(in millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||
Equity earnings from nonconsolidated affiliates | $ | 5.0 | $ | 3.0 | $ | 1.6 |
(in millions) | June 1, 2019 | June 2, 2018 | ||||
Investments in nonconsolidated affiliates | $ | 89.0 | $ | 16.8 |
(In millions) | Retention Level (per occurrence) | |||
General liability | $ | 1.00 | ||
Auto liability | $ | 1.00 | ||
Workers' compensation | $ | 0.75 | ||
Health benefit | $ | 0.50 |
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Interest and penalty expense (income) | $ | (0.3 | ) | $ | 0.1 | $ | 0.2 | ||||
Liability for interest and penalties | $ | 0.7 | $ | 1.0 |
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 1, 2019: | |||||||||||||||
Accounts receivable allowances — uncollectible accounts(1) | $ | 2.4 | $ | 0.6 | $ | (0.1 | ) | $ | 2.9 | ||||||
Accounts receivable allowances — credit memo(2) | $ | 0.5 | $ | — | $ | 0.1 | $ | 0.6 | |||||||
Allowance for possible losses on notes receivable | $ | 0.4 | $ | (0.1 | ) | $ | — | $ | 0.3 | ||||||
Valuation allowance for deferred tax asset | $ | 10.3 | $ | 0.4 | $ | (0.3 | ) | $ | 10.4 | ||||||
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 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Accrual balance, beginning | $ | 51.5 | $ | 47.7 | $ | 43.9 | |||||
Accrual for warranty matters | 20.7 | 22.1 | 22.8 | ||||||||
Settlements | (19.1 | ) | (18.3 | ) | (19.0 | ) | |||||
Accrual balance, ending | $ | 53.1 | $ | 51.5 | $ | 47.7 |
Pension Benefits | Post-Retirement Benefits | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
(In millions) | Domestic | International | Domestic | International | |||||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 1.0 | $ | 105.9 | $ | 1.0 | $ | 113.8 | $ | 4.0 | $ | 5.0 | |||||||||||
Interest cost | — | 2.7 | 0.1 | 2.7 | 0.1 | 0.1 | |||||||||||||||||
Plan Amendments | — | 0.9 | — | — | — | — | |||||||||||||||||
Foreign exchange impact | — | (6.0 | ) | — | 4.2 | — | — | ||||||||||||||||
Actuarial loss (gain) | 0.1 | 9.7 | — | (12.2 | ) | (0.3 | ) | (0.5 | ) | ||||||||||||||
Benefits paid | (0.1 | ) | (4.1 | ) | (0.1 | ) | (2.6 | ) | (0.5 | ) | (0.6 | ) | |||||||||||
Benefit obligation at end of year | $ | 1.0 | $ | 109.1 | $ | 1.0 | $ | 105.9 | $ | 3.3 | $ | 4.0 | |||||||||||
Change in plan assets: | |||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | — | $ | 94.6 | $ | — | $ | 80.5 | $ | — | $ | — | |||||||||||
Actual return on plan assets | — | 2.5 | — | 1.2 | — | — | |||||||||||||||||
Foreign exchange impact | — | (5.1 | ) | — | 2.8 | — | — | ||||||||||||||||
Employer contributions | 0.1 | 0.3 | 0.1 | 12.7 | 0.5 | 0.6 | |||||||||||||||||
Benefits paid | (0.1 | ) | (4.1 | ) | (0.1 | ) | (2.6 | ) | (0.5 | ) | (0.6 | ) | |||||||||||
Fair value of plan assets at end of year | $ | — | $ | 88.2 | $ | — | $ | 94.6 | $ | — | $ | — | |||||||||||
Funded status: | |||||||||||||||||||||||
Under funded status at end of year | $ | (1.0 | ) | $ | (20.9 | ) | $ | (1.0 | ) | $ | (11.3 | ) | $ | (3.3 | ) | $ | (4.0 | ) | |||||
Components of the amounts recognized in the Consolidated Balance Sheets: | |||||||||||||||||||||||
Current liabilities | $ | (0.1 | ) | $ | — | $ | (0.1 | ) | $ | — | $ | (0.6 | ) | $ | (0.6 | ) | |||||||
Non-current liabilities | $ | (0.9 | ) | $ | (20.9 | ) | $ | (0.9 | ) | $ | (11.3 | ) | $ | (2.7 | ) | $ | (3.4 | ) | |||||
Components of the amounts recognized in Accumulated other comprehensive loss before the effect of income taxes: | |||||||||||||||||||||||
Prior service cost | $ | — | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Unrecognized net actuarial loss (gain) | $ | 0.3 | $ | 47.3 | $ | 0.3 | $ | 40.8 | $ | (1.3 | ) | $ | (1.1 | ) | |||||||||
Accumulated other comprehensive loss | $ | 0.3 | $ | 48.1 | $ | 0.3 | $ | 40.8 | $ | (1.3 | ) | $ | (1.1 | ) |
Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets | |||||||
(In millions) | 2019 | 2018 | |||||
Projected benefit obligation | $ | 110.1 | $ | 106.9 | |||
Accumulated benefit obligation | $ | 106.4 | $ | 103.1 | |||
Fair value of plan assets | $ | 88.2 | $ | 94.6 |
Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income (Loss): | |||||||||||||||||||||||
Pension Benefits | Post-Retirement Benefits | ||||||||||||||||||||||
(In millions) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||
Domestic: | |||||||||||||||||||||||
Interest cost | $ | — | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | |||||||||||
Net periodic benefit cost | $ | — | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | |||||||||||
International: | |||||||||||||||||||||||
Interest cost | $ | 2.7 | $ | 2.7 | $ | 2.7 | |||||||||||||||||
Expected return on plan assets | (4.5 | ) | (5.6 | ) | (4.7 | ) | |||||||||||||||||
Net amortization | 2.8 | 4.2 | 2.2 | ||||||||||||||||||||
Net periodic benefit cost | $ | 1.0 | $ | 1.3 | $ | 0.2 |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): | |||||||||||||||
Pension Benefits | Post-Retirement Benefits | ||||||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Domestic: | |||||||||||||||
Net actuarial gain | $ | 0.1 | $ | — | $ | (0.3 | ) | $ | (0.5 | ) | |||||
Total recognized in other comprehensive loss | $ | 0.1 | $ | — | $ | (0.3 | ) | $ | (0.5 | ) | |||||
International: | |||||||||||||||
Net actuarial (gain) loss | $ | 11.7 | $ | (7.7 | ) | ||||||||||
Net amortization | (2.7 | ) | (4.2 | ) | |||||||||||
Total recognized in other comprehensive loss | $ | 9.0 | $ | (11.9 | ) |
The weighted-average used in the determination of net periodic benefit cost: | |||||||||||
2019 | 2018 | 2017 | |||||||||
(Percentages) | Domestic | International | Domestic | International | Domestic | International | |||||
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 | |||||
Expected return on plan assets | n/a | 4.80 | n/a | 6.10 | n/a | 6.10 | |||||
The weighted-average used in the determination of the projected benefit obligations: | |||||||||||
Discount rate | 3.47 | 2.39 | 3.99 | 2.87 | 3.53 | 2.49 | |||||
Compensation increase rate | n/a | 3.20 | n/a | 3.10 | n/a | 3.25 |
Asset Category | Targeted Asset Allocation Percentage | Percentage of Plan Assets at Year End | |||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Fixed income | 35 | 35 | 33 | 36 | |||||||||
Common collective trusts | 65 | 65 | 67 | 64 | |||||||||
Total | 100 | 100 | |||||||||||
(In millions) | International Plan as of June 1, 2019 | ||||||||||||
Asset Category | Level 1 | Level 2 | Total | ||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | |||||||
Foreign government obligations | — | 29.3 | 29.3 | ||||||||||
Common collective trusts-balanced | — | 58.9 | 58.9 | ||||||||||
Total | $ | — | $ | 88.2 | $ | 88.2 | |||||||
(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) | Pension Benefits Domestic | Pension Benefits International | Post-Retirement Benefits | ||||||||
2020 | $ | 0.1 | $ | 1.8 | $ | 0.5 | |||||
2021 | $ | 0.1 | $ | 1.9 | $ | 0.4 | |||||
2022 | $ | 0.1 | $ | 2.3 | $ | 0.4 | |||||
2023 | $ | 0.1 | $ | 2.1 | $ | 0.4 | |||||
2024 | $ | 0.1 | $ | 2.3 | $ | 0.3 | |||||
2025-2029 | $ | 0.3 | $ | 16.7 | $ | 1.1 |
Year Ended | |||||||||||
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Cumulative translation adjustments at beginning of period | $ | (34.1 | ) | $ | (36.8 | ) | $ | (29.6 | ) | ||
Other comprehensive (loss) income before reclassifications | (14.2 | ) | 2.7 | (7.2 | ) | ||||||
Balance at end of period | (48.3 | ) | (34.1 | ) | (36.8 | ) | |||||
Pension and other post-retirement benefit plans at beginning of period | (37.2 | ) | (47.6 | ) | (34.9 | ) | |||||
Other comprehensive (loss) income before reclassifications (net of tax of $2.0, ($2.9), and $3.7) | (10.0 | ) | 5.3 | (14.5 | ) | ||||||
Reclassification from accumulated other comprehensive income - Other, net | 2.6 | 4.2 | 2.2 | ||||||||
Tax (expense) benefit | (0.4 | ) | 0.9 | (0.4 | ) | ||||||
Net reclassifications | 2.2 | 5.1 | 1.8 | ||||||||
Net current period other comprehensive (loss) income | (7.8 | ) | 10.4 | (12.7 | ) | ||||||
Balance at end of period | (45.0 | ) | (37.2 | ) | (47.6 | ) | |||||
Interest rate swap agreement at beginning of period | 9.9 | 2.1 | — | ||||||||
Cumulative effect of accounting change | 1.5 | — | — | ||||||||
Other comprehensive (loss) income before reclassifications (net of tax of $5.3, ($4.0), and ($1.2)) | (12.8 | ) | 7.5 | 2.1 | |||||||
Reclassification from accumulated other comprehensive income - Other, net | 0.5 | 0.3 | — | ||||||||
Net reclassifications | 0.5 | 0.3 | — | ||||||||
Net current period other comprehensive (loss) income | (12.3 | ) | 7.8 | 2.1 | |||||||
Balance at end of period | (0.9 | ) | 9.9 | 2.1 | |||||||
Unrealized Gains on Available-for-sale Securities at beginning of period | 0.1 | 0.1 | — | ||||||||
Cumulative effect of accounting change | (0.1 | ) | — | — | |||||||
Other comprehensive income before reclassifications | — | — | 0.1 | ||||||||
Balance at end of period | — | 0.1 | 0.1 | ||||||||
Total Accumulated other comprehensive loss | $ | (94.2 | ) | $ | (61.3 | ) | $ | (82.2 | ) |
Year Ended | |||
(In millions) | June 1, 2019 | ||
Net Sales: | |||
Single performance obligation | |||
Product revenue | $ | 2,155.0 | |
Multiple performance obligations | |||
Product revenue | 390.0 | ||
Service revenue | 12.6 | ||
Other | 9.6 | ||
Total | $ | 2,567.2 |
Year Ended | |||
(In millions) | June 1, 2019 | ||
North America Contract: | |||
Systems | $ | 564.4 | |
Seating | 501.8 | ||
Freestanding and storage | 384.9 | ||
Textiles | 113.8 | ||
Other | 121.6 | ||
Total North America Contract | $ | 1,686.5 | |
International Contract: | |||
Systems | $ | 103.6 | |
Seating | 276.1 | ||
Freestanding and storage | 53.0 | ||
Other | 59.5 | ||
Total International Contract | $ | 492.2 | |
Retail: | |||
Seating | $ | 235.6 | |
Freestanding and storage | 67.5 | ||
Other | 85.4 | ||
Total Retail | $ | 388.5 | |
Total | $ | 2,567.2 |
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | |||||||||
Employee stock purchase program | $ | 0.3 | $ | 0.3 | $ | 0.3 | ||||||
Stock option plans | (0.4 | ) | 2.6 | 2.0 | ||||||||
Restricted stock units | 4.6 | 3.9 | 3.6 | |||||||||
Performance share units | 2.8 | 0.9 | 2.8 | |||||||||
Total | $ | 7.3 | $ | 7.7 | $ | 8.7 | ||||||
Tax benefit | $ | 1.6 | $ | 2.3 | $ | 3.1 |
2019 | 2018 | 2017 | |||||||||
Risk-free interest rates (1) | 2.65-2.70% | 1.79 | % | 1.01 | % | ||||||
Expected term of options (2) | 4.4 years | 4.6 years | 4.0 years | ||||||||
Expected volatility (3) | 27 | % | 26 | % | 26 | % | |||||
Dividend yield (4) | 2.18-2.33% | 2.23 | % | 2.13 | % | ||||||
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 | $ | 8.05 | $ | 6.39 | $ | 5.50 |
Shares Under Option | Weighted-Average Exercise Prices | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 1,063,249 | $ | 30.33 | $ | 2.9 | 7.45 | ||||||
Granted at market | 156,008 | $ | 38.23 | |||||||||
Exercised | (347,248 | ) | $ | 28.84 | ||||||||
Forfeited or expired | (81,950 | ) | $ | 33.94 | ||||||||
Outstanding at June 1, 2019 | 790,059 | $ | 32.17 | $ | 3.0 | 5.81 | ||||||
Ending vested + expected to vest | 790,059 | $ | 32.17 | $ | 3.0 | 5.81 | ||||||
Exercisable at end of period | 282,985 | $ | 28.51 | $ | 2.0 | 4.42 |
Share Units | Weighted Average Grant-Date Fair Value | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 481,027 | $ | 32.20 | $ | 15.8 | 1.28 | ||||||
Granted | 91,304 | $ | 37.81 | |||||||||
Forfeited | (31,922 | ) | $ | 35.94 | ||||||||
Released | (229,128 | ) | $ | 31.40 | ||||||||
Outstanding at June 1, 2019 | 311,281 | $ | 33.93 | $ | 11.0 | 1.10 | ||||||
Ending vested + expected to vest | 311,281 | $ | 33.93 | $ | 11.0 | 1.10 |
Share Units | Weighted Average Grant-Date Fair Value | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 374,560 | $ | 30.76 | $ | 12.3 | 1.01 | ||||||
Granted | 207,568 | $ | 36.37 | |||||||||
Forfeited | (19,093 | ) | $ | 35.90 | ||||||||
Released | (239,679 | ) | $ | 31.55 | ||||||||
Outstanding at June 1, 2019 | 323,356 | $ | 33.48 | $ | 11.5 | 1.13 | ||||||
Ending vested + expected to vest | 323,356 | $ | 33.48 | $ | 11.5 | 1.13 |
2018 | |||
Risk-free interest rates (1) | 2.29 | % | |
Expected term of options (2) | 1.1 years | ||
Expected volatility (3) | 35 | % | |
Dividend yield | not applicable | ||
Strike price | 30.64 | ||
Per share value (4) | 8.24 |
Shares Under Option | Weighted-Average Exercise Prices | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 544,126 | $ | 24.04 | $ | 3.6 | 1.20 | ||||||
Exercised | (4,861 | ) | $ | 7.82 | ||||||||
Forfeited | (468,558 | ) | $ | 24.39 | ||||||||
Outstanding at June 1, 2019 | 70,707 | $ | 22.80 | $ | 0.5 | 0.20 | ||||||
Exercisable at end of period | 70,707 | $ | 22.80 | $ | 0.5 | 0.20 |
2019 | 2018 | 2017 | |||||||
Shares of common stock | 10,185 | 8,828 | 9,982 | ||||||
Shares through the deferred compensation program | 7,619 | 2,207 | 2,582 |
(In millions, except shares) | 2019 | 2018 | 2017 | ||||||||
Numerator: | |||||||||||
Numerator for both basic and diluted EPS, Net earnings attributable to Herman Miller, Inc. | $ | 160.5 | $ | 128.1 | $ | 123.9 | |||||
Denominator: | |||||||||||
Denominator for basic EPS, weighted-average common shares outstanding | 59,011,945 | 59,681,268 | 59,871,805 | ||||||||
Potentially dilutive shares resulting from stock plans | 369,846 | 630,037 | 682,784 | ||||||||
Denominator for diluted EPS | 59,381,791 | 60,311,305 | 60,554,589 |
(in millions) | June 1, 2019 | June 2, 2018 | ||||
Investments in nonconsolidated affiliates | $ | 89.0 | $ | 16.8 |
(in millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||
Equity earnings from nonconsolidated affiliates | $ | 5.0 | $ | 3.0 | $ | 1.6 |
Ownership Interest | June 1, 2019 | June 2, 2018 |
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* | 52.5% | 50.0% |
Global Holdings Netherlands B.V. | 48.2% | —% |
HAY A/S | 33.0% | —% |
(in millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Sales to nonconsolidated affiliates | $ | 3.9 | $ | 4.3 | $ | 4.0 | |||||
Purchases from nonconsolidated affiliates | $ | 23.0 | $ | 6.8 | $ | 4.2 |
(in millions) | June 1, 2019 | June 2, 2018 | |||||
Receivables from nonconsolidated affiliates | $ | 0.7 | $ | 0.9 | |||
Payables to nonconsolidated affiliates | $ | 1.2 | $ | 1.0 |
Ownership Interest | June 1, 2019 | June 2, 2018 |
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* | 52.5% | 50.0% |
Global Holdings Netherlands B.V. | 48.2% | —% |
HAY A/S | 33.0% | —% |
Fair Value Measurements | |||||||||||||||||||
June 1, 2019 | June 2, 2018 | ||||||||||||||||||
(In millions) Financial Assets | NAV | Quoted Prices With Other Observable Inputs (Level 2) | Management Estimates (Level 3) | NAV | Quoted Prices With Other Observable Inputs (Level 2) | Management Estimates (Level 3) | |||||||||||||
Cash equivalents: | |||||||||||||||||||
Money market funds | $ | 69.5 | $ | — | $ | — | $ | 121.0 | $ | — | $ | — | |||||||
Mutual funds - equity | — | 0.9 | — | — | 0.9 | — | |||||||||||||
Foreign currency forward contracts | — | — | — | — | 0.4 | — | |||||||||||||
Deferred compensation plan | — | 12.5 | — | — | 15.1 | — | |||||||||||||
Total | $ | 69.5 | $ | 13.4 | $ | — | $ | 121.0 | $ | 16.4 | $ | — | |||||||
Financial Liabilities | |||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | 1.4 | $ | — | $ | — | $ | 0.3 | $ | — | |||||||
Contingent consideration | — | — | 0.2 | — | — | 0.5 | |||||||||||||
Total | $ | — | $ | 1.4 | $ | 0.2 | $ | — | $ | 0.3 | $ | 0.5 |
(In millions) | June 1, 2019 | June 2, 2018 | ||||||
Carrying value | $ | 285.0 | $ | 285.8 | ||||
Fair value | $ | 287.8 | $ | 288.6 |
(In millions) | June 1, 2019 | June 2, 2018 | ||||||
Carrying value | $ | 285.0 | $ | 285.8 | ||||
Fair value | $ | 287.8 | $ | 288.6 |
Fair Value Measurements | |||||||||||||||||||
June 1, 2019 | June 2, 2018 | ||||||||||||||||||
(In millions) Financial Assets | NAV | Quoted Prices With Other Observable Inputs (Level 2) | Management Estimates (Level 3) | NAV | Quoted Prices With Other Observable Inputs (Level 2) | Management Estimates (Level 3) | |||||||||||||
Cash equivalents: | |||||||||||||||||||
Money market funds | $ | 69.5 | $ | — | $ | — | $ | 121.0 | $ | — | $ | — | |||||||
Mutual funds - equity | — | 0.9 | — | — | 0.9 | — | |||||||||||||
Foreign currency forward contracts | — | — | — | — | 0.4 | — | |||||||||||||
Deferred compensation plan | — | 12.5 | — | — | 15.1 | — | |||||||||||||
Total | $ | 69.5 | $ | 13.4 | $ | — | $ | 121.0 | $ | 16.4 | $ | — | |||||||
Financial Liabilities | |||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | 1.4 | $ | — | $ | — | $ | 0.3 | $ | — | |||||||
Contingent consideration | — | — | 0.2 | — | — | 0.5 | |||||||||||||
Total | $ | — | $ | 1.4 | $ | 0.2 | $ | — | $ | 0.3 | $ | 0.5 |
(In millions) | June 1, 2019 | 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 | $ | 7.9 | $ | — | $ | 7.7 | $ | — | |||||||
Interest rate swap agreement | 1.0 | — | 15.0 | — | |||||||||||
Total | $ | 8.9 | $ | — | $ | 22.7 | $ | — | |||||||
Financial Liabilities | |||||||||||||||
Interest rate swap agreement | $ | 2.2 | — | — | $ | — | |||||||||
Total | $ | 2.2 | $ | — | $ | — | $ | — |
(In millions) | |||||||
Contingent Consideration | June 1, 2019 | June 2, 2018 | |||||
Beginning balance | $ | 0.5 | $ | 0.5 | |||
Net realized (gains) losses | (0.2 | ) | 0.1 | ||||
Settlements | (0.1 | ) | (0.1 | ) | |||
Ending balance | $ | 0.2 | $ | 0.5 |
June 1, 2019 | June 2, 2018 | ||||||||||||||||||||||
(In millions) | Cost | Unrealized Gain/(Loss) | Market Value | Cost | Unrealized Gain/(Loss) | Market Value | |||||||||||||||||
Mutual funds - fixed income | $ | 7.9 | $ | — | $ | 7.9 | $ | 7.8 | $ | (0.1 | ) | $ | 7.7 | ||||||||||
Mutual funds - equity | 0.8 | 0.1 | 0.9 | 0.7 | 0.2 | 0.9 | |||||||||||||||||
Total | $ | 8.7 | $ | 0.1 | $ | 8.8 | $ | 8.5 | $ | 0.1 | $ | 8.6 |
(In millions) | Balance Sheet Location | June 1, 2019 | June 2, 2018 | ||||||
Designated derivatives: | |||||||||
Interest rate swap | Long-term assets: Other assets | $ | 1.0 | $ | 15.0 | ||||
Interest rate swap | Long-term liabilities: Other liabilities | $ | 2.2 | $ | — | ||||
Non-designated derivatives: | |||||||||
Foreign currency forward contracts | Current assets: Other | $ | — | $ | 0.4 | ||||
Foreign currency forward contracts | Current liabilities: Other accrued liabilities | $ | 1.4 | $ | 0.3 |
Fiscal Year | |||||||||||||
(In millions) | Statement of Comprehensive Income Location | June 1, 2019 | June 2, 2018 | June 3, 2017 | |||||||||
Gain (loss) recognized on foreign currency forward contracts | Other expenses (income): Other, net | $ | 0.3 | $ | 0.4 | $ | (1.2 | ) |
Fiscal Year | |||||||||||
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Interest rate swap | $ | (12.8 | ) | $ | 7.5 | $ | 2.1 |
(In millions) | |||||||
Contingent Consideration | June 1, 2019 | June 2, 2018 | |||||
Beginning balance | $ | 0.5 | $ | 0.5 | |||
Net realized (gains) losses | (0.2 | ) | 0.1 | ||||
Settlements | (0.1 | ) | (0.1 | ) | |||
Ending balance | $ | 0.2 | $ | 0.5 |
• | 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. |
(In millions) | Goodwill | Indefinite-lived Intangible Assets | Total Goodwill and Indefinite-lived Intangible Assets | |||||||||
Balance, June 3, 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 2, 2018 | $ | 304.1 | $ | 78.1 | $ | 382.2 | ||||||
Foreign currency translation adjustments | (0.3 | ) | — | (0.3 | ) | |||||||
Balance, June 1, 2019 | $ | 303.8 | $ | 78.1 | $ | 381.9 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Domestic | $ | 136.2 | $ | 121.6 | $ | 131.4 | |||||
Foreign | 58.9 | 46.5 | 46.2 | ||||||||
Total | $ | 195.1 | $ | 168.1 | $ | 177.6 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Current: Domestic - Federal | $ | 19.0 | $ | 30.2 | $ | 28.7 | |||||
Domestic - State | 6.4 | 4.3 | 2.3 | ||||||||
Foreign | 12.9 | 10.7 | 11.1 | ||||||||
38.3 | 45.2 | 42.1 | |||||||||
Deferred: Domestic - Federal | 1.0 | (4.1 | ) | 9.2 | |||||||
Domestic - State | (0.2 | ) | 0.1 | 2.8 | |||||||
Foreign | 0.5 | 1.2 | 1.0 | ||||||||
1.3 | (2.8 | ) | 13.0 | ||||||||
Total income tax provision | $ | 39.6 | $ | 42.4 | $ | 55.1 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Income taxes computed at the United States Statutory rate | $ | 41.0 | $ | 49.0 | $ | 62.2 | ||||||
Increase (decrease) in taxes resulting from: | ||||||||||||
Remeasurement of U.S. deferred tax assets and liabilities due to the Tax Act | (0.2 | ) | (8.9 | ) | — | |||||||
U.S. tax liability on undistributed foreign earnings due to the Tax Act | (2.6 | ) | 9.0 | — | ||||||||
Foreign-derived intangible income | (3.1 | ) | — | — | ||||||||
Global intangible low-taxed income | 6.9 | — | — | |||||||||
Foreign statutory rate differences | 1.9 | (4.0 | ) | (5.7 | ) | |||||||
Manufacturing deduction under the American Jobs Creation Act of 2004 | — | (2.7 | ) | (3.4 | ) | |||||||
State taxes | 4.9 | 3.3 | 3.8 | |||||||||
United Kingdom patent box deduction for research and development | (1.9 | ) | (1.8 | ) | (2.6 | ) | ||||||
Research and development credit | (3.4 | ) | (2.4 | ) | (1.4 | ) | ||||||
Foreign tax credit | (5.7 | ) | (2.4 | ) | (0.6 | ) | ||||||
Other, net | 1.8 | 3.3 | 2.8 | |||||||||
Income tax expense | $ | 39.6 | $ | 42.4 | $ | 55.1 | ||||||
Effective tax rate | 20.3 | % | 25.2 | % | 31.1 | % |
(In millions) | 2019 | 2018 | ||||||
Deferred tax assets: | ||||||||
Compensation-related accruals | $ | 13.1 | $ | 15.3 | ||||
Accrued pension and post-retirement benefit obligations | 7.2 | 6.6 | ||||||
Deferred revenue | 6.1 | 5.6 | ||||||
Inventory related | 1.2 | 1.0 | ||||||
Reserves for uncollectible accounts and notes receivable | 0.7 | 0.6 | ||||||
Other reserves and accruals | 8.1 | 5.2 | ||||||
Warranty | 12.3 | 11.9 | ||||||
State and local tax net operating loss carryforwards and credits | 2.5 | 2.3 | ||||||
Federal net operating loss carryforward | 1.4 | 1.7 | ||||||
Foreign tax net operating loss carryforwards and credits | 9.1 | 10.0 | ||||||
Accrued step rent and tenant reimbursements | 4.2 | 3.8 | ||||||
Other | 4.0 | 3.9 | ||||||
Subtotal | 69.9 | 67.9 | ||||||
Valuation allowance | (10.4 | ) | (10.3 | ) | ||||
Total | $ | 59.5 | $ | 57.6 | ||||
Deferred tax liabilities: | ||||||||
Book basis in property in excess of tax basis | $ | (26.6 | ) | $ | (25.5 | ) | ||
Intangible assets | (34.6 | ) | (32.3 | ) | ||||
Other | (2.1 | ) | (6.9 | ) | ||||
Total | $ | (63.3 | ) | $ | (64.7 | ) |
(In millions) | ||||
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 | ||
Increases related to current year income tax positions | 0.4 | |||
Increases related to prior year income tax positions | 0.1 | |||
Decreases related to prior year income tax positions | (0.4 | ) | ||
Decreases related to lapse of applicable statute of limitations | (0.3 | ) | ||
Decreases related to settlements | (1.1 | ) | ||
Balance at June 1, 2019 | $ | 1.9 |
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Interest and penalty expense (income) | $ | (0.3 | ) | $ | 0.1 | $ | 0.2 | ||||
Liability for interest and penalties | $ | 0.7 | $ | 1.0 |
June 1, 2019 | |||||||||||||||
(In millions) | Patent and Trademarks | Customer Relationships | Other | Total | |||||||||||
Gross carrying value | $ | 20.1 | $ | 55.2 | $ | 12.0 | $ | 87.3 | |||||||
Accumulated amortization | 12.5 | 27.6 | 6.1 | 46.2 | |||||||||||
Net | $ | 7.6 | $ | 27.6 | $ | 5.9 | $ | 41.1 | |||||||
June 2, 2018 | |||||||||||||||
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 |
(In millions) | June 1, 2019 | June 2, 2018 | ||||||
Finished goods and work in process | $ | 139.1 | $ | 124.2 | ||||
Raw materials | 45.1 | 38.2 | ||||||
Total | $ | 184.2 | $ | 162.4 |
(In millions) | |||
2020 | $ | 51.7 | |
2021 | $ | 46.8 | |
2022 | $ | 42.9 | |
2023 | $ | 39.0 | |
2024 | $ | 33.5 | |
Thereafter | $ | 101.9 |
(In millions) | June 1, 2019 | June 2, 2018 | |||||
Debt securities, 6.0%, 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 | 3.1 | 3.8 | |||||
Total debt | $ | 285.0 | $ | 285.8 | |||
Less: Current debt | (3.1 | ) | (10.8 | ) | |||
Long-term debt | $ | 281.9 | $ | 275.0 |
(In millions) | |||
2020 | $ | 3.1 | |
2021 | $ | 50.0 | |
2022 | $ | 225.0 | |
2023 | $ | — | |
2024 | $ | — | |
Thereafter | $ | 6.9 |
Year Ended | |||||||
(In millions) | June 1, 2019 | June 2, 2018 | |||||
Balance at beginning of period | $ | 30.5 | $ | 24.6 | |||
Purchase of redeemable noncontrolling interests | (10.1 | ) | (1.0 | ) | |||
Net income attributable to redeemable noncontrolling interests | — | 0.6 | |||||
Exercised options | 0.2 | 0.1 | |||||
Redemption value adjustment | — | 6.2 | |||||
Other adjustments | — | — | |||||
Balance at end of period | $ | 20.6 | $ | 30.5 |
Recently Adopted Accounting Standards | ||||||
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 adopted the standard effective June 3, 2018 using the modified retrospective method. Refer to Note 2 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 12 of the financial statements for further information. | |||
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract | This update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Early adoption is permitted. | September 2, 2018 | The Company early adopted the standard prospectively effective September 2, 2018. The impacts resulting from adoption did not have an impact on the Company’s Financial Statements. | |||
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. | September 2, 2018 | The Company early adopted the standard effective September 2, 2018 and reclassified $1.5 million from Accumulated other comprehensive loss to Retained earnings related to the tax impact of the Company’s interest rate swap agreements. | |||
Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost | This standard changes 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 fiscal years ended June 2, 2018 and June 3, 2017 from Selling, general and administrative to Other, net. Refer to Note 8 of the financial statements for further information. |
Recently Issued Accounting Standards Not Yet Adopted | ||||||
Standard | Description | Effective Date | Effect on the Financial Statements or Other Significant Matters | |||
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 Company has assembled a project team and has made significant process towards implementation of the lease accounting standard. The Company will adopt the standard in fiscal 2020 using the modified-retrospective transition approach. The Company has substantially completed its identification of the global lease population and the data migration to a lease integration tool that will support the accounting and disclosure requirements under the standard. Also, the Company will elect the package of practical expedients. The Company is in the process of finalizing its accounting policies and internal control processes related to the new standard. Upon adoption, the Company expects to record lease liabilities and right-of-use assets in the range of $250 million to $300 million. | |||
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 31, 2020 | The Company is currently evaluating the impact of adopting this guidance. | |||
Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement | This update eliminates, adds and modifies certain disclosure requirements for fair value measurements. Early adoption is permitted, and an entity is also permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. | May 31, 2020 | The Company is currently evaluating the impact of adopting this guidance. | |||
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans | This update eliminates, adds and clarifies certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Early adoption is permitted. | May 30, 2021 | The Company is currently evaluating the impact of adopting this guidance. |
(In millions, except per share data) | First Quarter (1) | Second Quarter (1) | Third Quarter (1) | Fourth Quarter (1) | ||||||||||||
2019 | Net sales | $ | 624.6 | $ | 652.6 | $ | 619.0 | $ | 671.0 | |||||||
Gross margin | 225.1 | 235.6 | 221.0 | 248.2 | ||||||||||||
Net earnings attributable to Herman Miller, Inc. | 35.8 | 39.3 | 39.2 | 46.2 | ||||||||||||
Earnings per share-basic | 0.60 | 0.66 | 0.67 | 0.78 | ||||||||||||
Earnings per share-diluted | 0.60 | 0.66 | 0.66 | 0.78 | ||||||||||||
2018 | Net Sales | $ | 580.3 | $ | 604.6 | $ | 578.4 | $ | 618.0 | |||||||
Gross margin | 216.9 | 222.1 | 205.8 | 228.3 | ||||||||||||
Net earnings attributable to Herman Miller, Inc. | 33.1 | 33.5 | 29.8 | 31.8 | ||||||||||||
Earnings per share-basic | 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 | 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 | 0.61 | 0.53 | 0.38 | 0.56 | ||||||||||||
Earnings per share-diluted | 0.60 | 0.53 | 0.37 | 0.55 |
Year Ended | |||||||
(In millions) | June 1, 2019 | June 2, 2018 | |||||
Balance at beginning of period | $ | 30.5 | $ | 24.6 | |||
Purchase of redeemable noncontrolling interests | (10.1 | ) | (1.0 | ) | |||
Net income attributable to redeemable noncontrolling interests | — | 0.6 | |||||
Exercised options | 0.2 | 0.1 | |||||
Redemption value adjustment | — | 6.2 | |||||
Other adjustments | — | — | |||||
Balance at end of period | $ | 20.6 | $ | 30.5 |
June 1, 2019 | |||||||||
(In millions) | Severance and Employee-Related | Exit or Disposal Activities | Total | ||||||
Beginning Balance | $ | — | $ | — | $ | — | |||
Restructuring Costs | 6.7 | 1.0 | $ | 7.7 | |||||
Ending Balance | $ | 6.7 | $ | 1.0 | $ | 7.7 |
(In millions) | Severance and Employee-Related | Impairment of Property and Equipment | Exit or Disposal Activities | Total | ||||||||
June 3, 2017 | $ | — | $ | — | $ | — | $ | — | ||||
Restructuring Costs | 2.4 | — | 1.5 | $ | 3.9 | |||||||
Amounts Paid | (2.4 | ) | — | (1.5 | ) | $ | (3.9 | ) | ||||
June 2, 2018 | $ | — | $ | — | $ | — | $ | — | ||||
Restructuring Costs | 0.3 | 0.8 | 1.4 | $ | 2.5 | |||||||
Amounts Paid | (0.2 | ) | — | (1.3 | ) | $ | (1.5 | ) | ||||
Charges Against Assets | — | (0.8 | ) | — | $ | (0.8 | ) | |||||
June 1, 2019 | $ | 0.1 | $ | — | $ | 0.1 | $ | 0.2 |
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 |
Year Ended June 1, 2019 | |||||||||||||||
(In millions) | As reported | Performance Obligation Change | Gross vs. Net Change | Legacy GAAP | |||||||||||
Statement of Comprehensive Income | |||||||||||||||
Net sales | $ | 2,567.2 | $ | (21.5 | ) | $ | (38.0 | ) | $ | 2,507.7 | |||||
Cost of sales | 1,637.3 | (12.8 | ) | (38.0 | ) | 1,586.5 | |||||||||
Gross margin | 929.9 | (8.7 | ) | 921.2 | |||||||||||
Total operating expenses | 726.4 | (0.1 | ) | 726.3 | |||||||||||
Operating earnings | 203.5 | (8.6 | ) | 194.9 | |||||||||||
Income tax expense | 39.6 | (1.5 | ) | 38.1 | |||||||||||
Net earnings | 160.5 | (7.1 | ) | 153.4 |
As of June 1, 2019 | |||||||||||||
(In millions) | As reported | Performance Obligation Change | Gross vs. Net Change | Legacy GAAP | |||||||||
Balance Sheet | |||||||||||||
Assets: | |||||||||||||
Unbilled accounts receivable | $ | 34.3 | $ | (32.6 | ) | $ | 1.7 | ||||||
Inventories, net | 184.2 | 17.6 | 201.8 | ||||||||||
Liabilities: | |||||||||||||
Accrued compensation and benefits | 85.5 | (0.4 | ) | 85.1 | |||||||||
Other accrued liabilities | 99.1 | (5.6 | ) | 93.5 | |||||||||
Equity: | |||||||||||||
Retained earnings | 712.7 | (8.9 | ) | 703.8 |
– | 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 Retail reportable segment, as well as customer purchase orders for the Maharam subsidiary within the North America Contract 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 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. |
Year Ended | |||
(In millions) | June 1, 2019 | ||
Net Sales: | |||
Single performance obligation | |||
Product revenue | $ | 2,155.0 | |
Multiple performance obligations | |||
Product revenue | 390.0 | ||
Service revenue | 12.6 | ||
Other | 9.6 | ||
Total | $ | 2,567.2 |
Year Ended | |||
(In millions) | June 1, 2019 | ||
North America Contract: | |||
Systems | $ | 564.4 | |
Seating | 501.8 | ||
Freestanding and storage | 384.9 | ||
Textiles | 113.8 | ||
Other | 121.6 | ||
Total North America Contract | $ | 1,686.5 | |
International Contract: | |||
Systems | $ | 103.6 | |
Seating | 276.1 | ||
Freestanding and storage | 53.0 | ||
Other | 59.5 | ||
Total International Contract | $ | 492.2 | |
Retail: | |||
Seating | $ | 235.6 | |
Freestanding and storage | 67.5 | ||
Other | 85.4 | ||
Total Retail | $ | 388.5 | |
Total | $ | 2,567.2 |
Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets | |||||||
(In millions) | 2019 | 2018 | |||||
Projected benefit obligation | $ | 110.1 | $ | 106.9 | |||
Accumulated benefit obligation | $ | 106.4 | $ | 103.1 | |||
Fair value of plan assets | $ | 88.2 | $ | 94.6 |
Year Ended | |||||||||||
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Cumulative translation adjustments at beginning of period | $ | (34.1 | ) | $ | (36.8 | ) | $ | (29.6 | ) | ||
Other comprehensive (loss) income before reclassifications | (14.2 | ) | 2.7 | (7.2 | ) | ||||||
Balance at end of period | (48.3 | ) | (34.1 | ) | (36.8 | ) | |||||
Pension and other post-retirement benefit plans at beginning of period | (37.2 | ) | (47.6 | ) | (34.9 | ) | |||||
Other comprehensive (loss) income before reclassifications (net of tax of $2.0, ($2.9), and $3.7) | (10.0 | ) | 5.3 | (14.5 | ) | ||||||
Reclassification from accumulated other comprehensive income - Other, net | 2.6 | 4.2 | 2.2 | ||||||||
Tax (expense) benefit | (0.4 | ) | 0.9 | (0.4 | ) | ||||||
Net reclassifications | 2.2 | 5.1 | 1.8 | ||||||||
Net current period other comprehensive (loss) income | (7.8 | ) | 10.4 | (12.7 | ) | ||||||
Balance at end of period | (45.0 | ) | (37.2 | ) | (47.6 | ) | |||||
Interest rate swap agreement at beginning of period | 9.9 | 2.1 | — | ||||||||
Cumulative effect of accounting change | 1.5 | — | — | ||||||||
Other comprehensive (loss) income before reclassifications (net of tax of $5.3, ($4.0), and ($1.2)) | (12.8 | ) | 7.5 | 2.1 | |||||||
Reclassification from accumulated other comprehensive income - Other, net | 0.5 | 0.3 | — | ||||||||
Net reclassifications | 0.5 | 0.3 | — | ||||||||
Net current period other comprehensive (loss) income | (12.3 | ) | 7.8 | 2.1 | |||||||
Balance at end of period | (0.9 | ) | 9.9 | 2.1 | |||||||
Unrealized Gains on Available-for-sale Securities at beginning of period | 0.1 | 0.1 | — | ||||||||
Cumulative effect of accounting change | (0.1 | ) | — | — | |||||||
Other comprehensive income before reclassifications | — | — | 0.1 | ||||||||
Balance at end of period | — | 0.1 | 0.1 | ||||||||
Total Accumulated other comprehensive loss | $ | (94.2 | ) | $ | (61.3 | ) | $ | (82.2 | ) |
Asset Category | Targeted Asset Allocation Percentage | Percentage of Plan Assets at Year End | |||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Fixed income | 35 | 35 | 33 | 36 | |||||||||
Common collective trusts | 65 | 65 | 67 | 64 | |||||||||
Total | 100 | 100 | |||||||||||
(In millions) | International Plan as of June 1, 2019 | ||||||||||||
Asset Category | Level 1 | Level 2 | Total | ||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | |||||||
Foreign government obligations | — | 29.3 | 29.3 | ||||||||||
Common collective trusts-balanced | — | 58.9 | 58.9 | ||||||||||
Total | $ | — | $ | 88.2 | $ | 88.2 | |||||||
(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 |
Pension Benefits | Post-Retirement Benefits | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
(In millions) | Domestic | International | Domestic | International | |||||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 1.0 | $ | 105.9 | $ | 1.0 | $ | 113.8 | $ | 4.0 | $ | 5.0 | |||||||||||
Interest cost | — | 2.7 | 0.1 | 2.7 | 0.1 | 0.1 | |||||||||||||||||
Plan Amendments | — | 0.9 | — | — | — | — | |||||||||||||||||
Foreign exchange impact | — | (6.0 | ) | — | 4.2 | — | — | ||||||||||||||||
Actuarial loss (gain) | 0.1 | 9.7 | — | (12.2 | ) | (0.3 | ) | (0.5 | ) | ||||||||||||||
Benefits paid | (0.1 | ) | (4.1 | ) | (0.1 | ) | (2.6 | ) | (0.5 | ) | (0.6 | ) | |||||||||||
Benefit obligation at end of year | $ | 1.0 | $ | 109.1 | $ | 1.0 | $ | 105.9 | $ | 3.3 | $ | 4.0 | |||||||||||
Change in plan assets: | |||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | — | $ | 94.6 | $ | — | $ | 80.5 | $ | — | $ | — | |||||||||||
Actual return on plan assets | — | 2.5 | — | 1.2 | — | — | |||||||||||||||||
Foreign exchange impact | — | (5.1 | ) | — | 2.8 | — | — | ||||||||||||||||
Employer contributions | 0.1 | 0.3 | 0.1 | 12.7 | 0.5 | 0.6 | |||||||||||||||||
Benefits paid | (0.1 | ) | (4.1 | ) | (0.1 | ) | (2.6 | ) | (0.5 | ) | (0.6 | ) | |||||||||||
Fair value of plan assets at end of year | $ | — | $ | 88.2 | $ | — | $ | 94.6 | $ | — | $ | — | |||||||||||
Funded status: | |||||||||||||||||||||||
Under funded status at end of year | $ | (1.0 | ) | $ | (20.9 | ) | $ | (1.0 | ) | $ | (11.3 | ) | $ | (3.3 | ) | $ | (4.0 | ) | |||||
Components of the amounts recognized in the Consolidated Balance Sheets: | |||||||||||||||||||||||
Current liabilities | $ | (0.1 | ) | $ | — | $ | (0.1 | ) | $ | — | $ | (0.6 | ) | $ | (0.6 | ) | |||||||
Non-current liabilities | $ | (0.9 | ) | $ | (20.9 | ) | $ | (0.9 | ) | $ | (11.3 | ) | $ | (2.7 | ) | $ | (3.4 | ) | |||||
Components of the amounts recognized in Accumulated other comprehensive loss before the effect of income taxes: | |||||||||||||||||||||||
Prior service cost | $ | — | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Unrecognized net actuarial loss (gain) | $ | 0.3 | $ | 47.3 | $ | 0.3 | $ | 40.8 | $ | (1.3 | ) | $ | (1.1 | ) | |||||||||
Accumulated other comprehensive loss | $ | 0.3 | $ | 48.1 | $ | 0.3 | $ | 40.8 | $ | (1.3 | ) | $ | (1.1 | ) |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): | |||||||||||||||
Pension Benefits | Post-Retirement Benefits | ||||||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Domestic: | |||||||||||||||
Net actuarial gain | $ | 0.1 | $ | — | $ | (0.3 | ) | $ | (0.5 | ) | |||||
Total recognized in other comprehensive loss | $ | 0.1 | $ | — | $ | (0.3 | ) | $ | (0.5 | ) | |||||
International: | |||||||||||||||
Net actuarial (gain) loss | $ | 11.7 | $ | (7.7 | ) | ||||||||||
Net amortization | (2.7 | ) | (4.2 | ) | |||||||||||
Total recognized in other comprehensive loss | $ | 9.0 | $ | (11.9 | ) |
The weighted-average used in the determination of net periodic benefit cost: | |||||||||||
2019 | 2018 | 2017 | |||||||||
(Percentages) | Domestic | International | Domestic | International | Domestic | International | |||||
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 | |||||
Expected return on plan assets | n/a | 4.80 | n/a | 6.10 | n/a | 6.10 | |||||
The weighted-average used in the determination of the projected benefit obligations: | |||||||||||
Discount rate | 3.47 | 2.39 | 3.99 | 2.87 | 3.53 | 2.49 | |||||
Compensation increase rate | n/a | 3.20 | n/a | 3.10 | n/a | 3.25 |
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | |||||||||
Employee stock purchase program | $ | 0.3 | $ | 0.3 | $ | 0.3 | ||||||
Stock option plans | (0.4 | ) | 2.6 | 2.0 | ||||||||
Restricted stock units | 4.6 | 3.9 | 3.6 | |||||||||
Performance share units | 2.8 | 0.9 | 2.8 | |||||||||
Total | $ | 7.3 | $ | 7.7 | $ | 8.7 | ||||||
Tax benefit | $ | 1.6 | $ | 2.3 | $ | 3.1 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Current: Domestic - Federal | $ | 19.0 | $ | 30.2 | $ | 28.7 | |||||
Domestic - State | 6.4 | 4.3 | 2.3 | ||||||||
Foreign | 12.9 | 10.7 | 11.1 | ||||||||
38.3 | 45.2 | 42.1 | |||||||||
Deferred: Domestic - Federal | 1.0 | (4.1 | ) | 9.2 | |||||||
Domestic - State | (0.2 | ) | 0.1 | 2.8 | |||||||
Foreign | 0.5 | 1.2 | 1.0 | ||||||||
1.3 | (2.8 | ) | 13.0 | ||||||||
Total income tax provision | $ | 39.6 | $ | 42.4 | $ | 55.1 |
(In millions) | June 1, 2019 | June 2, 2018 | |||||
Debt securities, 6.0%, 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 | 3.1 | 3.8 | |||||
Total debt | $ | 285.0 | $ | 285.8 | |||
Less: Current debt | (3.1 | ) | (10.8 | ) | |||
Long-term debt | $ | 281.9 | $ | 275.0 |
(In millions) | 2019 | 2018 | ||||||
Deferred tax assets: | ||||||||
Compensation-related accruals | $ | 13.1 | $ | 15.3 | ||||
Accrued pension and post-retirement benefit obligations | 7.2 | 6.6 | ||||||
Deferred revenue | 6.1 | 5.6 | ||||||
Inventory related | 1.2 | 1.0 | ||||||
Reserves for uncollectible accounts and notes receivable | 0.7 | 0.6 | ||||||
Other reserves and accruals | 8.1 | 5.2 | ||||||
Warranty | 12.3 | 11.9 | ||||||
State and local tax net operating loss carryforwards and credits | 2.5 | 2.3 | ||||||
Federal net operating loss carryforward | 1.4 | 1.7 | ||||||
Foreign tax net operating loss carryforwards and credits | 9.1 | 10.0 | ||||||
Accrued step rent and tenant reimbursements | 4.2 | 3.8 | ||||||
Other | 4.0 | 3.9 | ||||||
Subtotal | 69.9 | 67.9 | ||||||
Valuation allowance | (10.4 | ) | (10.3 | ) | ||||
Total | $ | 59.5 | $ | 57.6 | ||||
Deferred tax liabilities: | ||||||||
Book basis in property in excess of tax basis | $ | (26.6 | ) | $ | (25.5 | ) | ||
Intangible assets | (34.6 | ) | (32.3 | ) | ||||
Other | (2.1 | ) | (6.9 | ) | ||||
Total | $ | (63.3 | ) | $ | (64.7 | ) |
Fiscal Year | |||||||||||
(In millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Interest rate swap | $ | (12.8 | ) | $ | 7.5 | $ | 2.1 |
(In millions) | Balance Sheet Location | June 1, 2019 | June 2, 2018 | ||||||
Designated derivatives: | |||||||||
Interest rate swap | Long-term assets: Other assets | $ | 1.0 | $ | 15.0 | ||||
Interest rate swap | Long-term liabilities: Other liabilities | $ | 2.2 | $ | — | ||||
Non-designated derivatives: | |||||||||
Foreign currency forward contracts | Current assets: Other | $ | — | $ | 0.4 | ||||
Foreign currency forward contracts | Current liabilities: Other accrued liabilities | $ | 1.4 | $ | 0.3 |
Fiscal Year | |||||||||||||
(In millions) | Statement of Comprehensive Income Location | June 1, 2019 | June 2, 2018 | June 3, 2017 | |||||||||
Gain (loss) recognized on foreign currency forward contracts | Other expenses (income): Other, net | $ | 0.3 | $ | 0.4 | $ | (1.2 | ) |
(In millions, except shares) | 2019 | 2018 | 2017 | ||||||||
Numerator: | |||||||||||
Numerator for both basic and diluted EPS, Net earnings attributable to Herman Miller, Inc. | $ | 160.5 | $ | 128.1 | $ | 123.9 | |||||
Denominator: | |||||||||||
Denominator for basic EPS, weighted-average common shares outstanding | 59,011,945 | 59,681,268 | 59,871,805 | ||||||||
Potentially dilutive shares resulting from stock plans | 369,846 | 630,037 | 682,784 | ||||||||
Denominator for diluted EPS | 59,381,791 | 60,311,305 | 60,554,589 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Income taxes computed at the United States Statutory rate | $ | 41.0 | $ | 49.0 | $ | 62.2 | ||||||
Increase (decrease) in taxes resulting from: | ||||||||||||
Remeasurement of U.S. deferred tax assets and liabilities due to the Tax Act | (0.2 | ) | (8.9 | ) | — | |||||||
U.S. tax liability on undistributed foreign earnings due to the Tax Act | (2.6 | ) | 9.0 | — | ||||||||
Foreign-derived intangible income | (3.1 | ) | — | — | ||||||||
Global intangible low-taxed income | 6.9 | — | — | |||||||||
Foreign statutory rate differences | 1.9 | (4.0 | ) | (5.7 | ) | |||||||
Manufacturing deduction under the American Jobs Creation Act of 2004 | — | (2.7 | ) | (3.4 | ) | |||||||
State taxes | 4.9 | 3.3 | 3.8 | |||||||||
United Kingdom patent box deduction for research and development | (1.9 | ) | (1.8 | ) | (2.6 | ) | ||||||
Research and development credit | (3.4 | ) | (2.4 | ) | (1.4 | ) | ||||||
Foreign tax credit | (5.7 | ) | (2.4 | ) | (0.6 | ) | ||||||
Other, net | 1.8 | 3.3 | 2.8 | |||||||||
Income tax expense | $ | 39.6 | $ | 42.4 | $ | 55.1 | ||||||
Effective tax rate | 20.3 | % | 25.2 | % | 31.1 | % |
Long-lived assets: | |||||||||||
United States | $ | 422.1 | $ | 349.3 | $ | 328.6 | |||||
International | 52.2 | 50.5 | 45.3 | ||||||||
Total | $ | 474.3 | $ | 399.8 | $ | 373.9 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Net Sales: | |||||||||||
Systems | $ | 668.0 | $ | 601.5 | $ | 639.0 | |||||
Seating | 1,013.5 | 965.9 | 894.8 | ||||||||
Freestanding and storage | 505.4 | 465.1 | 428.8 | ||||||||
Textiles | 113.8 | 94.3 | 96.9 | ||||||||
Other (1) | 266.5 | 254.4 | 218.7 | ||||||||
Total | $ | 2,567.2 | $ | 2,381.2 | $ | 2,278.2 |
(In millions) | Pension Benefits Domestic | Pension Benefits International | Post-Retirement Benefits | ||||||||
2020 | $ | 0.1 | $ | 1.8 | $ | 0.5 | |||||
2021 | $ | 0.1 | $ | 1.9 | $ | 0.4 | |||||
2022 | $ | 0.1 | $ | 2.3 | $ | 0.4 | |||||
2023 | $ | 0.1 | $ | 2.1 | $ | 0.4 | |||||
2024 | $ | 0.1 | $ | 2.3 | $ | 0.3 | |||||
2025-2029 | $ | 0.3 | $ | 16.7 | $ | 1.1 |
June 1, 2019 | |||||||||||||||
(In millions) | Patent and Trademarks | Customer Relationships | Other | Total | |||||||||||
Gross carrying value | $ | 20.1 | $ | 55.2 | $ | 12.0 | $ | 87.3 | |||||||
Accumulated amortization | 12.5 | 27.6 | 6.1 | 46.2 | |||||||||||
Net | $ | 7.6 | $ | 27.6 | $ | 5.9 | $ | 41.1 | |||||||
June 2, 2018 | |||||||||||||||
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 |
(In millions) | |||
2020 | $ | 51.7 | |
2021 | $ | 46.8 | |
2022 | $ | 42.9 | |
2023 | $ | 39.0 | |
2024 | $ | 33.5 | |
Thereafter | $ | 101.9 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Domestic | $ | 136.2 | $ | 121.6 | $ | 131.4 | |||||
Foreign | 58.9 | 46.5 | 46.2 | ||||||||
Total | $ | 195.1 | $ | 168.1 | $ | 177.6 |
(In millions) | Goodwill | Indefinite-lived Intangible Assets | Total Goodwill and Indefinite-lived Intangible Assets | |||||||||
Balance, June 3, 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 2, 2018 | $ | 304.1 | $ | 78.1 | $ | 382.2 | ||||||
Foreign currency translation adjustments | (0.3 | ) | — | (0.3 | ) | |||||||
Balance, June 1, 2019 | $ | 303.8 | $ | 78.1 | $ | 381.9 |
(In millions) | June 1, 2019 | June 2, 2018 | ||||||
Finished goods and work in process | $ | 139.1 | $ | 124.2 | ||||
Raw materials | 45.1 | 38.2 | ||||||
Total | $ | 184.2 | $ | 162.4 |
(In millions) | |||
2020 | $ | 3.1 | |
2021 | $ | 50.0 | |
2022 | $ | 225.0 | |
2023 | $ | — | |
2024 | $ | — | |
Thereafter | $ | 6.9 |
Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income (Loss): | |||||||||||||||||||||||
Pension Benefits | Post-Retirement Benefits | ||||||||||||||||||||||
(In millions) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||
Domestic: | |||||||||||||||||||||||
Interest cost | $ | — | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | |||||||||||
Net periodic benefit cost | $ | — | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | |||||||||||
International: | |||||||||||||||||||||||
Interest cost | $ | 2.7 | $ | 2.7 | $ | 2.7 | |||||||||||||||||
Expected return on plan assets | (4.5 | ) | (5.6 | ) | (4.7 | ) | |||||||||||||||||
Net amortization | 2.8 | 4.2 | 2.2 | ||||||||||||||||||||
Net periodic benefit cost | $ | 1.0 | $ | 1.3 | $ | 0.2 |
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 |
Share Units | Weighted Average Grant-Date Fair Value | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 374,560 | $ | 30.76 | $ | 12.3 | 1.01 | ||||||
Granted | 207,568 | $ | 36.37 | |||||||||
Forfeited | (19,093 | ) | $ | 35.90 | ||||||||
Released | (239,679 | ) | $ | 31.55 | ||||||||
Outstanding at June 1, 2019 | 323,356 | $ | 33.48 | $ | 11.5 | 1.13 | ||||||
Ending vested + expected to vest | 323,356 | $ | 33.48 | $ | 11.5 | 1.13 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Accrual balance, beginning | $ | 51.5 | $ | 47.7 | $ | 43.9 | |||||
Accrual for warranty matters | 20.7 | 22.1 | 22.8 | ||||||||
Settlements | (19.1 | ) | (18.3 | ) | (19.0 | ) | |||||
Accrual balance, ending | $ | 53.1 | $ | 51.5 | $ | 47.7 |
Year Ended June 1, 2019 | |||||||||||||||
(In millions) | As reported | Performance Obligation Change | Gross vs. Net Change | Legacy GAAP | |||||||||||
Statement of Comprehensive Income | |||||||||||||||
Net sales | $ | 2,567.2 | $ | (21.5 | ) | $ | (38.0 | ) | $ | 2,507.7 | |||||
Cost of sales | 1,637.3 | (12.8 | ) | (38.0 | ) | 1,586.5 | |||||||||
Gross margin | 929.9 | (8.7 | ) | 921.2 | |||||||||||
Total operating expenses | 726.4 | (0.1 | ) | 726.3 | |||||||||||
Operating earnings | 203.5 | (8.6 | ) | 194.9 | |||||||||||
Income tax expense | 39.6 | (1.5 | ) | 38.1 | |||||||||||
Net earnings | 160.5 | (7.1 | ) | 153.4 |
As of June 1, 2019 | |||||||||||||
(In millions) | As reported | Performance Obligation Change | Gross vs. Net Change | Legacy GAAP | |||||||||
Balance Sheet | |||||||||||||
Assets: | |||||||||||||
Unbilled accounts receivable | $ | 34.3 | $ | (32.6 | ) | $ | 1.7 | ||||||
Inventories, net | 184.2 | 17.6 | 201.8 | ||||||||||
Liabilities: | |||||||||||||
Accrued compensation and benefits | 85.5 | (0.4 | ) | 85.1 | |||||||||
Other accrued liabilities | 99.1 | (5.6 | ) | 93.5 | |||||||||
Equity: | |||||||||||||
Retained earnings | 712.7 | (8.9 | ) | 703.8 |
(In millions, except per share data) | First Quarter (1) | Second Quarter (1) | Third Quarter (1) | Fourth Quarter (1) | ||||||||||||
2019 | Net sales | $ | 624.6 | $ | 652.6 | $ | 619.0 | $ | 671.0 | |||||||
Gross margin | 225.1 | 235.6 | 221.0 | 248.2 | ||||||||||||
Net earnings attributable to Herman Miller, Inc. | 35.8 | 39.3 | 39.2 | 46.2 | ||||||||||||
Earnings per share-basic | 0.60 | 0.66 | 0.67 | 0.78 | ||||||||||||
Earnings per share-diluted | 0.60 | 0.66 | 0.66 | 0.78 | ||||||||||||
2018 | Net Sales | $ | 580.3 | $ | 604.6 | $ | 578.4 | $ | 618.0 | |||||||
Gross margin | 216.9 | 222.1 | 205.8 | 228.3 | ||||||||||||
Net earnings attributable to Herman Miller, Inc. | 33.1 | 33.5 | 29.8 | 31.8 | ||||||||||||
Earnings per share-basic | 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 | 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 | 0.61 | 0.53 | 0.38 | 0.56 | ||||||||||||
Earnings per share-diluted | 0.60 | 0.53 | 0.37 | 0.55 |
(in millions) | June 1, 2019 | June 2, 2018 | June 3, 2017 | ||||||||
Sales to nonconsolidated affiliates | $ | 3.9 | $ | 4.3 | $ | 4.0 | |||||
Purchases from nonconsolidated affiliates | $ | 23.0 | $ | 6.8 | $ | 4.2 |
(in millions) | June 1, 2019 | June 2, 2018 | |||||
Receivables from nonconsolidated affiliates | $ | 0.7 | $ | 0.9 | |||
Payables to nonconsolidated affiliates | $ | 1.2 | $ | 1.0 |
June 1, 2019 | |||||||||
(In millions) | Severance and Employee-Related | Exit or Disposal Activities | Total | ||||||
Beginning Balance | $ | — | $ | — | $ | — | |||
Restructuring Costs | 6.7 | 1.0 | $ | 7.7 | |||||
Ending Balance | $ | 6.7 | $ | 1.0 | $ | 7.7 |
(In millions) | Severance and Employee-Related | Impairment of Property and Equipment | Exit or Disposal Activities | Total | ||||||||
June 3, 2017 | $ | — | $ | — | $ | — | $ | — | ||||
Restructuring Costs | 2.4 | — | 1.5 | $ | 3.9 | |||||||
Amounts Paid | (2.4 | ) | — | (1.5 | ) | $ | (3.9 | ) | ||||
June 2, 2018 | $ | — | $ | — | $ | — | $ | — | ||||
Restructuring Costs | 0.3 | 0.8 | 1.4 | $ | 2.5 | |||||||
Amounts Paid | (0.2 | ) | — | (1.3 | ) | $ | (1.5 | ) | ||||
Charges Against Assets | — | (0.8 | ) | — | $ | (0.8 | ) | |||||
June 1, 2019 | $ | 0.1 | $ | — | $ | 0.1 | $ | 0.2 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Net Sales: | |||||||||||
United States | $ | 1,865.8 | $ | 1,737.9 | $ | 1,690.1 | |||||
International | 701.4 | 643.3 | 588.1 | ||||||||
Total | $ | 2,567.2 | $ | 2,381.2 | $ | 2,278.2 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Net Sales: | |||||||||||
North America Contract | $ | 1,686.5 | $ | 1,589.8 | $ | 1,574.6 | |||||
International Contract | 492.2 | 434.5 | 385.5 | ||||||||
Retail | 388.5 | 356.9 | 318.1 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 2,567.2 | $ | 2,381.2 | $ | 2,278.2 | |||||
Depreciation and Amortization: | |||||||||||
North America Contract | $ | 46.8 | $ | 43.9 | $ | 37.7 | |||||
International Contract | 10.5 | 10.2 | 9.4 | ||||||||
Retail | 14.1 | 12.1 | 10.2 | ||||||||
Corporate | 0.7 | 0.7 | 1.6 | ||||||||
Total | $ | 72.1 | $ | 66.9 | $ | 58.9 | |||||
Operating Earnings (Losses): | |||||||||||
North America Contract | $ | 189.7 | $ | 175.2 | $ | 184.1 | |||||
International Contract | 57.8 | 36.9 | 36.2 | ||||||||
Retail | 5.3 | 13.9 | 4.8 | ||||||||
Corporate | (49.3 | ) | (47.1 | ) | (34.0 | ) | |||||
Total | $ | 203.5 | $ | 178.9 | $ | 191.1 | |||||
Capital Expenditures: | |||||||||||
North America Contract | $ | 52.7 | $ | 46.0 | $ | 56.8 | |||||
International Contract | 16.6 | 11.4 | 8.5 | ||||||||
Retail | 16.5 | 13.2 | 22.0 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 85.8 | $ | 70.6 | $ | 87.3 | |||||
Total Assets: | |||||||||||
North America Contract | $ | 733.6 | $ | 677.4 | $ | 691.5 | |||||
International Contract | 356.8 | 283.4 | 230.3 | ||||||||
Retail | 310.0 | 291.2 | 276.4 | ||||||||
Corporate | 168.9 | 227.5 | 108.1 | ||||||||
Total | $ | 1,569.3 | $ | 1,479.5 | $ | 1,306.3 | |||||
Goodwill: | |||||||||||
North America Contract | $ | 185.3 | $ | 185.3 | $ | 185.6 | |||||
International Contract | 39.7 | 40.0 | 40.1 | ||||||||
Retail | 78.8 | 78.8 | 78.8 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 303.8 | $ | 304.1 | $ | 304.5 |
2019 | 2018 | 2017 | |||||||
Shares of common stock | 10,185 | 8,828 | 9,982 | ||||||
Shares through the deferred compensation program | 7,619 | 2,207 | 2,582 |
Shares Under Option | Weighted-Average Exercise Prices | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 1,063,249 | $ | 30.33 | $ | 2.9 | 7.45 | ||||||
Granted at market | 156,008 | $ | 38.23 | |||||||||
Exercised | (347,248 | ) | $ | 28.84 | ||||||||
Forfeited or expired | (81,950 | ) | $ | 33.94 | ||||||||
Outstanding at June 1, 2019 | 790,059 | $ | 32.17 | $ | 3.0 | 5.81 | ||||||
Ending vested + expected to vest | 790,059 | $ | 32.17 | $ | 3.0 | 5.81 | ||||||
Exercisable at end of period | 282,985 | $ | 28.51 | $ | 2.0 | 4.42 |
Shares Under Option | Weighted-Average Exercise Prices | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 544,126 | $ | 24.04 | $ | 3.6 | 1.20 | ||||||
Exercised | (4,861 | ) | $ | 7.82 | ||||||||
Forfeited | (468,558 | ) | $ | 24.39 | ||||||||
Outstanding at June 1, 2019 | 70,707 | $ | 22.80 | $ | 0.5 | 0.20 | ||||||
Exercisable at end of period | 70,707 | $ | 22.80 | $ | 0.5 | 0.20 |
2018 | |||
Risk-free interest rates (1) | 2.29 | % | |
Expected term of options (2) | 1.1 years | ||
Expected volatility (3) | 35 | % | |
Dividend yield | not applicable | ||
Strike price | 30.64 | ||
Per share value (4) | 8.24 |
2019 | 2018 | 2017 | |||||||||
Risk-free interest rates (1) | 2.65-2.70% | 1.79 | % | 1.01 | % | ||||||
Expected term of options (2) | 4.4 years | 4.6 years | 4.0 years | ||||||||
Expected volatility (3) | 27 | % | 26 | % | 26 | % | |||||
Dividend yield (4) | 2.18-2.33% | 2.23 | % | 2.13 | % | ||||||
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 | $ | 8.05 | $ | 6.39 | $ | 5.50 |
Share Units | Weighted Average Grant-Date Fair Value | Aggregate Intrinsic Value (in millions) | Weighted-Average Remaining Contractual Term (Years) | |||||||||
Outstanding at June 2, 2018 | 481,027 | $ | 32.20 | $ | 15.8 | 1.28 | ||||||
Granted | 91,304 | $ | 37.81 | |||||||||
Forfeited | (31,922 | ) | $ | 35.94 | ||||||||
Released | (229,128 | ) | $ | 31.40 | ||||||||
Outstanding at June 1, 2019 | 311,281 | $ | 33.93 | $ | 11.0 | 1.10 | ||||||
Ending vested + expected to vest | 311,281 | $ | 33.93 | $ | 11.0 | 1.10 |
(In millions) | ||||
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 | ||
Increases related to current year income tax positions | 0.4 | |||
Increases related to prior year income tax positions | 0.1 | |||
Decreases related to prior year income tax positions | (0.4 | ) | ||
Decreases related to lapse of applicable statute of limitations | (0.3 | ) | ||
Decreases related to settlements | (1.1 | ) | ||
Balance at June 1, 2019 | $ | 1.9 |
(In millions) | |||
2020 | $ | 6.4 | |
2021 | $ | 6.3 | |
2022 | $ | 6.1 | |
2023 | $ | 5.4 | |
2024 | $ | 5.1 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Net Sales: | |||||||||||
North America Contract | $ | 1,686.5 | $ | 1,589.8 | $ | 1,574.6 | |||||
International Contract | 492.2 | 434.5 | 385.5 | ||||||||
Retail | 388.5 | 356.9 | 318.1 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 2,567.2 | $ | 2,381.2 | $ | 2,278.2 | |||||
Depreciation and Amortization: | |||||||||||
North America Contract | $ | 46.8 | $ | 43.9 | $ | 37.7 | |||||
International Contract | 10.5 | 10.2 | 9.4 | ||||||||
Retail | 14.1 | 12.1 | 10.2 | ||||||||
Corporate | 0.7 | 0.7 | 1.6 | ||||||||
Total | $ | 72.1 | $ | 66.9 | $ | 58.9 | |||||
Operating Earnings (Losses): | |||||||||||
North America Contract | $ | 189.7 | $ | 175.2 | $ | 184.1 | |||||
International Contract | 57.8 | 36.9 | 36.2 | ||||||||
Retail | 5.3 | 13.9 | 4.8 | ||||||||
Corporate | (49.3 | ) | (47.1 | ) | (34.0 | ) | |||||
Total | $ | 203.5 | $ | 178.9 | $ | 191.1 | |||||
Capital Expenditures: | |||||||||||
North America Contract | $ | 52.7 | $ | 46.0 | $ | 56.8 | |||||
International Contract | 16.6 | 11.4 | 8.5 | ||||||||
Retail | 16.5 | 13.2 | 22.0 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 85.8 | $ | 70.6 | $ | 87.3 | |||||
Total Assets: | |||||||||||
North America Contract | $ | 733.6 | $ | 677.4 | $ | 691.5 | |||||
International Contract | 356.8 | 283.4 | 230.3 | ||||||||
Retail | 310.0 | 291.2 | 276.4 | ||||||||
Corporate | 168.9 | 227.5 | 108.1 | ||||||||
Total | $ | 1,569.3 | $ | 1,479.5 | $ | 1,306.3 | |||||
Goodwill: | |||||||||||
North America Contract | $ | 185.3 | $ | 185.3 | $ | 185.6 | |||||
International Contract | 39.7 | 40.0 | 40.1 | ||||||||
Retail | 78.8 | 78.8 | 78.8 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 303.8 | $ | 304.1 | $ | 304.5 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Net Sales: | |||||||||||
Systems | $ | 668.0 | $ | 601.5 | $ | 639.0 | |||||
Seating | 1,013.5 | 965.9 | 894.8 | ||||||||
Freestanding and storage | 505.4 | 465.1 | 428.8 | ||||||||
Textiles | 113.8 | 94.3 | 96.9 | ||||||||
Other (1) | 266.5 | 254.4 | 218.7 | ||||||||
Total | $ | 2,567.2 | $ | 2,381.2 | $ | 2,278.2 |
(In millions) | 2019 | 2018 | 2017 | ||||||||
Net Sales: | |||||||||||
United States | $ | 1,865.8 | $ | 1,737.9 | $ | 1,690.1 | |||||
International | 701.4 | 643.3 | 588.1 | ||||||||
Total | $ | 2,567.2 | $ | 2,381.2 | $ | 2,278.2 |
Long-lived assets: | |||||||||||
United States | $ | 422.1 | $ | 349.3 | $ | 328.6 | |||||
International | 52.2 | 50.5 | 45.3 | ||||||||
Total | $ | 474.3 | $ | 399.8 | $ | 373.9 |
(In millions) | Retention Level (per occurrence) | |||
General liability | $ | 1.00 | ||
Auto liability | $ | 1.00 | ||
Workers' compensation | $ | 0.75 | ||
Health benefit | $ | 0.50 |
(In millions) | Goodwill | Indefinite-lived Intangible Assets | Total Goodwill and Indefinite-lived Intangible Assets | |||||||||
Balance, June 3, 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 2, 2018 | $ | 304.1 | $ | 78.1 | $ | 382.2 | ||||||
Foreign currency translation adjustments | (0.3 | ) | — | (0.3 | ) | |||||||
Balance, June 1, 2019 | $ | 303.8 | $ | 78.1 | $ | 381.9 |
June 1, 2019 | |||||||||||||||
(In millions) | Patent and Trademarks | Customer Relationships | Other | Total | |||||||||||
Gross carrying value | $ | 20.1 | $ | 55.2 | $ | 12.0 | $ | 87.3 | |||||||
Accumulated amortization | 12.5 | 27.6 | 6.1 | 46.2 | |||||||||||
Net | $ | 7.6 | $ | 27.6 | $ | 5.9 | $ | 41.1 | |||||||
June 2, 2018 | |||||||||||||||
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 |
(In millions) | |||
2020 | $ | 6.4 | |
2021 | $ | 6.3 | |
2022 | $ | 6.1 | |
2023 | $ | 5.4 | |
2024 | $ | 5.1 |
(In millions) | Retention Level (per occurrence) | |||
General liability | $ | 1.00 | ||
Auto liability | $ | 1.00 | ||
Workers' compensation | $ | 0.75 | ||
Health benefit | $ | 0.50 |
• | 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 | |||
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 2 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 12 of the financial statements for further information. | |||
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract | This update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Early adoption is permitted. | September 2, 2018 | The Company early adopted the standard prospectively effective September 2, 2018. The impacts resulting from adoption did not have an impact on the Company’s Financial Statements. | |||
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. | September 2, 2018 | The Company early adopted the standard effective September 2, 2018 and reclassified $1.5 million from Accumulated other comprehensive loss to Retained earnings related to the tax impact of the Company’s interest rate swap agreements. | |||
Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost | This standard changes 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 fiscal years ended June 2, 2018 and June 3, 2017 from Selling, general and administrative to Other, net. Refer to Note 8 of the financial statements for further information. |
Recently Issued Accounting Standards Not Yet Adopted | ||||||
Standard | Description | Effective Date | Effect on the Financial Statements or Other Significant Matters | |||
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 Company has assembled a project team and has made significant process towards implementation of the lease accounting standard. The Company will adopt the standard in fiscal 2020 using the modified-retrospective transition approach. The Company has substantially completed its identification of the global lease population and the data migration to a lease integration tool that will support the accounting and disclosure requirements under the standard. Also, the Company will elect the package of practical expedients. The Company is in the process of finalizing its accounting policies and internal control processes related to the new standard. Upon adoption, the Company expects to record lease liabilities and right-of-use assets in the range of $250 million to $300 million. | |||
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 31, 2020 | The Company is currently evaluating the impact of adopting this guidance. | |||
Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement | This update eliminates, adds and modifies certain disclosure requirements for fair value measurements. Early adoption is permitted, and an entity is also permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. | May 31, 2020 | The Company is currently evaluating the impact of adopting this guidance. | |||
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans | This update eliminates, adds and clarifies certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Early adoption is permitted. | May 30, 2021 | The Company is currently evaluating the impact of adopting this guidance. |
June 1, 2019 | June 2, 2018 | ||||||||||||||||||||||
(In millions) | Cost | Unrealized Gain/(Loss) | Market Value | Cost | Unrealized Gain/(Loss) | Market Value | |||||||||||||||||
Mutual funds - fixed income | $ | 7.9 | $ | — | $ | 7.9 | $ | 7.8 | $ | (0.1 | ) | $ | 7.7 | ||||||||||
Mutual funds - equity | 0.8 | 0.1 | 0.9 | 0.7 | 0.2 | 0.9 | |||||||||||||||||
Total | $ | 8.7 | $ | 0.1 | $ | 8.8 | $ | 8.5 | $ | 0.1 | $ | 8.6 |