Gross Margin - Fiscal ~~2017~~2019 Compared to Fiscal ~~2016~~2018

Consolidated gross margin was 36.2% for fiscal ~~2017 was 37.9 percent, a decrease of 70 basis points from the~~2019 as compared to 36.7% for fiscal ~~2016 level.~~2018. The following factors summarize the major drivers of the year-over-year ~~decrease~~change in gross margin percentage:

~~Incremental price discounting, net~~Approximately 60 basis points of ~~price increases, reduced~~ the ~~company's consolidated~~year-over-year decrease in gross margin ~~by approximately 90~~related to the adoption of the new revenue recognition standard (ASC 606) at the beginning of fiscal 2019. This adoption requires recording certain product pricing elements as expenses within cost of goods sold that were previously classified on a net basis ~~points relative to fiscal 2016.~~within sales. This reclassification lowers gross margin percentage but has no impact on gross margin dollars.

Higher commodity costs ~~within~~and the ~~North American operating segment in the current fiscal year~~impact of tariffs on Chinese imports drove an unfavorable ~~year-over-year margin impact of approximately 40 basis points.~~

~~The divestiture of the company's dealerships in Australia and Philadelphia, Pennsylvania in fiscal 2016 and 2017, respectively, resulted in a favorable~~ impact of approximately 30 basis points relative to last fiscal ~~2016.~~year.

A decrease in employee incentive costs increased our consolidated gross margin by 30 basis points relative to fiscal 2016. The decrease reflects lower employee incentive costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.

Improved material cost performance at the company's West Michigan manufacturing facilities driven by process engineering initiatives increased gross margin by approximately 20 basis points as compared to fiscal 2016.

~~Product mix at the company's West Michigan manufacturing facilities~~Higher freight and ~~material usage efficiencies at various international locations had a favorable impact on gross margin.~~

~~Gross Margin - Fiscal 2016 Compared to Fiscal 2015~~

Consolidated gross margin for fiscal 2016 was 38.6 percent, an increase of 170 basis points from the fiscal 2015 level. The following factors summarize the major drivers of the year-over-year improvement in gross margin percentage:

~~Lower commodity~~storage costs within the ~~North American operating~~Retail segment ~~in the current fiscal year drove a favorable year-over-year margin impact of approximately 90 basis points.~~

A decrease in freight expenses, due primarily to lower fuel costs and improved leverage of fixed product distribution costs, drove a favorable impact to gross margin of approximately 40 basis points compared to fiscal 2015.

~~Inventory-related purchase accounting adjustments related to the acquisition of DWR unfavorably impacted gross margin in the prior year by approximately 30 basis points.~~

~~Improved production volume leverage at the company's West Michigan manufacturing facilities increased~~decreased gross margin by approximately 30 basis points as compared to ~~fiscal 2015.~~

~~We estimate that relative changes in foreign currency exchange rates had a negative impact on our consolidated gross margin of approximately 30 basis points relative to~~ last fiscal year.

~~Improved operating efficiencies at certain international~~Lower material costs within the North America segment, due primarily to reduced outsourcing, and ~~domestic subsidiaries also provided a favorable impact~~lower costs within the International segment, due primarily to volume leverage and product mix, increased gross margin by approximately 50 basis points as compared to last fiscal year.

Operating Expenses - Fiscal ~~2017~~2019 Compared to Fiscal ~~2016~~2018

Operating expenses ~~in fiscal 2017 were $673.4~~increased by $32.3 million or ~~29.6 percent of net sales, which compares to $662.7 million, or 29.3 percent of net sales in fiscal 2016.~~4.7% over the prior year. The following factors contributed to the change:

~~Fiscal 2017 results reflected restructuring~~Compensation and ~~impairment~~benefit costs increased by approximately $9 million due mainly to employee headcount and wage increases.

Incremental spend of approximately $5 million related to the marketing, e-commerce and studios associated with the launch of the HAY brand in North America.

Higher information technology related expenses of ~~$12.5~~approximately $4 million.

Restructuring and special charges, primarily related to ~~targeted workforce reductions increased operating expenses by $5.4 million, while the impairment of the Nemschoff trade name increased operating expenses by $7.1 million.~~

~~Marketing~~facilities consolidation and ~~selling expenses increased approximately $10 million relative to last fiscal year.~~

~~The impact of~~costs associated with an ~~extra week in fiscal 2017~~early retirement program increased operating expenses by approximately $9$4 million.

Sales volume based costs, such as sales commissions and royalties, drove an increase in operating expenses of approximately $4 million.

Marketing expenses increased by roughly $3 million due primarily to the sales initiatives within the North America and Retail segments.

Incremental costs related to the continued growth and expansion of DWR retail studios ~~of approximately $8 million for the twelve month comparative period.~~

~~Increased costs within the company's DWR subsidiary of approximately $5 million as a result of~~ increased ~~investment in information technology, infrastructure to support the contract channel and other business support functions.~~

~~Lower employee incentive costs decreased~~ operating expenses by ~~$8.8~~approximately $2 million.

Depreciation expense increased by approximately $2 million ~~compared to prior fiscal year. The decrease reflects lower incentive compensation costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.~~

~~The divestiture of the company's dealerships in Australia~~ and ~~Philadelphia in fiscal 2016 and 2017, respectively, resulted in a decrease in operating expenses of $14.2 million for the twelve month comparative period.~~

~~The remainder of the change~~ was driven ~~mainly~~primarily by ~~company-wide cost savings initiatives, decreases~~investment in ~~stock-based compensation, research~~facilities and ~~development expenses and changes in foreign currency exchange rates.~~

~~Operating Expenses - Fiscal 2016 Compared to Fiscal 2015~~

Operating expenses in fiscal 2016 were $662.7 million, or 29.3 percent of net sales, which compares to $628.0 million, or 29.3 percent of net sales in fiscal 2015. The following factors contributed to the change:

~~Employee incentive costs increased by $14.7 million relative to fiscal 2015. The increase reflects higher incentive compensation costs that are tied to increased earnings for the comparative periods.~~

Marketing and selling expenses increased $14.5 million relative to fiscal 2015. The increase resulted from new marketing initiatives, particularly within the Consumer segment, as well as increases in selling capacity and sales growth during fiscal 2016.

Fiscal 2016 included a full 52 weeks of DWR results whereas fiscal 2015 included only 44 weeks. This difference accounts for approximately $13.7 million of the year-over-year increase in consolidated operating expenses.

~~Design and research expenses increased $5.7 million in fiscal 2016 as compared to the prior year.~~

~~Year-over-year changes in currency exchange rates decreased operating expenses by an estimated $10 million.~~

~~Fiscal 2015 results reflected restructuring and impairment expenses of $12.7 million.~~

~~The remaining change relates to various contributing factors, including but not limited to higher costs for~~ information technology ~~initiatives, wage and benefit inflation, and general variability with higher net sales.~~systems.

Operating Earnings

InOperating earnings in fiscal ~~2017, the company generated~~2019 were $203.5 million, or 7.9% of sales, an increase of $24.6 million compared to fiscal 2018 operating earnings of ~~$190.8~~$178.9 million, ~~a decrease~~or 7.5% of $20.7 million from fiscal 2016 operating earnings of $211.5 million. Operating earnings of $211.5 million in fiscal 2016 represented a $48.1 million increase from fiscal 2015 operating earnings of $163.4 million.sales.

Other Expenses and Income

Net other expenses for fiscal ~~2017~~2019 were ~~$13.2~~$8.4 million, a decrease of ~~$1.7~~$2.4 million compared to net other expenses in fiscal ~~2016~~2018 of ~~$14.9~~$10.8 million. The decrease in net other expenses in fiscal ~~2017~~2019 was primarily the result of a gain related to ~~higher~~an investment ~~income associated with the company's deferred compensation plan.~~fair value adjustment.

~~Net other expenses~~Equity Earnings from Nonconsolidated Affiliates

Equity earnings from nonconsolidated affiliates for fiscal ~~2016~~2019 were ~~$14.9~~$5.0 million, ~~a decrease~~an increase of ~~$3.3~~$2.0 million compared to ~~net other expenses~~Equity earnings from nonconsolidated affiliates of $3.0 million in fiscal ~~2015 of $18.2 million. The decrease in net other expenses in fiscal 2016 as compared to fiscal 2015~~2018. This increase was ~~primarily related to a reduction in interest expense related to a decrease in long term debt. The reduction in long term debt resulted~~driven by incremental earnings from the ~~repayment of borrowings on the revolving line of credit.~~Company's investment in Naughtone and HAY.

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law in the United States. The ~~company's~~effects of the Act included the reduction of the federal corporate income tax rate from 35 percent to 21 percent and a new participation exemption system of taxation on foreign earnings, among other provisions.

Securities and Exchange Commission Staff Accounting Bulletin No. 118 allowed the use of provisional amounts if accounting for certain income tax effects of the Act had not been completed by the time the company’s financial statements are issued. A measurement period was provided beginning December 22, 2017 and was not to last longer than one year. During the year ended June 1, 2019, the Company completed its accounting for all the effects of the Act and recorded adjustments to the provisional amounts primarily for the one-time U.S. tax liability on certain undistributed foreign earnings and also an adjustment related to foreign tax credits to increase the income tax benefit from the Act by $1.0 million.

The Company's effective tax rate was ~~31.1~~20.3 percent in fiscal ~~2017, 30.3~~2019, and 25.2 percent in fiscal ~~2016 and 32.6 percent in fiscal 2015.~~2018. The effective tax rate in fiscal ~~2017~~2019 was below the United States statutory rate of 3521 percent, primarily due to an increase in the mix of earnings in tax jurisdictions that have rates lower than the United States statutory rate and the research and development tax credit under the Protecting Americans from Tax Hikes ("PATH") Act of 2015.

The effective tax rate in fiscal 2018 was below the statutory rate of 29.1 percent, primarily due to an increase in the mix of earnings in tax jurisdictions that have rates lower than the United States statutory rate, the manufacturing deduction under the American Jobs Creation Act of 2004 (“AJCA”) and the research and development tax credit under the ~~Protecting Americans from Tax Hikes ("PATH") Act of 2015.~~

The effective tax rate in fiscal 2016 was below the statutory rate of 35 percent, primarily due to the domestic U.S. manufacturing deduction under the AJCA as well as a significant amount of foreign earnings subject to tax at foreign rates below 35 percent.

The effective tax rate in fiscal 2015 was below the statutory rate of 35 percent, primarily due to the domestic U.S. manufacturing deduction under the AJCA and a $3.9 million tax benefit related to a foreign entity reorganization.

PATH.

For further information regarding income taxes, refer to Note 1011 of the Consolidated Financial Statements.

Net Earnings; Earnings per Share

In fiscal ~~2017, fiscal 2016,~~2019 and fiscal ~~2015,~~2018, the ~~company~~Company generated net earnings attributable to Herman Miller, Inc. of ~~$123.9~~$160.5 million ~~$136.7 million~~ and ~~$97.5~~$128.1 million, respectively. Diluted earnings per share were ~~$2.05, $2.26~~$2.70 and ~~$1.62~~$2.12 for fiscal ~~2017, fiscal 2016~~2019 and fiscal ~~2015,~~2018, respectively.

Reportable Operating Segments Results

The business is comprised of various operating segments as defined by generally accepted accounting principles in the United States. These operating segments are determined on the basis of how the ~~company~~Company internally reports and evaluates financial information used to make operating decisions.

Prior to the fourth quarter of fiscal 2019, the Company's reportable segments consisted of North American Furniture Solutions, ELA ("EMEA, Latin America, and Asia Pacific") Furniture Solutions, Specialty and Consumer. Effective in the fourth quarter of fiscal 2019, the Company has revised its reportable segments to combine the Specialty reportable segment with the North American Furniture Solutions reportable segment. The ~~company~~newly combined segment is called "North America Contract". There were no changes to the Company's ELA Furniture Solutions ("ELA") and Consumer segments, but each has ~~identified~~been renamed. Effective in the ~~following~~fourth quarter of fiscal 2019, ELA is now named "International Contract" and Consumer is named "Retail". The Specialty segment (Maharam, Geiger, Nemschoff and the Herman Miller Collection) has been combined with the North America Contract segment under a common segment manager as of the fourth quarter fiscal 2019. The change in operating segments reflect the basis of how the Company internally reports and evaluates financial information used to make operating decisions. Prior year results disclosed in the table below have been revised to reflect these changes. Accordingly, fiscal 2018 net sales and operating earnings for the Specialty segment of $305.4 million and $8.9 million, respectively, have been included within the results of the North America Contract reportable ~~segments:~~segment.


◦	~~North American Furniture Solutions~~ — Includes the operations associated with the design, manufacture and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States and Canada.


◦	~~ELA Furniture Solutions~~ ~~— Includes EMEA, Latin America, and Asia-Pacific operations associated with the design, manufacture and sale of furniture products, primarily for work-related settings.~~


◦	~~Specialty~~ — Includes operations associated with the design, manufacture, and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles and Herman Miller Collection products.


◦	~~Consumer~~ — Includes operations associated with the sale of modern design furnishings and accessories to third party retail distributors, as well as direct to consumer sales through e-commerce, direct mailing catalogs and DWR retail studios.

The ~~company~~Company's operating segments can be further described as follows:

North America Contract — Includes the operations associated with the design, manufacture, and sale of furniture and textile products for work-related settings, including office, education and healthcare environments, throughout the United States and Canada. The business associated with the Company's owned contract furniture dealers is also ~~reports a corporate category consisting~~included in the North America Contract segment. In addition to the Herman Miller brand, this segment includes the operations associated with the design, manufacture and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles, Nemschoff and Herman Miller Collection products.

International Contract — Includes the operations associated with the design, manufacture and sale of furniture products, primarily for work-related settings, in the Europe, Middle East and Africa (EMEA), Latin America and Asia-Pacific geographic regions.

Retail — Includes the operations associated with the sale of modern design furnishings and accessories to third party retail distributors, as well as direct to consumer sales through e-commerce, direct mailing catalogs and DWR and HAY studios.

Corporate — Consists primarily of ~~as applicable,~~ unallocated expenses related to general corporate ~~expenses~~functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related ~~costs and other unallocated corporate~~ costs.

The charts below present the relative mix of ~~net~~Net sales and Operating earnings across each of the ~~company's~~Company's reportable segments. This is followed by a discussion of the ~~company's~~Company's results, by ~~segment, for each~~ reportable segment.

North ~~American Furniture Solutions~~America Contract ("North America")

~~Fiscal 2017 Compared to Fiscal 2016~~

Net sales in the North American segment were $1,342.2 million in fiscal 2017, an increase of 0.8 percent from fiscal 2016 net sales of $1,331.8 million. Orders for fiscal 2017 totaled $1,347.6 million, an increase of 0.9 percent from the prior year. Operating earnings for North America in fiscal 2017 were $137.7 million or 10.3 percent of sales as compared to $152.0 million or 11.4 percent of sales in the prior year.



	Fiscal 2019			Fiscal 2018			Change
Net sales	$	1,686.5		$	1,589.8		$	96.7
Gross margin	592.3			565.5			26.8
Gross margin %	35.1		%	35.6		%	(0.5		)%
Operating earnings	189.7			175.2			14.5
Operating earnings %	11.2		%	11.0		%	0.2		%

~~The impact of the extra week~~Net sales increased ~~net sales by~~6.1%, or 4.8%^(*) on an ~~estimated $23 million and increased orders by $21 million for fiscal 2017 as compared to~~organic basis, over the prior ~~year.~~year due to:

~~Incremental price discounting, net of price increases, in fiscal 2017 decreased net~~

Increased sales ~~by approximately $26 million compared to the prior year.~~

~~Sales~~ volumes within the North ~~American~~America segment ~~increased by~~of approximately ~~$23~~$74 million ~~resulting primarily from~~due to increased demand within the ~~company's Healthcare business unit, along with growth late in the year in the North America office~~Company's core contract furniture ~~business.~~

business; and

The ~~impact~~adoption of ASC 606 - Revenue from Contracts with Customers at the ~~divestiture~~beginning of fiscal 2019 which led to the ~~company's dealership in Philadelphia, Pennsylvania in fiscal 2017 had the effect~~reclassification of ~~reducing~~$27.0 million of certain pricing elements from net sales ~~by approximately $9 million as compared~~ to ~~fiscal 2016.~~

~~Commodity price increases and incremental discounting drove a decrease in gross margins and operating earnings.~~

~~Decreased employee incentive costs recorded in operating expenses and~~ cost of ~~goods sold increased operating earnings~~sales; partially offset by $14.1 million compared to prior fiscal year. The decrease reflects lower incentive compensation costs that are variable based on the achievement of earnings levels for the fiscal year relative to plan.

Restructuring charges related to targeted workforce reductions increased operating expenses by $5.4 million, while the impairment of the Nemschoff trade name increased operating expenses by $7.1 million as compared to the prior year.

~~Operating expenses within the North American segment were higher than the prior year due to the extra week of operations.~~

~~Company-wide cost savings initiatives resulted in a decrease in operating expenses relative to the prior year period.~~

~~Fiscal 2016 Compared to Fiscal 2015~~

Net sales in the North American segment increased to $1,331.8 million in fiscal 2016, an increase of $89.9 million from fiscal 2015 net sales of $1,241.9 million. Orders for fiscal 2016 totaled $1,336.1 million, an increase of $100.3 million from fiscal 2015. Operating earnings for North America in fiscal 2016 were $152.0 million, an increase of $26.8 million from fiscal 2015.

Sales volumes within the North American segment increased by approximately $108 million. This was driven by a combination of general market growth and company-specific actions taken to improve selling capacity, launch innovative products and refresh showrooms.

The impact of foreign currency translation, which decreased ~~net sales and operating earnings by approximately $13 million and $7 million, respectively.~~

~~Changes in pricing, net of incremental discounting, decreased fiscal 2016 net~~ sales by ~~approximately $6 million compared to the prior year.~~

Operating earnings increased mainly due to improvements in gross margin that were driven by increased sales volumes, improved production volume leverage, a decrease in commodity costs and improved operational efficiency.

~~Higher incentive compensation expenses had an unfavorable impact on operating earnings of $18.6~~roughly $4 million.

~~ELA Furniture Solutions (EMEA, Latin America, and Asia Pacific)~~

~~Fiscal 2017 Compared to Fiscal 2016~~

Net sales in the ELA segment were $385.5 million in fiscal 2017, a decrease of $27.1 million from fiscal 2016 net sales of $412.6 million. Orders for fiscal 2017 totaled $384.9 million, a decrease of $32.2 million from fiscal 2016. Operating earnings ~~within ELA for fiscal 2017 were $30.8~~increased $14.5 million ~~a $4.5 million decrease from fiscal 2016.~~, or 8.3%, over the prior year due to:

~~Fiscal 2016 included the results~~Increased gross margin of ~~the company’s dealership in Australia that was divested at the end of the fourth quarter of fiscal 2016. Accordingly, net sales for the ELA segment decreased by $30.8~~$26.8 million due to increased sales volumes and decreased gross margin percentage of 50 basis points due mainly to the ~~divestiture. The divestiture~~adoption of ASC 606 and higher commodity and tariff costs, partially offset by profit optimization initiatives and improved material performance; partially offset by

Increased operating expenses of $12.3 million driven primarily by greater restructuring expenses in the current year related to facilities consolidation and costs associated with an early retirement program. Increases in compensation and benefit costs also ~~decreased orders by $32.8 million year-over-year.~~contributed to the increase in operating expenses from the comparative period.

(*) Non-GAAP measurements; see accompanying reconciliations and explanations.

International Contract ("International")



	Fiscal 2019			Fiscal 2018			Change
Net sales	$	492.2		$	434.5		$	57.7
Gross margin	166.9			144.2			22.7
Gross margin %	33.9		%	33.2		%	0.7		%
Operating earnings	57.8			36.9			20.9
Operating earnings %	11.7		%	8.5		%	3.2		%

Net sales increased 13.3%, or 12.9%^(*) on an organic basis, over the prior year due to:

Increased sales volumes within the ~~ELA~~International segment of approximately ~~$17~~$57 million which were driven by ~~increases within~~broad-based growth across the ~~Europe,~~Asia Pacific and Latin America regions; and ~~Asia regions.~~

The ~~largest increases were due~~adoption of ASC 606 - Revenue from Contracts with Customers at the beginning of fiscal 2019 which led to ~~larger project activity in mainland Europe, Mexico, Brazil, Japan and China.~~

~~Deeper discounting, net~~the reclassification of ~~incremental price increases, decreased fiscal 2017~~$13.5 million of certain pricing elements from net sales ~~by an estimated $6 million.~~

~~Foreign currency translation decreased net sales by approximately $13.9 million.~~

~~The impact~~to cost of ~~the extra week increased net sales~~sales; partially offset by ~~$6.3 million in fiscal 2017.~~

~~The divestiture of the company’s dealership in Australia decreased operating earnings by $1.6 million.~~

~~Operating earnings were also reduced in fiscal 2017 by $1.0 million due to restructuring expenses, related primarily to severance costs.~~

Fiscal 2016 included nonrecurring gains related to the sale of a former manufacturing facility in the United Kingdom and the divestiture of the company’s dealership in Australia. Accordingly, the operating earnings for the ELA segment decreased by $6.1 million due to the nonrecurring gains recorded in fiscal 2016.

~~Fiscal 2016 Compared to Fiscal 2015~~

Net sales increased to $412.6 million in fiscal 2016, and increase of $2.7 million as compared to fiscal 2015 of $409.9 million. Orders for fiscal 2016 totaled $417.0 million, a decrease of $0.6 million from fiscal 2015. Operating earnings within ELA for fiscal 2016 were $35.3 million, a $9.4 million increase from fiscal 2015.

~~Improved sales volumes within Australia, Mexico and China increased in net sales by approximately $31 million.~~

~~Changes in pricing, net of incremental discounting, decreased fiscal 2016 net sales by about $2 million compared to the prior year.~~

The impact of foreign currency translation which decreased ~~net~~ sales by ~~approximately $26.1~~roughly $12 million.

Operating earnings increased $20.9 million, or 56.6%, over the prior year due to:

~~Gross~~Increased gross margin ~~improvements driven by~~of $22.7 million due mainly to increased sales ~~volumes, manufacturing efficiency as well as decreased~~volumes; and

Increased gross margin of 70 basis points due mainly to lower overhead costs associated with the benefit from recent restructuring activities in China and lower material costs, driven primarily by volume leverage and ~~freight costs provided a favorable impact on operating earnings.~~product mix; partially offset by

~~Nonrecurring gains related~~Decreases to ~~the sale of a former manufacturing facility in the United Kingdom~~gross margin due to deeper discounting and the ~~divestiture~~adoption of ~~the company’s dealership in Australia increased operating earnings by $6.1 million.~~

~~The impact of foreign currency changes decreased fiscal 2015 operating earnings for ELA by approximately $7 million.~~ASC 606.

~~Specialty~~Retail

~~Fiscal 2017 Compared to Fiscal 2016~~

Net sales within the Specialty reportable segment were $232.4 million in fiscal 2017, an improvement of $0.6 million as compared to $231.8 million in fiscal 2016. Orders for fiscal 2017 totaled $232.0 million, a decrease of $2.8 million from $234.8 million in fiscal 2016. Operating earnings within the Specialty reportable segment totaled $17.7 million for the year, an increase of $1.3 million from $16.4 million in fiscal 2016.



	Fiscal 2019			Fiscal 2018			Change
Net sales	$	388.5		$	356.9		$	31.6
Gross margin	170.7			163.3			7.4
Gross margin %	43.9		%	45.8		%	(1.9		)%
Operating earnings	5.3			13.9			(8.6		)
Operating earnings %	1.4		%	3.9		%	(2.5		)%

~~The impact~~Net sales increased 8.9%, or 10.5%^(*) on an organic basis, over the prior year due to:

Increased sales volumes within the Retail segment of ~~an extra week in fiscal 2017~~approximately $29 million which were driven primarily by the introduction of HAY products and growth across the Company's DWR studio, e-commerce, and contract channels; and

Incremental list price increases, net of deeper discounting, which increased net sales by approximately ~~$3.0~~$4 million.

Operating earnings decreased $8.6 million, ~~as compared to~~or 61.9%, over the prior ~~year.~~ year due to:

~~Sales volumes within~~

Increased operating expenses of $16.0 million due to incremental marketing, compensation and depreciation expenses that were driven mainly by growth in the ~~Specialty~~ segment, ~~decreased~~new studios and the launch of the HAY brand in North America; offset by ~~approximately $2.0 million. This decrease was driven by lower~~

Increased gross margin of $7.4 million on higher sales volumes ~~within the Geiger~~but decreased gross margin percentage of 190 basis points due mainly to lower shipping revenue, higher freight and ~~Maharam subsidiaries, offset by an increase~~storage costs and a shift in ~~sales within the Herman Miller Collection business.~~

~~Improved operational efficiencies and lower benefit costs had a favorable impact on operating earnings, which was~~product mix, partially offset by ~~increased marketing and selling costs.~~ profit optimization initiatives.

Corporate

~~Fiscal 2016 Compared to Fiscal 2015~~

~~Net sales within the Specialty reportable segment were $231.8~~Corporate unallocated expenses totaled $49.3 million ~~during fiscal 2016, an improvement of $11.9 million as compared to fiscal 2015. Orders~~ for fiscal ~~2016 totaled $234.8 million,~~2019, an increase of ~~$13.4~~$2.2 million from fiscal ~~2015. Operating earnings within the Specialty reportable segment totaled $16.4 million for the year, an~~2018. The increase ~~of $2.9 million from fiscal 2015.~~was driven mainly by increased legal and information technology expenses.

~~Improved sales volumes increased net sales by $10.9 million, which was driven by increases within the Herman Miller Collection~~(*) Non-GAAP measurements; see accompanying reconciliations and ~~Geiger subsidiary.~~

~~Changes in pricing, net of incremental discounting, increased fiscal 2016 net sales by an estimated $2 million compared to the prior year.~~

~~Increased sales volumes and improved operational efficiencies had a favorable impact on operating earnings.~~

~~Higher incentive compensation expenses and increased marketing and selling costs had an unfavorable impact on operating earnings of $2.3 million and $1.9 million, respectively.~~explanations.

~~Consumer~~

~~Fiscal 2017 Compared to Fiscal 2016~~

Net sales totaled $318.1 million for the year, an increase of 10.2 percent over the fiscal 2016 amount of $288.7 million. Orders of $318.4 million increased 9.1 percent over fiscal 2016. Operating earnings for the year were $5.3 million or 1.7 percent of sales as compared to operating earnings of $8.1 million or 2.8 percent of sales for fiscal 2016.

~~Increased sales volumes of approximately $29.4 million were due to improvements across several Consumer sales channels, including studios, e-commerce, contract and direct-mail catalogs.~~

~~The impact of the extra week increased net sales by $4.7 million in fiscal 2017 as compared to prior year.~~

Operating expenses within the Consumer segment were higher than the prior year primarily as a result of increased investments in information technology, marketing and investments in personnel supporting the contract and e-commerce channels.

Incremental pre-opening costs related to non-comparable studios increased operating expenses relative to the prior year and had a negative impact on operating earnings of approximately $8 million compared to fiscal 2016.

~~Fiscal 2016 Compared to Fiscal 2015~~

Net sales for the Consumer reportable segment increased to $288.7 million in fiscal 2016, an increase of $18.2 million from fiscal 2015 net sales of $270.5 million. Orders for fiscal 2016 totaled $291.7 million, an increase of $20.0 million from fiscal 2015. Operating earnings within the Consumer segment were $8.1 million during fiscal 2016 as compared to operating earnings of $14.7 million in fiscal 2015.

The fiscal year ended May 30, 2015 included 44 weeks of DWR operations (as the acquisition of DWR was completed on July 28, 2014). Accordingly, approximately $30.2 million of the year-over-year net sales increase for this segment is due to the inclusion of DWR operations for the full twelve months of fiscal year 2016.

Adjusted for the impact of this partial period consolidation during fiscal 2015 and the impact of foreign currency translation, which increased net sales by $0.8 million, net sales for the Consumer segment decreased $11.2 million as compared to fiscal 2015. This

~~was driven by the closing of legacy DWR studios, selling activity interruptions from the implementation of a new ERP system at DWR and the rationalization of independent retail distributors.~~

The decrease in operating earnings was driven by a reduction in the gross margin percentage at DWR due to a shift in mix to lower margin channels, the impact of promotional activity related to shipping and certain period costs associated with an ERP implementation.

An increase in DWR operating expenses of $8.2 million decreased operating earnings. The increase in operating expenses was due to increased marketing investment, higher staffing levels and incremental occupancy costs that were driven by studio opening costs and double rent associated with new studio openings. These factors were partially offset by inventory-related purchase accounting adjustments that reduced prior year operating earnings by approximately $7.8 million.

Liquidity and Capital Resources

The table below presents certain key cash flow and capital highlights for the fiscal years indicated.


	Fiscal Year Ended									Fiscal Year Ended
(In millions)	2017			2016			2015			2019			2018
Cash and cash equivalents, end of period	$	96.2		$	84.9		$	63.7		$	159.2		$	203.9
Marketable securities, end of period	$	8.6		$	7.5		$	5.7		$	8.8		$	8.6
Cash provided by operating activities	$	202.1		$	210.4		$	167.7		$	216.4		$	166.5
Cash used for investing activities	$	(116.3	)	$	(80.8	)	$	(213.6	)
Cash provided by (used for) financing activities	$	(74.6	)	$	(106.5	)	$	6.8
Pension and post-retirement benefit plan contributions	$	(1.1	)	$	(1.2	)	$	1.4
Cash used in investing activities										$	(165.0	)	$	(62.7	)
Cash (used in) provided by financing Activities										$	(91.9	)	$	2.5
Pension contributions										$	(0.9	)	$	(13.4	)
Capital expenditures	$	(87.3	)	$	(85.1	)	$	(63.6	)	$	(85.8	)	$	(70.6	)
Stock repurchased	$	(23.7	)	$	(14.1	)	$	(3.7	)
Interest-bearing debt, end of period	$	199.9		$	221.9		$	289.8
Common stock repurchased										$	(47.9	)	$	(46.5	)
Long-term debt, end of period										$	281.9		$	275.0
Available unsecured credit facilities, end of period ⁽¹⁾	$	391.7		$	232.1		$	164.5		$	165.0		$	166.8

(1) Amounts shown are net of outstanding letters of credit, which are applied against the ~~company's~~Company's unsecured credit facility. ~~During fiscal 2015, the company renegotiated the unsecured revolving credit facility. Refer to Note 5 of the Consolidated Financial Statements for additional information.~~

Cash Flow — Operating Activities

Cash generated from operating activities in fiscal ~~2017~~2019 totaled $~~202.1~~216.4 million compared to $~~210.4~~166.5 million generated in the prior year.

Changes in working capital balances in fiscal 2019resulted in a ~~$23.5~~$34.1 million use of cash compared to a ~~$6.0~~$32.8 million use of cash in the prior fiscal year. The cash outflow related to changes in working capital balances was driven primarily by an increase in inventory of ~~$29.9~~$31.9 million and ~~a decrease~~an increase in accounts ~~payable~~receivable of ~~$11.2~~$24.8 million. The increase in inventory as of the end of fiscal ~~2017~~2019 as compared to fiscal ~~2016~~2018 was due mainly to growth in demand at DWR, the build out of inventory in the International segment to fulfill demand, and the launch of the HAY brand in North America. The increase in accounts receivable was driven ~~mainly~~ by ~~an increase at~~ the ~~company's DWR subsidiary, due to studio openings~~timing of customer payments and ~~year-end inventory stocking for upcoming promotional events and new product launches. This was partially offset by a decrease in trade receivables of $17.3 million.~~

~~During fiscal 2016, changes in working capital balances resulted in a $6.0 million use of cash compared to a $3.5 million source of cash~~shipments in the ~~prior~~fourth quarter of the fiscal year. ~~The use of~~These cash related to changes in working capital balances in fiscal 2016 consisted primarily of an increase in trade receivables of $30.5 million, an increase in inventory of $6.0 million and an increase in prepaid expenses of $11.7 million. This wasoutflows were partially offset by an increase in ~~accrued compensation and benefits of $19.4 million, an increase in~~ accounts payable of ~~$8.7~~$0.5 million and an increase in ~~other~~ accrued liabilities of ~~$14.1~~$22.7 million. This increase in accrued liabilities is primarily related to an increase in accrued compensation related to the early retirement program instituted in fiscal 2019 and an increase in other accruals.

~~Collections of accounts receivable remained strong throughout~~In addition to changes in working capital, changes in pension contributions also impacted cash generated from operating activities. The Company decreased pension contributions by $12.5 million in fiscal ~~2017, and the company's~~2019 as compared to fiscal 2018.

The Company believes its recorded accounts receivable allowances at the end of the year are ~~believed to be~~ adequate to cover the risk of potential bad debts. Allowances for non-collectible accounts receivable, as a percent of gross accounts receivable, totaled ~~1.7 percent, 2.0~~1.4 percent and ~~1.7~~1.3 percent, at the end of fiscal years ~~2017, 2016~~2019 and ~~2015,~~2018 respectively.

Cash Flow — Investing Activities

Capital expenditures totaled ~~$87.3~~$85.8 million ~~$85.1 million~~ and ~~$63.6~~$70.6 million in fiscal ~~2017, 2016,~~2019 and ~~2015,~~2018 respectively. The increase in capital expenditures of ~~$2.2~~$15.2 million from fiscal ~~2017~~2018 to fiscal ~~2016~~2019 was driven primarily by ~~capital~~an increase in expenditures ~~associated with the opening of new DWR retail~~related to manufacturing assets in West Michigan and Design Within Reach studio ~~locations.~~build outs.

The increase in capital expenditures of $21.5 million from fiscal 2015 to fiscal 2016 was driven primarily by payments related to the construction of a new facility in the United Kingdom for the purpose of consolidating manufacturing and distribution activities, as well as capital expenditures associated with product development and the opening of new DWR retail studio locations.

In fiscal 2017, the company repaid loans against the cash surrender value of life insurance policies in the amount of $15.3 million, which has been recorded within investing activities. The cash surrender value of the company-owned life insurance policies and the loans were previously recorded net within "Other noncurrent assets" within the Condensed Consolidated Balance Sheets.

Cash proceeds from ~~sale~~sales of dealers and properties were ~~zero~~, ~~$10.7~~$0.5 million and ~~$0.6~~$2.1 million in fiscal ~~2017, 2016,~~2019 and ~~2015 ,~~2018 respectively. ~~During~~Cash proceeds received in fiscal ~~2017,~~2019 were primarily due to the ~~company sold its~~disposal of property plant and equipment in the International Contract segment. Cash proceeds received in fiscal 2018 was primarily attributable to the sale of a wholly-owned contract furniture dealership in ~~Pennsylvania in exchange~~Vancouver, Canada for ~~a $3.0 million note receivable. Cash proceeds received~~initial cash consideration of $2.0 million.

Included in the ~~prior year was driven mainly by~~fiscal 2019 and 2018 investing activities are net cash outflows related to equity investments in non-consolidated entities. The following amounts represent the ~~sale of a former manufacturing facility in~~primary investments that drove the cash outflows:



(In millions)	2019		2018
Maars Holding, B.V	$	6.1	$	—
HAY A/S*	$	65.5	$	—
Naughtone Holdings Limited	$	2.0	$	—
Total Cash Outflow	$	73.6	$	—

* Formerly known as Nine United ~~Kingdom for $4.8 million and the divestiture of the company’s remaining 75 percent equity stake in its dealership in Australia for $2.7 million.~~Denmark A/S

Outstanding commitments for future capital purchases at the end of fiscal ~~2017~~2019 were approximately ~~$16.3~~$34.7 million. The ~~company~~Company expects capital spending in fiscal ~~2018~~2020 to be between ~~$90~~$105 million and ~~$100~~$115 million. The capital spending will be allocated primarily to planned investments in ~~product development~~manufacturing assets and retail studio openings.

~~Included in the fiscal 2017, 2016 and 2015 investing activities are net cash outflows related to the acquisition of consolidated and non-consolidated entities.~~ The ~~followings amounts represent the primary investments that drove the cash outflows:~~

(In millions) 2017 2016 2015
Naughtone Holdings Limited $ 11.6

George Nelson Bubble Lamp Product Line $ 3.6

Design Within Reach (DWR) $ 154.0

~~Our~~Company's net marketable securities transactions for fiscal ~~2017~~2019 yielded a ~~$1.1~~$0.2 million ~~use of cash.~~cash outflow. This compares to a ~~$1.7 million~~zero use ~~of cash and $5.3 million source~~ of cash in fiscal ~~2016 and fiscal 2015, respectively.~~2018.

Cash Flow — Financing Activities

~~In fiscal 2017, cash~~Cash used for financing activities was ~~$74.6~~$91.9 million in fiscal 2019 as compared to cash ~~used for~~provided by financing activities of ~~$106.5~~$2.5 million in fiscal ~~2016. Cash outflows from net payments~~2018. During fiscal 2018, the Company borrowed $225.0 million on ~~the~~its revolving line of credit ~~facility~~and of these proceeds, $150.0 million was used to repay its Series B Notes. There were ~~$22 million during~~no such borrowings in fiscal ~~2017. By comparison, cash outflows from net payments on the revolving credit facility were $68.0 million during fiscal 2016.~~2019.

Cash paid for repurchases of common stock was ~~$23.7~~$47.9 million in the current year as compared to ~~$14.1~~$46.5 million in the prior year. Additionally, in fiscal ~~2017~~2019 there was ~~an increase~~a decrease in cash inflows from the issuance of shares related to stock-based compensation plans. The ~~company~~Company received ~~$11.7~~$12.3 million related to stock-based compensation plans in fiscal ~~2017~~2019 compared to ~~$9.2~~$17.0 million in fiscal ~~2016.~~

In fiscal 2016, cash used for financing activities was $106.5 million, as compared to cash provided by financing activities of $6.8 million in fiscal 2015. Cash outflows from net payments on the revolving credit facility were $68.0 million during fiscal 2016. By comparison, cash inflows from net borrowings were $40.0 million during fiscal 2015.2018.

Cash outflows for dividend payments were ~~$39.4 million, $34.9~~$45.6 million and ~~$33.3~~$42.4 million in fiscal ~~2017, 2016~~2019 and ~~2015,~~2018 respectively.

~~Cash paid for repurchases~~The Company is the controlling owner of ~~common stock was $14.1 million~~a subsidiary in ~~fiscal 2016 as compared to $3.7 million in fiscal 2015. Additionally, in fiscal 2016~~which there was an increase in cash inflows from the issuance of shares related to stock-based compensation plans. The company received $9.2 million related to stock-based compensation plans in fiscal 2016 compared to $7.8 million in fiscal 2015.

are redeemable noncontrolling equity interests outstanding. Certain minority shareholders in athis subsidiary have the right, at certain times, to require the ~~company~~subsidiary to acquire a portion of their ownership interest in those entities at fair value. ~~It is possible that within~~During fiscal 2019, these minority shareholders exercised certain of these options to require the ~~next three~~Company's subsidiary to purchase $10.1 million of the outstanding redeemable noncontrolling interests. By comparison, options exercised by the minority shareholders in fiscal ~~years years the company could be required~~2018 resulted in purchases totaling $1.0 million. The subsidiary also has an option to acquire ~~this ownership interest. The fair value~~a portion of ~~this~~the redeemable noncontrolling ~~interest as~~interests at fair market value. On July 23, 2019, the subsidiary exercised an option that allowed it to acquire approximately $12.6 million of ~~June 3, 2017 was $24.6~~the remaining $20.6 million of the redeemable noncontrolling equity interests.

The Company is a party to options, that if exercised, would require the Company to purchase an additional 33% of the equity in HAY at fair market value. These options may be exercised during a period commencing from the third quarter of fiscal 2020 and ~~is included within "Redeemable noncontrolling interests" on the Consolidated Balance Sheets.~~annually thereafter.

Sources of Liquidity

In addition to cash flows from operating activities, the ~~company~~Company has access to liquidity through credit facilities, cash and cash equivalents and short-term investments. These sources have been summarized below. For additional information, see Note 56 to the consolidated financial statements.


(In millions, )	June 3, 2017		May 28, 2016
(In millions)					June 1, 2019		June 2, 2018
Cash and cash equivalents	$	96.2	$	84.9	$	159.2	$	203.9
Marketable securities	$	8.6	$	7.5	$	8.8	$	8.6
Availability under revolving lines of credit	$	391.7	$	232.1	$	165.0	$	166.8

At the end of fiscal ~~2017,~~2019, the ~~company~~Company had cash and cash equivalents of ~~$96.2~~$159.2 million, including foreign cash and cash equivalents of ~~$78.5~~$87.9 million. In addition, the ~~company~~Company had foreign marketable securities of ~~$8.6~~$8.8 million. The foreign subsidiary holding the ~~company's~~Company's marketable securities is taxed as a U.S. taxpayer at the ~~company's~~Company's election. Consequently, for tax purposes, all U.S. tax impacts for this subsidiary have been recorded. ~~The company's~~Historically, the Company’s intent iswas to permanently reinvest the ~~foreign~~remainder of the cash ~~amounts~~ outside the ~~U.S.~~United States. However, the Tax Cuts and Jobs Act (the “Act”), enacted on December 22, 2017, assesses a one-time tax on deferred foreign income upon transition to a participation exemption system of taxation. The ~~company's plans do not demonstrate a need to repatriate these balances to fund U.S. operations. The company repatriated zero, $0.7 million~~Company is considering the impact of the Act and ~~zero of~~the one-time transition tax on its foreign earnings ~~during fiscal years 2017, 2016~~which are invested in liquidable assets. As a result, the Company may repatriate certain amounts in the future and ~~2015, respectively.~~is assessing the amount of cash that will remain permanently reinvested.

~~We believe~~The Company believes cash on hand, cash generated from operations, and ~~our~~ borrowing capacity will provide adequate liquidity to fund near term and foreseeable future business operations, capital needs, future dividends and share repurchases, subject to financing availability in the marketplace.

Contingencies

The ~~company~~Company is 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~~Company's Consolidated Financial Statements.

Basis of Presentation

The ~~company's~~Company's fiscal year ends on the Saturday closest to May 31. The fiscal ~~year ended~~ ~~June 3, 2017~~ ~~had 53 weeks of operations while fiscal~~ years ended ~~May 28, 2016~~June 1, 2019 and ~~May 30, 2015~~ ~~each~~June 2, 2018 contained 52 weeks, ~~of operations.~~while the fiscal year ended June 3, 2017 contained 53 weeks.

Contractual Obligations

Contractual obligations associated with our ongoing business and financing activities will result in cash payments in future periods. The following table summarizes the amounts and estimated timing of these future cash payments. Further information regarding debt obligations can be found in Note 56 of the Consolidated Financial Statements. Additional information related to operating leases can be found in Note 67 of the Consolidated Financial Statements.


											Payments due by fiscal year
(In millions)	Payments due by fiscal year										Total		2020		2021-2022		2023-2024		Thereafter
	Total		2018		2019-2020		2021-2022		Thereafter
Long-term debt⁽¹⁾	$	199.9	$	—	$	—	$	50.0	$	149.9	$	275.0	$	—	$	275.0	$	—	$	—
Estimated interest on debt obligations ⁽²⁾⁽¹⁾	83.3		11.4		19.3		15.5		37.1		73.1		11.8		19.9		17.5		23.9
Operating leases	329.2		47.0		77.5		63.2		141.5		315.8		51.7		89.7		72.5		101.9
Purchase obligations ⁽³⁾⁽²⁾	45.4		35.2		6.2		1.0		3.0		73.5		69.6		3.9		—		—
Pension plan funding ⁽⁴⁾	0.9		0.4		0.1		0.1		0.3
Pension and other post employment benefit plans funding ⁽³⁾											0.9		0.4		0.1		0.1		0.3
Stockholder dividends ⁽⁵⁾⁽⁴⁾	10.2		10.2		—		—		—		11.6		11.6		—		—		—
Other ⁽⁶⁾⁽⁵⁾	18.9		1.7		3.3		3.1		10.8		15.3		5.4		2.3		1.9		5.7
Total	$	687.8	$	105.9	$	106.4	$	132.9	$	342.6	$	765.2	$	150.5	$	390.9	$	92.0	$	131.8

(1) ~~The notes maturing in fiscal 2018 have been included as~~Contractual cash payments on long-term debt inobligations are disclosed herein based on the ~~table above as~~maturity date of the ~~company has both the intent and ability to refinance this short-term obligation on a long-term basis, through the use of its syndicated revolving line of credit.~~

~~(2)~~underlying debt. Estimated future interest payments on our outstanding interest-bearing debt obligations are based on interest rates as of June ~~3, 2017.~~1, 2019. Actual cash outflows may differ significantly due to changes in ~~underlying timing of principal payments.~~interest rates.

~~(3)~~(2) Purchase obligations consist of non-cancelable purchase orders and commitments for goods, services, and capital assets.

~~(4)~~(3) Pension plan funding commitments are known for a 12-month period for those plans that are funded; unfunded pension and post-retirement plan funding amounts are equal to the estimated benefit payments. As of June ~~3, 2017,~~1, 2019, the total projected benefit obligation for our domestic and international employee pension benefit plans was ~~$114.8~~$110.1 million.

~~(5)~~(4) Represents the dividend payable as of June ~~3, 2017.~~1, 2019. Future dividend payments are not considered contractual obligations until declared.

~~(6)~~(5) Other contractual obligations primarily represent long-term commitments related to deferred and supplemental employee compensation benefits, and other post-employment benefits.

Off-Balance Sheet Arrangements — Guarantees

We provide certain guarantees to third parties under various arrangements in the form of product warranties, loan guarantees, standby letters of credit, lease guarantees, performance bonds and indemnification provisions. These arrangements are accounted for and disclosed in accordance with Accounting Standards Codification (ASC) Topic 460, "Guarantees" as described in Note 1213 of the Consolidated Financial Statements.

Critical Accounting Policies and Estimates

Our goal is to report financial results clearly and understandably. We follow accounting principles generally accepted in the United States in preparing our Consolidated Financial Statements, which require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. These policies and disclosures are reviewed at least annually with the Audit Committee of the Board of Directors. Following is a summary of our more significant accounting policies that require the use of estimates and judgments in preparing the financial statements.

Revenue Recognition

~~As described in the “Executive Overview,” the majority~~Most of our products and services are sold through one of six channels: independent and owned contract furniture dealers, direct ~~to end customers, DWR~~contract sales, retail studios, e-commerce, ~~DWR~~ direct-mail catalogs, and independent retailers. ~~We recognize~~The Company recognizes revenue when performance obligations, based on ~~sales to independent dealers, licensees~~the terms of customer contracts, are satisfied. This happens when control of goods and ~~retailers once products are shipped and title passes~~services based on the contract have been conveyed to the ~~buyer. When we sell product directly to~~customer. Revenue for the ~~end customer or through owned dealers or retail studios, we recognize revenue once~~sale of products is typically recognized at the ~~product and services are shipped,~~point in time when control transfers, generally upon transfer of title and risk of loss ~~have transferred~~ to the ~~customer and~~customer. Revenue for services, including the installation of products by the Company's owned dealers, is ~~substantially complete, if applicable.~~recognized over time as the services are provided. The method of revenue recognition may vary, depending on the type of contract with the customer.

~~Amounts recorded as net sales generally~~The Company's contracts with customers include ~~any freight charged~~master agreements and certain other forms of contracts, which do not reach the level of a performance obligation until a purchase order is received from a customer. At the point in time that a purchase order under a contract is received by the Company, the collective group of documents represent an enforceable contract between the Company and the customer. While certain customer contracts may have a duration of greater than a year, all purchase orders are less than a year in duration.

Variable consideration exists within certain contracts that the Company has with customers. When variable consideration is present in a contract with a customer, the Company estimates the amount that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. These estimates are primarily related to customers, with the related freight expenses recognized within cost of sales. Items such as discounts off list price, rebates and other price related incentives are recorded as reductions to net sales. We record accruals for rebates and other marketingrebate programs which ~~require us~~involve estimating future sales amounts and rebate percentages to ~~make estimates about~~use in the determination of transaction price. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future ~~customer buying patterns and market conditions. Customer~~reversal of cumulative revenue under the contract will not occur. Adjustments to Net sales ~~that reach (or fail~~from changes in variable consideration related to ~~reach) certain levels can affect~~performance obligations completed in previous periods are not material to the ~~amount of such estimates and actual results could differ from our estimates.~~Company's financial statements. Also, the Company has no contracts with significant financing components.

Receivable Allowances

We base our allowances for receivables on known customer exposures, historical credit experience and the specific identification of other potential problems, including the current economic climate. These methods are applied to all major receivables, including trade, lease, and notes receivable. In addition, we follow a policy that consistently applies reserve rates based on the outstanding accounts receivable and historical experience. Actual collections can differ from our historical experience and if economic or business conditions deteriorate significantly, adjustments to these reserves may be required.

The accounts receivable allowance totaled ~~$3.3~~$3.5 million and ~~$4.3~~$2.9 million at June ~~3, 2017~~1, 2019 and ~~May 28, 2016,~~June 2, 2018, respectively. As a percentage of gross accounts receivable, these allowances totaled ~~1.7~~1.4 percent and ~~2.0~~1.3 percent for fiscal ~~2017~~2019 and fiscal ~~2016,~~2018, respectively. The year-over-year ~~decrease~~increase in the allowance is primarily due to ~~fewer~~increased general and customer-specific reserves in the current year, relative to the prior year.

Goodwill and Indefinite-lived Intangibles

The carrying value of goodwill and indefinite-lived intangible assets as of June ~~3, 2017~~1, 2019 and ~~May 28, 2016~~June 2, 2018, was $~~382.6~~381.9 million and $~~390.5~~382.2 million, respectively. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently, if changes in circumstances or the occurrence of events suggest that impairment exists. The ~~company~~Company performs the annual goodwill and indefinite-lived intangible assets impairment testing during the fourth quarter of the fiscal year.

The ~~company~~Company completed the required annual goodwill impairment test in the fourth quarter of fiscal ~~2017,~~2019, as of ~~April 1, 2017,~~March 31, 2019, performing a ~~combination of the~~quantitative and qualitative ~~assessment~~impairment test for all goodwill reporting units and ~~the quantitative impairment test.~~other indefinite-lived intangible assets. For the reporting units that ~~were tested~~the Company elected to test qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment, the ~~qualitative assessment, the company determined that~~Company concluded it ~~was~~to be more likely than not that ~~the goodwill of the reporting units were not impaired, and thus, the two-step quantitative impairment test was unnecessary. For the reporting units that were tested under~~their estimated fair values are greater than their respective carrying values.

In performing the quantitative impairment test, the ~~company~~Company determined that the fair value of the reporting units exceeded the carrying amount and, as such, the reporting units were not impaired and the second step of the impairment test was not necessary.

The Company performed a sensitivity analysis over key valuation assumptions. The carrying value of the Company's Retail reporting unit was $249.9 million as of June 1, 2019. The calculated fair value of the reporting unit was $282.6 million, which represents an excess fair value of $32.7 million or 13%. Due to the level that the reporting unit fair values exceeded the carrying amounts and the results of the sensitivity analysis, the Company may need to record an impairment charge if the operating results of its Retail reporting unit were to decline in future periods.

The test for impairment requires the ~~company~~Company to make several estimates about fair value, most of which are based on projected future cash flows and market valuation multiples. We estimated the fair value of the reporting units using a discounted cash flow analysis and reconciled the sum of the fair values of the reporting units to total market capitalization of the ~~company,~~Company, plus a control premium. The control premium represents an estimate associated with obtaining control of the ~~company~~Company in an acquisition. The discounted cash flow analysis used the present value of projected cash flows and a residual value.

The ~~company~~Company employs a market-based approach in selecting the discount rates used in our analysis. The discount rates selected represent market rates of return equal to what the ~~company~~Company believes a reasonable investor would expect to achieve on investments of similar size to the ~~company's~~Company's reporting units. The ~~company~~Company believes the discount rates selected in the quantitative assessment are appropriate in that, in all cases, they meet or exceed the estimated weighted average cost of capital for our business as a whole. The results of the impairment test are sensitive to changes in the discount rates and changes in the discount rate may result in future impairment.

~~The company performs both qualitative and~~In fiscal 2019, the Company performed only quantitative assessments ~~to determine whether an~~in testing indefinite-lived intangible asset is impaired. A qualitative assessment is performed first to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, after considering the totality of events and circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is not impaired, then calculating the fair value of such asset is unnecessary.assets for impairment. The quantitative impairment test ~~when necessary,~~ is based on the relief from royalty method to determine the fair value of the indefinite-lived intangible assets, which is both a market-based approach and an income-based approach. The relief from royalty method focuses on the level of royalty payments that the user of an intangible asset would have to pay a third party for the use of the asset if it were not owned by the user. This method involves estimating theoretical future after tax royalty payments based on the ~~company's~~Company's forecasted revenues attributable to the trade names. These payments are then discounted to present value utilizing a discount rate that considers the after-corporate tax required rate of return applicable to the asset. The projected revenues reflect the best estimate of management for the trade names; however, actual revenues could differ from our estimates.

The discount rates selected represent market rates of return equal to what the ~~company~~Company believes a reasonable investor would expect to achieve on investments of similar size and type to the indefinite-lived intangible asset being tested. The ~~company~~Company believes the discount rates selected are appropriate in that, in all cases, they exceed the estimated weighted average cost of capital for our business as a whole. The results of the impairment test are sensitive to changes in the discount rates and changes in the discount rate may result in future impairment. The Company performed a sensitivity analysis over key valuation assumptions.

The carrying value of the Company's DWR trade name indefinite-lived intangible asset was $55.1 million as of June 1, 2019. The calculated fair value of the reporting unit was $63.2 million which represents an excess fair value of $8.1 million or 14.6%. If the residual cash flows related to the Company's DWR trade name were to decline in future periods, the Company may need to record an impairment charge.

During fiscal 2017, the ~~company~~Company recognized pre-tax asset impairment expenses totaling $7.1 million associated with the Nemschoff trade name, after which there is no remaining carrying value for this trade name. This impairment expense was incurred due to the fact that the forecasted revenue and profitability of the business did not support the recorded fair value for the trade name. There was no impairment indicated on indefinite-lived intangible assets in fiscal ~~2016~~2019 or fiscal 2018 as a result of our impairment testing. In fiscal 2015, the company recognized pre-tax asset impairment expenses totaling $10.8 million associated with the POSH trade name. Although profitability associated with the POSH trade name increased as compared to fiscal 2014, forecasts developed during the fourth quarter of fiscal 2015 indicated that forecasts of revenue and profitability no longer supported the value of the trade name intangible asset.

Long-lived Assets

The ~~company~~Company evaluates other long-lived assets and acquired business units for indicators of impairment when events or circumstances indicate that an impairment risk may be present. The judgments regarding the existence of impairment are based on market conditions, operational performance, and estimated future cash flows. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded to adjust the asset to its estimated fair value.

Warranty ~~Reserve~~Reserves

The ~~company~~Company stands behind ~~company~~Company products and the promises it makes to customers. From time to time, quality issues arise resulting in the need to incur costs to correct problems with products or services. The ~~company~~Company has established warranty reserves for the various costs associated with these obligations. General warranty reserves are based on historical claims experience and periodically adjusted for business levels. Specific reserves are established once an issue is identified. The valuation of such reserves is based on the estimated costs to correct the problem. Actual costs may vary and may result in an adjustment to these reserves.

Inventory Reserves

Inventories are valued at the lower of cost or ~~market.~~net realizable value. The inventories at our West Michigan manufacturing operations are valued using the last-in, first-out (LIFO) method, whereas inventories of certain other subsidiaries are valued using the first-in, first-out (FIFO) method. The ~~company~~Company establishes reserves for excess and obsolete inventory, based on prevailing circumstances and judgment for consideration of current events, such as economic conditions that may affect inventory. The reserve required to record inventory at lower of cost or market may be adjusted in response to changing conditions.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

See Note 1011 of the Consolidated Financial Statements for information regarding the ~~company's~~Company's uncertain tax positions.

The ~~company~~Company has net operating loss (NOL) carryforwards available in certain jurisdictions to reduce future taxable income. The ~~company~~Company also has ~~foreign~~ tax credits available in certain jurisdictions to reduce future tax due. Future tax benefits for NOL carryforwards and ~~foreign~~ tax credits are recognized to the extent that realization of these benefits is considered more likely than not. This determination is based on the expectation

that related operations will be sufficiently profitable or various tax planning strategies available to us will enable us to utilize the NOL carryforwards and/or foreign tax credits. When information becomes available that raises doubts about the realization of a deferred income tax asset, a valuation allowance is established.us.

Self-Insurance Reserves

With the assistance of independent actuaries, reserves are established for workers' compensation and general liability exposures. The reserves are established based on expected future claims for incurred losses. The ~~company~~Company also establishes reserves for health, prescription drugs and dental benefit exposures based on historical claims information along with certain assumptions about future trends. The methods and assumptions used to determine the liabilities are applied consistently, although, actual claims experience can vary. The ~~company~~Company also maintains insurance coverage for certain risk exposures through traditional, premium-based insurance policies. The ~~company's~~Company's health ~~benefits~~benefit and auto liability retention ~~level does~~levels do not include an aggregate stop loss policy. The ~~company's~~Company's retention levels designated within significant insurance arrangements as of June ~~3, 2017,~~1, 2019, are as ~~follows.~~follows:

(In millions) Retention Level (per occurrence)
General liability and auto liability/physical damage $ 1.00
Workers' compensation and property $ 0.75



(In millions)	Retention Level (per occurrence)
General liability	$	1.00
Auto liability	$	1.00
Workers' compensation	$	0.75
Health benefit	$	0.50

Pension and other Post-Retirement Benefits

The determination of the obligation and expense for pension and other post-retirement benefits depends on certain actuarial assumptions. Among the most significant of these assumptions are the discount rate and expected long-term rate of return on plan assets. We determine these assumptions as follows.

Discount Rate — This assumption is established at the end of the fiscal year based on high-quality corporate bond yields. The ~~company~~Company utilizes the services of an independent actuarial firm to assist in determining the rate. Future expected actuarially determined cash flows for the ~~company's~~Company's domestic pension, international pension and post-retirement medical plans are individually discounted at the spot rates under the Mercer Yield Curve to arrive at the plan’s obligations as of the measurement date.

Expected Long-Term Rate of Return — The~~company~~ Company bases this assumption on our long-term assumed rates of return for equities and fixed income securities, weighted by the allocation of the invested assets of the pension plan. The ~~company~~Company considers likely returns and risk factors specific to the various classes of investments and advice from independent actuaries in establishing this rate. Changes in the investment allocation of plan assets would impact this assumption. A shift to a higher relative percentage of fixed income securities, for example, would result in a lower assumed rate.

While the above assumption represents the long-term market return expectation, actual asset returns can and do differ from year-to-year. Such differences give rise to actuarial gains and losses. In years where actual market returns are lower than the assumed rate, an actuarial loss is generated. Conversely, an actuarial gain results when actual market returns exceed the assumed rate in a given year. ~~As of~~ ~~June 3, 2017, and~~ ~~May 28, 2016, the net actuarial loss associated with the employee pension and post-retirement benefit plans totaled approximately $50.6 million and $39.4 million, respectively.~~

Changes in the discount rate and return on assets can have a significant effect on the expense and obligations related to our pension plans. The ~~company~~Company cannot reasonably predict if adjustments impacting the expense or obligation from changes in these estimates will be significant. Both the June ~~3, 2017~~1, 2019 pension funded status and ~~2018~~fiscal 2020 expense are affected by year end ~~2017~~fiscal 2019 discount rate and expected return on assets assumptions. Any change to these assumptions will be specific to the time periods noted and may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown.

As of June 1, 2019, and June 2, 2018, the net actuarial loss associated with the employee pension and post-retirement benefit plans totaled approximately $48 million and $40 million, respectively.

The effect of a 1 percent increase/(decrease) in discount rates and expected return on assets on the projected fiscal ~~2018~~2020 expense and the pension obligation as at June ~~3, 2017~~1, 2019 is shown below:



(In millions)
Assumption	~~2018~~2020 Expense		June ~~3, 2017~~1, 2019 Obligation
	U.S.	International	U.S.	International
Discount rate	—	$ ~~(1.5)~~(1.4) / ~~1.9~~1.6	$(0.3) / ~~0.4~~0.3	$ ~~(21.2)~~(19.6) / ~~28.8~~25.8
Expected return on assets	—	$ ~~(0.8)~~(1.0) / ~~0.8~~1.0	—	—

For purposes of determining annual net pension expense, the ~~company~~Company uses a calculated method for determining the market-related value of plan assets. Under this method, the ~~company~~Company recognizes the change in fair value of plan assets systematically over a five-year period. Accordingly,

a portion of the net actuarial loss is deferred. As of June ~~3, 2017~~,1, 2019, the deferred net actuarial loss (i.e., the portion of the total net actuarial loss not subject to amortization) was ~~$0.9~~$3.2 million.

Refer to Note 78 of the Consolidated Financial Statements for more information regarding costs and assumptions used for employee benefit plans.

Stock-Based Compensation

The ~~company~~Company views stock-based compensation as a key component of total compensation for certain employees, non-employee directors and officers. The stock-based compensation programs have included grants of ~~restricted~~ stock options, restricted stock units, performance share units, and employee stock ~~purchases and stock options.~~purchases. The ~~company~~Company recognizes expense related to each of these share-based arrangements. The Black-Scholes option pricing model is used in estimating the fair value of stock options issued in connection with compensation programs. This pricing model requires the use of several input assumptions. Among the most significant of these assumptions are the expected volatility of the common stock price and the expected timing of future stock option exercises.

Expected Volatility — This represents a measure, expressed as a percentage, of the expected fluctuation in the market price of the ~~company's~~Company's common stock. As a point of reference, a high volatility percentage would assume a wider expected range of market returns for a particular security. All other assumptions held constant, this would yield a higher stock option valuation than a calculation using a lower measure of volatility. In measuring the fair value of the majority of stock options issued during fiscal ~~2017~~2019, we utilized an expected volatility of ~~26 percent. Certain options related to the Herman Miller Consumer Holdings (HMCH) Stock Option Plan are classified as a liability within the Consolidated Balance Sheets. As of~~ ~~June 3, 2017, an expected volatility of 35 percent was used in the year end liability valuation.~~27 percent.

Expected Term of Options — This assumption represents the expected length of time between the grant date of a stock option and the date at which it is exercised (option life). The ~~company~~Company assumed an average expected term of ~~4.0~~4.4 years in calculating the fair values of the majority of stock options issued during fiscal ~~2017~~2019~~, except for the HMCH Stock Option Plan, where we utilized an average expected term of 2.1 years.~~.

Refer to Note 910 of the Consolidated Financial Statements for further discussion on our stock-based compensation plans.

Contingencies

In the ordinary course of business, the ~~company~~Company encounters matters that raise the potential for contingent liabilities. In evaluating these matters for accounting treatment and disclosure, the ~~company~~Company is required to apply judgment to determine the probability that a liability has been incurred. The ~~company~~Company is also required to measure, if possible, the dollar value of such liabilities in determining whether or not recognition in our financial statements is required. This process involves the use of estimates which may differ from actual outcomes. Refer to Note 1213 of the Consolidated Financial Statements for more information relating to contingencies.

New Accounting Standards

Refer to Note 1 of the Consolidated Financial Statements for information related to new accounting standards.

Forward Looking Statements

This information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about the office furniture industry, the economy, and the ~~company~~Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. These risks include, without limitation, the success of our growth strategy, employment and general economic conditions, the pace of economic recovery in the U.S and in our International markets, the increase in white-collar employment, the willingness of customers to undertake capital expenditures, the types of products purchased by customers, competitive-pricing pressures, the availability and pricing of raw materials, our reliance on a limited number of suppliers, our ability to expand globally given the risks associated with regulatory and legal compliance challenges and accompanying currency fluctuations, the ability to increase prices to absorb the additional costs of raw materials, the financial strength of our dealers and the financial strength of our customers, our ability to locate new ~~DWR~~retail studios, negotiate favorable lease terms for new and existing locations and the implementation of our studio portfolio transformation, our ability to attract and retain key executives and other qualified employees, our ability to continue to make product innovations, the success of newly-introduced products, our ability to serve all of our markets, possible acquisitions, divestitures or alliances, the pace and level of government procurement, the outcome of pending litigation or governmental audits or investigations, political risk in the markets

we serve, and other risks identified in our filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc., undertakes no obligation to update, amend or clarify forward-looking statements.

Item 7A ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Quantitative and Qualitative Disclosures About Market Risk

The ~~company~~Company manufactures, markets, and sells its products throughout the world and, as a result, is subject to changing economic conditions, which could reduce the demand for its products.

Direct Material Costs

The ~~company~~Company is exposed to risks arising from price changes for certain direct materials and assembly components used in its operations. The largest of such costs incurred by the ~~company~~Company are for steel, plastics, textiles, wood particleboard, and aluminum components. The impact from changes in all commodity prices increased the ~~company's~~Company's costs by approximately $9$16 million during fiscal ~~2017~~2019 compared to the prior year. The impact from changes in commodity prices ~~decreased~~increased the ~~company's~~Company's costs by approximately ~~$20~~$10 million during fiscal ~~2016~~2018 as compared to fiscal ~~2015.~~2017. Note that these changes include the impact of Chinese tariffs on the Company's direct material costs.

The market prices for commodities will fluctuate over time and the ~~company~~Company acknowledges that such changes are likely to impact its costs for key direct materials and assembly components. Consequently, it views the prospect of such changes as an outlook risk to the business.

Foreign Exchange Risk

The ~~company~~Company primarily manufactures its products in the United States, United Kingdom, China and India. It also sources completed products and product components from outside the United States. The ~~company's~~Company's completed products are sold in numerous countries around the world. Sales in foreign countries as well as certain expenses related to those sales are transacted in currencies other than the ~~company's~~Company's reporting currency, the U.S. dollar. Accordingly, production costs and profit margins related to these sales are effected by the currency exchange relationship between the countries where the sales take place and the countries where the products are sourced or manufactured. These currency exchange relationships can also impact the ~~company's~~Company's competitive positions within these markets.

In the normal course of business, the ~~company~~Company enters into contracts denominated in foreign currencies. The principal foreign currencies in which the ~~company~~Company conducts its business are the British pound sterling, euro, Canadian dollar, Japanese yen, Mexican peso, Hong Kong dollar and Chinese renminbi. As of June ~~3, 2017,~~1, 2019, the ~~company~~Company had outstanding, thirteen forward currency instruments designed to offset either net asset or net liability exposure that is denominated in non-functional currencies. ~~One~~Four forward ~~contract was~~contracts were placed to offset a ~~35.0~~21.5 million ~~Hong Kong~~U.S. dollar-denominated net asset exposure. Two forward contracts were placed to offset ~~an 11.6~~a 21 million euro-denominated net asset ~~exposure. Three forward contracts were placed to offset a 12.0 million U.S. dollar-denominated net liability~~ exposure. One forward contract was placed to offset an ~~8.5~~8 million South African rand-denominated net asset exposure. One forward contract was placed to offset an $0.6 million Canadian dollar-denominated net asset exposure. Five forward contracts were placed to offset a ~~13.3~~14.0 million U.S.dollar-denominated net liability exposure. One forward contract was placed to offset a ~~5.8~~1.5 million euro-denominated net liability exposure.

As of ~~May 28, 2016,~~June 2, 2018, the ~~company~~Company had outstanding, ~~sixteen~~thirteen forward currency instruments designed to offset either net asset or net liability exposure that is denominated in non-functional currencies. ~~One~~Three forward ~~contract was~~contracts were placed to offset a ~~52.9~~18.5 million ~~Hong Kong~~U.S. dollar-denominated net ~~asset~~liability exposure. Two forward contracts were placed to offset a ~~9.3~~13.7 million euro-denominated net asset exposure. One forward contract was placed to offset an 10.5 million South African rand-denominated net asset exposure. Five forward contracts were placed to offset a ~~13.6~~13.0 million ~~U.S. dollar-denominated~~U.S.dollar-denominated net ~~asset~~liability exposure. One forward contract was placed to offset a 6.6 million South African rand-denominated net asset exposure. One forward contract was placed to offset a 0.7 million Canadian dollar-denominated net asset exposure. One forward contract was placed to offset a 1.01.2 million euro-denominated net liability exposure. ~~Five forward contracts were placed to offset a 13.1 million U.S.dollar-denominated net liability exposure.~~

~~A net loss of $0.7 million, $0.7 million and $2.1 million related to the~~The cost of the foreign currency hedges and remeasuring all foreign currency transactions into the appropriate functional currency was a net gain of $0.3 million in fiscal 2019 in contrast to net loss of $0.4 million in fiscal 2018 included in net ~~earnings for the fiscal years ended June 3, 2017, May 28, 2016 and May 30, 2015, respectively.~~earnings. These amounts are included in “Other Expenses (Income)” in the Consolidated Statements of Comprehensive Income. Additionally, the cumulative effect of translating the balance sheet and income statement accounts from the functional currency into the United States dollar ~~increased~~decreased the accumulated comprehensive loss component of total stockholders' equity by ~~$7.2~~$14.2 million ~~$8.8 million~~ and ~~$9.7~~$2.7 million as of the end of as of the end of fiscal ~~2017, 2016~~2019 and ~~2015,~~2018, respectively.

Interest Rate Risk

During the fiscal year ended June 3, 2017, the company entered into an interest rate swap agreement with an aggregate notional amount of $150.0 million, a forward start date of January 3, 2018 and a termination date of January 3, 2028. As a result of the transaction, the company effectively will convert $150.0 million of its outstanding indebtedness from a LIBOR-based floating interest rate plus applicable margin to a 1.949 percent fixed interest rate plus applicable margin under the agreement as of the forward start date. On January 3, 2018, the company

will borrow on its variable rate revolving credit facility in order to pay off $150.0 million of Series B Senior Notes. These variable rate borrowings will be converted from variable to fixed through the use of the interest rate swap.

The ~~company~~Company enters into interest rate swap agreements to manage its exposure to interest rate changes and its overall cost of borrowing. The ~~company's~~Company's interest rate swap agreement was entered into to exchange variable rate interest payments for fixed rate payments over the life of the agreement without the exchange of the underlying notional amounts. The notional amount of the interest rate swap agreement is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap agreement is recognized as an adjustment to interest expense.

These interest rate swap derivative instruments are held and used by the ~~company~~Company as a tool for managing interest rate risk. They are not used for trading or speculative purposes. The counterparties to the swap instruments are large financial institutions that the ~~company~~Company believes are of high-quality creditworthiness. While the ~~company~~Company may be exposed to potential losses due to the credit risk of non-performance by these counterparties, such losses are not anticipated.

In September 2016, the Company entered into an interest rate swap agreement. The ~~combined~~interest rate swap is for an aggregate notional amount of $150.0 million with a forward start date of January 3, 2018 and a termination date of January 3, 2028. As a result of the transaction, the Company effectively converted indebtedness anticipated to be borrowed on the Company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 1.949 percent fixed interest rate plus applicable margin under the agreement as of the forward start date.

In June 2017, the Company entered into an interest rate swap agreement. The interest rate swap is for an aggregate notional amount of $75.0 million with a forward start date of January 3, 2018 and a termination date of January 3, 2028. As a result of the transaction, the Company effectively converted the Company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 2.387 percent fixed interest rate plus applicable margin under the agreement as of the forward start date.

The fair market value ~~and net asset amount~~ of the effective interest rate swap instruments was ~~$2.1~~a net liability of $1.2 million at June ~~3, 2017. The swap instrument has~~1, 2019 compared to a ~~forward start date~~net asset of ~~January 3, 2018 hence had no impact on total interest expense in fiscal 2017.~~$15.0 million at June 2, 2018. All cash flows related to the ~~company's~~Company's interest rate swap instruments are denominated in U.S. dollars. For further information, refer to Notes 56 and 1112 of the Consolidated Financial Statements.

Expected cash outflows (notional amounts) over the next five years and thereafter related to debt instruments are as follows.


(In millions)	2018		2019		2020		2021		2022		Thereafter		Total⁽¹⁾		2020		2021		2022		2023		2024		Thereafter		Total⁽¹⁾
Long-Term Debt - Fixed rate:
Interest rate = 6.42%⁽²⁾	$	—	$	—	$	—	$	—	$	—	$	149.9	$	149.9
Interest rate = 6.00%	$	—	$	—	$	—	$	50.0	$	—	$	—	$	50.0	$	—	$	50.0	$	—	$	—	$	—	$	—	$	50.0
Interest rate = 1.949%⁽²⁾															$	—	$	—	$	150.0	$	—	$	—	$	—	$	150.0
Interest rate = 2.387%⁽²⁾															$	—	$	—	$	75.0	$	—	$	—	$	—	$	75.0

(1) Amount does not include the recorded fair value of the swap ~~instrument,~~instruments, which totaled ~~$2.1~~a $1.2 million net liability and a $15.0 million net asset at the end of fiscal ~~2017.~~2019 and 2018, respectively.

(2) The company will have debt outstanding related to its Series B Senior Notes at a fixed interest rate of 6.42 percent until January 3, 2018. At that point in time, the company will borrow on its variable rate revolving credit facility in order to pay off notes. The company'sCompany's revolving credit facility has a variable interest rate, but due to the interest rate ~~swap,~~swaps, the rate on $150.0 million and $75.0 million will be fixed at 1.949% and 2.387%, respectively as demonstrated in the table above.

Item 8 ~~FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA~~Financial Statements and Supplementary Data

Herman Miller, Inc.

Consolidated Statements of Comprehensive Income


	Fiscal Years Ended									Fiscal Years Ended
(In millions, except per share data)	June 3, 2017			May 28, 2016			May 30, 2015			June 1, 2019			June 2, 2018			June 3, 2017
Net sales	$	2,278.2		$	2,264.9		$	2,142.2		$	2,567.2		$	2,381.2		$	2,278.2
Cost of sales	1,414.0			1,390.7			1,350.8			1,637.3			1,508.2			1,414.0
Gross margin	864.2			874.2			791.4			929.9			873.0			864.2
Operating expenses:
Selling, general and administrative	587.8			585.6			543.9			639.3			615.3			587.5
Restructuring and impairment expenses	12.5			—			12.7			10.2			5.7			12.5
Design and research	73.1			77.1			71.4			76.9			73.1			73.1
Total operating expenses	673.4			662.7			628.0			726.4			694.1			673.1
Operating earnings	190.8			211.5			163.4			203.5			178.9			191.1
Other expenses (income):
Interest expense	15.2			15.4			17.5			12.1			13.5			15.2
Interest and other investment income	(2.2		)	(0.8		)	(0.6		)	(2.1		)	(4.4		)	(2.2		)
Other, net	0.2			0.3			1.3			(1.6		)	1.7			0.5
Net other expenses	13.2			14.9			18.2			8.4			10.8			13.5
Earnings before income taxes	177.6			196.6			145.2			195.1			168.1			177.6
Income tax expense	55.1			59.5			47.2			39.6			42.4			55.1
Equity earnings from nonconsolidated affiliates, net of tax	1.6			0.4			0.1			5.0			3.0			1.6
Net earnings	124.1			137.5			98.1			160.5			128.7			124.1
Net earnings attributable to noncontrolling interests	0.2			0.8			0.6			—			0.6			0.2
Net earnings attributable to Herman Miller, Inc.	$	123.9		$	136.7		$	97.5		$	160.5		$	128.1		$	123.9

Earnings per share — basic	$	2.07		$	2.28		$	1.64		$	2.72		$	2.15		$	2.07
Earnings per share — diluted	$	2.05		$	2.26		$	1.62		$	2.70		$	2.12		$	2.05

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	$	(7.2	)	$	(8.8	)	$	(9.7	)	$	(14.2	)	$	2.7		$	(7.2	)
Pension and post-retirement liability adjustments	(12.7		)	0.5			(8.6		)	(7.8		)	10.4			(12.7		)
Unrealized gains on interest rate swap agreement	2.1			—			—
Unrealized (losses) gains on interest rate swap agreement										(12.3		)	7.8			2.1
Unrealized holding gain on available for sale securities	0.1			—			—			—			—			0.1
Total other comprehensive loss	(17.7		)	(8.3		)	(18.3		)
Total other comprehensive (loss) income										(34.3		)	20.9			(17.7		)
Comprehensive income	106.4			129.2			79.8			126.2			149.6			106.4
Comprehensive income attributable to noncontrolling interests	0.2			0.8			0.6			—			0.6			0.2
Comprehensive income attributable to Herman Miller, Inc.	$	106.2		$	128.4		$	79.2		$	126.2		$	149.0		$	106.2

Herman Miller, Inc.

Consolidated Balance Sheets


(In millions, except share and per share data)	June 3, 2017			May 28, 2016			June 1, 2019			June 2, 2018
Assets
Current Assets:
Cash and cash equivalents	$	96.2		$	84.9		$	159.2		$	203.9
Marketable securities	8.6			7.5			8.8			8.6
Accounts and notes receivable, less allowances of $3.3 in 2017 and $4.3 in 2016	186.6			211.0
Accounts and notes receivable, less allowances of $3.8 in 2019 and $3.3 in 2018							218.0			217.4
Unbilled accounts receivable							34.3			1.9
Inventories, net	152.4			128.2			184.2			162.4
Prepaid taxes	17.7			20.4			9.2			9.9
Other	30.4			28.5			47.6			41.3
Total Current Assets	491.9			480.5			661.3			645.4

Property and Equipment:
Land and improvements	24.0			24.1			24.2			24.4
Buildings and improvements	229.0			205.7			267.6			238.6
Machinery and equipment	662.4			645.3			733.0			700.0
Construction in progress	53.3			53.9			59.9			57.8
Gross Property and Equipment	968.7			929.0			1,084.7			1,020.8
Less: Accumulated depreciation	(654.1		)	(648.9		)	(736.1		)	(689.4		)
Net Property and Equipment	314.6			280.1			348.6			331.4
Goodwill	304.5			305.3			303.8			304.1
Indefinite-lived intangibles	78.1			85.2			78.1			78.1
Other amortizable intangibles, net	45.4			50.8			41.1			41.3
Other assets	71.8			33.3			136.4			79.2
Total Assets	$	1,306.3		$	1,235.2		$	1,569.3		$	1,479.5

Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity
Current Liabilities:
Accounts payable	$	148.4		$	165.6		$	177.7		$	171.4
Accrued compensation and benefits	79.7			85.2			85.5			86.3
Accrued warranty	47.7			43.9			53.1			51.5
Unearned revenue	33.2			35.4
Customer deposits							30.7			27.6
Other accrued liabilities	76.7			59.9			99.1			77.0
Total Current Liabilities	385.7			390.0			446.1			413.8

Long-term debt	199.9			221.9
Long-term debt, less current portion							281.9			275.0
Pension and post-retirement benefits	38.5			25.8			24.5			15.6
Other liabilities	69.9			45.8			77.0			79.8
Total Liabilities	694.0			683.5			829.5			784.2

Redeemable noncontrolling interests	24.6			27.0			20.6			30.5
Stockholders' Equity:
Preferred stock, no par value (10,000,000 shares authorized, none issued)	—			—			—			—
Common stock, $0.20 par value (240,000,000 shares authorized, 59,715,824 and 59,868,276 shares issued and outstanding in 2017 and 2016, respectively)	11.9			12.0
Common stock, $0.20 par value (240,000,000 shares authorized, 58,794,148 and 59,230,974 shares issued and outstanding in 2019 and 2018, respectively)							11.7			11.7
Additional paid-in capital	139.3			142.7			89.8			116.6
Retained earnings	519.5			435.3			712.7			598.3
Accumulated other comprehensive loss	(82.2		)	(64.5		)	(94.2		)	(61.3		)
Key executive deferred compensation	(1.0		)	(1.1		)	(0.8		)	(0.7		)
Herman Miller, Inc. Stockholders' Equity	587.5			524.4			719.2			664.6
Noncontrolling interests	0.2			0.3			—			0.2
Total Stockholders' Equity	587.7			524.7			719.2			664.8
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders' Equity	$	1,306.3		$	1,235.2		$	1,569.3		$	1,479.5

Herman Miller, Inc.

Consolidated Statements of Stockholders' Equity

Fiscal Years Ended
June 3, 2017 May 28, 2016 May 30, 2015
Preferred Stock
Balance at beginning of year and end of year $ —
$ —
$ —
Common Stock
Balance at beginning of year $ 12.0
$ 11.9
$ 11.9
Repurchase and retirement of common stock (0.1 ) —
—
Restricted stock units released —
0.1
—
Balance at end of year $ 11.9
$ 12.0
$ 11.9
Additional Paid-in Capital
Balance at beginning of year $ 142.7
$ 135.1
$ 122.4
Exercise of stock options 9.4
6.6
5.7
Repurchase and retirement of common stock (23.7 ) (14.1 ) (3.7 )
Employee stock purchase plan issuances 1.9
1.7
1.6
Stock-based compensation expense 9.1
11.9
8.6
Excess tax benefit for stock-based compensation (0.6 ) 0.8
0.4
Restricted stock units released 0.3
0.2
0.2
Deferred compensation plan (0.1 ) (0.1 ) (0.5 )
Directors' fees 0.3
0.6
0.4
Balance at end of year $ 139.3
$ 142.7
$ 135.1
Retained Earnings
Balance at beginning of year $ 435.3
$ 330.2
$ 269.6
Net income attributable to Herman Miller, Inc. 123.9
136.7
97.5
Dividends declared on common stock (per share - 2017: $0.68; 2016: $0.59; 2015: $0.56) (40.9 ) (35.6 ) (33.6 )
Noncontrolling interests redemption value adjustment 1.2
4.0
(3.3 )
Balance at end year $ 519.5
$ 435.3
$ 330.2
Accumulated Other Comprehensive Loss
Balance at beginning of year $ (64.5 ) $ (56.2 ) $ (37.9 )
Other comprehensive loss (17.7 ) (8.3 ) (18.3 )
Balance at end of year $ (82.2 ) $ (64.5 ) $ (56.2 )
Key Executive Deferred Compensation
Balance at beginning of year $ (1.1 ) $ (1.2 ) $ (1.7 )
Deferred compensation plan 0.1
0.1
0.5
Balance at end of year $ (1.0 ) $ (1.1 ) $ (1.2 )
Herman Miller, Inc. Stockholders' Equity $ 587.5
$ 524.4
$ 419.8
Noncontrolling Interests
Balance at beginning of year $ 0.3
$ 0.5
$ —
Initial origination of noncontrolling interests —
—
6.0
Net income attributable to noncontrolling interests —
0.3
0.1
Deconsolidation of entity with noncontrolling interests —
(0.5 ) —
Stock-based compensation expense (0.1 ) —
0.2
Purchase of noncontrolling interests —
—
(5.8 )
Balance at end of year $ 0.2
$ 0.3
$ 0.5
Total Stockholders' Equity $ 587.7
$ 524.7
$ 420.3



	Preferred Stock		Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Key Executive Deferred Compensation			Herman Miller, Inc. Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity
(In millions, except share and per share data)	Preferred Stock		Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Key Executive Deferred Compensation			Herman Miller, Inc. Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity
May 28, 2016	$	—	59,868,276		$	12.0		$	142.7		$	435.3		$	(64.5	)	$	(1.1	)	$	524.4		$	0.3		$	524.7
Net earnings	—		—		—			—			123.9			—			—			123.9			—			123.9
Other comprehensive loss	—		—		—			—			—			(17.7		)	—			(17.7		)	—			(17.7		)
Stock-based compensation expense	—		—		—			9.1			—			—			—			9.1			(0.1		)	9.0
Excess tax benefit for stock-based compensation	—		—		—			(0.6		)	—			—			—			(0.6		)	—			(0.6		)
Exercise of stock options	—		327,299		—			9.4			—			—			—			9.4			—			9.4
Restricted and performance stock units released	—		207,776		—			0.3			—			—			—			0.3			—			0.3
Employee stock purchase plan issuances	—		68,047		—			1.9			—			—			—			1.9			—			1.9
Repurchase and retirement of common stock	—		(765,556	)	(0.1		)	(23.7		)	—			—			—			(23.8		)	—			(23.8		)
Directors' fees	—		9,982		—			0.3			—			—			—			0.3			—			0.3
Deferred compensation plan	—		—		—			(0.1		)	—			—			0.1			—			—			—
Dividends declared ($0.68 per share)	—		—		—			—			(40.9		)	—			—			(40.9		)	—			(40.9		)
Redemption value adjustment	—		—		—			—			1.2			—			—			1.2			—			1.2
June 3, 2017	$	—	59,715,824		$	11.9		$	139.3		$	519.5		$	(82.2	)	$	(1.0	)	$	587.5		$	0.2		$	587.7
Net earnings	—		—		—			—			128.1			—			—			128.1			—			128.1
Other comprehensive income	—		—		—			—			—			20.9			—			20.9			—			20.9
Stock-based compensation expense	—		—		—			7.0			—			—			—			7.0			—			7.0
Exercise of stock options	—		538,259		—			14.6			—			—			—			14.6			—			14.6
Restricted and performance stock units released	—		256,884		0.1			0.2			—			—			—			0.3			—			0.3
Employee stock purchase plan issuances	—		67,335		—			2.0			—			—			—			2.0			—			2.0
Repurchase and retirement of common stock	—		(1,356,156	)	(0.3		)	(46.2		)	—			—			—			(46.5		)	—			(46.5		)
Directors' fees	—		8,828		—			0.4			—			—			—			0.4			—			0.4
Deferred compensation plan	—		—		—			(0.4		)	—			—			0.3			(0.1		)	—			(0.1		)
Dividends declared ($0.72 per share)	—		—		—			—			(43.2		)	—			—			(43.2		)	—			(43.2		)
Redemption value adjustment	—		—		—			—			(6.2		)	—			—			(6.2		)	—			(6.2		)
Cumulative effect of accounting changes	—		—		—			(0.3		)	0.1			—			—			(0.2		)	—			(0.2		)
June 2, 2018	$	—	59,230,974		$	11.7		$	116.6		$	598.3		$	(61.3	)	$	(0.7	)	$	664.6		$	0.2		$	664.8
Net earnings	—		—		—			—			160.5			—			—			160.5			—			160.5
Other comprehensive loss	—		—		—			—			—			(34.3		)	—			(34.3		)	—			(34.3		)
Stock-based compensation expense	—		—		—			8.4			—			—			—			8.4			(0.2		)	8.2
Exercise of stock options	—		347,248		0.1			10.0			—			—			—			10.1			—			10.1
Restricted and performance stock units released	—		468,807		0.1			0.2			—			—			—			0.3			—			0.3
Employee stock purchase plan issuances	—		62,957		—			1.9			—			—			—			1.9			—			1.9
Repurchase and retirement of common stock	—		(1,326,023	)	(0.2		)	(47.6		)	—			—			—			(47.8		)	—			(47.8		)
Directors' fees	—		10,185		—			0.3			—			—			—			0.3			—			0.3
Deferred compensation plan	—		—		—			—			—			—			(0.1		)	(0.1		)	—			(0.1		)
Dividends declared ($0.79 per share)	—		—		—			—			(46.6		)	—			—			(46.6		)	—			(46.6		)
Cumulative effect of accounting changes	—		—		—			—			0.5			1.4			—			1.9			—			1.9
June 1, 2019	$	—	58,794,148		$	11.7		$	89.8		$	712.7		$	(94.2	)	$	(0.8	)	$	719.2		$	—		$	719.2

Herman Miller, Inc.

Consolidated Statements of Cash Flows


	Fiscal Years Ended									Fiscal Years Ended
(In millions)	June 3, 2017			May 28, 2016			May 30, 2015			June 1, 2019			June 2, 2018			June 3, 2017
Cash Flows from Operating Activities:
Net earnings	$	124.1		$	137.5		$	98.1		$	160.5		$	128.7		$	124.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation expense	52.9			47.0			44.2			65.9			60.9			52.9
Amortization expense	6.0			6.0			5.6			6.2			6.0			6.0
Provision for losses on accounts receivable and notes receivable	—			2.2			1.8
Earnings from nonconsolidated affiliates net of dividends received	(1.5		)	—			0.3			(2.1		)	(0.2		)	(1.5		)
Gain on sales of property and dealers	—			(5.8		)	—
Investment fair value adjustment										(2.1		)	—			—
Loss (gain) on sales of property and dealers										0.8			(0.5		)	—
Deferred taxes	14.8			10.4			(8.8		)	0.8			(0.8		)	14.8
Pension contributions										(0.9		)	(13.4		)	(1.1		)
Pension and post-retirement expenses	0.5			1.4			0.8			1.2			2.9			0.5
Restructuring and impairment expenses	12.5			—			12.7			10.2			5.7			12.5
Stock-based compensation	8.7			11.9			10.0			7.3			7.7			8.7
Excess tax benefits from stock-based compensation	(0.5		)	(1.4		)	(0.7		)
Increase (decrease) in long-term liabilities	6.2			6.7			(1.2		)
Increase in long-term liabilities										1.6			3.4			6.2
Changes in current assets and liabilities:
Decrease (Increase) in accounts receivable	17.3			(30.5		)	7.8
(Increase) decrease in accounts receivable & unbilled accounts receivable										(24.8		)	(33.1		)	17.3
Increase in inventories	(29.9		)	(6.0		)	(9.0		)	(31.9		)	(12.4		)	(29.9		)
Increase in prepaid expenses and other	(0.5		)	(11.7		)	(2.5		)	(0.6		)	(3.0		)	(0.5		)
(Decrease) increase in accounts payable	(11.2		)	8.7			1.1
Increase in accrued liabilities	0.8			33.5			6.1
Increase (decrease) in accounts payable										0.5			16.0			(11.2		)
(Decrease) increase in accrued liabilities										22.7			(0.3		)	0.8
Other	1.9			0.5			1.4			1.1			(1.1		)	2.5
Net Cash Provided by Operating Activities	202.1			210.4			167.7			216.4			166.5			202.1

Cash Flows from Investing Activities:
Net receipts from notes receivable	2.4			0.2			0.9
Net receipts (advances) from notes receivable										1.1			(1.1		)	2.4
Marketable securities purchases	(2.0		)	(7.8		)	—			(1.9		)	(1.0		)	(2.0		)
Marketable securities sales	0.9			6.1			5.3			1.7			1.0			0.9
Capital expenditures	(87.3		)	(85.1		)	(63.6		)	(85.8		)	(70.6		)	(87.3		)
Proceeds from sales of property and dealers	—			10.7			0.6			0.5			2.1			—
Payments of loans on cash surrender value of life insurance	(15.3		)	—			—			—			—			(15.3		)
Acquisitions, net of cash received	—			(3.6		)	(154.0		)
Proceeds from life insurance policy										—			8.1			—
Purchase of HAY licensing agreement										(4.8		)	—			—
Equity investment in non-controlled entities	(13.1		)	—			—			(73.6		)	—			(13.1		)
Other, net	(1.9		)	(1.3		)	(2.8		)	(2.2		)	(1.2		)	(1.9		)
Net Cash Used for Investing Activities	(116.3		)	(80.8		)	(213.6		)
Net Cash Used in Investing Activities										(165.0		)	(62.7		)	(116.3		)

Cash Flows from Financing Activities:
Repayments of long-term debt	—			—			(50.0		)	—			(150.0		)	—
Proceeds from credit facility	794.4			800.8			796.7			—			340.4			794.4
Repayments of credit facility	(816.4		)	(868.8		)	(706.7		)	—			(115.4		)	(816.4		)
Dividends paid	(39.4		)	(34.9		)	(33.3		)	(45.6		)	(42.4		)	(39.4		)
Common stock issued	11.7			9.2			7.8			12.3			17.0			11.7
Common stock repurchased and retired	(23.7		)	(14.1		)	(3.7		)	(47.9		)	(46.5		)	(23.7		)
Excess tax benefits from stock-based compensation	0.5			1.4			0.7
Payment of contingent consideration obligation	(2.0		)	—			—
Purchase of noncontrolling interests	(1.5		)	—			(5.8		)	(10.1		)	(1.0		)	(1.5		)
Other, net	1.8			(0.1		)	1.1			(0.6		)	0.4			0.3
Net Cash Provided by (Used for) Financing Activities	(74.6		)	(106.5		)	6.8
Net Cash (Used in) Provided by Financing Activities										(91.9		)	2.5			(74.6		)
Effect of exchange rate changes on cash and cash equivalents	0.1			(1.9		)	1.3			(4.2		)	1.4			0.1
Net Increase (Decrease) in Cash and Cash Equivalents	11.3			21.2			(37.8		)
Net Increase In Cash and Cash Equivalents										(44.7		)	107.7			11.3
Cash and cash equivalents, Beginning of Year	84.9			63.7			101.5			203.9			96.2			84.9
Cash and Cash Equivalents, End of Year	$	96.2		$	84.9		$	63.7		$	159.2		$	203.9		$	96.2

Other Cash Flow Information
Interest paid	$	13.4		$	13.4		$	16.9		$	11.5		$	16.4		$	13.4
Income taxes paid, net of cash received	$	35.6		$	57.6		$	48.5		$	41.0		$	34.2		$	35.6

Notes to the Consolidated Financial Statements

Table of Contents



		Page No.
	Note 1 - Significant Accounting and Reporting Policies	4644
	Note 2 - ~~Acquisitions and Divestitures~~Revenue from Contracts with Customers	52
	Note 3 - ~~Inventories~~	54
	~~Note 4 -~~ ~~Investments in Nonconsolidated Affiliates~~	54
	~~Note 5 -~~ ~~Long-Term Debt~~	55
	~~Note 6 -~~ ~~Operating Leases~~Acquisitions and Divestitures	56
	Note 74 - ~~Employee Benefit Plans~~Inventories	56
	Note 5 - Investments in Nonconsolidated Affiliates	57
	Note 6 - Long-Term Debt	58
	Note 7 - Operating Leases	60
	Note 8 - Employee Benefit Plans	61
	Note 9 - Common Stock and Per Share Information	60
	~~Note 9 -~~ ~~Stock-Based Compensation~~	6064
	Note 10 - ~~Income Taxes~~Stock-Based Compensation	65
	Note 11 - ~~Fair Value of Financial Instruments~~Income Taxes	6769
	Note 12 - ~~Warranties, Guarantees, and Contingencies~~Fair Value of Financial Instruments	7072
	Note 13 - ~~Operating Segments~~Warranties, Guarantees, and Contingencies	7176
	Note 14 - ~~Accumulated Other Comprehensive Loss~~Operating Segments	7477
	Note 15 - ~~Redeemable Noncontrolling Interests~~Accumulated Other Comprehensive Loss	7480
	Note 16 - ~~Restructuring and Impairment Activities~~Redeemable Noncontrolling Interests	7481
	Note 17 - ~~Subsequent Event~~Restructuring and Impairment Activities	7581
	Note 18 - Variable Interest Entities	82
	Note 19 - Quarterly Financial Data (Unaudited)	7583

1. Significant Accounting and Reporting Policies

The following is a summary of significant accounting and reporting policies not reflected elsewhere in the accompanying financial statements.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Herman Miller, Inc. and its ~~majority-owned~~controlled domestic and foreign subsidiaries. The consolidated entities are collectively referred to as “the ~~company.~~Company.” All intercompany accounts and transactions have been eliminated in the Consolidated Financial Statements. ~~Nonconsolidated affiliates (20-50 percent owned companies) are accounted for using the equity method.~~

Description of Business

The ~~company~~Company researches, designs, manufactures, sells, and distributes interior furnishings, for use in various environments including office, healthcare, educational and residential settings and provides related services that support companies all over the world. The ~~company's~~Company's products are sold primarily through independent contract office furniture dealers as well as the following channels: owned contract office furniture dealers, direct customer sales, independent retailers, owned retail studios, direct-mail catalogs and the ~~company's~~Company's e-commerce platforms.

Fiscal Year

The ~~company's~~Company's fiscal year ends on the Saturday closest to May 31. The fiscal years ended June 1, 2019 and June 2, 2018 contained 52 weeks, while the fiscal year ended June 3, 2017 contained 53 ~~weeks, while the fiscal years ended May 28, 2016, and May 30, 2015 each contained 52~~ weeks.

Foreign Currency Translation

The functional currency for most of the foreign subsidiaries is their local currency. The cumulative effects of translating the balance sheet accounts from the functional currency into the United States dollar using fiscal year-end exchange rates and translating revenue and expense accounts using average exchange rates for the period is reflected as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets.

The financial statement impact of gains and losses resulting from remeasuring foreign currency transactions into the appropriate functional currency resulted in a net ~~loss~~gain of ~~$0.7 million, $0.7~~$0.3 million and ~~$2.1~~$0.4 million for the fiscal years ended June 1, 2019 and June 2, 2018, respectively, and a net loss of $0.7 million for the fiscal year ended June 3, ~~2017, May 28, 2016, and May 30, 2015, respectively.~~2017. These amounts are included in “Other, net” in the Consolidated Statements of Comprehensive Income.

Cash Equivalents

The ~~company~~Company holds cash equivalents as part of its cash management function. Cash equivalents include money market funds and time deposit investments with original maturities of less than three months. The carrying value of cash equivalents, which approximates fair value, totaled $~~33.6~~102.8 million and $~~7.5~~148.8 million as of June ~~3, 2017~~1, 2019 and ~~May 28, 2016~~June 2, 2018, respectively. All cash equivalents are high-credit quality financial instruments, and the amount of credit exposure to any one financial institution or instrument is limited.

Marketable Securities

The ~~company~~Company maintains a portfolio of marketable securities primarily comprised of mutual funds. These mutual funds are comprised of both equity and fixed income funds. These investments are held by the ~~company's~~Company's wholly owned insurance captive and are considered “available-for-sale” securities. Accordingly, they have been recorded at fair value based on quoted market ~~prices, with~~prices. Net unrealized holding gains or losses related to the ~~resulting~~equity mutual funds are recorded through net income while net unrealized holding gains or losses ~~reflected net of tax as a component of “Accumulated~~related to the fixed income mutual funds are recorded through other comprehensive ~~loss” in the Consolidated Balance Sheets.~~income.

All marketable security transactions are recognized on the trade date. Realized gains and losses on disposal of available-for-sale investments are included in “Interest and other investment income” in the Consolidated Statements of Comprehensive Income. See Note 1112 of the Consolidated Financial Statements for additional disclosures of marketable securities.

Accounts Receivable Allowances

Reserves for uncollectible accounts receivable balances are based on known customer exposures, historical credit experience and the specific identification of other potentially uncollectible accounts. Balances are written off against the reserve once the ~~company~~Company determines the probability of collection to be remote. The ~~company~~Company generally does not require collateral or other security on trade accounts receivable.

Concentrations of Credit Risk

~~Our~~The Company's trade receivables are primarily due from independent dealers who, in turn, carry receivables from their customers. ~~We monitor~~The Company monitors and ~~manage~~manages the credit risk associated with individual dealers and direct customers where applicable. Dealers are responsible for assessing and assuming credit risk of their customers and may require their customers to provide deposits, letters of credit or other credit enhancement measures. Some

sales contracts are structured such that the customer payment or obligation is direct to ~~us.~~the Company. In those cases, wethe Company may assume the credit risk. Whether from dealers or customers, ~~our~~the Company's trade credit exposures are not concentrated with any particular entity.

Inventories

Inventories are valued at the lower of cost or market and include material, labor and overhead. Inventory cost is determined using the last-in, first-out (LIFO) method at manufacturing facilities in Michigan, whereas inventories of the ~~company's~~Company's other locations are valued using the first-in, first-out (FIFO) method. The ~~company~~Company establishes reserves for excess and obsolete inventory based on prevailing circumstances and judgment for consideration of current events, such as economic conditions, that may affect inventory. The reserve required to record inventory at lower of cost or ~~market~~net realizable value may be adjusted in response to changing conditions. Further information on the ~~company's~~Company's recorded inventory balances can be found in Note 34 of the Consolidated Financial Statements.

Goodwill and Indefinite-lived Intangible Assets

Goodwill is tested for impairment at the reporting unit level annually, or more frequently, when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. A reporting unit is defined as an operating segment or one level below an operating segment. When testing goodwill for impairment, the ~~company~~Company may first assess qualitative factors. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is performed. The ~~company~~Company may also elect to skip the qualitative testing and proceed directly to the quantitative testing. If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value.

To estimate the fair value of each reporting unit when performing the ~~company~~quantitative testing, the Company utilizes a weighting of the income method and the market method. The income method is based on a discounted future cash flow approach that uses a number of estimates, including revenue based on assumed growth rates, estimated costs and discount rates based on the reporting unit's weighted average cost of capital. Growth rates for each reporting unit are determined based on internal estimates, historical data and external sources. The growth estimates are also used in planning for ~~our~~the Company's long-term and short-term business planning and forecasting. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against comparable market data. The market method is based on financial multiples of companies comparable to each reporting unit and applies a control premium. The carrying value of each reporting unit represents the assignment of various assets and liabilities, excluding corporate assets and liabilities, such as cash, investments and debt.

The Company completed the required annual goodwill impairment test in the fourth quarter of fiscal 2019, as of March 31, 2019, performing a quantitative and qualitative impairment test for all goodwill reporting units and other indefinite-lived intangible assets. For the reporting units that the Company elected to test qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment, the Company concluded it to be more likely than not that their estimated fair values are greater than their respective carrying values.

In performing the quantitative impairment test, the Company determined that the fair value of the reporting units exceeded the carrying amount and, as such, the reporting units were not impaired and the second step of the impairment test was not necessary.

Intangible assets with indefinite useful lives are not subject to amortization and are evaluated annually for impairment, or more frequently, when events or changes in circumstances indicate that the fair value of an intangible asset may not be recoverable. The ~~company~~Company utilizes the relief from royalty methodology to test for impairment. The primary assumptions for the relief from royalty method include revenue forecasts, earnings forecasts, royalty rates and discount rates. The ~~company~~Company measures and records an impairment loss for the excess of the carrying value of the asset over its fair value. The ~~company's~~Company's indefinite-lived intangible assets consist of certain trade names valued at approximately $78.1 million ~~and $85.2 million~~ as of the end of fiscal ~~2017~~2019 and fiscal ~~2016, respectively.~~2018. These assets have indefinite useful lives.

In fiscal 2019, the Company performed only quantitative assessments in testing indefinite-lived intangible assets for impairment. The ~~company~~carrying value of the Company's DWR trade name indefinite-lived intangible asset was $55.1 million as of June 1, 2019. The calculated fair value of the DWR trade name was $63.2 million which represents an excess fair value of $8.1 million or 14.6%. If the residual cash flows related to the Company's DWR trade name were to decline in future periods, the Company may need to record an impairment charge.

During fiscal 2017, the Company recognized asset impairment expense totaling $7.1 million associated with the Nemschoff trade name, ~~for the fiscal year 2017,~~ which was recorded within the North ~~American Furniture Solutions~~America Contract operating segment. As of the end of fiscal 2017, the carrying value of the Nemschoff trade name was zero. The company recognized asset impairment expense totaling $10.8 million associated with the POSH trade name for the fiscal year 2015, which was recorded within the Corporate category within segment reporting. The POSH trade name asset is included within the ELA Furniture Solutions segment and as of the end of fiscal 2015, the carrying value was zero. These impairment expenses are recorded in the Restructuring and impairment expenses line item within the Consolidated Statements of Comprehensive Income. ~~The trade name assets represent level 3 fair value measurements and these assets are recorded at fair value only when an impairment charge is recognized.~~

Goodwill and other indefinite-lived assets included in the Consolidated Balance Sheets consist of the following:

(In millions) Goodwill Indefinite-lived Intangible Assets Total Goodwill and Indefinite-lived Intangible Assets
Balance, May 30, 2015 $ 303.1
$ 85.2
$ 388.3
Foreign currency translation adjustments (0.4 ) —
(0.4 )
Acquisition of George Nelson Bubble Lamp product line 3.2
—
3.2
Sale of owned dealer (0.6 ) —
(0.6 )
Balance, May 28, 2016 $ 305.3
$ 85.2
$ 390.5
Foreign currency translation adjustments (0.7 ) —
(0.7 )
Sale of owned dealer (0.1 ) —
(0.1 )
Impairment charges —
(7.1 ) (7.1 )
Balance, June 03, 2017 $ 304.5
$ 78.1
$ 382.6

~~Goodwill stemming from the acquisition of the George Nelson Bubble Lamp Product Line in fiscal 2016 is included within the Consumer reportable segment.~~



(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

Property, Equipment and Depreciation

Property and equipment are stated at cost. The cost is depreciated over the estimated useful lives of the assets using the straight-line method. Estimated useful lives range from 3 to 10 years for machinery and equipment and do not exceed 40 years for buildings. Leasehold improvements are depreciated over the lesser of the lease term or the useful life of the asset. ~~We capitalize~~The Company capitalizes certain costs incurred in connection with the development, testing and installation of software for internal ~~use.~~use and cloud computing arrangements. Software for internal use is included in property and equipment and is depreciated over an estimated useful life not exceeding 5 years. Depreciation and amortization expense is included in the Consolidated Statements of Comprehensive Income in the Cost of sales, Selling, general and administrative and Design and research line items.

As of the end of fiscal ~~2017,~~2019, outstanding commitments for future capital purchases approximated ~~$16.3~~$34.7 million.

Other Long-Lived Assets

The ~~company~~Company reviews other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or an asset group may not be recoverable. Each impairment test is based on a comparison of the carrying amount of the asset or asset group to the future undiscounted net cash flows expected to be generated by the asset or asset group, or in some cases, by prices for similar assets. If such assets are considered to be impaired, the impairment amount to be recognized is the amount by which the carrying value of the assets exceeds their fair value.

During the third quarter of fiscal 2015, the company entered into an agreement to sell property in Ningbo, China upon which the company had previously intended to construct a new manufacturing and distribution facility. In the fiscal year preceding this agreement, the property had been written down to its fair value. Subsequent to the end of fiscal 2015, the company completed the sale of the Ningbo property for cash consideration of approximately $4.2 million. The cash consideration received approximated the carrying value of the property.

Amortizable intangible assets within Other amortizable intangibles, net in the Consolidated Balance Sheets consist primarily of patents, trademarks and customer relationships. The customer relationships intangible asset is comprised of relationships with customers, specifiers, networks, dealers and distributors. Refer to the following table for the combined gross carrying value and accumulated amortization for these amortizable intangibles.


	June 3, 2017								June 1, 2019
(In millions)	Patent and Trademarks		Customer Relationships		Other		Total		Patent and Trademarks		Customer Relationships		Other		Total
Gross carrying value	$	20.5	$	55.3	$	7.5	$	83.3	$	20.1	$	55.2	$	12.0	$	87.3
Accumulated amortization	13.3		19.7		4.9		37.9		12.5		27.6		6.1		46.2
Net	$	7.2	$	35.6	$	2.6	$	45.4	$	7.6	$	27.6	$	5.9	$	41.1

	May 28, 2016								June 2, 2018
	Patent and Trademarks		Customer Relationships		Other		Total		Patent and Trademarks		Customer Relationships		Other		Total
Gross carrying value	$	19.8	$	55.7	$	7.5	$	83.0	$	22.4	$	55.3	$	7.5	$	85.2
Accumulated amortization	12.3		15.9		4.0		32.2		14.7		23.5		5.7		43.9
Net	$	7.5	$	39.8	$	3.5	$	50.8	$	7.7	$	31.8	$	1.8	$	41.3

2. Revenue from Contracts with Customers

Impact of Adoption

2.The Company adopted ASC 606 - Revenue from Contracts with Customers at the beginning of fiscal year 2019. The Company completed its review of the impact of the new standard and identified certain key accounting policy changes that resulted from adopting the new standard. These included changes to the identification of performance obligations for commercial contracts in which the Company sells directly to end customers. Under previous accounting rules, which were codified under ASC 605, the Company generally delayed revenue recognition until the products were shipped and installed as the Company had concluded that contracts that contained both products and services represented a single, combined deliverable. However, under ASC 606, the Company has determined that products and services are distinct and as such, represent separate performance obligations. The Company also determined that under ASC 606, certain product pricing elements related to its direct customer sales should be recorded within Cost of sales rather than net within Net sales as had been historical practice under ASC 605.

The Company adopted ASC 606 using the modified retrospective approach and applied the guidance therein to all applicable contracts that were not complete as of the date of adoption. As a result of these changes in accounting, the Company recorded a cumulative adjustment to retained earnings of $1.9 million on the date of adoption. With the change in performance obligations under ASC 606, product revenue recognition is accelerated on certain direct commercial customer sales. As a result, the cumulative adjustment recorded upon the adoption of ASC 606 had the impact of reducing inventory for sales transactions that would have been recognized in a prior period under ASC 606 and recording unbilled receivables for the amounts owed prior to invoicing. Additionally, the cumulative adjustment reflects the change in accrued expenses, including income taxes payable, related to these sales transactions.

The cumulative impact to our Consolidated Balance Sheet as of June 3, 2018 was as follows:



	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

In accordance with the modified retrospective adoption rules per ASC 606, the Company has disclosed in the table below the differences in our financial statements due to the adoption of the standard. The “As reported” column represents the financial statement values recorded in accordance with ASC 606, while the “Legacy GAAP” column represents what the financial statement values would have been under ASC 605, had the new standard not been adopted.



	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

There was no impact on Net Cash Provided by Operating Activities within the Company's Consolidated Statement of Cash Flows as a result of adopting ASC 606.

Accounting Policies

The Company recognizes revenue when performance obligations, based on the terms of customer contracts, are satisfied. This happens when control of goods and services based on the contract have been conveyed to the customer. Revenue for the sale of products is typically recognized at the point in time when control transfers, generally upon transfer of title and risk of loss to the customer. Revenue for services, including the installation of products by the Company's owned dealers, is recognized over time as the services are provided. The method of revenue recognition may vary, depending on the type of contract with the customer, as noted in the section Disaggregated Revenue further below.

The Company's contracts with customers include master agreements and certain other forms of contracts, which do not reach the level of a performance obligation until a purchase order is received from a customer. At the point in time that a purchase order under a contract is received by the Company, the collective group of documents represent an enforceable contract between the Company and the customer. While certain customer contracts may have a duration of greater than a year, all purchase orders are less than a year in duration. As of June 1, 2019, all unfulfilled performance obligations are expected to be fulfilled in the next twelve months.

The Company adopted the following accounting policies as a result of adopting the new standard on revenue recognition:


–	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.

Disaggregated Revenue

The Company’s revenue is comprised primarily of sales of products and installation services. Depending on the type of contract, the method of accounting and timing of revenue recognition may differ. Below, descriptions have been provided that summarize the Company’s different types of contracts and how revenue is recognized for each.

–

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.

In certain instances, entities owned by the Company, rather than independent third-party dealers, perform installation and other services. In these cases, Service revenue is generated by the Company’s entities that provide installation services, which include owned dealers, and is recognized by the Company over time as the services are provided. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation based on relative standalone selling prices.


–	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.

Revenue disaggregated by contract type has been provided in the table below:



	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

Revenue disaggregated by product type and reportable segment has been provided in the table below:



	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

Refer to Note 14 of the Consolidated Financial Statements for further information related to our reportable segments.

Contract Assets and Contract Liabilities

The Company records contract assets and contract liabilities related to its revenue generating activities. Contract assets include certain receivables from customers that are unconditional as all performance obligations with respect to the contract with the customer have been completed. These amounts represent trade receivables and they are recorded within the caption “Accounts and notes receivable” in the Consolidated Balance Sheets. The payment terms for the Company's customers differs depending on the type of customer. For third-party dealers and commercial contract customers, standard credit terms apply. Sales transacted through the Company's direct to consumer channels are generally paid for by the customer at point of sale.

Contract assets also include amounts that are conditional because certain performance obligations in the contract with the customer are incomplete as of the balance sheet date. These contract assets generally arise due to contracts with the customer that include multiple performance obligations, both the product that is shipped to the customer by the Company, as well as installation services provided by independent third-party dealers. For these contracts, the Company recognizes revenue upon satisfaction of the product performance obligation. However, the asset is conditional and the customer is not invoiced by the Company until the installation performance obligation is completed. These contract assets are included in the caption "Unbilled accounts receivable" in the Consolidated Balance Sheets until all performance obligations in the contract with the customer have been satisfied.

Contract liabilities represent deposits made by customers before the satisfaction of performance obligation(s) are complete and revenue is recognized. Upon completion of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer deposit is relieved and revenue is recognized. These customer deposits are included within the caption “Customer deposits” in the Consolidated Balance Sheets. During the year ended June 1, 2019, the Company recognized Net sales of $26.9 million related to customer deposits there were included in the balance sheet as of June 2, 2018.

3. Acquisitions and Divestitures

~~Dealership~~Contract Furniture Dealerships

On July 31, 2017, the Company completed the sale of a wholly-owned contract furniture dealership in Vancouver, Canada for initial cash consideration of $2.0 million. A pre-tax gain of $1.1 million was recognized as a result of the sale within the caption Selling, general and administrative within the Consolidated Statements of Comprehensive Income.

On January 1, 2017, the ~~company~~Company completed the sale of a wholly-owned contract furniture dealership in Pennsylvania in exchange for a $3.0 million note receivable. A pre-tax gain of $0.7 million was recognized as a result of the sale within the caption Selling, general and administrative within the Consolidated Statements of Comprehensive Income. The full balance of the note receivable was ~~deemed to be a variable interest~~paid in ~~a variable interest entity. The carrying value of~~ the note was $1.4 million as of June 3, 2017 and represents the company's maximum exposure to loss. The company is not deemed to be the primary beneficiary of the variable interest entity as the buyers of the dealership control the activities that most significantly

~~impact the entity's economic performance, including sales, marketing and operations.~~

~~George Nelson Bubble Lamp Product Line Acquisition~~

On September 17, 2015, the company acquired certain assets associated with the George Nelson Bubble Lamp product line, which together constituted the acquisition of a business. Consideration transferred to acquire the assets consisted of $3.6 million in cash transferred during the secondfourth quarter of fiscal ~~2016 and an additional component of performance-based contingent consideration with~~2019.

Maars Holding B.V.

On August 31, 2018, Herman Miller Holdings Limited, a ~~fair value of $2.7 million as~~wholly owned subsidiary of the ~~acquisition date.~~

~~The assets~~Company, acquired included an exclusive manufacturing agreement and customer relationships with fair values of $2.5 million and $0.6 million, respectively, each having a useful life of 10 years. The excess of the purchase consideration over the fair value of the net assets acquired was $3.2 million and recognized as goodwill within the Consumer reportable segment. The total amount of this goodwill is deductible for tax purposes.

~~Design Within Reach Acquisition~~

~~On July 28, 2014, the company acquired the majority~~48.2% of the outstanding equity of ~~Design Within Reach, Inc.~~Global Holdings Netherlands B.V., which owns 100% of Maars Holding B.V. ("~~DWR"~~Maars”), a ~~Stamford, Connecticut based, leading North American marketer~~Harderwijk, Netherlands-based worldwide leader in the design and ~~seller~~manufacturing of ~~modern furniture, lighting, and accessories primarily serving consumers and design trade professionals.~~interior wall solutions. The ~~acquisition~~Company acquired its 48.2% ownership interest in Maars for approximately $6.1 million in cash. The entity is accounted for using the equity method of ~~DWR advances~~accounting as the ~~company's strategy of being both an industry brand and a consumer brand by expanding~~Company has significant influence, but not control, over the ~~company's reach into the consumer sector.~~entity.

For the Maars equity method investment, the fair values assigned to the assets acquired were based on best estimates and assumptions as of the reporting date and the valuation analysis was completed in the fourth quarter of fiscal 2019 with no differences noted from the preliminary valuation.

Nine United Denmark A/S

On June 7, 2018, Herman Miller Holdings Limited, a wholly owned subsidiary of the Company, acquired 33% of the outstanding equity of Nine United Denmark A/S, d/b/a HAY and subsequently renamed to HAY A/S ("HAY”), a Copenhagen, Denmark-based, design leader in furniture and ancillary furnishings for residential and contract markets in Europe and Asia. The Company acquired its 33% ownership interest in HAY for approximately $65.5 million in cash. The entity is accounted for using the equity method of accounting as the Company has significant influence, but not control, over the entity.

The ~~company purchased an ownership interest~~Company also acquired the rights to the HAY brand in ~~DWR equal to~~North America under a long-term license agreement for approximately ~~81 percent for $155.2~~$4.8 million million in cash. ~~Subsequent to the initial transaction, the company acquired~~This licensing agreement is recorded as an ~~additional 4 percent of DWR stock from the remaining public shareholders for approximately $5.8 million in cash, all of which was paid during the first~~amortizing intangible asset and second quarters of fiscal 2015. The remaining 15 percent of DWR stock was contributed by DWR executives into the newly formed consumer business subsidiary and the company contributed the assets of the existing Herman Miller Consumer business. After these transactions, the redeemable noncontrolling interests in the newly formed subsidiary, known as Herman Miller Consumer Holdings, Inc. ("HMCH"), were approximately 7 percent. The remaining HMCH shareholders have a put option to require the company to purchase their remaining interestis being amortized over ~~a five years period from the date of issuance of such shares. As a result, these noncontrolling interests are not included~~its 15-year useful life. This asset is recorded within ~~Stockholders' Equity~~Other amortizable intangibles, net within the Condensed Consolidated Balance ~~Sheets, but rather are included within Redeemable noncontrolling interests.~~Sheets.

~~DWR acquisition-related expenses~~For the Hay equity method investment, the fair values assigned to the assets acquired were ~~$2.2 million during~~based on best estimates and assumptions as of the reporting date and the valuation analysis was completed in the third quarter of fiscal ~~year 2015. These expenses included legal and professional services fees.~~

Assets Acquired and Liabilities Assumed on July 28, 2014
(In millions) Fair Value
Purchase price $ 155.2
Fair value of the assets acquired:
Cash 1.2
Accounts receivable 2.2
Inventory 47.4
Current deferred tax asset 1.5
Other current assets 5.5
Goodwill 75.6
Other intangible assets 68.5
Property 32.0
Other long term assets 2.4
Total assets acquired 236.3
Fair value of liabilities assumed:
Accounts payable 20.8
Accrued compensation and benefits 1.6
Other accrued liabilities 12.3
Long term deferred tax liability 14.5
Other long term liabilities 0.4
Total liabilities assumed 49.6
Redeemable noncontrolling interests 25.7
Noncontrolling interests 5.8
Net assets acquired $ 155.2
2019 with no differences noted from the preliminary valuation.

The ~~goodwill stemming~~Company is a party to options, that if exercised, would require the Company to purchase an additional 33% of the equity in HAY at fair market value. These options may be exercised during a period commencing from the ~~transaction in the amount~~third quarter of ~~$75.6 million was recorded as "Goodwill" in the Condensed Consolidated Balance Sheets~~fiscal 2020 and allocated to the Consumer reportable segment. The goodwill recognized is attributable primarily to the assembled workforce and expected synergies from DWR and the total amount of this goodwill is not deductible for tax purposes.annually thereafter.

~~Other intangible assets acquired as a result of the acquisition of DWR were valued at $68.5 million. These amounts are reflected in the values presented in the following table:~~

Intangible Assets Acquired from the DWR Acquisition
(In millions) Fair Value Useful Life
Trade Names and Trademarks $ 55.1
Indefinite
Exclusive Distribution Agreements 0.2
1.5 years
Customer Relationships 12.0
10 - 16 years
Product Development Designs 1.2
7 years
Total Intangible Assets Acquired $ 68.5

3.4. Inventories


(In millions)	June 3, 2017		May 28, 2016		June 1, 2019		June 2, 2018
Finished goods and work in process	$	119.0	$	102.1	$	139.1	$	124.2
Raw materials	33.4		26.1		45.1		38.2
Total	$	152.4	$	128.2	$	184.2	$	162.4

Item 9A ~~CONTROLS AND PROCEDURES~~Controls and Procedures



(a)	Disclosure Controls and Procedures. Under the supervision and with the participation of management, the ~~company's~~Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the ~~company's~~Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June ~~3, 2017~~1, 2019 and have concluded that as of that date, the ~~company's~~Company's disclosure controls and procedures were effective.
(b)	Management's Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Independent Registered Public Accounting Firm. Refer to Item 8 for “Management's Report on Internal Control Over Financial Reporting.” The effectiveness of the ~~company's~~Company's internal control over financial reporting has been audited by Ernst and Young LLP, an independent registered accounting firm, as stated in its report included in Item 8.
(c)	Changes in Internal Control Over Financial Reporting. There were no changes in the ~~company's~~Company's internal control over financial reporting during the fourth quarter ended June ~~3, 2017,~~1, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B ~~OTHER INFORMATION~~Other Information

None

PART III

Item 10 ~~DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE~~Directors, Executive Officers and Corporate Governance

Directors, Executive Officers, Promoters and Control Persons

Information relating to directors and director nominees of the ~~registrant~~Company is contained under the caption “Director and Executive Officer Information” in the ~~company's~~Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders, and the information within that section is incorporated by reference. Information relating to Executive Officers of the ~~company~~Company is included in Part I hereof entitled “Executive Officers of the Registrant.”

Compliance with Section 16(a) of the Exchange Act

Information relating to compliance with Section 16(a) of the Exchange Act is contained under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the ~~company's~~Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders, and the information within that section is incorporated by reference.

Code of Ethics

The ~~company~~Company has adopted a Code of Conduct that serves as the code of ethics for the executive officers and senior financial officers and as the code of business conduct for all Company directors and ~~employees of the registrant.~~employees. This code is made available free of charge through the “Investors” section of the ~~company's~~Company's internet website at www.hermanmiller.com. Any amendments to, or waivers from, a provision of this code also will be posted to the ~~company's~~Company's internet website.

Corporate Governance

Information relating to the identification of the audit committee, audit committee financial experts, and director nomination procedures of the ~~registrant~~Company is contained under the captions “Board Committees” and “Corporate Governance and Board Matters — Director Nominations” in the ~~company's~~Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders, and the information within these sections is incorporated by reference.

Item 11 ~~EXECUTIVE COMPENSATION~~Executive Compensation

Information relating to ~~management remuneration~~executive compensation is contained under the captions “Compensation Discussion and Analysis,” “Summary Compensation Table,” “Grants of Plan-Based Awards,” “Outstanding Equity Awards at Fiscal Year-End,” “Option Exercises and Stock Vested,” “Pension Benefits,” “Nonqualified Deferred Compensation,” “Potential Payments Upon Termination, Death, Disability, Retirement or Change in Control,” “Director Compensation,” “Director Compensation Table,” and “Compensation Committee Interlocks and Insider Participation” in the ~~company's~~Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders, and the information within these sections is incorporated by reference. The information under the caption “Compensation Committee Report” is incorporated by reference, however, such information is not deemed filed with the Commission.

Item 12 ~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The sections entitled “Voting Securities and Principal Stockholders,” “Director and Executive Officer Information,” and “Equity Compensation Plan Information” in the Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders, and the information within these sections is incorporated by reference.

Item 13 ~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~Certain Relationships and Related Transactions, and Director Independence

Information concerning certain relationships and related transactions contained under the captions “Related Party Transactions,” and “Corporate Governance and Board Matters — Determination of Independence of Board Members” in the Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders and the information within these sections is incorporated by reference.

Item 14 ~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~Principal Accountant Fees and Services

Information relating to the ratification of the selection of the Company's independent public accountants and concerning the payments to our principal accountants and the services provided by our principal accounting firm set forth under the ~~caption~~captions "Ratification of the Audit Committee's selection of Independent Registered Accounting Firm" and “Disclosure of Fees Paid to Independent Auditors” in the ~~Definitive~~Company's definitive Proxy Statement, relating to the ~~company's 2017~~Company's 2019 Annual Meeting of Stockholders, and the information within that section is incorporated by reference.

PART IV

Item 15 ~~EXHIBITS AND FINANCIAL STATEMENT SCHEDULE~~Exhibits and Financial Statement Schedule



(a)	The following documents are filed as a part of this report:

	1.	Financial Statements

	The following Consolidated Financial Statements of the ~~company~~Company are included in this Annual Report on Form 10-K on the pages noted:

				Page Number in this Form 10-K
	Consolidated Statements of Comprehensive Income			4139
	Consolidated Balance Sheets			4240
	Consolidated Statements of Stockholders' Equity			4341
	Consolidated Statements of Cash Flows			4442
	Notes to the Consolidated Financial Statements			4543
	Management's Report on Internal Control over Financial Reporting			7784
	Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting			7885
	Report of Independent Registered Public Accounting Firm on Financial Statements			7986

	2.	Financial Statement Schedule

	The following financial statement schedule ~~and related Report of Independent Public Accountants on the Financial Statement Schedule are~~is included in this Annual Report on Form 10-K on the pages noted:

				Page Number in this Form 10-K
	~~Report of Independent Registered Public Accounting Firm on Financial Statement Schedule~~		84

	Schedule II-		Valuation and Qualifying Accounts and Reserves for the Years Ended June 1, 2019, June 2, 2018 and and June 3, 2017 ~~May 28, 2016 and May 30, 2015~~	85101

	All other schedules required by Form 10-K Annual Report have been omitted because they were not applicable, included in the Notes to the Consolidated Financial Statements, or otherwise not required under instructions contained in Regulation S-X.

	3.	Exhibits

	Reference is made to the Exhibit Index which is included on pages ~~85-86.~~97-99.

Item 16 Form 10-K Summary

None

EXHIBIT INDEX



(3)	Articles of Incorporation and Bylaws

	(a)	Restated Articles of Incorporation, dated October 8, 2018, is incorporated by reference to Exhibit 3.1 of Registrant's Form 8-K Report dated October 8, 2018 (Commission File No. 001-15141).

	(b)	Amended and Restated Bylaws, dated April 9, 2019, is incorporated by reference to Exhibit 3 of the Registrant's Form 8-K Report dated April 9, 2019 (Commission File No. 001-15141).



(4)	Instruments Defining the Rights of Security Holders

	(a)	Specimen copy of Herman Miller, Inc., common stock is incorporated by reference to Exhibit 4(a) of Registrant's 1981 Form 10-K Annual Report (Commission File No. 001-15141).

	(b)	Other instruments which define the rights of holders of long-term debt individually represent debt of less than 10% of total assets. In accordance with item 601(b)(4)(iii)(A) of regulation S-K, the Registrant agrees to furnish to the Commission copies of such agreements upon request.

	(c)	Dividend Reinvestment Plan for Shareholders of Herman Miller, Inc., dated January 6, 1997, is incorporated by reference to Exhibit 4(d) of the Registrant's 1997 Form 10-K Annual Report (Commission File No. 000-05813).

	(d)	Third Amended and Restated Credit agreement dated as of July 21, 2014 among Herman Miller, Inc. and various lenders is incorporated by reference to Exhibit 10.1 of the Registrant's Report on Form 8-K dated July 22, 2014 (Commission File No. 001-15141).



(10)	Material Contracts

	(a)	Herman Miller, Inc. 2011 Long-Term Incentive Plan, as amended by Sixth Amendment (2019).⁽¹⁾

	(b)	Herman Miller, Inc. Nonemployee Officer and Director Deferred Compensation Plan is incorporated by reference to Exhibit 10(b) of the Registrant's Form 10-K Report dated July 26, 2016 (Commission File No. 001-15141).⁽¹⁾

	(c)	Form of Change in Control Agreement of the Registrant is incorporated by reference to Exhibit 10(c) of Registrant's Form 10-K Report dated August 1, 2017 (Commission File No. 001-15141).⁽¹⁾

	(d)	Herman Miller, Inc. Executive Equalization Retirement Plan is incorporated by reference to Exhibit 10 (d) of the Registrant's Form 10-K Report dated July 28, 2015 (Commission File No. 001-15141).⁽¹⁾

	(e)	Form of Herman Miller, Inc., Long-Term Incentive Plan Stock Option Agreement is incorporated by reference to Exhibit 10.1 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

	(f)	Form of Herman Miller, Inc., Long-Term Incentive Restricted Stock Unit Award is incorporated by reference to Exhibit 10.2 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

	(g)	Form of Herman Miller, Inc. 2011 Long-Term Incentive HMVA Plan Performance Share Unit Award is incorporated by reference to Exhibit 10.3 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

	(h)	Form of Herman Miller, Inc. 2011 Long-Term Incentive Plan TSR Performance Share Unit Award Agreement is incorporated by reference to Exhibit 10.4 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾



		(i)	Form of Herman Miller, Inc. 2011 Long-Term Incentive Plan Conditional Stock Option Award is incorporated by reference to Exhibit 10(p) of the Registrant's 10-K Report dated July 28, 2015 (Commission File No. 001-15141).⁽¹⁾

		(j)	Trust Under the Herman Miller, Inc. Nonemployee Officer and Director Compensation Plan is incorporated by reference to Exhibit 10(q) of the Registrant's Form 10-K Report dated July 26, 2016 (Commission File No. 001-15141).⁽¹⁾

		(k)	Retirement Agreement dated February 5, 2018 between Herman Miller, Inc. and Brian C. Walker, Chief Executive Officer, is incorporated by reference to Exhibit 10.1 of the Registrant's Form 10-Q Report dated April 11, 2018 (Commission File No. 001-15141).⁽¹⁾

		(l)	Covenant Agreement dated February 5, 2018 between Herman Miller, Inc. and Brian C. Walker, Chief Executive Officer, is incorporated by reference to Exhibit 10.2 of the Registrant's Form 10-Q Report dated April 11, 2018 (Commission File No. 001-15141).⁽¹⁾

		(m)	Form of Retention Agreement between Herman Miller, Inc. and Jeffrey M. Stutz, Gregory J. Bylsma, Andrew J. Lock, and B. Ben Watson is incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K Report dated February 5, 2018 (Commission File No. 001-15141).⁽¹⁾

		(n)	The Share Purchase agreement dated June 7, 2018 between Herman Miller Holdings Limited, Nine United A/S and Holdingselskabet af 1/7 2007 ApS is incorporated by reference to Exhibit 10(v) of Registrant's Form 10-K Report dated July 31, 2018 (Commission File No. 001-15141).⁽¹⁾

		(o)	Employment Agreement between Herman Miller, Inc. and Andrea R. Owen, Chief Executive Officer, dated August 3, 2018, is incorporated by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Report dated October 10, 2018 (Commission File No. 001-15141).⁽¹⁾

		(p)	Stock Option Agreement between Herman Miller, Inc. and Andrea Owen is incorporated by reference to Exhibit [10.5] of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

		(q)	Restricted Stock Unit Award Agreement between Herman Miller, Inc. and Andrea Owen is incorporated by reference to Exhibit 10.6 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

		(r)	HMVA Performance Share Award Agreement between Herman Miller, Inc. and Andrea Owen is incorporated by reference to Exhibit 10.7 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

		(s)	TSR Performance Share Unit Award Agreement between Herman Miller, Inc. and Andrea Owen is incorporated by reference to Exhibit 10.8 of the Registrant's Form 10-Q Report dated January 9, 2019 (Commission File No. 001-15141).⁽¹⁾

		(t)	Herman Miller, Inc. 2019 Executive Incentive Cash Bonus Plan dated July 15, 2019 is incorporated by reference to Exhibit 10 of the Registrant's Form 8-K filed July 19, 2019 (Commission File No. 001-15141).⁽¹⁾



	(21)	Subsidiaries



	(23)(a)	Consent of Independent Registered Public Accounting Firm



	(24)	Power of Attorney (included on the signature page to this Registration Statement)



	(31)(a)	Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



	(31)(b)	Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



	(32)(a)	Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



	(32)(b)	Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



	101.INS	XBRL Instance Document

	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

⁽¹⁾ Denotes compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~August 1, 2017~~July 30, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on, ~~August 1, 2017~~July 30, 2019 by the following persons on behalf of the Registrant in the capacities indicated.



/s/ Michael A. Volkema		/s/ Lisa Kro
Michael A. Volkema (Chairman of the Board)		Lisa Kro (Director)

/s/ David ~~O. Ulrich~~A. Brandon		/s/ Mary Vermeer Andringa
David ~~O. Ulrich~~ A. Brandon (Director)		Mary Vermeer Andringa (Director)

/s/ ~~Dorothy A. Terrell~~Douglas D. French		/s/ John R. Hoke III
~~Dorothy A. Terrell~~ Douglas D. French (Director)		John R. Hoke III (Director)

/s/ ~~David A. Brandon~~Heidi Manheimer		/s/ J. Barry Griswell
~~David A. Brandon~~ Heidi Manheimer (Director)		J. Barry Griswell (Director)

/s/ ~~Douglas D. French~~Mike Smith		/s/ ~~Brian C. Walker~~Andrea R. Owen
~~Douglas D. French~~Mike Smith (Director)		~~Brian C. Walker~~Andrea R. Owen (President, Chief Executive Officer, and Director)

~~/s/ Heidi Manheimer~~		/s/ Jeffrey M. Stutz
~~Heidi Manheimer~~ ~~(Director)~~		Jeffrey M. Stutz (Chief Financial Officer and Principal Accounting Officer)

~~/s/ Brenda Freeman~~
~~Brenda Freeman (Director)~~	��

~~Report of Independent Registered Public Accounting Firm~~

~~To the Board of Directors and Shareholders of Herman Miller, Inc.~~

We have audited the consolidated financial statements of Herman Miller, Inc. as of June 3, 2017 and May 28, 2016, and for each of the three years in the period ended June 3, 2017, and have issued our report thereon dated August 1, 2017 (included elsewhere in this Form 10K). Our audits also included the financial statement schedule listed in Item 15(a) of this Form 10-K. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this schedule based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

~~/s/ Ernst & Young LLP~~

~~Grand Rapids, Michigan~~

~~August 1, 2017~~

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(In millions)


Column A	Column B		Column C			Column D			Column E		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		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	$	3.4	$	—		$	(1.1	)	$	2.3

Accounts receivable allowances — credit memo⁽²⁾	$	0.4	$	—		$	—		$	0.4	$	0.4	$	—		$	—		$	0.4

Allowance for possible losses on notes receivable	$	0.9	$	—		$	—		$	0.9	$	0.9	$	—		$	—		$	0.9

Valuation allowance for deferred tax asset	$	10.6	$	(0.6	)	$	—		$	10.0	$	10.6	$	(0.6	)	$	—		$	10.0

Year ended May 28, 2016:
Accounts receivable allowances — uncollectible accounts⁽¹⁾	$	2.4	$	2.3		$	(1.3	)	$	3.4

Accounts receivable allowances — credit memo⁽²⁾	$	0.4	$	—		$	—		$	0.4

Allowance for possible losses on notes receivable	$	1.0	$	(0.1	)	$	—		$	0.9

Valuation allowance for deferred tax asset	$	11.1	$	(1.5	)	$	1.0		$	10.6

Year ended May 30, 2015:
Accounts receivable allowances — uncollectible accounts⁽¹⁾	$	3.4	$	0.9		$	(1.9	)	$	2.4

Accounts receivable allowances — credit memo⁽²⁾	$	0.6	$	—		$	(0.2	)	$	0.4

Allowance for possible losses on notes receivable	$	0.1	$	0.9		$	—		$	1.0

Valuation allowance for deferred tax asset	$	8.5	$	(0.6	)	$	3.2		$	11.1

(1) Activity under the “Charges to expense or net sales” column are recorded within selling, general and administrative expenses.

(2) Activity under the “Charges to expenses or net sales” column are recorded within net sales.

(3) Represents amounts written off, net of recoveries and other adjustments. Includes effects of foreign translation.

~~EXHIBIT INDEX~~



~~(3)~~	~~Articles of Incorporation and Bylaws~~

	~~(a)~~	~~Restated Articles of Incorporation, dated October 4, 2013, is incorporated by reference from Exhibit 3(a) of Registrant's 2014 Form 10-K Annual Report (Commission File No. 001-15141).~~

	~~(b)~~	~~Amended and Restated Bylaws, dated July 13, 2015, is incorporated by reference from Exhibit 3 of the Registrant's Form 8-K dated July 17, 2015 (Commission File No. 001-15141).~~ .



~~(4)~~	~~Instruments Defining the Rights of Security Holders~~

	~~(a)~~	~~Specimen copy of Herman Miller, Inc., common stock is incorporated by reference from Exhibit 4(a) of Registrant's 1981 Form 10-K Annual Report (Commission File No. 001-15141).~~ .

	~~(b)~~	Other instruments which define the rights of holders of long-term debt individually represent debt of less than 10% of total assets. In accordance with item 601(b)(4)(iii)(A) of regulation S-K, the Registrant agrees to furnish to the Commission copies of such agreements upon request.

	~~(c)~~	Dividend Reinvestment Plan for Shareholders of Herman Miller, Inc., dated January 6, 1997, is incorporated by reference from Exhibit 4(d) of the Registrant's 1997 Form 10-K Annual Report (Commission File No. 000-05813).

	~~(d)~~	Third Amended and Restated Credit agreement dated as of July 21, 2014 among Herman Miller, Inc. and various lenders is incorporated by reference from Exhibit 10.1 of the Registrant's Current Report on Form 8-K dated July 22, 2014 (Commission File No. 001-15141).



	~~(10)~~	~~Material Contracts~~



		~~(a)~~	Herman Miller, Inc. 2011 Long-Term Incentive Plan is incorporated by reference from Appendix I of the Registrant's Definitive Proxy Statement dated August 26, 2014, as amended, filed with the Commission as of August 26, 2014 (Commission File No. 001-15141). ⁽¹⁾

		~~(b)~~	Herman Miller, Inc. Nonemployee Officer and Director Deferred Compensation Plan is incorporated by reference to Exhibit 10(b) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾

		~~(c)~~	~~Form of Change in Control Agreement of the Registrant and James E. Christenson.~~



		~~(d)~~	~~Herman Miller, Inc. Executive Equalization Retirement Plan is incorporated by reference from Exhibit 10 (d) of the Registrant's Form 10-K dated July 28, 2015 (Commission File No. 001-15141).~~ ⁽¹⁾

		~~(e)~~	~~Herman Miller, Inc. Executive Incentive Cash Bonus Plan dated April 24, 2006.~~ ⁽¹⁾

		~~(f)~~	Form of Herman Miller, Inc., Long-Term Incentive Plan Stock Option Agreement is incorporated by reference to Exhibit 10(f) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾

		~~(g)~~	Form of Herman Miller, Inc., Long-Term Incentive Restricted Stock Unit Award is incorporated by reference to Exhibit 10(g) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾

		~~(h)~~	~~Form of Herman Miller, Inc., Long-Term Incentive Performance Stock Unit EBITDA Award.~~⁽¹⁾

		~~(i)~~	Second Amendment to the Herman Miller, Inc. 2011 Long-Term Incentive Plan is incorporated by reference to Exhibit 10(i) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾

		~~(j)~~	Form of Herman Miller, Inc. 2011 Long-Term Incentive Plan Performance Share Unit Award is incorporated by reference to Exhibit 10(j) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾



		~~(k)~~	~~Employment Agreement between John Edelman and Design Within Reach is incorporated by reference from Exhibit 10(b) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).~~ ⁽¹⁾

		~~(l)~~	~~Employment Agreement between John McPhee and Design Within Reach is incorporated by reference from Exhibit 10(c) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).~~ ⁽¹⁾

		~~(m)~~	Stockholders' Agreement between HM Springboard, Inc., Herman Miller, Inc., John Edelman, and John McPhee is incorporated by reference from Exhibit 10(d) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141). ⁽¹⁾⁽³⁾

		~~(n)~~	~~HM Springboard, Inc. Stock Option Plan is incorporated by reference from Exhibit 10(e) of the Registrant's Form 10-Q dated October 8, 2014 (Commission File No. 001-15141).~~ ⁽¹⁾⁽³⁾

		~~(o)~~	Third Amendment to the Herman Miller, Inc. 2011 Long-Term Incentive Plan is incorporated by reference to Exhibit 10(o) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾

		~~(p)~~	Form of Herman Miller, Inc. 2011 Long-Term Incentive Plan Conditional Stock Option Award is incorporated by reference from Exhibit 10 (p) of the Registrant's Form 10-K dated July 28, 2015 (Commission File No. 001-15141). ⁽¹⁾

		~~(q)~~	Trust Under the Herman Miller, Inc. Nonemployee Officer and Director Compensation Plan is incorporated by reference to Exhibit 10(q) of the Registrant's Report on Form 10-K dated July 26, 2016 (Commission File No. 001-15141). ⁽¹⁾



	~~(21)~~	~~Subsidiaries~~



	~~(23)(a)~~	~~Consent of Independent Registered Public Accounting Firm~~



	~~(24)~~	~~Power of Attorney (included on the signature page to this Registration Statement)~~



	~~(31)(a)~~	~~Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~



	~~(31)(b)~~	~~Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~



	~~(32)(a)~~	~~Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~



	~~(32)(b)~~	~~Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~



	~~101.INS~~	~~XBRL Instance Document~~⁽²⁾



	~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~⁽²⁾



	~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~⁽²⁾



	~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~⁽²⁾



	~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~⁽²⁾



	~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~⁽²⁾

⁽¹⁾ ~~Denotes compensatory plan or arrangement.~~

⁽²⁾ In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed “furnished” and not “filed” under sections 11 or 12 of the Securities Act of 1933 and/or under section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

⁽³⁾ ~~Subsequent to the agreement, the legal name of the company was changed from HM Springboard, Inc. to~~ Herman Miller, ~~Consumer Holdings,~~ Inc.

~~87 2017 Annual Report~~ and Subsidiaries 101



	Michigan		38-0837640
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	855 East Main Avenue
	PO Box 302
	Zeeland, Michigan		49464-0302
	(Address of principal executive offices)		(Zip Code)



Registrant's telephone number, including area code: (616) 654 3000
Securities registered pursuant to Section 12(b) of the Act: ~~None~~
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	MLHR	NASDAQ-Global Select Market System
Securities registered pursuant to Section 12(g) of the Act: None	~~Common Stock, $.20 Par Value~~ ~~(Title of Class)~~



	Page No.
Part I
Item 1 Business	32
Item 1A Risk Factors	65
Item 1B Unresolved Staff Comments	910
Item 2 Properties	1011
Item 3 Legal Proceedings	1112
Additional Item: Executive Officers of the Registrant	1112
Item 4 Mine Safety Disclosures	1113
Part II
Item 5 Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	1214
Item 6 Selected Financial Data	1416
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 7A Quantitative and Qualitative Disclosures about Market Risk	3937
Item 8 Financial Statements and Supplementary Data	4139
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	8087
Item 9A Controls and Procedures	8088
Item 9B Other Information	8089
Part III
Item 10 Directors, Executive Officers, and Corporate Governance	8190
Item 11 Executive Compensation	8191
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8192
Item 13 Certain Relationships and Related Transactions, and Director Independence	8193
Item 14 Principal Accountant Fees and Services	8194
Part IV
Item 15 Exhibits and Financial Statement Schedule	8295
Item 16 Form 10-K Summary	96
Exhibit Index	97
Signatures	83
~~Report of Independent Registered Public Accounting Firm on Financial Statement Schedule~~	84100
Schedule II Valuation and Qualifying Accounts	85
~~Exhibit Index~~	86101



Owned Locations	Square Footage	Use
Zeeland, Michigan	~~750,800~~770,800	Manufacturing, Warehouse, Office
Spring Lake, Michigan	~~582,700~~582,800	Manufacturing, Warehouse, Office
Holland, Michigan	357,400	Warehouse
Holland, Michigan	293,100	Manufacturing, Office
Dongguan, China*	269,000	Manufacturing, Office
Holland, Michigan	238,200	Office, Design
~~Dongguan, China~~	~~431,600~~	~~Manufacturing, Office~~
Sheboygan, Wisconsin	207,700	Manufacturing, Warehouse, Office
Melksham, United Kingdom	170,000	Manufacturing, Warehouse, Office
Hildebran, North Carolina	93,000	Manufacturing, Office

Leased Locations	Square Footage	Use
Batavia, Ohio**	617,600	Warehouse
Dongguan, China*	429,300	Manufacturing, Office
Hebron, ~~Kentucky~~Kentucky**	~~316,800~~423,700	Warehouse
Atlanta, Georgia	180,200	Manufacturing, Warehouse, Office
Bangalore, India	104,800	Manufacturing, Warehouse
~~Ningbo, China~~	~~185,100~~	~~Manufacturing, Warehouse, Office~~
Yaphank, New York	92,000	Warehouse, Office
New York City, New York	~~59,000~~66,600	Office, Retail
Hong Kong, China	54,400	Warehouse
Brooklyn, New York	39,400	Warehouse, Retail
Stamford, Connecticut	35,300	Office, Retail


Per Share and Unaudited	Market Price High (at close)		Market Price Low (at close)		Market Price Close		Earnings Per Share- Diluted		Dividends Declared Per Share		Market Price High (at close)		Market Price Low (at close)		Market Price Close		Earnings Per Share- Diluted		Dividends Declared Per Share
Year ended June 3, 2017:
Year ended June 1, 2019:
First quarter	$	36.46	$	27.87	$	35.94	$	0.60	$	0.1700	$	40.10	$	32.75	$	38.30	$	0.60	$	0.1975
Second quarter	36.14		26.99		32.65		0.53		0.1700		40.65		31.38		33.86		0.66		0.1975
Third quarter	36.45		29.75		30.45		0.37		0.1700		37.62		28.66		36.89		0.66		0.1975
Fourth quarter	34.05		28.55		32.70		0.55		0.1700		39.70		33.94		35.49		0.78		0.1975
Year	$	36.46	$	26.99	$	32.70	$	2.05	$	0.6800	$	40.65	$	28.66	$	35.49	$	2.70	$	0.7900
Year ended May 28, 2016:
Year ended June 2, 2018:
First quarter	$	30.50	$	26.75	$	26.99	$	0.56	$	0.1475	$	35.30	$	29.25	$	34.00	$	0.55	$	0.1800
Second quarter	32.69		26.28		32.14		0.57		0.1475		37.00		32.05		34.55		0.55		0.1800
Third quarter	32.11		22.92		26.29		0.46		0.1475		41.84		33.65		36.75		0.49		0.1800
Fourth quarter	31.64		26.09		31.64		0.67		0.1475		39.20		29.95		32.85		0.53		0.1800
Year	$	32.69	$	22.92	$	31.64	$	2.26	$	0.5900	$	41.84	$	29.25	$	32.85	$	2.12	$	0.7200



[ X ]	ANNUAL REPORT ~~UNDER~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



[__]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For ~~Fiscal Year Ended~~the fiscal year ended June ~~3, 2017~~1, 2019	Commission File No. 001-15141



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
	Yes [ X ] No [__]



Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
	Yes [__] No [ X ]



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
	Yes [ X ] No [__]


Name	Age	Year Elected an Executive Officer	Position with the Company	Age	Year Elected an Executive Officer	Position with the Company
Brian C. Walker	55	1996	President and Chief Executive Officer
Andrew J. Lock	63	2003	President, Herman Miller International
Andrea R. Owen				54	2018	President and Chief Executive Officer
Jeremy Hocking				58	2017	President, International Contract
Gregory J. Bylsma	52	2009	President, North America Contract	54	2009	President, North America Contract
Steven C. Gane	62	2009	President, Specialty Brands
Jeffrey M. Stutz	46	2009	Executive Vice President, Chief Financial Officer	48	2009	Chief Financial Officer
B. Ben Watson	52	2010	Chief Creative Officer	54	2010	Chief Creative Officer
Michael F. Ramirez	52	2011	Executive Vice President, People, Places & Administration
H. Timothy Lopez	46	2014	Senior Vice President of Legal Services, General Counsel and Secretary
Jacqueline H. Rice				47	2019	General Counsel
John McPhee	54	2015	President, Herman Miller Consumer	56	2015	President, Retail
John Edelman	50	2015	Chief Executive Officer, Herman Miller Consumer
Kevin Veltman	42	2015	Vice President, Investor Relations & Treasurer	44	2015	Vice President, Investor Relations & Treasurer
Jeremy Hocking	56	2017	Executive Vice President, Strategy and Business Development
Jeffrey L. Kurburski				52	2018	Chief Technology Officer
Benjamin P.T. Groom				35	2019	Chief Digital Officer
Leander D. LeSure				53	2019	Chief Human Resource Officer
Megan Lyon				39	2019	Chief Strategy Officer



Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share or Unit	(c) Total Number of Share (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares(or Units) that May Yet be Purchased Under the Plans or Programs ⁽¹⁾
3/5/17 - 4/1/17	—	—	—	$	115,162,898
4/2/17 - 4/29/17	146,255	32.17	146,255	$	110,457,467
4/30/17 - 6/3/17	58,697	33.04	58,697	$	108,517,876
Total	204,952		204,952



Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share or Unit	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs ⁽¹⁾
3/3/19-3/30/19	11,253	34.95	11,253	$	268,232,481
3/31/19-4/27/19	60,815	36.61	60,815	$	266,006,033
4/28/19-6/1/19	47,498	37.56	47,498	$	264,222,017
Total	119,566		119,566


	2012		2013		2014		2015		2016		2017		2014		2015		2016		2017		2018		2019
Herman Miller, Inc.	$	100	$	159	$	180	$	163	$	189	$	199	$	100	$	90	$	105	$	111	$	114	$	126
S&P 500 Index	$	100	$	128	$	151	$	165	$	164	$	191	$	100	$	110	$	109	$	127	$	142	$	143
NASD Non-Financial	$	100	$	128	$	159	$	192	$	189	$	240	$	100	$	121	$	119	$	159	$	187	$	186



Review of Operations
(In millions, except key ratios and per share data)	2012			2011			2010			2009			2008			2007
Operating Results
Net sales	$	1,724.1		$	1,649.2		$	1,318.8		$	1,630.0		$	2,012.1		$	1,918.9
Gross margin	590.6			538.1			428.5			527.7			698.7			645.9
Selling, general, and administrative ⁽⁸⁾	400.3			369.0			334.4			359.2			400.9			395.8
Design and research	52.7			45.8			40.5			45.7			51.2			52.0
Operating earnings	137.6			123.3			53.6			122.8			246.6			198.1
Earnings before income taxes	119.5			102.5			34.8			98.9			230.4			187.0
Net earnings	75.2			70.8			28.3			68.0			152.3			129.1
Cash flow from operating activities	90.1			89.0			98.7			91.7			213.6			137.7
Cash flow used in investing activities	(58.4		)	(31.4		)	(77.6		)	(29.5		)	(51.0		)	(37.4		)
Cash flow used in financing activities	(1.6		)	(50.2		)	(78.9		)	(16.5		)	(86.5		)	(131.5		)
Depreciation and amortization	37.2			39.1			42.6			41.7			43.2			41.2
Capital expenditures	28.5			30.5			22.3			25.3			40.5			41.3
Common stock repurchased plus cash dividends paid	7.9			6.0			5.7			19.5			287.9			185.6

Key Ratios
Sales growth (decline)	4.5		%	25.1		%	(19.1		)%	(19.0		)%	4.9		%	10.5		%
Gross margin ⁽¹⁾	34.3			32.6			32.5			32.4			34.7			33.7
Selling, general, and administrative ^{(1) (8)}	23.2			22.4			25.4			22.0			19.9			20.6
Design and research ⁽¹⁾	3.1			2.8			3.1			2.8			2.5			2.7
Operating earnings ⁽¹⁾	8.0			7.5			4.1			7.5			12.3			10.3
Net earnings growth (decline)	6.2			150.2			(58.4		)	(55.4		)	18.0			30.1
After-tax return on net sales ⁽⁴⁾	4.4			4.3			2.1			4.2			7.6			6.7
After-tax return on average assets ⁽⁵⁾	9.0			8.9			3.7			8.7			20.9			19.2
After-tax return on average equity ⁽⁶⁾	34.4		%	52.5		%	78.1		%	860.8		%	186.4		%	92.7		%

Share and Per Share Data
Earnings per share-diluted	$	1.29		$	1.06		$	0.43		$	1.25		$	2.56		$	1.98
Cash dividends declared per share	0.09			0.09			0.09			0.29			0.35			0.33
Book value per share at year end ⁽⁹⁾	4.13			3.42			1.27			—			0.28			2.35
Market price per share at year end	17.87			24.56			19.23			14.23			24.80			36.53
Weighted average shares outstanding-diluted	58.5			57.7			57.5			54.5			59.6			65.1

Financial Condition
Total assets	$	843.8		$	819.1		$	775.3		$	772.0		$	787.9		$	670.9
Working capital ⁽³⁾	189.1			193.4			69.2			155.2			170.2			87.7



	June 1, 2019												June 2, 2018
	North America			International			Retail			Total			North America			International		Retail			Total
Net Sales, as reported	$	1,686.5		$	492.2		$	388.5		$	2,567.2		$	1,589.8		$	434.5	$	356.9		$	2,381.2
% change from PY	6.1		%	13.3		%	8.9		%	7.8		%

Proforma Adjustments
Dealer Divestitures	—			—			—			—			(0.8		)	—		—			(0.8		)
Currency Translation Effects ⁽¹⁾	3.8			12.4			0.3			16.5			—			—		—			—
Impact of Reclassification Related to New Revenue Recognition Standard	—			—			—			—			23.9			12.3		—			36.2
Impact of Change in DWR Shipping Terms	—			—			—			—			—			—		(5.0		)	(5.0		)
Organic net sales	$	1,690.3		$	504.6		$	388.8		$	2,583.7		$	1,612.9		$	446.8	$	351.9		$	2,411.6
% change from PY	4.8		%	12.9		%	10.5		%	7.1		%



	June 1, 2019			June 2, 2018
Earnings per Share - Diluted	$	2.70		$	2.12

Less: Adjustments Related to Adoption of U.S. Tax Cuts and Jobs Act	(0.02		)	(0.05		)
Less: Investment fair value adjustment, after tax	(0.03		)	—
Add: Special charges, after tax	0.18			0.16
Add: inventory step up on HAY equity method investment, after tax	0.01			—
Add: Restructuring expenses, after tax	0.13			0.07
Adjusted Earnings per Share - Diluted	$	2.97		$	2.30

Weighted Average Shares Outstanding (used for Calculating Adjusted Earnings per Share) – Diluted	59,381,791			60,311,305


(Dollars In millions)	Fiscal 2017		% Change from 2016			Fiscal 2016			% Change from 2015			Fiscal 2015
(Dollars In millions)	53 weeks				52 weeks				% Change from 2015		52 weeks
(Dollars in millions)															Fiscal 2019			Fiscal 2018			% Change
Net sales	$	2,278.2	% Change from 2016	0.6	%		$	2,264.9		5.7	%		$	2,142.2		$	2,567.2		$	2,381.2		7.8	%
Cost of sales	1,414.0		1.7	%		1,390.7			3.0	%		1,350.8			1,637.3			1,508.2			8.6	%
Gross margin	864.2		(1.1	)%		874.2			10.5	%		791.4			929.9			873.0			6.5	%
Operating expenses	673.4		1.6	%		662.7			5.5	%		628.0			726.4			694.1			4.7	%
Operating earnings	190.8		(9.8	)%		211.5			29.4	%		163.4			203.5			178.9			13.8	%
Net other expenses	13.2		(11.4	)%		14.9			(18.1	)%		18.2			8.4			10.8			(22.2	)%
Earnings before income taxes	177.6		(9.7	)%		196.6			35.4	%		145.2			195.1			168.1			16.1	%
Income tax expense	55.1		(7.4	)%		59.5			26.1	%		47.2			39.6			42.4			(6.6	)%
Equity income from nonconsolidated affiliates, net of tax	1.6		300.0	%		0.4			300.0	%		0.1			5.0			3.0			66.7	%
Net earnings	124.1		(9.7	)%		137.5			40.2	%		98.1			160.5			128.7			24.7	%
Net earnings attributable to noncontrolling interests	0.2		(75.0	)%		0.8			33.3	%		0.6			—			0.6			(100.0	)%
Net earnings attributable to Herman Miller, Inc.	$	123.9	(9.4	)%		$	136.7		40.2	%		$	97.5		$	160.5		$	128.1		25.3	%



(In millions)	Retention Level (per occurrence)
General liability and auto liability/physical damage	$	1.00
Workers' compensation and property	$	0.75



Recently ~~Issued~~Adopted Accounting Standards ~~Not Yet Adopted~~
~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Financial Statements or Other Significant Matters~~
~~Simplifying the Measurement of Inventory~~	Under the updated standard, an entity should measure inventory that is measured using either the first-in, first-out ("FIFO") or average cost methods at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The updated standard should be applied prospectively.	~~June 4, 2017~~	~~The company has evaluated the impact of the update and its expected to be immaterial.~~

~~Improvements to Employee Share-Based Payment Accounting~~	The standard simplifies several aspects of the accounting for share-based payment awards to employees, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows. Different adoption methodologies exist (retrospectively, modified-retrospectively, or prospectively) for the various different features of the standard being updated.	~~June 4, 2017~~	The company expects the most significant impact from the share-based compensation standard to be driven by the treatment of excess tax benefits/deficiencies and expects the other impacts from the standard to be nominal. The company intends to adopt an entity-wide accounting policy election to account for forfeitures in compensation cost when they occur.



~~Recently Issued Accounting Standards Not Yet Adopted (continued)~~
Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters

Revenue from Contracts with Customers	The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The standard allows for two adoption methods, a full retrospective or modified retrospective approach.	June 3, 2018	The ~~company has completed a preliminary review of~~Company adopted the ~~impact of~~standard effective June 3, 2018 using the new standard and expects changes in how the company’s performance obligations around product and service revenue are accounted for. Additionally, the company expects changes in the way it recognizes certain pricing elements of its commercial contracts. These changes are not expectedmodified retrospective method. Refer to ~~be material~~Note 2 to the financial ~~statements. The company expects to adopt~~statements for further information regarding the ~~standard in fiscal 2019 using~~adoption of the ~~modified-retrospective approach.~~ 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~~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 ~~have a significant impact on our Consolidated Financial Statements, however the company~~inform credit loss estimates.	May 31, 2020	The Company is currently evaluating the ~~impact.~~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.



Assets Acquired and Liabilities Assumed on July 28, 2014
(In millions)	Fair Value
Purchase price	$	155.2
Fair value of the assets acquired:
Cash	1.2
Accounts receivable	2.2
Inventory	47.4
Current deferred tax asset	1.5
Other current assets	5.5
Goodwill	75.6
Other intangible assets	68.5
Property	32.0
Other long term assets	2.4
Total assets acquired	236.3
Fair value of liabilities assumed:
Accounts payable	20.8
Accrued compensation and benefits	1.6
Other accrued liabilities	12.3
Long term deferred tax liability	14.5
Other long term liabilities	0.4
Total liabilities assumed	49.6
Redeemable noncontrolling interests	25.7
Noncontrolling interests	5.8
Net assets acquired	$	155.2


Ownership Interest	June 3, 2017	May 28, 2016	June 1, 2019	June 2, 2018
Kvadrat Maharam Arabia DMCC	50.0%	50.0%	50.0%	50.0%
Kvadrat Maharam Pty Limited	50.0%		50.0%
Kvadrat Maharam Turkey JSC	50.0%		50.0%
Danskina B.V.	50.0%		50.0%
Naughtone Holdings Limited	50.0%	—%
Naughtone Holdings Limited*			52.5%	50.0%
Global Holdings Netherlands B.V.			48.2%	—%
HAY A/S			33.0%	—%



	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)	2017		2016		2019		2018
Projected benefit obligation	$	114.8	$	105.4	$	110.1	$	106.9
Accumulated benefit obligation	$	111.0	$	101.8	$	106.4	$	103.1
Fair value of plan assets	$	80.5	$	85.0	$	88.2	$	94.6


Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income:
Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income (Loss):																Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income (Loss):
	Pension Benefits									Post-Retirement Benefits						Pension Benefits									Post-Retirement Benefits
(In millions)	2017			2016			2015			2017		2016		2015		2019			2018			2017			2019		2018		2017
Domestic:
Interest cost	$	0.1		$	—		$	—		$	0.2	$	0.2	$	0.2	$	—		$	0.1		$	0.1		$	0.1	$	0.1	$	0.2
Net periodic benefit cost	$	0.1		$	—		$	—		$	0.2	$	0.2	$	0.2	$	—		$	0.1		$	0.1		$	0.1	$	0.1	$	0.2

International:
Interest cost	$	2.7		$	3.8		$	4.3								$	2.7		$	2.7		$	2.7
Expected return on plan assets	(4.7		)	(5.4		)	(5.5		)							(4.5		)	(5.6		)	(4.7		)
Net amortization	2.2			2.8			1.8									2.8			4.2			2.2
Net periodic benefit cost	$	0.2		$	1.2		$	0.6								$	1.0		$	1.3		$	0.2


Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Income):
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):													Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
	Pension Benefits						Post-Retirement Benefits						Pension Benefits						Post-Retirement Benefits
(In millions)	2017			2016			2017			2016			2019			2018			2019			2018
Domestic:
Net actuarial gain	$	—		$	—		$	(0.4	)	$	(1.3	)	$	0.1		$	—		$	(0.3	)	$	(0.5	)
Total recognized in other comprehensive loss	$	—		$	—		$	(0.4	)	$	(1.3	)	$	0.1		$	—		$	(0.3	)	$	(0.5	)

International:
Net actuarial loss	$	18.6		$	2.2
Net actuarial (gain) loss													$	11.7		$	(7.7	)
Net amortization	(2.2		)	(2.8		)							(2.7		)	(4.2		)
Total recognized in other comprehensive loss	$	16.4		$	(0.6	)							$	9.0		$	(11.9	)

													The weighted-average used in the determination of net periodic benefit cost:
	2017		2016		2015		2019		2018		2017
(Percentages)	Domestic	International	Domestic	International	Domestic	International	Domestic	International	Domestic	International	Domestic	International
Discount rate	3.51	3.43	3.41	3.50	3.44	4.40	3.99	2.87	3.53	2.49	3.51	3.43
Compensation increase rate	n/a	2.95	n/a	3.20	n/a	3.35	n/a	3.10	n/a	3.25	n/a	2.95
Expected return on plan assets	n/a	6.10	n/a	6.10	n/a	6.10	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	3.53	2.49	3.51	3.43	3.41	3.50	3.47	2.39	3.99	2.87	3.53	2.49
Compensation increase rate	n/a	3.25	n/a	2.95	n/a	3.20	n/a	3.20	n/a	3.10	n/a	3.25



(In millions)	1 Percent Increase		1 Percent Decrease
Effect on total fiscal 2017 service and interest cost components	$	—	$	—
Effect on post-retirement benefit obligation at June 3, 2017	$	0.2	$	(0.2	)


Asset Category	Targeted Asset Allocation Percentage		Percentage of Plan Assets at Year End				Targeted Asset Allocation Percentage			Percentage of Plan Assets at Year End
			2017		2016		2019	2018		2019		2018
Fixed income	20		27		24		35	35		33		36
Common collective trusts	80		73		76		65	65		67		64
Total			100		100					100		100

(In millions)	International Plan as of June 3, 2017							International Plan as of June 1, 2019
Asset Category	Level 1		Level 2		Total			Level 1		Level 2		Total
Cash and cash equivalents	$	0.2	$	—	$	0.2		$	—	$	—	$	—
Foreign government obligations	—		21.4		21.4			—		29.3		29.3
Common collective trusts-balanced	—		58.9		58.9			—		58.9		58.9
Total	$	0.2	$	80.3	$	80.5		$	—	$	88.2	$	88.2

(In millions)	International Plan as of May 28, 2016							International Plan as of June 2, 2018
Asset Category	Level 1		Level 2		Total			Level 1		Level 2		Total
Cash and cash equivalents	$	0.2	$	—	$	0.2		$	0.2	$	—	$	0.2
Foreign government obligations	—		20.5		20.5			—		33.4		33.4
Common collective trusts-balanced	—		64.3		64.3			—		61.0		61.0
Total	$	0.2	$	84.8	$	85.0		$	0.2	$	94.4	$	94.6


(In millions)	Pension Benefits Domestic		Pension Benefits International		Post-Retirement Benefits		Pension Benefits Domestic		Pension Benefits International		Post-Retirement Benefits
2018	$	0.1	$	1.7	$	0.7
2019	$	0.1	$	2.1	$	0.6
2020	$	0.1	$	2.1	$	0.6	$	0.1	$	1.8	$	0.5
2021	$	0.1	$	2.1	$	0.5	$	0.1	$	1.9	$	0.4
2022	$	0.1	$	2.6	$	0.5	$	0.1	$	2.3	$	0.4
2023-2027	$	0.3	$	15.5	$	1.7
2023							$	0.1	$	2.1	$	0.4
2024							$	0.1	$	2.3	$	0.3
2025-2029							$	0.3	$	16.7	$	1.1


(In millions, except shares)	2017		2016		2015		2019		2018		2017
Numerator:
Numerator for both basic and diluted EPS, Net earnings attributable to Herman Miller, Inc.	$	123.9	$	136.7	$	97.5	$	160.5	$	128.1	$	123.9

Denominator:
Denominator for basic EPS, weighted-average common shares outstanding	59,871,805		59,844,540		59,475,297		59,011,945		59,681,268		59,871,805
Potentially dilutive shares resulting from stock plans	682,784		684,729		649,069		369,846		630,037		682,784
Denominator for diluted EPS	60,554,589		60,529,269		60,124,366		59,381,791		60,311,305		60,554,589


	Shares Under Option		Weighted-Average Exercise Prices		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In millions)		Shares Under Option		Weighted-Average Exercise Prices		Aggregate Intrinsic Value (in millions)		Weighted-Average Remaining Contractual Term (Years)
Outstanding at May 28, 2016	921,380		$	25.80	4.20	$	5.5
Outstanding at June 2, 2018								1,063,249		$	30.33	$	2.9	7.45
Granted at market	745,141		$	31.86				156,008		$	38.23
Exercised	(327,299	)	$	28.84				(347,248	)	$	28.84
Forfeited or expired	(9,520	)	$	38.11				(81,950	)	$	33.94
Outstanding at June 3, 2017	1,329,702		$	28.36	7.26	$	5.8
Outstanding at June 1, 2019								790,059		$	32.17	$	3.0	5.81
Ending vested + expected to vest	1,325,647		$	28.35	7.25	$	5.8	790,059		$	32.17	$	3.0	5.81
Exercisable at end of period	498,522		$	22.95	4.37	$	4.9	282,985		$	28.51	$	2.0	4.42



	2017
	Shares		Weighted Average Grant-Date Fair Value
Outstanding at May 28, 2016	20,823		$	21.35
Vested	(20,323	)	$	21.38
Forfeited	(500	)	$	20.17
Outstanding at June 3, 2017	—		$	—

HERMAN MILLER, INC.

/s/ Jeffrey M. Stutz

Jeffrey M. Stutz
Chief Financial Officer (Principal Accounting Officer and Duly Authorized Signatory for Registrant)