Employee Benefit Plans

The company maintains retirement benefit plans for substantially all of its employees.

Pension Plans and Post-Retirement Medical Insurance

The principal domestic retirement plan is a defined-benefit plan with benefits determined by a cash balance calculation. Benefits under this plan are based upon an employee's years of service and earnings. The company also offers certain employees retirement benefits under other domestic defined benefit plans. The company provides healthcare benefits to employees who retired from service on or before a qualifying date in 1998. As of the qualifying date, the company discontinued offering post-retirement medical to future retirees. Benefits to qualifying retirees under this plan are based on the employee's years of service and age at the date of retirement.

In addition to the domestic pension and retiree healthcare plan, one of the company's wholly owned foreign subsidiaries has a defined-benefit pension plan based upon an average final pay benefit calculation.

The measurement date for the company's principal domestic and international pension plans, as well as its post-retirement medical, is the last day of the fiscal year.

Benefit Obligations and Funded Status

The following table presents, for the fiscal years noted, a summary of the changes in the projected benefit obligation, plan assets, and funded status of the company's domestic and international pension plans and post-retirement plan.



	Pension Benefits												Post-Retirement Benefits
	2011						2010						2011			2010
(In millions)	Domestic			International			Domestic			International
Change in benefit obligation:
Benefit obligation at beginning of year	$	296.0		$	71.6		$	281.2		$	66.0		$	11.1		$	13.6
Service cost	6.9			1.9			8.1			—			—			—
Interest cost	15.1			4.3			17.9			4.2			0.5			0.6
Amendments	—			—			—			0.3			—			—
Foreign exchange impact	—			9.2			—			(7.6		)	—			—
Actuarial (gain)/loss	9.0			(10.5		)	12.2			11.9			(0.4		)	(2.1		)
Employee contributions	—			0.3			—			—			—			—
Benefits paid	(17.1		)	(1.8		)	(23.4		)	(3.2		)	(0.9		)	(1.0		)
Benefit obligation at end of year	$	309.9		$	75.0		$	296.0		$	71.6		$	10.3		$	11.1

Change in plan assets:
Fair value of plan assets at beginning of year	$	200.1		$	53.2		$	175.3		$	50.6		$	—		$	—
Actual return on plan assets	40.2			8.2			30.8			10.6			—			—
Foreign exchange impact	—			7.4			—			(5.7		)	—			—
Employer contributions	50.2			1.7			17.4			0.9			0.9			1.0
Employee contributions	—			0.3			—			—			—			—
Benefits paid	(17.1		)	(1.8		)	(23.4		)	(3.2		)	(0.9		)	(1.0		)
Fair value of plan assets at end of year	273.4			69.0			200.1			53.2			—			—
Under funded status at end of year	$	(36.5	)	$	(6.0	)	$	(95.9	)	$	(18.4	)	$	(10.3	)	$	(11.1	)

The components of the amounts recognized in the Consolidated Balance Sheets are as follows.



	Pension Benefits												Post-Retirement Benefits
	2011						2010						2011			2010
(In millions)	Domestic			International			Domestic			International
Current liabilities	$	(0.1	)	$	—		$	(0.1	)	$	—		$	(1.1	)	$	(1.1	)
Non-current liabilities	(36.4		)	(6.0		)	(95.8		)	(18.4		)	(9.2		)	(10.0		)
	$	(36.5	)	$	(6.0	)	$	(95.9	)	$	(18.4	)	$	(10.3	)	$	(11.1	)

The accumulated benefit obligation for the company's domestic pension benefit plans totaled $307.2 million and $289.6 million as of the end of fiscal years 2011 and 2010, respectively. For its international plans, these amounts totaled $72.8 million and $68.4 million as of the same dates, respectively.

The components of the amounts recognized in accumulated other comprehensive loss before the effect of income taxes are as follows.



	Pension Benefits										Post-Retirement Benefits
	2011					2010					2011		2010
(In millions)	Domestic			International		Domestic			International
Unrecognized net actuarial loss	$	144.9		$	11.6	$	165.6		$	24.7	$	1.7	$	2.0
Unrecognized prior service cost (credit)	(3.9		)	—		(6.2		)	—		0.1		0.2
Unrecognized transition amount	—			—		—			—		—		—
	$	141.0		$	11.6	$	159.4		$	24.7	$	1.8	$	2.2

Components of Net Periodic Benefit Costs and Other Changes Recognized in Other Comprehensive Income

The following table is a summary of the annual cost of the company's pension and post-retirement plans.



	Pension Benefits									Post-Retirement Benefits
(In millions)	2011			2010			2009			2011		2010		2009
Domestic:
Service cost	$	6.9		$	8.1		$	8.4		$	—	$	—	$	—
Interest cost	15.1			17.9			18.3			0.5		0.6		0.8
Expected return on plan assets	(18.7		)	(18.9		)	(22.2		)	—		—		—
Net amortization	6.0			3.1			2.5			0.1		0.1		0.2
Net periodic benefit cost	$	9.3		$	10.2		$	7.0		$	0.6	$	0.7	$	1.0

International:
Service cost	$	1.9		$	—		$	2.1
Interest cost	4.3			4.2			4.6
Expected return on plan assets	(4.2		)	(4.4		)	(4.6		)
Net amortization	1.2			1.3			1.0
Net periodic benefit cost	$	3.2		$	1.1		$	3.1

Total net periodic benefit cost	$	12.5		$	11.3		$	10.1		$	0.6	$	0.7	$	1.0

The net prior service credit and actuarial loss included in accumulated other comprehensive income expected to be recognized in net periodic benefit cost during fiscal 2012 is prior service cost of $2.1 million ($1.3 million, net of tax) and actuarial loss of $9.2 million ($5.5 million, net of tax), respectively.

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Income) Loss



	Pension Benefits						Post-Retirement Benefits
(In millions)	2011			2010			2011			2010
Domestic:
Prior service cost	$	—		$	—		$	—		$	—
Net actuarial (gain) loss	(12.5		)	0.3			(0.3		)	(2.2		)
Net amortization	(6.0		)	(3.1		)	(0.1		)	(0.1		)
Total recognized in other comprehensive (income) loss	(18.5		)	(2.8		)	(0.4		)	(2.3		)

Total recognized net pension cost and other comprehensive (income) loss	$	(9.2	)	$	7.4		$	0.2		$	(1.6	)

International:
Prior service cost	$	—		$	0.3
Net actuarial loss	(14.5		)	5.5
Effect of exchange rates on amounts included in accumulated other comprehensive income	2.6			—
Net amortization	(1.2		)	(1.0		)
Total recognized in other comprehensive loss	(13.1		)	4.8
Total recognized net pension cost and other comprehensive loss	$	(9.9	)	$	5.9

Total:
Total recognized in other comprehensive (income) loss	$	(31.6	)	$	2.0		$	(0.4	)	$	(2.3	)
Total recognized net pension cost and other comprehensive (income) loss	$	(19.1	)	$	13.3		$	0.2		$	(1.6	)

Actuarial Assumptions

The weighted-average actuarial assumptions used to determine the benefit obligation amounts as of the end of the fiscal year for the company's pension plans and post-retirement plans are as follows.



	2011		2010		2009
	U.S.	International	U.S.	International	U.S.	International
(Percentages)
Discount rate	4.75	5.40	5.25	5.50	6.75	6.50
Compensation increase rate	3.00	3.50	4.50	4.90	4.50	4.80

The weighted-average actuarial assumptions used to determine the net periodic benefit cost are established at the end of the previous fiscal year for the subsequent fiscal years as follows.



	2011		2010		2009
	U.S.	International	U.S.	International	U.S.	International
(Percentages)
Discount rate	5.25	5.50	6.75	6.50	6.75	6.25
Compensation increase rate	4.50	4.90	4.50	4.80	4.50	5.00
Expected return on plan assets	7.75	6.80	7.75	7.25	8.50	7.30

In calculating post-retirement benefit obligations, a 7.6 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2011, decreasing gradually to 4.5 percent by 2029 and remaining at that level thereafter. For purposes of calculating post-retirement benefit costs, a 7.7 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2010, decreasing gradually to 4.5 percent by 2029 and remaining at that level thereafter.

Assumed health care cost-trend rates have a significant effect on the amounts reported for retiree health care costs. A one-percentage-point change in the assumed health care cost-trend rates would have the following effects:



(In millions)	1 Percent Increase		1 Percent Decrease
Effect on total fiscal 2011 service and interest cost components	$	—	$	—
Effect on post-retirement benefit obligation at May 28, 2011	$	0.5	$	(0.4	)

Plan Assets and Investment Strategies

The company's primary domestic and international employee benefit plans' assets consist mainly of listed common stocks, mutual funds, fixed income obligations and cash. The company's primary objective for invested pension plan assets is to provide for sufficient long-term growth and liquidity to satisfy all of its benefit obligations over time. Accordingly, the company has developed an investment strategy that it believes maximizes the probability of meeting this overall objective. This strategy includes the development of a target investment allocation by asset category in order to provide guidelines for making investment decisions. This target allocation emphasizes the long-term characteristics of individual asset classes as well as the diversification among multiple asset classes. In developing its strategy, the company considered the need to balance the varying risks associated with each asset class with the long-term nature of its benefit obligations. The company's strategy moving forward will be to increase the level of fixed income investments as the funding status improves, thereby more closely matching the return on assets with the liabilities of the plans.

The company utilizes independent investment managers to assist with investment decisions within the overall guidelines of the investment strategy.

The company has assumed an average long-term expected return on defined benefit plan assets of 7.75 percent and 6.80 percent for its primary domestic plan and international plan, respectively, as of May 28, 2011. The expected return is determined by applying the target allocation in each asset category of plan investments to the anticipated return for each asset category based on historical and projected returns.

The asset allocation for the company's primary pension plans at the end of fiscal 2011 and 2010 are as follows:

Primary Domestic Plan



	Targeted Asset Allocation Percentage	Actual Percentage of Plan Assets at Year end
Asset Category	Targeted Asset Allocation Percentage	2011	2010
Equities	54 - 66	57	54
Fixed Income	35 - 43	43	45
Other	0 - 5	—	1
Total		100	100

Primary International Plan



	Targeted Asset Allocation Percentage	Actual Percentage of Plan Assets at Year end
Asset Category	Targeted Asset Allocation Percentage	2011	2010
Equities	54 - 66	58	59
Fixed Income	35 - 43	39	39
Other	0 - 5	3	2
Total		100	100

The following tables summarize the fair value of the company's domestic and international pension plans by asset category as of May 28, 2011. The company currently does not hold any level three investments within any of its pension plans.



(In millions)	Domestic Plans
Asset Category	Level 1		Level 2		Total
Cash and cash equivalents	$	—	$	0.4	$	0.4
Common collective trusts-equities	—		136.0		136.0
Debt securities-corporate	—		4.8		4.8
Common collective trusts-fixed income	—		112.2		112.2
Equities - Herman Miller stock	20.0		—		20.0
Total	$	20.0	$	253.4	$	273.4



(in millions)	International Plan
Asset Category	Level 1		Level 2		Total
Cash and cash equivalents	$	0.2	$	—	$	0.2
Common collective trusts-balanced	—		68.8		68.8
Total	$	0.2	$	68.8	$	69.0

The following tables summarize the fair value of the company's domestic and international pension plans by asset category as of May 29, 2010.



(In millions)	Domestic Plans
Asset Category	Level 1		Level 2		Total
Cash and cash equivalents	$	0.6	$	0.5	$	1.1
Common collective trusts-equities	—		92.0		92.0
Debt securities-corporate	—		4.5		4.5
Common collective trusts-fixed income	—		86.0		86.0
Equities - Herman Miller stock	16.5		—		16.5
Total	$	17.1	$	183.0	$	200.1



(in millions)	International Plan
Asset Category	Level 1		Level 2		Total
Cash and cash equivalents	$	6.1	$	—	$	6.1
Common collective trusts-equities	—		32.7		32.7
Debt securities-government	—		0.6		0.6
Debt securities-corporate	—		13.4		13.4
Other	—		0.4		0.4
Total	$	6.1	$	47.1	$	53.2

Cash Flows

The company anticipates contributing $16.3 million to its pension and other post-retirement plans in fiscal 2012 and is reviewing whether any voluntary pension plan contributions will be made in the next year. Actual contributions will be dependent upon investment returns, changes in pension obligations, and other economic and regulatory factors. In fiscal 2011 the company made a non-cash contribution of company stock to its domestic benefit plan which was valued at $14.6 million at the contribution date. The company also made cash contributions totaling $38.2 million to its benefit plans.

In August 2006, the Pension Protection Act of 2006 (the “Act”) was signed into law. Beginning in 2008, the Act replaces prevailing statutory minimum funding requirements, and will generally require contributions to the company's U.S. defined benefit pension plans in amounts necessary to fund the cost of currently-accruing benefits, and to fully-fund any unfunded accrued benefits over a period of seven years. In the long-term, the new law is not expected to materially change aggregate contributions required to be made to the U.S. pension plans, although such contributions may vary on a year to year basis from what otherwise would have been required. The extent of these variations is not expected to have a material impact on the company's financial position or cash flows.

The following represents a summary of the benefits expected to be paid by the plans in future fiscal years. These expected benefits were estimated based on the same actuarial valuation assumptions used to determine benefit obligations at May 28, 2011.



(In millions)	Pension Benefits Domestic		Pension Benefits International		Post-Retirement Benefits
2012	$	25.0	$	1.4	$	1.1
2013	26.2		1.5		1.1
2014	27.0		1.5		1.0
2015	27.8		1.6		1.0
2016	20.8		1.6		1.0
2017-2021	112.8		8.9		4.0

Profit Sharing and 401(k) Plan

Herman Miller, Inc. has a trusteed profit sharing plan that includes substantially all domestic employees. These employees are eligible to begin participating on their date of hire. The plan provides for discretionary contributions, payable in the company's common stock, of not more than 6.0 percent of employees' wages based on the company's financial performance. The cost of the profit sharing contribution during fiscal 2011 was $7.7 million. The company made no profit sharing contributions in fiscal years 2010 and 2009. The company has traditionally matched 50 percent of employee contributions to their 401(k) accounts up to 6.0 percent of their pay. The company indefinitely suspended the 401(k) matching program in the fourth quarter of fiscal 2009 and the suspension remained in effect until the second half of fiscal 2011. The company, therefore, did not incur any costs for this program in fiscal 2010. The cost of the company's matching contributions charged against operations was approximately $2.0 million and $4.7 million in fiscal years 2011 and 2009, respectively.