x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
KNOLL, INC. |
A Delaware Corporation | I.R.S. Employer No. 13-3873847 |
1235 Water Street |
East Greenville, PA 18041 |
Telephone Number (215) 679-7991 |
Title of each class | Name of exchange on which registered | Trading Symbol | ||
Common Stock, par value $0.01 per share | New York Stock Exchange | KNL |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o |
Item | Page | ||
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | (Unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2.4 | $ | 1.6 | |||
Customer receivables, net of allowance for doubtful accounts of $3.9 and $3.7, respectively | 109.1 | 120.2 | |||||
Inventories | 177.2 | 170.5 | |||||
Prepaid expenses | 21.1 | 25.6 | |||||
Other current assets | 14.5 | 13.7 | |||||
Total current assets | 324.3 | 331.6 | |||||
Property, plant, and equipment, net | 215.8 | 215.0 | |||||
Goodwill | 317.1 | 320.8 | |||||
Intangible assets, net | 349.9 | 353.9 | |||||
Right-of-use lease assets | 97.7 | — | |||||
Other noncurrent assets | 9.3 | 5.6 | |||||
Total assets | $ | 1,314.1 | $ | 1,226.9 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 17.1 | $ | 17.2 | |||
Accounts payable | 118.2 | 126.7 | |||||
Current portion of lease liability | 21.1 | — | |||||
Other current liabilities | 118.3 | 128.9 | |||||
Total current liabilities | 274.7 | 272.8 | |||||
Long-term debt | 444.3 | 443.9 | |||||
Deferred income taxes | 89.9 | 86.5 | |||||
Pension liability | 13.2 | 13.9 | |||||
Lease liability | 90.7 | — | |||||
Other noncurrent liabilities | 8.5 | 23.3 | |||||
Total liabilities | 921.3 | 840.4 | |||||
Commitments and contingent liabilities | |||||||
Equity: | |||||||
Common stock, $0.01 par value; 200,000,000 shares authorized; 66,252,679 shares issued and 49,757,728 shares outstanding (including 913,273 non-voting restricted shares and net of 16,494,951 treasury shares) at March 31, 2019 and 65,778,891 shares issued and 49,431,178 shares outstanding (including 725,252 non-voting restricted shares and net of 16,347,713 treasury shares) at December 31, 2018 | 0.5 | 0.5 | |||||
Additional paid-in capital | 58.4 | 58.8 | |||||
Retained earnings | 405.9 | 395.4 | |||||
Accumulated other comprehensive loss | (72.0 | ) | (68.4 | ) | |||
Total Knoll, Inc. stockholders’ equity | 392.8 | 386.3 | |||||
Noncontrolling interests | — | 0.2 | |||||
Total equity | 392.8 | 386.5 | |||||
Total liabilities and equity | $ | 1,314.1 | $ | 1,226.9 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Sales | $ | 332.8 | $ | 296.6 | |||
Cost of sales | 209.0 | 188.9 | |||||
Gross profit | 123.8 | 107.7 | |||||
Selling, general, and administrative expenses | 94.5 | 84.7 | |||||
Restructuring charges | 0.1 | 0.5 | |||||
Operating profit | 29.2 | 22.5 | |||||
Interest expense | 5.2 | 4.1 | |||||
Loss on extinguishment of debt | — | 1.4 | |||||
Pension settlement charge | 0.2 | — | |||||
Other income, net | (0.7 | ) | (4.0 | ) | |||
Income before income tax expense | 24.5 | 21.0 | |||||
Income tax expense | 6.5 | 5.7 | |||||
Net earnings | $ | 18.0 | $ | 15.3 | |||
Net earnings per common share attributable to Knoll, Inc. stockholders: | |||||||
Basic | $ | 0.37 | $ | 0.31 | |||
Diluted | $ | 0.37 | $ | 0.31 | |||
Dividends per share | $ | 0.15 | $ | 0.15 | |||
Weighted-average number of common shares outstanding: | |||||||
Basic | 48,774,883 | 48,556,686 | |||||
Diluted | 49,190,288 | 49,204,776 | |||||
Net earnings | $ | 18.0 | $ | 15.3 | |||
Other comprehensive income (loss): | |||||||
Unrealized loss on interest rate swap, net of tax | (1.5 | ) | (0.1 | ) | |||
Pension and other post-employment liability adjustment, net of tax | 0.1 | 0.2 | |||||
Foreign currency translation adjustment | 1.9 | (0.4 | ) | ||||
Foreign currency translation adjustment on long term intercompany notes | (4.1 | ) | (0.5 | ) | |||
Total other comprehensive (loss), net of tax | (3.6 | ) | (0.8 | ) | |||
Total comprehensive income | $ | 14.4 | $ | 14.5 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net earnings | $ | 18.0 | $ | 15.3 | |||
Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||
Depreciation | 6.3 | 6.3 | |||||
Amortization expense (including deferred financing fees) | 2.5 | 2.2 | |||||
Loss on extinguishment of debt | — | 1.4 | |||||
Inventory obsolescence | 0.4 | 0.5 | |||||
Unrealized foreign currency loss (gains) | 0.7 | (2.0 | ) | ||||
Stock-based compensation | 2.2 | 2.4 | |||||
Bad debt and customer claims | 0.3 | 0.4 | |||||
Changes in assets and liabilities: | |||||||
Customer receivables | 11.4 | (6.3 | ) | ||||
Inventories | (7.1 | ) | (9.6 | ) | |||
Prepaid and other current assets | 1.8 | 3.0 | |||||
Accounts payable | (7.5 | ) | (0.2 | ) | |||
Current and deferred income taxes | 3.9 | 1.9 | |||||
Other current liabilities | (10.5 | ) | (4.2 | ) | |||
Other noncurrent assets and liabilities | (3.3 | ) | (5.5 | ) | |||
Cash provided by operating activities | 19.1 | 5.6 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures | (9.2 | ) | (8.5 | ) | |||
Purchase of business, net of cash acquired | — | (303.7 | ) | ||||
Cash used in investing activities | (9.2 | ) | (312.2 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from revolving credit facility | 111.0 | 282.0 | |||||
Repayment of revolving credit facility | (105.0 | ) | (132.0 | ) | |||
Proceeds from term loan | — | 350.5 | |||||
Repayment of term loan | (4.3 | ) | (165.0 | ) | |||
Payment of financing fees | — | (4.5 | ) | ||||
Payment of fees related to debt extinguishment | — | (1.0 | ) | ||||
Payment of dividends | (7.8 | ) | (7.7 | ) | |||
Purchase of common stock for treasury | (3.0 | ) | (1.9 | ) | |||
Cash (used in) provided by financing activities | (9.1 | ) | 320.4 | ||||
Effect of exchange rate changes on cash and cash equivalents | — | 0.2 | |||||
Net increase in cash and cash equivalents | 0.8 | 14.0 | |||||
Cash and cash equivalents at beginning of period | 1.6 | 2.2 | |||||
Cash and cash equivalents at end of period | $ | 2.4 | $ | 16.2 |
(1) | ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As the majority of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company uses the implicit rate when readily determinable. |
(2) | The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise. |
(3) | Lease payments included in the measurement of the lease liability comprise the following: fixed payments (including in-substance fixed payments), less any lease incentives paid or payable to the lessee, variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the exercise price of the Company option to purchase the underlying asset if the Company is reasonably certain to exercise. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Office Segment | |||||||
Office Systems | $ | 106.3 | $ | 104.0 | |||
Seating | 30.9 | 31.0 | |||||
Files and Storage | 25.6 | 22.2 | |||||
Ancillary | 25.5 | 18.5 | |||||
Other | 13.9 | 9.4 | |||||
Total Office Segment | 202.2 | 185.1 | |||||
Lifestyle Segment | |||||||
Studio | 101.6 | 84.1 | |||||
Coverings | 29.0 | 27.4 | |||||
Total Lifestyle Segment | 130.6 | 111.5 | |||||
Total Sales | $ | 332.8 | $ | 296.6 |
Three Months Ended | ||||
March 31, 2018 | ||||
Pro forma sales | $ | 300.7 | ||
Pro forma net earnings attributable to Knoll, Inc. stockholders | $ | 17.6 |
March 31, 2019 | December 31, 2018 | ||||||
Raw materials | $ | 67.6 | $ | 65.1 | |||
Work-in-process | 10.2 | 8.3 | |||||
Finished goods | 99.4 | 97.1 | |||||
$ | 177.2 | $ | 170.5 |
Pension Benefits | Other Benefits | ||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Expected administrative expenses | $ | 0.4 | $ | 0.2 | $ | — | $ | — | |||||||
Interest cost | 2.5 | 2.5 | 0.1 | — | |||||||||||
Expected return on plan assets | (4.0 | ) | (4.6 | ) | — | — | |||||||||
Amortization of prior service credit | — | — | (0.2 | ) | (0.2 | ) | |||||||||
Recognized actuarial loss (gain) | 0.1 | 0.4 | — | — | |||||||||||
Pension settlement charge (1) | 0.2 | — | — | — | |||||||||||
Net periodic benefit income | $ | (0.8 | ) | $ | (1.5 | ) | $ | (0.1 | ) | $ | (0.2 | ) |
Fair Value as of March 31, 2019 | Fair Value as of December 31, 2018 | ||||||||||||||||||||||||||||||
Liabilities: | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Interest rate swap | $ | — | $ | 3.6 | $ | — | $ | 3.6 | $ | — | $ | 1.7 | $ | — | $ | 1.7 | |||||||||||||||
Contingent purchase price payment - DatesWeiser | — | — | 0.8 | 0.8 | — | — | 0.8 | 0.8 |
Liability Derivatives | |||||||||||
March 31, 2019 | December 31, 2018 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivatives designated as hedging instruments | |||||||||||
Interest rate swap | Other current liabilities | $ | 0.7 | Other current liabilities | $ | 0.3 | |||||
Interest rate swap | Other noncurrent liabilities | $ | 2.9 | Other noncurrent liabilities | $ | 1.4 | |||||
Total derivatives designated as hedging instruments | $ | 3.6 | $ | 1.7 |
Three months ended | ||||
March 31, 2019 | ||||
Lease cost: | ||||
Operating lease cost | $ | 6.9 | ||
Short-term lease cost | 0.1 | |||
Sublease income | (0.1 | ) | ||
Total lease cost | $ | 6.9 |
Three months ended | ||||
March 31, 2019 | ||||
Weighted-average remaining lease term (in years) | ||||
Operating leases | 6.3 | |||
Weighted-average discount rate | ||||
Operating leases | 4.8 | % | ||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | 7.2 | ||
Right-of-use assets obtained in exchange for lease liabilities: | ||||
Operating leases | $ | 1.5 |
March 31, 2019 | ||||
2019 | $ | 20.3 | ||
2020 | 25.9 | |||
2021 | 19.8 | |||
2022 | 17.2 | |||
2023 | 14.7 | |||
Thereafter | 37.8 | |||
Total undiscounted lease payments | 135.7 | |||
Less: imputed interest | (23.9 | ) | ||
Total lease liability | $ | 111.8 |
March 31, 2019 | December 31, 2018 | ||||||
Accrued employee compensation | $ | 27.8 | $ | 40.6 | |||
Customer deposits | 40.4 | 37.7 | |||||
Warranty | 9.7 | 9.6 | |||||
Other | 40.4 | 41.0 | |||||
Other current liabilities | $ | 118.3 | $ | 128.9 |
March 31, 2019 | December 31, 2018 | ||||||
Balance of revolving credit facility | $ | 140.5 | $ | 134.5 | |||
Balance of term loans | 324.8 | 330.8 | |||||
Total long-term debt | 465.3 | 465.3 | |||||
Less: Current maturities of long-term debt | 17.1 | 17.2 | |||||
Less: Deferred financing fees, net | 3.9 | 4.2 | |||||
Long-term debt | $ | 444.3 | $ | 443.9 |
Capacity | Amount Borrowed | Letters of Credit Outstanding | Unused Capacity | ||||
March 31, 2019 | $400.0 | $140.5 | $5.2 | $254.3 | |||
December 31, 2018 | $400.0 | $134.5 | $5.2 | $260.3 |
Balance, December 31, 2018 | $ | 9.6 | ||
Provision for warranty claims | 1.9 | |||
Warranty claims incurred | (1.8 | ) | ||
Balance, March 31, 2019 | $ | 9.7 |
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, 2018 | $ | 0.5 | $ | 58.8 | $ | 395.4 | $ | (68.4 | ) | $ | 386.3 | $ | 0.2 | $ | 386.5 | |||||||||||||
Net earnings | — | — | 18.0 | — | 18.0 | — | 18.0 | |||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | (3.6 | ) | (3.6 | ) | — | (3.6 | ) | ||||||||||||||||||
Stock-based compensation, net of forfeitures | — | 2.2 | — | — | 2.2 | — | 2.2 | |||||||||||||||||||||
Cash dividend ($0.15 per share) | — | — | (7.5 | ) | — | (7.5 | ) | — | (7.5 | ) | ||||||||||||||||||
Purchase of common stock (141,738 shares) | — | (3.0 | ) | — | — | (3.0 | ) | — | (3.0 | ) | ||||||||||||||||||
Other | — | 0.4 | — | — | 0.4 | (0.2 | ) | 0.2 | ||||||||||||||||||||
Balance at March 31, 2019 | $ | 0.5 | $ | 58.4 | $ | 405.9 | $ | (72.0 | ) | $ | 392.8 | $ | — | $ | 392.8 |
Shares outstanding as of December 31, 2018 | 48,706 | ||
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes | 138 | ||
Shares issued to Board of Directors in lieu of cash | 1 | ||
Shares outstanding as of March 31, 2019 | 48,845 |
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, 2017 | $ | 0.5 | $ | 54.5 | $ | 347.3 | $ | (43.8 | ) | $ | 358.5 | $ | 0.3 | $ | 358.8 | |||||||||||||
Adoption of ASU 2018-02 | — | — | 6.3 | (6.3 | ) | — | — | — | ||||||||||||||||||||
Net earnings | — | — | 15.3 | — | 15.3 | — | 15.3 | |||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | (0.8 | ) | (0.8 | ) | — | (0.8 | ) | ||||||||||||||||||
Stock-based compensation, net of forfeitures | — | 2.4 | — | — | 2.4 | — | 2.4 | |||||||||||||||||||||
Cash dividend ($0.15 per share) | — | — | (7.3 | ) | — | (7.3 | ) | — | (7.3 | ) | ||||||||||||||||||
Purchase of common stock (95,412 shares) | — | (2.0 | ) | — | — | (2.0 | ) | — | (2.0 | ) | ||||||||||||||||||
Balance at March 31, 2018 | $ | 0.5 | $ | 54.9 | $ | 361.5 | $ | (50.8 | ) | $ | 366.1 | $ | 0.3 | $ | 366.4 |
Shares outstanding as of December 31, 2017 | 48,498 | ||
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes | 108 | ||
Shares issued to Board of Directors in lieu of cash | 1 | ||
Shares outstanding as of March 31, 2018 | 48,607 |
Unrealized gains (losses) on Interest Rate Swaps | Foreign Currency Translation Adjustment | Foreign Currency Translation Adjustment on Long-term Intercompany Notes | Pension and Other Post-Employment Liability Adjustment | Total | |||||||||||||||
Balance, as of December 31, 2018 | $ | (1.2 | ) | $ | (18.8 | ) | $ | (8.1 | ) | $ | (40.3 | ) | $ | (68.4 | ) | ||||
Other comprehensive income (loss) before reclassifications | (2.1 | ) | 1.9 | (4.1 | ) | — | (4.3 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | 0.1 | — | — | 0.1 | 0.2 | ||||||||||||||
Net current-period other comprehensive income (loss) before income tax | (2.0 | ) | 1.9 | (4.1 | ) | 0.1 | (4.1 | ) | |||||||||||
Income tax benefit (expense) | 0.5 | — | — | — | 0.5 | ||||||||||||||
Other comprehensive income (loss) | (1.5 | ) | 1.9 | (4.1 | ) | 0.1 | (3.6 | ) | |||||||||||
Balance, as of March 31, 2019 | $ | (2.7 | ) | $ | (16.9 | ) | $ | (12.2 | ) | $ | (40.2 | ) | $ | (72.0 | ) |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Amortization of pension and other post-employment liability adjustments | |||||||
Prior service credits (1) | $ | (0.2 | ) | $ | (0.2 | ) | |
Actuarial losses (1) | 0.1 | 0.4 | |||||
Loss recognized during settlement | 0.2 | — | |||||
Total before tax | 0.1 | 0.2 | |||||
Tax (benefit) expense | — | — | |||||
Net of tax | $ | 0.1 | $ | 0.2 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Numerator: | |||||||
Net earnings attributable to Knoll, Inc. stockholders | $ | 18.0 | $ | 15.3 | |||
Denominator: | |||||||
Denominator for basic earnings per shares - weighted-average shares | 48,775 | 48,557 | |||||
Effect of dilutive securities: | |||||||
Potentially dilutive shares resulting from stock plans | 415 | 648 | |||||
Denominator for diluted earnings per share - weighted-average shares | 49,190 | 49,205 | |||||
Antidilutive equity awards not included in weighted-average common shares—diluted | 110 | 1 | |||||
Net earnings per common share attributable to Knoll, Inc. stockholders: | |||||||
Basic | $ | 0.37 | $ | 0.31 | |||
Diluted | $ | 0.37 | $ | 0.31 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
SALES | |||||||
Office | $ | 202.2 | $ | 185.1 | |||
Lifestyle | 130.6 | 111.5 | |||||
Knoll, Inc. | $ | 332.8 | $ | 296.6 | |||
INTERSEGMENT SALES (1) | |||||||
Office | $ | 0.4 | $ | 0.5 | |||
Lifestyle | 2.5 | 2.4 | |||||
Knoll, Inc. | $ | 2.9 | $ | 2.9 | |||
OPERATING PROFIT | |||||||
Office (2) | $ | 14.1 | $ | 8.9 | |||
Lifestyle | 20.7 | 20.2 | |||||
Corporate | (5.6 | ) | (6.6 | ) | |||
Knoll, Inc.(3) | $ | 29.2 | $ | 22.5 |
Office Segment | Lifestyle Segment | Total | |||||||||
Balance as of December 31, 2018 | $ | 39.1 | $ | 281.7 | $ | 320.8 | |||||
Foreign currency translation adjustment | 0.1 | (3.8 | ) | (3.7 | ) | ||||||
Balance as of March 31, 2019 | $ | 39.2 | $ | 277.9 | $ | 317.1 |
Three Months Ended March 31, | 2019 vs. 2018 | ||||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||
Net Sales | $ | 332.8 | $ | 296.6 | $ | 36.2 | 12.2 | % | |||||||
Gross profit | 123.8 | 107.7 | 16.1 | 15.0 | % | ||||||||||
Selling, general, and administrative expenses | 94.5 | 84.7 | 9.8 | 11.6 | % | ||||||||||
Operating profit | 29.2 | 22.5 | 6.8 | 30.1 | % | ||||||||||
Interest expense | 5.2 | 4.1 | 1.1 | 26.9 | % | ||||||||||
Other income, net | (0.7 | ) | (4.0 | ) | 3.3 | (82.5 | )% | ||||||||
Income tax expense | 6.5 | 5.7 | 0.8 | 14.1 | % | ||||||||||
Net earnings | 18.0 | 15.3 | 2.7 | 17.7 | % | ||||||||||
Net earnings per common share attributable to Knoll, Inc. stockholders: | |||||||||||||||
Basic | $ | 0.37 | $ | 0.31 | $ | 0.06 | 19.4 | % | |||||||
Diluted | $ | 0.37 | $ | 0.31 | $ | 0.06 | 19.4 | % | |||||||
Statistical Data | |||||||||||||||
Gross profit % | 37.2 | % | 36.3 | % | |||||||||||
Operating profit % | 8.8 | % | 7.6 | % | |||||||||||
Selling, general, and administrative expenses % | 28.4 | % | 28.6 | % |
Three Months Ended March 31, | 2019 vs. 2018 | ||||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||||
(Dollars in millions) | |||||||||||||||
SALES | |||||||||||||||
Office | $ | 202.2 | $ | 185.1 | $ | 17.1 | 9.2 | % | |||||||
Lifestyle | 130.6 | 111.5 | 19.1 | 17.2 | % | ||||||||||
Knoll, Inc. | $ | 332.8 | $ | 296.6 | $ | 36.2 | 12.2 | % | |||||||
OPERATING PROFIT | |||||||||||||||
Office | $ | 14.1 | $ | 8.9 | $ | 5.3 | 59.5 | % | |||||||
Lifestyle | 20.7 | 20.2 | 0.5 | 2.5 | % | ||||||||||
Corporate | (5.6 | ) | (6.6 | ) | 1.0 | (15.2 | )% | ||||||||
Knoll, Inc. (1) | $ | 29.2 | $ | 22.5 | $ | 6.8 | 30.1 | % |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Cash provided by operating activities | $ | 19.1 | $ | 5.6 | |||
Capital expenditures, net | (9.2 | ) | (8.5 | ) | |||
Purchase of business, net of cash acquired | — | (303.7 | ) | ||||
Cash used in investing activities | (9.2 | ) | (312.2 | ) | |||
Purchase of common stock for treasury | (3.0 | ) | (1.9 | ) | |||
Proceeds from revolving credit facilities | 111.0 | 282.0 | |||||
Repayment of revolving credit facilities | (105.0 | ) | (132.0 | ) | |||
Proceeds of term loans | — | 350.5 | |||||
Repayment of term loans | (4.3 | ) | (165.0 | ) | |||
Payment of dividends | (7.8 | ) | (7.7 | ) | |||
Payment of financing fees | — | (4.5 | ) | ||||
Loss on debt extinguishment | — | (1.0 | ) | ||||
Cash (used in) provided by financing activities | (9.1 | ) | 320.4 |
March 31, 2019 | December 31, 2018 | ||||||
Cash | $ | 2.4 | $ | 1.6 | |||
Availability under revolving credit facility | 254.3 | 260.3 |
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) | ||||||||||
January 1, 2019 - January 31, 2019 | — | $ | — | — | $ | 32,352,413 | ||||||||
February 1, 2019 - February 28, 2019 | 141,738 | (2) | $ | 21.28 | — | $ | 32,352,413 | |||||||
March 1, 2019 - March 31, 2019 | — | $ | — | — | $ | 32,352,413 | ||||||||
Total | 141,738 | — |
Exhibit Number | Description | |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | ||
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. | ||
Certification of Chief Executive Officer and 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 March 31, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income for the three months ended March 31, 2019 and 2018, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.* |
KNOLL, INC. | |||
(Registrant) | |||
Date: | May 10, 2019 | ||
By: | /s/ Andrew B. Cogan | ||
Andrew B. Cogan | |||
Chairman and Chief Executive Officer | |||
Date: | May 10, 2019 | ||
By: | /s/ Charles W. Rayfield | ||
Charles W. Rayfield | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
Date: | May 10, 2019 | |
/s/ Andrew B. Cogan | ||
Andrew B. Cogan | ||
Chief Executive Officer |
Date: | May 10, 2019 | |
/s/ Charles W. Rayfield | ||
Charles W. Rayfield | ||
Chief Financial Officer | ||
May 10, 2019 | |
/s/ Andrew B. Cogan | |
Andrew B. Cogan | |
Chief Executive Officer | |
/s/ Charles W. Rayfield | |
Charles W. Rayfield | |
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2019 |
May 09, 2019 |
|
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 | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 49,757,728 | |
Restricted stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 913,273 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 3.9 | $ 3.7 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 66,252,679 | 65,778,891 |
Common stock, shares outstanding (n shares) | 49,757,728 | 49,431,178 |
Non-vesting restricted shares (in shares) | 913,273 | 725,252 |
Treasury shares (in shares) | 16,494,951 | 16,347,713 |
BASIS OF PRESENTATION |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. 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. Operating results for the three-month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed. The condensed consolidated balance sheet of the Company, as of December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018. New Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU. Accounting Standards Adopted In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million, with an offsetting increase to right-of-use assets of $102.4 million, for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019. In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Leases The Company accounts for leases in accordance with ASC Topic 842, Leases, (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset. The Company determines whether the contracts are considered operating or financing leases. The Company does not currently have finance leases. Operating leases are included in right-of-use (“ROU”) lease assets, current portion lease liability, and lease liabilities on the Condensed Consolidated Balance Sheets. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date, and subsequently remeasured at each balance sheet date. Key estimates and judgments include how the Company determined (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.
The ROU asset is initially measured at cost, which comprises the initial measurement of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expenses in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases. ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of March 31, 2019, the Company has not incurred any impairment losses. The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis. Lease expense for short-term leases are recognized on a straight-line basis over the lease term. On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. Further, the Company does not expect the amendments in ASU 2018-01: Land Easement Practical Expedient for Transition to Topic 842 to have an effect on the Company because it does not enter into land easement arrangements. The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases. Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term. All other significant accounting policies are consistent with those disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2018. |
REVENUE |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | REVENUE Disaggregation of Revenue The majority of the Company’s revenue presented as “Sales” in the Condensed Consolidated Statements of Operations and Comprehensive Income is the result of contracts with customers for the sale of the Company’s products. The Company’s sales by product category were as follows (in millions):
Contract Balances The Company has contract assets consisting of Customer receivables in the Condensed Consolidated Balance Sheets which represent the amount of consideration the Company expects to be entitled to in exchange for the goods or services rendered to its customers. When the Company generally receives deposits, the recognition of revenue is deferred and results in the recognition of a contract liability (Customer deposits) presented as a component of Other Current Liabilities in the Condensed Consolidated Balance Sheets. Subsequent recognition of revenue and the satisfaction of the contract liability is typically less than one year as the Company’s standard contract is less than one year. As of March 31, 2019 and December 31, 2018, the contract liability related to customer deposits was $40.4 million and $37.7 million. The Company recognized revenues that were included in the contract liability at the beginning of the current year of $19.8 million. |
ACQUISITION |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||
ACQUISITION | ACQUISITION On January 25, 2018, the Company acquired one hundred percent (100%) of the shares of Muuto Holding ApS and MIE4 Holding 5 ApS, which collectively hold substantially all the business operations of Muuto ApS (“Muuto”). Muuto’s affordable luxury products span commercial and residential applications, adding scale and diversity to the Company’s business. The aggregate purchase price for the acquisition was $303.7 million, net of $7.6 million of cash acquired and subject to certain customary adjustments. The Company recorded acquisition costs and certain other costs of $1.0 million within selling, general, and administrative expenses in its Condensed Consolidated Statement of Operations and Comprehensive Income, during the three months ended March 31, 2018. Unaudited pro forma information for the Company for the three month periods ended March 31, 2018 as if the acquisition had occurred January 1, 2017 is as follows (in millions):
The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented above has been derived from the historical condensed consolidated financial statements of the Company and from the historical consolidated financial statements of Muuto. The pro forma financial information presented above includes adjustment for: (1) incremental amortization expense related to fair value adjustments to identifiable intangible assets, (2) incremental interest expense for outstanding borrowings to reflect the terms of the Amended Credit Agreement, (3) nonrecurring items and (4) the tax effect of the above adjustments. Nonrecurring adjustments related to acquisition costs and loss on debt extinguishment of $2.4 million were recorded during the three month period of March 31, 2018 were recorded in the Condensed Consolidated Statements of Operations. A pro forma adjustment was made to incorporate the effect of nonrecurring costs related to loss on debt extinguishment of $1.7 million during the period of March 31, 2017. Adjustments were made in the calculation of pro forma amounts to remove the effect of these nonrecurring items and related income taxes. The pro forma financial information does not include adjustments for potential future cost savings. For further information on acquisitions, refer to the Company’s annual report on Form 10-K for the year ended December 31, 2018. |
INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Information regarding the Company’s inventories is as follows (in millions):
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PENSION AND OTHER POST-EMPLOYMENT BENEFITS |
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Pension and Other Postretirement Benefits Cost (Reversal of Cost) [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 millions):
(1) The pension settlement charge was related to cash payments from lump sum elections. |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
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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, classified as Level 1 within the fair value hierarchy, approximate carrying value due to their short maturities. The fair value of the Company’s long-term debt, classified as Level 2 within the fair value hierarchy, approximates its carrying value, as it is variable rate debt and the terms are comparable to market terms as of the balance sheet dates. 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 millions):
Interest Rate Swap The Company’s interest rate swap is with a counterparty with a credit rating of A- according to S&P and Fitch. The fair value of interest rate swap agreement is based on observable prices as quoted for receiving the variable one-month London Interbank Offered Rates (LIBOR) and paying fixed interest rates and therefore were classified as Level 2 within the fair value hierarchy. Contingent Purchase Price Payment 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. Any changes in the fair value will be included within selling, general and administrative expenses. The maximum amount of possible future contingent payments under the agreement as of March 31, 2019 is $4.0 million. There were no additional assets and/or liabilities recorded at fair value on a recurring basis as of March 31, 2019 or December 31, 2018. |
DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company is exposed to interest rate risks related to its business operations. To reduce the interest rate risk the Company uses an interest rate swap contract. The Company does not use derivatives for speculative trading purposes. Cash flow hedge To offset the variability of cash flows in interest payments associated with a portion of the Company’s variable rate debt, the Company entered into an interest rate swap contract in January 2018 which is designated as a cash flow hedge. The interest rate swap hedges one month LIBOR which effectively converts a portion of the variable-rate debt to a fixed interest rate. The interest rate swap effective date is December 31, 2018 and the maturity date is January 23, 2023. As of March 31, 2019 the Company’s interest rate swap agreement, which hedges long-term debt obligations, has a notional amount of $300.0 million, which decreases over time by $50 million increments. The contract has a fixed rate of 2.63%. The following table illustrates the location and fair value of the Company’s interest rate swap at March 31, 2019 and December 31, 2018 (in millions):
The interest rate swap is included at its estimated fair value as an asset or a liability in the Condensed Consolidated Balance Sheet based on a discounted cash flow model using applicable market swap rates and certain assumptions. The fair value of the swap recorded in Accumulated Other Comprehensive Income (Loss) may be recognized in the Condensed Consolidated Statement of Operations within interest income (expense) if certain terms of the agreement change, are modified or if the loan is extinguished. As of March 31, 2019 there was no hedge ineffectiveness associated with the Company’s interest rate swap and no portion of the cash flow hedge is excluded from the assessment of effectiveness. The Company recognized within interest expense less than $0.1 million of loss of other comprehensive income within the Condensed Consolidated Statement of Operations during the period ended March 31, 2019. The Company expects to reclassify in the next 12 months a loss of approximately $0.7 million from accumulated other comprehensive income into earnings, as a component of interest expense, related to the Company’s interest rate swap based on the borrowing rates at March 31, 2019. |
LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company has commitments under operating leases for certain machinery and equipment as well as manufacturing, warehousing, showroom and other facilities used in its operations. The Company does not have financing leases. Excluding short-term leases, the Company’s leases have initial terms ranging from 1 to 16 years, most of which include options the Company may elect to extend or renew the lease for 0.1 to 6 years, and some of which may include options to terminate the leases with notice periods of up to 1 year. Certain lease agreements contain provisions for future rent increases. Payments due under lease contracts are fixed. The components of lease cost for the three months ended March 31, 2019 are as follows (in millions):
As of December 31, 2018, minimum rental payments under operating leases were recognized on a straight-line basis over the term of the lease including any periods of free rent. Other lease information for the three months ended March 31, 2019 includes (in millions):
As of March 31, 2019, the Company has an additional operating lease that has not yet commenced for which it will record a right of use asset and lease liability of $1.3 million. The lease will commence in April 2019 with a lease term of approximately 12 years. Future minimum lease payments under non-cancellable leases as of the three months ended March 31, 2019 include (in millions):
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OTHER CURRENT LIABILITIES |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Information regarding the Company’s other current liabilities is as follows (in millions):
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INDEBTEDNESS |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INDEBTEDNESS | INDEBTEDNESS The Company’s long-term debt is summarized as follows (in millions):
Credit facility The following revolving credit facility was in place at March 31, 2019 and December 31, 2018 (in millions):
At March 31, 2019, borrowings under the revolving credit facility include $140.5 million at a weighted average LIBOR rate of 4.23%. At December 31, 2018, borrowings under the revolving credit facility include $2.5 million at a base rate of 6.25% and $132.0 million at a weighted average LIBOR rate of 4.25%. At March 31, 2019 and December 31, 2018, the letters of credit issued under the revolving credit facility incurred interest at 1.75% for both periods. At March 31, 2019, the U.S. term loan and multicurrency term loan incurred interest at 4.25% and 1.75%, respectively. At December 31, 2018 the U.S. term loan and multicurrency term loan incurred interest at 4.27% and 1.75%, respectively. The Eurocurrency rates used for the U.S. dollar-denominated term loan and the Euro-denominated term loan are one-month LIBOR and one-month Euribor, respectively. Deferred Financing Fees Deferred financing fees, net of accumulated amortization, totaled $3.9 million and $4.2 million as of March 31, 2019 and December 31, 2018, respectively. In conjunction with terminating the Company’s Existing Credit Agreement, $0.4 million in unamortized debt issuance costs and $1.0 million of third party fees related to debt extinguishment were written-off as a loss on extinguishment of debt during the three months ended March 31, 2018. |
CONTINGENT LIABILITIES AND COMMITMENTS |
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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 millions):
Warranty expense for each of the three months ended March 31, 2019 and 2018 was $1.9 million. |
EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the three months ended March 31, 2019 (in millions and excludes share information):
The following table demonstrates the change in the number of shares of common stock outstanding during the three months ended March 31, 2019 (table in thousands and excluding non-voting restricted shares):
The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the three months ended March 31, 2018 (in millions and excludes share information):
The following table demonstrates the change in the number of shares of common stock outstanding during the three months ended March 31, 2018 (table in thousands and excluding non-voting restricted shares):
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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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 three months ended March 31, 2019 (in millions):
The following pension and other post-retirement benefit reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income (in millions):
(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information. |
EARNINGS PER SHARE |
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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 vesting of 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 reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. At March 31, 2019 and 2018, the Company had restricted stock, restricted stock units and stock options, which could potentially dilute basic earnings per share in the future. The following table sets forth the reconciliation from basic to dilutive average common shares (in millions, except shares which are in thousands):
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INCOME TAXES |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s income tax provision consists of federal, state and foreign income taxes. The tax provisions for the three months ended March 31, 2019 and 2018 were based on the estimated effective tax rates applicable for the full years ending December 31, 2019 and 2018 and include items specifically related to the interim periods. The Company’s effective tax rate was 26.6% and 27.1% for the three months ended March 31, 2019 and 2018, respectively. The decrease in the Company’s effective tax rate for the three months ended March 31, 2019 was due to the Tax Act legislation, state income tax and income tax credits offset by the vesting of equity awards when compared to the three months ended March 31, 2018. The Company’s geographic mix of pretax income and the varying effective tax rates in the countries and states in which the Company operates also impacts its effective tax rate. As of both March 31, 2019 and December 31, 2018, 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 March 31, 2019, the Company is subject to U.S. Federal Income Tax examination for the tax years 2015 through 2018, and to non-U.S. income tax examination for the tax years 2011 through 2018. In addition, the Company is subject to state and local income tax examinations for the tax years 2014 through 2018. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two reportable segments: Office and Lifestyle. The Office reportable segment is comprised of the operations of the Office operating segment. The Lifestyle reportable segment is an aggregation of the Lifestyle, Europe, and Muuto operating segments. All unallocated expenses are included within Corporate. The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms in North America and Europe. These products include: office systems furniture, seating, storage, tables, desks and KnollExtra® accessories. The Office segment includes DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard of design, quality and technology integration. The Lifestyle segment includes KnollStudio®, HOLLY HUNT®, Muuto®, KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. Lifestyle products, which are distributed in North America and Europe, include iconic seating, lounge furniture, side, café and dining chairs as well as conference, training, dining and occasional tables, lighting, rugs, textiles, high-quality fabrics, felt, leather and related architectural products. During the first quarter of 2019, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As a result, DatesWeiser is now a component of the Office operating segment as opposed to the Lifestyle operating segment. As a result of this change in segment reporting, the Company retrospectively revised prior period results, by segment, to conform to current period presentation. 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 are 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 reporting segment results. Prior year amounts have been recast to conform to the current presentation (in millions):
_______________________________________________________________________________ (1) Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities. (2) Knoll recorded restructuring charges of $0.1 million and $0.5 million during the three months ended March 31, 2019 and March 31, 2018, respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control. (3) The Company does not allocate interest expense or other income, net to the reportable segments. The changes in the carrying amount of goodwill by reportable segment are as follows (in millions):
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. 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. Operating results for the three-month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed. The condensed consolidated balance sheet of the Company, as of December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018. |
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New Accounting Pronouncements Not Yet Adopted And Adopted | New Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU. Accounting Standards Adopted In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million, with an offsetting increase to right-of-use assets of $102.4 million, for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019. In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. |
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Leases | Leases The Company accounts for leases in accordance with ASC Topic 842, Leases, (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset. The Company determines whether the contracts are considered operating or financing leases. The Company does not currently have finance leases. Operating leases are included in right-of-use (“ROU”) lease assets, current portion lease liability, and lease liabilities on the Condensed Consolidated Balance Sheets. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date, and subsequently remeasured at each balance sheet date. Key estimates and judgments include how the Company determined (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.
The ROU asset is initially measured at cost, which comprises the initial measurement of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expenses in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases. ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of March 31, 2019, the Company has not incurred any impairment losses. The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis. Lease expense for short-term leases are recognized on a straight-line basis over the lease term. On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. Further, the Company does not expect the amendments in ASU 2018-01: Land Easement Practical Expedient for Transition to Topic 842 to have an effect on the Company because it does not enter into land easement arrangements. The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases. Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term. |
REVENUE (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales by Product Category | The Company’s sales by product category were as follows (in millions):
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ACQUISITION (Tables) |
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Acquisition Pro Forma Information | Unaudited pro forma information for the Company for the three month periods ended March 31, 2018 as if the acquisition had occurred January 1, 2017 is as follows (in millions):
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INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Information regarding the Company’s inventories is as follows (in millions):
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PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables) |
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Pension and Other Postretirement Benefits Cost (Reversal of Cost) [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 millions):
(1) The pension settlement charge was related to cash payments from lump sum elections. |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured 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 millions):
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DERIVATIVE INSTRUMENTS (Tables) |
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Schedule of Derivative Liabilities at Fair Value | The following table illustrates the location and fair value of the Company’s interest rate swap at March 31, 2019 and December 31, 2018 (in millions):
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LEASES (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease, Cost | Other lease information for the three months ended March 31, 2019 includes (in millions):
The components of lease cost for the three months ended March 31, 2019 are as follows (in millions):
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Schedule of Future Minimum Lease Payments | Future minimum lease payments under non-cancellable leases as of the three months ended March 31, 2019 include (in millions):
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OTHER CURRENT LIABILITIES (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other current liabilities | Information regarding the Company’s other current liabilities is as follows (in millions):
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INDEBTEDNESS (Tables) |
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Summary of long-term debt | The Company’s long-term debt is summarized as follows (in millions):
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Schedule of Revolving Credit Facility | The following revolving credit facility was in place at March 31, 2019 and December 31, 2018 (in millions):
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CONTINGENT LIABILITIES AND COMMITMENTS (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Schedule of changes in the warranty reserve | Changes in the warranty reserve are as follows (in millions):
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EQUITY (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in stockholders equity and noncontrolling interest | The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the three months ended March 31, 2019 (in millions and excludes share information):
The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the three months ended March 31, 2018 (in millions and excludes share information):
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Schedule of Change in Number of Shares of Common Stock Outstanding | The following table demonstrates the change in the number of shares of common stock outstanding during the three months ended March 31, 2019 (table in thousands and excluding non-voting restricted shares):
The following table demonstrates the change in the number of shares of common stock outstanding during the three months ended March 31, 2018 (table in thousands and excluding non-voting restricted shares):
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
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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 three months ended March 31, 2019 (in millions):
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Reclassification out of accumulated other comprehensive income | The following pension and other post-retirement benefit reclassifications were made from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations and other comprehensive income (in millions):
(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information. |
EARNINGS PER SHARE (Tables) |
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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 millions, except shares which are in thousands):
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information with Corporate Costs Excluded | The tables below present the Company’s segment information with Corporate costs excluded from reporting segment results. Prior year amounts have been recast to conform to the current presentation (in millions):
_______________________________________________________________________________ (1) Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer prices between legal entities. (2) Knoll recorded restructuring charges of $0.1 million and $0.5 million during the three months ended March 31, 2019 and March 31, 2018, respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control. (3) The Company does not allocate interest expense or other income, net to the reportable segments. |
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Schedule of Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill by reportable segment are as follows (in millions):
|
BASIS OF PRESENTATION - Accounting Standards Adopted (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liabilities | $ 111.8 | ||
Right-of-use asset | $ 97.7 | $ 0.0 | |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liabilities | $ 117.2 | ||
Right-of-use asset | $ 102.4 |
REVENUE - Contract Balances (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||
Contract liability related to customer deposits | $ 40.4 | $ 37.7 |
Revenue recognized | $ 19.8 |
ACQUISITION - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jan. 25, 2018 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Business Acquisition [Line Items] | ||||
Aggregate purchase price | $ 0.0 | $ 303.7 | ||
Cash acquired from acquisition | $ 7.6 | |||
Loss on extinguishment of debt | $ 0.0 | 1.4 | ||
Muuto Acquisition | ||||
Business Acquisition [Line Items] | ||||
Percentage of voting interests acquired | 100.00% | |||
Aggregate purchase price | $ 303.7 | |||
Acquisition costs | 1.0 | |||
Loss on extinguishment of debt | $ 2.4 | $ 1.7 |
ACQUISITION - Pro Forma Information (Details) - Muuto Acquisition $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Business Acquisition [Line Items] | |
Pro forma sales | $ 300.7 |
Pro forma net earnings attributable to Knoll, Inc. stockholders | $ 17.6 |
INVENTORIES (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 67.6 | $ 65.1 |
Work-in-process | 10.2 | 8.3 |
Finished goods | 99.4 | 97.1 |
Inventories, net | $ 177.2 | $ 170.5 |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Pension Benefits | ||
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | ||
Expected administrative expenses | $ 0.4 | $ 0.2 |
Interest cost | 2.5 | 2.5 |
Expected return on plan assets | (4.0) | (4.6) |
Amortization of prior service credit | 0.0 | 0.0 |
Recognized actuarial loss (gain) | 0.1 | 0.4 |
Pension settlement charge | 0.2 | 0.0 |
Net periodic benefit income | (0.8) | (1.5) |
Other Benefits | ||
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | ||
Expected administrative expenses | 0.0 | 0.0 |
Interest cost | 0.1 | 0.0 |
Expected return on plan assets | 0.0 | 0.0 |
Amortization of prior service credit | (0.2) | (0.2) |
Recognized actuarial loss (gain) | 0.0 | 0.0 |
Pension settlement charge | 0.0 | 0.0 |
Net periodic benefit income | $ (0.1) | $ (0.2) |
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Derivatives, Fair Value [Line Items] | ||
Interest rate swap | $ 3.6 | $ 1.7 |
Loss recognized in interest expense (less than) | 0.1 | |
Loss expected to be reclassified in the next 12 months | 0.7 | |
Interest Rate Swap | ||
Derivatives, Fair Value [Line Items] | ||
Aggregate notional amount | 300.0 | |
Decrease in notional amount over time | $ 50.0 | |
Contract rate | 2.63% | |
Interest Rate Swap | Designated as Hedging Instrument | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate swap | $ 0.7 | 0.3 |
Interest Rate Swap | Designated as Hedging Instrument | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate swap | $ 2.9 | $ 1.4 |
LEASES - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
Lease renewal term | 1 month |
Lease termination period | 12 months |
Lease not yet commenced, right-of-use asset | $ 1.3 |
Lease not yet commenced, liability | $ 1.3 |
Lease not yet commenced, term of contract | 12 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms | 16 years |
Lease renewal term | 6 years |
LEASES - Components of Lease Cost (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Lease, Cost [Abstract] | |
Operating lease cost | $ 6.9 |
Short-term lease cost | 0.1 |
Sublease income | (0.1) |
Total lease cost | $ 6.9 |
LEASES - Schedule of Other Lease Information (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Operating leases | |
Weighted-average remaining lease term (in years) | 6 years 3 months |
Weighted-average discount rate | 4.80% |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 7.2 |
Right-of-use assets obtained in exchange for lease liabilities: | $ 1.5 |
LEASES - Schedule of Future Minimum Lease Payments (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 20.3 |
2020 | 25.9 |
2021 | 19.8 |
2021 | 17.2 |
2023 | 14.7 |
Thereafter | 37.8 |
Lessee, Operating Lease, Liability, Payments, Due | 135.7 |
Less: imputed interest | (23.9) |
Total lease liability | $ 111.8 |
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued employee compensation | $ 27.8 | $ 40.6 |
Customer deposits | 40.4 | 37.7 |
Warranty | 9.7 | 9.6 |
Other | 40.4 | 41.0 |
Other current liabilities | $ 118.3 | $ 128.9 |
INDEBTEDNESS - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Long-term debt | ||
Total long-term debt | $ 465.3 | $ 465.3 |
Less: current maturities of long-term debt | 17.1 | 17.2 |
Less: deferred financing fees, net | 3.9 | 4.2 |
Long-term debt | 444.3 | 443.9 |
Revolving credit facility | ||
Long-term debt | ||
Long-term debt | 140.5 | 134.5 |
Term loan | ||
Long-term debt | ||
Long-term debt | $ 324.8 | $ 330.8 |
INDEBTEDNESS (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Long-term debt | |||
Borrowings under line of credit | $ 111.0 | $ 282.0 | |
Debt issuance costs | 0.4 | ||
Write off of deferred debt issuance cost | 1.0 | ||
Credit Agreement | Credit Facility | Base rate | |||
Long-term debt | |||
Borrowings under line of credit | $ 2.5 | ||
Basis spread on variable rate (as percent) | 6.25% | ||
Credit Agreement | Credit Facility | LIBOR | |||
Long-term debt | |||
Borrowings under line of credit | $ 140.5 | $ 132.0 | |
Basis spread on variable rate (as percent) | 4.23% | 4.25% | |
Credit Agreement | Letter of Credit | |||
Long-term debt | |||
Interest rate | 1.75% | 1.75% | |
Amended Credit Agreement | |||
Long-term debt | |||
Deferred financing fees, net | $ 3.9 | $ 4.2 | |
Amended Credit Agreement | Term loan | |||
Long-term debt | |||
Interest rate | 4.25% | 4.27% | |
Amended Credit Agreement | Multicurrency Term Loan | |||
Long-term debt | |||
Interest rate | 1.75% | 1.75% |
INDEBTEDNESS - Schedule of Line of Credit (Details) - Credit Agreement - Revolving Credit Facility - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Capacity | $ 400,000,000.0 | $ 400,000,000.0 |
Amount Borrowed | 140,500,000 | 134,500,000 |
Letters of Credit Outstanding | 5,200,000 | 5,200,000 |
Unused Capacity | $ 254,300,000 | $ 260,300,000 |
CONTINGENT LIABILITIES AND COMMITMENTS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Changes in warranty reserve | ||
Balance, December 31, 2018 | $ 9.6 | |
Provision for warranty claims | 1.9 | $ 0.0 |
Warranty claims incurred | (1.8) | |
Balance, March 31, 2019 | $ 9.7 |
EQUITY - Schedule of Change in Number of Shares of Common Stock Outstanding (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Shares outstanding, beginning of period (in shares) | 48,706,000 | 48,498,000,000 |
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes (in shares) | 138,000 | 108,000,000 |
Shares issued to Board of Directors in lieu of cash (in shares) | 1,000 | 1,000,000 |
Shares outstanding, end of period (in shares) | 48,845,000 | 48,607,000,000 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Loss recognized during settlement | $ 0 | |
Net current-period other comprehensive income (loss) before income tax | $ (4,100) | |
Tax (benefit) expense | (6,500) | (5,700) |
Net of tax | 200 | |
Reclassification out of Accumulated Other Comprehensive Income | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Prior service credits | (200) | (200) |
Actuarial losses | 100 | 400 |
Loss recognized during settlement | 200 | |
Net current-period other comprehensive income (loss) before income tax | 100 | 200 |
Tax (benefit) expense | 0 | 0 |
Net of tax | $ 100 | $ 200 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Net earnings attributable to Knoll, Inc. stockholders | $ 18.0 | $ 15.3 |
Weighted-average shares of common stock outstanding—basic (in shares) | 48,774,883 | 48,556,686 |
Potentially dilutive shares resulting from stock plans (in shares) | 415,000 | 648,000 |
Denominator for diluted earnings per share - weighted-average shares (in shares) | 49,190,288 | 49,204,776 |
Antidilutive equity awards not included in weighted-average common shares—diluted (in shares) | 110,000 | 1,000 |
Basic (in dollars per share) | $ 0.37 | $ 0.31 |
Diluted (in dollars per share) | $ 0.37 | $ 0.31 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 26.60% | 27.10% | |
Unrecognized tax benefits, which would reduce the effective tax rate if recognized | $ 0.9 | $ 0.9 |
SEGMENT INFORMATION Segment Information with Corporate Costs Excluded (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
segment
|
Mar. 31, 2018
USD ($)
|
|
Financial information of segments | ||
Number of reportable segments | segment | 2 | |
SALES | $ 332.8 | $ 296.6 |
OPERATING PROFIT | 29.2 | 22.5 |
Operating Segments | ||
Financial information of segments | ||
SALES | 332.8 | 296.6 |
INTERSEGMENT SALES | 2.9 | 2.9 |
Corporate | ||
Financial information of segments | ||
OPERATING PROFIT | (5.6) | (6.6) |
Office | ||
Financial information of segments | ||
SALES | 202.2 | 185.1 |
Restructuring charges | 0.1 | 0.5 |
Office | Operating Segments | ||
Financial information of segments | ||
SALES | 202.2 | 185.1 |
INTERSEGMENT SALES | 0.4 | 0.5 |
OPERATING PROFIT | 14.1 | 8.9 |
Lifestyle | ||
Financial information of segments | ||
SALES | 130.6 | 111.5 |
Lifestyle | Operating Segments | ||
Financial information of segments | ||
SALES | 130.6 | 111.5 |
INTERSEGMENT SALES | 2.5 | 2.4 |
OPERATING PROFIT | $ 20.7 | $ 20.2 |
SEGMENT INFORMATION - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 320.8 |
Foreign currency translation adjustment | (3.7) |
Balance at end of period | 317.1 |
Office Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 39.1 |
Foreign currency translation adjustment | 0.1 |
Balance at end of period | 39.2 |
Studio Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 281.7 |
Foreign currency translation adjustment | (3.8) |
Balance at end of period | $ 277.9 |
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