10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                       

Commission File No. 001-12907

KNOLL, INC.

A Delaware Corporation I.R.S. Employer No. 13-3873847

1235 Water Street

East Greenville, PA 18041

Telephone Number (215) 679-7991

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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, or a smaller reporting company.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x, Accelerated filer o, Non-accelerated filer o, Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)  Yes o No x

As of July 30, 2015, there were 48,784,675 shares (including 1,034,259 shares of non-voting restricted shares) of the Registrant’s common stock, par value $0.01 per share, outstanding.

KNOLL, INC.

TABLE OF CONTENTS FOR FORM 10-Q

Item		Page
PART I — FINANCIAL INFORMATION
1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2015 and 2014	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014	5
	Notes to the Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
3.	Quantitative and Qualitative Disclosures about Market Risk	23
4.	Controls and Procedures	24
PART II — OTHER INFORMATION
1.	Legal Proceedings	25
1A.	Risk Factors	25
2.	Unregistered Sales of Equity Securities and The Use of Proceeds	25
6.	Exhibits	26
Signatures		27

2

PART I - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KNOLL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and per share data)

	June 30, 2015			December 31, 2014
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	10,342		$	19,021
Customer receivables, net	104,374			114,551
Inventories, net	143,440			140,835
Deferred income taxes	15,015			15,868
Prepaid and other current assets	24,411			21,544
Total current assets	297,582			311,819
Property, plant, and equipment, net	164,649			165,019
Goodwill	128,379			128,918
Intangible assets, net	252,451			253,739
Other non-trade receivables	2,950			3,278
Other noncurrent assets	5,355			6,170
Total Assets	$	851,366		$	868,943
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	10,000		$	10,000
Accounts payable	75,738			114,914
Income taxes payable	—			12,895
Other current liabilities	96,283			93,965
Total current liabilities	182,021			231,774
Long-term debt	264,000			248,000
Deferred income taxes	67,987			64,203
Postretirement benefits other than pensions	8,808			8,765
Pension liability	73,429			70,770
Other noncurrent liabilities	26,330			32,213
Total Liabilities	622,575			655,725
Commitments and contingent liabilities
Equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 64,564,959 shares issued and 48,816,899 shares outstanding (including 1,044,434 non-voting restricted shares and net of 15,748,060 treasury shares) at June 30, 2015 and 64,113,785 shares issued and 48,723,414 shares outstanding (including 1,235,904 non-voting restricted shares and net of 15,390,371 treasury shares) at December 31, 2014	488			487
Additional paid-in capital	43,996			41,143
Retained earnings	226,924			204,063
Accumulated other comprehensive loss	(42,799		)	(32,682		)
Total Knoll, Inc. stockholders' equity	228,609			213,011
Noncontrolling interests	182			207
Total Equity	228,791			213,218
Total Liabilities and Equity	$	851,366		$	868,943

See accompanying notes to the condensed consolidated financial statements.

3

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(dollars in thousands, except share and per share data)

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2015			2014			2015			2014
Net sales	$	268,622		$	265,943		$	535,120		$	495,544
Cost of sales	167,431			168,669			338,620			321,672
Gross profit	101,191			97,274			196,500			173,872
Selling, general, and administrative expenses	72,936			74,833			145,946			139,555
Restructuring charges	—			203			—			795
Operating profit	28,255			22,238			50,554			33,522
Interest expense	1,851			1,944			3,736			3,615
Other expense (income), net	200			2,700			(6,957		)	196
Income before income tax expense	26,204			17,594			53,775			29,711
Income tax expense	8,982			6,753			19,118			11,038
Net earnings	17,222			10,841			34,657			18,673
Net losses attributable to noncontrolling interests	(17		)	(14		)	(25		)	(8		)
Net earnings attributable to Knoll, Inc. stockholders	$	17,239		$	10,855		$	34,682		$	18,681
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.36		$	0.23		$	0.73		$	0.40
Diluted	$	0.36		$	0.23		$	0.72		$	0.39
Dividends per share	$	0.12		$	0.12		$	0.24		$	0.24
Weighted-average number of common shares outstanding:
Basic	47,760,961			47,365,780			47,705,222			47,283,396
Diluted	48,509,546			47,974,559			48,445,060			48,012,233
Net earnings	$	17,222		$	10,841		$	34,657		$	18,673
Other comprehensive income (loss):
Foreign currency translation adjustment	118			3,730			(12,881		)	(89		)
Pension and other post-retirement liability adjustment, net    of tax	1,382			64			2,764			128
Total other comprehensive income (loss), net of tax	1,500			3,794			(10,117		)	39
Total comprehensive income	18,722			14,635			24,540			18,712
Comprehensive losses attributable to noncontrolling interests	(17		)	(14		)	(25		)	(8		)
Comprehensive income attributable to Knoll, Inc. stockholders	$	18,739		$	14,649		$	24,565		$	18,720

See accompanying notes to the condensed consolidated financial statements.

4

KNOLL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(dollars in thousands)

	Six Months Ended   June 30,
	2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	34,657			$	18,673
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation	8,776				7,850
Amortization expense (including deferred financing fees)	1,951				2,176
Unrealized foreign currency gains	(6,818		)		(452		)
Stock-based compensation	3,574				3,658
Other non-cash items, net	227				30
Changes in assets and liabilities, net of acquisition:
Customer receivables	9,248				446
Inventories	(5,081		)		(10,325		)
Accounts payable	(36,399		)		3,174
Current and deferred income taxes	(11,437		)		6,291
Prepaid and other current assets	(1,765		)		(4,042		)
Other current liabilities	3,192				(13,662		)
Other noncurrent assets and liabilities	7,317				17,460
Cash provided by operating activities	7,442				31,277
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(12,340		)		(17,741		)
Purchase of business, net of cash acquired	—				(93,349		)
Purchase of licenses	(330		)		(315		)
Cash used in investing activities	(12,670		)		(111,405		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility	170,000				608,000
Repayment of revolving credit facility	(154,000		)		(515,000		)
Payment of financing fees	—				(1,914		)
Payment of dividends	(11,502		)		(11,363		)
Proceeds from the issuance of common stock	4,421			3	2,590
Purchase of common stock for treasury	(6,067		)		(6,227		)
Contingent purchase price payment	(5,000		)		—
Excess tax benefit from the exercise of stock options and vesting of equity awards	979				210
Cash (used in) provided by financing activities	(1,169		)		76,296
Effect of exchange rate changes on cash and cash equivalents	(2,282		)		279
Decrease in cash and cash equivalents	(8,679		)		(3,553		)
Cash and cash equivalents at beginning of period	19,021				12,026
Cash and cash equivalents at end of period	$	10,342			$	8,473

See accompanying notes to the condensed consolidated financial statements.

5

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.  The consolidated balance sheet of the Company, as of December 31, 2014, was derived from the Company’s audited consolidated balance sheet as of that date.  All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented.  All of these adjustments are of a normal recurring nature. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and any partially owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation.  These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU is the result of a convergence project between the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The ASU removes inconsistencies and weaknesses in revenue requirements; provides a more robust framework for addressing revenue issues; improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; provides more useful information to users of financial statements through expanded disclosure requirements; and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The Company has not yet selected a transition method and is currently evaluating the impact of the amended guidance on the consolidated financial position, results of operations and related disclosures.

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30). This ASU simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the debt liability, which is consistent with the treatment of debt discounts. The new guidance should be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures necessary for a change in accounting principle. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company does not expect the impact of the adoption of this ASU to have a material impact on its financial position, results of operations and cash flows.

In July 2015, the FASB issued ASU 2015-11, which amends existing guidance for measuring inventories.  This amendment will require the Company to measure inventories recorded using the first-in, first-out method at the lower of cost and net realizable value.  This amendment does not change the methodology for measuring inventories recorded using the last-in, first-out method.  This amendment will be effective for the Company on January 1, 2017.  Early adoption is permitted.  The Company does not expect the impact of the adoption of this ASU to have a material impact on its financial position, results of operations and cash flows.

6

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 2. ACQUISITIONS

On February 3, 2014, the Company acquired Holly Hunt Enterprises, Inc. The acquisition advances the Company's strategy of building its global capability as a resource for high-design workplaces and homes, including the commercial contract, decorator to-the-trade and consumer markets. The aggregate purchase price for the acquisition was $95.0 million, plus certain contingent payouts of up to $16.0 million. Of the $16.0 million of contingent payouts, $5.0 million was paid in the first quarter of 2015. The remaining contingent payouts, if earned based on future performance of the business, are expected to be paid in 2016 and 2017. The purchase price was funded from borrowings under the Company's revolving credit facility. The Company has recorded the acquisition of HOLLY HUNT^® using the acquisition method of accounting and has recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition. The Company finalized the purchase accounting for the acquisition of HOLLY HUNT during the first quarter of 2015 as no additional adjustments were made from the fair values assigned since December 31, 2014.

The amount of net sales and net earnings that resulted from the acquisition and attributable to Knoll, Inc. stockholders included in the condensed consolidated statements of operations and comprehensive income during the six months ended June 30, 2015 and 2014 were as follows (in thousands):

	June 30, 2015		June 30, 2014
Net sales	$	57,569	$	44,509
Net earnings attributable to Knoll, Inc. stockholders	$	2,739	$	3,108

The following unaudited pro forma summary financial information presents the operating results of the combined company, assuming the acquisition had occurred as of January 1, 2013 (in thousands):

	Six Months Ended June 30, 2014
Pro forma net sales	$	503,365
Pro forma net earnings attributable to Knoll, Inc stockholders	$	19,106

The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results that would have been attained had the acquisition occurred on January 1, 2013, nor is it indicative of results of operations for future periods. The pro forma information presented for the six months ended June 30, 2014, include adjustments for acquisition costs, interest expense that would have been incurred to finance the acquisition, amortization and depreciation.

NOTE 3. INVENTORIES

 Information regarding the Company's inventories is as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw materials	$	58,226	$	54,376
Work-in-process	7,294		7,265
Finished goods	77,920		79,194
Total	$	143,440	$	140,835

Inventory reserves for obsolescence and other estimated losses were $7.8 million and $8.4 million at June 30, 2015 and December 31, 2014, respectively, and have been included in the amounts above.

7

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 4. INCOME TAXES

The Company’s income tax provision consists of federal, state and foreign income taxes.  The tax provisions for the three months ended June 30, 2015 and 2014 were based on the estimated effective tax rates applicable for the full years ending December 31, 2015 and 2014, after giving effect to items specifically related to the interim periods.  The Company’s effective tax rate was 34.3% for the three months ended June 30, 2015 and 38.4% for the three months ended June 30, 2014. The Company’s effective tax rate was 35.6% for the six months ended June 30, 2015 and 37.2% for the six months ended June 30, 2014. The decrease in the Company's effective tax rate for the three and six months ended June 30, 2015, was primarily a result of the geographic mix of pretax income and the varying effective tax rates in the countries and states in which the Company operates.

As of June 30, 2015 and December 31, 2014, the Company had unrecognized tax benefits of approximately $5.1 million and $4.9 million, respectively.  These unrecognized tax benefit amounts would affect the effective tax rate if recognized.  As of June 30, 2015, the Company is subject to U.S. Federal income tax examinations for the tax years 2011 through 2014, and to non-U.S. income tax examinations for the tax years 2006 through 2014.  In addition, the Company is subject to state and local income tax examinations for the tax years 2010 through 2014.

NOTE 5. CONTINGENT LIABILITIES AND COMMITMENTS

Litigation

The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business.  The Company accrues for such matters when expenditures are probable and reasonably estimable.  Based upon information presently known, management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Warranty

The Company offers a warranty for all of its products.  The specific terms and conditions of those warranties vary depending upon the product.  The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time product revenue is recognized.  Factors that affect the Company’s liability include historical product-failure experience and estimated repair costs for identified matters for each specific product category.  The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the warranty reserve are as follows (in thousands):

Balance, as of December 31, 2014	$	8,180
Provision for warranty claims	3,717
Warranty claims paid	(3,476		)
Foreign currency translation adjustment	(68		)
Balance, as of June 30, 2015	$	8,353

Warranty expense for the three months ended June 30, 2015 and 2014 was $2.0 million and $1.7 million, respectively. Warranty expense for the six months ended June 30, 2015 and 2014 was $3.7 million and $3.4 million, respectively.

8

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 6. INDEBTEDNESS

Information regarding the Company's indebtedness is as follows (in thousands):

	June 30, 2015		December 31, 2014
Balance of revolving credit facility	$	84,000	$	63,000
Balance of term loan	190,000		195,000
Total long-term debt	274,000		258,000
Less: Current maturities of long-term debt	10,000		10,000
Long-term debt	$	264,000	$	248,000

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2015 (in thousands):

	Foreign Currency Translation Adjustment			Pension and Other Post-Retirement Liability Adjustment			Total
Balance, as of December 31, 2014	$	2,095		$	(34,777	)	$	(32,682	)
Other comprehensive income (loss) before reclassifications	(12,881		)	—			(12,881		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			2,764			2,764
Net current-period other comprehensive income (loss)	(12,881		)	2,764			(10,117		)
Balance, as of June 30, 2015	$	(10,786	)	$	(32,013	)	$	(42,799	)

The following reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income for the three months ended (in thousands):

	June 30, 2015			June 30, 2014
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs (1)	$	(72	)	$	(558	)
Actuarial Losses (1)	2,258			656
Total Before Tax	2,186			98
Tax Benefit	(804		)	(34		)
Net of Tax	$	1,382		$	64

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

The following reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income for the six months ended (in thousands):

9

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (continued)

	June 30, 2015			June 30, 2014
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs (1)	$	(144	)	$	(1,116	)
Actuarial Losses (1)	4,516			1,312
Total Before Tax	4,372			196
Tax Benefit	(1,608		)	(69		)
Net of Tax	$	2,764		$	127

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

NOTE 8. PENSIONS AND OTHER POST-RETIREMENT BENEFITS

The following tables summarize the costs of the Company’s employee pension and other post-retirement benefit plans for the periods indicated (in thousands):

	Pension Benefits						Other Benefits
	Three months ended						Three months ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Service cost	$	1,887		$	1,734		$	4		$	6
Interest cost	3,114			3,335			80			91
Expected return on plan assets	(3,655		)	(3,936		)	—			—
Amortization of prior service cost	—			3			(72		)	(561		)
Recognized actuarial loss	2,166			502			92			154
Net periodic benefit cost	$	3,512		$	1,638		$	104		$	(310	)

For the three months ended June 30, 2015, $2.0 million of pension expense was incurred in cost of sales and $1.5 million was incurred in selling, general, and administrative expenses. For the three months ended June 30, 2014, $0.9 million of pension expense was incurred in cost of sales and $0.7 million was incurred in selling, general, and administrative expenses.

	Pension Benefits						Other Benefits
	Six months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Service cost	$	3,774		$	3,468		$	8		$	12
Interest cost	6,228			6,670			160			182
Expected return on plan assets	(7,310		)	(7,872		)	—			—
Amortization of prior service cost	—			6			(144		)	(1,122		)
Recognized actuarial loss	4,332			1,004			184			308
Net periodic benefit cost	$	7,024		$	3,276		$	208		$	(620	)

For the six months endedJune 30, 2015, $4.0 million of pension expense was incurred in cost of sales and $3.0 million was incurred in selling, general, and administrative expenses. For the six months endedJune 30, 2014, $1.9 million of pension expense was incurred in cost of sales and $1.4 million was incurred in selling, general, and administrative expenses.

10

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9. COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share attributable to Knoll, Inc. stockholders excludes the dilutive effect of (i) common shares that could potentially be issued due to the exercise of stock options, and (ii) unvested restricted stock and restricted stock units and is computed by dividing net earnings attributable to Knoll, Inc. stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share attributable to Knoll, Inc. stockholders includes the effect of shares and potential shares issued under the stock incentive plans. The following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding:

	Three months ended		Six months ended
	June 30,	June 30,	June 30,	June 30,
	2015	2014	2015	2014
	(in thousands)		(in thousands)
Weighted-average number of common shares outstanding - basic	47,761	47,366	47,705	47,283
Potentially dilutive shares resulting from stock plans	749	609	740	729
Weighted-average number of common shares outstanding - diluted	48,510	47,975	48,445	48,012
Antidilutive equity awards number of shares not included in the weighted-average common shares - diluted	—	138	—	158

Common stock activity for the six months ended June 30, 2015 and 2014 included the repurchase of 287,689 shares for $6.1 million and 379,051 shares for $6.2 million, respectively.  Common stock activity for the six months ended June 30, 2015 also included the exercise of 302,750 stock options for $4.4 million and the vesting of 281,581 restricted shares.  Common stock activity for the six months ended June 30, 2014 included the exercise of 195,807 stock options for $2.6 million and the vesting of 496,191 restricted shares. During the three and six months ended June 30, 2015, the Company granted 998 and 272,424, respectively, equity-based awards to certain employees and the Company's Board of Directors. The vesting of these awards is subject to certain service, performance or market conditions.

NOTE 10. EQUITY

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2015 (in thousands):

	Equity Attributable to Knoll Inc., Stockholders			Noncontrolling Interests			Total
Balance, as of December 31, 2014	$	213,011		$	207		$	213,218
Total comprehensive income:
Net earnings (losses) attributable to Knoll, Inc. stockholders and noncontrolling interests	34,682			(25		)	34,657
Other comprehensive income	(10,117		)	—			(10,117		)
Other changes in equity:
Purchase of common stock for treasury	(6,067		)	—			(6,067		)
Cash dividends declared	(11,874		)	—			(11,874		)
Proceeds from the issuance of common stock	4,421			—			4,421
Stock-based compensation	3,574			—			3,574
Excess tax benefit from the exercise of stock options and vesting of    equity awards	979			—			979
Balance, as of June 30, 2015	$	228,609		$	182		$	228,791

11

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following valuation techniques to measure fair value for its financial assets and financial liabilities:

· Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

· Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

· Level 3: Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The fair value of the Company's cash and cash equivalents, accounts receivable and accounts payable approximate carrying value due to their short maturities.

The fair value of the Company’s long-term debt approximates its carrying value, as it is variable rate debt and the terms are comparable to market terms as of the balance sheet dates, and is classified as Level 2. 

Financial Instruments

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table represents the financial assets and liabilities, measured at fair value on a recurring basis and the basis for that measurement (in thousands):

	Fair value as of June 30, 2015								Fair value as of December 31, 2014
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent purchase price payment	$	—	$	—	$	11,000	$	11,000	$	—	$	—	$	16,000	$	16,000

Pursuant to the agreement governing the acquisition of HOLLY HUNT, the Company may be required to make annual contingent purchase price payments. The payouts are based upon HOLLY HUNTreaching an annual net sales target, for each year over the next two calendar years, and are paid out by February 15 of the following calendar year. The Company classifies this as a Level 3 measurement and is required to remeasure this liability at fair value on a recurring basis. The fair value of such contingent purchase price payments was determined at the time of acquisition based upon net sales projections for HOLLY HUNTfor 2014, 2015, and 2016. The Company paid $5.0 million during the first quarter of 2015, as a result of HOLLY HUNT achieving the 2014 net sales projections. Excluding the initial recognition of the liability for the contingent purchase price payments and payments made to reduce the liability, any changes in the fair value would be included within selling, general and administrative expenses.

There were no additional assets and/or liabilities recorded at fair value on a recurring basis as of June 30, 2015 or December 31, 2014.

12

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 12. SEGMENT INFORMATION

The Company reports its segment results based on the following reportable segments: (i) Office; (ii) Studio; and (iii) Coverings. The Office segment serves corporate, government, healthcare, retail and other customers in the United States and Canada providing a portfolio of office furnishing solutions including systems, seating, storage, and KnollExtra^® ergonomic accessories, and other products. The Studio segment includes KnollStudio^®, Knoll Europe which sells primarily KnollStudio products, Richard Schultz® Design and HOLLY HUNT.  The KnollStudio portfolio includes a range of lounge seating; side, cafe and dining chairs; barstools; and conference, dining and occasional tables. HOLLY HUNT produces and showcases custom made product including indoor and outdoor furniture, lighting, rugs, textiles and leathers. The Coverings segment includes, KnollTextiles®, Spinneybeck® and EdelmanLeather®. These businesses serve a wide range of customers offering high-quality textiles, felt, and leather.

The following information below categorizes certain financial information into the above-noted segments for the three and six months ended June 30, 2015 and 2014:

	Three months ended				Six months ended
	June 30,				June 30,
	2015		2014		2015		2014
	(in thousands)
NET SALES
Office	$	160,877	$	159,100	$	328,600	$	305,183
Studio	77,863		76,454		148,057		132,451
Coverings	29,882		30,389		58,463		57,910
Total	$	268,622	$	265,943	$	535,120	$	495,544
INTERSEGMENT SALES (1)
Office	$	415	$	511	$	901	$	984
Studio	1,706		1,524		3,086		2,834
Coverings	1,317		2,798		3,242		5,413
Total	$	3,438	$	4,833	$	7,229	$	9,231
OPERATING PROFIT (2)
Office (3)	$	9,099	$	6,402	$	16,345	$	6,873
Studio	12,079		9,506		21,031		15,048
Coverings	7,077		6,330		13,178		11,601
Total	$	28,255	$	22,238	$	50,554	$	33,522

(1) Intersegment sales represent sales between Knoll, Inc. segments; these intersegment sales are eliminated in consolidation.

(2)  The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

(3) Office operating profit includes $0.2 million and $0.8 million of restructuring expenses incurred during the three and six months ended June 30, 2014, respectively.

13. RESTRUCTURING CHARGES

During 2014, the Company approved certain restructuring actions. These actions primarily included reductions in headcount in the Office and Coverings segments, the exiting of certain showrooms within our Coverings segment, and charges related to improvements to better utilize the Company's manufacturing capacity. The Company does not expect any additional charges related to these restructuring actions in the future, and the Company anticipates that the remaining liability will be paid in the next twelve months.

13

KNOLL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

13. RESTRUCTURING CHARGES (continued)

Below is a summary of the changes in the restructuring liability during 2015 (in thousands):

	Office Segment			Studio Segment		Coverings Segment			Total
Balance, as of December 31, 2014	$	1,046		$	—	$	16		$	1,062
Payments	(305		)	—		(16		)	(321		)
Balance, as of June 30, 2015	$	741		$	—	$	—		$	741

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations provides an account of our financial performance and financial condition that should be read in conjunction with the accompanying unaudited condensed consolidated financial statements.

Forward-looking Statements

This Quarterly report on Form 10-Q contains forward-looking statements, principally in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures About Market Risk.” Statements and financial discussion and analysis contained in this Form 10-Q that are not historical facts are forward-looking statements. These statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on our current beliefs as well as assumptions made by us and information currently available to us. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” or other similar words, phrases or expressions. This includes, without limitation, our statements and expectations regarding any current or future recovery in our industry and publicly announced plans for increased capital and investment spending to achieve our long-term revenue and profitability growth goals, and our expectations with respect to leverage.  Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: the risks described in Item 1A and Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2014; changes in the financial stability of our clients or the overall economic environment, resulting in decreased corporate spending and service sector employment; changes in relationships with clients; the mix of products sold and of clients purchasing our products; the success of new technology initiatives; changes in business strategies and decisions; competition from our competitors; our ability to recruit and retain an experienced management team; changes in raw material and commodity prices and availability; restrictions on government spending resulting in fewer sales to the U.S. government, one of our largest customers; our debt restrictions on spending; our ability to protect our patents, copyrights and trademarks; our reliance on furniture dealers to produce sales; lawsuits arising from patents, copyrights and trademark infringements; violations of environmental laws and regulations; potential labor disruptions; adequacy of our insurance policies; the availability of future capital; the overall strength and stability of our dealers, suppliers, and customers; access to necessary capital; our ability to successfully integrate acquired businesses; the success of our design and implementation of a new enterprise resource planning system; and currency rate fluctuations. The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement. Unpredictable or unknown factors could also have material adverse effects on us. All forward-looking statements included in this Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements. Except as required under the Federal securities laws and rules and regulations of the SEC, we undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Critical Accounting Policies

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions that affect the reported amounts and disclosures in the condensed consolidated financial statements.  Actual results may differ from such estimates. On an ongoing basis, we review our accounting policies and procedures.  A more detailed review of our critical accounting policies is contained in our Annual Report on Form 10-K for the year ended December 31, 2014.

15

Overview

We design, manufacture, market and sell furnishings and accessories, textiles, fine leathers, and felt, for the workplace and home. Our commitment to innovation and modern design has yielded a comprehensive portfolio of products and a brand recognized for high quality and a sophisticated image. Our products are targeted at the middle to upper end of the market and are sold primarily in North America and Europe through a direct sales force and a broad network of independent dealers, showrooms, and retailers.

During the second quarter of 2015, net sales increased by 1.0%, or 3.0% on a constant currency basis. Consolidated net sales and operating profits were $268.6 million and $28.3 million, respectively, during the second quarter of 2015 in comparison to $265.9 million and $22.2 million, respectively, for the second quarter of 2014. Net earnings increased from $10.8 million a year ago to $17.2 million for the second quarter of 2015. Diluted earnings per share increased from $0.23 per share to $0.36 per share.

We ended the quarter with $10.3 million of cash and cash equivalents compared to $14.7 million as of the first quarter of 2015 and $8.5 million a year ago. Changes in accounts receivable, inventory, and accounts payable from the first quarter of 2015 provided approximately $12.0 million of liquidity during the second quarter of 2015. As a result of the positive change in working capital and net earnings achievement in the quarter, cash provided by operations was $33.5 million compared to $18.4 million for the second quarter of 2014. During the quarter, we invested $7.5 million in capital expenditures and reduced our debt outstanding from $300.0 million as of the first quarter of 2015 to $274.0 million as of the second quarter of 2015. As a result of lower debt outstanding and increased EBITDA, our leverage ratio improved from 2.55 as of the first quarter of 2015 to 2.22 as of the second quarter of 2015.

Constant currency sales is a non-GAAP financial measure and is reconciled to GAAP net sales in the below section, Reconciliation of Non-GAAP Financial Measures.

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Results of Operations

Comparison of Three and Six Months ended June 30, 2015 and 2014

	Three Months Ended						Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(in thousands)
Condensed Consolidated Statement of Operations Data:
Net sales	$	268,622		$	265,943		$	535,120		$	495,544
Gross profit	101,191			97,274			196,500			173,872
Operating profit	28,255			22,238			50,554			33,522
Interest expense	1,851			1,944			3,736			3,615
Other (income) expense, net	200			2,700			(6,957		)	196
Income tax expense	8,982			6,753			19,118			11,038
Net earnings	17,222			10,841			34,657			18,673
Statistical and Other Data:
Sales growth from comparable prior year	1.0		%	24.1		%	8.0		%	19.4		%
Gross profit margin	37.7		%	36.6		%	36.7		%	35.1		%
Operating profit margin	10.5		%	8.4		%	9.4		%	6.8		%

Net Sales

Net sales for the second quarter of 2015 were $268.6 million, an increase of $2.7 million, or 1.0%, from net sales of $265.9 million for the same period in the prior year. Net sales for the six months endedJune 30, 2015 were $535.1 million, an increase of $39.6 million, or 8.0%, from net sales of $495.5 million for the same period in the prior year. On a constant currency basis, net sales increased 3.0% and 9.9% for the three and six months ended June 30, 2015. The increase in sales during the three and six months ended June 30, 2015 was largely the result of improved systems sales in our Office segment and strong sales growth by our North America Studio and Holly Hunt businesses. When comparing net sales for the six months ended June 30, 2015 to June 30, 2014, net sales for the six months ended June 30, 2015 included one additional month of sales for our Holly Hunt business. During the six months endedJune 30, 2015 and 2014, approximately 9.2% and 12.0%, respectively, of our sales were to U.S., state, and local governmental agencies.

Gross Profit and Operating Profit

Gross profit for the second quarter of 2015 was $101.2 million, an increase of $3.9 million or 4.0%, from gross profit of $97.3 million for the same period in the prior year. Gross profit for the six months endedJune 30, 2015 was $196.5 million, an increase of $22.6 million, or 13.0%, from gross profit of $173.9 million for the same period in the prior year. As a percentage of net sales, gross profit increased from 36.6% for the second quarter of 2014 to 37.7% for the second quarter of 2015. As a percentage of net sales, gross profit increased from 35.1% for the six months endedJune 30, 2014 to 36.7% for the six months ended ended June 30, 2015. The increase in gross margin during the three and six months ended June 30, 2015 mainly resulted from benefits achieved from net price realization and foreign exchange savings across our segments.

Operating expenses for the three months ended June 30, 2015 were $72.9 million, or 27.1% of net sales, compared to $75.0 million, or 28.2% of net sales, for the second quarter of 2014. Operating expenses for the second quarter of 2014 included $0.2 million of restructuring charges. Operating expenses for the six months ended June 30, 2015 were $145.9 million in comparison to $139.6 million for the second quarter of 2014. For the three and six months ended June 30, 2015, when compared to the same periods from a year ago, additional operating expenses were incurred and primarily associated with our Holly Hunt business. These operating expenses included additional showroom expenses, which were offset by foreign exchange savings, lower incentive accruals, and other cost containment efforts for the three months ended June 30, 2015.

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Operating profit for the second quarter of 2015 was $28.3 million, an increase of $6.1 million, or 27.5%, from operating profit of $22.2 million for the same period in the prior year. Operating profit for the six months endedJune 30, 2015 was $50.6 million, an increase of $17.1 million, or 51.0%, from operating profit of $33.5 million for the same period in the prior year. Operating profit as a percentage of net sales increased from 8.4% in the second quarter of 2014 to 10.5% for the same period of 2015. Operating profit as a percentage of net sales increased from 6.8% for the six months ended June 30, 2014 to 9.4% in the same period for 2015. All segments experienced an increase in operating profit for the three and six months ended June 30, 2015.

Interest Expense

Interest expense for the second quarter of 2015 and 2014 was $1.9 million.  Interest expense for six months endedJune 30, 2015 was $3.7 million, an increase of $0.1 million from $3.6 million for the same period in the prior year. The average interest rate for the three and six months ended June 30, 2015 was 2.1%, compared to 2.3% for the three and six months ended June 30, 2014.

Other (Income) Expense, net

Other (income) expense for the second quarter of 2015 was $0.2 million, which included $0.4 million of foreign exchange losses. Other (income) expense for the second quarter of 2014 was $2.7 million, which included $2.4 million of foreign exchange losses and $0.3 million of expense related to the write-off of deferred financing fees. Other (income) expense for the six months endedJune 30, 2015 was ($7.0) million, which primarily consisted of foreign exchange gains. Other (income) expense for the six months endedJune 30, 2014 was $0.2 million, which related to net a foreign exchange gain of $0.1 million and expense of $0.3 million associated with the write-off of deferred financing fees.

Income Tax Expense

The effective tax rate was 34.3% for the second quarter of 2015, as compared to 38.4% for the same period in 2014.  The effective tax rate was 35.6% for the six months ended June 30, 2015, as compared to 37.2% for the same period in 2014. The mix of pretax income and the varying effective tax rates in the countries in which we operate directly affects our consolidated effective tax rate.

Business Segment Analysis

The below table categorizes certain financial information into our Office, Studio, and Coverings segments for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
	(in thousands)
NET SALES
Office	$	160,877	$	159,100	$	328,600	$	305,183
Studio	77,863		76,454		148,057		132,451
Coverings	29,882		30,389		58,463		57,910
Total	$	268,622	$	265,943	$	535,120	$	495,544
OPERATING PROFIT (1)
Office (2)	$	9,099	$	6,402	$	16,345	$	6,873
Studio	12,079		9,506		21,031		15,048
Coverings	7,077		6,330		13,178		11,601
Total	$	28,255	$	22,238	$	50,554	$	33,522

(1) The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

(2) Office operating profit includes $0.2 million and $0.8 million of restructuring expenses incurred during the three and six months ended June 30, 2014, respectively.

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Office:

Net sales for the Office segment for the second quarter of 2015 were $160.9 million, an increase of $1.8 million, or 1.1%, when compared with the same period in 2014.  Net sales for the Office segment for the six months endedJune 30, 2015 were $328.6 million, an increase of $23.4 million, or 7.7%, when compared with the same period in 2014. On a constant currency basis, net sales for the Office segment increased 1.9% and 8.4% for the three and six months ended June 30, 2015. Increased sales in the Office segment for the three and six months ended June 30, 2015 were the result of improved systems sales sales year-over-year.

Operating profit for the second quarter of 2015 for the Office segment was $9.1 million, an increase of $2.7 million, or 42.2%, when compared with the same period in 2014. Operating profit for the six months endedJune 30, 2015 for the Office segment was $16.3 million, an increase of $9.4 million, or 136.2%, when compared with the same period in 2014. The increase in operating profit in the Office segment for both the three and six months ended June 30, 2015 was attributable to increased sales, improved pricing, and foreign exchange benefits. As a percentage of net sales, the Office segment operating profit for the three and six months ended June 30, 2015 was 5.7% and 5.0%, respectively. As a percentage of net sales, the Office segment operating profit for the three and six months ended June 30, 2014 was 4.0% and 2.3%, respectively.

Studio:

Net sales for the Studio segment for the second quarter of 2015 were $77.9 million, an increase of $1.4 million, or 1.8%, when compared with the same period in 2014. Net sales for the Studio segment for the six months endedJune 30, 2015 were $148.1 million, an increase of $15.6 million, or 11.8%, when compared with the same period in 2014. On a constant currency basis, net sales for the Studio segment increased 6.8% and 17.1% for the three and six months ended June 30, 2015. The increase in sales in the Studio segment was mainly the result strong sales growth in North America and Holly Hunt. Additionally, when comparing net sales for the six months ended June 30, 2015 to June 30, 2014, net sales for the six months ended June 30, 2015 included one additional month of sales for our Holly Hunt business.

Operating profit for the second quarter of 2015 for the Studio segment was $12.1 million, an increase of $2.6 million, or 27.4%, when compared with the same period in 2014. Operating profit for the six months endedJune 30, 2015 for the Studio segment was $21.0 million, an increase of $6.0 million, or 40.0%, when compared with the same period in 2014. As a percentage of net sales, the Studio segment operating profit was 15.5% for the second quarter ended June 30, 2015, up from 12.4% for the second quarter ended June 30, 2014.  As a percentage of net sales, the Studio segment operating profit was 14.2% for the six months endedJune 30, 2015, up from 11.3% for the same period in the prior year. The increase in operating profit for the three and six months ended June 30, 2015 in the Studio segment was mainly the result of net price realization and foreign currency savings.

Coverings:

Net sales for the second quarter of 2015 for the Coverings segment were $29.9 million, an decrease of $0.5 million, or 1.6%, when compared with the same period in 2014.  Net sales for the six months endedJune 30, 2015 for the Coverings segment were $58.5 million, an increase of $0.6 million, or 1.0%, when compared with the same period in 2014. On a constant currency basis, net sales decreased 0.7% and increased 1.9% for the three and six months ended June 30, 2015. When comparing the three months ended June 30, 2015 to the three months ended June 30, 2014, our Textiles business provided net sales improvement; however, these increased sales were offset by lower sales in our leather businesses. For the six months ended June 30, 2015, the increase in sales achieved by both our Spinneybeck and Textiles businesses provided for year-over-year net sales improvement.

Operating profit for the second quarter of 2015 for the Coverings segment was $7.1 million, an increase of $0.8 million, or 12.7%, when compared with the same period of 2014. Operating profit for the six months endedJune 30, 2015 for the Coverings segment was $13.2 million, an increase of $1.6 million, or 13.8%, when compared with the same period in 2014. The increase in operating profit in the Coverings segment during the three and six months ended June 30, 2015 was the result of improved operating performance from our Textiles and Spinneybeck businesses.  As a percentage of net sales, the Coverings segment operating profit was 23.7% for the second quarter ended June 30, 2015 compared to 20.7% for the second quarter ended June 30, 2014. As a percentage of net sales, the Coverings segment operating profit was 22.6% for the six months endedJune 30, 2015 compared to 20.0% for the same period in the prior year.

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Liquidity and Capital Resources

The following table highlights certain key cash flows and capital information pertinent to the discussion that follows:

	Six Months Ended
	June 30, 2015			June 30, 2014
	(in thousands)
Cash provided by operating activities	$	7,442		$	31,277
Capital expenditures	(12,340		)	(17,741		)
Purchase of a business, net of cash acquired	—			(93,349		)
Cash used in investing activities	(12,670		)	(111,405		)
Proceeds from revolving credit facility	170,000			608,000
Repayment of revolving credit facility	(154,000		)	(515,000		)
Payment of dividends	(11,502		)	(11,363		)
Proceeds from the issuance of common stock	4,421			2,590
Purchase of common stock for treasury	(6,067		)	(6,227		)
Contingent purchase price payment	(5,000		)	—
Cash (used in) provided by financing activities	(1,169		)	76,296

Historically, we have carried significant amounts of debt, and cash generated by operating activities has been used to fund working capital, capital expenditures, repurchase shares, pay quarterly dividends, and make payments of principal and interest on our indebtedness.  Our capital expenditures are typically for new product tooling and manufacturing equipment.  These capital expenditures support new products and continuous improvements in our manufacturing processes. In addition, continued expenditures related to our technology infrastructure upgrades with the implementation of a new enterprise resource planning system increased capital spending during the first half of 2015. Moreover, in February 2013, we announced a three-year plan of strategic investments and initiatives intended to enable us to achieve our longer-term revenue and profitability goals. These investments will increase capital spending in 2015 when compared with periods prior to the launch of this program.

Year-to-date net cash provided by operations was $7.4 million, of which $42.5 million was provided by net earnings plus non-cash items, offset by $35.1 million of unfavorable changes in operating assets and liabilities.  For the six months ended June 2014, net cash provided by operations was $31.3 million, of which $31.9 million was provided by net income plus non-cash items, offset by $0.6 million of unfavorable changes in assets and liabilities.

For the six months endedJune 30, 2015, we used available cash, including $7.4 million of net cash from operating activities, to fund $12.3 million in capital expenditures, make dividend payments to shareholders totaling $11.5 million, and fund working capital. Total cash used in investing and financing activities was $12.7 million and $1.2 million, respectively, for the six months endedJune 30, 2015. For the six months endedJune 30, 2014, we used available cash, including $31.3 million of net cash from operating activities, to fund $17.7 million in capital expenditures, fund dividend payments to shareholders totaling $11.4 million, repurchase $6.2 million of common stock for treasury, and fund working capital. Total cash used in investing and financing activities was $111.4 million and $76.3 million, respectively, for the six months ended June 30, 2014.

We use our credit facility in the ordinary course of business to fund our working capital needs and, at times, make significant borrowings and repayments under the facility depending on our cash needs and availability at such time.  As of June 30, 2015 and December 31, 2014, there was $274.0 million and $258.0 million, respectively, outstanding under the credit facility.  Borrowings under the credit facility may be repaid at any time, but no later than May 2019.

Our credit facility requires that we comply with two financial covenants: our consolidated leverage ratio, defined as the ratio of total indebtedness to consolidated EBITDA (as defined in our credit agreement) and our consolidated interest coverage ratio, defined as the ratio of our consolidated EBITDA (as defined in our credit agreement) to our consolidated interest expense. Our leverage ratio cannot exceed 4.0 to 1.0 under our credit facility agreement. Our consolidated interest coverage ratio cannot be less than 3.0 to 1.0 as of the end of any fiscal quarter. We are also required to comply with various other affirmative and negative covenants including, without limitation, covenants that prevent or restrict our ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future

20

indebtedness, make significant capital expenditures, engage in sale-leaseback transactions, alter our capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates and sell stock or assets. Our leverage ratio was 2.22 and 2.41 for the periods ending June 30, 2015 and December 31, 2014, respectively.

Environmental Matters

Our past and present business operations and the past and present ownership and operation of manufacturing plants on real property are subject to extensive and changing federal, state, local and foreign environmental laws and regulations, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste and the cleanup of properties affected by hazardous substances.  As a result, we are involved from time-to-time in administrative and judicial proceedings and inquiries relating to environmental matters and could become subject to fines or penalties related thereto.  We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist.  Compliance with more stringent laws or regulations, or stricter interpretation of existing laws, may require additional expenditures by us, some of which may be material.  We have been identified as a potentially responsible party pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) for remediation costs associated with waste disposal sites that we previously used.  The remediation costs and our allocated share at some of these CERCLA sites are unknown. We may also be subject to claims for personal injury or contribution relating to CERCLA sites.  We reserve amounts for such matters when expenditures are probable and reasonably estimable.

Off-Balance Sheet Arrangements

We do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special-purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange-traded contracts.  As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could have arisen if we had engaged in these relationships.

Reconciliation of Non-GAAP Financial Measures

This item contains certain non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP") in the statements of income, balance sheets, or statements of cash flow of the company. Pursuant to applicable reporting requirements, the company has provided reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure. The reconciliation of net sales to net sales, adjusted and the reconciliation of net earnings to adjusted EBITDA are provided below.

The non-GAAP financial measures presented within this item are net sales, adjusted (constant currency sales) and adjusted EBITDA. These non-GAAP measures are not indicators of our financial performance under GAAP and should not be considered as an alternative to the applicable GAAP measure. These non-GAAP measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating these non-GAAP measures, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of these non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results and using non-GAAP measures only supplementally. These non-GAAP financial measures, net sales, adjusted and adjusted EBITDA, are presented because management uses this information to monitor and evaluate financial results and trends. Therefore, management believes this information is also useful for investors.

21

The following tables reconcile net sales, adjusted to GAAP net sales for the periods indicated.

	Office			Studio			Coverings			Knoll, Inc.
Q2 2015 Net Sales	$	160.9		$	77.8		$	29.9		$	268.6
Currency translation effects (1)	1.2			3.8			0.3			5.3
Q2 2015 Net Sales, Adjusted	162.1			81.6			30.2			273.9
Q2 2014 Net Sales	159.1			76.4			30.4			265.9
Adjusted Growth / (Decline) $	$	3.0		$	5.2		$	(0.2	)	$	8.0
Adjusted Growth / (Decline) %	1.9		%	6.8		%	(0.7		)%	3.0		%

	Office			Studio			Coverings			Knoll, Inc.
YTD Q2 2015 Net Sales (2)	$	328.6		$	148.1		$	58.5		$	535.1
Currency translation effects (1)	2.2			7.0			0.5			9.7
YTD Q2 2015 Net Sales, Adjusted	330.8			155.1			59.0			544.8
YTD Q2 2014 Net Sales (2)	305.2			132.5			57.9			495.5
Adjusted Growth / (Decline) $	$	25.6		$	22.6		$	1.1		$	49.3
Adjusted Growth / (Decline) %	8.4		%	17.1		%	1.9		%	9.9		%

(1) - Currency translation effects represent the estimated net impact of translating current period sales using the average exchange rates applicable to the comparable prior year period.

(2) - Results do not add due to rounding.

The following table reconciles net earnings to adjusted EBITDA and computes our bank leverage calculation as of June 30, 2015, March 31, 2015, and December 31, 2014. The bank leverage calculation is in accordance with our Second Amended and Restated Credit Agreement dated May 20, 2014.

	June 30, 2015		March 31, 2015		December 31, 2014
	(in millions)
Debt Levels (1)	$	290.7	$	316.7	$	275.5
LTM Net Earnings	62.6		56.2		46.6
LTM Adjustments
Interest	6.8		6.9		6.7
Taxes	37.2		35.0		29.2
Depreciation and Amortization	21.1		20.6		20.0
Non-cash items and Other (2)	3.3		5.7		11.9
LTM Adjusted EBITDA	$	131.0	$	124.4	$	114.4	(3)
Bank Leverage Calculation (4)	2.22		2.55		2.41

(1) - Outstanding debt levels include outstanding letters of credit and guarantee obligations. Excess cash over $15.0

million reduces outstanding debt per the terms of our credit facility, a copy of which was filed with the Securities and

Exchange Commission on May 21, 2014.

(2) - Non-cash items include, but are not limited to, a pension settlement and other postretirement benefit curtailment, stock-based compensation expenses, unrealized gains and losses on foreign exchange, and restructuring charges.

(3) - Includes an annualized pro forma EBITDA for HOLLY HUNT, which was acquired on February 3, 2014.

(4) - Debt divided by LTM (Last Twelve Months) adjusted EBITDA, as calculated in accordance with our credit facility.

22

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We provided a discussion of our market risk in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2014. During the first six months of 2015, there was no substantive change in our market risk except for the items noted below. This discussion should be read in conjunction with Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2014.

During the normal course of business, we are routinely subjected to market risk associated with interest rate movements and foreign currency exchange rate movements. Interest rate risk arises from our debt obligations and foreign currency exchange rate risk arises from our non-U.S. operations and purchases of inventory from foreign suppliers.

We also have risk in our exposure to certain materials and transportation costs.  Steel, leather, textiles, wood products, and plastics are all used in the manufacture of our products. During the six months endedJune 30, 2015, we experienced an increase in material and transportation costs when compared with the same period in the prior year. We continue to work to offset price changes in raw materials and transportation through our global sourcing initiatives, cost improvements, and price increases to our products.

Interest Rate Risk

We have variable rate debt obligations that are denominated in U.S. dollars.  A change in interest rates impacts the interest incurred and cash paid on our variable rate debt obligations.

In the past, we have used interest rate swap agreements for other-than-trading purposes in order to manage our exposure to fluctuations in interest rates on our variable rate debt. Fluctuations in LIBOR affect both our net financial instrument position and the amount of cash to be paid or received by us, if any, under these agreements. Our annualized average rate of interest for the six months ended June 30, 2015 was 2.1%. Our annualized average rate of interest for the same period of 2014 was 2.3%.

Foreign Currency Exchange Rate Risk

We manufacture our products in the United States, Canada and Italy, and source and sell our products worldwide.  Our foreign sales and certain expenses are transacted in foreign currencies.  Our production costs, profit margins, and competitive position are affected by the strength of the currencies in countries where we manufacture or purchase goods relative to the strength of the currencies in countries where our products are sold.  Additionally, as we report currency in the U.S. dollar, our financial position is affected by the strength of the currencies in countries where we have operations relative to the strength of the U.S. dollar.  The principal foreign currencies in which we conduct business are the Canadian dollar and the Euro. Approximately 11.5% of our revenues for the first six months of 2015 and 12.2% in the same period for 2014, and 27.1% of our cost of goods sold for the first six months of 2015 and 31.0% in the same period of 2014, were denominated in currencies other than the U.S. dollar.  For the six months ended June 30, 2015 and 2014, other (income) expense included foreign exchange gains of $7.0 million and $0.1 million, respectively.

From time to time, we enter into foreign currency forward exchange contracts and foreign currency option contracts for other than trading purposes in order to manage our exposure to foreign exchange rates.  The terms of these contracts are generally less than a year.  Changes in the fair value of such contracts are reported in earnings in the period the value of the contract changes.  The net gain or loss upon settlement and the change in fair value of outstanding contracts is recorded as a component of other expense (income), net. 

23

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. We, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report (June 30, 2015) (“Disclosure Controls”). Disclosure controls and procedures include, without limitation, (i) information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on the below discussed material weakness in internal controls over financial reporting related to accounting for income taxes, management has concluded that our disclosure controls were not effective at a reasonable level of assurance as of June 30, 2015.

Changes in internal control over financial reporting. As previously disclosed in Item 9A of the 2014 Form 10-K, management had then concluded that there was a material weakness in internal controls over financial reporting related to accounting for income taxes. Remedial actions have been taken to improve internal controls over accounting for income taxes, including dedicating additional internal and external personnel resources with the appropriate level of proficiency to identify, evaluate, and review complex tax accounting matters; organizational structure changes, which better integrate the tax accounting and finance functions; enhancement of our processes and procedures for determining, documenting and calculating our income tax provision; and increasing the level of certain tax review activities during the financial statement close process.

When all remedial actions have been implemented and in operation for a sufficient period of time, these actions will be tested to determine whether the applicable controls are operating effectively. Management is focused on the remediation of the material weakness related to controls over the accounting for income taxes and expects the remediation efforts to be completed within the current fiscal year. However, there are no assurances that we will successfully remediate this material weakness within the anticipated timeframe.

Therefore, management concluded that, as of June 30, 2015, there was a material weakness over financial reporting related to accounting for income taxes. Notwithstanding the identified material weakness, management believes the condensed consolidated financial statements included in this Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP. As such, except as noted in the preceding paragraphs, there has been no change in our internal control over financial reporting that occurred during the most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

24

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the first six months of 2015, there have been no new material legal proceedings or material changes in the legal proceedings disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 1A. RISK FACTORS

During the first six months of 2015, there were no material changes in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND THE USE OF PROCEEDS

Repurchases of Equity Securities

The following is a summary of share repurchase activity during the three months ended June 30, 2015.

On August 17, 2005, our board of directors approved a stock repurchase program (the “Options Proceeds Program”), whereby it authorized us to purchase shares of our common stock in the open market using the cash proceeds received by us upon exercise of outstanding options to purchase shares of our common stock.

On February 2, 2006, our board of directors approved an additional stock repurchase program, pursuant to which we are authorized to purchase up to $50.0 million of our common stock in the open market, through privately negotiated transactions, or otherwise.  On February 4, 2008, our board of directors expanded this previously authorized $50.0 million stock repurchase program by an additional $50.0 million.

Period	Total Number of Shares Purchased	Average Price paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2015 - April 30, 2015	—	$	—	—	$	32,352,413
May 1, 2015 - May 31, 2015	—	$	—	—	$	32,352,413
June 1, 2015 - June 30, 2015	—	$	—	—	$	32,352,413
Total	—			—

(1) There is no limit on the number or value of shares that may be purchased by us under the Options Proceeds Program.  Under our $50.0 million stock repurchase program, which was expanded by an additional $50.0 million in February of 2008, we are authorized to spend an aggregate of $100.0 million on stock repurchases.  Amounts in this column represent the amounts that remain available under the $100.0 million stock repurchase program as of the end of the period indicated.  There is no scheduled expiration date for the Option Proceeds Program or the stock repurchase program, but our board of directors may terminate either program in the future.

25

ITEM 6.  EXHIBITS

Exhibit Number	Description
10.1	Amendment No. 6 to Employment Agreement, dated as of June 24, 2015, between Knoll, Inc. and Andrew B. Cogan
10.2	Joseph T. Coppola Offer Letter, dated May 4, 2015
10.3	Summary of Craig B. Spray 2015 Compensation
10.4	Summary of Benjamin A. Pardo 2015 Compensation
10.5	Summary of Pamela J. Ahrens 2015 Compensation
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income for the three and six months ended June 30, 2015 and 2014, (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.*

* The Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KNOLL, INC.
(Registrant)
Date: August 3, 2015
	By:	/s/ Andrew B. Cogan
		Andrew B. Cogan
		Chief Executive Officer
Date: August 3, 2015
	By:	/s/ Craig B. Spray
		Craig B. Spray
		Chief Financial Officer
		(Chief Accounting Officer)

27

EX-10.1

EXHIBIT 10.1

AMENDMENT NO. 6 TO EMPLOYMENT AGREEMENT

This Amendment No. 6 to the Employment Agreement (the “Amendment”) is entered into as of this 24th day of June, 2015, between Knoll, Inc., a Delaware corporation (the “Company”), and Andrew B. Cogan (“Executive”).

WHEREAS, the parties wish to amend the March 23, 2001 Employment Agreement between Executive and the Company, as previously amended (the “Agreement”), as hereinafter set forth;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to become legally bound, the parties agree as follows:

1. All defined terms contained in this Amendment shall have the meanings ascribed to them in the Agreement.

2. Executive’s “Base Salary” is changed to be $857,000 effective as of July 1, 2015.

3. Except as specifically set forth herein, the terms of the Agreement shall remain unchanged.

IN WITNESS WHEREOF, each of the parties has duly executed this Agreement effective as of the date first above written.

KNOLL, INC.

By:	/s/ Craig B. Spray
	Name: Craig B. Spray
	Title: Senior Vice President and Chief Financial Officer

/s/ Andrew B. Cogan    

Andrew B. Cogan

EX-10.2

Exhibit 10.2

1235 Water Street                                

P O Box 157

East Greenville, PA 18041

Tel 215 679-7991

Fax 215 679-3904

May 4, 2015

Joseph Coppola

12016 Milona Drive

Draper, UT 84020

Dear Joe:

This letter confirms our offer to you of “at-will” employment with Knoll, Inc. (“Knoll”) as Chief Operating Officer, reporting to me. Subject to your acceptance of this offer, your expected effective date of hire will be June 1, 2015.

Your base salary will be $335,000 annually (paid in installments of $12,884.62 biweekly). You will also be eligible to participate in the Knoll annual incentive compensation program. Under the 2015 program you will have an annual target bonus opportunity of $335,000. Payout under this program is discretionary and based on Knoll achieving its financial plan and your individual objectives. However, Knoll guarantees you will receive a minimum bonus payment of $335,000 for 2015, 50% (or $167,000) (referred to herein as the “Bonus Advance”) of which will be paid upon your commencement of employment and the remainder of which will be paid in February 2016. Payment of all bonuses (including the guaranteed bonus provided in the foregoing sentence) is contingent upon your continued employment through the date of payment; provided, however, in the case of the $335,000 guaranteed bonus for 2015, if Knoll terminates your employment without “cause” (as defined below) prior to the date 2015 bonuses are paid out in February 2016, Knoll will pay you the $335,000 guaranteed bonus amount. If you voluntarily terminate your employment with Knoll or are terminated with “cause” prior to February 15, 2016, you must promptly repay the Bonus Advance.

Subject to formal approval by the Knoll Compensation Committee, you will also be granted 20,000 restricted shares and 20,000 performance-based restricted stock units under the company’s stock incentive plans. Consistent with Knoll’s equity grant practices, these grants will be submitted to the Knoll Compensation Committee for formal approval at a meeting scheduled after you commence employment with Knoll. The grants would be effective the third trading day after the first public announcement of quarterly financial results after such meeting. The restricted shares would cliff vest on the third anniversary of the date of grant. The restricted stock units will only vest if Knoll exceeds a 3-Year Cumulative Operating Profit target and if Knoll’s Total Shareholder Return exceeds the median of its designated peer group. Based on your expected date of hire, we expect the grant date for these equity awards to be on or about October 2015. The restricted shares and restricted stock units will

Joseph Coppola

Page 2

May 4, 2015

be evidenced by Knoll’s standard agreements to be signed by you and Knoll, which will set forth the terms and conditions associated with the equity grant in more detail, including the accrual of dividends.

If you are terminated by Knoll before your first anniversary of employment date without “Cause” (as hereinafter defined), you will receive twelve (12) months base salary as severance in complete satisfaction of any and all claims you have against Knoll upon (and only upon) your execution of a general release reasonably acceptable to Knoll; provided however, that you will not receive any severance payment whatsoever and will have no claim against Knoll if you voluntarily leave Knoll or if you are terminated for “Cause”. We will mutually agree to structure the payment of any severance to comply with requirements of Internal Revenue Code Section 409A.

For purposes of this letter “Cause” means: (i) your failure, neglect, or refusal to perform your duties which failure, neglect or refusal is not corrected by you within thirty (30) days of your receipt of written notice from Knoll of such failure, neglect or refusal (it being understood that a failure to attain performance objectives shall not in and of itself be treated as a failure to perform your duties for purpose of this clause), (ii) your engaging in conduct that has the effect of injuring the reputation or business of Knoll or its affiliates, as determined by Knoll; (iii) your continued or repeated absence from Knoll, unless such absence is approved or excused; (iv) illegal use of drugs or significant violations of Knoll’s policies and procedures, as determined by Knoll; (v) your conviction for the commission of a misdemeanor involving moral turpitude or a felony or any plea by you of guilty or “nolo contendere” to the charge of a misdemeanor involving moral turpitude or a felony; (vi) Knoll’s reasonable suspicion of your commission of an act of fraud, misappropriation or embezzlement against Knoll or any of its affiliates, employees, customers or suppliers; or (vii) conduct substantially disloyal to Knoll, as determined by Knoll.

This position will be located at our East Greenville, Pennsylvania location and you are eligible to receive benefits the first of the month following 30 days of employment. A summary of the 2015 Knoll benefit program can be found at www.knollbenefits.com (Username: knoll Password:XXXXXXXXX).

You will also be eligible to participate in the Knoll Relocation Program. You will receive $75,000 (minus applicable taxes) upon commencement of employment for relocation expenses. A summary of the program is attached. In addition, we will reimburse you for up to $3,000 per month in temporary living expenses from your date of hire through the first four months of employment (a max of $12,000).

Joseph Coppola

Page 3

May 4, 2015

Knoll will provide you with twenty (20) vacation days per year. As a Knoll associate you will be eligible to participate in the Knoll Retirement Savings Plan (a 401(k) Plan) immediately upon hire. The Knoll Retirement Savings Plan matches 50% of your own retirement contributions up to 6% of eligible earnings (i.e, a maximum of 3% of earnings). Knoll also will contribute as much as an additional 3% of eligible earnings to you if the company meets established annual profit goals.

Knoll requires all associates to complete a pre-employment drug screening prior to the start of employment. The employment offer is contingent upon successful completion of this screening and verification of all the information you have provided. Costs associated with the pre-employment screening are covered by Knoll. Please bring with you on your first day, 2 forms of documentation to support your eligibility to work in the United States.

Joe, I am enthusiastic about the prospect of you joining us at Knoll. I believe that as Chief Operating Officer you will open an exciting new chapter for Knoll and for your own career. This offer is open until May 5, 2015. Please sign and return one copy of this letter to me and retain a copy for your records.

Very truly yours,

/s/ Andrew B. Cogan

Andrew B. Cogan

CEO, Knoll Inc.

Acceptance and acknowledgement of terms and conditions:

/s/ Joseph T. Coppola	May 4, 2015
Signature	Date

EX-10.3

EXHIBIT 10.3

Summary of Craig B. Spray 2015 Compensation

Effective July 1, 2015, the Knoll, Inc. compensation committee approved an annual base salary of $335,000 for Craig B. Spray, with a bonus target of $325,000. Mr. Spray is also entitled to participate in the benefit plans provided by Knoll that are generally available to Knoll employees.

EX-10.4

EXHIBIT 10.4

Summary of Benjamin A. Pardo 2015 Compensation

Effective July 1, 2015, the Knoll, Inc. compensation committee approved an annual base salary of $295,000 for Benjamin A. Pardo, with a bonus target of $285,000. Mr. Pardo is also entitled to participate in the benefit plans provided by Knoll that are generally available to Knoll employees.

EX-10.5

EXHIBIT 10.5

Summary of Pamela J. Ahrens 2015 Compensation

Effective July 1, 2015, the Knoll, Inc. compensation committee approved an annual base salary of $295,000 for Pamela J. Ahrens, with a bonus target of $285,000. Ms. Ahrens is also entitled to participate in the benefit plans provided by Knoll that are generally available to Knoll employees.

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Andrew B. Cogan, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2015 of Knoll, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to material affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2015
	/s/ Andrew B. Cogan
	Andrew B. Cogan
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Craig B. Spray, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2015 of Knoll, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to material affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2015
	/s/ Craig B. Spray
	Craig B. Spray
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

In connection with the Quarterly Report on Form 10-Q of Knoll, Inc. (the “Company”) for the period ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Andrew B. Cogan, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

a. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

b. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 3, 2015

/s/ Andrew B. Cogan

Andrew B. Cogan

Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

In connection with the Quarterly Report on Form 10-Q of Knoll, Inc. (the “Company”) for the period ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Craig B. Spray, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

a. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

b. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 3, 2015

/s/ Craig B. Spray

Craig B. Spray

Chief Financial Officer

XML

COMMON STOCK AND EARNINGS PER SHARE (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
COMMON STOCK AND EARNINGS PER SHARE
Weighted-average number of common shares outstanding - basic	47,760,961	47,365,780	47,705,222	47,283,396
Potentially dilutive shares resulting from stock plans	749,000	609,000	740,000	729,000
Weighted-average number of common shares outstanding - diluted	48,509,546	47,974,559	48,445,060	48,012,233
Antidilutive equity awards number of shares not included in the weighted-average common shares - diluted	0	138,000	0	158,000
Earnings per share, other disclosures
Repurchase of common stock, shares			287,689	379,051
Purchase of common stock for treasury			$ 6,067	$ 6,227
Exercise of stock options, shares			302,750	195,807
Dividends, Common Stock, Cash			$ 11,874
Proceeds from the issuance of common stock			$ 4,421	$ 2,590
Vested (in shares)			281,581	496,191
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	998		272,424

XML

INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	34.30%	38.40%	35.60%	37.20%
Unrecognized tax benefits, which would affect the effective tax rate if recognized	$ 5.1		$ 5.1		$ 4.9

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COMMON STOCK AND EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2015

COMMON STOCK AND EARNINGS PER SHARE

Reconciliation of number of shares used in the calculation of basic and diluted earnings (loss) per common share including unvested restrictive shares

The following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding:

	Three months ended		Six months ended
	June 30,	June 30,	June 30,	June 30,
	2015	2014	2015	2014
	(in thousands)		(in thousands)
Weighted-average number of common shares outstanding - basic	47,761	47,366	47,705	47,283
Potentially dilutive shares resulting from stock plans	749	609	740	729
Weighted-average number of common shares outstanding - diluted	48,510	47,975	48,445	48,012
Antidilutive equity awards number of shares not included in the weighted-average common shares - diluted	—	138	—	158

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SEGMENT INFORMATION (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Financial information of segments
NET SALES		$ 268,622	$ 265,943	$ 535,120	$ 495,544
INTERSEGMENT SALES	[1]	3,438	4,833	7,229	9,231
OPERATING PROFIT	[2]	28,255	22,238	50,554	33,522
Restructuring charges		0	203	0	795
Office
Financial information of segments
NET SALES		160,877	159,100	328,600	305,183
INTERSEGMENT SALES	[1]	415	511	901	984
OPERATING PROFIT	[2],[3]	9,099	6,402	16,345	6,873
Restructuring charges			200		800
Studio
Financial information of segments
NET SALES		77,863	76,454	148,057	132,451
INTERSEGMENT SALES	[1]	1,706	1,524	3,086	2,834
OPERATING PROFIT	[2]	12,079	9,506	21,031	15,048
Coverings
Financial information of segments
NET SALES		29,882	30,389	58,463	57,910
INTERSEGMENT SALES	[1]	1,317	2,798	3,242	5,413
OPERATING PROFIT	[2]	$ 7,077	$ 6,330	$ 13,178	$ 11,601

[1] Intersegment sales represent sales between Knoll, Inc. segments; these intersegment sales are eliminated in consolidation.

[2] The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

[3] Office operating profit includes $0.2 million and $0.8 million of restructuring expenses incurred during the three and six months ended June 30, 2014, respectively.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Amortization of pension and other post-retirement liability adjustments
Tax Benefit		$ 8,982	$ 6,753	$ 19,118	$ 11,038
Net of Tax				(34,657)	(18,673)
Amounts reclassified from accumulated other comprehensive income (loss)
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs	[1]	(72)	(558)	(144)	(1,116)
Actuarial Losses	[1]	2,258	656	4,516	1,312
Total Before Tax		2,186	98	4,372	196
Tax Benefit		(804)	(34)	(1,608)	(69)
Net of Tax		$ 1,382	$ 64	$ 2,764	$ 127

[1] These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

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INCOME TAXES

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company’s income tax provision consists of federal, state and foreign income taxes.  The tax provisions for the three months ended June 30, 2015 and 2014 were based on the estimated effective tax rates applicable for the full years ending December 31, 2015 and 2014, after giving effect to items specifically related to the interim periods.  The Company’s effective tax rate was 34.3% for the three months ended June 30, 2015 and 38.4% for the three months ended June 30, 2014. The Company’s effective tax rate was 35.6% for the six months ended June 30, 2015 and 37.2% for the six months ended June 30, 2014. The decrease in the Company's effective tax rate for the three and six months ended June 30, 2015, was primarily a result of the geographic mix of pretax income and the varying effective tax rates in the countries and states in which the Company operates.

As of June 30, 2015 and December 31, 2014, the Company had unrecognized tax benefits of approximately $5.1 million and $4.9 million, respectively.  These unrecognized tax benefit amounts would affect the effective tax rate if recognized.  As of June 30, 2015, the Company is subject to U.S. Federal income tax examinations for the tax years 2011 through 2014, and to non-U.S. income tax examinations for the tax years 2006 through 2014.  In addition, the Company is subject to state and local income tax examinations for the tax years 2010 through 2014.

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RESTRUCTURING CHARGES - Summary of Changes in Restructuring Liability (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Restructuring Reserve [Roll Forward]
Balance, as of December 31, 2014			$ 1,062
Restructuring charges	$ 0	$ 203	0	$ 795
Payments			(321)
Balance, as of June 30, 2015	741		741
Office Segment
Restructuring Reserve [Roll Forward]
Balance, as of December 31, 2014			1,046
Restructuring charges		$ 200		$ 800
Payments			(305)
Balance, as of June 30, 2015	741		741
Studio Segment
Restructuring Reserve [Roll Forward]
Balance, as of December 31, 2014			0
Payments			0
Balance, as of June 30, 2015	0		0
Coverings Segment
Restructuring Reserve [Roll Forward]
Balance, as of December 31, 2014			16
Payments			(16)
Balance, as of June 30, 2015	$ 0		$ 0

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RESTRUCTURING CHARGES (Tables)

6 Months Ended

Jun. 30, 2015

Restructuring and Related Activities [Abstract]

Summary of the changes in the restructuring liability

Below is a summary of the changes in the restructuring liability during 2015 (in thousands):

	Office Segment			Studio Segment		Coverings Segment			Total
Balance, as of December 31, 2014	$	1,046		$	—	$	16		$	1,062
Payments	(305		)	—		(16		)	(321		)
Balance, as of June 30, 2015	$	741		$	—	$	—		$	741

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Schedule of certain financial information related to segments

The following information below categorizes certain financial information into the above-noted segments for the three and six months ended June 30, 2015 and 2014:

	Three months ended				Six months ended
	June 30,				June 30,
	2015		2014		2015		2014
	(in thousands)
NET SALES
Office	$	160,877	$	159,100	$	328,600	$	305,183
Studio	77,863		76,454		148,057		132,451
Coverings	29,882		30,389		58,463		57,910
Total	$	268,622	$	265,943	$	535,120	$	495,544
INTERSEGMENT SALES (1)
Office	$	415	$	511	$	901	$	984
Studio	1,706		1,524		3,086		2,834
Coverings	1,317		2,798		3,242		5,413
Total	$	3,438	$	4,833	$	7,229	$	9,231
OPERATING PROFIT (2)
Office (3)	$	9,099	$	6,402	$	16,345	$	6,873
Studio	12,079		9,506		21,031		15,048
Coverings	7,077		6,330		13,178		11,601
Total	$	28,255	$	22,238	$	50,554	$	33,522

(1) Intersegment sales represent sales between Knoll, Inc. segments; these intersegment sales are eliminated in consolidation.

(2)  The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

(3) Office operating profit includes $0.2 million and $0.8 million of restructuring expenses incurred during the three and six months ended June 30, 2014, respectively.

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ACQUISITIONS - Net Sales and Earnings of Acquiree Included in Consolidated Results (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2015	Jun. 30, 2015	Jun. 30, 2014	Feb. 03, 2014
Business Acquisition [Line Items]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability		$ (5,000)	$ 0
Holly Hunt Enterprises, Inc
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest				$ 95,000
Business Combination, Contingent Consideration, Liability				$ 16,000
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ 5,000
Net Sales and Earnings of Acquiree Included in Consolidated Results [Abstract]
Net sales		57,569	44,509
Net earnings attributable to Knoll, Inc. stockholders		$ 2,739	$ 3,108

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ACQUISITIONS - Pro forma Summary Financial Information (Details) - Holly Hunt Enterprises, Inc $ in Thousands	6 Months Ended
	Jun. 30, 2014 USD ($)
Business Acquisition, Pro Forma Information [Abstract]
Pro forma net sales	$ 503,365
Pro forma net earnings attributable to Knoll, Inc stockholders	$ 19,106

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INVENTORIES

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

 Information regarding the Company's inventories is as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw materials	$	58,226	$	54,376
Work-in-process	7,294		7,265
Finished goods	77,920		79,194
Total	$	143,440	$	140,835

Inventory reserves for obsolescence and other estimated losses were $7.8 million and $8.4 million at June 30, 2015 and December 31, 2014, respectively, and have been included in the amounts above.

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INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 58,226	$ 54,376
Work-in-process	7,294	7,265
Finished goods	77,920	79,194
Inventories, Net	143,440	140,835
Inventory Valuation Reserves	$ 7,800	$ 8,400

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EQUITY (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests:
Balance, as of December 31, 2014			$ 213,218
Total comprehensive income:
Net earnings (losses) attributable to Knoll, Inc. stockholders and noncontrolling interests			34,657	$ 18,673
Total other comprehensive income (loss), net of tax	$ 1,500	$ 3,794	(10,117)	$ 39
Other changes in equity:
Purchase of common stock for treasury			(6,067)
Cash dividends declared			(11,874)
Proceeds from the issuance of common stock			4,421
Stock-based compensation			3,574
Excess tax benefit from the exercise of stock options and vesting of equity awards			979
Balance, as of June 30, 2015	228,791		228,791
Equity Attributable to Knoll Inc., Stockholders
Change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests:
Balance, as of December 31, 2014			213,011
Total comprehensive income:
Net earnings (losses) attributable to Knoll, Inc. stockholders and noncontrolling interests			34,682
Total other comprehensive income (loss), net of tax			(10,117)
Other changes in equity:
Purchase of common stock for treasury			(6,067)
Cash dividends declared			(11,874)
Proceeds from the issuance of common stock			4,421
Stock-based compensation			3,574
Excess tax benefit from the exercise of stock options and vesting of equity awards			979
Balance, as of June 30, 2015	228,609		228,609
Noncontrolling Interests
Change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests:
Balance, as of December 31, 2014			207
Total comprehensive income:
Net earnings (losses) attributable to Knoll, Inc. stockholders and noncontrolling interests			(25)
Total other comprehensive income (loss), net of tax			0
Other changes in equity:
Purchase of common stock for treasury			0
Cash dividends declared			0
Proceeds from the issuance of common stock			0
Stock-based compensation			0
Excess tax benefit from the exercise of stock options and vesting of equity awards			0
Balance, as of June 30, 2015	$ 182		$ 182

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 10,342	$ 19,021
Customer receivables, net	104,374	114,551
Inventories, net	143,440	140,835
Deferred income taxes	15,015	15,868
Prepaid and other current assets	24,411	21,544
Total current assets	297,582	311,819
Property, plant, and equipment, net	164,649	165,019
Goodwill	128,379	128,918
Intangible assets, net	252,451	253,739
Other non-trade receivables	2,950	3,278
Other noncurrent assets	5,355	6,170
Total Assets	851,366	868,943
Current liabilities:
Current maturities of long-term debt	10,000	10,000
Accounts payable	75,738	114,914
Income taxes payable	0	12,895
Other current liabilities	96,283	93,965
Total current liabilities	182,021	231,774
Long-term debt	264,000	248,000
Deferred income taxes	67,987	64,203
Postretirement benefits other than pensions	8,808	8,765
Pension liability	73,429	70,770
Other noncurrent liabilities	26,330	32,213
Total Liabilities	$ 622,575	$ 655,725
Commitments and contingent liabilities
Equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 64,564,959 shares issued and 48,816,899 shares outstanding (including 1,044,434 non-voting restricted shares and net of 15,748,060 treasury shares) at June 30, 2015 and 64,113,785 shares issued and 48,723,414 shares outstanding (including 1,235,904 non-voting restricted shares and net of 15,390,371 treasury shares) at December 31, 2014	$ 488	$ 487
Additional paid-in capital	43,996	41,143
Retained earnings	226,924	204,063
Accumulated other comprehensive loss	(42,799)	(32,682)
Total Knoll, Inc. stockholders' equity	228,609	213,011
Noncontrolling interests	182	207
Total Equity	228,791	213,218
Total Liabilities and Equity	$ 851,366	$ 868,943

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.  The consolidated balance sheet of the Company, as of December 31, 2014, was derived from the Company’s audited consolidated balance sheet as of that date.  All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to summarize fairly the financial position of the Company and the results of the Company’s operations and cash flows for the periods presented.  All of these adjustments are of a normal recurring nature. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and any partially owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation.  These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU is the result of a convergence project between the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The ASU removes inconsistencies and weaknesses in revenue requirements; provides a more robust framework for addressing revenue issues; improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; provides more useful information to users of financial statements through expanded disclosure requirements; and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The Company has not yet selected a transition method and is currently evaluating the impact of the amended guidance on the consolidated financial position, results of operations and related disclosures.

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30). This ASU simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the debt liability, which is consistent with the treatment of debt discounts. The new guidance should be applied on a retrospective basis, and upon transition, an entity is required to comply with the applicable disclosures necessary for a change in accounting principle. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The Company does not expect the impact of the adoption of this ASU to have a material impact on its financial position, results of operations and cash flows.

In July 2015, the FASB issued ASU 2015-11, which amends existing guidance for measuring inventories.  This amendment will require the Company to measure inventories recorded using the first-in, first-out method at the lower of cost and net realizable value.  This amendment does not change the methodology for measuring inventories recorded using the last-in, first-out method.  This amendment will be effective for the Company on January 1, 2017.  Early adoption is permitted.  The Company does not expect the impact of the adoption of this ASU to have a material impact on its financial position, results of operations and cash flows.

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INDEBTEDNESS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Total long-term debt	$ 274,000	$ 258,000
Less: Current maturities of long-term debt	10,000	10,000
Long-term debt	264,000	248,000
Balance of revolving credit facility
Debt Instrument [Line Items]
Total long-term debt	84,000	63,000
Balance of term loan
Debt Instrument [Line Items]
Total long-term debt	$ 190,000	$ 195,000

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INDEBTEDNESS (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of Debt

Information regarding the Company's indebtedness is as follows (in thousands):

	June 30, 2015		December 31, 2014
Balance of revolving credit facility	$	84,000	$	63,000
Balance of term loan	190,000		195,000
Total long-term debt	274,000		258,000
Less: Current maturities of long-term debt	10,000		10,000
Long-term debt	$	264,000	$	248,000

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Changes in accumulated other comprehensive loss components
Balance			$ (32,682)
Other comprehensive income (loss) before reclassifications			(12,881)
Amounts reclassified from accumulated other comprehensive income (loss)			2,764
Total other comprehensive income (loss), net of tax	$ 1,500	$ 3,794	(10,117)	$ 39
Net current-period other comprehensive income (loss)	(1,382)	$ (64)	(2,764)	$ (128)
Balance	(42,799)		(42,799)
Foreign Currency Translation Adjustment
Changes in accumulated other comprehensive loss components
Balance			2,095
Other comprehensive income (loss) before reclassifications			(12,881)
Amounts reclassified from accumulated other comprehensive income (loss)			0
Total other comprehensive income (loss), net of tax			(12,881)
Balance	(10,786)		(10,786)
Pension and Other Post- Retirement Liability Adjustment
Changes in accumulated other comprehensive loss components
Balance			(34,777)
Other comprehensive income (loss) before reclassifications			0
Amounts reclassified from accumulated other comprehensive income (loss)			2,764
Balance	$ (32,013)		$ (32,013)

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PENSIONS AND OTHER POST-RETIREMENT BENEFITS (Tables)

6 Months Ended

Jun. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Summary of the costs of the Company's employee pension and post retirement plans

The following tables summarize the costs of the Company’s employee pension and other post-retirement benefit plans for the periods indicated (in thousands):

	Pension Benefits						Other Benefits
	Three months ended						Three months ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Service cost	$	1,887		$	1,734		$	4		$	6
Interest cost	3,114			3,335			80			91
Expected return on plan assets	(3,655		)	(3,936		)	—			—
Amortization of prior service cost	—			3			(72		)	(561		)
Recognized actuarial loss	2,166			502			92			154
Net periodic benefit cost	$	3,512		$	1,638		$	104		$	(310	)

For the three months ended June 30, 2015, $2.0 million of pension expense was incurred in cost of sales and $1.5 million was incurred in selling, general, and administrative expenses. For the three months ended June 30, 2014, $0.9 million of pension expense was incurred in cost of sales and $0.7 million was incurred in selling, general, and administrative expenses.

	Pension Benefits						Other Benefits
	Six months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Service cost	$	3,774		$	3,468		$	8		$	12
Interest cost	6,228			6,670			160			182
Expected return on plan assets	(7,310		)	(7,872		)	—			—
Amortization of prior service cost	—			6			(144		)	(1,122		)
Recognized actuarial loss	4,332			1,004			184			308
Net periodic benefit cost	$	7,024		$	3,276		$	208		$	(620	)

For the six months endedJune 30, 2015, $4.0 million of pension expense was incurred in cost of sales and $3.0 million was incurred in selling, general, and administrative expenses. For the six months endedJune 30, 2014, $1.9 million of pension expense was incurred in cost of sales and $1.4 million was incurred in selling, general, and administrative expenses.

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ACQUISITIONS

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

On February 3, 2014, the Company acquired Holly Hunt Enterprises, Inc. The acquisition advances the Company's strategy of building its global capability as a resource for high-design workplaces and homes, including the commercial contract, decorator to-the-trade and consumer markets. The aggregate purchase price for the acquisition was $95.0 million, plus certain contingent payouts of up to $16.0 million. Of the $16.0 million of contingent payouts, $5.0 million was paid in the first quarter of 2015. The remaining contingent payouts, if earned based on future performance of the business, are expected to be paid in 2016 and 2017. The purchase price was funded from borrowings under the Company's revolving credit facility. The Company has recorded the acquisition of HOLLY HUNT^® using the acquisition method of accounting and has recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition. The Company finalized the purchase accounting for the acquisition of HOLLY HUNT during the first quarter of 2015 as no additional adjustments were made from the fair values assigned since December 31, 2014.

The amount of net sales and net earnings that resulted from the acquisition and attributable to Knoll, Inc. stockholders included in the condensed consolidated statements of operations and comprehensive income during the six months ended June 30, 2015 and 2014 were as follows (in thousands):

	June 30, 2015		June 30, 2014
Net sales	$	57,569	$	44,509
Net earnings attributable to Knoll, Inc. stockholders	$	2,739	$	3,108

The following unaudited pro forma summary financial information presents the operating results of the combined company, assuming the acquisition had occurred as of January 1, 2013 (in thousands):

	Six Months Ended June 30, 2014
Pro forma net sales	$	503,365
Pro forma net earnings attributable to Knoll, Inc stockholders	$	19,106

The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results that would have been attained had the acquisition occurred on January 1, 2013, nor is it indicative of results of operations for future periods. The pro forma information presented for the six months ended June 30, 2014, include adjustments for acquisition costs, interest expense that would have been incurred to finance the acquisition, amortization and depreciation.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	64,564,959	64,113,785
Common stock, shares outstanding	48,816,899	48,723,414
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	1,044,434	1,235,904
Treasury shares	15,748,060	15,390,371

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company reports its segment results based on the following reportable segments: (i) Office; (ii) Studio; and (iii) Coverings. The Office segment serves corporate, government, healthcare, retail and other customers in the United States and Canada providing a portfolio of office furnishing solutions including systems, seating, storage, and KnollExtra^® ergonomic accessories, and other products. The Studio segment includes KnollStudio^®, Knoll Europe which sells primarily KnollStudio products, Richard Schultz® Design and HOLLY HUNT.  The KnollStudio portfolio includes a range of lounge seating; side, cafe and dining chairs; barstools; and conference, dining and occasional tables. HOLLY HUNT produces and showcases custom made product including indoor and outdoor furniture, lighting, rugs, textiles and leathers. The Coverings segment includes, KnollTextiles®, Spinneybeck® and EdelmanLeather®. These businesses serve a wide range of customers offering high-quality textiles, felt, and leather.

The following information below categorizes certain financial information into the above-noted segments for the three and six months ended June 30, 2015 and 2014:

	Three months ended				Six months ended
	June 30,				June 30,
	2015		2014		2015		2014
	(in thousands)
NET SALES
Office	$	160,877	$	159,100	$	328,600	$	305,183
Studio	77,863		76,454		148,057		132,451
Coverings	29,882		30,389		58,463		57,910
Total	$	268,622	$	265,943	$	535,120	$	495,544
INTERSEGMENT SALES (1)
Office	$	415	$	511	$	901	$	984
Studio	1,706		1,524		3,086		2,834
Coverings	1,317		2,798		3,242		5,413
Total	$	3,438	$	4,833	$	7,229	$	9,231
OPERATING PROFIT (2)
Office (3)	$	9,099	$	6,402	$	16,345	$	6,873
Studio	12,079		9,506		21,031		15,048
Coverings	7,077		6,330		13,178		11,601
Total	$	28,255	$	22,238	$	50,554	$	33,522

(1) Intersegment sales represent sales between Knoll, Inc. segments; these intersegment sales are eliminated in consolidation.

(2)  The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

(3) Office operating profit includes $0.2 million and $0.8 million of restructuring expenses incurred during the three and six months ended June 30, 2014, respectively.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 30, 2015
Document Information [Line Items]
Entity Registrant Name	KNOLL INC
Entity Central Index Key	0001011570
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		48,784,675
Restricted Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		1,034,259

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RESTRUCTURING CHARGES

6 Months Ended

Jun. 30, 2015

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

During 2014, the Company approved certain restructuring actions. These actions primarily included reductions in headcount in the Office and Coverings segments, the exiting of certain showrooms within our Coverings segment, and charges related to improvements to better utilize the Company's manufacturing capacity. The Company does not expect any additional charges related to these restructuring actions in the future, and the Company anticipates that the remaining liability will be paid in the next twelve months.

13. RESTRUCTURING CHARGES (continued)

Below is a summary of the changes in the restructuring liability during 2015 (in thousands):

	Office Segment			Studio Segment		Coverings Segment			Total
Balance, as of December 31, 2014	$	1,046		$	—	$	16		$	1,062
Payments	(305		)	—		(16		)	(321		)
Balance, as of June 30, 2015	$	741		$	—	$	—		$	741

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Net sales		$ 268,622	$ 265,943	$ 535,120	$ 495,544
Cost of sales		167,431	168,669	338,620	321,672
Gross profit		101,191	97,274	196,500	173,872
Selling, general, and administrative expenses		72,936	74,833	145,946	139,555
Restructuring charges		0	203	0	795
Operating profit	[1]	28,255	22,238	50,554	33,522
Interest expense		1,851	1,944	3,736	3,615
Other expense (income), net		200	2,700	(6,957)	196
Income before income tax expense		26,204	17,594	53,775	29,711
Income tax expense		8,982	6,753	19,118	11,038
Net earnings		17,222	10,841	34,657	18,673
Net losses attributable to noncontrolling interests		(17)	(14)	$ (25)	(8)
Net earnings attributable to Knoll, Inc. stockholders		$ 17,239	$ 10,855		$ 18,681
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic (in dollars per share)		$ 0.36	$ 0.23	$ 0.73	$ 0.40
Diluted (in dollars per share)		0.36	0.23	0.72	0.39
Dividends per share (in dollars per share)		$ 0.12	$ 0.12	$ 0.24	$ 0.24
Weighted-average number of common shares outstanding:
Basic (in shares)		47,760,961	47,365,780	47,705,222	47,283,396
Diluted (in shares)		48,509,546	47,974,559	48,445,060	48,012,233
Net earnings		$ 17,222	$ 10,841	$ 34,657	$ 18,673
Other comprehensive income (loss):
Foreign currency translation adjustment		118	3,730	(12,881)	(89)
Pension and other post-retirement liability adjustment, net of tax		1,382	64	2,764	128
Total other comprehensive income (loss), net of tax		1,500	3,794	(10,117)	39
Total comprehensive income		18,722	14,635	24,540	18,712
Comprehensive losses attributable to noncontrolling interests			(14)		(8)
Comprehensive income attributable to Knoll, Inc. stockholders		$ 18,739	$ 14,649	$ 24,565	$ 18,720

[1] The Company does not allocate interest expense or other (income) expense, net to the reportable segments.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2015

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2015 (in thousands):

	Foreign Currency Translation Adjustment			Pension and Other Post-Retirement Liability Adjustment			Total
Balance, as of December 31, 2014	$	2,095		$	(34,777	)	$	(32,682	)
Other comprehensive income (loss) before reclassifications	(12,881		)	—			(12,881		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			2,764			2,764
Net current-period other comprehensive income (loss)	(12,881		)	2,764			(10,117		)
Balance, as of June 30, 2015	$	(10,786	)	$	(32,013	)	$	(42,799	)

The following reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income for the three months ended (in thousands):

	June 30, 2015			June 30, 2014
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs (1)	$	(72	)	$	(558	)
Actuarial Losses (1)	2,258			656
Total Before Tax	2,186			98
Tax Benefit	(804		)	(34		)
Net of Tax	$	1,382		$	64

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

The following reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income for the six months ended (in thousands):

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (continued)

	June 30, 2015			June 30, 2014
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs (1)	$	(144	)	$	(1,116	)
Actuarial Losses (1)	4,516			1,312
Total Before Tax	4,372			196
Tax Benefit	(1,608		)	(69		)
Net of Tax	$	2,764		$	127

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

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INDEBTEDNESS

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

INDEBTEDNESS

INDEBTEDNESS

Information regarding the Company's indebtedness is as follows (in thousands):

	June 30, 2015		December 31, 2014
Balance of revolving credit facility	$	84,000	$	63,000
Balance of term loan	190,000		195,000
Total long-term debt	274,000		258,000
Less: Current maturities of long-term debt	10,000		10,000
Long-term debt	$	264,000	$	248,000

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2015

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Summary of changes in accumulated other comprehensive income (loss) by component

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2015 (in thousands):

	Foreign Currency Translation Adjustment			Pension and Other Post-Retirement Liability Adjustment			Total
Balance, as of December 31, 2014	$	2,095		$	(34,777	)	$	(32,682	)
Other comprehensive income (loss) before reclassifications	(12,881		)	—			(12,881		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			2,764			2,764
Net current-period other comprehensive income (loss)	(12,881		)	2,764			(10,117		)
Balance, as of June 30, 2015	$	(10,786	)	$	(32,013	)	$	(42,799	)

Schedule of reclassifications made from accumulated other comprehensive income (loss) to the statement of operations

The following reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income for the three months ended (in thousands):

	June 30, 2015			June 30, 2014
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs (1)	$	(72	)	$	(558	)
Actuarial Losses (1)	2,258			656
Total Before Tax	2,186			98
Tax Benefit	(804		)	(34		)
Net of Tax	$	1,382		$	64

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

The following reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income for the six months ended (in thousands):

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (continued)

	June 30, 2015			June 30, 2014
Amortization of pension and other post-retirement liability adjustments
Prior Service Costs (1)	$	(144	)	$	(1,116	)
Actuarial Losses (1)	4,516			1,312
Total Before Tax	4,372			196
Tax Benefit	(1,608		)	(69		)
Net of Tax	$	2,764		$	127

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 8 for additional information.

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ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Amount of net sales and net earnings attributable to Knoll, Inc. stockholders included in the condensed consolidated statement of operations and comprehensive income

The amount of net sales and net earnings that resulted from the acquisition and attributable to Knoll, Inc. stockholders included in the condensed consolidated statements of operations and comprehensive income during the six months ended June 30, 2015 and 2014 were as follows (in thousands):

	June 30, 2015		June 30, 2014
Net sales	$	57,569	$	44,509
Net earnings attributable to Knoll, Inc. stockholders	$	2,739	$	3,108

Pro forma summary financial information

The following unaudited pro forma summary financial information presents the operating results of the combined company, assuming the acquisition had occurred as of January 1, 2013 (in thousands):

	Six Months Ended June 30, 2014
Pro forma net sales	$	503,365
Pro forma net earnings attributable to Knoll, Inc stockholders	$	19,106

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EQUITY

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

EQUITY

EQUITY

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2015 (in thousands):

	Equity Attributable to Knoll Inc., Stockholders			Noncontrolling Interests			Total
Balance, as of December 31, 2014	$	213,011		$	207		$	213,218
Total comprehensive income:
Net earnings (losses) attributable to Knoll, Inc. stockholders and noncontrolling interests	34,682			(25		)	34,657
Other comprehensive income	(10,117		)	—			(10,117		)
Other changes in equity:
Purchase of common stock for treasury	(6,067		)	—			(6,067		)
Cash dividends declared	(11,874		)	—			(11,874		)
Proceeds from the issuance of common stock	4,421			—			4,421
Stock-based compensation	3,574			—			3,574
Excess tax benefit from the exercise of stock options and vesting of    equity awards	979			—			979
Balance, as of June 30, 2015	$	228,609		$	182		$	228,791

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PENSIONS AND OTHER POST-RETIREMENT BENEFITS

6 Months Ended

Jun. 30, 2015

Compensation and Retirement Disclosure [Abstract]

PENSIONS AND OTHER POST-RETIREMENT BENEFITS

PENSIONS AND OTHER POST-RETIREMENT BENEFITS

The following tables summarize the costs of the Company’s employee pension and other post-retirement benefit plans for the periods indicated (in thousands):

	Pension Benefits						Other Benefits
	Three months ended						Three months ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Service cost	$	1,887		$	1,734		$	4		$	6
Interest cost	3,114			3,335			80			91
Expected return on plan assets	(3,655		)	(3,936		)	—			—
Amortization of prior service cost	—			3			(72		)	(561		)
Recognized actuarial loss	2,166			502			92			154
Net periodic benefit cost	$	3,512		$	1,638		$	104		$	(310	)

For the three months ended June 30, 2015, $2.0 million of pension expense was incurred in cost of sales and $1.5 million was incurred in selling, general, and administrative expenses. For the three months ended June 30, 2014, $0.9 million of pension expense was incurred in cost of sales and $0.7 million was incurred in selling, general, and administrative expenses.

	Pension Benefits						Other Benefits
	Six months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Service cost	$	3,774		$	3,468		$	8		$	12
Interest cost	6,228			6,670			160			182
Expected return on plan assets	(7,310		)	(7,872		)	—			—
Amortization of prior service cost	—			6			(144		)	(1,122		)
Recognized actuarial loss	4,332			1,004			184			308
Net periodic benefit cost	$	7,024		$	3,276		$	208		$	(620	)

For the six months endedJune 30, 2015, $4.0 million of pension expense was incurred in cost of sales and $3.0 million was incurred in selling, general, and administrative expenses. For the six months endedJune 30, 2014, $1.9 million of pension expense was incurred in cost of sales and $1.4 million was incurred in selling, general, and administrative expenses.

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COMMON STOCK AND EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2015

COMMON STOCK AND EARNINGS PER SHARE

COMMON STOCK AND EARNINGS PER SHARE

COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share attributable to Knoll, Inc. stockholders excludes the dilutive effect of (i) common shares that could potentially be issued due to the exercise of stock options, and (ii) unvested restricted stock and restricted stock units and is computed by dividing net earnings attributable to Knoll, Inc. stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share attributable to Knoll, Inc. stockholders includes the effect of shares and potential shares issued under the stock incentive plans. The following table sets forth the reconciliation from basic to diluted weighted-average number of common shares outstanding:

	Three months ended		Six months ended
	June 30,	June 30,	June 30,	June 30,
	2015	2014	2015	2014
	(in thousands)		(in thousands)
Weighted-average number of common shares outstanding - basic	47,761	47,366	47,705	47,283
Potentially dilutive shares resulting from stock plans	749	609	740	729
Weighted-average number of common shares outstanding - diluted	48,510	47,975	48,445	48,012
Antidilutive equity awards number of shares not included in the weighted-average common shares - diluted	—	138	—	158

Common stock activity for the six months ended June 30, 2015 and 2014 included the repurchase of 287,689 shares for $6.1 million and 379,051 shares for $6.2 million, respectively.  Common stock activity for the six months ended June 30, 2015 also included the exercise of 302,750 stock options for $4.4 million and the vesting of 281,581 restricted shares.  Common stock activity for the six months ended June 30, 2014 included the exercise of 195,807 stock options for $2.6 million and the vesting of 496,191 restricted shares. During the three and six months ended June 30, 2015, the Company granted 998 and 272,424, respectively, equity-based awards to certain employees and the Company's Board of Directors. The vesting of these awards is subject to certain service, performance or market conditions.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following valuation techniques to measure fair value for its financial assets and financial liabilities:

· Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

· Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

· Level 3: Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The fair value of the Company's cash and cash equivalents, accounts receivable and accounts payable approximate carrying value due to their short maturities.

The fair value of the Company’s long-term debt approximates its carrying value, as it is variable rate debt and the terms are comparable to market terms as of the balance sheet dates, and is classified as Level 2. 

Financial Instruments

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table represents the financial assets and liabilities, measured at fair value on a recurring basis and the basis for that measurement (in thousands):

	Fair value as of June 30, 2015								Fair value as of December 31, 2014
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent purchase price payment	$	—	$	—	$	11,000	$	11,000	$	—	$	—	$	16,000	$	16,000

Pursuant to the agreement governing the acquisition of HOLLY HUNT, the Company may be required to make annual contingent purchase price payments. The payouts are based upon HOLLY HUNTreaching an annual net sales target, for each year over the next two calendar years, and are paid out by February 15 of the following calendar year. The Company classifies this as a Level 3 measurement and is required to remeasure this liability at fair value on a recurring basis. The fair value of such contingent purchase price payments was determined at the time of acquisition based upon net sales projections for HOLLY HUNTfor 2014, 2015, and 2016. The Company paid $5.0 million during the first quarter of 2015, as a result of HOLLY HUNT achieving the 2014 net sales projections. Excluding the initial recognition of the liability for the contingent purchase price payments and payments made to reduce the liability, any changes in the fair value would be included within selling, general and administrative expenses.

There were no additional assets and/or liabilities recorded at fair value on a recurring basis as of June 30, 2015 or December 31, 2014.

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CONTINGENT LIABILITIES AND COMMITMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Changes in the Company's warranty reserve
Balance, as of December 31, 2014			$ 8,180
Provision for warranty claims			3,717
Warranty claims paid			(3,476)
Foreign currency translation adjustment			(68)
Balance, as of June 30, 2015	$ 8,353		8,353
Contingent liabilities and commitments, additional disclosure
Warranty expense	$ 2,000	$ 1,700	$ 3,700	$ 3,400

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CONTINGENT LIABILITIES AND COMMITMENTS (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of changes in the warranty reserve

Changes in the warranty reserve are as follows (in thousands):

Balance, as of December 31, 2014	$	8,180
Provision for warranty claims	3,717
Warranty claims paid	(3,476		)
Foreign currency translation adjustment	(68		)
Balance, as of June 30, 2015	$	8,353

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Change in Equity and Noncontrolling Interests

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2015 (in thousands):

	Equity Attributable to Knoll Inc., Stockholders			Noncontrolling Interests			Total
Balance, as of December 31, 2014	$	213,011		$	207		$	213,218
Total comprehensive income:
Net earnings (losses) attributable to Knoll, Inc. stockholders and noncontrolling interests	34,682			(25		)	34,657
Other comprehensive income	(10,117		)	—			(10,117		)
Other changes in equity:
Purchase of common stock for treasury	(6,067		)	—			(6,067		)
Cash dividends declared	(11,874		)	—			(11,874		)
Proceeds from the issuance of common stock	4,421			—			4,421
Stock-based compensation	3,574			—			3,574
Excess tax benefit from the exercise of stock options and vesting of    equity awards	979			—			979
Balance, as of June 30, 2015	$	228,609		$	182		$	228,791

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ 5,000	$ 0
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payments	11,000		$ 16,000
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payments	$ 11,000		$ 16,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITES
Net earnings	$ 34,657	$ 18,673
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation	8,776	7,850
Amortization expense (including deferred financing fees)	1,951	2,176
Unrealized foreign currency gains	(6,818)	(452)
Stock-based compensation	3,574	3,658
Other non-cash items, net	227	30
Changes in assets and liabilities, net of acquisition:
Customer receivables	9,248	446
Inventories	(5,081)	(10,325)
Accounts payable	(36,399)	3,174
Current and deferred income taxes	(11,437)	6,291
Prepaid and other current assets	(1,765)	(4,042)
Other current liabilities	3,192	(13,662)
Other noncurrent assets and liabilities	7,317	17,460
Cash provided by operating activities	7,442	31,277
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(12,340)	(17,741)
Purchase of business, net of cash acquired	0	(93,349)
Purchase of licenses	(330)	(315)
Cash used in investing activities	(12,670)	(111,405)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility	170,000	608,000
Repayment of revolving credit facility	(154,000)	(515,000)
Payment of financing fees	0	(1,914)
Payment of dividends	(11,502)	(11,363)
Proceeds from the issuance of common stock	4,421	2,590
Purchase of common stock for treasury	(6,067)	(6,227)
Contingent purchase price payment	(5,000)	0
Excess tax benefit from the exercise of stock options and vesting of equity awards	979	210
Cash (used in) provided by financing activities	(1,169)	76,296
Effect of exchange rate changes on cash and cash equivalents	(2,282)	279
Decrease in cash and cash equivalents	(8,679)	(3,553)
Cash and cash equivalents at beginning of period	19,021	12,026
Cash and cash equivalents at end of period	$ 10,342	$ 8,473

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CONTINGENT LIABILITIES AND COMMITMENTS

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

CONTINGENT LIABILITIES AND COMMITMENTS

CONTINGENT LIABILITIES AND COMMITMENTS

Litigation

The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business.  The Company accrues for such matters when expenditures are probable and reasonably estimable.  Based upon information presently known, management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Warranty

The Company offers a warranty for all of its products.  The specific terms and conditions of those warranties vary depending upon the product.  The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time product revenue is recognized.  Factors that affect the Company’s liability include historical product-failure experience and estimated repair costs for identified matters for each specific product category.  The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the warranty reserve are as follows (in thousands):

Balance, as of December 31, 2014	$	8,180
Provision for warranty claims	3,717
Warranty claims paid	(3,476		)
Foreign currency translation adjustment	(68		)
Balance, as of June 30, 2015	$	8,353

Warranty expense for the three months ended June 30, 2015 and 2014 was $2.0 million and $1.7 million, respectively. Warranty expense for the six months ended June 30, 2015 and 2014 was $3.7 million and $3.4 million, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Assets and Liabilities Recorded at Fair Value on a Recurring and Nonrecurring Basis

The following table represents the financial assets and liabilities, measured at fair value on a recurring basis and the basis for that measurement (in thousands):

	Fair value as of June 30, 2015								Fair value as of December 31, 2014
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent purchase price payment	$	—	$	—	$	11,000	$	11,000	$	—	$	—	$	16,000	$	16,000

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PENSIONS AND OTHER POST-RETIREMENT BENEFITS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Pension Benefits
Components of the net periodic benefit cost
Service cost	$ 1,887	$ 1,734	$ 3,774	$ 3,468
Interest cost	3,114	3,335	6,228	6,670
Expected return on plan assets	(3,655)	(3,936)	(7,310)	(7,872)
Amortization of prior service cost	0	3	0	6
Recognized actuarial loss	2,166	502	4,332	1,004
Net periodic benefit cost	3,512	1,638	7,024	3,276
Pension Benefits | Cost of sales
Components of the net periodic benefit cost
Net periodic benefit cost	2,000	900	4,000	1,900
Pension Benefits | Selling, general, and administrative expenses
Components of the net periodic benefit cost
Net periodic benefit cost	1,500	700	3,000	1,400
Other Benefits
Components of the net periodic benefit cost
Service cost	4	6	8	12
Interest cost	80	91	160	182
Expected return on plan assets	0	0	0	0
Amortization of prior service cost	(72)	(561)	(144)	(1,122)
Recognized actuarial loss	92	154	184	308
Net periodic benefit cost	$ 104	$ (310)	$ 208	$ (620)

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Schedule of inventories

 Information regarding the Company's inventories is as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw materials	$	58,226	$	54,376
Work-in-process	7,294		7,265
Finished goods	77,920		79,194
Total	$	143,440	$	140,835