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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Herman Miller Inc | NASDAQ:MLHR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 38.92 | 38.00 | 39.30 | 0 | 01:00:00 |
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ _ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended September 1, 2018
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Commission File No. 001-15141
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A Michigan Corporation
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ID No. 38-0837640
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855 East Main Avenue, Zeeland, MI 49464-0302
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Phone (616) 654 3000
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Large accelerated filer [ X ]
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Accelerated filer [_]
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Non-accelerated filer [_]
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Smaller reporting company [_]
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Page No.
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Part I — Financial Information
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Item 1 Financial Statements (Unaudited)
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Condensed Consolidated Statements of Comprehensive Income — Three Months Ended September 1, 2018 and September 2, 2017
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Condensed Consolidated Balance Sheets — September 1, 2018 and June 2, 2018
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Condensed Consolidated Statements of Cash Flows — Three Months Ended September 1, 2018 and September 2, 2017
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Condensed Consolidated Statements of Stockholders' Equity — Three Months Ended September 1, 2018 and September 2, 2017
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Notes to Condensed Consolidated Financial Statements
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Note 1 -
Basis of Presentation
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Note 2 -
Recently Issued Accounting Standards
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|
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||
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Note 4 -
Acquisitions and Divestitures
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Note 5 -
Inventories, net
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||
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Note 7 -
Employee Benefit Plans
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Note 8 -
Earnings Per Share
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Note 9 -
Stock-Based Compensation
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Note 10 -
Income Taxes
|
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Note 11 -
Fair Value Measurements
|
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Note 12 -
Commitments and Contingencies
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Note 13 -
Debt
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Note 14 -
Accumulated Other Comprehensive Loss
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Note 15 -
Redeemable Noncontrolling Interests
|
|
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Note 16 -
Operating Segments
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Note 17 -
Restructuring Expenses and Other Charges
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Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3 Quantitative and Qualitative Disclosures about Market Risk
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Item 4 Controls and Procedures
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Part II — Other Information
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Item 1 Legal Proceedings
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Item 1A Risk Factors
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Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3 Defaults upon Senior Securities
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Item 4 Mine Safety Disclosures
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Item 5 Other Information
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Item 6 Exhibits
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Signatures
|
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Three Months Ended
|
||||||
|
September 1, 2018
|
|
September 2, 2017
|
||||
Net sales
|
$
|
624.6
|
|
|
$
|
580.3
|
|
Cost of sales
|
399.5
|
|
|
363.4
|
|
||
Gross margin
|
225.1
|
|
|
216.9
|
|
||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative
|
159.5
|
|
|
146.8
|
|
||
Restructuring and impairment expenses
|
1.1
|
|
|
1.4
|
|
||
Design and research
|
18.5
|
|
|
19.2
|
|
||
Total operating expenses
|
179.1
|
|
|
167.4
|
|
||
Operating earnings
|
46.0
|
|
|
49.5
|
|
||
Other expenses:
|
|
|
|
||||
Interest expense
|
2.9
|
|
|
3.7
|
|
||
Other, net
|
(1.0
|
)
|
|
(0.7
|
)
|
||
Earnings before income taxes and equity income
|
44.1
|
|
|
46.5
|
|
||
Income tax expense
|
8.9
|
|
|
14.2
|
|
||
Equity income from nonconsolidated affiliates, net of tax
|
0.7
|
|
|
0.8
|
|
||
Net earnings
|
35.9
|
|
|
33.1
|
|
||
Net earnings attributable to noncontrolling interests
|
0.1
|
|
|
—
|
|
||
Net earnings attributable to Herman Miller, Inc.
|
$
|
35.8
|
|
|
$
|
33.1
|
|
|
|
|
|
||||
Earnings per share — basic
|
$
|
0.60
|
|
|
$
|
0.55
|
|
Earnings per share — diluted
|
$
|
0.60
|
|
|
$
|
0.55
|
|
Dividends declared, per share
|
$
|
0.1975
|
|
|
$
|
0.1800
|
|
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
|
|
||||
Foreign currency translation adjustments
|
$
|
(7.9
|
)
|
|
$
|
4.4
|
|
Pension and other post-retirement plans
|
0.7
|
|
|
0.8
|
|
||
Interest rate swaps
|
(0.5
|
)
|
|
(1.6
|
)
|
||
Unrealized holding loss
|
(0.1
|
)
|
|
—
|
|
||
Other comprehensive (loss) income
|
(7.8
|
)
|
|
3.6
|
|
||
Comprehensive income
|
28.1
|
|
|
36.7
|
|
||
Comprehensive income attributable to noncontrolling interests
|
0.1
|
|
|
—
|
|
||
Comprehensive income attributable to Herman Miller, Inc.
|
$
|
28.0
|
|
|
$
|
36.7
|
|
|
September 1, 2018
|
|
June 2, 2018
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
101.7
|
|
|
$
|
203.9
|
|
Short-term investments
|
8.5
|
|
|
8.6
|
|
||
Accounts and notes receivable, net
|
205.4
|
|
|
217.4
|
|
||
Unbilled accounts receivable
|
25.4
|
|
|
1.9
|
|
||
Inventories, net
|
163.8
|
|
|
162.4
|
|
||
Prepaid expenses and other
|
51.2
|
|
|
51.2
|
|
||
Total current assets
|
556.0
|
|
|
645.4
|
|
||
Property and equipment, at cost
|
1,031.0
|
|
|
1,020.8
|
|
||
Less — accumulated depreciation
|
(701.2
|
)
|
|
(689.4
|
)
|
||
Net property and equipment
|
329.8
|
|
|
331.4
|
|
||
Goodwill
|
303.9
|
|
|
304.1
|
|
||
Indefinite-lived intangibles
|
78.1
|
|
|
78.1
|
|
||
Other amortizable intangibles, net
|
45.1
|
|
|
41.3
|
|
||
Other noncurrent assets
|
150.8
|
|
|
79.2
|
|
||
Total Assets
|
$
|
1,463.7
|
|
|
$
|
1,479.5
|
|
|
|
|
|
||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
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|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
170.2
|
|
|
$
|
171.4
|
|
Accrued compensation and benefits
|
68.8
|
|
|
86.3
|
|
||
Accrued warranty
|
52.1
|
|
|
51.5
|
|
||
Customer deposits
|
27.3
|
|
|
27.6
|
|
||
Other accrued liabilities
|
73.0
|
|
|
77.0
|
|
||
Total current liabilities
|
391.4
|
|
|
413.8
|
|
||
Long-term debt
|
281.9
|
|
|
275.0
|
|
||
Pension and post-retirement benefits
|
14.6
|
|
|
15.6
|
|
||
Other liabilities
|
81.9
|
|
|
79.8
|
|
||
Total Liabilities
|
769.8
|
|
|
784.2
|
|
||
Redeemable noncontrolling interests
|
20.7
|
|
|
30.5
|
|
||
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, 59,302,918 and 59,774,490 shares issued and outstanding in 2019 and 2018, respectively)
|
11.9
|
|
|
11.7
|
|
||
Additional paid-in capital
|
106.5
|
|
|
116.6
|
|
||
Retained earnings
|
624.5
|
|
|
598.3
|
|
||
Accumulated other comprehensive loss
|
(69.2
|
)
|
|
(61.3
|
)
|
||
Key executive deferred compensation plans
|
(0.7
|
)
|
|
(0.7
|
)
|
||
Herman Miller, Inc. Stockholders' Equity
|
673.0
|
|
|
664.6
|
|
||
Noncontrolling Interests
|
0.2
|
|
|
0.2
|
|
||
Total Stockholders' Equity
|
673.2
|
|
|
664.8
|
|
||
Total Liabilities, Redeemable Noncontrolling Interests, and Stockholders' Equity
|
$
|
1,463.7
|
|
|
$
|
1,479.5
|
|
|
Three Months Ended
|
||||||
September 1, 2018
|
|
September 2, 2017
|
|||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net earnings
|
$
|
35.9
|
|
|
$
|
33.1
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
19.0
|
|
|
15.5
|
|
||
Stock-based compensation
|
2.5
|
|
|
1.3
|
|
||
Pension and post-retirement expenses
|
0.3
|
|
|
0.4
|
|
||
Pension contributions
|
—
|
|
|
(12.0
|
)
|
||
Earnings from nonconsolidated affiliates net of dividends received
|
(0.7
|
)
|
|
(0.1
|
)
|
||
Deferred taxes
|
—
|
|
|
(0.2
|
)
|
||
Gain on sales of property and dealers
|
—
|
|
|
(1.1
|
)
|
||
Restructuring and impairment expenses
|
1.1
|
|
|
1.4
|
|
||
Increase in current assets
|
(7.6
|
)
|
|
(13.9
|
)
|
||
Decrease in current liabilities
|
(18.3
|
)
|
|
(7.6
|
)
|
||
Increase in non-current liabilities
|
0.6
|
|
|
1.6
|
|
||
Other, net
|
0.1
|
|
|
0.5
|
|
||
Net Cash Provided by Operating Activities
|
32.9
|
|
|
18.9
|
|
||
|
|
|
|
||||
Cash Flows from Investing Activities:
|
|
|
|
||||
Proceeds from sale of property and dealers
|
—
|
|
|
2.0
|
|
||
Marketable securities sales
|
0.1
|
|
|
—
|
|
||
Equity investment in non-controlled entities
|
(71.6
|
)
|
|
—
|
|
||
Capital expenditures
|
(22.0
|
)
|
|
(24.9
|
)
|
||
Purchase of HAY licensing agreement
|
(4.8
|
)
|
|
—
|
|
||
Net advances on notes receivable
|
—
|
|
|
(1.0
|
)
|
||
Other, net
|
(1.4
|
)
|
|
(0.3
|
)
|
||
Net Cash Used in Investing Activities
|
(99.7
|
)
|
|
(24.2
|
)
|
||
|
|
|
|
||||
Cash Flows from Financing Activities:
|
|
|
|
||||
Dividends paid
|
(10.7
|
)
|
|
(10.2
|
)
|
||
Proceeds from issuance of long-term debt
|
—
|
|
|
89.4
|
|
||
Payments of long-term debt
|
—
|
|
|
(85.4
|
)
|
||
Common stock issued
|
8.5
|
|
|
4.4
|
|
||
Common stock repurchased and retired
|
(20.8
|
)
|
|
(11.1
|
)
|
||
Purchase of redeemable noncontrolling interests
|
(10.0
|
)
|
|
(1.0
|
)
|
||
Net proceeds from supplier financing program
|
—
|
|
|
0.8
|
|
||
Payment of contingent consideration
|
(0.1
|
)
|
|
—
|
|
||
Other, net
|
0.1
|
|
|
0.1
|
|
||
Net Cash Used in by Financing Activities
|
(33.0
|
)
|
|
(13.0
|
)
|
||
|
|
|
|
||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
(2.4
|
)
|
|
2.1
|
|
||
Net Decrease in Cash and Cash Equivalents
|
(102.2
|
)
|
|
(16.2
|
)
|
||
|
|
|
|
||||
Cash and Cash Equivalents, Beginning of Period
|
203.9
|
|
|
96.2
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
101.7
|
|
|
$
|
80.0
|
|
|
Three Months Ended
|
||||||
September 1, 2018
|
|
September 2, 2017
|
|||||
Preferred Stock
|
|
|
|
||||
Balance at beginning of year and end of period
|
$
|
—
|
|
|
$
|
—
|
|
Common Stock
|
|
|
|
||||
Balance at beginning of year
|
$
|
11.7
|
|
|
$
|
11.9
|
|
Exercise of stock options
|
0.2
|
|
|
0.1
|
|
||
Restricted stock units released
|
0.1
|
|
|
—
|
|
||
Repurchase and retirement of common stock
|
(0.1
|
)
|
|
—
|
|
||
Balance at end of period
|
$
|
11.9
|
|
|
$
|
12.0
|
|
Additional Paid-in Capital
|
|
|
|
||||
Balance at beginning of year
|
$
|
116.6
|
|
|
$
|
139.3
|
|
Cumulative effect of accounting change
|
—
|
|
|
(0.3
|
)
|
||
Repurchase and retirement of common stock
|
(20.7
|
)
|
|
(11.1
|
)
|
||
Exercise of stock options
|
7.9
|
|
|
3.8
|
|
||
Stock-based compensation expense
|
2.2
|
|
|
1.6
|
|
||
Restricted stock units released
|
—
|
|
|
0.1
|
|
||
Employee stock purchase plan issuances
|
0.5
|
|
|
0.5
|
|
||
Balance at end of period
|
$
|
106.5
|
|
|
$
|
133.9
|
|
Retained Earnings
|
|
|
|
||||
Balance at beginning of year
|
$
|
598.3
|
|
|
$
|
519.5
|
|
Cumulative effect of accounting changes
|
2.0
|
|
|
0.2
|
|
||
Net income attributable to Herman Miller, Inc.
|
35.8
|
|
|
33.1
|
|
||
Dividends declared on common stock (per share - 2019: $0.1975; 2018; $0.1800)
|
(11.6
|
)
|
|
(10.8
|
)
|
||
Redeemable noncontrolling interests valuation adjustment
|
—
|
|
|
0.2
|
|
||
Balance at end of period
|
$
|
624.5
|
|
|
$
|
542.2
|
|
Accumulated Other Comprehensive Loss
|
|
|
|
||||
Balance at beginning of year
|
$
|
(61.3
|
)
|
|
$
|
(82.2
|
)
|
Cumulative effect of accounting change
|
(0.1
|
)
|
|
—
|
|
||
Other comprehensive income (loss)
|
(7.8
|
)
|
|
3.6
|
|
||
Balance at end of period
|
$
|
(69.2
|
)
|
|
$
|
(78.6
|
)
|
Key Executive Deferred Compensation
|
|
|
|
||||
Balance at beginning of year and end of period
|
$
|
(0.7
|
)
|
|
$
|
(1.0
|
)
|
Herman Miller, Inc. Stockholders' Equity
|
$
|
673.0
|
|
|
$
|
608.5
|
|
Noncontrolling Interests
|
|
|
|
||||
Balance at beginning of year and end of period
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Total Stockholders' Equity
|
$
|
673.2
|
|
|
$
|
608.7
|
|
Standard
|
|
Description
|
|
Effective Date
|
|
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 adopted the standard effective June 3, 2018 using the modified retrospective method. Refer to Note 3 to the financial statements for further information regarding the adoption of the standard.
|
|
|
|
|
|
|
|
Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities
|
|
The standard provides guidance for the measurement, presentation and disclosure of financial assets and liabilities. The standard requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any change in fair value in net income. The standard does not permit early adoption and at adoption a cumulative-effect adjustment to beginning retained earnings should be recorded.
|
|
June 3, 2018
|
|
The company adopted the standard effective June 3, 2018 using the modified retrospective method. As a result, the company reclassified $0.1 million of net gains on mutual fund equity securities, that were formerly classified as available for sale securities before the adoption of the new standard, from Accumulated Other Comprehensive Loss to Retained earnings. The impact of adoption also resulted in certain disclosure changes. Refer to Note 11 of the financial statements for further information.
|
|
|
|
|
|
|
|
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 company retrospectively adopted the standard effective June 3, 2018. Prior to adoption, the company recorded net periodic benefit costs related to its defined benefit pension and post-retirement medical plans within Selling, general and administrative expenses. As a result of adoption, these costs are recorded within Other, net. The company retrospectively reclassified these costs in the Condensed Consolidated Statements of Comprehensive Income for the period ending September 2, 2017 from Selling, general and administrative to Other, net. Refer to Note 7 of the financial statements for further information.
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial Statements or Other Significant Matters
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
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. The company does not expect the Statement of Comprehensive Income to be significantly impacted. However, the impact to the balance sheet of recording right of use assets and lease liabilities for the company’s operating leases, as well as the necessary financial statement disclosures, is expected to be significant. The company has assembled a project team and is working towards implementation of the lease accounting standard.
|
|
|
|
|
|
|
|
Measurement of Credit Losses on Financial Instruments
|
|
This guidance replaces the existing incurred loss impairment model with an expected loss model and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
|
|
May 30, 2020
|
|
The company is currently evaluating the impact of adopting this guidance.
|
|
Balance at
|
|
Adjustments due
|
|
Balance at
|
||||||
(In millions)
|
June 2, 2018
|
|
to ASC 606
|
|
June 3, 2018
|
||||||
Balance Sheet
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Unbilled accounts receivable
|
$
|
1.9
|
|
|
$
|
11.1
|
|
|
$
|
13.0
|
|
Inventories, net
|
162.4
|
|
|
(7.1
|
)
|
|
155.3
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Accrued compensation and benefits
|
86.3
|
|
|
0.2
|
|
|
86.5
|
|
|||
Other accrued liabilities
|
77.0
|
|
|
1.9
|
|
|
78.9
|
|
|||
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
||||||
Retained earnings
|
598.3
|
|
|
1.9
|
|
|
600.2
|
|
|
For the period ended September 1, 2018
|
||||||||||||||
(In millions)
|
As reported
|
|
Performance Obligation Change
|
|
Gross vs. Net Change
|
|
Legacy GAAP
|
||||||||
Statement of Comprehensive Income
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
624.6
|
|
|
$
|
(10.7
|
)
|
|
$
|
(8.5
|
)
|
|
$
|
605.4
|
|
Cost of sales
|
399.5
|
|
|
(5.8
|
)
|
|
(8.5
|
)
|
|
385.2
|
|
||||
Gross margin
|
225.1
|
|
|
(4.9
|
)
|
|
|
|
220.2
|
|
|||||
Total operating expenses
|
179.1
|
|
|
(0.1
|
)
|
|
|
|
179.0
|
|
|||||
Operating earnings
|
46.0
|
|
|
(4.8
|
)
|
|
|
|
41.2
|
|
|||||
Income tax expense
|
8.9
|
|
|
(1.1
|
)
|
|
|
|
7.8
|
|
|||||
Net earnings
|
35.9
|
|
|
(3.7
|
)
|
|
|
|
32.2
|
|
|
For the period ended September 1, 2018
|
|||||||||||
(In millions)
|
As reported
|
|
Performance Obligation Change
|
|
Gross vs. Net Change
|
|
Legacy GAAP
|
|||||
Balance Sheet
|
|
|
|
|
|
|
|
|||||
Assets:
|
|
|
|
|
|
|
|
|||||
Unbilled accounts receivable
|
$
|
25.4
|
|
|
(21.8
|
)
|
|
|
|
$
|
3.6
|
|
Inventories, net
|
163.8
|
|
|
12.5
|
|
|
|
|
176.3
|
|
||
|
|
|
|
|
|
|
|
|||||
Liabilities:
|
|
|
|
|
|
|
|
|||||
Accrued compensation and benefits
|
68.8
|
|
|
(0.3
|
)
|
|
|
|
68.5
|
|
||
Other accrued liabilities
|
73.0
|
|
|
(3.4
|
)
|
|
|
|
69.6
|
|
||
|
|
|
|
|
|
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|||||
Retained earnings
|
624.5
|
|
|
(5.6
|
)
|
|
|
|
618.9
|
|
–
|
Shipping and Handling Activities
- the company accounts for shipping and handling activities as fulfillment activities and these costs are accrued within Cost of sales at the same time revenue is recognized.
|
–
|
Sales Taxes
-
the company does not record revenue for sales tax, value added tax or other taxes that are collected on behalf of government entities. The company’s revenue is recorded net of these taxes as they are passed through to the relevant government entities.
|
–
|
Incremental Costs of Obtaining a Contract
- the company has recognized incremental costs to obtain a contract as an expense when incurred as the amortization period is less than one year.
|
–
|
Significant Financing Component
- the company has not adjusted the amount of consideration to be received for any significant financing components as the company’s contracts have a duration of one year or less.
|
–
|
Single Performance Obligation
- these contracts are transacted with customers and include only the product performance obligation. Most commonly, these contracts represent master agreements with independent third-party dealers in which a purchase order represents the customer contract, point of sale transactions through the Consumer reportable segment, as well as customer purchase orders for the Maharam subsidiary within the Specialty reportable segment. For contracts that include a single performance obligation, the company records revenue at the point in time when title and risk of loss has transferred to the customer.
|
–
|
Multiple Performance Obligations
- these contracts are transacted with customers and include more than one performance obligation; products, which are shipped to the customer by the company and installation and other services, which are primarily fulfilled by independent third-party dealers. For contracts that include multiple performance obligations, the company records revenue for the product performance obligation at the point in time when control transfers, generally upon transfer of title and risk of loss to the customer. In most cases, the company has concluded that it is the agent for the installation services performance obligation and as such, the revenue and costs of these services are recorded net within “Net sales” in the company’s Condensed Consolidated Statements of Comprehensive Income.
|
–
|
Other
- these contracts are comprised mainly of alliance fee arrangements, whereby the company earns revenue for allowing other furniture sellers access to its dealer distribution channel, as well as other miscellaneous selling arrangements. Revenue from alliance contracts are recorded at the point in time in which the sale is made by other furniture sellers through the company’s sales channel.
|
|
Three Months Ended
|
||
(In millions)
|
September 1, 2018
|
||
Net Sales:
|
|
||
Single performance obligation
|
|
||
Product revenue
|
$
|
535.2
|
|
Multiple performance obligations
|
|
||
Product revenue
|
84.8
|
|
|
Service revenue
|
2.7
|
|
|
Other
|
1.9
|
|
|
Total
|
$
|
624.6
|
|
|
Three Months Ended
|
||
(In millions)
|
September 1, 2018
|
||
North American Furniture Solutions:
|
|
||
Systems
|
$
|
144.5
|
|
Seating
|
96.6
|
|
|
Freestanding and storage
|
74.7
|
|
|
Other
|
27.9
|
|
|
Total North American Furniture Solutions
|
$
|
343.7
|
|
|
|
||
ELA Furniture Solutions:
|
|
||
Systems
|
$
|
22.8
|
|
Seating
|
68.7
|
|
|
Freestanding and storage
|
10.4
|
|
|
Other
|
13.5
|
|
|
Total ELA Furniture Solutions
|
$
|
115.4
|
|
|
|
||
Specialty:
|
|
||
Systems
|
$
|
1.6
|
|
Seating
|
29.0
|
|
|
Freestanding and storage
|
12.9
|
|
|
Textiles
|
28.8
|
|
|
Other
|
5.0
|
|
|
Total Specialty
|
$
|
77.3
|
|
|
|
||
Consumer:
|
|
||
Seating
|
53.7
|
|
|
Freestanding and storage
|
17.2
|
|
|
Other
|
17.3
|
|
|
Total Consumer
|
$
|
88.2
|
|
|
|
||
Total
|
$
|
624.6
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||
Finished goods
|
$
|
125.2
|
|
|
$
|
124.2
|
|
Raw materials
|
38.6
|
|
|
38.2
|
|
||
Total
|
$
|
163.8
|
|
|
$
|
162.4
|
|
(In millions)
|
Goodwill
|
|
Indefinite-lived Intangible Assets
|
|
Total Goodwill and Indefinite-lived Intangible Assets
|
||||||
June 2, 2018
|
$
|
304.1
|
|
|
$
|
78.1
|
|
|
$
|
382.2
|
|
Foreign currency translation adjustments
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||
September 1, 2018
|
$
|
303.9
|
|
|
$
|
78.1
|
|
|
$
|
382.0
|
|
(In millions)
|
September 1, 2018
|
|
September 2, 2017
|
||||
Interest cost
|
$
|
0.7
|
|
|
$
|
0.8
|
|
Expected return on plan assets
|
(1.2
|
)
|
|
(1.7
|
)
|
||
Net amortization loss
|
0.8
|
|
|
1.3
|
|
||
Net periodic benefit cost
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
September 1, 2018
|
|
September 2, 2017
|
||||
Numerators
:
|
|
|
|
||||
Numerator for both basic and diluted EPS, Net earnings attributable to Herman Miller, Inc. - in millions
|
$
|
35.8
|
|
|
$
|
33.1
|
|
|
|
|
|
||||
Denominators
:
|
|
|
|
||||
Denominator for basic EPS, weighted-average common shares outstanding
|
59,370,160
|
|
|
59,758,610
|
|
||
Potentially dilutive shares resulting from stock plans
|
498,954
|
|
|
570,659
|
|
||
Denominator for diluted EPS
|
59,869,114
|
|
|
60,329,269
|
|
||
Antidilutive equity awards not included in weighted-average common shares - diluted
|
161,457
|
|
|
536,418
|
|
(In millions)
|
September 1, 2018
|
|
September 2, 2017
|
||||
Stock-based compensation expense
|
$
|
2.5
|
|
|
$
|
1.3
|
|
Related income tax effect
|
0.6
|
|
|
0.5
|
|
(Shares)
|
Three Months Ended
|
||||
|
September 1, 2018
|
|
September 2, 2017
|
||
Stock Options
|
265,739
|
|
|
150,556
|
|
Restricted Stock Units
|
95,587
|
|
|
90,671
|
|
Performance Share Units
|
239,679
|
|
|
130,179
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||
Liability for interest and penalties
|
$
|
0.8
|
|
|
$
|
1.0
|
|
Liability for uncertain tax positions, current
|
3.0
|
|
|
3.2
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||
Carrying value
|
$
|
285.6
|
|
|
$
|
285.8
|
|
Fair value
|
$
|
288.9
|
|
|
$
|
288.6
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||||||||||
Financial Assets
|
Quoted Prices with
Other Observable Inputs (Level 2)
|
|
Management Estimate (Level 3)
|
|
Quoted Prices with
Other Observable Inputs (Level 2) |
|
Management Estimate (Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
25.8
|
|
|
$
|
—
|
|
|
$
|
121.0
|
|
|
$
|
—
|
|
Mutual funds - equity
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
Foreign currency forward contracts
|
0.3
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
||||
Deferred compensation plan
|
16.1
|
|
|
—
|
|
|
15.1
|
|
|
—
|
|
||||
Total
|
$
|
43.1
|
|
|
$
|
—
|
|
|
$
|
137.4
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
Contingent consideration
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.5
|
|
||||
Total
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||||||||||
Financial Assets
|
Quoted Prices with
Other Observable Inputs (Level 2)
|
|
Management Estimate (Level 3)
|
|
Quoted Prices with
Other Observable Inputs (Level 2) |
|
Management Estimate (Level 3)
|
||||||||
Mutual funds - fixed income
|
7.6
|
|
|
—
|
|
|
7.7
|
|
|
—
|
|
||||
Interest rate swap agreement
|
14.4
|
|
|
—
|
|
|
15.0
|
|
|
—
|
|
||||
Total
|
$
|
22.0
|
|
|
$
|
—
|
|
|
$
|
22.7
|
|
|
$
|
—
|
|
Contingent Consideration
|
September 1, 2018
|
|
September 2, 2017
|
||||
Beginning balance
|
$
|
0.5
|
|
|
$
|
0.5
|
|
Payments
|
(0.1
|
)
|
|
—
|
|
||
Ending balance
|
$
|
0.4
|
|
|
$
|
0.5
|
|
|
September 1, 2018
|
|
June 2, 2018
|
||||||||||||||||||||
(In millions)
|
Cost
|
|
Unrealized
Gain/(loss)
|
|
Market
Value
|
|
Cost
|
|
Unrealized
Gain/(Loss) |
|
Market
Value |
||||||||||||
Mutual funds - fixed income
|
$
|
7.7
|
|
|
$
|
(0.1
|
)
|
|
$
|
7.6
|
|
|
$
|
7.8
|
|
|
$
|
(0.1
|
)
|
|
$
|
7.7
|
|
Mutual funds - equity
|
0.7
|
|
|
0.2
|
|
|
0.9
|
|
|
0.7
|
|
|
0.2
|
|
|
0.9
|
|
||||||
Total
|
$
|
8.4
|
|
|
$
|
0.1
|
|
|
$
|
8.5
|
|
|
$
|
8.5
|
|
|
$
|
0.1
|
|
|
$
|
8.6
|
|
(In millions)
|
September 1, 2018
|
|
September 2, 2017
|
||||
Accrual Balance — beginning
|
$
|
51.5
|
|
|
$
|
47.7
|
|
Accrual for product-related matters
|
5.6
|
|
|
9.4
|
|
||
Settlements and adjustments
|
(5.0
|
)
|
|
(4.5
|
)
|
||
Accrual Balance — ending
|
$
|
52.1
|
|
|
$
|
52.6
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||
Debt securities, due March 1, 2021
|
50.0
|
|
|
50.0
|
|
||
Syndicated revolving line of credit, due September 2021
|
225.0
|
|
|
225.0
|
|
||
Construction-Type Lease
|
6.9
|
|
|
7.0
|
|
||
Supplier financing program
|
3.7
|
|
|
$
|
3.8
|
|
|
Total debt
|
$
|
285.6
|
|
|
$
|
285.8
|
|
Less: Current debt
|
(3.7
|
)
|
|
(10.8
|
)
|
||
Long-term debt
|
$
|
281.9
|
|
|
$
|
275.0
|
|
(In millions)
|
Cumulative Translation Adjustments
|
|
Pension and Other Post-retirement Benefit Plans
|
|
Unrealized
Gains on Available-for-sale Securities
|
|
Interest Rate Swap Agreement
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at June 3, 2017
|
$
|
(36.8
|
)
|
|
$
|
(47.6
|
)
|
|
$
|
0.1
|
|
|
$
|
2.1
|
|
|
$
|
(82.2
|
)
|
Other comprehensive income (loss) before reclassifications
|
4.4
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
2.8
|
|
|||||
Reclassification from accumulated other comprehensive loss - Selling, general and administrative
|
—
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||||
Tax benefit
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||||
Net reclassifications
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|||||
Net current period other comprehensive income
|
4.4
|
|
|
0.8
|
|
|
—
|
|
|
(1.6
|
)
|
|
3.6
|
|
|||||
Balance at September 2, 2017
|
$
|
(32.4
|
)
|
|
(46.8
|
)
|
|
$
|
0.1
|
|
|
$
|
0.5
|
|
|
$
|
(78.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at June 2, 2018
|
$
|
(34.1
|
)
|
|
$
|
(37.2
|
)
|
|
$
|
0.1
|
|
|
$
|
9.9
|
|
|
$
|
(61.3
|
)
|
Cumulative effect of accounting change
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Other comprehensive income before reclassifications
|
(7.9
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|
(8.5
|
)
|
|||||
Reclassification from accumulated other comprehensive loss - Selling, general and administrative
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|||||
Tax benefit
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||
Net reclassifications
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
Net current period other comprehensive income
|
(7.9
|
)
|
|
0.7
|
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|
(7.8
|
)
|
|||||
Balance at September 1, 2018
|
$
|
(42.0
|
)
|
|
$
|
(36.5
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
9.4
|
|
|
$
|
(69.2
|
)
|
(In millions)
|
September 1, 2018
|
|
September 2, 2017
|
||||
Beginning Balance
|
$
|
30.5
|
|
|
$
|
24.6
|
|
Purchase of redeemable noncontrolling interests
|
(10.0
|
)
|
|
(1.0
|
)
|
||
Net income attributable to redeemable noncontrolling interests
|
0.1
|
|
|
—
|
|
||
Exercised options
|
0.2
|
|
|
—
|
|
||
Redemption value adjustment
|
—
|
|
|
(0.2
|
)
|
||
Other adjustments
|
(0.1
|
)
|
|
—
|
|
||
Ending Balance
|
$
|
20.7
|
|
|
$
|
23.4
|
|
|
Three Months Ended
|
||||||
(In millions)
|
September 1, 2018
|
|
September 2, 2017
|
||||
Net Sales:
|
|
|
|
||||
North American Furniture Solutions
|
$
|
343.7
|
|
|
$
|
328.6
|
|
ELA Furniture Solutions
|
115.4
|
|
|
93.4
|
|
||
Specialty
|
77.3
|
|
|
75.1
|
|
||
Consumer
|
88.2
|
|
|
83.2
|
|
||
Total
|
$
|
624.6
|
|
|
$
|
580.3
|
|
|
|
|
|
||||
Operating Earnings (Loss):
|
|
|
|
||||
North American Furniture Solutions
|
$
|
45.0
|
|
|
$
|
48.7
|
|
ELA Furniture Solutions
|
10.5
|
|
|
7.0
|
|
||
Specialty
|
3.1
|
|
|
1.6
|
|
||
Consumer
|
2.1
|
|
|
0.3
|
|
||
Corporate
|
(14.7
|
)
|
|
(8.1
|
)
|
||
Total
|
$
|
46.0
|
|
|
$
|
49.5
|
|
(In millions)
|
September 1, 2018
|
|
June 2, 2018
|
||||
Total Assets:
|
|
|
|
||||
North American Furniture Solutions
|
$
|
506.1
|
|
|
$
|
488.7
|
|
ELA Furniture Solutions
|
347.4
|
|
|
283.4
|
|
||
Specialty
|
190.8
|
|
|
188.7
|
|
||
Consumer
|
294.8
|
|
|
291.2
|
|
||
Corporate
|
124.6
|
|
|
227.5
|
|
||
Total
|
$
|
1,463.7
|
|
|
$
|
1,479.5
|
|
(In millions)
|
September 1, 2018
|
||
Beginning Balance
|
$
|
—
|
|
Restructuring and impairment expenses
|
1.1
|
|
|
Payments
|
(1.1
|
)
|
|
Ending Balance
|
$
|
—
|
|
(In millions)
|
September 2, 2017
|
||
Beginning Balance
|
$
|
2.4
|
|
Restructuring expenses
|
1.4
|
|
|
Payments
|
(1.8
|
)
|
|
Ending Balance
|
$
|
2.0
|
|
(*) Non-GAAP measurements; see accompanying reconciliations and explanations.
|
|
|
9/1/2018
|
9/2/2017
|
||||
Earnings per Share - Diluted
|
$
|
0.60
|
|
$
|
0.55
|
|
|
|
|
||||
Add: Inventory step up on HAY equity method investment, after tax
|
0.01
|
|
—
|
|
||
Add: Special charges, after tax
|
0.06
|
|
—
|
|
||
Add: Restructuring and impairment expenses, after tax
|
0.02
|
|
0.02
|
|
||
Adjusted Earnings per Share - Diluted
|
$
|
0.69
|
|
$
|
0.57
|
|
(In millions, except per share data)
|
September 1, 2018
|
|
September 2, 2017
|
|
Percent
Change
|
|||||
Net sales
|
$
|
624.6
|
|
|
$
|
580.3
|
|
|
7.6
|
%
|
Cost of sales
|
399.5
|
|
|
363.4
|
|
|
9.9
|
%
|
||
Gross margin
|
225.1
|
|
|
216.9
|
|
|
3.8
|
%
|
||
Operating expenses
|
178.0
|
|
|
166.0
|
|
|
7.2
|
%
|
||
Restructuring expenses
|
1.1
|
|
|
1.4
|
|
|
n/a
|
|
||
Total operating expenses
|
179.1
|
|
|
167.4
|
|
|
7.0
|
%
|
||
Operating earnings
|
46.0
|
|
|
49.5
|
|
|
(7.1
|
)%
|
||
Other expenses, net
|
1.9
|
|
|
3.0
|
|
|
(36.7
|
)%
|
||
Earnings before income taxes and equity income
|
44.1
|
|
|
46.5
|
|
|
(5.2
|
)%
|
||
Income tax expense
|
8.9
|
|
|
14.2
|
|
|
(37.3
|
)%
|
||
Equity income from nonconsolidated affiliates, net of tax
|
0.7
|
|
|
0.8
|
|
|
n/a
|
|
||
Net earnings
|
35.9
|
|
|
33.1
|
|
|
8.5
|
%
|
||
Net earnings attributable to noncontrolling interests
|
0.1
|
|
|
—
|
|
|
n/a
|
|
||
Net earnings attributable to Herman Miller, Inc.
|
$
|
35.8
|
|
|
$
|
33.1
|
|
|
8.2
|
%
|
|
|
|
|
|
|
|||||
Earnings per share — diluted
|
0.60
|
|
|
0.55
|
|
|
9.1
|
%
|
||
Orders
|
630.6
|
|
|
594.8
|
|
|
6.0
|
%
|
||
Backlog
|
346.4
|
|
|
332.1
|
|
|
4.3
|
%
|
|
September 1, 2018
|
|
September 2, 2017
|
||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
64.0
|
|
|
62.6
|
|
Gross margin
|
36.0
|
|
|
37.4
|
|
Operating expenses
|
28.5
|
|
|
28.6
|
|
Restructuring expenses
|
0.2
|
|
|
0.2
|
|
Total operating expenses
|
28.7
|
|
|
28.8
|
|
Operating earnings
|
7.4
|
|
|
8.5
|
|
Other expenses, net
|
0.3
|
|
|
0.5
|
|
Earnings before income taxes and equity income
|
7.1
|
|
|
8.0
|
|
Income tax expense
|
1.4
|
|
|
2.4
|
|
Equity income from nonconsolidated affiliates, net of tax
|
0.1
|
|
|
0.1
|
|
Net earnings
|
5.7
|
|
|
5.7
|
|
Net earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
Net earnings attributable to Herman Miller, Inc.
|
5.7
|
|
|
5.7
|
|
(*) Non-GAAP measurements; see accompanying reconciliations and explanations.
|
•
|
Increased sales volumes within the ELA segment of approximately
$21 million
were driven
primarily by broad-based growth across all regions.
|
•
|
Sales volumes within the North American segment
increased
by approximately $12 million, resulting from increased demand within the company's North America office furniture businesses.
|
•
|
Adoption of
ASC 606 - Revenue from Contracts with Customers
at the beginning of fiscal 2019 led to the
reclassification of certain pricing elements from Net sales to Cost of sales
, which resulted in an increase in Net sales of $8.5 million compared to the same period of the prior year in which revenue was recorded under previous accounting rules.
|
•
|
Incremental sales volumes within the Consumer segment of approximately
$4 million
were driven by growth across the DWR studio, e-commerce and contract channels. In the prior year period, Consumer sales benefited from a change in shipping terms at DWR that increased sales volumes by $5 million.
|
•
|
Increased sales volumes within the Specialty segment of approximately $1 million was driven mainly by the company's
Maharam subsidiary.
|
•
|
Foreign currency translation had a negative impact on net sales of approximately $1 million.
|
•
|
The impact of the divestiture of the company's dealerships in Vancouver, Canada in fiscal 2018 had the effect of reducing sales by
$0.8 million
in the current
three month period
as compared to the same period of the prior fiscal year.
|
•
|
Approximately 60 basis points of the year-over-year decrease in gross margin related to the adoption of the new revenue recognition standard (ASC 606) at the beginning of fiscal 2019. This adoption requires recording certain product pricing elements as expenses within cost of goods sold that were previously classified on a net basis within sales. This reclassification lowers gross margin percentage but has no impact on gross margin dollars.
|
•
|
Higher manufacturing costs at the company's West Michigan manufacturing facilities related to higher medical costs, depreciation and overtime costs decreased gross margin by approximately 30 basis points as compared to the same period of the prior fiscal year.
|
•
|
Shipping and freight costs were unfavorable compared to the same period of the prior year period, which drove a decrease of approximately 20 basis points. This impact was recognized primarily within the company's Consumer reportable segment.
|
•
|
Higher commodity costs within the North American operating segment drove an unfavorable impact of approximately 20 basis points relative to the prior year period.
|
•
|
The rest of the decrease in gross margin was driven by several factors, including lower alliance revenues during the current year period and product mix changes.
|
•
|
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 $4.0 million compared to last fiscal year.
|
•
|
Depreciation expense increased by approximately $4 million and was driven primarily by capital investment in facilities and systems.
|
•
|
Compensation and benefit costs increased $2.2 million due mainly to employee headcount increases and wage inflation.
|
•
|
Higher employee incentive costs increased operating expenses by $1.9 million. The increase reflects higher incentive compensation costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.
|
•
|
Warranty costs were $3.7 million lower due to specific reserves incurred in the same period of the prior year that did not recur in the current three month period.
|
•
|
The rest of the increase in operating expenses was driven mainly by incremental legal and marketing expenditures.
|
•
|
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 Herman Miller 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 eCommerce and DWR retail studios and outlets.
|
•
|
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 American segment
increased
by approximately $12 million, resulting from increased demand within the company's North America office furniture businesses.
|
•
|
Adoption of
ASC 606 - Revenue from Contracts with Customers
at the beginning of fiscal 2019 led to the
reclassification of certain pricing elements from Net sales to Cost of sales
, which resulted in an increase in Net sales for the North American segment by $5.3 million compared to the same period of the prior year, in which revenue was recorded under previous accounting rules.
|
•
|
Deeper contract price discounting, net of incremental list price increases, reduced net sales and operating earnings in the
first
quarter of
fiscal 2019
by roughly $1 million as compared to the prior year.
|
•
|
Operating earnings decreased due to higher costs of approximately $3 million at the company's West Michigan manufacturing facilities due to higher commodity costs, medical costs, depreciation expense and overtime costs.
|
•
|
Increased depreciation expenses of approximately $2 million, which related to investments in facilities and systems, and workforce related costs, including compensation and benefits and incentive compensation costs decreased operating earnings by roughly $2 million as compared to the prior year period.
|
•
|
These decreases in operating earnings were partially offset by increased operating earnings of an estimated $4 million from incremental sales volumes.
|
•
|
Increased
sales volumes within the ELA segment of approximately
$21 million
were driven
by broad-based growth, with Asia Pacific and EMEA generating the most significant year-over-year growth.
|
•
|
Adoption of
ASC 606 - Revenue from Contracts with Customers
at the beginning of fiscal 2019 led to the
reclassification of certain pricing elements from Net sales to Cost of sales
, which resulted in an increase in Net sales for the ELA segment by $2.8 million compared to the same period of the prior year, in which revenue was recorded under previous accounting rules.
|
•
|
Operating earnings increased by approximately $7 million in the current three month period of fiscal 2018 due to increased sales volumes. This increase was partially offset by the impact of unfavorable product mix of approximately $2 million and higher restructuring and impairment costs of $1.1 million.
|
•
|
Net sales increased in the first quarter of fiscal 2018 as compared to the same period of the prior year due primarily to increased sales volumes of approximately $1 million, which was driven primarily by the company's Maharam subsidiary businesses.
|
•
|
Adoption of
ASC 606 - Revenue from Contracts with Customers
at the beginning of fiscal 2019 led to the
reclassification of certain pricing elements from Net sales to Cost of sales
, which resulted in an increase in Net sales for the Specialty segment by $0.4 million compared to the same period of the prior year, in which revenue was recorded under previous accounting rules.
|
•
|
Operating earnings increased by approximately $1.5 million in the current three month period of fiscal 2018 due to the increased sales volumes, favorable channel mix and a decrease in warranty expenses of $0.6 million.
|
•
|
Incremental sales volumes within the Consumer segment of approximately
$4 million
were driven by growth across the DWR studio, e-commerce and contract channels. In the prior year period, Consumer sales benefited from a change in shipping terms at DWR that increased sales volumes by $5 million.
|
•
|
Operating earnings increased by approximately $3 million in the current three month period of fiscal 2018 due to increased sales volumes and net pricing benefits. Decreased freight revenue due to changes in shipping policies and an increase in freight costs partially offset these increases in operating earnings.
|
(In millions)
|
September 1, 2018
|
|
September 2, 2017
|
||||
Cash and cash equivalents, end of period
|
$
|
101.7
|
|
|
$
|
80.0
|
|
Marketable securities, end of period
|
8.5
|
|
|
8.7
|
|
||
Cash provided by operating activities
|
32.9
|
|
|
18.9
|
|
||
Cash used in investing activities
|
(99.7
|
)
|
|
(24.2
|
)
|
||
Cash used in financing activities
|
(33.0
|
)
|
|
(13.0
|
)
|
||
Capital expenditures
|
(22.0
|
)
|
|
(24.9
|
)
|
||
Stock repurchased and retired
|
(20.8
|
)
|
|
(11.1
|
)
|
||
Common stock issued
|
8.5
|
|
|
4.4
|
|
||
Dividends paid
|
(10.7
|
)
|
|
(10.2
|
)
|
||
Interest-bearing debt, end of period
|
281.9
|
|
|
203.9
|
|
||
Available unsecured credit facility, end of period
(1)
|
$
|
165.2
|
|
|
$
|
387.8
|
|
(In millions)
|
September 1, 2018
|
September 2, 2017
|
||||
Cash and cash equivalents
|
$
|
101.7
|
|
$
|
80.0
|
|
Marketable securities
|
8.5
|
|
8.7
|
|
||
Availability under syndicated revolving line of credit
|
$
|
165.2
|
|
$
|
387.8
|
|
Period
|
(a) Total Number of Shares (or Units)
Purchased
|
|
(b) Average price Paid per Share or Unit
|
|
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (in millions)
|
||||||
6/3/18 - 6/30/18
|
5,871
|
|
|
$
|
34.19
|
|
|
5,871
|
|
|
$
|
61,888,262
|
|
7/1/18 - 7/28/18
|
328,037
|
|
|
$
|
38.47
|
|
|
328,037
|
|
|
$
|
49,268,550
|
|
7/29/18 - 9/1/18
|
211,958
|
|
|
$
|
37.80
|
|
|
211,958
|
|
|
$
|
41,256,763
|
|
Total
|
545,866
|
|
|
|
|
545,866
|
|
|
|
Exhibit Number
|
Document
|
3.1
|
3.2
|
10.1
|
31.1
|
31.2
|
32.1
|
32.2
|
101.INS
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL 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
|
October 10, 2018
|
|
/s/ Andrea R. Owen
|
|
|
|
|
|
Andrea R. Owen
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Duly Authorized Signatory for Registrant)
|
|
|
|
|
|
|
October 10, 2018
|
|
/s/ Jeffrey M. Stutz
|
|
|
|
|
|
Jeffrey M. Stutz
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Duly Authorized Signatory for Registrant)
|
1 Year Herman Miller Chart |
1 Month Herman Miller Chart |
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