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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 November 27, 2021
or
☐ 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 x Accelerated filer o Non-accelerated filer   o 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 1, 2022, MillerKnoll, Inc. had [75,744,162] 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 (Loss) — Three and Six Months Ended November 27, 2021 and November 28, 2020
3
Condensed Consolidated Balance Sheets — November 27, 2021 and May 29, 2021
4
Condensed Consolidated Statements of Cash Flows — Six Months Ended November 27, 2021 and November 28, 2020
5
Condensed Consolidated Statements of Stockholders' Equity — Six Months Ended November 27, 2021 and November 28, 2020
6
Notes to Condensed Consolidated Financial Statements
8
9
9
Note 4 - Leases
Note 5 - Acquisitions
Note 11 - Income Taxes
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Item 4 Controls and Procedures
Part II — Other Information
Item 1   Legal Proceedings
Item 1A Risk Factors
Item 2   Unregistered Sales of Equity Securities and Use of Proceeds
Item 6   Exhibits
Signatures
 


PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
MillerKnoll, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Dollars in millions, except share data) Three Months Ended Six Months Ended
(Unaudited) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Net sales $ 1,026.3  $ 626.3  $ 1,816.0  $ 1,253.0 
Cost of sales 675.7  382.1  1,187.9  758.8 
Gross margin 350.6  244.2  628.1  494.2 
Operating expenses:
Selling, general and administrative 318.6  153.0  625.5  292.8 
Restructuring expense, net —  2.4  —  1.2 
Design and research 28.2  17.8  51.6  33.8 
Total operating expenses 346.8  173.2  677.1  327.8 
Operating earnings (loss) 3.8  71.0  (49.0) 166.4 
Interest expense 9.2  3.5  14.8  7.2 
Interest and other investment income 0.3  0.4  0.5  0.8 
Other (income) expense, net (0.7) (0.9) 11.8  (2.7)
Earnings (loss) before income taxes and equity income (4.4) 68.8  (75.1) 162.7 
Income tax expense (benefit) (3.4) 16.2  (14.1) 36.9 
Equity (loss) income from nonconsolidated affiliates, net of tax (0.1) 0.2  —  0.4 
Net earnings (loss) (1.1) 52.8  (61.0) 126.2 
Net earnings attributable to redeemable noncontrolling interests 2.3  1.5  3.9  2.0 
Net earnings (loss) attributable to MillerKnoll, Inc. $ (3.4) $ 51.3  $ (64.9) $ 124.2 
Earnings (loss) per share — basic $ (0.05) $ 0.87  $ (0.92) $ 2.11 
Earnings (loss) per share — diluted $ (0.05) $ 0.87  $ (0.92) $ 2.10 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments $ (60.9) $ 4.9  $ (52.1) $ 35.1 
Pension and post-retirement liability adjustments 1.8  1.4  4.1  2.5 
Unrealized (loss) gains on interest rate swap agreement 4.0  0.9  3.0  1.2 
Unrealized holding loss on available for sale securities —  —  —  (0.1)
Other comprehensive (loss) income, net of tax (55.1) 7.2  (45.0) 38.7 
Comprehensive (loss) income (56.2) 60.0  (106.0) 164.9 
Comprehensive (loss) income attributable to redeemable noncontrolling interests (0.2) 1.7  1.9  4.8 
Comprehensive (loss) income attributable to MillerKnoll, Inc. $ (56.0) $ 58.3  $ (107.9) $ 160.1 
See accompanying notes to Condensed Consolidated Financial Statements.
MillerKnoll, Inc. and Subsidiaries 3

MillerKnoll, Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions, except share data)
(Unaudited) November 27, 2021 May 29, 2021
ASSETS
Current Assets:
Cash and cash equivalents $ 227.3  $ 396.4 
Short-term investments 7.4  7.7 
Accounts receivable, net of allowances of $6.2 and $5.5
 319.3  204.7 
Unbilled accounts receivable 34.5  16.4 
Inventories 482.9  213.6 
Prepaid expenses 136.5  45.1 
Other current assets 6.7  7.6 
Total current assets 1,214.6  891.5 
Property and equipment, at cost 1,470.1  1,159.7 
Less — accumulated depreciation (879.3) (832.5)
Net property and equipment 590.8  327.2 
Right-of-use assets 412.9  214.7 
Goodwill 1,284.5  364.2 
Indefinite-lived intangibles 497.4  97.6 
Other amortizable intangibles, net of accumulated amortization of $111.1 and $68.6
 392.3  105.2 
Other noncurrent assets 73.4  61.5 
Total Assets $ 4,465.9  $ 2,061.9 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 333.6  $ 178.4 
Short-term borrowings and current portion of long-term debt 29.3  2.2 
Accrued compensation and benefits 108.9  90.2 
Short-term lease liability 101.2  69.0 
Accrued warranty 18.6  14.5 
Customer deposits 118.8  43.1 
Other accrued liabilities 146.9  103.4 
Total current liabilities 857.3  500.8 
Long-term debt 1,340.7  274.9 
Pension and post-retirement benefits 41.3  34.5 
Lease liabilities 364.2  196.9 
Other liabilities 356.6  128.2 
Total Liabilities 2,960.1  1,135.3 
Redeemable noncontrolling interests 69.4  77.0 
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, 75,740,388 and 59,029,165 shares issued and outstanding in fiscal 2022 and 2021, respectively)
 15.1  11.8 
Additional paid-in capital 814.8  94.7 
Retained earnings 714.8  808.4 
Accumulated other comprehensive loss (108.1) (65.1)
Deferred compensation plan (0.2) (0.2)
Total Stockholders' Equity 1,436.4  849.6 
Total Liabilities, Redeemable Noncontrolling Interests, and Stockholders' Equity $ 4,465.9  $ 2,061.9 
See accompanying notes to Condensed Consolidated Financial Statements.
4 Form 10-Q

MillerKnoll, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in millions) Six Months Ended
(Unaudited) November 27, 2021 November 28, 2020
Cash Flows from Operating Activities:
Net (loss) earnings $ (61.0) $ 126.2 
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization 109.9  43.3 
Stock-based compensation 22.1  3.9 
Pension and post-retirement expenses (4.2) 1.5 
Deferred taxes (13.6) 4.4 
Loss on impairment 15.5  — 
Loss on extinguishment of debt 13.4  — 
(Increase) decrease in current assets (166.7) 2.3 
Increase (decrease) in current liabilities 34.1  22.9 
(Decrease) increase in non-current liabilities (5.3) 9.0 
Other, net (1.8) 1.1 
Net Cash (Used in) Provided by Operating Activities (57.6) 214.6 
Cash Flows from Investing Activities:
Proceeds from sale of property and dealers —  11.4 
Capital expenditures (46.3) (24.4)
Acquisitions, net of cash received (1,088.5) — 
Other, net 1.0  (11.4)
Net Cash Used in Investing Activities (1,133.8) (24.4)
Cash Flows from Financing Activities:
Repayments of long-term debt (50.0) — 
Proceeds from issuance of debt, net of discounts 1,007.0  — 
Payments of deferred financing costs (9.3) — 
Proceeds from credit facility 587.5  — 
Repayments of credit facility (449.4) (265.0)
Payment of make whole premium on debt (13.4) — 
Dividends paid (25.4) (12.3)
Common stock issued 4.3  3.1 
Common stock repurchased and retired (14.4) (0.9)
Other, net (1.4) (1.8)
Net Cash Provided by (Used in) Financing Activities 1,035.5  (276.9)
Effect of Exchange Rate Changes on Cash and Cash Equivalents (13.2) 10.6 
Net Decrease in Cash and Cash Equivalents (169.1) (76.1)
Cash and Cash Equivalents, Beginning of Period 396.4  454.0 
Cash and Cash Equivalents, End of Period $ 227.3  $ 377.9 
See accompanying notes to Condensed Consolidated Financial Statements.
MillerKnoll, Inc. and Subsidiaries 5

MillerKnoll, Inc.
Condensed Consolidated Statements of Stockholders' Equity
Six Months Ended November 27, 2021
(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 29, 2021 59,029,165  $ 11.8  $ 94.7  $ 808.4  $ (65.1) $ (0.2) $ 849.6 
Net earnings (61.5) (61.5)
Other comprehensive income, net of tax (15.2) (15.2)
Stock-based compensation expense 15.1  15.1 
Exercise of stock options 49,584  1.3  1.3 
Restricted and performance stock units released 358,016  — 
Employee stock purchase plan issuances 19,020  0.7  0.7 
Repurchase and retirement of common stock (267,522) (11.0) (11.0)
Shares issued for the acquisition of Knoll 15,843,921  3.2  685.1  688.3 
Pre-combination expense from Knoll rollover 751,907  0.2  22.4  22.6 
Dividends declared $0.1875 per share)
 (14.3) (14.3)
August 28, 2021 75,784,091  $ 15.2  $ 808.3  $ 732.6  $ (80.3) $ (0.2) $ 1,475.6 
Net earnings (3.4) (3.4)
Other comprehensive income, net of tax (27.8) (27.8)
Stock-based compensation expense 7.0  7.0 
Exercise of stock options 52,697  1.5  1.5 
Restricted and performance stock units released 91,443  0.2  0.2 
Employee stock purchase plan issuances 18,813  0.6  0.6 
Repurchase and retirement of common stock (76,246) (3.3) (3.3)
Forfeiture of shares (130,410) (0.1) (0.1)
NCI Adjustment 0.5  0.5 
Dividends declared ($0.1875 per share)
 (14.4) (14.4)
November 27, 2021 75,740,388  $ 15.1  $ 814.8  $ 714.8  $ (108.1) $ (0.2) $ 1,436.4 
6 Form 10-Q

Six Months Ended November 28, 2020
(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 30, 2020 58,793,275  $ 11.8  $ 81.6  $ 683.9  $ (134.0) $ (0.3) $ 643.0 
Net earnings —  —  —  73.0  —  —  73.0 
Other comprehensive income, net of tax —  —  —  —  28.9  —  28.9 
Stock-based compensation expense —  —  1.5  —  —  —  1.5 
Exercise of stock options 8,133  —  0.2  —  —  —  0.2 
Restricted and performance stock units released 106,607  —  —  —  —  —  — 
Employee stock purchase plan issuances 25,116  —  0.6  —  —  —  0.6 
Repurchase and retirement of common stock (36,644) —  (0.9) —  —  —  (0.9)
Directors' fees 3,013  —  0.1  —  —  —  0.1 
August 29, 2020 58,899,500  $ 11.8  $ 83.1  $ 756.9  $ (105.1) $ (0.3) $ 746.4 
Net earnings —  —  —  51.3  —  —  51.3 
Other comprehensive income, net of tax —  —  —  —  7.0  —  7.0 
Stock-base compensation expense —  —  2.4  —  —  —  2.4 
Exercise of stock options 54,771  —  1.9  —  —  —  1.9 
Restricted and performance stock units released 3,688  —  —  —  —  —  — 
Employee stock purchase plan issuances 14,880  —  0.4  —  —  —  0.4 
Repurchase and retirement of common stock (1,198) —  —  —  —  —  — 
Dividends declared ($0.1875 per share)
 —  —  $ —  (11.1) —  —  (11.1)
November 28. 2020 58,971,641  $ 11.8  $ 87.8  $ 797.1  $ (98.1) $ (0.3) $ 798.3 

See accompanying notes to Condensed Consolidated Financial Statements.
MillerKnoll, Inc. and Subsidiaries 7

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 office, healthcare, educational, and residential settings and provides related services that support companies all over the world. The Company's products are sold through independent contract office furniture dealers, owned retail studios, the Company’s eCommerce platforms, and direct mail catalogs as well as direct customer sales, independent retailers, and an owned contract office furniture dealership.
On July 19, 2021 the Company acquired Knoll, Inc. ("Knoll") (See Note 5. "Acquisitions"). Knoll is a leading global manufacturer of commercial and residential furniture, accessories, lighting and coverings. The Company has included the financial results of Knoll in the condensed consolidated financial statements from the date of acquisition. On October 11, 2021, our shareholders approved an amendment to our Restated Articles of Incorporation to change our corporate name from Herman Miller, Inc. to MillerKnoll, Inc. On November 1, 2021, the change in corporate name and ticker symbol to MLKN became effective.
MillerKnoll is a collective of dynamic brands that comes together to design the world we live in. Powering the world's most dynamic design brands, MillerKnoll includes Herman Miller® and Knoll®, as well as Colebrook Bosson Saunders®, DatesWeiser®, Design Within Reach®, Edelman® Leather, Fully®, Geiger®, HAY®, Holly Hunt®, KnollTextiles®, Maars® Living Walls, Maharam®, Muuto®, naughtone®, and Spinneybeck®|FilzFelt®. MillerKnoll is an unparalleled platform that redefines modern for the 21st century by building a more sustainable, equitable, and beautiful future for everyone.
Basis of Presentation
The Condensed Consolidated Financial Statements have been prepared by MillerKnoll, Inc. (“the Company”) 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," "Herman Miller," "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 November 27, 2021. Operating results for the three and six months ended November 27, 2021 are not necessarily indicative of the results that may be expected for the year ending May 28, 2022 ("fiscal 2022"). It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 29, 2021 ("fiscal 2021"). All intercompany transactions have been eliminated in the Condensed Consolidated Financial Statements. The financial statements of equity method investments are not consolidated.
Segment Reorganization
Effective as of May 30, 2021, the beginning of fiscal year 2022, the Company implemented an organizational change that resulted in a change in the reportable segments. The Company has recast historical results to reflect this change. Below is a description of each reportable segment. Intersegment sales are eliminated within each segment, with the exception of sales to and from the Knoll segment, which are presented as intersegment eliminations.
•Global Retail – reflects the legacy North America Retail segment and now includes International Retail
•Americas Contract ("Americas") – reflects the legacy Herman Miller North America Contract segment combined with Latin America and Design Within Reach Contract
•International Contract ("International") – reflects global Contract activity outside the Americas, excluding the international activity of Knoll
8 Form 10-Q

•Knoll – the Knoll segment includes the global operations associated with the design, manufacture, and sale of furniture products within the Knoll constellation of brands. The acquired Knoll business will initially be reflected as a stand-alone segment.
2. Recently Issued Accounting Standards
Recently Adopted Accounting Standards
On May 30, 2021, the Company adopted ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This update eliminates, adds and clarifies certain disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits. Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period. The adoption of this guidance did not have a material effect on our consolidated financial statements and additional disclosures will be made in our annual report.
On May 30, 2021, the Company adopted ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This update removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. The update also adds guidance to reduce complexity in certain areas. The adoption of this guidance did not have a material impact on the Company's financial statements.
Recently Issued Accounting Standards Not Yet Adopted
The Company is currently evaluating the impact of adopting the following relevant standards issued by the FASB:
Standard Description Effective Date
2021-10 Government Assistance This update adds certain disclosure requirements for entities that receive government assistance in the form of tax credits, cash grants, grants of other assets and project grants. Early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its financial statements. May 28, 2022
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 Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Net Sales:
Single performance obligation
Product revenue $ 942.3  $ 544.3  $ 1,678.7  $ 1,087.6 
Multiple performance obligations
Product revenue 78.5  77.2  128.0  155.7 
Service revenue 2.9  2.9  4.8  6.0 
Other 2.6  1.9  4.5  3.7 
Total $ 1,026.3  $ 626.3  $ 1,816.0  $ 1,253.0 
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.
MillerKnoll, Inc. and Subsidiaries 9

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.
Revenue disaggregated by product type and reportable segment is provided in the table below:
Three Months Ended Six Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Americas Contract:
Workplace $ 197.3  $ 202.9  $ 373.8  $ 416.7 
Performance Seating 96.7  82.7  181.6  169.3 
Lifestyle 34.5  28.3  67.1  61.5 
Other 33.0  33.3  64.3  69.7 
Total Americas Contract $ 361.5  $ 347.2  $ 686.8  $ 717.2 
International Contract:
Workplace $ 35.4  $ 28.0  $ 61.2  $ 59.7 
Performance Seating 57.6  51.0  106.8  94.7 
Lifestyle 28.9  21.6  51.4  39.4 
Other 3.2  0.9  4.7  1.7 
Total International Contract $ 125.1  $ 101.5  $ 224.1  $ 195.5 
Global Retail:
Workplace $ 2.9  $ 2.5  $ 6.4  $ 4.9 
Performance Seating 60.1  63.6  121.1  121.2 
Lifestyle 146.4  111.1  294.1  213.6 
Other 0.6  0.4  1.0  0.6 
Total Global Retail $ 210.0  $ 177.6  $ 422.6  $ 340.3 
Knoll:
Workplace $ 157.8  $ —  $ 233.0  $ — 
Performance Seating 25.6  —  37.7  — 
Lifestyle 128.6  —  185.0  — 
Other 24.3  —  37.0  — 
Total Knoll $ 336.3  $ —  $ 492.7  $ — 
Intersegment sales elimination $ (6.6) $ —  $ (10.2) $ — 
Total $ 1,026.3  $ 626.3  $ 1,816.0  $ 1,253.0 
Refer to Note 16 of the Condensed Consolidated Financial Statements for further information related to our reportable segments.


10 Form 10-Q

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 months ended November 27, 2021, the Company recognized Net sales of $30.2 million and $71.3 million, respectively, related to customer deposits that were included in the balance sheet as of August 28, 2021 and May 29, 2021 respectively. The Company assumed a contract liability of $55.5 million related to the acquisition of Knoll, Inc on July 19, 2021.
4. Leases
The components of lease expense are provided in the table below:
Three Months Ended Six Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Operating lease costs $ 23.1  $ 12.4  $ 41.1  $ 23.4 
Short-term lease costs 2.9  0.7  4.4  1.5 
Variable lease costs* 2.4  2.0  4.9  3.6 
Total $ 28.4  $ 15.1  $ 50.4  $ 28.5 
*Not included in the table above for the three and six months ended November 27, 2021 are variable lease costs of $25.0 million and $45.7 million, respectively, for raw material purchases under certain supply arrangements that the Company has determined meet the definition of a lease. This compares to purchases of $21.6 million and $38.6 million for the three and six months ended November 28, 2020, respectively.
At November 27, 2021, the Company had no financing leases.
The undiscounted annual future minimum lease payments related to the Company's right-of-use assets are summarized by fiscal year in the following table:
(In millions)
2022 $ 89.2 
2023 83.8 
2024 74.3 
2025 64.8 
2026 50.5 
Thereafter 148.8 
Total lease payments* $ 511.4 
Less interest 46.0 
Present value of lease liabilities $ 465.4 
*Lease payments exclude $14.6 million of legally binding minimum lease payments for leases signed but not yet commenced.
At November 27, 2021, the weighted average remaining lease term and weighted average discount rate for operating leases were 7.3 years and 2.4%, respectively.
Supplemental cash flow and other information related to leases are provided in the table below:
Three Months Ended Six Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Operating cash flows used in operating leases $ 17.0  $ 11.6  $ 33.7  $ 22.6 
Right-of-use assets obtained in exchange for new liabilities $ 5.9  $ 36.9  $ 25.9  $ 49.2 


MillerKnoll, Inc. and Subsidiaries 11

5. Acquisitions
Knoll, Inc.
On July 19, 2021, the Company completed its previously announced acquisition of Knoll, Inc. (“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 $0.9 million and $27.6 million for the three and six months ended November 27, 2021 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 preliminary acquisition date fair value of the consideration transferred for Knoll was approximately $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 preliminary 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 14. Short-Term Borrowings and Long-Term Debt."
Outstanding unvested restricted stock awards, performance stock awards, performance stock units and restricted stock units with a preliminary estimated fair value of $53.4 million automatically converted into Company awards. Of the total fair value, $22.4 million was preliminarily allocated to purchase consideration and $31.0 million was preliminarily allocated to future services and will be expensed over the remaining service periods on a straight-line basis. Per the terms of the converted awards
12 Form 10-Q

any qualifying termination within the twelve months subsequent to the acquisition will result 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 purchase price allocation is preliminary and subject to change as the valuation of inventory, property, plant and equipment, intangible assets and income taxes among other items is not complete. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.
The following table summarizes the preliminary 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 221.5 
Other current assets 36.2 
Property and equipment 291.0 
Right-of-use assets 202.7 
Intangible assets 746.7 
Goodwill 943.7 
Other noncurrent assets 22.0 
Total assets acquired 2,634.1 
Accounts payable 150.7 
Other current liabilities 129.1 
Lease liabilities 177.8 
Other liabilities 289.2 
Total liabilities assumed 746.8 
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 primarily attributed to the assembled workforce of Knoll and anticipated operational synergies. Goodwill related to the acquisition was recorded within the Knoll segment at $943.7 million. Goodwill arising from the acquisition is not expected to be deductible for tax reporting purposes.
The fair values assigned to tangible assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and may be subject to change as additional information is received and certain tax matters are finalized. Certain adjustments were made during the three months ended November 27, 2021 to the preliminary fair values resulting in a net increase to goodwill of $17.8 million primarily related to the acquired backlog intangible asset and the corresponding deferred tax liability. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, income and non-income-based taxes and residual goodwill. The Company expects to finalize the valuations as soon as practicable, but not later than one year from the acquisition date.
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
 $ 27.8 
Trade name - indefinite lived Relief from Royalty Indefinite 405.9 
Trade name - amortizing Relief from Royalty
5-10 Years
 14.0 
Designs Relief from Royalty
9-15 years
 31.0 
Customer Relationships Multi-Period Excess Earnings
2-15 years
 268.0 
Total $ 746.7 
Revenue and Net Loss of Knoll included in the Company's Condensed Consolidated Statements of Comprehensive Income (Loss) from the acquisition date of July 19, 2021 through November 27, 2021 are as follows (in millions):
MillerKnoll, Inc. and Subsidiaries 13

Total revenues $ 492.7 
Net Loss (73.3)

Unaudited Pro Forma Results of Operations
The results of Knoll's operations have been included in the Consolidated Financial Statements beginning on July 19, 2021. The following table provides pro forma results of operations for the three months and six months ended November 27, 2021 and November 28, 2020, as if Knoll had been acquired as of May 31, 2020. The pro forma results include certain purchase accounting adjustments such as the estimated change in depreciation and amortization expense on the acquired tangible and intangible assets. The impact of these adjustments is subject to change as valuations are finalized. The pro forma results also include the impact of incremental interest expense incurred to finance the merger. Transaction related costs, including debt extinguishment costs related to the transaction, have been eliminated from the pro forma amounts presented in both periods. Pro forma results do not include any anticipated cost savings from the integration of this acquisition. Accordingly, such amounts are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future.
Three Months Ended Six Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Net sales $ 1,026.3  $ 940.5  $ 1,970.2  $ 1,832.3 
Net earnings attributable to MillerKnoll, Inc. $ 8.2  $ 58.4  $ (22.6) $ 110.3 
6. Inventories, net
(In millions) November 27, 2021 May 29, 2021
Finished goods and work in process $ 355.5  $ 166.7 
Raw materials 127.4  46.9 
Total $ 482.9  $ 213.6 
Inventories are valued at the lower of cost or market and include material, labor, and overhead. Certain inventories within our United States-based manufacturing operations are valued using the last-in, first-out (LIFO) method. Inventories of all other operations are valued using the first-in, first-out (FIFO) method.
Inventories valued using LIFO amounted to $23.9 million and $21.8 million as of November 27, 2021 and May 29, 2021, respectively. If all inventories had been valued using the first-in first-out method, inventories would have been $524.4 million and $230.2 million at November 27, 2021 and May 29, 2021, respectively.
7. 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 November 27, 2021 and May 29, 2021:
(In millions) Goodwill Indefinite-lived Intangible Assets
May 29, 2021 $ 364.2  $ 97.6 
Foreign currency translation adjustments (23.4) (6.1)
Acquisition of Knoll 943.7  405.9 
November 27, 2021 $ 1,284.5  $ 497.4 
Goodwill is tested for impairment at the reporting unit level annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. 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.
14 Form 10-Q

Each of the reporting units, with the exception of Knoll, were reviewed for impairment using a quantitative assessment as of March 31, 2021, our annual testing date. In performing the quantitative impairment test for fiscal year 2021, the Company determined that the fair value of its reporting units exceeded the carrying amount and, as such, these reporting units were not impaired.
In connection with the segment reorganization, certain of the Company’s reporting units have changed in composition, and goodwill was reallocated between such reporting units using a relative fair value approach. Accordingly, the Company performed interim goodwill impairment tests in the first quarter of 2022 for each reporting unit, with the exception of Knoll. Based on the results of the tests performed, the Company determined that the fair value of each reporting unit, as reorganized, exceeded its respective carrying amount in each case.
Goodwill related to the acquisition of Knoll was recorded within the Knoll segment at $943.7 million. The increase in goodwill from the acquisition of Knoll was offset in part by foreign currency translation adjustments, resulting in a goodwill balance of $1,284.5 million as of November 27, 2021.
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.
In fiscal 2021, the Company performed quantitative assessments in testing indefinite-lived intangible assets for impairment. The carrying value of the Company's HAY trade name indefinite-lived intangible asset was $41.7 million as of March 31, 2021. The calculated fair value of the HAY trade name was $43.8 million which represents an excess fair value of $2.1 million or 5.0%. If the residual cash flow related to this trade name were to decline in future periods, the Company may need to record an impairment charge.
During the six months ended November 27, 2021, there were no identified indicators of impairment that required the Company to complete an interim quantitative impairment assessment related to any of the Company's reporting units or indefinitely-lived intangible assets.
8. 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 November 27, 2021 Three Months Ended November 28, 2020
(In millions) Domestic International Domestic International
Service cost $ 0.1  $ —  $ —  $ — 
Interest cost 1.1  0.8  —  0.7 
Expected return on plan assets(1)
 (2.2) (1.8) —  (1.4)
Net amortization loss —  1.7  —  1.6 
Net periodic benefit cost $ (1.0) $ 0.7  $ —  $ 0.9 
Six Months Ended November 27, 2021 Six Months Ended November 28, 2020
(In millions) Domestic International Domestic International
Service cost $ 0.2  $ —  $ —  $ — 
Interest cost 1.5  1.7  —  1.3 
Expected return on plan assets(1)
 (3.1) (3.6) —  (2.8)
Net amortization loss —  3.3  —  3.3 
Net periodic benefit cost $ (1.4) $ 1.4  $ —  $ 1.8 
(1)The weighted-average expected long-term rate of return on plan assets is 4.98%.
MillerKnoll, Inc. and Subsidiaries 15

9. Earnings Per Share
The following table reconciles the numerators and denominators used in the calculations of basic and diluted earnings per share ("EPS") for the three and six months ended:
Three Months Ended Six Months Ended
November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Numerators:
Numerator for both basic and diluted EPS, Net (loss) earnings attributable to MillerKnoll, Inc. - in millions $ (3.4) $ 51.3  $ (64.9) $ 124.2 
Denominators:
Denominator for basic EPS, weighted-average common shares outstanding 75,304,752  58,908,094  70,803,483  58,869,699 
Potentially dilutive shares resulting from stock plans 359,304  —  174,229 
Denominator for diluted EPS 75,304,752  59,267,398  70,803,483  59,043,928 
Antidilutive equity awards not included in weighted-average common shares - diluted 1,518,161  301,002  1,438,374  1,067,979 
10. Stock-Based Compensation
The following table summarizes the stock-based compensation expense and related income tax effect for the three and six months ended:
Three Months Ended Six Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Stock-based compensation expense $ 7.0  $ 2.4  $ 22.1  $ 3.9 
Related income tax effect $ 1.6  $ 0.6  $ 5.3  $ 0.9 
The increase in Stock-based compensation expense was driven in part by the addition of Knoll's equity-based compensation awards. This impact includes the accelerated stock-compensation award expense related to workforce reductions as part of the Knoll integration.
Certain of the Company's 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.
11. Income Taxes
The Company's process for determining the provision for income taxes for the three and six months ended November 27, 2021 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 77.6% and 23.5%, respectively, for the three month periods ended November 27, 2021 and November 28, 2020. The year over year change in the effective tax rate for the three months ended November 27, 2021 resulted from an adjustment due to a pre-tax book loss reported for the quarter coupled with an overall forecasted pre-tax book loss for the year resulting from restructuring costs in connection with the Knoll acquisition and increased margin pressure from global supply chain disruptions and labor shortages. The same quarter of the prior year had no comparable impacts. For the three months ended November 27, 2021, the effective tax rate is higher than the United States federal statutory rate due to the impact of applying the estimated annual effective tax rate to the year to date pre-tax loss. For the three months ended November 28, 2020, the effective tax rate was higher than the United States federal statutory rate due to United States state income taxes and the mix of earnings in tax jurisdictions that had rates that were higher than the United States federal statutory rate.
The effective tax rates were 18.8% and 22.6%, respectively, for the six months ended November 27, 2021 and November 28, 2020. The year over year decrease in the effective rate for the six months ended November 27, 2021 resulted from an overall
16 Form 10-Q

pre-tax book loss reported for the six months coupled with non-deductible discrete compensation and acquisition costs in connection with the Knoll acquisition. The same six months in the prior year had no comparable impacts from the acquisition. For the six months ended November 27, 2021, the effective tax rate is lower than the United States federal statutory rate due to the impact of applying the estimated annual effective tax rate to the year to date pre-tax loss, which includes an adjustment impacted by non-deductible Knoll acquisition related costs. For the six months ended November 28, 2020, the effective tax rate was higher than the United States federal statutory rate mainly due to United States state income taxes and the mix of earnings in tax jurisdictions that had rates that were higher than the United States federal statutory rate.
The Company recognizes interest and penalties related to uncertain tax benefits through income tax expense in its Condensed Consolidated Statements of Comprehensive Income. Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and six months ended November 27, 2021 and November 28, 2020.
The Company's recorded liability for potential interest and penalties related to uncertain tax benefits was:
(In millions) November 27, 2021 May 29, 2021
Liability for interest and penalties $ 1.0  $ 0.9 
Liability for uncertain tax positions, current $ 2.7  $ 2.1 
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 of the 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 2018.
12. Fair Value Measurements
The Company's financial instruments consist of cash equivalents, marketable securities, accounts and notes receivable, a deferred compensation plan, accounts payable, debt, interest rate swaps, foreign currency exchange contracts, redeemable noncontrolling interests, indefinite-lived intangible assets and right-of-use assets. The Company's financial instruments, 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) November 27, 2021 May 29, 2021
Carrying value $ 1,391.2  $ 277.1 
Fair value $ 1,320.5  $ 284.8 
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 November 27, 2021 and May 29, 2021.
MillerKnoll, Inc. and Subsidiaries 17

(In millions) November 27, 2021 May 29, 2021
Financial Assets NAV Quoted Prices with Other
Observable Inputs (Level 2)		 NAV Quoted Prices with Other
Observable Inputs (Level 2)
Cash equivalents:
Money market funds $ 16.7  $ —  $ 162.2  $ — 
Mutual funds - equity —  0.7  —  0.8 
Foreign currency forward contracts —  0.3  —  1.6 
Deferred compensation plan —  17.7  —  16.1 
Total $ 16.7  $ 18.7  $ 162.2  $ 18.5 
Financial Liabilities
Foreign currency forward contracts $ —  $ 2.7  $ —  $ 0.1 
Total $ —  $ 2.7  $ —  $ 0.1 
In connection with the acquisition of Knoll, the Company acquired a contingent obligation related to Knoll's acquisition of Fully. The fair value measurement of the Company's contingent obligation is based on significant, unobservable inputs for which little or no market data exists, and thus represents a Level 3 measurement. The contingent obligation is revalued each reporting period, with changes in fair value recognized through net income. The valuation inputs utilized to estimate fair value of the contingent obligation at November 27, 2021, included a discount rate of 2.5%, Fully's net sales and earnings before interest, taxes, depreciation and amortization ("EBITDA") for the period ended November 27. 2021, and projections related to Fully's net sales and EBITDA for each of the calendar years 2021 through 2023. The contingent obligation's fair value at November 27, 2021 is $9.9 million. The maximum amount of contingent obligation that could be earned by Fully through 2023 is $10.3 million.
The following describes the methods the Company uses to estimate the fair value of financial assets and liabilities recorded in other comprehensive income, which have not significantly changed in the current period:
Mutual funds-fixed income — The Company's fixed-income securities primarily include fixed income mutual funds and government obligations. These investments are recorded at fair value using quoted prices for similar securities.
Interest rate swap agreements — The value of the Company's interest rate swap agreements 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 November 27, 2021 and May 29, 2021.
(In millions) November 27, 2021 May 29, 2021
Financial Assets Quoted Prices with Other Observable Inputs (Level 2) Quoted Prices with Other Observable Inputs (Level 2)
Mutual funds - fixed income $ 6.7  $ 6.9 
Total $ 6.7  $ 6.9 
Financial Liabilities
Interest rate swap agreement $ 10.4  $ 14.4 
Total $ 10.4  $ 14.4 
The following is a summary of the carrying and market values of the Company's fixed income mutual funds and equity mutual funds as of the dates indicated:
November 27, 2021 May 29, 2021
(In millions) Cost Unrealized
Gain/(Loss)		 Market
Value		 Cost Unrealized
Gain/(Loss)		 Market
Value
Mutual funds - fixed income $ 6.7  $ —  $ 6.7  $ 6.9  $ —  $ 6.9 
Mutual funds - equity 0.4  0.3  0.7  0.5  0.3  0.8 
Total $ 7.1  $ 0.3  $ 7.4  $ 7.4  $ 0.3  $ 7.7 
18 Form 10-Q

The cost of securities sold is based on the specific identification method; realized gains and losses resulting from such sales are included in the Condensed Consolidated Statements of Comprehensive Income within "Other (income) expense, net". The Company views its equity and fixed income mutual funds as available for use in its current operations. Accordingly, the investments are recorded within Current Assets within the Condensed Consolidated Balance Sheets.
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. Foreign currency exposures typically arise from net liability or asset exposures in non-functional currencies on the balance sheets of our foreign subsidiaries. Foreign currency forward contracts generally settle within 30 days and are not used for trading purposes.
These 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 November 27, 2021. 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.
As of November 27, 2021, the Company had the following two outstanding interest rate swap agreements:
(In millions) Notional Amount Forward Start Date Termination Date Effective Fixed Interest Rate
September 2016 Interest Rate Swap $ 150.0  January 3, 2018 January 3, 2028 1.949  %
June 2017 Interest Rate Swap $ 75.0  January 3, 2018 January 3, 2028 2.387  %
The swaps above effectively converted indebtedness anticipated to be borrowed on the Company's revolving line of credit up to the notional amounts from a LIBOR-based floating interest rate plus applicable margin to an effective fixed interest rate plus applicable margin under the agreements as of the forward start date.
As of November 27, 2021, the fair value of the Company’s two outstanding interest rate swap agreements was a liability of $10.4 million and is recorded within "Other liabilities" in the Condensed Consolidated Balance Sheets.
The following table summarizes the effects of the interest rate swap agreements for the three and six months ended:
MillerKnoll, Inc. and Subsidiaries 19

Three Months Ended Six Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Gain recognized in Other comprehensive loss (effective portion) $ 4.0  $ 0.9  $ 3.0  $ 1.2 
(Loss) reclassified from Accumulated other comprehensive loss into earnings $ (1.2) $ (1.1) $ (1.9) $ (2.2)
There were no gains or losses recognized in earnings for hedge ineffectiveness for the three and six month periods ended November 27, 2021 and November 28, 2020. The amount of loss expected to be reclassified from Accumulated other comprehensive loss into earnings during the next twelve months is $4.2 million, and net of tax is $3.2 million.
Redeemable Noncontrolling Interests
Changes in the Company's redeemable noncontrolling interest in HAY for the six months ended November 27, 2021 and November 28, 2020 are as follows:
(In millions) November 27, 2021 November 28, 2020
Beginning Balance $ 77.0  $ 50.4 
Net income attributable to redeemable noncontrolling interests 3.9  2.0 
Distributions to redeemable noncontrolling interests (3.8) (2.7)
Cumulative translation adjustments attributable to redeemable noncontrolling interests (2.0) 2.8 
Foreign currency translation adjustments (5.7) 4.0 
Ending Balance $ 69.4  $ 56.5 
13. 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 program. 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 Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Accrual Balance — beginning $ 69.8  $ 60.3  $ 60.1  $ 59.2 
Accrual for warranty matters 3.9  2.7  9.2  7.3 
Settlements and adjustments (3.8) (3.2) (9.5) (6.7)
Acquired through business acquisition —  —  $ 10.1  $ — 
Accrual Balance — ending $ 69.9  $ 59.8  $ 69.9  $ 59.8 
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 November 27, 2021, the Company had a maximum financial
20 Form 10-Q

exposure related to performance bonds totaling approximately $7.1 million. The Company has no history of claims, nor is it aware of circumstances that would require it to pay, under any of these arrangements. The Company also believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the Company's Consolidated Financial Statements. Accordingly, no liability has been recorded in respect to these bonds as of either November 27, 2021 or May 29, 2021.
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 November 27, 2021, the Company had a maximum financial exposure from these standby letters of credit totaling approximately $15.4 million, all of which is considered usage against the Company's revolving line of credit. 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 in respect to these arrangements as of November 27, 2021 or May 29, 2021.
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.
14. Short-Term Borrowings and Long-Term Debt
Short-term borrowings and long-term debt as of November 27, 2021 and May 29, 2021 consisted of the following:
(In millions) November 27, 2021 May 29, 2021
Debt securities, 4.95%, due May 20, 2030
 $ —  $ 49.9 
Syndicated revolving line of credit, due August 2024 —  225.0 
Syndicated revolving line of credit, due July 2026 363.1  — 
Term Loan A, 1.5625%, due July 2026
 400.0  — 
Term Loan B, 2.0625%, due July 2028
 625.0  — 
Supplier financing program 3.1  2.2 
Total debt $ 1,391.2  $ 277.1 
Less: Unamortized discount and issuance costs (21.2) — 
Less: Current portion of long-term debt (29.3) (2.2)
Long-term debt $ 1,340.7  $ 274.9 
As of May 29, 2021, the Company's syndicated revolving line of credit provided the Company with up to $500 million in revolving variable interest borrowing capacity and included an "accordion feature" allowing the Company to increase, at its option and subject to the approval of the participating banks, the aggregate borrowing capacity of the facility by up to $250 million. Outstanding borrowings bear interest at rates based on the prime rate, federal funds rate, LIBOR or negotiated rates as outlined in the agreement. Interest is payable periodically throughout the period if borrowings are outstanding. The Company paid off the outstanding balance due on the syndicated revolving line of credit during the first quarter of 2022.
In connection with the acquisition of Knoll, in July, 2021, the Company entered into a credit agreement that provided for a syndicated revolving line of credit and two term loans. The revolving line of credit provides the Company with up to $725 million in revolving variable interest borrowing capacity that matures in July 2026, replacing the previous $500 million syndicated revolving line of credit. The term loans consist of a five-year senior secured term loan "A" facility with an aggregate principal amount of $400 million and a seven-year senior secured term loan "B" facility with an aggregate principal amount of $625 million, the proceeds of which were used to finance a portion of the cash consideration for the acquisition of Knoll, for the repayment of certain debt of Knoll and to pay fees, costs and expenses related thereto. Both term loans have a variable interest rate. The Company also repaid $64 million of private placement notes due May 20, 2030. A loss on extinguishment of debt of approximately $13.4 million was recognized as part of the repayment of the private placement notes, which represented the premium on early redemption.
Available borrowings under the syndicated revolving line of credit were as follows for the periods indicated:
MillerKnoll, Inc. and Subsidiaries 21

(In millions) November 27, 2021 May 29, 2021
Syndicated revolving line of credit borrowing capacity $ 725.0  $ 500.0 
Less: Borrowings under the syndicated revolving line of credit 363.1  225.0 
Less: Outstanding letters of credit 15.4  9.8 
Available borrowings under the syndicated revolving line of credit
 $ 346.5  $ 265.2 
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 the caption “Accounts payable” in the Condensed Consolidated Balance Sheets as the amounts have been accounted for by the Company as current debt, within the caption “Short-term borrowings and current portion of long-term debt”.
15. Accumulated Other Comprehensive Loss
The following table provides an analysis of the changes in accumulated other comprehensive loss for the six months ended November 27, 2021 and November 28, 2020:
(In millions) Cumulative Translation Adjustments Pension and Other Post-retirement Benefit Plans Unrealized
Gains on Available-for-sale Securities		 Interest Rate Swap Agreement Accumulated Other Comprehensive Loss
Balance at May 29, 2021 $ (3.9) $ (50.4) $ —  $ (10.8) $ (65.1)
Other comprehensive (loss) income, net of tax before reclassifications (50.1) —  —  4.9  (45.2)
Reclassification from accumulated other comprehensive loss - Other, net —  4.7  —  (1.9) 2.8 
Tax benefit —  (0.6) —  —  (0.6)
Net reclassifications —  4.1  —  (1.9) 2.2 
Net current period other comprehensive (loss) income (50.1) 4.1  —  3.0  (43.0)
Balance at November 27, 2021 $ (54.0) $ (46.3) $ —  $ (7.8) $ (108.1)
Balance at May 30, 2020 $ (56.0) $ (59.2) $ 0.1  $ (18.9) $ (134.0)
Other comprehensive income (loss), net of tax before reclassifications 32.3  —  (0.1) 3.4  35.6 
Reclassification from accumulated other comprehensive loss - Other, net —  3.0  —  (2.2) 0.8 
Tax benefit —  (0.5) —  —  (0.5)
Net reclassifications —  2.5  —  (2.2) 0.3 
Net current period other comprehensive income (loss) 32.3  2.5  (0.1) 1.2  35.9 
Balance at November 28, 2020 $ (23.7) (56.7) $ —  $ (17.7) $ (98.1)
16. Operating Segments
Effective as of May 30, 2021, the beginning of fiscal year 2022, the Company implemented an organizational change that resulted in a change in the reportable segments. The Company has restated historical results to reflect this change. Below is a summary of the change in reportable segments.
•The activities related to the manufacture and sale of furniture products direct to consumers and to third-party retailers that previously resided within the International Contract segment moved to the Global Retail segment.
22 Form 10-Q

•The operations associated with the design, manufacture and sale of furniture products for work-related settings in Latin America moved from the International Contract segment to the North America Contract segment to form a new Americas Contract segment.
•Operations of the DWR Contract business, a division of DWR that sells design furnishings and accessories for use in work-related settings moved into the Americas Contract segment.
The Company's reportable segments now consist of Americas Contract, International Contract, Global Retail, and Knoll. Intersegment sales are eliminated within each segment, with the exception of sales to and from the Knoll segment, which are presented as intersegment eliminations.
The Americas Contract segment includes the operations associated with the design, manufacture and sale of furniture and textile products for work-related settings, including office, healthcare, and educational environments, throughout North America and South America. The business associated with the Company's owned contract furniture dealers is also included in the Americas Contract segment. In addition to the Herman Miller brand and the DWR Contract business, this segment includes the operations associated with the design, manufacture and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles, Herman Miller Healthcare, naughtone and Herman Miller Collection products.
The International Contract segment includes the operations associated with the design, manufacture and sale of furniture products, primarily for work-related settings in Europe, the Middle East and Africa ("EMEA") and Asia-Pacific.
The Global Retail segment includes operations associated with the sale of modern design furnishings and accessories to third party retailers, as well as direct to consumer sales through eCommerce, direct-mail catalogs, DWR studios and HAY stores.
The Knoll segment includes the global operations associated with the design, manufacture, and sale of furniture products within the Knoll constellation of brands.
Intersegment sales are eliminated within each segment, with the exception of sales to and from the Knoll segment, which are presented as intersegment eliminations.
The Company also reports a “Corporate” category consisting primarily of unallocated expenses related to general corporate functions, including, but not limited to, certain legal, executive, corporate finance, information technology, administrative and acquisition-related costs. 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 Months Ended
(In millions) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020
Net Sales:
Americas Contract $ 361.5  $ 347.2  $ 686.8  $ 717.2 
International Contract 125.1  101.5  224.1  195.5 
Global Retail 210.0  177.6  422.6  340.3 
Knoll 336.3  —  492.7  — 
Intersegment Eliminations (6.6) —  (10.2) — 
Total $ 1,026.3  $ 626.3  $ 1,816.0  $ 1,253.0 
Operating Earnings (Loss):
Americas Contract $ 6.3  $ 39.1  $ 17.1  $ 97.0 
International Contract 15.2  12.9  26.5  29.1 
Global Retail 23.2  29.3  50.9  60.8 
Knoll (20.6) —  (74.4) — 
Corporate (20.3) (10.3) (69.1) (20.5)
Total $ 3.8  $ 71.0  $ (49.0) $ 166.4 
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.
MillerKnoll, Inc. and Subsidiaries 23

17. 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, non-cash severance, including accelerated equity award compensation expense. The Company also incurs expenses that are an integral component of, and directly attribute to, our restructuring and integration activities, which do not qualify as exit and disposal costs under U.S. GAAP. These include integration implementation costs that relate primarily to professional fees and non-cash losses incurred on debt extinguishment.
The expense associated with integration initiatives are included in Selling, general and administrative and the expense associated with restructuring activities are included in Restructuring expense in the Condensed Consolidated Statements of Comprehensive Income. Non-cash costs related to debt extinguishment in the financing of the transaction is recorded in Other expense (income), net in the Condensed Consolidated Statements of Comprehensive Income.
Knoll Integration:
Following the Knoll merger the Company announced a multi-year program (the "Knoll Integration") designed to reduce costs, integrate and optimize the combined organization. The Company currently expects that the Knoll Integration will result in pre-tax costs that are expected not to exceed approximately $100 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 contract and lease terminations and asset impairment charges.
•Other integration costs include professional fees and other incremental third-party expenses, including a loss on extinguishment of debt associated with financing of the merger.
For the six months ended November 27, 2021, we have incurred $95.8 million of costs related to the Knoll Integration including: $46.4 million of severance and employee benefit costs, $15.5 million of non-cash asset impairments, $13.4 million of non-cash costs related to debt-extinguishment in the financing of the transaction, and $20.5 million of other integration costs.
The following table provides an analysis of the changes in liability balance for Knoll Integration costs that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the six months ended November 27, 2021:
(In millions) Severance and Employee Benefit Exit and Disposal Activities Total
May 29, 2021 $ —  $ —  $ — 
Integration Costs 46.4  15.5  61.9 
Amounts Paid (26.6)