Restructuring and Integration Expense

12 Months Ended

Jun. 03, 2023

Restructuring and Related Activities [Abstract]

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 incurred expenses that are an integral component of, and directly attribute to, our restructuring and integration activities, which do not qualify as exit and disposal costs under U.S. 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 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 Consolidated Statements of Comprehensive Income.

Knoll Integration:

Following the acquisition of Knoll, the Company announced a multi-year program (the "Knoll Integration") designed to reduce costs and integrate and optimize the combined organization. The Company currently expects that the Knoll Integration will result in pre-tax costs of approximately $140 million, comprised of the following categories:

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

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

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

For the year ended June 3, 2023, the Company incurred $18.0 million of costs related to the Knoll Integration including: $3.6 million of severance and employee benefit costs, $5.9 million of exit and disposal costs related to the consolidation of facilities, and $8.5 million of other integration costs.

For the year ended May 28, 2022, the Company incurred $107.9 million of costs related to the Knoll Integration including: $51.1 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 $27.9 million of other integration costs.

The following table provides an analysis of the changes in liability balance for Knoll Integration costs that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the fiscal year ended June 3, 2023:


(In millions)	Severance and Employee Benefit		Exit and Disposal Activities		Total
May 28, 2022	$	1.4	$	—	$	1.4
Integration Costs	3.6		5.9		9.5
Amounts Paid	(2.3)		(5.9)		(8.2)
Non-cash costs	0.2		—		0.2
June 3, 2023	$	2.9	$	—	$	2.9

The Company expects that a substantial portion of the liability for the Knoll Integration as of June 3, 2023, will be paid in the first quarter of fiscal year 2024.

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


	Twelve Months Ended
(In millions)	June 3, 2023		May 28, 2022
Americas Contract	$	9.7	$	21.9
International Contract and Specialty	2.5		—
Global Retail	0.2		—
Corporate	5.6		86.0
Total	$	18.0	$	107.9

2023 Restructuring Plan

During fiscal year 2023, the Company announced a series of actions that relate to the 2023 restructuring plan ("2023 restructuring plan") to reduce expenses. These restructuring activities included voluntary and involuntary reductions in workforces and charges incurred in connection with the Fully decision. As the result of these actions, the Company projects an annualized expense reduction of approximately $30 million to $35 million. For the year ended June 3, 2023, the Company incurred $34.0 million of costs related to the 2023 restructuring plan comprised of $27.9 million of severance and employee benefit costs and $6.1 million of non-impairment charges related to the closure of the Fully business. The restructuring plan is complete and no future costs related to this plan are expected.

The following table provides an analysis of the changes in liability balance for the 2023 restructuring plan that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs and exit and disposal activities) for the fiscal year ended June 3, 2023:


(In millions)	Severance and Employee-Related		Exit and Disposal Activities		Total
May 28, 2022	$	—	$	—	$	—
Restructuring Costs	27.9		6.1		34.0
Amounts Paid	(20.6)		(6.1)		(26.7)
June 3, 2023	$	7.3	$	—	$	7.3

The Company expects that remaining liability for the 2023 restructuring plan as of June 3, 2023, will be paid in fiscal year 2024.

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


	Year Ended
(In millions)		June 3, 2023		May 28, 2022
Americas Contract		$	22.8	$	—
International Contract & Specialty		1.3		—
Retail		9.9		—
Corporate		—		—
Total		$	34.0	$	—