What changed in this filing

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Item 1. Financial Statements

2023-10-11 compared with 2023-04-12 · 157 added, 272 removed, 481 unchanged (47% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

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

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

(Unaudited) September 2, 2023 September 3, 2022

Net sales $ 917.7 $ 1,078.8

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Selling, general and administrative 290.5 296.9

Impairment charges 21.5 — 21.5 —

Restructuring expense 5.2 0.5

1 unchanged sentence

Total operating expenses 317.8 321.3

Operating earnings (loss) 21.2 29.2 110.7 ( 17.2 )

Operating earnings 40.3 50.8

Interest expense 19.2 16.7

Interest and other investment income 2.2 0.4

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

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

Income tax expense (benefit) 0.5 3.6 11.1 ( 9.8 )

Other expense, net 2.2 0.8

Earnings before income taxes and equity income 21.1 33.7

Income tax expense 5.1 6.3

Equity income from nonconsolidated affiliates, net of tax 0.1 —

Net earnings (loss) 1.1 16.2 46.0 ( 43.0 )

Net earnings attributable to redeemable noncontrolling interests 0.7 1.8 3.8 5.7

Net earnings (loss) attributable to MillerKnoll, Inc.

Net earnings 16.1 27.4

Net (loss) earnings attributable to redeemable noncontrolling interests ( 0.6 ) 1.6

Net earnings attributable to MillerKnoll, Inc.

$ 16.7 $ 25.8

Earnings (loss) per share - basic $ 0.01 $ 0.19 $ 0.56 $ ( 0.66 )

Earnings (loss) per share - diluted $ 0.01 $ 0.19 $ 0.56 $ ( 0.66 )

Earnings per share - basic $ 0.22 $ 0.34

Earnings per share - diluted $ 0.22 $ 0.34

Other comprehensive income (loss), net of tax

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Comprehensive income (loss) 27.7 ( 30.4 )

Comprehensive income attributable to redeemable noncontrolling interests 0.7 1.8 3.8 3.7

Comprehensive (loss) income attributable to redeemable noncontrolling interests ( 0.6 ) 1.7

Comprehensive income (loss) attributable to MillerKnoll, Inc.

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(Dollars in millions, except share data)

(Unaudited) March 4, 2023 May 28, 2022

(Unaudited) September 2, 2023 June 3, 2023

Current Assets:

Cash and cash equivalents $ 217.5 $ 223.5

Accounts receivable, net of allowances of $ 6.8 and $ 9.7

Accounts receivable, net of allowance of $ 7.4 and $ 6.4

Unbilled accounts receivable 25.1 29.4

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Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Nine Months Ended

(Unaudited) March 4, 2023 February 26, 2022

(Dollars in millions) Three Months Ended

(Unaudited) September 2, 2023 September 3, 2022

Cash Flows from Operating Activities:

Net earnings (loss) $ 46.0 $ ( 43.0 )

Net earnings $ 16.1 $ 27.4

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

2 unchanged sentences

Amortization of deferred financing costs 1.2 1.2

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

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

Deferred taxes — 0.1

Restructuring expense 5.2 0.5

Impairment 36.6 15.5

Loss on extinguishment of debt — 13.4

Decrease (increase) in current assets 73.3 ( 47.2 )

(Decrease) increase in current liabilities ( 159.1 ) 35.2

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

(Decrease) in current liabilities ( 4.8 ) ( 91.2 )

Other, net ( 3.7 ) ( 0.6 )

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Capital expenditures ( 19.9 ) ( 17.3 )

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

Proceeds from the sale of investments — 7.7

Proceeds from the sale of property and dealers — 2.8

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

3 unchanged sentences

Repayments of long-term debt ( 6.6 ) ( 6.6 )

Proceeds from issuance of debt, net of discounts — 1,007.0

Payments of deferred financing costs — ( 9.3 )

Proceeds from credit facility 153.1 401.4

Repayments of credit facility ( 212.5 ) ( 290.5 )

Payment of make whole premium on debt — ( 13.4 )

Dividends paid ( 14.2 ) ( 14.2 )

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Condensed Consolidated Statements of Stockholders' Equity

Nine Months Ended March 4, 2023

Three Months Ended September 2, 2023

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

1 unchanged sentence

(Unaudited) Shares Amount

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

Net earnings — — — 25.8 — — 25.8

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

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

Exercise of stock options 43,469 — 1.0 — — — 1.0

Restricted and performance stock units released 160,551 — 0.1 — — — 0.1

Employee stock purchase plan issuances 35,753 — 0.8 — — — 0.8

Repurchase and retirement of common stock ( 494,509 ) ( 0.1 ) ( 14.2 ) — — — ( 14.3 )

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

Other — — 0.5 0.5 — — 1.0

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

Net earnings — — — 16.0 — — 16.0

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

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

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

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

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

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

Other — — 0.2 ( 0.4 ) — — ( 0.2 )

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

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

Net earnings — — — 16.7 — — 16.7

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Repurchase and retirement of common stock ( 1,670,135 ) ( 0.3 ) ( 31.7 ) — — — ( 32.0 )

Deferred stock unit — — 0.6 — — — 0.6

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

Dividends declared ($ 0.1875 per share)

1 unchanged sentence

Other — — — — — — —

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

Nine Months Ended February 26, 2022

September 2, 2023 74,405,225 $ 14.9 $ 812.2 $ 678.7 $ ( 83.5 ) $ — $ 1,422.3

Three Months Ended September 3, 2022

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

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Net earnings — — — 25.8 — — 25.8

Other comprehensive income, net of tax — — — — ( 15.2 ) — ( 15.2 )

Stock-based compensation expense — — 15.1 — — — 15.1

Exercise of stock options 49,584 — 1.3 — — — 1.3

Restricted and performance stock units released 358,016 — — — — — —

Employee stock purchase plan issuances 19,020 — 0.7 — — — 0.7

Repurchase and retirement of common stock ( 267,522 ) — ( 11.0 ) — — — ( 11.0 )

Shares issued for the acquisition of Knoll 15,843,921 3.2 685.1 — — — 688.3

Pre-combination expense from Knoll rollover 751,907 0.2 22.4 — — — 22.6

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

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

Net earnings — — — (1.7) — — ( 1.7 )

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

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

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

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

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

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

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

NCI adjustment — — 0.5 — — — 0.5

Dividends declared ($ 0.1875 per share)

— — — ( 14.4 ) — — ( 14.4 )

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

Net earnings — — — 14.4 — — 14.4

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

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

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

2 unchanged sentences

Employee stock purchase plan issuances 35,753 — 0.8 — — — 0.8

Directors Fees 23,255 0.1 1.5 — — — 1.6

Repurchase and retirement of common stock ( 494,509 ) ( 0.1 ) ( 14.2 ) — — — ( 14.3 )

Deferred compensation plan — — — — — 0.2 0.2

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

Dividends declared ($ 0.1875 per share)

— — — ( 14.3 ) — — ( 14.3 )

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

Other — — 0.5 0.5 — — 1.0

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

See accompanying notes to Condensed Consolidated Financial Statements.

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MillerKnoll, Inc.

(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 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 4.

"Acquisitions").

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 condensed 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 change in the ticker symbol to MLKN became effective.

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

The Company's products are sold primarily through the following channels:

independent contract office furniture dealers, direct customer sales, owned and independent retailers, direct-mail catalogs, and the Company's eCommerce platforms.

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, 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®, Geiger®, HAY®, Holly Hunt®, Knoll Textiles®, Maharam®, Muuto®, NaughtOne®, and Spinneybeck®|FilzFelt®.

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

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

The accompanying unaudited Condensed Consolidated Financial Statements, taken as a whole, contain all adjustments that are of a normal recurring nature necessary to present fairly the financial position of the Company as of March 4, 2023.

Operating results for the three and nine months ended March 4, 2023 are not necessarily indicative of the results that may be expected for the year ending June 3, 2023 ("fiscal 2023").

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

Operating results for the three months ended September 2, 2023 are not necessarily indicative of the results that may be expected for the year ending June 1, 2024 ("fiscal 2024").

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

The financial statements of equity method investments are not consolidated.

Segment Reorganization

Effective as of May 29, 2022, the beginning of fiscal year 2023, the Company implemented an organizational change that resulted in a change in the reportable segments.

The Company has recast historical results to reflect this change.

See Note 15 "Operating Segments" for additional information.

The Company's fiscal year is the 52 or 53 week period ending on the Saturday closest to May 31.

The fiscal year ended May 28, 2022 ("fiscal 2022") was a 52 week period while the fiscal year ending June 3, 2023 ("fiscal 2023") will be a 53 week period.

The fiscal year ending June 1, 2024 contains 52 weeks, while fiscal year ended June 3, 2023 ("fiscal 2023") contained 53 week.

The first quarter of fiscal 2024 contained 13 weeks and the first quarter of fiscal 2023 contained 14 weeks.

Change in Accounting Principle

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

With this change

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

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

Recently Issued Accounting Standards

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Single performance obligation

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Americas Contract:

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Total $ 917.7 $ 1,078.8

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

The prior year has been restated to reflect these changes.

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

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

During the three and nine months ended March 4, 2023, the Company recognized Net sales of $ 9.9 million and $ 114.7 million respectively, related to customer deposits that were included in the balance sheet as of May 28, 2022.

During the three months ended September 2, 2023 and September 3, 2022, the Company recognized Net sales of $ 47.5 million and $ 79.1 million respectively, related to customer deposits that were included in the balance sheet as of June 3, 2023 and May 28, 2022.

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

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

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

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

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

Certain measurement period adjustments were made during the twelve months ended May 28, 2022 to the preliminary fair values resulting in a net decrease to goodwill of $ 22.4 million primarily related to adjustments to the value of certain liabilities acquired and the fair value of intangible assets acquired.

The allocation of purchase price was completed in the fourth quarter of fiscal year 2022.

The following table summarizes the acquired identified intangible assets, valuation method employed, useful lives and fair value, as determined by the Company as of the acquisition date:

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Total $ 756.6

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 three and nine months ended February 26, 2022, as if Knoll had been acquired as of May 31, 2020.

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

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

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

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.

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

Net sales $ 1,029.5 $ 2,999.7

Net income (loss) attributable to MillerKnoll, Inc.

$ 16.9 $ ( 0.8 )

Inventories, net

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

(In millions) September 2, 2023 June 3, 2023

Finished goods and work in process $ 349.1 $ 357.2

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Goodwill and Indefinite-Lived Intangibles

Goodwill and other indefinite-lived intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following as of March 4, 2023 and May 28, 2022:

Goodwill and other indefinite-lived intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following as of September 2, 2023 and June 3, 2023:

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

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

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

September 2, 2023 $ 529.1 $ 303.6 $ 390.9 $ 1,223.6

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

(In millions) Indefinite-lived Intangible Assets

May 28, 2022 $ 501.0

June 3, 2023 $ 480.7

Foreign currency translation adjustments 0.7

March 4, 2023 $ 499.4

September 2, 2023 $ 481.4

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

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

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

In connection with the segment reorganization, 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.

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

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

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

In performing the qualitative impairment test for fiscal year 2023, the Company determined that the fair value of its reporting units exceeded the carrying amount and, as such, these reporting units were not impaired.

During the first quarter of fiscal year 2024, the Company performed an assessment to determine whether there were indicators of a triggering event which could indicate the carrying amount of the reporting units may not be supported by the fair value.

No indicators of a triggering event for potential impairment were noted in the first quarter of fiscal 2024.

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

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• revenue and EBITDA of comparable companies

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

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

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

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

Management has not identified any events or changes in circumstances that may indicate that an indefinite-lived intangible is more likely than not to be impaired as of the first quarter of fiscal year 2024.

Employee Benefit Plans

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Pension Benefits

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

(In millions) Domestic International Domestic International

Service cost $ — $ — $ 0.1 $ —

Interest cost 1.5 0.8 1.1 0.8

Expected return on plan assets (1)

( 2.0 ) ( 1.2 ) ( 2.1 ) ( 1.8 )

Net amortization loss — 0.6 — 1.7

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

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

Three Months Ended September 2, 2023 Three Months Ended September 3, 2022

(In millions) Domestic International Domestic International

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( 2.3 ) ( 1.3 ) ( 2.0 ) ( 1.2 )

Expected administrative expenses 0.2 — 0.1 —

Net amortization loss — — — 0.6

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

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

Earnings Per Share

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

Three Months Ended Nine Months Ended

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

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

Three Months Ended

September 2, 2023 September 3, 2022

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

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Stock-Based Compensation

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

Three Months Ended Nine Months Ended

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

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Stock-based compensation expense $ 6.4 $ 5.4

Related income tax effect $ 1.6 $ 1.3

The decrease in stock-based compensation expense for the nine months ended March 4, 2023 as compared to the same period of the prior year was driven primarily by the prior year's acceleration of stock-based compensation award expense related to the targeted workforce reductions implemented subsequent to the Knoll acquisition.

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

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

The Company's process for determining the provision for income taxes for the three and nine months ended March 4, 2023 involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates.

The effective tax rates were 31.2 % and 15.6 %, respectively, for the three month periods ended March 4, 2023 and February 26, 2022.

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

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

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

For the three months ended February 26, 2022, the effective tax rate was lower than the United States federal statutory rate due to the impact of applying the estimated annual effective tax rate to the year to date pre-tax loss.

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

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

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

For the nine months ended March 4, 2023, the effective tax rate is lower than the United States federal statutory rate due to the favorable impact of increased foreign tax credits in the United States resulting from the recapture of prior year overall domestic loss.

For the nine months ended February 26, 2022, the effective tax rate is lower than the United States federal statutory rate due to the impact of applying the estimated annual effective tax rate to the year to date pre-tax loss, which included an adjustment impacted by non-deductible Knoll acquisition related costs.

The Company's process for determining the provision for income taxes for the three months ended September 2, 2023 involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates.

The effective tax rates were 24.4 % and 18.8 %, respectively, for the three month periods ended September 2, 2023 and September 3, 2022.

The year over year change in the effective tax rate for the three months ended September 2, 2023 resulted from the current year quarter reporting pre-tax book income with unfavorable discrete compensation impacts in the United States.

The same quarter of the prior year had favorable tax credit impacts in the United States.

For the three months ended September 2, 2023, the effective tax rate is higher than the United States federal statutory rate due to an unfavorable discrete tax adjustment in the current quarter related to stock compensation in the United States.

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

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

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

Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three months ended September 2, 2023 and September 3, 2022.

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

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

(In millions) September 2, 2023 June 3, 2023

Liability for interest and penalties $ 0.8 $ 0.7

6 unchanged sentences

Fair Value Measurements

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

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

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

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

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

(In millions) September 2, 2023 June 3, 2023

Carrying value $ 1,350.1 $ 1,414.4

2 unchanged sentences

Cash and cash equivalents — The Company invests excess cash in short term investments in the form of money market funds, which are valued using net asset value ("NAV").

Mutual Funds-equity — The Company's equity securities primarily include equity mutual funds.

The equity mutual fund investments are recorded at fair value using quoted prices for similar securities.

Deferred compensation plan — The Company's deferred compensation plan primarily includes various domestic and international mutual funds that are recorded at fair value using quoted prices for similar securities.

2 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 March 4, 2023 and May 28, 2022.

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

(In millions) September 2, 2023 June 3, 2023

Financial Assets NAV Quoted Prices with Other

12 unchanged sentences

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

The following table sets forth financial assets and liabilities measured at fair value through other comprehensive income and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy as of March 4, 2023 and May 28, 2022.

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

(In millions) September 2, 2023 June 3, 2023

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

8 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.

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

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

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.

These forward contracts are not designated as hedging instruments.

5 unchanged sentences

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

The notional amount of the interest rate

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

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

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

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

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

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

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

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

The interest rate swaps were designated as cash flow hedges at inception and the facts and circumstances of the hedged relationships remain consistent with the initial quantitative effectiveness assessment in that the hedged instruments remain an effective accounting hedge as of March 4, 2023.

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

Since a designated derivative meets hedge accounting criteria, the fair value of the hedge is recorded in the Consolidated Statements of Stockholders’ Equity as a component of Accumulated other comprehensive loss, net of tax.

The ineffective portion of the change in fair value of the derivatives is immediately recognized in earnings.

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 1.910 %

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

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

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

The swaps above effectively converted indebtedness up to the notional amounts from a SOFR-based floating interest rate plus applicable margin of 0.11448 % to an effective fixed rate plus 0.11448 % plus applicable margin under the agreements as of the forward start date.

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

Three Months Ended Nine Months Ended

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

(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 %

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, as amended.

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.

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Gain recognized in Other comprehensive loss (effective portion) $ 7.8 $ 14.3

Gain (Loss) reclassified from Accumulated other comprehensive loss into earnings $ 7.4 $ ( 0.4 )

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

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

There were no gains or losses recognized in earnings for hedge ineffectiveness for the three month periods ended September 2, 2023 and September 3, 2022.

The amount of gain expected to be reclassified from Accumulated other comprehensive income into earnings during the next twelve months is $ 30.3 million, net of tax is $ 22.7 million.

Redeemable Noncontrolling Interests

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

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

Changes in the Company's redeemable noncontrolling interest in HAY for the three months ended September 2, 2023 and September 3, 2022 are as follows:

(In millions) September 2, 2023 September 3, 2022

Beginning Balance $ 107.6 $ 106.9

15 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Accrual Balance — beginning $ 73.9 $ 73.2

1 unchanged sentence

Settlements and adjustments ( 5.9 ) ( 5.2 )

Acquired through business acquisition — 5 — 15.1

Accrual Balance — ending $ 73.2 $ 72.3

3 unchanged sentences

The bonds are provided by various bonding agencies.

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

As of March 4, 2023, the Company had a maximum financial exposure related to performance bonds totaling approximately $ 8.2 million.

However, the Company is

ultimately liable for claims that may occur against them.

As of September 2, 2023, the Company had a maximum financial exposure related to performance bonds totaling approximately $ 9.6 million.

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

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

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

Accordingly, no liability has been recorded in respect to these bonds as of either September 2, 2023 or June 3, 2023.

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 March 4, 2023, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $ 14.1 million, all of which is considered usage against the Company's revolving line of credit.

As of September 2, 2023, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $ 13.9 million, all of which is considered usage against the Company's revolving line of credit.

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

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

Accordingly, no liability has been recorded with respect to these arrangements as of September 2, 2023 or June 3, 2023.

Contingencies

2 unchanged sentences

Short-Term Borrowings and Long-Term Debt

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

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

Short-term borrowings and long-term debt as of September 2, 2023 and June 3, 2023 consisted of the following:

(In millions) September 2, 2023 June 3, 2023

Syndicated revolving line of credit, due July 2026 $ 367.3 $ 426.7

2 unchanged sentences

Supplier financing program 2.4 2.1

Finance lease liability 1.3 —

Total debt $ 1,350.1 $ 1,414.4

4 unchanged sentences

The revolving line of credit provides the Company with up to $ 725 million in revolving variable rate interest borrowing capacity that matures in July 2026, replacing the previous $ 500 million syndicated revolving line of credit.

The term loans consist of a five-year senior secured term loan "A" facility with an aggregate principal amount of $ 400 million and a seven-year senior secured term loan "B" facility with an aggregate principal amount of $ 625 million, the proceeds of which were used to finance a portion of the cash consideration for the acquisition of Knoll, for the repayment of certain debt of Knoll and to pay fees, costs and expenses related thereto.

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

The term loans consist of a five-year senior secured term loan "A" facility with an aggregate principal amount of $ 400 million and a seven-year senior secured term loan "B" facility with an aggregate principal amount of $ 625 million, the proceeds of which were used to finance a portion of the cash consideration for the acquisition of Knoll, and to pay fees, costs, and expenses related thereto.

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.

During the nine months ended February 26, 2022, the Company repaid $ 64 million of private placement notes due May 20, 2030 and a loss on extinguishment of debt of approximately $ 13.4 million was recognized as part of the repayment of the private placement notes, which represented the premium on early redemption.

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

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

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

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 the three months ended September 2, 2023 and the three months ended September 3, 2022, the Company made total principal payments on term loans "A" and "B" in the amounts of $ 5.0 million and $ 1.6 million, respectively.

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

(In millions) September 2, 2023 June 3, 2023

Syndicated revolving line of credit borrowing capacity $ 725.0 $ 725.0

8 unchanged sentences

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

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

As of September 2, 2023, the liability related to the supplier financing program is $ 2.4 million.

Accumulated Other Comprehensive Loss

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

The following table provides an analysis of the changes in accumulated other comprehensive loss for the three months ended September 2, 2023 and September 3, 2022:

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

Balance at May 28, 2022 $ ( 93.9 ) $ ( 36.9 ) $ 23.7 $ ( 107.1 )

Other comprehensive (loss) income, net of tax before reclassifications ( 30.6 ) — 24.9 ( 5.7 )

Balance at June 3, 2023 $ ( 114.0 ) $ ( 23.8 ) $ 42.7 $ ( 95.1 )

Other comprehensive income (loss), net of tax before reclassifications 3.9 — 0.4 4.3

Reclassification from accumulated other comprehensive loss - Other, net — ( 0.1 ) 7.4 7.3

1 unchanged sentence

Net reclassifications — ( 0.1 ) 7.4 7.3

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

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

Net current period other comprehensive income (loss) 3.9 ( 0.1 ) 7.8 11.6

Balance at September 2, 2023 $ ( 110.1 ) $ ( 23.9 ) $ 50.5 $ ( 83.5 )

Balance at May 28, 2022 $ ( 93.9 ) $ ( 36.9 ) $ 23.7 $ ( 107.1 )

4 unchanged sentences

Net current period other comprehensive (loss) income ( 72.5 ) 0.4 14.3 ( 57.8 )

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

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

Operating Segments

Effective as of May 29, 2022, the beginning of fiscal year 2023, the Company implemented an organizational change that resulted in a change in the reportable segments.

The Company has restated historical results to reflect this change.

Below is a summary of the change in reportable segments.

• The reportable segments now consist of three segments:

The Company's reportable segments 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.

5 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Americas $ 490.4 $ 537.4

2 unchanged sentences

Total $ 917.7 $ 1,078.8

Operating Earnings (Loss):

Operating Earnings:

Americas $ 41.4 $ 20.4

1 unchanged sentence

Retail 2.2 17.8

Total reportable segments $ 55.0 $ 66.1

Corporate ( 14.7 ) ( 15.3 )

8 unchanged sentences

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

The expense associated with integration initiatives are included in Selling, general and administrative and the expense associated with restructuring activities are included in Restructuring expense in the Condensed Consolidated Statements of Comprehensive Income.

Non-cash costs related to debt extinguishment in the financing of the transaction is recorded in Other expense (income), net in the Condensed Consolidated Statements of Comprehensive Income.

The expenses associated with integration initiatives are included in Selling, general and administrative and the expenses associated with restructuring activities are included in Restructuring expense in the Condensed Consolidated Statements of Comprehensive Income.

Knoll Integration:

6 unchanged sentences

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

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

For the three months ended September 2, 2023, we incurred $ 3.9 million of costs related to the Knoll Integration which was comprised of $ 3.4 million of exit and disposal costs related to the consolidation of facilities and $ 0.5 million of other integration costs.

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

$ 1.2 million of severance and employee benefit costs, $ 1.4 million of lease termination fees, and $ 2.0 million of other integration costs.

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

$ 49.9 million of severance and employee benefit costs, $ 15.5 million of non-cash asset impairments, $ 13.4 million of non-cash costs related to debt-extinguishment in the financing of the transaction, and $ 22.9 million of other integration costs.

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

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

GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the three months ended September 2, 2023:

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

May 29, 2022 $ 1.4 $ — $ 1.4

June 3, 2023 $ 2.9 $ — $ 2.9

Integration Costs — 3.4 3.4

1 unchanged sentence

Non-cash costs — ( 1.3 ) ( 1.3 )

March 4, 2023 $ 2.0 $ — $ 2.0

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

September 2, 2023 $ 1.5 $ — $ 1.5

The Company expects that a substantial portion of the liability for the Knoll Integration as of September 2, 2023 will be paid in the balance of fiscal year 2024.

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Americas Contract $ 3.1 $ 2.9

International Contract & Specialty 0.7 0.5

Retail — — 0.2 —

Corporate 0.1 1.0

Total $ 3.9 $ 4.6

2023 Restructuring Plan

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

These restructuring activities included voluntary and involuntary reductions in workforces.

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

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

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

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

(In millions) Severance and Employee-Related

May 28, 2022 $ —

Restructuring Activities

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 decision to cease operating Fully as a stand-alone brand.

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

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 was complete in fiscal 2023 and no future costs related to this plan are expected.

During fiscal year 2024, the Company announced an action related to the 2024 restructuring plan ("2024 restructuring plan") to reduce expenses.

This restructuring activity included involuntary reductions in workforces.

As the result of the action, the Company projects an annualized expense reduction of approximately $ 5 million to $ 6 million.

The Company incurred $ 5.2 million of severance and employee benefit costs related to the 2024 restructuring plan.

The following table provides an analysis of the changes in the restructuring cost reserve for the three months ended September 2, 2023:

Severance and Employee-Related

(In millions) 2024 Restructuring Plan 2023 Restructuring Plan

June 3, 2023 $ — $ 7.3

Restructuring Costs 5.2 —

Amounts Paid ( 1.8 ) ( 3.8 )

March 4, 2023 $ 7.0

September 2, 2023 $ 3.4 $ 3.5

The Company expects that remaining liability for the 2023 and 2024 restructuring plans as of September 2, 2023, will be paid in fiscal year 2024.

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) September 2, 2023 September 3, 2022

Americas Contract $ 4.3 $ —

2 unchanged sentences

Total $ 5.2 $ 0.5

Impairment of Fully

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

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

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

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

(In millions) Impairment Charge

Inventory $ 15.7

Property and equipment 3.8

Right of use asset 6.1

Tradename 11.6

Variable Interest Entities

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

The carrying value of these notes receivable was $ 5.7 million and $ 1.2 million as of March 4, 2023 and May 28, 2022 respectively.

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

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 $ 12.8 million and $ 6.3 million as of September 2, 2023 and June 3, 2023 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements