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, 2017

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, a smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 August 7, 2017, there were 49,321,826 shares (including 853,360 non-voting restricted shares) of the Registrant’s common stock, par value $0.01 per share, outstanding.

1

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, 2017 and December 31, 2016	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2017 and 2016	4
	Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2017 and 2016	5
	Notes to the Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
3.	Quantitative and Qualitative Disclosures about Market Risk	24
4.	Controls and Procedures	25
PART II — OTHER INFORMATION
1.	Legal Proceedings	26
1A.	Risk Factors	26
2.	Unregistered Sales of Equity Securities and The Use of Proceeds	26
6.	Exhibits	27
Signatures		28

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, 2017			December 31, 2016
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	5,924		$	9,854
Customer receivables, net of allowance for doubtful accounts of $6,108 and $8,059, respectively	77,762			84,425
Inventories, net	150,076			142,072
Prepaid expenses	28,801			27,461
Other current assets	13,957			12,996
Total current assets	276,520			276,808
Property, plant, and equipment, net	204,693			197,084
Goodwill	141,759			141,391
Intangible assets, net	240,226			241,870
Other non-trade receivables	27			26
Other noncurrent assets	1,423			1,434
Total assets	$	864,648		$	858,613
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	10,000		$	10,000
Accounts payable	99,885			97,518
Income taxes payable	32			81
Other current liabilities	94,955			114,774
Total current liabilities	204,872			222,373
Long-term debt	223,716			208,383
Deferred income taxes	80,123			76,854
Post-employment benefits other than pensions	4,976			5,124
Pension liability	13,332			17,428
Other noncurrent liabilities	17,303			18,982
Total liabilities	544,322			549,144
Commitments and contingent liabilities
Equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 65,434,707 shares issued and 49,321,826 shares outstanding (including 853,360 non-voting restricted shares and net of 16,112,881 treasury shares) at June 30, 2017 and 64,741,648 shares issued and 49,096,290 shares outstanding (including 993,962 non-voting restricted shares and net of 15,645,358 treasury shares) at December 31, 2016	493			491
Additional paid-in capital	50,170			55,148
Retained earnings	310,305			297,011
Accumulated other comprehensive loss	(40,878		)	(43,403		)
Total Knoll, Inc. stockholders' equity	320,090			309,247
Noncontrolling interests	236			222
Total equity	320,326			309,469
Total liabilities and equity	$	864,648		$	858,613

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,
	2017			2016			2017			2016
Sales	$	268,694		$	294,700		$	525,514		$	579,329
Cost of sales	168,736			180,636			329,882			357,501
Gross profit	99,958			114,064			195,632			221,828
Selling, general, and administrative expenses	75,578			80,590			148,218			156,505
Restructuring charges	2,150			—			2,150			—
Operating profit	22,230			33,474			45,264			65,323
Interest expense	1,859			1,307			3,530			2,861
Other expense, net	229			185			436			2,789
Income before income tax expense	20,142			31,982			41,298			59,673
Income tax expense	7,182			10,341			12,946			20,621
Net earnings	12,960			21,641			28,352			39,052
Net earnings attributable to noncontrolling interests	22			6			14			17
Net earnings attributable to Knoll, Inc. stockholders	$	12,938		$	21,635		$	28,338		$	39,035
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.27		$	0.45		$	0.59		$	0.81
Diluted	$	0.26		$	0.44		$	0.57		$	0.80
Dividends per share	$	0.15		$	0.15		$	0.30		$	0.30
Weighted-average number of common shares outstanding:
Basic	48,464,605			48,018,733			48,375,241			47,961,661
Diluted	49,376,506			48,832,874			49,294,525			48,713,633
Net earnings	$	12,960		$	21,641		$	28,352		$	39,052
Other comprehensive income (loss):
Pension and other post-employment liability adjustment, net of tax	(138		)	(136		)	(275		)	(272		)
Foreign currency translation adjustment	2,320			1,566			2,800			5,616
Total other comprehensive income (loss), net of tax	2,182			1,430			2,525			5,344
Total comprehensive income	15,142			23,071			30,877			44,396
Comprehensive income attributable to noncontrolling interests	22			6			14			17
Comprehensive income attributable to Knoll, Inc. stockholders	$	15,120		$	23,065		$	30,863		$	44,379

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,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	28,352		$	39,052
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation	10,668			9,248
Amortization expense (including deferred financing fees)	1,977			1,977
Inventory obsolescence	1,203			1,423
Loss on disposal of property, plant and equipment	29			1
Unrealized foreign currency (gains) losses	(122		)	1,605
Stock-based compensation	5,043			4,592
Bad debt and customer credits	(1,650		)	1,282
Changes in assets and liabilities:
Customer receivables	8,420			16,216
Inventories	(8,811		)	(6,410		)
Prepaid and other current assets	(1,807		)	(2,675		)
Accounts payable	6,015			(10,109		)
Current and deferred income taxes	2,567			710
Other current liabilities	(13,729		)	(9,787		)
Other noncurrent assets and liabilities	(5,917		)	(786		)
Cash provided by operating activities	32,238			46,339
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net	(20,756		)	(15,057		)
Cash used in investing activities	(20,756		)	(15,057		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from credit facility	214,000			173,500
Repayment of credit facility	(199,000		)	(185,500		)
Payment of dividends	(15,729		)	(14,727		)
Proceeds from the issuance of common stock	551			2,120
Purchase of common stock for treasury	(10,570		)	(3,903		)
Contingent purchase price payment	(6,000		)	(5,000		)
Cash used in financing activities	(16,748		)	(33,510		)
Effect of exchange rate changes on cash and cash equivalents	1,336			1,584
Net decrease in cash and cash equivalents	(3,930		)	(644		)
Cash and cash equivalents at beginning of period	9,854			4,192
Cash and cash equivalents at end of period	$	5,924		$	3,548

See accompanying notes to the condensed consolidated financial statements.

5

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, 2016, 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, 2016.

New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016. The FASB subsequently deferred the effective date of this standard to December 15, 2017 with early adoption permitted as of December 15, 2016. The Company will adopt the new standard in the annual period beginning January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective (cumulative effect) transition method. Transition practical expedients are available for both methods. The Company plans to apply the modified retrospective transition method. The Company assembled an implementation work team to assess and document the accounting conclusions for the adoption of ASU 2014-09. Based on this analysis, the Company does not believe the adoption of the ASU will have a material impact to the financial statements. The Company continues to assess the potential impact on accounting policies, internal control processes and related disclosures required under the new guidance.

In July 2015, the FASB issued ASU 2015-11 - Inventory (Topic 330), 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 is effective for fiscal years beginning after December 15, 2016.  The Company adopted this standard during the three months ended March 31, 2017, and the impact on its consolidated financial statements was not material.

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 will be effective for the Company on January 1, 2019, and the Company will adopt the standard using the modified retrospective approach. While the Company continues to evaluate the provisions of ASC 842 to determine how it will be affected, the primary effect of adopting the new standard will be to record assets and obligations for current operating leases. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment by removing the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Under the new guidance, goodwill impairment will be measured and recognized as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill allocated to the reporting unit. The revised guidance does not affect the reporting entity’s ability to first assess qualitative factors by reporting unit to determine whether it is necessary to perform the quantitative goodwill impairment test. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

6

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715). The new standard improves the presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will require all components of the Company's net periodic benefit cost (income), with the exception of service cost, currently reported within selling, general and administrative expenses, to be reclassified and reported within other expense. The adoption of this new standard will have no impact on pre-tax income or net income reported.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718). The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Under the new guidance, an entity should account for the effects of a modification unless all of the following are met, (i) the fair value of the modified award is the same as the fair value of the original award, (ii) the vesting conditions of the modified award are the same as the original awards immediately before modification, and (iii) the classification of the modified award as an equity instrument or liability instrument is the same as the classification immediately prior to modification. The guidance is effective for annual periods and interim periods within those beginning after December 15, 2017. Early adoption is permitted for annual and interim periods with a prospective application to an award modified on or after the adoption date. At this time, the Company believes there will be an immaterial impact to the financial statements as a result of adopting this ASU.

NOTE 2. INVENTORIES

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

	June 30, 2017		December 31, 2016
Raw materials	$	59,247	$	60,217
Work-in-process	7,830		7,186
Finished goods	82,999		74,669
	$	150,076	$	142,072

Inventory reserves for obsolescence and other estimated losses were $10.6 million and $9.5 million at June 30, 2017 and December 31, 2016, respectively, and have been included in the amounts above.

7

NOTE 3. PENSION AND OTHER POST-EMPLOYMENT BENEFITS

The following tables set forth the components of the net periodic benefit income for the Company's pension and other post-employment benefit plans (in thousands):

	Pension Benefits						Other Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	175		$	468		$	—		$	—
Interest cost	2,390			2,416			43			49
Expected return on plan assets	(4,615		)	(3,612		)	—			—
Amortization of prior service credit	—			—			(371		)	(280		)
Recognized actuarial loss (gain)	154			123			1			(62		)
Net periodic benefit (income) cost	$	(1,896	)	$	(605	)	$	(327	)	$	(293	)

	Pension Benefits						Other Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	350		$	936		$	—		$	—
Interest cost	4,780			4,832			86			98
Expected return on plan assets	(9,230		)	(7,224		)	—			—
Amortization of prior service credit	—			—			(742		)	(560		)
Recognized actuarial loss (gain)	308			246			2			(124		)
Net periodic benefit (income) cost	$	(3,792	)	$	(1,210	)	$	(654	)	$	(586	)

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments

The fair values of the Company’s cash and cash equivalents, customer receivables, 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 are classified as Level 2.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table represents the 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, 2017								Fair Value as of December 31, 2016
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent purchase price payment - HOLLY HUNT®	$	—	$	—	$	—	$	—	$	—	$	—	$	6,000	$	6,000
Contingent purchase price payment - DatesWeiser	—		—		1,100		1,100		—		—		1,100		1,100
Total	$	—	$	—	$	1,100	$	1,100	$	—	$	—	$	7,100	$	7,100

8

Pursuant to the agreement governing the acquisition of HOLLY HUNT®, the Company was required to make annual contingent purchase price payments. The payouts were based upon HOLLY HUNT® reaching an annual net sales target, for each year through 2016, and were paid out on or around February 20 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, totaling $16.0 million, was determined at the time of acquisition based upon net sales projections for HOLLY HUNT® for 2014, 2015, and 2016. The Company paid the remaining $6.0 million contingent purchase price in the three months ended March 31, 2017, as a result of HOLLY HUNT® achieving the 2016 net sales projections.

Pursuant to the agreement governing the acquisition of DatesWeiser, the Company may be required to make annual contingent purchase price payments. The payouts are based upon DatesWeiser reaching an annual net sales target, for each year through 2020. 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, totaling $1.1 million, was determined at the time of acquisition based upon net sales projections for DatesWeiser for 2017, 2018, 2019 and 2020. 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 will 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, 2017 or December 31, 2016.

NOTE 5. OTHER CURRENT LIABILITIES

Information regarding the Company's other current liabilities is as follows (in thousands):

	June 30, 2017		December 31, 2016
Accrued employee compensation	$	29,070	$	46,508
Customer deposits	34,640		31,216
Warranty	8,944		8,906
Contingent payout	1,100		7,100
Other	21,201		21,044
Other current liabilities	$	94,955	$	114,774

NOTE 6. INDEBTEDNESS

The Company's long-term debt is summarized as follows (in thousands):

	June 30, 2017		December 31, 2016
Balance of revolving credit facility	$	65,000	$	45,000
Balance of term loan	170,000		175,000
Total long-term debt	235,000		220,000
Less: Current maturities of long-term debt	10,000		10,000
Less: Deferred financing fees, net	1,284		1,617
Long-term debt	$	223,716	$	208,383

NOTE 7. 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.

9

Warranty

The Company provides for estimated product warranty expenses when related products are sold and are included within other current liabilities. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, future warranty claims may differ from the amounts provided.

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

Balance, December 31, 2016	$	8,906
Provision for warranty claims	2,832
Warranty claims paid	(3,044		)
Foreign currency translation adjustment	250
Balance, June 30, 2017	$	8,944

Warranty expense for the three and six months endedJune 30, 2017 was $1.7 million and $2.8 million, respectively. Warranty expense for the three and six months ended June 30, 2016 was $1.8 million and $3.4 million, respectively.

NOTE 8. EQUITY

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months endedJune 30, 2017 (in thousands):

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2016	$	491		$	55,148		$	297,011		$	(43,403	)	$	309,247		$	222	$	309,469
Net earnings	—			—			28,338			—			28,338			14		28,352
Other comprehensive income	—			—			—			2,525			2,525			—		2,525
Shares issued for consideration:
Exercise of stock options (22,500 shares)	—			472			—			—			472			—		472
Shares issued under stock incentive plan (676,850)	7			(3		)	—			—			4			—		4
Shares issued to Board of Directors in lieu of cash (3,188 shares)	—			75			—			—			75			—		75
Stock-based compensation, net of forfeitures	(1		)	5,044			—			—			5,043			—		5,043
Cash dividend ($0.30 per share)	—			—			(15,044		)	—			(15,044		)	—		(15,044		)
Purchase of common stock (420,072 shares)	(4		)	(10,566		)	—			—			(10,570		)	—		(10,570		)
Balance at June 30, 2017	$	493		$	50,170		$	310,305		$	(40,878	)	$	320,090		$	236	$	320,326

10

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months endedJune 30, 2017 (in thousands):

	Foreign Currency Translation Adjustment			Pension and Other Post-Employment Liability Adjustment			Total
Balance, as of December 31, 2016	$	(13,998	)	$	(29,405	)	$	(43,403	)
Other comprehensive income before reclassifications	2,800			—			2,800
Amounts reclassified from accumulated other comprehensive income (loss)	—			(275		)	(275		)
Net current-period other comprehensive income	2,800			(275		)	2,525
Balance, as of June 30, 2017	$	(11,198	)	$	(29,680	)	$	(40,878	)

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

	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Amortization of pension and other post-employment liability adjustments
Prior service credits (1)	$	(371	)	$	(280	)	$	(742	)	$	(560	)
Actuarial losses (1)	155			61			310			122
Total before tax	(216		)	(219		)	(432		)	(438		)
Tax benefit	78			83			157			166
Net of tax	$	(138	)	$	(136	)	$	(275	)	$	(272	)

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 3 for additional information.

11

NOTE 10. EARNINGS PER SHARE

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$	12,938	$	21,635	$	28,338	$	39,035
Denominator:
Denominator for basic earnings per shares - weighted-average shares	48,465		48,019		48,375		47,962
Effect of dilutive securities:
Potentially dilutive shares resulting from stock plans	912		814		920		752
Denominator for diluted earnings per share - weighted-average shares	49,377		48,833		49,295		48,714
Antidilutive equity awards not included in weighted-average common shares—diluted	—		—		12		—
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.27	$	0.45	$	0.59	$	0.81
Diluted	$	0.26	$	0.44	$	0.57	$	0.80

NOTE 11. INCOME TAXES

The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provisions for the three months endedJune 30, 2017 and 2016 were based on the estimated effective tax rates applicable for the full years ending December 31, 2017 and 2016 and includes items specifically related to the interim periods. The Company’s effective tax rate was 31.3% and 34.6% for the six months endedJune 30, 2017 and 2016, respectively. The decrease in the Company's effective tax rate for the six months endedJune 30, 2017 was due primarily to the adoption of ASU 2016-09 in the third quarter of 2016, which impacted the accounting treatment of excess tax benefits related to vesting of equity awards in the six months ended June 30, 2017. This resulted in the realization of tax benefits as a reduction to income tax expense in the quarter. In addition, the effective tax rate was affected by 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, 2017 and December 31, 2016, the Company had unrecognized tax benefits of approximately $0.9 million, respectively. These unrecognized tax benefit amounts would affect the effective tax rate if recognized. As of June 30, 2017, the Company is subject to U.S. Federal Income Tax examination for the tax years 2007 through 2016, and to non-U.S. income tax examination for the tax years 2010 to 2016. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2016.

12

NOTE 12. SEGMENT INFORMATION

The Company manages its business through its reporting segments: Office, Studio, and Coverings. All unallocated expenses are included within Corporate.

The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms. These products include: systems furniture, seating, storage, tables, desks and KnollExtra® accessories as well as the international sales of North American Office products.

The Studio segment includes KnollStudio®, HOLLY HUNT®, Knoll Europe and DatesWeiser. KnollStudio® products, include iconic seating, lounge furniture, side, cafe and dining chairs as well as conference, training and dining and occasional tables. HOLLY HUNT® is known for high quality residential furniture, lighting, rugs, textiles and leathers. In 2016, HOLLY HUNT® acquired Vladimir Kagan Design Group, a renowned collection of modern luxury furnishings. Knoll Europe, which markets and sells both KnollStudio® and Knoll Office products, manufactures and sells products to customers primarily in Europe. DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard for design, quality and technology integration.

The Coverings segment includes KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. These businesses provide a wide range of customers with high-quality fabrics, felt, leather and related architectural products.

Corporate costs include unallocated costs relating to shared services and general corporate activities such as legal expenses, acquisition expenses, certain finance, human resources, administrative and executive expenses and other expenses that are not directly attributable to an operating segment. Dedicated, direct selling, general and administrative expenses of the segments continue to be included within segment operating profit. Management regularly reviews the costs included in the Corporate function, and believes disclosing such information provides more visibility and transparency of how the chief operating decision maker reviews the results for the Company.

The tables below present the Company’s segment information with Corporate costs excluded from operating segment results. Prior year amounts have been recast to conform to the current presentation (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
SALES
Office	$	153,042		$	179,270		$	302,874		$	364,626
Studio	88,039			88,650			167,112			160,156
Coverings	27,613			26,780			55,528			54,547
Knoll, Inc.	$	268,694		$	294,700		$	525,514		$	579,329
INTERSEGMENT SALES (1)
Office	$	450		$	488		$	724		$	1,069
Studio	1,493			1,753			2,591			3,058
Coverings	649			2,008			2,600			4,255
Knoll, Inc.	$	2,592		$	4,249		$	5,915		$	8,382
OPERATING PROFIT
Office (2)	$	4,395		$	15,794		$	13,171		$	35,627
Studio	14,919			15,627			26,558			26,110
Coverings	6,194			6,458			12,430			13,180
Corporate	(3,278		)	(4,405		)	(6,895		)	(9,594		)
Knoll, Inc.(3)	$	22,230		$	33,474		$	45,264		$	65,323

_______________________________________________________________________________

(1) Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities.

(2) Office Operating Profit includes $2.2 million of restructuring charges for the three and six months ended June 30, 2017. The restructuring charges related to headcount rationalization and modernization of equipment. The Company does not expect to incur additional restructuring charges related to these activities.

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

13

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 audited consolidated financial statements.

Forward-looking Statements

This quarterly report on Form 10-Q contains forward-looking statements, principally in the sections entitled “Business,” “Risk Factors,” “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 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, 2016; 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 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 allegations of patents, copyrights and trademark infringements; violations of environmental laws and regulations; potential labor disruptions; adequacy of our insurance policies; the availability of future capital and the cost of borrowing; 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 the 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.

Overview

We design, manufacture, market and sell high-end commercial and residential furniture, accessories, textiles, fine leathers and designer felt for the workplace and home. We work with clients to create inspired modern interiors. Our design-driven businesses share a reputation for high-quality and sophistication offering a diversified product portfolio that endures throughout evolving trends. Our products are targeted at the middle to upper-end of the market where we reach customers primarily through a broad network of independent dealers and distribution partners, our direct sales force, our showrooms and our online presence.

Business Highlights

During the last decade, we have diversified our sources of revenue among our varying operating segments. We continue to build Knoll with an eye toward what works for our customers and shareholders: a constellation of high-design, high-margin businesses that leverage our historic relationships with architects, designers and decorators.

Our efforts to diversify our sources of revenue among our operating segments has not detracted from our continued focus on growing and improving the operating performance of our Office segment. We are looking beyond the traditional office product categories of systems, task seating and storage, to furniture that supports activity areas and the in-between spaces where people meet. We believe that our success in traditional office products gives us an advantage throughout the workplace. Our new Rockwell Unscripted collection encompasses every product category ranging from seating and lounge to architectural walls and storage. It addresses the needs of organizations that seek alternatives to the traditional workspace, and is substantially additive to our current product portfolio. In addition to these initiatives, we aim to increase profitability through operational improvements and investments in our physical and technological infrastructure. Our investments in lean manufacturing, combined with continued modernization of our facilities, is allowing us to progressively deliver on this goal.

14

We believe that over time our diversification efforts and strategy will continue to result in a more profitable and less cyclical enterprise. The 2016 acquisitions of DatesWeiser and Vladimir Kagan further advance our strategy of building global capability as a singular go-to resource for high-design workplaces and homes. DatesWeiser plays an integral role in the creation of high performance workplaces as its sophisticated meeting and conference tables and credenzas set a standard for design, quality and technology integration. DatesWeiser products are offered as a compliment of our ‘ancillary’ offerings. Vladimir Kagan's elegant and contemporary designs are leveraged within our HOLLY HUNT® distribution channels to maximize profitability and growth in future years.

We are committed to building a more efficient and responsive customer centric service culture and technology infrastructure across our organization. Our capital expenditures are reflective of this commitment as we continued to invest in the business through technology infrastructure upgrades, continued investments in our manufacturing facilities focusing on lean initiatives and in our showroom footprint.

Results of Operations

Comparison of Consolidated Results for the Three Months EndedJune 30, 2017 and 2016

	Three Months Ended June 30,						2017 vs. 2016
	2017			2016			$ Change			% Change
	(Dollars in thousands, except per share data)
Net Sales	$	268,694		$	294,700		$	(26,006	)	(8.8	)%
Gross profit	99,958			114,064			(14,106		)	(12.4	)%
Selling, general, and administrative expenses	75,578			80,590			(5,012		)	(6.2	)%
Restructuring charges	2,150			—			2,150			100.0	%
Operating profit	22,230			33,474			(11,244		)	(33.6	)%
Interest expense	1,859			1,307			552			42.2	%
Other expense, net	229			185			44			23.8	%
Income tax expense	7,182			10,341			(3,159		)	(30.5	)%
Net earnings	12,960			21,641			(8,681		)	(40.1	)%
Net earnings attributable to Knoll, Inc. stockholders	12,938			21,635			(8,697		)	(40.2	)%
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.27		$	0.45		$	(0.18	)	(40.0	)%
Diluted	$	0.26		$	0.44		$	(0.18	)	(40.9	)%
Statistical Data
Gross profit %	37.2		%	38.7		%
Operating profit %	8.3		%	11.4		%
Selling, general, and administrative expenses %	28.1		%	27.3		%

Net Sales

Net sales for the three months endedJune 30, 2017 were $268.7 million, a decrease of $26.0 million, or 8.8%, from sales of $294.7 million for the three months endedJune 30, 2016. Net sales for the Office segment were $153.0 million for the three months endedJune 30, 2017, a decrease of 14.6%, when compared with the three months endedJune 30, 2016. The decrease in the Office segment was a result of lower government sales and fewer large commercial projects. Net sales for the Studio segment were $88.0 million during the three months endedJune 30, 2017, a decrease of 0.7%, when compared with the same period of 2016. Growth in HOLLY HUNT® and the incremental sales from DatesWeiser were offset by the decrease in KnollStudio® and Europe. Net sales for the Coverings segment were $27.6 million during the three months endedJune 30, 2017, an increase of 3.1%, when compared with the three months endedJune 30, 2016. The increase in Coverings was driven primarily by higher volume in Spinneybeck | FilzFelt.

Gross Profit

Gross profit for the three months endedJune 30, 2017 was $100.0 million, a decrease of $14.1 million, or 12.4%, from gross profit of $114.1 million for the three months endedJune 30, 2016. As a percentage of sales, gross profit decreased from 38.7% for the three months endedJune 30, 2016 to 37.2% for the three months endedJune 30, 2017. This decrease was driven mainly by the Office segment, where lower volume had an unfavorable impact on fixed-cost leverage, partially offset by net price realization.

15

Operating Profit

Operating profit for the three months endedJune 30, 2017 was $22.2 million, a decrease of $11.2 million, or 33.6%, from operating profit of $33.5 million for the three months endedJune 30, 2016. The decrease in operating profit was driven primarily by the Office segment resulting from lower sales volume partially offset by reduced performance based incentive accruals and lower sales commissions. Operating profit for the Office segment was $4.4 million, or 2.9% of net sales for the three months endedJune 30, 2017, a decrease of $11.4 million, or 72.2%, when compared with three months endedJune 30, 2016.

Selling, general, and administrative expenses for the three months endedJune 30, 2017 were $75.6 million, or 28.2% of sales, compared to $80.6 million, or 27.0% of sales, for the three months endedJune 30, 2016. The decrease is due primarily to lower incentive accruals from decreased profitability, as well as lower sales commissions as a result of a reduction in volume in the Office segment.

Interest Expense

Interest expense for the three months endedJune 30, 2017 was $1.9 million, an increase of $0.6 million from interest expense of $1.3 million for the three months endedJune 30, 2016. The increase in interest expense is due to an increase in outstanding borrowings in the three months ended June 30, 2017 compared to the same period in 2016. During the three months endedJune 30, 2017 and 2016, our weighted average interest rate was approximately 2.4% and 1.9%, respectively.

Other Expense, net

During the three months endedJune 30, 2017 and 2016, other expense was $0.2 million. Other expenses are primarily related to foreign exchange losses.

Income Tax Expense

Our effective tax rate was 35.7% for the three months endedJune 30, 2017, compared to 32.3% for the three months endedJune 30, 2016. The increase in the tax rate was due primarily to a favorable income tax examination ruling received from a non-U.S. income tax jurisdiction during the second quarter of 2016. The tax rate was also affected by the mix of pretax income and the varying effective tax rates in the countries and states in which we operate.

Comparison of Consolidated Results for theSix Months EndedJune 30, 2017 and 2016

	Six Months Ended June 30,						2017 vs. 2016
	2017			2016			$ Change			% Change
	(Dollars in thousands, except per share data)
Net Sales	$	525,514		$	579,329		$	(53,815	)	(9.3	)%
Gross profit	195,632			221,828			(26,196		)	(11.8	)%
Selling, general, and administrative expenses	148,218			156,505			(8,287		)	(5.3	)%
Restructuring expense	2,150			—			2,150			100.0	%
Operating profit	45,264			65,323			(20,059		)	(30.7	)%
Interest expense	3,530			2,861			669			23.4	%
Other expense (income), net	436			2,789			(2,353		)	(84.4	)%
Income tax expense	12,946			20,621			(7,675		)	(37.2	)%
Net earnings	28,352			39,052			(10,700		)	(27.4	)%
Net earnings attributable to Knoll, Inc. stockholders	28,338			39,035			(10,697		)	(27.4	)%
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.59		$	0.81		$	(0.22	)	(27.2	)%
Diluted	$	0.57		$	0.80		$	(0.23	)	(28.8	)%
Statistical Data
Gross profit %	37.2		%	38.3		%
Operating profit %	8.6		%	11.3		%
Selling, general, and administrative expenses %	28.2		%	27.0		%

16

Net Sales

Net sales for the six months endedJune 30, 2017 were $525.5 million, a decrease of $53.8 million, or 9.3%, from sales of $579.3 million for the six months endedJune 30, 2016. The decrease in sales was due to a $61.8 million decrease in our Office segment sales resulting from a reduction in the quantity and lower average size of project opportunities, lower government sales, and a limited ship week at the end of March to facilitate the first phase of the implementation of a new enterprise resource planning system. The decrease in sales in our Office segment were partially offset by our Studio segment, where sales increased 4.3% from the same period in the prior year. The increase in the Studio segment was driven by strong sales growth in HOLLY HUNT® and incremental sales from DatesWeiser which was acquired in the fourth quarter of 2016.

Gross Profit

Gross profit for the six months endedJune 30, 2017 was $195.6 million, a decrease of $26.2 million, or 11.8%, from gross profit of $221.8 million for the six months endedJune 30, 2016. As a percentage of sales, gross profit decreased from 38.3% for the six months endedJune 30, 2016 to 37.2% for the six months endedJune 30, 2017. This decrease was driven primarily by the Office segment, where lower volume had an unfavorable impact on fixed-cost leverage, partially offset by net price realization.

Operating Profit

Operating profit for the six months endedJune 30, 2017 was $45.3 million, a decrease of $20.1 million, or 30.7%, from operating profit of $65.3 million for the six months endedJune 30, 2016. The decrease in operating profit was driven primarily by the Office segment resulting from lower sales volume partially offset by reduced performance based incentive accruals and lower sales commissions. Operating profit as a percentage of sales decreased from 11.3% in the six months endedJune 30, 2016 to 8.6% in the six months endedJune 30, 2017.

Selling, general, and administrative expenses for the six months endedJune 30, 2017 were $148.2 million, or 28.2% of sales, compared to $156.5 million, or 27.0% of sales, for the six months endedJune 30, 2016. The decrease is due primarily to lower incentive accruals from decreased profitability as well as lower sales commissions as a result of a reduction in volume in the Office segment, partially offset by increased investments in training and costs related to the rollout of the Rockwell Unscripted product line.

Interest Expense

Interest expense for the six months endedJune 30, 2017 was $3.5 million, an increase of $0.7 million from interest expense of $2.9 million for the six months endedJune 30, 2016. During the six months endedJune 30, 2017 and 2016, our weighted average interest rate was approximately 2.3% and 2.1%, respectively.

Other Expense, net

Other expense for the six months endedJune 30, 2017 was $0.4 million a decrease of $2.4 million from $2.8 million for the six months endedJune 30, 2016. Other expense for the six months endedJune 30, 2017 was primarily related to foreign exchange losses. Other expense for the six months endedJune 30, 2016 was primarily related to foreign exchanges losses that resulted from the revaluation of intercompany balances between our Canadian and U.S. entities.

Income Tax Expense

Our effective tax rate was 31.3% for the six months endedJune 30, 2017, compared to 34.6% for the six months endedJune 30, 2016. The change in the tax rate was due primarily to the early adoption of ASU 2016-09 in the third quarter of 2016, which impacted the accounting treatment of the vesting of a large quantity of equity awards. This resulted in the realization of tax benefits recognized as a reduction of income tax expense. In addition, the tax rate was affected by the mix of pretax income and the varying effective tax rates in the countries and states in which we operate.

17

Segment Reporting

We manage our business through our reporting segments: Office, Studio, and Coverings. All unallocated expenses are included within Corporate.

Our Office segment includes a complete range of workplace products that address diverse workplace planning paradigms. These products include: systems furniture, seating, storage, tables, desks and KnollExtra® accessories as well as the international sales of our North American Office products.

Our Studio segment includes KnollStudio®, HOLLY HUNT®, Knoll Europe and DatesWeiser. KnollStudio® products, include iconic seating, lounge furniture, side, cafe and dining chairs as well as conference, training and dining and occasional tables. HOLLY HUNT® is known for high quality residential furniture, lighting, rugs, textiles and leathers. In 2016, HOLLY HUNT® acquired Vladimir Kagan Design Group, a renowned collection of modern luxury furnishings. Knoll Europe, which distributes both KnollStudio® and Knoll Office products, manufactures and sells products to customers primarily in Europe. DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard for design, quality and technology integration.

Our Coverings segment includes KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. These businesses provide a wide range of customers with high-quality fabrics, felt, leather and related architectural products.

In 2016, we revised our segment presentation to segregate Corporate costs. We believe this facilitates improved communication as we report segment results and better aligns with how we view and operate the Company. Corporate costs represent the portion of unallocated expenses relating to shared services and general corporate functions including, but not limited to, legal expenses, acquisition expenses, certain finance, human resources, administrative and executive expenses and other expenses that are not directly attributable to an operating segment. Dedicated, direct selling, general and administrative expenses of the segments continue to be included within segment operating profit. We regularly review the costs included in the Corporate function, and believe disclosing such information provides more visibility and transparency of how our chief operating decision maker reviews the results for the Company.

The comparisons of segment results found below present our segment information with Corporate costs excluded from operating segment results. Prior year amounts have been recast to conform to the current presentation.

Comparison of Segment Results for theThree Months EndedJune 30, 2017 and 2016

	Three Months Ended June 30,						2017 vs. 2016
	2017			2016			$ Change			% Change
	(Dollars in thousands)
SALES
Office	$	153,042		$	179,270		$	(26,228	)	(14.6	)%
Studio	88,039			88,650			(611		)	(0.7	)%
Coverings	27,613			26,780			833			3.1	%
Knoll, Inc.	$	268,694		$	294,700		$	(26,006	)	(8.8	)%
OPERATING PROFIT
Office	$	4,395		$	15,794		$	(11,399	)	(72.2	)%
Studio	14,919			15,627			(708		)	(4.5	)%
Coverings	6,194			6,458			(264		)	(4.1	)%
Corporate	(3,278		)	(4,405		)	1,127			(25.6	)%
Knoll, Inc. (1)	$	22,230		$	33,474		$	(11,244	)	(33.6	)%

_______________________________________________________________________________

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

Office

Net sales for the Office segment for the three months endedJune 30, 2017 were $153.0 million, a decrease of $26.2 million, or 14.6%, when compared with the three months endedJune 30, 2016. The decrease in the Office segment was a result of lower government sales and fewer large commercial projects. Operating profit for the Office segment in the three months endedJune 30, 2017 was $4.4 million, a decrease of $11.4 million, or 72.2%, when compared with the three months endedJune 30, 2016. The decrease in operating profit for the Office segment was due primarily to lower sales volume partially offset by reduced performance-based incentive accruals and lower sales commissions.

18

Studio

Net sales for the Studio segment for the three months endedJune 30, 2017 were $88.0 million, a decrease of $0.6 million, or 0.7%, when compared with the three months endedJune 30, 2016. Double digit growth at HOLLY HUNT® and the incremental sales from DatesWeiser were offset by the decreases in contract shipments at both KnollStudio® and Europe. Operating profit for the Studio segment in the three months endedJune 30, 2017 was $14.9 million, a decrease of $0.7 million, or 4.5%, when compared with the three months endedJune 30, 2016. The decrease in operating profit was driven by decreased volume, partially offset by net price realization.

Coverings

Net sales for the Coverings segment for the three months endedJune 30, 2017 were $27.6 million, an increase of $0.8 million, or 3.1%, when compared with the three months endedJune 30, 2016. The increase in Coverings was driven primarily by higher volume in the Spinneybeck | FilzFelt business. Operating profit for the Coverings segment in the three months endedJune 30, 2017 was $6.2 million, a decrease of $0.3 million, or 4.1%, when compared with the three months endedJune 30, 2016.

Corporate

Corporate costs for the three months endedJune 30, 2017 were $3.3 million, a decrease of $1.1 million, or 25.6%, when compared with the three months endedJune 30, 2016. The decrease was driven primarily by reduced costs associated with employee benefits and incentive compensation.

Comparison of Segment Results for the Six Months EndedJune 30, 2017 and 2016

	Six Months Ended June 30,						2017 vs. 2016
	2017			2016			$ Change			% Change
	(Dollars in thousands)
SALES
Office	$	302,874		$	364,626		$	(61,752	)	(16.9	)%
Studio	167,112			160,156			6,956			4.3	%
Coverings	55,528			54,547			981			1.8	%
Knoll, Inc.	$	525,514		$	579,329		$	(53,815	)	(9.3	)%
OPERATING PROFIT
Office	$	13,171		$	35,627		$	(22,456	)	(63.0	)%
Studio	26,558			26,110			448			1.7	%
Coverings	12,430			13,180			(750		)	(5.7	)%
Corporate	(6,895		)	(9,594		)	2,699			(28.1	)%
Knoll, Inc. (1)	$	45,264		$	65,323		$	(20,059	)	(30.7	)%

_______________________________________________________________________________

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

Office

Net sales for the Office segment for the six months endedJune 30, 2017 were $302.9 million, a decrease of $61.8 million, or 16.9%, when compared with the six months endedJune 30, 2016. The decrease in the Office segment was a result of lower government sales and fewer large commercial projects. Operating profit for the Office segment in the six months endedJune 30, 2017 was $13.2 million, a decrease of $22.5 million, or 63.0%, when compared with the six months endedJune 30, 2016. The decrease in operating profit for the Office segment was due primarily to lower sales volume partially offset by reduced performance based incentive accruals and lower sales commissions.

Studio

Net sales for the Studio segment for the six months endedJune 30, 2017 were $167.1 million, an increase of $7.0 million, or 4.3%, when compared with the six months endedJune 30, 2016. This increase was driven by strong growth at HOLLY HUNT® and incremental sales from DatesWeiser, offset by the decreases in contract shipments at KnollStudio®. Operating profit for the Studio segment in the six months endedJune 30, 2017 was $26.6 million, an increase of $0.4 million, or 1.7%, when compared with the six months endedJune 30, 2016. The increase in operating profit was driven primarily by net price realization, partially offset by foreign exchange.

19

Coverings

Net sales for the Coverings segment for the six months endedJune 30, 2017 were $55.5 million, an increase of $1.0 million, or 1.8%, when compared with the six months endedJune 30, 2016. The increase in Coverings was driven primarily by higher volume in the Spinneybeck | FilzFelt business. Operating profit for the Coverings segment in the six months endedJune 30, 2017 was $12.4 million, a decrease of $0.8 million, or 5.7%, when compared with the six months endedJune 30, 2016.

Corporate

Corporate costs for the six months endedJune 30, 2017 were $6.9 million, a decrease of $2.7 million, or 28.1%, when compared with the six months endedJune 30, 2016. The decrease was driven primarily by reduced costs associated with employee benefits and incentive compensation, partially offset by an increase in stock based compensation expense.

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,
	2017			2016
	(in thousands)
Cash provided by operating activities	$	32,238		$	46,339
Capital expenditures, net	(20,756		)	(15,057		)
Purchase of common stock for treasury	(10,570		)	(3,903		)
Proceeds from credit facilities	214,000			173,500
Repayment of credit facilities	(199,000		)	(185,500		)
Payment of dividends	(15,729		)	(14,727		)
Contingent purchase price payment	(6,000		)	(5,000		)
Cash used in financing activities	(16,748		)	(33,510		)

We have historically funded our business through cash generated from operations, supplemented by debt borrowings. Available cash is primarily used for our working capital needs, ongoing operations, capital expenditures, the payment of quarterly dividends, and the repurchase of shares. Capital expenditures are related primarily to investments in assets that help to improve operating efficiency, innovation and modernization, showroom refreshes and technology infrastructure. During the six months ended June 30, 2017, we made quarterly dividend payments of $0.30 per share, returning $14.6 million of cash to our shareholders. In addition to our quarterly dividend payments, we also paid accrued dividends on vested shares of $1.1 million.

Cash provided by operating activities was $32.2 million for the six months endedJune 30, 2017 compared to $46.3 million for the six months endedJune 30, 2016. For the six months endedJune 30, 2017, cash provided by operating activities consisted primarily of $45.5 million from net income and various non-cash charges, including $12.6 million of depreciation and amortization and $5.0 million of stock based compensation, partially offset by $13.3 million of unfavorable changes in assets and liabilities driven primarily by incentive compensation payments, increased inventory purchases and a reduction of benefits liabilities. For the six months endedJune 30, 2016, cash provided by operating activities consisted of $59.2 million from net income and various non-cash charges, including $11.2 million of depreciation and amortization and $4.6 million of stock based compensation, partially offset by $12.8 million of unfavorable changes in assets and liabilities.

During the six months endedJune 30, 2017 and 2016, we used $20.8 million and $15.1 million of cash for capital expenditures, respectively. The capital expenditures are reflective of our continued commitment to enhance and modernize our sales, manufacturing and information technology infrastructure.

During the six months endedJune 30, 2017, we used cash of $10.6 million for the purchase of common stock to satisfy employee tax withholding requirements related to the vesting of restricted shares, and $6.0 million of a contingent purchase price payment related to an earn-out for the HOLLY HUNT® acquisition in 2014. The Company also used $15.7 million of cash to pay dividends, of which $1.1 million was for accrued dividends on vested shares in addition to quarterly dividend payments of $0.30 per share, returning $14.6 million of cash to our shareholders. For the six months endedJune 30, 2016, we used $14.7 million of cash to fund dividend payments to shareholders, $5.0 million for the HOLLY HUNT® contingent purchase price payment, and $3.9 million for share repurchases.

20

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. Borrowings under the credit facility may be repaid at any time, but no later than May 2019. See Note 12 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 for further information regarding this facility. The combination of increased debt levels and a reduction of EBITDA caused leverage to increase from 1.37 at December 31, 2016 to 1.57 at June 30, 2017. The calculation of our leverage ratio under our credit facility includes the use of adjusted EBITDA, a non-GAAP financial measure. For details on the leverage ratio calculations, see “Reconciliation of Non-GAAP Financial Measures” below.

Our credit facility requires that we comply with two financial covenants, consolidated leverage ratio, defined as the ratio of total indebtedness to consolidated EBITDA (as defined in our credit agreement) and consolidated interest coverage ratio, defined as the ratio of our consolidated EBITDA (as defined in our credit agreement) to our consolidated interest expense. Our consolidated leverage ratio cannot exceed 4.0 to 1, and our consolidated interest coverage ratio must be a minimum of 3.0 to 1. 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 indebtedness, 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.

We are currently in compliance with all of the covenants and conditions under our credit facility. We believe that existing cash balances and internally generated cash flows, together with borrowings available under our credit facility, will be sufficient to fund working capital needs, capital spending requirements, debt service requirements and dividend payments for at least the next twelve months. Future debt payments may be paid out of cash flows from operations, from future refinancing of our debt or from equity issuances. Our ability to make scheduled payments of principal, pay interest on or to refinance our indebtedness, satisfy our other debt obligations and to pay dividends to stockholders will depend upon our future operating performance, which is affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control.

Reconciliation of Non-GAAP Financial Measures

This quarterly report on Form 10-Q contains certain non-GAAP financial measures. A “non-GAAP financial measure” is 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. These non-GAAP financial measures 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. Pursuant to applicable reporting requirements, the company has provided reconciliations below of non-GAAP financial measures to the most directly comparable GAAP measure.

21

The non-GAAP financial measures presented within this quarterly report on Form 10-Q are Last Twelve Months (“LTM”) 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 as supplemental presentations.

The following table reconciles net earnings to adjusted EBITDA and computes our bank leverage calculations for the periods shown. The bank leverage calculation is in accordance with our Second Amended and Restated Credit Agreement dated May 20, 2014.

	6/30/2016		9/30/2016		12/31/2016		3/31/2017		6/30/2017
	($ in millions)
Debt Levels (1)	$	221.7	$	206.7	$	231.8	$	249.8	$	240.4
LTM Net Earnings	69.3		74.1		82.1		80.1		72.8
LTM Adjustments
Interest	6.2		5		4.7		4.9		5.4
Taxes	39.3		39.6		45.4		40.9		38.5
Depreciation and Amortization	21.3		22.5		23		23.5		24.4
Non-cash items and Other (2)	22.4		23.8		13.4		13.3		12.0
LTM Adjusted EBITDA	$	158.5	$	165.0	$	168.6	$	162.7	$	153.1
Bank Leverage Calculation (3)	1.40		1.25		1.37		1.53		1.57
(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 and Other includes, but is not limited to, intangible asset impairment charges, pension settlements and other post-employment benefit curtailments, stock-based compensation expenses, unrealized gains and losses on foreign exchange, and restructuring charges.
(3) Debt divided by LTM Adjusted EBITDA, as calculated in accordance with our credit facility.

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 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 arise if we had engaged in these relationships.

22

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, 2016.

23

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, 2016. There have been no substantive changes in our market risk described in our Annual Report on Form 10-K except for the items noted below. 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, wood products and plastics are all used in our products. For the six months endedJune 30, 2017, we estimated that materials inflation was approximately $2.2 million and transportation deflation was less than $0.1 million. During the six months endedJune 30, 2016, we estimated that materials deflation was approximately $0.7 million and transportation inflation was less than $0.1 million, respectively. We continue to work to offset price increases 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 will impact the interest costs incurred and cash paid on the variable rate debt. During the six months endedJune 30, 2017 and 2016, our weighted average interest rates were approximately 2.3% and 2.1%, respectively.

Foreign Currency Exchange Rate Risk

We manufacture our products in the United States, Canada and Italy, and sell our products primarily in those markets as well as in other countries. 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 our reporting currency is 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 13.1% and 11.6% of our revenues in the six months endedJune 30, 2017 and 2016, respectively, and 27.1% and 27.7% of our cost of goods sold in the six months endedJune 30, 2017 and 2016, respectively, were denominated in currencies other than the U.S. dollar. Foreign currency exchange rate fluctuations resulted in $0.5 million and $3.1 million of translation losses for the six months endedJune 30, 2017 and 2016, respectively.

24

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, 2017) ("Disclosure Controls"). Based upon the Disclosure Controls evaluation, our principal executive officer and principal financial officer have concluded that the Disclosure Controls are effective in reaching a reasonable level of assurance that (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.

Changes in internal control over financial reporting.  During the second quarter of 2017, Knoll implemented a new enterprise resource planning system which resulted in a material change to our internal control over financial reporting. We continue to review the impact of the implementation and make changes to the internal control over financial reporting to address the inherent risks associated with implementing the new system. The implementation of the system is expected to strengthen our overall internal controls. Other than the enterprise resource planning system implementation, there were no changes in our internal control over financial reporting during the second quarter of 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For the six months endedJune 30, 2017, 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, 2016.

ITEM 1A. RISK FACTORS

For the six months endedJune 30, 2017, there have been no material changes in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.

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 six months endedJune 30, 2017.

On August 17, 2005, our board of directors approved a stock repurchase program (the “Options Proceeds Program”), whereby they 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.

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, 2017 - April 31, 2017	9,455	(2)	$	23.51	—	$	32,352,413
May 1, 2017 - May 31, 2017	—		$	—	—	$	32,352,413
June 1, 2017 - June 30, 2017	—		$	—	—	$	32,352,413
Total	9,455				—

_______________________________________________________________________________

(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 2008, we are only 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 $100.0 million stock repurchase program, but our Board of Directors may terminate either program in the future.

(2) In April 2017, 15,451 shares of outstanding restricted stock and 5,000 restricted stock units vested. Concurrently with the vesting, 9,455 shares were forfeited by the holders of the shares to cover applicable taxes paid on the holders' behalf by the Company.

26

ITEM 6.  EXHIBITS

Exhibit Number	Description
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, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income for the three and six months ended June 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016, 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.

27

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 9, 2017
		By:	/s/ Andrew B. Cogan
			Andrew B. Cogan
			Chief Executive Officer
Date:	August 9, 2017
		By:	/s/ Charles W. Rayfield
			Charles W. Rayfield
			Chief Accounting Officer
			(Principal Financial Officer)

28

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, 2017 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 9, 2017
	/s/ Andrew B. Cogan
	Andrew B. Cogan
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

I, Charles W. Rayfield, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2017 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 9, 2017
	/s/ Charles W. Rayfield
	Charles W. Rayfield
	Chief Accounting Officer
	(Principal 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, 2017, 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 9, 2017

/s/ Andrew B. Cogan

Andrew B. Cogan

Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Principal Financial Officer

In connection with the Quarterly Report on Form 10-Q of Knoll, Inc. (the “Company”) for the period ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Charles W. Rayfield, Principal 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 9, 2017

/s/ Charles W. Rayfield

Charles W. Rayfield

Chief Accounting Officer

(Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 07, 2017
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, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		49,321,826
Restricted stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		853,360

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 5,924	$ 9,854
Customer receivables, net of allowance for doubtful accounts of $6,108 and $8,059, respectively	77,762	84,425
Inventories, net	150,076	142,072
Prepaid expenses	28,801	27,461
Other current assets	13,957	12,996
Total current assets	276,520	276,808
Property, plant, and equipment, net	204,693	197,084
Goodwill	141,759	141,391
Intangible assets, net	240,226	241,870
Other non-trade receivables	27	26
Other noncurrent assets	1,423	1,434
Total assets	864,648	858,613
Current liabilities:
Current maturities of long-term debt	10,000	10,000
Accounts payable	99,885	97,518
Income taxes payable	32	81
Other current liabilities	94,955	114,774
Total current liabilities	204,872	222,373
Long-term debt	223,716	208,383
Deferred income taxes	80,123	76,854
Post-employment benefits other than pensions	4,976	5,124
Pension liability	13,332	17,428
Other noncurrent liabilities	17,303	18,982
Total liabilities	544,322	549,144
Commitments and contingent liabilities
Equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 65,434,707 shares issued and 49,321,826 shares outstanding (including 853,360 non-voting restricted shares and net of 16,112,881 treasury shares) at June 30, 2017 and 64,741,648 shares issued and 49,096,290 shares outstanding (including 993,962 non-voting restricted shares and net of 15,645,358 treasury shares) at December 31, 2016	493	491
Additional paid-in capital	50,170	55,148
Retained earnings	310,305	297,011
Accumulated other comprehensive loss	(40,878)	(43,403)
Total Knoll, Inc. stockholders' equity	320,090	309,247
Noncontrolling interests	236	222
Total equity	320,326	309,469
Total liabilities and equity	$ 864,648	$ 858,613

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 6,108	$ 8,059
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	65,434,707	64,741,648
Common stock, shares outstanding	49,321,826	49,096,290
Non-vesting restricted shares	853,360	993,962
Treasury shares	16,112,881	15,645,358

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Sales	$ 268,694	$ 294,700	$ 525,514	$ 579,329
Cost of sales	168,736	180,636	329,882	357,501
Gross profit	99,958	114,064	195,632	221,828
Selling, general, and administrative expenses	75,578	80,590	148,218	156,505
Restructuring charges	2,150	0	2,150	0
Operating profit	22,230	33,474	45,264	65,323
Interest expense	1,859	1,307	3,530	2,861
Other expense, net	229	185	436	2,789
Income before income tax expense	20,142	31,982	41,298	59,673
Income tax expense	7,182	10,341	12,946	20,621
Net earnings	12,960	21,641	28,352	39,052
Net earnings attributable to noncontrolling interests	22	6	14	17
Net earnings attributable to Knoll, Inc. stockholders	$ 12,938	$ 21,635	$ 28,338	$ 39,035
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic (in dollars per share)	$ 0.27	$ 0.45	$ 0.59	$ 0.81
Diluted (in dollars per share)	0.26	0.44	0.57	0.80
Dividends per share (in dollars per share)	$ 0.15	$ 0.15	$ 0.30	$ 0.30
Weighted-average number of common shares outstanding:
Basic (in shares)	48,464,605	48,018,733	48,375,241	47,961,661
Diluted (in shares)	49,376,506	48,832,874	49,294,525	48,713,633
Other comprehensive income (loss):
Pension and other post-employment liability adjustment, net of tax	$ (138)	$ (136)	$ (275)	$ (272)
Foreign currency translation adjustment	2,320	1,566	2,800	5,616
Total other comprehensive income (loss), net of tax	2,182	1,430	2,525	5,344
Total comprehensive income	15,142	23,071	30,877	44,396
Comprehensive income attributable to noncontrolling interests	22	6	14	17
Comprehensive income attributable to Knoll, Inc. stockholders	$ 15,120	$ 23,065	$ 30,863	$ 44,379

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$ 28,352	$ 39,052
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation	10,668	9,248
Amortization expense (including deferred financing fees)	1,977	1,977
Inventory obsolescence	1,203	1,423
Loss on disposal of property, plant and equipment	29	1
Unrealized foreign currency (gains) losses	(122)	1,605
Stock-based compensation	5,043	4,592
Bad debt and customer credits	(1,650)	1,282
Changes in assets and liabilities:
Customer receivables	8,420	16,216
Inventories	(8,811)	(6,410)
Prepaid and other current assets	(1,807)	(2,675)
Accounts payable	6,015	(10,109)
Current and deferred income taxes	2,567	710
Other current liabilities	(13,729)	(9,787)
Other noncurrent assets and liabilities	(5,917)	(786)
Cash provided by operating activities	32,238	46,339
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net	(20,756)	(15,057)
Cash used in investing activities	(20,756)	(15,057)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from credit facility	214,000	173,500
Repayment of credit facility	(199,000)	(185,500)
Payment of dividends	(15,729)	(14,727)
Proceeds from the issuance of common stock	551	2,120
Purchase of common stock for treasury	(10,570)	(3,903)
Contingent purchase price payment	(6,000)	(5,000)
Cash used in financing activities	(16,748)	(33,510)
Effect of exchange rate changes on cash and cash equivalents	1,336	1,584
Net decrease in cash and cash equivalents	(3,930)	(644)
Cash and cash equivalents at beginning of period	9,854	4,192
Cash and cash equivalents at end of period	$ 5,924	$ 3,548

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016. The FASB subsequently deferred the effective date of this standard to December 15, 2017 with early adoption permitted as of December 15, 2016. The Company will adopt the new standard in the annual period beginning January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective (cumulative effect) transition method. Transition practical expedients are available for both methods. The Company plans to apply the modified retrospective transition method. The Company assembled an implementation work team to assess and document the accounting conclusions for the adoption of ASU 2014-09. Based on this analysis, the Company does not believe the adoption of the ASU will have a material impact to the financial statements. The Company continues to assess the potential impact on accounting policies, internal control processes and related disclosures required under the new guidance.

In July 2015, the FASB issued ASU 2015-11 - Inventory (Topic 330), 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 is effective for fiscal years beginning after December 15, 2016.  The Company adopted this standard during the three months ended March 31, 2017, and the impact on its consolidated financial statements was not material.

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 will be effective for the Company on January 1, 2019, and the Company will adopt the standard using the modified retrospective approach. While the Company continues to evaluate the provisions of ASC 842 to determine how it will be affected, the primary effect of adopting the new standard will be to record assets and obligations for current operating leases. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment by removing the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Under the new guidance, goodwill impairment will be measured and recognized as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill allocated to the reporting unit. The revised guidance does not affect the reporting entity’s ability to first assess qualitative factors by reporting unit to determine whether it is necessary to perform the quantitative goodwill impairment test. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715). The new standard improves the presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will require all components of the Company's net periodic benefit cost (income), with the exception of service cost, currently reported within selling, general and administrative expenses, to be reclassified and reported within other expense. The adoption of this new standard will have no impact on pre-tax income or net income reported.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718). The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Under the new guidance, an entity should account for the effects of a modification unless all of the following are met, (i) the fair value of the modified award is the same as the fair value of the original award, (ii) the vesting conditions of the modified award are the same as the original awards immediately before modification, and (iii) the classification of the modified award as an equity instrument or liability instrument is the same as the classification immediately prior to modification. The guidance is effective for annual periods and interim periods within those beginning after December 15, 2017. Early adoption is permitted for annual and interim periods with a prospective application to an award modified on or after the adoption date. At this time, the Company believes there will be an immaterial impact to the financial statements as a result of adopting this ASU.

XML

INVENTORIES

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

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

	June 30, 2017		December 31, 2016
Raw materials	$	59,247	$	60,217
Work-in-process	7,830		7,186
Finished goods	82,999		74,669
	$	150,076	$	142,072

Inventory reserves for obsolescence and other estimated losses were $10.6 million and $9.5 million at June 30, 2017 and December 31, 2016, respectively, and have been included in the amounts above.

XML

PENSION AND OTHER POST-EMPLOYMENT BENEFITS

6 Months Ended

Jun. 30, 2017

Pension and Other Postretirement Benefit Expense [Abstract]

PENSION AND OTHER POST-EMPLOYMENT BENEFITS

PENSION AND OTHER POST-EMPLOYMENT BENEFITS

The following tables set forth the components of the net periodic benefit income for the Company's pension and other post-employment benefit plans (in thousands):

	Pension Benefits						Other Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	175		$	468		$	—		$	—
Interest cost	2,390			2,416			43			49
Expected return on plan assets	(4,615		)	(3,612		)	—			—
Amortization of prior service credit	—			—			(371		)	(280		)
Recognized actuarial loss (gain)	154			123			1			(62		)
Net periodic benefit (income) cost	$	(1,896	)	$	(605	)	$	(327	)	$	(293	)

	Pension Benefits						Other Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	350		$	936		$	—		$	—
Interest cost	4,780			4,832			86			98
Expected return on plan assets	(9,230		)	(7,224		)	—			—
Amortization of prior service credit	—			—			(742		)	(560		)
Recognized actuarial loss (gain)	308			246			2			(124		)
Net periodic benefit (income) cost	$	(3,792	)	$	(1,210	)	$	(654	)	$	(586	)

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments

The fair values of the Company’s cash and cash equivalents, customer receivables, 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 are classified as Level 2.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table represents the 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, 2017								Fair Value as of December 31, 2016
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent purchase price payment - HOLLY HUNT®	$	—	$	—	$	—	$	—	$	—	$	—	$	6,000	$	6,000
Contingent purchase price payment - DatesWeiser	—		—		1,100		1,100		—		—		1,100		1,100
Total	$	—	$	—	$	1,100	$	1,100	$	—	$	—	$	7,100	$	7,100

Pursuant to the agreement governing the acquisition of HOLLY HUNT®, the Company was required to make annual contingent purchase price payments. The payouts were based upon HOLLY HUNT® reaching an annual net sales target, for each year through 2016, and were paid out on or around February 20 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, totaling $16.0 million, was determined at the time of acquisition based upon net sales projections for HOLLY HUNT® for 2014, 2015, and 2016. The Company paid the remaining $6.0 million contingent purchase price in the three months ended March 31, 2017, as a result of HOLLY HUNT® achieving the 2016 net sales projections.

Pursuant to the agreement governing the acquisition of DatesWeiser, the Company may be required to make annual contingent purchase price payments. The payouts are based upon DatesWeiser reaching an annual net sales target, for each year through 2020. 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, totaling $1.1 million, was determined at the time of acquisition based upon net sales projections for DatesWeiser for 2017, 2018, 2019 and 2020. 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 will 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, 2017 or December 31, 2016.

XML

OTHER CURRENT LIABILITIES OTHER CURRENT LIABILITIES

6 Months Ended

Jun. 30, 2017

Other Liabilities Disclosure [Abstract]

OTHER CURRENT LIABILITIES

OTHER CURRENT LIABILITIES

Information regarding the Company's other current liabilities is as follows (in thousands):

	June 30, 2017		December 31, 2016
Accrued employee compensation	$	29,070	$	46,508
Customer deposits	34,640		31,216
Warranty	8,944		8,906
Contingent payout	1,100		7,100
Other	21,201		21,044
Other current liabilities	$	94,955	$	114,774

XML

INDEBTEDNESS

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

INDEBTEDNESS

INDEBTEDNESS

The Company's long-term debt is summarized as follows (in thousands):

	June 30, 2017		December 31, 2016
Balance of revolving credit facility	$	65,000	$	45,000
Balance of term loan	170,000		175,000
Total long-term debt	235,000		220,000
Less: Current maturities of long-term debt	10,000		10,000
Less: Deferred financing fees, net	1,284		1,617
Long-term debt	$	223,716	$	208,383

XML

CONTINGENT LIABILITIES AND COMMITMENTS

6 Months Ended

Jun. 30, 2017

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 provides for estimated product warranty expenses when related products are sold and are included within other current liabilities. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, future warranty claims may differ from the amounts provided.

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

Balance, December 31, 2016	$	8,906
Provision for warranty claims	2,832
Warranty claims paid	(3,044		)
Foreign currency translation adjustment	250
Balance, June 30, 2017	$	8,944

Warranty expense for the three and six months endedJune 30, 2017 was $1.7 million and $2.8 million, respectively. Warranty expense for the three and six months ended June 30, 2016 was $1.8 million and $3.4 million, respectively.

XML

EQUITY

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

EQUITY

EQUITY

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months endedJune 30, 2017 (in thousands):

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2016	$	491		$	55,148		$	297,011		$	(43,403	)	$	309,247		$	222	$	309,469
Net earnings	—			—			28,338			—			28,338			14		28,352
Other comprehensive income	—			—			—			2,525			2,525			—		2,525
Shares issued for consideration:
Exercise of stock options (22,500 shares)	—			472			—			—			472			—		472
Shares issued under stock incentive plan (676,850)	7			(3		)	—			—			4			—		4
Shares issued to Board of Directors in lieu of cash (3,188 shares)	—			75			—			—			75			—		75
Stock-based compensation, net of forfeitures	(1		)	5,044			—			—			5,043			—		5,043
Cash dividend ($0.30 per share)	—			—			(15,044		)	—			(15,044		)	—		(15,044		)
Purchase of common stock (420,072 shares)	(4		)	(10,566		)	—			—			(10,570		)	—		(10,570		)
Balance at June 30, 2017	$	493		$	50,170		$	310,305		$	(40,878	)	$	320,090		$	236	$	320,326

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2017

Equity [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 endedJune 30, 2017 (in thousands):

	Foreign Currency Translation Adjustment			Pension and Other Post-Employment Liability Adjustment			Total
Balance, as of December 31, 2016	$	(13,998	)	$	(29,405	)	$	(43,403	)
Other comprehensive income before reclassifications	2,800			—			2,800
Amounts reclassified from accumulated other comprehensive income (loss)	—			(275		)	(275		)
Net current-period other comprehensive income	2,800			(275		)	2,525
Balance, as of June 30, 2017	$	(11,198	)	$	(29,680	)	$	(40,878	)

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

	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Amortization of pension and other post-employment liability adjustments
Prior service credits (1)	$	(371	)	$	(280	)	$	(742	)	$	(560	)
Actuarial losses (1)	155			61			310			122
Total before tax	(216		)	(219		)	(432		)	(438		)
Tax benefit	78			83			157			166
Net of tax	$	(138	)	$	(136	)	$	(275	)	$	(272	)

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 3 for additional information.

XML

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$	12,938	$	21,635	$	28,338	$	39,035
Denominator:
Denominator for basic earnings per shares - weighted-average shares	48,465		48,019		48,375		47,962
Effect of dilutive securities:
Potentially dilutive shares resulting from stock plans	912		814		920		752
Denominator for diluted earnings per share - weighted-average shares	49,377		48,833		49,295		48,714
Antidilutive equity awards not included in weighted-average common shares—diluted	—		—		12		—
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.27	$	0.45	$	0.59	$	0.81
Diluted	$	0.26	$	0.44	$	0.57	$	0.80

XML

INCOME TAXES

6 Months Ended

Jun. 30, 2017

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 endedJune 30, 2017 and 2016 were based on the estimated effective tax rates applicable for the full years ending December 31, 2017 and 2016 and includes items specifically related to the interim periods. The Company’s effective tax rate was 31.3% and 34.6% for the six months endedJune 30, 2017 and 2016, respectively. The decrease in the Company's effective tax rate for the six months endedJune 30, 2017 was due primarily to the adoption of ASU 2016-09 in the third quarter of 2016, which impacted the accounting treatment of excess tax benefits related to vesting of equity awards in the six months ended June 30, 2017. This resulted in the realization of tax benefits as a reduction to income tax expense in the quarter. In addition, the effective tax rate was affected by 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, 2017 and December 31, 2016, the Company had unrecognized tax benefits of approximately $0.9 million, respectively. These unrecognized tax benefit amounts would affect the effective tax rate if recognized. As of June 30, 2017, the Company is subject to U.S. Federal Income Tax examination for the tax years 2007 through 2016, and to non-U.S. income tax examination for the tax years 2010 to 2016. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2016.

XML

SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company manages its business through its reporting segments: Office, Studio, and Coverings. All unallocated expenses are included within Corporate.

The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms. These products include: systems furniture, seating, storage, tables, desks and KnollExtra® accessories as well as the international sales of North American Office products.

The Studio segment includes KnollStudio®, HOLLY HUNT®, Knoll Europe and DatesWeiser. KnollStudio® products, include iconic seating, lounge furniture, side, cafe and dining chairs as well as conference, training and dining and occasional tables. HOLLY HUNT® is known for high quality residential furniture, lighting, rugs, textiles and leathers. In 2016, HOLLY HUNT® acquired Vladimir Kagan Design Group, a renowned collection of modern luxury furnishings. Knoll Europe, which markets and sells both KnollStudio® and Knoll Office products, manufactures and sells products to customers primarily in Europe. DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard for design, quality and technology integration.

The Coverings segment includes KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. These businesses provide a wide range of customers with high-quality fabrics, felt, leather and related architectural products.

Corporate costs include unallocated costs relating to shared services and general corporate activities such as legal expenses, acquisition expenses, certain finance, human resources, administrative and executive expenses and other expenses that are not directly attributable to an operating segment. Dedicated, direct selling, general and administrative expenses of the segments continue to be included within segment operating profit. Management regularly reviews the costs included in the Corporate function, and believes disclosing such information provides more visibility and transparency of how the chief operating decision maker reviews the results for the Company.

The tables below present the Company’s segment information with Corporate costs excluded from operating segment results. Prior year amounts have been recast to conform to the current presentation (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
SALES
Office	$	153,042		$	179,270		$	302,874		$	364,626
Studio	88,039			88,650			167,112			160,156
Coverings	27,613			26,780			55,528			54,547
Knoll, Inc.	$	268,694		$	294,700		$	525,514		$	579,329
INTERSEGMENT SALES (1)
Office	$	450		$	488		$	724		$	1,069
Studio	1,493			1,753			2,591			3,058
Coverings	649			2,008			2,600			4,255
Knoll, Inc.	$	2,592		$	4,249		$	5,915		$	8,382
OPERATING PROFIT
Office (2)	$	4,395		$	15,794		$	13,171		$	35,627
Studio	14,919			15,627			26,558			26,110
Coverings	6,194			6,458			12,430			13,180
Corporate	(3,278		)	(4,405		)	(6,895		)	(9,594		)
Knoll, Inc.(3)	$	22,230		$	33,474		$	45,264		$	65,323

_______________________________________________________________________________

(1) Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities.

(2) Office Operating Profit includes $2.2 million of restructuring charges for the three and six months ended June 30, 2017. The restructuring charges related to headcount rationalization and modernization of equipment. The Company does not expect to incur additional restructuring charges related to these activities.

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

XML

BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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, 2016, 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, 2016.

BASIS OF PRESENTATION

New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016. The FASB subsequently deferred the effective date of this standard to December 15, 2017 with early adoption permitted as of December 15, 2016. The Company will adopt the new standard in the annual period beginning January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective (cumulative effect) transition method. Transition practical expedients are available for both methods. The Company plans to apply the modified retrospective transition method. The Company assembled an implementation work team to assess and document the accounting conclusions for the adoption of ASU 2014-09. Based on this analysis, the Company does not believe the adoption of the ASU will have a material impact to the financial statements. The Company continues to assess the potential impact on accounting policies, internal control processes and related disclosures required under the new guidance.

In July 2015, the FASB issued ASU 2015-11 - Inventory (Topic 330), 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 is effective for fiscal years beginning after December 15, 2016.  The Company adopted this standard during the three months ended March 31, 2017, and the impact on its consolidated financial statements was not material.

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 will be effective for the Company on January 1, 2019, and the Company will adopt the standard using the modified retrospective approach. While the Company continues to evaluate the provisions of ASC 842 to determine how it will be affected, the primary effect of adopting the new standard will be to record assets and obligations for current operating leases. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment by removing the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Under the new guidance, goodwill impairment will be measured and recognized as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill allocated to the reporting unit. The revised guidance does not affect the reporting entity’s ability to first assess qualitative factors by reporting unit to determine whether it is necessary to perform the quantitative goodwill impairment test. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715). The new standard improves the presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will require all components of the Company's net periodic benefit cost (income), with the exception of service cost, currently reported within selling, general and administrative expenses, to be reclassified and reported within other expense. The adoption of this new standard will have no impact on pre-tax income or net income reported.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718). The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Under the new guidance, an entity should account for the effects of a modification unless all of the following are met, (i) the fair value of the modified award is the same as the fair value of the original award, (ii) the vesting conditions of the modified award are the same as the original awards immediately before modification, and (iii) the classification of the modified award as an equity instrument or liability instrument is the same as the classification immediately prior to modification. The guidance is effective for annual periods and interim periods within those beginning after December 15, 2017. Early adoption is permitted for annual and interim periods with a prospective application to an award modified on or after the adoption date. At this time, the Company believes there will be an immaterial impact to the financial statements as a result of adopting this ASU.

Nature of Operations [Text Block]

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016. The FASB subsequently deferred the effective date of this standard to December 15, 2017 with early adoption permitted as of December 15, 2016. The Company will adopt the new standard in the annual period beginning January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective (cumulative effect) transition method. Transition practical expedients are available for both methods. The Company plans to apply the modified retrospective transition method. The Company assembled an implementation work team to assess and document the accounting conclusions for the adoption of ASU 2014-09. Based on this analysis, the Company does not believe the adoption of the ASU will have a material impact to the financial statements. The Company continues to assess the potential impact on accounting policies, internal control processes and related disclosures required under the new guidance.

In July 2015, the FASB issued ASU 2015-11 - Inventory (Topic 330), 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 is effective for fiscal years beginning after December 15, 2016.  The Company adopted this standard during the three months ended March 31, 2017, and the impact on its consolidated financial statements was not material.

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 will be effective for the Company on January 1, 2019, and the Company will adopt the standard using the modified retrospective approach. While the Company continues to evaluate the provisions of ASC 842 to determine how it will be affected, the primary effect of adopting the new standard will be to record assets and obligations for current operating leases. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment by removing the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Under the new guidance, goodwill impairment will be measured and recognized as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill allocated to the reporting unit. The revised guidance does not affect the reporting entity’s ability to first assess qualitative factors by reporting unit to determine whether it is necessary to perform the quantitative goodwill impairment test. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715). The new standard improves the presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will require all components of the Company's net periodic benefit cost (income), with the exception of service cost, currently reported within selling, general and administrative expenses, to be reclassified and reported within other expense. The adoption of this new standard will have no impact on pre-tax income or net income reported.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718). The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Under the new guidance, an entity should account for the effects of a modification unless all of the following are met, (i) the fair value of the modified award is the same as the fair value of the original award, (ii) the vesting conditions of the modified award are the same as the original awards immediately before modification, and (iii) the classification of the modified award as an equity instrument or liability instrument is the same as the classification immediately prior to modification. The guidance is effective for annual periods and interim periods within those beginning after December 15, 2017. Early adoption is permitted for annual and interim periods with a prospective application to an award modified on or after the adoption date. At this time, the Company believes there will be an immaterial impact to the financial statements as a result of adopting this ASU.

XML

INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Schedule of inventories

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

	June 30, 2017		December 31, 2016
Raw materials	$	59,247	$	60,217
Work-in-process	7,830		7,186
Finished goods	82,999		74,669
	$	150,076	$	142,072

XML

PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables)

6 Months Ended

Jun. 30, 2017

Pension and Other Postretirement Benefit Expense [Abstract]

Schedule of components of the net periodic benefit cost

The following tables set forth the components of the net periodic benefit income for the Company's pension and other post-employment benefit plans (in thousands):

	Pension Benefits						Other Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	175		$	468		$	—		$	—
Interest cost	2,390			2,416			43			49
Expected return on plan assets	(4,615		)	(3,612		)	—			—
Amortization of prior service credit	—			—			(371		)	(280		)
Recognized actuarial loss (gain)	154			123			1			(62		)
Net periodic benefit (income) cost	$	(1,896	)	$	(605	)	$	(327	)	$	(293	)

	Pension Benefits						Other Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Service cost	$	350		$	936		$	—		$	—
Interest cost	4,780			4,832			86			98
Expected return on plan assets	(9,230		)	(7,224		)	—			—
Amortization of prior service credit	—			—			(742		)	(560		)
Recognized actuarial loss (gain)	308			246			2			(124		)
Net periodic benefit (income) cost	$	(3,792	)	$	(1,210	)	$	(654	)	$	(586	)

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of indefinite lived intangible assets recorded at fair value on a recurring basis

The following table represents the 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, 2017								Fair Value as of December 31, 2016
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent purchase price payment - HOLLY HUNT®	$	—	$	—	$	—	$	—	$	—	$	—	$	6,000	$	6,000
Contingent purchase price payment - DatesWeiser	—		—		1,100		1,100		—		—		1,100		1,100
Total	$	—	$	—	$	1,100	$	1,100	$	—	$	—	$	7,100	$	7,100

XML

OTHER CURRENT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2017

Other Liabilities Disclosure [Abstract]

Schedule of other current liabilities

Information regarding the Company's other current liabilities is as follows (in thousands):

	June 30, 2017		December 31, 2016
Accrued employee compensation	$	29,070	$	46,508
Customer deposits	34,640		31,216
Warranty	8,944		8,906
Contingent payout	1,100		7,100
Other	21,201		21,044
Other current liabilities	$	94,955	$	114,774

XML

INDEBTEDNESS (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Schedule of long-term debt

The Company's long-term debt is summarized as follows (in thousands):

	June 30, 2017		December 31, 2016
Balance of revolving credit facility	$	65,000	$	45,000
Balance of term loan	170,000		175,000
Total long-term debt	235,000		220,000
Less: Current maturities of long-term debt	10,000		10,000
Less: Deferred financing fees, net	1,284		1,617
Long-term debt	$	223,716	$	208,383

XML

CONTINGENT LIABILITIES AND COMMITMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of changes in the warranty reserve

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

Balance, December 31, 2016	$	8,906
Provision for warranty claims	2,832
Warranty claims paid	(3,044		)
Foreign currency translation adjustment	250
Balance, June 30, 2017	$	8,944

XML

EQUITY (Tables)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Schedule of stockholders' equity

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months endedJune 30, 2017 (in thousands):

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2016	$	491		$	55,148		$	297,011		$	(43,403	)	$	309,247		$	222	$	309,469
Net earnings	—			—			28,338			—			28,338			14		28,352
Other comprehensive income	—			—			—			2,525			2,525			—		2,525
Shares issued for consideration:
Exercise of stock options (22,500 shares)	—			472			—			—			472			—		472
Shares issued under stock incentive plan (676,850)	7			(3		)	—			—			4			—		4
Shares issued to Board of Directors in lieu of cash (3,188 shares)	—			75			—			—			75			—		75
Stock-based compensation, net of forfeitures	(1		)	5,044			—			—			5,043			—		5,043
Cash dividend ($0.30 per share)	—			—			(15,044		)	—			(15,044		)	—		(15,044		)
Purchase of common stock (420,072 shares)	(4		)	(10,566		)	—			—			(10,570		)	—		(10,570		)
Balance at June 30, 2017	$	493		$	50,170		$	310,305		$	(40,878	)	$	320,090		$	236	$	320,326

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Schedule of accumulated other comprehensive income (loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months endedJune 30, 2017 (in thousands):

	Foreign Currency Translation Adjustment			Pension and Other Post-Employment Liability Adjustment			Total
Balance, as of December 31, 2016	$	(13,998	)	$	(29,405	)	$	(43,403	)
Other comprehensive income before reclassifications	2,800			—			2,800
Amounts reclassified from accumulated other comprehensive income (loss)	—			(275		)	(275		)
Net current-period other comprehensive income	2,800			(275		)	2,525
Balance, as of June 30, 2017	$	(11,198	)	$	(29,680	)	$	(40,878	)

Reclassification out of accumulated other comprehensive income

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

	Three Months Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Amortization of pension and other post-employment liability adjustments
Prior service credits (1)	$	(371	)	$	(280	)	$	(742	)	$	(560	)
Actuarial losses (1)	155			61			310			122
Total before tax	(216		)	(219		)	(432		)	(438		)
Tax benefit	78			83			157			166
Net of tax	$	(138	)	$	(136	)	$	(275	)	$	(272	)

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 3 for additional information.

XML

COMMON STOCK AND EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of reconciliation of basic to dilutive average common shares

The following table sets forth the reconciliation from basic to dilutive average common shares (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$	12,938	$	21,635	$	28,338	$	39,035
Denominator:
Denominator for basic earnings per shares - weighted-average shares	48,465		48,019		48,375		47,962
Effect of dilutive securities:
Potentially dilutive shares resulting from stock plans	912		814		920		752
Denominator for diluted earnings per share - weighted-average shares	49,377		48,833		49,295		48,714
Antidilutive equity awards not included in weighted-average common shares—diluted	—		—		12		—
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.27	$	0.45	$	0.59	$	0.81
Diluted	$	0.26	$	0.44	$	0.57	$	0.80

XML

SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Schedule of certain financial information related to segments

The tables below present the Company’s segment information with Corporate costs excluded from operating segment results. Prior year amounts have been recast to conform to the current presentation (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
SALES
Office	$	153,042		$	179,270		$	302,874		$	364,626
Studio	88,039			88,650			167,112			160,156
Coverings	27,613			26,780			55,528			54,547
Knoll, Inc.	$	268,694		$	294,700		$	525,514		$	579,329
INTERSEGMENT SALES (1)
Office	$	450		$	488		$	724		$	1,069
Studio	1,493			1,753			2,591			3,058
Coverings	649			2,008			2,600			4,255
Knoll, Inc.	$	2,592		$	4,249		$	5,915		$	8,382
OPERATING PROFIT
Office (2)	$	4,395		$	15,794		$	13,171		$	35,627
Studio	14,919			15,627			26,558			26,110
Coverings	6,194			6,458			12,430			13,180
Corporate	(3,278		)	(4,405		)	(6,895		)	(9,594		)
Knoll, Inc.(3)	$	22,230		$	33,474		$	45,264		$	65,323

_______________________________________________________________________________

(1) Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities.

(2) Office Operating Profit includes $2.2 million of restructuring charges for the three and six months ended June 30, 2017. The restructuring charges related to headcount rationalization and modernization of equipment. The Company does not expect to incur additional restructuring charges related to these activities.

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

XML

INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 59,247	$ 60,217
Work-in-process	7,830	7,186
Finished goods	82,999	74,669
Inventories, net	150,076	142,072
Inventory reserves for obsolescence and other estimated losses	$ 10,600	$ 9,500

XML

PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Pension Benefits
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Service cost	$ 175	$ 468	$ 350	$ 936
Interest cost	2,390	2,416	4,780	4,832
Expected return on plan assets	(4,615)	(3,612)	(9,230)	(7,224)
Amortization of prior service credit	0	0	0	0
Recognized actuarial loss (gain)	154	123	308	246
Net periodic benefit (income) cost	(1,896)	(605)	(3,792)	(1,210)
Other Benefits
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Service cost	0	0	0	0
Interest cost	43	49	86	98
Expected return on plan assets	0	0	0	0
Amortization of prior service credit	(371)	(280)	(742)	(560)
Recognized actuarial loss (gain)	1	(62)	2	(124)
Net periodic benefit (income) cost	$ (327)	$ (293)	$ (654)	$ (586)

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	$ 1,100	$ 7,100	$ 16,000
Holly Hunt Enterprises, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	6,000
DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	1,100	1,100
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	0
Level 1 | Holly Hunt Enterprises, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	0
Level 1 | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	0
Level 2 | Holly Hunt Enterprises, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	0
Level 2 | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	1,100	7,100
Level 3 | Holly Hunt Enterprises, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	0	6,000
Level 3 | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase price payment	$ 1,100	$ 1,100

XML

OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Other Liabilities Disclosure [Abstract]
Accrued employee compensation	$ 29,070	$ 46,508
Customer deposits	34,640	31,216
Warranty	8,944	8,906
Contingent payout	1,100	7,100
Other	21,201	21,044
Other current liabilities	$ 94,955	$ 114,774

XML

INDEBTEDNESS (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Long-term debt
Long-term debt	$ 235,000	$ 220,000
Less: Current maturities of long-term debt	10,000	10,000
Less: Deferred financing fees, net	1,284	1,617
Long-term debt	223,716	208,383
Revolving credit facility
Long-term debt
Long-term debt	65,000	45,000
Term loan
Long-term debt
Long-term debt	$ 170,000	$ 175,000

XML

CONTINGENT LIABILITIES AND COMMITMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Changes in warranty reserve
Balance, December 31, 2016			$ 8,906
Provision for warranty claims	$ 1,700	$ 1,800	2,832	$ 3,400
Warranty claims paid			(3,044)
Foreign currency translation adjustment			250
Balance, June 30, 2017	$ 8,944		$ 8,944

XML

EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			$ 309,469
Net earnings			28,352
Other comprehensive income	$ 2,182	$ 1,430	2,525	$ 5,344
Exercise of stock options (22,500 shares)			472
Shares issued under stock incentive plan (676,850)			4
Shares issued to Board of Directors in lieu of cash (3,188 shares)			75
Stock-based compensation, net of forfeitures			5,043
Cash dividend ($0.30 per share)			(15,044)
Purchase of common stock (420,072 shares)			(10,570)
Ending Balance	320,326		$ 320,326
Exercise of stock options (in shares)			22,500
Shares issued under stock incentive plan (676,850) (in shares)			676,850
Shares issued to Board of Directors in lieu of cash (in shares)			3,188
Cash dividend (in dollars per share)			$ 0.3
Purchase of common stock (in shares)			420,072
Total Knoll, Inc. Stockholders' Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			$ 309,247
Net earnings			28,338
Other comprehensive income			2,525
Exercise of stock options (22,500 shares)			472
Shares issued under stock incentive plan (676,850)			4
Shares issued to Board of Directors in lieu of cash (3,188 shares)			75
Stock-based compensation, net of forfeitures			5,043
Cash dividend ($0.30 per share)			(15,044)
Purchase of common stock (420,072 shares)			(10,570)
Ending Balance	320,090		320,090
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			491
Shares issued under stock incentive plan (676,850)			7
Stock-based compensation, net of forfeitures			(1)
Purchase of common stock (420,072 shares)			(4)
Ending Balance	493		493
Additional Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			55,148
Exercise of stock options (22,500 shares)			472
Shares issued under stock incentive plan (676,850)			(3)
Shares issued to Board of Directors in lieu of cash (3,188 shares)			75
Stock-based compensation, net of forfeitures			5,044
Purchase of common stock (420,072 shares)			(10,566)
Ending Balance	50,170		50,170
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			297,011
Net earnings			28,338
Cash dividend ($0.30 per share)			(15,044)
Ending Balance	310,305		310,305
Accumulated Other Comprehensive Income (Loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			(43,403)
Other comprehensive income			2,525
Ending Balance	(40,878)		(40,878)
Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			222
Net earnings			14
Ending Balance	$ 236		$ 236

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	$ (43,403)
Other comprehensive income before reclassifications	2,800
Amounts reclassified from accumulated other comprehensive income (loss)	(275)
Net current-period other comprehensive income	2,525
Ending Balance	(40,878)
Foreign Currency Translation Adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(13,998)
Other comprehensive income before reclassifications	2,800
Amounts reclassified from accumulated other comprehensive income (loss)	0
Net current-period other comprehensive income	2,800
Ending Balance	(11,198)
Pension and Other Post-Employment Liability Adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(29,405)
Other comprehensive income before reclassifications	0
Amounts reclassified from accumulated other comprehensive income (loss)	(275)
Net current-period other comprehensive income	(275)
Ending Balance	$ (29,680)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Tax benefit	$ (7,182)	$ (10,341)	$ (12,946)	$ (20,621)
Net of tax			28,352
Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Prior service credits	(371)	(280)	(742)	(560)
Actuarial losses	155	61	310	122
Total before tax	(216)	(219)	(432)	(438)
Tax benefit	78	83	157	166
Net of tax	$ (138)	$ (136)	$ (275)	$ (272)

XML

COMMON STOCK AND EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net earnings attributable to Knoll, Inc. stockholders	$ 12,938	$ 21,635		$ 28,338	$ 39,035
Weighted-average shares of common stock outstanding—basic (in shares)	48,464,605	48,018,733		48,375,241	47,961,661
Potentially dilutive shares resulting from stock plans (in shares)	912,000	814,000		920,000	752,000
Denominator for diluted earnings per share - weighted-average shares (in shares)	49,376,506	48,832,874	48,833,000	49,294,525	48,713,633
Antidilutive equity awards not included in weighted-average common shares—diluted (in shares)	0	0		12,000	0
Basic (in dollars per share)	$ 0.27	$ 0.45		$ 0.59	$ 0.81
Diluted (in dollars per share)	$ 0.26	$ 0.44		$ 0.57	$ 0.80

XML

INCOME TAXES (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Effective tax rate	31.30%	34.60%
Unrecognized tax benefits, which would reduce the effective tax rate if recognized	$ 0.9

XML

SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Financial information of segments
SALES	$ 268,694	$ 294,700	$ 525,514	$ 579,329
OPERATING PROFIT	22,230	33,474	45,264	65,323
Operating Segments
Financial information of segments
SALES	268,694	294,700	525,514	579,329
INTERSEGMENT SALES	2,592	4,249	5,915	8,382
Corporate
Financial information of segments
OPERATING PROFIT	(3,278)	(4,405)	(6,895)	(9,594)
Office | Operating Segments
Financial information of segments
SALES	153,042	179,270	302,874	364,626
INTERSEGMENT SALES	450	488	724	1,069
OPERATING PROFIT	4,395	15,794	13,171	35,627
Restructuring charges	2,200		2,200
Studio | Operating Segments
Financial information of segments
SALES	88,039	88,650	167,112	160,156
INTERSEGMENT SALES	1,493	1,753	2,591	3,058
OPERATING PROFIT	14,919	15,627	26,558	26,110
Coverings | Operating Segments
Financial information of segments
SALES	27,613	26,780	55,528	54,547
INTERSEGMENT SALES	649	2,008	2,600	4,255
OPERATING PROFIT	$ 6,194	$ 6,458	$ 12,430	$ 13,180