What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-04-12 compared with 2023-01-11 · 169 added, 106 removed, 584 unchanged (32% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

(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

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

(Unaudited) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Net sales $ 984.7 $ 1,029.5 $ 3,130.4 $ 2,845.5

3 unchanged sentences

Selling, general and administrative 264.7 282.3 852.3 907.8

Impairment charges 21.5 — 21.5 —

Restructuring expense 4.6 — 19.8 —

4 unchanged sentences

Interest and other investment income 0.9 0.6 2.0 1.2

Other (income) expense, net ( 0.5 ) ( 0.7 ) 0.3 11.8

Other expense (income), net 1.4 ( 0.2 ) 1.7 11.9

Earnings (loss) before income taxes and equity income 1.6 19.8 56.9 ( 52.8 )

13 unchanged sentences

Comprehensive income (loss) 8.7 33.3 47.6 ( 72.9 )

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

Comprehensive income attributable to redeemable noncontrolling interests 0.7 1.8 3.8 3.7

Comprehensive income (loss) attributable to MillerKnoll, Inc.

4 unchanged sentences

(Dollars in millions, except share data)

(Unaudited) December 3, 2022 May 28, 2022

(Unaudited) March 4, 2023 May 28, 2022

Current Assets:

42 unchanged sentences

Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Six Months Ended

(Unaudited) December 3, 2022 November 27, 2021

(Dollars in millions) Nine Months Ended

(Unaudited) March 4, 2023 February 26, 2022

Cash Flows from Operating Activities:

5 unchanged sentences

Pension and post-retirement expenses ( 7.8 ) ( 6.2 )

(Gain) on sales of property and dealers — ( 2.0 )

Deferred taxes ( 1.2 ) ( 16.4 )

2 unchanged sentences

Loss on extinguishment of debt — 13.4

(Increase) decrease in current assets ( 34.7 ) ( 169.3 )

Decrease (increase) in current assets 5.9 ( 224.9 )

(Decrease) increase in current liabilities ( 159.1 ) 35.2

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

(Decrease) in non-current liabilities ( 5.3 ) ( 8.6 )

Other, net 0.4 ( 0.8 )

Net Cash Used in Operating Activities ( 5.3 ) ( 57.6 )

Net Cash Provided by (Used in) Operating Activities 70.4 ( 57.9 )

Cash Flows from Investing Activities:

2 unchanged sentences

Acquisitions, net of cash received — ( 1,088.5 )

Proceeds from the sale of investments — 7.7

Proceeds from the sale of property and dealers — 2.8

Proceeds from loan on cash surrender value of life insurance 13.5 —

12 unchanged sentences

Other, net ( 3.6 ) ( 5.3 )

Net Cash Provided by Financing Activities 11.6 1,035.5

Net Cash (Used in) Provided by Financing Activities ( 22.1 ) 1,061.4

Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 8.3 ) ( 9.0 )

5 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity

Six Months Ended December 3, 2022

Nine Months Ended March 4, 2023

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

23 unchanged sentences

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

Six Months Ended November 27, 2021

Net earnings — — — 0.4 — — 0.4

Other comprehensive income, net of tax — — — — 7.6 — 7.6

Stock-based compensation expense ( 15,563 ) — 4.8 — — — 4.8

Restricted and performance stock units released 44,926 — 0.3 — — — 0.3

Employee stock purchase plan issuances 36,375 — 0.8 — — — 0.8

Repurchase and retirement of common stock ( 69,927 ) — ( 1.6 ) — — — ( 1.6 )

Deferred stock unit — — 0.6 — — — 0.6

Directors' fees 27,784 — 0.6 — — — 0.6

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

Other — — ( 0.2 ) 0.6 — — 0.4

March 4, 2023 75,626,701 $ 15.1 $ 831.0 $ 693.3 $ ( 105.5 ) $ — $ 1,433.9

Nine Months Ended February 26, 2022

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

26 unchanged sentences

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

Net earnings — — — 14.4 — — 14.4

Other comprehensive income, net of tax — — — — 15.1 — 15.1

Stock-based compensation expense — — 4.9 — — — 4.9

Exercise of stock options 11,053 — 0.3 — — — 0.3

Restricted and performance stock units released 45,417 — — — — — —

Employee stock purchase plan issuances 20,437 — 0.7 — — — 0.7

Directors Fees 23,255 0.1 1.5 — — — 1.6

Repurchase and retirement of common stock ( 41,346 ) — ( 1.6 ) — — — ( 1.6 )

Deferred compensation plan — — — — — 0.2 0.2

Forfeiture of shares ( 652 ) — — — — — —

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

February 26, 2022 75,798,552 $ 15.2 $ 820.6 $ 727.7 $ ( 93.0 ) $ — $ 1,470.5

See accompanying notes to Condensed Consolidated Financial Statements.

14 unchanged sentences

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

A global leader in design, MillerKnoll includes Herman Miller® and Knoll®, as well as Colebrook Bosson Saunders®, DatesWeiser®, Design Within Reach®, Edelman® Leather, Fully®, Geiger®, HAY®, Holly Hunt®, KnollTextiles®, Maars® Living Walls, Maharam®, Muuto®, NaughtOne®, and Spinneybeck®|FilzFelt®.

A global leader in design, MillerKnoll includes Herman Miller® and Knoll®, as well as Colebrook Bosson Saunders®, DatesWeiser®, Design Within Reach®, Edelman® Leather, Geiger®, HAY®, Holly Hunt®, KnollTextiles®, Maars® Living Walls, Maharam®, Muuto®, NaughtOne®, and Spinneybeck®|FilzFelt®.

MillerKnoll represents over 100 years of design research and exploration in service of humanity.

8 unchanged sentences

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 December 3, 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").

Operating results for the three and nine months ended March 4, 2023 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").

19 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Single performance obligation

16 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Americas Contract:

21 unchanged sentences

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

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.

During the three and nine months ended March 4, 2023, the Company recognized Net sales of $ 9.9 million and $ 114.7 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.

1 unchanged sentence

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

Of the total transaction costs, $ 1.2 million and $ 28.8 million were recorded, respectively, in the three and nine months ended February 26, 2022.

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 Miller, Inc.

53 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 and six months ended November 27, 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 nine months ended February 26, 2022, 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.

3 unchanged sentences

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.

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

(In millions) Three Months Ended February 26, 2022 Nine Months Ended February 26, 2022

Net sales $ 1,029.5 $ 2,999.7

2 unchanged sentences

Inventories, net

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

(In millions) March 4, 2023 May 28, 2022

Finished goods and work in process $ 397.1 $ 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 December 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 March 4, 2023 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 )

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

March 4, 2023 $ 526.7 $ 301.9 $ 389.2 $ 1,217.8

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

2 unchanged sentences

Foreign currency translation adjustments ( 1.6 )

December 3, 2022 $ 498.5

March 4, 2023 $ 499.4

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.

8 unchanged sentences

Based on the results of the tests performed, the Company determined that the fair value of each reporting unit, both before and after the reorganization, exceeded its respective carrying amount.

During the third quarter of fiscal year 2023, the Company assessed changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair values of any reporting units were below their carrying amounts.

Although our annual impairment test is performed during the fourth quarter, we perform this qualitative assessment each interim reporting period.

While there was no single determinate event, the consideration in totality of several factors that developed during the third quarter of fiscal year 2023 led us to conclude that it was more likely than not that the fair value of the Global Retail reporting unit was below its carrying amount.

These factors included:

(i) the decision to discontinue stand-alone operations of the Fully brand and (ii) the assessment of our third quarter results, for which the performance of the Global Retail reporting unit was below management's expectations.

Accordingly, the Company performed an interim quantitative impairment analysis as of March 4, 2023 to determine the fair value of the Global Retail reporting unit as compared to the carrying value.

In performing the quantitative impairment test, the Company determined that the fair value of the Global Retail reporting unit exceeded the carrying amount and, as such, the reporting unit was not impaired.

The Company determined that the Global Retail reporting unit exceeded its carrying value by 1 % and therefore has a heightened risk of future impairments if any assumptions, estimates or market factors change in the future.

The Global Retail reporting unit has a goodwill carrying amount of $ 389.2 million as of March 4, 2023.

The Company generally uses the discounted cash flow method under a weighting of the income and market approach to estimate the fair value of our reporting units.

These approaches are based on a discounted cash flow analysis and observable comparable company information that use several inputs, including:

• actual and forecasted revenue growth rates and operating margins,

• discount rates based on the reporting unit's weighted average cost of capital, and

• revenue and EBITDA of comparable companies

The Company has selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, management’s long-term strategic plans, and guideline companies.

Intangible assets with indefinite useful lives are not subject to amortization and are evaluated annually for impairment, or more frequently when events or changes in circumstances indicate that the fair value of an intangible asset may not be recoverable.

Management has not identified any events or changes in circumstances that may indicate that an indefinite-lived intangible is more likely than not to be impaired as of the third quarter of fiscal year 2023.

Employee Benefit Plans

1 unchanged sentence

Pension Benefits

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

Three Months Ended March 4, 2023 Three Months Ended February 26, 2022

(In millions) Domestic International Domestic International

5 unchanged sentences

Net periodic benefit (income) cost $ ( 0.5 ) $ 0.2 $ ( 0.9 ) $ 0.7

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

Nine Months Ended March 4, 2023 Nine Months Ended February 26, 2022

(In millions) Domestic International Domestic International

6 unchanged sentences

(1) The weighted-average expected long-term rate of return on plan assets is 6.00 %.

In the third quarter of fiscal 2023, the Company recorded a pension settlement charge of $ 0.5 million that resulted from cash payments of lump sum elections.

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 and six months ended:

Three Months Ended Six Months Ended

December 3, 2022 November 27, 2021 December 3, 2022 November 27, 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 nine months ended:

Three Months Ended Nine Months Ended

March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

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 and six months ended:

Three Months Ended Six Months Ended

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

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Stock-based compensation expense $ 4.8 $ 4.9 $ 15.7 $ 27.0

Related income tax effect $ 1.2 $ 1.2 $ 3.8 $ 6.6

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.

The decrease in stock-based compensation expense for the nine months ended March 4, 2023 as compared to the same period 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 acquisition.

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 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 Company's process for determining the provision for income taxes for the three and nine months ended March 4, 2023 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 31.2 % and 15.6 %, respectively, for the three month periods ended March 4, 2023 and February 26, 2022.

The year over year change in the effective tax rate for the three months ended March 4, 2023 resulted from the current year quarter reporting minimal pre-tax book income with unfavorable discrete compensation 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.

For the three months ended March 4, 2023, the effective tax rate is higher than the United States federal statutory rate due to an unfavorable tax adjustment in the current quarter related to stock compensation and the absence in the current quarter of favorable tax adjustments in the prior quarter related to acquisition and restructure charges.

For the three months ended February 26, 2022, the effective tax rate was 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.

The effective tax rates were 19.5 % and 19.8 %, respectively, for the nine months ended March 4, 2023 and February 26, 2022.

The year over year decrease in the effective rate for the nine months ended March 4, 2023 resulted from favorable foreign tax

credit impacts in the United States whereas the prior year period had no comparable impacts.

For the nine months ended March 4, 2023, 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 nine months ended February 26, 2022, 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 and six months ended December 3, 2022 and November 27, 2021.

Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and nine months ended March 4, 2023 and February 26, 2022.

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

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

(In millions) March 4, 2023 May 28, 2022

Liability for interest and penalties $ 0.9 $ 0.9

6 unchanged sentences

Fair Value Measurements

The Company's financial instruments consist of cash equivalents, marketable securities, accounts and notes receivable, a deferred compensation plan, accounts payable, debt, interest rate swaps, foreign currency exchange contracts, redeemable noncontrolling interests, indefinite-lived intangible assets and right-of-use assets.

The Company's financial instruments consist of cash equivalents, accounts and notes receivable, a deferred compensation plan, accounts payable, debt, interest rate swaps, foreign currency exchange contracts, redeemable noncontrolling interests, indefinite-lived intangible assets and right-of-use assets.

The Company's financial instruments, other than long-term debt, are recorded at fair value.

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) December 3, 2022 May 28, 2022

(In millions) March 4, 2023 May 28, 2022

Carrying value $ 1,462.8 $ 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 December 3, 2022 and May 28, 2022.

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

(In millions) March 4, 2023 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 December 3, 2022 and May 28, 2022.

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

(In millions) March 4, 2023 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 December 3, 2022.

In February 2023, the Company entered into an additional interest rate swap agreement.

The interest rate swap is for an aggregate notional amount of $ 150.0 million with a forward start date of March 3, 2023 and a termination date of January 3, 2029.

As a result of the transaction, under the terms of the agreement the Company effectively will convert one month Spread Adjusted Term SOFR floating interest rate plus applicable margin to 3.95 % fixed interest rate and adjustment % plus applicable margin as of the forward start date.

"Spread adjusted Term SOFR" means Term SOFR plus an adjustment % that varies with tenor.

The Company typically selects a one month tenor and that is calculated as the one month Term SOFR rate plus 0.11448 %.

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 1.650 %

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

March 2023 Interest Rate Swap $ 150.0 March 3, 2023 January 3, 2029 3.950 %

The swaps above effectively converted indebtedness up to the notional amounts from a SOFR-based floating interest rate plus applicable margin of 0.11448 % to an effective fixed rate plus 0.11448 % 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 nine months ended:

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Gain recognized in Other comprehensive loss (effective portion) $ 10.3 $ 10.2 $ 31.8 $ 13.2

Gain (Loss) reclassified from Accumulated other comprehensive loss into earnings $ 4.9 $ ( 1.1 ) $ 6.9 $ ( 3.1 )

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.

There were no gains or losses recognized in earnings for hedge ineffectiveness for the three and nine month periods ended March 4, 2023 and February 26, 2022.

The amount of loss expected to be reclassified from Accumulated other comprehensive loss into earnings during the next twelve months is $ 28.3 million, net of tax is $ 21.2 million.

Redeemable Noncontrolling Interests

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

Changes in the Company's redeemable noncontrolling interest in HAY for the nine months ended March 4, 2023 and February 26, 2022 are as follows:

(In millions) March 4, 2023 February 26, 2022

Beginning Balance $ 106.9 $ 77.0

15 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Accrual Balance — beginning $ 74.1 $ 69.9 $ 73.2 $ 60.1

2 unchanged sentences

Acquired through business acquisition — 5 — 15.1

Measurement period adjustments to the reserve made subsequent to the period ended August 28, 2021 — — — ( 5.0 )

Accrual Balance — ending $ 74.5 $ 73.9 $ 74.5 $ 73.9

4 unchanged sentences

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

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

As of March 4, 2023, the Company had a maximum financial exposure related to performance bonds totaling approximately $ 8.2 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 December 3, 2022 or May 28, 2022.

Accordingly, no liability has been recorded in respect to these bonds as of either March 4, 2023 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 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.

As of March 4, 2023, 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 with respect to these arrangements as of December 3, 2022 or May 28, 2022.

Accordingly, no liability has been recorded with respect to these arrangements as of March 4, 2023 or May 28, 2022.

Contingencies

2 unchanged sentences

Short-Term Borrowings and Long-Term Debt

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

Short-term borrowings and long-term debt as of March 4, 2023 and May 28, 2022 consisted of the following:

(In millions) March 4, 2023 May 28, 2022

Syndicated revolving line of credit, due July 2026 $ 468.5 $ 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 rate 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.

Both term loans have a LIBOR-based floating interest rate plus applicable margin.

The credit agreement provides for the transition from LIBOR to SOFR, the recommended risk-free reference rate of the Federal Reserve Board and Alternative Reference Rates Committee, as of the LIBOR Transition Date, as defined within the credit agreement.

The credit agreement includes accommodations regarding the transition to SOFR.

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) December 3, 2022 May 28, 2022

In January 2023, the company entered into the 2nd Amendment to the credit agreement which transitioned the benchmark rate from LIBOR to the Secured Overnight Financing Rate ("SOFR") for U.S.

dollar borrowings.

SOFR is the recommended risk-free reference rate of the Federal Reserve Board and Alternative Reference Rates Committee, as defined within the credit agreement.

During the nine months ended February 26, 2022, 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 total principal payments on term loan "A" and "B" during the nine months ended March 4, 2023 in the amount of $ 15.0 million and $ 4.7 million, respectively.

The Company made total principal payments on term loan "A" and "B" during the nine months ended February 26, 2022 in the amount of $ 5.0 million and $ 1.6 million, respectively.

(In millions) March 4, 2023 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.

As of March 4, 2023, the liability related to the supplier financing program is $ 2.1 million.

Accumulated Other Comprehensive Loss

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:

The following table provides an analysis of the changes in accumulated other comprehensive loss for the nine months ended March 4, 2023 and February 26, 2022:

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

5 unchanged sentences

Net current period other comprehensive (loss) income ( 30.6 ) 0.4 31.8 1.6

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

Balance at March 4, 2023 $ ( 124.5 ) $ ( 36.5 ) $ 55.5 $ ( 105.5 )

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

4 unchanged sentences

Net current period other comprehensive (loss) income ( 46.7 ) 5.6 13.2 ( 27.9 )

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

Balance at February 26, 2022 $ ( 50.6 ) $ ( 44.8 ) $ 2.4 $ ( 93.0 )

Operating Segments

4 unchanged sentences

Americas Contract ("Americas"), International Contract & Specialty ("International & Specialty"), and Global Retail ("Retail").

• The activities related to the manufacture and sale of furniture products direct to consumers and third-party retailers for the Knoll, Muuto and Fully brands that were previously reported within the Knoll segment have been moved to the Global Retail segment.

• The activities related to the manufacture and sale of furniture products direct to consumers and third-party retailers for the Knoll and Muuto brands that were previously reported within the Knoll segment have been moved to the Global Retail segment.

• The activities related to the manufacture and sale of furniture products in the Americas for the Knoll, Muuto and Datesweiser brands that were previously reported within the Knoll segment have been moved to the Americas Contract segment.

8 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Americas $ 484.6 $ 509.4 $ 1,551.7 $ 1,390.0

13 unchanged sentences

These include severance and employee benefit costs as well as other direct separation benefit costs.

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

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

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.

3 unchanged sentences

Knoll Integration:

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.

Following the Knoll acquisition, the Company announced a multi-year program (the "Knoll Integration") designed to reduce costs and integrate and optimize operations of 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:

2 unchanged sentences

severance and employee benefits (cash severance, non-cash severance, including accelerated stock-compensation award expense and other termination benefits).

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

• Exit and disposal activities include those incurred as a direct result of integration activities, primarily including the reorganization and consolidation of facilities as well as 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 Knoll acquisition.

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

For the nine months ended March 4, 2023, we incurred $ 12.7 million of costs related to the Knoll Integration including:

$ 3.1 million of severance and employee benefit costs, $ 3.6 million of lease termination fees, and $ 6.0 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:

For the nine months ended February 26, 2022, we incurred $ 101.7 million of costs related to the Knoll Integration including:

$ 49.9 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 $ 22.9 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 six months ended December 3, 2022:

GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the nine months ended March 4, 2023:

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

3 unchanged sentences

Non-cash costs ( 0.2 ) — ( 0.2 )

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.

March 4, 2023 $ 2.0 $ — $ 2.0

The Company expects that a substantial portion of the liability for the Knoll Integration as of March 4, 2023 will be paid in the balance of fiscal year 2023.

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Americas Contract $ 2.2 $ 0.9 $ 6.2 $ 21.8

7 unchanged sentences

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.

In connection with the 2023 restructuring plan, the Company incurred severance and related charges of $ 4.6 million and $ 19.8 million for the three and nine months ended March 4, 2023, 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:

The following table provides an analysis of the changes in the restructuring cost reserve for the nine months ended March 4, 2023:

(In millions) Severance and Employee-Related

2 unchanged sentences

Amounts Paid ( 12.8 )

December 3, 2022 $ 12.6

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

Three Months Ended Six Months Ended

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

March 4, 2023 $ 7.0

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

Three Months Ended Nine Months Ended

(In millions) March 4, 2023 February 26, 2022 March 4, 2023 February 26, 2022

Americas Contract $ 4.4 $ — $ 17.5 $ —

2 unchanged sentences

Total $ 4.6 $ — $ 19.8 $ —

Impairment of Fully

In the third quarter of fiscal 2023 the decision was made to cease operating Fully as a stand-alone brand and sales channel and instead sell certain Fully products through other channels of the Global Retail business.

As a result of this decision, the Company recorded asset Impairment charges of $ 37.2 million in the third quarter of fiscal 2023.

The table below provides information related to the impairments recognized during the third quarter of fiscal 2023.

These charges are included in "Impairment charges" and "Cost of sales" within the Consolidated Statements of Comprehensive Income.

(In millions) Impairment Charge

Inventory $ 15.7

Property and equipment 3.8

Right of use asset 6.1

Tradename 11.6

Variable Interest Entities

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 $ 5.7 million and $ 1.2 million as of December 3, 2022 and May 28, 2022 respectively.

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

The carrying value of these notes receivable was $ 5.7 million and $ 1.2 million as of March 4, 2023 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