UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 2, ~~2023~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-15141

__________________________________________

MillerKnoll, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________


Michigan						38-0837640
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

855 East Main Avenue

Zeeland, MI 49464

(Address of principal executive offices and zip code)

(616) 654-3000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.20 per share	MLKN	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the

registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of ~~January~~April 5, 2024, MillerKnoll, Inc. had 7271,~~818~~638,~~258~~797 shares of common stock outstanding.

MillerKnoll, Inc.

Form 10-Q

Table of Contents

			Page No.
Part I — Financial Information
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Statements of Comprehensive Income — Three and Six Months Ended December 2, 2023 and December 3, 2022			3
Condensed Consolidated Statements of Comprehensive Income — Three and Nine Months Ended March 2, 2024 and March 4, 2023			3
Condensed Consolidated Balance Sheets — December 2, 2023 and June 3, 2023			4
Condensed Consolidated Balance Sheets — March 2, 2024 and June 3, 2023			4
Condensed Consolidated Statements of Cash Flows — Six Months Ended December 2, 2023 and December 3, 2022			5
Condensed Consolidated Statements of Cash Flows — Nine Months Ended March 2, 2024 and March 4, 2023			5
Condensed Consolidated Statements of Stockholders' Equity — Six Months Ended December 2, 2023 and December 3, 2022			6
Condensed Consolidated Statements of Stockholders' Equity — Nine Months Ended March 2, 2024 and March 4, 2023			6
Notes to Condensed Consolidated Financial Statements
Note 1 - Description of Business and Basis of Presentation			8
Note 2 - Recently Issued Accounting Standards			8
Note 3 - Revenue from Contracts with Customers			9
Note 4 - Acquisitions			10
Note 5 - Inventories, net			12
Note 6 - Goodwill and Indefinite-Lived Intangibles			13
Note 7 - Employee Benefit Plans			14
Note 8 - Earnings Per Share			1514
Note 9 - Stock-Based Compensation			15
Note 10 - Income Taxes			15
Note 11 - Fair Value Measurements			16
Note 12 - Commitments and Contingencies			19
Note 13 - Short-Term Borrowings and Long-Term Debt			20
Note 14 - Accumulated Other Comprehensive Loss			21
Note 15 - Operating Segments			21
Note 16 - Restructuring and Integration Expense			22
Note 17 - Variable Interest Entities			24
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3 Quantitative and Qualitative Disclosures about Market Risk			4041
Item 4 Controls and Procedures			4142
Part II — Other Information
Item 1 Legal Proceedings			4243
Item 1A Risk Factors			4243
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			4243
Item 5 Other Information			4243
Item 6 Exhibits			4243
Signatures			4445

PART I - FINANCIAL INFORMATION

Item 1: Financial Statements

MillerKnoll, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Dollars in millions, except share data)	Three Months Ended				~~Six~~Nine Months Ended
(Unaudited)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Net sales	$	~~949~~872.53	$	~~1,066~~984.97	$	12,~~867~~739.25	$	23,~~145~~130.74
Cost of sales	~~577~~535.53		~~699~~649.31		1,~~137~~672.14		12,~~406~~055.01
Gross margin	~~372~~337.0		~~367~~335.6		~~730~~1,067.1		~~739~~1,075.73
Operating expenses:
Selling, general and administrative	~~287~~271.61		~~290~~264.87		~~578~~849.12		~~587~~852.73
Restructuring expense	1.8		14.7		7.0		15.2
Impairment charges	—		21.5		—		21.5
Design and research	22.2		23.4		44.3		47.3
Restructuring expense	1.7		4.6		8.7		19.8
Total operating expenses	311.6		328.9		629.4		650.2
Design and research	21.4		23.6		65.7		71.0
Operating earnings	60.4		38.7		100.7		89.5
Total operating expenses	294.2		314.4		923.6		964.6
Interest expense	19.8		18.3		39.0		35.0
Operating earnings	42.8		21.2		143.5		110.7
Interest and other investment (income) expense	(1.3)		(0.7)		(3.5)		(1.1)
Interest expense	18.4		19.1		57.4		54.1
Other (income) expense, net	(2.4)		(0.5)		(0.2)		0.3
Interest and other investment (income) expense	(1.3)		(0.9)		(4.8)		(2.0)
Earnings before income taxes and equity income	44.3		21.6		65.4		55.3
Other (income) expense, net	(1.8)		1.4		(2.0)		1.7
Income tax expense	9.5		4.3		14.6		10.6
Earnings before income taxes and equity income	27.5		1.6		92.9		56.9
Equity (loss) income from nonconsolidated affiliates, net of tax	(0.4)		0.2		(0.3)		0.2
Income tax expense	4.4		0.5		19.0		11.1
Net earnings	34.4		17.5		50.5		44.9
Equity (loss) income from nonconsolidated affiliates, net of tax	—		—		(0.3)		0.2
Net earnings attributable to redeemable noncontrolling interests	0.9		1.5		0.3		3.1
Net earnings	23.1		1.1		73.6		46.0
Net earnings attributable to MillerKnoll, Inc.	$	33.5	$	16.0	$	50.2	$	41.8
Net earnings attributable to redeemable noncontrolling interests	0.9		0.7		1.2		3.8
Earnings per share - basic	$	0.45	$	0.21	$	0.67	$	0.55
Net earnings attributable to MillerKnoll, Inc.	$	22.2	$	0.4	$	72.4	$	42.2
Earnings per share - diluted	$	0.45	$	0.21	$	0.67	$	0.55
Earnings per share - basic	$	0.31	$	0.01	$	0.98	$	0.56
Earnings per share - diluted	$	0.30	$	0.01	$	0.97	$	0.56
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	$	7(3.3)	$	~~44.~~(2.3)	$	117.29	$	(2830.36)
Pension and post-retirement liability adjustments	—(0.1)		(0.4)		(0.12)		0.84
Unrealized (loss) gain on interest rate swap agreement	(71.91)		710.23		(0.1.2)		2131.58
Other comprehensive (loss) income, net of tax	$	(04.65)	$	517.86	$	116.05	$	(61.0)6
Comprehensive income	3318.86		698.37		6180.51		3847.96
Comprehensive income attributable to redeemable noncontrolling interests	0.9		10.47		01.32		3.18
Comprehensive income attributable to MillerKnoll, Inc.	$	3217.97	$	678.90	$	6178.29	$	3543.8

See accompanying notes to Condensed Consolidated Financial Statements.

MillerKnoll, Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions, except share data)
(Unaudited)	~~December~~March 2, ~~2023~~2024		June 3, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	~~225~~223.86	$	223.5
Accounts receivable, net of allowance of $9.5 and $6.4	319.9		334.1
Accounts receivable, net of allowance of $7.6 and $6.4	291.1		334.1
Unbilled accounts receivable	2427.96		29.4
Inventories, net	~~448~~437.24		487.4
Prepaid expenses	8289.09		92.7
Assets held for sale	4.6		—
Other current assets	8.9.2		9.1
Total current assets	1,~~114~~083.34		1,176.2
Property and equipment, at cost	1,~~578~~583.68		1,570.7
Less — accumulated depreciation	(1,~~060~~077.76)		(1,034.4)
Net property and equipment	~~517~~506.92		536.3
Right of use assets	~~382~~376.58		415.9
Goodwill	1,~~227~~225.69		1,221.7
Indefinite-lived intangibles	482.72		480.7
Other amortizable intangibles, net of accumulated amortization of $205.0 and $185.2	297.0		313.1
Other amortizable intangibles, net of accumulated amortization of $214.1 and $185.2	287.7		313.1
Other noncurrent assets	~~133~~132.59		130.9
Total Assets	$	4,~~155~~095.51	$	4,274.8
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	~~250~~242.70	$	269.5
Short-term borrowings and current portion of long-term debt	3840.89		33.4
Accrued compensation and benefits	95104.8		61.7
Short-term lease liability	7671.1		77.1
Accrued warranty	18.83		20.8
Customer deposits	9285.95		93.8
Other accrued liabilities	~~140~~117.79		146.5
Total current liabilities	~~713~~680.85		702.8
Long-term debt	1,~~278~~290.24		1,365.1
Pension and post-retirement benefits	7.74		7.5
Lease liabilities	~~360~~355.72		393.7
Other liabilities	~~264~~263.95		265.5
Total Liabilities	2,~~625~~597.30		2,734.6
Redeemable noncontrolling interests	~~109~~107.62		107.6
Stockholders' Equity:
Preferred stock, no par value (10,000,000 shares authorized, none issued)	—		—
Common stock, $0.20 par value (240,000,000 shares authorized, 73,077,659 and 75,698,670 shares issued and outstanding in fiscal 2024 and 2023, respectively)	14.6		15.1
Common stock, $0.20 par value (240,000,000 shares authorized, 71,736,286 and 75,698,670 shares issued and outstanding in fiscal 2024 and 2023, respectively)	14.3		15.1
Additional paid-in capital	~~791~~758.51		836.5
Retained earnings	~~698~~707.61		676.1
Accumulated other comprehensive loss	(8488.16)		(95.1)
Total Stockholders' Equity	1,~~420~~390.69		1,432.6
Total Liabilities, Redeemable Noncontrolling Interests, and Stockholders' Equity	$	4,~~155~~095.51	$	4,274.8

See accompanying notes to Condensed Consolidated Financial Statements.

MillerKnoll, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in millions)	~~Six~~Nine Months Ended
(Unaudited)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Cash Flows from Operating Activities:
Net earnings	$	5073.56	$	4446.90
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	74111.6		77115.79
Stock-based compensation	1117.71		1015.97
Amortization of deferred financing costs	2.3.5		2.3.5
Loss on sale of equity method investment	0.4		—
Deferred taxes	(0.3)		(01.32)
Restructuring expense	78.07		1519.28
Decrease (increase) in current assets	71.0		(34.7)
Impairment	—		36.6
(Decrease) in current liabilities	(1.7)		(111.9)
Decrease in current assets	100.0		5.9
Other, net	(2.1)		(9.4)
(Decrease) in current liabilities	(32.9)		(159.1)
Net Cash Provided by (Used in) Operating Activities	213.4		(5.3)
(Decrease) in non-current liabilities	(2.1)		(5.3)
Other, net	(5.7)		(7.4)
Net Cash Provided by Operating Activities	273.9		70.4
Cash Flows from Investing Activities:
Notes receivables issued	(7.1)		(4.5)
Advances of notes receivable	(10.6)		(4.4)
Proceeds from the sale of equity method investment	3.5		—
Capital expenditures	(3956.95)		(4060.36)
Proceeds from loan on cash surrender value of life insurance	—		13.5
Other, net	2.26		(01.7)
Net Cash (Used in) Investing Activities	(41.3)		(32.0)
Net Cash Used in Investing Activities	(61.0)		(53.2)
Cash Flows from Financing Activities:
Repayments of long-term debt	(1322.12)		(1319.17)
Proceeds from credit facility	~~386~~620.1		~~559~~720.32
Repayments of credit facility	(~~457~~668.89)		(~~492~~664.37)
Dividends paid	(2842.12)		(2842.49)
Common stock issued	14.93		24.5
Common stock repurchased and retired	(60101.0)		(1415.39)
Other, net	0(3.2)		(23.16)
Net Cash (Used in) Provided by Financing Activities	(170.8)		11.6
Net Cash Used in Financing Activities	(213.1)		(22.1)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	1.0.3		(78.13)
Net Increase (Decrease) in Cash and Cash Equivalents	20.31		(3213.82)
Cash and Cash Equivalents, Beginning of Period	223.5		230.3
Cash and Cash Equivalents, End of Period	$	~~225~~223.86	$	~~197~~217.51

See accompanying notes to Condensed Consolidated Financial Statements.

MillerKnoll, Inc.

Condensed Consolidated Statements of Stockholders' Equity

		Six Months Ended December 2, 2023
		Nine Months Ended March 2, 2024
(Dollars in millions, except share data)		Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Deferred Compensation Plan		MillerKnoll, Inc. Stockholders' Equity
(Unaudited)	Shares		Amount
June 3, 2023		75,698,670		$	15.1	$	836.5	$	676.1	$	(95.1)	$	—	$	1,432.6
Net earnings		—		—		—		16.7		—		—		16.7
Other comprehensive income, net of tax		—		—		—		—		11.6		—		11.6
Stock-based compensation expense		(983)		—		6.4		—		—		—		6.4
Restricted and performance stock units released		332,566		0.1		0.1		—		—		—		0.2
Employee stock purchase plan issuances		45,107		—		0.9		—		—		—		0.9
Repurchase and retirement of common stock		(1,670,135)		(0.3)		(31.7)		—		—		—		(32.0)
Dividends declared ($0.1875 per share)		—		—		—		(14.1)		—		—		(14.1)
September 2, 2023		74,405,225		$	14.9	$	812.2	$	678.7	$	(83.5)	$	—	$	1,422.3
September 3, 2023		74,405,225		$	14.9	$	812.2	$	678.7	$	(83.5)	$	—	$	1,422.3
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
Net earnings		—		—		—		22.2		—		—		22.2
Other comprehensive income, net of tax		—		—		—		—		(4.5)		—		(4.5)
Stock-based compensation expense		—		—		5.4		—		—		—		5.4
Exercise of stock options		18,659		—		0.4		—		—		—		0.4
Restricted and performance stock units released		112,794		—		0.7		—		—		—		0.7
Employee stock purchase plan issuances		29,225		—		—		—		—		—		—
Repurchase and retirement of common stock		(1,533,430)		(0.3)		(40.7)		—		—		—		(41.0)
Directors' fees		31,379		—		0.8		—		—		—		0.8
Dividends declared ($0.1875 per share)		—		—		—		(13.8)		—		—		(13.8)
Other		—		—		—		0.1		—		—		0.1
March 2, 2024		71,736,286		$	14.3	$	758.1	$	707.1	$	(88.6)	$	—	$	1,390.9

		Six Months Ended December 3, 2022
		Nine Months Ended March 4, 2023
(Dollars in millions, except share data)		Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Deferred Compensation Plan		MillerKnoll, Inc. Stockholders' Equity
(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-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	~~0.2~~	$(0.4)	~~(0.4)~~	$—	—	$—	—	(0.2)
December 3, 2022		75,603,106		$	15.1	$	825.7	$	706.6	$	(113.1)	$	—	$	1,434.3
Net earnings		—		—		—		0.4		—		—		0.4
Other comprehensive income, net of tax		—		—		—		—		7.6		—		7.6
Stock-based compensation expense		(15,563)		—		4.8		—		—		—		4.8
Restricted and performance stock units released		44,926		—		0.3		—		—		—		0.3
Employee stock purchase plan issuances		36,375		—		0.8		—		—		—		0.8
Repurchase and retirement of common stock		(69,927)		—		(1.6)		—		—		—		(1.6)
Deferred compensation plan		—		—		0.6		—		—		—		0.6
Directors Fees		27,784		—		0.6		—		—		—		0.6
Dividends declared ($0.1875 per share)		—		—		—		(14.3)		—		—		(14.3)
Other		—		—		(0.2)		0.6		—		—		0.4
March 4, 2023		75,626,701		$	15.1	$	831.0	$	693.3	$	(105.5)	$	—	$	1,433.9

See accompanying notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements

(Dollars in millions, except share data)

(unaudited)

1. Description of Business

MillerKnoll, Inc. (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®, Geiger®, HAY®, Holly Hunt®, ~~Knoll Textiles~~KnollTextiles®, Maharam®, Muuto®, NaughtOne®, and Spinneybeck®|FilzFelt®. MillerKnoll represents over 100 years of design research and exploration in service of humanity. The Company is united by a belief in design as a tool to create positive impact and shape a more sustainable, caring, and beautiful future for all people and the planet.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared by MillerKnoll, Inc. in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Management believes the disclosures made in this document are adequate with respect to interim reporting requirements. Unless otherwise noted or indicated by the context, all references to "MillerKnoll," "we," "our," "Company" and similar references are to MillerKnoll, Inc., its predecessors, and controlled subsidiaries.

The accompanying unaudited Condensed Consolidated Financial Statements, taken as a whole, contain all adjustments that are of a normal recurring nature necessary to present fairly the financial position of the Company as of ~~December~~March 2, ~~2023~~2024. Operating results for the three and ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 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"). All intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The financial statements of equity method investments are not consolidated.

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 the 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~~nine ~~quarter~~months ofended ~~fiscal~~March 2, 2024.

2. 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.

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. WeThe ~~are~~Company ~~assessing~~is currently evaluating the ~~effect~~impact of adopting this ~~update~~ASU on ~~our~~its 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.

3. Revenue from Contracts with Customers

Disaggregated Revenue

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

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Net Sales:
Single performance obligation
Product revenue	$	~~871~~809.39	$	~~996~~919.67	$	12,~~716~~526.87	$	2,~~004~~924.30
Multiple performance obligations
Product revenue	7458.93		6660.39		~~143~~201.69		~~132~~193.87
Service revenue	1.04		0.68		23.04		12.86
Other	2.37		3.43		47.85		610.81
Total	$	~~949~~872.53	$	~~1,066~~984.97	$	12,~~867~~739.25	$	23,~~145~~130.74

The Company internally reports and evaluates products based on the categories Workplace, Performance Seating, Lifestyle, and Other. A description of these categories is included below.

The Workplace category includes products centered on creating highly functional and productive settings for both groups and individuals. This category focuses on the development of products, beyond seating, that define boundaries, support work and enable productivity.

The Performance Seating category includes products centered on seating ergonomics, productivity and function across an evolving and diverse range of settings. This category focuses on the development of ergonomic seating solutions for specific use cases requiring more than basic utility.

The Lifestyle category includes products focused on bringing spaces to life through beautiful yet functional products. This category focuses on the development of products that support a way of living, in thoughtful yet elevated ways. The products in this category help create emotive and visually appealing spaces via a portfolio that offers diversity in aesthetics, price and performance.

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

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

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Americas Contract:
Workplace	$	~~311~~281.38	$	~~342~~313.15	$	~~635~~917.53	$	~~680~~994.83
Performance Seating	~~103~~96.83		~~115~~102.08		~~207~~303.14		~~233~~336.97
Lifestyle	5655.03		6860.48		~~116~~171.69		~~139~~200.53
Other	57.07		47.25		715.30		1220.94
Total Americas Contract	$	~~476~~441.1	$	~~529~~484.76	$	~~966~~1,407.56	$	1,~~067~~551.17
International Contract & Specialty:
Workplace	$	3634.58	$	4937.5	$	75110.20	$	93131.84
Performance Seating	6455.38		6563.73		~~116~~172.97		~~134~~197.79
Lifestyle	8881.95		9992.64		~~177~~258.38		~~206~~299.60
Other	5145.52		5049.13		~~100~~145.13		~~102~~151.36
Total International Contract & Specialty	$	~~241~~217.23	$	~~264~~242.95	$	~~469~~686.58	$	~~537~~779.49
Global Retail:
Workplace	$	3.3	$	2120.93	$	710.58	$	4969.47
Performance Seating	5550.64		5059.98		97148.71		~~102~~161.19
Lifestyle	~~172~~159.9		~~198~~177.82		~~325~~485.43		~~388~~565.68
Other	0.43		0.73		0.69		1.14
Total Global Retail	$	~~232~~213.29	$	~~272~~257.36	$	~~431~~645.21	$	~~541~~798.28
Total	$	~~949~~872.53	$	~~1,066~~984.97	$	12,~~867~~739.25	$	23,~~145~~130.74

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.

Contract Balances

Customers may make payments before the satisfaction of the Company's performance obligation and recognition of revenue. These payments represent contract liabilities and are included within the caption “Customer deposits” in the Condensed Consolidated Balance Sheets. During the three and ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024, the Company recognized Net sales of $~~24.~~4.0 million and $7175.9 million respectively, related to customer deposits that were included in the balance sheet as of June 3, 2023.

4. Acquisitions

Knoll, Inc.

On July 19, 2021, the Company completed the acquisition of Knoll, a leader in the design, manufacture, marketing and sale of high-end furniture products and accessories for workplace and residential markets. The Company has included the financial results of Knoll in the condensed consolidated financial statements from the date of acquisition. The transaction costs associated with the acquisition, which included financial advisory, legal, proxy filing, regulatory and financing fees, were approximately $30.0 million for the twelve months ended May 28, 2022 and were recorded in general and administrative expenses.

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. (now MillerKnoll, Inc.) common stock and $11.00 in cash, without interest. The acquisition date fair value of the consideration transferred for Knoll was $1,887.3 million, which consisted of the following (in millions, except share amounts):


	Knoll Shares	Herman Miller, Inc (now MillerKnoll, Inc.) Shares Exchanged	Fair Value
Cash Consideration:
Shares of Knoll Common Stock issued and outstanding at July 19, 2021	49,444,825		$	543.9
Knoll equivalent shares for outstanding option awards, outstanding awards of restricted common stock held by non-employee directors and outstanding awards of performance units held by individuals who are former employees of Knoll and remain eligible to vest at July 19, 2021	184,857		1.4
Total number of Knoll shares for cash consideration	49,629,682

Shares of Knoll Preferred Stock issued and outstanding at July 19, 2021	169,165		254.4

Consideration for payment to settle Knoll's outstanding debt			376.9

Share Consideration:
Shares of Knoll Common Stock issued and outstanding at July 19, 2021	49,444,825
Knoll equivalent shares for outstanding awards of restricted common stock held by non-employee directors and outstanding awards of performance units held by individuals who are former employees of Knoll and remain eligible to vest at July 19, 2021	74,857
Total number of Knoll shares for share consideration	49,519,682	15,843,921	688.3

Replacement Share-Based Awards:
Outstanding awards of Knoll Restricted Stock and Performance units relating to Knoll Common Stock at July 19, 2021			22.4


Total acquisition date fair value of consideration transferred			$	1,887.3

The aggregate cash paid in connection with the Knoll acquisition was $1,176.6 million. MillerKnoll funded the acquisition through cash on-hand and debt proceeds, as described in "Note 13. Short-Term Borrowings and Long-Term Debt."

Outstanding unvested restricted stock awards, performance stock awards, performance stock units and restricted stock units with a fair value of $53.4 million converted into Company awards. Of the total fair value, $22.4 million was allocated to purchase consideration and $31.0 million was allocated to future services and is being expensed over the remaining service periods on a straight-line basis. Per the terms of the converted awards any qualifying termination within the twelve months subsequent to the acquisition resulted in accelerated vesting and related recognition of expense.

The transaction was accounted for as a business combination which requires that assets and liabilities assumed be recognized at their fair value as of the acquisition date. The following table summarizes the fair value of assets acquired and liabilities assumed as of the date of acquisition:


(In millions)	Fair Value
Cash	$	88.0
Accounts receivable	82.3
Inventories	219.9
Other current assets	29.2
Property and equipment	296.5
Right-of-use assets	202.7
Intangible assets	756.6
Goodwill	903.5
Other noncurrent assets	25.1
Total assets acquired	2,603.8

Accounts payable	144.0
Other current liabilities	153.1
Lease liabilities	177.8
Other liabilities	241.6
Total liabilities assumed	716.5
Net Assets Acquired	$	1,887.3

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. Goodwill is attributed to the assembled workforce of Knoll and anticipated operational synergies. Goodwill related to the acquisition was allocated to each of the reporting segments with a total value as of the opening balance sheet date of $903.5 million. Goodwill arising from the acquisition is not 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:

(In millions)

Valuation Method

Useful Life (years)

Fair Value

Backlog

Multi-Period Excess Earnings

Less than 1 Year

27.6

Trade name - indefinite lived

Relief from Royalty

Indefinite

418.0

Trade name - amortizing

Relief from Royalty

5-10 Years

14.0

Designs

Relief from Royalty

9-15 years

40.0

Customer Relationships

Multi-Period Excess Earnings

2-15 years

257.0

Total

756.6

5. Inventories, net

(In millions)	~~December~~March 2, ~~2023~~2024		June 3, 2023
Finished goods and work in process	$	~~330~~323.32	$	357.2
Raw materials	~~117~~114.92		130.2
Total	$	~~448~~437.24	$	487.4

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

6. Goodwill and Indefinite-Lived Intangibles

Goodwill and other indefinite-lived intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following as of ~~December~~March 2, ~~2023~~2024 and June 3, 2023:

(In millions)	Americas Contract		International Contract & Specialty		Global Retail		Total
June 3, 2023
Goodwill	$	565.1	$	303.0	$	479.1	$	1,347.2
Foreign currency translation adjustments	21.04		1.94		21.04		54.92
Accumulated impairment losses	(36.7)		—		(88.8)		(125.5)
December 2, 2023	$	530.4	$	304.9	$	392.3	$	1,227.6
March 2, 2024	$	529.8	$	304.4	$	391.7	$	1,225.9

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

(In millions)	Indefinite-lived Intangible Assets
June 3, 2023	$	480.7
Foreign currency translation adjustments	21.05
December 2, 2023	$	482.7
March 2, 2024	$	482.2

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. When testing goodwill for impairment, the Company may first assess qualitative factors. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is performed. The Company may also elect to bypass the qualitative testing and proceed directly to the quantitative testing. If the quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value.

During the third quarter of fiscal year 2023, the Company assessed changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair values of any reporting units were below their carrying amounts. Although our annual impairment test is performed during the fourth quarter, we perform this qualitative assessment each interim reporting period.

While there was no single determinate event, the consideration in totality of several factors that developed during the third quarter of fiscal year 2023 led us to conclude that it was more likely than not that the fair value of the Global Retail reporting unit was below its carrying amount. These factors included: (i) the decision to discontinue stand-alone operations of the Fully brand and (ii) the assessment of our third quarter results, for which the performance of the Global Retail reporting unit was below management's expectations.

Accordingly, the Company performed an interim quantitative impairment analysis as of March 4, 2023 to determine the fair value of the Global Retail reporting unit as compared to the carrying value. In performing the quantitative impairment test, the Company determined that the fair value of the Global Retail reporting unit exceeded the carrying amount and, as such, the reporting unit was not impaired. The Company determined that the Global Retail reporting unit exceeded its carrying value by 1% and therefore has a heightened risk of future impairments if any assumptions, estimates or market factors change in the future.

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

•actual and forecasted revenue growth rates and operating margins,

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

•revenue and EBITDA of comparable companies.

The Company 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 an indefinite-lived intangible is more likely than not to be impaired as of the ~~second~~third quarter of fiscal year 2024.

7. Employee Benefit Plans

The following table summarizes the components of net periodic benefit cost for the Company's defined benefit pension plans:

	Pension Benefits
	Three Months Ended December 2, 2023				Three Months Ended December 3, 2022
	Three Months Ended March 2, 2024				Three Months Ended March 4, 2023
(In millions)	Domestic		International		Domestic		International
Service cost	$	—	$	—	$	—	$	—
Interest cost	1.5		1.0		1.5		0.8
Expected return on plan assets(1)	(2.3)		(1.2)		(2.0)		(1.12)
Expected administrative expenses	0.2		—		0.1		—
Net amortization loss	—		—		—		0.6
Net periodic benefit (income) cost	$	(0.6)	$	(0.2)	$	(0.4)	$	0.3
Settlement charge	—		—		(0.5)		—
	Six Months Ended December 2, 2023				Six Months Ended December 3, 2022
Net periodic benefit (income) cost	$	(0.6)	$	(0.2)	$	(0.9)	$	0.2
	Nine Months Ended March 2, 2024				Nine Months Ended March 4, 2023
(In millions)	Domestic		International		Domestic		International
Service cost	$	—	$	—	$	—	$	—
Interest cost	34.05		23.0		34.05		12.64
Expected return on plan assets(1)	(4.6.9)		(23.57)		(~~4.0~~6)		(2.3.5)
Expected administrative expenses	0.46		—		0.23		—
Net amortization loss	—		—		—		1.28
Net periodic benefit (income) cost	$	(1.2)	$	(0.5)	$	(0.8)	$	0.5
Settlement charge	—		—		(0.5)		—
Net periodic benefit (income) cost	$	(1.8)	$	(0.7)	$	(1.7)	$	0.7

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

8. Earnings Per Share

~~The~~Basic ~~following~~earnings ~~table~~per ~~reconciles~~share ~~the~~is ~~numerators~~computed ~~and~~by ~~denominators~~dividing ~~used~~net inearnings attributable to MillerKnoll, Inc. by the ~~calculations~~weighted-average number of ~~basic~~common ~~and~~shares ~~diluted~~outstanding for the period. Diluted earnings per share ~~("EPS")~~is ~~for~~computed by dividing net earnings attributable to MillerKnoll, Inc. by the ~~three~~weighted-average ~~and~~number ~~six~~of ~~months~~common ~~ended:~~shares outstanding, including all potentially dilutive common

	Three Months Ended				Six Months Ended
	December 2, 2023		December 3, 2022		December 2, 2023		December 3, 2022
Numerators:
Numerator for both basic and diluted EPS, Net earnings attributable to MillerKnoll, Inc. - in millions	$	33.5	$	16.0	$	50.2	$	41.8
Denominators:
Denominator for basic EPS, weighted-average common shares outstanding	73,655,409		75,370,514		74,573,958		75,458,089
Potentially dilutive shares resulting from stock plans	584,884		507,564		503,754		584,551
Denominator for diluted EPS	74,240,293		75,878,078		75,077,712		76,042,640
Antidilutive equity awards not included in weighted-average common shares - diluted	4,277,783		2,654,297		4,079,832		1,171,951

shares. In periods of loss, there are no potentially dilutive common shares to add to the weighted-average number of common shares outstanding.

The table below presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share attributable to MillerKnoll, Inc.:


	Three Months Ended				Nine Months Ended
	March 2, 2024		March 4, 2023		March 2, 2024		March 4, 2023
Numerator:
Net earnings attributable to MillerKnoll, Inc. - in millions	$	22.2	$	0.4	$	72.4	$	42.2

Denominator:
Weighted-average common shares outstanding - basic	72,720,734		75,463,071		73,952,015		75,442,780
Potentially dilutive shares resulting from stock plans	1,426,092		603,144		664,376		593,364
Weighted-average common shares outstanding - diluted	74,146,826		76,066,215		74,616,391		76,036,144

Earnings per share attributable to MillerKnoll, Inc. - basic	0.31		0.01		0.98		0.56
Earnings per share attributable to MillerKnoll, Inc. - diluted	0.30		0.01		0.97		0.56

Antidilutive equity awards not included in weighted-average common shares - diluted	918,423		2,562,710		3,867,589		1,161,186

9. Stock-Based Compensation

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

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Stock-based compensation expense	$	5.34	$	54.58	$	1117.71	$	1015.97
Related income tax effect	$	1.23	$	1.32	$	24.81	$	23.68

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.

10. Income Taxes

The Company's process for determining the provision for income taxes for the three and ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 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 2116.40% and 1931.82%, respectively, for the three month periods ended ~~December~~March 2, ~~2023~~2024 and ~~December~~March 34, ~~2022~~2023. The year over year change in the effective tax rate for the three months ended ~~December~~March 2, ~~2023~~2024 resulted from the ~~same~~current quarter ofhaving ~~the~~favorable ~~prior~~discrete ~~year~~impacts ~~having~~from ~~more~~return ~~favorable~~to ~~tax~~provision ~~credit~~true-ups ~~impacts~~related into the United States ~~than~~research and development tax credit and the ~~current~~prior year quarter having no comparable impacts. For the three months ended ~~December~~March 2, ~~2023~~2024, the effective tax rate is ~~slightly~~lower ~~higher~~ than the United States federal statutory rate due to ~~United~~favorable ~~States~~discrete ~~state~~impacts ~~income~~from ~~taxes~~return ~~and~~to ~~the~~provision ~~mix~~true-ups ofrelated ~~earnings~~to ~~in tax jurisdictions that had rates that were higher than~~ the United States ~~federal~~research ~~statutory~~and ~~rate~~development ~~coupled with less favorable foreign~~ tax credit ~~impacts from the recapture of an overall domestic loss carryover~~. For the three months ended ~~December~~March 34, ~~2022~~2023, the effective tax rate was ~~lower~~higher than the United States federal statutory rate due to ~~the~~an ~~favorable~~unfavorable ~~impact of increased foreign~~ tax ~~credits~~adjustment in the ~~United~~quarter ~~States~~related ~~resulting~~to ~~from~~stock ~~the recapture of prior year overall domestic loss~~compensation.

The effective tax rates were 2220.45% and 19.25%, respectively, for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 and ~~December~~March 34, ~~2022~~2023. The year over year increase in the effective rate for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 resulted from the same ~~six~~nine months in the prior year having more favorable foreign tax credit impacts in the United States than the current ~~six~~nine months. For the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024, the effective tax rate is ~~higher~~slightly lower than the United States federal statutory rate due to ~~United~~favorable ~~States~~impacts ~~state~~from ~~income~~return ~~taxes~~to ~~and~~provision ~~the~~true-ups ~~mix~~related ofto ~~earnings in tax jurisdictions that had rates that were higher than~~ the United States ~~federal~~research ~~statutory~~and ~~rate~~development ~~coupled with less favorable foreign~~ tax credit ~~impacts from the recapture of an overall domestic loss carryover~~. For the ~~six~~nine months ended ~~December~~March 34, ~~2022~~2023, 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 ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 and ~~December~~March 34, ~~2022~~2023.

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

(In millions)	~~December~~March 2, ~~2023~~2024		June 3, 2023
Liability for interest and penalties	$	0.9	$	0.7
Liability for uncertain tax positions, current	$	1.67	$	1.6

The Company is subject to periodic audits by domestic and foreign tax authorities. Currently, the Company is undergoing routine periodic audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next twelve months ~~because~~as a result of ~~the~~these audits. Tax payments related to these audits, if any, are not expected to be material to the Company's Condensed Consolidated Statements of Comprehensive Income.

For the majority of tax jurisdictions, the Company is no longer subject to state, local, or non-United States income tax examinations by tax authorities for fiscal years before 2020.

11. Fair Value Measurements

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

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

(In millions)	~~December~~March 2, ~~2023~~2024		June 3, 2023
Carrying value	$	1,~~331~~344.16	$	1,414.4
Fair value	$	1,369.45	$	1,378.2

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

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.

Foreign currency exchange contracts — The Company's foreign currency exchange contracts are valued using an approach based on foreign currency exchange rates obtained from active markets. The estimated fair value of forward currency exchange contracts is based on month-end spot rates as adjusted by market-based current activity. 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 2, 2024 and June 3, 2023.


(In millions)	March 2, 2024						June 3, 2023
Financial Assets	NAV		Quoted prices in active markets for identical assets (Level 1)		Quoted prices with other observable inputs (Level 2)		NAV		Quoted prices in active markets for identical assets (Level 1)		Quoted prices with other observable inputs (Level 2)
Cash equivalents:
Money market funds	$	10.7	$	—	$	—	$	17.3	$	—	$	—

Foreign currency forward contracts	—		—		0.4		—		—		1.3
Deferred compensation plan	—		18.3		—		—		16.3		—
Total	$	10.7	$	18.3	$	0.4	$	17.3	$	16.3	$	1.3

Financial Liabilities
Foreign currency forward contracts	—		—		0.3		—		—		1.8

Total	$	—	$	—	$	0.3	$	—	$	—	$	1.8

(In millions)	December 2, 2023				June 3, 2023
Financial Assets	NAV		Quoted Prices with OtherObservable Inputs (Level 2)		NAV		Quoted Prices with Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	$	7.3	$	—	$	17.3	$	—
Foreign currency forward contracts	—		1.6		—		1.3
Deferred compensation plan	—		18.6		—		16.3
Total	$	7.3	$	20.2	$	17.3	$	17.6
Financial Liabilities
Foreign currency forward contracts	—		0.5		—		1.8
Total	$	—	$	0.5	$	—	$	1.8

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

Interest rate swap agreements — The value of the Company's interest rate swap agreements are determined using a market approach based on rates obtained from active markets. The interest rate swap agreements are designated as cash flow hedging instruments.

The following table sets forth financial assets and liabilities measured at fair value through other comprehensive income and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy as of ~~December~~March 2, ~~2023~~2024 and June 3, 2023.

(In millions)		~~December~~March 2, ~~2023~~2024		June 3, 2023
Financial Assets	Balance Sheet Location	Quoted Prices with Other Observable Inputs (Level 2)		Quoted Prices with Other Observable Inputs (Level 2)
Interest rate swap agreement	Other noncurrent assets	$	5755.57	$	59.9
Total		$	5755.57	$	59.9
Financial Liabilities
Interest rate swap agreement	Other liabilities	$	0.84	$	3.0
Total		$	0.84	$	3.0

Derivative Instruments and Hedging Activities

Foreign Currency Forward Contracts

The Company transacts business in various foreign currencies and has established a program that primarily utilizes foreign currency forward contracts to reduce the risks associated with the effects of certain foreign currency exposures. Under this program, the Company's strategy is to have increases or decreases in our foreign currency exposures offset by gains or losses on the foreign currency forward contracts to mitigate the risks and volatility associated with foreign currency transaction gains or losses. These foreign currency exposures typically arise from net liability or asset exposures in non-functional currencies on the balance sheets of our foreign subsidiaries. These foreign currency forward contracts generally settle within 30 days and are not used for trading purposes.

These forward contracts are not designated as hedging instruments. Accordingly, we record the fair value of these contracts as of the end of the reporting period in the Consolidated Balance Sheets with changes in fair value recorded within the Consolidated Statements of Comprehensive Income. The balance sheet classification for the fair values of these forward contracts is to Other current assets for unrealized gains and to Other accrued liabilities for unrealized losses. The Consolidated Statements of Comprehensive Income classification for the fair values of these forward contracts is to Other (income) expense, net, for both realized and unrealized gains and losses.

Interest Rate Swaps

The Company enters into interest rate swap agreements to manage its exposure to interest rate changes and its overall cost of borrowing. The Company's interest rate swap agreements 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 differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense.

The interest rate swaps were designated as cash flow hedges at inception and the facts and circumstances of the hedged relationships remain consistent with the initial quantitative effectiveness assessment in that the hedged instruments remain an effective accounting hedge as of ~~December~~March 2, ~~2023~~2024. 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. The impact of derivative instruments on our Condensed Consolidated Statements of Cash Flows is included in Net cash provided by operating activities.


(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~~fixed ~~Interest~~interest ~~Rates~~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 and ~~six~~nine months ended:

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
(Loss) Gain recognized in Other comprehensive loss (effective portion)	$	(7.9)	$	7.2	$	(0.1)	$	21.5
(Loss) Gain recognized in Other comprehensive loss (income) (effective portion)	$	(1.1)	$	10.3	$	(1.2)	$	31.8
Gain reclassified from Accumulated other comprehensive loss into earnings	$	7.79	$	2.4.9	$	1523.10	$	26.09

There were no gains or losses recognized in earnings for hedge ineffectiveness for the three and ~~six~~nine month periods ended ~~December~~March 2, ~~2023~~2024 and ~~December~~March 34, ~~2022~~2023. The amount of gain expected to be reclassified from Accumulated other comprehensive income into earnings during the next twelve months is $27.10 million, net of tax is $20.32 million.

Redeemable Noncontrolling Interests

Changes in the Company's redeemable noncontrolling interest in HAY for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 and ~~December~~March 34, ~~2022~~2023 are as follows:

(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Beginning Balance	$	107.6	$	106.9
Net income attributable to redeemable noncontrolling interests	01.42		3.18
Dividend attributable to redeemable noncontrolling interests	—(2.8)		(13.62)
Foreign currency translation adjustments	1.62		(10.89)
Ending Balance	$	~~109~~107.62	$	106.6

12. Commitments and Contingencies

Product Warranties

The Company provides coverage to the end-user for parts and labor on products sold under its warranty policy and for other product-related matters. The specific terms, conditions and length of those warranties vary depending upon the product sold. The Company does not sell or otherwise issue warranties or warranty extensions as stand-alone products. Reserves have been established for various costs associated with the Company's warranty programs. General warranty reserves are based on historical claims experience and other currently available information and are periodically adjusted for business levels and other factors. Specific reserves are established once an issue is identified with the amounts for such reserves based on the estimated cost of correction. The Company provides an assurance-type warranty that ensures that products will function as intended. As such, the Company's estimated warranty obligation is accounted for as a liability and is recorded within current and long-term liabilities within the Condensed Consolidated Balance Sheets.

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

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Accrual Balance — beginning	$	7371.23	$	7274.31	$	73.9	$	73.2
Accrual for warranty matters	4.9		76.40		1015.10		1117.7
Settlements and adjustments	(65.86)		(5.6)		(1218.73)		(1016.84)
Accrual Balance — ending	$	7170.36	$	74.15	$	7170.36	$	74.15

Guarantees

The Company is periodically required to provide performance bonds to do business with certain customers. These arrangements are common in the industry and generally have terms ranging between one year and three years. The bonds are required to provide assurance to customers that the products and services they have purchased will be installed and/or provided properly and without damage to their facilities. The bonds are provided by various bonding agencies. However, the Company is ultimately liable for claims that may occur against them. As of ~~December~~March 2, ~~2023~~2024, the Company had a maximum financial exposure related to performance bonds totaling approximately $97.19 million. The Company has no history of claims, nor is it aware of circumstances that would require it to pay, under any of these arrangements. The Company also believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the Company's Consolidated Financial Statements. Accordingly, no liability has been recorded in respect to these bonds as of either ~~December~~March 2, ~~2023~~2024 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 ~~December~~March 2, ~~2023~~2024, 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 ~~December~~March 2, ~~2023~~2024 or June 3, 2023.

Contingencies

The Company is also involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of such proceedings and litigation currently pending will not have a material adverse effect, if any, on the Company's Consolidated Financial Statements.

13. Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of ~~December~~March 2, ~~2023~~2024 and June 3, 2023 consisted of the following:

(In millions)	~~December~~March 2, ~~2023~~2024		June 3, 2023
Syndicated revolving line of credit, due July 2026	$	~~355~~377.09	$	426.7
Term Loan A, 7.2128%, due July 2026	360.0		370.0
Term Loan A, 6.9407%, due July 2026	352.5		370.0
Term Loan B, 7.4628%, due July 2028	612.5		615.6
Term Loan B, 7.4407%, due July 2028	610.9		615.6
Supplier financing program	21.39		2.1
Finance lease liability	1.54		—
Total debt	$	1,~~331~~344.36	$	1,414.4
Less: Unamortized discount and issuance costs	(1413.3)		(15.9)
Less: Current debt	(3840.89)		(33.4)
Long-term debt	$	1,~~278~~290.24	$	1,365.1

In connection with the acquisition of Knoll, in July, 2021, the Company entered into a credit agreement that provided for a syndicated revolving line of credit and two term loans. The revolving line of credit provides the Company with up to $725 million in revolving variable 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, 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. 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 ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024, the Company made total principal payments on term loans "A" and "B" in the ~~six~~amounts of $17.5 million and $4.7 million, respectively. During the nine months ended ~~December~~March 34, ~~2022~~2023, the Company made total principal payments on term loans "A" and "B" in the amounts of $1015.0 million and $34.1 7 million, respectively.

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

(In millions)	~~December~~March 2, ~~2023~~2024		June 3, 2023
Syndicated revolving line of credit borrowing capacity	$	725.0	$	725.0
Less: Borrowings under the syndicated revolving line of credit	~~355~~377.09		426.7
Less: Outstanding letters of credit	12.7		14.1
Available borrowings under the syndicated revolving line of credit	$	~~357~~334.34	$	284.2

Supplier Financing Program

The Company has an agreement with a third-party financial institution that allows certain participating suppliers the ability to finance payment obligations of the Company. Under this program, participating suppliers may finance payment obligations of the Company, prior to their scheduled due dates, at a discounted price to the third-party financial institution.

The Company has lengthened the payment terms for certain suppliers that have chosen to participate in the program. As a result, certain amounts due to suppliers have payment terms that are longer than standard industry practice and as such, these amounts have been excluded from “Accounts payable” in the Condensed Consolidated Balance Sheets as the amounts have been accounted for by the Company as current debt, within “Short-term borrowings and current portion of long-term debt”. As of ~~December~~March 2, ~~2023~~2024 and June 3, 2023, the liability related to the supplier financing program was $21.39 million and $2.1 million, respectively.

14. Accumulated Other Comprehensive Loss

The following table provides an analysis of the changes in accumulated other comprehensive loss for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 and ~~December~~March 34, ~~2022~~2023:

(In millions)	Cumulative Translation Adjustments		Pension and Other Post-retirement Benefit Plans		Interest Rate Swap Agreement		Accumulated Other Comprehensive Loss
Balance at June 3, 2023	$	(114.0)	$	(23.8)	$	42.7	$	(95.1)
Other comprehensive income (loss), net of tax before reclassifications	117.29		—		(1524.2)		(416.03)
Reclassification from accumulated other comprehensive loss - Other, net	—		(0.12)		1523.10		1522.08
Tax benefit	—		—		—		—
Net reclassifications	—		(0.12)		1523.10		1522.08
Net current period other comprehensive income (loss)	117.29		(0.12)		(0.1.2)		116.05
Balance at December 2, 2023	$	(102.8)	$	(23.9)	$	42.6	$	(84.1)
Balance at March 2, 2024	$	(106.1)	$	(24.0)	$	41.5	$	(88.6)
Balance at May 28, 2022	$	(93.9)	$	(36.9)	$	23.7	$	(107.1)
Other comprehensive (loss) income, net of tax before reclassifications	(2830.36)		—		1924.59		(85.87)
Reclassification from accumulated other comprehensive loss - Other, net	—		10.16		26.09		37.15
Tax benefit	—		(0.32)		—		(0.32)
Net reclassifications	—		0.84		26.09		27.83
Net current period other comprehensive (loss) income	(2830.36)		0.84		2131.58		(61.0)6
Balance at December 3, 2022	$	(122.2)	$	(36.1)	$	45.2	$	(113.1)
Balance at March 4, 2023	$	(124.5)	$	(36.5)	$	55.5	$	(105.5)

15. Operating Segments

The Company's reportable segments consist of three segments: 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 & 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.

The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and ~~acquisition~~integration-related costs. Management regularly reviews corporate costs and believes disclosing such information provides more visibility and transparency regarding how the chief operating decision maker reviews results of the Company. The accounting policies of the operating segments are the same as those of the Company.

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

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Net Sales:
Americas Contract	$	~~476~~441.1	$	~~529~~484.76	$	~~966~~1,407.56	$	1,~~067~~551.17
International Contract & Specialty	~~241~~217.23		~~264~~242.95		~~469~~686.58		~~537~~779.49
Global Retail	~~232~~213.29		~~272~~257.36		~~431~~645.21		~~541~~798.28
Total	$	~~949~~872.53	$	~~1,066~~984.97	$	12,~~867~~739.25	$	23,~~145~~130.74
Operating Earnings:
Operating Earnings (Loss):
Americas Contract	$	3525.13	$	2532.35	$	76101.58	$	4578.72
International Contract & Specialty	2318.85		2825.3		3553.27		5681.25
Global Retail	1411.73		2(24.05)		1628.92		19(4.87)
Total reportable segments	$	7355.61	$	5533.63	$	~~128~~183.67	$	~~121~~155.70
Corporate	(1312.23)		(1612.91)		(2740.92)		(3244.23)
Total	$	6042.48	$	3821.72	$	~~100~~143.75	$	89110.57

Many of the Company's assets, including manufacturing, office and showroom facilities, support multiple segments. For that reason, it is impractical to disclose asset information on a segment basis.

16. Restructuring and Integration Expense

As part of restructuring and integration activities the Company has incurred expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs as well as other direct separation benefit costs. Severance and employee benefit costs primarily relate to cash severance, as well as non-cash severance, including accelerated equity award compensation expense. The Company also incurs expenses that are an integral component of, and directly attributable to, our restructuring and integration activities, which do not qualify as exit and disposal costs under U.S. GAAP. These include integration implementation costs that relate primarily to professional fees and non-cash losses incurred on debt extinguishment.

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:

Following the Knoll acquisition, the Company announced a multi-year program (the "Knoll Integration") designed to reduce costs and integrate and optimize operations of the combined organization. The Company currently expects that the Knoll Integration will result in pre-tax cash costs that are expected to be approximately $150 million, comprised of the following categories:

•Severance and employee benefit costs associated with plans to integrate our operating structure, resulting in workforce reductions. These costs will primarily include: severance and employee benefits (cash severance, non-cash severance, including accelerated stock-compensation award expense and other termination benefits).

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

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

For the ~~six~~three months ended ~~December~~March 2, ~~2023~~2024, we incurred $107.86 million of costs related to the Knoll Integration which was comprised of $86.76 million of exit and disposal costs related to the consolidation of facilities, and $2.1 million of other integration costs.

For the ~~six~~three months ended ~~December~~March 34, ~~2022~~2023, we incurred $84.7 0 million of costs related to the Knoll Integration including: $1.47 million of severance and employee benefit costs, $20.8 million of ~~lease~~exit ~~termination~~and ~~fees~~disposal costs related to the consolidation of facilities, and $41.5 million of other integration costs.

~~The~~For ~~following~~the ~~table~~nine ~~provides~~months anended ~~analysis~~March 2, of2024, ~~the~~we ~~changes~~incurred in$18.4 ~~liability~~million ~~balance~~of ~~for Knoll Integration~~ costs ~~that~~related ~~qualify~~to asthe ~~exit~~Knoll ~~and~~Integration ~~disposal~~which ~~costs~~was ~~under~~comprised Uof $15.S.3 ~~GAAP~~million ~~(i.e.,~~of ~~severance~~exit and ~~employee~~disposal ~~benefit~~ costs ~~and~~related ~~exit~~to ~~and~~the ~~disposal~~consolidation ~~activities)~~of ~~for~~facilities ~~the~~and ~~six~~$3.1 million ~~months~~of ~~ended~~other ~~December 2,~~integration ~~2023:~~costs.

(In millions)	Severance and Employee Benefit		Exit and Disposal Activities		Total
June 3, 2023	$	2.9	$	—	$	2.9
Integration Costs	—		8.7		8.7
Amounts Paid	(1.6)		(4.7)		(6.3)
Non-cash costs	—		(2.6)		(2.6)
December 2, 2023	$	1.3	$	1.4	$	2.7

For the nine months ended March 4, 2023, we incurred $12.7 million of costs related to the Knoll Integration including: $3.1 million of severance and employee benefit costs, $3.6 million of of exit and disposal costs related to the consolidation of facilities, and $6.0 million of other integration costs.

The ~~Company~~following ~~expects~~table ~~that~~provides aan ~~substantial~~analysis ~~portion~~ of the changes in liability balance for ~~the~~ Knoll Integration costs that qualify as ofexit ~~December 2~~and disposal costs under U.S. GAAP (i.e., ~~2023~~severance ~~will~~and beemployee ~~paid~~benefit incosts and exit and disposal activities) for the ~~balance~~nine ofmonths ~~fiscal~~ended ~~year~~March 2, 2024. :


(In millions)	Severance and Employee Benefit		Exit and Disposal Activities		Total
June 3, 2023	$	2.9	$	—	$	2.9
Integration Costs	—		15.3		15.3
Amounts Paid	(2.8)		(10.2)		(13.0)
Non-cash costs	—		(3.9)		(3.9)
March 2, 2024	$	0.1	$	1.2	$	1.3

The Company expects that a substantial portion of the liability for the Knoll Integration as of March 2, 2024 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				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Americas Contract	$	65.48	$	12.12	$	915.53	$	46.02
International Contract & Specialty	01.58		1.0.5		13.20		12.50
Global Retail	—		—		—		0.2
Corporate	—		21.03		0.1		34.03
Total	$	67.96	$	4.10	$	1018.84	$	812.7

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~~March 2, ~~2023~~2024. No impairment has been recorded on the carrying value of the asset.

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 $515.0 million to $817.0 million. During the ~~six~~ three and nine months ended ~~December~~March 2, ~~2023~~2024 the Company incurred $1.7 million and $8.07 million, respectively 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
(In millions)	2024 Restructuring Plan		2023 Restructuring Plan
June 3, 2023	$	—	$	7.3
Restructuring Costs	7.0		—
Amounts Paid	(4.6)		(6.6)
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 table provides an analysis of the changes in the restructuring cost reserve for the nine months ended March 2, 2024:


	Severance and Employee-Related
(In millions)	2024 Restructuring Plan		2023 Restructuring Plan
June 3, 2023	$	—	$	7.3
Restructuring Costs	8.7		—
Amounts Paid	(6.4)		(7.0)
March 2, 2024	$	2.3	$	0.3

The Company expects that remaining liability for the 2023 restructuring plan as of March 2, 2024 will be paid in fiscal year 2024. The Company expects that remaining liability for the 2024 restructuring plan as of March 2, 2024, will be paid in fiscal year 2024 and fiscal 2025.

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

	Three Months Ended				~~Six~~Nine Months Ended
(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Americas Contract	$	—1.5	$	134.24	$	45.38	$	1317.25
International Contract & Specialty	0.81		~~0.7~~—		1.56		0.7
Global Retail	1.0.1		0.82		1.23		1.36
Total	$	1.87	$	144.76	$	78.07	$	1519.28

17. Variable Interest Entities

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 $1214.63 million and $6.3 million as of ~~December~~March 2, ~~2023~~2024 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.

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in millions, except share data)

The following is management's discussion and analysis of certain significant factors that affected the Company's financial condition, earnings and cash flows during the periods included in the accompanying Condensed Consolidated Financial Statements and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 3, 2023. References to “Notes” are to the footnotes included in the accompanying Condensed Consolidated Financial Statements.

Business Overview

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 independent contract office furniture dealers, direct customer sales, owned and independent retailers, direct-mail catalogs, and the Company’s eCommerce platforms. The following is a summary of results for the three months ended ~~December~~March 2, ~~2023~~2024:

•Net sales were $~~949~~872.53 million and orders were $~~944~~830.03 million, representing a decrease of 11.04% and 6.82%, respectively, when compared to the same quarter of the prior year. On an organic basis, which excludes the impact of foreign currency translation and the impact of the closure of the Fully business, Net sales were $~~941~~870.65 million(*) and orders were $~~934~~826.09 million(*), representing an organic decrease of 10.1% and 64.07%, respectively, when compared to the same quarter of the prior year.

•Gross margin in the ~~second~~third quarter was 3938.26% as compared to 34.51% for the same quarter of the prior year. The increase in ~~Gross~~gross margin was driven primarily by the ~~impact~~realization of price ~~increase~~optimization ~~actions~~strategies; improved freight, ~~reduced~~distribution ~~costs~~and ~~associated~~inventory ~~with~~management; ~~commodities,~~an ~~inventory~~impairment ~~handling~~charge ~~and~~in ~~freight,~~the assame ~~well~~quarter asof the ~~continued~~prior ~~realization~~year ofthat ~~synergies~~did ~~associated~~not ~~with~~reoccur; and benefits from our ongoing synergy efforts following the Knoll ~~integration~~acquisition.

•Operating expenses decreased by $1720.32 million or 56.34% as compared to the same quarter of the prior year. The decrease was driven primarily by the continued realization of cost synergies as a result of optimization of our organizational structure, a reduction in restructuring costs as compared to the same prior of the prior year as well as lower variable costs due to decreased sales.

•As of the end of the ~~second~~third quarter, the Company has captured $~~147~~153 million in annualized run rate synergies following the close of the Knoll acquisition in the first quarter of Fiscal 2022. The Company continues to make further progress on integration plans and expects total run-rate cost synergies to equal $160 million per year by July 2024 (three years following the acquisition closing date).

•The effective tax rate was 2116.40% compared to 1931.82% for the same quarter of the prior year. The ~~prior~~current ~~year~~quarter ~~tax~~ rate benefited from favorable ~~tax~~discrete ~~credit~~impacts ~~benefits~~from ~~which~~return ~~outpaced~~to provision true-ups related to the ~~current~~United ~~year~~States ~~benefit~~research and development tax credit.

•Diluted earnings per share was $0.4530 as compared to ~~earnings per share of~~ $0.2101 in the prior year. Excluding integration related costs, restructuring costs, impairment charges, and the amortization of intangible assets purchased as part of the Knoll acquisition, adjusted diluted earnings per share was $0.5945(*), a 2816.37%(*) ~~increase~~decrease as compared to prior year adjusted diluted earnings per share.

(*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

The following summary includes the Company's view of the economic environment in which it operates:

•During the ~~second~~third quarter, demand levels for the Company's products continued to be impacted by general economic uncertainty around the world driven by geopolitical concerns, persistent inflationary ~~affects~~effects, and elevated market interest rates. The Company believes that our second quarter financial results reflect how our diversified business model, with brands across multiple channels, customer segments and geographies, provides risk diversification, and opportunities for long-term future growth.

•The Americas Contract segment in the ~~second~~third quarter reported Net sales totaling $~~476~~441.1 million, down 109.10% compared to the prior year period on a reported basis and down 109.32%(*) organically. Americas Contract had new orders of $~~437~~420.41 million, which was a decrease of 79.70% from the prior year, and down 89.14%(*) on an organic basis.

•The International Contract & Specialty segment delivered Net sales in the ~~second~~third quarter of $~~241~~217.23 million, a decrease of 810.94% from the year-ago period on a reported basis and a decrease of 10.46%(*) organically. New orders in this segment totaled $~~233~~227.96 million, representing a year-over-year ~~decrease~~increase of 38.23% on a reported basis and aan ~~decrease~~increase of 57.19%(*) organically.

•Net sales in the ~~second~~third quarter for the Global Retail segment totaled $~~232~~213.29 million, a decrease of 1417.70% over the same quarter last year on a reported basis and a decrease of 911.43%(*) organically. Orders in the quarter totaled $~~272~~182.76 million, down 814.46% compared to the same period last year on a reported basis and down 37.01%(*) organically.

(*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

The remaining sections within Item 2 include additional analysis of the three and ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024, including discussion of significant variances compared to the prior year periods.

Reconciliation of Non-GAAP Financial Measures

This report contains non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. These non-GAAP financial measures are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included within this report. The Company believes these non-GAAP measures are useful for investors as they provide financial information on a more comparative basis for the periods presented.

The non-GAAP financial measures referenced within this report include: Adjusted Earnings per Share and Organic Growth (Decline).

Adjusted Earnings per Share represents reported diluted earnings per share excluding the impact from amortization of Knoll purchased intangibles, integration charges, restructuring expenses, impairment charges, and the related tax effect of these adjustments. These adjustments are described further below.

Organic Growth (Decline) represents the change in sales and orders, excluding currency translation effects, the impact of an additional week in the fiscal 2023 and the impact of the closure of the Fully business.

The adjustments made to arrive at these non-GAAP financial measures are as follows:

•Amortization of Knoll Purchased Intangibles: Includes expenses associated with the amortization of acquisition related intangibles acquired as part of the Knoll acquisition. The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. We exclude the impact of the amortization of Knoll purchased intangibles as such non-cash amounts were significantly impacted by the size of the Knoll acquisition. Furthermore, we believe that this adjustment enables better comparison of our results as Amortization of Knoll Purchased Intangibles will not recur in future periods once such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. Although we exclude the Amortization of Knoll Purchased Intangibles in these non-GAAP measures, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

•Integration Charges: Knoll integration-related costs include severance, accelerated stock-based compensation expenses, asset impairment charges, and expenses related to synergy realization efforts and reorganization initiatives.

•Restructuring charges: Includes costs associated with actions involving targeted workforce reductions.

•Tax related items: We excluded the income tax benefit/provision effect of the tax related items from our non-GAAP measures because they are not associated with the tax expense on our ongoing operating results.

•Impairment charges: Includes non-cash, pre-tax charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand.

The following tables reconciles Net sales to Net sales, organic for the periods ended as indicated below:

	Three Months Ended
	December 2, 2023
	March 2, 2024
	Americas Contract			International Contract & Specialty			Global Retail			Total
Net sales, as reported	$	~~476~~441.1		$	~~241~~217.23		$	~~232~~213.29		$	~~949~~872.53
% change from PY	(109.10)		%	(810.94)		%	(1417.70)		%	(11.04)		%
Adjustments
Currency translation effects (1)	(01.80)			(30.95)			(30.23)			(71.98)
Net sales, organic	$	~~475~~440.31		$	~~237~~216.38		$	~~229~~213.06		$	~~941~~870.65
% change from PY	(109.32)		%	(10.46)		%	(911.43)		%	(10.1)		%
	Three Months Ended
	December 3, 2022
	March 4, 2023
	Americas Contract			International Contract & Specialty			Global Retail			Total
Net sales, as reported	$	~~529~~484.76		$	~~264~~242.95		$	~~272~~257.36		$	~~1,066~~984.97
Adjustments
Fully closure	—			—			(1916.59)			(1916.59)
Net sales, organic	$	~~529~~484.76		$	~~264~~242.95		$	~~252~~240.87		$	~~1,047~~967.48
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period

	Six Months Ended
	December 2, 2023
	Americas Contract			International Contract & Specialty			Global Retail			Total
Net sales, as reported	$	966.5		$	469.5		$	431.2		$	1,867.2
% change from PY	(9.4)		%	(12.6)		%	(20.3)		%	(13.0)		%
Adjustments
Currency translation effects (1)	(1.2)			(6.9)			(5.2)			(13.3)
Net sales, organic	$	965.3		$	462.6		$	426.0		$	1,853.9
% change from PY	(6.1)		%	(10.7)		%	(11.4)		%	(8.5)		%
	Six Months Ended
	December 3, 2022
	Americas Contract			International Contract & Specialty			Global Retail			Total
Net sales, as reported	$	1,067.1		$	537.4		$	541.2		$	2,145.7
Adjustments
Fully closure	—			—			(42.3)			(42.3)
Impact of extra week in FY23	(38.7)			(19.6)			(18.2)			(76.5)
Net sales, organic	$	1,028.4		$	517.8		$	480.7		$	2,026.9
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period




	Nine Months Ended
	March 2, 2024
	Americas Contract			International Contract & Specialty			Global Retail			Total
Net sales, as reported	$	1,407.6		$	686.8		$	645.1		$	2,739.5
% change from PY	(9.3)		%	(11.9)		%	(19.2)		%	(12.5)		%

Adjustments


Currency translation effects (1)	(2.2)			(7.8)			(5.5)			(15.5)

Net sales, organic	$	1,405.4		$	679.0		$	639.6		$	2,724.0
% change from PY	(7.1)		%	(10.7)		%	(11.3)		%	(9.0)		%

	Nine Months Ended
	March 4, 2023
	Americas Contract			International Contract & Specialty			Global Retail			Total
Net sales, as reported	$	1,551.7		$	779.9		$	798.8		$	3,130.4

Adjustments

Fully closure	—			—			(59.3)			(59.3)

Impact of extra week in FY23	(38.7)			(19.6)			(18.2)			(76.5)
Net sales, organic	$	1,513.0		$	760.3		$	721.3		$	2,994.6
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period

The following tables reconcile orders as reported to organic orders for the periods ended as indicated below:

	Three Months Ended
	December 2, 2023
	March 2, 2024
	Americas Contract			International Contract & Specialty			Global Retail			Total
Orders, as reported	$	~~437~~420.41		$	~~233~~227.96		$	~~272~~182.76		$	~~944~~830.03
% change from PY	(79.70)		%	(38.2)3		%	(814.46)		%	(6.82)		%
Adjustments
Currency translation effects (1)	(1.98)			(40.59)			(30.67)			(103.04)
Orders, organic	$	~~435~~418.53		$	~~229~~226.47		$	~~269~~181.19		$	~~934~~826.09
% change from PY	(89.14)		%	(57.1)9		%	(37.01)		%	(64.07)		%
	Three Months Ended
	December 3, 2022
	March 4, 2023
	Americas Contract			International Contract & Specialty			Global Retail			Total
Orders, as reported	$	~~474~~461.16		$	~~241~~210.71		$	~~297~~213.67		$	~~1,013~~885.4
Adjustments
Fully closure	—			—			(2017.38)			(2017.38)
Orders, organic	$	~~474~~461.16		$	~~241~~210.71		$	~~277~~195.39		$	~~993~~867.16
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

	Six Months Ended
	Nine Months Ended
	December 2, 2023
	March 2, 2024
	Americas Contract			International Contract & Specialty			Global Retail			Total
Orders, as reported	$	~~924~~1,344.78		$	~~461~~689.84		$	~~471~~653.28		$	12,~~857~~688.70
% change from PY	(67.21)		%	(62.51)		%	(1314.91)		%	(87.37)		%
Adjustments
Currency translation effects (1)	(46.20)			(78.4)			(56.73)			(1720.37)
Orders, organic	$	~~920~~1,338.58		$	~~454~~681.40		$	~~465~~647.5		$	12,~~840~~667.43
% change from PY	(35.01)		%	(40.46)		%	(45.42)		%	(34.70)		%
	Six Months Ended
	Nine Months Ended
	December 3, 2022
	March 4, 2023
	Americas Contract			International Contract & Specialty			Global Retail			Total
Orders, as reported	$	~~985~~1,447.40		$	~~494~~704.12		$	~~547~~760.07		$	2,~~026~~911.59
Adjustments
Impact of extra week in FY23	(36.2)			(18.9)			(16.6)			(71.7)
Fully closure	—			—			(4361.30)			(4361.30)
Orders, organic	$	~~949~~1,410.28		$	~~475~~685.23		$	~~487~~683.1		$	12,~~911~~779.52
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period.

The following table reconciles earnings per share - diluted to adjusted earnings per share - diluted for the periods ended as indicated below:

	Three Months Ended				~~Six~~Nine Months Ended
	December 2, 2023		December 3, 2022		December 2, 2023		December 3, 2022
	March 2, 2024		March 4, 2023		March 2, 2024		March 4, 2023
Earnings per share - diluted	$	0.4530	$	0.2101	$	0.6797	$	0.5556
Add: Amortization of Knoll purchased intangibles	0.08		0.0809		0.1624		0.1626
Add: Integration charges	0.0910		0.0605		0.1626		0.1214
Add: Restructuring charges	0.02		0.1906		0.0810		0.2029
Tax impact on adjustments	(0.05)		(0.08)		(0.11)		(0.13)
Add: Impairment charges	—		0.48		—		0.48
Adjusted earnings per share - diluted	$	0.59	$	0.46	$	0.96	$	0.90
Tax impact on adjustments	(0.05)		(0.15)		(0.16)		(0.29)
Weighted average shares outstanding (used for calculating adjusted earnings per share) – diluted	74,240,293		75,878,078		75,077,712		76,042,640
Adjusted earnings per share - diluted	$	0.45	$	0.54	$	1.41	$	1.44
Weighted average shares outstanding (used for calculating adjusted earnings per share) – diluted	74,146,826		76,066,215		74,616,391		76,036,144

Key Highlights

The following table presents certain key highlights from the results of operations for the three and ~~six~~nine months ended:

	Three Months Ended						~~Six~~Nine Months Ended
(In millions, except share data)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		% Change		~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023		% Change
Net sales	$	~~949~~872.53	$	~~1,066~~984.97	(11.04)	%	$	12,~~867~~739.25	$	23,~~145~~130.74	(1312.05)	%
Cost of sales	~~577~~535.53		~~699~~649.31		(17.45)	%	1,~~137~~672.14		12,~~406~~055.01		(1918.16)	%
Gross margin	~~372~~337.0		~~367~~335.6		10.24	%	~~730~~1,067.1		~~739~~1,075.73		(10.38)	%
Operating expenses	~~311~~294.62		~~328~~314.94		(56.34)	%	~~629~~923.46		~~650~~964.26		(34.23)	%
Operating earnings	6042.48		3821.72		56101.19	%	~~100~~143.75		89110.57		1229.56	%
Other expenses, net	1615.13		1719.16		(521.89)	%	3550.36		3453.28		3(5.29)	%
Earnings before income taxes and equity income	4427.35		211.6		~~105.1~~N/A	%	6592.49		5556.39		1863.3	%
Income tax expense	94.54		40.35		~~120.9~~N/A	%	1419.60		1011.61		3771.72	%
Equity (loss) income from nonconsolidated affiliates, net of tax	~~(0.4)~~—		~~0.2~~—		~~(300.0)~~—	%	(0.3)		0.2		~~(250.0)~~N/A	%
Net earnings	3423.41		171.51		~~96.6~~N/A	%	5073.56		4446.90		1260.50	%
Net earnings attributable to redeemable noncontrolling interests	0.9		10.57		nN/aA		01.32		3.18		nN/aA
Net earnings attributable to MillerKnoll, Inc.	$	3322.52	$	~~16.~~0.4	~~109.4~~N/A	%	$	5072.24	$	4142.82	2071.16	%
Earnings per share - basic	$	0.4531	$	0.2101	~~114.3~~N/A	%	$	0.6798	$	0.5556	2175.80	%
Orders	$	~~944~~830.03	$	~~1,013~~885.4	(6.82)	%	$	12,~~857~~688.70	$	2,~~026~~911.59	(87.37)	%
Backlog	$	~~688~~639.54	$	~~815~~732.43	(1512.67)	%

The following table presents select components of the Company's Condensed Consolidated Statements of Comprehensive (Loss) Income as a percentage of Net sales, for the three and ~~six~~nine months ended:

	Three Months Ended				~~Six~~Nine Months Ended
	December 2, 2023		December 3, 2022		December 2, 2023		December 3, 2022
	March 2, 2024		March 4, 2023		March 2, 2024		March 4, 2023
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	6061.84	%	65.59	%	6061.90	%	65.56	%
Gross margin	3938.26	%	34.51	%	39.10	%	34.54	%
Operating expenses	3233.87	%	3031.89	%	33.7	%	30.38	%
Operating earnings	6.4.9	%	32.62	%	5.42	%	43.25	%
Other expenses, net	1.78	%	12.60	%	1.98	%	1.67	%
Earnings before income taxes and equity income	43.72	%	2.0.2	%	3.54	%	21.68	%
Income tax expense	1.0.5	%	0.41	%	0.87	%	0.54	%
Equity (loss) income from nonconsolidated affiliates, net of tax	—	%	—	%	—	%	—	%
Net earnings	32.6	%	10.61	%	2.7	%	2.1.5	%
Net earnings attributable to redeemable noncontrolling interests	0.1	%	0.1	%	—	%	0.1	%
Net earnings attributable to MillerKnoll, Inc.	32.5	%	~~1.5~~—	%	2.76	%	1.93	%

Net Sales

The following chart presents graphically the primary drivers of the year-over-year change in Net sales for the three and ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024. The amounts presented in the graph are expressed in millions and have been rounded.

~~Net sales decreased $117 million or 11.0% in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023. The following items contributed to the change:~~ 30

~~•Decreased~~Net sales ~~volume~~decreased ~~within~~$113 million or 11% in the ~~Global~~third ~~Retail,~~quarter ~~International~~of ~~Contract~~fiscal &2024 ~~Specialty,~~compared ~~and~~to ~~Americas~~the ~~Contract~~third ~~segments~~quarter of ~~approximately~~fiscal ~~$11~~2023. ~~million,~~The ~~$29~~following ~~million~~items ~~and~~contributed ~~$77~~to ~~million,~~the ~~respectively.~~change:

•~~Decrease~~Decreased ofsales ~~$20~~volume ~~million~~within ~~related~~the toInternational ~~the~~Contract ~~closure~~& ofSpecialty, ~~the~~Global ~~Fully~~Retail, ~~business~~and ~~that~~Americas ~~occurred~~Contract insegments ~~the~~of ~~prior~~approximately ~~year.~~$25 ~~Offset~~million, in$25 ~~part~~million ~~by:~~and $61 million, respectively.

•~~Price~~Decrease ~~increases,~~of ~~net~~$17 ofmillion ~~incremental~~related ~~discounting,~~to ~~which~~the ~~drove~~closure anof ~~increase~~the inFully ~~Net~~business ~~sales~~that ofoccurred ~~approximately~~in ~~$12~~the ~~million~~prior year. Offset in part by:

•~~Foreign~~Price ~~currency~~increases, ~~translation~~net ~~increased~~of incremental discounting, which drove an increase in Net sales byof approximately $813 million.

~~Net~~•Foreign ~~sales~~currency ~~decreased~~translation ~~$279~~increased ~~million~~Net orsales ~~13.0%~~by inapproximately ~~the~~$2 ~~first six months of fiscal 2024 compared to the first six months of fiscal 2023~~million. ~~The following items contributed to the change:~~

Net sales decreased $390 million or 12% in the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023. The following items contributed to the change:

•The additional week during the first quarter of the prior year contributed to approximately $77 million of the net sales decrease.

•Decrease of $4261 million related to the closure of the Fully business that occurred in the prior year.

•Decreased sales volume within the Global Retail, International Contract & Specialty, and Americas Contract segments of approximately $3760 million, $6388 million and $~~124~~183 million, respectively. Offset in part by:

•Price increases, net of incremental discounting, which drove an increase in Net sales of approximately $5164 million.

•Foreign currency translation increased Net sales by approximately $1315 million.

Gross Margin

Gross margin was 3938.26% in the ~~second~~third quarter of fiscal 2024 as compared to 34.51% in the ~~second~~third quarter of fiscal 2023. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:

•Reduction in costs from commodities, storage and handling costs, freight and product distribution costs, as compared to the same period of the prior year which increased gross margin by approximately 240 basis points.

•Charges in the prior year for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand contributed to an increase in gross margin of approximately 170 basis points.

•Price increases, net of incremental discounting, contributed to margin improvement of approximately 90 basis points.

•Savings from the realization of incremental synergies associated with the Knoll acquisition as compared to the same period in the prior year. These factors were offset in part by;

•Loss of leverage on lower sales volumes, which negatively impacted margin by approximately ~~120~~70 basis points.

Gross margin was 39.10% in the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 as compared to 34.54% for the same period in the prior fiscal year. The following factors summarize the major drivers of the year-over-year change in gross margin percentage:

•~~Price~~Reduction ~~increases~~in costs from commodities, ~~net~~storage ofand ~~incremental~~handling ~~discounting~~costs, ~~contributed~~freight and product distribution costs, as compared to ~~margin~~the ~~improvement~~same period of the prior year which increased gross margin by approximately ~~180~~330 basis points.

•~~Reduction~~Price ~~in costs from commodities~~increases, ~~storage~~net ~~and~~of ~~handling~~incremental ~~costs~~discounting, ~~freight~~contributed ~~and product distribution costs, as compared~~ to ~~the~~margin ~~same~~improvement ~~period~~ of ~~the prior year which increased gross margin by~~ approximately ~~370~~150 basis points.

•Savings from the realization of incremental synergies associated with the Knoll acquisition as compared to the same period in the prior year. These factors were offset in part by;

•Loss of leverage on lower sales volumes and unfavorable channel and product mix, which negatively impacted gross margin by approximately ~~110~~130 basis points.

Operating Expenses

The following chart presents graphically the primary drivers of the year-over-year change in Operating expenses for the three and six months ended December 2, 2023. The amounts presented in the graphs are expressed in millions and have been rounded.

Operating ~~expenses decreased by $17 million or 5.3% in the second quarter of fiscal 2024 compared to the prior year period. The following factors contributed to the change:~~Expenses

~~•Variable~~The ~~selling~~following ~~and~~chart ~~marketing~~presents ~~costs~~graphically ~~decreased~~the byprimary ~~approximately~~drivers ~~$10~~of ~~million,~~the ~~due~~year-over-year change in ~~part~~Operating toexpenses for the ~~closure~~three ofand ~~the~~nine ~~Fully~~months ~~business~~ended ~~that~~March 2, ~~occurred~~2024. The amounts presented in the ~~prior~~graphs ~~year;~~are expressed in millions and have been rounded.

~~•Restructuring~~Operating ~~charges~~expenses ~~related~~decreased toby ~~reductions~~$20 inmillion ~~the~~or ~~Company's~~6.4% ~~workforce~~in asthe ~~well~~third asquarter ~~acquisition~~of ~~related~~fiscal ~~integration~~2024 ~~costs contributed to a decrease in Operating expenses as~~ compared to the ~~same period of the~~ prior year ofperiod. ~~approximately~~The ~~$10~~following ~~million;~~factors ~~and~~contributed to the change:

•~~Other~~Charges ~~costs,~~for ~~primarily~~the ~~product~~impairment ~~development~~of ~~costs~~assets ~~decreased~~associated ~~approximately~~with $5the ~~million,~~decision ~~primarily~~to cease operating Fully as a stand-alone brand contributed a decrease in ~~the~~Operating ~~Americas~~expenses ~~Contract~~as ~~and~~compared ~~Global~~to ~~Retail~~the ~~segments.~~same ~~These~~period ~~decreases~~of ~~were~~the ~~offset~~prior inyear ~~part~~of ~~by:~~approximately $22 million; and

•~~Compensation~~Variable selling and ~~benefit~~marketing costs, ~~which~~decreased ~~increased~~by approximately $86 million, ~~driven~~due byin ~~changes~~part into ~~variable-based~~the ~~compensation~~closure ~~and~~of ~~incentives~~the Fully business that occurred in the prior year; and

~~Operating~~•Other ~~expenses~~costs decreased byapproximately $218 million oras ~~3.2%~~compared into the ~~first~~prior ~~six~~year, ~~months~~ of ~~fiscal~~which ~~2024~~the ~~compared~~largest tocategory ~~the~~of ~~first~~decrease ~~six~~was ~~months~~product ofdevelopment ~~fiscal~~costs ~~2023~~which decreased $4 million. ~~The~~These ~~following~~decreases ~~factors~~were ~~contributed~~offset toin ~~the~~part ~~change~~by:

•Compensation and benefit costs, which increased approximately $16 million, driven by changes in variable-based compensation and incentives.

Operating expenses decreased by $41 million or 4.3% in the first nine months of fiscal 2024 compared to the first nine months of fiscal 2023. The following factors contributed to the change:

•Charges for the impairment of assets associated with the decision to cease operating Fully as a stand-alone brand, restructuring charges related to reductions in the Company's workforce as well as acquisition related integration costs contributed a decrease in Operating expenses as compared to the same period of the prior year of approximately $27 million; and

•Variable selling and marketing costs decreased by approximately $16 million, due in part to the closure of the Fully business that occurred in the prior year; and

•Product development costs decreased approximately $13 million, primarily in the Americas Contract and Global Retail segments; and

•The impact of an extra week in the first quarter of fiscal 2023 decreased operating expenses by approximately $10 million in the current period; and

•Variable selling and marketing costs decreased by approximately $9 million, due in part to the closure of the Fully business that occurred in the prior year; and

•Restructuring charges related to reductions in the Company's workforce contributed to a decrease in Operating expenses of approximately $8 million; and

•Product development costs decreased approximately $8 million, primarily in the Americas Contract and Global Retail segments; and

•Savings from the realization of incremental synergies associated with the Knoll acquisition as compared to the same period in the prior year. These decreases were offset in part by:

•Compensation and benefit costs, which increased approximately $1632 million, driven by changes in variable-based compensation and incentives.

Other Income/Expense

During the three months ended ~~December~~March 2, ~~2023~~2024, net Other expense was $1615.13 million, representing a decrease of $14.03 million compared to the same period in the prior year, driven primarily by increased interest income as well as ~~higher~~reductions in foreign currency ~~gains recorded in the current fiscal year, offset in part by increased interest expense as compared to the same period of the prior year~~losses.

During the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024, net Other expense was $3550.36 million, representing ana ~~increase~~decrease of $13.12 million compared to the same period in the prior year. This change is driven primarily by increased interest ~~expense~~income asin ~~compared to~~ the ~~same~~current ~~period of the prior~~ year, offset in part by increased interest ~~income~~expense inas compared to the ~~current~~same period of the prior year.

Income Taxes

See Note 10 of the Condensed Consolidated Financial Statements for additional information.

Operating Segment Results

The business is comprised of various operating segments as defined by generally accepted accounting principles in the United States. These operating segments are determined on the basis of how the Company internally reports and evaluates financial information used to make operating decisions. The segments identified by the Company are Americas Contract, International Contract & Specialty, and Global Retail. Unallocated expenses are reported within the Corporate category. For descriptions of each segment, refer to Note 15 of the Condensed Consolidated Financial Statements.

The charts below present the relative mix of Net sales and Operating earnings across each of the Company's segments during the three and ~~six~~nine month periods ended ~~December~~March 2, ~~2023~~2024. This is followed by a discussion of the Company's results, by reportable segment. The amounts presented in the charts are in millions and have been rounded.

3435

Americas Contract

	Three Months Ended									~~Six~~Nine Months Ended
(Dollars in millions)	~~December~~March 2, ~~2023~~2024			~~December~~March 34, ~~2022~~2023			Change			~~December~~March 2, ~~2023~~2024			~~December~~March 34, ~~2022~~2023			Change
Net sales	$	~~476~~441.1		$	~~529~~484.76		$	(5343.65)		$	~~966~~1,407.56		$	1,~~067~~551.17		$	(~~100~~144.61)
Gross margin	~~161~~145.09			~~158~~149.76			2.(3.7)			~~335~~481.87			~~302~~452.95			3229.92
Gross margin %	33.81		%	30.09		%	32.82		%	34.72		%	2829.42		%	65.30		%
Operating earnings	3525.13			2532.35			9(7.82)			76101.58			4578.72			3023.86
Operating earnings %	75.47		%	46.87		%	2(1.60)		%	7.92		%	45.30		%	32.62		%

For the three month comparative period, Net sales decreased 109.10%, or 109.32%(*) on an organic basis, over the prior year period due to:

•Decreased sales volumes within the segment of approximately $7761 million, driven by the impact of a challenging macro-economic environment; offset in part by

•Price increases, net of incremental discounting of $2316 million.; and

For the six month comparative period, Net sales decreased 9.4%, or 6.1%(*) on an organic basis, over the prior year period due to:

•Decreased volumes within the segment of approximately $124 million, which was driven by the impact of a challenging macro-economic environment compounded by pandemic-driven pent-up demand last year; and

•The impact of an additional week in the same period of the prior year, which reduced sales approximately $39 million; offset by

•Price increases, net of incremental discounting of $61 million; and

•Favorable foreign currency translation of approximately $1 million.

For the nine month comparative period, Net sales decreased 9.3%, or 7.1%(*) on an organic basis, over the prior year period due to:

•Decreased volumes within the segment of approximately $183 million, which was driven by the impact of a challenging macro-economic environment compounded by pandemic-driven pent-up demand at the start of the prior year; and

•The impact of an additional week in the same period of the prior year, which reduced sales approximately $39 million; offset in part by

•Price increases, net of incremental discounting of $76 million; and

•Favorable foreign currency translation of approximately $2 million.

(*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, operating earnings ~~increased~~decreased $97.82 million, or 3822.72%, over the prior year period due to:

•~~Increased~~Decreased Gross margin of $24 million due to the ~~increased~~decrease ~~gross~~in ~~margin~~net ~~percentage~~sales ofdiscussed ~~380~~above ~~basis~~offset ~~points,~~in ~~which~~part ~~more~~by ~~than~~an ~~offset~~increase ~~the~~in ~~decrease~~gross inmargin ~~net~~percentage ~~sales~~of ~~discussed~~220 ~~above~~basis points. The increase in gross margin percentage was due primarily to:

35◦The impact of incremental list price increases, net of contract price discounting which provided an approximately 250 basis point improvement over the prior year; and

◦~~The~~Decreased ~~impact~~commodity costs which provided an improvement of ~~incremental~~approximately ~~list~~180 ~~price~~basis points. These increases, ~~net~~were offset in part by increased labor costs as well as loss of ~~contract~~labor ~~price~~and ~~discounting~~overhead ~~which~~leverage ~~provided~~due anto ~~approximately~~reduced ~~330~~production ~~basis~~volumes ~~point~~which ~~improvement~~had ~~over~~a ~~the~~negative ~~prior~~impact ~~year~~on margin of 210 basis points; ~~and~~as well as

◦Decreased commodity costs which provided an improvement of approximately 300 basis points. These increases were offset in part by increased labor costs as well as loss of labor and overhead leverage due to reduced production volumes which had a negative impact on margin of 250 basis points.; as well as

◦The favorable impact of realization of synergies associated with the Knoll acquisition.

•~~Decreased~~Increased Operating expenses of $84 million driven primarily by an increase in variable compensation costs of approximately $9 million offset in part by decreased restructuring charges related to reductions in the Company's workforce of approximately $133 million ~~offset~~and indecreased ~~part~~product bydevelopment ~~an increase in variable compensation~~ costs of ~~approximately~~ $42 million.

For the ~~six~~nine month comparative period, operating earnings increased $3023.86 million, or 6730.42%, over the prior year period due to:

•Increased Gross margin of $3229.92 million due to the increased gross margin percentage of ~~630~~500 basis points. The increase in gross margin percentage was due primarily to:

◦The impact of incremental list price increases, net of contract price discounting, that increased gross margin percentage by ~~430~~360 basis points; and

◦Decreased commodity and product distribution costs that increased gross margin percentage by 380 basis points. These increases were offset in part by increased labor costs as well as loss of labor and overhead leverage due to reduced production volumes as well as unfavorable product mix which had a negative impact on margin of 180 basis points. Partially offset by;

•Increased Operating expenses of $2 million. The following factors contributed to the change:

◦An increase in variable based compensation of approximately $10 million and increased acquisition related costs costs of $6 million; offset by

◦A decrease of approximately $5 million due to the additional week in the prior year as well as decreased restructuring charges related to reductions in the Company's workforce of approximately $9 million compared to the prior year.

International Contract & Specialty

	Three Months Ended									Six Months Ended
(Dollars in millions)	December 2, 2023			December 3, 2022			Change			December 2, 2023			December 3, 2022			Change
Net sales	$	241.2		$	264.9		$	(23.7)		$	469.5		$	537.4		$	(67.9)
Gross margin	106.0			109.0			(3.0)			202.9			222.4			(19.5)
Gross margin %	43.9		%	41.1		%	2.8		%	43.2		%	41.4		%	1.8		%
Operating earnings	23.8			28.3			(4.5)			35.2			56.2			(21.0)
Operating earnings %	9.9		%	10.7		%	(0.8)		%	7.5		%	10.5		%	(3.0)		%

For the three month comparative period, Net sales decreased 8.9%, or 10.4%(*) on an organic basis, over the prior year period due to:

•Decline in sales volume of approximately $29 million driven mainly by challenging macroeconomic conditions in Europe and China; offset in part by

•Favorable foreign currency translation of approximately $4 million; and

•Price increases, net of incremental discounting of $1 million.

For the six month comparative period, Net sales decreased 12.6%, or 10.7%(*) on an organic basis, over the prior year period due to:

•Impact of the extra week in the prior year period, which drove a decrease of $20 million; and

•Decreased sales volume of approximately $63 million; offset in part by

•Price increases, net of incremental discounting of $8 million; and

~~•Favorable~~◦Decreased ~~foreign~~commodity ~~currency~~and ~~translation~~product distribution costs that increased gross margin percentage by 300 basis points. These increases were offset in part by increased labor costs as well as loss of ~~approximately~~labor $7and ~~million~~overhead leverage due to reduced production volumes as well as unfavorable product mix which had a negative impact on margin of 160 basis points.

•The improvement in operating earnings from Gross margin was offset in part by increased Operating expenses of $6 million. The following factors contributed to the change:

◦An increase in variable based compensation of approximately $18 million and increased Knoll integration related costs costs of $9 million; offset by

◦A decrease of approximately $11 million in restructuring charges related to reductions in the Company's workforce compared to the prior year, decreased product development costs of $5 million, as well as a decrease of $5 million due to the additional week in the prior year.

International Contract & Specialty


	Three Months Ended									Nine Months Ended
(Dollars in millions)	March 2, 2024			March 4, 2023			Change			March 2, 2024			March 4, 2023			Change
Net sales	$	217.3		$	242.5		$	(25.2)		$	686.8		$	779.9		$	(93.1)
Gross margin	96.8			100.6			(3.8)			299.7			323.0			(23.3)
Gross margin %	44.5		%	41.5		%	3.0		%	43.6		%	41.4		%	2.2		%


Operating earnings	18.5			25.3			(6.8)			53.7			81.5			(27.8)
Operating earnings %	8.5		%	10.4		%	(1.9)		%	7.8		%	10.5		%	(2.7)		%

For the three month comparative period, Net sales decreased 10.4%, or 10.6%(*) on an organic basis, over the prior year period due to:

•Decline in sales volume of approximately $25 million driven mainly by challenging macroeconomic conditions in Europe and parts of Asia-Pacific; offset in part by

•Favorable foreign currency translation of approximately $1 million.

For the nine month comparative period, Net sales decreased 11.9%, or 10.7%(*) on an organic basis, over the prior year period due to:

•Decreased sales volume of approximately $88 million; and

•Impact of the extra week in the prior year period, which drove a decrease of $20 million; offset in part by

•Favorable foreign currency translation of approximately $8 million; and

•Price increases, net of incremental discounting of $7 million.

(*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, operating earnings decreased $~~4.5~~7 million, or ~~15.9~~27%, over the prior year period due to:

•Decreased Gross margin of $34 million due to the decrease in net sales discussed above, ~~which more than~~ offset by an increase in gross margin percentage of ~~280~~300 basis points due primarily to favorable product mix.

•Operating expenses increased approximately $23 million which was largely due to an increase in variable compensation costs in the current year.

For the ~~six~~nine month comparative period, operating earnings decreased $2127.08 million, or 3734.41%, over the prior year period due to:

•Decreased Gross margin of $2023 million due to the decrease in sales explained above, ~~which~~offset ~~more~~in ~~than~~part ~~offset~~by an increase in gross margin percentage of ~~180~~220 basis points due primarily to favorable product mix and the impact of incremental list price increases, net of contract price discounting.

•Increased Operating expenses of $25 million which was largely due to an increase in variable compensation costs in the current year of $811 million, offset in part by a decrease of $4 million due to the additional week in the prior year and a decrease of $2 million of variable selling costs.

Global Retail

	Three Months Ended									~~Six~~Nine Months Ended
(Dollars in millions)	~~December~~March 2, ~~2023~~2024			~~December~~March 34, ~~2022~~2023			Change			~~December~~March 2, ~~2023~~2024			~~December~~March 34, ~~2022~~2023			Change
Net sales	$	~~232~~213.29		$	~~272~~257.36		$	(4043.17)		$	~~431~~645.21		$	~~541~~798.28		$	(~~110~~153.07)
Gross margin	~~105~~94.03			9985.94			58.19			~~191~~285.47			~~214~~299.48			(2314.01)
Gross margin %	4544.21		%	3633.72		%	810.59		%	44.43		%	3937.65		%	46.8		%
Operating earnings	14.7			2.0			12.7			16.9			19.8			(2.9)
Operating earnings (loss)	11.3			(24.5)			35.8			28.2			(4.7)			32.9
Operating earnings %	65.3		%	0(9.75)		%	514.68		%	34.94		%	3(0.76)		%	05.20		%

For the three month comparative period, Net sales decreased 1417.70%, and decreased 911.43%(*) on an organic basis, over the prior year period due to:

•~~Decrease~~A decrease in sales volume of approximately $2025 million, ~~related~~driven toby ~~the~~elevated ~~closure~~interest ofrates in major markets around the ~~Fully~~world, ~~business~~ongoing ~~that~~geopolitical ~~occurred~~concerns, and a lagging housing market in the ~~prior year~~U.S.; and

•~~Incremental~~Decrease ~~discounting,~~of ~~net~~$17 million related to the closure of ~~price~~the ~~increases~~Fully ~~which~~business ~~decreased~~that ~~sales~~occurred byin ~~$12~~the ~~million~~prior year; and

•AIncremental ~~decrease~~discounting, innet ~~sales volume~~ of ~~approximately~~price ~~$11~~increases ~~million,~~which ~~driven~~decreased ~~by a slowdown in our wholesale~~ sales ~~internationally~~by ~~due~~$2 ~~to high rates impacting customer demand and the continued softness in the North American housing market; offset by~~million.

~~•Favorable~~For ~~foreign~~the ~~currency~~nine ~~translation~~month ofcomparative ~~approximately~~period, $3Net ~~million~~sales decreased 19.2%, and decreased 11.3%(*) on an organic basis, over the prior year period due to:

~~For~~•Decrease ~~the~~of ~~six~~$61 ~~month~~million ~~comparative~~related ~~period,~~to ~~Net~~the ~~sales~~closure ~~decreased~~of ~~20.3%,~~the ~~and~~Fully ~~decreased~~business ~~11.4%(*)~~that onoccurred anin ~~organic basis, over~~ the prior year; ~~period due to:~~and

•~~Decrease~~A decrease in sales volume of approximately $4260 million, ~~related~~driven toby ~~the~~a ~~closure~~slowdown ofin the ~~Fully~~North ~~business~~American ~~that~~housing ~~occurred~~market inand ~~the~~a ~~prior~~continuation ~~year~~of general economic uncertainty; and

•A decrease in sales volume of approximately $37 million, driven by a slowdown in the North American housing market and a continuation of general economic uncertainty; and

•The additional week during the first quarter of the prior year contributed to approximately $18 million of the net sales decrease; and

•Incremental discounting, net of price increases, which decreased sales by $1821 million; offset by

•Favorable foreign currency translation of approximately $56 million.

(*) Non-GAAP measurements; see accompanying reconciliations and explanations under the heading "Reconciliation of Non-GAAP Financial Measures."

For the three month comparative period, Operating earnings increased $1336 million or ~~635~~146.01% over the prior year period due to:

37•Increased Gross margin of $9 million due to the gross margin percentage increase of 1,090 basis points which was attributable to:

~~•Increased~~◦Charges ~~Gross~~in ~~margin~~the ofprior $5year ~~million~~for ~~due to~~ the ~~gross~~impairment ~~margin percentage increase~~ of ~~850~~assets ~~basis~~associated ~~points~~with ~~attributable to~~ the ~~favorable~~decision ~~impact~~to ofcease ~~reduced~~operating ~~costs~~Fully as ~~compared~~a tostand-alone ~~the prior year associated with product distribution and inventory handling~~brand; and

~~•Decreased~~◦The ~~Operating~~impact ~~expenses~~ of $8reduced ~~million driven primarily by decreased variable selling~~ costs, ~~decreased product development costs,~~ as ~~well~~compared ~~as a decrease due~~ to to the ~~closure~~prior ofyear ~~the~~associated ~~Fully~~with ~~business~~product ~~that~~distribution ~~occurred~~and ininventory ~~the prior year~~handling.

~~For~~•Decreased ~~the~~Operating ~~six~~expenses ~~month~~of ~~comparative~~$27 ~~period,~~million ~~Operating~~driven ~~earnings~~primarily ~~decreased~~by charges of $~~2.9~~22 million in the prior year for the impairment charges of assets associated with the decision to cease operating Fully as a stand-alone brand, ordecreased ~~14.6%~~variable selling and marketing costs, ~~over~~as ~~the~~well ~~prior~~as ~~year~~a ~~period~~decrease due to: to the closure of the Fully business that occurred in the prior year.

~~•Decreased~~For ~~Gross~~the ~~margin~~nine ofmonth ~~$23~~comparative ~~million~~period, ~~primarily~~Operating ~~due~~earnings toincreased ~~decreased~~$32.9 ~~sales explained above~~million, ~~offset~~or by700% anover ~~increase in gross margin percentage of 480 basis points attributable to~~ the ~~favorable impact of reduced costs as compared to the~~ prior year ~~associated~~period ~~with~~due ~~product distribution and inventory handling; and~~to:

•~~Decreased~~An ~~Operating~~increase ~~expenses~~in gross margin percentage of ~~$20~~680 ~~million~~basis ~~driven~~points ~~primarily~~attributable byto ~~decreased~~the ~~variable~~favorable ~~selling~~impact ~~and~~of ~~marketing~~reduced costs ofas ~~$11~~compared ~~million,~~to athe ~~decrease~~prior ofyear $4associated ~~million~~with ~~due~~product todistribution ~~the~~and ~~additional~~inventory ~~week~~handling as well as charges in the prior year, ~~decreased~~for ~~product~~the ~~development~~impairment of $3assets ~~million,~~associated aswith ~~well~~the decision to cease operating Fully as a ~~decrease~~stand-alone ~~due~~brand. toThese toincreases ~~the~~were ~~closure~~offset ofin ~~the~~part ~~Fully~~by ~~business~~unfavorable ~~that~~discounting, ~~occurred~~net inof ~~the~~price ~~prior year~~increases.

•Decreased Operating expenses of $47 million driven primarily by charges of $22 million in the prior year for the impairment charges of assets associated with the decision to cease operating Fully as a stand-alone brand, decreased

variable selling and marketing costs of $14 million, decreased product development of $4 million, a decrease of $4 million due to the additional week in the prior year, as well as a decrease due to to the closure of the Fully business that occurred in the prior year.

Corporate

Corporate unallocated expenses totaled $1312.23 million for the ~~second~~third quarter of fiscal 2024, a decrease of $30.72 million from the ~~second~~third quarter of fiscal 2023. The decrease was driven primarily by a reduction in integration costs as compared to the same period of the prior year.

Corporate unallocated expenses totaled $2740.92 million for the first ~~six~~nine months of fiscal 2024, a decrease of $4.31 million from the same period of fiscal 2023. The decrease was driven primarily by a reduction in integration costs as compared to the same period of the prior year.

Liquidity and Capital Resources

The table below summarizes the net change in Cash and cash equivalents for the ~~six~~nine months ended as indicated.

(In millions)	~~December~~March 2, ~~2023~~2024		~~December~~March 34, ~~2022~~2023
Cash provided by (used in):
Operating activities	$	~~213~~273.49	$	(570.3)4
Investing activities	(4161.30)		(3253.02)
Financing activities	(~~170~~213.81)		11(22.61)
Effect of exchange rate changes	1.0.3		(78.13)
Net change in Cash and cash equivalents	$	20.31	$	(3213.82)

Cash Flows - Operating Activities

The principal source of our operating cash flow is net earnings. Net cash provided by operating activities for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 totaled $~~213~~273.49 million, as compared to ~~cash used of~~ $570.34 million in the same period of the prior year. The increase in cash inflow is due primarily to higher net income and a reduction in working capital. Our working capital consists primarily of receivables from customers, inventory, prepaid expenses, accounts payable, accrued compensation, and accrued other expenses. The following all affected these account balances:

•The timing of collection of our receivables;

•Effective inventory management resulting in reduced inventory levels; and

•Increased variable compensation in the current ~~quarter~~year.

Cash Flows - Investing Activities

Cash used in investing activities for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 was $4161.30 million, as compared to $3253.02 million in the same period of the prior year. The increase in cash outflow in the current year, compared to the prior year, was primarily due to the advancement of $13.5 million of cash against the value of company owned life insurance policies received in the six months ended December 3, 2022. This is reflected as cash proceeds from investing activities in the Consolidated Statement of Cash Flows. In the six months ended December 2, 2023 the Company received $3.5 million of proceeds related to the sale of its investment in Maars.:

38•An increase in notes receivable received from certain independently owned dealers in the current year;

At•The ~~the~~advancement ~~end~~ of ~~the second quarter of fiscal 2024, there were outstanding commitments for capital purchases of~~ $1413.45 million. ~~The Company plans to fund these commitments through a combination~~ of cash onagainst ~~hand~~the ~~and~~value ~~cash~~of ~~flows~~company ~~from~~owned ~~operations.~~life ~~The~~insurance ~~Company~~policies ~~expects~~received ~~full-year~~in ~~capital~~the ~~purchases~~nine tomonths beended ~~between~~March 4, ~~$80~~2023 ~~million~~for ~~and $100 million,~~ which ~~will~~there bewas ~~primarily~~no ~~related~~activity ~~to investments~~ in the ~~Company's~~current ~~facilities and equipment. This compares to full-~~year ~~capital spending of $83~~.3 ~~million~~Offset in ~~fiscal~~part ~~2023. Capital expenditures for the first six months of fiscal 2024 of $39.9 million were comparable to the same period of the prior year.~~by:

•Proceeds of $3.5 million received in the nine months ended March 2, 2024 related to the sale of the Company's investment in Global Holdings Netherlands B.V.

At the end of the third quarter of fiscal 2024, there were outstanding commitments for capital purchases of $14.9 million. The Company plans to fund these commitments through a combination of cash on hand and cash flows from operations. The Company expects full-year capital purchases to be between $70 million and $90 million, which will be primarily related to investments in the Company's facilities and equipment. This compares to full-year capital spending of $83.3 million in fiscal 2023. Capital expenditures for the first nine months of fiscal 2024 were $56.5 million compared to $60.6 million for the nine months ended March 4, 2023.

Cash Flows - Financing Activities

Cash used in financing activities for the six months ended December 2, 2023 was $170.8 million, as compared to cash provided by financing activities of $11.6 million in the same period of the prior year. The increase in cash used in the current year, compared to the prior year, was primarily due to net payments on the credit agreement of $71.7 million in the current year compared to net borrowings of $67.0 million in the same period of the prior year. 39

~~During~~Cash used in financing activities for the ~~six~~nine months ended ~~December~~March 2, ~~2023~~2024 wewas ~~repurchased 3~~$213.1 million, ~~shares~~as atcompared ato ~~cost of 60~~$22.01 million, ~~compared~~in tothe ~~share~~same ~~repurchases~~period ~~totaling~~of ~~$14~~the prior year.3 ~~million~~The increase in cash used in the ~~same~~current ~~period~~year, ofcompared to the prior year., was primarily due to:

•Net payments on the credit agreement of $48.8 million in the current year compared to net borrowings of $55.5 million in the same period of the prior year; and

•The Company repurchased 4.6 million shares at a cost of $101.0 million during the nine months ended March 2, 2024 as compared to share repurchases totaling $15.9 million in the same period of the prior year.

Sources of Liquidity

The Company has taken actions to safeguard its cash flow and liquidity position in the current environment. The Company is closely managing spending levels, capital investments, and working capital.

The Company maintains an open market share repurchase program under our existing share repurchase authorization and may repurchase shares from time to time based on management’s evaluation of market conditions, share price and other factors.

At the end of the ~~second~~third quarter of fiscal 2024, the Company had a well-positioned balance sheet and liquidity profile. The Company has access to liquidity through credit facilities as well as cash and cash equivalents. These sources have been summarized below. For additional information, refer to Note 13 to the Condensed Consolidated Financial Statements.

(In millions)	~~December~~March 2, ~~2023~~2024		June 3, 2023
Cash and cash equivalents	$	~~225~~223.86	$	223.5
Availability under syndicated revolving line of credit	~~357~~334.34		284.2
Total liquidity	$	~~583~~558.10	$	507.7

Of the Cash and cash equivalents noted above at the end of the ~~second~~third quarter of fiscal 2024, the Company had $~~211~~210.94 million of Cash and cash equivalents held outside the United States.

The Company’s syndicated revolving line of credit, which matures in July, 2026, provides the Company with up to $725 million in revolving variable interest borrowing capacity and allows the Company to borrow incremental amounts, at its option, subject to negotiated terms as outlined in the agreement. Outstanding borrowings bear interest at rates based on the prime rate, federal funds rate, SOFR or negotiated terms as outlined in the agreement.

As of ~~December~~March 2, ~~2023~~2024, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $~~355~~377.09 million with available borrowings ~~against~~on this facility of $~~357~~334.34 million.

The Company intends to repatriate $106.5 million of undistributed foreign earnings all of which is held in cash in certain foreign jurisdictions with the remainder of undistributed earnings outside the U.S. recorded in working capital. The Company has recorded a $5.8 million deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S. from foreign subsidiaries. A significant portion of the $106.5 million of undistributed foreign earnings was previously taxed under the U.S. Tax Cut and Jobs Act (TCJA). The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S. which is estimated to be approximately $282.2 million on ~~December~~March 2, ~~2023~~2024.

The Company believes cash on hand, cash generated from operations, and borrowing capacity will provide adequate liquidity to fund near term and foreseeable future business operations, capital needs, upcoming debt maturities, future dividends and share repurchases, subject to financing availability in the marketplace.

Contractual Obligations

Contractual obligations associated with ongoing business and financing activities will require cash payments in future periods. A table summarizing the amounts and estimated timing of these future cash payments as of June 3, 2023 was provided in the Company's Annual Report on Form 10-K for the year ended June 3, 2023. There have been no material changes in such obligations since that date.

Guarantees

See Note 12 to the Condensed Consolidated Financial Statements.

Variable Interest Entities

See Note 17 to the Condensed Consolidated Financial Statements.

Contingencies

See Note 12 to the Condensed Consolidated Financial Statements.

Critical Accounting Policies

The Company strives to report financial results clearly and understandably. The Company follows accounting principles generally accepted in the United States in preparing its consolidated financial statements, which require certain estimates and judgments that affect the financial position and results of operations for the Company. The Company continually reviews the accounting policies and financial information disclosures. A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Company's Annual Report on Form 10-K for the year ended June 3, 2023.

New Accounting Standards

See Note 2 to the Condensed Consolidated Financial Statements.

Cautionary Note Regarding Forward-Looking Statements

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to future events and anticipated results of operations, business strategies, the anticipated benefits of our acquisition of Knoll, the anticipated impact of the Knoll acquisition on the combined Company’s business and future financial and operating results, the expected amount and timing of synergies from the Knoll acquisition, and other aspects of our operations or operating results. These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of MillerKnoll or the price of MillerKnoll’s stock. These forward-looking statements involve certain risks and uncertainties, many of which are beyond MillerKnoll’s control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including but not limited to: general economic conditions; the impact of any government policies and actions to protect the health and safety of individuals or to maintain the functioning of national or global economies, and the Company's response to any such policies and actions; the impact of public health crises, such as pandemics and epidemics; risks related to the additional debt incurred in connection with the Knoll acquisition; MillerKnoll’s ability to comply with its debt covenants and obligations; the risk that the anticipated benefits of the Knoll acquisition will be more costly to realize than expected; the effect of the announcement of the Knoll acquisition on the ability of MillerKnoll to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom MillerKnoll does business, or on MillerKnoll’s operating results and business generally; the ability to successfully integrate Knoll’s operations; the ability of MillerKnoll to implement its plans, forecasts and other expectations with respect to MillerKnoll’s business after the completion of the Knoll acquisition and realize expected synergies; business disruption following the Knoll acquisition; the availability and pricing of raw materials; the financial strength of our dealers and the financial strength of our customers; the success of newly-introduced products; the pace and level of government procurement; ~~regional~~ and ~~global geopolitical events; foreign currency exchange fluctuations; and~~ the outcome of pending litigation or governmental audits or investigations. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to MillerKnoll’s periodic reports and other filings with the SEC, including the risk factors identified in our most recent Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the year ended June 3, 2023. The forward-looking statements included in this report are made only as of the date hereof. MillerKnoll does not undertake any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

The information concerning quantitative and qualitative disclosures about market risk contained in the Company’s Annual Report on Form 10-K for the year ended June 3, 2023 has not changed materially. The nature of market risks from interest rates and commodity prices has not changed materially during the first ~~six~~nine months of fiscal 2024.

Foreign Exchange Risk

The Company primarily manufactures its products in the United States, United Kingdom, Canada, China, Italy, India, Mexico and Brazil. It also sources completed products and product components from outside the United States. The Company's completed products are sold in numerous countries around the world. Sales in foreign countries as well as certain expenses related to those sales are transacted in currencies other than the Company's reporting currency, the U.S. dollar. Accordingly, production costs and profit margins related to these sales are affected by the currency exchange relationship between the countries where the sales take place and the countries where the products are sourced or manufactured. These currency exchange relationships can also impact the Company's competitive positions within these markets.

related to those sales are transacted in currencies other than the Company's reporting currency, the U.S. dollar. Accordingly, production costs and profit margins related to these sales are affected by the currency exchange relationship between the countries where the sales take place and the countries where the products are sourced or manufactured. These currency exchange relationships can also impact the Company's competitive positions within these markets.

In the normal course of business, the Company enters into contracts denominated in foreign currencies. The principal foreign currencies in which the Company conducts its business are the British pound sterling, euro, Canadian dollar, Japanese yen, Mexican peso, Hong Kong dollar, Chinese renminbi, and the Danish krone. Changes in the fair value of such contracts are reported in earnings in the period the value of the contract changes. The net gain or loss upon settlement and the change in fair value of outstanding contracts is recorded as a component of Other (income) expense.

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including the Company's Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~December~~March 2, ~~2023~~2024, and the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of that date, the Company's disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarterly period ended ~~December~~March 2, ~~2023~~2024, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1: Legal Proceedings

There have been no material changes in the Company's legal proceedings from those set forth in the Company's Annual Report on Form 10-K for the year ended June 3, 2023.

Item 1A: Risk Factors

There have been no material changes in the Company's risk factors from those set forth in the Company's Annual Report on Form 10-K for the year ended June 3, 2023.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The Company has one share repurchase plan authorized by the Board of Directors on January 16, 2019, which provides a share repurchase authorization of $250.0 million with no specified expiration date. The approximate dollar value of shares available for purchase under the plan at ~~December~~March 2, ~~2023~~2024, was $~~160~~103.65 million.

The following is a summary of share repurchase activity during the fiscal quarter ended ~~December~~March 2, ~~2023~~2024.

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (in millions) (1)
9/3/2023 - 9/30/2023	924,662	$	18.28	924,662	$	171.6
12/3/2023 - 12/30/2023	101,883	$	27.50	101,883	$	141.7
10/1/2023 - 10/28/2023	323,590	$	24.04	323,590	$	163.8
12/31/2023 - 1/27/2024	801,927	$	25.94	801,927	$	120.9
10/29/2023 - 12/2/2023	142,299	$	22.92	142,299	$	160.6
1/28/2024 - 3/2/2024	629,620	$	27.62	629,620	$	103.5
Total	1,~~390~~533,~~551~~430			1,~~390~~533,~~551~~430

(1) Amounts are as of the end of the period indicated

The Company may repurchase shares from time to time ~~for cash~~ in open market transactions, privately negotiated transactions, pursuant to accelerated share repurchase programs or otherwise in accordance with applicable federal securities laws. The timing and amount of the repurchases will be determined by the Company's management based on their evaluation of market conditions, share price and other factors. The share repurchase program may be suspended or discontinued at any time.

During the period covered by this report, the Company did not sell any shares of common stock that were not registered under the Securities Act of 1933.

Item 5: Other Information

During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company adopted or terminated a "Rule 10b5-1 Trading Arrangement" or "Non-Rule 10b5-1 Trading Arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6: Exhibits

The following exhibits (listed by number corresponding to the Exhibit table as Item 601 in Regulation S-K) are filed with this Report:

Exhibit Number Document

10.1 MillerKnoll, Inc. 2023 Long-Term Incentive Plan ~~Global~~Nonemployee ~~EBITDA~~Director ~~Performance~~Global ~~Share~~Stock ~~Unit~~Option ~~with TSR Multiplier Award~~ Agreement*

31.1 Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certificate of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document.

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

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104 Cover Page Interactive Data File (embedded within the Inline XBRL Document)

* Denotes compensatory plan or arrangement.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MillerKnoll, Inc.

January 10, 2024

/s/ Andrea R. Owen

April 10, 2024

/s/ Andrea R. Owen

Andrea R. Owen

President and Chief Executive Officer

(Duly Authorized Signatory for Registrant)

January 10, 2024

/s/ Jeffrey M. Stutz

April 10, 2024

/s/ Jeffrey M. Stutz

Jeffrey M. Stutz

Chief Financial Officer

(Duly Authorized Signatory for Registrant)

4445

Filing Compare · MILLERKNOLL, INC.