Millerknoll, Inc 8-K/A, filed Oct 1, 2021

Millerknoll, Inc. (MLKN)

8-K/A 2021-10-01 For: 2021-07-19

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Added on April 09, 2026

About this 8-K/A

Millerknoll, Inc filed this 8-K/A on October 1, 2021, reporting on events of July 19, 2021.

Items reported

Item 9.01: Financial statements and exhibits

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Michigan	001-15141	38-0837640
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.20 per share	MLHR	Nasdaq Global Select Market


Dated:	October 1, 2021	Herman Miller, Inc.
		(Registrant)
		By:	/s/ Antonella Pilo Antonella Pilo
			Vice President of Investor Relations (Duly Authorized Signatory for Registrant)


(in millions)	Herman Miller, Inc.		Knoll, Inc.		Reclassification Adjustments (Note 3)		Pro Forma Adjustments (Note 4)			Pro Forma Combined
ASSETS
Current Assets:
Cash and cash equivalents	$	396.4	$	10.8	$	—	$	(165.9)	A	$	241.3
Accounts receivable, net	204.7		77.6		—		(3.9)		B	278.4
Inventories, net	213.6		206.5		—		10.7		C	430.8
Other current assets	76.8		53.1		—		—			129.9
Total current assets	891.5		348.0		—		(159.1)			1,080.4



Property and equipment, net	327.2		236.9		—		51.0		D	615.1
Right-of-use assets	214.7		181.8		—		—			396.5
Goodwill	364.2		341.1		—		574.8		E	1,280.1
Intangible assets, net	202.8		340.1		—		429.9		F	972.8
Other noncurrent assets	61.5		3.4		—		—			64.9
Total Assets	$	2,061.9	$	1,451.3	$	—	$	896.6		$	4,409.8



LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	178.4	$	103.7	$	—	$	(3.9)	B	$	278.2
Short-term borrowings and current portion of long-term debt	2.2		14.5		—		(14.5)		G	2.2
Other current liabilities	320.2		157.8				(4.7)		G	473.3
Total current liabilities	500.8		276.0		—		(23.1)			753.7



Long-term debt	274.9		269.3		—		739.6		G	1,283.8
Lease liabilities	196.9		173.1		—		—			370.0
Other liabilities	162.7		129.5				152.7		G, H	444.9
Total Liabilities	1,135.3		847.9		—		869.2			2,852.4



Redeemable noncontrolling interests	77.0		—		—		—			77.0
Convertible Preferred stock	—		166.9		—		(166.9)		I	—

Stockholders' Equity:
Preferred stock	—		—		—		—			—
Common stock	11.8		0.5		—		2.7		I	15.0
Additional paid-in capital	94.7		75.2		—		632.3		I	802.2
Retained earnings	808.4		410.9		—		(490.8)		J	728.5
Accumulated other comprehensive loss	(65.1)		(50.1)		—		50.1		I	(65.1)
Deferred compensation plan	(0.2)		—		—		—			(0.2)
Total Stockholders' Equity	849.6		436.5		—		194.3			1,480.4



Total Liabilities, Redeemable Noncontrolling Interests, Convertible Preferred Stock, and Stockholders' Equity	$	2,061.9	$	1,451.3	$	—	$	896.6		$	4,409.8


(in millions)	Herman Miller, Inc.			Knoll, Inc.		Reclassification Adjustments			Pro Forma Adjustments			Pro Forma Combined
Net sales	$	2,465.1		$	1,160.6	$	—		$	(19.6)	A	$	3,606.1
Cost of sales	1,515.9			744.5		(14.4)		B, C, D	(16.6)		B	2,229.4
Gross margin	949.2			416.1		14.4			(3.0)			1,376.7



Operating expenses:
Selling, general and administrative	643.8			361.9		(12.5)		A, B, D	60.0		C, D, F, G	1,053.2
Impairment charges	—			13.8		—			—			13.8
Restructuring expense, net	2.7			21.9		—			—			24.6
Design and research	72.1			—		26.9		A, C	—			99.0
Total operating expenses	718.6			397.6		14.4			60.0			1,190.6
Operating earnings	230.6			18.5		—			(62.9)			186.2



Other expense, net	4.2			20.3		—			13.3		E	37.8
Earnings (loss) before income taxes and equity income	226.4			(1.8)		—			(76.2)			148.4



Income tax expense	47.9			3.3		—			(19.5)		H	31.7
Equity income from nonconsolidated affiliates, net of tax	0.3			—		—			—			0.3
Net earnings (loss)	178.8			(5.1)		—			(56.7)			117.0



Net earnings attributable to redeemable noncontrolling interests	5.7			—		—			—			5.7
Net earnings (loss) attributable to Herman Miller, Inc.	173.1			(5.1)		—			(56.7)			111.3



Net earnings attributable to Preferred stockholders	—			5.2		—			(5.2)		I	—
Net earnings (loss) available to common stockholders	$	173.1		$	(10.3)	$	—		$	(51.0)		$	111.3



Earnings per share — basic	$	2.94										$	1.48
Shares used in basic per share calculations	58,931,268		J									75,191,428		J
Earnings per share — diluted	$	2.92										$	1.45
Shares used in diluted per share calculations	59,389,598		J									76,507,398		J


Inputs:
Herman Miller stock price as of July 19, 2021	$	43.44	(a)
Cash consideration per share per Merger Agreement	$	11.00
Equivalent share amount per Merger Agreement	0.32
Equity Award Exchange Ratio	0.5613

	Knoll Shares		Herman Miller Shares Exchanged	Fair Value		Consideration
Cash Consideration:
Shares of Knoll Common Stock issued and outstanding at July 19, 2021	49,444,825			$	543.9
Knoll equivalent shares for outstanding option awards, outstanding awards of restricted common stock held by non-employee directors and outstanding awards of performance units held by individuals who are former employees of Knoll and remain eligible to vest at July 19, 2021 (b)	184,857			1.4
Total number of shares of Knoll Common Stock to receive cash consideration	49,629,682			545.3		Cash

Shares of Knoll Preferred Stock issued and outstanding at July 19, 2021	169,165			254.4		Cash

Share Consideration:
Shares of Knoll Common Stock issued and outstanding at July 19, 2021	49,444,825
Knoll equivalent shares for outstanding awards of restricted common stock held by non-employee directors and outstanding awards of performance units held by individuals who were former employees of Knoll and remained eligible to vest at July 19, 2021 (b)	74,857
Total number of Knoll shares for share consideration	49,519,682		15,843,921	688.3		Herman Miller Common Stock

Replacement Share-Based Awards:
Outstanding awards of Knoll Restricted Stock and Performance units relating to Knoll Common Stock at July 19, 2021 (c)				22.4		Herman Miller Restricted Stock and Performance Unit Awards

Other Consideration
Consideration for payment to settle Knoll's outstanding debt				294.6
Less: Consideration for settlement of pre-existing payable to Knoll				(3.9)

Total preliminary acquisition date fair value of consideration transferred				$	1,801.1


Assets acquired
Cash and cash equivalents	$	10.8
Accounts receivable	77.6
Inventories	219.1
Other current assets	53.1
Property and equipment	287.9
Right-of-use assets	181.8
Intangible assets	770.0
Other noncurrent assets	3.4
Total assets acquired	$	1,603.7

Liabilities assumed
Accounts payable	$	103.7
Other current liabilities	153.1
Lease liabilities	173.1
Other liabilities	126.6
Total liabilities assumed	556.5
Net assets acquired, excluding goodwill	1,047.2
Deferred tax liability adjustment on the fair value of purchased intangibles, net	(162.0)
Total estimated preliminary purchase consideration	1,801.1
Goodwill	$	915.9


A.			Reclassification of Design and research expenses from Selling, general and administrative to a separate line item to conform with Herman Miller's financial statement line item presentation.

B			Reclassification of Warranty related expenses from Cost of sales to Selling, general and administrative to conform with Herman Miller's presentation.

C			Reclassification of Royalty related expenses from Cost of sales to Design and research to conform with Herman Miller's presentation.

D			Reclassification of certain pricing elements related to direct customer sales from Selling, general and administrative to Cost of sales to align with Herman Miller's presentation.


A.			Represents adjustments to the combined company cash balance to complete and fund the Merger, including (i) net proceeds from Herman Miller’s new debt and subsequent Knoll debt payoff (see pro forma footnote Note 4(G) below), (ii) estimated cash consideration to be paid at the closing of the Merger, and (iii) Herman Miller and Knoll severance and transaction costs anticipated to be paid by each party (in millions):


Net proceeds from Herman Miller's new debt	$	1,282.8
Cash consideration to be paid upon Merger	(799.7)
Settlement of Knoll interest rate swap liabilities	(7.6)
Consideration for settlement of pre-existing payable to Knoll	3.9
Pro forma cash payments at Merger under severance and retention agreements	(18.1)
Herman Miller transaction costs	(26.7)
Debt payoff	(575.6)
Knoll transaction costs	(24.9)
Net adjustment to cash and cash equivalents	$	(165.9)


B.			Represents the elimination of Accounts receivable, net and Accounts payable between Herman Miller and Knoll related to historical sales transactions between the two companies.


C.			Represents the reduction of Herman Miller's inventory held at the end of the period to Knoll cost and the preliminary adjustment to the carrying value of Knoll's inventories from its recorded value to its preliminary estimated fair value. The estimated fair value is expected to be amortized into cost of goods sold based on historical inventory turnover for Knoll. The estimated fair value and amortization period are preliminary and subject to change once Herman Miller has sufficient information as to the specific types, nature, age, condition, and location of Knoll's inventory (in millions):


Reduction of Herman Miller inventory held at the end of the period to Knoll cost for inventory purchased from Knoll	$	(1.9)
Knoll’s historical Inventory, net book value	(206.5)
Estimated fair value of inventories acquired	219.1
Net adjustment to Inventories, net	$	10.7


D.			Represents the preliminary adjustment to the carrying value of Knoll's property and equipment from its recorded net book value to its preliminary estimated fair value. The estimated fair value is expected to be depreciated over the estimated useful lives of the assets, generally on a straight-line basis. The weighted average useful lives of all property and equipment are 10 years. The estimated fair values and estimated useful lives are preliminary (in millions):


Knoll’s historical Property and equipment, net book value	$	(236.9)
Estimated fair value of property and equipment acquired	287.9
Net adjustment to Property and equipment, net	$	51.0


	Estimated Fair Value		Estimated Remaining Useful Life (in years)
Customer relationships	$	268.0	2 - 15 Years
Tradenames - Indefinite Lived	397.0		Indefinite
Tradenames - Amortizing	23.0		5 - 10 Years
Designs	29.0		9 - 15 Years
Backlog	53.0		Less than 1 Year
Estimated fair value of intangible assets acquired	770.0
Elimination of Knoll's historical intangible asset	(340.1)
Net adjustment to intangible assets	$	429.9


E.			As described in pro forma footnote Note 4(G) above, Herman Miller funded the cash portion of the Merger consideration with a combination of new debt and cash on hand. Borrowings under the Senior Facilities bear interest at a rate per annum equal to, at the Company’s option, either a LIBOR rate (subject to a 0.00% floor) or a base rate, in each case plus an applicable margin of, initially, (i) in the case of borrowings under the Term Loan A Facility, 1.50% for LIBOR loans and 0.50% for base rate loans, (ii) in the case of borrowings under the Term Loan B Facility, 2.00% for LIBOR loans and 1.00% for base rate loans and (iii) in the case of borrowings under the Revolving Credit Facility, 1.50% for LIBOR loans and 0.50% for base rate loans. The applicable margin for borrowings under each of the Senior Facilities varies depending on the Company’s first lien secured net leverage ratio. The Company is also required to pay a commitment fee initially equal to 0.20% per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee under the Revolving Credit Facility varies depending on the Company’s first lien secured net leverage ratio. For pro forma purposes, the LIBOR rate used was 0.13225%, which represents the USD 3-month rate as of September 24, 2021. A change of 0.125% in the interest rate would result in an increase or decrease in interest expense of $0.9 million for the twelve months ended May 29, 2021. Adjustments to interest expense include the following: (in millions):


F.			Reflects the adjustments for share-based compensation expense related to outstanding Knoll equity awards that were converted into an award in respect of shares of Company Common Stock as set forth in the Merger Agreement. Knoll's historical share-based compensation expense was eliminated and replaced with the fair-value-based measure of the replacement award, less the amount attributed to purchase consideration and recognized over the remaining service period. This adjustment also includes the impact of accelerated stock-compensation expense for awards that vested at the Closing Date for employee terminations at Closing, driven by the change-in-control provisions for the underlying award. The adjustment does not include the impact from any accelerated vesting related to employees terminated subsequent to the close of the Merger. This impact could be material. The adjustment to share-based compensation expense is as follows (in millions):


	Twelve months ended May 29, 2021

Selling, general and administrative	$	4.1


E.			Represents the net adjustment to goodwill, as follows (in millions):


Elimination of Knoll’s historical goodwill	$	(341.1)
Goodwill to be recorded based on the estimated preliminary purchase price allocation	915.9
Net adjustment to goodwill	$	574.8


F.			Represents the adjustment to record net intangible assets to estimated fair values based on preliminary purchase price allocation, as follows (in millions):


G.			Herman Miller funded the cash portion of the Merger consideration with a combination of new debt and cash on hand. In connection with the acquisition of Knoll, in July, 2021, the Company entered into a credit agreement that provided for a syndicated revolving line of credit and two term loans. The revolving line of credit provides the Company with up to $725 million in revolving variable interest borrowing capacity that matures in July 2026, replacing the previous $500 million syndicated revolving line of credit. The term loans consist of a five-year senior secured term loan "A" facility with an aggregate principal amount of $400 million and a seven-year senior secured term loan "B" facility with an aggregate principal amount of $625 million, the proceeds of which were used to finance a portion of the cash consideration for the acquisition of Knoll, for the repayment of certain debt of Knoll and Herman Miller and to pay fees, costs and expenses related to the acquisition and related finances. Adjustments to Short-term borrowings and current portion of long-term debt and Long-term debt include the following:


Herman Miller proceeds from issuance of debt, net of issuance costs	$	1,282.8
Extinguishment of certain existing indebtedness of Herman Miller, including recognition of unamortized debt issuance costs	(273.9)
Extinguishment of certain existing indebtedness of Knoll (includes current and long-term portions)	(283.8)
Net adjustment to debt	$	725.1


H.			Represents the adjustment to long-term deferred income tax liabilities, as follows (in millions):


Deferred tax liability adjustment on the fair value of purchased intangibles, net	$	162.0
Deferred tax asset on the pro forma adjustment for Herman Miller’s transaction costs	(6.4)
Net adjustment to long-term deferred income tax liabilities	$	155.6


I.			Represents the elimination of Knoll's preferred stock and historical stockholder's equity and the increase of $710.7 million to common stock and additional paid-in capital of the combined company for the fair value of Herman Miller stock consideration.


J.			Represents the net pro forma adjustment to retained earnings, as follows (in millions):


Elimination of Knoll's historical retained earnings	$	(410.9)
Effect of pro forma acquisition related transaction and severance costs	(69.7)
Reduction of Herman Miller inventory held at the end of the period to Knoll cost for inventory purchased from Knoll	(1.9)
Recognition of a tax benefit related to tax-deductible transaction costs	6.4
Recognition of an estimated make whole premium related to the extinguishment of certain existing indebtedness of Herman Miller	(13.0)
Recognition of unamortized debt issuance costs related to the extinguishment of certain existing indebtedness of Herman Miller	(1.7)
Net adjustment to retained earnings	$	(490.8)


A.			Represents the elimination of historical sales between Herman Miller and Knoll, primarily related to sales from Knoll to Herman Miller.


B.			Represents cost of sales adjustments related to the sales adjustments described in pro forma footnote Note 5(A) above, the elimination of intercompany profit in Herman Miller and Knoll's unsold ending inventory, and increased depreciation and amortization of the step-up in property and equipment associated with the preliminary valuation (in millions):


	Twelve months ended May 29, 2021
Eliminate Herman Miller purchases from Knoll	$	(19.6)
Depreciation of property and equipment fair value adjustment	2.4
Net period change in Herman Miller inventory purchased from Knoll to Knoll cost	0.5
Net pro forma impact to Cost of sales	$	(16.7)


C.			Represents increased depreciation expense associated with the step-up in property and equipment fair values associated with the preliminary valuation (in millions):


	Twelve months ended May 29, 2021
Elimination of Knoll historical Intangible assets, net amortization expense	$	(11.6)

New amortization expense for newly acquired intangible assets
Amortization of acquired backlog	$	53.0
Amortization of customer relationships	$	19.2
Amortization of patents, tradenames and designs	4.1
Total new amortization expense from newly acquired intangible assets	76.3
Total pro forma amortization expense adjustment	$	64.7


	Twelve months ended May 29, 2021
Interest expense related to new debt used to finance a portion of the Merger	$	30.1
Amortization of new debt issuance costs to interest expense	3.9
Pro forma adjustment to reflect repayment of certain Herman Miller debt	(5.2)
Pro forma adjustment to reflect repayment of Knoll debt	(15.5)
Net pro forma impact to interest expense:	$	13.3


G.			Represents adjustments to reverse non-recurring transaction costs which were recorded in Herman Miller and Knoll's Selling, general and administrative expenses in the historical statements of operations. The adjustment is $11.5 million of transaction costs related to financial advisory, due diligence and consulting fees for the twelve months ended May 29, 2021.


H.			Represents the impact to income tax expense, as follows (in millions):


	Twelve months ended May 29, 2021
Income tax impact of transaction costs	$	2.9
Income tax impact of sales and cost of goods sold adjustments	(0.7)
Income tax impact of the net increase in interest expense	(3.3)
Income tax impact of the net increase in depreciation expense	(1.3)
Income tax impact of the net increase in amortization expense	(16.0)
Income tax impact of the share-based compensation expense adjustment	(1.0)
Total pro forma adjustments for Income tax expense	$	(19.5)


I.			Represents an adjustment to reverse Net earnings attributable to holders of Knoll preferred stock as Herman Miller purchased all Knoll preferred stock as part of the acquisition.