What changed in this filing

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Item 1. Business

2022-07-26 compared with 2021-07-27 · 74 added, 64 removed, 65 unchanged (68% of the section changed)

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General Development of Business

Herman Miller's purpose statement is design for the good of humankind.

MillerKnoll is a collective of dynamic brands that comes together to design the world we live in.

From the spaces we make that help us live and work better, to how we manufacture our products, to the ways we solve challenges facing our customers and global community, design is our tool for creating positive impact.

Our optimism leads us as we redefine modern for the 21st century, shaping a future that’s more sustainable, caring, and beautiful for all people and our planet.

The Company researches, designs, manufactures and distributes interior furnishings for use in various environments including residential, office, healthcare and educational settings, and provides related services that support organizations and individuals all over the world.

Through research, the Company seeks to understand, define and clarify customer needs and problems existing and to design products, systems and services that serve as innovative solutions to those needs and problems.

The Company’s products are sold primarily through the following channels:

Owned and independent contract furniture dealers, direct customer sales, owned and independent retailers, direct-mail catalogs and the Company's eCommerce platforms.

Herman Miller, Inc.

and Subsidiaries 2

The Company was incorporated in Michigan in 1905.

As a global design leader the Company established Herman Miller Group, a purposefully selected, complementary family of brands that collectively offers a variety of products for environments where people live, learn, work, heal and play.

The family of brands includes Herman Miller®, Colebrook Bosson Saunders®, Design Within Reach®, Geiger®, HAY®, Maars® Living Walls, Maharam®, naughtone® and Nemschoff®.

independent contract furniture dealers, direct customer sales, owned and independent retailers, direct-mail catalogs, and the Company’s eCommerce platforms.

In July 2021, the Company finalized the acquisition of Knoll, Inc.

(“Knoll”) in a cash and stock transaction valued at approximately $1.8 billion.

On November 1, 2021, Herman Miller, Inc.

changed its name to MillerKnoll, Inc., and the Company changed its ticker symbol on the Nasdaq Global Select Market to MLKN.

Powering the world's most dynamic design brands, MillerKnoll includes Herman Miller® and Knoll®, as well as Colebrook Bosson Saunders®, DatesWeiser®, Design Within Reach®, Edelman® Leather, Fully®, Geiger®, HAY®, Holly Hunt®, KnollTextiles®, Maars® Living Walls, Maharam®, Muuto®, naughtone®, and Spinneybeck®|FilzFelt®.

All of these companies are considered controlled subsidiaries, except for Maars of which the Company owns 48.2% of as of May 28, 2022.

Herman Miller's corporate offices are located at 855 East Main Avenue, PO Box 302, Zeeland, Michigan, 49464-0302 and its telephone number is 616 654 3000.

Unless otherwise noted or indicated by the context, all references to "Herman Miller," "we," "our," "Company" and similar references are to Herman Miller, Inc.

MillerKnoll's corporate offices are located at 855 East Main Avenue, PO Box 302, Zeeland, Michigan, 49464-0302 and its telephone number is 616 654 3000.

Unless otherwise noted or indicated by the context, all references to "MillerKnoll," "we," "our," "Company" and similar references are to MillerKnoll, Inc.

and its controlled subsidiaries.

Further information relating to principles of consolidation is provided in Note 1 to the Consolidated Financial Statements included in Item 8 of this report.

The Company has three reportable segments:

North America Contract, International Contact and Retail.

The Company has four reportable segments:

Americas Contract, International Contact, Global Retail and Knoll.

The Company also reports a corporate category consisting primarily of unallocated corporate expenses.

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Description of Business

The Company's principal business consists of the research, design, manufacture, selling and distribution of seating products, office furniture systems, other freestanding furniture elements, textiles, home furnishings and related services.

3 2021 Annual Report

The Company's ingenuity and design excellence create award-winning products and services, which have made the Company a leader in the design and development of furniture, furniture systems, textiles and technology solutions.

This leadership is exemplified by the innovative concepts introduced by the Company in its broad array of seating products (including Embody®, Aeron®, Mirra2™, Setu®, Sayl®, Verus®, Cosm®, Lino®, Verus®, Celle®, Equa®, Taper™ and Ergon® office chairs) and modular systems (including Canvas Office Landscape®, Locale®, Public Office Landscape®, Layout Studio®, Action Office®, Ethospace®, Arras®, Prospect®, Overlay™, Resolve®, and OE1®).

The Company also offers storage (including Meridian® and Tu® products), wood casegoods (including Geiger® products), freestanding furniture products (including Abak™, Intent®, Sense™ and Envelop®), healthcare products (including Palisade™, Compass™, Nala®, Ava® and other Nemschoff® products), the Thrive portfolio of ergonomic solutions, ergonomic and technology support products (including Colebrook Bosson Saunders® products) and the textiles of Maharam Fabric Corporation (Maharam®).

The Live Platform™ system of cloud-connected furnishings, applications and dashboards provides data-enabled solutions for the Company's customers.

The Company also offers products for residential settings, including Eames®, Eames (lounge chair configuration)®, Eames (management chair configuration)®, Eames Soft Pad™, HAY®, Nelson™ basic cabinet series, Nelson™ end table, Nelson™ lanterns, Nelson™ marshmallow sofa, Nelson™ miniature chests, Nelson™ platform bench, Nelson™ swag leg group, Nelson™ tray table, Bubble Lamps®, Airia™, Ardea®, Bumper™, Burdick Group™, Everywhere™ tables, Claw™, Caper®, Distil™, Envelope™, Formwork®, Full Round™, H Frame™, I Beam™, Landmark™, Logic Mini™, Logic Power Access Solutions™, Renew™, Rolled Arm™, Scissor™, Sled™, Soft Pad™, Swoop™, Tone™, Twist™, Ward Bennett™ and Wireframe™.

The Company also offers residential and ancillary products through its subsidiaries, including:

the Line™ Storage Collection, Lina™ Swivel Chair, Matera™ Bedroom Collection, Emmy™ Sofa Collection, Story™ Bookcase and Sømmer™ Outdoor Collection for Design Within Reach®;

the Always™ Lounge Chair, Always™ Chair, Polly™ Chair, Viv™ Chair, and Hush™ Chair for naughtone®;

and the Mags™ Sofa and About A™ Chair Collections for HAY®.

The Company's products are marketed worldwide by its own sales staff, independent dealers and retailers, owned dealers, via its eCommerce websites, and through its owned Herman Miller, Design Within Reach ("DWR") and HAY retail stores and studios.

MillerKnoll is a global leader of design.

Our brands have led conversations on design for over 100 years, and we continue to drive our industry forward with visionary thinking and a purposeful approach.

This leadership is exemplified by the innovative concepts introduced by the Company in its broad array of product offerings.

The Company's products are marketed worldwide by its own sales staff, independent dealers and retailers, via its eCommerce websites, and through its owned Herman Miller, Design Within Reach ("DWR"), HAY, Knoll, and Muuto retail stores and studios.

Salespeople work with dealers, the architecture and design community, and directly with end-users.

Independent dealerships concentrate on the sale of Herman Miller Group products and some complementary product lines of other manufacturers.

It is estimated that approximately 63 percent of the Company's sales in the fiscal year ended May 29, 2021, were made to or through independent dealers.

The remaining sales were made directly to end-users, including federal, state and local governments and several business organizations by the Company's own sales staff, owned dealer network, retail channels, or independent retailers.

Independent dealerships concentrate on the sale of MillerKnoll products and some complementary product lines of other manufacturers.

It is estimated that approximately 58.1% of the Company's sales in the fiscal year ended May 28, 2022, were made to or through independent dealers.

The remaining sales were made directly to end-users, including federal, state and local governments and several business organizations by the Company's own sales staff, retail channels, or independent retailers.

The Company is a recognized leader within its industry for the use, development, and integration of customer-centered technologies that enhance the reliability, speed, and efficiency of our customers' operations.

This includes proprietary sales tools, interior design and product specification software, order entry and manufacturing scheduling and production systems, and direct connectivity to the Company's suppliers.

The Company's furniture systems, seating, freestanding furniture, storage, casegoods, textile products, and related services are used in (1) institutional environments including offices and related conference, lobby, and lounge areas and general public areas including transportation terminals;

The Company's furniture systems, seating, freestanding furniture, storage, casegoods, textile products, leather, felt, acoustic products and related services are used in (1) institutional environments including offices and related conference, lobby, and lounge areas and general public areas including transportation terminals;

(2) health/science environments including hospitals, clinics and other healthcare facilities;

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Further information regarding the impact of direct material costs on the Company's financial results is provided in Management's Discussion and Analysis in Item 7 of this report, "Management's Discussion and Analysis of Financial Condition and Results of Operations”.

Herman Miller, Inc.

and Subsidiaries 4

Patents, Trademarks, Licenses, Etc.

The Company has active utility and design patents in the United States.

Many of the inventions covered by these patents also have been patented in a number of foreign countries.

Various trademarks, including the name and stylized “Herman Miller” and the “Herman Miller Circled Symbolic M” trademark are registered in the United States and many foreign countries.

The Company does not believe that any material part of its business depends on the continued availability of any one or all of its patents or trademarks, or that its business would be materially and adversely affected by the loss of any such marks, except for the following trademarks:

Herman Miller®, Herman Miller Circled Symbolic M®, Maharam®, Geiger®, Design Within Reach®, DWR®, HAY®, naughtone®, Nemschoff®, Action Office®, Aeron®, Mirra®, Embody®, Setu®, Sayl®, Cosm®, Caper®, Eames®, Eames Lounge & Ottoman Configurations, Eames Aluminum Group Configuration, and Canvas Office Landscape®.

Patents and Trademarks

The Company believes its intellectual property rights are an important component supporting the long-term success of its brands and its competitive position, and it strategically applies for, registers, and maintains its intellectual property rights in the United States and a number of foreign countries where such protection is available.

These rights include patent, trademark, copyright and trade secrets, among other proprietary rights.

The Company also maintains a robust intellectual property enforcement program to protect its intellectual property rights against third party infringers.

The Company and its subsidiaries hold many active utility and design patents in the United States as well as in a number of foreign countries.

The Company has also registered various trademarks, including the name and stylized “Herman Miller” trademark, the “Herman Miller Circled Symbolic M” trademark, and the name and stylized “Knoll” trademark in the United States and many foreign countries, which it considers to be among its most valuable intellectual property rights.

The Company considers the following trademarks and any associated stylized depictions of the word marks to be among its most important trademarks for distinguishing the Company, its subsidiaries and its goods from those of others:

MillerKnoll TM , Herman Miller®, Herman Miller Circled Symbolic M®, Knoll ®, Maharam®, Geiger®, Design Within Reach®, DWR®, HAY®, naughtone®, Nemschoff®, Aeron®, Mirra®, Embody®, Setu®, Sayl®, Cosm®, Caper®, Eames®, Knoll ® , KnollExtra ® , Knoll Luxe ® , KnollStudio ® , KnollTextiles ® , Edelman ® Leather, Spinneybeck ® Leather, Generation by Knoll ® , Regeneration by Knoll ® , MultiGeneration by Knoll ® , Remix ® , Holly Hunt ® , Vladimir Kagan ® , Muuto ®, Fully ®, Barcelona®, Womb®, as well as trademark registrations for trade dress and common law rights in trade dress for some of the Company’s significant product designs.

Working Capital Practices

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Customer Base

The Company approximates that no single dealer accounted for more than three percent of the Company's net sales in the fiscal year ended May 29, 2021.

The Company approximates that no single dealer accounted for more than 2% of the Company's net sales in the fiscal year ended May 28, 2022.

The Company estimates that the largest single end-user customer accounted for $114.4 million, $113.0 million and $122.9 million of the Company's net sales in fiscal 2022, 2021, and 2020, respectively.

This represents approximately five percent of the Company's net sales in fiscal 2021, 2020 and 2019.

The Company's ten largest customers in the aggregate accounted for approximately 17 percent of net sales in fiscal 2021 and 18 percent of net sales in fiscal 2020 and 2019.

This represents approximately 3% of the Company's net sales in fiscal 2022 and 5% in 2021 and 2020.

The Company's ten largest customers in the aggregate accounted for approximately 11% of net sales in fiscal 2022 and 17% and 18% of net sales in fiscal 2021 and 2020, respectively.

Backlog of Unfilled Orders

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At May 29, 2021, the Company's backlog totaled $446.9 million.

The decrease in backlog in the current year was primarily due to delays in processing customer orders in the fourth quarter of fiscal 2020 caused by the outbreak of COVID-19 and related facility shut-downs.

It is expected that substantially all the orders forming the backlog at May 29, 2021, will be filled during the next fiscal year.

Many orders received by the Company are reflected in the backlog for only a short period while other orders specify delayed shipments and are carried in the backlog for up to one year.

Accordingly, the amount of the backlog at any particular time does not necessarily indicate the level of net sales for a particular succeeding period.

The increase in backlog was due primarily to the Knoll acquisition, which contributed backlog of $293.3 million as well as from growth in order volume in excess of sales for the remainder of the business.

It is expected that substantially all of the orders forming the backlog at May 28, 2022 will be filled during the next fiscal year.

Many orders received by the Company are reflected in the backlog for only a short period while other orders request extended delivery dates and are carried in the backlog for up to one year.

Accordingly, the backlog at any particular time does not necessarily indicate the level of net sales for a particular succeeding period.

Government Contracts

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The Company sells to the U.S.

Government both through a General Services Administration ("GSA") Multiple Award Schedule Contract and through competitive bids.

Government both through General Services Administration ("GSA") Multiple Award Schedule Contracts and through competitive bids.

The GSA Multiple Award Schedule Contract pricing is principally based upon the Company's commercial price list in effect when the contract is initiated, rather than being determined on a cost-plus-basis.

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Although the Company is one of the largest office furniture manufacturers in the world, it competes with manufacturers that have significant resources and sales as well as many smaller companies.

The Company's most significant competitors are Haworth, HNI Corporation, Kimball International, and Steelcase.

The Company's most significant competitors are Haworth, HNI Corporation, Kimball International, Inc., and Steelcase Inc.

The Company also competes in the home furnishings industry, primarily against national, regional and independent home furnishings retailers who market high-craft furniture to end-user customers and the interior design community.

5 2021 Annual Report

These competitors include companies such as Crate & Barrel Holdings, Inc., Hive Modern, Restoration Hardware, Room & Board, Wayfair and Williams-Sonoma, Inc.

These competitors include companies such as Crate & Barrel Holdings, Inc., Hive Modern, Restoration Hardware, Room & Board, Inc., Wayfair Inc., and Williams-Sonoma, Inc.

Similar to its office furniture product offerings, the Company competes primarily on design, product and service quality, speed of delivery and product pricing in this market.

On July 19, 2021, we completed the acquisition of Knoll, Inc.

Refer to the "Executive Overview" and "Business Overview" sections within Item 7 for further discussion of the acquisition of Knoll as well as in Note 18 to the Consolidated Financial Statements included in Item 8 of this report.

On July 19, 2021, the acquisition of Knoll, Inc.

was completed.

For further discussion about the acquisition of Knoll, refer to Note 3 to the Consolidated Financial Statements included in Item 8 of this report.

Research, Design and Development

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The Company designs innovative products and services that address customer needs and solve their problems.

The Company uses both internal and independent research resources and independent design resources.

The Company uses both internal and independent research and design resources.

Exclusive of royalty payments, the Company spent approximately $71.1 million, $50.8 million and $54.3 million on design and research activities in fiscal 2022, 2021 and 2020, respectively.

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The Company believes that a business must stand for more than just its products and services and the Company's people around the globe share a commitment to using business as a force for good.

Increased focus by U.S.

and overseas governmental authorities on environmental matters is likely to lead to new governmental initiatives, particularly in the area of climate change.

While we cannot predict the precise nature of these initiatives, we expect that they may impact our business both directly and indirectly.

Although the impact would likely vary by world region and/or market, we believe that adoption of new regulations and execution of the Company's sustainability strategy will increase costs for the Company.

Also, there is a possibility that governmental initiatives, or actual or perceived effects of changes in weather patterns, climate, or water resources could have a direct impact on the operations of the Company in ways which we cannot predict at this time.

The Company monitors developments related to environmental matters and plans to respond to governmental initiatives in a timely and appropriate manner.

The Company’s commitment to the planet is embedded in its corporate strategy and will continue to develop as the Company outlines next steps in its sustainability strategy.

As part of this commitment, the Company focuses on operating its global footprint with minimal impact on the environment and designing products with materials and processes that are safe for both people and the planet.

Based on current facts known to management, the Company does not believe that existing environmental laws and regulations have had or will have any material effect upon the capital expenditures, earnings or competitive position of the Company.

However, there can be no assurance that environmental legislation will not result in or require material capital expenditures or additional costs to our manufacturing process.

Human Resources

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Additionally, there have been no work stoppages or labor disputes in the Company's history.

As of May 29, 2021, approximately four percent of the Company's employees are covered by collective bargaining agreements, most of whom are employees of its Nemschoff and Herman Miller Holdings Limited subsidiaries.

As of May 29, 2021, the Company had approximately 7,600 employees, which was consistent with May 30, 2020.

As of May 28, 2022, approxima tely 2% of t he Company's employees are covered by collective bargaining agreements, most of whom are employees located in Wisconsin, the United Kingdom, Italy, and Brazil.

As of May 28, 2022, the Company had approximately 11,300 employees, which is approximately 3,100 higher since May 29, 2021 due to the acquisition of Knoll.

In addition to its employee workforce, the Company uses temporary labor to meet fluctuating demand in its manufacturing operations.

Diversity and Inclusion

At MillerKnoll, our differences contribute to our success.

We are committed to diversity, equity and inclusion ("DEI") and creating opportunities for people who come from diverse cultural and ethnic backgrounds, gender identities, LGBTQ+, people with differing abilities, those with military backgrounds, as well as those who are reentering the workforce for a variety of reasons.

We are committed to ensuring equity exists for all persons to thrive, and we focus on building diverse leadership across MillerKnoll.

We believe that embracing diverse perspectives contributes to an inclusive workplace and strengthens the communities where we live and work.

We continue to build DEI into our everyday practices by focusing on:

• An ongoing commitment to educate ourselves and integrate cultural competency across the organization

• Recruiting, developing, retaining, and promoting diverse talent through targeted plans that drive better results in this area

• Implementing and taking action on appropriate metrics and measures to hold ourselves accountable to our commitments

The Company's policy is to competitively compensate all employees for their contributions to MillerKnoll, Inc.

and to appropriately reward and motivate employees to deliver our business goals.

We do this, in part, by closely monitoring and benchmarking compensation matters and working to ensure that our programs provide our associates with the right features to provide for their families and prepare for retirement.

We provide competitive health and welfare benefits and retirement savings plans (401k), with matching employer contributions.

Retention of our talent is exceedingly important and drives how we design our programs.

Information about International Operations

The Company's sales in international markets are made primarily to office/institutional customers.

Foreign sales consist mostly of office furniture products such as Aeron®, Mirra®, Sayl®, Embody®, Layout Studio®, Imagine Desking System®, Ratio®, Cosm®, and other seating and storage products and ergonomic accessories such as About A Chair®, Palissade®, and the Flo® monitor arm.

The Company's sales in international markets are made primarily to office/institutional customers and residential retail customers.

Foreign sales consist mostly of office furniture products such as Aeron®, Mirra®, Sayl®, Embody®, Layout Studio®, Imagine Desking System®, Ratio®, Cosm®, Tone®, Generation by Knoll®, and other seating and storage products and ergonomic accessories such as About A Chair®, Palissade®, Eero Saarinen designs, Barcelona®, and the Flo® monitor arm.

The Company conducts business in the following major international markets:

Europe, the Middle East, Africa, Latin America and the Asia/Pacific region.

The Company's products currently sold in international markets are manufactured primarily by controlled subsidiaries in the United States, the United Kingdom, China, Brazil and India.

The Company's products currently sold in international markets are manufactured primarily by controlled subsidiaries in the United States, the United Kingdom, Italy, China, Brazil, Mexico and India.

A portion of the Company's products sold internationally are also manufactured by third-party suppliers.

Sales are made through wholly owned subsidiaries or branches in Canada, the United Kingdom, Denmark, Mexico, Australia, Singapore, Japan, China (including Hong Kong),

Herman Miller, Inc.

and Subsidiaries 6

India and Brazil.

The Company's products are offered in Canada, Europe, the Middle East, Africa, Latin America and the Asia/Pacific region primarily through dealers.

Sales are made through wholly owned subsidiaries or branches in Canada, the United Kingdom, Italy, France, Denmark, the Netherlands, Mexico, Australia, Singapore, Japan, China (including Hong Kong), India and Brazil.

The Company's products are offered in Canada, Europe, the Middle East, Africa, Latin America and the Asia/Pacific region primarily through dealer and retail channels.

Additional information with respect to operations by geographic area appears in Note 14 of the Consolidated Financial Statements included in Item 8 of this report.

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Available Information

The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are made available free of charge through the “Investors” section of the Company's internet website at www.hermanmiller.com, as soon as practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).

The Company's filings with the SEC are also available for the public to read via the SEC's internet website at www.sec.gov.

The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are made available free of charge through the “Investors” section of the Company's website at www.millerknoll.com, as soon as practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).

The Company's filings with the SEC are also available for the public to read via the SEC's website at www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business