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Short-Term Borrowings and Long-Term Debt | 12 Months Ended
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Jun. 01, 2024
Debt Disclosure [Abstract] |
Short-Term Borrowings and Long-Term Debt | Short-Term Borrowings and Long-Term Debt Long-term debt consisted of the following obligations:
(In millions) |  | June 1, 2024 |  | June 3, 2023
Syndicated revolving line of credit, due July 2026 |  | $ | 390.0 |  |  | $ | 426.7 |
Term Loan A, 7.1937%, due July 2026 |  | 345.0 |  |  | 370.0 |
Term Loan B, 7.4437% due July 2028 |  | 609.4 |  |  | 615.6 |
Supplier financing program |  | 2.0 |  |  | 2.1 |
Finance lease liability |  | 1.4 |  |  | — |
Total debt |  | $ | 1,347.8 |  |  | $ | 1,414.4 |
Less: Unamortized discount and issuance costs |  | (12.6) |  |  | (15.9) |
Less: Current debt |  | (43.5) |  |  | (33.4) |
Long-term debt |  | $ | 1,291.7 |  |  | $ | 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 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 loan "B" facility with an aggregate principal amount of $625 million, the proceeds of which were used to finance a portion of the cash consideration for the acquisition of Knoll, for the repayment of certain debt of Knoll, and to pay fees, costs, and expenses related thereto. In January 2023, the Company entered into 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 2022, t he Company repaid $64 million of private placement notes due May 20, 2030, and recognized a loss of approximately $13.4 million on extinguishment of the debt, which represented the premium on early redemption. The Company made principal payments on term loans "A" and "B" during the year ended June 1, 2024 in the amount of $25.0 million and $6.3 million, respectively and during the year ended June 3, 2023 in the amount of $20.0 million and $6.3 million, respectively. Prior to J uly 2021, the Company's syndicated revolving line of credit provided the Company with up t o $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 would bear interest at rates based on the prime rate, federal funds rate, LIBOR or negotiated rates as outlined in the agreement. Interest was payable periodically throughout the period if borrowings were outstanding. The Company paid off the outstanding balance due on the syndicated revolving line of credit during the first quarter of 2022. Available borrowings under the syndicated revolving line of credit were as follows for the periods indicated:
(In millions) |  | June 1, 2024 |  | June 3, 2023
Syndicated revolving line of credit borrowing capacity |  | $ | 725.0 |  |  | $ | 725.0 |
Less: Borrowings under the syndicated revolving line of credit |  | 390.0 |  |  | 426.7 |
Less: Outstanding letters of credit |  | 12.7 |  |  | 14.1 |
Available borrowings under the syndicated revolving line of credit |  | $ | 322.3 |  |  | $ | 284.2 |
The senior secured revolving credit facility restricts, without prior consent, the Company's borrowings, capital leases, investments, liens, mergers, consolidations, restricted payments, and the sale of certain assets. In addition, for the Revolving line of credit and Term Loan A, the Company has agreed to maintain a financial performance ratio, a maximum first lien secured net leverage ratio covenant which is measured by the ratio of first lien debt (less unrestricted cash) to trailing four quarter adjusted consolidated EBITDA (as defined in the credit agreement) and is required to be less than 4.25:1 for the trailing four quarter periods ending November 21, 2021, and the three immediately succeeding fiscal quarters, then 4.00:1 for the next four fiscal quarters, and 3.75:1 at the end of each fiscal quarter thereafter, except that the Company may elect, under certain conditions, a step-up in the covenant level of 0.50 for the four subsequent trailing four quarter periods. Adjusted EBITDA is generally defined in the credit agreement as EBITDA adjusted by certain items which include non-cash share-based compensation, non-recurring restructuring costs and extraordinary items. At June 1, 2024 the Company was in compliance with these restrictions and performance ratios. On May 20, 2020, the Company entered into a third amendment to its existing Private Shelf Agreement, dated December 14, 2010, as amended (together with the third amendment, the "Agreement"), between the Company and PGIM, Inc. (formerly known as Prudential Investment Management, Inc.) and certain of its affiliates (collectively, “Prudential”). The Agreement provided for a $150.0 million revolving facility, which included $50.0 million of unsecured senior notes that were repaid on March 1, 2021 (the "Existing Notes") and an additional $50.0 million aggregate principal amount of unsecured senior notes issued on May 20, 2020 (the "2020 Notes"). The Notes and facility were paid off with the new revolver and term loans entered in connection with the acquisition of Knoll in July 2021. Annual maturities of debt for the five fiscal years subsequent to June 1, 2024 are as shown in the table below.
(In millions) |
2025 | $ | 43.6 |
2026 | 46.8 |
2027 | 666.4 |
2028 | 6.4 |
2029 | 584.6 |
Thereafter | — |
Total | $ | 1,347.8 |
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 from 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 Consolidated Balance Sheets as the amounts have been accounted for by the Company as a current debt, within "Short-term borrowings and current portion of long-term debt". As of June 1, 2024, the liability related to the supplier financing program was $2.0 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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