(State or other jurisdiction of | (IRS Employer | |||||||
incorporation) | Identification No.) |
Title of each class | Trading Symbol | Name of exchange on which registered | ||||||||||||
Exhibit No. | Description | |||||||
Consent of Independent Registered Public Accounting Firm | ||||||||
Updated portion of the Knoll, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2020 | ||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
Knoll, Inc. | ||||||||||||||||||||||||||
Date: May 12, 2021 | By: | /s/ Charles W. Rayfield | ||||||||||||||||||||||||
Charles W. Rayfield | ||||||||||||||||||||||||||
Senior Vice President, Chief Financial Officer | ||||||||||||||||||||||||||
Year Ended December 31, | 2020 vs. 2019 | |||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
(Dollar in millions) | ||||||||||||||||||||||||||
Net Sales | $ | 1,236.4 | $ | 1,428.1 | $ | (191.7) | (13.4) | % | ||||||||||||||||||
Gross profit | 442.7 | 549.0 | (106.3) | (19.4) | % | |||||||||||||||||||||
Selling, general, and administrative expenses | 375.4 | 411.9 | (36.5) | (8.9) | % | |||||||||||||||||||||
Restructuring charges | 25.9 | 0.8 | 25.1 | 3,023.9 | % | |||||||||||||||||||||
Loss on fair value measurements | 13.8 | 6.5 | 7.3 | 111.8 | % | |||||||||||||||||||||
Operating profit | 27.6 | 129.8 | (102.2) | (78.7) | % | |||||||||||||||||||||
Pension settlement charges | 4.8 | 21.0 | (16.2) | (77.1) | % | |||||||||||||||||||||
Interest expense, net | 17.4 | 21.7 | (4.3) | (20.2) | % | |||||||||||||||||||||
Other expense (income), net | (1.5) | (3.8) | 2.3 | (61.6) | % | |||||||||||||||||||||
Income tax expense (benefit) | (0.8) | 23.4 | (24.2) | (103.0) | % | |||||||||||||||||||||
Net earnings | 7.7 | 67.5 | (59.8) | (88.7) | % | |||||||||||||||||||||
Net earnings attributable to Knoll, Inc. stockholders | 4.4 | 67.5 | (63.1) | (93.5) | % | |||||||||||||||||||||
Net earnings per common share attributable to Knoll, Inc. stockholders: | ||||||||||||||||||||||||||
Basic | $ | 0.09 | $ | 1.38 | $ | (1.29) | (93.5) | % | ||||||||||||||||||
Diluted | $ | 0.09 | $ | 1.36 | $ | (1.27) | (93.4) | % | ||||||||||||||||||
Statistical Data | ||||||||||||||||||||||||||
Gross profit % | 35.8 | % | 38.4 | % | ||||||||||||||||||||||
Operating profit % | 2.2 | % | 9.1 | % | ||||||||||||||||||||||
Year Ended December 31, | 2019 vs. 2018 | |||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||||||||||||||
(Dollar in millions) | ||||||||||||||||||||||||||
Sales | $ | 1,428.1 | $ | 1,302.3 | $ | 125.8 | 9.7 | % | ||||||||||||||||||
Gross profit | 549.0 | 481.5 | 67.5 | 14.0 | % | |||||||||||||||||||||
Selling, general, and administrative expenses | 411.9 | 363.7 | 48.2 | 13.3 | % | |||||||||||||||||||||
Restructuring charges | 0.8 | 2.6 | (1.8) | (68.3) | % | |||||||||||||||||||||
Intangible asset impairment charge | 6.5 | — | 6.5 | 100.0 | % | |||||||||||||||||||||
Operating profit | 129.8 | 115.2 | 14.6 | 12.6 | % | |||||||||||||||||||||
Pension settlement charge | 21.0 | 5.7 | 15.3 | 265.8 | % | |||||||||||||||||||||
Interest expense | 21.7 | 20.9 | 0.8 | 4.0 | % | |||||||||||||||||||||
Other income, net | (3.8) | (9.6) | 5.8 | (60.0) | % | |||||||||||||||||||||
Income tax expense | 23.4 | 24.9 | (1.5) | (5.9) | % | |||||||||||||||||||||
Net earnings | 67.5 | 73.3 | (5.8) | (8.0) | % | |||||||||||||||||||||
Net earnings attributable to Knoll, Inc. stockholders | 67.5 | 73.3 | (5.8) | (8.0) | % | |||||||||||||||||||||
Net earnings per common share attributable to Knoll, Inc. stockholders: | ||||||||||||||||||||||||||
Basic | $ | 1.38 | $ | 1.51 | $ | (0.13) | (8.6) | % | ||||||||||||||||||
Diluted | $ | 1.36 | $ | 1.49 | $ | (0.13) | (8.7) | % | ||||||||||||||||||
Statistical Data | ||||||||||||||||||||||||||
Gross profit % | 38.4 | % | 37.0 | % | ||||||||||||||||||||||
Operating profit % | 9.1 | % | 8.8 | % | ||||||||||||||||||||||
Year Ended December 31, | 2020 vs. 2019 | |||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
(Dollar in millions) | ||||||||||||||||||||||||||
SALES | ||||||||||||||||||||||||||
Workplace | $ | 814.2 | $ | 918.4 | $ | (104.2) | (11.3) | % | ||||||||||||||||||
Lifestyle | 422.2 | 509.7 | (87.5) | (17.2) | % | |||||||||||||||||||||
Corporate | — | — | — | — | % | |||||||||||||||||||||
Knoll, Inc. | $ | 1,236.4 | $ | 1,428.1 | $ | (191.7) | (13.4) | % | ||||||||||||||||||
OPERATING PROFIT (1) | ||||||||||||||||||||||||||
Workplace | $ | 27.9 | $ | 85.0 | $ | (57.1) | (67.2) | % | ||||||||||||||||||
Lifestyle | 37.4 | 69.4 | (32.0) | (46.1) | % | |||||||||||||||||||||
Corporate | (37.7) | (24.6) | (13.1) | 53.3 | % | |||||||||||||||||||||
Knoll, Inc. | $ | 27.6 | $ | 129.8 | $ | (102.2) | (78.7) | % | ||||||||||||||||||
Year Ended December 31, | 2019 vs. 2018 | |||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||||||||||||||
(Dollar in millions) | ||||||||||||||||||||||||||
SALES | ||||||||||||||||||||||||||
Workplace | $ | 918.4 | $ | 833.5 | $ | 84.9 | 10.2 | % | ||||||||||||||||||
Lifestyle | 509.7 | 468.8 | 40.9 | 8.7 | % | |||||||||||||||||||||
Corporate | — | — | — | — | % | |||||||||||||||||||||
Knoll, Inc. | $ | 1,428.1 | $ | 1,302.3 | $ | 125.8 | 9.7 | % | ||||||||||||||||||
OPERATING PROFIT (1) | ||||||||||||||||||||||||||
Workplace | $ | 85.0 | $ | 73.6 | $ | 11.4 | 15.5 | % | ||||||||||||||||||
Lifestyle | 69.4 | 65.9 | 3.5 | 5.3 | % | |||||||||||||||||||||
Corporate | (24.6) | (24.3) | (0.3) | 1.2 | % | |||||||||||||||||||||
Knoll, Inc. | $ | 129.8 | $ | 115.2 | $ | 14.6 | 12.7 | % |
2020 | 2019 | 2018 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash provided by operating activities | $ | 60.7 | $ | 138.2 | $ | 108.2 | ||||||||||||||
Purchases of property and equipment | (43.3) | (49.9) | (40.3) | |||||||||||||||||
Purchase of businesses, net of cash acquired | — | (30.9) | (308.0) | |||||||||||||||||
Proceeds from sales of property and equipment | 12.3 | 0.1 | — | |||||||||||||||||
Cash used in investing activities | (30.9) | (80.7) | (348.3) | |||||||||||||||||
Payments of withholding taxes related to net share settlements of equity awards | (4.3) | (3.3) | (4.4) | |||||||||||||||||
Proceeds from revolving credit facilities | 414.5 | 417.5 | 490.5 | |||||||||||||||||
Repayment of revolving credit facilities | (492.0) | (413.5) | (383.0) | |||||||||||||||||
Proceeds from term loans | — | — | 350.2 | |||||||||||||||||
Repayment of term loans | (65.9) | (17.1) | (177.9) | |||||||||||||||||
Payment of dividends | (16.9) | (32.8) | (30.0) | |||||||||||||||||
Proceeds from issuance of preferred stock, net | 161.8 | — | — | |||||||||||||||||
Cash (used in) provided by financing activities | (3.1) | (50.7) | 239.8 |
December 31, | ||||||||||||||
2020 | 2019 | |||||||||||||
Cash | $ | 37.3 | $ | 8.5 | ||||||||||
Availability under revolving credit facility (1) | 333.9 | 256.4 |
Payments Due by Period | ||||||||||||||||||||||||||||||||
Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | Total | ||||||||||||||||||||||||||||
Long-term debt (1) | $ | 18.4 | $ | 44.4 | $ | 273.4 | $ | — | $ | 336.2 | ||||||||||||||||||||||
Operating lease liabilities | 33.7 | 58.7 | 42.9 | 59.1 | 194.4 | |||||||||||||||||||||||||||
Operating lease obligations (2) | 1.8 | 8.7 | 9.1 | 27.7 | 47.3 | |||||||||||||||||||||||||||
Purchase commitments | 36.6 | 3.8 | — | — | 40.4 | |||||||||||||||||||||||||||
Pension and other post-employment benefit plan obligations (3) | 0.3 | — | — | — | 0.3 | |||||||||||||||||||||||||||
Other liabilities (4) | — | — | — | — | — | |||||||||||||||||||||||||||
Total * | $ | 90.8 | $ | 115.6 | $ | 325.4 | $ | 86.8 | $ | 618.6 |
Defined Benefit Pension Obligation | ||||||||
Description of the Matter | At December 31, 2020, the Company’s projected benefit obligation related to its defined benefit plan was $206.4 million and exceeded the fair value of pension plan assets of $182.2 million, resulting in an unfunded defined benefit pension obligation of $24.2 million. As explained in Note 2 to the consolidated financial statements, the measurement of the Company’s projected benefit obligation is dependent, in part, on the selection of certain actuarial assumptions. Auditing the projected benefit obligation was complex and required the involvement of actuarial specialists due to the highly judgmental nature of the assumptions (e.g., discount rates and mortality rates) used in the Company’s measurement process. These assumptions had a significant effect on the projected benefit obligation. |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s valuation of the projected benefit obligation. For example, we tested the Company's controls over management’s review of the significant assumptions utilized in the valuation, including the discount rates and mortality rates. To test the projected benefit obligation, we performed audit procedures that included, among others, evaluating the methodology used, the significant actuarial assumptions described above, and the underlying data used by the Company. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the projected benefit obligation from the prior year due to the change in interest cost, actuarial gains and losses, benefit payments, settlements and other activities. In addition, we involved our actuarial specialists to assist in evaluating management’s methodology for selecting the appropriate discount rates that reflect the maturity and duration of the expected benefit payments and applying those discount rates to the benefit payments used to measure the projected benefit obligation. As part of this assessment, we compared the projected benefit obligation cash flows to those in the prior year and compared the current-year benefits paid to the prior-year projected cash flows. To evaluate the mortality rates, we assessed whether the information is consistent with publicly available information, and whether any adjustments for entity-specific factors were applied. We also tested the completeness and accuracy of the underlying data, including the participant data used in the actuarial calculations. | |||||||
Valuation of Goodwill and Other Indefinite-Lived Intangible Assets | ||||||||
Description of the Matter | At December 31, 2020, the Company’s goodwill and other indefinite-lived intangible assets were $349.8 million and $278.4 million, respectively. As discussed in Note 2 to the consolidated financial statements, goodwill and other indefinite-lived intangible assets are either qualitatively tested and, when considered necessary, quantitatively tested, for impairment at least annually. The Company’s goodwill is tested for impairment at the reporting unit level. Auditing management’s annual quantitative goodwill and other indefinite-lived intangible assets impairment tests was complex and involved a high degree of subjectivity due to the significant estimation required in determining the fair value of the reporting units and the other indefinite-lived intangible assets. In particular, the fair value estimates were sensitive to significant assumptions such as discount rates, revenue growth rates, profit margins, royalty rates, and terminal growth rates, which are forward-looking and could be affected by future economic and market conditions. | |||||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s quantitative goodwill and other indefinite-lived intangible assets annual impairment tests. For example, we tested controls over management’s review of the valuation models, the significant assumptions described above, and the completeness and accuracy of the data used in the valuations. To test the estimated fair value of the Company’s reporting units and other indefinite-lived intangible assets, we performed audit procedures that included, among others, assessing fair value methodologies and testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analyses. For example, we compared the significant assumptions used by management to current industry, market and economic trends, to historical results of the Company's business and other guideline companies within the same industry and to other relevant factors. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units and other indefinite-lived intangible assets that would result from changes in the assumptions. We also involved internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the Company. |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Customer receivables, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant, and equipment, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Right-of-use lease assets | |||||||||||
Other non-current assets | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current maturities of long-term debt | |||||||||||
Accounts payable | |||||||||||
Current portion of lease liability | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred income taxes | |||||||||||
Lease liability | |||||||||||
Pension liability | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingent liabilities (Note 14) | |||||||||||
Convertible preferred stock,$ | |||||||||||
Shareholders' Equity: (shares in thousands) | |||||||||||
Common stock, | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total shareholders' equity | |||||||||||
Total liabilities, convertible preferred stock and shareholders' equity | $ | $ |
Years ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Sales | $ | $ | $ | ||||||||||||||
Cost of sales | |||||||||||||||||
Gross profit | |||||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||||
Restructuring charges | |||||||||||||||||
Loss on fair value measurements | |||||||||||||||||
Operating profit | |||||||||||||||||
Pension settlement charges | |||||||||||||||||
Interest expense, net | |||||||||||||||||
Other income, net | ( | ( | ( | ||||||||||||||
Income before income tax expense (benefit) | |||||||||||||||||
Income tax expense (benefit) | ( | ||||||||||||||||
Net earnings | $ | $ | $ | ||||||||||||||
Less: Net earnings attributable to Preferred stockholders | ( | ||||||||||||||||
Net earnings available to common stockholders | $ | $ | $ | ||||||||||||||
Net earnings per share: | |||||||||||||||||
Basic | $ | $ | $ | ||||||||||||||
Diluted | $ | $ | $ | ||||||||||||||
Weighted-average common shares outstanding: (in thousands) | |||||||||||||||||
Basic | |||||||||||||||||
Diluted | |||||||||||||||||
Net earnings | $ | $ | $ | ||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||
Unrealized loss on cash flow hedge, net of amounts reclassified into earnings | ( | ( | ( | ||||||||||||||
Pension and other post-employment liability adjustments, net of tax | ( | ||||||||||||||||
Foreign currency translation adjustments | ( | ||||||||||||||||
Foreign currency translation adjustments on long-term intercompany notes | ( | ( | |||||||||||||||
Total other comprehensive income (loss), net | ( | ( | |||||||||||||||
Total comprehensive income | $ | $ | $ |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Knoll, Inc. Stockholders' Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Adoption of ASU 2018-02 (1) | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Purchase of common stock | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Purchase of common stock | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Other | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||
Net earnings | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared on preferred stock (2) | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Dividends declared on common stock ($ | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Purchase of common stock | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | ( | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||
Net earnings | $ | $ | $ | ||||||||||||||
Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | |||||||||||||||||
Amortization of debt issuance costs and loss on extinguishment of debt | |||||||||||||||||
Deferred income tax expense (benefit) | ( | ||||||||||||||||
Pension settlement charges | |||||||||||||||||
Loss (gain) on fair value remeasurement of contingent consideration | ( | ( | |||||||||||||||
Inventory obsolescence | |||||||||||||||||
Unrealized foreign currency losses | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Intangible asset impairments | |||||||||||||||||
Other non-cash items | ( | ||||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||||||
Customer receivables | ( | ||||||||||||||||
Inventories | ( | ( | |||||||||||||||
Prepaid and other current assets | ( | ( | |||||||||||||||
Accounts payable | ( | ( | |||||||||||||||
Other current liabilities | ( | ( | |||||||||||||||
Other noncurrent assets and liabilities | ( | ||||||||||||||||
Cash provided by operating activities | |||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||
Purchases of property and equipment | ( | ( | ( | ||||||||||||||
Purchases of businesses, net of cash acquired | ( | ( | |||||||||||||||
Proceeds from sales of property and equipment | |||||||||||||||||
Other, net | |||||||||||||||||
Cash used in investing activities | ( | ( | ( | ||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||
Proceeds from revolving credit facility | |||||||||||||||||
Repayment of revolving credit facility | ( | ( | ( | ||||||||||||||
Proceeds from term loans | |||||||||||||||||
Repayment of term loans | ( | ( | ( | ||||||||||||||
Capitalized debt issuance costs | ( | ( | ( | ||||||||||||||
Payment of fees related to debt extinguishment | ( | ||||||||||||||||
Payment of dividends | ( | ( | ( | ||||||||||||||
Proceeds from the issuance of preferred stock, net | |||||||||||||||||
Payments of withholding taxes related to net share settlements of equity awards | ( | ( | ( | ||||||||||||||
Cash (used in) provided by financing activities | ( | ( | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||||||||
Cash and cash equivalents at beginning of year | |||||||||||||||||
Cash and cash equivalents at end of year | $ | $ | $ | ||||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Cash paid for interest, net of amounts capitalized | $ | $ | $ | ||||||||||||||
Cash paid for income taxes, net of refunds received | $ | $ | $ |
Category | Useful Life (in years) | |||||||||||||
Leasehold improvements (1) | Various | |||||||||||||
Buildings | — | |||||||||||||
Building improvements | — | |||||||||||||
Office equipment | — | |||||||||||||
Software | — | |||||||||||||
Machinery and equipment | — | |||||||||||||
Level 1 | Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. | |||||||
Level 2 | Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. | |||||||
Level 3 | Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. |
Year Ended December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||
Historic Office Segment | ||||||||||||||||||||
Office Systems | $ | $ | $ | |||||||||||||||||
Seating | ||||||||||||||||||||
Files and Storage | ||||||||||||||||||||
Ancillary | ||||||||||||||||||||
Other | ||||||||||||||||||||
Total Historical Office Segment | $ | $ | $ | |||||||||||||||||
Lifestyle Segment | ||||||||||||||||||||
Studio | ||||||||||||||||||||
Coverings | ||||||||||||||||||||
Total Lifestyle Segment | $ | $ | $ | |||||||||||||||||
Total Sales | $ | $ | $ |
Balance at Beginning of Year | Provision | Charge-Offs | Other | Balance at End of Year | ||||||||||||||||||||||||||||
Year ended December 31, 2018 | ( | |||||||||||||||||||||||||||||||
Year ended December 31, 2019 | ( | |||||||||||||||||||||||||||||||
Year ended December 31, 2020 | ( |
Amount | Estimated useful Life (in years) | |||||||||||||
Tradenames | $ | |||||||||||||
Customer relationships | ||||||||||||||
Non-compete agreements | ||||||||||||||
Goodwill | - |
Amount | |||||
Cash | $ | ||||
Customer receivables | |||||
Inventory | |||||
Other current assets | |||||
Property, plant, and equipment, net | |||||
Intangible assets | |||||
Other non-current assets | |||||
Total assets acquired | $ | ||||
Accounts payable | |||||
Other current liabilities | |||||
Deferred income taxes | |||||
Total liabilities assumed | $ | ||||
Net assets acquired | $ | ||||
Purchase price | $ | ||||
Less: Fair value of acquired identifiable assets and liabilities | |||||
Goodwill | $ |
Amount | Estimated Useful Life (in years) | ||||||||||
Indefinite-lived intangible assets: | |||||||||||
Trade name | $ | Indefinite | |||||||||
Finite-lived intangible assets: | |||||||||||
Wholesale customer relationships | |||||||||||
Contract customer relationships | |||||||||||
Copyrights & designs | |||||||||||
Non-competition agreements | |||||||||||
Total intangible assets | $ |
Year Ended December 31, | |||||
2018 | |||||
Pro forma sales | $ | ||||
Pro forma net earnings attributable to Knoll, Inc. stockholders | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Raw materials | $ | $ | |||||||||
Work-in-process | |||||||||||
Finished goods | |||||||||||
$ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Land | $ | $ | |||||||||
Leasehold improvements | |||||||||||
Buildings | |||||||||||
Office equipment | |||||||||||
Software | |||||||||||
Machinery and equipment | |||||||||||
Construction-in-progress | |||||||||||
Property, plant and equipment | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Property, plant, and equipment, net | $ | $ |
October 1, 2020 | |||||||||||||||||
Reporting Unit | Amount of Goodwill Allocated | Excess Fair Value | |||||||||||||||
Office (historical) | $ | < | |||||||||||||||
Lifestyle (historical) | > | ||||||||||||||||
Muuto | < | ||||||||||||||||
Office Segment (1) | Lifestyle Segment (1) | Total | |||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | ||||||||||||||
Foreign currency translation adjustment | ( | ( | |||||||||||||||
Goodwill recognized in connection with the Fully acquisition | |||||||||||||||||
Balance as of December 31, 2019 | |||||||||||||||||
Foreign currency translation adjustment | |||||||||||||||||
Balance as of December 31, 2020 | $ | $ | $ |
December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
Tradenames | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||
Finite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
Customer relationships | ( | ( | |||||||||||||||||||||||||||||||||
Various | ( | ( | |||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | $ | ( | $ |
October 1, 2020 | |||||||||||||||||
Tradename | Carrying Amount | Excess Fair Value | |||||||||||||||
Knoll | $ | > | |||||||||||||||
Holly Hunt | $ | < | |||||||||||||||
Muuto | $ | % | to | ||||||||||||||
Year Ending December 31, | Amount | ||||
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Accrued employee compensation | $ | $ | |||||||||
Customer deposits | |||||||||||
Warranty | |||||||||||
Other | |||||||||||
Other current liabilities | $ | $ |
Year ended December 31, | ||||||||||||||
2020 | 2019 | |||||||||||||
Lease cost: | ||||||||||||||
Operating lease cost | $ | $ | ||||||||||||
Short-term lease cost | ||||||||||||||
Sublease income | ( | ( | ||||||||||||
Total lease cost | $ | $ |
2020 | 2019 | |||||||||||||
Weighted-average remaining lease term (in years) | ||||||||||||||
Operating leases | ||||||||||||||
Weighted-average discount rate | ||||||||||||||
Operating leases | % | % | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
Operating cash flows from operating leases | $ | $ | ||||||||||||
ROU assets obtained in exchange for new operating lease liabilities: | ||||||||||||||
Operating leases | $ | $ |
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Total lease payments | |||||
Less imputed interest | ( | ||||
Present value of lease liability | $ |
Pension Benefits | Other Benefits | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Change in projected benefit obligation: | |||||||||||||||||||||||
Projected benefit obligation at beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Expected administrative expenses | |||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Participant contributions | |||||||||||||||||||||||
Actuarial loss | |||||||||||||||||||||||
Benefits paid | ( | ( | ( | ( | |||||||||||||||||||
Benefits paid related to settlement | ( | ( | |||||||||||||||||||||
Gain related to settlement | ( | ( | |||||||||||||||||||||
Administrative expenses paid | ( | ( | |||||||||||||||||||||
Projected benefit obligation at end of the period | |||||||||||||||||||||||
Accumulated benefit obligation at end of the period | |||||||||||||||||||||||
Change in fair value of plan assets: | |||||||||||||||||||||||
Fair value of plan assets at beginning of the period | |||||||||||||||||||||||
Actual return on plan assets | |||||||||||||||||||||||
Employer contributions | |||||||||||||||||||||||
Transfer to U.S. retirement savings plan | ( | ||||||||||||||||||||||
Participant contributions | |||||||||||||||||||||||
Actual expenses paid | ( | ( | |||||||||||||||||||||
Benefits paid | ( | ( | ( | ( | |||||||||||||||||||
Benefits paid related to settlement | ( | ( | |||||||||||||||||||||
Fair value of plan assets at the end of period | |||||||||||||||||||||||
Funded status (underfunded) | $ | ( | $ | ( | $ | ( | $ | ( |
Pension Benefits | Other Benefits | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Discount rate | % | % | |||||||||||||||||||||
Rate of compensation increase | N/A | N/A | N/A | N/A |
As of December 31, 2020 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Short-term investments | $ | $ | $ | $ | |||||||||||||||||||
U.S. government securities | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Total investments in the fair value hierarchy | |||||||||||||||||||||||
Investments measured at net asset value | — | — | — | ||||||||||||||||||||
Total investments at fair value | $ | $ | $ | $ | |||||||||||||||||||
As of December 31, 2019 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Short-term investments | $ | $ | $ | $ | |||||||||||||||||||
U.S. government securities | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Total investments in the fair value hierarchy | |||||||||||||||||||||||
Investments measured at net asset value | — | — | — | ||||||||||||||||||||
Total investments at fair value | $ | $ | $ | $ |
Pension Benefits | Other Benefits | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Amounts recognized in the consolidated balance sheets consist of: | |||||||||||||||||||||||
Other current liabilities | $ | $ | $ | ( | $ | ( | |||||||||||||||||
Pension Liability | ( | ( | |||||||||||||||||||||
Other noncurrent liabilities | ( | ( | |||||||||||||||||||||
Net amount recognized | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Amounts recognized in accumulated other comprehensive income (loss) before taxes: | |||||||||||||||||||||||
Net actuarial loss | $ | $ | $ | $ | |||||||||||||||||||
Prior service (credit) | ( | ( | |||||||||||||||||||||
Net amount recognized | $ | $ | $ | $ | ( |
Pension Benefits | Other Benefits | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net actuarial loss | $ | $ | $ | $ | |||||||||||||||||||
Amortization of: | |||||||||||||||||||||||
Prior service credit | |||||||||||||||||||||||
Actuarial (loss) gain | ( | ( | ( | ||||||||||||||||||||
(Loss) gain recognized related to settlement | ( | ( | |||||||||||||||||||||
Total recognized in OCI | $ | ( | $ | ( | $ | $ |
Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Expected administrative expenses | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ||||||||||||||||||||||||||||||||
Amortization of prior service credit | ( | ( | ( | ||||||||||||||||||||||||||||||||
Recognized actuarial loss (gain) | ( | ||||||||||||||||||||||||||||||||||
Settlement-related expense (1) | ( | ||||||||||||||||||||||||||||||||||
Net periodic benefit cost (income) | $ | $ | $ | $ | ( | $ | ( | $ | ( |
Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Discount rate | % | ||||||||||||||||||||||||||||||||||
Expected return on plan assets | % | % | N/A | N/A | N/A | ||||||||||||||||||||||||||||||
Rate of compensation increase | N/A | N/A | N/A | N/A | N/A | N/A |
Benefit obligation | Net periodic benefit cost | ||||||||||||||||||||||
2020 | 2027 and thereafter | 2020 | 2027 and thereafter | ||||||||||||||||||||
Healthcare | % | % | % | % | |||||||||||||||||||
Prescription drug | % | % | % | % |
Plan Assets at December 31, | |||||||||||
2020 | 2019 | ||||||||||
Asset Category: | |||||||||||
Fixed income funds | % | % | |||||||||
Return seeking (growth assets) funds | % | % | |||||||||
Total | % | % |
Pension Benefits | Other Benefits | ||||||||||
2021 | $ | $ | |||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 - 2030 |
Fair Value as of December 31, 2020 | Fair Value as of December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Description: | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
Interest rate swap | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Contingent consideration obligations (1) | $ |
Estimated Fair Value (Level 3) at measurement date (2) | Impairment recognized during the year ended (1) | |||||||||||||
December 31, 2020 | ||||||||||||||
Tradename - DatesWeiser | $ | $ | ||||||||||||
December 31, 2019 | ||||||||||||||
Tradename - Edelman Leather |
Period | Notional Amount (in millions) | |||||||
December 31, 2020 - December 30, 2021 | $ | |||||||
December 31, 2021- December 29, 2022 | $ | |||||||
December 30, 2022 - January 23, 2023 | $ |
December 31, | ||||||||||||||||||||
Derivatives designated as hedging instruments | Balance Sheet Location | 2020 | 2019 | |||||||||||||||||
Derivative liabilities: | ||||||||||||||||||||
Interest rate swap | Other current liabilities | $ | $ | |||||||||||||||||
Interest rate swap | Other noncurrent liabilities | |||||||||||||||||||
Total derivative liabilities | $ | $ |
December 31, | |||||||||||||||||
Maturities | 2020 | 2019 | |||||||||||||||
Revolving credit facility | August 2024 | $ | $ | ||||||||||||||
U.S. term loan | 2021 - 2024 | ||||||||||||||||
Multi-currency term loans | 2021 - 2024 | ||||||||||||||||
Total long-term debt | |||||||||||||||||
Less: Current maturities of long-term debt | |||||||||||||||||
Less: Unamortized debt issuance costs | |||||||||||||||||
Long-term debt, net | $ | $ |
Commitments | Outstanding Borrowings | Letter of Credit Outstanding | Borrowing Capacity (1) | |||||||||||||||||||||||
December 31, 2020 | $ | $ | $ | $ | ||||||||||||||||||||||
December 31, 2019 | $ | $ | $ | $ |
2021 | $ | |||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
Total | $ |
2020 | 2019 | 2018 | |||||||||||||||
Balance, beginning of the year | $ | $ | $ | ||||||||||||||
Provision for warranty claims | |||||||||||||||||
Warranty claims settled | ( | ( | ( | ||||||||||||||
Warranties acquired through business acquisition | |||||||||||||||||
Foreign currency translation adjustment | ( | ||||||||||||||||
Balance, end of the year | $ | $ | $ |
North America Operations Optimization | Workforce Reduction and Other Cost Initiatives | Total | |||||||||||||||
Balance as of December 31, 2019 | $ | $ | $ | ||||||||||||||
Provisions and accruals | |||||||||||||||||
Cash payments | ( | ( | ( | ||||||||||||||
Balance as of December 31, 2020 | $ | $ | $ |
Restricted Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding at December 31, 2019 | $ | ||||||||||
Granted | $ | ||||||||||
Forfeited | ( | $ | |||||||||
Vested | ( | $ | |||||||||
Outstanding at December 31, 2020 | $ |
2020 | 2019 | 2018 | |||||||||||||||
Weighted-average grant date fair value | $ | $ | $ | ||||||||||||||
Assumptions used to compute fair value : | |||||||||||||||||
Volatility | % | % | % | ||||||||||||||
Risk free interest rate | % | % | % | ||||||||||||||
Expected life | |||||||||||||||||
Expected dividend yield | % | % | % |
PBRSUs | Weighted-Average Grant Date Fair Value | MBRSUs | Weighted-Average Grant Date Fair Value | |||||||||||||||||||||||
Outstanding at December 31, 2019 | $ | $ | ||||||||||||||||||||||||
Granted | $ | $ | ||||||||||||||||||||||||
Vested | ( | $ | ( | $ | ||||||||||||||||||||||
Forfeited (1) | ( | $ | ( | $ | ||||||||||||||||||||||
Outstanding at December 31, 2020 (1) | $ | $ |
Shares under Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding at December 31, 2019 | $ | ||||||||||||||||||||||
Granted | |||||||||||||||||||||||
Outstanding at December 31, 2020 | $ | $ | |||||||||||||||||||||
Exercisable at December 31, 2020 | $ | $ |
Shares outstanding as of December 31, 2017 | |||||
Shares issued under stock incentive plans, net of forfeitures and surrenders to pay applicable taxes | |||||
Shares outstanding as of December 31, 2018 | |||||
Shares issued under stock incentive plans, net of forfeitures and surrenders to pay applicable taxes | |||||
Shares outstanding as of December 31, 2019 | |||||
Shares issued under stock incentive plans, net of forfeitures and surrenders to pay applicable taxes | |||||
Shares outstanding as of December 31, 2020 |
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, 2017 | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||
Other comprehensive loss before reclassifications | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Amounts reclassified from AOCL | |||||||||||||||||||||||||||||
Net other comprehensive income (loss) before income tax | ( | ( | ( | ( | |||||||||||||||||||||||||
Income tax benefit (expense) | ( | ( | |||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||
Adoption of ASU 2018-02 | — | — | — | ( | ( | ||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||
Amounts reclassified from AOCL | |||||||||||||||||||||||||||||
Net other comprehensive income (loss) before income tax | ( | ( | ( | ||||||||||||||||||||||||||
Income tax benefit (expense) | ( | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||
Balance as of December 31, 2019 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||||||||
Amounts reclassified from AOCL | |||||||||||||||||||||||||||||
Net other comprehensive income (loss) before income tax | ( | ( | |||||||||||||||||||||||||||
Income tax benefit | |||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||
Balance as of December 31, 2020 | $ | ( | $ | ( | $ | $ | ( | $ | ( |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Amortization of pension and other post-employment liability adjustments | |||||||||||||||||
Prior service credits (1) | $ | $ | $ | ||||||||||||||
Actuarial losses (1) | ( | ( | ( | ||||||||||||||
Pension settlement charges | ( | ( | ( | ||||||||||||||
Total before tax | ( | ( | ( | ||||||||||||||
Tax (benefit) | ( | ( | ( | ||||||||||||||
Net of tax | $ | ( | $ | ( | $ | ( |
Shares | Par | Additional Paid in Capital | Total | |||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | |||||||||||||||||||||||
Preferred stock issued | ||||||||||||||||||||||||||
Dividends declared and paid in kind | ||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ |
Years ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Numerator: | |||||||||||||||||
Net earnings | $ | $ | $ | ||||||||||||||
Less: Preferred stock dividends | $ | ( | $ | $ | |||||||||||||
Net earnings available to common stockholders (Basic and Diluted) | $ | $ | $ | ||||||||||||||
Denominator: (shares in thousands) | |||||||||||||||||
Denominator for basic EPS - weighted-average shares | |||||||||||||||||
Potentially dilutive shares issuable under stock compensation plans (1) | |||||||||||||||||
Denominator for diluted EPS - weighted-average shares | |||||||||||||||||
Net earnings per share: | |||||||||||||||||
Basic | $ | $ | $ | ||||||||||||||
Diluted | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
U.S. operations | $ | ( | $ | $ | |||||||||||||
Foreign operations | |||||||||||||||||
Total | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Current: | |||||||||||||||||
Federal | $ | ( | $ | $ | |||||||||||||
State | ( | ||||||||||||||||
Foreign | |||||||||||||||||
Total current | $ | ( | $ | $ | |||||||||||||
Deferred: | |||||||||||||||||
Federal | ( | ||||||||||||||||
State | ( | ( | |||||||||||||||
Foreign | ( | ( | |||||||||||||||
Total deferred | ( | ||||||||||||||||
Income tax expense (benefit) | $ | ( | $ | $ |
2020 | 2019 | 2018 | |||||||||||||||
Federal statutory tax rate | % | % | % | ||||||||||||||
Increase (decrease) in the tax rate resulting from: | |||||||||||||||||
State taxes, net of federal effect | ( | % | % | % | |||||||||||||
Foreign operations, net (1) | % | % | % | ||||||||||||||
Research and development tax credits | ( | % | ( | % | ( | % | |||||||||||
Nondeductible interest | % | % | % | ||||||||||||||
Nondeductible officers' compensation | % | % | % | ||||||||||||||
Impact of the Tax Cuts and Jobs Act of 2017 (2) | % | % | ( | % | |||||||||||||
Impact of the CARES Act (3) | ( | % | % | % | |||||||||||||
Return to provision adjustments | % | ( | % | % | |||||||||||||
Change in valuation allowance against deferred tax assets | ( | % | ( | % | % | ||||||||||||
Other (4) | ( | % | % | % | |||||||||||||
Effective tax (benefit) rate | ( | % | % | % |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Deferred tax assets | |||||||||||
Accounts receivable, principally due to allowance for doubtful accounts | $ | $ | |||||||||
Inventories | |||||||||||
NOL carryforwards | |||||||||||
Operating lease liabilities | |||||||||||
Accrued pension | |||||||||||
Stock-based compensation | |||||||||||
Compensation-related accruals | |||||||||||
Warranty | |||||||||||
OPEB obligation | |||||||||||
Accrued liabilities and other items | |||||||||||
Gross deferred tax assets | $ | $ | |||||||||
Valuation allowance | ( | ( | |||||||||
Net deferred tax assets | |||||||||||
Deferred tax liabilities: | |||||||||||
ROU assets | ( | ( | |||||||||
Intangibles | ( | ( | |||||||||
Plant and equipment | ( | ( | |||||||||
Gross deferred tax liabilities | ( | ( | |||||||||
Net deferred tax liabilities | $ | ( | $ | ( |
Balance at Beginning of Year | Releases (tax benefit recognized) (1) | Other(2) | Balance at End of Year | |||||||||||||||||||||||
Year ended December 31, 2018 | $ | $ | $ | $ | ||||||||||||||||||||||
Year ended December 31, 2019 | ( | ( | ||||||||||||||||||||||||
Year ended December 31, 2020 | ( |
2020 | 2019 | 2018 | |||||||||||||||
Balance, beginning of the year | $ | $ | $ | ||||||||||||||
Additions for tax position related to the current year | |||||||||||||||||
Lapse of statute of limitations | ( | ( | ( | ||||||||||||||
Balance, end of the year | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Foreign exchange losses (gains) | $ | $ | $ | ( | |||||||||||||
Net periodic pension and OPEB benefit credit | ( | ( | ( | ||||||||||||||
Other, net | ( | ||||||||||||||||
Other income, net | $ | ( | $ | ( | $ | ( |
2020 | 2019 | 2018 | |||||||||||||||
SALES | |||||||||||||||||
Workplace | $ | $ | $ | ||||||||||||||
Lifestyle | |||||||||||||||||
Corporate | |||||||||||||||||
Knoll, Inc. | $ | $ | $ | ||||||||||||||
INTERSEGMENT SALES (1) | |||||||||||||||||
Workplace | $ | $ | $ | ||||||||||||||
Lifestyle | |||||||||||||||||
Corporate | |||||||||||||||||
Knoll, Inc. | $ | $ | $ | ||||||||||||||
DEPRECIATION AND AMORTIZATION | |||||||||||||||||
Workplace | $ | $ | $ | ||||||||||||||
Lifestyle | |||||||||||||||||
Corporate | |||||||||||||||||
Knoll, Inc. | $ | $ | $ | ||||||||||||||
OPERATING PROFIT | |||||||||||||||||
Workplace (2) | $ | $ | $ | ||||||||||||||
Lifestyle (3) | |||||||||||||||||
Corporate (3) | ( | ( | ( | ||||||||||||||
Knoll, Inc.(4) | $ | $ | $ | ||||||||||||||
CAPITAL EXPENDITURES (5) | |||||||||||||||||
Workplace | $ | $ | $ | ||||||||||||||
Lifestyle | |||||||||||||||||
Corporate | |||||||||||||||||
Knoll, Inc. | $ | $ | $ |
United States | Canada | Europe | Other | Consolidated | |||||||||||||||||||||||||
2020 | |||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Property, plant, and equipment, net | |||||||||||||||||||||||||||||
2019 | |||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Property, plant, and equipment, net | |||||||||||||||||||||||||||||
2018 | |||||||||||||||||||||||||||||
Sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Property, plant, and equipment, net |
Cover |
May 12, 2021 |
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Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | May 12, 2021 |
Entity Registrant Name | Knoll, Inc. |
Entity File Number | 001-12907 |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 13-3873847 |
Entity Address, Address Line One | 1235 Water Street |
Entity Address, City or Town | East Greenville |
Entity Address, State or Province | PA |
Entity Address, Postal Zip Code | 18041 |
City Area Code | 215 |
Local Phone Number | 679-7991 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | KNL |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001011570 |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Convertible preferred stock par value (in dollars per share) | $ 1.00 | |
Convertible preferred stock shares authorized (in shares) | 10,000,000 | |
Convertible preferred stock, shares issued (in shares) | 167,284 | |
Convertible preferred stock, outstanding (in shares) | 167,284 | |
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) | 67,458,000 | 66,296,000 |
Common stock, shares outstanding (in shares) | 50,645,000 | 49,775,000 |
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions |
Total |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total Knoll, Inc. Stockholders' Equity |
Noncontrolling Interests |
||||
---|---|---|---|---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2017 | $ 358.7 | $ 0.5 | $ 54.5 | $ 347.3 | $ (43.8) | $ 358.5 | $ 0.2 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net earnings | 73.3 | 73.3 | 73.3 | ||||||||
Adoption of ASU 2018-02 | [1] | 4.7 | (4.7) | ||||||||
Other comprehensive loss | (19.9) | (19.9) | (19.9) | ||||||||
Stock-based compensation | 8.7 | 8.7 | 8.7 | ||||||||
Dividends declared on common stock | (29.9) | (29.9) | (29.9) | ||||||||
Purchase of common stock | (4.4) | (4.4) | (4.4) | ||||||||
Ending Balance at Dec. 31, 2018 | 386.5 | 0.5 | 58.8 | 395.4 | (68.4) | 386.3 | 0.2 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net earnings | 67.5 | 67.5 | 67.5 | ||||||||
Other comprehensive loss | (1.0) | (1.0) | (1.0) | ||||||||
Stock-based compensation | 10.8 | 10.8 | 10.8 | ||||||||
Dividends declared on common stock | (33.2) | (33.2) | (33.2) | ||||||||
Purchase of common stock | (3.3) | (3.3) | (3.3) | ||||||||
Other | 0.3 | 0.5 | 0.5 | (0.2) | |||||||
Ending Balance at Dec. 31, 2019 | 427.6 | 0.5 | 66.8 | 429.7 | (69.4) | 427.6 | 0.0 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net earnings | 7.7 | 7.7 | 7.7 | ||||||||
Other comprehensive loss | 23.6 | 23.6 | 23.6 | ||||||||
Stock-based compensation | 12.9 | 12.9 | 12.9 | ||||||||
Dividends declared on common stock | (16.4) | (16.4) | (16.4) | ||||||||
Dividends declared on preferred stock | [2] | (3.3) | (3.3) | (3.3) | |||||||
Purchase of common stock | (4.3) | (4.3) | (4.3) | ||||||||
Ending Balance at Dec. 31, 2020 | $ 447.8 | $ 0.5 | $ 75.4 | $ 417.7 | $ (45.8) | $ 447.8 | $ 0.0 | ||||
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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Statement of Stockholders' Equity [Abstract] | |||
Cash dividend (in dollars per share) | $ 0.33 | $ 0.66 | $ 0.60 |
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION Description of the Business Knoll, Inc. and its subsidiaries (the “Company” or “Knoll”) are engaged in the design, manufacture, marketing and sale of high-end furniture products and accessories for workplace and residential markets. The Company is also engaged in the sale of fine leather, textiles, and felt, focusing on the middle to high-end segments of the market. The Company primarily operates in the United States (“U.S.”), Canada and Europe, and sells its products through a broad network of independent dealers and distribution partners, a direct sales force, its showrooms, and its e-commerce platforms. Basis of Presentation The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB establishes accounting principles generally accepted in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants, which the Company is required to follow. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification (“ASC”), which serves as a single source of authoritative non-SEC accounting and reporting standards to be applied by non-governmental entities. Certain prior period amounts in the Consolidated Statements of Cash Flows, as well as in the notes, have been reclassified to conform to the current year presentation. During the fourth quarter of 2019, the Company aligned the consolidation of certain of its foreign subsidiaries in the consolidated financial statements, which previously included results on a -month reporting lag. The Company believes that this change in accounting principle was preferable, as all of the its subsidiaries are now reported based on the same period-end, which improves overall financial reporting to investors by providing the most current information available. In accordance with applicable accounting literature, the elimination of a one-month reporting lag of a subsidiary is treated as a change in accounting principle and requires retrospective application. The Company has determined that the effect of this change is not material to the financial statements for all periods presented and therefore, the Company has not presented retrospective application of this change. The net impact of the elimination of the reporting lag of $0.6 million of loss for the month of December 2019 has been included within "Other income, net" on the Consolidated Statements of Operations and Comprehensive Income in the fourth quarter of 2019.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. Significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates and assumptions take into account historical and forward looking factors that the Company believes are reasonable, including, but not limited to, the potential impacts arising from the coronavirus pandemic of 2019 (“COVID-19”) and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts of COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Actual results may differ from such estimates. Examples of significant estimates include the allowance for credit losses, the recoverability of property, plant and equipment, the incremental borrowing rate for lease liabilities, the recoverability of intangible assets and other long-lived assets, fair value measurements, including those related to financial instruments, goodwill and intangible assets, valuation allowances on tax assets, pension and postretirement benefit obligations, contingencies and the identification and valuation of assets acquired and liabilities assumed in connection with business combinations. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly-liquid investments with maturities of three months or less at the date of purchase. Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, the Company determines revenue recognition by applying the following steps: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue as the performance obligations are satisfied. The Company recognizes revenue when performance obligations under the terms of a contract with a customer are satisfied. The Company's primary performance obligation to its customers is the delivery of products. Control of the products sold typically transfers to the customer upon shipment or delivery, depending on the shipping terms of the underlying contract. Each customer contract sets forth the transaction price for the products and services purchased under that arrangement. Some customer arrangements include variable consideration, such as volume rebates, some of which depend upon the customers meeting specified performance criteria, such as a purchasing level over a period of time. The Company uses judgment to estimate the most likely amount of variable consideration at each reporting date. When estimating variable consideration, the Company applies judgment when considering the probability of whether a reversal of revenue could occur and only recognize revenue subject to this constraint. The Company uses historical customer return data as a basis of estimation for customer returns and records the reduction of sales at the time revenue is recognized. Customer returns have historically not been significant. The Company may receive deposits from customers before revenue is recognized, thus resulting in the recognition of a contract liability (customer deposits). Amounts billed to customers for shipping and handling of products are included in sales and the related costs incurred by the Company for shipping and handling are included in cost of sales. The Company applies a policy election to account for shipping and handling as an activity to fulfill the promise to transfer the product to the customer. The Company applies an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer. The Company has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. The Company has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Company’s contracts are typically less than one year in length, consideration will not be adjusted. The Company’s contracts generally include a standard payment term of 30 days, consequently there is no significant financing component within its contracts. Allowance for Doubtful Accounts Accounts receivable are recorded net of an allowance for expected credit losses. The Company maintains an allowance for credit losses for the expected failure or inability of its customers to make required payments. The Company recognizes the allowance for expected credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, as well as management’s expectations of conditions in the future. The Company’s allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. Management analyzes receivables based on the credit quality indicators and shared risk characteristics of dealers and other customers. Management stratifies the dealer population generally by the level of their purchase activity, mainly recurring purchasers compared to non-recurring purchasers, as well as the financial strength of the dealer. Management also stratifies receivables based on government and corporate purchasers with common risk characteristics. Management considers multiple factors, including payment history, frequency of purchases and financial strength of the purchaser to determine the reserve needed. Inventories Inventories are stated at the lower of cost or net realizable value and include material, labor and overhead. Cost is determined using the first-in, first-out method. The Company adjusts for inventory that it believes is impaired or obsolete. Obsolescence occurs as the result of several factors, including the discontinuance of a product line, changes in product material specifications, replacement products in the marketplace and other competitive influences. Property, Plant, and Equipment Property, plant, and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:
(1)Leasehold improvements are amortized over the shorter of the economic life of the asset or the remaining lease term. Maintenance and repairs are expensed as incurred. Interest on significant capital projects is capitalized during the construction period. The Company reviews the carrying values of its property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on undiscounted estimated cash flows expected to result from its use and eventual disposition. The factors considered by the Company in performing this assessment include current operating results, business trends affecting the use of certain assets and other economic factors. In assessing the recoverability of the carrying value of property and equipment, the Company must make assumptions regarding future cash flows and other factors. If these estimates or the related assumptions change in the future, the Company may be required to record an impairment loss for these assets. Goodwill and Intangible Assets Goodwill and intangible assets with indefinite lives are tested for impairment at least annually, as of October 1, and more frequently whenever events or circumstances occur indicating that a possible impairment may have been incurred. Intangible assets with finite lives are amortized over their estimated useful lives. Goodwill The Company evaluates goodwill for impairment by way of qualitative and quantitative assessments. A qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, based on this qualitative assessment, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed by determining the fair value of the Company's reporting units. The Company estimates the fair value of its reporting units using a combination of the fair values derived from both the income approach and the market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the businesses ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. When performing a qualitative assessment, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of the reporting units are less than their respective carrying values. The Company considers factors that would impact the reporting unit fair values as estimated by the market and income approaches compared to the last quantitative assessment. The Company reviews current projections of cash flows and compares the current projections to the projections included in the most recent quantitative assessment and considers whether any new significant competitors have entered the marketplace in the industry and if consumer demand for the industry’s products remains relatively constant, is growing or declining. Also, the Company considers if economic factors during the year significantly affected the discount rates that should be used for the valuation of the reporting units. The Company would conclude if events occurring since the last quantitative assessment have a significant impact on the fair value of each of the reporting units. Intangible Assets Other than Goodwill The Company assesses whether impairment of its indefinite-lived intangible assets, comprised of tradenames, exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If based on this qualitative assessment, the Company determines it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed to determine whether an indefinite-lived intangible asset impairment exists. The Company tests its indefinite-lived intangible assets for impairment by comparing the carrying values of the applicable tradenames to their estimated fair values. The estimated fair values are based on an income approach using the so-called "relief from royalty method", which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the benefits of the tradename asset. The cash flow projections used in this process involve several significant assumptions, including (i) current revenue projections of the related business operations, (ii) estimated royalty rates, (iii) after-tax benefit expected from ownership of the tradenames, and (iv) discount rates used to derive the estimated fair values. Any excess of carrying value over the respective estimated fair value is recognized as an impairment in the reporting period in which it's been identified. Finite-lived intangible assets such as customer relationships, non-compete agreements, and licenses are amortized over their estimated useful lives. The Company reviews the carrying values of these assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on estimated undiscounted cash flows expected to result from its use and eventual disposition. The Company regularly evaluates the reasonableness of the useful lives of these assets. 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 an operating or finance lease. 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 Consolidated Balance Sheets when the lease term exceeds one year. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments. (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. 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 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. 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. On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within Accounting Standards Update ("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. 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. Business Combinations The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company's operating results from the date of acquisition. Deferred Financing Fees Financing fees that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense over the life of the underlying indebtedness. Deferred financing fees are presented in the Company's consolidated balance sheets as a direct reduction from long-term debt. Research and Development Costs Research and development costs are expensed as incurred, and are included as a component of selling, general, and administrative expenses. Research and development expenses were $14.2 million for 2020, $16.4 million for 2019, and $20.1 million for 2018. Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined and recognized based on the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases using the tax rates expected to be in effect when the temporary differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not some portion or all of the related tax benefit will not be realized. The need to establish valuation allowances against deferred tax assets is assessed quarterly. The Company's valuation allowances are primarily attributable to net operating loss ("NOL") carryforwards in certain foreign tax jurisdictions where the Company has incurred historical tax losses from operations and has determined that it is more likely than not these deferred tax assets will not be realized. The primary factors used to assess the likelihood of realization are reversals of taxable temporary timing differences, forecasts of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. The Company evaluates tax positions to determine whether the benefits of tax positions are more likely than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not to be sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement. For tax positions that are not more likely than not to be sustained upon audit, the Company does not recognize any portion of the benefit. If the more likely than not threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period. The Company recognizes income tax-related interest and penalties in income tax expense and accrues for interest and penalties in other noncurrent liabilities. Fair Value of Financial Instruments GAAP establishes a three-level hierarchy that ranks the quality and reliability of information used in developing fair value estimates. The three levels of the fair value hierarchy, with Level 1 having the highest priority and Level 3 having the lowest, are summarized as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. Derivative Instrument The Company utilizes a derivative instrument to mitigate its exposure to interest rate volatility. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company recognizes its derivative instrument as either an asset or liability on the Consolidated Balance Sheets and measures it at estimated fair value. Changes in the fair value of that instrument are deferred in shareholders' equity as a component of Accumulated Other Comprehensive Loss ("AOCL"), as the derivative instrument, which is a cash flow hedge, qualifies for hedge accounting. Derivatives qualify for hedge accounting if they are designated as hedge instruments and if the hedge is highly effective in achieving offsetting changes in the cash flows of the asset or liability hedged. Hedge effectiveness is assessed on a regular basis. For all periods presented herein, gains or losses deferred in AOCL are recognized in the results of operations in the same period in which the hedged items are recognized and on the same financial statement line item as the hedged items. Commitments and Contingencies The Company establishes reserves for the estimated cost of environmental, legal and other contingencies when such expenditures are probable and reasonably estimable. A significant amount of judgment is required to estimate and quantify the ultimate exposure in these matters. The Company engages outside experts as deemed necessary or appropriate to assist in the evaluation of exposure. From time to time, as information becomes available regarding changes in circumstances for ongoing issues as well as information regarding emerging issues, the potential liability is reassessed and reserve balances are adjusted as necessary. Revisions to the estimates of potential liability, and actual expenditures related to commitments and contingencies, could have a material impact on the results of operations or financial position. Warranty The Company generally offers an assurance-type warranty for its products. The specific terms and conditions of those warranties vary depending upon the product sold. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include historical product-failure experience and estimated repair costs for identified matters. The Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Concentration of Credit Risk The Company's customer receivables are comprised primarily of amounts due from independent dealers and direct customers. The Company monitors and manages the credit risk associated with the individual dealers and direct customers. The independent dealers are responsible for assessing and assuming the credit risk of their customers and may require their customers to provide deposits or other credit enhancement measures. Historically, the Company has had a concentration of federal and local government receivables; however, they carry minimal credit risk. Foreign Currency Translation Results of foreign operations are translated into U.S. dollars using average exchange rates during the year, while assets and liabilities are translated into U.S. dollars using the exchange rates as of the balance sheet dates. The resulting translation adjustments are recorded in AOCL. Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency of the applicable subsidiary are included in the consolidated statements of operations, within other income, net, in the year in which the gain or loss occurs. Stock-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The Company recognizes compensation expense using the straight-line method over the vesting period. Compensation expense relating to restricted stock units subject to performance conditions is recognized if it is probable that the performance condition will be achieved. Forfeitures are recognized when they occur. Stock-based compensation for all types of awards is included in selling, general and administrative expenses in the Consolidated Statements of Operations. The fair value of restricted stock and restricted stock units, excluding market-based restricted stock units, is based upon the closing market price of the Company's common stock on the date of grant. The fair value of market-based restricted stock units is estimated at the date of grant using a Monte Carlo simulation model, which requires management to make certain assumptions based on both historical and current data. These awards vest based upon the performance of the Company's stock price relative to a peer group. The assumptions included in the model include, but are not limited to, risk-free interest rate, expected volatility of the Company's and the peer group's stock prices, and dividend yield. The risk-free rate is based upon the applicable U.S. Treasury Note rate. Expected volatility is estimated based on the historical volatility of the Company's and peer group's stock prices. The dividend yield is based on the Company's historical data. Pension and Other Post-Employment Benefits The Company had sponsored two defined benefit pension plans, one of which was terminated during 2019, and four other post-employment benefit plans ("OPEB"), one of which was terminated during 2019. Several statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liability related to the plans. Key factors include assumptions about the expected rates of return on plan assets, discount rates, mortality rates and health care cost trend rates. The Company considers market and regulatory conditions, including changes in investment returns and interest rates, in making these assumptions. The Company determines the expected long-term rate of return on plan assets based on aggregating the expected rates of return for each component of the plan's asset mix. The Company uses historic plan asset returns combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption. The discount rate reflects the market rate for high-quality fixed income debt instruments as of the Company's annual measurement date and is subject to change each year. Unrecognized actuarial gains and losses are recognized over the expected remaining lifetime of the plan participants. Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to the obligations of the pension and OPEB plans, and from the difference between expected returns and actual returns on plan assets. These unrecognized gains and losses are systematically recognized as a change in future net periodic pension expense in accordance with the appropriate accounting guidance relating to defined benefit pension and OPEB plans. Key assumptions used in determining the amount of the obligation and expense recorded for the OPEB plans include the assumed discount rate and the assumed rate of increases in future health care costs. In estimating the health care cost trend rate, the Company considers actual health care cost experience, future benefit structures, industry trends and advice from its actuaries. The Company assumes that the relative increase in health care costs will generally trend downward over the next several years, reflecting assumed increases in efficiency and cost-containment initiatives in the health care system. In accordance with the appropriate accounting guidance, the Company has recognized the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligation) of the defined benefit pension and OPEB plans in the consolidated balance sheets. To record the unfunded status of the plans, the Company recorded an additional liability and an adjustment to accumulated other comprehensive loss, net of tax. Other changes in the benefit obligation including net actuarial loss (gain) and prior service cost (credit) are recognized in other comprehensive income. The actuarial assumptions the Company used in determining the pension and OPEB retirement benefits may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. While the Company believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions could materially affect the financial position or results of operations. Segment Information Effective as of the beginning of the first quarter of 2021, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As such, the Company implemented a segment reorganization in order to more closely align its segment reporting with its current operating structure (the "Segment Reorganization"). The Company's new reportable segments are: Workplace and Lifestyle. The Workplace reportable segment is comprised of the operations of the Workplace operating segment, which, following the Segment Reorganization, reflects the reassignment of the Spinneybeck and KnollTextiles businesses from the Lifestyle segment, as well as the reassignment of the Europe Office business from the historical Office segment to the Lifestyle segment. The Lifestyle reportable segment is an aggregation of the Holly Hunt (which includes Edelman), Muuto, KnollStudio North America and Europe operating segments. In conjunction with the new reporting structure, the Company recast the segment disclosures for all periods presented. The Workplace segment includes a complete range of products that address diverse workplace planning paradigms in North America. These products include: office systems furniture, seating, storage, tables (conference, training), desks (fixed and height-adjustable), textiles, high-quality fabrics, felt, leather, architectural products, and KnollExtra® accessories. The businesses comprising the Workplace segment serve a broad range of customers, from geographically diverse global accounts to consumers and small businesses, and do so through various physical and digital interfaces, including a direct sales force, Company and dealer showrooms, and multiple e-commerce platforms The Lifestyle segment product offerings, which are distributed globally, include iconic seating, lounge furniture, side, café and dining chairs, dining and occasional tables, lighting, rugs, and leather. The businesses comprising the Lifestyle segment serve affordable luxury and high-end luxury markets that often blur the distinction between commercial and residential spaces, but understand and appreciate the impact that furnishings borne out of exceptional design and made with high-quality, innovative materials can have on their respective environments. Lifestyle products are sold through a global network of showrooms, e-commerce websites, retail stores and independent dealers. 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. Accounting Standards Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or other reference rate expected to be discontinued due to reference rate reform. The amendments in this ASU are effective immediately and may be applied to impacted contracts and hedges prospectively through December 31, 2022. The adoption of the ASU had no impact on the Company’s consolidated financial statements for the period ended December 31, 2020. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The Company adopted ASU 2018-13 as of January 1, 2020. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements or disclosures. 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, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted ASU 2016-13 as of January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
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REVENUE |
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REVENUE | 3. REVENUE Disaggregation of Revenue The Company’s revenue presented as “Sales” in the Consolidated Statements of Operations and Comprehensive Income is derived from contracts with customers for the sale of the Company’s products. The Company’s sales by product category for its historical segments were as follows (in millions):
Contract Balances The Company’s contract assets consist of customer receivables which are included on the Consolidated Balance Sheets. These amounts represent the amount of consideration the Company expects to be entitled to in exchange for the goods delivered to its customers. When the Company receives deposits, the recognition of revenue is deferred and results in the recognition of a contract liability (Customer deposits) which is included in Other current liabilities on the Consolidated Balance Sheets. Subsequent recognition of revenue and discharge of the contract liability typically occurs within a year of a deposit receipt, as the Company’s standard contract is less than one year. As of December 31, 2020 and 2019, the contract liability related to customer deposits was $33.8 million and $32.5 million, respectively. The Company recognized revenues that were included in the contract liability at the beginning of 2020 and 2019 of $31.9 million and $31.1 million, respectively.
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ACQUISITIONS |
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ACQUISITIONS | 4. ACQUISITIONS Fully On August 20, 2019, the Company acquired FHI LLC (“Fully”), a Portland, Oregon-based e-commerce furniture brand with products targeting the home office and small business markets. The acquisition provides the Company access to new markets for current products, while simultaneously allowing it to leverage its existing distribution channels to expand its product offerings to include Fully’s portfolio of high-performance adjustable height desks, ergonomic chairs and accessories. The aggregate purchase price consisted of cash paid at closing of $30.9 million, net of cash acquired of $4.1 million, plus additional earn-out consideration should Fully achieve certain revenue and earnings targets associated with separate short-term and long-term earn-out periods of and four years, respectively (together, the “Earn-Out Consideration”). The estimated fair value of the Earn-Out Consideration was $2.0 million as of the acquisition date (see Note 11 for further discussion). The acquisition was funded from cash on hand and borrowings under the Company’s Revolver. The Company recognized the assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded to goodwill. Fully's operating results are reported in the historical Office segment and have been included in the consolidated results of operations from the acquisition date. Pro forma financial information has not been presented for the Fully acquisition as the impact to the Company's Consolidated Financial Statements was not material. The following table summarizes the final estimates of the fair value and useful lives of the intangible assets acquired as of the August 20, 2019 Fully acquisition date (dollars in millions):
Muuto 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 held 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 $307.7 million, net of $7.6 million of cash acquired. The Company recognized the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition. The results of operations of Muuto have been included in the Company’s Lifestyle segment beginning January 25, 2018. The Company funded the acquisition with proceeds from debt issued under the Third Amended and Restated Credit Agreement, as well as cash on hand (see Note 13). The Company recorded acquisition and certain other costs incurred in connection with the acquisition totaling $5.1 million within selling, general, and administrative expenses in its Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2018. The following table summarizes the fair values assigned to the assets acquired and liabilities assumed of Muuto and the resulting goodwill as of the January 25, 2018 acquisition date (in millions):
The excess of the purchase price over the net tangible and intangible assets is recorded to goodwill and primarily reflects the assembled workforce and expected synergies. Goodwill is not deductible for tax purposes. The following table summarizes the final estimates of the fair value and useful lives of the intangible assets acquired as of the January 25, 2018 Muuto acquisition date (dollars in millions):
The following table presents unaudited pro forma information for the period presented as if the acquisition of Muuto had occurred as of January 1, 2017 (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 of results that may occur in the future. The pro forma financial information presented above has been derived from the historical consolidated financial statements of the Company and from the historical consolidated financial statements of Muuto. The pro forma financial information presented above include adjustments 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, (4) the tax effect of the above adjustments. The pro forma information presented for the year ended December 31, 2018 excludes expenses for future payments that are considered compensation for post combination service of $3.2 million, loss on debt extinguishment of $1.4 million, acquisition costs of $1.9 million, and acquisition-related inventory step-up valuation adjustment of $0.9 million, and includes incremental interest expense of $0.1 million and incremental amortization of intangibles of $0.8 million. The income tax impact of these adjustments for the year ended December 31, 2018 was $1.3 million.
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INVENTORIES |
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INVENTORIES | 5. INVENTORIES Inventories consisted of the following as of the dates presented (in millions):
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PROPERTY, PLANT, AND EQUIPMENT, NET | 6. PROPERTY, PLANT, AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following as of the dates presented (in millions):
Depreciation expense on property, plant and equipment was $32.2 million, $29.6 million and $25.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. During 2020, 2019 and 2018, the Company capitalized interest of approximately $0.5 million, $0.5 million and $0.8 million, respectively.
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 7. GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill In connection with the Segment Reorganization, certain of the Company's reporting units have changed in composition, and goodwill was reallocated between such reporting units using a relative fair value approach. During the fourth quarter of 2020, the Company performed its annual assessment of impairment to goodwill allocated to the reporting units in effect at the time. The Company had four reporting units: Office, Lifestyle, Europe Studio, and Muuto. No goodwill was allocated to Europe Studio. Given the significant impact the COVID-19 pandemic had on the Company's market capitalization, profitability and demand for certain components of its product portfolio, the Company elected to perform quantitative impairment tests of goodwill on all three of the reporting units to which goodwill was allocated. A considerable amount of management judgement and assumptions are required in performing these impairments tests, particularly as it relates to future cash flow streams derived from revenue and after-tax operating income projections through the terminal year, as well as the discount and long-term growth rates used to value those cash flow streams and develop the terminal values. While the Company believes the judgements and assumptions to be reasonable, different assumptions could change the estimated fair values per reporting unit, resulting in different outcomes from those reached in connection with the impairment tests noted above. Based on the results of the tests performed, there was no indication of impairment to the goodwill allocated to any of the reporting units in effect at the time, as the estimated fair value exceeded the respective carrying amount in each case, as summarized in the table below:
The Company is unable to predict future impacts of the COVID-19 pandemic, how long conditions related to the pandemic will persist, what additional restrictions might be placed on the private sector by federal, state and local governments in the U.S. and abroad, when herd immunity will be reached in the applicable geographies in which the Company operates or sells its products or what the future of the workplace will really look like over the relevant timeframe. Any action on the part of government (at all levels, in all geographies) that requires or encourages people to stay home, continue the practice of social distancing or avoid large indoor gatherings is likely to have some negative impact on demand for certain components of the Company's product portfolio. The Company will continue to monitor changes in the macro environment and test more frequently if those changes indicate that goodwill might be impaired. The following table summarizes the changes in the carrying amount of goodwill by historical reportable segment for the years ended December 31, 2020 and 2019 (in millions):
(1)Historical segment presentation The Company did not record any goodwill impairment charges during 2020, 2019 or 2018. Intangible Assets The components of intangible assets, net are as follows (in millions):
During the fourth quarter of 2020, the Company performed its annual assessment of impairment to its tradename intangible assets with indefinite lives. In connection therewith, the Company elected to perform quantitative valuations of its principal indefinite-lived tradenames, including Knoll, Holly Hunt and Muuto. Based on the results of the tests performed, there was no indication of impairment to any of the tradenames noted above, as the estimated fair value exceeded the respective carrying amount in each case, as summarized in the table below:
Pursuant to additional quantitative tests performed on the balance of the indefinite-lived intangibles, the Company determined that the DatesWeiser tradename was impaired, as its estimated fair value was less than its carrying amount of $2.3 million. Using the relief-from-royalty method, under which assumed royalty and discount rates of 1.5% and 13.0%, respectively, were employed, the Company concluded that the DatesWeiser tradename had an estimated fair value of $0.9 million, to which it was written down. The resultant non-cash impairment charge of $1.4 million, included in Loss on fair value measurements on the Consolidated Statements of Operations and Comprehensive Income, is reflected in the historical Office Segment operating results for 2020 (see Note 22). The decline in the fair value of the DatesWeiser tradename was primarily attributable to certain negative trends within the historical Office Segment's traditional markets brought about by the COVID-19 pandemic. DatesWeiser's product portfolio, comprised of high-end conference furniture deployed on-premise, experienced significant order and revenue declines during the second half of 2020. The negative trends noted above, which remain largely in place as of the end of 2020, also prompted the Company to reclassify the DatesWeiser tradename to finite-lived, which will be amortized over its newly estimated useful life of seven years. During the fourth quarter of 2019, the Company performed its annual assessment of impairment to its tradename intangible assets with indefinite lives. The Company determined that the Edelman Leather tradename was fully impaired. Accordingly, the Edelman tradename was written-off completely, resulting in a non-cash impairment charge of $6.5 million, included in Loss on fair value measurements on the Consolidated Statements of Operations and Comprehensive Income. Edelman is reflected in the Lifestyle Segment operating results for 2019 (see Note 22). The decline in the fair value of the Edelman tradename was primarily attributable to weaker than expected revenue during the latter part of 2019, a corresponding reduction in future revenue expectations and a reduction in the royalty rate used for valuation purposes. The revenue reductions were primarily a result of lower sales of luxury products, an aging of Edelman showrooms, and the inability to replace private aviation customers with a comparable revenue stream. There were no impairments of indefinite-lived intangible assets during 2018. Amortization expense related to finite-lived intangible assets was $11.1 million, $8.9 million, and $8.9 million for the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, the estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows (in millions):
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OTHER CURRENT LIABILITIES |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CURRENT LIABILITIES | 8. OTHER CURRENT LIABILITIES Other current liabilities are comprised of the following (in millions):
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LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | 9. 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 has no finance 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 exercise to extend or renew the lease for 1 to 6 years, and some of which include options to terminate the leases with notification periods of up to 1 year. Certain lease agreements contain provisions for future rent increases. Payments due under lease contracts are fixed. Lease cost recognized in the consolidated statements of operations for 2020 and 2019 is summarized as follows (in millions):
The Company recognized rent expense of $32.1 million for the year ended December 31, 2018. Other lease information as of and for the years ended December 31, includes (dollars in millions):
As of December 31, 2020, maturities of the Company's operating lease liabilities are as follows (in millions):
As of December 31, 2020, the Company has entered into operating leases that have not yet commenced, for which it will recognize ROU assets and lease liabilities of approximately $37.9 million. These leases will commence in 2021 with lease terms of 3 years to 11 years.
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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 | 10. PENSION AND OTHER POST-EMPLOYMENT BENEFITS The Company had two domestic defined benefit pension plans and four plans providing for other post-employment benefits, including two medical and two life insurance coverage plans. One of the pension plans and one each of the medical and life insurance coverage plans covered eligible U.S. nonunion employees while the other pension plan and one each of the medical and life insurance coverage plans covered eligible U.S. union employees. The Company uses a December 31 measurement date for all of these plans. Prior to 2017, the Company froze all of the defined benefit plans thereby eliminating the accrual of future benefits and closed entry to new participants. During 2019, the union pension plan paid lump sum distributions to certain participants and purchased annuities from an insurance company to cover the benefits available to employees who did not elect a lump sum payment, and the Company terminated the plan. The remaining balance of union pension plan assets of $2.0 million was transferred to the Company's U.S. retirement savings plan. There were no assets or liabilities of the union pension plan remaining at December 31, 2019. Also during 2019, the Company terminated the medical OPEB plan for nonunion employees. The following table sets forth a reconciliation of the related benefit obligation and plan assets related to the benefits provided by the Company (in millions):
Significant changes in the pension projected benefit obligation for the year ended 2020 include a $17.2 million actuarial loss attributable to the change in discount rate from 3.34% to 2.68%, a $4.4 million actuarial loss attributable to lump sum conversion assumption changes, and a $1.7 million actuarial gain due to the update to the generational mortality projection scale to reflect the most recently published scale adjusted for a ‘Slow Recovery’ improvement scale due to COVID-19. Similarly, significant changes in the pension projected benefit obligation for the year ended 2019 include a $32.0 million actuarial loss attributable to the decrease in discount rate, an $8.2 million actuarial loss attributable to lump sum conversion assumption changes, and a $0.6 million actuarial gain due to the update to the generational mortality projection scale to reflect the most recently published. Assumptions used in computing the benefit obligation as of December 31, 2020 and 2019 were as follows:
The following table presents the fair value of the Company's pension plan investments as of December 31, 2020 and 2019 (in millions):
Short-term investments are primarily held in registered short-term investment vehicles which are valued using a market approach based on quoted market prices of similar instruments. U.S. government securities and corporate bonds are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported observable trades for identical or comparable instruments. Investments in comingled, common investment trust funds are carried at net asset value ("NAV") as a practical expedient to estimate fair value. The NAV is the total value of the fund divided by the number of shares outstanding. Adjustments to NAV, if any, are determined based on evaluation of data provided by fund managers, including valuation of the underlying investments derived using inputs such as cost, operating results, discounted future cash flows and market-based comparable data. In accordance with ASC 820-10, investments that are measured at NAV practical expedient are not classified in the fair value hierarchy; however, their fair value amounts are presented in these tables to permit reconciliation of the fair value hierarchy to the total plan assets disclosed in this footnote. Termination of investing in the common collective trust requires a 30-day notice period. See Note 2 of the consolidated financial statements for the description of the levels of the fair value hierarchy. The following table sets forth the consolidated balance sheets presentation for components relating to the Company's pension and OPEB plans (in millions):
The following table sets forth changes in the benefit obligation before income taxes recognized in other comprehensive income for the Company's pension and OPEB plans (in millions):
The following table sets forth the components of the net periodic benefit cost (income) of the Company's pension and OPEB plans (in millions):
(1)The Pension settlement charge for 2020 is related to cash payments for lump sum elections. The pension settlement charge for 2019 is comprised of two components. First, the Union Pension Plan terminated in 2019. As a result of the plan termination the plan settled all participant benefits, which triggered a settlement charge of $14.5 million in 2019. Second, the Nonunion Plan executed a lump sum window for both retirees and terminated vested participants. The lump sums paid to Nonunion participants caused a settlement charge of $6.6 million in 2019. The pension settlement charge for 2018 related to the purchase of annuities for certain plan retirees as well as cash payments for lump sum elections. Assumptions used to determine net periodic benefit cost for the years ended December 31, 2020, 2019, and 2018 were as follows:
The expected long-term rate of return on assets is based on management's expectations of long-term average rates of return to be earned on the investment portfolio. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plan assets are invested. For purposes of measuring the benefit obligation associated with the Company's OPEB plans as of December 31, 2020, as well as the assumed rate for 2020, the following rates were assumed to affect the per capita costs of the following covered benefits:
The Company's pension plans' weighted-average asset allocations by asset category as of December 31, 2020 and 2019, were as follows:
The Company's nonunion pension plan investment policy includes an asset mix based on the Company's risk posture. The investment policy follows a glide path approach that shifts a higher portfolio weighting to assets with interest rate sensitive characteristics, similar to those used for liability measurement, as the funded status increases. The investment policy states a target allocation based on the plan's funded status of approximately 54% return seeking investments (growth assets) and 46% liability hedging investments (fixed income). Inclusion of the fixed income assets is to hedge risk associated with the plan's liabilities along with providing potential growth through income. These assets should primarily invest in fixed income instruments of the U.S. Treasury and government agencies and investment-grade corporate bonds. The return seeking investments (growth assets) can consist of broadly diversified domestic equity, international equity, fixed income, alternative investments, commodities, and real estate assets. The purpose of these assets is to provide the opportunity for capital appreciation, income, and the ability to diversify investments. A mix of mutual funds, exchange traded funds, and separate accounts are used as the plan's investment vehicles with clearly stated investment objectives and guidelines, as well as offer competitive long-term results. The Company expects to contribute $0.3 million to its OPEB plans in 2021. Currently, no contributions are expected in 2021 for the Company's nonunion pension plan. Estimated future benefit payments under the pension and OPEB plans are as follows (in millions):
The Company also sponsors 401(k) retirement savings plans for all U.S. associates. Under the 401(k) retirement savings plans, participants may defer a portion of their earnings up to the annual contribution limits established by the Internal Revenue Service, and the Company matches a portion of the participant's deferral up to a maximum of 3% of the participant's salary. The Company also may make profit-sharing contributions based on the Company's financial performance. The Company's total expense under the 401(k) plans for U.S. employees was $1.6 million for 2020, $4.3 million for 2019 and $3.9 million for 2018. During 2020, the Company suspended employer 401(k) match contributions, which resulted in a reduction of expense. Employees of the Canadian, Belgium, Denmark and United Kingdom operations also participate in defined contribution pension plans sponsored by the Company. The Company's expense related to these plans for 2020, 2019, and 2018 was $1.2 million, $1.8 million, and $1.7 million, respectively.
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 11. FAIR VALUE OF 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. Recurring Fair Value Measurements The Company measures certain financial liabilities at fair value on a recurring basis. The following table summarizes the valuation of those liabilities as of the dates presented (in millions):
(1)In connection with the acquisition of Fully in August 2019, the Company is contingently liable to make additional payments in the form of consideration based upon the achievement of certain performance targets. The maximum amount of contingent consideration that could be earned through 2023 is $15.0 million. Interest Rate Swap The fair value of the interest rate swap 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 is classified as Level 2 within the fair value hierarchy. Contingent Consideration Obligation The fair value measurement of the Company’s contingent consideration obligations is based on significant, unobservable inputs for which little or no market data exists, and thus represents a Level 3 measurement. The contingent consideration obligations are revalued each reporting period, with changes in fair value recognized in the consolidated statements of operations. The valuation inputs utilized to estimate the fair value of the contingent consideration obligations as of December 31, 2020, included a discount rate of 2.5%, Fully's net sales and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the year ended December 31, 2020, and projections related to Fully's net sales and EBITDA for each of the calendar years 2021 through 2023. For the year ended December 31, 2020, the $12.5 million change in the fair value of the Company’s contingent consideration obligations was primarily due to changes in expectations related to the achievement of the applicable performance targets. The emergent and seemingly durable shift to a significant “Work-from-home” (“WFH”) paradigm, catalyzed in large measure by restrictions placed on business operations and movement generally by state and local governments throughout 2020, aligns well with Fully’s WFH product portfolio and e-commerce capabilities. As of December 31, 2020, $1.2 million of the contingent consideration obligation is classified as current and is included in Other current liabilities, while the remaining $13.3 million is included in Other non-current liabilities on the consolidated balance sheets. There were no additional assets and/or liabilities recorded at fair value on a recurring basis as of December 31, 2020 or 2019. Assets Measured at Fair Value on a Nonrecurring Basis The following table presents the impairment losses on assets that were measured at estimated fair value on a nonrecurring basis (in millions):
(1)See Note 7 for additional information on impairments to tradenames. (2)The estimated fair values of the impaired assets were based on significant inputs that were not observable in the market and are considered to be Level 3 inputs (see Note 2). Other than the fair value measurements applied to the DatesWeiser and Edelman tradenames, the Company did not have any non-recurring fair value measurements during 2020, 2019 or 2018.
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DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | 12. DERIVATIVE INSTRUMENTS The Company is exposed to certain market risks, including the effect of changes in interest rates on future payments to be made on its variable rate debt. The Company utilizes a derivative instrument to mitigate its financial exposure to interest rate volatility. The derivative instrument, which is placed with a financial institution that the Company believes to be of acceptable credit risk, takes the form of an interest rate swap. The Company does not use derivatives for speculative trading purposes. Cash flow hedge In January 2018, the Company entered into an interest rate swap contract, which is designated as a cash flow hedge of the forecasted interest payments associated with a portion of the Company's variable rate debt. 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 was effective as of December 31, 2018, matures January 23, 2023 and carries a fixed rate of 2.63%. As of December 31, 2020, the interest rate swap has a notional amount of $200.0 million, which decreases over time by $50 million increments as follows:
The following table summarizes the fair value of the Company’s derivative instrument, as well as the location of this instrument on the Consolidated Balance Sheets as of the dates presented (in millions):
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INDEBTEDNESS |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INDEBTEDNESS | 13. INDEBTEDNESS The following table summarizes the Company's long-term debt as of the dates presented (in millions):
Credit Facility On August 21, 2020, the Company entered into the Second Amendment to the Third Amended and Restated Credit Agreement (the "Credit Agreement Amendment"), dated as of January 23, 2018, as previously amended by the First Amendment to the Third Amended and Restated Credit Agreement, dated as of August 26, 2019 (together, as amended, the "Credit Agreement"). The Credit Agreement Amendment, among other things, relaxed certain requirements or constraints under which affirmative covenants related to net leverage ratios are determined. In connection with the closing of the Credit Agreement Amendment, a covenant was added requiring the Company to make partial prepayments of term-loan principal in the amount of $50.0 million, all of which were made during the third quarter of 2020. Borrowings under the revolving credit facility (the "Revolver") and the term loan facilities bear interest, at the Company’s election, at either (i) the Eurocurrency Rate (as defined in the Credit Agreement), plus a spread based on the Company’s leverage ratio or (ii) the Base Rate (as defined in the Credit Agreement), which is a fluctuating rate equal to the highest of (a) the prime rate announced from time-to-time by Bank of America, (b) the Federal Reserve System’s federal funds rate, plus 0.50% and (c) the Eurocurrency Rate, plus 1.00%. Indebtedness incurred under the credit facility is secured by substantially all of the Company’s tangible and intangible assets, including, without limitation, the Company’s intellectual property. The Company’s direct and indirect wholly-owned domestic subsidiaries have also guaranteed the obligations of the Company and the foreign borrowers under the Credit Agreement and pledged substantially all of their tangible and intangible assets as security for their obligations under such guarantee. Certain of the Company’s wholly-owned foreign subsidiaries have guaranteed the obligations of the foreign borrowers under the Credit Agreement and pledged certain of their assets as security for their obligations under such guarantee. Repayments under the Credit Agreement can be accelerated by the lenders upon the occurrence of certain events of default, including, without limitation, a failure to pay any principal, interest or other amounts in respect of loans when due, breach by the Company (or its subsidiaries) of any of the covenants or representations contained in the Credit Agreement or related loan documents, failure of the Company (or its material subsidiaries) to pay any amounts owed with respect to other significant indebtedness of the Company or such subsidiary, or a bankruptcy event with respect to the Company or any of its material subsidiaries. The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including, without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio (or under certain circumstances, a maximum specified net secured leverage ratio), and (ii) covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, engage in sale-leaseback transactions, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates and sell stock or assets. At December 31, 2020, the Company was in compliance with all covenants applicable to its credit facility. Revolver The commitments and available borrowing capacity under the Revolver were as follows as of the dates presented:
(1)The Company's actual borrowing availability under the Revolver as of December 31, 2020 is constrained by certain financial covenants. At December 31, 2020, borrowings under the Revolver include $61.0 million at a weighted-average LIBOR rate of 1.65%. At December 31, 2019, borrowings under the Revolver included $10.0 million at a base rate of 5.25% and $128.5 million at a weighted-average LIBOR rate of 3.27%. As of December 31, 2020 and 2019, letters of credit issued under the Revolver incurred interest at the rate of 1.50%, while commitment fees on the undrawn portion of the Revolver were charged at the rate of 0.225%. Borrowings under the Revolver may be repaid at any time, but no later than at maturity in August 2024. The Company retains the right to terminate or reduce the size of the Revolver at any time. Term Loan Facilities As of December 31, 2020, the U.S term loan ("USTL") and multi-currency term loans ("MCTL") incurred interest at the rate of 1.65% and 1.50%, respectively. As of December 31, 2019, the USTL and MCTL incurred interest at the rate of 3.30% and 1.50%, respectively. The Eurocurrency rates used for the U.S. dollar-denominated term loan and the Euro-denominated term loans are one-month LIBOR and one-month or three-month Euribor, respectively. Prior to the execution of the Credit Agreement Amendment, amortization of term loan principal on both the USTL and the MCTL was required in equal quarterly installments at the rate of 5% per annum, as applied to the size of each facility as provided for in the Third Amended and Restated Credit Agreement, with the remaining balance due upon maturity. Pursuant to the Credit Agreement Amendment and the pro rata application of the partial prepayments of term-loan principal in the amount of $50.0 million during the third quarter of 2020, quarterly principal amortization payments on the USTL and the MCTL are required in the approximate fixed amounts of $2.8 million and €0.7 million, respectively. The remaining balance is still due upon maturity. Third Amended and Restated Credit Agreement On January 23, 2018, the Company amended its existing credit facility at the time, dated as of May 20, 2014 (the “Second Amended and Restated Credit Agreement”), whereby the existing credit agreement was amended and restated in its entirety (as amended and restated, the "Third Amended and Restated Credit Agreement"), by and among the Company and certain foreign subsidiaries of the Company, as borrowers, and certain domestic and foreign subsidiaries of the Company, as guarantors. The Third Amended and Restated Credit Agreement provided for a $750.0 million credit facility that was scheduled to mature in five years, consisting of a revolving commitment in the amount of $400.0 million, which may be made available in U.S. dollars, Euro, British Pound and other foreign currencies, a U.S. term loan commitment in the amount of $250.0 million and a multi-currency term loan commitment in the amount of €81.7 million. The Third Amended and Restated Credit Agreement also includes an option to increase the size of the Revolver or incur incremental term loans by an amount equal to the greater of $250.0 million or 90% of the EBITDA of the Company and its subsidiaries for the four fiscal quarters prior to such increase or additional loan, subject to the satisfaction of certain terms and conditions. Proceeds from the debt issued under the Third Amended and Restated Credit Agreement were used, among other things, to (1) fund the Muuto acquisition and, (2) refinance certain indebtedness. Maturities As of December 31, 2020, the Company's contractual maturities of its debt are as follows (in millions):
Deferred Financing Fees Amortization expense related to deferred financing fees, recognized as a component of interest expense in the consolidated statements of operations, was $0.9 million, $1.0 million and $1.1 million for the years ended December 31, 2020, 2019 and 2018, respectively. In connection with the Credit Agreement Amendment executed in the third quarter of 2020, the Company incurred $0.3 million of debt issuance costs, which were capitalized and are being amortized through August 2024. The Company recorded a loss on extinguishment of debt of approximately $0.2 million related to the write-down of the balance of the unamortized costs associated with the partial prepayments of term-loan principal noted above. During 2019 and 2018, the Company recorded losses on extinguishment of debt of approximately $0.4 million and $1.4 million, respectively, related to amendments to its Credit Agreement.
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COMMITMENTS AND CONTINGENT LIABILITIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 14. COMMITMENTS AND CONTINGENT LIABILITIES Litigation The Company is currently involved in matters of litigation and legal proceedings, 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, which are included in other current liabilities, when related products are sold. 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):
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RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES | 15. RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES In January 2020, the Company announced its plan to consolidate its manufacturing footprint in North America, resulting in the closure of the Grand Rapids, Michigan manufacturing facility (“Grand Rapids”). The closure was part of an initiative to optimize the Company’s North American manufacturing operations. In June 2020, the Company sold its Grand Rapids land and building assets for $12.9 million and received cash proceeds of approximately $12.2 million, net of transaction costs and customary closing adjustments. The Company recognized a gain on sale of approximately $1.2 million, which is netted against Restructuring charges on the accompanying Consolidated Statement of Operations. Concurrent with the sale, the Company entered into a lease agreement under which the Company arranged to lease back certain zoned premises within the facility for various terms, none of which extend beyond August 2021, and the majority of which expired as of December 31, 2020. As of December 31, 2020, all production has been migrated from Grand Rapids to the Company’s other North American facilities. Other restructuring actions the Company initiated during 2020 relate to supply chain optimization, which are expected to be completed by the end of 2021. The Company’s existing manufacturing operations in East Greenville, Pennsylvania; Muskegon, Michigan; and Toronto, Ontario (Canada) are not otherwise impacted by the restructuring plan. In addition to the restructuring actions noted above, under which approximately 70 positions were eliminated on a net basis, the Company has executed certain other cost reduction initiatives in May and October in response to the current economic environment from COVID-19 resulting in the elimination of approximately 500 positions. Further, management approved plans to close five of its North American Office showrooms. In connection with these facilities-related actions, the Company estimates that it will incur an additional $7.6 million of cash charges, $5.0 million of which is attributable to the showroom closures, and $2.6 million of which is attributable to supply chain optimization. The Company expects the plan to be fully executed by the end of 2021. Between the restructuring actions and other initiatives noted above, the Company expects to incur total charges of approximately $36.7 million, comprised of severance and other one-time termination benefits, facilities-related charges and other associated costs. The Company anticipates making cash payments totaling approximately $31.2 million, approximately $6.0 million of which will be paid subsequent to 2020. During the period ended December 31, 2020, the Company recognized restructuring charges of $28.5 million, attributable to the historical Office and Lifestyle segments in the amounts of $20.3 million and $0.8 million, respectively, and to Corporate in the amount of $7.4 million. The restructuring charges have been recognized between operating expenses and Cost of sales in the amounts of $27.1 million and $1.4 million, respectively, on the accompanying Consolidated Statement of Operations. The restructuring charge of $1.4 million included in Cost of sales represents non-cash items related to abandoned equipment and inventory write-downs, which is not reflected in the table below. Changes in restructuring and exit activity-related obligations during the year ended December 31, 2020 are summarized as follows:
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | 16. STOCK-BASED COMPENSATION The Company sponsors several stock compensation plans (collectively, the "Stock Compensation Plans") under which awards denominated or payable in shares, units or options to purchase shares of Knoll common stock may be granted to officers, certain other employees, directors and consultants of the Company. As of December 31, 2020, there were approximately 0.9 million shares authorized and available for issuance pursuant to the Stock Compensation Plans. Equity awards are granted under the Stock Compensation Plans based upon terms and conditions established by the Compensation Committee of the Company's Board of Directors (the "Committee"). For the years ended December 31, 2020, 2019, and 2018, the Company recognized tax benefits related to stock-based compensation costs of $3.4 million, $2.8 million and $2.3 million, respectively. As of December 31, 2020, unrecognized compensation cost related to all unvested equity awards was $18.1 million, the vast majority of which relates to unvested restricted shares and restricted stock units. This expense is expected to be recognized over a weighted-average period of 1.9 years. Restricted Shares Restricted shares generally vest at the end of the or -year period following the grant date. Stock-based compensation cost is measured at grant date based on the fair value of the underlying awards on the grant date. Grantees of restricted shares are entitled to participate in dividends declared on the Company's outstanding common stock, the accumulated balance of which is paid or payable upon the vesting date of the underlying restricted shares. The following table summarizes activity during 2020 with respect to restricted shares (shares in thousands):
The fair value of restricted shares that vested during 2020, 2019 and 2018 was $4.8 million, $5.0 million, $7.4 million, respectively. Restricted Stock Units All of the Company's outstanding restricted stock units ("RSUs") are contingently issuable, as they are subject to either certain performance-based conditions ("PBRSUs") or a market-based condition related to relative total shareholder return ("MBRSUs"). The Committee determines the time period over which RSUs vest, as well as the vesting schedule per award, which is generally at the end of the or -year period following the grant date. PBRSUs have payouts that range from 0% to 150% of the target award. MBRSUs either payout at 100% or not at all. All RSUs settle in shares and are entitled to participate in dividends declared on the Company's outstanding common stock, the accumulated balance of which is paid or payable upon the vesting of the underlying RSUs. To the extent that performance or market conditions are not fully attained, the underlying RSUs are forfeited. During the third quarter of 2020, the Company amended the terms of certain PBRSUs granted in 2019 by (i) extending the performance period by one calendar year to December 31, 2023, and (ii) reducing the applicable cumulative performance target by approximately 30%. There was no incremental cost recognized at the modification date as a result of these amendments. The estimated fair values of MBRSUs are initially determined on the grant date using a Monte Carlo simulation model. The Company's assumptions used as inputs into the valuation process are based on the expected life, which matches the applicable vesting period. The following weighted-average assumptions were used as inputs into the valuation of the MBRSUs granted during the fiscal years indicated:
The following table summarizes activity during 2020 with respect to RSUs (units in thousands):
(1)The weighted-average grant date fair values of PBRSUs forfeited in 2020 and outstanding as of December 31, 2020, reflect the modifications noted above. The fair value of RSUs that vested and settled in shares during 2020, 2019 and 2018 was $4.9 million, $1.9 million, and $1.4 million, respectively. Stock Options Stock options are granted with an exercise price equal to the market value of Knoll's common stock on the date of grant and have a maximum contractual term of ten years. The fair value of each option is initially measured on the grant date using the Black-Scholes option pricing model. The expected life is estimated based on the vesting period and expiration date of the award. Expected volatility is estimated based on the historical volatility of the Company's stock price over a period of time matching the expected life. The dividend yield is based on the Company's historical dividend record. The risk-free rate is based on the applicable U.S. Treasury Note rate. The following table summarizes activity during 2020 with respect to stock options (shares in thousands):
The weighted-average grant-date fair value of options granted during the years ended December 31, 2019 and 2018 was $4.65 and $4.01 per option, respectively. There were no options granted in 2020. No options were exercised during 2020, 2019 or 2018. The total grant-date fair value of options that vested during 2019 was less than $0.1 million. There were no options that vested in 2020 or 2018.
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | 17. STOCKHOLDERS' EQUITY Common Stock The following table presents the change in the number of shares of common stock outstanding during the years ended December 2020, 2019, and 2018 (table in thousands and is inclusive of non-voting restricted shares):
Treasury Stock (in thousands) As of December 31, 2020 and 2019, the Company held 16,813 and 16,521 treasury shares, respectively. The Company records repurchases of its common stock for treasury at cost. Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in AOCL by component during the years presented (in millions):
The following pension and OPEB reclassifications were made from AOCL into earnings during the periods presented (in millions):
(1)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 10 for additional information.
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PREFERRED STOCK |
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Temporary Equity Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREFERRED STOCK | 18. PREFERRED STOCK On July 21 2020, the Company closed on an Investment Agreement (the “Investment Agreement”) entered into on June 22, 2020, with Furniture Investments Acquisitions S.C.S., a common limited partnership (société en commandite simple) (the “Buyer”), relating to the issuance and sale to the Buyer of 164,000 shares of the Company’s Series A Convertible Preferred Stock, par value $1.00 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $164.0 million (the “Issuance”). The Issuance resulted in net cash proceeds of $161.8 million after transaction costs. The Series A Preferred Stock will rank senior to the Company’s common stock, par value $0.01 per share (the “Common Stock”), with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Series A Preferred Stock will have a liquidation preference of $1,000 per share. Holders of the Series A Preferred Stock will be entitled to a cumulative dividend at the rate of 4.5% per annum, payable quarterly in arrears. The Company may elect, at its sole discretion, to pay dividends in cash or as a dividend in-kind with additional shares of Series A Preferred Stock having value equal to the amount of accrued dividends until the two years anniversary of the Closing Date, after which the Company must pay dividends in cash. The Series A Preferred Stock will be convertible at the option of the holders thereof at any time into shares of Common Stock at a fixed conversion price of $16.75 per share of Series A Preferred Stock, subject to certain anti-dilution adjustments. At any time after the -year anniversary of the Closing Date, if the volume weighted-average price of the Common Stock exceeds $29.3125 per share (subject to adjustment in certain cases) for at least 20 trading days in any period of 30 consecutive trading days, the Company may elect to convert all or a portion of the Series A Preferred Stock into shares of Common Stock. Holders of the Series A Preferred Stock will be entitled to vote as a single class with the holders of the Common Stock on an as-converted basis. Holders of the Series A Preferred Stock will be entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the rights, preferences, privileges or voting power of the Series A Preferred Stock, authorizations or issuances by the Company of securities that are senior to, or equal in priority with, the Series A Preferred Stock and increases or decreases in the number of authorized shares or issuances of shares of Series A Preferred Stock after the Closing Date. At any time on or after the sixth anniversary of the Closing Date, the Company may redeem, in whole or, from time to time, in part, the shares of Series A Preferred Stock for a redemption price equal to: (i) the sum of (x) the liquidation preference thereof, plus (y) all accrued and unpaid dividends, multiplied by (ii) (A) 110% if the redemption occurs at any time on or after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, (B) 105% if the redemption occurs at any time on or after the seventh anniversary of the Closing Date and prior to the eighth anniversary of the Closing Date, and (C) 100% if the redemption occurs at any time on or after the eighth anniversary of the Closing Date. Upon certain change of control events involving the Company, the holders of the Series A Preferred Stock may either (i) convert their shares of Series A Preferred Stock into Common Stock at the then-current conversion price or (ii) cause the Company to redeem their shares of Series A Preferred Stock. Additionally, upon certain change of control events involving the Company, the Company may elect to redeem the Series A Preferred Stock. If the holders of the Series A Preferred Stock elect to have their shares of Series A Preferred Stock redeemed, or if the Company elects to redeem the Series A Preferred Stock, in each case, in connection with a change of control, the redemption price per share will be an amount in cash equal to 100% of the sum of the liquidation preference thereof and all accrued but unpaid dividends, plus a premium if such change of control occurs on or before the seventh anniversary of the Closing Date, plus, (i) if the redemption date is prior to the sixth anniversary of the Closing Date, all dividends that would have accrued on such share from the change of control redemption date to the sixth anniversary of the Closing Date, or (ii) if the redemption date is on or after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, all dividends that would have accrued on such share from the change of control redemption date to the seventh anniversary of the Closing Date. As the redemption feature is not solely within the control of the Company, the Series A Preferred Stock does not qualify as permanent equity and has been classified as mezzanine, or temporary, equity. If the Company proposes to issue equity securities of any kind, then, until the earlier of (i) the first date on which the 50% Beneficial Ownership Requirement as described in the investment agreement is no longer satisfied and (ii) the irrevocable waiver by the Buyer of its designation rights, subject to certain exceptions, the Company will be required to offer the Buyer the opportunity to purchase a portion of such proposed issuance equal to (i) the number of shares of Series A Preferred Stock, on an as-converted basis, and/or shares of Common Stock issued upon conversion of such Series A Preferred Stock then beneficially owned by the Buyer, divided by (ii) the total number of shares of Common Stock and Series A Preferred Stock then outstanding, on an as-converted basis. Registration Rights The Buyer and its affiliates will have certain customary registration rights with respect to shares of Common Stock held by the Buyer, including any Common Stock issued upon any future conversion of the Series A Preferred Stock, pursuant to the terms of a Registration Rights Agreement. The following table presents a roll-forward of the Company's preferred stock for the periods presented (in millions, except shares, which are in thousands):
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EARNINGS PER SHARE | 19. EARNINGS PER SHARE Basic earnings per share ("EPS") is computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. The Company’s Series A Preferred Stock shares are considered participating securities, as these securities have non-forfeitable rights to participating dividends (as defined in the Investment Agreement) if and to the extent that the Company pays any participating dividends, and thus require the two-class method of computing EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated between the common shares and the participating securities. For the year ended December 31, 2020, there were no undistributed earnings allocated to the participating securities. Diluted EPS is similarly computed, but includes the weighted-average dilutive effect, if any, of all outstanding potentially dilutive securities. Diluted EPS is calculated under the treasury stock method for equity awards issued under the Company’s stock compensation plans, and under both the two-class and if-converted methods for the Series A Preferred Stock, with the more dilutive amount reported. Potentially dilutive securities having an anti-dilutive effect are excluded from the calculation. The following table sets forth the computation of basic and diluted EPS for the periods presented (in millions):
(1)For the year ended December 31, 2020, an aggregate of 0.3 million potentially dilutive securities representing options to purchase common stock and unvested shares of restricted stock, and common shares issuable upon assumed conversion of the Series A Preferred Stock totaling 4.4 million shares had the effect of being anti-dilutive and were excluded from the computation of diluted EPS. For the year ended December 31, 2018, less than 0.1 million of potentially dilutive securities representing options to purchase common stock were excluded from the computation of diluted EPS on account of being anti-dilutive. There were no exclusions for the year ended December 31, 2019.
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | 20. INCOME TAXES The source of earnings before income taxes consisted of the following (in millions):
Income tax expense (benefit) is comprised of the following (in millions):
On March 27, 2020, the U.S. federal government enacted tax legislation under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") in response to the economic impacts of the spread of COVID-19. The CARES Act provides, among other things, relief to corporate taxpayers by permitting additional carryback allowances for net operating losses ("NOLs") generated in tax years 2018 through 2020, and additional depreciation deductions related to qualified improvement property. The CARES Act also provides for changes to the limitations on interest expense deductibility for tax years beginning in 2019 and 2020. The following table sets forth a reconciliation of the U.S. statutory federal income tax rate to the Company's effective income tax (benefit) rate for the following annual periods:
(1)Includes the tax effects of income tax rate differentials, deductions and credits applicable to the operations of the Company's foreign subsidiaries. (2)During 2018, the Company reversed a provisional amount recorded in December 2017 (the month in which the Tax Cuts and Jobs Act was enacted) related to withholding taxes on the repatriation of certain foreign earnings, effectively resulting in a tax benefit of $1.7 million. (3)Primarily reflects the benefit derived from carrying back the domestic NOL generated in 2020 to the 2015 tax year. (4)Primarily reflects the tax effects of certain nondeductible items (not separately stated above). The following table sets forth the tax effects of temporary differences that give rise to the Company's deferred tax assets and liabilities (in millions):
As of December 31, 2020, to the extent the Company’s earnings attributable to its foreign subsidiaries are not considered permanently reinvested, a deferred tax liability for the tax consequences of remitting the accumulated earnings has been provided in the financial statements. As of December 31, 2020, the Company had NOL carryforwards of approximately $18.3 million between the United Kingdom and Germany. These NOL carryforwards do not expire. The Company regularly evaluates positive and negative evidence as it relates to realizability of deferred tax assets in each jurisdiction. The Company continues to carry a valuation allowance against the deferred tax asset associated with the NOL carryforwards from operations in Germany due to the uncertainty of its realization, either in whole or in part. As of December 31, 2020, the Company recorded a deferred tax asset of $1.2 million for U.S. state and local NOLs, net of the federal effect. The state NOL deferred tax asset relates to multiple jurisdictions and the NOLs expire in various years beginning in 2023. The following table summarizes the activity related to the Company's deferred tax asset valuation allowance and the changes therein during the periods presented (in millions):
(1)During 2020 and 2019, the valuation allowance related to the NOL carryforward from operations in Germany was partially released. (2)Primarily foreign exchange impact The following table presents a reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the periods presented (in millions):
All of the unrecognized tax benefits as of December 31, 2020, if recognized, would affect the Company's effective tax rate. The amounts of income tax-related interest and penalties recognized in the Consolidated Statements of Operations were not significant for the years ended December 31, 2020 and 2019, and 2018. As of December 31, 2020, the Company is subject to U.S. Federal Income Tax examination for the tax years 2017 through 2020, and to non-U.S. income tax examination for the tax years 2013 to 2020. In addition, the Company is subject to state and local income tax examinations for the tax years 2016 through 2020.
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OTHER INCOME, NET |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INCOME, NET | 21. OTHER INCOME, NET The components of other income, net are as follows (in millions):
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SEGMENT AND GEOGRAPHIC REGION INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND GEOGRAPHIC REGION INFORMATION | The table below summarizes the Company’s segment information for the years presented, which has been recast to conform to the reporting structure in effect after the Segment Reorganization (in millions):
1.Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer pricing between legal entities. 2.Reflects pension settlement charges of $4.8 million, $21.0 million, and $5.7 million during 2020, 2019, and 2018, respectively; restructuring charges of $20.3 million, $0.8 million, and $2.6 million during 2020, 2019, and 2018, respectively; a $12.4 million loss on fair value remeasurement of contingent consideration and a $1.4 million intangible asset impairment charge during 2020. 3.Lifestyle and Corporate results for 2020 reflect restructuring charges of $0.8 million and $7.4 million, respectively. Lifestyle results for 2019 reflect a $6.5 million intangible asset impairment charge. Lifestyle and Corporate results for 2018 reflect charges of $0.6 million and $1.3 million, respectively, related to the acquisition of Muuto. 4.The Company does not allocate interest expense or other (income) expense, net to the reportable segments. 5.The amounts reported above do not account for the change in accrued capital costs during the years ended December 31, 2020, 2019 or 2018. The Company does not identify or allocate assets by reportable segment, nor does the chief operating decision maker evaluate segments using discrete asset information. Therefore, it is impractical to disclose asset information on a segment basis. The Company markets its products in the United States and internationally, with its principal international markets being Canada and Europe. The table below contains information about the geographical areas in which the Company operates. Sales are attributed to the geographic areas based on the origin of sale, and property, plant, and equipment, net is based on the geographic area in which the asset resides (in millions):
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB establishes accounting principles generally accepted in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants, which the Company is required to follow. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification (“ASC”), which serves as a single source of authoritative non-SEC accounting and reporting standards to be applied by non-governmental entities. Certain prior period amounts in the Consolidated Statements of Cash Flows, as well as in the notes, have been reclassified to conform to the current year presentation. During the fourth quarter of 2019, the Company aligned the consolidation of certain of its foreign subsidiaries in the consolidated financial statements, which previously included results on a -month reporting lag. The Company believes that this change in accounting principle was preferable, as all of the its subsidiaries are now reported based on the same period-end, which improves overall financial reporting to investors by providing the most current information available. In accordance with applicable accounting literature, the elimination of a one-month reporting lag of a subsidiary is treated as a change in accounting principle and requires retrospective application. The Company has determined that the effect of this change is not material to the financial statements for all periods presented and therefore, the Company has not presented retrospective application of this change. The net impact of the elimination of the reporting lag of $0.6 million of loss for the month of December 2019 has been included within "Other income, net" on the Consolidated Statements of Operations and Comprehensive Income in the fourth quarter of 2019.
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Principles of Consolidation | Principles of Consolidation The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. Significant intercompany transactions and balances have been eliminated in consolidation.
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Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates and assumptions take into account historical and forward looking factors that the Company believes are reasonable, including, but not limited to, the potential impacts arising from the coronavirus pandemic of 2019 (“COVID-19”) and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts of COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Actual results may differ from such estimates. Examples of significant estimates include the allowance for credit losses, the recoverability of property, plant and equipment, the incremental borrowing rate for lease liabilities, the recoverability of intangible assets and other long-lived assets, fair value measurements, including those related to financial instruments, goodwill and intangible assets, valuation allowances on tax assets, pension and postretirement benefit obligations, contingencies and the identification and valuation of assets acquired and liabilities assumed in connection with business combinations.
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly-liquid investments with maturities of three months or less at the date of purchase.
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Revenue Recognition | Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, the Company determines revenue recognition by applying the following steps: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue as the performance obligations are satisfied. The Company recognizes revenue when performance obligations under the terms of a contract with a customer are satisfied. The Company's primary performance obligation to its customers is the delivery of products. Control of the products sold typically transfers to the customer upon shipment or delivery, depending on the shipping terms of the underlying contract. Each customer contract sets forth the transaction price for the products and services purchased under that arrangement. Some customer arrangements include variable consideration, such as volume rebates, some of which depend upon the customers meeting specified performance criteria, such as a purchasing level over a period of time. The Company uses judgment to estimate the most likely amount of variable consideration at each reporting date. When estimating variable consideration, the Company applies judgment when considering the probability of whether a reversal of revenue could occur and only recognize revenue subject to this constraint. The Company uses historical customer return data as a basis of estimation for customer returns and records the reduction of sales at the time revenue is recognized. Customer returns have historically not been significant. The Company may receive deposits from customers before revenue is recognized, thus resulting in the recognition of a contract liability (customer deposits). Amounts billed to customers for shipping and handling of products are included in sales and the related costs incurred by the Company for shipping and handling are included in cost of sales. The Company applies a policy election to account for shipping and handling as an activity to fulfill the promise to transfer the product to the customer. The Company applies an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer. The Company has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. The Company has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Company’s contracts are typically less than one year in length, consideration will not be adjusted. The Company’s contracts generally include a standard payment term of 30 days, consequently there is no significant financing component within its contracts. Contract Balances The Company’s contract assets consist of customer receivables which are included on the Consolidated Balance Sheets. These amounts represent the amount of consideration the Company expects to be entitled to in exchange for the goods delivered to its customers. When the Company receives deposits, the recognition of revenue is deferred and results in the recognition of a contract liability (Customer deposits) which is included in Other current liabilities on the Consolidated Balance Sheets. Subsequent recognition of revenue and discharge of the contract liability typically occurs within a year of a deposit receipt, as the Company’s standard contract is less than one year.
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Accounts receivable are recorded net of an allowance for expected credit losses. The Company maintains an allowance for credit losses for the expected failure or inability of its customers to make required payments. The Company recognizes the allowance for expected credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, as well as management’s expectations of conditions in the future. The Company’s allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. Management analyzes receivables based on the credit quality indicators and shared risk characteristics of dealers and other customers. Management stratifies the dealer population generally by the level of their purchase activity, mainly recurring purchasers compared to non-recurring purchasers, as well as the financial strength of the dealer. Management also stratifies receivables based on government and corporate purchasers with common risk characteristics. Management considers multiple factors, including payment history, frequency of purchases and financial strength of the purchaser to determine the reserve needed.
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Inventories | Inventories Inventories are stated at the lower of cost or net realizable value and include material, labor and overhead. Cost is determined using the first-in, first-out method. The Company adjusts for inventory that it believes is impaired or obsolete. Obsolescence occurs as the result of several factors, including the discontinuance of a product line, changes in product material specifications, replacement products in the marketplace and other competitive influences.
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Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:
(1)Leasehold improvements are amortized over the shorter of the economic life of the asset or the remaining lease term. Maintenance and repairs are expensed as incurred. Interest on significant capital projects is capitalized during the construction period. The Company reviews the carrying values of its property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on undiscounted estimated cash flows expected to result from its use and eventual disposition. The factors considered by the Company in performing this assessment include current operating results, business trends affecting the use of certain assets and other economic factors. In assessing the recoverability of the carrying value of property and equipment, the Company must make assumptions regarding future cash flows and other factors. If these estimates or the related assumptions change in the future, the Company may be required to record an impairment loss for these assets.
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Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets with indefinite lives are tested for impairment at least annually, as of October 1, and more frequently whenever events or circumstances occur indicating that a possible impairment may have been incurred. Intangible assets with finite lives are amortized over their estimated useful lives. Goodwill The Company evaluates goodwill for impairment by way of qualitative and quantitative assessments. A qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, based on this qualitative assessment, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed by determining the fair value of the Company's reporting units. The Company estimates the fair value of its reporting units using a combination of the fair values derived from both the income approach and the market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the businesses ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. When performing a qualitative assessment, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of the reporting units are less than their respective carrying values. The Company considers factors that would impact the reporting unit fair values as estimated by the market and income approaches compared to the last quantitative assessment. The Company reviews current projections of cash flows and compares the current projections to the projections included in the most recent quantitative assessment and considers whether any new significant competitors have entered the marketplace in the industry and if consumer demand for the industry’s products remains relatively constant, is growing or declining. Also, the Company considers if economic factors during the year significantly affected the discount rates that should be used for the valuation of the reporting units. The Company would conclude if events occurring since the last quantitative assessment have a significant impact on the fair value of each of the reporting units. Intangible Assets Other than Goodwill The Company assesses whether impairment of its indefinite-lived intangible assets, comprised of tradenames, exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If based on this qualitative assessment, the Company determines it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed to determine whether an indefinite-lived intangible asset impairment exists. The Company tests its indefinite-lived intangible assets for impairment by comparing the carrying values of the applicable tradenames to their estimated fair values. The estimated fair values are based on an income approach using the so-called "relief from royalty method", which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the benefits of the tradename asset. The cash flow projections used in this process involve several significant assumptions, including (i) current revenue projections of the related business operations, (ii) estimated royalty rates, (iii) after-tax benefit expected from ownership of the tradenames, and (iv) discount rates used to derive the estimated fair values. Any excess of carrying value over the respective estimated fair value is recognized as an impairment in the reporting period in which it's been identified. Finite-lived intangible assets such as customer relationships, non-compete agreements, and licenses are amortized over their estimated useful lives. The Company reviews the carrying values of these assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on estimated undiscounted cash flows expected to result from its use and eventual disposition. The Company regularly evaluates the reasonableness of the useful lives of these assets.
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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 an operating or finance lease. 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 Consolidated Balance Sheets when the lease term exceeds one year. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments. (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. 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 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. 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. On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within Accounting Standards Update ("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. 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.
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Business Combinations | Business Combinations The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company's operating results from the date of acquisition.
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Deferred Financing Fees | Deferred Financing Fees Financing fees that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense over the life of the underlying indebtedness. Deferred financing fees are presented in the Company's consolidated balance sheets as a direct reduction from long-term debt.
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Research and Development Costs | Research and Development CostsResearch and development costs are expensed as incurred, and are included as a component of selling, general, and administrative expenses. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined and recognized based on the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases using the tax rates expected to be in effect when the temporary differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not some portion or all of the related tax benefit will not be realized. The need to establish valuation allowances against deferred tax assets is assessed quarterly. The Company's valuation allowances are primarily attributable to net operating loss ("NOL") carryforwards in certain foreign tax jurisdictions where the Company has incurred historical tax losses from operations and has determined that it is more likely than not these deferred tax assets will not be realized. The primary factors used to assess the likelihood of realization are reversals of taxable temporary timing differences, forecasts of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. The Company evaluates tax positions to determine whether the benefits of tax positions are more likely than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not to be sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement. For tax positions that are not more likely than not to be sustained upon audit, the Company does not recognize any portion of the benefit. If the more likely than not threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period. The Company recognizes income tax-related interest and penalties in income tax expense and accrues for interest and penalties in other noncurrent liabilities.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments GAAP establishes a three-level hierarchy that ranks the quality and reliability of information used in developing fair value estimates. The three levels of the fair value hierarchy, with Level 1 having the highest priority and Level 3 having the lowest, are summarized as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.
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Derivative Instruments | Derivative Instrument The Company utilizes a derivative instrument to mitigate its exposure to interest rate volatility. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company recognizes its derivative instrument as either an asset or liability on the Consolidated Balance Sheets and measures it at estimated fair value. Changes in the fair value of that instrument are deferred in shareholders' equity as a component of Accumulated Other Comprehensive Loss ("AOCL"), as the derivative instrument, which is a cash flow hedge, qualifies for hedge accounting. Derivatives qualify for hedge accounting if they are designated as hedge instruments and if the hedge is highly effective in achieving offsetting changes in the cash flows of the asset or liability hedged. Hedge effectiveness is assessed on a regular basis. For all periods presented herein, gains or losses deferred in AOCL are recognized in the results of operations in the same period in which the hedged items are recognized and on the same financial statement line item as the hedged items.
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Commitments and Contingencies | Commitments and Contingencies The Company establishes reserves for the estimated cost of environmental, legal and other contingencies when such expenditures are probable and reasonably estimable. A significant amount of judgment is required to estimate and quantify the ultimate exposure in these matters. The Company engages outside experts as deemed necessary or appropriate to assist in the evaluation of exposure. From time to time, as information becomes available regarding changes in circumstances for ongoing issues as well as information regarding emerging issues, the potential liability is reassessed and reserve balances are adjusted as necessary. Revisions to the estimates of potential liability, and actual expenditures related to commitments and contingencies, could have a material impact on the results of operations or financial position.
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Warranty | Warranty The Company generally offers an assurance-type warranty for its products. The specific terms and conditions of those warranties vary depending upon the product sold. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include historical product-failure experience and estimated repair costs for identified matters. The Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
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Concentration of Credit Risk | Concentration of Credit Risk The Company's customer receivables are comprised primarily of amounts due from independent dealers and direct customers. The Company monitors and manages the credit risk associated with the individual dealers and direct customers. The independent dealers are responsible for assessing and assuming the credit risk of their customers and may require their customers to provide deposits or other credit enhancement measures. Historically, the Company has had a concentration of federal and local government receivables; however, they carry minimal credit risk.
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Foreign Currency Translation | Foreign Currency Translation Results of foreign operations are translated into U.S. dollars using average exchange rates during the year, while assets and liabilities are translated into U.S. dollars using the exchange rates as of the balance sheet dates. The resulting translation adjustments are recorded in AOCL. Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency of the applicable subsidiary are included in the consolidated statements of operations, within other income, net, in the year in which the gain or loss occurs.
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Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The Company recognizes compensation expense using the straight-line method over the vesting period. Compensation expense relating to restricted stock units subject to performance conditions is recognized if it is probable that the performance condition will be achieved. Forfeitures are recognized when they occur. Stock-based compensation for all types of awards is included in selling, general and administrative expenses in the Consolidated Statements of Operations. The fair value of restricted stock and restricted stock units, excluding market-based restricted stock units, is based upon the closing market price of the Company's common stock on the date of grant. The fair value of market-based restricted stock units is estimated at the date of grant using a Monte Carlo simulation model, which requires management to make certain assumptions based on both historical and current data. These awards vest based upon the performance of the Company's stock price relative to a peer group. The assumptions included in the model include, but are not limited to, risk-free interest rate, expected volatility of the Company's and the peer group's stock prices, and dividend yield. The risk-free rate is based upon the applicable U.S. Treasury Note rate. Expected volatility is estimated based on the historical volatility of the Company's and peer group's stock prices. The dividend yield is based on the Company's historical data.
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Pension and Other Post-Employment Benefits | Pension and Other Post-Employment Benefits The Company had sponsored two defined benefit pension plans, one of which was terminated during 2019, and four other post-employment benefit plans ("OPEB"), one of which was terminated during 2019. Several statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liability related to the plans. Key factors include assumptions about the expected rates of return on plan assets, discount rates, mortality rates and health care cost trend rates. The Company considers market and regulatory conditions, including changes in investment returns and interest rates, in making these assumptions. The Company determines the expected long-term rate of return on plan assets based on aggregating the expected rates of return for each component of the plan's asset mix. The Company uses historic plan asset returns combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption. The discount rate reflects the market rate for high-quality fixed income debt instruments as of the Company's annual measurement date and is subject to change each year. Unrecognized actuarial gains and losses are recognized over the expected remaining lifetime of the plan participants. Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to the obligations of the pension and OPEB plans, and from the difference between expected returns and actual returns on plan assets. These unrecognized gains and losses are systematically recognized as a change in future net periodic pension expense in accordance with the appropriate accounting guidance relating to defined benefit pension and OPEB plans. Key assumptions used in determining the amount of the obligation and expense recorded for the OPEB plans include the assumed discount rate and the assumed rate of increases in future health care costs. In estimating the health care cost trend rate, the Company considers actual health care cost experience, future benefit structures, industry trends and advice from its actuaries. The Company assumes that the relative increase in health care costs will generally trend downward over the next several years, reflecting assumed increases in efficiency and cost-containment initiatives in the health care system. In accordance with the appropriate accounting guidance, the Company has recognized the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligation) of the defined benefit pension and OPEB plans in the consolidated balance sheets. To record the unfunded status of the plans, the Company recorded an additional liability and an adjustment to accumulated other comprehensive loss, net of tax. Other changes in the benefit obligation including net actuarial loss (gain) and prior service cost (credit) are recognized in other comprehensive income. The actuarial assumptions the Company used in determining the pension and OPEB retirement benefits may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. While the Company believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions could materially affect the financial position or results of operations.
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Segment Information | Segment Information Effective as of the beginning of the first quarter of 2021, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As such, the Company implemented a segment reorganization in order to more closely align its segment reporting with its current operating structure (the "Segment Reorganization"). The Company's new reportable segments are: Workplace and Lifestyle. The Workplace reportable segment is comprised of the operations of the Workplace operating segment, which, following the Segment Reorganization, reflects the reassignment of the Spinneybeck and KnollTextiles businesses from the Lifestyle segment, as well as the reassignment of the Europe Office business from the historical Office segment to the Lifestyle segment. The Lifestyle reportable segment is an aggregation of the Holly Hunt (which includes Edelman), Muuto, KnollStudio North America and Europe operating segments. In conjunction with the new reporting structure, the Company recast the segment disclosures for all periods presented. The Workplace segment includes a complete range of products that address diverse workplace planning paradigms in North America. These products include: office systems furniture, seating, storage, tables (conference, training), desks (fixed and height-adjustable), textiles, high-quality fabrics, felt, leather, architectural products, and KnollExtra® accessories. The businesses comprising the Workplace segment serve a broad range of customers, from geographically diverse global accounts to consumers and small businesses, and do so through various physical and digital interfaces, including a direct sales force, Company and dealer showrooms, and multiple e-commerce platforms The Lifestyle segment product offerings, which are distributed globally, include iconic seating, lounge furniture, side, café and dining chairs, dining and occasional tables, lighting, rugs, and leather. The businesses comprising the Lifestyle segment serve affordable luxury and high-end luxury markets that often blur the distinction between commercial and residential spaces, but understand and appreciate the impact that furnishings borne out of exceptional design and made with high-quality, innovative materials can have on their respective environments. Lifestyle products are sold through a global network of showrooms, e-commerce websites, retail stores and independent dealers. 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.
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Accounting Standards Adopted | Accounting Standards Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or other reference rate expected to be discontinued due to reference rate reform. The amendments in this ASU are effective immediately and may be applied to impacted contracts and hedges prospectively through December 31, 2022. The adoption of the ASU had no impact on the Company’s consolidated financial statements for the period ended December 31, 2020. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The Company adopted ASU 2018-13 as of January 1, 2020. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements or disclosures. 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, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted ASU 2016-13 as of January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Depreciable Lives | Property, plant, and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:
(1)Leasehold improvements are amortized over the shorter of the economic life of the asset or the remaining lease term. Property, plant and equipment, net consisted of the following as of the dates presented (in millions):
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Fair Value Valuation Techniques | The three levels of the fair value hierarchy, with Level 1 having the highest priority and Level 3 having the lowest, are summarized as follows:
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REVENUE (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales by Product Category | The Company’s sales by product category for its historical segments were as follows (in millions):
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Summary of Changes in the Allowance for Doubtful Accounts | The following table summarizes the changes in the allowance for doubtful accounts for the periods presented (in millions):
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ACQUISITIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Estimated Fair Value of Identifiable Intangible Assets and Their Estimated Useful Lives | The following table summarizes the final estimates of the fair value and useful lives of the intangible assets acquired as of the August 20, 2019 Fully acquisition date (dollars in millions):
The following table summarizes the final estimates of the fair value and useful lives of the intangible assets acquired as of the January 25, 2018 Muuto acquisition date (dollars in millions):
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Schedule of Recognized Identifiable Assets and Liabilities | The following table summarizes the fair values assigned to the assets acquired and liabilities assumed of Muuto and the resulting goodwill as of the January 25, 2018 acquisition date (in millions):
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Schedule of Business Acquisition Pro Forma Information | The following table presents unaudited pro forma information for the period presented as if the acquisition of Muuto had occurred as of January 1, 2017 (in millions):
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INVENTORIES (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories consisted of the following as of the dates presented (in millions):
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PROPERTY, PLANT, AND EQUIPMENT, NET (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment | Property, plant, and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:
(1)Leasehold improvements are amortized over the shorter of the economic life of the asset or the remaining lease term. Property, plant and equipment, net consisted of the following as of the dates presented (in millions):
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill Tested for Impairment and Schedule of Changes in the Carrying Amount of Goodwill by Reportable Segment | Based on the results of the tests performed, there was no indication of impairment to the goodwill allocated to any of the reporting units in effect at the time, as the estimated fair value exceeded the respective carrying amount in each case, as summarized in the table below:
The following table summarizes the changes in the carrying amount of goodwill by historical reportable segment for the years ended December 31, 2020 and 2019 (in millions):
(1)Historical segment presentation
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Schedule of the Components Intangible Assets | The components of intangible assets, net are as follows (in millions):
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Schedule of Estimated Amortization Expense Based on the Finite-lived Intangible Assets | estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows (in millions):
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Summary of Trade Names Tested For Impairment | Based on the results of the tests performed, there was no indication of impairment to any of the tradenames noted above, as the estimated fair value exceeded the respective carrying amount in each case, as summarized in the table below:
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OTHER CURRENT LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Liabilities | Other current liabilities are comprised of the following (in millions):
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LEASES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Cost | Lease cost recognized in the consolidated statements of operations for 2020 and 2019 is summarized as follows (in millions):
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Schedule of Other Lease Information | Other lease information as of and for the years ended December 31, includes (dollars in millions):
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Schedule of Maturities of Operating Lease Liabilities | As of December 31, 2020, maturities of the Company's operating lease liabilities are as follows (in millions):
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PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Related Benefit Obligation and Plan Assets | The following table sets forth a reconciliation of the related benefit obligation and plan assets related to the benefits provided by the Company (in millions):
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Schedule of Assumptions Used in Computing the Benefit Obligation | Assumptions used in computing the benefit obligation as of December 31, 2020 and 2019 were as follows:
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Schedule of Fair Value of Pension Plan investments | The following table presents the fair value of the Company's pension plan investments as of December 31, 2020 and 2019 (in millions):
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Schedule of Consolidated Balance Sheet Presentation for Components Relating to Company's Pension and OPEB Plans | The following table sets forth the consolidated balance sheets presentation for components relating to the Company's pension and OPEB plans (in millions):
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Schedule of Other Changes in Benefit Obligation Recognized in Other Comprehensive Income | The following table sets forth changes in the benefit obligation before income taxes recognized in other comprehensive income for the Company's pension and OPEB plans (in millions):
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Schedule of Components of the Net Periodic Benefit Cost | The following table sets forth the components of the net periodic benefit cost (income) of the Company's pension and OPEB plans (in millions):
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Schedule of Assumptions Used to Determine Net Periodic Benefit Cost | Assumptions used to determine net periodic benefit cost for the years ended December 31, 2020, 2019, and 2018 were as follows:
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Schedule of Health Care Cost trend Rates | For purposes of measuring the benefit obligation associated with the Company's OPEB plans as of December 31, 2020, as well as the assumed rate for 2020, the following rates were assumed to affect the per capita costs of the following covered benefits:
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Schedule of Weighted-average Asset Allocations by Asset Category | The Company's pension plans' weighted-average asset allocations by asset category as of December 31, 2020 and 2019, were as follows:
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Estimated Future Benefit Payments Under the Pension and OPEB plans | Estimated future benefit payments under the pension and OPEB plans are as follows (in millions):
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Recorded at Fair Value on a Recurring Basis | The following table summarizes the valuation of those liabilities as of the dates presented (in millions):
(1)In connection with the acquisition of Fully in August 2019, the Company is contingently liable to make additional payments in the form of consideration based upon the achievement of certain performance targets. The maximum amount of contingent consideration that could be earned through 2023 is $15.0 million.
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Schedule Impairment Losses on Assets that were Measured at Estimated Fair Value on a Nonrecurring Basis | The following table presents the impairment losses on assets that were measured at estimated fair value on a nonrecurring basis (in millions):
(1)See Note 7 for additional information on impairments to tradenames. (2)The estimated fair values of the impaired assets were based on significant inputs that were not observable in the market and are considered to be Level 3 inputs (see Note 2).
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DERIVATIVE INSTRUMENTS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Rate Swap, Which Hedges Long-term Debt Obligation, Notional Amount Decrease | As of December 31, 2020, the interest rate swap has a notional amount of $200.0 million, which decreases over time by $50 million increments as follows:
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Location and Fair Value of Interest Rate Swap | The following table summarizes the fair value of the Company’s derivative instrument, as well as the location of this instrument on the Consolidated Balance Sheets as of the dates presented (in millions):
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INDEBTEDNESS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | The following table summarizes the Company's long-term debt as of the dates presented (in millions):
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Schedule of Revolving Credit Facilities | The commitments and available borrowing capacity under the Revolver were as follows as of the dates presented:
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Schedule of Aggregate Maturities of Long-term Debt | As of December 31, 2020, the Company's contractual maturities of its debt are as follows (in millions):
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COMMITMENTS AND CONTINGENT LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restructuring Cost Reserve | Changes in restructuring and exit activity-related obligations during the year ended December 31, 2020 are summarized as follows:
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STOCK-BASED COMPENSATION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Activity | The following table summarizes activity during 2020 with respect to restricted shares (shares in thousands):
The following table summarizes activity during 2020 with respect to RSUs (units in thousands):
(1)The weighted-average grant date fair values of PBRSUs forfeited in 2020 and outstanding as of December 31, 2020, reflect the modifications noted above.
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Schedule of Assumptions | The Company's assumptions used as inputs into the valuation process are based on the expected life, which matches the applicable vesting period. The following weighted-average assumptions were used as inputs into the valuation of the MBRSUs granted during the fiscal years indicated:
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Schedule of Stock Options Activity | The following table summarizes activity during 2020 with respect to stock options (shares in thousands):
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STOCKHOLDERS' EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Common Stock Outstanding | The following table presents the change in the number of shares of common stock outstanding during the years ended December 2020, 2019, and 2018 (table in thousands and is inclusive of non-voting restricted shares):
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Schedule of Components of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the changes in AOCL by component during the years presented (in millions):
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Schedule of Reclassifications Made From Accumulated Other Comprehensive Income (Loss) to the statement of Operations | The following pension and OPEB reclassifications were made from AOCL into earnings during the periods presented (in millions):
(1)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs. See Note 10 for additional information.
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PREFERRED STOCK (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Temporary Equity Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll-forward of the Company's preferred stock | The following table presents a roll-forward of the Company's preferred stock for the periods presented (in millions, except shares, which are in thousands):
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EARNINGS PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Basic to Dilutive Average Common Shares | The following table sets forth the computation of basic and diluted EPS for the periods presented (in millions):
(1)For the year ended December 31, 2020, an aggregate of 0.3 million potentially dilutive securities representing options to purchase common stock and unvested shares of restricted stock, and common shares issuable upon assumed conversion of the Series A Preferred Stock totaling 4.4 million shares had the effect of being anti-dilutive and were excluded from the computation of diluted EPS. For the year ended December 31, 2018, less than 0.1 million of potentially dilutive securities representing options to purchase common stock were excluded from the computation of diluted EPS on account of being anti-dilutive. There were no exclusions for the year ended December 31, 2019.
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Before Income Tax Expense | The source of earnings before income taxes consisted of the following (in millions):
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Schedule of Income (Benefit) Tax Expense | Income tax expense (benefit) is comprised of the following (in millions):
On March 27, 2020, the U.S. federal government enacted tax legislation under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") in response to the economic impacts of the spread of COVID-19. The CARES Act provides, among other things, relief to corporate taxpayers by permitting additional carryback allowances for net operating losses ("NOLs") generated in tax years 2018 through 2020, and additional depreciation deductions related to qualified improvement property. The CARES Act also provides for changes to the limitations on interest expense deductibility for tax years beginning in 2019 and 2020.
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Schedule of Tax Effects of Temporary Differences that Give Rise to the Deferred Tax Assets and Liabilities | The following table sets forth the tax effects of temporary differences that give rise to the Company's deferred tax assets and liabilities (in millions):
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Summary of Activity in Deferred Tax Asset Valuation Allowance | The following table summarizes the activity related to the Company's deferred tax asset valuation allowance and the changes therein during the periods presented (in millions):
(1)During 2020 and 2019, the valuation allowance related to the NOL carryforward from operations in Germany was partially released. (2)Primarily foreign exchange impact
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Schedule of Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax Rate | The following table sets forth a reconciliation of the U.S. statutory federal income tax rate to the Company's effective income tax (benefit) rate for the following annual periods:
(1)Includes the tax effects of income tax rate differentials, deductions and credits applicable to the operations of the Company's foreign subsidiaries. (2)During 2018, the Company reversed a provisional amount recorded in December 2017 (the month in which the Tax Cuts and Jobs Act was enacted) related to withholding taxes on the repatriation of certain foreign earnings, effectively resulting in a tax benefit of $1.7 million. (3)Primarily reflects the benefit derived from carrying back the domestic NOL generated in 2020 to the 2015 tax year. (4)Primarily reflects the tax effects of certain nondeductible items (not separately stated above).
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Summarizes the Activity Related to the Entity's Unrecognized Tax Benefits | The following table presents a reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the periods presented (in millions):
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OTHER INCOME, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Income, Net | The components of other income, net are as follows (in millions):
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SEGMENT AND GEOGRAPHIC REGION INFORMATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information | The table below summarizes the Company’s segment information for the years presented, which has been recast to conform to the reporting structure in effect after the Segment Reorganization (in millions):
1.Intersegment sales are presented on a cost-plus basis which takes into consideration the effect of transfer pricing between legal entities. 2.Reflects pension settlement charges of $4.8 million, $21.0 million, and $5.7 million during 2020, 2019, and 2018, respectively; restructuring charges of $20.3 million, $0.8 million, and $2.6 million during 2020, 2019, and 2018, respectively; a $12.4 million loss on fair value remeasurement of contingent consideration and a $1.4 million intangible asset impairment charge during 2020. 3.Lifestyle and Corporate results for 2020 reflect restructuring charges of $0.8 million and $7.4 million, respectively. Lifestyle results for 2019 reflect a $6.5 million intangible asset impairment charge. Lifestyle and Corporate results for 2018 reflect charges of $0.6 million and $1.3 million, respectively, related to the acquisition of Muuto. 4.The Company does not allocate interest expense or other (income) expense, net to the reportable segments. 5.The amounts reported above do not account for the change in accrued capital costs during the years ended December 31, 2020, 2019 or 2018.
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Schedule of Information About the Geographical Areas in Which the Company Operates | The table below contains information about the geographical areas in which the Company operates. Sales are attributed to the geographic areas based on the origin of sale, and property, plant, and equipment, net is based on the geographic area in which the asset resides (in millions):
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DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Previous reporting period lag | 1 month | |
Elimination of reporting lag | $ 0.6 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020
USD ($)
plan
|
Dec. 31, 2019
USD ($)
plan
|
Dec. 31, 2018
USD ($)
|
|
Defined Benefit Plan Disclosure [Line Items] | |||
Maximum term of original maturity to classify instruments as cash and cash equivalents | 3 months | ||
Research and development expenses | $ | $ 14.2 | $ 16.4 | $ 20.1 |
Pension Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Number of plans | 2 | 2 | |
Number of plans terminated during the period | 1 | ||
Other Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Number of plans | 4 | 4 |
REVENUE - Contract Balances (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Revenue from Contract with Customer [Abstract] | ||
Contract liability | $ 33.8 | $ 32.5 |
Revenue recognized that was included in contract liability | $ 31.9 | $ 31.1 |
REVENUE - Allowance for Doubtful Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | $ 4.0 | $ 3.7 | $ 4.0 |
Provision | 1.3 | 0.9 | 0.1 |
Charge-Offs | 0.5 | 0.7 | 0.4 |
Other | 0.1 | 0.1 | 0.0 |
Balance at End of Year | $ 4.9 | $ 4.0 | $ 3.7 |
ACQUISITIONS - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions |
Jan. 25, 2018 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 349.8 | $ 332.1 | $ 320.8 | |
Muuto Acquisition | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 7.6 | |||
Customer receivables | 8.6 | |||
Inventory | 11.1 | |||
Other current assets | 0.4 | |||
Property, plant, and equipment, net | 1.3 | |||
Intangible assets | 135.6 | |||
Other non-current assets | 0.3 | |||
Total assets acquired | 164.9 | |||
Accounts payable | 3.4 | |||
Other current liabilities | 10.6 | |||
Deferred income taxes | 29.9 | |||
Total liabilities assumed | 43.9 | |||
Net assets acquired | 121.0 | |||
Purchase price | 315.3 | |||
Goodwill | $ 194.3 |
ACQUISITIONS - Pro Forma (Details) - Muuto Acquisition $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Business Acquisition [Line Items] | |
Pro forma sales | $ 1,306.4 |
Pro forma net earnings attributable to Knoll, Inc. stockholders | $ 79.0 |
INVENTORIES (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 49.3 | $ 58.7 |
Work-in-process | 6.7 | 8.1 |
Finished goods | 137.1 | 129.1 |
Inventories, net | $ 193.1 | $ 195.9 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET -Tested for Impairment (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Oct. 01, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Goodwill [Line Items] | ||||
Goodwill | $ 349.8 | $ 332.1 | $ 320.8 | |
Office (historical) | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 58.4 | |||
Excess Fair Value | 10.00% | |||
Lifestyle (historical) | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 98.8 | |||
Excess Fair Value | 20.00% | |||
Muuto | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 183.1 | |||
Excess Fair Value | 5.00% |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Schedule of Changes in the Carrying Amount of Goodwill by Reportable Segment (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Changes in the carrying amount of goodwill | ||
Balance as of beginning of period | $ 332.1 | $ 320.8 |
Foreign currency translation adjustment | 17.7 | (3.6) |
Goodwill acquired | 14.9 | |
Balance as of end of period | 349.8 | 332.1 |
Office Segment | ||
Changes in the carrying amount of goodwill | ||
Balance as of beginning of period | 54.3 | 39.1 |
Foreign currency translation adjustment | 0.2 | 0.3 |
Goodwill acquired | 14.9 | |
Balance as of end of period | 54.5 | 54.3 |
Lifestyle Segment | ||
Changes in the carrying amount of goodwill | ||
Balance as of beginning of period | 277.8 | 281.7 |
Foreign currency translation adjustment | 17.5 | (3.9) |
Goodwill acquired | 0.0 | |
Balance as of end of period | $ 295.3 | $ 277.8 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Summary of Finite and Indefinite Lived Intangible Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Finite-lived intangible assets: | ||
Accumulated Amortization | $ (50.9) | $ (39.2) |
Intangible assets, gross | 398.8 | 387.4 |
Intangible assets, net | 347.9 | 348.2 |
Customer relationships | ||
Finite-lived intangible assets: | ||
Finite lived intangible assets, gross | 84.2 | 78.9 |
Accumulated Amortization | (32.9) | (25.0) |
Net Amount | 51.3 | 53.9 |
Various | ||
Finite-lived intangible assets: | ||
Finite lived intangible assets, gross | 36.2 | 30.9 |
Accumulated Amortization | (18.0) | (14.2) |
Net Amount | 18.2 | 16.7 |
Tradenames | ||
Indefinite-lived intangible assets: | ||
Indefinite-lived intangible assets | $ 278.4 | $ 277.6 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Trade Names Tested For Impairment (Details) $ in Millions |
Oct. 01, 2020
USD ($)
|
---|---|
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible asset impairment test, measurement, royalty rate | 1.50% |
Indefinite- lived intangible asset, impairment test, measurement, discount rate | 13.00% |
Knoll | |
Indefinite-lived Intangible Assets [Line Items] | |
Carrying Amount | $ 187.8 |
Excess Fair Value | 25.00% |
Holly Hunt | |
Indefinite-lived Intangible Assets [Line Items] | |
Carrying Amount | $ 23.5 |
Excess Fair Value | 1.00% |
Muuto | |
Indefinite-lived Intangible Assets [Line Items] | |
Carrying Amount | $ 62.1 |
Muuto | Minimum | |
Indefinite-lived Intangible Assets [Line Items] | |
Excess Fair Value | 10000000.00% |
Muuto | Maximum | |
Indefinite-lived Intangible Assets [Line Items] | |
Excess Fair Value | 20000000.00% |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Future Amortization of Intangible Assets (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 | $ 10.3 |
2022 | 10.0 |
2023 | 9.8 |
2024 | 8.2 |
2025 | $ 6.9 |
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued employee compensation | $ 25.8 | $ 37.4 |
Customer deposits | 33.8 | 32.5 |
Warranty | 10.5 | 10.1 |
Other | 43.4 | 40.3 |
Other current liabilities | $ 113.5 | $ 120.3 |
LEASES - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2018 |
|
Lessee, Lease, Description [Line Items] | ||
Lease termination period | 1 year | |
Leases rent expense | $ 32.1 | |
Lease not yet commenced, right-of-use asset | $ 37.9 | |
Lease not yet commenced, liability | $ 37.9 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lease terms | 1 year | |
Lease renewal term | 1 year | |
Lease not yet commenced, term of contract | 3 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lease terms | 16 years | |
Lease renewal term | 6 years | |
Lease not yet commenced, term of contract | 11 years |
LEASES - Components of Lease Cost (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Lease cost: | ||
Operating lease cost | $ 33.0 | $ 28.6 |
Short-term lease cost | 4.2 | 3.3 |
Sublease income | (0.2) | (0.2) |
Total lease cost | $ 37.0 | $ 31.7 |
LEASES - Schedule of Other Lease Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Weighted-average remaining lease term (in years) | ||
Weighted-average remaining lease term (in years) | 7 years 2 months 12 days | 5 years 10 months 24 days |
Lease Weighted Average Discount Rate [Abstract] | ||
Weighted-average discount rate | 3.80% | 4.90% |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 30.4 | $ 29.0 |
ROU assets obtained in exchange for new operating lease liabilities: | ||
Operating leases | $ 80.3 | $ 15.8 |
LEASES - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2021 | $ 33.7 |
2022 | 30.8 |
2023 | 27.9 |
2024 | 24.5 |
2025 | 18.4 |
Thereafter | 59.1 |
Total lease payments | 194.4 |
Less imputed interest | (26.0) |
Total lease liability | $ 168.4 |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Balance Sheet and Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Pension Benefits | ||
Amounts recognized in the consolidated balance sheets consist of: | ||
Other current liabilities | $ 0.0 | $ 0.0 |
Pension Liability | (24.2) | (22.0) |
Other noncurrent liabilities | 0.0 | 0.0 |
Net amount recognized | (24.2) | (22.0) |
Amounts recognized in accumulated other comprehensive income (loss) before taxes: | ||
Net actuarial loss | 49.0 | 49.2 |
Prior service (credit) | 0.0 | 0.0 |
Net amount recognized | 49.0 | 49.2 |
Other Benefits | ||
Amounts recognized in the consolidated balance sheets consist of: | ||
Other current liabilities | (0.3) | (0.3) |
Pension Liability | 0.0 | 0.0 |
Other noncurrent liabilities | (3.9) | (3.6) |
Net amount recognized | (4.2) | (3.9) |
Amounts recognized in accumulated other comprehensive income (loss) before taxes: | ||
Net actuarial loss | 1.5 | 1.1 |
Prior service (credit) | (1.4) | (1.5) |
Net amount recognized | $ 0.1 | $ (0.4) |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Schedule of Other Changes to Benefit Obligation (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Pension Benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Net actuarial loss | $ 6.0 | $ 15.1 |
Amortization of: | ||
Prior service credit | 0.0 | 0.0 |
Actuarial (loss) gain | (1.4) | (0.8) |
(Loss) gain recognized related to settlement | (4.8) | (21.0) |
Total recognized in OCI | (0.2) | (6.7) |
Other Benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Net actuarial loss | 0.3 | 0.3 |
Amortization of: | ||
Prior service credit | 0.2 | 0.7 |
Actuarial (loss) gain | 0.0 | (0.1) |
(Loss) gain recognized related to settlement | 0.0 | 0.2 |
Total recognized in OCI | $ 0.5 | $ 1.1 |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Weighted-Average Asset Allocations (Details) - Pension Benefits |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Plan asset allocation | 100.00% | 100.00% |
Fixed income funds | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Plan asset allocation | 45.00% | 46.00% |
Return seeking (growth assets) funds | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Plan asset allocation | 55.00% | 54.00% |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Estimated Future Benefit Payments (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Pension Benefits | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
2021 | $ 12.9 |
2022 | 12.9 |
2023 | 12.7 |
2024 | 12.6 |
2025 | 12.6 |
2026 - 2030 | 56.2 |
Other Benefits | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
2021 | 0.3 |
2022 | 0.3 |
2023 | 0.3 |
2024 | 0.3 |
2025 | 0.3 |
2026 - 2030 | $ 1.3 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Loss on fair value remeasurement of contingent consideration | $ 12.5 | $ (0.8) | $ (0.3) |
Level 3 | Other current liabilities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration, liability, current | 1.2 | ||
Level 3 | Other noncurrent liabilities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration, liability, noncurrent | $ 13.3 | ||
Fair Value, Measurements, Recurring | Level 3 | Fully | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration, liability, discount rate | pURE | 0.025 | ||
Loss on fair value remeasurement of contingent consideration | $ 12.5 |
INDEBTEDNESS - Summary of Long-term Debt (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 313.2 | $ 450.3 |
Less: Current maturities of long-term debt | 14.6 | 17.1 |
Less: Unamortized debt issuance costs | 3.4 | 4.3 |
Long-term debt | 295.2 | 428.9 |
Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Total | 61.0 | 138.5 |
U.S. term loan | ||
Debt Instrument [Line Items] | ||
Total | 196.2 | 228.1 |
Multi-currency term loans | ||
Debt Instrument [Line Items] | ||
Total | $ 56.0 | $ 83.7 |
INDEBTEDNESS - Commitments and Available Borrowing Capacity Under the Revolver (Details) - Credit Agreement - Revolving Credit Facility - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Commitments | $ 400,000,000.0 | $ 400,000,000.0 |
Outstanding Borrowings | 61,000,000.0 | 138,500,000 |
Letter of Credit Outstanding | 5,100,000 | 5,100,000 |
Borrowing Capacity | $ 333,900,000 | $ 256,400,000 |
INDEBTEDNESS - Schedule of Aggregate Maturities of Long-term Debt (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Disclosure [Abstract] | ||
2021 | $ 14.6 | |
2022 | 14.6 | |
2023 | 14.6 | |
2024 | 269.4 | |
Total | $ 313.2 | $ 450.3 |
COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Changes in warranty reserve | |||
Balance, beginning of the year | $ 10.1 | $ 9.6 | $ 9.2 |
Provision for warranty claims | 6.5 | 8.4 | 7.7 |
Warranty claims settled | (6.1) | (7.8) | (7.9) |
Warranties acquired through business acquisition | 0.0 | 0.0 | 0.6 |
Foreign currency translation adjustment | 0.0 | (0.1) | 0.0 |
Balance, end of the year | $ 10.5 | $ 10.1 | $ 9.6 |
RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES - Restructuring Reserve (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Balance as of December 31, 2019 | $ 0.2 |
Provisions and accruals | 27.1 |
Cash payments | (25.2) |
Balance as of December 31, 2020 | 2.1 |
North America Operations Optimization | |
Restructuring Reserve [Roll Forward] | |
Balance as of December 31, 2019 | 0.0 |
Provisions and accruals | 14.1 |
Cash payments | (14.0) |
Balance as of December 31, 2020 | 0.1 |
Workforce Reduction and Other Cost Initiatives | |
Restructuring Reserve [Roll Forward] | |
Balance as of December 31, 2019 | 0.2 |
Provisions and accruals | 13.0 |
Cash payments | (11.2) |
Balance as of December 31, 2020 | $ 2.0 |
STOCK-BASED COMPENSATION - Assumptions Used to Estimate Fair Value of Restricted Stock Units (Details) - MBRSUs - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Assumptions used to compute fair value : | |||
Weighted-average grant date fair value | $ 11.46 | $ 14.75 | $ 13.87 |
Volatility | 28.30% | 28.60% | 27.30% |
Risk free interest rate | 1.30% | 2.50% | 2.30% |
Expected life | 3 years | 3 years | 3 years |
Expected dividend yield | 3.10% | 2.90% | 2.80% |
STOCK-BASED COMPENSATION - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
$ / shares
shares
| |
Number of Options | |
Outstanding at beginning of year (in shares) | shares | 110 |
Granted (in shares) | shares | 0 |
Outstanding at end of year (in shares) | shares | 110 |
Exercisable at end of year (in shares) | shares | 20 |
Weighted-Average Exercise Price | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 20.83 |
Granted (in dollars per share) | $ / shares | 0 |
Outstanding at end of year (in dollars per share) | $ / shares | 20.83 |
Exercisable at end of year (in dollars per share) | $ / shares | $ 22.59 |
Weighted- Average Remaining Contractual Life (years) | |
Outstanding at end of year (in years) | 7 years 1 month 6 days |
Exercisable at end of year (in years) | 2 years 7 months 6 days |
Aggregate Intrinsic Value | |
Outstanding at end of year | $ | $ 0.0 |
Exercisable at end of year | $ | $ 0.0 |
STOCKHOLDERS' EQUITY - Common Stock (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Increase (Decrease) in Stockholders' Equity | |||
Shares outstanding, beginning (in shares) | 49,775 | 49,431 | 49,339 |
Shares issued under stock incentive plan, net of awards surrender to pay applicable taxes (in shares) | 870 | 344 | 92 |
Shares outstanding, ending (in shares) | 50,645 | 49,775 | 49,431 |
STOCKHOLDERS' EQUITY - Narrative (Details) - shares |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Equity [Abstract] | ||
Treasury shares (in shares) | 16,813,000 | 16,521,000 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Numerator: | |||
Net earnings | $ 7.7 | $ 67.5 | $ 73.3 |
Less: Preferred stock dividends | (3.3) | 0.0 | 0.0 |
Net earnings available to common stockholders (Basic and Diluted) | $ 4.4 | $ 67.5 | $ 73.3 |
Denominator: | |||
Denominator for basic earnings per share - weighted-average shares (in shares) | 49,077,000 | 48,846,000 | 48,657,000 |
Potentially dilutive shares resulting from stock plans (in shares) | 453,000 | 611,000 | 561,000 |
Denominator for diluted earnings per share - weighted-average shares (in shares) | 49,530,000 | 49,457,000 | 49,218,000 |
Net earnings per share: | |||
Basic (in dollars per share) | $ 0.09 | $ 1.38 | $ 1.51 |
Diluted (in dollars per share) | $ 0.09 | $ 1.36 | $ 1.49 |
Common Stock Restricted Stock And Restricted Stock Units | |||
Net earnings per share: | |||
Antidilutive equity awards not included in weighted-average common shares—diluted (in shares) | 300,000 | 0 | 100,000 |
Common Stock Issued, Conversion of Series A Preferred Stock | |||
Net earnings per share: | |||
Antidilutive equity awards not included in weighted-average common shares—diluted (in shares) | 4,400,000 |
INCOME TAXES - Components of Income Tax Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
U.S. operations | $ (21.2) | $ 50.9 | $ 67.3 |
Foreign operations | 28.1 | 40.0 | 30.9 |
Income before income tax expense (benefit) | $ 6.9 | $ 90.9 | $ 98.2 |
INCOME TAXES - Summary of Current and Deferred Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Current: | |||
Federal | $ (9.3) | $ 8.5 | $ 4.3 |
State | (1.0) | 5.3 | 2.1 |
Foreign | 5.2 | 10.9 | 13.7 |
Total current | (5.1) | 24.7 | 20.1 |
Deferred: | |||
Federal | 3.4 | (0.7) | 6.3 |
State | (0.5) | (0.4) | 0.9 |
Foreign | 1.4 | (0.2) | (2.4) |
Total deferred | 4.3 | (1.3) | 4.8 |
Income tax expense (benefit) | $ (0.8) | $ 23.4 | $ 24.9 |
INCOME TAXES - Narrative (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Foreign | |
Operating loss carryforwards | |
Net operating loss carryforwards | $ 18.3 |
State and Local | |
Operating loss carryforwards | |
Net operating loss carryforwards | $ 1.2 |
INCOME TAXES - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Deferred tax assets | ||
Accounts receivable, principally due to allowance for doubtful accounts | $ 1.8 | $ 1.4 |
Inventories | 7.0 | 5.9 |
NOL carryforwards | 6.3 | 5.0 |
Operating lease liabilities | 35.9 | 25.3 |
Accrued pension | 6.3 | 5.8 |
Stock-based compensation | 5.3 | 4.8 |
Compensation-related accruals | 0.1 | 1.2 |
Warranty | 2.7 | 2.7 |
OPEB obligation | 1.1 | 1.0 |
Accrued liabilities and other items | 5.5 | 4.5 |
Gross deferred tax assets | 72.0 | 57.6 |
Valuation allowance | (3.8) | (4.3) |
Net deferred tax assets | 68.2 | 53.3 |
Deferred tax liabilities: | ||
ROU assets | (30.9) | (21.5) |
Intangibles | (94.6) | (92.3) |
Plant and equipment | (33.8) | (24.5) |
Gross deferred tax liabilities | (159.3) | (138.3) |
Net deferred tax liabilities | $ (91.1) | $ (85.0) |
INCOME TAXES - Summary of Activity in Deferred Tax Asset Valuation Allowance (Details) - SEC Schedule, 12-09, Valuation Allowance, Deferred Tax Asset - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | $ 4.3 | $ 4.8 | $ 4.8 |
SEC Schedule, 12-09, Valuation Allowances and Reserves, Deduction | (0.8) | (0.2) | 0.0 |
Other | 0.3 | (0.3) | 0.0 |
Balance at End of Year | $ 3.8 | $ 4.3 | $ 4.8 |
INCOME TAXES - Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Federal statutory tax rate | 21.00% | 21.00% | 21.00% |
Increase (decrease) in the tax rate resulting from: | |||
State taxes, net of federal effect | (15.40%) | 4.20% | 2.40% |
Foreign operations, net | 19.30% | 3.20% | 0.70% |
Research and development tax credits | (16.40%) | (1.10%) | (1.10%) |
Nondeductible interest | 9.90% | 0.80% | 0.80% |
Nondeductible officers' compensation | 13.60% | 0.70% | 0.70% |
Impact of Tax Cuts and Jobs Act of 2017 | 0.00% | 0.00% | (2.90%) |
Impact of the CARES Act | (49.60%) | 0.00% | 0.00% |
Return to provision adjustments | 24.10% | (3.70%) | 1.10% |
Change in valuation allowance against deferred tax assets | (11.20%) | (0.30%) | 0.00% |
Other | (6.00%) | 1.00% | 2.70% |
Effective tax (benefit) rate | (10.70%) | 25.80% | 25.40% |
Tax benefit as a result of the Tax Cuts and Jobs Act | $ 1.7 |
INCOME TAXES - Reconciliation of Total Amounts in Unrecognized Income Tax Benefits at Beginning and End of Period (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Activity related to unrecognized tax benefits | |||
Balance, beginning of the year | $ 0.8 | $ 0.9 | $ 0.9 |
Additions for tax position related to the current year | 0.0 | 0.0 | 0.1 |
Lapse of statute of limitations | (0.1) | (0.1) | (0.1) |
Balance, end of the year | $ 0.7 | $ 0.8 | $ 0.9 |
OTHER INCOME, NET (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Other Income and Expenses [Abstract] | |||
Foreign exchange losses (gains) | $ 1.8 | $ 1.5 | $ (2.0) |
Net periodic pension and OPEB benefit credit | (3.4) | (6.4) | (7.1) |
Other, net | 0.1 | 1.1 | (0.5) |
Other income, net | $ (1.5) | $ (3.8) | $ (9.6) |
SEGMENT AND GEOGRAPHIC REGION INFORMATION - Segment Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Financial information of segments | |||
SALES | $ 1,236,400,000 | $ 1,428,100,000 | $ 1,302,300,000 |
DEPRECIATION AND AMORTIZATION | 43,300,000 | 38,500,000 | 34,200,000 |
OPERATING PROFIT | 27,600,000 | 129,800,000 | 115,200,000 |
CAPITAL EXPENDITURES | 41,000,000.0 | 51,900,000 | 41,900,000 |
Pension settlement charges | 4,800,000 | 21,000,000.0 | 5,700,000 |
Restructuring charges | 28,500,000 | ||
Loss on fair value measurement | 12,400,000 | ||
Loss on fair value measurements | 13,800,000 | 6,500,000 | 0 |
Loss on fair value measurements | 1,400,000 | 6,500,000 | 0 |
Tradename - DatesWeiser | |||
Financial information of segments | |||
Loss on fair value measurements | 1,400,000 | 6,500,000 | |
Corporate | |||
Financial information of segments | |||
SALES | 0 | 0 | 0 |
DEPRECIATION AND AMORTIZATION | 300,000 | 500,000 | 600,000 |
OPERATING PROFIT | (37,700,000) | (24,600,000) | (24,300,000) |
CAPITAL EXPENDITURES | 1,100,000 | 1,100,000 | 900,000 |
Restructuring charges | 7,400,000 | ||
Acquisition costs | 1,300,000 | ||
Intersegment Eliminations | |||
Financial information of segments | |||
SALES | 6,300,000 | 9,600,000 | 10,000,000.0 |
Workplace | |||
Financial information of segments | |||
Pension settlement charges | 21,000,000.0 | 5,700,000 | |
Restructuring charges | 20,300,000 | 800,000 | 2,600,000 |
Workplace | Operating Segments | |||
Financial information of segments | |||
SALES | 814,200,000 | 918,400,000 | 833,500,000 |
DEPRECIATION AND AMORTIZATION | 26,600,000 | 23,600,000 | 20,000,000.0 |
OPERATING PROFIT | 27,900,000 | 85,000,000.0 | 73,600,000 |
CAPITAL EXPENDITURES | 29,200,000 | 38,000,000.0 | 33,500,000 |
Workplace | Intersegment Eliminations | |||
Financial information of segments | |||
SALES | 1,300,000 | 3,400,000 | 3,000,000.0 |
Lifestyle | |||
Financial information of segments | |||
SALES | 460,700,000 | 554,300,000 | 505,200,000 |
Restructuring charges | 800,000 | ||
Lifestyle | Operating Segments | |||
Financial information of segments | |||
SALES | 422,200,000 | 509,700,000 | 468,800,000 |
DEPRECIATION AND AMORTIZATION | 16,400,000 | 14,400,000 | 13,600,000 |
OPERATING PROFIT | 37,400,000 | 69,400,000 | 65,900,000 |
CAPITAL EXPENDITURES | 10,700,000 | 12,800,000 | 7,500,000 |
Acquisition costs | 600,000 | ||
Lifestyle | Intersegment Eliminations | |||
Financial information of segments | |||
SALES | $ 5,000,000.0 | $ 6,200,000 | $ 7,000,000.0 |
SEGMENT AND GEOGRAPHIC REGION INFORMATION - Sales and Long Lived Assets by Geographical Region (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Sales to clients attributed to the geographic areas based on the origin of sale | |||
Sales | $ 1,236.4 | $ 1,428.1 | $ 1,302.3 |
Property, plant, and equipment, net | 237.1 | 239.0 | 215.0 |
United States | |||
Sales to clients attributed to the geographic areas based on the origin of sale | |||
Sales | 1,013.6 | 1,183.6 | 1,066.8 |
Property, plant, and equipment, net | 186.8 | 191.3 | 172.7 |
Canada | |||
Sales to clients attributed to the geographic areas based on the origin of sale | |||
Sales | 31.6 | 37.2 | 37.3 |
Property, plant, and equipment, net | 28.9 | 28.9 | 26.9 |
Europe | |||
Sales to clients attributed to the geographic areas based on the origin of sale | |||
Sales | 190.8 | 206.9 | 197.4 |
Property, plant, and equipment, net | 21.4 | 18.8 | 15.4 |
Other | |||
Sales to clients attributed to the geographic areas based on the origin of sale | |||
Sales | 0.4 | 0.4 | 0.8 |
Property, plant, and equipment, net | $ 0.0 | $ 0.0 | $ 0.0 |
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