v3.26.1
Income Taxes
 12 Months Ended
May 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of earnings (loss) before income taxes are as follows:
(In millions)
202620252024
Domestic$16.2  $(132.8) $(24.8)
Foreign112.0  110.9  124.5 
Total$128.2  $(21.9) $99.7 
The provision (benefit) for income taxes consists of the following:
(In millions)
202620252024
Current:Domestic - Federal$1.2  $15.8  $10.8 
Domestic - State6.2  5.9  7.4 
Foreign36.6  34.7  34.6 
44.0  56.4  52.8 
Deferred:Domestic - Federal1.6 (28.4)(22.2)
Domestic - State(3.1)(6.1)(6.5)
Foreign(10.1)(10.3)(9.4)
(11.6)(44.8)(38.1)
Total income tax provision$32.4  $11.6  $14.7 
During fiscal 2026, the Company incurred net operation losses ("NOL") of $13.8 million in certain foreign jurisdictions, the majority of which were in the United Kingdom and Mexico, resulting in a deferred tax asset of $3.7 million related to the current-year build of foreign NOL carryforwards. This amount is included in the deferred tax benefit above. The Company expects to utilize these carryforwards in future periods based on projected taxable income and has not recorded a valuation allowance against this asset.
The following table represents a reconciliation of the U.S. federal statutory rate of 21.0% to the Company's effective rate for fiscal 2026, in accordance with our adoption of ASU 2023-09:
(In millions)
2026
U.S. Federal Statutory Tax Rate$26.921.0 %
United States
State and Local Income Taxes**
2.5 2.0 %
Domestic Federal
Effect of Cross-Border Tax Laws
Foreign Derived Intangible Income(1.9)(1.5)%
Global Intangible Low-Taxed Income1.6 1.2 %
Other0.1 0.1 %
Tax Credits
R&D Credit(4.7)(3.7)%
Other(0.9)(0.7)%
Changes in Valuation Allowances1.0 0.8 %
Nontaxable or Nondeductible Items
Officers Compensation Limitation3.0 2.3 %
Meals and Entertainment1.4 1.1 %
Other0.4 0.3 %
Other Adjustments(0.1)(0.1)%
Foreign Tax Effects 
China
Withholding Taxes1.4 1.1 %
Other0.9 0.7 %
Other Foreign Jurisdictions0.8 0.6 %
Changes in Unrecognized Tax Benefits— — %
Income Tax Expense$32.4 25.3 %
**California and Texas comprise the majority (greater than 50%) of the tax effect in this category
The following table represents a reconciliation of the U.S. federal statutory rate of 21.0% to the Company's effective rate for income taxes for fiscal 2025 and fiscal 2024, prior to the adoption of ASU 2023-09:
(In millions)
20252024
Income taxes computed at the United States Statutory rate$(4.6) $20.9 
Increase (decrease) in taxes resulting from:
State and local income taxes, net of federal income tax benefit— 0.4 
Non-deductible goodwill impairment19.5 — 
Gain on consolidation of equity method investments— — 
Non-deductible officers' compensation2.8 1.1 
Foreign-derived intangible income(3.1)(2.4)
Foreign-based company income5.1 3.8 
Global intangible low-taxed income8.3 8.1 
Foreign statutory rate differences
2.5 3.1 
Research and development incentives(6.0)(7.1)
Foreign offshore income claim(1.5)(1.0)
Federal return to provision adjustments(1.6)(1.8)
Foreign return to provision adjustments(0.1)(2.5)
Foreign tax credit(12.9)(12.1)
Foreign withholding taxes and other miscellaneous foreign taxes2.9 1.1 
Change in valuation allowance against deferred tax assets1.1 2.5 
Other, net(0.8)0.6 
Income tax expense$11.6  $14.7 
Effective tax rate(53.1)%14.8 %
The tax effects and types of temporary differences that give rise to significant components of the deferred tax assets and liabilities at May 30, 2026, and May 31, 2025, are as follows:
(In millions)
20262025
Deferred tax assets:
Compensation-related accruals$20.6 $19.2 
Capitalized research and experimental costs41.8 40.5 
Deferred revenue7.4 8.2 
Inventory related14.5 13.5 
Other reserves and accruals11.3 10.5 
Warranty16.5 16.3 
State and local tax net operating loss carryforwards and credits4.6 4.3 
Federal and state nondeductible interest expense carryforward24.8 26.0 
Foreign tax net operating loss carryforwards and credits22.1 22.5 
Lease liability108.4 107.0 
Other5.1 6.7 
Subtotal277.1 274.7 
Valuation allowance(14.0)(16.9)
Total$263.1 $257.8 
 
Deferred tax liabilities:
Book basis in property in excess of tax basis$43.9 $48.5 
Intangible assets176.4 178.5 
Interest rate swap3.9 6.5 
Right of use lease assets95.3 92.5 
Withholding taxes on planned repatriation of foreign earnings1.4 3.5 
Other2.5 2.6 
Total$323.4 $332.1 
The future tax benefits of NOL carry-forwards and foreign tax credits are recognized to the extent that realization of these benefits is considered more likely than not. The Company bases this determination on the expectation that related operations will be sufficiently profitable or various tax planning strategies will enable the Company to utilize the NOL carry-forwards and/or foreign tax credits. To the extent that available evidence about the future raises doubt about the realization of these tax benefits, a valuation allowance is established.
At May 30, 2026, the Company had state and local tax NOL carry-forwards of $69.9 million, the state tax benefit of which is $3.9 million, which have expiration periods from 1 year to an unlimited term. The Company also had state credits with a state tax benefit of $0.7 million, which expire in 1 to 5 years. For financial statement purposes, the NOL carry-forwards and state tax credits have been recognized as deferred tax assets, subject to a valuation allowance of $1.7 million.
At May 30, 2026, the Company had federal NOL carry-forwards of $1.5 million, the tax benefit of which is $0.3 million, which have expiration periods from 3 years to an unlimited term. For financial statement purposes, the NOL carry-forwards have been recognized as deferred tax assets.
At May 30, 2026, the Company had foreign net operating loss carry-forwards of $75.0 million, the tax benefit of which is $19.5 million, which have expiration periods from 2 years to an unlimited term. The Company also had foreign tax credits with a tax benefit of $2.6 million which have expiration periods from 5 to 12 years. For financial statement purposes, the NOL carry-forwards and foreign tax credits have been recognized as deferred tax assets, subject to a valuation allowance of $9.6 million.
At May 30, 2026, the Company had foreign deferred assets of $4.0 million, the tax benefit of which is $1.0 million, which is related to various deferred taxes in Canada, Ireland, and buildings in the United Kingdom. For financial statement purposes, the assets have been recognized as deferred tax assets, subject to a valuation allowance of $1.0 million.
The Company intends to repatriate $119.9 million in cash held in certain foreign jurisdictions and as such has recorded a deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S. from foreign subsidiaries of $1.4 million. A significant portion of this cash was previously taxed under the U.S. Tax Cut and Jobs Act either as one-time U.S. tax liability on undistributed foreign earnings or GILTI. The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S, which was $377.8 million on May 30, 2026. Determination
of the total amount of unrecognized deferred income tax on the remaining undistributed earnings of foreign subsidiaries is not practicable.
The components of the Company's unrecognized tax benefits are as follows:
(In millions)
Balance at June 1, 2024$1.5 
Increases related to current year income tax positions0.7 
Increases related to prior year income tax positions0.1 
Decreases related to lapse of applicable statute of limitations(0.4)
Decreases related to settlements(0.3)
Balance at May 31, 2025$1.6 
Increases related to current year income tax positions0.2 
Decreases related to lapse of applicable statute of limitations(0.2)
Balance at May 30, 2026$1.6 
The Company's effective tax rate would have been affected by the total amount of unrecognized tax benefits had this amount been recognized as a reduction to income tax expense.
The Company recognizes interest and penalties related to unrecognized tax benefits through Income tax expense in its Consolidated Statements of Comprehensive Income. Interest and penalties and the related liability, which are excluded from the table above, were as follows for the periods indicated:
(In millions)
May 30, 2026May 31, 2025June 1, 2024
Interest and penalty (income) expense $— $(0.1)$0.1 
Liability for interest and penalties$0.7 $0.6 $0.8 
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 not expected that any of the changes will be material to the Company's Consolidated Statements of Comprehensive Income.
The Company has received full acceptance from the Internal Revenue Service for the audits of fiscal year 2024 and earlier under the Compliance Assurance Process (CAP). Knoll’s federal consolidated returns related to calendar years 2019, 2020, and the July 2021 period were accepted as filed by the Internal Revenue Service, however awaiting Joint Committee review due to size of refunds. The Company’s fiscal year 2025 federal consolidated return is currently under audit with the Internal Revenue Service. For the majority of the remaining tax jurisdictions, the Company is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for fiscal years before 2020.
Cash paid for income taxes by jurisdiction, net of refunds received, in accordance with our adoption of ASU 2023-09 was as follows:

(In millions)
May 30, 2026
Federal$9.6 
State and Local7.4 
Foreign36.7 
China4.9 
Denmark12.5 
Mexico3.8 
Singapore4.0 
Other Jurisdictions11.5 
Cash Paid for Income Taxes, net of refunds received$53.7 

Cash paid for income taxes in fiscal 2025 and fiscal 2024 was $51.3 million and $28.1 million, respectively.