Operating Segments

In fiscal 2018, 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 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 been renamed. Effective in the 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.

The North America Contract segment 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 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. The International Contract segment includes EMEA, Latin America, and Asia-Pacific. International Contract includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, in these aforementioned geographic regions. The Retail segment 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 eCommerce, direct mailing catalogs and Design Within Reach and HAY studios.

The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs. Management regularly reviews corporate costs and believes disclosing such information provides more visibility and transparency regarding how the chief operating decision maker reviews results of the Company. The accounting policies of the reportable operating segments are the same as those of the Company.

The performance of the operating segments is evaluated by the Company's management using various financial measures. The following is a summary of certain key financial measures for the respective fiscal years indicated:



(In millions)	2019			2018			2017
Net Sales:
North America Contract	$	1,686.5		$	1,589.8		$	1,574.6
International Contract	492.2			434.5			385.5
Retail	388.5			356.9			318.1
Corporate	—			—			—
Total	$	2,567.2		$	2,381.2		$	2,278.2

Depreciation and Amortization:
North America Contract	$	46.8		$	43.9		$	37.7
International Contract	10.5			10.2			9.4
Retail	14.1			12.1			10.2
Corporate	0.7			0.7			1.6
Total	$	72.1		$	66.9		$	58.9

Operating Earnings (Losses):
North America Contract	$	189.7		$	175.2		$	184.1
International Contract	57.8			36.9			36.2
Retail	5.3			13.9			4.8
Corporate	(49.3		)	(47.1		)	(34.0		)
Total	$	203.5		$	178.9		$	191.1

Capital Expenditures:
North America Contract	$	52.7		$	46.0		$	56.8
International Contract	16.6			11.4			8.5
Retail	16.5			13.2			22.0
Corporate	—			—			—
Total	$	85.8		$	70.6		$	87.3

Total Assets:
North America Contract	$	733.6		$	677.4		$	691.5
International Contract	356.8			283.4			230.3
Retail	310.0			291.2			276.4
Corporate	168.9			227.5			108.1
Total	$	1,569.3		$	1,479.5		$	1,306.3

Goodwill:
North America Contract	$	185.3		$	185.3		$	185.6
International Contract	39.7			40.0			40.1
Retail	78.8			78.8			78.8
Corporate	—			—			—
Total	$	303.8		$	304.1		$	304.5

The accounting policies of the reportable operating segments are the same as those of the Company. Additionally, the Company employs a methodology for allocating corporate costs and assets with the underlying objective of this methodology being to allocate corporate costs according to the relative usage of the underlying resources and to allocate corporate assets according to the relative expected benefit. The majority of the allocations for corporate expenses are based on relative net sales. However, certain corporate costs, generally considered the result of isolated business decisions, are not subject to allocation and are evaluated separately from the rest of the regular ongoing business operations.

The Company's product offerings consist primarily of office furniture systems, seating, freestanding furniture, storage and casegoods. These product offerings are marketed, distributed and managed primarily as a group of similar products on an overall portfolio basis. The following is a summary of net sales estimated by product category for the respective fiscal years indicated:



(In millions)	2019		2018		2017
Net Sales:
Systems	$	668.0	$	601.5	$	639.0
Seating	1,013.5		965.9		894.8
Freestanding and storage	505.4		465.1		428.8
Textiles	113.8		94.3		96.9
Other ⁽¹⁾	266.5		254.4		218.7
Total	$	2,567.2	$	2,381.2	$	2,278.2

(1) “Other” primarily consists of uncategorized product sales and service sales.

Sales by geographic area are based on the location of the customer. Long-lived assets consist of long-term assets of the Company, excluding financial instruments, deferred tax assets and long-term intangibles. The following is a summary of geographic information for the respective fiscal years indicated. Individual foreign country information is not provided as none of the individual foreign countries in which the Company operates are considered material for separate disclosure based on quantitative and qualitative considerations.



(In millions)	2019		2018		2017
Net Sales:
United States	$	1,865.8	$	1,737.9	$	1,690.1
International	701.4		643.3		588.1
Total	$	2,567.2	$	2,381.2	$	2,278.2




Long-lived assets:
United States	$	422.1	$	349.3	$	328.6
International	52.2		50.5		45.3
Total	$	474.3	$	399.8	$	373.9

The Company estimates that no single dealer accounted for more than 5 percent of the Company's net sales in the fiscal year ended June 1, 2019. The Company estimates that its largest single end-user customer accounted for $129.6 million, $109.8 million and $102.3 million of the Company's net sales in fiscal 2019, 2018 and 2017, respectively. This represents approximately 5 percent, 5 percent and 5 percent of the Company's net sales in fiscal 2019, 2018 and 2017, respectively.

Approximately 5 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.