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Shares of common stock
|
|
8,828
|
|
|
9,982
|
|
|
21,988
|
|
Shares through the deferred compensation program
|
|
2,207
|
|
|
2,582
|
|
|
3,118
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Domestic
|
$
|
121.6
|
|
|
$
|
131.4
|
|
|
$
|
154.9
|
|
Foreign
|
46.5
|
|
|
46.2
|
|
|
41.7
|
|
|||
Total
|
$
|
168.1
|
|
|
$
|
177.6
|
|
|
$
|
196.6
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Current: Domestic - Federal
|
$
|
30.2
|
|
|
$
|
28.7
|
|
|
$
|
36.4
|
|
Domestic - State
|
4.3
|
|
|
2.3
|
|
|
6.4
|
|
|||
Foreign
|
10.7
|
|
|
11.1
|
|
|
6.3
|
|
|||
|
45.2
|
|
|
42.1
|
|
|
49.1
|
|
|||
Deferred: Domestic - Federal
|
(4.1
|
)
|
|
9.2
|
|
|
7.5
|
|
|||
Domestic - State
|
0.1
|
|
|
2.8
|
|
|
0.2
|
|
|||
Foreign
|
1.2
|
|
|
1.0
|
|
|
2.7
|
|
|||
|
(2.8
|
)
|
|
13.0
|
|
|
10.4
|
|
|||
Total income tax provision
|
$
|
42.4
|
|
|
$
|
55.1
|
|
|
$
|
59.5
|
|
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income taxes computed at the United States Statutory rate
|
|
$
|
49.0
|
|
|
$
|
62.2
|
|
|
$
|
68.8
|
|
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
|
||||||
Remeasurement of U.S. deferred tax assets and liabilities due to the Tax Act
|
|
(8.9
|
)
|
|
—
|
|
|
—
|
|
|||
U.S. tax liability on undistributed foreign earnings due to the Tax Act
|
|
9.0
|
|
|
—
|
|
|
—
|
|
|||
Foreign statutory rate differences
|
|
(4.0
|
)
|
|
(5.7
|
)
|
|
(4.3
|
)
|
|||
Manufacturing deduction under the American Jobs Creation Act of 2004
|
|
(2.7
|
)
|
|
(3.4
|
)
|
|
(4.8
|
)
|
|||
State taxes
|
|
3.3
|
|
|
3.8
|
|
|
5.2
|
|
|||
United Kingdom patent box deduction for research and development
|
|
(1.8
|
)
|
|
(2.6
|
)
|
|
(1.7
|
)
|
|||
Research and development credit
|
|
(2.4
|
)
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|||
Sale of manufacturing facility in the United Kingdom
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|||
Other, net
|
|
0.9
|
|
|
2.2
|
|
|
(0.7
|
)
|
|||
Income tax expense
|
|
$
|
42.4
|
|
|
$
|
55.1
|
|
|
$
|
59.5
|
|
Effective tax rate
|
|
25.2
|
%
|
|
31.1
|
%
|
|
30.3
|
%
|
(In millions)
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Compensation-related accruals
|
|
$
|
15.3
|
|
|
$
|
22.7
|
|
Accrued pension and post-retirement benefit obligations
|
|
6.6
|
|
|
10.9
|
|
||
Deferred revenue
|
|
5.6
|
|
|
5.3
|
|
||
Inventory related
|
|
1.0
|
|
|
4.1
|
|
||
Reserves for uncollectible accounts and notes receivable
|
|
0.6
|
|
|
1.0
|
|
||
Other reserves and accruals
|
|
5.2
|
|
|
6.1
|
|
||
Warranty
|
|
11.9
|
|
|
17.0
|
|
||
State and local tax net operating loss carryforwards and credits
|
|
2.3
|
|
|
2.7
|
|
||
Federal net operating loss carryforward
|
|
1.7
|
|
|
5.0
|
|
||
Foreign tax net operating loss carryforwards and credits
|
|
10.0
|
|
|
10.0
|
|
||
Accrued step rent and tenant reimbursements
|
|
3.8
|
|
|
4.7
|
|
||
Other
|
|
3.9
|
|
|
4.2
|
|
||
Subtotal
|
|
67.9
|
|
|
93.7
|
|
||
Valuation allowance
|
|
(10.3
|
)
|
|
(10.0
|
)
|
||
Total
|
|
$
|
57.6
|
|
|
$
|
83.7
|
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Book basis in property in excess of tax basis
|
|
$
|
(25.5
|
)
|
|
$
|
(37.4
|
)
|
Intangible assets
|
|
(32.3
|
)
|
|
(47.3
|
)
|
||
Other
|
|
(6.9
|
)
|
|
(3.2
|
)
|
||
Total
|
|
$
|
(64.7
|
)
|
|
$
|
(87.9
|
)
|
(In millions)
|
|
|
||
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
|
|
|
Increases related to current year income tax positions
|
|
0.3
|
|
|
Increases related to prior year income tax positions
|
|
0.4
|
|
|
Decreases related to lapse of applicable statute of limitations
|
|
(0.3
|
)
|
|
Balance at June 2, 2018
|
|
$
|
3.2
|
|
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Interest and penalty expense (income)
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
(0.1
|
)
|
|
|
|
|
|
|
||||||
Liability for interest and penalties
|
$
|
1.0
|
|
|
$
|
0.8
|
|
|
|
(In millions)
|
|
June 2, 2018
|
|
June 3, 2017
|
||||
Carrying value
|
|
$
|
285.8
|
|
|
$
|
210.1
|
|
Fair value
|
|
$
|
288.6
|
|
|
$
|
223.2
|
|
|
Fair Value Measurements
|
||||||||||||
|
June 2, 2018
|
|
June 3, 2017
|
||||||||||
(In millions)
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)
|
||||||||
Cash Equivalents
|
$
|
121.0
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
Available-for-sale securities:
|
|
|
|
|
|
||||||||
Mutual funds - fixed income
|
7.7
|
|
—
|
|
|
7.7
|
|
—
|
|
||||
Mutual funds - equity
|
0.9
|
|
—
|
|
|
0.9
|
|
—
|
|
||||
Foreign currency forward contracts
|
0.4
|
|
—
|
|
|
0.5
|
|
—
|
|
||||
Interest rate swap agreement
|
15.0
|
|
—
|
|
|
3.3
|
|
—
|
|
||||
Deferred compensation plan
|
15.1
|
|
—
|
|
|
12.8
|
|
—
|
|
||||
Total
|
$
|
160.1
|
|
$
|
—
|
|
|
$
|
25.2
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
0.3
|
|
$
|
—
|
|
|
$
|
0.6
|
|
$
|
—
|
|
Contingent consideration
|
—
|
|
0.5
|
|
|
—
|
|
0.5
|
|
||||
Total
|
$
|
0.3
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
$
|
0.5
|
|
|
June 2, 2018
|
|
June 3, 2017
|
||||||||||||||||||||||||||||
(In millions)
|
Cost
|
|
Unrealized Gain
|
|
Unrealized Loss
|
|
Market Value
|
|
Cost
|
|
Unrealized Gain
|
|
Unrealized Loss
|
|
Market Value
|
||||||||||||||||
Mutual funds - fixed income
|
$
|
7.8
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
7.7
|
|
|
$
|
7.6
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
7.7
|
|
Mutual funds - equity
|
0.7
|
|
|
0.2
|
|
|
—
|
|
|
0.9
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
||||||||
Total
|
$
|
8.5
|
|
|
$
|
0.2
|
|
|
$
|
0.1
|
|
|
$
|
8.6
|
|
|
$
|
8.5
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
8.6
|
|
(In millions)
|
Balance Sheet Location
|
|
June 2, 2018
|
|
June 3, 2017
|
||||
Designated derivatives:
|
|
|
|
|
|
||||
Interest rate swap
|
Long-term assets: Other assets
|
|
$
|
15.0
|
|
|
$
|
3.3
|
|
Non-designated derivatives:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Current assets: Other
|
|
$
|
0.4
|
|
|
$
|
0.5
|
|
Foreign currency forward contracts
|
Current liabilities: Other accrued liabilities
|
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
|
|
Fiscal Year
|
||||||||||
(In millions)
|
Statement of Comprehensive Income Location
|
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Gain recognized on foreign currency forward contracts
|
Other expenses (income): Other, net
|
|
$
|
0.4
|
|
|
$
|
(1.2
|
)
|
|
$
|
(0.7
|
)
|
|
Fiscal Year
|
||||||||||
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Interest rate swap
|
$
|
7.5
|
|
|
$
|
2.1
|
|
|
$
|
—
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Accrual balance, beginning
|
$
|
47.7
|
|
|
$
|
43.9
|
|
|
$
|
39.3
|
|
Accrual for warranty matters
|
22.1
|
|
|
22.8
|
|
|
25.5
|
|
|||
Settlements
|
(18.3
|
)
|
|
(19.0
|
)
|
|
(20.9
|
)
|
|||
Accrual balance, ending
|
$
|
51.5
|
|
|
$
|
47.7
|
|
|
$
|
43.9
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Net Sales:
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
$
|
1,284.4
|
|
|
$
|
1,276.6
|
|
|
$
|
1,269.4
|
|
ELA Furniture Solutions
|
434.5
|
|
|
385.5
|
|
|
412.6
|
|
|||
Specialty
|
305.4
|
|
|
298.0
|
|
|
294.2
|
|
|||
Consumer
|
356.9
|
|
|
318.1
|
|
|
288.7
|
|
|||
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
2,381.2
|
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
|
|
|
|
|
||||||
Depreciation and Amortization:
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
$
|
33.4
|
|
|
$
|
28.3
|
|
|
$
|
24.5
|
|
ELA Furniture Solutions
|
10.2
|
|
|
9.4
|
|
|
9.1
|
|
|||
Specialty
|
10.5
|
|
|
9.4
|
|
|
9.4
|
|
|||
Consumer
|
12.1
|
|
|
10.2
|
|
|
8.6
|
|
|||
Corporate
|
0.7
|
|
|
1.6
|
|
|
1.4
|
|
|||
Total
|
$
|
66.9
|
|
|
$
|
58.9
|
|
|
$
|
53.0
|
|
|
|
|
|
|
|
||||||
Operating Earnings (Losses):
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
$
|
166.3
|
|
|
$
|
176.0
|
|
|
$
|
187.6
|
|
ELA Furniture Solutions
|
35.5
|
|
|
35.9
|
|
|
40.2
|
|
|||
Specialty
|
8.9
|
|
|
8.1
|
|
|
15.0
|
|
|||
Consumer
|
13.9
|
|
|
4.8
|
|
|
8.1
|
|
|||
Corporate
|
(47.1
|
)
|
|
(34.0
|
)
|
|
(39.4
|
)
|
|||
Total
|
$
|
177.5
|
|
|
$
|
190.8
|
|
|
$
|
211.5
|
|
|
|
|
|
|
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
$
|
38.9
|
|
|
$
|
46.2
|
|
|
$
|
56.1
|
|
ELA Furniture Solutions
|
11.4
|
|
|
8.5
|
|
|
15.0
|
|
|||
Specialty
|
7.1
|
|
|
10.6
|
|
|
3.8
|
|
|||
Consumer
|
13.2
|
|
|
22.0
|
|
|
10.2
|
|
|||
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
70.6
|
|
|
$
|
87.3
|
|
|
$
|
85.1
|
|
|
|
|
|
|
|
||||||
Total Assets:
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
$
|
488.7
|
|
|
$
|
519.3
|
|
|
$
|
503.4
|
|
ELA Furniture Solutions
|
283.4
|
|
|
230.3
|
|
|
218.4
|
|
|||
Specialty
|
188.7
|
|
|
172.2
|
|
|
175.6
|
|
|||
Consumer
|
291.2
|
|
|
276.4
|
|
|
245.3
|
|
|||
Corporate
|
227.5
|
|
|
108.1
|
|
|
92.4
|
|
|||
Total
|
$
|
1,479.5
|
|
|
$
|
1,306.3
|
|
|
$
|
1,235.1
|
|
|
|
|
|
|
|
||||||
Goodwill:
|
|
|
|
|
|
||||||
North American Furniture Solutions
|
$
|
133.2
|
|
|
$
|
133.5
|
|
|
$
|
133.5
|
|
ELA Furniture Solutions
|
40.0
|
|
|
40.1
|
|
|
40.9
|
|
|||
Specialty
|
52.1
|
|
|
52.1
|
|
|
52.1
|
|
|||
Consumer
|
78.8
|
|
|
78.8
|
|
|
78.8
|
|
|||
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
304.1
|
|
|
$
|
304.5
|
|
|
$
|
305.3
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales:
|
|
|
|
|
|
||||||
Systems
|
$
|
601.5
|
|
|
$
|
639.0
|
|
|
$
|
656.8
|
|
Seating
|
965.9
|
|
|
894.8
|
|
|
855.5
|
|
|||
Freestanding and storage
|
465.1
|
|
|
428.8
|
|
|
456.9
|
|
|||
Textiles
|
94.3
|
|
|
96.9
|
|
|
97.6
|
|
|||
Other
(1)
|
254.4
|
|
|
218.7
|
|
|
198.1
|
|
|||
Total
|
$
|
2,381.2
|
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales:
|
|
|
|
|
|
||||||
United States
|
$
|
1,737.9
|
|
|
$
|
1,690.1
|
|
|
$
|
1,757.0
|
|
International
|
643.3
|
|
|
588.1
|
|
|
507.9
|
|
|||
Total
|
$
|
2,381.2
|
|
|
$
|
2,278.2
|
|
|
$
|
2,264.9
|
|
|
Year Ended
|
||||||||||
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
|
May 28, 2016
|
||||||
Cumulative translation adjustments at beginning of period
|
$
|
(36.8
|
)
|
|
$
|
(29.6
|
)
|
|
$
|
(20.8
|
)
|
Other comprehensive income (loss) before reclassifications (net of tax of $- , $- and ($0.3))
|
2.7
|
|
|
(7.2
|
)
|
|
(8.8
|
)
|
|||
Balance at end of period
|
(34.1
|
)
|
|
(36.8
|
)
|
|
(29.6
|
)
|
|||
Pension and other post-retirement benefit plans at beginning of period
|
(47.6
|
)
|
|
(34.9
|
)
|
|
(35.4
|
)
|
|||
Other comprehensive income (loss) before reclassifications (net of tax of ($2.9), $3.7 and ($0.7))
|
5.3
|
|
|
(14.5
|
)
|
|
(2.0
|
)
|
|||
Reclassification from accumulated other comprehensive income - Selling, general and administrative
|
4.2
|
|
|
2.2
|
|
|
3.2
|
|
|||
Tax benefit
|
0.9
|
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|||
Net reclassifications
|
5.1
|
|
|
1.8
|
|
|
2.5
|
|
|||
Net current period other comprehensive income
|
10.4
|
|
|
(12.7
|
)
|
|
0.5
|
|
|||
Balance at end of period
|
(37.2
|
)
|
|
(47.6
|
)
|
|
(34.9
|
)
|
|||
Interest rate swap agreement at beginning of period
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income before reclassifications (net of tax of ($4.0), ($1.2) and $-)
|
7.5
|
|
|
2.1
|
|
|
—
|
|
|||
Reclassification from accumulated other comprehensive income - Interest expense
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
Net reclassifications
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
Net current period other comprehensive income
|
7.8
|
|
|
2.1
|
|
|
—
|
|
|||
Balance at end of period
|
9.9
|
|
|
2.1
|
|
|
—
|
|
|||
Available-for-sale Securities at beginning of period
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income before reclassifications (net of tax of $- , $- and $-)
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Balance at end of period
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|||
Total accumulated other comprehensive loss
|
$
|
(61.3
|
)
|
|
$
|
(82.2
|
)
|
|
$
|
(64.5
|
)
|
|
Year Ended
|
||||||
(In millions)
|
June 2, 2018
|
|
June 3, 2017
|
||||
Balance at beginning of period
|
$
|
24.6
|
|
|
$
|
27.0
|
|
Purchase of redeemable noncontrolling interests
|
(1.0
|
)
|
|
(1.5
|
)
|
||
Net income attributable to redeemable noncontrolling interests
|
0.6
|
|
|
0.2
|
|
||
Exercised options
|
0.1
|
|
|
—
|
|
||
Redemption value adjustment
|
6.2
|
|
|
(1.2
|
)
|
||
Other adjustments
|
—
|
|
|
0.1
|
|
||
Balance at end of period
|
$
|
30.5
|
|
|
$
|
24.6
|
|
|
June 2, 2018
|
||||||||
(In millions)
|
Severance and employee related expenses
|
Costs associated with exit and disposal activities
|
Total
|
||||||
Beginning Balance
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Restructuring expenses
|
2.4
|
|
1.5
|
|
3.9
|
|
|||
Payments
|
(2.4
|
)
|
(1.5
|
)
|
(3.9
|
)
|
|||
Ending Balance
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
June 2, 2018
|
|
June 3, 2017
|
||||
(In millions)
|
Severance and employee related expenses
|
|
Severance and employee related expenses
|
||||
Beginning Balance
|
$
|
2.4
|
|
|
$
|
0.4
|
|
Restructuring expenses
|
—
|
|
|
5.4
|
|
||
Payments
|
(2.4
|
)
|
|
(3.4
|
)
|
||
Ending Balance
|
$
|
—
|
|
|
$
|
2.4
|
|
(In millions, except per share data)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|||||||||
2018
|
Net sales
(1)
|
$
|
580.3
|
|
|
$
|
604.6
|
|
|
$
|
578.4
|
|
|
$
|
618.0
|
|
|
Gross margin
(1)
|
216.9
|
|
|
222.1
|
|
|
205.8
|
|
|
228.3
|
|
||||
|
Net earnings attributable to Herman Miller, Inc.
(1)
|
33.1
|
|
|
33.5
|
|
|
29.8
|
|
|
31.8
|
|
||||
|
Earnings per share-basic
(1)
|
0.55
|
|
|
0.56
|
|
|
0.50
|
|
|
0.53
|
|
||||
|
Earnings per share-diluted
|
0.55
|
|
|
0.55
|
|
|
0.49
|
|
|
0.53
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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 2, 2018 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 2, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
|
(3)
|
Articles of Incorporation and Bylaws
|
|
|
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
(b)
|
|
(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)
|
|
|
|
|
|
|
|
(d)
|
|
(10)
|
Material Contracts
|
|
|
(a)
|
|
|
|
|
|
|
|
(b)
|
|
|
|
|
|
|
|
(c)
|
|
|
|
|
|
|
|
(d)
|
|
|
|
|
|
|
|
(e)
|
|
|
|
|
|
|
|
(f)
|
|
|
|
|
|
|
|
(g)
|
|
|
|
|
|
|
|
(h)
|
|
|
|
|
|
|
|
(i)
|
|
|
|
|
|
|
|
(j)
|
|
|
|
|
|
|
|
(k)
|
|
|
(m)
|
|
|
|
|
|
|
|
(n)
|
|
|
|
|
|
|
|
(o)
|
|
|
|
|
|
|
|
(p)
|
|
|
|
|
|
|
|
(q)
|
|
|
|
|
|
|
|
(r)
|
|
|
|
|
|
|
|
(s)
|
|
|
|
|
|
|
|
(t)
|
|
|
|
|
|
|
|
(u)
|
|
|
|
|
|
|
|
(v)
|
|
(21)
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
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 A. Brandon
|
|
/s/ Mary Vermeer Andringa
|
|
|
David A. Brandon
(Director) |
|
Mary Vermeer Andringa
(Director)
|
|
|
|
|
|
|
|
/s/ Douglas D. French
|
|
/s/ John R. Hoke III
|
|
|
Douglas D. French
(Director) |
|
John R. Hoke III
(Director)
|
|
|
|
|
|
|
|
/s/ Heidi Manheimer
|
|
/s/ J. Barry Griswell
|
|
|
Heidi Manheimer
(Director) |
|
J. Barry Griswell
(Director)
|
|
|
|
|
|
|
|
/s/ Brenda Freeman
|
|
/s/ Brian C. Walker
|
|
|
Brenda Freeman (Director)
|
|
Brian C. Walker
(President, Chief Executive Officer, and Director)
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey M. Stutz
|
|
|
|
|
Jeffrey M. Stutz
(Chief Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2, 2018:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — uncollectible accounts
(1)
|
$
|
2.3
|
|
|
$
|
0.6
|
|
|
$
|
(0.5
|
)
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances — credit memo
(2)
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
|
|
|
|
|
|
|
||||||||
Allowance for possible losses on notes receivable
|
$
|
0.9
|
|
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
|
|
|
|
|
|
|
||||||||
Valuation allowance for deferred tax asset
|
$
|
10.0
|
|
|
$
|
0.5
|
|
|
$
|
(0.2
|
)
|
|
$
|
10.3
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
•
|
A cash bonus payment matching (“the match”) the actual bonus percentage you achieve for FY18, subject to a maximum payout amount of the 250% (inclusive of the match) of your annual target bonus, which will be paid 50% on the date that FY18 annual bonuses are paid and 50% on the last pay period in December 2018. Your right to this cash bonus award is subject to your being employed by Herman Miller on the dates payments are made and the successful transition of the CEO position from Brian Walker to a new CEO as solely determined by the Herman Miller Board of Directors; and
|
•
|
A restricted stock unit (“RSU”) grant with a value equal to 100% of your base salary in effect on the grant date, which will cliff vest on the second anniversary of the grant date, provided that you are employed by Herman Miller or one of its subsidiaries on such date, except as provided below. The number of units subject to the RSU grant will be determined by dividing your base salary by the closing price of Herman Miller’s stock on the grant date.
|
|
Very truly yours,
Michael A. Volkema,
Chairman of the Board
|
Copenhagen
|
Aarhus
|
Shanghai
|
|
|
Langelinie Allé 35
|
Værkmestergade 2
|
Suite 2H08
|
T +45 72 27 00 00
|
Law Firm P/S
|
2100 Copenhagen
|
8000 Aarhus Denmark
|
No.1440 Yan'an Middle Road
|
F +45 72 27 00 27
|
CVR No. 38538071
|
Denmark
|
Denmark
|
Jing'an District, 200040
|
E info@bechbruun.com
|
www.bechbruun.com
|
1.
|
Definitions,
schedules and interpretation
4
|
2.
|
The subject-matter
of
the
Agreement
and
Effective Date
9
|
3.
|
The Purchase
Price
and its payment
10
|
4.
|
Closing of the Transaction
10
|
5.
|
Post Closing
12
|
6.
|
The
Purchaser's
examinations
12
|
7.
|
The S
e
llers
'
Representations and W
a
rranties
13
|
8.
|
Th
e
S
ellers'
Specific
Inde
mnit
i
es
13
|
9.
|
The Purchaser’s
Representations
and
Warranties
16
|
10.
|
Indemnification
17
|
11.
|
Non-competition
and
non
-s
olicitation clauses
23
|
12.
|
Other provisions
25
|
13.
|
Disputes
29
|
1.
|
Definitions, schedules and interpretation
|
1.
|
For the purposes of this Agreement, the following terms and expressions have the following meanings:
|
1.
|
Agreement
means this share purchase agreement and its Schedules.
|
2.
|
Annual Reports
mean the annual reports of the Companies for the financial years 2014/15 - 2016/17 to the extent such accounts have been prepared.
|
3.
|
Banking Day
means a day where the banks in Copenhagen and London are generally open for the public for
ordinary
banking business (other than for internet banking only)
|
4.
|
Breach
means in relation to (i) the Sellers' Representations and Warranties; that one of the Sellers' Representations and Warranties turns out to be incorrect or not fulfilled, (ii) the Sellers' Specific Indemnities; that an event, Claim, Loss or the like covered by one of the Sellers
'
Specific Indemnities occurs, (iii) the Purchaser's Representations and Warranties; that one of the Purchaser's Representations and Warranties turns out to be incorrect or not fulfilled, or (iv) other provisions in the Agreement; any other failure to meet the obligations of a Party under the Agreement
.
|
5.
|
Claim
means a claim for indemnification by eithe
r
Party against the other Party resulting from a Breach.
|
6.
|
Claim Notice
has the meaning set forth in Clause 10
.
5
.
1.
|
7.
|
Clause
means a clause included in this Agreement
.
|
8.
|
Closing
means the signing and completion of the Transaction through the Parties' exchange of their respective deliveries and fulfilment of their respective obligations as set out in Clause 4, i.e.
the Effective Date
.
|
9.
|
Closing Date
means the Effective Date.
|
10.
|
Companies
means the Company and its following subsidiaries
:
|
•
|
Nine United Norway AS, company reg. no. 994 085 522 (org. no
.
), Josefines gate 23, 0351 Oslo, Norway (of which the Company owns seventy (70)% of the share capital); and
|
•
|
Nine United Studio UK Ltd
.
, company reg. no. 08109344, 34 Queen Annes Gate, London, SWlH 9AB, England.
|
11.
|
Company
means Nine United Denmark A/S, company reg
.
no
.
(CVR) 26 79 99 45, Havnen 1, 8700 Horsens, Denmark.
|
12.
|
Confidential Information
has the meaning set forth in Clause 12.6
.
1.
|
13.
|
Contract
means any contract, agreement, binding arrangement or commitment, to which any of the Companies is a party.
|
14.
|
Corporate Documents
means memorandum of association, articles of association, rules of procedure for the board of directors and any similar corporate document s
.
|
15.
|
DKK
means Danish Kroner, the lawful currency of Denmark.
|
16.
|
Due Diligence Documentation
means the material listed in Schedule 6.1 with accompanying USB stick.
|
17.
|
Effective Date
means 7 June 2018.
|
18.
|
Fundamental Representations and Warranties
mean the Sellers' Representations and Warranties specified in
|
19.
|
Governmental Authority
means any state, government, government department, ministry, commission, council, board, bureau, agency, court, municipality, district or other judicial, administrative, regulatory or legislative authority in Denmark, the European Union, or any other jurisdiction in which the Companies carry on its business or activities.
|
20.
|
Intellectual Property Rights
and
IPR
mean patents, utility models, trademarks (registered or unregistered), other business logos, domain names and design rights, know-how, trade secrets and other intellectual property rights owned or used by the Companies.
|
21.
|
Interest
means an annual rate of interest of 1.5 percentage points above 3 month CIBOR as published by the Nasdaq Copenhagen A/S at 11: 00 (CET) on the Effective Date calculated on the basis of the actual number of days elapsed and
|
22.
|
Key Employees
means the following employees: Henrik Ellebcek Steensgaard, Rolf Hay, Mette Hay, Jesper Langballe, Mette Langkilde, Dan Nielsen, Susanne 0stergaard, Trine Thomsen, Jan Jensen and Anne-Sofie Mortensen.
|
23.
|
Leakage
means, except for any Permitted Leakage, any dividend, other payment, other financial advantage or distribution (whether in cash or in kind) declared, paid or made by the Companies to or for the benefit of the Sellers and/or any of Sellers' Related Parties
.
|
24.
|
Loss
means any documented loss, claim, liability, cost or expense recoverable under the laws of Denmark, except for indirect and/or consequential losses, e.g. loss of goodwill and loss of profit etc. However, losses for the Purchaser due to the Companies suffering losses that would normally be considered indirect and/or consequential losses for the Companies (e.g. loss of the Companies' goodwill and loss of profit), including
reasonable
external costs and expenses related to the recovery of such loss, shall be considered as a direct loss.
|
25.
|
Maximum Limit
has the meaning set forth in Clause 10.3.2
.
|
26.
|
Minimum Limit
has the meaning set forth in Clause 10
.
3
.
1.
|
27.
|
Party
means the Purchaser and/or the Sellers, and the
Parties
means the Purchaser and the Sellers collectively.
|
28.
|
Permitted Leakage
means distribution of dividends from the Company of DKK 110,000,000 to the Sellers and any
|
29.
|
Person
means any individual (natural person), corporation, company, partnership, firm, association, trust, incorporated or unincorporated organization or other legal entity as well as any Governmental Authority.
|
30.
|
Purchase Price
means DKK 423,500,000.
|
31.
|
Purchaser
means Herman Miller Holdings Limited, Corporation registration No. 7200056, 5th Floor, 9-10 Market Place, London, WlW 8AQ, United Kingdom.
|
32.
|
Purchaser's Representations and Warranties
means the representations and warranties contained in Clause 9.
|
33.
|
Related Parties
means Persons that are related parties
(In Danish "ncerstfiende
") pursuant to the definition in section 2 of the Danish Insolvency Act in force at any time or another similar provision
.
|
34.
|
Release Date
has the meaning set forth in Clause 10
.
9
.
1.
|
35.
|
Retained Amount
has the meaning set forth in Clause 10
.
9
.
1.
|
36.
|
Schedules
means the schedules of this Agreement
.
|
37.
|
Sellers
mean Nine United A/ S
,
Company reg
.
no
.
(CVR) 25 93 44 58, Havnen 1
,
8700 Horsens, Denmark, and Holdingselskabet af 1/7 2007 ApS, Company reg. no. (CVR) 30 70 87 17, Baunegardsvej 57, 2900 Hellerup, Denmark.
|
38.
|
Sellers' Bank Accounts
means (i) in respect of Nine United a bank account with Nordea Bank Denma
r
k (!B AN
:
DK482005655757866) and (ii) in respect of Holdingselskabet a bank account with Nordea Bank Denmark (!BAN
:
DK72 20006272 222310 )
.
|
39.
|
Sellers' Representations and Warranties
means the representations and warranties contained in Schedule 7
.
1.
|
40.
|
Sellers' Specific Indemnities
mean the indemnities contained in Clause 8.
|
41.
|
Sellers' Ultimate Owners
mean (i) Troels Holch Povlsen in respect of Nine United and (ii) Rolf Hay in
r
espect of Holdingselskabet
.
|
1.
|
Shares
means the fully paid-up shares in the Company of a nominal value of DKK 1,485,000 and equal to thirty
-
three (33)% of all of the Company's issued and outstanding share capital. The Parties acknowledge and agree that (i) Nine United sells shares in the Company of a nominal value of DKK 1,170,000 and equal to twenty-six (26)% of all of the Company's issued and outstand
i
ng share capital to the Purchaser, (ii) Holdingselskabet sells shares in the Company of a nominal value of DKK 315,000 and equal to seven (7)% of all of the Company's issued and outstanding share capital to the Purchaser and (iii) the Purchase Price being paid by the Purchaser to the Sellers, cf
.
Clause 3
.
1, shall be div
i
ded pro rata to the shares sold by each of the Sellers (out of all Shares sold by the Sellers).
|
2.
|
TAK
means Nine United TAK Co., Ltd., Corporate registration No
.
91310000MA1K34BX43, Room 301-57, Floor 3, Building 1, No.38, Debao Road, Pilot Free Trade Zone, China (Shanghai).
|
3.
|
TAK License Agreement
means the license agreement dated 7 June 2018 between TAK and the Company.
|
4.
|
TAK License Payment
means the license payment of DKK 15,000,000 that falls due 10 Banking Days after 7 June 2018 from TAK to the Company under the TAK License Agreement.
|
5.
|
Taxes
means all direct and indirect taxes, whether contingent or actual, such as income tax, company tax, VAT and turnover tax and social benefits and all similar taxes, duties and fees.
|
6.
|
Third Party Rights
means liens, encumbrances, charges, pre-emption rights, options to purchase, other options, owners' rights as well as any other right, actual or potential, of third party (including any other party than the authorised rights owner)
|
7.
|
Tipping Basket
has the meaning set forth in Clause 10.3.1.
|
8.
|
Transaction
means the transfer of the Shares from the Sellers to the Purchaser as contemplated by the Agreement.
|
1.
|
The Schedules attached to the Agreement form an integral part of the Agreement.
|
2.
|
Each Party has participated in the negotiation and drawing up of the Agreement. None of the Parties is regarded as a drafter for the purposes of interpreting the Agreement.
|
2.
|
The subject-matter of the Agreement and Effective Date
|
1.
|
With effect from the Effective Date, the Sellers sell the Shares to the Purchaser, and the Purchaser acquires the Shares from the Sellers on the terms and conditions set out in this Agreement.
|
2.
|
The Shares amount to thirty-three (33)% of the total share capital of the Company and are transferred to the Purchaser free and clear of all Third Party Right s
.
The remaining shares in the Company are owned by the Sellers, as shown in the list of shareholders attached as
Schedule 2.2.
|
3.
|
The Company is part
of
the group structure shown in the attached
Schedule 2.3.
|
4.
|
As of the Effective Date, the Purchaser shall be entitled to all benefits, and to exercise all rights, attached or accruing to the Shares including, without limitation, the right to receive all dividends, distributions or any return of capital declared, paid or made by the Company on or after the Effective Date.
|
3.
|
The Purchase Price and its payment
|
1.
|
In return for the sale of the Shares, the Purchaser shall pay to the Sellers the Purchase Price
|
4.
|
Closing of the Transaction
|
1.
|
Completion of the Transaction
("Closing")
shall take place electronically (via e mail) and simultaneously with the Parties' execution of the Agreement, i.e
.
at the Effective Date
.
|
2.
|
At the Effective Date, the Sellers have delivered the following documents against the Purchaser's simultaneous fulfilment of all its obligations set forth in Clause 4
.
3:
|
1.
|
Approval of the Transaction from the board of directors of the Company, such approval attached as
Schedule 4. 2.1.
|
2.
|
.
2 The Company's register of shareholders in which the Purchase
r
had been registered as the owner of the Shares free of any Third Party Rights, such register of shareholders attached as
Schedule 4.2.2.
|
3.
|
3 Confirmation from the Sellers stating that the minutes of general meetings and board meetings and audit reports of the Companies are in the Companies' possession, such confirmation attached as
Schedule 4. 2.3.
|
4.
|
Statement from Mette Hay stating that she retires as board member of the Company and does not have any claims against the Company as a result of her directorship, such statement attached as
Schedule 4.2.4.
|
5.
|
Executed version of a exclusive license agreement between the Company and Herman Miller, Inc
.
signed by the legal representatives of the Company
,
such license agreement attached as
Schedule 4. 2.5.
|
6.
|
Executed version of the Shareholders
'
Agreement signed by the legal rep
r
esentatives of the Sellers and the Sellers
'
Ultimate Owners,
such Shareholders‘
Agreement attached as
Schedule 4.2.6.
|
7.
|
Statement from Rolf Hay confirming that he is not entitled to any bonus payments from the Companies and that any previous bonus agreements entered into (written or not written) between the Company and Rolf Hay has been terminated, such statement attached as
Schedule 4.2
.
7.
|
8.
|
.
8 Documentation stating that the inter-company loan provided by the Company to Nine United as of 24 July 2013 (the balance amounted to DKK 62,000, 000
.
00 as of 21 February 2018), including interest
,
has been settled in full prior to Closing, such documentation attached as
Schedule 4.2.8
.
|
3.
|
3
At the Effect
i
ve Date, the Purchaser has delivered the following documents against the Sellers' simultaneous fulfilment of all their obligations set forth in Clause 4
.
2:
|
1.
|
.
1 Approval of the Transaction from the Purchaser's board of directors, such approval attached as
Schedule 4.3
.
1.
|
1.
|
Documentation stating that the Purchase Price has been transferred to the Sellers
'
Bank Accounts in immediately available funds with value as of the Effective Date, such documentation attached as
Schedule 4.3 .2.
|
2.
|
3 Executed version of an exclusive license agreement between the Company and Herman Miller, Inc. signed by the legal representatives of Herman Miller, Inc., such license agreement attached as
Schedule 4.2.5.
|
3.
|
Executed version of the Shareholders
'
Agreement signed by the legal representatives of the Purchaser, such Shareholders' Agreement attached as
Schedule 4.2.6.
|
2.
|
The actions specified in Clauses 4.1 and 4
.
3 are considered as being performed simultaneously to the
effect
that none of the actions are considered as having been performed before all actions have been performed or a Party has waived the other Part y
'
s performance thereof.
|
3.
|
In the event that the Purchaser fails to fulfil its obligations under Clause 4
.
3
.
2, the Sellers are entitled (i) to rescind (in Danish
:
"h<Eve")
the Agreement and (ii) to be indemnified by the Purchaser for any Loss incurred due to such failure.
|
5.
|
Post Closing
|
1.
|
General meetings
|
1.
|
Registration of transfer of Shares with public register of shareholders
.
|
1.
|
1 The Sellers shall procure that the Company on the Effective Date or as soon as reasonably possible thereafter procure that the new ownership of the Shares is duly recorded in the Danish Public Register of Shareholders (in Danish
:
"Det Offentlige Ejerregister” and
“
register over reel/e eje
r
e”) at
the webpage
www.virk.dk
.
|
2.
|
Incentive program for Rolf Hay
|
1.
|
Within a reasonable time following the Effective Date and no later than three (3) months after the Effective Date, the Parties shall procure that the Company offers Rolf Hay a customary management incentive program as further set out in the Shareholders' Agreement.
|
3.
|
Additional post Closing activities
|
6.
|
The Purchaser's examinations
|
1.
|
Prior to the Effective Date, the Purchaser and its advisers have had the opportunity to examine the commercial, financial, legal and other matters of the Companies through a virtual data room during the period from 16 April 2018 to 1 June 2018.
|
2.
|
As part of its due diligence, the Purchaser has had opportunity to ask questions to the Sellers in writing and to interview relevant employees of the Company. A list of written questions and answers is also included in Schedule 6
.
1.
|
7.
|
The Sellers' Representations and Warranties
|
1.
|
As at the Effective Date, each of the Sellers provide the representations and warranties contained in
Schedule 7.1
in favour of the Purchaser.
|
2.
|
The Sellers' Representations and Warranties are provided with effect as at the Effective Date on an objective basis, i.e
.
without regard to the Sellers' actual knowledge. Except for the Sellers
'
Specific Indemnities, the Sellers' Representations and Warranties are the Sellers' complete and only representations and warranties and the Purchaser shall not rely on any other representations, warranties, assumptions or expectations - whether express or implied - except as expressly set out in this Agreement.
|
3.
|
The Sellers' Representation and Warranties are not limited by any knowledge of the Purchaser and its advisors whatsoever, including such knowledge which have been obtained on the basis of the Due Diligence Documentation.
|
8.
|
The Sellers' Specific Indemnities
|
1.
|
In addition to the Sellers' Representations and Warranties the Sellers provide the below
indemnities
in Clauses 8.2-8.8 (the
"Sellers' Specific Indemnities")
in favour of the Purchaser as at the Effective Date. The Sellers
'
Specific Indemnities concern matters of which the Purchaser has had notice prior to the Effective Date, and thus the Sellers' Specific Indemnities are not limited by any knowledge of the Purchaser and its advisors whatsoever.
|
2.
|
Tax
|
1.
|
No special Tax relief, Tax exemption, Tax incentive or the like enjoyed by any of the Companies may be changed or reversed as a result of circumstances attributable to the activities of the Companies prior to the Effective Date or as a result of the conclusion of the Agreement.
|
1.
|
.
2 All income tax returns and reports relating to Tax which must be filed prior to the Effective Date by or on behalf of the Companies have been duly filed with the relevant authority and were correct and complete, and any information which must be filed for the purpose of correct Tax assessment has been filed
.
All due Tax payable by and imposed on the Companies has been paid in full.
|
1.
|
3 The
required
and sufficient provisions for any kind of Tax payable but not yet due as at the date of the Annual Accounts have been made in the Annual Reports
.
|
2.
|
No transactions, agreements or measures have been made or taken where the primary object was tax arbitrage, and no transactions, agreements or measures constitute illegal tax evasion.
|
3.
|
To the extent that the Companies have not met the applicable requirements of transfer pricing documentation and
|
4.
|
The Companies have reported the Companies' historical tax losses to the Danish tax authorities, to the effect that the Danish tax authorities cannot refuse use of deferrable tax losses for the period preceding the Effective Date on the grounds that notification has not taken place in compliance with the provisions of Danish tax law
.
|
5.
|
The pre-Closing
restructuring
of shares regarding Nine United Norway AS and Nine United Studio UK Ltd. have been carried out on arm's length terms and will not result in any adverse Tax consequences for any of the Companies
.
|
6.
|
No Governmental Authority is entitled to make any claim against any of the Companies due to the Company's historical credit relief for foreign taxes
.
|
7.
|
No Governmental Authority is entitled to make any claim against the Company regarding withholding Taxes concerning the Company's royalty payments to ERB Sari.
|
2.
|
IPR
|
1.
|
.
2 The Company's obligation to enforce the designers' Intellectual Property Rights in the whole world under the license Contract with Komplot Design will not result in a loss for any of the Companies.
|
2.
|
Claims
|
1.
|
.
2 The personal injury claim of approximately EUR 40,000, which was caused in the Netherlands in 2016 due to a failure of a AAC23 chair, and which has been
registered
with the Company's insurance company, will not result in any Loss for any of the Companies
.
|
2.
|
General data protection regulation (GDPR)
|
1.
|
Any non-compliance with the European GDPR will not result in any Loss for the Purchaser and/or the Companies
.
|
3.
|
Competition law
|
1.
|
In the event that (a) the following Contracts (i) strategic co-operation agreement with Kvist Industries A/S; (ii) cooperation agreement with Sandra Baumer Thomas Schultz GbR; (iii) retail agreement with Over the Top BV; (iv) Retail agreement with HAY by Einrichter GmbH & Co. KG; (v) retail agreement Sari Pierfran; (vi) retail agreement with Reload Management AS; and (vii) cooperation agreement with Bahne S0rensen A/S violate applicable competition law and/or (b) any Person is entitled to make any claim against any of the Companies due to violation of such applicable competition law, such issues will not result in any Loss for the Purchaser and/or the Companies
.
|
1.
|
.
1 At 4 June 2018, the Company had a positive cash balance of at least DKK 108,800,000.
For the avoidance of doubt, the TAK License Payment and the lump sum payment from Herman Miller, Inc. under the exclusive license agreement (Schedule 4
.
2
.
5) are not
included
in the DKK 108,800,000.
|
2.
|
Contracts
|
9.
|
The Purchaser's Representations and Warranties
|
1.
|
The Purchaser represents and warrants (the
"Purchaser's Representations and Warranties")
to the Sellers as set out in Clauses 9.1-9
.
5. The representations and warranties set out in Clauses 9
.
1-9.5 are the Purchaser's complete and sole representations and warranties and no other representations and warranties have been provided by the Purchaser pursuant to the Agreement
.
The Sellers shall not rely on any other representations, warranties, assumptions, expectations or agreements - whether express or implied - except as expressly set out in this Agreement. The Purchaser's Representations and Warranties are given with effect as of the Effective Date
.
|
2.
|
Due authorisation and binding obligations
|
1.
|
The Purchaser validly exists and is registered, having capacity to carry on its business, to sue and be sued, to hold
|
2.
|
The Agreement is valid and binding on the Purchaser and is enforceable against the Purchaser in accordance with its terms, except where enforceability is prohibited or restrained by applicable bankruptcy and insolvency law or similar legislation generally affecting the enforceability of creditors' rights.
|
3.
|
No breach
|
1.
|
.
1 Neither the execution nor the performance of the Agreement conflicts with or constitutes a breach of:
|
(1)
|
the Purchaser's Corporate Document s
;
|
(2)
|
any material judgement, decision or order of any court, arbitration tribunal or Governmental Authority which includes or binds the Purchaser;
|
(3)
|
any law o
r
regulation applicable to the Purchaser; or
|
(4)
|
any material agreement or obligation binding upon the Purchaser
.
|
2.
|
No disputes
|
1.
|
.
1 No claim
,
lawsuit, legal or other proceeding is pending or to the Purchaser
'
s knowledge threatened against the Purchaser or its assets before any court, arb
i
tration tribunal, or administrative body which, if adversely decided
,
would prevent or delay the Purchaser
'
s consummation of the Agreement.
|
2.
|
Payment guarantee
|
10.
|
Indemnification
|
1.
|
Breach of the Agreement
|
1.
|
1 Either Party shall indemnify the other Party in compliance with the general rules of Danish law from any Loss suffered by the other Party as a result of a B
r
each
.
Notwithstanding the above, the clarifications and modifications specified in
|
2.
|
The Sellers have no obligation to indemnify the Purchaser with respect to information in the Due Diligence Documentation relating to futu
r
e commercial risks, business plans, budgets, forecasts or similar commercially forward-looking matters
|
1
|
.
1. 3 In case of a Breach of any of the Sellers
'
Representations and Warranties, the Sellers' Specific Indemnities or this Agreement,
the Sellers shall in accordance with this Agreement indemnify the Purchaser for any Loss related to such Breach. Consequently, the Sellers are jointly and severally liable, however, in the
individual relationship between the Sellers, each of the Sellers shall finally bear such Loss in proportion to their pro rata share of the Shares, i. e
.
Nine United shall bear 26/33 and Holdingselskabet shall bear 7/33.
|
1.
|
Calculation of Claims
|
1.
|
All Claims must be compensated by cash payment; however, the Purchaser is entitled to Claim specific performance instead of financial compensation
in
case of Breach of the Fundamental Representations and Warranties.
|
2.
|
Any payment from the Sellers to the Purchaser under Clause 10.1.1 is regarded as a reduction of the Purchase Price.
|
3.
|
Losses are calculated at the ratio of DKK 1 to DKK 1 without consideration of any multiples under which the Purchase Price has been calculated.
|
4.
|
When calculating the Purchaser's Loss, any amount and value of other benefits obtained (alter deduction of costs and expenses such as self insurance) by the Companies (valued on the basis of Purchaser's thirty-three (33)% interest purchased hereunder) or the Purchaser as a result of the event giving rise to the Claim must be deducted from the Purchaser's Claim against the Sellers, including:
|
(1)
|
Tax savings which the Purchaser and/or the Companies have obtained; and
|
(2)
|
insurance payments received by the Purchaser and/or the Companies.
|
5.
|
In the event that the Purchaser - following payment by the Sellers of any amount of indemnification to the Purchaser
-
receives payment or enjoys a benefit (alter deduction of costs and expenses such as self insurance) from a third party relating to the same Breach in accordance with Clause 10.2.4, the Purchaser shall reimburse the Sellers an amount corresponding to such net amount or benefit to the Sellers (not exceeding the amount of indemnification paid by the Sellers to the Purchaser) plus Interest from the time of the Purchaser's receipt of the amount or benefit from
|
1.
|
The Sellers have no obligation to indemnify the Purchaser for any Loss caused by (
i
) any change in appl
i
cable laws or regulations after the Effective Date including any change in Tax rates, (ii) any change in the Companies
'
accounting principles adopted after the Effective Date; or (iii) the Purchaser
'
s and the Companies' actions or omissions after Closing.
|
2.
|
The Sellers have no obligation to indemnify the Purchaser for any Loss incurred by the Purchase
r
if and to the extent specific provisions o
r
w
r
it e
-
offs are made
i
n respect thereof in the Annual Reports.
|
1.
|
Minimum Limit, Tipping Basket and Maximum Limit
|
1.
|
.
3 Any Loss or Claim by the Purchaser and/or the Purchaser's group/affiliates under the exclusive license agreement in Schedule 4
.
2
.
5 shall be included when calculated whether the Maximum Limit has been reached. Thus, if, for instance, DKK 10,000,000 has been claimed in the exclusive license agreement, a maximum of DKK 21
,
709, 000 (DKK 31,709,000
-
10,000, 000) can be claimed by the Purchaser under the Agreement.
|
1.
|
Series of Claims (i.e. Claims arising out of the same event or of several similar events) are regarded as one Claim according to the Minimum Limit of DKK 423,500 specified in Clause 10
.
3
.
1.
|
2.
|
The limits specified in Clauses 10.3.1-10.
3.4 do not apply to the Fundamental Representations and Warranties but do apply to the Sellers
'
Specific Indemnities.
|
2.
|
Time-barring
|
1.
|
Except with respect to the specific other Clauses of this Agreement described in Clauses 10.4.2-10.4.3, the Sellers' obligation to indemnify the Purchaser from Breach of the Sellers' Representations and Warranties becomes time-barred (i) in accordance with the provisions of Clause 10.5; or (ii) within fifteen (15) months after the Effective Date.
|
2.
|
The Sellers have no obligation to indemnify the Purchaser for a Loss resulting from Breach of the Fundamental Representations and Warrant
i
es, if the Purchaser fails to give notice to the Sellers of such Claims prior ten (10) years after the Effective Date
.
|
3.
|
The Sellers have no obligation to indemnify the Purchaser for a Loss resulting from Breach of the Sellers' Specific Indemnities set forth in Clauses 9
.
2.1-9
.
2.9 (Taxes), if the Purchaser fails to give notice to the Sellers of such Claims prior to the date falling three (3) months after expiry of the statutory limitation period applicable to the underlying claim to which the Claim refers. Except with respect to the specific Sellers' Specific Indemnities described above, the Sellers have no obligation to indemnify the Purchaser for a Loss resulting from Breach of the other Sellers' Specific Indemnities, if the Purchaser fails to give notice to the Sellers of such Claims prior to fifteen (15) months after the Effective Date
.
It is intentional that this period equals the period in Clause 10.4.1.
|
1.
|
Notice of Claims
|
1.
|
In the event that the Purchaser wishes to make a Claim against the Sellers or in the event that the Purchaser acquires knowledge of a matter which may give rise to a Claim against the Sellers, the Purchaser shall give notice (a
"Claim Notice”) to
the Sellers within sixty (60) Banking Days after the Purchaser appointed member and/or observer of the Company's board of directors acquiring knowledge of the matter giving rise to such Claim or possible Claim.
|
1.
|
The Purchaser shall keep the Se
l
lers informed of the status, development and other relevant information concerning
|
2.
|
5 In the event that the Sellers reject (in part or in full) any obligation to indemnify the Purchaser in respect of a Claim,
the Sellers shall notify the Purchaser thereof in writing.
In such case, the Purchaser must commence arbitration proceedings in respect of the Claim (or such part thereof which the Sellers have rejected) within three (3) months of the Purchaser's receipt of the Sellers' rejection notice, failing which the Sellers
'
obligation to indemn
i
fy the Purcha
s
er in respect of the Claim (or the relevant part thereof) will automatically cease.
|
1.
|
Third party claims
|
1.
|
1
This Clause 10
.
6
.
1 applies in circumstances where:
|
(1)
|
a claim is made by a third party against the Purchaser o
r
the Companies which has given rise or may be expected to give rise to a Claim by the Purchaser against the Sellers under the Sellers
'
Representations and Warranties or the Sellers' Specific Indemnities; or
|
(2)
|
the Purchaser or the Companies have made or may be expected to make a claim against a third party in respect of matters for which the Purchaser has made or may be expected to make a Claim against the Sellers under the Sellers' Representations and Warranties or the Sellers' Specific Indemnities
.
|
1.
|
.
2 In the circumstances described in Clause 10.6.1 and provided that the Sellers beforehand have accepted to be under an indemnification obligation with respect to the Claim concerned in accordance with this Clause 10, the Purchaser shall (and the Purchaser shall contribute to that the Companies will):
|
(1)
|
keep the Sellers informed of all relevant matters pertaining to such claim, including written communication and discussions with the relevant third party and give the Sellers and their advisors access to the material pertaining to such claim, optionally with the exception of confidential paragraphs
,
and to a reasonable extent consult with the Purchaser's and the Companies
'
employees and advisors relevant in the context of such claim; and
|
(2)
|
take any such reasonable action requested by the Sellers, including the instruction of professional advisors nominated by the Sellers and who is acceptable to the Purchaser, such accept not to be unreasonably withheld, to act on behalf of the Purchaser and/or the Companies, provided that the expenses incurred in this connection are reasonable, to make, defend or settle any such claim raised by or against a third party as referred to in Clause 10.6.1(1) or Clause 10.6.1(2).
|
2.
|
No other remedies for Breach of the Agreement
|
1.
|
Intent
|
1.
|
The limits specified in Clause 10.3 with respect
to
the remedies for Breach of the Parties do not apply in the event of intent (except in the event that such issue, information or circumstance was fairly disclosed in the Due Diligence Documentation or within the Purchaser's knowledge), however they do apply in the event of gross negligence. In the event of intent, the Sellers' obligation to
indemnify
the Purchaser from non-performance of the Sellers' Representations and Warranties or the Sellers' Specific Indemnities becomes time-barred at the latest of the following dates: (i) the date of time barring under Clause 10.4 and (ii) the date of time barring pursuant to the provision of the Danish Limitations Act on time barring.
|
2.
|
The Purchaser's security for Claims under the Sellers' Representations and Warranties and the Sellers' Specific Indemnities
|
1.
|
In security of any Claims of the Purchaser against the Sellers relating to Breach of the Sellers' Representations and Warranties and the Sellers' Specific Indemnities, each of the Sellers undertakes to retain an amount equal to ten (10)% of their respective part of the Purchase Price in cash or cash equivalents (the
"Retained Amount")
until the later of (i) fifteen (15) months from the Effective Date and (ii) the final settlement of any Claims made by the Purchaser
in
accordance with the provisions of the Agreement (the
"Release Date")
as security for the payment of any Claims that the Purchaser may have under the Agreement. If any of the Sellers at any time before the Release Date fails to retain the Retained Amount, the relevant Sellers Ultimate Owner shall be directly and personally liable for an amount equal to the shortfall of the Retained Amount
.
The Sellers and the Sellers' Ultimate Owners acknowledge and agree that they shall
not allow any Third Party Rights to be granted in the Sellers' remaining shares in the Company
|
11.
|
Non-competition and non-solicitation clauses
|
1.
|
Without the prior written approval from the Purchaser cf
.
Clause 11.11, Holdingselskabet and Rolf Hay may not, directly or indirectly, have any interests in an undertaking that markets goods or services competing with the Companies' present activities or activities initiated or planned at the Effective Date
.
|
2.
|
Interests in such a competing undertaking include
:
|
a.
|
direct or indirect ownership or co-ownership of the undertaking;
|
b.
|
interest in the undertaking
'
s turnover or earnings;
|
c.
|
participation in consortiums, joint ventures or other cooperation agreements with the undertaking;
|
d.
|
status as a licensor of knowhow or Intellectual Property Rights or as a supplier of goods, including raw materials, semi-manufactures and components forming part of the undertaking's competing products;
|
e.
|
performance of consultancy tasks and the like for the undertaking;
|
f.
|
employment and a position as a special adviser or a member of the board of directors of the undertaking;
|
g.
|
interests which according to their nature and significance must be ranked on a par with those mentioned; and
|
h.
|
interests as those stated above in a company that directly or indirectly has such interests in the undertaking.
|
3.
|
For the avoidance of doubt, indirect interest shall also include Holdingselskabet's or Rolf Hay's financing of an undertaking's or person's (e.g. Rolf Hay's spouse) holding of an interest or performance of an action which could constitute a Breach of the non-competition clause if it was held or performed by Holdingselskabet or Rolf Hay
.
|
4.
|
The non-competition clause does not prevent passive investments in companies whose shares are admitted to trading on a regulated market.
|
5.
|
The non
-
competition Clause applies within the Companies' geographical area which shall mean the markets where the Companies conducts or have initiated or planned to conduct activities at the Effective Date
.
|
6.
|
The non-competition Clause applies to Holdingselskabet and Rolf Hay for thirty six (36) months after the Effective Date.
|
7.
|
For the same period described in Clause 11.6, Holdingselskabet and Rolf Hay may not - directly or indirectly - have any business relations with Persons or undertakings that are or have been business connections, including without limitation customers, suppliers and designers of products in the HAY portfolio, of the Companies within the last twelve (12) months prior to the Effective Date if the business relation causes the Companies competition or in any other way may adversely affect the Companies
'
business relation with the customer
,
supplier or designer concerned
.
|
8.
|
Non-compliance with the non-competition or non-solicitation Clause obliges Holdingselskabet or Rolf Hay to pay an agreed penalty of DKK 1,500,000 to the Purchaser for each Breach
If the Breach consists in bringing about or continuing a situation, including running a rival business o
r
maintain
i
ng a customer relationsh
i
p, each commenced month in which the situation is maintained will be regarded as one Breach
.
|
1
|
.
9 Payment of the agreed penalty does not mean that the obligations no longer apply, and in addition to the agreed penalty the Purchaser is entitled to prevent any wrongfu
l
conduct by means of an injunct
i
on or demand that the Company makes a decision on filing for an
i
njunction
.
An injunction may be issued without provision of security
.
|
1.
|
If the Purchaser finds that Holdingselskabet and/or Rolf Hay do not comply with the restrictive covenants in this Clause
|
2.
|
For the sake of clarification, and notwithstanding anything to the contrary set fo
r
th in this Agreement, in the event that Holdingselskabet and/or Rolf Hay desires to make any investment that would be prohibited by this Clause 11, Holdingselskabet may notify the Purchaser of the opportunity
.
If the Company does not desire to pursue such opportunity itself and the investment by Holdingselskabet and/or Rolf Hay would not have a material negative impact on the Company, the Purchaser shall not unreasonably withhold approval of such investment by Holdingselskabet and/or Rolf Hay.
|
3.
|
The remedies stated in this Clause 11 are the Parties' and/or the Company's exclusive remedies in case of a Breach of this Clause 11.
|
2.
|
Other provisions
|
1.
|
Joint taxation
|
2.
|
2
Costs
|
1.
|
Nine United, Holdingselskabet and the Purchaser each pays its own costs regarding the negotiation, drafting and conclusion of the Agreement
|
3.
|
Interest
|
1.
|
Any payment which the Sellers and/or the Sellers Ultimate Owners are obligated to pay to the Purchaser under the Agreement shall include payment of Interest from (but not including) the due date set out in regard to such payment and until and including the date of payment.
|
4.
|
Counterparts
|
1.
|
.
1
The Agreement is executed in three (3) identical counterparts of which the Purchaser and each of the Sellers each receive one original counterpart.
|
2.
|
Notices
|
1.
|
.
1
Any notice required to be given under this Agreement must be in writing and as regards the Sellers addressed to:
|
2.
|
Confidentiality and publication
|
1.
|
Subject to Clauses 12
.
6
.
2 and 12
.
6.4, each Party shall treat as strictly confidential all Confidential Information. Confidential Information comprises (i) the terms and conditions of the Agreement, (ii) information concerning the other Party and its business and affairs obtained from the other Party in connection with the negotiations regarding the Agreement and its execution and performance and (iii) with respect to the Sellers and subject to Closing being completed, information concerning the Companies and their businesses and affairs.
|
2.
|
Each Party may, however, disclose information which would otherwise be Confidential Information in the event that:
|
(1)
|
it is required by law or by a court of competent jurisdiction;
|
(2)
|
it is required by any securities exchange, administrative body or other Governmental Authority, whether or not the requirement for information has the force of law;
|
(3)
|
disclosure is made as a normal part of the preparation of the accounts and/or other financial reports;
|
(4)
|
disclosure is made as a usual part of a due diligence review, however, provided that the parties to whom disclosure is made are subject to customary confidentiality undertakings;
|
(5)
|
disclosure is made to its affiliates and/or its or their legal or financial advisers or banks, if such advisers or banks are under a legal obligation to treat such
information
as confidential;
|
(6)
|
for the purpose of enforcing any right or complying with any obligation under this Agreement, including, to the extent required or appropriate, for the purpose of any arbitration proceedings pursuant to Clause 13.2;
|
(7)
|
the information has come into the public domain through no fault of the relevant Party or any of its authorized recipients under Clause 12.6.
2(5); or
|
(8)
|
the other Party has given its prior written approval to the disclosure, such approval not to be unreasonably withheld or delayed.
|
3.
|
Any disclosure pursuant to Clause 12.6
.
2(2) requires prior notice to and consultation with the other Parties to the extent permitted by law.
|
3.
|
Omission to enforce rights
|
1.
|
A Party's omission in a specific situation to enforce a right under this Agreement will not limit such Party's right to exercise its right in compliance with the provisions of the Agreement in another situation, e.g. a later similar situation (except as expressly set out in this Agreement).
|
4.
|
Entire agreement
|
1.
|
This Agreement and the Shareholders' Agreement constitute the sole understanding of the Parties with respect to the subject matter hereof and supersede all prior oral or written discussions and agreements regarding the subject matter hereof, including, but not limited to, the letter of intent entered into by the Parties on 23 March 2018.
|
5.
|
Changes to the Agreement
|
1.
|
Should the Parties agree to amend this Agreement, such agreement must be made in writing.
|
6.
|
Assignment of rights and obligations
|
1.
|
.
1 Neither Party may transfer or assign the Agreement or any of its rights or obligations hereunder to any third party - whether in ownership or as security - without the prior approval of the other Party save by operation of law
.
|
2.
|
Invalid or unenforceable terms
|
3.
|
Disputes
|
1.
|
Any dispute arising out of or in connection with this Agreement, including disputes regarding the existence or validity of the Agreement must be settled pursuant to Danish law, with the exception of any conflict of laws rules, which may lead to the application of other law than Danish law and/or CISG.
|
2.
|
Any disputes, which cannot be amicably settled by the Parties, shall be settled with binding and final effect by arb
i
tration administrated in English by the Danish Institute of Arbitration in accordance with the rules of arbitration procedure adopted by the Danish Institute of Arbitration and in force at the time of filing of the arbitration case. If the Parties so agree, the dispute may be settled by one (1) arbitrator appointed by the Danish Institute of Arbitration. In other cases, the dispute shall be settled by three (3) arbitrators, whereas each Party involved in the arbitration case appoints an arbitrator, and the Danish Institute of Arbitration appoints the chairman of the arbitration tribunal. If a Party has not appointed an arbitrator within twenty (20) Banking Days of that Party having filed or received Notice of the request for arbitration, the Danish Institute of Arbitration will also appoint such arbitrator.
|
3.
|
The place of arbitration shall be Copenhagen, Denmark.
|
4.
|
The Parties are obliged to keep secret the arbitration proceedings and the award.
|
Troels Holch Povlsen
|
Rolf Foged Hvidegaard Hay
|
Chairman of the board of directors
|
Chief executive officer
|
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
|
Global Holdings Netherlands B.V.
|
100% Company
|
Netherlands
|
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 International Finance Luxembourg S.à r.l.
|
100% Company
|
Luxembourg
|
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.
|
100% Company
|
Michigan
|
Nemschoff Chairs, Inc.
|
100% Company
|
Wisconsin
|
POSH Office Systems (Hong Kong) Limited
|
100% Company
|
Hong Kong
|
Steeline (Hong Kong) Limited
|
100% Company
|
Hong Kong
|
Sun Hing POSH Holdings Limited
|
100% Company
|
Hong Kong
|
Design Within Reach, Inc.
|
93% Company
|
Delaware
|
Herman Miller Consumer Co. Holdings
|
93% Company
|
Delaware
|
Naughtone (Holdings) Limited
|
50% Company
|
England, U.K.
|
Naughtone Manufacturing Ltd
|
50% Company
|
England, U.K.
|
1.
|
I have reviewed this annual report on Form 10-K for the period ended June 2, 2018, of Herman Miller, Inc;
|
|
|
2.
|
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;
|
|
|
3.
|
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;
|
|
|
4.
|
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:
|
|
|
a)
|
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;
|
|
|
b)
|
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;
|
|
|
c)
|
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
|
|
|
d)
|
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
|
|
|
5.
|
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):
|
|
|
a)
|
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
|
|
|
b)
|
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.
|
1.
|
I have reviewed this annual report on Form 10-K for the period ended June 2, 2018, of Herman Miller, Inc;
|
|
|
2.
|
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;
|
|
|
3.
|
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;
|
|
|
4.
|
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:
|
|
|
a)
|
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;
|
|
|
b)
|
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;
|
|
|
c)
|
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
|
|
|
d)
|
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
|
|
|
5.
|
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):
|
|
|
a)
|
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
|
|
|
b)
|
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.
|
(1)
|
The Annual Report on Form 10-K for the period ended June 2, 2018, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
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.
|
(1)
|
The Annual Report on Form 10-K for the period ended June 2, 2018, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
(2)
|
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.
|