COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 07, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-12907 | |
Entity Registrant Name | KNOLL, INC. | |
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 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NYSE | |
Trading Symbol | KNL | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001011570 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 49,774,598 | |
Restricted Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 896,181 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 8.3 | $ 1.6 |
Customer receivables, net of allowance for doubtful accounts of $4.3 and $3.7, respectively | 111.2 | 120.2 |
Inventories | 192.6 | 170.5 |
Prepaid and other current assets | 29.8 | 39.3 |
Total current assets | 341.9 | 331.6 |
Property, plant, and equipment, net | 223.5 | 215 |
Goodwill | 329.3 | 320.8 |
Intangible assets, net | 356.1 | 353.9 |
Right-of-use lease assets | 96.8 | 0 |
Other noncurrent assets | 6.8 | 5.6 |
Total assets | 1,354.4 | 1,226.9 |
Current liabilities: | ||
Current maturities of long-term debt | 17 | 17.2 |
Accounts payable | 122.1 | 126.7 |
Current portion of lease liability | 23.2 | 0 |
Other current liabilities | 132.5 | 128.9 |
Total current liabilities | 294.8 | 272.8 |
Long-term debt, net | 440.8 | 443.9 |
Deferred income taxes | 84.4 | 86.5 |
Pension liability | 21.8 | 13.9 |
Lease liability | 87.3 | 0 |
Other noncurrent liabilities | 19.2 | 23.3 |
Total liabilities | 948.3 | 840.4 |
Commitments and contingent liabilities | ||
Equity: | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 66,295,547 and 65,778,891 shares issued, respectively, 49,774,598 and 49,431,178 shares outstanding, respectively, net, at all periods, of treasury shares and inclusive of non-voting restricted shares | 0.5 | 0.5 |
Additional paid-in capital | 63.7 | 58.8 |
Retained earnings | 427.9 | 395.4 |
Accumulated other comprehensive loss | (86) | (68.4) |
Total Knoll, Inc. stockholders’ equity | 406.1 | 386.3 |
Noncontrolling interests | 0 | 0.2 |
Total equity | 406.1 | 386.5 |
Total liabilities and equity | $ 1,354.4 | $ 1,226.9 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 4.3 | $ 3.7 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 66,295,547 | 65,778,891 |
Common stock, shares outstanding (n shares) | 49,774,598 | 49,431,178 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Sales | $ 356.5 | $ 327.7 | $ 1,056.6 | $ 947.6 |
Cost of sales | 216.1 | 204.9 | 651.7 | 597.8 |
Gross profit | 140.4 | 122.8 | 404.9 | 349.8 |
Selling, general, and administrative expenses | 103.6 | 88.7 | 304.9 | 267 |
Restructuring charges | 0.1 | 1.2 | 0.2 | 2.6 |
Operating profit | 36.7 | 32.9 | 99.8 | 80.2 |
Interest expense | 5.5 | 5 | 16.2 | 14.4 |
Loss on extinguishment of debt | 0.4 | 0 | 0.4 | 1.4 |
Pension settlement charge | 9.8 | 0.6 | 10.4 | 5.2 |
Other income, net | (2.5) | (0.2) | (4.1) | (7) |
Income before income tax expense | 23.5 | 27.5 | 76.9 | 66.2 |
Income tax expense | 6 | 7.2 | 19.8 | 17.5 |
Net earnings | $ 17.5 | $ 20.3 | $ 57.1 | $ 48.7 |
Net earnings per common share attributable to Knoll, Inc. stockholders: | ||||
Basic (in dollars per share) | $ 0.36 | $ 0.42 | $ 1.17 | $ 1 |
Diluted (in dollars per share) | 0.35 | 0.41 | 1.16 | 0.99 |
Dividends per share (in dollars per share) | $ 0.17 | $ 0.15 | $ 0.49 | $ 0.45 |
Weighted-average number of common shares outstanding: | ||||
Basic (in shares) | 48,873,186 | 48,694,438 | 48,834,737 | 48,641,595 |
Diluted (in shares) | 49,573,706 | 49,231,376 | 49,359,812 | 49,189,592 |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on interest rate swap, net of tax and amounts reclassified into earnings | $ (0.4) | $ 0.9 | $ (4.7) | $ 2 |
Pension and other post-employment liability adjustment, net of tax | (2.5) | 1.1 | (2) | 9 |
Foreign currency translation adjustment | (4) | (4.6) | (1.7) | (10.9) |
Foreign currency translation adjustment on long term intercompany notes | (7.1) | 3.1 | (9.2) | (2.5) |
Total other comprehensive income (loss), net of tax | (14) | 0.5 | (17.6) | (2.4) |
Total comprehensive income | $ 3.5 | $ 20.8 | $ 39.5 | $ 46.3 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net earnings | $ 17.5 | $ 18 | $ 20.3 | $ 15.3 | $ 57.1 | $ 48.7 | |
Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||
Depreciation | 21.4 | 19 | |||||
Amortization expense (including debt issuance costs) | 7.4 | 7.1 | |||||
Loss on extinguishment of debt | 0.4 | 0 | 0.4 | 1.4 | |||
Pension settlement charges | 10.4 | 5.2 | |||||
Inventory obsolescence | 1.7 | 1.7 | |||||
Unrealized foreign currency losses | 1.3 | 0.4 | |||||
Stock-based compensation | 7.7 | 6.7 | |||||
Bad debt and customer claims | 0.7 | (0.6) | |||||
Other non-cash items | (0.2) | 0.3 | |||||
Changes in assets and liabilities: | |||||||
Customer receivables | 8.1 | (14.7) | |||||
Inventories | (17.6) | (16.2) | |||||
Prepaid and other current assets | 0.9 | 16.6 | |||||
Accounts payable | (5) | 6.2 | |||||
Accrued liabilities | 15.8 | (4.1) | |||||
Other noncurrent assets and liabilities | (12.4) | (13.3) | |||||
Cash provided by operating activities | 98.1 | 63.8 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures | (32.4) | (21.3) | |||||
Purchase of businesses, net of cash acquired | (30.9) | (308) | |||||
Cash used in investing activities | (63.3) | (329.3) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from revolving credit facility | 350.5 | 409 | |||||
Repayment of revolving credit facility | (336.5) | (287.5) | |||||
Proceeds from term loan | 0 | 395.1 | |||||
Repayment of term loan | (12.8) | (224.1) | |||||
Capitalized debt issuance costs | (1.4) | (4.6) | |||||
Payment of fees related to debt extinguishment | 0 | (1) | |||||
Payment of dividends | (24.5) | (22.7) | |||||
Purchase of common stock for treasury | (3.3) | (4.4) | |||||
Cash (used in) provided by financing activities | (28) | 259.8 | |||||
Effect of exchange rate changes on cash and cash equivalents | (0.1) | 10.8 | |||||
Net increase in cash and cash equivalents | 6.7 | 5.1 | |||||
Cash and cash equivalents at beginning of period | $ 1.6 | $ 2.2 | 1.6 | 2.2 | $ 2.2 | ||
Cash and cash equivalents at end of period | $ 8.3 | $ 7.3 | $ 8.3 | $ 7.3 | $ 1.6 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and nine-month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019 . Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed. The condensed consolidated balance sheet of the Company, as of December 31, 2018 , has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Certain reclassifications have been made to prior year balances to conform to current year presentation in the condensed consolidated statement of cash flows. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . New Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 will be effective for the Company as of January 1, 2020. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU, and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU. Accounting Standards Adopted In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million , with an offsetting increase to right-of-use assets of $102.4 million , for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019. In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers . The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) which reduces the complexity of accounting for costs of implementing a cloud computing service arrangement and aligns the accounting for capitalizing implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the component of the hosting arrangement is ready for its intended use. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted the amendment prospectively as of October 1, 2019 and does not expect the adoption to have a material impact on the Company’s condensed consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Leases The Company accounts for leases in accordance with ASC Topic 842, Leases , (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset. The Company determines whether the contracts are considered 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 Condensed Consolidated Balance Sheets. 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 determined (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 Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases. ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of September 30, 2019 , the Company has not incurred any impairment losses. The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis. Lease expense for short-term leases are recognized on a straight-line basis over the lease term. On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases. Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term. All other significant accounting policies are consistent with those disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2018 . |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Disaggregation of Revenue The Company’s revenue presented as “Sales” in the Condensed 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 were as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Office Segment Office Systems $ 111.2 $ 112.3 $ 332.3 $ 322.3 Seating 32.3 30.0 97.8 95.1 Files and Storage 26.0 24.1 78.9 67.7 Ancillary 36.6 24.7 92.5 64.1 Other 13.0 9.5 43.0 31.1 Total Office Segment 219.1 200.6 644.5 580.3 Lifestyle Segment Studio 108.7 98.4 323.5 283.4 Coverings 28.7 28.7 88.6 83.9 Total Lifestyle Segment 137.4 127.1 412.1 367.3 Total Sales $ 356.5 $ 327.7 $ 1,056.6 $ 947.6 Contract Balances The Company’s contract assets consist of trade receivables, the balances of which are included in Customer receivables, net in the Condensed 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 generally deferred and results in the recognition of a contract liability (Customer deposits), which is included in Other current liabilities in the Condensed 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 September 30, 2019 and December 31, 2018 , the contract liability related to customer deposits was $39.9 million and $37.7 million , respectively. During the nine months ended September 30, 2019, the Company recognized revenues that were included in the contract liability at the beginning of the current year of $29.0 million . |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS On August 20, 2019 (the “Acquisition Date”), 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 consists 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 two and four years , respectively (together, the “Earn-Out Consideration”). The estimated fair value of the Earn-Out Consideration is $5.0 million as of the Acquisition Date (see Note 7 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. Adjustments to the initial accounting for the acquisition may occur if additional information is obtained that results in a revision to the analysis of the facts and circumstances that existed as of the Acquisition Date, but no later than one year thereafter (the “Measurement Period”). The results of operations of Fully are reported in the Office segment and have been included in the consolidated results of operations from the Acquisition Date. The results of Fully, as well as pro forma financial information, have not been presented as the financial impact of this acquisition is not considered material. On January 25, 2018, the Company acquired one hundred percent ( 100% ) of the shares of Muuto Holding ApS and MIE4 Holding 5 ApS, which collectively hold substantially all the business operations of Muuto ApS (“Muuto”). Muuto’s affordable luxury products span commercial and residential applications, adding scale and diversity to the Company’s business. The aggregate purchase price for the acquisition was $307.8 million , net of $7.6 million of cash acquired. The Company recorded acquisition costs and certain other costs of $1.6 million within selling, general, and administrative expenses in its Condensed Consolidated Statement of Operations and Comprehensive Income during the nine months ended September 30, 2018. 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): Nine Months Ended September 30, 2018 Pro forma sales $ 951.8 Pro forma net earnings attributable to Knoll, Inc. stockholders $ 53.7 The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented above has been derived from the historical condensed consolidated financial statements of the Company and from the historical consolidated financial statements of Muuto. The pro forma financial information presented above includes adjustment for: (1) incremental amortization expense related to fair value adjustments to identifiable intangible assets, (2) incremental interest expense for outstanding borrowings to reflect the terms of the Amended Credit Agreement, (3) nonrecurring items and (4) the tax effect of the above adjustments. The pro forma information presented for the nine months ended September 30, 2018 includes adjustments for future payments that are considered compensation for post combination service of $2.3 million , acquisition related inventory valuation of $0.9 million , incremental interest expense of $0.9 million , incremental amortization of intangibles of $0.1 million , as well as combined acquisition costs and loss on debt extinguishment of $3.0 million . The income tax impact of these adjustments for the nine months ended September 30, 2018 was $1.1 million . For further information on acquisitions, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Information regarding the Company’s inventories is as follows (in millions): September 30, 2019 December 31, 2018 Raw materials $ 59.7 $ 65.1 Work-in-process 9.1 8.3 Finished goods 123.8 97.1 $ 192.6 $ 170.5 |
PENSION AND OTHER POST-EMPLOYME
PENSION AND OTHER POST-EMPLOYMENT BENEFITS | 9 Months Ended |
Sep. 30, 2019 | |
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS | PENSION AND OTHER POST-EMPLOYMENT BENEFITS The following tables set forth the components of the net periodic benefit cost (credit) for the Company’s pension and other post-employment benefit plans (in millions): Pension Benefits Other Benefits Three Months Ended September 30, Three Months Ended September 30, 2019 2018 2019 2018 Interest cost 2.5 2.6 (0.1 ) — Expected return on plan assets (3.9 ) (4.0 ) — — Amortization of prior service credit — — (0.1 ) (0.2 ) Recognized actuarial loss 0.1 0.1 — — Pension settlement charge (1) 9.8 0.6 — — Net periodic benefit cost (credit) $ 8.5 $ (0.7 ) $ (0.2 ) $ (0.2 ) Pension Benefits Other Benefits Nine Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest cost 7.4 7.6 0.1 0.1 Expected return on plan assets (11.9 ) (13.2 ) — — Amortization of prior service credit — — (0.5 ) (0.5 ) Recognized actuarial loss 0.4 0.8 — (0.1 ) Pension settlement charge (1) 10.4 5.2 — — Net periodic benefit cost (credit) $ 6.3 $ 0.4 $ (0.4 ) $ (0.5 ) __________________________________ (1) The pension settlement charges for the three and nine months ended September 30, 2019 related to cash payments made from the Company’s two domestic defined benefit pension plans (the “Plans”) to settle lump sum elections and to fund the purchase of annuities for certain plan participants associated with the union plan termination, which is expected to be finalized in the fourth quarter of 2019. The pension settlement charges for the three and nine months ended September 30, 2018 related to the Plans’ funding of the purchase of annuities for certain pension plan retirees, as well as cash payments made from the Plans to settle lump sum elections. During the three and nine months ended September 30, 2018, the Company made a voluntary contribution to the tax-qualified U.S. pension plan for Union Employees of $7.9 million |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS 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 Certain financial liabilities are measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. The following table summarizes the valuation of those liabilities as of the dates presented (in millions): Fair Value as of September 30, 2019 Fair Value as of December 31, 2018 Liabilities: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Interest rate swap $ — $ 8.1 $ — $ 8.1 $ — $ 1.7 $ — $ 1.7 Earn-Out Consideration - Fully (1) — — 5.0 5.0 — — — — Contingent consideration related to a previously completed acquisition — — 0.8 0.8 — — 0.8 0.8 (1) The maximum amount of Earn-Out Consideration as of September 30, 2019 is $15.0 million . Changes in the fair value of the Earn-Out Consideration during the Measurement Period attributable to additional information related to the facts and circumstances that existed as of the Acquisition Date will be recorded as an offset to Goodwill. All other changes will be included within Selling, general and administrative expenses. 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. Non-Recurring Fair Value Measurements |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company is exposed to certain market risks, including the effect of changes in interest rates on future interest 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 effective date was December 31, 2018 and the maturity date is January 23, 2023. As of September 30, 2019 , the interest rate swap has a notional amount of $300.0 million , which decreases over time by $50 million increments. The contract has a fixed rate of 2.63% . The following table summarizes the fair value of the Company’s derivative instrument, as well as the location of this instrument on the Condensed Consolidated Balance Sheets as of the dates presented (in millions): Derivatives designated as hedging instruments Balance Sheet Location September 30, 2019 December 31, 2018 Derivative liabilities: Interest rate swap Other current liabilities $ 2.6 $ 0.3 Interest rate swap Other noncurrent liabilities 5.5 1.4 Total derivative liabilities $ 8.1 $ 1.7 The fair value of the swap recorded in Accumulated Other Comprehensive Loss (“AOCL”) may be recognized in the Condensed Consolidated Statement of Operations if certain terms of the agreement change, are modified or if the loan is extinguished. As of September 30, 2019 , there was no hedge ineffectiveness associated with the Company’s interest rate swap and no portion of the cash flow hedge is excluded from the assessment of effectiveness. The Company reclassified $0.3 million and $0.5 million from AOCL to interest expense within the Condensed Consolidated Statement of Operations during the three and nine months ended September 30, 2019 , respectively. The Company expects to reclassify in the next 12 months a loss of approximately $2.6 million from AOCL into earnings, as a component of interest expense, related to the Company’s interest rate swap based on the borrowing rates at September 30, 2019 . |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company has commitments under operating leases for certain machinery and equipment, as well as manufacturing, warehousing, showroom and other facilities used in its operations. The Company 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 elect to extend or renew the lease for 0.1 to 6 years , and some of which may include options to terminate the leases with notice periods of up to 1 year . Certain lease agreements contain provisions for future rent increases. Payments due under lease contracts are fixed. The components of lease cost for the three and nine months ended September 30, 2019 are as follows (in millions): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Lease cost: Operating lease cost $ 7.5 $ 21.2 Short-term lease cost 1.6 2.2 Sublease income — (0.1 ) Total lease cost $ 9.1 $ 23.3 Other lease information as of and for the period ended September 30, 2019 includes: September 30, 2019 Weighted-average remaining lease term (in years) Operating leases 5.9 Weighted-average discount rate Operating leases 4.9 % (dollars in millions) Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 21.4 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 12.3 As of September 30, 2019 , the Company has additional operating leases that have not yet commenced for which it will record a right of use asset and lease liability of approximately $6.5 million . The leases will commence in the first quarter of 2020 with lease terms of approximately 10 years . Future minimum lease payments under non-cancellable leases, net of sublease income, as of September 30, 2019 are as follows (in millions): September 30, 2019 2019 (remaining three months) $ 7.4 2020 28.9 2021 22.2 2022 19.3 2023 16.5 Thereafter 44.0 Total undiscounted lease payments 138.3 Less: imputed interest (26.9 ) Total lease liability $ 111.4 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Other current liabilities are comprised of the following (in millions): September 30, 2019 December 31, 2018 Accrued employee compensation $ 37.2 $ 40.6 Customer deposits 39.9 37.7 Warranty 10.1 9.6 Other 45.3 41.0 Other current liabilities $ 132.5 $ 128.9 |
INDEBTEDNESS
INDEBTEDNESS | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | INDEBTEDNESS The following table summarizes the Company’s long-term debt as of the dates presented: September 30, 2019 December 31, 2018 Revolving credit facility $ 148.5 $ 134.5 Term loans 313.7 330.8 Total long-term debt 462.2 465.3 Less: Current maturities of long-term debt 17.0 17.2 Less: Unamortized debt issuance costs 4.4 4.2 Long-term debt, net $ 440.8 $ 443.9 Credit Facility The commitments and available borrowing capacity under the revolving credit facility (the “Revolver”) were as follows as of the dates presented: Commitments Outstanding Borrowings Letters of Credit Outstanding Borrowing Capacity September 30, 2019 $400.0 $148.5 $5.1 $246.4 December 31, 2018 $400.0 $134.5 $5.2 $260.3 On August 26, 2019, the Company entered into a first amendment to the Third Amended and Restated Credit Agreement (the “Credit Agreement Amendment”), dated as of January 23, 2018. The Credit Agreement Amendment, among other things, extends the maturity of the credit facility from January 2023 to August 2024, and reduces both the applicable rate applied to outstanding borrowings and the commitment fee rate applied to the unutilized balance under the Revolver. The Company incurred $1.9 million of debt issuance costs in connection with the Credit Agreement Amendment, the majority of which were capitalized and will be amortized over the term of the amended credit agreement. The Company also recorded a non-cash charge of approximately $0.4 million for loss on extinguishment of debt related to the balance of unamortized costs associated with lenders that exited the credit facility or reduced their Revolver commitment. The remaining unamortized costs of approximately $3.1 million will also be amortized over the term of the amended credit agreement. At September 30, 2019 , borrowings under the revolving credit facility include $5.0 million at a base rate of 5.50% and $143.5 million at a weighted average LIBOR rate of 3.54% . At December 31, 2018 , borrowings under the revolving credit facility include $2.5 million at a base rate of 6.25% and $132.0 million at a weighted average LIBOR rate of 4.25% . At September 30, 2019 and December 31, 2018, the letters of credit issued under the revolving credit facility incurred interest at 1.50% and 1.75% , respectively. At September 30, 2019 , the U.S. term loan and multi-currency term loan incurred interest at 3.54% and 1.50% , respectively. At December 31, 2018 the U.S. term loan and multi-currency term loan incurred interest at 4.27% and 1.75% , respectively. The Eurocurrency rates used for the U.S. dollar-denominated term loan and the Euro-denominated term loan are one-month LIBOR and one-month Euribor, respectively. The aggregate maturities of long-term debt are as follows: Future minimum debt payments 2019 $ 4.1 2020 17.0 2021 17.0 2022 17.0 2023 17.0 Thereafter 390.1 Total $ 462.2 |
CONTINGENT LIABILITIES AND COMM
CONTINGENT LIABILITIES AND COMMITMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENT LIABILITIES AND COMMITMENTS | CONTINGENT LIABILITIES AND COMMITMENTS Litigation The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business. The Company accrues for such matters when expenditures are probable and reasonably estimable. Based upon information presently known, management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Warranty The Company accrues for estimated future warranty costs in the period in which the sale for the related products is recorded. As warranty estimates are forecasts based on the best available information, primarily historical claims experience, future warranty claims may differ from the amounts accrued. Changes in the Company’s product warranty accrual during the periods presented were as follows (in millions): Balance, December 31, 2018 $ 9.6 Provision for warranty claims 6.7 Warranty claims settled (5.9 ) Foreign currency translation adjustment (0.3 ) Balance, September 30, 2019 $ 10.1 Warranty expense for the three and nine months ended September 30, 2019 was $2.1 million and $6.7 million , respectively. Warranty expense for the three and nine months ended September 30, 2018 was $1.7 million and $4.6 million , respectively. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
EQUITY | EQUITY The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the nine months ended September 30, 2019 (in millions, except share information): Common Additional Retained Accumulated Total Noncontrolling Interests Total Equity Balance at December 31, 2018 $ 0.5 $ 58.8 $ 395.4 $ (68.4 ) $ 386.3 $ 0.2 $ 386.5 Net earnings — — 18.0 — 18.0 — 18.0 Other comprehensive loss — — — (3.6 ) (3.6 ) — (3.6 ) Stock-based compensation, net of forfeitures — 2.2 — — 2.2 — 2.2 Cash dividend ($0.15 per share) — — (7.5 ) — (7.5 ) — (7.5 ) Purchase of common stock (141,738 shares) — (3.0 ) — — (3.0 ) — (3.0 ) Other — 0.4 — — 0.4 (0.2 ) 0.2 Balance at March 31, 2019 $ 0.5 $ 58.4 $ 405.9 $ (72.0 ) $ 392.8 $ — $ 392.8 Net earnings — — 21.7 — 21.7 — 21.7 Other comprehensive loss — — — — — — — Stock-based compensation, net of forfeitures — 2.4 — — 2.4 — 2.4 Cash dividend ($0.17 per share) — — (8.6 ) — (8.6 ) — (8.6 ) Other — 0.1 — — 0.1 — 0.1 Balance at June 30, 2019 $ 0.5 $ 60.9 $ 419.0 $ (72.0 ) $ 408.4 $ — $ 408.4 Net earnings — — 17.5 — 17.5 — 17.5 Other comprehensive loss — — — (14.0 ) (14.0 ) — (14.0 ) Stock-based compensation, net of forfeitures — 3.1 — — 3.1 — 3.1 Cash dividend ($0.17 per share) — — (8.6 ) — (8.6 ) — (8.6 ) Purchase of common stock (11,465 shares) — (0.3 ) — — (0.3 ) — (0.3 ) Balance at September 30, 2019 $ 0.5 $ 63.7 $ 427.9 $ (86.0 ) $ 406.1 $ — $ 406.1 The following table shows the change in the number of shares of common stock outstanding during the nine months ended September 30, 2019 (table in thousands and is exclusive of non-voting restricted shares): Shares outstanding as of December 31, 2018 48,706 Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes 171 Shares issued to Board of Directors in lieu of cash 1 Shares outstanding as of September 30, 2019 48,878 The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the nine months ended September 30, 2018 (in millions, except share information): Common Additional Retained Accumulated Total Noncontrolling Interests Total Equity Balance at December 31, 2017 $ 0.5 $ 54.5 $ 347.3 $ (43.8 ) $ 358.5 $ 0.3 $ 358.8 Adoption of ASU 2018-02 — — 6.3 (6.3 ) — — — Net earnings — — 15.3 — 15.3 — 15.3 Other comprehensive (loss) income — — — (0.8 ) (0.8 ) — (0.8 ) Stock-based compensation, net of forfeitures — 2.4 — — 2.4 — 2.4 Cash dividend ($0.15 per share) — — (7.3 ) — (7.3 ) — (7.3 ) Purchase of common stock (95,412 shares) — (2.0 ) — — (2.0 ) — (2.0 ) Balance at March 31, 2018 $ 0.5 $ 54.9 $ 361.6 $ (50.9 ) $ 366.1 $ 0.3 $ 366.4 Net earnings — — 13.1 — 13.1 — 13.1 Other comprehensive (loss) income — — — (2.2 ) (2.2 ) — (2.2 ) Stock-based compensation, net of forfeitures — 2.1 — — 2.1 — 2.1 Cash dividend ($0.15 per share) — — (7.9 ) — (7.9 ) — (7.9 ) Purchase of common stock — (2.4 ) — — (2.4 ) — (2.4 ) Balance at June 30, 2018 $ 0.5 $ 54.6 $ 366.8 $ (53.1 ) $ 368.8 $ 0.3 $ 369.1 Net earnings — — 20.3 — 20.3 — $ 20.3 Other comprehensive (loss) income — — — 0.5 0.5 — 0.5 Stock-based compensation, net of forfeitures — 2.2 — — 2.2 — 2.2 Cash dividend ($0.15 per share) — — (7.1 ) — (7.1 ) — (7.1 ) Purchase of common stock — — — — — — — Balance at September 30, 2018 $ 0.5 $ 56.8 $ 380.0 $ (52.6 ) $ 384.7 $ 0.3 $ 385.0 The following table shows the change in the number of shares of common stock outstanding during the nine months ended September 30, 2018 (table in thousands and is exclusive of non-voting restricted shares): Shares outstanding as of December 31, 2017 48,498 Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes 194 Shares issued to Board of Directors in lieu of cash 2 Shares outstanding as of September 30, 2018 48,694 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in AOCL by component for the nine months ended September 30, 2019 (in millions): Unrealized gains (losses) on Interest Rate Swaps Foreign Foreign Currency Translation Adjustment on Long-term Intercompany Notes Pension and Total Balance as of December 31, 2018 $ (1.2 ) $ (18.8 ) $ (8.1 ) $ (40.3 ) $ (68.4 ) Other comprehensive loss before reclassifications (6.9 ) (1.7 ) (9.2 ) (13.0 ) (30.8 ) Amounts reclassified from AOCL 0.5 — — 10.3 10.8 Net current-period other comprehensive loss before income tax (6.4 ) (1.7 ) (9.2 ) (2.7 ) (20.0 ) Income tax benefit 1.7 — — 0.7 2.4 Other comprehensive loss (4.7 ) (1.7 ) (9.2 ) (2.0 ) (17.6 ) Balance as of September 30, 2019 $ (5.9 ) $ (20.5 ) $ (17.3 ) $ (42.3 ) $ (86.0 ) The following pension and other post-employment benefit reclassifications were made from AOCL to the Condensed Consolidated Statements of Operations and Other Comprehensive Income (in millions): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Amortization of pension and other post-employment liability adjustments Prior service credits (1) $ (0.1 ) $ (0.2 ) $ (0.5 ) $ (0.5 ) Actuarial losses (1) 0.1 0.1 0.4 0.7 Pension settlement charge 9.8 0.6 10.4 5.2 Total before tax 9.8 0.5 10.3 5.4 Tax benefit (2.7 ) (0.2 ) (2.7 ) (1.4 ) Net of tax $ 7.1 $ 0.3 $ 7.6 $ 4.0 (1) These AOCL components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information. The following table summarizes the unrealized gains (losses) on derivative instruments, including the impact of components reclassified into net income from AOCL, for the three and nine months ended September 30, 2019 and 2018 (in millions): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Unrealized gain (loss) on derivative instruments $ (0.9 ) $ 0.9 $ (6.9 ) $ 2.0 Loss on derivatives reclassified into income 0.3 — 0.5 — Total before tax (0.6 ) 0.9 (6.4 ) 2.0 Tax benefit 0.2 — 1.7 — Net of tax $ (0.4 ) $ 0.9 $ (4.7 ) $ 2.0 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share excludes the dilutive effect of common shares that could potentially be issued due to the exercise of stock options and vesting of unvested restricted stock and restricted stock units, and is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. At September 30, 2019 and 2018 , the Company had restricted stock, restricted stock units and stock options, which could potentially dilute basic earnings per share in the future. The following table sets forth the components used in the calculation of basic and diluted earnings per share for the periods presented (in millions, except per share data, and shares, which are in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator: Net earnings attributable to Knoll, Inc. stockholders $ 17.5 $ 20.3 $ 57.1 $ 48.7 Denominator: Denominator for basic earnings per shares - weighted-average shares 48,873 48,694 48,835 48,642 Effect of dilutive securities: Potentially dilutive shares resulting from stock plans 701 537 525 548 Denominator for diluted earnings per share - weighted-average shares 49,574 49,231 49,360 49,190 Anti-dilutive equity awards not included in weighted-average common shares—diluted — 1 — — Net earnings per common share attributable to Knoll, Inc. stockholders: Basic $ 0.36 $ 0.42 $ 1.17 $ 1.00 Diluted $ 0.35 $ 0.41 $ 1.16 $ 0.99 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company develops interim income tax provisions based on estimates of the effective tax rates expected to apply per tax domicile for the current annual reporting period. These estimates are reevaluated each quarter and updated as necessary. The tax effects of any discrete items are recorded in the period in which they occur and are excluded from the interim estimates of the effective annual rates. The Company’s effective tax rates for the three months ended September 30, 2019 and 2018 was 25.4% and 26.1% , respectively, and 25.7% and 26.4% for the nine months ended September 30, 2019 and 2018 , respectively. Changes in the effective tax rates for the third quarter and nine months ended September 30, 2019, as compared to the same periods in 2018, were primarily driven by the vesting of equity awards. In addition, changes in the relative taxable income in the countries and states in which the Company operates impact the effective tax rate. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two reportable segments: Office and Lifestyle. The Office reportable segment is comprised of the operations of the Office operating segment. The Lifestyle reportable segment is an aggregation of the Lifestyle, Europe, and Muuto operating segments. All unallocated expenses are included within Corporate. The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms in North America and Europe. These products include: office systems furniture, seating, storage, tables, desks and KnollExtra® accessories. The Office segment includes DatesWeiser and Fully. DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard of design, quality and technology integration. Fully is an e-commerce furniture brand selling height-adjustable desks, ergonomic chairs and accessories principally for individual home offices and small businesses. The Lifestyle segment includes KnollStudio®, HOLLY HUNT®, Muuto®, KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. Lifestyle products, which are distributed globally, include iconic seating, lounge furniture, side, café and dining chairs as well as conference, training, dining and occasional tables, lighting, rugs, textiles, high-quality fabrics, felt, leather and related architectural products. During the first quarter of 2019, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As a result, DatesWeiser is now a component of the Office operating segment as opposed to the Lifestyle operating segment. As a result of this change in segment reporting, the Company retrospectively revised prior period results, by segment, to conform to current period presentation. Corporate costs include unallocated costs relating to shared services and general corporate activities such as legal expenses, acquisition expenses, certain finance, human resources, administrative and executive expenses and other expenses that are not directly attributable to an operating segment. Dedicated, direct selling, general and administrative expenses of the segments are included within segment operating profit. Management regularly reviews the costs included in the Corporate function and believes disclosing such information provides more visibility and transparency of how the chief operating decision maker reviews the results for the Company. The tables below present the Company’s segment information with Corporate costs excluded from reporting segment results. Prior year amounts have been recast to conform to the current presentation (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 SALES Office $ 219.1 $ 200.6 $ 644.5 $ 580.3 Lifestyle 137.4 127.1 412.1 367.3 Knoll, Inc. $ 356.5 $ 327.7 $ 1,056.6 $ 947.6 INTERSEGMENT SALES (1) Office $ 0.6 $ 0.4 $ 1.5 $ 1.4 Lifestyle 2.2 2.6 7.2 8.0 Knoll, Inc. $ 2.8 $ 3.0 $ 8.7 $ 9.4 OPERATING PROFIT Office (2) $ 18.3 $ 15.5 $ 46.8 $ 34.7 Lifestyle 25.0 22.7 71.3 63.8 Corporate (3) (6.6 ) (5.3 ) (18.3 ) (18.3 ) Knoll, Inc. $ 36.7 $ 32.9 $ 99.8 $ 80.2 _______________________________________________________________________________ (1) Intersegment sales are presented on a cost-plus basis, which takes into consideration the effect of transfer prices between legal entities. (2) Knoll recorded restructuring charges of $0.1 million and $0.2 million during the three and nine months ended September 30, 2019 , respectively and $1.2 million and $2.6 million during the three and nine months ended September 30, 2018 , respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control. (3) Knoll recorded acquisition costs within the Corporate segment of $0.3 million related to the acquisition of Fully during the three and nine months ended September 30, 2019 and $0.1 million and $1.6 million related to the acquisition of Muuto during the three and nine months ended September 30, 2018. The changes in the carrying amount of goodwill by reportable segment are as follows (in millions): Office Lifestyle Segment Total Balance as of December 31, 2018 $ 39.1 $ 281.7 $ 320.8 Foreign currency translation adjustment 0.2 (8.8 ) (8.6 ) Goodwill from current year acquisition 17.1 — 17.1 Balance as of September 30, 2019 $ 56.4 $ 272.9 $ 329.3 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and nine-month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019 . Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed. The condensed consolidated balance sheet of the Company, as of December 31, 2018 , has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Certain reclassifications have been made to prior year balances to conform to current year presentation in the condensed consolidated statement of cash flows. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . |
New Accounting Pronouncements Not Yet Adopted And Adopted | New Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 will be effective for the Company as of January 1, 2020. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU, and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU. Accounting Standards Adopted In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million , with an offsetting increase to right-of-use assets of $102.4 million , for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019. In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers . The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) which reduces the complexity of accounting for costs of implementing a cloud computing service arrangement and aligns the accounting for capitalizing implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the component of the hosting arrangement is ready for its intended use. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted the amendment prospectively as of October 1, 2019 and does not expect the adoption to have a material impact on the Company’s condensed consolidated financial statements. |
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 Condensed Consolidated Balance Sheets. 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 determined (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 Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases. ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of September 30, 2019 , the Company has not incurred any impairment losses. The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis. Lease expense for short-term leases are recognized on a straight-line basis over the lease term. On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases. Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Net Sales by Product Category | The Company’s sales by product category were as follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Office Segment Office Systems $ 111.2 $ 112.3 $ 332.3 $ 322.3 Seating 32.3 30.0 97.8 95.1 Files and Storage 26.0 24.1 78.9 67.7 Ancillary 36.6 24.7 92.5 64.1 Other 13.0 9.5 43.0 31.1 Total Office Segment 219.1 200.6 644.5 580.3 Lifestyle Segment Studio 108.7 98.4 323.5 283.4 Coverings 28.7 28.7 88.6 83.9 Total Lifestyle Segment 137.4 127.1 412.1 367.3 Total Sales $ 356.5 $ 327.7 $ 1,056.6 $ 947.6 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
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): Nine Months Ended September 30, 2018 Pro forma sales $ 951.8 Pro forma net earnings attributable to Knoll, Inc. stockholders $ 53.7 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Information regarding the Company’s inventories is as follows (in millions): September 30, 2019 December 31, 2018 Raw materials $ 59.7 $ 65.1 Work-in-process 9.1 8.3 Finished goods 123.8 97.1 $ 192.6 $ 170.5 |
PENSION AND OTHER POST-EMPLOY_2
PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |
Schedule of Components of the Net Periodic Benefit Cost | The following tables set forth the components of the net periodic benefit cost (credit) for the Company’s pension and other post-employment benefit plans (in millions): Pension Benefits Other Benefits Three Months Ended September 30, Three Months Ended September 30, 2019 2018 2019 2018 Interest cost 2.5 2.6 (0.1 ) — Expected return on plan assets (3.9 ) (4.0 ) — — Amortization of prior service credit — — (0.1 ) (0.2 ) Recognized actuarial loss 0.1 0.1 — — Pension settlement charge (1) 9.8 0.6 — — Net periodic benefit cost (credit) $ 8.5 $ (0.7 ) $ (0.2 ) $ (0.2 ) Pension Benefits Other Benefits Nine Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest cost 7.4 7.6 0.1 0.1 Expected return on plan assets (11.9 ) (13.2 ) — — Amortization of prior service credit — — (0.5 ) (0.5 ) Recognized actuarial loss 0.4 0.8 — (0.1 ) Pension settlement charge (1) 10.4 5.2 — — Net periodic benefit cost (credit) $ 6.3 $ 0.4 $ (0.4 ) $ (0.5 ) __________________________________ (1) The pension settlement charges for the three and nine months ended September 30, 2019 related to cash payments made from the Company’s two domestic defined benefit pension plans (the “Plans”) to settle lump sum elections and to fund the purchase of annuities for certain plan participants associated with the union plan termination, which is expected to be finalized in the fourth quarter of 2019. The pension settlement charges for the three and nine months ended September 30, 2018 related to the Plans’ funding of the purchase of annuities for certain pension plan retirees, as well as cash payments made from the Plans to settle lump sum elections. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | following table summarizes the valuation of those liabilities as of the dates presented (in millions): Fair Value as of September 30, 2019 Fair Value as of December 31, 2018 Liabilities: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Interest rate swap $ — $ 8.1 $ — $ 8.1 $ — $ 1.7 $ — $ 1.7 Earn-Out Consideration - Fully (1) — — 5.0 5.0 — — — — Contingent consideration related to a previously completed acquisition — — 0.8 0.8 — — 0.8 0.8 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following table summarizes the fair value of the Company’s derivative instrument, as well as the location of this instrument on the Condensed Consolidated Balance Sheets as of the dates presented (in millions): Derivatives designated as hedging instruments Balance Sheet Location September 30, 2019 December 31, 2018 Derivative liabilities: Interest rate swap Other current liabilities $ 2.6 $ 0.3 Interest rate swap Other noncurrent liabilities 5.5 1.4 Total derivative liabilities $ 8.1 $ 1.7 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Components of Lease Cost | The components of lease cost for the three and nine months ended September 30, 2019 are as follows (in millions): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Lease cost: Operating lease cost $ 7.5 $ 21.2 Short-term lease cost 1.6 2.2 Sublease income — (0.1 ) Total lease cost $ 9.1 $ 23.3 Other lease information as of and for the period ended September 30, 2019 includes: September 30, 2019 Weighted-average remaining lease term (in years) Operating leases 5.9 Weighted-average discount rate Operating leases 4.9 % (dollars in millions) Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 21.4 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 12.3 |
Schedule of Future Minimum Lease Payments | Future minimum lease payments under non-cancellable leases, net of sublease income, as of September 30, 2019 are as follows (in millions): September 30, 2019 2019 (remaining three months) $ 7.4 2020 28.9 2021 22.2 2022 19.3 2023 16.5 Thereafter 44.0 Total undiscounted lease payments 138.3 Less: imputed interest (26.9 ) Total lease liability $ 111.4 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities are comprised of the following (in millions): September 30, 2019 December 31, 2018 Accrued employee compensation $ 37.2 $ 40.6 Customer deposits 39.9 37.7 Warranty 10.1 9.6 Other 45.3 41.0 Other current liabilities $ 132.5 $ 128.9 |
INDEBTEDNESS (Tables)
INDEBTEDNESS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of long-term debt | The following table summarizes the Company’s long-term debt as of the dates presented: September 30, 2019 December 31, 2018 Revolving credit facility $ 148.5 $ 134.5 Term loans 313.7 330.8 Total long-term debt 462.2 465.3 Less: Current maturities of long-term debt 17.0 17.2 Less: Unamortized debt issuance costs 4.4 4.2 Long-term debt, net $ 440.8 $ 443.9 |
Schedule of Revolving Credit Facility | The commitments and available borrowing capacity under the revolving credit facility (the “Revolver”) were as follows as of the dates presented: Commitments Outstanding Borrowings Letters of Credit Outstanding Borrowing Capacity September 30, 2019 $400.0 $148.5 $5.1 $246.4 December 31, 2018 $400.0 $134.5 $5.2 $260.3 |
Schedule of Aggregate Maturities of Long-term Debt | The aggregate maturities of long-term debt are as follows: Future minimum debt payments 2019 $ 4.1 2020 17.0 2021 17.0 2022 17.0 2023 17.0 Thereafter 390.1 Total $ 462.2 |
CONTINGENT LIABILITIES AND CO_2
CONTINGENT LIABILITIES AND COMMITMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of changes in the warranty reserve | Changes in the Company’s product warranty accrual during the periods presented were as follows (in millions): Balance, December 31, 2018 $ 9.6 Provision for warranty claims 6.7 Warranty claims settled (5.9 ) Foreign currency translation adjustment (0.3 ) Balance, September 30, 2019 $ 10.1 |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of changes in stockholders equity and noncontrolling interest | The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the nine months ended September 30, 2019 (in millions, except share information): Common Additional Retained Accumulated Total Noncontrolling Interests Total Equity Balance at December 31, 2018 $ 0.5 $ 58.8 $ 395.4 $ (68.4 ) $ 386.3 $ 0.2 $ 386.5 Net earnings — — 18.0 — 18.0 — 18.0 Other comprehensive loss — — — (3.6 ) (3.6 ) — (3.6 ) Stock-based compensation, net of forfeitures — 2.2 — — 2.2 — 2.2 Cash dividend ($0.15 per share) — — (7.5 ) — (7.5 ) — (7.5 ) Purchase of common stock (141,738 shares) — (3.0 ) — — (3.0 ) — (3.0 ) Other — 0.4 — — 0.4 (0.2 ) 0.2 Balance at March 31, 2019 $ 0.5 $ 58.4 $ 405.9 $ (72.0 ) $ 392.8 $ — $ 392.8 Net earnings — — 21.7 — 21.7 — 21.7 Other comprehensive loss — — — — — — — Stock-based compensation, net of forfeitures — 2.4 — — 2.4 — 2.4 Cash dividend ($0.17 per share) — — (8.6 ) — (8.6 ) — (8.6 ) Other — 0.1 — — 0.1 — 0.1 Balance at June 30, 2019 $ 0.5 $ 60.9 $ 419.0 $ (72.0 ) $ 408.4 $ — $ 408.4 Net earnings — — 17.5 — 17.5 — 17.5 Other comprehensive loss — — — (14.0 ) (14.0 ) — (14.0 ) Stock-based compensation, net of forfeitures — 3.1 — — 3.1 — 3.1 Cash dividend ($0.17 per share) — — (8.6 ) — (8.6 ) — (8.6 ) Purchase of common stock (11,465 shares) — (0.3 ) — — (0.3 ) — (0.3 ) Balance at September 30, 2019 $ 0.5 $ 63.7 $ 427.9 $ (86.0 ) $ 406.1 $ — $ 406.1 The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the nine months ended September 30, 2018 (in millions, except share information): Common Additional Retained Accumulated Total Noncontrolling Interests Total Equity Balance at December 31, 2017 $ 0.5 $ 54.5 $ 347.3 $ (43.8 ) $ 358.5 $ 0.3 $ 358.8 Adoption of ASU 2018-02 — — 6.3 (6.3 ) — — — Net earnings — — 15.3 — 15.3 — 15.3 Other comprehensive (loss) income — — — (0.8 ) (0.8 ) — (0.8 ) Stock-based compensation, net of forfeitures — 2.4 — — 2.4 — 2.4 Cash dividend ($0.15 per share) — — (7.3 ) — (7.3 ) — (7.3 ) Purchase of common stock (95,412 shares) — (2.0 ) — — (2.0 ) — (2.0 ) Balance at March 31, 2018 $ 0.5 $ 54.9 $ 361.6 $ (50.9 ) $ 366.1 $ 0.3 $ 366.4 Net earnings — — 13.1 — 13.1 — 13.1 Other comprehensive (loss) income — — — (2.2 ) (2.2 ) — (2.2 ) Stock-based compensation, net of forfeitures — 2.1 — — 2.1 — 2.1 Cash dividend ($0.15 per share) — — (7.9 ) — (7.9 ) — (7.9 ) Purchase of common stock — (2.4 ) — — (2.4 ) — (2.4 ) Balance at June 30, 2018 $ 0.5 $ 54.6 $ 366.8 $ (53.1 ) $ 368.8 $ 0.3 $ 369.1 Net earnings — — 20.3 — 20.3 — $ 20.3 Other comprehensive (loss) income — — — 0.5 0.5 — 0.5 Stock-based compensation, net of forfeitures — 2.2 — — 2.2 — 2.2 Cash dividend ($0.15 per share) — — (7.1 ) — (7.1 ) — (7.1 ) Purchase of common stock — — — — — — — Balance at September 30, 2018 $ 0.5 $ 56.8 $ 380.0 $ (52.6 ) $ 384.7 $ 0.3 $ 385.0 |
Schedule of change in number of shares of common stock outstanding | The following table shows the change in the number of shares of common stock outstanding during the nine months ended September 30, 2019 (table in thousands and is exclusive of non-voting restricted shares): Shares outstanding as of December 31, 2018 48,706 Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes 171 Shares issued to Board of Directors in lieu of cash 1 Shares outstanding as of September 30, 2019 48,878 The following table shows the change in the number of shares of common stock outstanding during the nine months ended September 30, 2018 (table in thousands and is exclusive of non-voting restricted shares): Shares outstanding as of December 31, 2017 48,498 Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes 194 Shares issued to Board of Directors in lieu of cash 2 Shares outstanding as of September 30, 2018 48,694 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The following table summarizes the changes in AOCL by component for the nine months ended September 30, 2019 (in millions): Unrealized gains (losses) on Interest Rate Swaps Foreign Foreign Currency Translation Adjustment on Long-term Intercompany Notes Pension and Total Balance as of December 31, 2018 $ (1.2 ) $ (18.8 ) $ (8.1 ) $ (40.3 ) $ (68.4 ) Other comprehensive loss before reclassifications (6.9 ) (1.7 ) (9.2 ) (13.0 ) (30.8 ) Amounts reclassified from AOCL 0.5 — — 10.3 10.8 Net current-period other comprehensive loss before income tax (6.4 ) (1.7 ) (9.2 ) (2.7 ) (20.0 ) Income tax benefit 1.7 — — 0.7 2.4 Other comprehensive loss (4.7 ) (1.7 ) (9.2 ) (2.0 ) (17.6 ) Balance as of September 30, 2019 $ (5.9 ) $ (20.5 ) $ (17.3 ) $ (42.3 ) $ (86.0 ) |
Reclassification out of accumulated other comprehensive income | The following pension and other post-employment benefit reclassifications were made from AOCL to the Condensed Consolidated Statements of Operations and Other Comprehensive Income (in millions): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Amortization of pension and other post-employment liability adjustments Prior service credits (1) $ (0.1 ) $ (0.2 ) $ (0.5 ) $ (0.5 ) Actuarial losses (1) 0.1 0.1 0.4 0.7 Pension settlement charge 9.8 0.6 10.4 5.2 Total before tax 9.8 0.5 10.3 5.4 Tax benefit (2.7 ) (0.2 ) (2.7 ) (1.4 ) Net of tax $ 7.1 $ 0.3 $ 7.6 $ 4.0 (1) These AOCL components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information. |
Summary of Unrealized Gains (Losses) on Derivative Instruments | The following table summarizes the unrealized gains (losses) on derivative instruments, including the impact of components reclassified into net income from AOCL, for the three and nine months ended September 30, 2019 and 2018 (in millions): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Unrealized gain (loss) on derivative instruments $ (0.9 ) $ 0.9 $ (6.9 ) $ 2.0 Loss on derivatives reclassified into income 0.3 — 0.5 — Total before tax (0.6 ) 0.9 (6.4 ) 2.0 Tax benefit 0.2 — 1.7 — Net of tax $ (0.4 ) $ 0.9 $ (4.7 ) $ 2.0 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of basic to dilutive average common shares | The following table sets forth the components used in the calculation of basic and diluted earnings per share for the periods presented (in millions, except per share data, and shares, which are in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator: Net earnings attributable to Knoll, Inc. stockholders $ 17.5 $ 20.3 $ 57.1 $ 48.7 Denominator: Denominator for basic earnings per shares - weighted-average shares 48,873 48,694 48,835 48,642 Effect of dilutive securities: Potentially dilutive shares resulting from stock plans 701 537 525 548 Denominator for diluted earnings per share - weighted-average shares 49,574 49,231 49,360 49,190 Anti-dilutive equity awards not included in weighted-average common shares—diluted — 1 — — Net earnings per common share attributable to Knoll, Inc. stockholders: Basic $ 0.36 $ 0.42 $ 1.17 $ 1.00 Diluted $ 0.35 $ 0.41 $ 1.16 $ 0.99 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information with Corporate Costs Excluded | The tables below present the Company’s segment information with Corporate costs excluded from reporting segment results. Prior year amounts have been recast to conform to the current presentation (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 SALES Office $ 219.1 $ 200.6 $ 644.5 $ 580.3 Lifestyle 137.4 127.1 412.1 367.3 Knoll, Inc. $ 356.5 $ 327.7 $ 1,056.6 $ 947.6 INTERSEGMENT SALES (1) Office $ 0.6 $ 0.4 $ 1.5 $ 1.4 Lifestyle 2.2 2.6 7.2 8.0 Knoll, Inc. $ 2.8 $ 3.0 $ 8.7 $ 9.4 OPERATING PROFIT Office (2) $ 18.3 $ 15.5 $ 46.8 $ 34.7 Lifestyle 25.0 22.7 71.3 63.8 Corporate (3) (6.6 ) (5.3 ) (18.3 ) (18.3 ) Knoll, Inc. $ 36.7 $ 32.9 $ 99.8 $ 80.2 _______________________________________________________________________________ (1) Intersegment sales are presented on a cost-plus basis, which takes into consideration the effect of transfer prices between legal entities. (2) Knoll recorded restructuring charges of $0.1 million and $0.2 million during the three and nine months ended September 30, 2019 , respectively and $1.2 million and $2.6 million during the three and nine months ended September 30, 2018 , respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control. (3) Knoll recorded acquisition costs within the Corporate segment of $0.3 million related to the acquisition of Fully during the three and nine months ended September 30, 2019 and $0.1 million and $1.6 million related to the acquisition of Muuto during the three and nine months ended September 30, 2018. |
Schedule of Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill by reportable segment are as follows (in millions): Office Lifestyle Segment Total Balance as of December 31, 2018 $ 39.1 $ 281.7 $ 320.8 Foreign currency translation adjustment 0.2 (8.8 ) (8.6 ) Goodwill from current year acquisition 17.1 — 17.1 Balance as of September 30, 2019 $ 56.4 $ 272.9 $ 329.3 |
BASIS OF PRESENTATION - Account
BASIS OF PRESENTATION - Accounting Standards Adopted (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liabilities | $ 111.4 | ||
Right-of-use asset | $ 96.8 | $ 0 | |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liabilities | $ 117.2 | ||
Right-of-use asset | $ 102.4 |
REVENUE - Net Sales by Product
REVENUE - Net Sales by Product Category (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue from External Customer [Line Items] | ||||
Total Sales | $ 356.5 | $ 327.7 | $ 1,056.6 | $ 947.6 |
Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 219.1 | 200.6 | 644.5 | 580.3 |
Lifestyle Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 137.4 | 127.1 | 412.1 | 367.3 |
Office Systems | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 111.2 | 112.3 | 332.3 | 322.3 |
Seating | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 32.3 | 30 | 97.8 | 95.1 |
Files and Storage | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 26 | 24.1 | 78.9 | 67.7 |
Ancillary | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 36.6 | 24.7 | 92.5 | 64.1 |
Other | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 13 | 9.5 | 43 | 31.1 |
Studio | Lifestyle Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 108.7 | 98.4 | 323.5 | 283.4 |
Coverings | Lifestyle Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | $ 28.7 | $ 28.7 | $ 88.6 | $ 83.9 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Customer deposits | $ 39.9 | $ 37.7 |
Revenue recognized | $ 29 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) - USD ($) $ in Millions | Aug. 20, 2019 | Jan. 25, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Business Acquisition [Line Items] | ||||||
Aggregate purchase price | $ 30.9 | $ 308 | ||||
Inventory valuation adjustments | $ 216.1 | $ 204.9 | 651.7 | 597.8 | ||
Interest expense | 5.5 | 5 | 16.2 | 14.4 | ||
Loss on extinguishment of debt | 0.4 | 0 | 0.4 | 1.4 | ||
Income tax expense | $ 6 | $ 7.2 | $ 19.8 | 17.5 | ||
Fully | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate purchase price | $ 30.9 | |||||
Cash acquired from acquisition | 4.1 | |||||
Earn-Out Consideration | $ 5 | |||||
Muuto Acquisition | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate purchase price | $ 307.8 | |||||
Cash acquired from acquisition | $ 7.6 | |||||
Percentage of voting interests acquired | 100.00% | |||||
Acquisition costs | 1.6 | |||||
Interest expense | 0.9 | |||||
Amortization of intangible assets | 0.1 | |||||
Loss on extinguishment of debt | 3 | |||||
Income tax expense | 1.1 | |||||
Muuto Acquisition | Acquisition-related Costs | ||||||
Business Acquisition [Line Items] | ||||||
Compensation for post combination services | 2.3 | |||||
Muuto Acquisition | Fair Value Adjustment to Inventory | ||||||
Business Acquisition [Line Items] | ||||||
Inventory valuation adjustments | $ 0.9 | |||||
Minimum | Fully | ||||||
Business Acquisition [Line Items] | ||||||
Contingent future payments, period | 2 years | |||||
Maximum | Fully | ||||||
Business Acquisition [Line Items] | ||||||
Contingent future payments, period | 4 years |
ACQUISITIONS - Pro Forma Inform
ACQUISITIONS - Pro Forma Information (Details) - Muuto Acquisition $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Acquisition [Line Items] | |
Pro forma sales | $ 951.8 |
Pro forma net earnings attributable to Knoll, Inc. stockholders | $ 53.7 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 59.7 | $ 65.1 |
Work-in-process | 9.1 | 8.3 |
Finished goods | 123.8 | 97.1 |
Inventories, net | $ 192.6 | $ 170.5 |
PENSION AND OTHER POST-EMPLOY_3
PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | ||||
Pension settlement charge | $ 10.4 | $ 5.2 | ||
Number of domestic defined benefit plans | 2 | 2 | ||
Pension Benefits | ||||
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | ||||
Interest cost | $ 2.5 | $ 2.6 | $ 7.4 | 7.6 |
Expected return on plan assets | (3.9) | (4) | (11.9) | (13.2) |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Recognized actuarial loss | 0.1 | 0.1 | 0.4 | 0.8 |
Pension settlement charge | 9.8 | 0.6 | 10.4 | 5.2 |
Net periodic benefit cost (credit) | 8.5 | (0.7) | 6.3 | 0.4 |
Other Benefits | ||||
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | ||||
Interest cost | (0.1) | 0 | 0.1 | 0.1 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service credit | (0.1) | (0.2) | (0.5) | (0.5) |
Recognized actuarial loss | 0 | 0 | 0 | (0.1) |
Pension settlement charge | 0 | 0 | 0 | 0 |
Net periodic benefit cost (credit) | $ (0.2) | $ (0.2) | $ (0.4) | $ (0.5) |
PENSION AND OTHER POST-EMPLOY_4
PENSION AND OTHER POST-EMPLOYMENT BENEFITS - Narrative (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |
U.S. pension plan for Union Employees | $ 7.9 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Aug. 20, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Maximum future payments under the agreement | $ 15 | ||
Earn-Out Consideration - Fully | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | $ 5 | ||
Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 0.8 | $ 0.8 | |
Fair Value, Measurements, Recurring | Earn-Out Consideration - Fully | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 5 | 0 | |
Fair Value, Measurements, Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 0 | 0 | |
Fair Value, Measurements, Recurring | Level 1 | Earn-Out Consideration - Fully | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 0 | 0 | |
Fair Value, Measurements, Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 0 | 0 | |
Fair Value, Measurements, Recurring | Level 2 | Earn-Out Consideration - Fully | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 0 | 0 | |
Fair Value, Measurements, Recurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 0.8 | 0.8 | |
Fair Value, Measurements, Recurring | Level 3 | Earn-Out Consideration - Fully | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Acquisition, contingent consideration | 5 | 0 | |
Interest Rate Swap | Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | 8.1 | 1.7 | |
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | 0 | 0 | |
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | 8.1 | 1.7 | |
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | $ 0 | $ 0 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | |||
Loss recognized in interest expense | $ 0.3 | $ 0.5 | |
Loss expected to be reclassified in the next 12 months | 2.6 | ||
Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Interest rate swap | 8.1 | 8.1 | $ 1.7 |
Interest Rate Swap | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate notional amount | $ 300 | 300 | |
Decrease in notional amount over time | $ 50 | ||
Contract rate | 2.63% | 2.63% | |
Interest Rate Swap | Designated as Hedging Instrument | Other current liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Interest rate swap | $ 2.6 | $ 2.6 | 0.3 |
Interest Rate Swap | Designated as Hedging Instrument | Other noncurrent liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Interest rate swap | $ 5.5 | $ 5.5 | $ 1.4 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Lease termination period | 1 year |
Lease not yet commenced, right-of-use asset | $ 6.5 |
Lease not yet commenced, liability | $ 6.5 |
Lease not yet commenced, term of contract | 10 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms | 1 year |
Lease renewal term | 1 month 6 days |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms | 16 years |
Lease renewal term | 6 years |
LEASES - Components of Lease Co
LEASES - Components of Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 7.5 | $ 21.2 |
Short-term lease cost | 1.6 | 2.2 |
Sublease income | 0 | (0.1) |
Total lease cost | $ 9.1 | $ 23.3 |
LEASES - Schedule of Other Leas
LEASES - Schedule of Other Lease Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Operating leases | |
Weighted-average remaining lease term (in years) | 5 years 10 months 24 days |
Weighted-average discount rate | 4.90% |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 21.4 |
Right-of-use assets obtained in exchange for lease liabilities, Operating leases | $ 12.3 |
LEASES - Schedule of Future Min
LEASES - Schedule of Future Minimum Lease Payments (Details) $ in Millions | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 (remaining three months) | $ 7.4 |
2020 | 28.9 |
2021 | 22.2 |
2022 | 19.3 |
2023 | 16.5 |
Thereafter | 44 |
Total undiscounted lease payments | 138.3 |
Less: imputed interest | (26.9) |
Total lease liability | $ 111.4 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Accrued employee compensation | $ 37.2 | $ 40.6 |
Customer deposits | 39.9 | 37.7 |
Warranty | 10.1 | 9.6 |
Other | 45.3 | 41 |
Other current liabilities | $ 132.5 | $ 128.9 |
INDEBTEDNESS - Schedule of Long
INDEBTEDNESS - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Long-term debt | ||
Total long-term debt | $ 462.2 | $ 465.3 |
Less: Current maturities of long-term debt | 17 | 17.2 |
Less: Unamortized debt issuance costs | 4.4 | 4.2 |
Long-term debt, net | 440.8 | 443.9 |
Revolving credit facility | Revolving Credit Facility | ||
Long-term debt | ||
Long-term debt | 148.5 | 134.5 |
Term loans | ||
Long-term debt | ||
Long-term debt | $ 313.7 | $ 330.8 |
INDEBTEDNESS - Schedule of Cred
INDEBTEDNESS - Schedule of Credit Facility (Details) - Credit Agreement - Revolving Credit Facility - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Line of Credit Facility [Line Items] | ||
Commitments | $ 400,000,000 | $ 400,000,000 |
Outstanding Borrowings | 148,500,000 | 134,500,000 |
Letters of Credit Outstanding | 5,100,000 | 5,200,000 |
Borrowing Capacity | $ 246,400,000 | $ 260,300,000 |
INDEBTEDNESS - Narrative (Detai
INDEBTEDNESS - Narrative (Details) - USD ($) $ in Millions | Aug. 26, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Long-term debt | ||||||
Loss on extinguishment of debt | $ 0.4 | $ 0 | $ 0.4 | $ 1.4 | ||
Borrowings under line of credit | 350.5 | $ 409 | ||||
Credit Agreement | Credit Facility | Base rate | ||||||
Long-term debt | ||||||
Borrowings under line of credit | $ 5 | $ 2.5 | ||||
Basis spread on variable rate (as percent) | 5.50% | 6.25% | ||||
Credit Agreement | Credit Facility | LIBOR | ||||||
Long-term debt | ||||||
Borrowings under line of credit | $ 143.5 | $ 132 | ||||
Basis spread on variable rate (as percent) | 3.54% | 4.25% | ||||
Credit Agreement | Letter of Credit | ||||||
Long-term debt | ||||||
Interest rate | 1.50% | 1.50% | 1.75% | |||
Amended Credit Agreement | ||||||
Long-term debt | ||||||
Deferred financing fees, net | $ 1.9 | |||||
Loss on extinguishment of debt | 0.4 | |||||
Unamortized debt issuance cost | $ 3.1 | |||||
Amended Credit Agreement | Term loan | ||||||
Long-term debt | ||||||
Interest rate | 3.54% | 3.54% | 4.27% | |||
Amended Credit Agreement | Multicurrency Term Loan | ||||||
Long-term debt | ||||||
Interest rate | 1.50% | 1.50% | 1.75% |
INDEBTEDNESS - Aggregate Maturi
INDEBTEDNESS - Aggregate Maturities of Long-term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2019 | $ 4.1 | |
2020 | 17 | |
2021 | 17 | |
2021 | 17 | |
2023 | 17 | |
Thereafter | 390.1 | |
Total | $ 462.2 | $ 465.3 |
CONTINGENT LIABILITIES AND CO_3
CONTINGENT LIABILITIES AND COMMITMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Changes in warranty accrual | ||||
Balance, December 31, 2018 | $ 9.6 | |||
Provision for warranty claims | $ 2.1 | $ 1.7 | 6.7 | $ 4.6 |
Warranty claims settled | (5.9) | |||
Foreign currency translation adjustment | (0.3) | |||
Balance, September 30, 2019 | $ 10.1 | $ 10.1 |
EQUITY - Schedule of Change in
EQUITY - Schedule of Change in Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | $ 408.4 | $ 392.8 | $ 386.5 | $ 369.1 | $ 366.4 | $ 358.8 | $ 386.5 | $ 358.8 |
Net earnings | 17.5 | 21.7 | 18 | 20.3 | 13.1 | 15.3 | 57.1 | 48.7 |
Other comprehensive loss | (14) | (3.6) | 0.5 | (2.2) | (0.8) | (17.6) | (2.4) | |
Stock-based compensation, net of forfeitures | 3.1 | 2.4 | 2.2 | 2.2 | 2.1 | 2.4 | ||
Cash dividend | (8.6) | (8.6) | (7.5) | (7.1) | (7.9) | (7.3) | ||
Purchase of common stock | (0.3) | (3) | (2.4) | (2) | ||||
Other | 0.1 | 0.2 | ||||||
Ending Balance | $ 406.1 | $ 408.4 | $ 392.8 | $ 385 | $ 369.1 | $ 366.4 | 406.1 | 385 |
Cash dividends (in dollars per share) | $ 0.17 | $ 0.17 | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.15 | ||
Purchase of common stock, shares (in shares) | 11,465 | 141,738 | 95,412 | |||||
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | $ 0.5 | $ 0.5 | $ 0.5 | $ 0.5 | $ 0.5 | $ 0.5 | 0.5 | 0.5 |
Ending Balance | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
Additional Paid-In Capital | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | 60.9 | 58.4 | 58.8 | 54.6 | 54.9 | 54.5 | 58.8 | 54.5 |
Stock-based compensation, net of forfeitures | 3.1 | 2.4 | 2.2 | 2.2 | 2.1 | 2.4 | ||
Purchase of common stock | (0.3) | (3) | (2.4) | (2) | ||||
Other | 0.1 | 0.4 | ||||||
Ending Balance | 63.7 | 60.9 | 58.4 | 56.8 | 54.6 | 54.9 | 63.7 | 56.8 |
Retained Earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | 419 | 405.9 | 395.4 | 366.8 | 361.6 | 347.3 | 395.4 | 347.3 |
Net earnings | 17.5 | 21.7 | 18 | 20.3 | 13.1 | 15.3 | ||
Cash dividend | (8.6) | (8.6) | (7.5) | (7.1) | (7.9) | (7.3) | ||
Ending Balance | 427.9 | 419 | 405.9 | 380 | 366.8 | 361.6 | 427.9 | 380 |
Retained Earnings | ASU 2018-02 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Adoption of ASU 2018-02 | 6.3 | |||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | (72) | (72) | (68.4) | (53.1) | (50.9) | (43.8) | (68.4) | (43.8) |
Other comprehensive loss | (14) | (3.6) | 0.5 | (2.2) | (0.8) | |||
Ending Balance | (86) | (72) | (72) | (52.6) | (53.1) | (50.9) | (86) | (52.6) |
Accumulated Other Comprehensive Income (Loss) | ASU 2018-02 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Adoption of ASU 2018-02 | (6.3) | |||||||
Total Knoll, Inc. Stockholders' Equity | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | 408.4 | 392.8 | 386.3 | 368.8 | 366.1 | 358.5 | 386.3 | 358.5 |
Net earnings | 17.5 | 21.7 | 18 | 20.3 | 13.1 | 15.3 | ||
Other comprehensive loss | (14) | (3.6) | 0.5 | (2.2) | (0.8) | |||
Stock-based compensation, net of forfeitures | 3.1 | 2.4 | 2.2 | 2.2 | 2.1 | 2.4 | ||
Cash dividend | (8.6) | (8.6) | (7.5) | (7.1) | (7.9) | (7.3) | ||
Purchase of common stock | (0.3) | (3) | (2.4) | (2) | ||||
Other | 0.1 | 0.4 | ||||||
Ending Balance | 406.1 | 408.4 | 392.8 | 384.7 | 368.8 | 366.1 | 406.1 | 384.7 |
Noncontrolling Interests | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning Balance | 0 | 0 | 0.2 | 0.3 | 0.3 | 0.3 | 0.2 | 0.3 |
Net earnings | 0 | |||||||
Other | (0.2) | |||||||
Ending Balance | $ 0 | $ 0 | $ 0 | $ 0.3 | $ 0.3 | $ 0.3 | $ 0 | $ 0.3 |
EQUITY - Schedule of Change i_2
EQUITY - Schedule of Change in Number of Shares of Common Stock Outstanding (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Shares outstanding, beginning of period (in shares) | 48,706,000 | 48,498,000,000 |
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes (in shares) | 171,000 | 194,000,000 |
Shares issued to Board of Directors in lieu of cash (in shares) | 1,000 | 2,000,000 |
Shares outstanding, end of period (in shares) | 48,878,000 | 48,694,000,000 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Changes by Component (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning Balance | $ 386.5 |
Other comprehensive loss before reclassifications | (30.8) |
Amounts reclassified from AOCL | 10.8 |
Net current-period other comprehensive loss before income tax | (20) |
Income tax benefit | 2.4 |
Other comprehensive loss | (17.6) |
Ending Balance | 406.1 |
Unrealized gains (losses) on Interest Rate Swaps | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning Balance | (1.2) |
Other comprehensive loss before reclassifications | (6.9) |
Amounts reclassified from AOCL | 0.5 |
Net current-period other comprehensive loss before income tax | (6.4) |
Income tax benefit | 1.7 |
Other comprehensive loss | (4.7) |
Ending Balance | (5.9) |
Foreign Currency Translation Adjustment | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning Balance | (18.8) |
Other comprehensive loss before reclassifications | (1.7) |
Amounts reclassified from AOCL | 0 |
Net current-period other comprehensive loss before income tax | (1.7) |
Income tax benefit | 0 |
Other comprehensive loss | (1.7) |
Ending Balance | (20.5) |
Foreign Currency Translation Adjustment on Long-term Intercompany Notes | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning Balance | (8.1) |
Other comprehensive loss before reclassifications | (9.2) |
Amounts reclassified from AOCL | 0 |
Net current-period other comprehensive loss before income tax | (9.2) |
Income tax benefit | 0 |
Other comprehensive loss | (9.2) |
Ending Balance | (17.3) |
Pension and Other Post-Employment Liability Adjustment | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning Balance | (40.3) |
Other comprehensive loss before reclassifications | (13) |
Amounts reclassified from AOCL | 10.3 |
Net current-period other comprehensive loss before income tax | (2.7) |
Income tax benefit | 0.7 |
Other comprehensive loss | (2) |
Ending Balance | (42.3) |
Total | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning Balance | (68.4) |
Ending Balance | $ (86) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Other income, net | $ 2.5 | $ 0.2 | $ 4.1 | $ 7 | ||||
Pension settlement charge | 9.8 | 0.6 | 10.4 | 5.2 | ||||
Income before income tax expense | (23.5) | (27.5) | (76.9) | (66.2) | ||||
Tax benefit | 6 | 7.2 | 19.8 | 17.5 | ||||
Net earnings | (17.5) | $ (21.7) | $ (18) | (20.3) | $ (13.1) | $ (15.3) | (57.1) | (48.7) |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Net Prior Service | ||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Other income, net | (0.1) | (0.2) | (0.5) | (0.5) | ||||
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) | ||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Other income, net | (0.1) | (0.1) | (0.4) | (0.7) | ||||
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Pension Settlement Charge | ||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Pension settlement charge | 9.8 | 0.6 | 10.4 | 5.2 | ||||
Reclassification out of Accumulated Other Comprehensive Income | Pension and Other Post-Employment Liability Adjustment | ||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Income before income tax expense | 9.8 | 0.5 | 10.3 | 5.4 | ||||
Tax benefit | (2.7) | (0.2) | (2.7) | (1.4) | ||||
Net earnings | $ 7.1 | $ 0.3 | $ 7.6 | $ 4 |
ACCUMULATED OTHER COMPREHENSI_5
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Unrealized Gains (Losses) on Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Reclassification Adjustment Out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Tax benefit | $ (6) | $ (7.2) | $ (19.8) | $ (17.5) |
Net of tax | (0.4) | 0.9 | (4.7) | 2 |
Interest Rate Contract | ||||
Reclassification Adjustment Out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Unrealized gain (loss) on derivative instruments | (0.9) | 0.9 | (6.9) | 2 |
Loss on derivatives reclassified into income | 0.3 | 0 | 0.5 | 0 |
Total before tax | (0.6) | 0.9 | (6.4) | 2 |
Tax benefit | 0.2 | 0 | 1.7 | 0 |
Net of tax | $ (0.4) | $ 0.9 | $ (4.7) | $ 2 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | ||||
Net earnings attributable to Knoll, Inc. stockholders | $ 17.5 | $ 20.3 | $ 57.1 | $ 48.7 |
Denominator: | ||||
Weighted-average shares of common stock outstanding—basic (in shares) | 48,873,186 | 48,694,438 | 48,834,737 | 48,641,595 |
Potentially dilutive shares resulting from stock plans (in shares) | 701,000 | 537,000 | 525,000 | 548,000 |
Denominator for diluted earnings per share - weighted-average shares (in shares) | 49,573,706 | 49,231,376 | 49,359,812 | 49,189,592 |
Anti-dilutive equity awards not included in weighted-average common shares—diluted (in shares) | 0 | 1,000 | 0 | 0 |
Net earnings per common share attributable to Knoll, Inc. stockholders: | ||||
Basic (in dollars per share) | $ 0.36 | $ 0.42 | $ 1.17 | $ 1 |
Diluted (in dollars per share) | $ 0.35 | $ 0.41 | $ 1.16 | $ 0.99 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 25.40% | 26.10% | 25.70% | 26.40% |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information with Corporate Costs Excluded (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | |
Financial information of segments | ||||
Number of reportable segments | segment | 2 | |||
SALES | $ 356.5 | $ 327.7 | $ 1,056.6 | $ 947.6 |
OPERATING PROFIT | 36.7 | 32.9 | 99.8 | 80.2 |
Operating Segments | ||||
Financial information of segments | ||||
SALES | 356.5 | 327.7 | 1,056.6 | 947.6 |
INTERSEGMENT SALES | 2.8 | 3 | 8.7 | 9.4 |
Corporate | ||||
Financial information of segments | ||||
OPERATING PROFIT | (6.6) | (5.3) | (18.3) | (18.3) |
Acquisition costs | 0.3 | 0.1 | 0 | 1.6 |
Office | ||||
Financial information of segments | ||||
SALES | 219.1 | 200.6 | 644.5 | 580.3 |
Restructuring charges | 0.1 | 1.2 | 0.2 | 2.6 |
Office | Operating Segments | ||||
Financial information of segments | ||||
SALES | 219.1 | 200.6 | 644.5 | 580.3 |
INTERSEGMENT SALES | 0.6 | 0.4 | 1.5 | 1.4 |
OPERATING PROFIT | 18.3 | 15.5 | 46.8 | 34.7 |
Lifestyle | ||||
Financial information of segments | ||||
SALES | 137.4 | 127.1 | 412.1 | 367.3 |
Lifestyle | Operating Segments | ||||
Financial information of segments | ||||
SALES | 137.4 | 127.1 | 412.1 | 367.3 |
INTERSEGMENT SALES | 2.2 | 2.6 | 7.2 | 8 |
OPERATING PROFIT | $ 25 | $ 22.7 | $ 71.3 | $ 63.8 |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 320.8 |
Foreign currency translation adjustment | (8.6) |
Goodwill from current year acquisition | 17.1 |
Balance at end of period | 329.3 |
Office Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 39.1 |
Foreign currency translation adjustment | 0.2 |
Goodwill from current year acquisition | 17.1 |
Balance at end of period | 56.4 |
Lifestyle Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 281.7 |
Foreign currency translation adjustment | (8.8) |
Goodwill from current year acquisition | 0 |
Balance at end of period | $ 272.9 |