COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 04, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
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 $0.01 per share | |
Trading Symbol | KNL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001011570 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 50,682,053 | |
Restricted Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1,542,698 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 14.5 | $ 8.5 |
Customer receivables, net | 91.7 | 107.4 |
Inventories | 205.4 | 195.9 |
Prepaid expenses and other current assets | 44.9 | 28.8 |
Total current assets | 356.5 | 340.6 |
Property, plant, and equipment, net | 227.6 | 239 |
Goodwill | 340.3 | 332.1 |
Intangible assets, net | 346.6 | 348.2 |
Right-of-use lease assets | 116.2 | 94.4 |
Other non-current assets | 2.4 | 3.6 |
Total assets | 1,389.6 | 1,357.9 |
Current liabilities: | ||
Current maturities of long-term debt | 14.5 | 17.1 |
Accounts payable | 91.2 | 131.9 |
Current portion of lease liability | 26.8 | 20.7 |
Other current liabilities | 124.6 | 120.3 |
Total current liabilities | 257.1 | 290 |
Long-term debt, net | 294 | 428.9 |
Deferred income taxes | 80.2 | 87.5 |
Pension liability | 30.4 | 22 |
Lease liability | 107.7 | 87 |
Other non-current liabilities | 29.3 | 14.9 |
Total liabilities | 798.7 | 930.3 |
Commitments and contingent liabilities (Note 9) | ||
Convertible preferred stock, $1.00 par value; authorized 10,000,000 shares; issued and outstanding 165,423 shares | 163.1 | 0 |
Shareholders’ equity: (shares in thousands) | ||
Common stock,$0.01 par value; 200,000 shares authorized; 67,436 and 66,296 shares issued, respectively, 50,703 and 49,775 shares outstanding, respectively, net, at all periods, of treasury shares and inclusive of restricted shares | 0.5 | 0.5 |
Additional paid-in capital | 71.5 | 66.8 |
Retained earnings | 423.2 | 429.7 |
Accumulated other comprehensive loss | (67.4) | (69.4) |
Total shareholders’ equity | 427.8 | 427.6 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ 1,389.6 | $ 1,357.9 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, par value (USD per share) | $ 1 | |
Convertible preferred stock, shares authorized (in shares) | 10,000,000,000 | |
Convertible preferred stock, issued (in shares) | 165,423,000 | |
Convertible preferred stock, outstanding (in shares) | 165,423,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 67,436,000 | 66,296,000 |
Common stock, shares outstanding (in shares) | 50,703,000 | 49,775,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Sales | $ 309.4 | $ 356.5 | $ 923.5 | $ 1,056.6 |
Cost of sales | 196 | 216.1 | 592.1 | 651.7 |
Gross profit | 113.4 | 140.4 | 331.4 | 404.9 |
Selling, general, and administrative expenses | 90.8 | 103.6 | 278.8 | 304.9 |
Loss on fair value remeasurement of contingent consideration | 0 | 0 | 12.4 | 0 |
Restructuring charges | 3.3 | 0.1 | 19.5 | 0.2 |
Operating profit | 19.3 | 36.7 | 20.7 | 99.8 |
Interest expense | 4.1 | 5.5 | 13.6 | 16.2 |
Loss on extinguishment of debt | 0.2 | 0.4 | 0.2 | 0.4 |
Pension settlement charges | 1.3 | 9.8 | 2.8 | 10.4 |
Other (income) expense, net | (0.5) | (2.5) | (1.3) | (4.1) |
Income before income tax expense | 14.2 | 23.5 | 5.4 | 76.9 |
Income tax expense (benefit) | 7.2 | 6 | (2.9) | 19.8 |
Net earnings | 7 | 17.5 | 8.3 | 57.1 |
Less: Net earnings attributable to Preferred stockholders | (1.4) | 0 | (1.4) | 0 |
Net earnings available to common stockholders | $ 5.6 | $ 17.5 | $ 6.9 | $ 57.1 |
Net earnings per share: | ||||
Basic (in dollars per share) | $ 0.11 | $ 0.36 | $ 0.14 | $ 1.17 |
Diluted (in dollars per share) | $ 0.11 | $ 0.35 | $ 0.14 | $ 1.16 |
Weighted-average common shares outstanding: (in thousands) | ||||
Basic (in shares) | 49,112,000 | 48,873,000 | 49,057,000 | 48,835,000 |
Diluted (in shares) | 49,441,000 | 49,574,000 | 49,485,000 | 49,360,000 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gains (losses) on cash flow hedge, net of amounts reclassified into earnings | $ 1.2 | $ (0.4) | $ (3) | $ (4.7) |
Pension and other post-employment liability adjustments | 3.1 | (2.5) | (4.5) | (2) |
Foreign currency translation adjustments | 5.4 | (4) | 0 | (1.7) |
Foreign currency translation adjustments on long-term intercompany notes | 7.5 | (7.1) | 9.5 | (9.2) |
Total other comprehensive income (loss), net | 17.2 | (14) | 2 | (17.6) |
Total comprehensive income | $ 24.2 | $ 3.5 | $ 10.3 | $ 39.5 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net earnings | $ 7 | $ 17.5 | $ 18 | $ 8.3 | $ 57.1 | |
Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||
Depreciation and amortization | 32.6 | 28 | ||||
Deferred income tax benefit | (5.6) | 0 | ||||
Amortization of debt issuance costs and loss on extinguishment of debt | 0.9 | 1.2 | ||||
Pension settlement charges | 2.8 | 10.4 | ||||
Inventory obsolescence | 2.2 | 1.7 | ||||
Gain on disposal of property, plant and equipment | (1.1) | 0 | ||||
Unrealized foreign currency (gains) losses | (0.2) | 1.3 | ||||
Stock-based compensation | 8.8 | 7.7 | ||||
Loss on fair value remeasurement of contingent consideration | 12.4 | 0 | ||||
Bad debt and customer claims | 1.2 | 0.7 | ||||
Other non-cash items | (1.5) | 0.2 | ||||
Changes in operating assets and liabilities: | ||||||
Customer receivables | 14 | 8.1 | ||||
Inventories | (11.9) | (17.6) | ||||
Prepaid expenses and other assets | 7.1 | 0.9 | ||||
Accounts payable | (38.6) | (5) | ||||
Other liabilities | (12) | 3.4 | ||||
Cash provided by operating activities | 19.4 | 98.1 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Purchases of property and equipment | (28.1) | (32.4) | ||||
Purchase of business, net of cash acquired | 0 | (30.9) | ||||
Proceeds from sales of property and equipment | 12.3 | 0 | ||||
Other, net | 0.3 | 0 | ||||
Cash used in investing activities | (15.5) | (63.3) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Proceeds from revolving credit facility | 340.5 | 350.5 | ||||
Repayment of revolving credit facility | (420) | (336.5) | ||||
Repayment of term loans | (62.2) | (12.8) | ||||
Capitalized debt issuance costs | (0.3) | (1.4) | ||||
Payment of dividends | (13.9) | (24.5) | ||||
Proceeds from the issuance of preferred stock, net | 161.8 | 0 | ||||
Payments of withholding taxes related to net share settlements of equity awards | (4) | (3.3) | ||||
Cash provided by (used in) financing activities | 1.9 | (28) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0.2 | (0.1) | ||||
Net increase in cash and cash equivalents | 6 | 6.7 | ||||
Cash and cash equivalents at beginning of period | $ 1.6 | 8.5 | 1.6 | $ 1.6 | ||
Cash and cash equivalents at end of period | $ 14.5 | $ 8.3 | $ 14.5 | $ 8.3 | $ 8.5 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
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 U.S. generally accepted accounting principles (“GAAP”) 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 GAAP 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 months ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ended December 31, 2020. The condensed consolidated balance sheet of the Company, as of December 31, 2019, 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 GAAP 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. During the fourth quarter of 2019, the Company aligned the consolidation of certain of its foreign subsidiaries in the consolidated financial statements which previously included results on a one-month reporting lag. The Company has determined that the effect of this change is not material to the condensed consolidated financial statements for the prior periods presented and therefore has not presented retrospective application of this change. 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, 2019. Use of Estimates U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. These estimates and assumptions take into account historical and forward looking factors that the Company believes are reasonable, including, but not limited to, the potential impacts arising from the coronavirus pandemic of 2019 (“COVID-19”) and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts of COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Actual results could differ significantly from those estimates. Examples of significant estimates include the allowance for credit losses, the recoverability of property, plant and equipment, the incremental borrowing rate for lease liabilities, the recoverability of intangible assets and other long-lived assets, fair value measurements, including those related to financial instruments, goodwill and intangible assets, valuation allowances on tax assets, pension and postretirement benefit obligations, contingencies and the identification and valuation of assets acquired and liabilities assumed in connection with business combinations. Credit Losses Subsequent to January 1, 2020, accounts receivable are recorded at amortized cost less an allowance for expected credit losses. The Company maintains an allowance for credit losses for the expected failure or inability of its customers to make required payments. The Company recognizes the allowance for expected credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, as well as management’s expectations of conditions in the future. The Company’s allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. Management analyzes receivables based on the credit quality indicators and shared risk characteristics of dealers and other customers. Management stratifies the dealer population generally by the level of their purchase activity, mainly recurring purchasers compared to non-recurring purchasers, as well as the financial strength of the dealer. Management also stratifies receivables based on government and corporate purchasers with common risk characteristics. Management considers multiple factors, including payment history, frequency of purchases and financial strength of the purchaser to determine the reserve needed. Accounting Standards Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or other reference rate expected to be discontinued due to reference rate reform. The amendments in this ASU are effective immediately and may be applied to impacted contracts and hedges prospectively through December 31, 2022. The adoption of the ASU had no impact on the Company’s condensed consolidated financial statements for the periods ended September 30, 2020. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The Company adopted ASU 2018-13 as of January 1, 2020. The adoption of this ASU did not have a significant impact on the Company’s condensed consolidated financial statements or disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted ASU 2016-13 as of January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Office Segment Office Systems $ 84.7 $ 111.2 $ 268.6 $ 332.3 Seating 25.7 32.3 77.4 97.8 Files and Storage 18.4 26.0 64.3 78.9 Ancillary 52.2 36.6 147.1 92.5 Other 12.2 13.0 32.5 43.0 Total Office Segment 193.2 219.1 589.9 644.5 Lifestyle Segment Studio 96.4 108.7 267.4 323.5 Coverings 19.8 28.7 66.2 88.6 Total Lifestyle Segment 116.2 137.4 333.6 412.1 Total Sales $ 309.4 $ 356.5 $ 923.5 $ 1,056.6 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, 2020 and December 31, 2019, the contract liability related to customer deposits was $35.1 million and $32.5 million, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized revenues that were included in the contract liability at the beginning of the respective year of $28.8 million and $29.0 million, respectively. Allowance for Doubtful Accounts The following table sets forth the changes in the Company’s allowance for doubtful accounts for the three and nine months ended September 30, 2020 (in millions): Balance at December 31, 2019 $ 4.0 Provision for doubtful accounts 0.6 Write-offs, net of recoveries and other 0.2 Balance at March 31, 2020 $ 4.8 Provision for doubtful accounts 0.4 Write-offs, net of recoveries and other 0.1 Balance at June 30, 2020 $ 5.3 Provision for doubtful accounts $ 0.2 Write-offs, net of recoveries and other $ (0.3) Balance at September 30, 2020 $ 5.2 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following as of the dates presented (in millions): September 30, 2020 December 31, 2019 Raw materials $ 55.9 $ 58.7 Work-in-process 7.8 8.1 Finished goods 141.7 129.1 $ 205.4 $ 195.9 |
PENSION AND OTHER POST-EMPLOYME
PENSION AND OTHER POST-EMPLOYMENT BENEFITS | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Interest cost $ 1.2 $ 2.5 $ — $ (0.1) Expected return on plan assets (2.5) (3.9) — — Amortization of prior service credit — — — (0.1) Recognized actuarial loss 0.4 0.1 — — Pension settlement charge (1) 1.3 9.8 — — Net periodic benefit cost (credit) $ 0.4 $ 8.5 $ — $ (0.2) Pension Benefits Other Benefits Nine Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Interest cost $ 4.3 $ 7.4 $ 0.1 $ 0.1 Expected return on plan assets (7.8) (11.9) — — Amortization of prior service credit — — (0.2) (0.5) Recognized actuarial loss 1.0 0.4 — — Pension settlement charge (1) 2.8 10.4 — — Net periodic benefit cost (credit) $ 0.3 $ 6.3 $ (0.1) $ (0.4) (1) The pension settlement charge was related to payments for lump sum elections. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2020 | |
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 The Company measures certain financial liabilities at fair value on a recurring basis. The following table summarizes the valuation of those liabilities as of the dates presented (in millions): Fair Value as of September 30, 2020 Fair Value as of December 31, 2019 Liabilities: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Interest rate swap $ — $ 10.6 $ — $ 10.6 $ — $ 6.6 $ — $ 6.6 Contingent consideration obligations (1) — — 14.4 14.4 — — 2.0 2.0 (1) In connection with the Company’s acquisition of FHI LLC (“Fully”) in August 2019, the Company is contingently liable to make additional payments in the form of consideration based upon the achievement of certain performance targets. The maximum amount of contingent consideration that could be earned through 2023 is $15.0 million (see Notes 4 and 11 to the Company’s 2019 Annual Report on Form 10-K for additional information on the Fully acquisition, the valuation of the related contingent consideration and the accounting treatment applied to any changes thereof). Interest Rate Swap The fair value of the interest rate swap is based on observable prices as quoted for receiving the variable one-month LIBOR and paying fixed interest rates and therefore is classified as Level 2 within the fair value hierarchy. Contingent Consideration Obligations The fair value measurement of the Company’s contingent consideration obligations is based on significant, unobservable inputs for which little or no market data exists, and thus represents a Level 3 measurement. The contingent consideration obligations are revalued each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations. The valuation inputs utilized to estimate the fair value of the contingent consideration obligations as of September 30, 2020, included a discount rate of 2.5% and projections related to Fully’s net sales and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for each of the calendar years 2020 through 2023. For the nine months ended September 30, 2020, the $12.4 million change in the fair value of the Company’s contingent consideration obligations was primarily due to changes in expectations related to the achievement of the applicable performance targets. The emergent and seemingly durable shift to a significant “Work-from-home” (“WFH”) paradigm, catalyzed in large measure by movement and business operation restrictions imposed by various state and local governments during the second quarter of 2020, aligns well with Fully’s WFH product portfolio and e-commerce capabilities. As of September 30, 2020, $1.2 million of the contingent consideration obligation is classified as current and is included in Other current liabilities, while the remaining $13.2 million is included in Other non-current liabilities on the condensed consolidated balance sheets. Non-Recurring Fair Value Measurements |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2020 | |
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, matures January 23, 2023 and carries a fixed rate of 2.63%. As of September 30, 2020, the interest rate swap has a notional amount of $250.0 million, which decreases over time by $50 million increments. 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, 2020 December 31, 2019 Derivative liabilities: Interest rate swap Other current liabilities $ 5.3 $ 2.6 Interest rate swap Other non-current liabilities 5.3 4.0 Total derivative liabilities $ 10.6 $ 6.6 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, 2020, 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 $1.6 million and $3.5 million from AOCL to interest expense within the Condensed Consolidated Statements of Operations during the three and nine months ended September 30, 2020. Based on the forward interest rate curve in place as of September 30, 2020, the Company expects to reclassify approximately $5.3 million of unrealized losses related to its cash flow hedge from AOCL into earnings in the next twelve months. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Other current liabilities are comprised of the following (in millions): September 30, 2020 December 31, 2019 Customer deposits $ 35.1 $ 32.5 Accrued employee compensation 31.1 37.4 Warranty 10.8 10.1 Other 47.6 40.3 Other current liabilities $ 124.6 $ 120.3 |
INDEBTEDNESS
INDEBTEDNESS | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | INDEBTEDNESS The following table summarizes the Company’s long-term debt as of the dates presented (in millions): September 30, 2020 December 31, 2019 Revolving credit facility $ 59.0 $ 138.5 U.S. term loans 199.0 228.1 Multi-currency term loans 54.2 83.7 Total long-term debt 312.2 450.3 Less: Current maturities of long-term debt 14.5 17.1 Less: Unamortized debt issuance costs 3.7 4.3 Long-term debt, net $ 294.0 $ 428.9 Credit Facility The commitments and available borrowing capacity under the revolving credit facility (the “Revolver”) were as follows as of the dates presented (in millions): Commitments Outstanding Borrowings Letters of Credit Outstanding Borrowing Capacity September 30, 2020 $ 400.0 $ 59.0 $ 5.1 $ 335.9 December 31, 2019 $ 400.0 $ 138.5 $ 5.1 $ 256.4 On August 21, 2020, the Company entered into the Second Amendment to the Third Amended and Restated Credit Agreement (the “Credit Agreement Amendment”), dated as of January 23, 2018, as previously amended by the First Amendment to the Third Amended and Restated Credit Agreement, dated as of August 26, 2019 (together, as amended, the “Credit Agreement”). The Credit Agreement Amendment, among other things, relaxed certain requirements or constraints under which affirmative covenants related to net leverage ratios are determined. In connection with the closing of the Credit Agreement Amendment, a covenant was added requiring the Company to make partial prepayments of term-loan principal in the amount of $50.0 million, all of which were made as of September 30, 2020. The Company incurred approximately $0.3 million of debt issuance costs in connection with the Credit Agreement Amendment, which were capitalized and will be amortized over the remaining term of the Credit Facility. In connection with the prepayment of the $50.0 million in term-loan principal, the Company recorded a non-cash charge of approximately $0.2 million for loss on extinguishment of debt. At September 30, 2020, borrowings under the Revolver include $59.0 million at a LIBOR rate of 1.90%. At December 31, 2019, borrowings under the Revolver included $10.0 million at a base rate of 5.25% and $128.5 million at a weighted-average LIBOR rate of 3.27%. As of September 30, 2020 and December 31, 2019, letters of credit issued under the Revolver incurred interest at the rate of 1.75% and 1.50%, respectively. |
CONTINGENT LIABILITIES AND COMM
CONTINGENT LIABILITIES AND COMMITMENTS | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENT LIABILITIES AND COMMITMENTS | CONTINGENT LIABILITIES AND COMMITMENTS Litigation The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business. The Company accrues for such matters when expenditures are probable and reasonably estimable. Based upon information presently known, management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Warranty The Company provides for estimated product warranty expenses, which are included in Other current liabilities, when related products are sold. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, future warranty claims may differ from the amounts accrued. Changes in the warranty reserve are as follows (in millions): Balance, December 31, 2019 $ 10.1 Provision for warranty claims 5.9 Warranty claims settled (5.2) Balance, September 30, 2020 $ 10.8 Warranty expense for the three and nine months ended September 30, 2020 was $1.9 million and $5.9 million, respectively. Warranty expense for the three and nine months ended September 30, 2019 was $2.1 million and $6.7 million, respectively. |
RESTRUCTURING AND COST REDUCTIO
RESTRUCTURING AND COST REDUCTION INITIATIVES | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND COST REDUCTION INITIATIVES | RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES In January 2020, the Company announced its plan to consolidate its manufacturing footprint in North America, resulting in the closure of the Grand Rapids, Michigan manufacturing facility (“Grand Rapids”). The closure was part of an initiative to optimize the Company’s North American manufacturing operations. In June 2020, the Company sold its Grand Rapids land and building assets for $12.9 million and received cash proceeds of approximately $12.2 million, net of transaction costs and customary closing adjustments. The Company recognized a gain on sale of approximately $1.2 million, which is netted against Restructuring charges on the accompanying condensed consolidated statement of operations. Concurrent with the sale, the Company entered into a sale-leaseback arrangement under which the Company is leasing various zoned premises within the facility for various terms, none of which extend beyond August 2021, and the majority of which expire through December 2020. As of September 30, 2020, substantially all production has been migrated from Grand Rapids to the Company’s other North America facilities. Other restructuring actions the Company has taken during 2020 relate to supply chain optimization, which are expected to be completed by the end of 2021. The Company’s existing manufacturing operations in East Greenville, Pennsylvania; Muskegon, Michigan; and Toronto, Ontario (Canada) are not otherwise impacted by the restructuring plan. In addition to the restructuring actions noted above, under which approximately 70 positions were eliminated on a net basis, the Company has executed certain other cost reduction initiatives in response to the current economic environment resulting from COVID-19. These actions include the elimination of approximately 290 positions, resulting in an aggregate workforce reduction of approximately 10% since December 31, 2019. On October 6, 2020, management approved plans to further reduce the Company’s operating expenses in response to the economic challenges and uncertainty from the COVID-19 pandemic and its impact on the Company’s business. As part of this restructuring, the Company expects to reduce its workforce by approximately 200 positions and close five of its North American Office showrooms. In connection with these actions, the Company estimates that it will incur approximately $10.0 million of cash charges, comprised of separation payments and other employee termination expenses of approximately $5.0 million, and facilities-related charges of approximately $5.0 million. The Company expects the plan to be fully executed by the end of the first quarter of 2021. Between the restructuring actions and other initiatives noted above, the Company expects to incur total charges of approximately $37.1 million, comprised of severance and other one-time termination benefits, facilities-related charges and other associated costs. The Company anticipates making cash payments totaling approximately $31.6 million, approximately $4.0 million of which will be paid subsequent to 2020. During the nine months ended September 30, 2020, the Company recognized restructuring charges of $22.1 million, attributable to the Office and Lifestyle segments in the amounts of $16.7 million and $0.7 million, respectively, and to Corporate in the amount of $4.7 million. The restructuring charges have been recognized between operating expenses and Cost of sales in the amounts of $20.7 million and $1.4 million, respectively, on the accompanying condensed consolidated statement of operations. The restructuring charge of $1.4 million included in Cost of sales represents accelerated depreciation and other non-cash items related to abandoned equipment and inventory write-downs, which is not reflected in the table below. Changes in restructuring obligations during the nine months ended September 30, 2020 are summarized as follows: North America Operations Optimization Workforce Reduction and Other Cost Initiatives Total Balance as of December 31, 2019 $ — $ 0.2 $ 0.2 Provisions and accruals 12.6 8.1 20.7 Cash payments (12.2) (8.0) (20.2) Balance as of September 30, 2020 $ 0.4 $ 0.3 $ 0.7 |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
EQUITY | EQUITY The following table summarizes the components of shareholders’ equity and the changes therein during the three and nine months ended September 30, 2020 and (in millions, except share information): Common Additional Retained Accumulated Total Equity Balance at December 31, 2019 $ 0.5 $ 66.8 $ 429.7 $ (69.4) $ 427.6 Net earnings — — 10.9 — 10.9 Other comprehensive loss — — — (23.9) (23.9) Stock-based compensation, net — 1.6 — — 1.6 Dividends declared ($0.17 per share) — — (8.5) — (8.5) Purchase of common stock (154,012 shares) — (4.0) — — (4.0) Balance at March 31, 2020 $ 0.5 $ 64.4 $ 432.1 $ (93.3) $ 403.7 Net loss — — (9.6) — (9.6) Other comprehensive income — — — 8.7 8.7 Stock-based compensation, net — 3.3 — — 3.3 Dividends declared ($0.04 per share) — — (1.4) — (1.4) Purchase of common stock (3,130 shares) — — — — — Balance at June 30, 2020 $ 0.5 $ 67.7 $ 421.1 $ (84.6) $ 404.7 Net earnings — — 7.0 — 7.0 Other comprehensive income — — — 17.2 17.2 Stock-based compensation, net — 3.8 — — 3.8 Dividends declared on preferred stock (1) — — (1.4) — (1.4) Dividends declared on common stock ($0.06 per share) — — (3.5) — (3.5) Purchase of common stock (3,631 shares) — — — — — Balance at September 30, 2020 $ 0.5 $ 71.5 $ 423.2 $ (67.4) $ 427.8 (1) The Company exercised its payable in kind (“PIK”) dividend option in connection with the dividend paid on September 30, 2020. The following table summarizes the change in the number of shares of common stock outstanding during the nine months ended September 30, 2020 (table in thousands and is inclusive of restricted shares): Shares outstanding as of December 31, 2019 49,775 Shares issued under stock incentive plans, net of awards surrendered to pay applicable taxes 928 Shares outstanding as of September 30, 2020 50,703 The following table summarizes the components of shareholders’ equity and the changes therein during the three and 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 — 2.2 — — 2.2 — 2.2 Dividends declared ($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 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) income — — — (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 — (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 summarizes the change in the number of shares of common stock outstanding during the nine months ended September 30, 2019 (table in thousands and is inclusive of restricted shares): Shares outstanding as of December 31, 2018 49,431 Shares issued under stock incentive plans, net of awards surrendered to pay applicable taxes 344 Shares outstanding as of September 30, 2019 49,775 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 (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, 2019 $ (4.8) $ (15.6) $ (13.0) $ (36.0) $ (69.4) Other comprehensive income (loss) before reclassifications (7.6) — 9.5 (9.6) (7.7) Amounts reclassified from AOCL 3.5 — — 3.6 7.1 Net current period other comprehensive income (loss) before income tax (4.1) — 9.5 (6.0) (0.6) Income tax benefit 1.1 — — 1.5 2.6 Other comprehensive income (loss) (3.0) — 9.5 (4.5) 2.0 Balance as of September 30, 2020 $ (7.8) $ (15.6) $ (3.5) $ (40.5) $ (67.4) 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 September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Amortization of pension and other post-employment liability adjustments Prior service credits (1) $ — $ (0.1) $ (0.2) $ (0.5) Actuarial losses (1) 0.4 0.1 1.0 0.4 Pension settlement charge 1.3 9.8 2.8 10.4 Total before tax 1.7 9.8 3.6 10.3 Tax benefit (0.4) (2.7) (0.9) (2.7) Net of tax $ 1.3 $ 7.1 $ 2.7 $ 7.6 (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 4 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, 2020 and 2019 (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Unrealized gain (loss) on derivative instruments $ — $ (0.9) $ (7.6) $ (6.9) Loss on derivatives reclassified into income 1.6 0.3 3.5 0.5 Total before tax 1.6 (0.6) (4.1) (6.4) Tax (expense) benefit (0.4) 0.2 1.1 1.7 Net of tax $ 1.2 $ (0.4) $ (3.0) $ (4.7) |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income applicable to common stockholders for the period by the weighted-average number of shares of common stock outstanding during the same period. The Company’s Series A Preferred Stock shares are considered participating securities, as these securities have non-forfeitable rights to participating dividends (as defined in the Investment Agreement) if and to the extent that the Company pays any participating dividends, and thus require the two-class method of computing EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated between the common shares and the participating securities. For the three and nine months ended September 30, 2020, there were no undistributed earnings allocated to the participating securities. Diluted EPS is similarly computed, but includes the weighted-average dilutive effect, if any, of all outstanding potentially dilutive securities. Diluted EPS is calculated under the treasury stock method for equity awards issued under the Company’s stock compensation plans, and under both the two-class and if-converted methods for the Series A Preferred Stock, with the more dilutive amount reported. Potentially dilutive securities having an anti-dilutive effect are excluded from the calculation. The following table sets forth the computation of basic and diluted EPS for the periods presented (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net earnings $ 7.0 $ 17.5 $ 8.3 $ 57.1 Less: Preferred stock dividends (1.4) — (1.4) — Net earnings available to common stockholders (Basic and Diluted) $ 5.6 $ 17.5 $ 6.9 $ 57.1 Denominator: (shares in thousands) Denominator for basic EPS - weighted-average shares 49,112 48,873 49,057 48,835 Potentially dilutive shares resulting from stock plans (1) 329 701 428 525 Denominator for diluted EPS - weighted-average shares 49,441 49,574 49,485 49,360 Net earnings per share: Basic $ 0.11 $ 0.36 $ 0.14 $ 1.17 Diluted $ 0.11 $ 0.35 $ 0.14 $ 1.16 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
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. On March 27, 2020, the U.S. federal government enacted tax legislation under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) in response to the economic impacts of the spread of COVID-19. The CARES Act provides, among other things, relief to corporate taxpayers by permitting additional carryback allowances for net operating losses (“NOLs”) incurred for periods beginning after January 1, 2017 and before January 1, 2021. The CARES Act also provides changes to the limitations on interest expense deductibility for tax years beginning in 2019 and 2020. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2020 | |
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 TM and Fully®. DatesWeiser TM , 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. 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 (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 SALES Office $ 193.2 $ 219.1 $ 589.9 $ 644.5 Lifestyle 116.2 137.4 333.6 412.1 Knoll, Inc. $ 309.4 $ 356.5 $ 923.5 $ 1,056.6 INTERSEGMENT SALES (1) Office $ — $ 0.6 $ 0.4 $ 1.5 Lifestyle 2.2 2.2 6.7 7.2 Knoll, Inc. $ 2.2 $ 2.8 $ 7.1 $ 8.7 OPERATING PROFIT Office $ 5.4 $ 18.3 $ 10.1 $ 46.8 Lifestyle 16.0 25.0 38.7 71.3 Corporate (2.1) (6.6) (28.1) (18.3) Knoll, Inc. $ 19.3 $ 36.7 $ 20.7 $ 99.8 (1) Intersegment sales are presented on a cost-plus basis, which takes into consideration the effect of transfer prices between legal entities. 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, 2019 $ 54.3 $ 277.8 $ 332.1 Foreign currency translation adjustment (0.1) 8.3 8.2 Balance as of September 30, 2020 $ 54.2 $ 286.1 $ 340.3 |
PREFERRED STOCK
PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2020 | |
Temporary Equity Disclosure [Abstract] | |
PREFERRED STOCK | PREFERRED STOCK On July 21 2020, the Company closed on an Investment Agreement (the “Investment Agreement”) entered into on June 22, 2020, with Furniture Investments Acquisitions S.C.S., a common limited partnership ( société en commandite simple ) (the “Buyer”), relating to the issuance and sale to the Buyer of 164,000 shares of the Company’s Series A Convertible Preferred Stock, par value $1.00 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $164.0 million (the “Issuance”). The Issuance resulted in net cash proceeds of $161.8 million after transaction costs. The Series A Preferred Stock will rank senior to the Company’s common stock, par value $0.01 per share (the “Common Stock”), with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Series A Preferred Stock will have a liquidation preference of $1,000 per share. Holders of the Series A Preferred Stock will be entitled to a cumulative dividend at the rate of 4.5% per annum, payable quarterly in arrears. The Company may elect, at its sole discretion, to pay dividends in cash or as a dividend in-kind with additional shares of Series A Preferred Stock having value equal to the amount of accrued dividends until the two year anniversary of the Closing Date, after which the Company must pay dividends in cash. The Series A Preferred Stock will be convertible at the option of the holders thereof at any time into shares of Common Stock at an initial conversion price of $16.75 per share of Series A Preferred Stock, subject to certain anti-dilution adjustments. At any time after the two-year anniversary of the Closing Date, if the volume weighted-average price of the Common Stock exceeds $29.3125 per share (subject to adjustment in certain cases) for at least 20 trading days in any period of 30 consecutive trading days, the Company may elect to convert all or a portion of the Series A Preferred Stock into shares of Common Stock. Holders of the Series A Preferred Stock will be entitled to vote as a single class with the holders of the Common Stock on an as-converted basis. Holders of the Series A Preferred Stock will be entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the rights, preferences, privileges or voting power of the Series A Preferred Stock, authorizations or issuances by the Company of securities that are senior to, or equal in priority with, the Series A Preferred Stock and increases or decreases in the number of authorized shares or issuances of shares of Series A Preferred Stock after the Closing Date. At any time on or after the sixth anniversary of the Closing Date, the Company may redeem, in whole or, from time to time, in part, the shares of Series A Preferred Stock for a redemption price equal to: (i) the sum of (x) the liquidation preference thereof, plus (y) all accrued and unpaid dividends, multiplied by (ii) (A) 110% if the redemption occurs at any time on or after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, (B) 105% if the redemption occurs at any time on or after the seventh anniversary of the Closing Date and prior to the eighth anniversary of the Closing Date, and (C) 100% if the redemption occurs at any time on or after the eighth anniversary of the Closing Date. Upon certain change of control events involving the Company, the holders of the Series A Preferred Stock may either (i) convert their shares of Series A Preferred Stock into Common Stock at the then-current conversion price or (ii) cause the Company to redeem their shares of Series A Preferred Stock. Additionally, upon certain change of control events involving the Company, the Company may elect to redeem the Series A Preferred Stock. If the holders of the Series A Preferred Stock elect to have their shares of Series A Preferred Stock redeemed, or if the Company elects to redeem the Series A Preferred Stock, in each case, in connection with a change of control, the redemption price per share will be an amount in cash equal to 100% of the sum of the liquidation preference thereof and all accrued but unpaid dividends, plus a premium if such change of control occurs on or before the seventh anniversary of the Closing Date, plus, (i) if the redemption date is prior to the sixth anniversary of the Closing Date, all dividends that would have accrued on such share from the change of control redemption date to the sixth anniversary of the Closing Date, or (ii) if the redemption date is on or after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, all dividends that would have accrued on such share from the change of control redemption date to the seventh anniversary of the Closing Date. As the redemption feature is not solely within the control of the Company, the Series A Preferred Stock does not qualify as permanent equity and has been classified as mezzanine, or temporary, equity. If the Company proposes to issue equity securities of any kind, then, until the earlier of (i) the first date on which the 50% Beneficial Ownership Requirement as described in the investment agreement is no longer satisfied and (ii) the irrevocable waiver by the Buyer of its designation rights, subject to certain exceptions, the Company will be required to offer the Buyer the opportunity to purchase a portion of such proposed issuance equal to (i) the number of shares of Series A Preferred Stock, on an as-converted basis, and/or shares of Common Stock issued upon conversion of such Series A Preferred Stock then beneficially owned by the Buyer, divided by (ii) the total number of shares of Common Stock and Series A Preferred Stock then outstanding, on an as-converted basis. Registration Rights The Buyer and its affiliates will have certain customary registration rights with respect to shares of Common Stock held by the Buyer, including any Common Stock issued upon any future conversion of the Series A Preferred Stock, pursuant to the terms of a Registration Rights Agreement. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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 GAAP 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 months ended September 30, 2020, are not necessarily indicative of the results that may be expected for the year ended December 31, 2020. The condensed consolidated balance sheet of the Company, as of December 31, 2019, 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 GAAP 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. During the fourth quarter of 2019, the Company aligned the consolidation of certain of its foreign subsidiaries in the consolidated financial statements which previously included results on a one-month reporting lag. The Company has determined that the effect of this change is not material to the condensed consolidated financial statements for the prior periods presented and therefore has not presented retrospective application of this change. 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, 2019. |
Use of Estimates | U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. These estimates and assumptions take into account historical and forward looking factors that the Company believes are reasonable, including, but not limited to, the potential impacts arising from the coronavirus pandemic of 2019 (“COVID-19”) and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts of COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Actual results could differ significantly from those estimates. Examples of significant estimates include the allowance for credit losses, the recoverability of property, plant and equipment, the incremental borrowing rate for lease liabilities, the recoverability of intangible assets and other long-lived assets, fair value measurements, including those related to financial instruments, goodwill and intangible assets, valuation allowances on tax assets, pension and postretirement benefit obligations, contingencies and the identification and valuation of assets acquired and liabilities assumed in connection with business combinations. |
Credit Losses | Subsequent to January 1, 2020, accounts receivable are recorded at amortized cost less an allowance for expected credit losses. The Company maintains an allowance for credit losses for the expected failure or inability of its customers to make required payments. The Company recognizes the allowance for expected credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, as well as management’s expectations of conditions in the future. The Company’s allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. Management analyzes receivables based on the credit quality indicators and shared risk characteristics of dealers and other customers. Management stratifies the dealer population generally by the level of their purchase activity, mainly recurring purchasers compared to non-recurring purchasers, as well as the financial strength of the dealer. Management also stratifies receivables based on government and corporate purchasers with common risk characteristics. Management considers multiple factors, including payment history, frequency of purchases and financial strength of the purchaser to determine the reserve needed. |
Accounting Standards Adopted | In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or other reference rate expected to be discontinued due to reference rate reform. The amendments in this ASU are effective immediately and may be applied to impacted contracts and hedges prospectively through December 31, 2022. The adoption of the ASU had no impact on the Company’s condensed consolidated financial statements for the periods ended September 30, 2020. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The Company adopted ASU 2018-13 as of January 1, 2020. The adoption of this ASU did not have a significant impact on the Company’s condensed consolidated financial statements or disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses, which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted ASU 2016-13 as of January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
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, 2020 2019 2020 2019 Office Segment Office Systems $ 84.7 $ 111.2 $ 268.6 $ 332.3 Seating 25.7 32.3 77.4 97.8 Files and Storage 18.4 26.0 64.3 78.9 Ancillary 52.2 36.6 147.1 92.5 Other 12.2 13.0 32.5 43.0 Total Office Segment 193.2 219.1 589.9 644.5 Lifestyle Segment Studio 96.4 108.7 267.4 323.5 Coverings 19.8 28.7 66.2 88.6 Total Lifestyle Segment 116.2 137.4 333.6 412.1 Total Sales $ 309.4 $ 356.5 $ 923.5 $ 1,056.6 |
Allowance for Doubtful Accounts | The following table sets forth the changes in the Company’s allowance for doubtful accounts for the three and nine months ended September 30, 2020 (in millions): Balance at December 31, 2019 $ 4.0 Provision for doubtful accounts 0.6 Write-offs, net of recoveries and other 0.2 Balance at March 31, 2020 $ 4.8 Provision for doubtful accounts 0.4 Write-offs, net of recoveries and other 0.1 Balance at June 30, 2020 $ 5.3 Provision for doubtful accounts $ 0.2 Write-offs, net of recoveries and other $ (0.3) Balance at September 30, 2020 $ 5.2 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following as of the dates presented (in millions): September 30, 2020 December 31, 2019 Raw materials $ 55.9 $ 58.7 Work-in-process 7.8 8.1 Finished goods 141.7 129.1 $ 205.4 $ 195.9 |
PENSION AND OTHER POST-EMPLOY_2
PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Interest cost $ 1.2 $ 2.5 $ — $ (0.1) Expected return on plan assets (2.5) (3.9) — — Amortization of prior service credit — — — (0.1) Recognized actuarial loss 0.4 0.1 — — Pension settlement charge (1) 1.3 9.8 — — Net periodic benefit cost (credit) $ 0.4 $ 8.5 $ — $ (0.2) Pension Benefits Other Benefits Nine Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Interest cost $ 4.3 $ 7.4 $ 0.1 $ 0.1 Expected return on plan assets (7.8) (11.9) — — Amortization of prior service credit — — (0.2) (0.5) Recognized actuarial loss 1.0 0.4 — — Pension settlement charge (1) 2.8 10.4 — — Net periodic benefit cost (credit) $ 0.3 $ 6.3 $ (0.1) $ (0.4) (1) The pension settlement charge was related to payments for lump sum elections. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes the valuation of those liabilities as of the dates presented (in millions): Fair Value as of September 30, 2020 Fair Value as of December 31, 2019 Liabilities: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Interest rate swap $ — $ 10.6 $ — $ 10.6 $ — $ 6.6 $ — $ 6.6 Contingent consideration obligations (1) — — 14.4 14.4 — — 2.0 2.0 (1) In connection with the Company’s acquisition of FHI LLC (“Fully”) in August 2019, the Company is contingently liable to make additional payments in the form of consideration based upon the achievement of certain performance targets. The maximum amount of contingent consideration that could be earned through 2023 is $15.0 million (see Notes 4 and 11 to the Company’s 2019 Annual Report on Form 10-K for additional information on the Fully acquisition, the valuation of the related contingent consideration and the accounting treatment applied to any changes thereof). |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 December 31, 2019 Derivative liabilities: Interest rate swap Other current liabilities $ 5.3 $ 2.6 Interest rate swap Other non-current liabilities 5.3 4.0 Total derivative liabilities $ 10.6 $ 6.6 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities are comprised of the following (in millions): September 30, 2020 December 31, 2019 Customer deposits $ 35.1 $ 32.5 Accrued employee compensation 31.1 37.4 Warranty 10.8 10.1 Other 47.6 40.3 Other current liabilities $ 124.6 $ 120.3 |
INDEBTEDNESS (Tables)
INDEBTEDNESS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Long-term Debt | The following table summarizes the Company’s long-term debt as of the dates presented (in millions): September 30, 2020 December 31, 2019 Revolving credit facility $ 59.0 $ 138.5 U.S. term loans 199.0 228.1 Multi-currency term loans 54.2 83.7 Total long-term debt 312.2 450.3 Less: Current maturities of long-term debt 14.5 17.1 Less: Unamortized debt issuance costs 3.7 4.3 Long-term debt, net $ 294.0 $ 428.9 |
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 (in millions): Commitments Outstanding Borrowings Letters of Credit Outstanding Borrowing Capacity September 30, 2020 $ 400.0 $ 59.0 $ 5.1 $ 335.9 December 31, 2019 $ 400.0 $ 138.5 $ 5.1 $ 256.4 |
CONTINGENT LIABILITIES AND CO_2
CONTINGENT LIABILITIES AND COMMITMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Changes in the Warranty Reserve | Changes in the warranty reserve are as follows (in millions): Balance, December 31, 2019 $ 10.1 Provision for warranty claims 5.9 Warranty claims settled (5.2) Balance, September 30, 2020 $ 10.8 |
RESTRUCTURING AND COST REDUCT_2
RESTRUCTURING AND COST REDUCTION INITIATIVES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Cost Reserve | Changes in restructuring obligations during the nine months ended September 30, 2020 are summarized as follows: North America Operations Optimization Workforce Reduction and Other Cost Initiatives Total Balance as of December 31, 2019 $ — $ 0.2 $ 0.2 Provisions and accruals 12.6 8.1 20.7 Cash payments (12.2) (8.0) (20.2) Balance as of September 30, 2020 $ 0.4 $ 0.3 $ 0.7 |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of changes in stockholders equity and noncontrolling interest | The following table summarizes the components of shareholders’ equity and the changes therein during the three and nine months ended September 30, 2020 and (in millions, except share information): Common Additional Retained Accumulated Total Equity Balance at December 31, 2019 $ 0.5 $ 66.8 $ 429.7 $ (69.4) $ 427.6 Net earnings — — 10.9 — 10.9 Other comprehensive loss — — — (23.9) (23.9) Stock-based compensation, net — 1.6 — — 1.6 Dividends declared ($0.17 per share) — — (8.5) — (8.5) Purchase of common stock (154,012 shares) — (4.0) — — (4.0) Balance at March 31, 2020 $ 0.5 $ 64.4 $ 432.1 $ (93.3) $ 403.7 Net loss — — (9.6) — (9.6) Other comprehensive income — — — 8.7 8.7 Stock-based compensation, net — 3.3 — — 3.3 Dividends declared ($0.04 per share) — — (1.4) — (1.4) Purchase of common stock (3,130 shares) — — — — — Balance at June 30, 2020 $ 0.5 $ 67.7 $ 421.1 $ (84.6) $ 404.7 Net earnings — — 7.0 — 7.0 Other comprehensive income — — — 17.2 17.2 Stock-based compensation, net — 3.8 — — 3.8 Dividends declared on preferred stock (1) — — (1.4) — (1.4) Dividends declared on common stock ($0.06 per share) — — (3.5) — (3.5) Purchase of common stock (3,631 shares) — — — — — Balance at September 30, 2020 $ 0.5 $ 71.5 $ 423.2 $ (67.4) $ 427.8 (1) The Company exercised its payable in kind (“PIK”) dividend option in connection with the dividend paid on September 30, 2020. The following table summarizes the components of shareholders’ equity and the changes therein during the three and 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 — 2.2 — — 2.2 — 2.2 Dividends declared ($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 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) income — — — (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 — (0.3) — — (0.3) — (0.3) Balance at September 30, 2019 $ 0.5 $ 63.7 $ 427.9 $ (86.0) $ 406.1 $ — $ 406.1 |
Schedule of change in number of shares of common stock outstanding | The following table summarizes the change in the number of shares of common stock outstanding during the nine months ended September 30, 2020 (table in thousands and is inclusive of restricted shares): Shares outstanding as of December 31, 2019 49,775 Shares issued under stock incentive plans, net of awards surrendered to pay applicable taxes 928 Shares outstanding as of September 30, 2020 50,703 The following table summarizes the change in the number of shares of common stock outstanding during the nine months ended September 30, 2019 (table in thousands and is inclusive of restricted shares): Shares outstanding as of December 31, 2018 49,431 Shares issued under stock incentive plans, net of awards surrendered to pay applicable taxes 344 Shares outstanding as of September 30, 2019 49,775 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 (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, 2019 $ (4.8) $ (15.6) $ (13.0) $ (36.0) $ (69.4) Other comprehensive income (loss) before reclassifications (7.6) — 9.5 (9.6) (7.7) Amounts reclassified from AOCL 3.5 — — 3.6 7.1 Net current period other comprehensive income (loss) before income tax (4.1) — 9.5 (6.0) (0.6) Income tax benefit 1.1 — — 1.5 2.6 Other comprehensive income (loss) (3.0) — 9.5 (4.5) 2.0 Balance as of September 30, 2020 $ (7.8) $ (15.6) $ (3.5) $ (40.5) $ (67.4) |
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 September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Amortization of pension and other post-employment liability adjustments Prior service credits (1) $ — $ (0.1) $ (0.2) $ (0.5) Actuarial losses (1) 0.4 0.1 1.0 0.4 Pension settlement charge 1.3 9.8 2.8 10.4 Total before tax 1.7 9.8 3.6 10.3 Tax benefit (0.4) (2.7) (0.9) (2.7) Net of tax $ 1.3 $ 7.1 $ 2.7 $ 7.6 (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 4 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, 2020 and 2019 (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Unrealized gain (loss) on derivative instruments $ — $ (0.9) $ (7.6) $ (6.9) Loss on derivatives reclassified into income 1.6 0.3 3.5 0.5 Total before tax 1.6 (0.6) (4.1) (6.4) Tax (expense) benefit (0.4) 0.2 1.1 1.7 Net of tax $ 1.2 $ (0.4) $ (3.0) $ (4.7) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted EPS for the periods presented (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net earnings $ 7.0 $ 17.5 $ 8.3 $ 57.1 Less: Preferred stock dividends (1.4) — (1.4) — Net earnings available to common stockholders (Basic and Diluted) $ 5.6 $ 17.5 $ 6.9 $ 57.1 Denominator: (shares in thousands) Denominator for basic EPS - weighted-average shares 49,112 48,873 49,057 48,835 Potentially dilutive shares resulting from stock plans (1) 329 701 428 525 Denominator for diluted EPS - weighted-average shares 49,441 49,574 49,485 49,360 Net earnings per share: Basic $ 0.11 $ 0.36 $ 0.14 $ 1.17 Diluted $ 0.11 $ 0.35 $ 0.14 $ 1.16 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 SALES Office $ 193.2 $ 219.1 $ 589.9 $ 644.5 Lifestyle 116.2 137.4 333.6 412.1 Knoll, Inc. $ 309.4 $ 356.5 $ 923.5 $ 1,056.6 INTERSEGMENT SALES (1) Office $ — $ 0.6 $ 0.4 $ 1.5 Lifestyle 2.2 2.2 6.7 7.2 Knoll, Inc. $ 2.2 $ 2.8 $ 7.1 $ 8.7 OPERATING PROFIT Office $ 5.4 $ 18.3 $ 10.1 $ 46.8 Lifestyle 16.0 25.0 38.7 71.3 Corporate (2.1) (6.6) (28.1) (18.3) Knoll, Inc. $ 19.3 $ 36.7 $ 20.7 $ 99.8 (1) Intersegment sales are presented on a cost-plus basis, which takes into consideration the effect of transfer prices between legal entities. |
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, 2019 $ 54.3 $ 277.8 $ 332.1 Foreign currency translation adjustment (0.1) 8.3 8.2 Balance as of September 30, 2020 $ 54.2 $ 286.1 $ 340.3 |
REVENUE - Net Sales by Product
REVENUE - Net Sales by Product Category (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue from External Customer [Line Items] | ||||
Total Sales | $ 309.4 | $ 356.5 | $ 923.5 | $ 1,056.6 |
Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 193.2 | 219.1 | 589.9 | 644.5 |
Lifestyle Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 116.2 | 137.4 | 333.6 | 412.1 |
Office Systems | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 84.7 | 111.2 | 268.6 | 332.3 |
Seating | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 25.7 | 32.3 | 77.4 | 97.8 |
Files and Storage | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 18.4 | 26 | 64.3 | 78.9 |
Ancillary | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 52.2 | 36.6 | 147.1 | 92.5 |
Other | Office Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 12.2 | 13 | 32.5 | 43 |
Studio | Lifestyle Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | 96.4 | 108.7 | 267.4 | 323.5 |
Coverings | Lifestyle Segment | ||||
Revenue from External Customer [Line Items] | ||||
Total Sales | $ 19.8 | $ 28.7 | $ 66.2 | $ 88.6 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||
Customer deposits | $ 35.1 | $ 32.5 | |
Revenue recognized | $ 28.8 | $ 29 |
REVENUE - Allowance for Doubtfu
REVENUE - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Balance at December 31, 2019 | $ 5.3 | $ 4.8 | $ 4 |
Provision for doubtful accounts | 0.2 | 0.4 | 0.6 |
Write-offs, net of recoveries and other | (0.3) | 0.1 | 0.2 |
Balance at June 30, 2020 | $ 5.2 | $ 5.3 | $ 4.8 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 55.9 | $ 58.7 |
Work-in-process | 7.8 | 8.1 |
Finished goods | 141.7 | 129.1 |
Inventories, net | $ 205.4 | $ 195.9 |
PENSION AND OTHER POST-EMPLOY_3
PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | |||||
Pension settlement charge | $ 2.8 | $ 10.4 | |||
Weighted-average expected long-term rate of return on plan assets | 5.75% | 6.40% | |||
Pension Benefits | |||||
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | |||||
Interest cost | $ 1.2 | $ 2.5 | 4.3 | 7.4 | |
Expected return on plan assets | (2.5) | (3.9) | (7.8) | (11.9) | |
Amortization of prior service credit | 0 | 0 | 0 | 0 | |
Recognized actuarial loss | 0.4 | 0.1 | 1 | 0.4 | |
Pension settlement charge | 1.3 | 9.8 | 2.8 | 10.4 | |
Net periodic benefit cost (credit) | 0.4 | 8.5 | 0.3 | 6.3 | |
Other Benefits | |||||
PENSIONS AND OTHER POSTRETIREMENT BENEFITS | |||||
Interest cost | 0 | (0.1) | 0.1 | 0.1 | |
Expected return on plan assets | 0 | 0 | 0 | 0 | |
Amortization of prior service credit | 0 | (0.1) | (0.2) | (0.5) | |
Recognized actuarial loss | 0 | 0 | 0 | 0 | |
Pension settlement charge | 0 | 0 | 0 | 0 | |
Net periodic benefit cost (credit) | $ 0 | $ (0.2) | $ (0.1) | $ (0.4) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Change in fair value of consideration obligations | $ 0 | $ 0 | $ 12.4 | $ 0 | |
Other current liabilities | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration, liability, current | 1.2 | 1.2 | |||
Other non-current liabilities | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration, liability, noncurrent | 13.2 | 13.2 | |||
Earn-Out Consideration - Fully | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Maximum future payments under the agreement | $ 15 | 15 | |||
Change in fair value of consideration obligations | $ 12.4 | ||||
Earn-Out Consideration - Fully | Discount Rate | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration, liability, discount rate | 0.025 | 0.025 | |||
Earn-Out Consideration - Fully | Fair Value, Measurements, Recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration obligations | $ 14.4 | $ 14.4 | $ 2 | ||
Earn-Out Consideration - Fully | Fair Value, Measurements, Recurring | Level 1 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration obligations | 0 | 0 | 0 | ||
Earn-Out Consideration - Fully | Fair Value, Measurements, Recurring | Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration obligations | 0 | 0 | 0 | ||
Earn-Out Consideration - Fully | Fair Value, Measurements, Recurring | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration obligations | 14.4 | 14.4 | 2 | ||
Interest Rate Swap | Fair Value, Measurements, Recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Interest rate swap | 10.6 | 10.6 | 6.6 | ||
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 | 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 | 10.6 | 10.6 | 6.6 | ||
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 | $ 0 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | ||||
Contract rate | 2.63% | |||
Loss recognized in interest expense | $ 1.6 | $ 3.5 | ||
Loss expected to be reclassified in the next 12 months | 5.3 | |||
Designated as Hedging Instrument | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liabilities | 10.6 | 10.6 | $ 6.6 | |
Interest Rate Swap | ||||
Derivatives, Fair Value [Line Items] | ||||
Aggregate notional amount | 250 | 250 | ||
Decrease in notional amount over time | 50 | |||
Interest Rate Swap | Designated as Hedging Instrument | Other current liabilities | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liabilities | 5.3 | 5.3 | 2.6 | |
Interest Rate Swap | Designated as Hedging Instrument | Other non-current liabilities | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liabilities | $ 5.3 | $ 5.3 | $ 4 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Customer deposits | $ 35.1 | $ 32.5 |
Accrued employee compensation | 31.1 | 37.4 |
Warranty | 10.8 | 10.1 |
Other | 47.6 | 40.3 |
Other current liabilities | $ 124.6 | $ 120.3 |
INDEBTEDNESS - Schedule of Long
INDEBTEDNESS - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Long-term debt | ||
Total long-term debt | $ 312.2 | $ 450.3 |
Less: Current maturities of long-term debt | 14.5 | 17.1 |
Less: Unamortized debt issuance costs | 3.7 | 4.3 |
Long-term debt, net | 294 | 428.9 |
Revolving credit facility | Revolving Credit Facility | ||
Long-term debt | ||
Total long-term debt | 59 | 138.5 |
U.S. term loans | ||
Long-term debt | ||
Total long-term debt | 199 | 228.1 |
Multi-currency term loans | ||
Long-term debt | ||
Total long-term debt | $ 54.2 | $ 83.7 |
INDEBTEDNESS - Schedule of Cred
INDEBTEDNESS - Schedule of Credit Facility (Details) - Credit Agreement - Revolving Credit Facility - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | ||
Commitments | $ 400,000,000 | $ 400,000,000 |
Outstanding borrowings | 59,000,000 | 138,500,000 |
Letters of credit outstanding | 5,100,000 | 5,100,000 |
Borrowing capacity | $ 335,900,000 | $ 256,400,000 |
INDEBTEDNESS - Narrative (Detai
INDEBTEDNESS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Aug. 21, 2020 | |
Long-term debt | ||||||
Repayments of term loans | $ 62.2 | $ 12.8 | ||||
Loss on extinguishment of debt | $ 0.2 | $ 0.4 | 0.2 | 0.4 | ||
Borrowings under line of credit | 340.5 | $ 350.5 | ||||
Credit Agreement | Credit Facility | Base rate | ||||||
Long-term debt | ||||||
Borrowings under line of credit | $ 10 | |||||
Basis spread on variable rate | 5.25% | |||||
Credit Agreement | Credit Facility | LIBOR | ||||||
Long-term debt | ||||||
Borrowings under line of credit | $ 59 | $ 128.5 | ||||
Basis spread on variable rate | 1.90% | 3.27% | ||||
Credit Agreement | Letter of Credit | ||||||
Long-term debt | ||||||
Interest rate | 1.75% | 1.75% | 1.50% | |||
Amended Credit Agreement | Term loan | ||||||
Long-term debt | ||||||
Repayments of term loans | $ 50 | |||||
Debt issuance costs | $ 0.3 | |||||
Loss on extinguishment of debt | $ 0.2 | |||||
Interest rate | 1.90% | 1.90% | 3.30% | |||
Amended Credit Agreement | Multi-currency term loans | ||||||
Long-term debt | ||||||
Interest rate | 1.75% | 1.75% | 1.50% |
CONTINGENT LIABILITIES AND CO_3
CONTINGENT LIABILITIES AND COMMITMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in warranty accrual | ||||
Balance, December 31, 2019 | $ 10.1 | |||
Provision for warranty claims | $ 1.9 | $ 2.1 | 5.9 | $ 6.7 |
Warranty claims settled | (5.2) | |||
Balance, September 30, 2020 | $ 10.8 | $ 10.8 |
RESTRUCTURING AND COST REDUCT_3
RESTRUCTURING AND COST REDUCTION INITIATIVES (Details) $ in Millions | Oct. 06, 2020USD ($)numberOfPositionsnumberOfShowrooms | Jun. 30, 2020USD ($) | Sep. 30, 2020USD ($)numberOfPositions | Sep. 30, 2019USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) |
Restructuring charges | ||||||
Proceeds from sales of property and equipment | $ 12.2 | $ 12.3 | $ 0 | |||
Gain on disposal of property, plant and equipment | $ 1.2 | $ 1.1 | $ 0 | |||
Number of positions eliminated | numberOfPositions | 70 | |||||
Positions eliminated, inception to date, percent | 10.00% | |||||
Restructuring charges | $ 22.1 | |||||
Restructuring cost expected | 37.1 | |||||
Cash payments | 20.2 | |||||
Operating Expense | ||||||
Restructuring charges | ||||||
Restructuring charges | 20.7 | |||||
Cost of Sales | ||||||
Restructuring charges | ||||||
Restructuring charges | 1.4 | |||||
Forecast | ||||||
Restructuring charges | ||||||
Cash payments | $ 4 | $ 31.6 | ||||
Office Segment | ||||||
Restructuring charges | ||||||
Restructuring charges | 16.7 | |||||
Lifestyle Segment | ||||||
Restructuring charges | ||||||
Restructuring charges | 0.7 | |||||
Corporate Segment | ||||||
Restructuring charges | ||||||
Restructuring charges | $ 4.7 | |||||
Subsequent Event | ||||||
Restructuring charges | ||||||
Number of positions eliminated | numberOfPositions | 200 | |||||
Number of showrooms closed | numberOfShowrooms | 5 | |||||
Non-production Related | ||||||
Restructuring charges | ||||||
Number of positions eliminated | numberOfPositions | 290 | |||||
Employee Separation | Subsequent Event | Forecast | ||||||
Restructuring charges | ||||||
Restructuring charges | $ 10 | |||||
Employee Termination Benefits | Subsequent Event | Forecast | ||||||
Restructuring charges | ||||||
Restructuring charges | 5 | |||||
Facility Closing | Subsequent Event | Forecast | ||||||
Restructuring charges | ||||||
Restructuring charges | $ 5 | |||||
Accelerated Depreciation, Equipment and Oher | Cost of Sales | ||||||
Restructuring charges | ||||||
Restructuring charges | $ 1.4 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||
Restructuring charges | ||||||
Consideration for sale of assets | $ 12.9 |
RESTRUCTURING AND COST REDUCT_4
RESTRUCTURING AND COST REDUCTION INITIATIVES - Restructuring Reserve (Details) - USD ($) $ in Millions | 9 Months Ended | 15 Months Ended |
Sep. 30, 2020 | Dec. 31, 2021 | |
Restructuring Reserve [Roll Forward] | ||
Balance as of December 31, 2019 | $ 0.2 | $ 0.7 |
Provisions and accruals | 20.7 | |
Cash payments | (20.2) | |
Balance as of September 30, 2020 | 0.2 | 0.7 |
North America Operations Optimization | ||
Restructuring Reserve [Roll Forward] | ||
Balance as of December 31, 2019 | 0 | 0.4 |
Provisions and accruals | 12.6 | |
Cash payments | (12.2) | |
Balance as of September 30, 2020 | 0 | 0.4 |
Workforce Reduction and Other Cost Initiatives | ||
Restructuring Reserve [Roll Forward] | ||
Balance as of December 31, 2019 | 0.2 | 0.3 |
Provisions and accruals | 8.1 | |
Cash payments | (8) | |
Balance as of September 30, 2020 | $ 0.2 | $ 0.3 |
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, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | $ 408.4 | $ 392.8 | $ 386.5 | $ 386.5 | ||||
Net earnings | $ 7 | 17.5 | 21.7 | 18 | $ 8.3 | 57.1 | ||
Other comprehensive (loss) income | $ 17.2 | (14) | (3.6) | 2 | (17.6) | |||
Stock-based compensation, net | 3.1 | 2.4 | 2.2 | |||||
Dividends declared common stock | (8.6) | (8.6) | (7.5) | |||||
Purchase of common stock | (0.3) | (3) | ||||||
Other | 0.1 | 0.2 | ||||||
Ending balance | $ 406.1 | $ 408.4 | 392.8 | 406.1 | ||||
Dividends declared (in dollars per share) | $ 0.06 | $ 0.04 | $ 0.17 | $ 0.17 | $ 0.15 | |||
Purchase of common stock, shares (in shares) | 3,631 | 3,130 | 154,012 | 141,738 | ||||
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 | 67.7 | 64.4 | 66.8 | 60.9 | 58.4 | 58.8 | 66.8 | 58.8 |
Stock-based compensation, net | 3.8 | 3.3 | 1.6 | 3.1 | 2.4 | 2.2 | ||
Purchase of common stock | (4) | (0.3) | (3) | |||||
Other | 0.1 | 0.4 | ||||||
Ending balance | 71.5 | 67.7 | 64.4 | 63.7 | 60.9 | 58.4 | 71.5 | 63.7 |
Retained Earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 421.1 | 432.1 | 429.7 | 419 | 405.9 | 395.4 | 429.7 | 395.4 |
Net earnings | 7 | (9.6) | 10.9 | 17.5 | 21.7 | 18 | ||
Dividends declared common stock | (3.5) | (1.4) | (8.5) | (8.6) | (8.6) | (7.5) | ||
Dividends declared on preferred stock | (1.4) | |||||||
Ending balance | 423.2 | 421.1 | 432.1 | 427.9 | 419 | 405.9 | 423.2 | 427.9 |
Accumulated Other Comprehensive Loss | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (84.6) | (93.3) | (69.4) | (72) | (72) | (68.4) | (69.4) | (68.4) |
Other comprehensive (loss) income | 17.2 | 8.7 | (23.9) | (14) | (3.6) | |||
Ending balance | (67.4) | (84.6) | (93.3) | (86) | (72) | (72) | (67.4) | (86) |
Total Equity | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 404.7 | 403.7 | 427.6 | 408.4 | 392.8 | 386.3 | 427.6 | 386.3 |
Net earnings | 7 | (9.6) | 10.9 | 17.5 | 21.7 | 18 | ||
Other comprehensive (loss) income | 17.2 | 8.7 | (23.9) | (14) | (3.6) | |||
Stock-based compensation, net | 3.8 | 3.3 | 1.6 | 3.1 | 2.4 | 2.2 | ||
Dividends declared common stock | (3.5) | (1.4) | (8.5) | (8.6) | (8.6) | (7.5) | ||
Dividends declared on preferred stock | (1.4) | |||||||
Purchase of common stock | (4) | (0.3) | (3) | |||||
Other | 0.1 | 0.4 | ||||||
Ending balance | $ 427.8 | $ 404.7 | $ 403.7 | 406.1 | 408.4 | 392.8 | $ 427.8 | 406.1 |
Noncontrolling Interest | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 0 | 0 | 0.2 | 0.2 | ||||
Other | (0.2) | |||||||
Ending balance | $ 0 | $ 0 | $ 0 | $ 0 |
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, 2020 | Sep. 30, 2019 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Shares outstanding, beginning of period (in shares) | 49,775,000 | 49,431,000 |
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes (in shares) | 928,000 | 344,000 |
Shares outstanding, end of period (in shares) | 50,703,000 | 49,775,000 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Changes by Component (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Other comprehensive income (loss) before reclassifications | $ (7.7) |
Amounts reclassified from AOCL | 7.1 |
Net current period other comprehensive income (loss) before income tax | (0.6) |
Income tax benefit | 2.6 |
Other comprehensive income (loss) | 2 |
Unrealized gains (losses) on Interest Rate Swaps | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (4.8) |
Other comprehensive income (loss) before reclassifications | (7.6) |
Amounts reclassified from AOCL | 3.5 |
Net current period other comprehensive income (loss) before income tax | (4.1) |
Income tax benefit | 1.1 |
Other comprehensive income (loss) | (3) |
Ending balance | (7.8) |
Foreign Currency Translation Adjustment | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (15.6) |
Other comprehensive income (loss) before reclassifications | 0 |
Amounts reclassified from AOCL | 0 |
Net current period other comprehensive income (loss) before income tax | 0 |
Income tax benefit | 0 |
Other comprehensive income (loss) | 0 |
Ending balance | (15.6) |
Foreign Currency Translation Adjustment on Long-term Intercompany Notes | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (13) |
Other comprehensive income (loss) before reclassifications | 9.5 |
Amounts reclassified from AOCL | 0 |
Net current period other comprehensive income (loss) before income tax | 9.5 |
Income tax benefit | 0 |
Other comprehensive income (loss) | 9.5 |
Ending balance | (3.5) |
Pension and Other Post-Employment Liability Adjustment | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (36) |
Other comprehensive income (loss) before reclassifications | (9.6) |
Amounts reclassified from AOCL | 3.6 |
Net current period other comprehensive income (loss) before income tax | (6) |
Income tax benefit | 1.5 |
Other comprehensive income (loss) | (4.5) |
Ending balance | (40.5) |
Total | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (69.4) |
Ending balance | $ (67.4) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Other income, net | $ 0.5 | $ 2.5 | $ 1.3 | $ 4.1 | ||
Pension settlement charges | 1.3 | 9.8 | 2.8 | 10.4 | ||
Total before tax | (14.2) | (23.5) | (5.4) | (76.9) | ||
Tax expense | 7.2 | 6 | (2.9) | 19.8 | ||
Net earnings | (7) | (17.5) | $ (21.7) | $ (18) | (8.3) | (57.1) |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Prior Service Credits | ||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Other income, net | 0 | (0.1) | (0.2) | (0.5) | ||
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Actuarial Losses | ||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Other income, net | (0.4) | (0.1) | (1) | (0.4) | ||
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 charges | 1.3 | 9.8 | 2.8 | 10.4 | ||
Reclassification out of Accumulated Other Comprehensive Income | Pension and Other Post-Employment Liability Adjustment | ||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Total before tax | 1.7 | 9.8 | 3.6 | 10.3 | ||
Tax expense | (0.4) | (2.7) | (0.9) | (2.7) | ||
Net earnings | $ 1.3 | $ 7.1 | $ 2.7 | $ 7.6 |
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, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Reclassification Adjustment Out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Tax benefit | $ (7.2) | $ (6) | $ 2.9 | $ (19.8) |
Net of tax | 1.2 | (0.4) | (3) | (4.7) |
Interest Rate Contract | ||||
Reclassification Adjustment Out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||||
Unrealized gain (loss) on derivative instruments | 0 | (0.9) | (7.6) | (6.9) |
Loss on derivatives reclassified into income | 1.6 | 0.3 | 3.5 | 0.5 |
Total before tax | 1.6 | (0.6) | (4.1) | (6.4) |
Tax benefit | (0.4) | 0.2 | 1.1 | 1.7 |
Net of tax | $ 1.2 | $ (0.4) | $ (3) | $ (4.7) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||||
Net earnings | $ 7 | $ 17.5 | $ 21.7 | $ 18 | $ 8.3 | $ 57.1 |
Less: Preferred stock dividends | (1.4) | 0 | (1.4) | 0 | ||
Net earnings available to common stockholders | 5.6 | 17.5 | 6.9 | 57.1 | ||
Net Income (Loss) Available to Common Stockholders, Diluted | $ 5.6 | $ 17.5 | $ 6.9 | $ 57.1 | ||
Denominator: (shares in thousands) | ||||||
Denominator for basic earnings per share - weighted-average shares (in shares) | 49,112,000 | 48,873,000 | 49,057,000 | 48,835,000 | ||
Potentially dilutive shares resulting from stock plans (in shares) | 329,000 | 701,000 | 428,000 | 525,000 | ||
Denominator for diluted earnings per share - weighted-average shares (in shares) | 49,441,000 | 49,574,000 | 49,485,000 | 49,360,000 | ||
Net earnings per share: | ||||||
Basic (in dollars per share) | $ 0.11 | $ 0.36 | $ 0.14 | $ 1.17 | ||
Diluted (in dollars per share) | $ 0.11 | $ 0.35 | $ 0.14 | $ 1.16 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive equity awards not included in weighted-average common shares—diluted (in shares) | 8,000,000 | 2,900,000 | ||||
Common Stock, Restricted Stock and Restricted Stock Units | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive equity awards not included in weighted-average common shares—diluted (in shares) | 400,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 50.70% | 25.40% | (53.00%) | 25.70% |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information with Corporate Costs Excluded (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Financial information of segments | ||||
Number of reportable segments | segment | 2 | |||
Sales | $ 309.4 | $ 356.5 | $ 923.5 | $ 1,056.6 |
Operating profit | 19.3 | 36.7 | 20.7 | 99.8 |
Operating Segments | ||||
Financial information of segments | ||||
Sales | 309.4 | 356.5 | 923.5 | 1,056.6 |
Intersegment sales | 2.2 | 2.8 | 7.1 | 8.7 |
Corporate | ||||
Financial information of segments | ||||
Operating profit | (2.1) | (6.6) | (28.1) | (18.3) |
Office | ||||
Financial information of segments | ||||
Sales | 193.2 | 219.1 | 589.9 | 644.5 |
Office | Operating Segments | ||||
Financial information of segments | ||||
Sales | 193.2 | 219.1 | 589.9 | 644.5 |
Intersegment sales | 0 | 0.6 | 0.4 | 1.5 |
Operating profit | 5.4 | 18.3 | 10.1 | 46.8 |
Lifestyle | ||||
Financial information of segments | ||||
Sales | 116.2 | 137.4 | 333.6 | 412.1 |
Lifestyle | Operating Segments | ||||
Financial information of segments | ||||
Sales | 116.2 | 137.4 | 333.6 | 412.1 |
Intersegment sales | 2.2 | 2.2 | 6.7 | 7.2 |
Operating profit | $ 16 | $ 25 | $ 38.7 | $ 71.3 |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 332.1 |
Foreign currency translation adjustment | 8.2 |
Balance at end of period | 340.3 |
Office Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 54.3 |
Foreign currency translation adjustment | (0.1) |
Balance at end of period | 54.2 |
Lifestyle Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 277.8 |
Foreign currency translation adjustment | 8.3 |
Balance at end of period | $ 286.1 |
PREFERRED STOCK (Details)
PREFERRED STOCK (Details) $ / shares in Units, $ in Millions | Jul. 21, 2020USD ($)day$ / sharesRateshares | Sep. 30, 2020$ / shares | Dec. 31, 2019$ / shares |
Class of Stock [Line Items] | |||
Convertible preferred stock, par value (USD per share) | $ 1 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Series A Convertible Preferred Stock | Investment Agreement | |||
Class of Stock [Line Items] | |||
Number of shares issued in transaction (in shares) | shares | 164,000 | ||
Convertible preferred stock, par value (USD per share) | $ 1 | ||
Aggregate purchase price | $ | $ 164 | ||
Proceeds received from issuance of preferred stock, net of transaction costs | $ | $ 161.8 | ||
Liquidation preference per share (in dollars per share) | $ 1,000 | ||
Cumulative dividend rate | 4.50% | ||
Conversion price per share (in dollars per share) | $ 16.75 | ||
Common stock, volume weighted average price per share (USD per share) | $ 29.3125 | ||
Preferred stock, convertible, threshold trading days | day | 20 | ||
Preferred stock, convertible, threshold consecutive trading days | day | 30 | ||
Preferred stock, conversion price, after sixth anniversary | Rate | 110.00% | ||
Preferred stock, conversion price, after seventh anniversary | Rate | 105.00% | ||
Preferred stock, conversion price, after eight anniversary | Rate | 100.00% | ||
Change in control, redemption price, percentage | Rate | 100.00% | ||
Beneficial ownership requirement | Rate | 50.00% |