[ X ] | QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ _ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For Quarter Ended August 31, 2013 | Commission File No. 001-15141 |
A Michigan Corporation | ID No. 38-0837640 | |
855 East Main Avenue, Zeeland, MI 49464-0302 | Phone (616) 654 3000 |
Large accelerated filer [ X ] | Accelerated filer [_] | Non-accelerated filer [_] | Smaller reporting company [_] |
Page No. | ||
Part I — Financial Information | ||
Item 1 Financial Statements (Unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income — Three Months Ended August 31, 2013, and September 1, 2012 | ||
Condensed Consolidated Balance Sheets — August 31, 2013, and June 1, 2013 | ||
Condensed Consolidated Statements of Cash Flows — Three Months Ended August 31, 2013, and September 1, 2012 | ||
Notes to Condensed Consolidated Financial Statements | ||
Note 1 - Basis of Presentation | ||
Note 2 - New Accounting Standards | ||
Note 3 - Fiscal Year | ||
Note 4 - Acquisitions and Divestitures | ||
Note 5 - Inventories | ||
Note 7 - Employee Benefit Plans | ||
Note 8 - Earnings Per Share | ||
Note 9 - Stock-Based Compensation | ||
Note 10 - Income Taxes | ||
Note 11 - Fair Value Measurements | ||
Note 12 - Commitments and Contingencies | ||
Note 13 - Debt | ||
Note 14 - Accumulated Other Comprehensive Income | ||
Note 15 - Restructuring Activities | ||
Note 16 - Operating Segments | ||
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3 Quantitative and Qualitative Disclosures about Market Risk | ||
Item 4 Controls and Procedures | ||
Part II — Other Information | ||
Item 1 Legal Proceedings | ||
Item 1A Risk Factors | ||
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 3 Defaults upon Senior Securities | ||
Item 4 Mine Safety Disclosures | ||
Item 5 Other Information | ||
Item 6 Exhibits | ||
Signatures |
Three Months Ended | |||||||
August 31, 2013 | September 1, 2012 | ||||||
Net sales | $ | 468.1 | $ | 449.7 | |||
Cost of sales | 298.1 | 300.0 | |||||
Gross margin | 170.0 | 149.7 | |||||
Operating Expenses: | |||||||
Selling, general, and administrative | 114.4 | 101.0 | |||||
Restructuring and impairment expenses | — | 0.5 | |||||
Design and research | 16.5 | 13.9 | |||||
Total operating expenses | 130.9 | 115.4 | |||||
Operating earnings | 39.1 | 34.3 | |||||
Other expenses: | |||||||
Interest expense | 4.5 | 4.3 | |||||
Other, net | 0.1 | — | |||||
Earnings before income taxes | 34.5 | 30.0 | |||||
Income tax expense | 12.0 | 10.0 | |||||
Equity loss from nonconsolidated affiliates, net of tax | — | — | |||||
Net earnings | $ | 22.5 | $ | 20.0 | |||
Earnings per share — basic | $ | 0.38 | $ | 0.34 | |||
Earnings per share — diluted | $ | 0.38 | $ | 0.34 | |||
Dividends declared, per share | $ | 0.125 | $ | 0.090 | |||
Other comprehensive income, net of tax | |||||||
Foreign currency translation adjustments | $ | (0.7 | ) | $ | 2.8 | ||
Pension and post-retirement liability adjustments | 1.4 | 1.6 | |||||
Unrealized holding gain | — | — | |||||
Total other comprehensive income | 0.7 | 4.4 | |||||
Comprehensive income | $ | 23.2 | $ | 24.4 |
August 31, 2013 | June 1, 2013 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 110.1 | $ | 82.7 | |||
Marketable securities | 11.0 | 10.8 | |||||
Accounts receivable, net | 172.4 | 178.4 | |||||
Inventories, net | 77.4 | 76.2 | |||||
Prepaid expenses and other | 55.6 | 51.2 | |||||
Total current assets | 426.5 | 399.3 | |||||
Property and equipment, at cost | 754.5 | 765.3 | |||||
Less — accumulated depreciation | (571.7 | ) | (581.2 | ) | |||
Net property and equipment | 182.8 | 184.1 | |||||
Goodwill | 226.7 | 227.0 | |||||
Indefinite-lived intangibles | 62.3 | 62.3 | |||||
Other amortizable intangibles, net | 47.1 | 48.0 | |||||
Other noncurrent assets | 27.6 | 25.8 | |||||
Total Assets | $ | 973.0 | $ | 946.5 | |||
LIABILITIES & STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 130.2 | $ | 130.1 | |||
Accrued compensation and benefits | 59.2 | 65.9 | |||||
Accrued warranty | 24.6 | 24.8 | |||||
Other accrued liabilities | 82.8 | 69.2 | |||||
Total current liabilities | 296.8 | 290.0 | |||||
Long-term debt | 250.0 | 250.0 | |||||
Pension and post-retirement benefits | 39.7 | 39.6 | |||||
Other liabilities | 45.5 | 47.4 | |||||
Total Liabilities | 632.0 | 627.0 | |||||
Stockholders' Equity: | |||||||
Preferred stock, no par value (10,000,000 shares authorized, none issued) | — | — | |||||
Common stock, $0.20 par value (240,000,000 shares authorized) | 11.8 | 11.7 | |||||
Additional paid-in capital | 108.5 | 102.9 | |||||
Retained earnings | 346.2 | 331.1 | |||||
Accumulated other comprehensive loss | (123.6 | ) | (124.3 | ) | |||
Key executive deferred compensation plans | (1.9 | ) | (1.9 | ) | |||
Total Stockholders' Equity | 341.0 | 319.5 | |||||
Total Liabilities and Stockholders' Equity | $ | 973.0 | $ | 946.5 |
Three Months Ended | |||||||
August 31, 2013 | September 1, 2012 | ||||||
Cash Flows from Operating Activities: | |||||||
Net earnings | $ | 22.5 | $ | 20.0 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 11.1 | 9.5 | |||||
Stock-based compensation | 2.8 | 1.8 | |||||
Excess tax benefits from stock-based compensation | (0.7 | ) | — | ||||
Pension and post-retirement expenses | 3.4 | 5.0 | |||||
Deferred taxes | (2.9 | ) | — | ||||
Gain on sales of property and dealers | (0.2 | ) | — | ||||
Restructuring and impairment expenses | — | 0.5 | |||||
Other, net | — | (0.5 | ) | ||||
Increase in current assets | (3.3 | ) | (0.3 | ) | |||
Increase in current liabilities | 6.6 | (0.6 | ) | ||||
Decrease in non-current liabilities | (1.1 | ) | (6.7 | ) | |||
Net Cash Provided by Operating Activities | 38.2 | 28.7 | |||||
Cash Flows from Investing Activities: | |||||||
Marketable securities purchases | (0.4 | ) | (0.3 | ) | |||
Marketable securities sales | 0.2 | 0.7 | |||||
Capital expenditures | (6.5 | ) | (15.7 | ) | |||
Other, net | 0.5 | 0.2 | |||||
Net Cash Used in Investing Activities | (6.2 | ) | (15.1 | ) | |||
Cash Flows from Financing Activities: | |||||||
Dividends paid | (7.3 | ) | (1.3 | ) | |||
Common stock issued | 6.1 | 0.4 | |||||
Common stock repurchased and retired | (3.8 | ) | (0.4 | ) | |||
Excess tax benefits from stock-based compensation | 0.7 | — | |||||
Net Cash Used in Financing Activities | (4.3 | ) | (1.3 | ) | |||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (0.3 | ) | (0.2 | ) | |||
Net Increase in Cash and Cash Equivalents | 27.4 | 12.1 | |||||
Cash and Cash Equivalents, Beginning of Period | 82.7 | 172.2 | |||||
Cash and Cash Equivalents, End of Period | $ | 110.1 | $ | 184.3 |
Valuation as of April 29, 2013 | |||
(In millions) | Fair Value | ||
Purchase price | $ | 155.8 | |
Fair value of the assets acquired | |||
Accounts receivable | 11.1 | ||
Inventory | 14.1 | ||
Other current assets | 4.4 | ||
Investments in nonconsolidated affiliates | 4.3 | ||
Other intangible assets | 42.4 | ||
Goodwill | 80.7 | ||
Property | 12.1 | ||
Long term deferred tax asset | 1.6 | ||
Other assets | 0.2 | ||
Total assets acquired | 170.9 | ||
Fair value of liabilities assumed | |||
Accounts payable | 6.5 | ||
Current deferred tax liabilities | 1.6 | ||
Accrued compensation and benefits | 4.7 | ||
Other accrued liabilities | 1.0 | ||
Other long term liabilities | 1.3 | ||
Total liabilities assumed | 15.1 | ||
Net assets acquired | $ | 155.8 |
Goodwill Segment Allocation from the Maharam Acquisition | |||
(In millions) | Fair Value | ||
North American Furniture Solutions | $ | 31.9 | |
Specialty and Consumer | 48.8 | ||
Total Goodwill | $ | 80.7 |
Intangible Assets Acquired from the Maharam Acquisition | ||||
(In millions) | Fair Value | Useful Life | ||
Trade name | $ | 23.0 | Indefinite | |
Designs and patterns | 3.1 | 5 | ||
Specifier and customer relationships | 16.0 | 20 | ||
Non-compete agreements | 0.3 | 2 | ||
Total Intangibles Acquired | $ | 42.4 |
Maharam Results of Operations | ||||||
(In millions) | April 29, 2013 - June 1, 2013 | Three Months Ended August 31, 2013 | ||||
Net sales | $ | 10.6 | $ | 27.3 | ||
Net income (loss) | (0.1 | ) | 0.8 |
(In millions) | August 31, 2013 | June 1, 2013 | |||||
Finished goods | $ | 59.3 | $ | 57.5 | |||
Raw materials | 18.1 | 18.7 | |||||
Total | $ | 77.4 | $ | 76.2 |
(In millions) | Goodwill | Indefinite-lived Intangible Assets | Total Goodwill and Indefinite-lived Intangible Assets | ||||||||
June 1, 2013 | $ | 227.0 | $ | 62.3 | $ | 289.3 | |||||
Foreign currency translation adjustments | (0.2 | ) | — | (0.2 | ) | ||||||
Sale of owned dealer | (0.1 | ) | — | (0.1 | ) | ||||||
August 31, 2013 | $ | 226.7 | $ | 62.3 | $ | 289.0 |
(In millions) | Three Months Ended | ||||||||||||||
August 31, 2013 | September 1, 2012 | August 31, 2013 | September 1, 2012 | ||||||||||||
Pension Benefits | Other Post-Retirement Benefits | ||||||||||||||
Domestic: | |||||||||||||||
Service cost | $ | — | $ | 2.0 | $ | — | $ | — | |||||||
Interest cost | 2.6 | 2.9 | 0.1 | 0.1 | |||||||||||
Expected return on plan assets | (1.9 | ) | (3.2 | ) | — | — | |||||||||
Net amortization loss | 2.4 | 3.1 | — | — | |||||||||||
Settlement loss recognized | — | — | — | — | |||||||||||
Net periodic benefit cost | $ | 3.1 | $ | 4.8 | $ | 0.1 | $ | 0.1 | |||||||
International: | |||||||||||||||
Service cost | $ | — | $ | — | |||||||||||
Interest cost | 1.0 | 0.9 | |||||||||||||
Expected return on plan assets | (1.2 | ) | (1.2 | ) | |||||||||||
Net amortization loss | 0.4 | 0.4 | |||||||||||||
Net periodic benefit cost | $ | 0.2 | $ | 0.1 |
Three Months Ended | |||||||
August 31, 2013 | September 1, 2012 | ||||||
Numerators: | |||||||
Numerator for both basic and diluted EPS, net earnings (In millions) | $ | 22.5 | $ | 20.0 | |||
Denominators: | |||||||
Denominator for basic EPS, weighted-average common shares outstanding | 58,727,106 | 58,318,702 | |||||
Potentially dilutive shares resulting from stock plans | 609,736 | 296,960 | |||||
Denominator for diluted EPS | 59,336,842 | 58,615,662 |
(In millions) | Fair Value Measurements | ||||||
August 31, 2013 | June 1, 2013 | ||||||
Financial Assets | Quoted Prices with Other Observable Inputs (Level 2) | Quoted Prices with Other Observable Inputs (Level 2) | |||||
Available-for-sale marketable securities: | |||||||
Asset-backed securities | $ | 1.0 | $ | 0.8 | |||
Corporate securities | 1.7 | 1.7 | |||||
Government obligations | 5.1 | 5.1 | |||||
Mortgage-backed securities | 3.2 | 3.2 | |||||
Foreign currency forward contracts | 0.1 | 0.3 | |||||
Deferred compensation plan | 5.2 | 4.8 | |||||
Total | $ | 16.3 | $ | 15.9 | |||
Financial Liabilities | |||||||
Foreign currency forward contracts | $ | 0.1 | $ | 0.3 | |||
Total | $ | 0.1 | $ | 0.3 |
August 31, 2013 | |||||||||||||||
(In millions) | Cost | Unrealized Gain | Unrealized Loss | Market Value | |||||||||||
Asset-backed securities | $ | 1.0 | $ | — | $ | — | $ | 1.0 | |||||||
Corporate securities | 1.7 | — | — | 1.7 | |||||||||||
Government obligations | 5.1 | — | — | 5.1 | |||||||||||
Mortgage-backed securities | 3.2 | — | — | 3.2 | |||||||||||
Total | $ | 11.0 | $ | — | $ | — | $ | 11.0 | |||||||
June 1, 2013 | |||||||||||||||
(In millions) | Cost | Unrealized Gain | Unrealized Loss | Market Value | |||||||||||
Asset-backed securities | $ | 0.8 | $ | — | $ | — | $ | 0.8 | |||||||
Corporate securities | 1.7 | — | — | 1.7 | |||||||||||
Government obligations | 5.1 | — | — | 5.1 | |||||||||||
Mortgage-backed securities | 3.2 | — | — | 3.2 | |||||||||||
Total | $ | 10.8 | $ | — | $ | — | $ | 10.8 |
(In millions) | Cost | Fair Value | |||||
Due within one year | $ | 4.2 | $ | 4.2 | |||
Due after one year through five years | 6.7 | 6.7 | |||||
Due after five years through ten years | 0.1 | 0.1 | |||||
Total | $ | 11.0 | $ | 11.0 |
(In millions) | Three Months Ended | ||||||
August 31, 2013 | September 1, 2012 | ||||||
Accrual Balance — beginning | $ | 24.8 | $ | 22.2 | |||
Accrual for warranty matters | 4.9 | 6.8 | |||||
Settlements and adjustments | (5.1 | ) | (5.4 | ) | |||
Accrual Balance — ending | $ | 24.6 | $ | 23.6 |
Three Months Ended | |||||||
(In millions) | August 31, 2013 | September 1, 2012 | |||||
Cumulative translation adjustments at beginning of year | $ | (14.0 | ) | $ | (13.0 | ) | |
Translation adjustments | (0.7 | ) | 2.8 | ||||
Balance at end of period | (14.7 | ) | (10.2 | ) | |||
Pension and other post-retirement benefit plans at beginning of year | (110.3 | ) | (127.6 | ) | |||
Adjustments to pension and other post-retirement benefit plans | (0.3 | ) | (0.6 | ) | |||
Reclassification to earnings - cost of sales (net of tax $(.3), $(.5)) | 0.5 | 1.0 | |||||
Reclassification to earnings - operating expenses (net of tax $(.8), $(.7)) | 1.2 | 1.2 | |||||
Balance at end of period | (108.9 | ) | (126.0 | ) | |||
Total accumulated other comprehensive loss | $ | (123.6 | ) | $ | (136.2 | ) |
Three Months Ended | |||||||
(In millions) | August 31, 2013 | September 1, 2012 | |||||
Net Sales: | |||||||
North American Furniture Solutions | $ | 318.2 | $ | 320.3 | |||
Non-North American Furniture Solutions | 81.6 | 94.6 | |||||
Specialty and Consumer | 68.3 | 34.8 | |||||
Corporate | — | — | |||||
Total | $ | 468.1 | $ | 449.7 | |||
Depreciation and Amortization: | |||||||
North American Furniture Solutions | $ | 7.1 | $ | 7.1 | |||
Non-North American Furniture Solutions | 2.0 | 1.8 | |||||
Specialty and Consumer | 2.0 | 0.6 | |||||
Corporate | — | — | |||||
Total | $ | 11.1 | $ | 9.5 | |||
Operating Earnings (Loss): | |||||||
North American Furniture Solutions | $ | 34.0 | $ | 26.9 | |||
Non-North American Furniture Solutions | (0.1 | ) | 5.5 | ||||
Specialty and Consumer | 5.2 | 2.4 | |||||
Corporate | — | (0.5 | ) | ||||
Total | $ | 39.1 | $ | 34.3 | |||
Capital Expenditures: | |||||||
North American Furniture Solutions | $ | 4.5 | $ | 8.8 | |||
Non-North American Furniture Solutions | 1.4 | 6.8 | |||||
Specialty and Consumer | 0.6 | 0.1 | |||||
Corporate | — | — | |||||
Total | $ | 6.5 | $ | 15.7 | |||
(In millions) | August 31, 2013 | June 1, 2013 | |||||
Total Assets | |||||||
North American Furniture Solutions | $ | 439.5 | $ | 427.8 | |||
Non-North American Furniture Solutions | 242.0 | 250.9 | |||||
Specialty and Consumer | 170.4 | 174.3 | |||||
Corporate | 121.1 | 93.5 | |||||
Total | $ | 973.0 | $ | 946.5 | |||
Total Goodwill | |||||||
North American Furniture Solutions | $ | 136.0 | $ | 136.1 | |||
Non-North American Furniture Solutions | 40.9 | 41.1 | |||||
Specialty and Consumer | 49.8 | 49.8 | |||||
Corporate | — | — | |||||
Total | $ | 226.7 | $ | 227.0 |
Three Months Ended | ||||||
(Dollars In millions) | August 31, 2013 | September 1, 2012 | ||||
Operating earnings | $ | 39.1 | $ | 34.3 | ||
Percentage of net sales | 8.4 | % | 7.6 | % | ||
Add: Restructuring and impairment expenses | — | 0.5 | ||||
Add: Inventory step-up expenses | 1.4 | — | ||||
Add: Legacy pension expenses (1) | 3.1 | 1.7 | ||||
Adjusted operating earnings | $ | 43.6 | $ | 36.5 | ||
Percentage of net sales | 9.3 | % | 8.1 | % |
Three Months Ended | ||||||
August 31, 2013 | September 1, 2012 | |||||
Earnings per share – diluted | $ | 0.38 | $ | 0.34 | ||
Add: Restructuring and impairment expenses | — | 0.01 | ||||
Add: Inventory step-up expenses | 0.02 | — | ||||
Add: Legacy pension expenses (1) | 0.03 | 0.02 | ||||
Adjusted earnings per share – diluted | $ | 0.43 | $ | 0.37 |
(In millions, except per share data) | Three Months Ended | |||||||||
August 31, 2013 | September 1, 2012 | Percent Change | ||||||||
Net sales | $ | 468.1 | $ | 449.7 | 4.1 | % | ||||
Cost of sales | 298.1 | 300.0 | (0.6 | )% | ||||||
Gross margin | 170.0 | 149.7 | 13.6 | % | ||||||
Operating expenses | 130.9 | 114.9 | 13.9 | % | ||||||
Restructuring and impairment expenses | — | 0.5 | (100.0 | )% | ||||||
Total operating expenses | 130.9 | 115.4 | 13.4 | % | ||||||
Operating earnings | 39.1 | 34.3 | 14.0 | % | ||||||
Net other expenses | 4.6 | 4.3 | 7.0 | % | ||||||
Earnings before income taxes | 34.5 | 30.0 | 15.0 | % | ||||||
Income tax expense | 12.0 | 10.0 | 20.0 | % | ||||||
Net earnings | $ | 22.5 | $ | 20.0 | 12.5 | % | ||||
Earnings per share - diluted | $ | 0.38 | $ | 0.34 | 11.8 | % | ||||
Orders | 471.2 | 452.0 | 4.2 | % | ||||||
Backlog | $ | 275.7 | $ | 280.2 | (1.6 | )% |
Three Months Ended | |||||
August 31, 2013 | September 1, 2012 | ||||
Net sales | 100.0 | % | 100.0 | % | |
Cost of sales | 63.7 | 66.7 | |||
Gross margin | 36.3 | 33.3 | |||
Operating expenses | 28.0 | 25.6 | |||
Restructuring and impairment expenses | — | 0.1 | |||
Total operating expenses | 28.0 | 25.7 | |||
Operating earnings | 8.4 | 7.6 | |||
Net other expenses | 1.0 | 1.0 | |||
Earnings before income taxes | 7.4 | 6.7 | |||
Income tax expense | 2.6 | 2.2 | |||
Net earnings | 4.8 | 4.4 |
(In millions) | |||
First Quarter Fiscal 2013 Net sales | $ | 449.7 | |
Acquisitions and divestitures | |||
Maharam acquisition | 27.3 | ||
Dealer divestitures | (9.9 | ) | |
Impact from foreign currency | (1.9 | ) | |
Net changes in pricing | 5.0 | ||
Change in sales volumes | (2.1 | ) | |
First Quarter Fiscal 2014 Net sales | $ | 468.1 |
Three Months Ended | ||||||||
Period Ended | August 31, 2013 | September 1, 2012 | Change | |||||
Direct materials | 40.8 | % | 44.3 | % | (3.5 | )% | ||
Direct labor | 6.5 | 6.3 | 0.2 | |||||
Manufacturing overhead | 10.6 | 10.1 | 0.5 | |||||
Freight and distribution | 5.8 | 6.0 | (0.2 | ) | ||||
Cost of sales | 63.7 | % | 66.7 | % | (3.0 | )% |
(In millions) | |||
First Quarter Fiscal 2013 Operating expenses | $ | 115.4 | |
Selling, general & administrative change | |||
Acquisitions and divestitures | |||
Maharam acquisition | 12.4 | ||
Dealer divestitures | (2.2 | ) | |
Legacy pension expenses | 1.4 | ||
Warranty | (1.9 | ) | |
Marketing and selling | 2.4 | ||
Employee incentive costs | 2.4 | ||
Impact from foreign currency | (0.5 | ) | |
Design and research | 2.3 | ||
Other | (0.3 | ) | |
Restructuring and impairment change | (0.5 | ) | |
First Quarter Fiscal 2014 Operating expenses | $ | 130.9 |
◦ | North American Furniture Solutions — Includes the operations associated with the design, manufacture, and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States and Canada. The North American Furniture Solutions reportable segment is the aggregation of two operating segments. In addition, the company has determined that both operating segments within the North American Furniture Solutions reportable segment each represent reporting units. |
◦ | Non-North American Furniture Solutions — Includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, for Mexico and outside of North America as well as the company's Non-North America consumer retail business. |
◦ | Specialty and Consumer — Includes the operations associated with the design, manufacture, and sale of high-end furniture products and textiles including Geiger wood products, Maharam textiles, Herman Miller Collection products and the company's North American consumer retail business. |
(In millions) | Three Months Ended | ||||||||||
August 31, 2013 | September 1, 2012 | Change | |||||||||
Net Sales: | |||||||||||
North American Furniture Solutions | $ | 318.2 | $ | 320.3 | $ | (2.1 | ) | ||||
Non-North American Furniture Solutions | 81.6 | 94.6 | (13.0 | ) | |||||||
Specialty and Consumer | 68.3 | 34.8 | 33.5 | ||||||||
Corporate | — | — | — | ||||||||
Total | $ | 468.1 | $ | 449.7 | |||||||
Operating Earnings (Loss): | |||||||||||
North American Furniture Solutions | $ | 34.0 | $ | 26.9 | $ | 7.1 | |||||
Non-North American Furniture Solutions | (0.1 | ) | 5.5 | (5.6 | ) | ||||||
Specialty and Consumer | 5.2 | 2.4 | 2.8 | ||||||||
Corporate | — | (0.5 | ) | 0.5 | |||||||
Total | $ | 39.1 | $ | 34.3 |
(In millions) | Three Months Ended | ||||||
August 31, 2013 | September 1, 2012 | ||||||
Cash and cash equivalents, end of period | $ | 110.1 | $ | 184.3 | |||
Marketable securities, end of period | 11.0 | 9.2 | |||||
Cash provided by operating activities | 38.2 | 28.7 | |||||
Cash used in investing activities | (6.2 | ) | (15.1 | ) | |||
Cash used in financing activities | (4.3 | ) | (1.3 | ) | |||
Capital expenditures | (6.5 | ) | (15.7 | ) | |||
Stock repurchased and retired | (3.8 | ) | (0.4 | ) | |||
Common stock issued | 6.1 | 0.4 | |||||
Dividends paid | (7.3 | ) | (1.3 | ) | |||
Interest-bearing debt, end of period | 250.0 | 250.0 | |||||
Available unsecured credit facility, end of period (1) | 142.7 | 142.3 |
Item 1: | Legal Proceedings |
Item 1A: | Risk Factors |
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | (a) Total Number of Shares (or Units) Purchased(1) | (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) | |||||||||
6/2/13 - 6/29/13 | 238 | $ | 27.71 | 238 | $ | 163.0 | |||||||
6/30/13 - 7/27/13 | 131,748 | $ | 28.79 | 131,748 | $ | 159.2 | |||||||
7/28/13 - 8/31/13 | 96 | $ | 26.80 | 96 | $ | 159.2 | |||||||
Total | 132,082 | 132,082 |
Item 3: | Defaults upon Senior Securities — None |
Item 4: | Mine Safety Disclosures — Not applicable |
Item 5: | Other Information — None |
Item 6: | Exhibits |
Exhibit Number | Document |
10 | Material Contracts |
31.1 | Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certificate of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
October 9, 2013 | /s/ Brian C. Walker | |||
Brian C. Walker | ||||
Chief Executive Officer | ||||
(Duly Authorized Signatory for Registrant) | ||||
October 9, 2013 | /s/ Gregory J. Bylsma | |||
Gregory J. Bylsma | ||||
Chief Financial Officer | ||||
(Duly Authorized Signatory for Registrant) |
• | You will transition from your current position on July 18, 2013 and assume the role of Strategic Consultant – Operations, described further below. This new role will be for a two-year period that will end in July 2015. |
• | Ninety days prior to July 2015, we will mutually determine if the agreement will be extended. The extension may be in a similar or reduced capacity. |
• | Your compensation beginning July 18, 2013 will be $250,000 per year. You will be eligible to receive all of the benefits available to full time Herman Miller employees. You will not be eligible to participate in the Long Term Incentive Plan, the Executive Cash Bonus or other bonus programs. |
• | You will be entitled to use your bundled benefits until Dec 31, 2013. You will not be eligible to participate in the bundled benefits program thereafter. You will be allowed $5,000 per year for your spouse to accompany you on required international travel. |
• | In July of 2013, you will be granted a RSU award of $150,000 that will cliff vest over three years. This RSU award and the vesting of it will be based on completing this two year employment agreement and your agreement to non-competition and non-solicitation requirements that will extend for one year after your employment ends. If you do not complete this employment agreement for any reason or fail to comply with the non-competition or non-solicitation requirements the grant will be forfeited. |
• | Outstanding Long Term Incentive Grants will continue to vest as provided in the grants. |
• | You will continue to be eligible to use the Mayo clinic services provided to the ELT for the duration of the two-year period. |
• | You will report to Greg Bylsma, CFO and EVP of Operations. |
• | Your responsibilities will include: Regular consultation and mentoring of Greg Bylsma as to operations strategy and the implementation of HMPS. Recruiting, mentoring and evaluating members of the BOLD |
• | You will work a minimum of 8 days/month. You will reserve a minimum of 4 days per month to consult and coach Greg Bylsma. This will include engaging in HMPS evaluations of operational facilities, discussion of key capital expenditures and talent development. You will be available for one international trip per quarter to advance key projects, evaluate HMPS implementation and/or trouble shoot. |
• | You will meet with Brian Walker once per month to update him on progress with key projects, development of Greg Bylsma and relay strategic observations. |
• | Every six months you will work with Greg to develop and agree to a chart of work. This chart of work will include the specific operations he would like evaluated, assignments and development of BOLD candidates and key projects to be completed by you. |
• | You will lead the following international projects and ensure they are delivered with-in required time frames, at or below planned investment and meet the operational and manufacturing needs of the business. Projects goals around completion and budget may be adjusted during the course of the year based upon changing business objectives and/or project scope. For purposes of these projects the Senior Vice President of Operations and Engineering will report directly to you. |
◦ | POSH Operational Integration |
◦ | Ningbo Facility development and move |
◦ | UK Facility Consolidation |
◦ | India Assembly and Distribution |
◦ | Brazil Assembly and Distribution |
Commencement of Retirement at Attained Age of | Maximum Percent of Attained Compensation | |
55 | 50 | |
56 | 53 | |
57 | 56 | |
58 | 59 | |
59 | 62 | |
60 | 65 | |
61 | 67 | |
62 | 69 | |
63 | 71 | |
64 | 73 | |
65 or after | 75 |
a. | No payments will be made unless the individual has signed and returned the Termination and Mutual Release Agreement and ADEA Waiver (if applicable) within the required time period and without revocation. |
b. | Except as prohibited by law, no payments will be made after the date on which the individual accepts employment with, becomes a consultant to, or affiliates with a competitor of the Company, engages in competition in any way with the Company or any of its Subsidiaries or if it is determined that the individual has taken action contrary to the Company’s interests. The right and authority to (1) determine whether or not the individual’s new employer (or client) is a competitor and (2) whether or not the individual has taken action contrary to the Company’s interests shall be vested solely and wholly with the Company’s President and Chief Executive Officer, and his/her decision shall be final and binding on the individual. |
c. | Except as prohibited by law, no payments will be made after the date on which the individual solicits another Company employee(s) for employment or other similar relationship. The right and authority to determine whether of not the individual has engaged in solicitation shall be vested solely and wholly with the Company’s President and Chief Executive Officer and his/her decision shall be finding and binding on the individual. |
d. | Executive must be employed in an executive role for two years to be eligible for the full amount of salary continuation as indicated above. If the termination occurs prior to completing the first year of service, Executive is entitled to half the amount. If the termination occurs prior to completing the 2nd year of service they receive two-thirds of the amount. |
e. | In the event Executive is promoted from a non-executive role from within HMI, and they are terminated prior to completing the two year period, they will receive the greater of the severance amount they would have been entitled to under the applicable policy for non-executive employees or the executive Salary Continuation amount. |
3. | Ineligible Terminations |
a. | Whose employment terminates, voluntarily or involuntarily, on account of his/her malfeasance. The right and authority to determine whether a corporate officer shall be eligible or ineligible for benefits under this subparagraph shall be vested solely and wholly with the Company’s President and Chief Executive Officer. This decision shall be final and binding on the individual. |
b. | Who voluntarily terminates his/her employment. |
Page | |||
ARTICLE I | PURPOSE | 3 | |
ARTICLE II | DEFINITIONS AND CONSTRUCTION | 3 | |
2.1 Definitions | 3 | ||
2.2 Construction | 6 | ||
ARTICLE III | PARTICIPATION | 6 | |
ARTICLE IV | CONTRIBUTION CREDITS | 6 | |
4.1 Contribution Credits | 6 | ||
4.2 Retirement Savings Agreements | 7 | ||
4.3 Reemployed Veterans | 8 | ||
ARTICLE V | ALLOCATIONS TO PARTICIPANT ACCOUNTS | 8 | |
5.1 Individual Accounts | 8 | ||
5.2 Account Adjustments | 8 | ||
ARTICLE VI | PAYMENTS FROM PLAN | 10 |
6.1 Election of Participant | 10 | ||
6.2 Payment of amounts that are not Covered by Participant's Election | 10 | ||
6.3 Payments Upon Death | 11 | ||
6.4 Hardship Distributions | 11 | ||
6.5 Distributions Pursuant to Domestic Relations Orders | 12 | ||
6.6 Designation of Beneficiary | 12 | ||
6.7 Payments Upon Change in Control | 10 | ||
ARTICLE VII | DEFERRED COMPENSATION FUND | 15 | |
ARTICLE VIII | ADMINISTRATION | 15 | |
8.1 Administrator | 15 | ||
8.2 Indemnification | 15 | ||
8.3 Records and Reports | 15 | ||
8.4 Appointment of Committee | 15 | ||
8.5 Claims Procedure | 16 | ||
8.6 Rules and Decisions | 17 | ||
8.7 Committee Procedures | 17 | ||
8.8 Authorization of Benefit Payments | 17 | ||
8.9 Application and Forms for Benefits | 17 | ||
8.10 Facility of Payment | 18 |
ARTICLE IX | INDIVIDUAL INVESTMENT ACCOUNTS | 18 | |
9.1 Investment of Individual Accounts | 18 | ||
9.2 Procedure for Investments | 18 | ||
ARTICLE X | PAYMENT OF TAXES | 18 | |
ARTICLE XI | TERMINATION AND AMENDMENT | 19 | |
11.1 Amendments | 19 | ||
11.2 Termination | 19 | ||
ARTICLE XII | NONALIENATION OF BENEFITS AND DOMESTIC RELATIONS ORDERS | 19 | |
12.1 Nonalienation of Benefits | 19 | ||
12.2 Procedure for Domestic Relations Orders | 19 | ||
ARTICLE XIII | MISCELLANEOUS | 20 | |
13.1 Status of Participants | 20 | ||
13.2 No Interest in Company Affairs | 20 | ||
13.3 Litigation | 20 | ||
13.4 Governing Law | 21 | ||
13.5 Severability of Provisions | 21 |
(a) Accounts: The accounts maintained to record a participant’s share of contributions to the Plan and allocation of income with respect to these contributions. The following separate accounts will be maintained for each participant: |
(1) Cash Balance Account: The account maintained to record the participant’s share of the Company’s contributions that are made to supplement the contributions made pursuant to the Company’s Retirement Income Plan and allocations of income with respect to this account; |
(2) Profit Sharing Account: The account maintained to record the participant’s share of the Company’s contributions that are made to supplement the Company’s discretionary contributions to the Company’s Profit Sharing and 401(k) Plan and allocations of income with respect to these contributions; |
(3) Retirement Savings Account: The account maintained to record the participant’s voluntary retirement savings contributions and allocations of income with respect to these contributions. |
(4) Matching Account: The account maintained to record the participant’s share of the Company’s matching contributions and allocations of income with respect to these contributions. |
(b) Beneficiary: A person or persons, natural or otherwise, designated in accordance with the Plan to receive any death benefit payable under this Plan. |
(c) Code: The Internal Revenue Code of 1986, as amended from time to time. |
(d) Committee: The persons appointed to assist the Company in administering the Plan. |
(e) Company: Herman Miller, Inc., a Michigan corporation, and any subsidiary of Herman Miller, Inc. who, with the consent of Herman Miller, Inc., has elected to adopt this Plan for the benefit of its employees. |
(f) Compensation: The total of all amounts paid to a participant during the plan year by the Company that is reportable in Box 1 of IRS Form W-2, adjusted by: |
(1) Adding the amount of any elective contributions made for the participant to this Plan and plans maintained pursuant to Code Sections 125, 132(f), and 401(k); and |
(2) Subtracting the following amounts: |
(A) Amounts paid before a participant became a participant; and |
(B) Amounts paid as signing bonuses, reimbursements of moving expenses or other expense allowance, severance pay, and miscellaneous earnings such as income from the exercise of stock options. |
(g) ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time. |
(h) Excess Compensation: Compensation for a participant for a plan year that is in excess of the limit on compensation imposed by Code Section 401(a)(17). |
(i) Fiscal year: The fiscal year of the Company which is the period of 52 or 53 weeks ending on the Saturday nearest the end of May and commencing for the next year on the following Sunday. |
(j) Fund: The fund known as the Herman Miller, Inc. Executive Equalization Retirement Fund and maintained in accordance with the terms of this Plan. |
(k) Key employee: An employee or former employee who during the plan year was any of the following: |
(1) an officer of the Company whose compensation from the Company for the year was more than $130,000, as adjusted pursuant to Code Section 416(i); |
(2) a more than 5% owner of the Company; or |
(3) A more than 1% owner of the Company whose annual compensation from the Company was more than $150,000. |
(l) Participant: An employee participating in the Plan in accordance with the provisions of Section 3.1 or a former employee who has an account balance in the Plan. |
(m) Plan: The Herman Miller, Inc. Executive Equalization Retirement Plan as set forth in this document and any later amendments. |
(n) Plan year: The “fiscal year” of the Plan which will be the period of twelve consecutive months ending on December 31 of every year. |
(o) Qualified Plans: The Herman Miller, Inc. Profit Sharing and 401(k) Plan and the Herman Miller, Inc. Retirement Income Plan, both of which are intended to meet the requirements of Code Section 401(a). |
(p) Reemployed Veteran: A participant or former participant who returns from a leave of absence for military service during the period in which reemployment rights are protected by federal law. |
(a) Retirement Savings. After the end of each payroll period, the Company will contribute to the fund as retirement savings contributions the total amount by which participants’ compensation for the period has been reduced pursuant to retirement savings agreements. |
(b) Matching. The Company will contribute to the fund as matching contributions the amount determined by applying the matching contribution formula adopted by the Company for the plan year to the amount of each participant’s retirement savings contributions to this Plan for the year. |
(c) Cash Balance. The Company will contribute to the fund as cash balance contributions for each plan year an amount equal to 4% of each participant’s excess compensation for the plan year. |
(d) Profit Sharing. The Company will contribute to the fund as a profit sharing contribution for each plan year the amount determined by the executive compensation committee of the Company’s board of directors. |
(a) A participant’s initial retirement savings agreement will apply to payroll periods beginning after it is accepted by the Company if the agreement is filed with the Company within 30 days after the participant becomes eligible. If the initial agreement is not filed with the Company within 30 days after the participant becomes eligible, then it will apply to compensation earned in the plan year after the plan year in which the agreement is filed with the Company; |
(b) A retirement savings agreement may be amended by a participant once a year and the amendment will be effective on the first day of the next plan year beginning after the year in which the amendment has been filed with the Company; and |
(c) The maximum amount that a participant may contribute pursuant to a retirement savings agreement will be 50% of the participant’s salary for the year and 100% of the participant’s bonus for the year. |
(a) Income. The “income” of the fund will mean the net income or loss from investments, including realized and unrealized gains and losses on securities and other investment transactions, less expenses paid from the fund. All assets of the fund will be valued at their fair market value in determining unrealized gains and losses. If any assets of the fund are segregated for any purpose, the income from the segregated assets will not be included in account adjustments under this Subsection (a). |
The income of the fund will be determined and allocated to accounts in accordance with the rules established by the Company. |
(b) Retirement Savings. After the end of each payroll period, retirement savings contributions will be credited to the accounts of participants in amounts equal to the amounts by which their salaries and bonuses were reduced during the period pursuant to retirement savings agreements. |
(c) Matching Contributions. As soon as administratively feasible after the end of each plan year, matching contributions will be credited to the accounts of participants who made retirement savings contributions and are employed by the Company on the last day of the plan year. The matching contributions will be equal to 50% of the participant’s retirement savings contributions until the matching contributions bring the total Company contributions for the participant to this Plan and the qualified plans up to the “target maximum percentage” of the participant’s compensation for the plan year. |
The target maximum percentage is the maximum percentage of compensation that the Company contributed for the fiscal year ending during the plan year to the accounts in the qualified plans of participants who are not highly compensated employees. For purposes of these percentages, the “pay credits” that are credited to the cash balances of participants in the Herman Miller, Inc. Retirement Income Plan will be treated as contributions rather than hypothetical credits. |
(d) Cash Balance Contributions. As soon as administratively feasible after the end of each plan year, cash balance contributions will be credited to the accounts of participants who are employed by the Company on the last day of the plan year in an amount equal to 4% of the participant’s excess compensation for the plan year. |
(e) Profit Sharing Contributions. As soon as administratively feasible after the end of each plan year, the Company’s profit sharing contribution for the year will be credited to the accounts of participants who are in the employ of the Company on the last day of the fiscal year ending during the plan year in accordance with the ratio of each participant’s excess compensation for the plan year to the total excess compensation of all eligible participants for the year. For purposes of this allocation, the term “compensation” will mean compensation as defined in Section 2.1, but reduced by the amount of any EVA bonuses, executive incentive pay, worker’s compensation benefits, short-term disability benefits, or automobile accident disability benefits paid to the participant. |
(a) Commencement Date. Benefit payments to participants other than key employees will begin as soon as administratively feasible after the end of the calendar year in which the participant’s employment terminates, but not later than March 30 of the following year. |
Benefit payments to participants who are key employees will begin as soon as administratively feasible after the end of the year in which the participant’s employment terminates or six (6) months after the participant’s employment terminates, whichever is later. |
(b) Form of Payment. Payments will be made in annual installments over a period of not more than five (5) years. Each installment will be equal to the greater of the following: |
(1) $100,000 or the balance in the participant’s accounts, whichever amount is smaller; or |
(2) One-fifth (1/5) of the amount in the participant’s accounts in the first installment, one-quarter (1/4) of the amount in the participant’s accounts in the second installment, one-third (1/3) of the amount in the participant’s accounts in the third installment, one-half (1/2) of the amount in the participant’s accounts in the fourth installment, and the remaining balance in the accounts in the fifth installment. |
The first installment will be paid in accordance with (a) and each subsequent installment will be paid on the 15th day of January of the following year. |
(a) Amounts that are subject to an election filed by the participant in accordance with Section 6.1 will be made in accordance with the election; and |
(b) Amounts that are not subject to an election filed by the participant will be paid in a single lump sum payment as soon as administratively feasible after the date of the participant’s death. |
(a) A “Change in Ownership” occurs on the date that any one person, or more than one person acting as a group (as such term is described in subsection (d), acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company, subject to the following: |
(i) If any one person, or more than one person acting as a group is considered to own more than 50 percent of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock in the Company by the same person or persons is not considered to cause a Change in Ownership (or to cause a Change in Effective Control under subsection (b); and |
(ii) An increase in the percentage of stock owned by any one person, or persons acting as a group as a result of a transaction in which the Company acquired stock in exchange for property will be treated as an acquisition of stock for purposes of this subsection (a). |
This subsection (a) shall apply only when there is a transfer of stock of the Company (or issuance of stock of the Company), and stock in the Company remains outstanding after the transaction. |
(b) A “Change in Effective Control” of the Company occurs on the date that either: |
(i) Any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 35 percent or more of the total voting power of the stock of the Company, or |
(ii) A majority of the members of the board of directors of the Company is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board prior to the date of the appointment or election. |
(c) A “Change in the Ownership of the Company’s Assets” occurs on the date that any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total “gross fair market value” equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. |
(i) “Gross fair market value” means the value of the assets of the Company, or the value of assets being disposed of, determined without regard to any liabilities associated with such assets. |
(ii) There is no Change in the Ownership of the Company’s Assets when there is a transfer to an entity that is controlled by the shareholders of the Company immediately after the transfer. A transfer of assets by the Company is not treated as a Change in the Ownership of the Company’s Assets if the assets are transferred to: |
(A) A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock; |
(B) An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Company; |
(C) A person, or more than one person acting as a group that owns, directly or indirectly, at least 50 percent of the total fair market value or voting power of all the outstanding stock of the Company; or |
(D) An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by a person described in subparagraph (C). |
Except as otherwise provided, for purposes of this Paragraph (ii), a person’s status is determined immediately after the transfer of assets. |
(d) For purposes of subsections (a), (b) and (c), persons will not be considered to be acting as a group solely because they purchase or own stock or purchase assets of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, acquisition of stock, or similar business transaction with the Company. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase, acquisition of stock, or similar transaction, the person will be considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. |
(a) If claimants are not satisfied with a decision of the Company, they must exhaust their administrative remedies under this Plan by filing a written appeal with the committee not later than 60 days after receipt of the notice of adverse benefit determination. |
(b) Claimants or their authorized representatives will be provided upon request and free of charge, reasonable access to and copies of all documents, records and other information relating to the claim for benefits. |
(c) Claimants or their authorized representatives may submit written comments, documents, records and other information relating to their claim in writing. All materials and arguments must be filed with the appeal. The committee will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. |
(d) The committee will render its decision on the appeal within a reasonable period of time, but not more than 60 days after receipt by the Company of the claimant’s appeal, unless the committee determines that special circumstances require an extension of time for processing. If an extension of time for review is required because of special circumstances, the committee will give written notice to the claimant of the extension prior to the commencement of the extension that will state the circumstances requiring the extension and the date by which the determination will be made. An extension of time for review will not entitle the claimant to a hearing before the committee as to the appeal. All appeal materials must be submitted in writing. |
(e) The committee will advise the claimant in writing or electronically of the decision on the appeal stating the reasons for the decision in language that may be understood by the claimant with references to the Plan provisions upon which the appeal determination is based. The notice will contain a statement that the claimant is entitled to receive upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits and a statement of the claimant’s right to bring an action under ERISA Section 502(a). |
(a) The Company will notify the participant and any “alternate payees” named in the order that the order was served on the Company and that objections concerning the order must be submitted in writing within 15 days; |
(b) The Company will determine whether the order would be a “qualified domestic relations order” as defined in Code Section 414(p) if this were a qualified plan, and notify the participant and each alternate payee of its determination. If the Company determines that the order would be a qualified domestic relations order, the Company will honor it as such and make payment in accordance with the order; |
(c) During the period in which the Company is determining the status of the order, payment of any benefits in dispute will be deferred. |
(d) The Company will notify the participant and all other alternate payees named in the order of its decision concerning the qualified status of the order. Payments pursuant to the order will be made as soon as practicable after the status of the order has been determined. |
1. | I have reviewed this quarterly report on Form 10-Q for the period ended August 31, 2013, of Herman Miller, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q for the period ended August 31, 2013, of Herman Miller, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
(1) | The quarterly report on Form 10-Q for the period ended August 31, 2013, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in this quarterly report on Form 10-Q for the quarterly period August 31, 2013, fairly presents, in all material respects, the financial condition and results of operations of the company |
(1) | The quarterly report on Form 10-Q for the period ended August 31, 2013, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in this quarterly report on Form 10-Q for the quarterly period ended August 31, 2013, fairly presents, in all material respects, the financial condition and results of operations of the company. |
Commitments and Contingencies
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ContingenciesAndGuaranteesDisclosure [Text Block] | COMMITMENTS AND CONTINGENCIES Product Warranties The company provides warranty coverage to the end-user for parts and labor on products sold. The standard length of warranty is 12 years; however, this varies depending on the product classification. The company does not sell or otherwise issue warranties or warranty extensions as stand-alone products. Reserves have been established for the various costs associated with the company's warranty program and are included in the Condensed Consolidated Balance Sheets under “Accrued warranty.” General warranty reserves are based on historical claims experience and other currently available information. These reserves are adjusted once an issue is identified and the actual cost of correction becomes known or can be estimated.
Guarantees The company is periodically required to provide performance bonds in order to do business with certain customers. These arrangements are common and generally have terms ranging between one and three years. The bonds are required to provide assurances to customers that the products and services they have purchased will be installed and/or provided properly and without damage to their facilities. The bonds are provided by various bonding agencies; however, the company is ultimately liable for claims that may occur against them. As of August 31, 2013, the company had a maximum financial exposure related to performance bonds totaling approximately $7.1 million. The company has no history of claims, nor is it aware of circumstances that would require it to pay under any of these arrangements. The company also believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the company's financial statements. Accordingly, no liability has been recorded as of August 31, 2013 and June 1, 2013. The company has entered into standby letter of credit arrangements for the purpose of protecting various insurance companies against default on the payment of certain premiums and claims. A majority of these arrangements are related to the company's wholly-owned captive insurance company. As of August 31, 2013, the company had a maximum financial exposure from these standby letters of credit totaling approximately $9.7 million. Of this amount, approximately $7.3 million is considered usage against the company's revolving credit facility. The company has no history of claims, nor is it aware of circumstances that would require it to perform under any of these arrangements and believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the company's financial statements. Accordingly, no liability has been recorded as of August 31, 2013 and June 1, 2013. Contingencies The company leases a facility in the U.K. under an agreement that expired in June 2011, and the company is currently leasing the facility on a month to month basis. Under the terms of the lease, the company is required to perform the maintenance and repairs necessary to address the general dilapidation of the facility. The ultimate cost of this provision to the company is dependent on a number of factors including, but not limited to, the future use of the facility by the lessor and whether the company chooses and is permitted to renew the lease term. The company has estimated the cost of these maintenance and repairs to be between $0 million and $3.0 million, depending on the outcome of future plans and negotiations. As a result, an estimated liability of $1.3 million has been recorded under the caption “Other accrued liabilities” in the Condensed Consolidated Balance Sheets as of August 31, 2013, and June 1, 2013, respectively. The company is also involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of such proceedings and litigation currently pending will not materially affect the company's consolidated financial statements. |
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