What changed in this filing

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Item 1. Financial Statements

2023-01-11 compared with 2022-10-12 · 159 added, 119 removed, 531 unchanged (34% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Dollars in millions, except share data) Three Months Ended

(Unaudited) September 3, 2022 August 28, 2021

(Dollars in millions, except share data) Three Months Ended Six Months Ended

(Unaudited) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Net sales $ 1,066.9 $ 1,026.3 $ 2,145.7 $ 1,816.0

22 unchanged sentences

Pension and post-retirement liability adjustments 0.4 1.8 0.8 4.1

Unrealized gain (loss) on interest rate swap agreement 14.3 ( 1.0 )

Other comprehensive (loss), net of tax $ ( 57.8 ) $ ( 14.7 )

Comprehensive (loss) ( 30.4 ) ( 74.5 )

Comprehensive income attributable to redeemable noncontrolling interests 1.7 2.1

Comprehensive (loss) income attributable to MillerKnoll, Inc.

Unrealized gain on interest rate swap agreement 7.2 4.0 21.5 3.0

Other comprehensive income (loss), net of tax $ 51.8 $ ( 55.1 ) $ ( 6.0 ) $ ( 45.0 )

Comprehensive income (loss) 69.3 ( 54.5 ) 38.9 ( 104.2 )

Comprehensive income (loss) attributable to redeemable noncontrolling interests 1.4 ( 0.2 ) 3.1 1.9

Comprehensive income (loss) attributable to MillerKnoll, Inc.

$ 67.9 $ ( 54.3 ) $ 35.8 $ ( 106.1 )

3 unchanged sentences

(Dollars in millions, except share data)

(Unaudited) September 3, 2022 May 28, 2022

(Unaudited) December 3, 2022 May 28, 2022

Current Assets:

Cash and cash equivalents $ 197.5 $ 230.3

Short-term investments — —

Accounts receivable, net of allowances of $ 6.9 and $ 9.7

35 unchanged sentences

Accumulated other comprehensive loss ( 113.1 ) ( 107.1 )

Deferred compensation plan — —

Total Stockholders' Equity 1,434.3 1,427.1

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Three Months Ended

(Unaudited) September 3, 2022 August 28, 2021

(Dollars in millions) Six Months Ended

(Unaudited) December 3, 2022 November 27, 2021

Cash Flows from Operating Activities:

4 unchanged sentences

Amortization of deferred financing costs 2.3 1.4

Pension and post-retirement expenses ( 10.1 ) ( 4.2 )

Deferred taxes ( 0.3 ) ( 13.6 )

Restructuring expense 15.2 —

Impairment — 15.5

Loss on extinguishment of debt — 13.4

1 unchanged sentence

(Decrease) increase in current liabilities ( 111.9 ) 34.9

(Decrease) increase in non-current liabilities ( 3.1 ) ( 5.3 )

Other, net 3.8 ( 3.2 )

26 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity

Three Months Ended September 3, 2022

Six Months Ended December 3, 2022

(Dollars in millions, except share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Deferred Compensation Plan MillerKnoll, Inc.

3 unchanged sentences

Net earnings — — — 25.8 — — 25.8

Other comprehensive income, net of tax — — — — ( 57.8 ) — ( 57.8 )

Other comprehensive loss net of tax — — — — ( 57.8 ) — ( 57.8 )

Stock-based compensation expense ( 13,474 ) — 5.4 — — — 5.4

7 unchanged sentences

September 3, 2022 75,556,031 $ 15.1 $ 819.3 $ 705.3 $ ( 164.9 ) $ — $ 1,374.8

Three Months Ended August 28, 2021

Net earnings — — — 16.0 — — 16.0

Other comprehensive income, net of tax — — — — 51.8 — 51.8

Stock-based compensation expense ( 2,476 ) — 5.5 — — — 5.5

Restricted and performance stock units released 8,763 — 0.1 — — — 0.1

Employee stock purchase plan issuances 44,010 — 0.7 — — — 0.7

Repurchase and retirement of common stock ( 3,222 ) — ( 0.1 ) — — — ( 0.1 )

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

Other — — 0.2 ( 0.4 ) — — ( 0.2 )

December 3, 2022 75,603,106 $ 15.1 $ 825.7 $ 706.6 $ ( 113.1 ) $ — $ 1,434.3

Six Months Ended November 27, 2021

(Dollars in millions, except share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Deferred Compensation Plan MillerKnoll, Inc.

14 unchanged sentences

August 28, 2021 75,784,091 $ 15.2 $ 808.3 $ 743.7 $ ( 80.3 ) $ ( 0.2 ) $ 1,486.7

Net earnings — — — ( 1.7 ) — — ( 1.7 )

Other comprehensive income, net of tax — — — — ( 27.8 ) — ( 27.8 )

Stock-base compensation expense — — 7.0 — — — 7.0

Exercise of stock options 52,697 — 1.5 — — — 1.5

Restricted and performance stock units released 91,443 — 0.2 — — — 0.2

Employee stock purchase plan issuances 18,813 — 0.6 — — — 0.6

Repurchase and retirement of common stock ( 76,246 ) — ( 3.3 ) — — — ( 3.3 )

Forfeiture of shares ( 130,410 ) ( 0.1 ) — — — — ( 0.1 )

NCI adjustment — — 0.5 — — — 0.5

Dividends declared ($ 0.1875 per share)

— — — ( 14.4 ) — — ( 14.4 )

November 27, 2021 75,740,388 $ 15.1 $ 814.8 $ 727.6 $ ( 108.1 ) $ ( 0.2 ) $ 1,449.2

See accompanying notes to Condensed Consolidated Financial Statements.

12 unchanged sentences

to MillerKnoll, Inc.

On November 1, 2021, the change in corporate name and ticker symbol to MLKN became effective.

On November 1, 2021, the change in corporate name and change in the ticker symbol to MLKN became effective.

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

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

The accompanying unaudited Condensed Consolidated Financial Statements, taken as a whole, contain all adjustments that are of a normal recurring nature necessary to present fairly the financial position of the Company as of September 3, 2022.

Operating results for the three months ended September 3, 2022 are not necessarily indicative of the results that may be expected for the year ending June 3, 2023 ("fiscal 2023").

It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 28, 2022 ("fiscal 2022").

Operating results for the three and six months ended December 3, 2022 are not necessarily indicative of the results that may be expected for the year ending June 3, 2023 ("fiscal 2023").

These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 28, 2022 ("fiscal 2022").

All intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements.

8 unchanged sentences

Change in Accounting Principle

In the fourth quarter of fiscal 2022, we elected to change our method of accounting for the cost of certain inventories within our Americas segment from the last-in, first-out method (“LIFO”) to first-in, first-out method (“FIFO”).

With this change there are

no longer any inventories accounted for under the LIFO method.

We have retrospectively adjusted the Consolidated Financial Statements for the prior period presented to reflect this change.

In the fourth quarter of fiscal 2022, the Company elected to change the method of accounting for the cost of certain inventories within the Americas segment from the last-in, first-out method (“LIFO”) to first-in, first-out method (“FIFO”).

With this change

there are no longer any inventories accounted for under the LIFO method.

The Company has retrospectively adjusted the Consolidated Financial Statements for the prior period presented to reflect this change.

Recently Issued Accounting Standards

4 unchanged sentences

Revenue disaggregated by contract type is provided in the table below:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Single performance obligation

14 unchanged sentences

The products in this category help create emotive and visually appealing spaces via a portfolio that offers diversity in aesthetics, price and performance.

The Other category primarily consists of textiles, uncategorized product sales, and service sales.

Revenue disaggregated by product type and reportable segment is provided in the table below:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Americas Contract:

17 unchanged sentences

Total $ 1,066.9 $ 1,026.3 $ 2,145.7 $ 1,816.0

(1) "Other" primarily consists of textiles, uncategorized product sales, and service sales.

Refer to Note 15 of the Condensed Consolidated Financial Statements for further information related to our reportable segments.

2 unchanged sentences

These payments represent contract liabilities and are included within the caption “Customer deposits” in the Condensed Consolidated Balance Sheets.

During the three months ended September 3, 2022, and August 28, 2021 the Company recognized Net sales of $ 79.1 million and $ 41.1 million, respectively, related to customer deposits that were included in the balance sheet as of August 28, 2021 and May 28, 2022 respectively.

On July 19, 2021, the Company completed its previously announced acquisition of Knoll, Inc.

(“Knoll"), a leader in the design, manufacture, marketing and sale of high-end furniture products and accessories for workplace and residential markets.

During the three and six months ended December 3, 2022, the Company recognized Net sales of $ 25.7 million and $ 104.8 million respectively, related to customer deposits that were included in the balance sheet as of May 28, 2022.

On July 19, 2021, the Company completed the acquisition of Knoll, a leader in the design, manufacture, marketing and sale of high-end furniture products and accessories for workplace and residential markets.

The Company has included the financial results of Knoll in the condensed consolidated financial statements from the date of acquisition.

The transaction costs associated with the acquisition, which included financial advisory, legal, proxy filing, regulatory and financing fees, were approximately $ 30.0 million for the twelve months ended May 28, 2022 and were recorded in general and administrative expenses.

Of the total transaction costs, $ 26.7 million were recorded in the three months ended August 28, 2021.

Under the terms of the Agreement and Plan of Merger, each issued and outstanding share of Knoll common stock (excluding shares exercising dissenters rights, shares owned by Knoll as treasury stock, shares owned by the deal parties or their subsidiaries, or shares subject to Knoll restricted stock awards) was converted into a right to receive 0.32 shares of Herman

Of the total transaction costs, $ 0.9 million and $ 27.6 million were recorded in the three and six months ended November 27, 2021.

(now MillerKnoll, Inc.) common stock and $ 11.00 in cash, without interest.

17 unchanged sentences

Short-Term Borrowings and Long-Term Debt."

Outstanding unvested restricted stock awards, performance stock awards, performance stock units and restricted stock units with a fair value of $ 53.4 million automatically converted into Company awards.

Of the total fair value, $ 22.4 million was allocated to purchase consideration and $ 31.0 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

Outstanding unvested restricted stock awards, performance stock awards, performance stock units and restricted stock units with a fair value of $ 53.4 million converted into Company awards.

Of the total fair value, $ 22.4 million was allocated to purchase consideration and $ 31.0 million was allocated to future services and is being expensed over the remaining service periods on a straight-line basis.

Per the terms of the converted awards any qualifying termination within the twelve months subsequent to the acquisition resulted in accelerated vesting and related recognition of expense.

31 unchanged sentences

The results of Knoll's operations have been included in the Consolidated Financial Statements beginning on July 19, 2021.

The following table provides pro forma results of operations for the three months ended August 28, 2021, as if Knoll had been acquired as of May 31, 2020.

The following table provides pro forma results of operations for the three and six months ended November 27, 2021, as if Knoll had been acquired as of May 31, 2020.

The pro forma results include certain purchase accounting adjustments such as the estimated change in depreciation and amortization expense on the acquired tangible and intangible assets.

The pro forma results also include the impact of incremental interest expense incurred to finance the merger.

The pro forma results also include the impact of incremental interest expense incurred to finance the Knoll acquisition.

Transaction related costs, including debt extinguishment costs related to the transaction, have been eliminated from the pro forma amounts presented in both periods.

1 unchanged sentence

Accordingly, such amounts are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.

Three Months Ended

(In millions) August 28, 2021

(In millions) Three Months Ended November 27, 2021 Six Months Ended November 27, 2021

Net sales $ 1,026.3 $ 1,970.2

Net (loss) attributable to MillerKnoll, Inc.

Net income (loss) attributable to MillerKnoll, Inc.

$ 6.6 $ ( 17.7 )

Inventories, net

(In millions) September 3, 2022 May 28, 2022

(In millions) December 3, 2022 May 28, 2022

Finished goods and work in process $ 434.3 $ 441.6

3 unchanged sentences

Goodwill and Indefinite-Lived Intangibles

Goodwill and other indefinite-lived intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following as of September 3, 2022 and May 28, 2022:

Goodwill and other indefinite-lived intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following as of December 3, 2022 and May 28, 2022:

(In millions) Americas Contract International Contract & Specialty Global Retail Total

2 unchanged sentences

Accumulated impairment losses — ( 36.7 ) ( 88.8 ) ( 125.5 )

September 3, 2022 $ 520.4 $ 295.3 $ 381.8 $ 1,197.5

December 3, 2022 $ 526.9 $ 301.7 $ 388.8 $ 1,217.4

Other indefinite-lived assets included in the Consolidated Balance Sheets consist of the following:

2 unchanged sentences

Foreign currency translation adjustments ( 2.5 )

September 3, 2022 $ 491.3

December 3, 2022 $ 498.5

Goodwill is tested for impairment at the reporting unit level annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value.

3 unchanged sentences

If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value.

Each of the reporting units were reviewed for impairment using a qualitative assessment as of March 31, 2022, our annual testing date.

Each of the reporting units was reviewed for impairment using a qualitative assessment as of March 31, 2022, our annual testing date.

In performing the qualitative impairment test for fiscal year 2022, the Company determined that the fair value of its reporting units exceeded the carrying amount and, as such, these reporting units were not impaired.

In connection with the segment reorganization, certain of the Company’s reporting units have changed in composition, and goodwill was reallocated between such reporting units using a relative fair value approach.

In connection with the segment reorganization, the Company’s reporting units have changed in composition, and goodwill was reallocated between such reporting units using a relative fair value approach.

Accordingly, the Company performed interim goodwill impairment tests in the first quarter of 2023 for each reporting unit.

4 unchanged sentences

Pension Benefits

Three Months Ended September 3, 2022 Three Months Ended August 28, 2021

Three Months Ended December 3, 2022 Three Months Ended November 27, 2021

(In millions) Domestic International Domestic International

4 unchanged sentences

Net amortization loss — 0.6 — 1.7

Net periodic benefit cost $ ( 0.5 ) $ 0.2 $ ( 0.4 ) $ 0.7

Net periodic benefit (income) cost $ ( 0.5 ) $ 0.3 $ ( 1.0 ) $ 0.7

Six Months Ended December 3, 2022 Six Months Ended November 27, 2021

(In millions) Domestic International Domestic International

Service cost $ — $ — $ 0.2 $ —

Interest cost 3.0 1.6 1.5 1.7

Expected return on plan assets (1)

( 4.0 ) ( 2.3 ) ( 3.1 ) ( 3.6 )

Net amortization loss — 1.2 — 3.3

Net periodic benefit (income) cost $ ( 1.0 ) $ 0.5 $ ( 1.4 ) $ 1.4

(1) The weighted-average expected long-term rate of return on plan assets is 4.99 %.

Earnings Per Share

The following table reconciles the numerators and denominators used in the calculations of basic and diluted earnings per share ("EPS") for the three months ended:

Three Months Ended

September 3, 2022 August 28, 2021

The following table reconciles the numerators and denominators used in the calculations of basic and diluted earnings per share ("EPS") for the three and six months ended:

Three Months Ended Six Months Ended

December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Numerator for both basic and diluted EPS, Net earnings (loss) attributable to MillerKnoll, Inc.

6 unchanged sentences

Stock-Based Compensation

The following table summarizes the stock-based compensation expense and related income tax effect for the three months ended:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

The following table summarizes the stock-based compensation expense and related income tax effect for the three and six months ended:

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Stock-based compensation expense $ 5.5 $ 7.0 $ 10.9 $ 22.1

Related income tax effect $ 1.3 $ 1.6 $ 2.6 $ 5.3

The decrease in stock-based compensation expense was driven in part by the prior year's acceleration of stock-based compensation award expense related to the workforce reductions subsequent to the Knoll integration.

The decrease in stock-based compensation expense in the current three and six month periods as compared to the same periods of the prior year was driven primarily by the prior year's acceleration of stock-based compensation award expense related to the targeted workforce reductions implemented subsequent to the Knoll integration.

Certain Company equity-based compensation awards contain provisions that allow for continued vesting into retirement.

Stock-based awards are considered fully vested for expense attribution purposes when the employee's retention of the award is no longer contingent on providing subsequent service.

The Company's process for determining the provision for income taxes for the three months ended September 3, 2022 involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates.

The effective tax rates were 18.8 % and 15.3 %, respectively, for the three month periods ended September 3, 2022 and August 28, 2021.

The year over year change in the effective tax rate for the three months ended September 3, 2022 resulted from the current year quarter reporting pre-tax book income with favorable foreign tax credit impacts in the United States and the same quarter of the prior year reporting pre-tax book loss with non-deductible discrete

compensation and acquisition costs in connection with the Knoll acquisition.

For the three months ended September 3, 2022, the effective tax rate is lower than the United States federal statutory rate due to the favorable impact of increased foreign tax credits in the United States resulting from the recapture of prior year overall domestic loss.

For the three months ended August 28, 2021, the effective tax rate is lower than the United States federal statutory rate due to the impact of the Knoll acquisition related costs creating a pre-tax loss for the quarter coupled with non-deductible discrete compensation and acquisition costs in the quarter.

The Company's process for determining the provision for income taxes for the three and six months ended December 3, 2022 involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates.

The effective tax rates were 19.8 % and 77.6 %, respectively, for the three month periods ended December 3, 2022 and November 27, 2021.

The year over year change in the effective tax rate for the three months ended December 3, 2022 resulted from the current year quarter reporting pre-tax book income with favorable foreign tax credit impacts in the United States.

The same quarter of the prior year had no comparable impacts.

For the three months ended December 3, 2022, the effective tax rate is lower than the United States federal statutory rate due to the favorable impact of increased foreign tax credits in the United States resulting from the recapture of prior year overall domestic loss.

For the three months ended November 27, 2021, the effective tax rate is higher than the United States federal statutory rate due to the impact of applying the estimated annual effective tax rate to the year to date pre-tax loss.

The effective tax rates were 19.2 % and 18.8 %, respectively, for the six months ended December 3, 2022 and November 27, 2021.

The year over year increase in the effective rate for the six months ended December 3, 2022 resulted from pre-tax book income reported for the six months with favorable foreign tax credit impacts in the United States and the same six months in the prior year resulted from an overall pre-tax book loss reported for the six months coupled with non-deductible discrete compensation and acquisition costs in connection with the Knoll acquisition.

For the six months ended December 3, 2022, the effective tax rate is lower than the United States federal statutory rate due to the favorable impact of increased foreign tax credits in the United States resulting from the recapture of prior year overall domestic loss.

For the six months ended November 27, 2021, the effective tax rate is lower than the United States federal statutory rate due to the impact of applying the estimated annual effective tax rate to the year to date pre-tax loss, which included an adjustment impacted by non-deductible Knoll acquisition related costs.

The Company recognizes interest and penalties related to uncertain tax benefits through income tax expense in its Condensed Consolidated Statements of Comprehensive Income.

Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three months ended September 3, 2022 and August 28, 2021.

Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and six months ended December 3, 2022 and November 27, 2021.

The Company's recorded liability for potential interest and penalties related to uncertain tax benefits was:

(In millions) September 3, 2022 May 28, 2022

(In millions) December 3, 2022 May 28, 2022

Liability for interest and penalties $ 0.9 $ 0.9

9 unchanged sentences

The carrying value and fair value of the Company's long-term debt, including current maturities, is as follows for the periods indicated:

(In millions) September 3, 2022 May 28, 2022

(In millions) December 3, 2022 May 28, 2022

Carrying value $ 1,481.3 $ 1,427.9

6 unchanged sentences

These forward contracts are not designated as hedging instruments.

The following table sets forth financial assets and liabilities measured at fair value through net income and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy as of September 3, 2022 and May 28, 2022.

(In millions) September 3, 2022 May 28, 2022

(In millions) December 3, 2022 May 28, 2022

Financial Assets NAV Quoted Prices with Other

12 unchanged sentences

The interest rate swap agreements are designated as cash flow hedging instruments.

The following table sets forth financial assets and liabilities measured at fair value through other comprehensive income and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy as of September 3, 2022 and May 28, 2022.

(In millions) September 3, 2022 May 28, 2022

(In millions) December 3, 2022 May 28, 2022

Financial Assets Balance Sheet Location Quoted Prices with Other Observable Inputs (Level 2) Quoted Prices with Other Observable Inputs (Level 2)

17 unchanged sentences

The Company's interest rate swap agreements exchange variable rate interest payments for fixed rate payments over the life of the agreement without the exchange of the underlying notional amounts.

The notional amount of the interest rate

swap agreements is used to measure interest to be paid or received.

The notional amount of the interest rate swap agreements is used to measure interest to be paid or received.

The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense.

The interest rate swaps were designated as cash flow hedges at inception and the facts and circumstances of the hedged relationships remain consistent with the initial quantitative effectiveness assessment in that the hedged instruments remain an effective accounting hedge as of September 3, 2022.

Since a designated derivative meets hedge accounting criteria, the fair value of the hedge is recorded in the Consolidated Statements of Stockholders’ Equity as a component of "Accumulated other comprehensive loss, net of tax." The ineffective portion of the change in fair value of the derivatives is immediately recognized in earnings.

4 unchanged sentences

January 2022 Interest Rate Swap $ 575.0 January 31, 2022 January 29, 2027 1.689 %

The swaps above effectively converted indebtedness anticipated to be borrowed on the Company's revolving line of credit up to the notional amounts from a LIBOR-based floating interest rate plus applicable margin to an effective fixed rate plus applicable margin under the agreements as of the forward start date.

The following table summarizes the effects of the interest rate swap agreements for the three months ended:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

The swaps above effectively converted indebtedness up to the notional amounts from a LIBOR-based floating interest rate plus applicable margin to an effective fixed rate plus applicable margin under the agreements as of the forward start date.

The following table summarizes the effects of the interest rate swap agreements for the three and six months ended:

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Gain recognized in Other comprehensive loss (effective portion) $ 7.2 $ 4.0 $ 21.5 $ 3.0

(Loss) reclassified from Accumulated other comprehensive loss into earnings $ ( 0.4 ) $ ( 0.8 )

There were no gains or losses recognized in earnings for hedge ineffectiveness for the three month periods ended September 3, 2022 and August 28, 2021.

Gain (Loss) reclassified from Accumulated other comprehensive loss into earnings $ 2.4 $ ( 1.2 ) $ 2.0 $ ( 1.9 )

There were no gains or losses recognized in earnings for hedge ineffectiveness for the three and six month periods ended December 3, 2022 and November 27, 2021.

The amount of loss expected to be reclassified from Accumulated other comprehensive loss into earnings during the next twelve months is $ 24.2 million, and net of tax is $ 18.2 million.

Redeemable Noncontrolling Interests

Changes in the Company's redeemable noncontrolling interest in HAY for the three months ended September 3, 2022 and August 28, 2021 are as follows:

(In millions) September 3, 2022 August 28, 2021

Changes in the Company's redeemable noncontrolling interest in HAY for the six months ended December 3, 2022 and November 27, 2021 are as follows:

(In millions) December 3, 2022 November 27, 2021

Beginning Balance $ 106.9 $ 77.0

Net income attributable to redeemable noncontrolling interests 3.1 3.9

Distributions to redeemable noncontrolling interests — ( 3.9 )

Dividend attributable to redeemable noncontrolling interests ( 1.6 ) ( 3.8 )

Cumulative translation adjustments attributable to redeemable noncontrolling interests — ( 2.0 )

12 unchanged sentences

Changes in the warranty reserve for the stated periods were as follows:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Accrual Balance — beginning $ 72.3 $ 69.8 $ 73.2 $ 60.1

9 unchanged sentences

However, the Company is ultimately liable for claims that may occur against them.

As of September 3, 2022, the Company had a maximum financial exposure related to performance bonds totaling approximately $ 7.0 million.

As of December 3, 2022, the Company had a maximum financial exposure related to performance bonds totaling approximately $ 8.1 million.

The Company has no history of claims, nor is it aware of circumstances that would require it to pay, under any of these arrangements.

The Company also believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the Company's Consolidated Financial Statements.

Accordingly, no liability has been recorded in respect to these bonds as of either September 3, 2022 or May 28, 2022.

Accordingly, no liability has been recorded in respect to these bonds as of either December 3, 2022 or May 28, 2022.

The Company has entered into standby letter of credit arrangements for purposes of protecting various insurance companies and lessors against default on insurance premium and lease payments.

As of September 3, 2022, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $ 14.5 million, all of which is considered usage against the Company's revolving line of credit.

As of December 3, 2022, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $ 14.1 million, all of which is considered usage against the Company's revolving line of credit.

The Company has no history of claims, nor is it aware of circumstances that would require it to perform under any of these arrangements and believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the Company's Consolidated Financial Statements.

Accordingly, no liability has been recorded in respect to these arrangements as of September 3, 2022 or May 28, 2022.

Accordingly, no liability has been recorded with respect to these arrangements as of December 3, 2022 or May 28, 2022.

Contingencies

2 unchanged sentences

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of September 3, 2022 and May 28, 2022 consisted of the following:

(In millions) September 3, 2022 May 28, 2022

Short-term borrowings and long-term debt as of December 3, 2022 and May 28, 2022 consisted of the following:

(In millions) December 3, 2022 May 28, 2022

Syndicated revolving line of credit, due July 2026 $ 480.0 $ 413.0

7 unchanged sentences

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 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 to pay fees, costs and expenses related thereto.

2 unchanged sentences

The credit agreement includes accommodations regarding the transition to SOFR.

In the three months ended August 28, 2021, the Company repaid $ 64 million of private placement notes due May 20, 2030 and a loss on extinguishment of debt of approximately $ 13.4 million was recognized as part of the repayment of the private placement notes, which represented the premium on early redemption.

The Company made principal payments on term loan "A" and "B" during the three months ended September 3, 2022 in the amount of $ 5.0 million and $ 1.6 million, respectively.

During the six months ended November 27, 2021, the Company repaid $ 64 million of private placement notes due May 20, 2030 and a loss on extinguishment of debt of approximately $ 13.4 million was recognized as part of the repayment of the private placement notes, which represented the premium on early redemption.

The Company made quarterly principal payments on term loan "A" and "B" during the six months ended December 3, 2022 in the amount of $ 5.0 million and $ 1.6 million, respectively.

Available borrowings under the syndicated revolving line of credit were as follows for the periods indicated:

(In millions) September 3, 2022 May 28, 2022

(In millions) December 3, 2022 May 28, 2022

Syndicated revolving line of credit borrowing capacity $ 725.0 $ 725.0

8 unchanged sentences

As a result, certain amounts due to suppliers have payment terms that are longer than standard industry practice and as such, these amounts have been excluded from “Accounts payable” in the Condensed Consolidated Balance Sheets as the amounts have been accounted for by the Company as current debt, within “Short-term borrowings and current portion of long-term debt”.

As of December 3, 2022, the liability related to the supplier financing program is $ 2.6 million.

Accumulated Other Comprehensive Loss

The following table provides an analysis of the changes in accumulated other comprehensive loss for the three months ended September 3, 2022 and August 28, 2021:

The following table provides an analysis of the changes in accumulated other comprehensive loss for the six months ended December 3, 2022 and November 27, 2021:

(In millions) Cumulative Translation Adjustments Pension and Other Post-retirement Benefit Plans Interest Rate Swap Agreement Accumulated Other Comprehensive Loss

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Net current period other comprehensive (loss) income ( 28.3 ) 0.8 21.5 ( 6.0 )

Balance at September 3, 2022 $ ( 166.4 ) $ ( 36.5 ) $ 38.0 $ ( 164.9 )

Balance at December 3, 2022 $ ( 122.2 ) $ ( 36.1 ) $ 45.2 $ ( 113.1 )

Balance at May 29, 2021 $ ( 3.9 ) $ ( 50.4 ) $ ( 10.8 ) $ ( 65.1 )

Other comprehensive income (loss), net of tax before reclassifications ( 16.5 ) — ( 0.2 ) ( 16.7 )

Other comprehensive (loss) income, net of tax before reclassifications ( 50.1 ) — 4.9 ( 45.2 )

Reclassification from accumulated other comprehensive loss - Other, net — 4.7 ( 1.9 ) 2.8

1 unchanged sentence

Net reclassifications — 4.1 ( 1.9 ) 2.2

Net current period other comprehensive income (loss) ( 16.5 ) 2.3 ( 1.0 ) ( 15.2 )

Balance at August 28, 2021 $ ( 20.4 ) $ ( 48.1 ) $ ( 11.8 ) $ ( 80.3 )

Net current period other comprehensive (loss) income ( 50.1 ) 4.1 3.0 ( 43.0 )

Balance at November 27, 2021 $ ( 54.0 ) $ ( 46.3 ) $ ( 7.8 ) $ ( 108.1 )

Operating Segments

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The Americas Contract segment includes the operations associated with the design, manufacture and sale of furniture products directly or indirectly through an independent dealership network for office, healthcare, and educational environments throughout North and South America.

The International Contract and Specialty segment includes the operations associated with the design, manufacture and sale of furniture products, indirectly or directly through an independent dealership network in Europe, the Middle East, Africa and Asia-Pacific as well as the global operations of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and Knoll Textiles.

The International Contract and Specialty segment includes the operations associated with the design, manufacture and sale of furniture products, indirectly or directly through an independent dealership network in Europe, the Middle East, Africa and Asia-Pacific as well as the global activities of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and Knoll Textiles.

The Global Retail segment includes global operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, and physical retail stores.

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The following is a summary of certain key financial measures for the respective periods indicated:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Americas $ 529.7 $ 499.3 $ 1,067.1 $ 880.6

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Severance and employee benefit costs primarily relate to cash severance, non-cash severance, including accelerated equity award compensation expense.

The Company also incurs expenses that are an integral component of, and directly attribute to, our restructuring and integration activities, which do not qualify as exit and disposal costs under U.S.

The Company also incurs expenses that are an integral component of, and directly attributable to, our restructuring and integration activities, which do not qualify as exit and disposal costs under U.S.

These include integration implementation costs that relate primarily to professional fees and non-cash losses incurred on debt extinguishment.

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Knoll Integration:

Following the Knoll merger the Company announced a multi-year program (the "Knoll Integration") designed to reduce costs, integrate and optimize the combined organization.

The Company currently expects that the Knoll Integration will result in pre-tax costs that are expected not to exceed approximately $ 100 million to $ 120 million, comprised of the following categories:

Following the Knoll acquisition, the Company announced a multi-year program (the "Knoll Integration") designed to reduce costs and integrate and optimize the combined organization.

The Company currently expects that the Knoll Integration will result in pre-tax cash costs that are expected to be approximately $ 140 million, comprised of the following categories:

• Severance and employee benefit costs associated with plans to integrate our operating structure, resulting in workforce reductions.

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• Exit and disposal activities include those incurred as a direct result of integration activities, primarily including contract and lease terminations and asset impairment charges.

• Other integration costs include professional fees and other incremental third-party expenses, including a loss on extinguishment of debt associated with financing of the merger.

For the three months ended September 3, 2022, we incurred $ 4.6 million of costs related to the Knoll Integration including:

• Other integration costs include professional fees and other incremental third-party expenses, including a loss on extinguishment of debt associated with financing of the Knoll acquisition.

For the six months ended December 3, 2022, we incurred $ 8.7 million of costs related to the Knoll Integration including:

$ 1.4 million of severance and employee benefit costs, $ 2.8 million of lease termination fees, and $ 4.5 million of other integration costs.

For the six months ended November 27, 2021, we incurred $ 95.8 million of costs related to the Knoll Integration including:

$ 46.4 million of severance and employee benefit costs, $ 15.5 million of non-cash asset impairments, $ 13.4 million of non-cash costs related to debt-extinguishment in the financing of the transaction, and $ 20.5 million of other integration costs.

The following table provides an analysis of the changes in liability balance for Knoll Integration costs that qualify as exit and disposal costs under U.S.

GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the three months ended September 3, 2022:

GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the six months ended December 3, 2022:

(In millions) Severance and Employee Benefit Exit and Disposal Activities Total

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Non-cash costs ( 0.2 ) — ( 0.2 )

September 3, 2022 $ 0.9 $ — $ 0.9

The Company's expects that a substantial portion of the liability for the Knoll Integration as of September 3, 2022 to be paid in fiscal year 2023.

December 3, 2022 $ 0.5 $ — $ 0.5

The Company expects that a substantial portion of the liability for the Knoll Integration as of December 3, 2022 will be paid in fiscal year 2023.

The following is a summary of integration expenses by segment for the periods indicated:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Americas Contract $ 1.1 $ 19.9 $ 4.0 $ 20.9

International Contract & Specialty 1.0 — 1.5 —

Retail — — 0.2 —

Corporate 2.0 20.3 3.0 74.9

Total $ 4.1 $ 40.2 $ 8.7 $ 95.8

Restructuring Activities:

During the first quarter of fiscal 2023, the Company recognized restructuring charges associated with involuntary workforce reductions within the Global Retail segment.

As a result of this action the Company incurred severance and related charges of $ 0.5 million.

The following table provides an analysis of the changes in the restructuring cost reserve for the three months ended September 3, 2022:

2023 Restructuring Plan

During the first quarter of fiscal year 2023, the Company announced a restructuring plan ("2023 restructuring plan") to reduce expenses.

These restructuring activities included voluntary and involuntary reductions in workforces.

As the result of these actions, the Company projects an annualized expense reduction of approximately $ 30 million to $ 35 million.

In connection with the 2023 restructuring plan, the Company incurred severance and related charges of $ 14.7 million and $ 15.2 million for the three and six months ended December 3, 2022, respectively.

These charges consisted solely of cash expenditures for employee termination and severance costs to be paid in fiscal 2023.

The following table provides an analysis of the changes in the restructuring cost reserve for the six months ended December 3, 2022:

(In millions) Severance and Employee-Related

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Amounts Paid ( 2.6 )

September 3, 2022 $ 0.5

December 3, 2022 $ 12.6

The following is a summary of restructuring expenses by segment for the periods indicated:

Three Months Ended

(In millions) September 3, 2022 August 28, 2021

Three Months Ended Six Months Ended

(In millions) December 3, 2022 November 27, 2021 December 3, 2022 November 27, 2021

Americas Contract $ 13.2 $ — $ 13.2 $ —

International Contract & Specialty 0.7 — 0.7 —

Retail 0.8 — 1.3 —

Total $ 14.7 $ — $ 15.2 $ —

1 unchanged sentence

The Company entered into notes receivable with certain of its third-party owned dealers that are deemed to be variable interests in variable interest entities.

The carrying value of these notes receivable was $ 5.8 million and $ 1.2 million as of September 3, 2022 and May 28, 2022 respectively.

The carrying value of these notes receivable was $ 5.7 million and $ 1.2 million as of December 3, 2022 and May 28, 2022 respectively.

This carrying value of long-term notes receivable represents the Company’s maximum exposure to loss.

1 unchanged sentence

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-Q

Item 1. Financial Statements