What changed in this filing

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Item 1. Financial Statements

2024-01-10 compared with 2023-10-11 · 167 added, 115 removed, 523 unchanged (35% of the section changed)

1 unchanged sentence

MillerKnoll, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

(Unaudited) September 2, 2023 September 3, 2022

Condensed Consolidated Statements of Comprehensive Income

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

(Unaudited) December 2, 2023 December 3, 2022 December 2, 2023 December 3, 2022

Net sales $ 949.5 $ 1,066.9 $ 1,867.2 $ 2,145.7

8 unchanged sentences

Interest expense 19.8 18.3 39.0 35.0

Interest and other investment income 2.2 0.4

Other expense, net 2.2 0.8

Interest and other investment (income) expense ( 1.3 ) ( 0.7 ) ( 3.5 ) ( 1.1 )

Other (income) expense, net ( 2.4 ) ( 0.5 ) ( 0.2 ) 0.3

Earnings before income taxes and equity income 44.3 21.6 65.4 55.3

Income tax expense 9.5 4.3 14.6 10.6

Equity income from nonconsolidated affiliates, net of tax 0.1 —

Equity (loss) income from nonconsolidated affiliates, net of tax ( 0.4 ) 0.2 ( 0.3 ) 0.2

Net earnings 34.4 17.5 50.5 44.9

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

Net earnings attributable to redeemable noncontrolling interests 0.9 1.5 0.3 3.1

Net earnings attributable to MillerKnoll, Inc.

2 unchanged sentences

Earnings per share - diluted $ 0.45 $ 0.21 $ 0.67 $ 0.55

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustments $ 7.3 $ 44.2 $ 11.2 $ ( 28.3 )

Pension and post-retirement liability adjustments — 0.4 ( 0.1 ) 0.8

Unrealized gain on interest rate swap agreement 7.8 14.3

Other comprehensive income (loss), net of tax $ 11.6 $ ( 57.8 )

Comprehensive income (loss) 27.7 ( 30.4 )

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

Comprehensive income (loss) attributable to MillerKnoll, Inc.

Unrealized (loss) gain on interest rate swap agreement ( 7.9 ) 7.2 ( 0.1 ) 21.5

Other comprehensive (loss) income, net of tax $ ( 0.6 ) $ 51.8 $ 11.0 $ ( 6.0 )

Comprehensive income 33.8 69.3 61.5 38.9

Comprehensive income attributable to redeemable noncontrolling interests 0.9 1.4 0.3 3.1

Comprehensive income attributable to MillerKnoll, Inc.

$ 32.9 $ 67.9 $ 61.2 $ 35.8

3 unchanged sentences

(Dollars in millions, except share data)

(Unaudited) September 2, 2023 June 3, 2023

(Unaudited) December 2, 2023 June 3, 2023

Current Assets:

4 unchanged sentences

Prepaid expenses 82.0 92.7

Assets held for sale 4.6 —

Other current assets 8.9 9.1

36 unchanged sentences

Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Three Months Ended

(Unaudited) September 2, 2023 September 3, 2022

(Dollars in millions) Six Months Ended

(Unaudited) December 2, 2023 December 3, 2022

Cash Flows from Operating Activities:

Net earnings $ 50.5 $ 44.9

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

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

Depreciation and amortization 74.6 77.7

1 unchanged sentence

Amortization of deferred financing costs 2.3 2.3

Loss on sale of equity method investment 0.4 —

Deferred taxes ( 0.3 ) ( 0.3 )

6 unchanged sentences

Notes receivables issued ( 7.1 ) ( 4.5 )

Proceeds from the sale of equity method investment 3.5 —

Capital expenditures ( 39.9 ) ( 40.3 )

12 unchanged sentences

Effect of Exchange Rate Changes on Cash and Cash Equivalents 1.0 ( 7.1 )

Net Decrease in Cash and Cash Equivalents ( 6.0 ) ( 14.5 )

Net Increase (Decrease) in Cash and Cash Equivalents 2.3 ( 32.8 )

Cash and Cash Equivalents, Beginning of Period 223.5 230.3

3 unchanged sentences

Condensed Consolidated Statements of Stockholders' Equity

Three Months Ended September 2, 2023

Six Months Ended December 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.

10 unchanged sentences

— — — ( 14.1 ) — — ( 14.1 )

Other — — — — — — —

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

Three Months Ended September 3, 2022

Net earnings — — — 33.5 — — 33.5

Other comprehensive income, net of tax — — — — ( 0.6 ) — ( 0.6 )

Stock-based compensation expense — — 5.3 — — — 5.3

Exercise of stock options 19,429 — 0.4 — — — 0.4

Restricted and performance stock units released 11,887 — — — — — —

Employee stock purchase plan issuances 31,669 — 1.3 — — — 1.3

Repurchase and retirement of common stock ( 1,390,551 ) ( 0.3 ) ( 27.7 ) — — — ( 28.0 )

Dividends declared ($ 0.1875 per share)

— — — ( 13.7 ) — — ( 13.7 )

Other — — — 0.1 — — 0.1

December 2, 2023 73,077,659 $ 14.6 $ 791.5 $ 698.6 $ ( 84.1 ) $ — $ 1,420.6

Six Months Ended December 3, 2022

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

13 unchanged sentences

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-base 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

See accompanying notes to Condensed Consolidated Financial Statements.

18 unchanged sentences

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

The accompanying unaudited Condensed Consolidated Financial Statements, taken as a whole, contain all adjustments that are of a normal recurring nature necessary to present fairly the financial position of the Company as of September 2, 2023.

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").

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

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 June 3, 2023 ("fiscal 2023").

2 unchanged sentences

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

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

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

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

Investments in Nonconsolidated Affiliates

On October 30, 2023, the Company sold its 48.2 % investment in Global Holdings Netherlands B.V., which owns 100 % of Maars Holding B.V.

("Maars") for total purchase consideration of $ 5.9 million.

As part of this transaction, we received cash proceeds of $ 3.5 million at closing, a $ 1.4 million receivable under a vendor loan, and $ 1.0 million of cash held in an escrow account to secure the representations and warranties made to the purchaser.

As a result of the sale, a loss of $ 0.4 million was recorded in Equity (loss) income from nonconsolidated affiliates, net of tax during the second quarter of fiscal 2024.

Recently Issued Accounting Standards

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.

Recently Issued Accounting Standards Not Yet Adopted

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

In November 2023, the FASB issued this ASU to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

ASU 2023-09, Income Taxes (Topic 740):

Improvements to Tax Disclosures.

In December 2023, the FASB issued this ASU which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

The update will be effective for annual periods beginning after December 15, 2024.

We are assessing the effect of this update on our consolidated financial statements and related disclosures.

We have assessed all other 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

1 unchanged sentence

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

Three Months Ended

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

Three Months Ended Six Months Ended

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

Single performance obligation

16 unchanged sentences

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

Three Months Ended

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

Three Months Ended Six Months Ended

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

Americas Contract:

23 unchanged sentences

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

During the three months ended September 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.

During the three and six months ended December 2, 2023, the Company recognized Net sales of $ 24.4 million and $ 71.9 million respectively, related to customer deposits that were included in the balance sheet as of June 3, 2023 .

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.

57 unchanged sentences

Inventories, net

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

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

Finished goods and work in process $ 330.3 $ 357.2

3 unchanged sentences

Goodwill and Indefinite-Lived Intangibles

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

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

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

2 unchanged sentences

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

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

December 2, 2023 $ 530.4 $ 304.9 $ 392.3 $ 1,227.6

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

2 unchanged sentences

Foreign currency translation adjustments 2.0

September 2, 2023 $ 481.4

December 2, 2023 $ 482.7

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.

13 unchanged sentences

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.

During the second 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 second 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.

3 unchanged sentences

• revenue and EBITDA of comparable 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.

The Company 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 first quarter of fiscal year 2024.

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

Employee Benefit Plans

1 unchanged sentence

Pension Benefits

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

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

(In millions) Domestic International Domestic International

2 unchanged sentences

Expected return on plan assets(1) ( 2.3 ) ( 1.2 ) ( 2.0 ) ( 1.1 )

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

Expected administrative expenses 0.2 — 0.1 —

1 unchanged sentence

Net periodic benefit (income) cost $ ( 0.6 ) $ ( 0.2 ) $ ( 0.4 ) $ 0.3

Six Months Ended December 2, 2023 Six Months Ended December 3, 2022

(In millions) Domestic International Domestic International

Service cost $ — $ — $ — $ —

Interest cost 3.0 2.0 3.0 1.6

Expected return on plan assets(1) ( 4.6 ) ( 2.5 ) ( 4.0 ) ( 2.3 )

Expected administrative expenses 0.4 — 0.2 —

Net amortization loss — — — 1.2

Net periodic benefit (income) cost $ ( 1.2 ) $ ( 0.5 ) $ ( 0.8 ) $ 0.5

(1) The weighted-average expected long-term rate of return on plan assets is 6.0 %.

Earnings Per Share

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

Three Months Ended

September 2, 2023 September 3, 2022

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

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

Three Months Ended Six Months Ended

December 2, 2023 December 3, 2022 December 2, 2023 December 3, 2022

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

- in millions $ 33.5 $ 16.0 $ 50.2 $ 41.8

5 unchanged sentences

Stock-Based Compensation

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

Three Months Ended

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

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

Three Months Ended Six Months Ended

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

Stock-based compensation expense $ 5.3 $ 5.5 $ 11.7 $ 10.9

2 unchanged sentences

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

The Company's process for determining the provision for income taxes for the three months ended September 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's process for determining the provision for income taxes for the three and six months ended December 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 21.4 % and 19.8 %, respectively, for the three month periods ended December 2, 2023 and December 3, 2022.

The year over year change in the effective tax rate for the three months ended December 2, 2023 resulted from the same quarter of the prior year having more favorable tax credit impacts in the United States than the current year quarter.

For the three months ended December 2, 2023, the effective tax rate is slightly higher than the United States federal statutory rate due to United States state income taxes and the mix of earnings in tax jurisdictions that had rates that were higher than the United States federal statutory rate coupled with less favorable foreign tax credit impacts from the recapture of an overall domestic loss carryover.

For the three months ended December 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 effective tax rates were 22.4 % and 19.2 %, respectively, for the six months ended December 2, 2023 and December 3, 2022.

The year over year increase in the effective rate for the six months ended December 2, 2023 resulted from the same six months in the prior year having more favorable foreign tax credit impacts in the United States than the current six months.

For the six months ended December 2, 2023, the effective tax rate is higher than the United States federal statutory rate due to United States state income taxes and the mix of earnings in tax jurisdictions that had rates that were higher than the United States federal statutory rate coupled with less favorable foreign tax credit impacts from the recapture of an overall domestic loss carryover.

For the six months ended December 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 months ended September 2, 2023 and September 3, 2022.

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

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

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

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

Liability for interest and penalties $ 0.9 $ 0.7

9 unchanged sentences

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

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

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

Carrying value $ 1,331.1 $ 1,414.4

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 September 2, 2023 and June 3, 2023.

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

(In millions) December 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 September 2, 2023 and June 3, 2023.

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

(In millions) December 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)

19 unchanged sentences

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

The interest rate swaps were designated as cash flow hedges at inception and the facts and circumstances of the hedged relationships remain consistent with the initial quantitative effectiveness assessment in that the hedged instruments remain an effective accounting hedge as of September 2, 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.

6 unchanged sentences

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 month periods ended September 2, 2023 and September 3, 2022.

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

Three Months Ended Six Months Ended

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

(Loss) Gain recognized in Other comprehensive loss (effective portion) $ ( 7.9 ) $ 7.2 $ ( 0.1 ) $ 21.5

Gain reclassified from Accumulated other comprehensive loss into earnings $ 7.7 $ 2.4 $ 15.1 $ 2.0

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

The amount of gain expected to be reclassified from Accumulated other comprehensive income into earnings during the next twelve months is $ 27.1 million, net of tax is $ 20.3 million.

Redeemable Noncontrolling Interests

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

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

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

Beginning Balance $ 107.6 $ 106.9

1 unchanged sentence

Dividend attributable to redeemable noncontrolling interests — ( 1.6 )

Cumulative translation adjustments attributable to redeemable noncontrolling interests — 0.1

Foreign currency translation adjustments 1.6 ( 1.8 )

11 unchanged sentences

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

Three Months Ended

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

Three Months Ended Six Months Ended

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

Accrual Balance — beginning $ 73.2 $ 72.3 $ 73.9 $ 73.2

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

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

As of December 2, 2023, the Company had a maximum financial exposure related to performance bonds totaling approximately $ 9.1 million.

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

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

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

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

As of December 2, 2023, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $ 12.7 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 September 2, 2023 or June 3, 2023.

Accordingly, no liability has been recorded with respect to these arrangements as of December 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 September 2, 2023 and June 3, 2023 consisted of the following:

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

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

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

Syndicated revolving line of credit, due July 2026 $ 355.0 $ 426.7

15 unchanged sentences

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.

During the six months ended December 2, 2023 and the six months ended December 3, 2022, the Company made total principal payments on term loans "A" and "B" in the amounts of $ 10.0 million and $ 3.1 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

(In millions) December 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 September 2, 2023, the liability related to the supplier financing program is $ 2.4 million.

As of December 2, 2023 and June 3, 2023, the liability related to the supplier financing program was $ 2.3 million and $ 2.1 million, respectively.

Accumulated Other Comprehensive Loss

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:

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

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

5 unchanged sentences

Net current period other comprehensive income (loss) 11.2 ( 0.1 ) ( 0.1 ) 11.0

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

Balance at December 2, 2023 $ ( 102.8 ) $ ( 23.9 ) $ 42.6 $ ( 84.1 )

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

4 unchanged sentences

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

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

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

Operating Segments

The Company's reportable segments consist of three segments:

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

Americas Contract, International Contract & Specialty, and Global Retail.

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

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

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 activities of the Specialty brands, which include Holly Hunt, Spinneybeck, Maharam, Edelman, and Knoll Textiles.

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

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

Three Months Ended

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

Americas $ 490.4 $ 537.4

International & Specialty 228.3 272.5

Retail 199.0 268.9

Three Months Ended Six Months Ended

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

Americas Contract $ 476.1 $ 529.7 $ 966.5 $ 1,067.1

International Contract & Specialty 241.2 264.9 469.5 537.4

Global Retail 232.2 272.3 431.2 541.2

Total $ 949.5 $ 1,066.9 $ 1,867.2 $ 2,145.7

Operating Earnings:

Americas $ 41.4 $ 20.4

International & Specialty 11.4 27.9

Retail 2.2 17.8

Americas Contract $ 35.1 $ 25.3 $ 76.5 $ 45.7

International Contract & Specialty 23.8 28.3 35.2 56.2

Global Retail 14.7 2.0 16.9 19.8

Total reportable segments $ 73.6 $ 55.6 $ 128.6 $ 121.7

18 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 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:

For the six months ended December 2, 2023, we incurred $ 10.8 million of costs related to the Knoll Integration which was comprised of $ 8.7 million of exit and disposal costs related to the consolidation of facilities and $ 2.1 million of other integration costs.

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

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

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

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

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

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

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Non-cash costs — ( 2.6 ) ( 2.6 )

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.

December 2, 2023 $ 1.3 $ 1.4 $ 2.7

The Company expects that a substantial portion of the liability for the Knoll Integration as of December 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

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

Three Months Ended Six Months Ended

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

Americas Contract $ 6.4 $ 1.1 $ 9.5 $ 4.0

International Contract & Specialty 0.5 1.0 1.2 1.5

Global Retail — — — 0.2

Corporate — 2.0 0.1 3.0

Total $ 6.9 $ 4.1 $ 10.8 $ 8.7

In the second quarter of fiscal 2024 a manufacturing facility located in Wisconsin met the criteria to be classified as an asset held for sale.

The decision to sell this facility was made as a result of facility integration activities performed in connection with the integration of Knoll.

The carrying amount of these assets held for sale was $ 4.6 million and is classified as current assets within "Assets held for sale" in the Condensed Consolidated Balance Sheets as of December 2, 2023.

No impairment has been recorded on the carrying value of the asset.

Restructuring Activities

7 unchanged sentences

As the result of the action, the Company projects an annualized expense reduction of approximately $ 5.0 million to $ 8.0 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:

During the six months ended December 2, 2023 the Company incurred $ 7.0 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 six months ended December 2, 2023:

Severance and Employee-Related

3 unchanged sentences

Amounts Paid ( 4.6 ) ( 6.6 )

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.

December 2, 2023 $ 2.4 $ 0.7

The Company expects that remaining liability for the 2023 and 2024 restructuring plans as of December 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

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

Three Months Ended Six Months Ended

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

Americas Contract $ — $ 13.2 $ 4.3 $ 13.2

International Contract & Specialty 0.8 0.7 1.5 0.7

Retail 0.2 0.5

Global Retail 1.0 0.8 1.2 1.3

Total $ 1.8 $ 14.7 $ 7.0 $ 15.2

Variable Interest Entities

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.

The Company entered into long-term notes receivable with certain independently owned dealers that are deemed to be variable interests in variable interest entities.

The carrying value of these long-term notes receivable was $ 12.6 million and $ 6.3 million as of December 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 independently owned 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