What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-07-26 compared with 2022-07-26 · 415 added, 650 removed, 1217 unchanged (47% of the section changed)

2 unchanged sentences

Consolidated Statements of Comprehensive Income

(In millions, except per share data) May 28, 2022 May 29, 2021 May 30, 2020

(In millions, except per share data) June 3, 2023 May 28, 2022 May 29, 2021

Net sales $ 4,087.1 $ 3,946.0 $ 2,465.1

8 unchanged sentences

Total operating expenses 1,307.7 1,312.9 718.6

Operating earnings (loss) 39.8 232.5 ( 37.9 )

Gain on consolidation of equity method investments — — 36.2

Operating earnings 122.3 39.8 232.5

Interest expense

1 unchanged sentence

Interest and other investment income 2.8 1.6 2.1

Other expense (income), net 12.2 ( 7.6 ) 1.0

(Loss) earnings before income taxes and equity income ( 8.6 ) 228.3 ( 12.9 )

Other (income) expense, net ( 0.3 ) 12.2 ( 7.6 )

Earnings (loss) before income taxes and equity income 51.4 ( 8.6 ) 228.3

Income tax expense 4.5 11.1 48.3

Equity earnings from nonconsolidated affiliates, net of tax

Net (loss) earnings ( 19.7 ) 180.3 ( 14.0 )

Net earnings (loss) attributable to redeemable noncontrolling interests 7.4 5.7 ( 5.3 )

Net (loss) earnings attributable to MillerKnoll, Inc.

Equity (loss) earnings from nonconsolidated affiliates, net of tax ( 0.8 ) — 0.3

Net earnings (loss) 46.1 ( 19.7 ) 180.3

Net earnings attributable to redeemable noncontrolling interests 4.0 7.4 5.7

Net earnings (loss) attributable to MillerKnoll, Inc.

$ 42.1 $ ( 27.1 ) $ 174.6

(Loss) earnings per share — basic $ ( 0.37 ) $ 2.96 $ ( 0.15 )

(Loss) earnings per share — diluted ( 0.37 ) 2.94 ( 0.15 )

Other comprehensive (loss) income, net of tax:

Earnings (loss) per share - basic $ 0.56 $ ( 0.37 ) $ 2.96

Earnings (loss) per share - diluted 0.55 ( 0.37 ) 2.94

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments ( 20.1 ) ( 90.0 ) 52.1

Pension and post-retirement liability adjustments 13.1 13.5 8.8

Unrealized gains (losses) on interest rate swap agreement 34.5 8.1 ( 18.0 )

Unrealized gains on interest rate swap agreement 19.0 34.5 8.1

Unrealized holding (losses) gains on securities — — ( 0.1 )

Total other comprehensive (loss) income, net of tax ( 42.0 ) 68.9 ( 39.8 )

Comprehensive (loss) income ( 61.7 ) 249.2 ( 53.8 )

Comprehensive income (loss) attributable to redeemable noncontrolling interests 4.4 5.7 ( 5.3 )

Comprehensive (loss) income attributable to MillerKnoll, Inc.

Other comprehensive income (loss), net of tax 12.0 ( 42.0 ) 68.9

Comprehensive income (loss) 58.1 ( 61.7 ) 249.2

Comprehensive income attributable to redeemable noncontrolling interests 4.0 4.4 5.7

Comprehensive income (loss) attributable to MillerKnoll, Inc.

$ 54.1 $ ( 66.1 ) $ 243.5

1 unchanged sentence

Consolidated Balance Sheets

(In millions, except share and per share data) May 28, 2022 May 29, 2021

(In millions, except share and per share data) June 3, 2023 May 28, 2022

Current Assets:

Cash and cash equivalents $ 223.5 $ 230.3

Short-term investments — 7.7

Accounts receivable, net of allowances of $ 6.4 and $ 9.7

34 unchanged sentences

( 95.1 ) ( 107.1 )

Deferred compensation plan

Total Stockholders' Equity 1,432.6 1,427.1

2 unchanged sentences

Consolidated Statements of Stockholders' Equity

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Deferred Compensation Plan MillerKnoll, Inc.

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Deferred Compensation Plan MillerKnoll, Inc.

Stockholders' Equity

(In millions, except share and per share data) Shares Amount

June 1, 2019 58,794,148 $ 11.7 $ 89.8 $ 721.7 $ ( 94.2 ) $ ( 0.8 ) $ 728.2

Net loss — — — ( 8.7 ) — — ( 8.7 )

Other comprehensive loss — — — — ( 39.8 ) — ( 39.8 )

Stock-based compensation expense — — 2.7 — — — 2.7

Exercise of stock options 423,815 0.2 13.3 — — — 13.5

Restricted and performance stock units released 138,590 — 0.2 — — — 0.2

Employee stock purchase plan issuances 70,145 — 2.1 — — — 2.1

Repurchase and retirement of common stock ( 641,192 ) ( 0.1 ) ( 26.5 ) — — — ( 26.6 )

Directors' fees 7,769 — 0.3 — — — 0.3

Deferred compensation plan — — ( 0.3 ) — — 0.5 0.2

Dividends declared ($ 0.63 per share)

— — — ( 37.5 ) — — ( 37.5 )

Cumulative effect of accounting changes — — — 17.8 — — 17.8

May 30, 2020 58,793,275 $ 11.8 $ 81.6 $ 693.3 $ ( 134.0 ) $ ( 0.3 ) $ 652.4

Net earnings — — — 174.6 — — 174.6

Other comprehensive income — — — — 68.9 — 68.9

Other comprehensive income, net of tax — — — — 68.9 — 68.9

Stock-based compensation expense — — 9.0 — — — 9.0

11 unchanged sentences

Net loss — — — ( 27.1 ) — — ( 27.1 )

Other comprehensive loss — — — — ( 42.0 ) — ( 42.0 )

Other comprehensive loss, net of tax — — — — ( 42.0 ) — ( 42.0 )

Stock-based compensation expense — — 31.4 — — — 31.4

15 unchanged sentences

May 28, 2022 75,824,241 $ 15.2 $ 825.7 $ 693.3 $ ( 107.1 ) $ — $ 1,427.1

Net earnings — — — 42.1 — — 42.1

Other comprehensive income, net of tax — — — — 12.0 — 12.0

Stock-based compensation expense ( 39,839 ) — 20.2 — — — 20.2

Exercise of stock options 49,482 — 1.0 — — — 1.0

Restricted and performance stock units released 226,657 — 0.4 — — — 0.4

Employee stock purchase plan issuances 185,551 — 3.1 — — — 3.1

Repurchase and retirement of common stock ( 575,207 ) ( 0.1 ) ( 15.9 ) — — — ( 16.0 )

Deferred stock unit — — 0.6 — — — 0.6

Director's fees 27,785 — 0.6 — — — 0.6

NCI Valuation — — — ( 1.9 ) — — ( 1.9 )

Dividends declared ($ 0.75 per share)

— — — ( 57.2 ) — — ( 57.2 )

Other — — 0.8 ( 0.2 ) — — 0.6

June 3, 2023 75,698,670 $ 15.1 $ 836.5 $ 676.1 $ ( 95.1 ) $ — $ 1,432.6

MillerKnoll, Inc.

Consolidated Statements of Cash Flows

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Cash Flows from Operating Activities:

Net (loss) earnings $ ( 19.7 ) $ 180.3 $ ( 14.0 )

Net earnings (loss) $ 46.1 $ ( 19.7 ) $ 180.3

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

1 unchanged sentence

Amortization expense 39.8 78.6 15.2

Earnings (loss) from nonconsolidated affiliates net of dividends received 0.8 ( 0.4 ) ( 4.8 )

Gain on consolidation of equity method investments — — ( 36.2 )

(Gain) loss on sales of property and dealers ( 1.0 ) — —

Loss (gain) on sales of property and dealers — ( 1.0 ) —

Deferred taxes ( 45.3 ) ( 21.7 ) 7.1

Pension contributions ( 11.7 ) ( 5.0 ) ( 5.4 )

Pension and post-retirement expenses ( 4.1 ) 3.0 1.6

Impairment charges 57.9 15.5 —

2 unchanged sentences

Stock-based compensation 20.2 31.4 9.0

Decrease (increase) in long-term assets ( 1.6 ) 1.2 ( 4.7 )

Increase in long-term liabilities ( 2.1 ) 16.0 5.8

Amortization of deferred financing costs 4.6 4.2 0.4

(Increase) decrease in long-term assets ( 4.7 ) ( 1.6 ) 1.2

(Decrease) increase in long-term liabilities ( 1.8 ) ( 2.1 ) 16.0

Changes in current assets and liabilities:

1 unchanged sentence

Decrease (increase) in inventories 81.5 ( 166.4 ) ( 10.4 )

Increase in prepaid expenses and other ( 39.6 ) ( 3.9 ) ( 2.2 )

Increase (decrease) in accounts payable 51.5 43.2 ( 59.5 )

Increase (decrease) in accrued liabilities 47.2 15.1 ( 32.0 )

Decrease (increase) in prepaid expenses and other 19.6 ( 39.6 ) ( 3.9 )

(Decrease) increase in accounts payable ( 82.5 ) 51.5 43.2

(Decrease) increase in accrued liabilities ( 124.8 ) 47.2 15.1

Other, net ( 0.9 ) ( 16.2 ) 4.6

Net Cash (Used in) Provided by Operating Activities ( 11.9 ) 332.3 221.8

Net Cash Provided by (Used in) Operating Activities 162.9 ( 11.9 ) 332.3

Cash Flows from Investing Activities:

Notes receivable issued ( 5.1 ) ( 1.2 ) ( 2.0 )

Marketable securities purchases — — ( 5.9 )

2 unchanged sentences

Proceeds from sales of property and dealers 0.3 2.8 14.0

Proceeds from life insurance policy 13.5 — —

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

Equity investment in non-controlled entities — — ( 3.3 )

Other, net ( 1.9 ) 1.5 ( 11.5 )

11 unchanged sentences

Distribution to noncontrolling interest ( 4.9 ) ( 6.8 ) —

Purchase of redeemable noncontrolling interests — — ( 20.3 )

Other, net ( 1.7 ) 0.7 ( 2.3 )

Net Cash Provided by (Used in) Financing Activities 1,039.9 ( 347.7 ) 244.0

Net Cash (Used in) Provided by Financing Activities ( 86.8 ) 1,039.9 ( 347.7 )

Effect of exchange rate changes on cash and cash equivalents ( 6.4 ) ( 21.7 ) 17.7

Net (Decrease) Increase In Cash and Cash Equivalents ( 166.1 ) ( 57.6 ) 294.8

Net (Decrease) In Cash and Cash Equivalents ( 6.8 ) ( 166.1 ) ( 57.6 )

Cash and cash equivalents, Beginning of Year 230.3 396.4 454.0

21 unchanged sentences

Note 17 Variable Interest Entities

Note 18 Quarterly Financial Data (Unaudited)

Significant Accounting and Reporting Policies

6 unchanged sentences

The Company researches, designs, manufactures, sells and distributes interior furnishings for use in various environments including office, healthcare, educational and residential settings and provides related services that support companies all over the world.

The Company's products are sold primarily through independent contract office furniture dealers, retail studios, the Company's eCommerce platforms, direct-mail catalogs, as well as direct customer sales and independent retailers.

On July 19, 2021 the Company acquired Knoll, Inc.

("Knoll") (See Note 3.

"Acquisitions and Divestitures").

Knoll is a leading global manufacturer of commercial and residential furniture, accessories, lighting, and coverings.

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

On October 11, 2021, the Company's shareholders approved an amendment to our Restated Articles of Incorporation to change our corporate name from Herman Miller, Inc.

to MillerKnoll, Inc.

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

The Company's products are sold primarily through independent contract furniture dealers, retail studios, the Company's eCommerce platforms, direct-mail catalogs, as well as direct customer sales and independent retailers.

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®.

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

1 unchanged sentence

The Company's fiscal year ends on the Saturday closest to May 31.

The fiscal years ended May 28, 2022, May 29, 2021, and May 30, 2020 contained 52 weeks .

The fiscal year ended June 3, 2023, contained 53 weeks and the fiscal years ended May 28, 2022 and May 29, 2021 contained 52 weeks.

Foreign Currency Translation

1 unchanged sentence

The cumulative effects of translating the balance sheet accounts from the functional currency into the United States dollar using fiscal year-end exchange rates and translating revenue and expense accounts using average exchange rates for the period are reflected as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets.

The financial statement impact of gains and losses resulting from remeasuring foreign currency transactions into the appropriate functional currency resulted in a net loss of $ 3.3 million, net gain of $ 0.8 million, and a net loss of $ 1.1 million for the fiscal years ended May 28, 2022, May 29, 2021, and May 30, 2020, respectively.

These amounts are included in Other expense (income), net in the Consolidated Statements of Comprehensive Income.

The financial statement impact of gains and losses resulting from remeasuring foreign currency transactions into the appropriate functional currency resulted in a net loss of $ 4.8 million, $ 3.3 million, and $ 0.8 million for the fiscal years ended June 3, 2023, May 28, 2022, and May 29, 2021, respectively.

These amounts are included in Other (income) expense, net in the Consolidated Statements of Comprehensive Income.

Cash Equivalents

1 unchanged sentence

Cash equivalents include money market funds and time deposit investments with original maturities of less than three months.

The carrying value of cash equivalents, which approximates fair value, totaled $ 43.1 million an d $ 229.8 million as of May 28, 2022 and May 29, 2021 , respectively.

The carrying value of cash equivalents, which approximates fair value, totaled $ 40.8 million an d $ 43.1 million as of June 3, 2023 and May 28, 2022 , respectively.

All cash equivalents are high-credit quality financial instruments and the amount of credit exposure to any one financial institution or instrument is limited.

1 unchanged sentence

The Company previously maintained a portfolio of marketable securities primarily comprised of mutual funds.

These investments were liquidated during the year resulting in a cash in-flow of approximately $ 7.7 million.

These investments were liquidated during fiscal year 2022 resulting in a cash in-flow in that year of approximately $ 7.7 million.

Allowances for Credit Losses

2 unchanged sentences

An accounts receivable balance is considered past due when payment is not received within the stated terms.

Accounts that are considered to have higher credit risk are reviewed using information available about the debtor, such as financial statements, news reports and published credit ratings.

Accounts that are considered to have higher credit risk are reviewed using

information available about the debtor, such as financial statements, news reports and published credit ratings.

General information regarding industry trends, the economic environment is also used.

10 unchanged sentences

Whether from dealers or customers, the Company's trade credit exposures are not concentrated with any particular entity.

Prior to the fourth quarter of 2022, certain inventories within the United States were recorded at cost (not in excess of net realizable value) as determined by the last-in, first-out method (“LIFO”).

Inventory valued under the LIFO method represented approximately 9 % of consolidated inventories.

During the fourth quarter of 2022, we changed our method of costing for these inventories from LIFO to the first-in, first-out (“FIFO”) method.

This change in accounting principle is preferable because FIFO more closely resembles the physical flow of inventory being used in production and the change conforms all of the Company's consolidated inventory to be on either the FIFO or weighted average methods of accounting, including the newly acquired Knoll, Inc.

The cumulative effect of the change was recorded in the opening June 1, 2019 retained earnings, which resulted in a net increase to total stockholders’ equity of $ 9.0 million.

It also increased May 29, 2021 inventories, tax payable and deferred tax liabilities by $ 15.0 million, $ 1.1 million, and $ 3.0 million, respectively.

The impact of this change in accounting principle on the Consolidated Financial Statements for each period presented is further explained in the Change in Accounting Principle section below.

Inventories are valued at the lower of cost or net realizable value and include material, labor and overhead.

1 unchanged sentence

The reserve required to record inventory at lower of cost or net realizable value may be adjusted in response to changing conditions, however inventory cannot be subsequently written back up, since the reserve establishes a new (lower) cost basis.

Inventory cost is determined using the first in, first out (FIFO) method.

Further information on the Company's recorded inventory balances can be found in Note 4 of the Consolidated Financial Statements.

1 unchanged sentence

The changes in the carrying amount of goodwill, by reporting segment, are as follows:

(In millions) Americas Contract International Contract Global Retail Knoll Total

Balance as of May 30, 2020

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

Balance at May 29, 2021

Goodwill $ 194.1 $ 103.0 $ 174.3 $ 471.4

Acquisition of HAY and naughtone 35.0 53.6 80.0 — 168.6

Foreign currency translation adjustments 3.3 8.2 6.8 18.3

Impairment loss ( 36.7 ) — ( 88.8 ) — ( 125.5 )

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

Net goodwill as of May 29, 2021

Balance as of May 29, 2021

$ 160.7 $ 111.2 $ 92.3 $ 364.2

Balance at May 28, 2022

Goodwill $ 197.4 $ 111.2 $ 181.1 $ 489.7

Sale of owned dealer ( 0.3 ) — — ( 0.3 )

Acquisition of Knoll 346.0 226.8 330.7 903.5

Foreign currency translation adjustments 23.7 ( 33.7 ) ( 31.2 ) ( 41.2 )

1 unchanged sentence

Net goodwill as of May 28, 2022

Balance as of May 28, 2022

$ 530.1 $ 304.3 $ 391.8 $ 1,226.2

Balance at June 3, 2023

Goodwill $ 566.8 $ 304.3 $ 480.6 $ 1,351.7

Sale of owned dealer ( 0.3 ) — — — ( 0.3 )

Acquisition of Knoll — — — 903.5 903.5

Foreign currency translation adjustments ( 1.7 ) ( 1.3 ) ( 1.5 ) ( 4.5 )

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

Balance as of May 28, 2022 $ 191.7 $ 82.5 $ 68.4 $ 883.6 $ 1,226.2

Net goodwill balance as of June 3, 2023

$ 528.4 $ 303.0 $ 390.3 $ 1,221.7

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

2 unchanged sentences

Foreign currency translation adjustments ( 14.6 )

Balance at May 29, 2021 $ 97.6

Foreign currency translation adjustments ( 14.6 )

Acquisition of Knoll $ 418.0

Balance at May 28, 2022 $ 501.0

Foreign currency translation adjustments ( 0.6 )

Impairment charges ( 19.7 )

Balance at June 3, 2023 $ 480.7

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.

Each of the reporting units was reviewed for impairment using a qualitative assessment as of March 31, 2023.

The Company elected to test each reporting unit qualitatively, as is permitted under ASU 2011-08, Intangibles-Goodwill and Other (Topic 350):

Testing Goodwill for Impairment, as the Company concluded it to be more likely than not that their estimated fair values are greater than their respective carrying values.

Testing Goodwill for Impairment.

The Company concluded it to be more likely than not that their estimated fair values are greater than their respective carrying values.

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.

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.

The Company utilized a weighting of the income approach and the market approach to estimate the fair value of the Global Retail reporting unit.

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 test for impairment requires the Company to make several estimates about fair value, most of which are based on projected future cash flows and market valuation multiples.

We estimated the fair value of the reporting units using a discounted cash flow analysis and reconciled the sum of the fair values of the reporting units to total market capitalization of the Company, plus a control premium.

The control premium represents an estimate associated with obtaining control of the Company in an acquisition.

We estimated the fair value of the Global Retail reporting unit using a discounted cash flow analysis.

The discounted cash flow analysis used the present value of projected cash flows and a residual value.

The Company employs a market-based approach in selecting the discount rates used in our analysis.

The discount rates selected represent market rates of return equal to what the Company believes a reasonable investor would expect to achieve on investments of similar size to the Company's reporting units.

The Company believes the discount rates selected in the

quantitative assessment are appropriate in that, in all cases, they meet or exceed the estimated weighted average cost of capital for our business as a whole.

The Company employed a market-based approach in selecting the discount rate used in our analysis.

The discount rate selected represents the market rates of return equal to what the Company believes a reasonable investor would expect to achieve on investments of similar size to the Company's reporting units.

The Company believes the discount rate selected in the quantitative assessment is appropriate in that exceeds the estimated weighted average cost of capital for our business as a

The results of the impairment test are sensitive to changes in the discount rates and changes in the discount rate may result in future impairment.

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.

The Company utilizes the relief from royalty methodology to test for impairment.

The primary assumptions for the relief from royalty method include forecasted revenue growth rates, royalty rates and discount rates.

The Company measures and records an impairment loss for the excess of the carrying value of the asset over its fair value.

In fiscal 2022, the Company performed qualitative assessments in testing indefinite-lived intangible assets for impairment for all assets except the HAY trade name for which a quantitative assessment was performed.

The carrying value of the Company's HAY trade name indefinite-lived intangible asset was $ 38.9 million as of March 31, 2022.

The calculated fair value of the HAY trade name was $ 54.8 million which represents an excess fair value of $ 15.9 million or 41.0 %.

Based on the assessments performed, the Company concluded it to be more likely than not that that the estimated fair values for indefinite-lived intangibles are greater than their respective carrying values.

In completing our annual indef inite-lived trade name impairment test, the HAY fair value was estimated using a relief-from-royalty approach, applying mar ket participant discount rate of 16.5 % developed using a weighted average cost of capital analysis, a royalty rate of 2.5 % and a long-term growth rate of 3.0 %.

The table below summarizes the carrying values as of May 28, 2022, for each of the Company’s indefinite-lived trade names:

(In millions)

Trade name Carrying Value

Maharam $ 16.5

naughtone 5.8

Knoll Product 173.0

Knoll Channel 99.0

Holly Hunt 26.0

Spinneybeck 23.0

Total $ 501.0

During fiscal 2020, the Company recognized $ 205.4 million of impairment charges related to goodwill, indefinite-lived intangible assets and long-lived assets.

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

The Company evaluated the sensitivity of changes in forecasted sales, operating margin and the discount rate for the Global Retail reporting unit.

Reducing the Global Retail reporting unit's forecasted sales by 5 % in all years, and leaving all other assumptions static, would result in an impairment of $ 26.0 million.

A decrease in the operating margin of 100 basis points would result in an impairment of $ 60.0 million.

An increase in the discount rate of 100 basis points would result in an impairment of $ 46.0 million.

The Company evaluates indefinite-lived trade name intangible assets for impairment using a qualitative assessment annually.

The Company also tests for impairment using a quantitative assessment if events and circumstances indicate that it is more likely than not that the fair value of an indefinite-lived intangible asset is below its carrying amount.

An impairment charge is recorded if the carrying amount of an indefinite-lived intangible asset exceeds the estimated fair value on the measurement date.

During fiscal 2023, the Company determined through a qualitative assessment that the Knoll trade name carrying value was more then likely above its fair value.

As a result, the Company performed a quantitative assessment to determine the fair value and as a result recognized a $ 19.7 million non-cash impairment charge to the indefinite-lived trade name.

The carrying value of the Knoll trade name as of the measurement date was $ 173.0 million.

The fair value of the Knoll trade name as of the measurement date is $ 153.3 million.

In performing this quantitative assessment, we estimated the fair value using the relief-from-royalty method which requires assumptions related to:

• forecasted revenue growth rate,

• assumed royalty rates that could be payable if we did not own the trademark, and

• a market participant discount rate based on a weighted-average cost of capital.

The assumptions used reflect management’s best estimate;

however, actual results could differ from our estimates.

In completing our annual indefinite-lived trade name impairment test, fair value of the Knoll trade name was estimated using a discount rate of 12.0 %, royalty rate of 2.00 % and long-term growth rate of 2.5 %.

The Company’s estimates of the fair value of its Knoll indefinite-lived intangible asset is sensitive to changes in the key assumptions above as well as projected financial performance.

Therefore, a sensitivity analysis was performed on certain key assumptions.

Keeping all other assumptions constant, a 10 % decrease in forecasted sales at June 3, 2023 would have resulted in $ 15.3 million of additional pre-tax impairment charges.

A decrease in the royalty rate of 25 basis points would result in an additional $ 20.0 million of impairment charges.

Keeping all other assumptions constant, a 100 basis point increase in the discount rate would have resulted in an additional $ 15.0 million of impairment charges.

If the estimated cash flows related to the Company's indefinite-lived intangibles were to decline in future periods, the Company may need to record an impairment charge.

Property, Equipment and Depreciation

7 unchanged sentences

The following table summarizes our property as of the dates indicated:

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Land and improvements $ 55.1 $ 54.4

15 unchanged sentences

Accumulated amortization 30.8 95.8 9.2 28.4 9.4 173.6

Impairment 11.6 — — — — 11.6

Net $ 17.7 $ 259.3 $ 32.8 $ — $ 3.3 $ 313.1

3 unchanged sentences

Net $ 33.2 $ 289.8 $ 36.1 $ — $ 3.3 $ 362.4

The Company amortizes these assets over their remaining useful lives using the straight-line method over periods ranging from less than 1 year to 20 years, or on an accelerated basis, to reflect the expected realization of the economic benefits.

It is estimated that the weighted-average remaining useful life of the patents and trademarks is approximately 6.7 and the weighted-average remaining useful life of the customer relationships is 10.5 years .

Estimated amortization expense on existing amortizable intangible assets as of May 28, 2022, for each of the succeeding five fiscal years, is as follows:

The Company amortizes these assets over their remaining useful lives using the straight-line method over periods ranging from 1 year to 20 years, or on an accelerated basis, to reflect the expected realization of the economic benefits.

It is estimated that the weighted-average remaining useful life of the patents and trademarks is approximately 3.6 and the weighted-average remaining useful life of the customer relationships is 9.6 .

Estimated amortization expense on existing amortizable intangible assets as of June 3, 2023, for each of the succeeding five fiscal years, is as follows:

(In millions)

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 related to Other Long-Lived Assets of $ 21.5 million in the third quarter of fiscal 2023.

Of this amount, $ 11.6 million of the impairment related to the Fully trade name.

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

Property and equipment 3.8

Right of use asset 6.1

Trade name 11.6

Self-Insurance

1 unchanged sentence

The Company's health benefit and auto liability retention levels do not include an aggregate stop loss policy.

The Company's retention levels designated within significant insurance arrangements as of May 28, 2022 , ar e as follows:

The Company's retention levels designated within significant insurance arrangements as of June 3, 2023 , ar e as follows:

(In millions) Retention Level (per occurrence)

4 unchanged sentences

The Company accrues for its self-insurance arrangements, as well as reserves for health, prescription drugs, and dental benefit exposures based on actuarial estimates, which are recorded in Other liabilities in the Consolidated Balance Sheets.

The value of the liability as of May 28, 2022 and May 29, 2021 was $ 14.7 million and $ 12.3 million, respectively.

The value of the liability as of June 3, 2023 and May 28, 2022 was $ 13.2 million and $ 14.7 million, respectively.

The actuarial valuations are based on historical information along with certain assumptions about future events.

21 unchanged sentences

While certain customer contracts may have a duration of greater than a year, all purchase orders are less than a year in duration.

As of May 28, 2022, all unfulfilled performance obligations are expected to be fulfilled in the next twelve months.

As of June 3, 2023, all unfulfilled performance obligations are expected to be fulfilled in the next twelve months.

Variable consideration exists within certain contracts that the Company has with customers.

19 unchanged sentences

Additionally, certain leases include renewal or termination options, which can be exercised at the Company’s discretion.

Lease terms include the noncancelable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods.

Lease terms include the non-cancelable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods.

The Company’s leases do not contain any residual value guarantees or material restrictive covenants.

6 unchanged sentences

The Company monitors for events or changes in circumstances that require a reassessment of a lease.

When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero.

When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying

amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero.

In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

6 unchanged sentences

Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and

liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

The Company's annual effective tax rate is based on income, statutory tax rates and tax planning strategies available in the various jurisdictions the Company operates.

Complex tax laws can be subject to different interpretations by the Company and the respective government authorities.

Significant judgment is required in evaluating tax positions and determining our tax expense.

Judgment is required in evaluating tax positions and determining our tax expense.

Tax positions are reviewed quarterly and tax assets and liabilities are adjusted as new information becomes available.

In evaluating the Company's ability to recover deferred tax assets within the jurisdiction from which they arise, the Company considers all positive and negative evidence.

These assumptions require significant judgment about forecasts of future taxable income.

These assumptions require judgment about forecasts of future taxable income.

Stock-Based Compensation

23 unchanged sentences

The fair values of all derivatives are recognized as assets or liabilities at the balance sheet date.

Changes in the fair value of these instruments are reported within Other expense (income), net in the Consolidated Statements of Comprehensive Income, or Accumulated other comprehensive loss within the Consolidated Balance Sheets, depending on the use of the derivative and whether it qualifies for hedge accounting treatment.

Changes in the fair value of these instruments are reported within Other (income) expense, net in the Consolidated Statements of Comprehensive Income, or Accumulated other comprehensive loss within the Consolidated Balance Sheets, depending on the use of the derivative and whether it qualifies for hedge accounting treatment.

Gains and losses on derivatives that are designated and qualify as cash flow hedging instruments are recorded in Accumulated Other Comprehensive Loss, to the extent the hedges are effective, until the underlying transactions are recognized in the Consolidated Statements of Comprehensive Income.

1 unchanged sentence

See Note 12 of the Consolidated Financial Statements for further information regarding derivatives.

Recently Adopted Accounting Standards

On May 30, 2021, the Company adopted ASU No.

2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This update eliminates, adds and clarifies certain disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans.

The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits.

Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period.

The adoption of this guidance did not have a material effect on our consolidated financial statements.

On May 30, 2021, the Company adopted ASU 2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes." This update removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.

The update also adds guidance to reduce complexity in certain areas.

The adoption of this guidance did not have a material impact on the Company's financial statements.

Recently Issued Accounting Standards Not Yet Adopted

The Company is currently evaluating the impact of adopting the following relevant standards issued by the FASB:

Standard Description Effective Date

2021-10 Government Assistance This update requires disclosures to increase the transparency of transactions with governments accounted for by applying a grant or contribution accounting model by analogy, including the (1) types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity's financial statements.

Early adoption is permitted.

We are currently evaluating the effect the adoption of this ASU may have on our disclosures.

All other issued and not yet effective accounting standards are not relevant to the Company.

Change in Accounting Principle

As described above, in the fourth quarter of 2022, we elected to change our method of accounting for certain inventories within the United States from LIFO to FIFO.

The tables below summarize the fiscal year 2022 financial results as if we had stayed on LIFO for the current year.

We have retrospectively adjusted the Consolidated Financial Statements for all periods presented to reflect this change.

As a result of the retrospective adjustment for the change in accounting principle, certain amounts in our Consolidated Statements of Comprehensive Income for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 were adjusted as follows:

(In millions, except per share data) May 28, 2022

If Reported using LIFO Impact of change to FIFO As Reported using FIFO

Cost of sales $ 2,603.9 $ ( 10.6 ) $ 2,593.3

(Loss) earnings before income taxes ( 19.2 ) 10.6 ( 8.6 )

Income tax expense 8.9 2.2 11.1

Net (loss) earnings ( 28.1 ) 8.4 ( 19.7 )

Net (loss) earnings attributable to MillerKnoll, Inc.

( 35.5 ) 8.4 ( 27.1 )

(Loss) earnings per share - basic ( 0.49 ) 0.12 ( 0.37 )

(Loss) earnings per share - diluted ( 0.49 ) 0.12 ( 0.37 )

(In millions, except per share data) May 29, 2021 May 30, 2020

As Reported Impact of change to FIFO As Adjusted As Reported Impact of change to FIFO As Adjusted

Cost of sales $ 1,515.9 $ ( 1.9 ) $ 1,514.0 $ 1,575.9 $ ( 0.5 ) $ 1,575.4

Earnings (loss) before income taxes 226.4 1.9 228.3 ( 13.4 ) 0.5 ( 12.9 )

Income tax expense 47.9 0.4 48.3 6.0 0.1 6.1

Net earnings (loss) 178.8 1.5 180.3 ( 14.4 ) 0.4 ( 14.0 )

Net earnings (loss) attributable to MillerKnoll, Inc.

173.1 1.5 174.6 ( 9.1 ) 0.4 ( 8.7 )

Earnings (loss) per share - basic 2.94 0.02 2.96 ( 0.15 ) — ( 0.15 )

Earnings (loss) per share - diluted 2.92 0.02 2.94 ( 0.15 ) — ( 0.15 )

The Consolidated Balance Sheets as of May 28, 2022 and May 29, 2021 were adjusted as follows:

(In millions) May 28, 2022 May 29, 2021

If Reported using LIFO Impact of change to FIFO As Reported using FIFO As Reported Impact of change to FIFO As Adjusted

Inventories, net $ 561.7 $ 25.6 $ 587.3 $ 213.6 $ 15.0 $ 228.6

Other liabilities 293.9 6.3 300.2 128.2 4.1 132.3

Retained earnings 674.0 19.3 693.3 808.4 10.9 819.3

The Consolidated Statements of Cash Flows for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 were adjusted as follows:

(In millions) May 28, 2022

If Reported using LIFO Impact of change to FIFO As Reported using FIFO

Net (loss) earnings $ ( 28.1 ) $ 8.4 $ ( 19.7 )

Adjustments to reconcile net earnings to net cash provided by operating activities:

Deferred taxes ( 23.9 ) 2.2 ( 21.7 )

Changes in current assets and liabilities:

(Decrease) increase in inventories ( 177.0 ) 10.6 ( 166.4 )

(In millions) May 29, 2021 May 30, 2020

As Reported Impact of change to FIFO As Adjusted As Reported Impact of change to FIFO As Adjusted

Net earnings (loss) $ 178.8 $ 1.5 $ 180.3 $ ( 14.4 ) $ 0.4 $ ( 14.0 )

Adjustments to reconcile net earnings to net cash provided by operating activities:

Deferred taxes 6.7 0.4 7.1 ( 25.2 ) 0.1 ( 25.1 )

Changes in current assets and liabilities:

(Decrease) increase in inventories ( 8.5 ) ( 1.9 ) ( 10.4 ) 6.0 ( 0.5 ) 5.5

Immaterial Correction of Error

The Company’s previously issued financial statements have been revised to reclassify certain lease liabilities that were inappropriately presented within the Consolidated Balance Sheet as of May 29, 2021.

As a result, $ 24.2 million was reclassified from Short-term lease liability to Lease liabilities on the Consolidated Balance Sheet as of May 29, 2021.

The error had no impact on the Company's Consolidated Statements of Comprehensive Income (Loss), Cash Flows or Stockholders’ Equity.

Management has evaluated the error and has determined, based on quantitative and qualitative factors, that it is not material to the May 29, 2021 Consolidated Balance Sheet.

The Company evaluates all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB") for consideration of their applicability to our consolidated financial statements.

We have assessed all ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact.

Revenue from Contracts with Customers

4 unchanged sentences

• Single Performance Obligations - these contracts are transacted with customers and include only the product performance obligation.

Most commonly, these contracts represent master agreements with independent third party dealers in which a purchase order represents the customer contract, point of sale transactions through the Retail segment, as well as customer purchase orders within the Americas Contract and Knoll segments.

For contracts that include a single performance obligation, the Company records revenue at the point in time when title and risk of loss has transferred to the customer.

For contracts that include a single performance obligation, the Company records revenue at the point in time when control has transferred to the customer.

• Multiple Performance Obligations - these contracts are transacted with customers and include more than one performance obligation;

8 unchanged sentences

Revenue disaggregated by contract type has been provided in the table below:

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Single performance obligation

15 unchanged sentences

Revenue disaggregated by product type and segment has been provided in the table below:

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Americas Contract:

3 unchanged sentences

Total Americas Contract $ 2,026.1 $ 1,929.1

International Contract:

International Contract & Specialty:

Workplace $ 170.1 $ 143.7

1 unchanged sentence

Lifestyle 394.5 348.6

Total International Contract $ 483.2 $ 399.5

Total International Contract & Specialty $ 1,017.3 $ 928.5

Global Retail:

3 unchanged sentences

Total Global Retail $ 1,043.7 $ 1,088.4

Workplace $ 547.2 $ —

Performance Seating 94.7 —

Lifestyle 452.2 —

Total Knoll $ 1,188.5 $ —

Intersegment Sales Elimination $ ( 27.4 ) —

Total $ 4,087.1 $ 3,946.0

In the current year, certain products were reclassified primarily within the Performance Seating and Lifestyle categories based on management’s internal reporting of the performance of these product lines.

The prior year period has been restated to reflect these changes.

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

Refer to Note 14 of the Consolidated Financial Statements for further information related to our segments.

Sales by geographic area are based on the location of the customer.

Long-lived assets consist of long-term assets of the Company, excluding financial instruments, deferred tax assets and long-term intangibles.

The following is a summary of geographic information for the years indicated.

Individual foreign country information is not provided as none of the individual foreign countries in which the Company operates are considered material for separate disclosure based on quantitative and qualitative considerations.

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

United States $ 2,918.0 $ 2,818.4 $ 1,728.9

International 1,169.1 1,127.6 736.2

Total $ 4,087.1 $ 3,946.0 $ 2,465.1

Long-lived assets:

United States $ 518.7 $ 531.2 $ 311.1

International 135.6 144.9 70.6

Total $ 654.3 $ 676.1 $ 381.7

The Company approximates that no single dealer accounted for more than 4% of the Company's net sales in the fiscal year ended June 3, 2023.

The Company estimates that the largest single end-user customer accounted for $ 174.9 million, $ 114.4 million and $ 113.0 million of the Company's net sales in fiscal 2023, 2022 and 2021, respectively.

This represents approximately 4 % of the Company's net sales in fiscal 2023, 3 % in 2022, and 5 % in 2021.

The Company's ten largest customers in the aggregate accounted for approximately 14 % of net sales in fiscal 2023, 11 % of net sales in fiscal 2022, and 17 % of net sales in fiscal 2021.

Contract Assets and Contract Liabilities

9 unchanged sentences

These customer deposits are included within Customer deposits in the Consolidated Balance Sheets.

During the twelve months ended May 28, 2022, the Company

recognized net sales of $ 89.5 million rel ate d to customer deposits that were included in the balance sheet as of May 29, 2021.

The Company assumed a contract liability of $ 55.5 million related to the acquisition of Knoll, Inc on July 19, 2021.

During the twelve months ended June 3, 2023, the Company recognized net sales of $ 117.7 million rel ate d to customer deposits that were included in the balance sheet as of May 28, 2022.

Acquisitions and Divestitures

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

On July 19, 2021, the Company completed its 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 consolidated financial statements from the date of acquisition.

42 unchanged sentences

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.

Goodwill is primarily attributed to the assembled workforce of Knoll and anticipated operational synergies.

Goodwill related to the acquisition was recorded within the Knoll segment at $ 903.5 million.

Goodwill is attributed to the assembled workforce of Knoll and anticipated operational synergies.

Goodwill related to the acquisition was allocated to each of the reporting segments with a total value as of the opening balance sheet date of $ 903.5 million.

Goodwill arising from the acquisition is not expected to be deductible for tax reporting purposes.

9 unchanged sentences

Total $ 756.6

Revenue and Net Loss of Knoll included in the Company's Consolidated Statements of Comprehensive Income (Loss) from the acquisition date of July 19, 2021 through May 28, 2022 are as follows (in millions):

Total Revenue $ 1,188.5

Net Loss $ ( 53.5 )

Unaudited Pro Forma Results of Operations

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 twelve months ended May 28, 2022 and May 29, 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.

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

Pro forma results do not include any anticipated cost savings from the integration of this acquisition.

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.

Twelve Months Ended

(In millions) May 28, 2022 May 29, 2021

Net sales $ 4,100.2 $ 3,586.6

Net earnings attributable to MillerKnoll, Inc.

$ 12.9 $ 115.8

On October 25, 2019 (“naughtone Acquisition Date”), the Company purchased the remaining 47.5 % equity voting interest in naughtone (Holdings) Limited and naughtone Manufacturing Ltd.

(together “naughtone”).

naughtone is an upscale, contemporary furniture manufacturer based in Harrogate, North Yorkshire, UK.

The acquisition is intended to allow the Company to further promote growth and development of naughtone's ancillary product lines, and continue to support product innovation and sales growth.

The Company previously accounted for its ownership interest in naughtone as an equity method investment.

Upon increasing its ownership to 100 % on the naughtone Acquisition Date, the Company obtained a controlling financial interest and consolidated the operations of naughtone.

Total consideration paid for naughtone on the naughtone Acquisition Date was $ 45.9 million, exclusive of naughtone cash on hand.

The Company funded the acquisition with cash and cash equivalents.

The allocation of the purchase price was finalized during the fourth quarter of fiscal 2020.

The following table presents the allocation of purchase price related to acquired tangible assets:

(In millions)

Working capital, net of cash and inventory step-up 1.3

Net property and equipment 0.8

Net assets acquired $ 7.2

The purchase of the remaining equity interest in naughtone was considered to be an acquisition achieved in stages, whereby the previously held equity interest was remeasured as of the naughtone Acquisition Date.

The Company considered multiple factors in determining the fair value of the previously held equity method investment, including the price negotiated with the selling shareholder for the 47.5 % equity interest in naughtone, an income valuation model (discounted cash flow) and current trading multiples for comparable companies.

Based on this analysis, the Company recognized a non-taxable gain of approximately $ 30.0 million on the remeasurement of the previously held equity method investment of $ 20.5 million in fiscal 2020.

The net gain has been recognized in Gain on consolidation of equity method investments within the Consolidated Statements of Comprehensive Income.

The following table summarizes the acquired identified intangible assets, valuation method employed, useful lives and fair value, as determined by the Company at the naughtone Acquisition Date:

(In millions) Valuation Method Useful Life (years) Fair Value

Inventory Step-up Comparative Sales Approach 0.3 $ 0.2

Backlog Multi-Period Excess Earnings 0.3 0.8

Tradename Relief from Royalty Indefinite 8.5

Customer Relationships Multi-Period Excess Earnings 9.0 29.4

Goodwill related to the acquisition was recorded within the America's Contract and International Contract segments for $ 35.0 million and $ 22.5 million, respectively.

Subsequent to the acquisition, the Company recognized an impairment charge of

$ 2.5 million on the naughtone tradename in the fourth quarter of fiscal 2020 based on the results of the Company's annual indefinite-lived trade name impairment test.

Nine United Denmark A/S

On June 7, 2018, the Company acquired 33 % of the outstanding equity of Nine United Denmark A/S, d/b/a HAY and subsequently renamed to HAY ApS ("HAY”), a Copenhagen, Denmark-based, design leader in furniture and ancillary furnishings for residential and contract markets in Europe and Asia.

The Company acquired its 33 % ownership interest in HAY for approximately $ 65.5 million in cash.

The Company also acquired the rights to the HAY brand in North America under a long-term license agreement for approximately $ 4.8 million in cash.

In the fiscal periods leading up to December 2, 2019 (“HAY Acquisition Date”), the date when the Company purchased an additional 34 % equity voting interest in HAY, this licensing agreement was recorded as a definite life intangible asset and was being amortized over its 15-year useful life.

This asset was also recorded within Other amortizable intangibles, net within the Consolidated Balance Sheets as of May 30, 2020.

On December 2, 2019, the Company obtained a controlling financial interest in HAY through the purchase of an additional 34 % equity voting interest.

The completion of the acquisition was intended to allow the Company to further promote growth and development of HAY's ancillary product lines and continue to support product innovation and sales growth.

The Company previously accounted for its ownership interest in HAY as an equity method investment, but upon increasing its ownership to 67 % on the HAY Acquisition Date, the Company consolidated the operations of HAY.

Total consideration paid for HAY on the HAY Acquisition Date was $ 79.0 million, exclusive of HAY cash on hand.

The Company funded the acquisition with cash and cash equivalents.

The previously mentioned HAY long-term licensing agreement was deemed to be a contractual preexisting relationship.

As a result of the business combination, the Company recorded this arrangement at its HAY Acquisition Date fair value, which resulted in an increase in goodwill of $ 10.0 million and a net gain of $ 5.9 million, which was recorded within Gain on consolidation of equity method investments within the Consolidated Statements of Comprehensive Income.

The goodwill was recorded within the Company’s Global Retail segment.

The Company is a party to options, that if exercised, would require it to purchase the remaining 33 % of the equity in HAY, at fair market value.

This remaining redeemable noncontrolling interest in HAY is classified outside permanent equity in the Consolidated Balance Sheets and is carried at the current estimated redemption amount.

The allocation of the purchase price was finalized during the first quarter of fiscal 2021.

The following table presents the allocation of purchase price related to acquired tangible assets:

(In millions)

Working capital, net of cash and inventory step-up 12.3

Net property and equipment 0.9

Other assets 3.9

Other liabilities ( 3.1 )

Net assets acquired $ 26.1

The purchase of the additional equity interest in HAY was considered to be an acquisition achieved in stages, whereby the previously held equity interest was remeasured as of the HAY Acquisition Date.

The Company considered multiple factors in determining the fair value of the previously held equity method investment, including the price negotiated with the selling shareholder for the 34 % equity interest in HAY, an income valuation model (discounted cash flow) and current trading multiples for comparable companies.

Based on this analysis, the Company recognized a non-taxable gain of approximately $ 0.3 million on the remeasurement of the previously held equity method investment of $ 67.8 million in the third quarter of fiscal 2020.

The net gain has been recognized in Gain on consolidation of equity method investments within the Consolidated Statements of Comprehensive Income.

The following table summarizes the acquired identified intangible assets, valuation method employed, useful lives and fair value, as determined by the Company at the HAY Acquisition Date:

(In millions) Valuation Method Useful Life (years) Fair Value

Inventory Step-up Comparative Sales Approach 0.8 $ 3.4

Backlog Multi-Period Excess Earnings 0.3 1.7

Deferred Revenue Adjusted Fulfillment Cost Method 0.1 ( 2.2 )

Tradename Relief from Royalty Indefinite 60.0

Product Development Relief from Royalty 8.0 22.0

Customer Relationships Multi-Period Excess Earnings 9.0 34.0

Total $ 118.9

Goodwill related to the acquisition was recorded within the International Contract segment for $ 101.1 million and the Global Retail segment for $ 10.0 million.

Subsequent to the acquisition, the goodwill recorded to the Global Retail segment was fully impaired in the fourth quarter of fiscal 2020 based on the results of the Company's annual goodwill impairment assessment.

Additionally, the Company recognized an impairment charge of $ 20.7 million on the HAY tradename in the fourth quarter of fiscal 2020 based on the results of the Company's annual indefinite-lived trade name impairment test.

Contract Furniture Dealership Divestiture

1 unchanged sentence

A pre-tax gain of $ 2.0 million was recognized as a result of the sale within Selling, general and administrative within the Consolidated Statements of Comprehensive Income.

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Finished goods and work in process $ 357.2 $ 441.6

2 unchanged sentences

Inventories are primarily valued using the first-in first-out method.

See Note 1, Significant Accounting and Reporting Policies for the impact a retrospective change in the method of valuing inventories made on the Consolidated Balance Sheets for the periods presented.

Investments in Nonconsolidated Affiliates

The Company has certain investments in entities that are accounted for using the equity method (“nonconsolidated affiliates”).

The investments are included in Other noncurrent assets in the Consolidated Balance Sheets and the equity earnings are included in Equity earnings from nonconsolidated affiliates, net of tax in the Consolidated Statements of Comprehensive Income.

The investments are included in Other noncurrent assets in the Consolidated Balance Sheets and the equity earnings are included in Equity (loss) earnings from nonconsolidated affiliates, net of tax in the Consolidated Statements of Comprehensive Income.

Refer to the tables below for the investment balances that are included in the Consolidated Balance Sheets and for the equity earnings that are included in the Consolidated Statements of Comprehensive Income.

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Investments in nonconsolidated affiliates $ 8.5 $ 9.9

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

Equity earnings from nonconsolidated affiliates, net of tax $ — $ 0.3 $ 5.0

The Company had an ownership interest in two nonconsolidated affiliates at May 28, 2022.

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Equity (loss) earnings from nonconsolidated affiliates, net of tax $ ( 0.8 ) $ — $ 0.3

The Company had an ownership interest in two nonconsolidated affiliates at June 3, 2023.

Refer to the Company's ownership percentages shown below:

Ownership Interest May 28, 2022 May 29, 2021

Ownership Interest June 3, 2023 May 28, 2022

Kvadrat Maharam Pty Limited 50.0 % 50.0 %

3 unchanged sentences

The Kvadrat Maharam Pty Limited nonconsolidated affiliate is a distribution entity engaged in selling decorative upholstery, drapery and wall covering products.

In fiscal 2020 the Company agreed to fully divest its interest in Kvadrat Maharam Arabia DMCC, Kvadrat Maharam Turkey JSC and Danskina B.V for approximately $ 3 million.

The divestitures were completed in the first half of fiscal 2021.

On August 31, 2018, the Company acquired 48.2 % of the outstanding equity of Global Holdings Netherlands B.V., which owns 100 % of Maars Holding B.V.

5 unchanged sentences

Of this difference, $ 2.7 million is being amortized over the remaining useful lives of the assets, while $ 0.4 million is considered a permanent difference.

At May 28, 2022, the Company's investment value in Maars is $ 2.2 million more than the Company's proportionate share of the underlying net assets, of which $ 1.8 million is being amortized over the remaining useful lives of the assets, while $ 0.4 million was considered a permanent basis difference.

In the fourth quarter of fiscal 2023, the Company determined the fair value was less than the carrying value and concluded the impairment was other-than-temporary and recorded an impairment charge of approximately $ 1.0 million within Other income and expense in the Consolidated Statements of Comprehensive Income.

At June 3, 2023, the Company's investment value in Maars is $ 1.0 million more than the Company's proportionate share of the underlying net assets, the total of which is being amortized over the remaining useful lives of the assets.

Transactions with Nonconsolidated Affiliates

Sales to and purchases from nonconsolidated affiliates were as follows for the periods presented below:

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Sales to nonconsolidated affiliates $ 2.8 $ 0.7 $ 1.0

1 unchanged sentence

Balances due to or due from nonconsolidated affiliates were as follows for the periods presented below:

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Receivables from nonconsolidated affiliates $ 0.5 $ 0.3

2 unchanged sentences

Long-term debt consisted of the following obligations:

(In millions) May 28, 2022 May 29, 2021

Debt securities, 4.95 %, due May 20, 2030

Syndicated revolving line of credit, due August 2024 — 225.0

(In millions) June 3, 2023 May 28, 2022

Syndicated revolving line of credit, due July 2026 $ 426.7 $ 413.0

9 unchanged sentences

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 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.

T he Company also repaid $ 64 million of private placement notes due May 20, 2030.

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 year ended May 28, 2022 in the amount of $ 10.0 million and $ 3.1 million, respectively.

Prior to July 2021, the Company's syndicated revolving line of credit provided the Company with up t o $ 500 million in revolving variable interest borrowing capacity and included an "accordion feature" allowing the Company to increase , at its option and subject to the approval of the participating banks, the aggregate borrowing capacity of the facility by up to $ 250 million.

In January 2023, the company entered into an 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.

The indebtedness incurred under the revolving line of credit and term loans is secured by substantially all of the Company’s tangible and intangible assets, including, without limitation, the Company’s intellectual property.

The Company’s direct and indirect wholly-owned domestic subsidiaries have also guaranteed the obligations of the Company and the foreign borrowers under the revolving line of credit and term loans and pledged substantially all of their tangible and intangible assets as security for their obligations under such guarantee.

During 2022, t he Company repaid $ 64 million of private placement notes due May 20, 2030, and recognized a loss of approximately $ 13.4 million on extinguishment of the debt ,which represented the premium on early redemption.

The Company made principal payments on term loans "A" and "B" during the year ended June 3, 2023 in the amount of $ 20.0 million and $ 6.3 million, respectively and during the year ended May 28, 2022 in the amount of $ 10.0 million and $ 3.1 million, respectively.

Prior to J uly 2021, the Company's syndicated revolving line of credit provided the Company with up t o $ 500 million in revolving variable interest borrowing capacity and included an "accordion feature" allowing the Company to increase , at its option and subject to the approval of the participating banks, the aggregate borrowing capacity of the facility by up to $ 250 million.

Outstanding borrowings would bear interest at rates based on the prime rate, federal funds rate, LIBOR or negotiated rates as outlined in the agreement.

1 unchanged sentence

The Company paid off the outstanding balance due on the syndicated revolving line of credit during the first quarter of 2022.

In June 2020, the Company repaid the $ 265 million draw on its syndicated revolving line of credit that was taken as a precautionary measure in March 2020 to provide additional near-term liquidity given the uncertainty related to COVID-19.

After the end of the quarter ended February 27, 2021, the Company repaid $ 50 million of private placement notes due March 1, 2021 with available cash on hand.

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

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Syndicated revolving line of credit borrowing capacity $ 725.0 $ 725.0

4 unchanged sentences

The senior secured revolving credit facility restricts, without prior consent, the Company's borrowings, capital leases, investments, liens, mergers, consolidations, restricted payments, and the sale of certain assets.

In addition, for the credit facility and Term Loan A, the Company has agreed to maintain a financial performance ratio, a maximum first lien secured net leverage ratio covenant which is measured by the ratio of first lien debt (less unrestricted cash) to trailing four quarter adjusted consolidated EBITDA (as defined in the credit agreement) and is required to be less than 4.25 :1 for the trailing four quarter periods ending November 21, 2021, and the three immediately succeeding fiscal quarters, then 4.00 :1 for the next four fiscal quarters, and 3.75 :1 at the end of each fiscal quarter thereafter, except that the Company may elect, under certain conditions, a step-up in the covenant level of 0.25 or 0.50 for the four subsequent trailing four quarter periods.

step-up in the covenant level of 0.50 for the four subsequent trailing four quarter periods.

Adjusted EBITDA is generally defined in the credit agreement as EBITDA adjusted by certain items which include non-cash share-based compensation, non-recurring restructuring costs and extraordinary items.

At May 28, 2022 the Company was in compliance with these restrictions and performance ratios.

At June 3, 2023 the Company was in compliance with these restrictions and performance ratios.

On May 20, 2020, the Company entered into a third amendment to its existing Private Shelf Agreement, dated December 14, 2010, as amended (together with the third amendment, the "Agreement"), between the Company and PGIM, Inc.

2 unchanged sentences

The Notes and facility were paid off with the new revolver and term loans entered in connection with the acquisition of Knoll in July 2021.

Annual maturities of debt for the five fiscal years subsequent to May 28, 2022 are as shown in the table below.

Annual maturities of debt for the five fiscal years subsequent to June 3, 2023 are as shown in the table below.

(In millions)

6 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 Consolidated Balance Sheets as the amounts have been accounted for by the Company as a current debt, within "Short-term borrowings and current portion of long-term debt".

The Company has leases for retail studios, showrooms, manufacturing facilities, warehouses and vehicles, which expire at various dates through 2042.

As of June 3, 2023, the liability related to the supplier financing program is $ 2.1 million.

The Company has leases for retail stores, showrooms, manufacturing facilities, warehouses and vehicles, which expire at various dates through 2042.

Certain lease agreements include contingent rental payments based on per unit usage over a contractual amount and others include rental payments adjusted periodically for inflationary indexes.

1 unchanged sentence

Year Ended Year Ended

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Operating lease costs $ 99.3 $ 89.4

4 unchanged sentences

Year Ended Year Ended

May 28, 2022 May 29, 2021

June 3, 2023 May 28, 2022

Variable lease costs $ 96.2 $ 95.6

During the fourth quarter of fiscal 2020, the Company determined it was more likely than not that the fair value of certain right of use assets were below their carrying values and assessed these assets for impairment.

As result of this assessment the Company recorded an impairment of $ 19.3 million in the Consolidated Statements of Comprehensive income.

At May 28, 2022, the Company has no financing leases.

During fiscal 2023, the Company determined it was more likely than not that the fair value of certain right of use assets within the Global Retail reporting unit, specifically Fully, were below their carrying value and assessed these assets for impairment.

a result of this assessment, the Company recorded an impairment of $ 6.1 million in the Consolidated Statements of Comprehensive income.

At June 3, 2023, the Company has no financing leases.

The undiscounted annual future minimum lease payments related to the Company's right-of-use assets are summarized by fiscal year in the following table:

7 unchanged sentences

Year Ended Year Ended

May 28, 2022 May 29, 2021

June 3, 2023 May 28, 2022

Weighted-average remaining lease term (in years)

9 unchanged sentences

The measurement date for this plan is the last day of the fiscal year and the plan is frozen to new participants.

The Company acquired Knoll during fiscal year 2022.

The Knoll subsidiary has one domestic defined-benefit pension plan covering eligible U.S.

29 unchanged sentences

Funded status:

Under-funded status at end of year $ ( 8.6 ) $ ( 11.0 ) $ — $ ( 31.0 )

Over (under) funded status at end of year $ 2.5 $ 8.4 $ ( 8.6 ) $ ( 11.0 )

Components of the amounts recognized in the Consolidated Balance Sheets:

Current assets $ — $ — $ — $ —

Non-current assets $ 2.5 $ 8.4 $ — $ —

Current liabilities $ — $ — $ — $ —

14 unchanged sentences

Expected administrative expenses 0.6 — 0.5 — — —

Settlement & Curtailment ( 0.1 ) — — — — —

Amortization of net (gain)/loss — 4.5 — 5.3 — 3.2

Settlement related expenses ( 0.6 ) — ( 0.1 ) — — —

Amortization of net loss/(gain) — 2.2 — 4.5 — 5.3

Net periodic benefit (income) cost $ ( 2.3 ) $ 0.7 $ ( 3.0 ) $ 1.9 $ — $ 3.0

4 unchanged sentences

Net amortization 0.1 ( 3.4 ) 0.1 ( 10.6 )

Settlement charge 0.6 — — —

Total recognized in other comprehensive loss $ ( 1.5 ) $ ( 15.8 ) $ ( 2.8 ) $ ( 20.6 )

5 unchanged sentences

Discount rate (1)

varies 1.99 — 1.66 — 2.39

Compensation increase rate N/A 3.20 — 2.75 — 3.20

varies 3.33 varies 1.99 — 1.66

Compensation increase rate N/A 4.45 N/A 3.20 — 2.75

Expected return on plan assets 6.80 4.80 5.10 4.80 — 4.80

(1) Due to settlement activity during FYE 2022 in the domestic plan, there were four remeasurements as of 8/21/2021, 11/27/2021, 2/26/2022, and 5/28/2022.

The discount rate for the benefit obligation at the beginning of each period is 2.90 %, 2.89 %, 3.00 %, and 3.52 %, respectively.

The discount rate for the interest cost for each period is 2.27 %, 2.28 %, 2.48 %, and 3.10 %, respectively.

(1) Due to settlement activity during FYE 2023 in the domestic plan, there were two remeasurements as of 3/4/2023 and 6/3/2023.

The discount rate for beginning of period is 4.40 % and 5.18 %, respectively.

Due to settlement activity during fiscal year 2022, there were four remeasurements as of 8/28/2021, 11/27/2021, 2/26/2022, and 5/28/2022.

The discount rate for beginning of period in fiscal 2022 is 2.90 %, 2.89 %, 3.00 %, and 3.52 % respectively.

Weighted-average assumptions used in the determination of the projected benefit obligations:

1 unchanged sentence

5.17 5.34 4.40 3.33 — 1.99

Compensation increase rate N/A 4.45 — 3.20 — 2.75

Compensation increase rate N/A 3.00 N/A 4.45 — 3.20

The Company uses a full yield curve approach to estimate the interest component of net periodic benefit cost for pension benefits.

21 unchanged sentences

Total 100 % 100 % 100 % 100 %

(In millions) May 28, 2022

(In millions) June 3, 2023

Asset Category Level 1 Level 2 Total

5 unchanged sentences

International

(In millions) May 28, 2022

(In millions) June 3, 2023

Asset Category Level 1 Level 2 Total

6 unchanged sentences

Cash and cash equivalents $ 2.4 $ — $ 2.4

government securities — 10.3 10.3

Foreign government obligations — 51.8 51.8

12 unchanged sentences

The following represents a summary of the benefits expected to be paid by the plans in future fiscal years.

These expected benefits were estimated based on the same actuarial valuation assumptions used to determine benefit obligations at May 28, 2022.

These expected benefits were estimated based on the same actuarial valuation assumptions used to determine benefit obligations at June 3, 2023.

(In millions) Pension Benefits

10 unchanged sentences

The Company contributes to the plans as matching contributions a certain percentage of the participant’s salary deferral, subject to certain limitations defined in the plan documents.

A core contribution based on a set percentage of wages is also included for most participants of the plans.

The Company’s other defined contribution retirement plans may provide for matching contributions, non-elective contributions and discretionary contributions as declared by management.

During the fourth quarter of fiscal 2020, the Company elected to temporarily suspend the Company's core contribution and 401(k) matches in order to reduce costs and preserve liquidity.

The Company reinstated the previously suspended employer-paid retirement plan contributions in the fourth quarter of fiscal 2021, and elected to make a catch-up contribution for the employer-paid retirement plan contributions that were suspended for a majority of fiscal 2020.

The expense recorded for the Company's 401(k) matching and core contributions wa s $ 36.3 million, $ 23.7 million and $ 22.2 million in fiscal years 2022, 2021 and 2020, respectively.

Effective January 1, 2023, the Knoll Retirement Savings Plan was merged into the MillerKnoll Retirement Plan.

The expense recorded for the Company's 401(k) matching and other discretionary contributions was $ 32.4 million, $ 36.3 million and $ 23.7 million in fiscal years 2023, 2022 and 2021, respectively.

Common Stock and Per Share Information

6 unchanged sentences

Denominator for diluted EPS 76,024,368 73,160,212 59,389,598

Equity awar ds of 1,245,988 shares, 207,365 sha res and 360,462 shares of common stock were excluded from the denominator for the computation of diluted earnings per share for the fiscal years ended May 28, 2022, May 29, 2021 and May 30, 2020, respectively, because they were anti-dilutive.

Equity awar ds of 2,119,223 shares, 1,245,988 shares and 207,365 shares of common stock were excluded from the denominator for the computation of diluted earnings per share for the fiscal years ended June 3, 2023, May 28, 2022 and May 29, 2021, respectively, because they were anti-dilutive.

The Company has a share repurchase plan authorized by the Board of Directors on January 16, 2019, which provides a share repurchase authorization of $ 250.0 million with no specified expiration date.

The approximate dollar value of shares available for purchase under the plan at May 28, 2022 was $ 220.5 million.

The approximate dollar value of shares available for purchase under the plan at June 3, 2023 was $ 204.5 million.

During fiscal year 2023, 2022, and 2021, shares repurchased under the repurchase plan totaled 575,207 , 390,010 , and 38,931 shares respectively.

1 unchanged sentence

The Company utilizes stock-based compensation incentives as a component of its employee and non-employee director and officer compensation philosophy.

A c ommittee of the Board of Directors determines the terms of the awards granted and may grant various forms of equity-based incentive compensation.

Currently, these incentives consist principally of stock options, restricted stock units, performance stock units, deferred stock units, and restricted shares.

At May 28, 2022, there were 8,164,945 shares authorized for issuance under active long-term incentive compensation plans:

For all stock-based compensation plans, the Company issues authorized but unissued shares to fulfill plan terms.

Since the inception of the employee stock purchase plan, 3,666,018 shares of common stock have been authorized for issuance and 246,338 shares remain available for future purchases as of June 3, 2023.

At June 3, 2023, there were 8,164,945 shares authorized for issuance under active long-term incentive compensation plans:

7,182,670 shares authorized under the MillerKnoll, Inc.

2020 Long Term Incentive Plan (the "LTIP") and 982,275 shares authorized under the Knoll, Inc.

2021 Stock Incentive Plan, as amended.

In addition, under the terms of the MillerKnoll, Inc.

Employee Stock Purchase Plan (the "ESPP"), the Company has reserved 4 million shares for purchase by its domestic and certain international employees.

For all stock-based compensation plans, the Company issues authorized but unissued shares to fulfill plan terms.

2021 Stock Incentive Plan, (the "SIP"), as amended.

There were 3,327,940 shares available for issuance under the LTIP and 530,684 under the SIP as of June 3, 2023.

Valuation and Expense Information

5 unchanged sentences

Excluding fully vested and non-forfeitable deferred stock units described under "Deferred Compensation Plan" below, pre-tax compensation expense and the related income tax benefit for all types of stock-based programs were as follows for the periods indicated:

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Employee stock purchase program $ 0.5 $ 0.5 $ 0.4

5 unchanged sentences

Tax benefit $ 4.9 $ 7.7 $ 2.0

As of May 28, 2022, total pre-tax stock-based compensation cost not yet recognized related to non-vested awards was approximately $ 19.5 million.

As of June 3, 2023, total pre-tax stock-based compensation cost not yet recognized related to non-vested awards was approximately $ 11.5 million.

The weighted-average period over which this amount is expected to be recognized is 0.9 year.

1 unchanged sentence

Employee Stock Purchase Program

Pursuant to the terms of the ESPP, eligible employees are permitted to purchase shares of our common stock at a price equal to 85 % of the closing price on the date of purchase, which coincides with the last trading day of each fiscal quarter.

The Company has an employee stock purchase plan (“ESPP”) which allows for eligible employees to participate in the purchase of shares of the Company’s common stock at a price equal to 85 % of the closing price on the date of purchase, which coincides with the last trading day of each fiscal quarter.

The ESPP is considered a liability award with estimated expense recognized over the three-month offering period which is subsequently adjusted to actual expense based on the fair value as of the date of purchase.

4 unchanged sentences

Most options are subject to graded vesting, and the related compensation expense is based on the fair value of the stock options on the date of grant using the Black-Scholes model and is recognized on a straight-line basis over the requisite service period.

In fiscal 2023, there was one stock option valuation date, but two valuations.

In fiscal 2022, there were two stock option valuation dates.

1 unchanged sentence

Therefore, the table below has been presented with the assumptions relevant to each valuation date.

In fiscal 2020, there were no stock option grants awarded to employees or non-employee directors.

The Company estimated the fair value of employee stock options on the date of grant using the Black-Scholes model.

The Company generally estimated the fair value of stock options on the date of grant using the Black-Scholes model;

however, the Hull-White I lattice model was used where historical expected term data for the option conditions was not prevalent.

In determining these values, the following weighted-average assumptions were used for the options granted during the fiscal years indicated:

2023 2022 2021

Valuation Method Hull-White I (1)

Black-Scholes Black-Scholes Black-Scholes

Risk-free interest rates (2)

2.91 % 3.01 % 0.47 % 0.23 - 0.25 %

Hull-White I barrier (3)

1.36 N/A N/A N/A

Expected term of options (4)

3.3 years 3.8 - 4.1 years

N/A 3.4 years 3.3 years 3.8 - 4.1 years

Expected volatility (5)

1 unchanged sentence

Dividend yield (6)

1.64 % 1.99 % N/A

2.52 % 2.50 % 1.64 % 1.99 %

Weighted-average grant-date fair value of stock options:

Granted with exercise prices equal to the fair market value of the stock on the date of grant $ 13.87 -$ 14.36

Granted with exercise prices equal to the fair market value of the stock on the date of grant N/A $ 9.43 $ 13.87 -$ 14.36

Granted with exercise prices greater than the fair market value of the stock on the date of grant $ 5.74 N/A N/A $ 5.62

(1) A conservative post-vest cancel rate of 0.00 % was applied under the assumption that the options will be exercised.

(2) Represents term-matched, zero-coupon risk-free rate from the Treasury Constant Maturity yield curve, continuously compounded.

(3) Represents historical average of Section 16 Officers in-the-money exercise ratio from Company’s historical data through May 27, 2022.

(4) Represents historical settlement data, using midpoint scenario with 1-year grant date filter assumption for outstanding options.

1 unchanged sentence

90 % term-matched historical volatility from daily stock prices and 10 % weighted average implied volatility from the 90 days preceding the grant date.

(4) Represents the quarterly dividend divided by the three-month average stock price as of July 9, 2021 and February 28, 2020, for 2022 and 2021, respectively.

(6) Represents the quarterly dividend divided by the three-month average stock price as of July 7 and 12, 2022, July 9, 2021, and February 28, 2023, for 2022 and 2021, respectively.

The following is a summary of stock option activity during fiscal 2023:

6 unchanged sentences

Forfeited or expired ( 7,210 ) 22.86

Outstanding at May 28, 2022 1,716,593 26.83 10.4 7.69

Outstanding at June 3, 2023 2,204,200 28.33 — 7.3

Exercisable at end of period 1,088,713 $ 26.57 $ — 6.5

The weighted-average remaining recognition period of the outstanding stock options at May 28, 2022 was 1.15 years.

The weighted-average remaining recognition period of the outstanding stock options at June 3, 2023 was 0.54 years.

The total pre-tax intrinsic value of options exercised during fiscal 2023, 2022 and 2021 was $ 0.4 million, $ 1.8 million and $ 0.5 million, respectively.

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the Company's closing stock price as of the end of the period presented, which would have been received by the option holders had all option holders exercised in-the-money options as of that date.

Total cash received during fiscal 2023 from the exercise of stock options was approximately $ 1.0 million.

9 unchanged sentences

In conjunction with the acquisition of Knoll, Inc.

on July 19, 2021, outstanding restricted stock unit awards previously granted under a Knoll stock compensation plan were automatically converted into MillerKnoll awards at the identified equity award exchange ratio, with each converted unit representing one equivalent share of the Company's common stock to be issued, free

of restrictions, after the vesting period.

The awards generally cliff-vest after a three-year service period from the original date of grant.

10 unchanged sentences

Released ( 219,734 ) 38.46

Outstanding at May 28, 2022 576,382 $ 37.33 $ 17.8 1.1

The weighted-average remaining recognition period of the outstanding restricted stock units at May 28, 2022, was 1.3 years.

The total market value of the units that vested during the twelve months ended May 28, 2022, was $ 19.9 million.

This includes $ 11.8 million of shares from converted Knoll awards for which, due to change-of-control provisions, vesting was accelerated.

In addition, $$ 0.3 million in accrued cash dividends were paid upon vesting the underlying shares of converted Knoll awards.

Outstanding at June 3, 2023 684,341 $ 31.83 $ 9.9 1.0

The weighted-average remaining recognition period of the outstanding restricted stock units at June 3, 2023, was 1.1 years.

The total market value of the units that vested during the twelve months ended June 3, 2023, was $ 6.0 million.

In addition, $ 74 thousand in accrued cash dividends were paid upon vesting of the underlying shares of converted Knoll awards.

The weighted-average grant-date fair value of restricted stock units granted during 2023, 2022, and 2021 was $ 27.76 , $ 44.25 , and $ 26.71 , respectively.

The intrinsic value presented above includes $ 0.1 million in accrued cash dividends on the underlying shares of outstanding converted Knoll restricted stock unit awards.

The intrinsic value presented above includes $ 60 thousand in accrued cash dividends on the underlying shares of outstanding converted Knoll restricted stock unit awards.

Performance Stock Units

19 unchanged sentences

Released ( 6,130 ) 31.23

Outstanding at May 28, 2022 364,087 $ 42.75 $ 11.3 0.9

The weighted-average remaining recognition period of the outstanding performance stock units at May 28, 2022, was 0.75 years.

The total market value for shares that vested during the twelve months ended May 28, 2022, was 1.0 million.

weighted-average grant-date fair value of performance stock units granted during fiscal 2022, 2021, and 2020 was $ 43.06 , $ 37.21 , and $ 45.71 , respectively.

Outstanding at June 3, 2023 350,971 $ 34.41 $ 5.2 1.2

The weighted-average remaining recognition period of the outstanding performance stock units at June 3, 2023, was 0.68 years.

The total market value for shares vested in a prior fiscal year but deferred that were released during the twelve months ended June 3, 2023, was $ 167 thousand;

no additional shares were vested in fiscal 2023.

The weighted-average grant-date fair value of performance stock units granted during fiscal 2023, 2022, and 2021 was $ 27.30 , $ 43.06 , and $ 37.21 , respectively.

The intrinsic value presented above includes $ 0.2 million in accrued cash dividends on the underlying shares of outstanding converted Knoll performance stock unit awards.

10 unchanged sentences

Outstanding at May 28, 2022 219,989 $ 44.36

Granted 751,907 44.36

Forfeited ( 39,839 ) 44.18

Released ( 145,407 ) 44.35

Outstanding at May 28, 2022 219,989 $ 44.36

The weighted-average remaining recognition period of the outstanding restricted stock award shares at May 28, 2022 was 1.1 years.

The total market value for shares that vested during the twelve months ended May 28, 2022, was $ 16.3 million.

Outstanding at June 3, 2023 34,743 $ 44.36

The weighted-average remaining recognition period of the outstanding restricted stock award shares at June 3, 2023 was 0.7 years.

The total market value for shares that vested during the twelve months ended June 3, 2023, was $ 3.7 million.

This includes $ 0.5 million of converted Knoll awards for which, due to change-in-control provisions, vesting was accelerated.

2 unchanged sentences

There were no restricted stock awards granted in fiscal 2023 or fiscal 2021.

Accrued cash dividends on the underlying shares reported above for outstanding converted Knoll restricted stock awards total $ 0.4 million.

Accrued cash dividends on the underlying shares reported above for outstanding converted Knoll restricted stock awards total $ 60 thousand.

Executive Deferred Compensation Plan

7 unchanged sentences

Investment options are closely aligned to those available under the MillerKnoll Retirement Plan, except for the Company stock fund.

Beginning in fiscal 2021, the Company stock fund was removed as an investment choice in the Executive Equalization Plan.

At November 27, 2021, the Executive Equalization Plan's Company stock fund balance was zero.

In accordance with the terms of the Executive Equalization Plan and the Director Plan described below, participant deferrals and Company contributions have been placed in a Rabbi trust.

3 unchanged sentences

Realized and unrealized gains and losses for investment assets other than Company common stock are recognized within the Company's Consolidated Statements of Comprehensive Income in the Interest and other investment income line item.

The associated changes to the liability are recorded as compensation expense within the Selling, general and administrative line item within the Company's Consolidated

Statements of Comprehensive Income.

The associated changes to the liability are

recorded as compensation expense within the Selling, general and administrative line item within the Company's Consolidated Statements of Comprehensive Income.

The net effect of any change to the asset and corresponding liability is offset and has no impact on net earnings in the Consolidated Statements of Comprehensive Income.

12 unchanged sentences

The units do not entitle the directors to the rights of holders of common stock, such as voting rights, until shares are issued.

During fiscal year 2022, 15,664 deferred stock units were credited to directors pursuant to the Director Plan with a weighted-average grant date fair value of $ 37.34 per share.

During fiscal year 2023, 25,230 deferred stock units were credited to directors pursuant to the Director Plan.

The total fair value of deferred stock units issued during fiscal year 2023 was $ 0.6 million.

At May 28, 2022, there were 15,664 deferred stock units outstanding, all of which are vested, with an aggregate intrinsic value of $ 0.5 million.

At June 3, 2023, there were 41,824 deferred stock units outstanding.

All of which are vested, with an aggregate intrinsic value of $ 0.6 million.

The weighted-average grant date fair value of deferred stock units granted during 2023 and 2022 was $ 22.73 and $ 37.34 per share, respectively.

All amounts deferred by directors pursuant to the Director Plan are fully vested and nonforfeitable.

2 unchanged sentences

Shares of common stock 27,785 23,255 3,013

Shares through the prior deferred compensation program — — 1,045

Deferred stock units pursuant to the Director Plan 25,230 15,664

21 unchanged sentences

State and local income taxes, net of federal income tax benefit ( 1.0 ) ( 4.0 ) 5.6

Non-deductible goodwill impairment — — 17.1

Gain on consolidation of equity method investments — — ( 5.5 )

Non-deductible officers' compensation 0.9 5.3 0.5

4 unchanged sentences

Research and development incentives ( 4.0 ) ( 4.8 ) ( 3.2 )

Foreign offshore income claim ( 0.7 ) ( 0.7 ) ( 1.7 )

Federal return to provision adjustments ( 4.1 ) ( 0.6 ) ( 0.4 )

Foreign tax credit ( 15.6 ) ( 8.8 ) ( 10.3 )

4 unchanged sentences

Effective tax rate 8.8 % ( 130.1 ) % 21.2 %

The tax effects and types of temporary differences that give rise to significant components of the deferred tax assets and liabilities at May 28, 2022 and May 29, 2021, are as follows:

The tax effects and types of temporary differences that give rise to significant components of the deferred tax assets and liabilities at June 3, 2023 and May 28, 2022, are as follows:

(In millions) 2023 2022

1 unchanged sentence

Compensation-related accruals $ 15.2 $ 15.3

Capitalized research and experimental costs 17.6 —

Accrued pension and post-retirement benefit obligations 0.4 7.1

5 unchanged sentences

Federal net operating loss carryforward 5.2 3.6

Federal and state nondeductible interest expense carryforward 7.9 1.0

Foreign tax net operating loss carryforwards and credits 14.2 15.9

Accrued step rent and tenant reimbursements 0.7 1.0

Interest rate swap — 3.5

Lease liability 109.6 109.0

7 unchanged sentences

Interest rate swap 14.1 8.0

Inventory related — 0.4

Right of use lease assets 99.1 100.5

5 unchanged sentences

To the extent that available evidence about the future raises doubt about the realization of these tax benefits, a valuation allowance is established.

At May 28, 2022, the Company had state and local tax NOL carry-forwards of $ 104.0 million, the state tax benefit of which is $ 6.8 million, which have expiration periods from 1 year to an unlimited term.

At June 3, 2023, the Company had state and local tax NOL carry-forwards of $ 67.7 million, the state tax benefit of which is $ 4.1 million, which have expiration periods from 1 year to an unlimited term.

The Company also had state credits with a state tax benefit of $ 0.6 million, which expire in 2 to 5 years.

For financial statement purposes, the NOL carry-forwards and state tax credits have been recognized as deferred tax assets, subject to a valuation allowance of $ 0.7 million.

At May 28, 2022, the Company had federal NOL carry-forwards of $ 17.2 million, the tax benefit of which is $ 3.6 million, which have expiration periods from 7 years to an unlimited term.

At June 3, 2023, the Company had federal NOL carry-forwards of $ 24.6 million, the tax benefit of which is $ 5.2 million, which have expiration periods from 6 years to an unlimited term.

For financial statement purposes, the NOL carry-forwards have been recognized as deferred tax assets.

At May 28, 2022, the Company had federal deferred assets of $ 1.1 million, the tax benefit of which is $ 0.2 million, which is related to an investment in a foreign joint venture.

At June 3, 2023, the Company had federal deferred assets of $ 1.3 million, the tax benefit of which is $ 0.3 million, which is related to an investment in a foreign joint venture.

For financial statement purposes, the assets have been recognized as deferred tax assets, subject to a valuation allowance of $ 0.3 million.

At May 28, 2022, the Company had foreign net operating loss carry-forwards of $ 51.9 million, the tax benefit of which is $ 13.3 million, which have expiration periods from 6 years to an unlimited term.

At June 3, 2023, the Company had foreign net operating loss carry-forwards of $ 52.6 million, the tax benefit of which is $ 13.5 million, which have expiration periods from 5 years to an unlimited term.

The Company also had foreign tax credits with a tax benefit of $ 0.7 million which have expiration periods from 8 to 10 years.

For financial statement purposes, the NOL carry-forwards and foreign tax credits have been recognized as deferred tax assets, subject to a valuation allowance of $ 11.0 million.

At May 28, 2022, the Company had foreign deferred assets of $ 2.3 million, the tax benefit of which is $ 0.6 million, which is related to various deferred taxes in Canada and Ireland as well as buildings in the United Kingdom.

At June 3, 2023, the Company had foreign deferred assets of $ 2.6 million, the tax benefit of which is $ 0.7 million, which is related to various deferred taxes in Canada, Belgium and Ireland as well as buildings in the United Kingdom.

For financial statement purposes, the assets have been recognized as deferred tax assets, subject to a valuation allowance of $ 0.7 million.

2 unchanged sentences

A significant portion of this cash was previously taxed under the U.S.

Tax Cut and Jobs Act (TCJA) one-time U.S.

tax liability on undistributed foreign earnings.

The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S, which was $ 331.3 million on May 28, 2022.

Tax Cut and Jobs Act either as one-time U.S.

tax liability on undistributed foreign earnings or GILTI.

The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S, which was $ 282.2 million on June 3, 2023.

Determination of the total amount of unrecognized deferred income tax on the remaining undistributed earnings of foreign subsidiaries is not practicable.

2 unchanged sentences

Balance at May 29, 2021 $ 2.1

Increases related to current year income tax positions 0.1

Increases related to prior year income tax positions 0.5

2 unchanged sentences

Increases related to current year income tax positions 0.1

Increases related to prior year income tax positions 0.5

Decreases related to lapse of applicable statute of limitations ( 0.6 )

Balance at May 28, 2022 $ 2.3

Decreases related to settlements ( 0.2 )

Balance at June 3, 2023 $ 1.6

The Company's effective tax rate would have been affected by the total amount of unrecognized tax benefits had this amount been recognized as a reduction to income tax expense.

1 unchanged sentence

Interest and penalties and the related liability, which are excluded from the table above, were as follows for the periods indicated:

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

Interest and penalty expense $ — $ 0.1 $ 0.1

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Interest and penalty (income) expense $ ( 0.2 ) $ — $ 0.1

Liability for interest and penalties $ 0.7 $ 0.9 $ 0.9

4 unchanged sentences

During the year, the return for fiscal year 2022 has been fully accepted by the Internal Revenue Service under the Compliance Assurance Process (CAP) and the Company is awaiting final closing documentation.

Knoll’s federal consolidated returns related to calendar years 2019 and 2020 have also been selected for examination by the Internal Revenue Service.

For the majority of the remaining tax jurisdictions, the Company is no longer subject to state and local, or non-U.S.

3 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) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Carrying value $ 1,414.4 $ 1,427.9

8 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 May 28, 2022 and May 29, 2021:

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Financial Assets NAV Quoted Prices With Other Observable Inputs (Level 2) NAV Quoted Prices With Other Observable Inputs (Level 2)

1 unchanged sentence

Money market funds $ 17.3 $ — $ 31.8 $ —

Mutual funds - equity — — — 0.8

Foreign currency forward contracts — 1.3 — 0.4

4 unchanged sentences

Total $ — $ 1.8 $ — $ 1.0

In connection with the acquisition of Knoll, the Company acquired a contingent obligation related to Knoll's acquisition of Fully.

During the third quarter of 2022 the Company paid the $ 10.0 million obligation in full.

The following describes the methods the Company uses to estimate the fair value of financial assets and liabilities recorded in other comprehensive income, which have not significantly changed in the current period:

Mutual funds-fixed income — The Company's fixed-income securities primarily include fixed income mutual funds and government obligations.

These investments are recorded at fair value using quoted prices for similar securities.

Interest rate swap agreements — The value of the Company's interest rate swap agreements is determined using a market approach based on rates obtained from active markets.

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 May 28, 2022 and May 29, 2021.

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 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)

Mutual funds - fixed income Short-term investments $ — $ 6.9

Interest rate swap agreement Other noncurrent assets $ 59.9 $ 31.9

3 unchanged sentences

Total $ 3.0 $ —

During the third quarter of 2022, the fixed income mutual funds and equity mutual funds were dissolved and converted to cash.

The following is a summary of the carrying and market values of the Company's fixed income mutual funds and equity mutual funds as of May 29, 2021:

(In millions) Cost Unrealized Gain/(Loss) Market Value

Mutual funds - fixed income $ 6.9 $ — $ 6.9

Mutual funds - equity 0.5 0.3 0.8

Total $ 7.4 $ 0.3 $ 7.7

The cost of securities sold is based on the specific identification method;

2 unchanged sentences

Accordingly, the investments are recorded within Current Assets within the Consolidated Balance Sheets.

The cost of securities sold is based on the specific identification method;

realized gains and losses resulting from such sales are included in the Consolidated Statements of Comprehensive Income within Other expense (income), net.

The Company reviews its investment portfolio for any unrealized losses that would be deemed other-than-temporary and requires the recognition of an impairment loss in earnings.

3 unchanged sentences

If conditions within individual markets, industry segments, or macro-economic environments deteriorate, the Company could incur future impairments.

The Company views its equity and fixed income mutual funds as available for use in its current operations.

Accordingly, the investments are recorded within Current Assets within the Consolidated Balance Sheets.

Derivative Instruments and Hedging Activities

2 unchanged sentences

Under this program, the Company's strategy is to have increases or decreases in our foreign currency exposures offset by gains or losses on the foreign currency forward contracts to mitigate the risks and volatility associated with foreign currency transaction gains or losses.

These foreign currency exposures typically arise from net liability or asset exposures in non-functional currencies on the

balance sheets of our foreign subsidiaries.

These foreign currency exposures typically arise from net liability or asset exposures in non-functional currencies on the balance sheets of our foreign subsidiaries.

These foreign currency forward contracts generally settle within 30 days and are not used for trading purposes.

1 unchanged sentence

Accordingly, we record the fair value of these contracts as of the end of the reporting period in the Consolidated Balance Sheets with changes in fair value recorded within the Consolidated Statements of Comprehensive Income.

The balance sheet classification for the fair values of these forward contracts is to Other current assets for unrealized gains and to Other accrued liabilities for unrealized losses.

The Consolidated Statements of Comprehensive Income classification for the fair values of these forward contracts is to Other expense (income), net, for both realized and unrealized gains and losses.

The balance sheet classification for the fair values of these forward contracts is Other current assets for unrealized gains and Other accrued liabilities for unrealized losses.

The Consolidated Statements of Comprehensive Income classification for the fair values of these forward contracts is to Other (income) expense, net, for both realized and unrealized gains and losses.

The notional amounts of the forward contracts held to purchase and sell U.S.

dollars in exchange for other major international currencies were $ 54.1 million and $ 61.9 million as of May 28, 2022 and May 29, 2021, respectively.

The notional amounts of the foreign currency forward contracts held to purchase and sell British pound sterling in exchange for other major international currencies were £ 43.1 million and £ 44.5 million as of May 28, 2022 and May 29, 2021, respectively .

dollars in exchange for other major international currencies were $ 99.5 million and $ 54.1 million as of June 3, 2023 and May 28, 2022, respectively.

The notional amounts of the foreign currency forward contracts held to purchase and sell British pound sterling in exchange for other major international currencies were £ 7.5 million and £ 43.1 million as of June 3, 2023 and May 28, 2022, respectively .

The Company also has other forward contracts related to other currency pairs at varying notional amounts.

1 unchanged sentence

The Company enters into interest rate swap agreements to manage its exposure to interest rate changes and its overall cost of borrowing.

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

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.

2 unchanged sentences

The interest rate swap is for an aggregate notional amount of $ 150.0 million with a forward start date of January 3, 2018 and a termination date of January 3, 2028.

As a result of the transaction, the Company effectively converted indebtedness anticipated to be borrowed on the Company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 1.949 % fixed interest rate plus applicable margin under the agreement as of the forward start date.

See Note 6 for information on the replacement of LIBOR with SOFR in our credit agreement.

In June 2017, the Company entered into an additional interest rate swap agreement.

As a result of the transaction, the Company effectively converted the interest rate on indebtedness anticipated to be borrowed on the Company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 1.949 % fixed interest rate plus applicable margin as of the forward start date.

The swap agreement was amended in February 2023 for each calculation period beginning on February 3, 2023, and thereafter, to replace the LIBOR-based floating interest rate with a Term SOFR rate, and a 1.910 % modified fixed interest rate.

In June 2017, the Company entered into a second interest rate swap agreement.

The interest rate swap is for an aggregate notional amount of $ 75.0 million with a forward start date of January 3, 2018 and a termination date of January 3, 2028.

As a result of the transaction, the Company effectively converted the Company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 2.387 % fixed interest rate plus applicable margin under the agreement as of the forward start date.

As a result of the transaction, the Company effectively converted the interest rate on indebtedness anticipated to be borrowed on the Company’s revolving line of credit up to the notional amount from a LIBOR-based floating interest rate plus applicable margin to a 2.387 % fixed interest rate plus applicable margin as of the forward start date.

In January 2022, the Company entered into a third interest rate swap agreement.

1 unchanged sentence

The interest rate swap locked in the Company’s interest rate on the forecasted outstanding borrowings of $ 575.0 million at 1.689 % exclusive of the credit spread on the variable rate debt.

The Company effectively will convert LIBOR-based floating interest rate plus applicable margin indebtedness to a 1.689 % fixed interest rate plus applicable margin under the agreement as of the forward start date.

The interest rate swaps were designated cash flow hedges at inception and the facts and circumstances of the hedged relationship remains consistent with the initial quantitative effectiveness assessment in that the hedged instruments remain an effective accounting hedge as of May 28, 2022.

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 1.689 % fixed interest rate and adjustment % plus applicable margin as of the forward start date.The swap agreement was amended in February 2023 for each calculation period beginning on January 31, 2023, and thereafter, to replace the LIBOR-based floating interest rate with a Term SOFR rate, and a 1.650 % modified fixed interest rate.

In February 2023, the Company entered into a fourth 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.

"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.

1 unchanged sentence

The interest rate swap agreements are assessed for hedge effectiveness on a quarterly basis.

(In millions) Notional Amount Forward Start Date Termination Date Effective Fixed Interest Rate

September 2016 Interest Rate Swap $ 150.0 January 3, 2018 January 3, 2028 1.949 %

June 2017 Interest Rate Swap $ 75.0 January 3, 2018 January 3, 2028 2.387 %

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 margins to an effective fixed rate plus applicable margin under the agreements as of the forward start date.

(In millions) Notional Amount Forward Start Date Amendment Effective Date Termination Date Effective Fixed Interest Rate

September 2016 Interest Rate Swap $ 150.0 January 3, 2018 February 3, 2023 January 3, 2028 1.910 %

June 2017 Interest Rate Swap $ 75.0 January 3, 2018 February 3, 2023 January 3, 2028 2.348 %

January 2022 Interest Rate Swap $ 575.0 January 31, 2022 January 31, 2023 January 29, 2027 1.650 %

March 2023 Interest Rate Swap $ 150.0 March 3, 2023 none January 3, 2029 3.950 %

As of June 3, 2023, the swaps above effectively converted indebtedness up to the notional amounts from a SOFR-based floating interest rate plus 0.11448 % plus applicable margin to an effective fixed interest rate plus 0.11448 % plus applicable margin under the terms of our Credit Agreement.

Effective Fixed Interest Rates include the rates amended effective January 31, 2023, or February 3, 2023, for the first three swaps included in the chart above.

For fiscal 2023, 2022 and 2021, there were no gains or losses recognized against earnings for hedge ineffectiveness.

1 unchanged sentence

The effects of non-designated derivatives on the consolidated financial statements were as follows for the fiscal years ended 2023 and 2022 (amounts presented exclude any income tax effects ):

(In millions) Balance Sheet Location May 28, 2022 May 29, 2021

(In millions) Balance Sheet Location June 3, 2023 May 28, 2022

Non-designated derivatives:

4 unchanged sentences

(1) Designated derivative and their balance sheet locations are located in above table within financial assets and liabilities measured at fair value.

(In millions) Statement of Comprehensive Income Location May 28, 2022 May 29, 2021 May 30, 2020

(Loss) gain recognized on foreign currency forward contracts Other expense (income), net $ 3.3 $ 0.8 $ ( 1.1 )

(In millions) Statement of Comprehensive Income Location June 3, 2023 May 28, 2022 May 29, 2021

Loss recognized on foreign currency forward contracts Other expense (income), net $ 4.8 $ 3.3 $ 0.8

The gain/(loss) recorded, net of income taxes, in Other comprehensive loss for the effective portion of designated derivatives was as follows for the periods presented below:

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Interest rate swap $ 4.7 $ 41.4 $ 12.6

Reclassified from Accumulated other comprehensive loss into earnings within Interest expense for the fiscal years ended 2022, 2021, and 2020 were gains of $ 6.9 million and $ 4.5 million and of $ 0.8 million, respectively.

Reclassified from Accumulated other comprehensive loss into earnings within Interest expense for the fiscal year ended 2023, was a loss of $ 14.3 million and in fiscal years ended 2022, and 2021 were gains of $ 6.9 million and of $ 4.5 million, respectively.

Pre-tax gains expected to be reclassified from Accumulated other comprehensive loss into earnings during the next twelve months are $ 28.2 million.

10 unchanged sentences

This represents a level 3 fair value measurement.

Changes in the Company's redeemable noncontrolling interest in HAY for the year ended May 28, 2022 are as follows:

(In millions) May 28, 2022

Changes in the Company's redeemable noncontrolling interest in HAY for the year ended June 3, 2023 are as follows:

(In millions) June 3, 2023

Beginning Balance $ 106.9

4 unchanged sentences

Ending Balance $ 107.6

The following table summarizes the valuation of our assets measured at fair value on a non-recurring basis as of May 28, 2022:

(In millions) May 28, 2022

Indefinite-lived intangible assets $ 501.0

Based on the quantitative impairment assessment performed in fiscal year 2020, the carrying value certain indefinite-lived intangible assets exceeded their fair value, resulting in an impairment charge of $ 53.3 million.

There were no impairment charges in fiscal 2021 or 2022.

See Note 1 to the Consolidated Financial Statements for additional information.

For further information on the fair value assessment of intangible assets and impairment charge recorded in the year ended June 3, 2023, refer to "Goodwill and Indefinite-lived Intangible Assets" within Note 1 to the Consolidated Financial Statements .

Commitments and Contingencies

9 unchanged sentences

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

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Accrual Balance — beginning $ 73.2 $ 60.1 $ 59.2

8 unchanged sentences

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

As of May 28, 2022, the Company had a maximum financial exposure related to performance bonds of approximately $ 6.4 million.

As of June 3, 2023, the Company had a maximum financial exposure related to performance bonds of approximately $ 8.9 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 h as been recorded in respect to these bonds as of either May 28, 2022 or May 29, 2021.

Accordingly, no liability h as been recorded in respect to these bonds as of either June 3, 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 May 28, 2022, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $ 15.4 million, all of which is considered usage against the Company's revolving line of credit.

As of June 3, 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 as of May 28, 2022 and May 29, 2021.

Accordingly, no liability has been recorded as of June 3, 2023 and May 28, 2022.

Contingencies

6 unchanged sentences

Below is a summary of the change in reportable segments.

• The activities related to the manufacture and sale of furniture products direct to consumers and to third-party retailers that previously resided within the International Contract segment moved to the Global Retail segment.

• The operations associated with the design, manufacture and sale of furniture products for work-related settings in Latin America moved from the International Contract segment to the North America Contract segment to form a new Americas Contract segment.

• Operations of the DWR Contract business, a division of DWR that sells design furnishings and accessories for use in work-related settings, moved into the Americas Contract segment.

The Company's reportable segments now consist of Americas Contract, International Contract, Global Retail, and Knoll.

Intersegment sales are eliminated within each segment, with the exception of sales to and from the Knoll segment, which are presented as intersegment eliminations.

Due to the change in reportable segments, the Company reviewed each of the new reporting units for impairment and concluded it to be more likely than not that their estimated fair values are greater than their respective carrying values.

The Americas Contract segment includes the operations associated with the design, manufacture and sale of furniture and textile products for work-related settings, including office, healthcare, and educational environments, throughout North America and South America.

In addition to the Herman Miller brand and the DWR Contract business, this segment includes the operations associated with the design, manufacture and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles, Herman Miller Healthcare, naughtone and Herman Miller Collection products.

The International Contract segment includes the operations associated with the design, manufacture and sale of furniture products, primarily for work-related settings in Europe, the Middle East and Africa ("EMEA") and Asia-Pacific.

The Global Retail segment includes 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, DWR studios and HAY stores.

The Knoll segment includes the global operations associated with the design, manufacture, and sale of furniture products within the Knoll constellation of brands.

• The reportable segments now consist of three segments:

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 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.

• The activities related to the manufacture and sale of furniture products in geographies other than the Americas for the Knoll and Muuto brands have been moved to the International Contract & Specialty segment.

• The activities related to manufacture and sale of products for the Maharam brand have been moved from the Americas Contract segment to the International Contract & Specialty segment, along with the activities of Holly Hunt, Spinneybeck, Knoll Textiles, and Edelman, which were previously reported within the Knoll segment.

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 & 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 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.

The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs.

1 unchanged sentence

The accounting policies of the operating segments are the same as those of the Company.

Subsequent to the end of fiscal 2022, the Company implemented an organizational change that will result in a change in our reportable segments.

Beginning in the first quarter of fiscal 2023, the Company will recast the historical results in reflection of the change.

Below is a summary of the change:

• The reportable segments will now consist of three segments:

Americas Contract, International Contract & Specialty and Global 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 currently reside within the Knoll segment will move to the Global Retail segment.

• The activities related to the manufacture and sale of furniture products for work-related settings in the Americas for the Knoll, Muuto and Datesweiser brands that currently reside within the Knoll segment will move to the Americas Contract segment.

• The activities related to the manufacture and sale of furniture products for work-related settings in geographies other than the Americas for the Knoll and Muuto brands that currently reside within the Knoll segment will move to the International Contract & Specialty segment.

• The activities related to manufacture and sale of products for the Maharam brand will move from the Americas Contract segment to the International Contract & Specialty segment, along with the activities of the Holly Hunt, Spinneybeck, Knoll Textiles and Edelman brands, which currently reside within the Knoll segment.

The performance of the operating segments is evaluated by the Company's management using various financial measures.

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

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Americas Contract $ 2,026.1 $ 1,929.1 $ 1,234.6

International Contract 483.2 399.5 345.9

International Contract and Specialty 1,017.3 928.5 479.6

Global Retail 1,043.7 1,088.4 750.9

Knoll 1,188.5 — —

Intersegment Elimination ( 27.4 ) — —

Total $ 4,087.1 $ 3,946.0 $ 2,465.1

1 unchanged sentence

Americas Contract $ 87.7 $ 104.5 $ 48.4

International Contract 13.2 11.2 10.4

International Contract and Specialty 33.4 52.3 20.2

Global Retail 34.0 33.8 18.6

Knoll 103.2 — —

Corporate — — —

2 unchanged sentences

Americas Contract $ 99.6 $ ( 24.0 ) $ 97.2

International Contract 59.3 48.5 ( 0.4 )

International Contract and Specialty 98.6 69.9 49.4

Global Retail ( 15.5 ) 134.5 138.2

Knoll ( 57.6 ) — —

Corporate ( 60.4 ) ( 140.6 ) ( 52.3 )

2 unchanged sentences

Americas Contract $ 52.4 $ 52.5 $ 40.8

International Contract 8.9 9.1 6.2

International Contract and Specialty 15.6 17.8 11.3

Global Retail 15.3 24.4 7.7

Knoll 23.0 — —

Total $ 83.3 $ 94.7 $ 59.8

Americas Contract $ 528.4 $ 530.1 $ 160.7

International Contract 82.5 91.3 84.5

International Contract and Specialty 303.0 304.3 111.2

Global Retail 390.3 $ 391.8 92.3

Knoll 883.6 — —

Total $ 1,221.7 $ 1,226.2 $ 364.2

5 unchanged sentences

However, certain corporate costs, generally considered the result of isolated business decisions, are not subject to allocation and are evaluated separately from the rest of the regular ongoing business operations.

The Company's product offerings consist primarily of office furniture systems, seating, freestanding furniture, storage and casegoods.

The Company's product offerings consist primarily of furniture systems, seating, freestanding furniture, storage, casegoods, textiles, architectural and acoustical products.

These product offerings are marketed, distributed and managed primarily as a group of similar products on an overall portfolio basis.

The following is a summary of net sales estimated by product category for the years indicated:

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Workplace $ 1,559.7 $ 1,484.4 $ 855.1

2 unchanged sentences

226.7 232.2 135.5

Restructuring ( 27.4 ) — —

Total $ 4,087.1 $ 3,946.0 $ 2,465.1

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

In fiscal year 2022 certain products were reclassified primarily from the Performance Seating to the Lifestyle category, to align with a change in management’s internal reporting and management of the products.

Prior year periods have been restated to reflect these changes, for comparability.

Sales by geographic area are based on the location of the customer.

Long-lived assets consist of long-term assets of the Company, excluding financial instruments, deferred tax assets and long-term intangibles.

The following is a summary of geographic information for the years indicated.

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

United States $ 2,818.4 $ 1,728.9 $ 1,795.8

International 1,127.6 736.2 690.8

Total $ 3,946.0 $ 2,465.1 $ 2,486.6

Long-lived assets:

United States $ 531.2 $ 311.1 $ 306.7

International 144.9 70.6 59.6

Total $ 676.1 $ 381.7 $ 366.3

The Company approximates that no single dealer accounted for more than 2% of the Company's net sales in the fiscal year ended May 28, 2022.

The Company estimates that the largest single end-user customer accounted for $ 114.4 million, $ 113 million and $ 122.9 million of the Company's net sales in fiscal 2022, 2021 and 2020, respectively.

This represents approximately 3 % of the Company's net sales in fiscal 2022 and 5 % in 2021 and 2020.

The Company's ten largest customers in the aggregate accounted for approximately 11 % of net sales in fiscal 2022 and 17 % of net sales in fiscal 2021 and 18 % of net sales in fiscal 2020.

Approximately 2 % of the Company's employees are covered by collective bargaining agreements.

Accumulated Other Comprehensive Loss

The following table provides an analysis of the changes in accumulated other comprehensive loss for the years indicated:

(In millions) May 28, 2022 May 29, 2021 May 30, 2020

(In millions) June 3, 2023 May 28, 2022 May 29, 2021

Cumulative translation adjustments at beginning of period $ ( 93.9 ) $ ( 3.9 ) $ ( 56.0 )

2 unchanged sentences

Pension and other post-retirement benefit plans at beginning of period ( 36.9 ) ( 50.4 ) ( 59.2 )

Other comprehensive income (loss) before reclassifications (net of tax of ($ .02 ), ($ .03 ), and $ 3.5 )

Other comprehensive income before reclassifications (net of tax of ($ 3.50 ), ($ .02 ), and ($ 0.03 ))

14.8 13.5 5.3

2 unchanged sentences

Net reclassifications ( 1.7 ) — 3.5

Net current period other comprehensive income (loss) 13.5 8.8 ( 14.2 )

Net current period other comprehensive income 13.1 13.5 8.8

Balance at end of period ( 23.8 ) ( 36.9 ) ( 50.4 )

Interest rate swap agreement at beginning of period 23.7 ( 10.8 ) ( 18.9 )

Other comprehensive income (loss) before reclassifications (net of tax of ($ 11.6 ), ($ 2.6 ), and $ 5.8 )

Other comprehensive income before reclassifications (net of tax of ($ 6.2 ), ($ 11.6 ), and ($ 2.6 ))

4.7 41.4 12.6

1 unchanged sentence

Net reclassifications 14.3 ( 6.9 ) ( 4.5 )

Net current period other comprehensive income (loss) 34.5 8.1 ( 18.0 )

Net current period other comprehensive income 19.0 34.5 8.1

Balance at end of period 42.7 23.7 ( 10.8 )

Unrealized holding gains on securities at beginning of period — — 0.1

Cumulative effect of accounting change — — —

Other comprehensive (loss) income before reclassifications — — ( 0.1 )

4 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 and non-cash severance, including accelerated equity award compensation expense.

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

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 incurred 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.

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

3 unchanged sentences

Following the acquisition of Knoll, 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 costs of approximately $ 100 million to $ 120 million, comprised of the following categories:

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

• Severance and employee benefit costs associated with plans to integrate the Company's operating structure, resulting in workforce reductions.

These costs will primarily include:

severance and employee benefits (cash severance and 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.

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 the reorganization and consolidation of facilities 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 acquisition.

For the year ended June 3, 2023, the Company incurred $ 18.0 million of costs related to the Knoll Integration including:

$ 3.6 million of severance and employee benefit costs, $ 5.9 million of exit and disposal costs related to the consolidation of facilities, and $ 8.5 million of other integration costs.

For the year ended May 28, 2022, the Company incurred $ 107.9 million of costs related to the Knoll Integration including:

1 unchanged sentence

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 fiscal year ended May 28, 2022:

GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the fiscal year ended June 3, 2023:

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

3 unchanged sentences

Non-cash costs 0.2 — 0.2

May 28, 2022 $ 1.4 $ — $ 1.4

The Company paid a substantial portion of the liability for the Knoll Integration in fiscal year 2022.

June 3, 2023 $ 2.9 $ — $ 2.9

The Company expects that a substantial portion of the liability for the Knoll Integration as of June 3, 2023, will be paid in the first quarter of fiscal year 2024.

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

Twelve Months Ended

(In millions) May 28, 2022 May 29, 2021

(In millions) June 3, 2023 May 28, 2022

Americas Contract $ 9.7 $ 21.9

International Contract 1.1 —

International Contract and Specialty 2.5 —

Global Retail 0.2 —

Corporate 5.6 86.0

Total $ 18.0 $ 107.9

Restructuring Activities:

During the fourth quarter of fiscal 2018, the Company announced a facilities consolidation plan related to its International Contract segment.

This impacted certain office and manufacturing facilities in the United Kingdom and C hina.

The plan was expected to generate c ost savings of approximately $ 3 million.

To date, the Company recognized restructuring and impairment expenses of $ 5.9 million, with a net credit of $ 1.9 million recognized in fiscal 2021 and the remainder in fiscal 2020, 2019, and 2018.

These expenses related to the facilities consolidation plan, comprised primarily of an asset impairment recorded against an office building in the United Kingdom that was vacated and the consolidation of the Company's manufacturing facilities in China.

No future restructuring costs related to the plan are expected as the plan is substantially complete.

The office building and related assets in China were sold in the first quarter of fiscal 2021, resulting in a gain of approximately $ 3.4 million.

T he office building and related assets in the United Kingdom were sold in the second quarter of fiscal 2021, resulting in a nominal gain.

Both of these gains are included within Restructuring expense in the Consolidated Statements of Comprehensive Income.

In the second quarter of fiscal 2020, the Americas Contract segment initiated restructuring discussions with labor unions related to its Healthcare operation in Wisconsin.

To date, the Company has recorded approximately $ 3.1 million in pre-tax restructuring expense related to this plan, with a net credit of $ 0.1 million recognized in fiscal 2021 and the remainder in fiscal 2020.

The plan is complete and no future costs related to this plan are expected.

In the second quarter of fiscal 2020, the Company initiated a reorganization of the Global Sales and Product teams.

The reorganization activities occurred primarily in the North America business with additional costs incurred internationally.

To date, the Company has recorded a total of $ 2.6 million in pre-tax restructuring expense related to this plan.

The reorganization is complete and no future costs related to this plan are expected.

In the third quarter of fiscal 2020, the Company announced a reorganization of the Global Retail segment's leadership team.

The Company recognized pre-tax severance and employee related restructuring expense of $ 2.2 million related to the plan.

No material future restructuring costs related to the plan are expected as the plan is substantially complete.

The following table provides an analysis of the changes in the restructuring costs reserve for the above plans for the fiscal years ended May 29, 2021 and May 28, 2022:

(In millions) Severance and Employee-Related Exit or Disposal Activities Total

May 30, 2020 $ 5.9 $ 0.8 $ 6.7

Restructuring Costs ( 1.7 ) ( 2.0 ) ( 3.7 )

Amounts Paid ( 3.3 ) ( 0.1 ) ( 3.4 )

Other* — 1.9 $ 1.9

May 29, 2021 $ 0.9 $ 0.6 $ 1.5

Restructuring Costs — — —

Amounts Paid ( 0.5 ) — ( 0.5 )

2023 Restructuring Plan

During fiscal year 2023, the Company announced a series of actions that relate to the 2023 restructuring plan ("2023 restructuring plan") to reduce expenses.

These restructuring activities included voluntary and involuntary reductions in workforces and charges incurred in connection with the Fully decision.

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

For the year ended June 3, 2023, the Company incurred $ 34.0 million of costs related to the 2023 restructuring plan comprised of $ 27.9 million of severance and employee benefit costs and $ 6.1 million of non-impairment charges related to the closure of the Fully business.

The restructuring plan is complete and no future costs related to this plan are expected.

The following table provides an analysis of the changes in liability balance for the 2023 restructuring plan 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 fiscal year ended June 3, 2023:

(In millions) Severance and Employee-Related Exit and Disposal Activities Total

May 28, 2022 $ — $ — $ —

*This represents the gains on the sales of office buildings and related assets in China and the United Kingdom offset by other non-cash charges.

The gains and other non-cash charges were recorded as restructuring cost, but do not impact the restructuring reserve.

In the fourth quarter of fiscal 2020, the Company announced a restructuring plan (“May 2020 restructuring plan") to substantially reduce expenses in response to the impact of the COVID-19 pandemic and related restrictions.

These activities included voluntary and involuntary reductions in its North American and international workforces.

Combined, these actions resulted in the elimination of approximately 400 full-time positions throughout the Company in various businesses and functions.

As the result of these actions, the Company projects an annualized expense reduction of approximately $ 40 million.

To date, the Company incurred severance and related charges of $ 18.7 million with $ 3.4 million recognized in fiscal 2021 and the remainder in fiscal 2020.

No material future restructuring costs related to the plan are expected.

The following table provides an analysis of the changes in the restructuring cost reserve for the May 2020 restructuring plan for the fiscal year ended May 28, 2022:

(In millions) Severance and Employee-Related

Beginning Balance $ 1.0

Restructuring Costs 27.9 6.1 34.0

Amounts Paid ( 20.6 ) ( 6.1 ) ( 26.7 )

Ending Balance $ 0.2

During fiscal 2022, the Company incurred no restructuring costs separate from the Knoll Integration costs discussed above.

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

(In millions) May 28, 2022 May 29, 2021

America's Contract $ — $ 3.8

International Contract — ( 1.1 )

Global Retail — —

June 3, 2023 $ 7.3 $ — $ 7.3

The Company expects that remaining liability for the 2023 restructuring plan as of June 3, 2023, will be paid in fiscal year 2024.

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

(In millions) June 3, 2023 May 28, 2022

Americas Contract $ 22.8 $ —

International Contract & Specialty 1.3 —

Corporate — —

Total $ 34.0 $ —

1 unchanged sentence

During the year ended May 28, 2022, the Company entered into long-term 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 long-term notes receivable was $ 1.2 million as of May 28, 2022 and represents the Company’s maximum exposure to loss.

The carrying value of these long-term notes receivable was $ 6.3 million and $ 1.2 million as of June 3, 2023 and May 28, 2022 respectively and represents the Company’s maximum exposure to loss.

The Company is not deemed to be the primary beneficiary for any of these variable interest entities as each dealer controls the activities that most significantly impact the entity’s economic performance, including sales, marketing, and operations.

The Company previously held a long-term note receivable with a third-party dealer that was deemed to be a variable interest in a variable interest entity.

The carrying value of this long-term note receivable was $ 1.2 million as of May 29, 2021 and was paid in full during the quarter ended August 28, 2021.

Quarterly Financial Data (Unaudited)

Set forth below is a summary of the quarterly operating results on a consolidated basis for the years ended May 28, 2022, May 29, 2021, and May 30, 2020.

(In millions, except per share data) (1)

2022 Net sales $ 789.7 $ 1,026.3 $ 1,029.5 $ 1,100.5

Gross margin 277.7 353.0 339.5 382.5

Net earnings attributable to MillerKnoll, Inc.

( 61.3 ) ( 1.7 ) 14.4 21.5

Earnings per share-basic

( 0.92 ) ( 0.02 ) 0.19 0.28

Earnings per share-diluted

( 0.92 ) ( 0.02 ) 0.19 0.28

2021 Net sales $ 626.8 $ 626.3 $ 590.5 $ 621.5

Gross margin 249.8 244.4 230.8 226.1

Net earnings attributable to MillerKnoll, Inc.

72.8 51.4 41.5 8.9

Earnings per share-basic 1.24 0.87 0.70 0.15

Earnings per share-diluted 1.23 0.86 0.70 0.15

2020 Net sales $ 670.9 $ 674.2 $ 665.7 $ 475.7

Gross margin 246.2 255.7 243.5 165.9

Net earnings attributable to MillerKnoll, Inc.

48.3 78.7 37.9 ( 173.6 )

Earnings per share-basic 0.82 1.33 0.64 ( 2.94 )

Earnings per share-diluted 0.81 1.32 0.64 ( 2.94 )

(1) Effective May 30, 2021, 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"), which were our only operations that were using the LIFO cost method.

All prior periods presented have been retrospectively adjusted to apply the effects of the change.

(2) For some line items, the sum of the quarters does not equal the annual balance reflected in the Consolidated Statements of Comprehensive Income due to rounding associated with the calculations on an individual quarter basis.

Management's Report on Internal Control over Financial Reporting

5 unchanged sentences

Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of May 28, 2022, based on the original framework in Internal Control — Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our management believes the Company's internal control over financial reporting was effective as of May 28, 2022.

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of June 3, 2023, based on the original framework in Internal Control — Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our management believes the Company's internal control over financial reporting was effective as of June 3, 2023.

KPMG LLP has issued an attestation report on the effectiveness of our internal control over financial reporting, which is included herein.

8 unchanged sentences

We have audited the accompanying consolidated balance sheets of MillerKnoll, Inc.

and subsidiaries (the Company) as of May 28, 2022 and May 29, 2021, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended May 28, 2022, and the related notes and financial statement schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of May 28, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of May 28, 2022 and May 29, 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended May 28, 2022, in conformity with U.S.

and subsidiaries (the Company) as of June 3, 2023 and May 28, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended June 3, 2023, and the related notes and financial statement schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of June 3, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 3, 2023 and May 28, 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended June 3, 2023, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 28, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has elected to change its method of accounting for the cost of certain inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method as of June 1, 2019.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 3, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

14 unchanged sentences

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

2 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of acquired intangible assets - Knoll acquisition

As discussed in Note 3 to the consolidated financial statements, the Company completed the acquisition of Knoll, Inc.

on July 19, 2021, for total consideration of $1,887.3 million.

Accordingly, the assets acquired and liabilities assumed were recognized based on their acquisition date fair values, including identified intangible assets of $756.6 million.

The Company primarily used valuation techniques under the income approach to determine the fair value of the identified intangible assets.

We identified the evaluation of the fair value of certain trade name and customer relationship intangible assets acquired in the Knoll acquisition as a critical audit matter because of the significant judgments made by management to estimate the fair values and the sensitivity of the calculated fair values to possible changes in the significant assumptions.

Additionally, the audit effort associated with the evaluation of the fair value of these certain acquired intangible assets required specialized skills and knowledge.

Specifically, subjective and challenging auditor judgment was required to evaluate the following significant assumptions:

• Forecasted revenue growth rates

• Estimated royalty rates

• Discount rates

Customer relationships

• Forecasted revenue growth rates

• Forecasted operating margins

• Discount rates

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill impairment assessment

As discussed in Note 1 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1,221.7 million as of June 3, 2023, of which $390.3 million was related to the Global Retail reporting unit.

Goodwill is tested for impairment annually in the fourth quarter of each fiscal year, or more frequently, when events or changes in circumstances indicate that the fair value of a reporting unit has declined below its carrying value.

To estimate the fair value of the Global Retail reporting unit, the Company utilized a weighting of the income approach and the market approach that used observable comparable company information.

We identified the evaluation of goodwill for impairment for the Global Retail reporting unit as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the selection of forecasted revenue growth rates, operating margins, and the discount rate used in the income approach.

Additionally, the audit effort associated with the evaluation of the Company’s discount rate involved the use of valuation professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s acquisition-date valuation process, including controls over the development and selection of significant assumptions related to the valuation of these certain intangible assets.

We evaluated the reasonableness of management’s forecasted revenue growth rates and operating margins by comparing the forecasts to historical revenue growth rates and operating margins, as well as external competitor and industry data.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s determination of the fair value of the Global Retail reporting unit, including controls over the selection of forecasted revenue growth rates, operating margins, and the discount rate.

We performed sensitivity analyses to assess the impact of reasonably possible changes to the forecasted revenue growth rates, operating margins, and discount rate assumptions on the reporting unit fair values.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate by comparing the Company’s inputs to the discount rate to publicly available data for comparable entities and assessing the resulting discount rate.

Knoll tradename impairment assessment

As discussed in Note 1 to the consolidated financial statements, the indefinite-lived intangible asset balance as of June 3, 2023 was $153.3 million related to the Knoll tradename.

During the fourth quarter of the year ended June 3, 2023, the Company recorded an impairment loss of $19.7 million related to the Knoll tradename.

Indefinite-lived intangible assets are tested for impairment annually in the fourth quarter, or more frequently, when events or changes in circumstances indicate that the fair value of an indefinite-lived intangible asset has declined below its carrying value.

To estimate the fair value of the indefinite-lived intangible assets, the Company utilizes the relief from royalty method.

We identified the evaluation of the Knoll tradename for impairment as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the selection of forecasted revenue growth rates, discount rate, and royalty rate used to estimate the fair value of the Knoll tradename.

Additionally, the audit effort associated with the evaluation of the Company’s discount rate and royalty rate required the use of valuation professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s determination of the fair value of the Knoll tradename, including controls over the selection of forecasted revenue growth rates, discount rate, and royalty rate.

We evaluated the reasonableness of management’s forecasted revenue growth rates by comparing the forecasts to historical revenue growth rates, considering industry conditions and growth plans.

We performed sensitivity analyses to assess the impact of reasonably possible changes to the forecasted revenue growth rates, discount rate, and royalty rate assumptions on the fair value of the tradename.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s royalty rates by comparing the selected royalty rates to the forecasted operating margins of the Knoll entities and publicly available data for comparable licensing agreements

• evaluating the Company’s discount rates by comparing the Company’s inputs to the discount rates to publicly available data for comparable entities.

• evaluating the Company’s discount rate by comparing the Company’s inputs to the discount rate to publicly available data for comparable entities and assessing the overall discount rate;

• evaluating the Company’s royalty rate by comparing the selected royalty rate to the royalty rate selected at the acquisition date and publicly available data for comparable licensing agreements in assessing the overall royalty rate.

We have served as the Company’s auditor since 2019.

3 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data