MILLERKNOLL INC

7. Leases

The Company has leases for retail stores, showrooms, manufacturing facilities, warehouses and vehicles, which expire at various dates through 2042. Certain lease agreements include contingent rental payments based on per unit usage over a contractual amount and others include rental payments adjusted periodically for inflationary indexes.

The Company's lease costs recognized in the Consolidated Statement of Income consist of the following:

In the fourth quarter of fiscal 2024 the decision was made to cease the use of certain leased locations resulting in impairment charges of $5.5 million recognized for the right of use assets associated with these locations. These charges are included within Restructuring expense in the Consolidated Statements of Comprehensive Income.

During fiscal 2023, the Company determined it was more likely than not that the fair value of certain right of use assets within the Global Retail reporting unit, specifically Fully, were below their carrying value and assessed these assets for impairment. As a result of this assessment, the Company recorded an impairment of the associated right of use assets of $6.1 million in the Consolidated Statements of Comprehensive income.

The Company has financing lease agreements that expire from fiscal 2025 to fiscal 2030. The leases have initial lease terms that range from 3 to 6 years with some containing renewal options.

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:

*Lease payments exclude $15.4 million of legally binding minimum lease payments for leases signed but not yet commenced.

Supplemental cash flow and other lease information as of and for periods indicated, includes (dollars in millions):