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Acquisitions and Divestitures | 12 Months Ended
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May 31, 2014
Business Combinations [Abstract] |
Business Combination Disclosure | Acquisitions and Divestitures China Manufacturing and Distribution Acquisition On September 30, 2013, the company acquired certain assets from Dongguan Sun Hing Steel Furniture Factory Ltd (DGSH) which together, constituted the acquisition of a business. The acquired business is a manufacturing and distribution operation in Dongguan, China, where product sold under the POSH trade name are produced. Subject to the finalization of certain post-closing adjustments, consideration transferred to acquire the net assets of DGSH consisted of $8.2 million in cash, of which $6.7 million wa s paid during the second and third quarters of fiscal 2014. The final payment is expected to be made within the next 12 months. The company is still finalizing information related to the valuation of the assets acquired and expects to finalize these matters within the measurement period. Maharam Acquisition On April 23, 2013, the company entered into an agreement to purchase Maharam Fabric Corporation, a New York-based, global designer and provider of high quality interior textiles for commercial, healthcare, and residential interiors. The company pursued the acquisition of Maharam in order to reinforce and accelerate Herman Miller’s Specialty and Consumer initiative and support further opportunities in commercial markets. The company closed the transaction on April 29, 2013 for consideration of $155.8 million. As a result of the transaction, 100 percent of the voting equity interests of Maharam were acquired. Furthermore, the company estimates it will receive future tax benefits with a present value of approximately $20 million. The allocation of the purchase price was finalized during the fourth quarter of fiscal 2014. The following table summarizes the fair values of the assets acquired and the liabilities assumed from Maharam on April 29, 2013:
Assets Acquired and Liabilities Assumed on April 29, 2013
(In millions) | Fair Value
Purchase price | $ | 155.8 |
Fair value of the assets acquired |
Accounts receivable | 11.1 |
Inventory | 14.1 |
Other current assets | 4.4 |
Investments in nonconsolidated affiliates | 4.3 |
Other intangible assets | 42.4 |
Goodwill | 80.7 |
Property | 12.1 |
Long term deferred tax asset | 1.6 |
Other assets | 0.2 |
Total assets acquired | 170.9 |
Fair value of liabilities assumed |
Accounts payable | 6.5 |
Current deferred tax liabilities | 1.6 |
Accrued compensation and benefits | 4.7 |
Other accrued liabilities | 1.0 |
Other long term liabilities | 1.3 |
Total liabilities assumed | 15.1 |
Net assets acquired | $ | 155.8 |
The goodwill stemming from the transaction in the amount of $80.7 million was recorded as "Goodwill" in the Consolidated Balance Sheet and allocated to the North American Furniture Solutions and the Specialty and Consumer reportable segments. The amounts were allocated based on the expected synergies to be realized by the reportable segments that will benefit from combining the operations of Maharam into the company. The goodwill amounts allocated to the reportable segments were as follows:
Goodwill Segment Allocation as of April 29, 2013
(In millions) | Fair Value
North American Furniture Solutions | $ | 31.9 |
Specialty and Consumer | 48.8 |
Total Goodwill | $ | 80.7 |
Intangible assets acquired as a result of the April 29, 2013 acquisition of Maharam were valued at $42.4 million. These amounts are reflected in the values presented in the table below:
Intangible Assets Acquired on April 29, 2013 |
(In millions) | Fair Value | Useful Life
Trade name | $ | 23.0 |  | Indefinite
Designs and patterns | 3.1 |  | 5
Specifier and customer relationships | 16.0 |  | 15
Non-compete agreements | 0.3 |  | 2
Total Intangibles Acquired | $ | 42.4 |  |
POSH Acquisition On April 3, 2012, the company acquired Sun Hing POSH Holdings Limited (POSH). POSH is a Hong Kong-based designer, and distributor of office furniture systems, freestanding furniture, seating, and filing and storage with distribution in Hong Kong and China. The total purchase price to acquire POSH was approximately $58.9 million, which included $48.8 million in net cash and contingent consideration valued at $10.1 million. During fiscal 2014, the portion of the contingent consideration that was related to the targeted sales growth of POSH was reduced by $2.6 million. The benefit of this change in value is reflected within “Total operating expenses” in the Consolidated Statements of Comprehensive Income. Since the acquisition of POSH, payments of $1.4 million have been made related to the contingent consideration obligation. The remaining contingent consideration will be in the form of a cash payment, which the company currently estimates to be $4.1 million. This payment is expected to be made in the next twelve months. The company acquired assets valued at $15.8 million, consisting primarily of cash, accounts receivable, inventory and property and equipment, and acquired liabilities valued at $8.6 million. The company also established a deferred tax liability of $4.9 million. Resulting goodwill, indefinite-lived intangibles, and amortizable intangibles were $34.5 million, $19.9 million, and $8.9 million, respectively. The allocation of the purchase price was finalized during the third quarter of fiscal 2013 and the amounts included above are final. POSH is reported within the ELA Furniture Solutions reportable operating segment. Divestitures During fiscal 2014, the company completed the sale of four wholly-owned contract furniture dealerships. The sale of these dealerships, that were located in Canada, Arkansas, Oregon, and Oklahoma, was not material to the consolidated financial statements. A gain on sale of $1.3 million was recognized as a result of the sale of the Oklahoma dealership. During fiscal 2013, the company completed the sale of one wholly-owned contract furniture dealership in Florida, the impact of which was not material to the consolidated financial statements. During fiscal 2012, the company completed the sale of three wholly-owned contract furniture dealerships. The sale of these dealerships, that were located in Texas, Colorado, and California, was not material to the consolidated financial statements.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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