10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549                         

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                    to                       

 Commission File No. 001-12907

KNOLL, INC.

Delaware	13-3873847
State or other jurisdiction of incorporation or organization	I.R.S. Employer No.

 

	1235 Water Street
East Greenville	PA	18041

Telephone Number (215) 679-7991

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class	Name of exchange on which registered	Trading Symbol
Common Stock, par value $0.01 per share	New York Stock Exchange	KNL

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No ☒

As of August 5, 2019, there were 49,775,599 shares (including 896,181 non-voting restricted shares) of the Registrant’s common stock, par value $0.01 per share, outstanding.

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KNOLL, INC.

TABLE OF CONTENTS FOR FORM 10-Q

Item		Page
PART I — FINANCIAL INFORMATION
1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2019 and 2018	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	5
	Notes to the Condensed Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
3.	Quantitative and Qualitative Disclosures about Market Risk	28
4.	Controls and Procedures	29
PART II — OTHER INFORMATION
1.	Legal Proceedings	30
1A.	Risk Factors	30
2.	Unregistered Sales of Equity Securities and The Use of Proceeds	30
6.	Exhibits	31
Signatures		32

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PART I - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KNOLL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions, except share and per share data)

	June 30, 2019			December 31, 2018
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	2.9		$	1.6
Customer receivables, net of allowance for doubtful accounts of $4.3 and $3.7, respectively	118.8			120.2
Inventories	182.0			170.5
Prepaid expenses	21.1			25.6
Other current assets	12.6			13.7
Total current assets	337.4			331.6
Property, plant, and equipment, net	221.8			215.0
Goodwill	319.7			320.8
Intangible assets, net	350.1			353.9
Right-of-use lease assets	94.4			—
Other noncurrent assets	10.1			5.6
Total assets	$	1,333.5		$	1,226.9
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	17.1		$	17.2
Accounts payable	131.7			126.7
Current portion of lease liability	21.1			—
Other current liabilities	123.9			128.9
Total current liabilities	293.8			272.8
Long-term debt	430.2			443.9
Deferred income taxes	88.7			86.5
Pension liability	12.1			13.9
Lease liability	87.1			—
Other noncurrent liabilities	13.2			23.3
Total liabilities	925.1			840.4
Commitments and contingent liabilities
Equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 66,287,054 shares issued and 49,777,570 shares outstanding (including 913,675 non-voting restricted shares and net of 16,509,484 treasury shares) at June 30, 2019 and 65,778,891 shares issued and 49,431,178 shares outstanding (including 725,252 non-voting restricted shares and net of 16,347,713 treasury shares) at December 31, 2018	0.5			0.5
Additional paid-in capital	60.9			58.8
Retained earnings	419.0			395.4
Accumulated other comprehensive loss	(72.0		)	(68.4		)
Total Knoll, Inc. stockholders’ equity	408.4			386.3
Noncontrolling interests	—			0.2
Total equity	408.4			386.5
Total liabilities and equity	$	1,333.5		$	1,226.9

See accompanying notes to the condensed consolidated financial statements.

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KNOLL, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(dollars in millions, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Sales	$	367.3		$	323.4		$	700.1		$	619.9
Cost of sales	226.6			204.2			435.6			392.9
Gross profit	140.7			119.2			264.5			227.0
Selling, general, and administrative expenses	106.8			93.6			201.3			178.4
Restructuring charges	—			0.8			0.1			1.4
Operating profit	33.9			24.8			63.1			47.2
Interest expense	5.5			5.3			10.7			9.3
Loss on extinguishment of debt	—			—			—			1.4
Pension settlement charge	0.5			4.6			0.6			4.6
Other income, net	(1.0		)	(2.8		)	(1.6		)	(6.8		)
Income before income tax expense	28.9			17.7			53.4			38.7
Income tax expense	7.2			4.6			13.8			10.3
Net earnings	$	21.7		$	13.1		$	39.6		$	28.4
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.44		$	0.27		$	0.81		$	0.58
Diluted	$	0.44		$	0.27		$	0.80		$	0.58
Dividends per share	$	0.17		$	0.15		$	0.32		$	0.30
Weighted-average number of common shares outstanding:
Basic	48,855,064			48,672,144			48,815,194			48,614,733
Diluted	49,314,364			49,131,106			49,252,546			49,137,528
Net earnings	$	21.7		$	13.1		$	39.6		$	28.4
Other comprehensive income (loss):
Unrealized (loss) gain on interest rate swap, net of tax	(2.8		)	1.2			(4.3		)	1.1
Pension and other post-employment liability adjustment, net of tax	0.4			7.7			0.5			7.9
Foreign currency translation adjustment	0.4			(6.0		)	2.3			(6.3		)
Foreign currency translation adjustment on long term intercompany notes	2.0			(5.1		)	(2.1		)	(5.6		)
Total other comprehensive income (loss), net of tax	—			(2.2		)	(3.6		)	(2.9		)
Total comprehensive income	$	21.7		$	10.9		$	36.0		$	25.5

See accompanying notes to the condensed consolidated financial statements.

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KNOLL, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(dollars in millions)

	Six Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	39.6		$	28.4
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation	13.7			12.7
Amortization expense (including deferred financing fees)	4.9			4.6
Loss on extinguishment of debt	—			1.4
Inventory obsolescence	0.7			0.8
Unrealized foreign currency loss (gains)	2.0			(1.8		)
Stock-based compensation	4.6			4.5
Bad debt and customer claims	0.9			0.7
Changes in assets and liabilities:
Customer receivables	0.4			(11.5		)
Inventories	(11.8		)	(13.6		)
Prepaid and other current assets	(0.8		)	0.8
Accounts payable	4.3			7.8
Accrued liabilities	4.4			0.1
Other noncurrent assets and liabilities	(7.0		)	(1.2		)
Cash provided by operating activities	55.9			33.7
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(21.9		)	(16.0		)
Purchase of business, net of cash acquired	—			(304.1		)
Cash used in investing activities	(21.9		)	(320.1		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility	198.5			339.0
Repayment of revolving credit facility	(203.5		)	(211.0		)
Proceeds from term loan	—			352.5
Repayment of term loan	(8.6		)	(171.8		)
Payment of financing fees	—			(4.5		)
Payment of fees related to debt extinguishment	—			(1.0		)
Payment of dividends	(16.1		)	(15.4		)
Purchase of common stock for treasury	(3.0		)	(4.4		)
Cash (used in) provided by financing activities	(32.7		)	283.4
Effect of exchange rate changes on cash and cash equivalents	—			2.2
Net increase (decrease) in cash and cash equivalents	1.3			(0.8		)
Cash and cash equivalents at beginning of period	1.6			2.2
Cash and cash equivalents at end of period	$	2.9		$	1.4

See accompanying notes to the condensed consolidated financial statements.

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NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and six-month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed.

The condensed consolidated balance sheet of the Company, as of December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU.

Accounting Standards Adopted

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million, with an offsetting increase to right-of-use assets of $102.4 million, for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019.

In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies

6

to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases, (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset. The Company determines whether the contracts are considered an operating or finance lease. The Company does not currently have finance leases.

Operating leases are included in right-of-use (“ROU”) lease assets, current portion lease liability, and lease liabilities on the Condensed Consolidated Balance Sheets. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how the Company determined (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

(1) ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As the majority of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company uses the implicit rate when readily determinable.

(2) The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise.

(3) Lease payments included in the measurement of the lease liability comprise the following: fixed payments (including in-substance fixed payments), less any lease incentives paid or payable to the lessee, variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the exercise price of the Company option to purchase the underlying asset if the Company is reasonably certain to exercise.

The ROU asset is initially measured at cost, which comprises the initial measurement of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expenses in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases.

ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of June 30, 2019, the Company has not incurred any impairment losses.

The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis.

Lease expense for short-term leases are recognized on a straight-line basis over the lease term.

7

On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. Further, the Company does not expect the amendments in ASU 2018-01: Land Easement Practical Expedient for Transition to Topic 842 to have an effect on the Company because it does not enter into land easement arrangements.

The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases.

Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term.

All other significant accounting policies are consistent with those disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2018.

NOTE 3. REVENUE

Disaggregation of Revenue

The majority of the Company’s revenue presented as “Sales” in the Condensed Consolidated Statements of Operations and Comprehensive Income is the result of contracts with customers for the sale of the Company’s products.

The Company’s sales by product category were as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Office Segment
Office Systems	$	114.8	$	106.0	221.1		$	210.0
Seating	34.6		34.1		65.5		65.1
Files and Storage	27.4		21.4		52.9		43.6
Ancillary	30.3		20.9		55.9		39.4
Other	16.1		12.2		30.0		21.6
Total Office Segment	223.2		194.6		425.4		379.7
Lifestyle Segment
Studio	113.3		101.0		214.8		185.0
Coverings	30.8		27.8		59.9		55.2
Total Lifestyle Segment	144.1		128.8		274.7		240.2
Total Sales	$	367.3	$	323.4	$	700.1	$	619.9

Contract Balances

The Company has contract assets consisting of Customer receivables in the Condensed Consolidated Balance Sheets which represent the amount of consideration the Company expects to be entitled to in exchange for the goods or services rendered to its customers.

When the Company receives deposits, generally the recognition of revenue is deferred and results in the recognition of a contract liability (Customer deposits) presented as a component of Other Current Liabilities in the Condensed Consolidated Balance Sheets. Subsequent recognition of revenue and the satisfaction of the contract liability is typically less than one year as the Company’s standard contract is less than one year. As of June 30, 2019 and December 31, 2018, the contract liability related to customer deposits was $41.3 million and $37.7 million. The Company recognized revenues that were included in the contract liability at the beginning of the current year of $28.8 million.

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NOTE 4. ACQUISITION

On January 25, 2018, the Company acquired one hundred percent (100%) of the shares of Muuto Holding ApS and MIE4 Holding 5 ApS, which collectively hold substantially all the business operations of Muuto ApS (“Muuto”). Muuto’s affordable luxury products span commercial and residential applications, adding scale and diversity to the Company’s business. The aggregate purchase price for the acquisition was $303.7 million, net of $7.6 million of cash acquired. The Company recorded acquisition costs and certain other costs of $1.5 million within selling, general, and administrative expenses in its Condensed Consolidated Statement of Operations and Comprehensive Income, during the six months ended June 30, 2018.

The following table presents unaudited pro forma information for the period presented as if the acquisition had occurred as of January 1, 2017 (in millions):

	Six Months Ended June 30, 2018
Pro forma sales	$	624.1
Pro forma net earnings attributable to Knoll, Inc. stockholders	$	32.6

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented above has been derived from the historical condensed consolidated financial statements of the Company and from the historical consolidated financial statements of Muuto.

The pro forma financial information presented above includes adjustment for: (1) incremental amortization expense related to fair value adjustments to identifiable intangible assets, (2) incremental interest expense for outstanding borrowings to reflect the terms of the Amended Credit Agreement, (3) nonrecurring items and (4) the tax effect of the above adjustments.

The pro forma information presented for the six months ended June 30, 2018 includes adjustments for future payments that are considered compensation for post combination service of $1.5 million, acquisition related inventory valuation of $0.9 million, incremental interest expense of $0.9 million, incremental amortization of intangibles of $0.1 million, as well as combined acquisition costs and loss on debt extinguishment of $2.9 million. The income tax impact of these adjustments for the six months ended June 30, 2018 was $0.9 million.

For further information on acquisitions, refer to the Company’s annual report on Form 10-K for the year ended December 31, 2018.

NOTE 5. INVENTORIES

Information regarding the Company’s inventories is as follows (in millions):

	June 30, 2019		December 31, 2018
Raw materials	$	58.6	$	65.1
Work-in-process	10.2		8.3
Finished goods	113.2		97.1
	$	182.0	$	170.5

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NOTE 6. PENSION AND OTHER POST-EMPLOYMENT BENEFITS

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

	Pension Benefits						Other Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Interest cost	2.4			2.5			0.1			—
Expected return on plan assets	(4.0		)	(4.6		)	—			—
Amortization of prior service credit	—			—			(0.2		)	(0.2		)
Recognized actuarial loss	0.2			0.4			—			—
Pension settlement charge (1)	0.5			4.6			—			—
Net periodic benefit (income) cost	$	(0.9	)	$	2.9		$	(0.1	)	$	(0.2	)

	Pension Benefits						Other Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Interest cost	4.9			5.0			0.2			0.1
Expected return on plan assets	(8.0		)	(9.2		)	—			—
Amortization of prior service credit	—			—			(0.4		)	(0.4		)
Recognized actuarial loss	0.3			0.7			—			—
Pension settlement charge (1)	0.6			4.6			—			—
Net periodic benefit (income) cost	$	(2.2	)	$	1.1		$	(0.2	)	$	(0.3	)

(1) The pension settlement charge for the periods ended June 30, 2019 related to cash payments from lump sum elections. The pension settlement charge for the six months ended June 30, 2018 was related to the purchase of annuities for certain pension plan retirees as well as cash payments from lump sum elections.

NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments

The fair values of the Company’s cash and cash equivalents, classified as Level 1 within the fair value hierarchy, approximate carrying value due to their short maturities.

The fair value of the Company’s long-term debt, classified as Level 2 within the fair value hierarchy, approximates its carrying value, as it is variable rate debt and the terms are comparable to market terms as of the balance sheet dates.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table represents the assets and liabilities, measured at fair value on a recurring basis and the basis for that measurement (in millions):

	Fair Value as of June 30, 2019								Fair Value as of December 31, 2018
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate swap	$	—	$	7.5	$	—	$	7.5	$	—	$	1.7	$	—	$	1.7
Contingent purchase price payment - DatesWeiser	—		—		0.8		0.8		—		—		0.8		0.8

Interest Rate Swap

The Company’s interest rate swap is with a counterparty with a credit rating of A- according to S&P and Fitch. The fair value of the interest rate swap agreement is based on observable prices as quoted for receiving the variable one-month London Interbank Offered Rates (LIBOR) and paying fixed interest rates and therefore were classified as Level 2 within the fair value hierarchy.

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Contingent Purchase Price Payment

Pursuant to the agreement governing the acquisition of DatesWeiser, which took place in 2016, the Company may be required to make annual contingent purchase price payments. The payouts are based upon DatesWeiser reaching an annual net sales target, for each year through 2020. The Company classifies this as a Level 3 measurement and is required to remeasure this liability at fair value on a recurring basis. Any changes in the fair value will be included within selling, general and administrative expenses. The maximum amount of possible future contingent payments under the agreement as of June 30, 2019 is $4.0 million.

There were no additional assets and/or liabilities recorded at fair value on a recurring basis as of June 30, 2019 or December 31, 2018.

NOTE 8. DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risks related to its business operations. To reduce the interest rate risk the Company uses an interest rate swap contract. The Company does not use derivatives for speculative trading purposes.

Cash flow hedge

To offset the variability of cash flows in interest payments associated with a portion of the Company’s variable rate debt, the Company entered into an interest rate swap contract in January 2018 which is designated as a cash flow hedge. The interest rate swap hedges one-month LIBOR, which effectively converts a portion of the variable-rate debt to a fixed interest rate. The interest rate swap effective date is December 31, 2018 and the maturity date is January 23, 2023. As of June 30, 2019, the Company’s interest rate swap agreement, which hedges long-term debt obligations, has a notional amount of $300.0 million, which decreases over time by $50 million increments. The contract has a fixed rate of 2.63%.

The following table summarizes the fair value of the Company’s derivative instruments, as well as the location of these instruments on the Condensed Consolidated Balance Sheets as of the dates presented (in millions):

Derivatives designated as hedging instruments	Balance Sheet Location	June 30, 2019		December 31, 2018
Derivative liabilities:
Interest rate swap	Other current liabilities	$	2.1	$	0.3
Interest rate swap	Other noncurrent liabilities	5.4		1.4
Total derivative liabilities		$	7.5	$	1.7

The interest rate swap is included at its estimated fair value as an asset or a liability in the Condensed Consolidated Balance Sheet based on a discounted cash flow model using applicable market swap rates and certain assumptions. The fair value of the swap recorded in Accumulated Other Comprehensive Income (Loss) may be recognized in the Condensed Consolidated Statement of Operations if certain terms of the agreement change, are modified or if the loan is extinguished. As of June 30, 2019 there was no hedge ineffectiveness associated with the Company’s interest rate swap and no portion of the cash flow hedge is excluded from the assessment of effectiveness. The Company reclassified $0.1 million and $0.2 million from other comprehensive loss to interest expense within the Condensed Consolidated Statement of Operations during the three and six months ended June 30, 2019, respectively. The Company expects to reclassify in the next 12 months a loss of approximately $2.1 million from accumulated other comprehensive income into earnings, as a component of interest expense, related to the Company’s interest rate swap based on the borrowing rates at June 30, 2019.

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NOTE 9. LEASES

The Company has commitments under operating leases for certain machinery and equipment as well as manufacturing, warehousing, showroom and other facilities used in its operations. The Company does not have finance leases. Excluding short-term leases, the Company’s leases have initial terms ranging from 1 to 16 years, most of which include options the Company may elect to extend or renew the lease for 0.1 to 6 years, and some of which may include options to terminate the leases with notice periods of up to 1 year. Certain lease agreements contain provisions for future rent increases. Payments due under lease contracts are fixed.

The components of lease cost for the three and six months ended June 30, 2019 are as follows (in millions):

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Lease cost:
Operating lease cost	$	6.8	$	13.7
Short-term lease cost	0.5		0.6
Sublease income	—		(0.1		)
Total lease cost	$	7.3	$	14.2

As of December 31, 2018, minimum rental payments under operating leases were recognized on a straight-line basis over the term of the lease including any periods of free rent.

Other lease information as of and for the period ended June 30, 2019 includes:

	June 30, 2019
Weighted-average remaining lease term (in years)
Operating leases	6.2
Weighted-average discount rate
Operating leases	4.8	%

(dollars in millions)	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13.9
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	5.0

As of June 30, 2019, the Company has an additional operating lease that has not yet commenced for which it will record a right of use asset and lease liability of approximately $3.3 million. The lease will commence in January 2020 with a lease term of approximately 10 years.

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Future minimum lease payments under non-cancellable leases, net of sublease income, as of June 30, 2019 is as follows (in millions):

	June 30, 2019
2019 (remaining six months)	$	12.5
2020	26.0
2021	20.0
2022	17.4
2023	14.8
Thereafter	40.4
Total undiscounted lease payments	131.1
Less: imputed interest	(22.9		)
Total lease liability	$	108.2

NOTE 10. OTHER CURRENT LIABILITIES

Information regarding the Company’s other current liabilities is as follows (in millions):

	June 30, 2019		December 31, 2018
Accrued employee compensation	$	28.4	$	40.6
Customer deposits	41.3		37.7
Warranty	10.1		9.6
Other	44.1		41.0
Other current liabilities	$	123.9	$	128.9

NOTE 11. INDEBTEDNESS

The Company’s long-term debt is summarized as follows (in millions):

	June 30, 2019		December 31, 2018
Balance of revolving credit facility	$	129.5	$	134.5
Balance of term loans	321.5		330.8
Total long-term debt	451.0		465.3
Less: Current maturities of long-term debt	17.1		17.2
Less: Deferred financing fees, net	3.7		4.2
Long-term debt	$	430.2	$	443.9

Credit facility

The following revolving credit facility was in place at June 30, 2019 and December 31, 2018 (in millions):

	Capacity	Amount Borrowed	Letters of Credit Outstanding	Unused Capacity
June 30, 2019	$400.0	$129.5	$5.2	$265.3
December 31, 2018	$400.0	$134.5	$5.2	$260.3

At June 30, 2019, borrowings under the revolving credit facility include $7.0 million at a base rate of 6.25% and $122.5 million at a weighted average LIBOR rate of 4.15%. At December 31, 2018, borrowings under the revolving credit facility include $2.5 million at a base rate of 6.25% and $132.0 million at a weighted average LIBOR rate of 4.25%. At June 30, 2019 and December 31, 2018, the letters of credit issued under the revolving credit facility incurred interest at 1.75% for both periods.

At June 30, 2019, the U.S. term loan and multicurrency term loan incurred interest at 4.15% and 1.75%, respectively. At December 31, 2018 the U.S. term loan and multicurrency term loan incurred interest at 4.27% and 1.75%, respectively. The

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Eurocurrency rates used for the U.S. dollar-denominated term loan and the Euro-denominated term loan are one-month LIBOR and one-month Euribor, respectively.

Deferred Financing Fees

Deferred financing fees, net of accumulated amortization, totaled $3.7 million and $4.2 million as of June 30, 2019 and December 31, 2018, respectively. In conjunction with terminating the Company’s Existing Credit Agreement, $0.4 million in unamortized debt issuance costs and $1.0 million of third party fees related to debt extinguishment were written-off as a loss on extinguishment of debt during the six months ended June 30, 2018.

NOTE 12. CONTINGENT LIABILITIES AND COMMITMENTS

Litigation

The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business. The Company accrues for such matters when expenditures are probable and reasonably estimable. Based upon information presently known, management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Warranty

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

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

Balance, December 31, 2018	$	9.6
Provision for warranty claims	4.6
Warranty claims settled	(4.0		)
Foreign currency translation adjustment	(0.1		)
Balance, June 30, 2019	$	10.1

Warranty expense for the three and six months ended June 30, 2019 was $2.7 million and $4.6 million, respectively. Warranty expense for the three and six months ended June 30, 2018 was $1.9 million and $3.8 million, respectively.

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NOTE 13. EQUITY

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2019 (in millions except share information):

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2018	$	0.5	$	58.8		$	395.4		$	(68.4	)	$	386.3		$	0.2		$	386.5
Net earnings	—		—			18.0			—			18.0			—			18.0
Other comprehensive (loss)      income	—		—			—			(3.6		)	(3.6		)	—			(3.6		)
Stock-based compensation, net of forfeitures	—		2.2			—			—			2.2			—			2.2
Cash dividend ($0.15 per share)	—		—			(7.5		)	—			(7.5		)	—			(7.5		)
Purchase of common stock (141,738 shares)	—		(3.0		)	—			—			(3.0		)	—			(3.0		)
Other	—		0.4			—			—			0.4			(0.2		)	0.2
Balance at March 31, 2019	$	0.5	$	58.4		$	405.9		$	(72.0	)	$	392.8		$	—		$	392.8
Net earnings	—		—			21.7			—			21.7			—			21.7
Other comprehensive (loss)       income	—		—			—			—			—			—			—
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

The following table shows the change in the number of shares of common stock outstanding during the six months ended June 30, 2019 (table in thousands and excluding non-voting restricted shares):

Shares outstanding as of December 31, 2018	48,706
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes	157
Shares issued to Board of Directors in lieu of cash	1
Shares outstanding as of June 30, 2019	48,864

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The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2018 (in millions except share information):

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2017	$	0.5	$	54.5		$	347.3		$	(43.8	)	$	358.5		$	0.3	$	358.8
Adoption of ASU 2018-02	—		—			6.3			(6.3		)	—			—		—
Net earnings	—		—			15.3			—			15.3			—		15.3
Other comprehensive (loss) income	—		—			—			(0.8		)	(0.8		)	—		(0.8		)
Stock-based compensation, net of forfeitures	—		2.4			—			—			2.4			—		2.4
Cash dividend ($0.15 per share)	—		—			(7.3		)	—			(7.3		)	—		(7.3		)
Purchase of common stock (95,412 shares)	—		(2.0		)	—			—			(2.0		)	—		(2.0		)
Balance at March 31, 2018	$	0.5	$	54.9		$	361.5		$	(50.8	)	$	366.1		$	0.3	$	366.4
Net earnings	—		—			13.1			—			13.1			—		13.1
Other comprehensive (loss) income	—		—			—			(2.2		)	(2.2		)	—		(2.2		)
Stock-based compensation, net of forfeitures	—		2.1			—			—			2.1			—		2.1
Cash dividend ($0.15 per share)	—		—			(7.9		)	—			(7.9		)	—		(7.9		)
Purchase of common stock	—		(2.4		)	—			—			(2.4		)	—		(2.4		)
Balance at June 30, 2018	$	0.5	$	54.6		$	366.7		$	(53.0	)	$	368.8		$	0.3	$	369.1

The following table shows the change in the number of shares of common stock outstanding during the six months ended June 30, 2018 (table in thousands and excluding non-voting restricted shares):

Shares outstanding as of December 31, 2017	48,498
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes	194
Shares issued to Board of Directors in lieu of cash	2
Shares outstanding as of June 30, 2018	48,694

NOTE 14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2019 (in millions):

	Unrealized gains (losses) on Interest Rate Swaps			Foreign Currency Translation Adjustment			Foreign Currency Translation Adjustment on Long-term Intercompany Notes			Pension and Other Post-Employment Liability Adjustment			Total
Balance, as of December 31, 2018	$	(1.2	)	$	(18.8	)	$	(8.1	)	$	(40.3	)	$	(68.4	)
Other comprehensive income (loss) before reclassifications	(6.0		)	2.3			(2.1		)	—			(5.8		)
Amounts reclassified from accumulated other comprehensive loss	0.2			—			—			0.5			0.7
Net current-period other comprehensive income (loss) before income tax	(5.8		)	2.3			(2.1		)	0.5			(5.1		)
Income tax benefit (expense)	1.5			—			—			—			1.5
Other comprehensive income (loss)	(4.3		)	2.3			(2.1		)	0.5			(3.6		)
Balance, as of June 30, 2019	$	(5.5	)	$	(16.5	)	$	(10.2	)	$	(39.8	)	$	(72.0	)

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The following pension and other post-retirement benefit reclassifications were made from accumulated other comprehensive income (loss) to the Condensed Consolidated Statements of Operations and Other Comprehensive Income (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Amortization of pension and other post-employment liability adjustments
Prior service credits (1)	$	(0.2	)	$	(0.2	)	$	(0.4	)	$	(0.4	)
Actuarial losses (1)	0.2			0.3			0.3			0.7
Pension settlement charge	0.5			4.6			0.6			4.6
Total before tax	0.5			4.7			0.5			4.9
Tax benefit	(0.2		)	(1.3		)	—			(1.3		)
Net of tax	$	0.3		$	3.4		$	0.5		$	3.6

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information.

The following table summarizes the unrealized gains (losses) on derivative instruments, including the impact of components reclassified into net income from accumulated other comprehensive income (loss), for the three and six months ended June 30, 2019 and 2018 (in millions):

	Three Months Ended					Six Months Ended
	June 30, 2019			June 30, 2018		June 30, 2019			June 30, 2018
Unrealized gain (loss) on derivative instruments	$	(3.9	)	$	1.2	$	(6.0	)	$	1.1
Loss (gain) on derivatives reclassified into income:
Interest rate contracts	0.1			—		0.2			—
Total reclassified into income	0.1			—		0.2			—
Income tax benefit	1.0			—		1.5			—
Amounts reclassified from accumulated other comprehensive income, net of tax	1.1			—		1.7			—
Unrealized gain (loss) on derivative instruments, net of tax	$	(2.8	)	$	1.2	$	(4.3	)	$	1.1

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NOTE 15. EARNINGS PER SHARE

Basic earnings per share excludes the dilutive effect of common shares that could potentially be issued due to the exercise of stock options and vesting of unvested restricted stock and restricted stock units, and is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. At June 30, 2019 and 2018, the Company had restricted stock, restricted stock units and stock options, which could potentially dilute basic earnings per share in the future. The following table sets forth the reconciliation from basic to dilutive average common shares (in millions, except shares which are in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$	21.7	$	13.1	$	39.6	$	28.4
Denominator:
Denominator for basic earnings per shares - weighted-average shares	48,855		48,672		48,815		48,615
Effect of dilutive securities:
Potentially dilutive shares resulting from stock plans	459		459		438		523
Denominator for diluted earnings per share - weighted-average shares	49,314		49,131		49,253		49,138
Antidilutive equity awards not included in weighted-average common shares—diluted	—		—		—		—
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.44	$	0.27	$	0.81	$	0.58
Diluted	$	0.44	$	0.27	$	0.80	$	0.58

NOTE 16. INCOME TAXES

The Company develops interim income tax provisions based on estimates of the effective tax rates expected to apply per tax domicile for the current annual reporting period. These estimates are reevaluated each quarter and updated as necessary. The tax effects of any discrete items are recorded in the period in which they occur and are excluded from the interim estimates of the effective annual rates.

The Company’s effective tax rates for the three months ended June 30, 2019 and 2018 were 25.1% and 26.0%, respectively, and 25.8% and 26.6% for the six months ended June 30, 2019 and 2018, respectively. Changes in the effective tax rates for the second quarter and first half of 2019, as compared to the same periods in 2018, were primarily driven by the amount and timing of share-based compensation deductions, the recognition of certain tax credits and the timing of the impact of certain provisions of the Tax Act applicable to our foreign jurisdictions.

NOTE 17. 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.

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The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms in North America and Europe. These products include: office systems furniture, seating, storage, tables, desks and KnollExtra® accessories. The Office segment includes DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard of design, quality and technology integration.

The Lifestyle segment includes KnollStudio®, HOLLY HUNT®, Muuto®, KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. Lifestyle products, which are distributed globally, include iconic seating, lounge furniture, side, café and dining chairs as well as conference, training, dining and occasional tables, lighting, rugs, textiles, high-quality fabrics, felt, leather and related architectural products.

During the first quarter of 2019, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As a result, DatesWeiser is now a component of the Office operating segment as opposed to the Lifestyle operating segment. As a result of this change in segment reporting, the Company retrospectively revised prior period results, by segment, to conform to current period presentation.

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

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
SALES
Office	$	223.2		$	194.6		425.4			379.7
Lifestyle	144.1			128.8			274.7			240.2
Knoll, Inc.	$	367.3		$	323.4		700.1			619.9
INTERSEGMENT SALES (1)
Office	$	0.5		$	0.5		0.9			1.0
Lifestyle	2.6			3.1			5.0			5.4
Knoll, Inc.	$	3.0		$	3.5		5.9			6.4
OPERATING PROFIT
Office (2)	$	14.3		$	10.4		28.5			19.2
Lifestyle	25.6			20.9			46.3			41.1
Corporate	(6.0		)	(6.5		)	(11.7		)	(13.1		)
Knoll, Inc.	$	33.9		$	24.8		$	63.1		$	47.2

_______________________________________________________________________________

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

(2) Knoll recorded restructuring charges of $0.1 million during the six months ended June 30, 2019 and $0.8 million and $1.4 million during the three and six months ended June 30, 2018, respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control.

The changes in the carrying amount of goodwill by reportable segment are as follows (in millions):

	Office Segment		Lifestyle Segment			Total
Balance as of December 31, 2018	$	39.1	$	281.7		$	320.8
Foreign currency translation adjustment	0.3		(1.4		)	(1.1		)
Balance as of June 30, 2019	$	39.4	$	280.3		$	319.7

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations provides an account of our financial performance and financial condition that should be read in conjunction with the accompanying audited consolidated financial statements.

Forward-looking Statements

This quarterly report on Form 10-Q contains forward-looking statements, principally in the sections entitled “Business,” “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures About Market Risk.” Statements and financial discussion and analysis contained in this Form 10-Q that are not historical facts are forward-looking statements. These statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on our current beliefs as well as assumptions made by us and information currently available to us. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” or other similar words, phrases or expressions. This includes, without limitation, our statements and expectations regarding any current or future recovery in our industry, our publicly announced plans for increased capital and investment spending to achieve our long-term revenue and profitability growth goals, our integration of acquired businesses, and our expectations with respect to leverage. Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Factors that may cause actual results to differ materially from those in the forward-looking statements include corporate spending and service-sector employment, price competition, acceptance of Knoll's new products, the pricing and availability of raw materials and components, foreign currency exchange, transportation costs, demand for high quality, well designed furniture solutions, changes in the competitive marketplace, changes in the trends in the market for furniture or coverings, the financial strength and stability of our suppliers, customers and dealers, access to capital, our success in designing and implementing our new enterprise resource planning system, our ability to successfully integrate acquired businesses, our supply chain optimization initiatives and other risks identified in Knoll's annual report on Form 10-K, and other filings with the Securities and Exchange Commission. The factors identified above are believed to be important factors but not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any forward-looking statement. Unpredictable or unknown factors could also have material adverse effects on us. All forward-looking statements included in this Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements. Except as required under the Federal securities laws and the rules and regulations of the SEC, we undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview

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

Business Highlights

During the last decade we have diversified our sources of revenue among our varying operating segments. These diversification efforts coupled with efforts to improve our Office segment profitability, have resulted in growth and margin expansion. We believe we are well positioned to continue to build on these initiatives and benefit from the trend to more social and hospitality-based workplaces in 2019 and beyond.

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

We also remain committed to building a more efficient and responsive, customer-centric, service culture and technology infrastructure across our organization. Our capital expenditures are reflective of this commitment as we continue to invest in

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the business through technology infrastructure upgrades, continued investments in our manufacturing facilities with a focus on lean initiatives and showroom presence.

Results of Operations

Comparison of Consolidated Results for the Three Months Ended June 30, 2019 and 2018

	Three Months Ended June 30,						2019 vs. 2018
	2019			2018			$ Change			% Change
	(Dollars in millions, except per share data)
Net Sales	$	367.3		$	323.4		$	43.9		13.6	%
Gross profit	140.7			119.2			21.5			17.9	%
Selling, general, and administrative expenses	106.8			93.6			13.2			14.0	%
Operating profit	33.9			24.8			9.1			36.7	%
Interest expense	5.5			5.3			0.2			4.5	%
Pension settlement charge	0.5			4.6			(4.1		)	(90.2	)%
Other income, net	(1.0		)	(2.8		)	1.8			(65.7	)%
Income tax expense	7.2			4.6			2.6			55.8	%
Net earnings	21.7			13.1			8.6			65.7	%
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.44		$	0.27		$	0.17		63.0	%
Diluted	$	0.44		$	0.27		$	0.17		63.0	%
Statistical Data
Gross profit %	38.3		%	36.9		%
Operating profit %	9.2		%	7.7		%
Selling, general, and administrative expenses %	29.1		%	28.9		%

Net Sales

Net sales for the three months ended June 30, 2019 were $367.3 million, an increase of $43.9 million, or 13.6%, from sales of $323.4 million for the three months ended June 30, 2018. Net sales for the Office segment were $223.2 million for the three months ended June 30, 2019, an increase of 14.7%, when compared to the three months ended June 30, 2018. The increase in the Office segment was a driven primarily by investments made in expanding our range of height adjustable tables and improved storage systems, as well as continued growth from ancillary products. Net sales for the Lifestyle segment were $144.1 million during the three months ended June 30, 2019, an increase of 11.9%, from the three months ended June 30, 2018. Lifestyle segment sales growth was primarily due to strong organic growth at Muuto, Spinneybeck and KnollStudio, primarily from increased crossover penetration of commercial workplace settings.

Gross Profit

Gross profit for the three months ended June 30, 2019 was $140.7 million, an increase of $21.5 million, or 17.9%, from gross profit of $119.2 million for the three months ended June 30, 2018. Gross margin in the second quarter of 2018 was negatively impacted by an acquisition related inventory adjustment of $0.9 million. The remaining increase for the three months ended June 30, 2019 was due primarily to fixed cost leverage in our manufacturing facilities from higher volume absorption, continuous improvement activities and favorable product mix, partially offset by transportation and commodity inflation.

Operating Profit

Operating profit for the three months ended June 30, 2019 was $33.9 million, an increase of $9.1 million, or 36.7%, from operating profit of $24.8 million for the three months ended June 30, 2018. Operating profit as a percentage of sales increased from 7.7% for the three months ended June 30, 2018 to 9.2% for the three months ended June 30, 2019, primarily due to the improvement in gross profit.

Selling, general, and administrative expenses for the three months ended June 30, 2019 were $106.8 million, or 29.1% of sales, an increase of $13.2 million from $93.6 million, or 28.9% of sales, for the three months ended June 30, 2018. The increase was due primarily to higher incentive-based compensation from increased volume, and strategic investments in increased sales force headcount, information technology infrastructure and our showrooms, partially offset by $1.9 million lower acquisition-related expenses.

21

Operating expenses also included restructuring charges of $0.8 million in the three months ended June 30, 2018. The restructuring charges were related to supply chain optimization expenses of $0.5 million as well as organizational realignment within the sales and customer service functions that have resulted in greater operational efficiency and control of $0.3 million.

Interest Expense

Interest expense for the three months ended June 30, 2019 was $5.5 million, an increase of $0.2 million from interest expense of $5.3 million for the three months ended June 30, 2018. The increase was due primarily to higher interest rates offset by reduced average outstanding debt. During the three months ended June 30, 2019 and 2018, our weighted average interest rate was approximately 4.0% and 3.6%, respectively.

Pension Settlement Charge

Pension settlement charge for the three months ended June 30, 2019 was $0.5 million, a decrease of $4.1 million from $4.6 million for the three months ended June 30, 2018. Pension settlement charges resulted from cash payments of lump sum elections in the second quarter of 2019 and the purchase of annuities for certain pension plan retirees as well as cash payments from lump sum elections in the second quarter of 2018.

Other Income, net

During the three months ended June 30, 2019 and 2018, other income was $1.0 million and $2.8 million, respectively. The decrease in other income was due primarily to foreign exchange losses driven by the depreciation of the US dollar against the Canadian dollar and a reduction in net periodic benefit income from the Company's pension and other post-employment benefit plans in the second quarter of 2019 compared to the second quarter of 2018.

Income Tax Expense

Our effective tax rate was 25.1% for the three months ended June 30, 2019, compared to 26.0% for the three months ended June 30, 2018. The decrease in the tax rate is primarily due to the Tax Act legislation, state income tax and income tax credits offset by the vesting of equity awards when compared to the three months ended June 30, 2018.

Comparison of Consolidated Results for the Six Months Ended June 30, 2019 and 2018

	Six Months Ended June 30,						2019 vs. 2018
	2019			2018			$ Change			% Change
	(Dollars in millions, except per share data)
Net Sales	$	700.1		$	619.9		$	80.2		12.9	%
Gross profit	264.5			227.0			37.5			16.5	%
Selling, general, and administrative expenses	201.3			178.4			22.9			12.8	%
Operating profit	63.1			47.2			15.9			33.6	%
Interest expense	10.7			9.3			1.4			14.7	%
Loss on debt extinguishment	—			1.4			(1.4		)	(100.0	)%
Pension settlement charge	0.6			4.6			(4.0		)	(86.9	)%
Other income, net	(1.6		)	(6.8		)	5.2			(76.8	)%
Income tax expense	13.8			10.3			3.5			33.7	%
Net earnings	39.6			28.4			11.2			39.6	%
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.81		$	0.58		$	0.23		39.7	%
Diluted	$	0.80		$	0.58		$	0.22		37.9	%
Statistical Data
Gross profit %	37.8		%	36.6		%
Operating profit %	9.0		%	7.6		%
Selling, general, and administrative expenses %	28.7		%	28.8		%

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Net Sales

Net sales for the six months ended June 30, 2019 were $700.1 million, an increase of $80.2 million, or 12.9%, from sales of $619.9 million for the six months ended June 30, 2018. The increase in sales was driven by strong sales across both of our segments. A $45.7 million increase in our Office segment sales resulting from continued growth in height-adjustable tables and storage systems, as well as continued growth in our ancillary offerings. Our Lifestyle segment sales increased $34.5 million, or 14.3%, from the same period in the prior year. This increase was primarily driven by strong volume growth at Muuto, Spinneybeck|Filzfelt and KnollStudio, primarily from increased crossover penetration in commercial workplace settings as well.

Gross Profit

Gross profit for the six months ended June 30, 2019 was $264.5 million, an increase of $37.5 million, or 16.5%, from gross profit of $227.0 million for the six months ended June 30, 2018. As a percentage of sales, gross profit increased from 36.6% for the six months ended June 30, 2018 to 37.8% for the six months ended June 30, 2019. This increase was driven mainly by fixed cost leverage in our manufacturing facilities from higher volume absorption and continuous improvement initiatives partially offset by unfavorable commodity and transportation inflation when compared to the six months ended June 30, 2018.

Operating Profit

Operating profit for the six months ended June 30, 2019 was $63.1 million, increase of $15.9 million, or 33.6%, from operating profit of $47.2 million for the six months ended June 30, 2018. Operating profit as a percentage of sales was 9.0% for the six months ended June 30, 2019 compared to 7.6% in the six months ended June 30, 2018, primarily due to the improvement in gross profit.

Selling, general, and administrative expenses for the six months ended June 30, 2019 were $201.3 million, or 28.7% of sales, compared to $178.4 million, or 28.8% of sales, for the six months ended June 30, 2018. The increase was due primarily to higher incentive-based compensation resulting from increased volume, and strategic investments in increased sales force headcount, information technology infrastructure and our showrooms.

Operating expenses also included restructuring changes of $1.4 million in the six months ended June 30, 2018. The restructuring charges included supply chain optimization expenses of $0.5 million, an organizational realignment in our manufacturing plants of $0.5 million, as well as organizational realignment within the sales and customer service functions that have resulted in greater operational efficiency and control of $0.3 million.

Interest Expense

Interest expense for the six months ended June 30, 2019 was $10.7 million, increase of $1.4 million from interest expense of $9.3 million for the six months ended June 30, 2018. During the six months ended June 30, 2019 and 2018, our weighted average interest rate was approximately 4.0% and 3.6%, respectively. The higher weighted-average interest rate was partially offset by a decreased average outstanding debt level.

Loss on Extinguishment of Debt

We recorded a loss on extinguishment of debt of $1.4 million resulting from the refinancing of our credit facility which includes a $0.4 million loss on previously recorded and unamortized deferred financing fees and $1.0 million of fees paid to creditors on the Amended Credit Agreement during the six months ended June 30, 2018.

Pension Settlement Charge

Pension settlement charge for the six months ended June 30, 2019 was $0.6 million, a decrease of $4.0 million from $4.6 million for the six months ended June 30, 2018. Pension settlement charges resulted from cash payments of lump sum elections in the first half of 2019 and the purchase of annuities for certain pension plan retirees as well as cash payments from lump sum elections in the first half of 2018.

Other Income, net

Other income for the six months ended June 30, 2019 was $1.6 million, a decrease of $5.2 million from $6.8 million for the six months ended June 30, 2018. The decrease in other income, net for the six months ended June 30, 2019 and 2018 was primarily due to foreign exchange losses driven by the depreciation of the US Dollar against the Canadian Dollar during the six months ended June 30, 2019 compared to foreign exchange gains in the prior year period. Additionally, a reduction in net periodic benefit income from the Company's pension and other post-employment benefit plans in the first half of 2019 compared to the prior year period contributed to the reduction of other income.

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Income Tax Expense

Our effective tax rate was 25.8% for the six months ended June 30, 2019, compared to 26.6% for the six months ended June 30, 2018. The decrease in the tax rate is due to the passage of the U.S. Tax Cuts and Jobs Act and state income tax credits offset by the vesting of equity awards, as well as the varying effective tax rates in the countries and states in which we operate.

Segment Reporting

The Company has two reportable segments: Office and Lifestyle.

The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms in North America and Europe. These products include: office systems furniture, seating, storage, tables, desks and KnollExtra® accessories. The Office segment includes DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard of design, quality and technology integration.

The Lifestyle segment includes KnollStudio®, HOLLY HUNT®, Muuto®, KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. Lifestyle products, which are distributed globally, include iconic seating, lounge furniture, side, café and dining chairs as well as conference, training, dining and occasional tables, lighting, rugs, textiles, high-quality fabrics, felt, leather and related architectural products.

During the first quarter of 2019, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As a result, DatesWeiser is now a component of the Office operating segment as opposed to the Lifestyle operating segment. The comparisons of segment results found below have been retrospectively adjusted to reflect the change in segment reporting discussed in Note 17 of Notes to Condensed Consolidated Financial Statements included elsewhere herein.

Comparison of Segment Results for the Three Months Ended June 30, 2019 and 2018

	Three Months Ended June 30,						2019 vs. 2018
	2019			2018			$ Change		% Change
	(Dollars in millions)
SALES
Office	$	223.2		$	194.6		$	28.6	14.7	%
Lifestyle	144.1			128.8			15.3		11.9	%
Knoll, Inc.	$	367.3		$	323.4		$	43.9	13.6	%
OPERATING PROFIT
Office	$	14.3		$	10.4		$	4.0	38.2	%
Lifestyle	25.6			20.9			4.7		22.5	%
Corporate	(6.0		)	(6.5		)	0.5		(7.7	)%
Knoll, Inc.	$	33.9		$	24.8		$	9.2	36.7	%

_______________________________________________________________________________

Office

Net sales for the Office segment for the three months ended June 30, 2019 were $223.2 million, an increase of $28.6 million, or 14.7%, when compared with the three months ended June 30, 2018. This increase was driven primarily by investments made in height adjustable tables and improved storage systems, as well as continued growth from ancillary products. Operating profit for the Office segment in the three months ended June 30, 2019 was $14.3 million, an increase of $4.0 million, or 38.2%, from $10.4 million when compared with the three months ended June 30, 2018. The increase was due primarily to increased sales volume and continuous improvement initiatives, partially offset by transportation and commodity inflation, higher incentive-based compensation from increased volume, and strategic investments in increased sales force headcount, information technology infrastructure and our showrooms.

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Lifestyle

Net sales for the Lifestyle segment for the three months ended June 30, 2019 were $144.1 million, an increase of $15.3 million, or 11.9%, when compared with the three months ended June 30, 2018. The increase was due primarily to volume growth in various Lifestyle businesses, primarily from increased crossover penetration of commercial workplace settings. Operating profit for the Lifestyle segment in the three months ended June 30, 2019 was $25.6 million, an increase of $4.7 million, or 22.5%, from $20.9 million when compared with the three months ended June 30, 2018. The increase was due primarily to volume growth, partially offset by commodity and transportation inflation and strategic investments in sales force headcount and showrooms.

Corporate

Corporate costs for the three months ended June 30, 2019 were $6.0 million, a decrease of $0.5 million, when compared with the three months ended June 30, 2018. The decrease was due primarily to decreased stock compensation expense.

Comparison of Segment Results for the Six Months Ended June 30, 2019 and 2018

	Six Months Ended June 30, 2019						2019 vs. 2018
	2019			2018			$ Change		% Change
	(Dollars in millions)
SALES
Office	$	425.4		$	379.7		$	45.7	12.0	%
Lifestyle	274.7			240.2			34.5		14.3	%
Knoll, Inc.	$	700.1		$	619.9		$	80.2	12.9	%
OPERATING PROFIT
Office	$	28.5		$	19.2		$	9.3	48.4	%
Lifestyle	46.3			41.1			5.2		12.7	%
Corporate	(11.7		)	(13.1		)	1.4		(10.7	)%
Knoll, Inc. (1)	$	63.1		$	47.2		$	15.9	33.7	%

_______________________________________________________________________________

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

Office

Net sales for the Office segment for the six months ended June 30, 2019 were $425.4 million, an increase of $45.7 million, or 12.0%, when compared with the six months ended June 30, 2018. The increase in the Office segment was due primarily to higher volume resulting from investments made in height adjustable tables and improved storage systems, as well as continued growth from ancillary products. Operating profit for the Office segment in the six months ended June 30, 2019 was $28.5 million, an increase of $9.3 million, or 48.4%, when compared with the six months ended June 30, 2018. The increase in operating profit for the Office segment was due primarily to increased sales volume and continuous improvement initiatives, partially offset by transportation and commodity inflation, higher incentive-based compensation from increased volume, and strategic investments in increased sales force headcount, information technology infrastructure and our showrooms.

Lifestyle

Net sales for the Lifestyle segment for the six months ended June 30, 2019 were $274.7 million, an increase of $34.5 million, or 14.3%, when compared with the six months ended June 30, 2018. This increase was due primarily to volume growth primarily from crossover penetration of commercial workplace settings. Operating profit for the Lifestyle segment in the six months ended June 30, 2019 was $46.3 million, an increase of $5.2 million, or 12.7%, when compared with the six months ended June 30, 2018. The increase in operating profit was driven primarily by volume growth, partially offset by additional investment spending in product launches and showrooms combined with commodity and transportation inflation and strategic investments in sales force headcount.

Corporate

Corporate costs for the six months ended June 30, 2019 were $11.7 million, a decrease of $1.4 million, or 10.7%, when compared with the six months ended June 30, 2018. The decrease was due primarily to decreased stock compensation expense of $0.8 million and the costs related to the acquisition of Muuto.

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Liquidity and Capital Resources

The following table highlights certain key cash flows and capital information pertinent to the discussion that follows:

	Six Months Ended June 30,
	2019			2018
	(in millions)
Cash provided by operating activities	$	55.9		$	33.7
Capital expenditures, net	(21.9		)	(16.0		)
Purchase of business, net of cash acquired	—			(304.1		)
Cash used in investing activities	(21.9		)	(320.1		)
Proceeds from revolving credit facilities	198.5			339.0
Repayment of revolving credit facilities	(203.5		)	(211.0		)
Proceeds of term loans	—			352.5
Repayment of term loans	(8.6		)	(171.8		)
Payment of dividends	(16.1		)	(15.4		)
Purchase of common stock for treasury	(3.0		)	(4.4		)
Payment of financing fees	—			(4.5		)
Payment of fees related to debt extinguishment	—			(1.0		)
Cash (used in) provided by financing activities	(32.7		)	283.4

We have historically funded our business through cash generated from operations, supplemented by debt borrowings. Available cash is primarily used for our working capital needs, ongoing operations, capital expenditures, the payment of quarterly dividends, and the repurchase of shares. Our capital expenditures are primarily related to investments in the improvement of our operating efficiency, innovation and modernization, showroom investment, new product tooling, manufacturing equipment and technology infrastructure. During the six months ended June 30, 2019, we made quarterly dividend payments of $0.15 in the first quarter and $0.17 per share in the second quarter, returning $16.1 million of cash to our shareholders, which includes payment of accrued dividends on share-based awards that vested during the period.

Cash provided by operating activities was $55.9 million for the six months ended June 30, 2019 compared to $33.7 million for the six months ended June 30, 2018. For the six months ended June 30, 2019, cash provided by operating activities consisted primarily of $66.4 million from net income and various non-cash charges, including $13.7 million of depreciation and amortization and $4.6 million of stock based compensation, partially offset by $10.5 million of unfavorable changes in working capital. For the six months ended June 30, 2018, cash provided by operating activities consisted of $51.3 million from net income and various non-cash charges, including $12.7 million of depreciation and amortization and $4.5 million of stock based compensation, partially offset by $17.6 million of unfavorable changes in working capital.

Investing activities used in the six months ended June 30, 2019 and 2018, was $21.9 million and $320.1 million, respectively. Capital expenditures were $21.9 million and $16.0 million for the six months ended June 30, 2019 and 2018, respectively, related to showroom investments, operating expenditures from maintenance activities and investments in lean initiatives, and our continued commitment to optimizing our information technology infrastructure. The six months ended June 30, 2018 includes the purchase of Muuto of $304.1 million, net of cash acquired, in January 2018.

Cash used in financing activities was $32.7 million for the six months ended June 30, 2019 compared to cash provided by financing activities of $283.4 million for the six months ended June 30, 2018. For the six months ended June 30, 2019 and June 30, 2018, we used $3.0 million and $4.4 million, respectively, for share repurchases, and used $16.1 million and $15.4 million of cash, respectively, to fund dividend payments to our shareholders. During the six months ended June 30, 2019, we repaid $8.6 million of our outstanding term loans and $5.0 million of our revolving credit facility borrowings. During the six months ended June 30, 2018, we amended and extended our Existing Credit Facility. The proceeds from our term loans and revolving credit facilities under our Amended Credit Facility of $352.5 million and $339.0 million, respectively, were used to finance a portion of the Muuto acquisition, repay the outstanding balance on the term loans of our Existing Credit Facility of $165.0 million and fund our working capital needs. Additionally, we paid $5.5 million of fees related to the issuance of the Amended Credit Facility, of which $4.5 million was capitalized as deferred financing fees and $1.0 million was expensed as a loss on debt extinguishment.

26

At June 30, 2019 and December 31, 2018, we had the following resources available to us to support our business (in millions):

	June 30, 2019		December 31, 2018
Cash	$	2.9	$	1.6
Availability under revolving credit facility	$	265.3	$	260.3

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

We use our credit facility in the ordinary course of business to fund our working capital needs and, at times, make significant borrowings and repayments under the facility depending on our cash needs and availability at such time. Borrowings under the credit facility may be repaid at any time, but no later than January 23, 2023. See Note 13 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 for further information regarding this facility.

Environmental Matters

Our past and present business operations and the past and present ownership and operation of manufacturing plants on real property are subject to extensive and changing federal, state, local and foreign environmental laws and regulations, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste and the cleanup of properties affected by hazardous substances. As a result, we are involved from time-to-time in administrative and judicial proceedings and inquiries relating to environmental matters and could become subject to fines or penalties related thereto. We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist. Compliance with more stringent laws or regulations, or stricter interpretation of existing laws, may require additional expenditures by us, some of which may be material. We have been identified as a potentially responsible party pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) for remediation costs associated with waste disposal sites that we previously used. The remediation costs and our allocated share at some of these CERCLA sites are unknown. We may also be subject to claims for personal injury or contribution relating to CERCLA sites. We reserve amounts for such matters when expenditures are probable and reasonably estimable.

Off-Balance Sheet Arrangements

We do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special-purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange-traded contracts. As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Policies

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions that affect the reported amounts and disclosures in the condensed consolidated financial statements. Actual results may differ from such estimates. On an ongoing basis, we review our accounting policies and procedures. A more detailed review of our critical accounting policies is contained in our Annual Report on Form 10-K for the year ended December 31, 2018.

With the adoption of ASC 842, we present value future lease payments using an incremental borrowing rate based on information available at the commencement of each lease as our leases do not provide an implicit rate.

27

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We provided a discussion of our market risk in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no substantive changes in our market risk described in our Annual Report on Form 10-K except for the items noted below. During the normal course of business, we are routinely subjected to market risk associated with interest rate movements and foreign currency exchange rate movements. Interest rate risk arises from our debt obligations and foreign currency exchange rate risk arises from our non-U.S. operations and purchases of inventory from foreign suppliers.

We also have risk in our exposure to certain materials and transportation costs. Steel, leather, wood products and plastics are all used in our products. For the six months ended June 30, 2019, we estimated that materials inflation was approximately $3.5 million and transportation inflation approximately $4.2 million. During the six months ended June 30, 2018, we estimated that materials inflation was approximately $1.6 million and transportation inflation approximately $3.0 million, respectively. We continue to work to offset price increases in raw materials and transportation through our global sourcing initiatives, cost improvements and price increases to our products.

Interest Rate Risk

At June 30, 2019, we had $451.0 million in principal of variable rate debt. We have entered into an interest rate swap agreement which fixes the interest rate for an initial notional amount of $300 million of our variable rate debt which decreases over time by $50 million increments, matures in January 2023 and effectively fixes our interest rate at 2.63%. Our remaining variable rate debt of $151.0 million is subject to changes in underlying interest rates, and, accordingly, our interest payments will fluctuate. During the period when our interest rate swap agreement is $300 million, a 1% change in interest rates would result in a change in interest expense of approximately $1.5 million per year. As the notional amount of the swap decreases, each $50 million decrease in the notional amount would be exposed to interest rate fluctuations, and a one percent change in interest rates would change interest expense by an additional $0.5 million.

Foreign Currency Exchange Rate Risk

We manufacture our products in the United States, Canada and Italy, and sell our products primarily in those markets as well as in other countries. Our foreign sales and certain expenses are transacted in foreign currencies. Our production costs, profit margins and competitive position are affected by the strength of the currencies in countries where we manufacture or purchase goods relative to the strength of the currencies in countries where our products are sold. Additionally, as our reporting currency is the U.S. dollar, our financial position is affected by the strength of the currencies in countries where we have operations relative to the strength of the U.S. dollar. The principal foreign currencies in which we conduct business are the Canadian Dollar the Euro, and with the acquisition of Muuto, the Danish Krone. Approximately 17.6% and 19.0% of our revenues in the six months ended June 30, 2019 and 2018, respectively, and 27.6% and 30.0% of our cost of goods sold in the six months ended June 30, 2019 and 2018, respectively, were denominated in currencies other than the U.S. dollar. Foreign currency exchange rate fluctuations resulted in $1.6 million of translation losses and $2.2 million of translation gains for the six months ended June 30, 2019 and 2018, respectively.

From time to time, we enter into foreign currency hedges to manage our exposure to foreign exchange rates. The terms of these contracts are typically less than a year. Changes in the fair value of such contracts are reported in earnings in the period the value of the contract changes. The net gain or loss upon settlement and the change in fair value of outstanding contracts is recorded as a component of other income, net.

28

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. We, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report (June 30, 2019) (“Disclosure Controls”). Based upon the Disclosure Controls evaluation, our principal executive officer and principal financial officer have concluded that the Disclosure Controls are effective in reaching a reasonable level of assurance that (i) information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

29

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For the six months ended June 30, 2019, there have been no new material legal proceedings or material changes in the legal proceedings disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 1A. RISK FACTORS

For the six months ended June 30, 2019, there have been no material changes in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND THE USE OF PROCEEDS

Repurchases of Equity Securities

The following is a summary of share repurchase activity during the six months ended June 30, 2019.

On August 17, 2005, our board of directors approved a stock repurchase program (the “Options Proceeds Program”), whereby they authorized us to purchase shares of our common stock in the open market using the cash proceeds received by us upon exercise of outstanding options.

On February 2, 2006, our board of directors approved an additional stock repurchase program, pursuant to which we are authorized to purchase up to $50.0 million of our common stock in the open market, through privately negotiated transactions, or otherwise. On February 4, 2008, our board of directors expanded this previously authorized $50.0 million stock repurchase program by an additional $50.0 million.

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1)
April 1, 2019 - April 30, 2019	—	$	—	—	$	32,352,413
May 1, 2019 - May 31, 2019	—	$	—	—	$	32,352,413
June 1, 2019 - June 30, 2019	—	$	—	—	$	32,352,413
Total	—			—

_______________________________________________________________________________

(1) There is no limit on the number or value of shares that may be purchased by us under the Options Proceeds Program. Under our $50.0 million stock repurchase program, which was expanded by an additional $50.0 million in February 2008, we are only authorized to spend an aggregate of $100.0 million on stock repurchases. Amounts in this column represent the amounts that remain available under the $100.0 million stock repurchase program as of the end of the period indicated. There is no scheduled expiration date for the Option Proceeds Program or the $100.0 million stock repurchase program, but our Board of Directors may terminate either program in the future.

30

ITEM 6.  EXHIBITS

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2019 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income for the three and six months ended June 30, 2019 and 2018, (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.*

* The Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KNOLL, INC.
(Registrant)
Date:	August 7, 2019
		By:	/s/ Andrew B. Cogan
			Andrew B. Cogan
			Chairman and Chief Executive Officer
Date:	August 7, 2019
		By:	/s/ Charles W. Rayfield
			Charles W. Rayfield
			Chief Financial Officer
			(Principal Financial Officer)

32

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Andrew B. Cogan, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2019 of Knoll, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to material affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 7, 2019
	/s/ Andrew B. Cogan
	Andrew B. Cogan
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

I, Charles W. Rayfield, certify that:

(1) I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2019 of Knoll, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to material affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 7, 2019
	/s/ Charles W. Rayfield
	Charles W. Rayfield
	Chief Financial Officer

EX-32

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer

In connection with the Quarterly Report on Form 10-Q of Knoll, Inc. (the “Company”) for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Andrew B. Cogan, Chief Executive Officer and Charles W. Rayfield, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to our knowledge:

a. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

b. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 7, 2019

/s/ Andrew B. Cogan

Andrew B. Cogan

Chief Executive Officer

/s/ Charles W. Rayfield

Charles W. Rayfield

Chief Financial Officer

XML

COVER - shares	6 Months Ended
	Jun. 30, 2019	Aug. 05, 2019
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2019
Document Transition Report	false
Entity File Number	001-12907
Entity Registrant Name	KNOLL, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-3873847
Entity Address, Address Line One	1235 Water Street
Entity Address, City or Town	East Greenville
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18041
City Area Code	215
Local Phone Number	679-7991
Title of 12(b) Security	Common Stock, par value $0.01 per share
Security Exchange Name	NYSE
Trading Symbol	KNL
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001011570
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		49,775,599
Restricted Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		896,181

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 2.9	$ 1.6
Customer receivables, net of allowance for doubtful accounts of $4.3 and $3.7, respectively	118.8	120.2
Inventories	182.0	170.5
Prepaid expenses	21.1	25.6
Other current assets	12.6	13.7
Total current assets	337.4	331.6
Property, plant, and equipment, net	221.8	215.0
Goodwill	319.7	320.8
Intangible assets, net	350.1	353.9
Right-of-use lease assets	94.4	0.0
Other noncurrent assets	10.1	5.6
Total assets	1,333.5	1,226.9
Current liabilities:
Current maturities of long-term debt	17.1	17.2
Accounts payable	131.7	126.7
Current portion of lease liability	21.1	0.0
Other current liabilities	123.9	128.9
Total current liabilities	293.8	272.8
Long-term debt	430.2	443.9
Deferred income taxes	88.7	86.5
Pension liability	12.1	13.9
Lease liability	87.1	0.0
Other noncurrent liabilities	13.2	23.3
Total liabilities	925.1	840.4
Commitments and contingent liabilities
Equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 66,287,054 shares issued and 49,777,570 shares outstanding (including 913,675 non-voting restricted shares and net of 16,509,484 treasury shares) at June 30, 2019 and 65,778,891 shares issued and 49,431,178 shares outstanding (including 725,252 non-voting restricted shares and net of 16,347,713 treasury shares) at December 31, 2018	0.5	0.5
Additional paid-in capital	60.9	58.8
Retained earnings	419.0	395.4
Accumulated other comprehensive loss	(72.0)	(68.4)
Total Knoll, Inc. stockholders’ equity	408.4	386.3
Noncontrolling interests	0.0	0.2
Total equity	408.4	386.5
Total liabilities and equity	$ 1,333.5	$ 1,226.9

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 4.3	$ 3.7
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	66,287,054	65,778,891
Common stock, shares outstanding (n shares)	49,777,570	49,431,178
Non-vesting restricted shares (in shares)	913,675	725,252
Treasury shares (in shares)	16,509,484	16,347,713

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Sales	$ 367.3	$ 323.4	$ 700.1	$ 619.9
Cost of sales	226.6	204.2	435.6	392.9
Gross profit	140.7	119.2	264.5	227.0
Selling, general, and administrative expenses	106.8	93.6	201.3	178.4
Restructuring charges	0.0	0.8	0.1	1.4
Operating profit	33.9	24.8	63.1	47.2
Interest expense	5.5	5.3	10.7	9.3
Loss on extinguishment of debt	0.0	0.0	0.0	1.4
Pension settlement charge	0.5	4.6	0.6	4.6
Other income, net	(1.0)	(2.8)	(1.6)	(6.8)
Income before income tax expense	28.9	17.7	53.4	38.7
Income tax expense	7.2	4.6	13.8	10.3
Net earnings	$ 21.7	$ 13.1	$ 39.6	$ 28.4
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic (in dollars per share)	$ 0.44	$ 0.27	$ 0.81	$ 0.58
Diluted (in dollars per share)	0.44	0.27	0.80	0.58
Dividends per share (in dollars per share)	$ 0.17	$ 0.15	$ 0.32	$ 0.30
Weighted-average number of common shares outstanding:
Basic (in shares)	48,855,064	48,672,144	48,815,194	48,614,733
Diluted (in shares)	49,314,364	49,131,106	49,252,546	49,137,528
Other comprehensive income (loss):
Unrealized (loss) gain on interest rate swap, net of tax	$ (2.8)	$ 1.2	$ (4.3)	$ 1.1
Pension and other post-employment liability adjustment, net of tax	0.4	7.7	0.5	7.9
Foreign currency translation adjustment	0.4	(6.0)	2.3	(6.3)
Foreign currency translation adjustment on long term intercompany notes	2.0	(5.1)	(2.1)	(5.6)
Total other comprehensive income (loss), net of tax	0.0	(2.2)	(3.6)	(2.9)
Total comprehensive income	$ 21.7	$ 10.9	$ 36.0	$ 25.5

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$ 21.7	$ 18.0	$ 13.1	$ 15.3	$ 39.6	$ 28.4
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation					13.7	12.7
Amortization expense (including deferred financing fees)					4.9	4.6
Loss on extinguishment of debt	0.0		0.0		0.0	1.4
Inventory obsolescence					0.7	0.8
Unrealized foreign currency loss (gains)					2.0	(1.8)
Stock-based compensation					4.6	4.5
Bad debt and customer claims					0.9	0.7
Changes in assets and liabilities:
Customer receivables					0.4	(11.5)
Inventories					(11.8)	(13.6)
Prepaid and other current assets					(0.8)	0.8
Accounts payable					4.3	7.8
Accrued liabilities					4.4	0.1
Other noncurrent assets and liabilities					(7.0)	(1.2)
Cash provided by operating activities					55.9	33.7
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures					(21.9)	(16.0)
Purchase of business, net of cash acquired					0.0	(304.1)
Cash used in investing activities					(21.9)	(320.1)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility					198.5	339.0
Repayment of revolving credit facility					(203.5)	(211.0)
Proceeds from term loan					0.0	352.5
Repayment of term loan					(8.6)	(171.8)
Payment of financing fees					0.0	(4.5)
Payment of fees related to debt extinguishment					0.0	(1.0)
Payment of dividends					(16.1)	(15.4)
Purchase of common stock for treasury					(3.0)	(4.4)
Cash (used in) provided by financing activities					(32.7)	283.4
Effect of exchange rate changes on cash and cash equivalents					0.0	2.2
Net increase (decrease) in cash and cash equivalents					1.3	(0.8)
Cash and cash equivalents at beginning of period		$ 1.6		$ 2.2	1.6	2.2	$ 2.2
Cash and cash equivalents at end of period	$ 2.9		$ 1.4		$ 2.9	$ 1.4	$ 1.6

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and six-month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed.

The condensed consolidated balance sheet of the Company, as of December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU.

Accounting Standards Adopted

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million, with an offsetting increase to right-of-use assets of $102.4 million, for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019.

In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies

to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

XML

SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases, (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset. The Company determines whether the contracts are considered an operating or finance lease. The Company does not currently have finance leases.

Operating leases are included in right-of-use (“ROU”) lease assets, current portion lease liability, and lease liabilities on the Condensed Consolidated Balance Sheets. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how the Company determined (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

(1) ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As the majority of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company uses the implicit rate when readily determinable.

(2) The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise.

(3) Lease payments included in the measurement of the lease liability comprise the following: fixed payments (including in-substance fixed payments), less any lease incentives paid or payable to the lessee, variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the exercise price of the Company option to purchase the underlying asset if the Company is reasonably certain to exercise.

The ROU asset is initially measured at cost, which comprises the initial measurement of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expenses in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases.

ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of June 30, 2019, the Company has not incurred any impairment losses.

The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis.

Lease expense for short-term leases are recognized on a straight-line basis over the lease term.

On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. Further, the Company does not expect the amendments in ASU 2018-01: Land Easement Practical Expedient for Transition to Topic 842 to have an effect on the Company because it does not enter into land easement arrangements.

The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases.

Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term.

All other significant accounting policies are consistent with those disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2018.

XML

REVENUE

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

Disaggregation of Revenue

The majority of the Company’s revenue presented as “Sales” in the Condensed Consolidated Statements of Operations and Comprehensive Income is the result of contracts with customers for the sale of the Company’s products.

The Company’s sales by product category were as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Office Segment
Office Systems	$	114.8	$	106.0	221.1		$	210.0
Seating	34.6		34.1		65.5		65.1
Files and Storage	27.4		21.4		52.9		43.6
Ancillary	30.3		20.9		55.9		39.4
Other	16.1		12.2		30.0		21.6
Total Office Segment	223.2		194.6		425.4		379.7
Lifestyle Segment
Studio	113.3		101.0		214.8		185.0
Coverings	30.8		27.8		59.9		55.2
Total Lifestyle Segment	144.1		128.8		274.7		240.2
Total Sales	$	367.3	$	323.4	$	700.1	$	619.9

Contract Balances

The Company has contract assets consisting of Customer receivables in the Condensed Consolidated Balance Sheets which represent the amount of consideration the Company expects to be entitled to in exchange for the goods or services rendered to its customers.

When the Company receives deposits, generally the recognition of revenue is deferred and results in the recognition of a contract liability (Customer deposits) presented as a component of Other Current Liabilities in the Condensed Consolidated Balance Sheets. Subsequent recognition of revenue and the satisfaction of the contract liability is typically less than one year as the Company’s standard contract is less than one year. As of June 30, 2019 and December 31, 2018, the contract liability related to customer deposits was $41.3 million and $37.7 million. The Company recognized revenues that were included in the contract liability at the beginning of the current year of $28.8 million.

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ACQUISITION

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

ACQUISITION

ACQUISITION

On January 25, 2018, the Company acquired one hundred percent (100%) of the shares of Muuto Holding ApS and MIE4 Holding 5 ApS, which collectively hold substantially all the business operations of Muuto ApS (“Muuto”). Muuto’s affordable luxury products span commercial and residential applications, adding scale and diversity to the Company’s business. The aggregate purchase price for the acquisition was $303.7 million, net of $7.6 million of cash acquired. The Company recorded acquisition costs and certain other costs of $1.5 million within selling, general, and administrative expenses in its Condensed Consolidated Statement of Operations and Comprehensive Income, during the six months ended June 30, 2018.

The following table presents unaudited pro forma information for the period presented as if the acquisition had occurred as of January 1, 2017 (in millions):

	Six Months Ended June 30, 2018
Pro forma sales	$	624.1
Pro forma net earnings attributable to Knoll, Inc. stockholders	$	32.6

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented above has been derived from the historical condensed consolidated financial statements of the Company and from the historical consolidated financial statements of Muuto.

The pro forma financial information presented above includes adjustment for: (1) incremental amortization expense related to fair value adjustments to identifiable intangible assets, (2) incremental interest expense for outstanding borrowings to reflect the terms of the Amended Credit Agreement, (3) nonrecurring items and (4) the tax effect of the above adjustments.

The pro forma information presented for the six months ended June 30, 2018 includes adjustments for future payments that are considered compensation for post combination service of $1.5 million, acquisition related inventory valuation of $0.9 million, incremental interest expense of $0.9 million, incremental amortization of intangibles of $0.1 million, as well as combined acquisition costs and loss on debt extinguishment of $2.9 million. The income tax impact of these adjustments for the six months ended June 30, 2018 was $0.9 million.

For further information on acquisitions, refer to the Company’s annual report on Form 10-K for the year ended December 31, 2018.

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INVENTORIES

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Information regarding the Company’s inventories is as follows (in millions):

	June 30, 2019		December 31, 2018
Raw materials	$	58.6	$	65.1
Work-in-process	10.2		8.3
Finished goods	113.2		97.1
	$	182.0	$	170.5

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PENSION AND OTHER POST-EMPLOYMENT BENEFITS

6 Months Ended

Jun. 30, 2019

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

PENSION AND OTHER POST-EMPLOYMENT BENEFITS

PENSION AND OTHER POST-EMPLOYMENT BENEFITS

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

	Pension Benefits						Other Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Interest cost	2.4			2.5			0.1			—
Expected return on plan assets	(4.0		)	(4.6		)	—			—
Amortization of prior service credit	—			—			(0.2		)	(0.2		)
Recognized actuarial loss	0.2			0.4			—			—
Pension settlement charge (1)	0.5			4.6			—			—
Net periodic benefit (income) cost	$	(0.9	)	$	2.9		$	(0.1	)	$	(0.2	)

	Pension Benefits						Other Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Interest cost	4.9			5.0			0.2			0.1
Expected return on plan assets	(8.0		)	(9.2		)	—			—
Amortization of prior service credit	—			—			(0.4		)	(0.4		)
Recognized actuarial loss	0.3			0.7			—			—
Pension settlement charge (1)	0.6			4.6			—			—
Net periodic benefit (income) cost	$	(2.2	)	$	1.1		$	(0.2	)	$	(0.3	)

(1) The pension settlement charge for the periods ended June 30, 2019 related to cash payments from lump sum elections. The pension settlement charge for the six months ended June 30, 2018 was related to the purchase of annuities for certain pension plan retirees as well as cash payments from lump sum elections.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments

The fair values of the Company’s cash and cash equivalents, classified as Level 1 within the fair value hierarchy, approximate carrying value due to their short maturities.

The fair value of the Company’s long-term debt, classified as Level 2 within the fair value hierarchy, approximates its carrying value, as it is variable rate debt and the terms are comparable to market terms as of the balance sheet dates.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following table represents the assets and liabilities, measured at fair value on a recurring basis and the basis for that measurement (in millions):

	Fair Value as of June 30, 2019								Fair Value as of December 31, 2018
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate swap	$	—	$	7.5	$	—	$	7.5	$	—	$	1.7	$	—	$	1.7
Contingent purchase price payment - DatesWeiser	—		—		0.8		0.8		—		—		0.8		0.8

Interest Rate Swap

The Company’s interest rate swap is with a counterparty with a credit rating of A- according to S&P and Fitch. The fair value of the interest rate swap agreement is based on observable prices as quoted for receiving the variable one-month London Interbank Offered Rates (LIBOR) and paying fixed interest rates and therefore were classified as Level 2 within the fair value hierarchy.

Contingent Purchase Price Payment

Pursuant to the agreement governing the acquisition of DatesWeiser, which took place in 2016, the Company may be required to make annual contingent purchase price payments. The payouts are based upon DatesWeiser reaching an annual net sales target, for each year through 2020. The Company classifies this as a Level 3 measurement and is required to remeasure this liability at fair value on a recurring basis. Any changes in the fair value will be included within selling, general and administrative expenses. The maximum amount of possible future contingent payments under the agreement as of June 30, 2019 is $4.0 million.

There were no additional assets and/or liabilities recorded at fair value on a recurring basis as of June 30, 2019 or December 31, 2018.

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DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risks related to its business operations. To reduce the interest rate risk the Company uses an interest rate swap contract. The Company does not use derivatives for speculative trading purposes.

Cash flow hedge

To offset the variability of cash flows in interest payments associated with a portion of the Company’s variable rate debt, the Company entered into an interest rate swap contract in January 2018 which is designated as a cash flow hedge. The interest rate swap hedges one-month LIBOR, which effectively converts a portion of the variable-rate debt to a fixed interest rate. The interest rate swap effective date is December 31, 2018 and the maturity date is January 23, 2023. As of June 30, 2019, the Company’s interest rate swap agreement, which hedges long-term debt obligations, has a notional amount of $300.0 million, which decreases over time by $50 million increments. The contract has a fixed rate of 2.63%.

The following table summarizes the fair value of the Company’s derivative instruments, as well as the location of these instruments on the Condensed Consolidated Balance Sheets as of the dates presented (in millions):

Derivatives designated as hedging instruments	Balance Sheet Location	June 30, 2019		December 31, 2018
Derivative liabilities:
Interest rate swap	Other current liabilities	$	2.1	$	0.3
Interest rate swap	Other noncurrent liabilities	5.4		1.4
Total derivative liabilities		$	7.5	$	1.7

The interest rate swap is included at its estimated fair value as an asset or a liability in the Condensed Consolidated Balance Sheet based on a discounted cash flow model using applicable market swap rates and certain assumptions. The fair value of the swap recorded in Accumulated Other Comprehensive Income (Loss) may be recognized in the Condensed Consolidated Statement of Operations if certain terms of the agreement change, are modified or if the loan is extinguished. As of June 30, 2019 there was no hedge ineffectiveness associated with the Company’s interest rate swap and no portion of the cash flow hedge is excluded from the assessment of effectiveness. The Company reclassified $0.1 million and $0.2 million from other comprehensive loss to interest expense within the Condensed Consolidated Statement of Operations during the three and six months ended June 30, 2019, respectively. The Company expects to reclassify in the next 12 months a loss of approximately $2.1 million from accumulated other comprehensive income into earnings, as a component of interest expense, related to the Company’s interest rate swap based on the borrowing rates at June 30, 2019.

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LEASES

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

LEASES

LEASES

The Company has commitments under operating leases for certain machinery and equipment as well as manufacturing, warehousing, showroom and other facilities used in its operations. The Company does not have finance leases. Excluding short-term leases, the Company’s leases have initial terms ranging from 1 to 16 years, most of which include options the Company may elect to extend or renew the lease for 0.1 to 6 years, and some of which may include options to terminate the leases with notice periods of up to 1 year. Certain lease agreements contain provisions for future rent increases. Payments due under lease contracts are fixed.

The components of lease cost for the three and six months ended June 30, 2019 are as follows (in millions):

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Lease cost:
Operating lease cost	$	6.8	$	13.7
Short-term lease cost	0.5		0.6
Sublease income	—		(0.1		)
Total lease cost	$	7.3	$	14.2

As of December 31, 2018, minimum rental payments under operating leases were recognized on a straight-line basis over the term of the lease including any periods of free rent.

Other lease information as of and for the period ended June 30, 2019 includes:

	June 30, 2019
Weighted-average remaining lease term (in years)
Operating leases	6.2
Weighted-average discount rate
Operating leases	4.8	%

(dollars in millions)	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13.9
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	5.0

As of June 30, 2019, the Company has an additional operating lease that has not yet commenced for which it will record a right of use asset and lease liability of approximately $3.3 million. The lease will commence in January 2020 with a lease term of approximately 10 years.

Future minimum lease payments under non-cancellable leases, net of sublease income, as of June 30, 2019 is as follows (in millions):

	June 30, 2019
2019 (remaining six months)	$	12.5
2020	26.0
2021	20.0
2022	17.4
2023	14.8
Thereafter	40.4
Total undiscounted lease payments	131.1
Less: imputed interest	(22.9		)
Total lease liability	$	108.2

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OTHER CURRENT LIABILITIES

6 Months Ended

Jun. 30, 2019

Other Liabilities Disclosure [Abstract]

OTHER CURRENT LIABILITIES

OTHER CURRENT LIABILITIES

Information regarding the Company’s other current liabilities is as follows (in millions):

	June 30, 2019		December 31, 2018
Accrued employee compensation	$	28.4	$	40.6
Customer deposits	41.3		37.7
Warranty	10.1		9.6
Other	44.1		41.0
Other current liabilities	$	123.9	$	128.9

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INDEBTEDNESS

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

INDEBTEDNESS

INDEBTEDNESS

The Company’s long-term debt is summarized as follows (in millions):

	June 30, 2019		December 31, 2018
Balance of revolving credit facility	$	129.5	$	134.5
Balance of term loans	321.5		330.8
Total long-term debt	451.0		465.3
Less: Current maturities of long-term debt	17.1		17.2
Less: Deferred financing fees, net	3.7		4.2
Long-term debt	$	430.2	$	443.9

Credit facility

The following revolving credit facility was in place at June 30, 2019 and December 31, 2018 (in millions):

	Capacity	Amount Borrowed	Letters of Credit Outstanding	Unused Capacity
June 30, 2019	$400.0	$129.5	$5.2	$265.3
December 31, 2018	$400.0	$134.5	$5.2	$260.3

At June 30, 2019, borrowings under the revolving credit facility include $7.0 million at a base rate of 6.25% and $122.5 million at a weighted average LIBOR rate of 4.15%. At December 31, 2018, borrowings under the revolving credit facility include $2.5 million at a base rate of 6.25% and $132.0 million at a weighted average LIBOR rate of 4.25%. At June 30, 2019 and December 31, 2018, the letters of credit issued under the revolving credit facility incurred interest at 1.75% for both periods.

At June 30, 2019, the U.S. term loan and multicurrency term loan incurred interest at 4.15% and 1.75%, respectively. At December 31, 2018 the U.S. term loan and multicurrency term loan incurred interest at 4.27% and 1.75%, respectively. The

Eurocurrency rates used for the U.S. dollar-denominated term loan and the Euro-denominated term loan are one-month LIBOR and one-month Euribor, respectively.

Deferred Financing Fees

Deferred financing fees, net of accumulated amortization, totaled $3.7 million and $4.2 million as of June 30, 2019 and December 31, 2018, respectively. In conjunction with terminating the Company’s Existing Credit Agreement, $0.4 million in unamortized debt issuance costs and $1.0 million of third party fees related to debt extinguishment were written-off as a loss on extinguishment of debt during the six months ended June 30, 2018.

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CONTINGENT LIABILITIES AND COMMITMENTS

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

CONTINGENT LIABILITIES AND COMMITMENTS

CONTINGENT LIABILITIES AND COMMITMENTS

Litigation

The Company is currently involved in matters of litigation, including environmental contingencies, arising in the ordinary course of business. The Company accrues for such matters when expenditures are probable and reasonably estimable. Based upon information presently known, management is of the opinion that such litigation, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Warranty

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

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

Balance, December 31, 2018	$	9.6
Provision for warranty claims	4.6
Warranty claims settled	(4.0		)
Foreign currency translation adjustment	(0.1		)
Balance, June 30, 2019	$	10.1

Warranty expense for the three and six months ended June 30, 2019 was $2.7 million and $4.6 million, respectively. Warranty expense for the three and six months ended June 30, 2018 was $1.9 million and $3.8 million, respectively.

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EQUITY

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

EQUITY

EQUITY

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2019 (in millions except share information):

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2018	$	0.5	$	58.8		$	395.4		$	(68.4	)	$	386.3		$	0.2		$	386.5
Net earnings	—		—			18.0			—			18.0			—			18.0
Other comprehensive (loss)      income	—		—			—			(3.6		)	(3.6		)	—			(3.6		)
Stock-based compensation, net of forfeitures	—		2.2			—			—			2.2			—			2.2
Cash dividend ($0.15 per share)	—		—			(7.5		)	—			(7.5		)	—			(7.5		)
Purchase of common stock (141,738 shares)	—		(3.0		)	—			—			(3.0		)	—			(3.0		)
Other	—		0.4			—			—			0.4			(0.2		)	0.2
Balance at March 31, 2019	$	0.5	$	58.4		$	405.9		$	(72.0	)	$	392.8		$	—		$	392.8
Net earnings	—		—			21.7			—			21.7			—			21.7
Other comprehensive (loss)       income	—		—			—			—			—			—			—
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

The following table shows the change in the number of shares of common stock outstanding during the six months ended June 30, 2019 (table in thousands and excluding non-voting restricted shares):

Shares outstanding as of December 31, 2018	48,706
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes	157
Shares issued to Board of Directors in lieu of cash	1
Shares outstanding as of June 30, 2019	48,864

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2018 (in millions except share information):

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2017	$	0.5	$	54.5		$	347.3		$	(43.8	)	$	358.5		$	0.3	$	358.8
Adoption of ASU 2018-02	—		—			6.3			(6.3		)	—			—		—
Net earnings	—		—			15.3			—			15.3			—		15.3
Other comprehensive (loss) income	—		—			—			(0.8		)	(0.8		)	—		(0.8		)
Stock-based compensation, net of forfeitures	—		2.4			—			—			2.4			—		2.4
Cash dividend ($0.15 per share)	—		—			(7.3		)	—			(7.3		)	—		(7.3		)
Purchase of common stock (95,412 shares)	—		(2.0		)	—			—			(2.0		)	—		(2.0		)
Balance at March 31, 2018	$	0.5	$	54.9		$	361.5		$	(50.8	)	$	366.1		$	0.3	$	366.4
Net earnings	—		—			13.1			—			13.1			—		13.1
Other comprehensive (loss) income	—		—			—			(2.2		)	(2.2		)	—		(2.2		)
Stock-based compensation, net of forfeitures	—		2.1			—			—			2.1			—		2.1
Cash dividend ($0.15 per share)	—		—			(7.9		)	—			(7.9		)	—		(7.9		)
Purchase of common stock	—		(2.4		)	—			—			(2.4		)	—		(2.4		)
Balance at June 30, 2018	$	0.5	$	54.6		$	366.7		$	(53.0	)	$	368.8		$	0.3	$	369.1

The following table shows the change in the number of shares of common stock outstanding during the six months ended June 30, 2018 (table in thousands and excluding non-voting restricted shares):

Shares outstanding as of December 31, 2017	48,498
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes	194
Shares issued to Board of Directors in lieu of cash	2
Shares outstanding as of June 30, 2018	48,694

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2019 (in millions):

	Unrealized gains (losses) on Interest Rate Swaps			Foreign Currency Translation Adjustment			Foreign Currency Translation Adjustment on Long-term Intercompany Notes			Pension and Other Post-Employment Liability Adjustment			Total
Balance, as of December 31, 2018	$	(1.2	)	$	(18.8	)	$	(8.1	)	$	(40.3	)	$	(68.4	)
Other comprehensive income (loss) before reclassifications	(6.0		)	2.3			(2.1		)	—			(5.8		)
Amounts reclassified from accumulated other comprehensive loss	0.2			—			—			0.5			0.7
Net current-period other comprehensive income (loss) before income tax	(5.8		)	2.3			(2.1		)	0.5			(5.1		)
Income tax benefit (expense)	1.5			—			—			—			1.5
Other comprehensive income (loss)	(4.3		)	2.3			(2.1		)	0.5			(3.6		)
Balance, as of June 30, 2019	$	(5.5	)	$	(16.5	)	$	(10.2	)	$	(39.8	)	$	(72.0	)

The following pension and other post-retirement benefit reclassifications were made from accumulated other comprehensive income (loss) to the Condensed Consolidated Statements of Operations and Other Comprehensive Income (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Amortization of pension and other post-employment liability adjustments
Prior service credits (1)	$	(0.2	)	$	(0.2	)	$	(0.4	)	$	(0.4	)
Actuarial losses (1)	0.2			0.3			0.3			0.7
Pension settlement charge	0.5			4.6			0.6			4.6
Total before tax	0.5			4.7			0.5			4.9
Tax benefit	(0.2		)	(1.3		)	—			(1.3		)
Net of tax	$	0.3		$	3.4		$	0.5		$	3.6

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information.

The following table summarizes the unrealized gains (losses) on derivative instruments, including the impact of components reclassified into net income from accumulated other comprehensive income (loss), for the three and six months ended June 30, 2019 and 2018 (in millions):

	Three Months Ended					Six Months Ended
	June 30, 2019			June 30, 2018		June 30, 2019			June 30, 2018
Unrealized gain (loss) on derivative instruments	$	(3.9	)	$	1.2	$	(6.0	)	$	1.1
Loss (gain) on derivatives reclassified into income:
Interest rate contracts	0.1			—		0.2			—
Total reclassified into income	0.1			—		0.2			—
Income tax benefit	1.0			—		1.5			—
Amounts reclassified from accumulated other comprehensive income, net of tax	1.1			—		1.7			—
Unrealized gain (loss) on derivative instruments, net of tax	$	(2.8	)	$	1.2	$	(4.3	)	$	1.1

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share excludes the dilutive effect of common shares that could potentially be issued due to the exercise of stock options and vesting of unvested restricted stock and restricted stock units, and is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. At June 30, 2019 and 2018, the Company had restricted stock, restricted stock units and stock options, which could potentially dilute basic earnings per share in the future. The following table sets forth the reconciliation from basic to dilutive average common shares (in millions, except shares which are in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$	21.7	$	13.1	$	39.6	$	28.4
Denominator:
Denominator for basic earnings per shares - weighted-average shares	48,855		48,672		48,815		48,615
Effect of dilutive securities:
Potentially dilutive shares resulting from stock plans	459		459		438		523
Denominator for diluted earnings per share - weighted-average shares	49,314		49,131		49,253		49,138
Antidilutive equity awards not included in weighted-average common shares—diluted	—		—		—		—
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.44	$	0.27	$	0.81	$	0.58
Diluted	$	0.44	$	0.27	$	0.80	$	0.58

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INCOME TAXES

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company develops interim income tax provisions based on estimates of the effective tax rates expected to apply per tax domicile for the current annual reporting period. These estimates are reevaluated each quarter and updated as necessary. The tax effects of any discrete items are recorded in the period in which they occur and are excluded from the interim estimates of the effective annual rates.

The Company’s effective tax rates for the three months ended June 30, 2019 and 2018 were 25.1% and 26.0%, respectively, and 25.8% and 26.6% for the six months ended June 30, 2019 and 2018, respectively. Changes in the effective tax rates for the second quarter and first half of 2019, as compared to the same periods in 2018, were primarily driven by the amount and timing of share-based compensation deductions, the recognition of certain tax credits and the timing of the impact of certain provisions of the Tax Act applicable to our foreign jurisdictions.

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company has two reportable segments: Office and Lifestyle. The Office reportable segment is comprised of the operations of the Office operating segment. The Lifestyle reportable segment is an aggregation of the Lifestyle, Europe, and Muuto operating segments. All unallocated expenses are included within Corporate.

The Office segment includes a complete range of workplace products that address diverse workplace planning paradigms in North America and Europe. These products include: office systems furniture, seating, storage, tables, desks and KnollExtra® accessories. The Office segment includes DatesWeiser, known for its sophisticated meeting and conference tables and credenzas, sets a standard of design, quality and technology integration.

The Lifestyle segment includes KnollStudio®, HOLLY HUNT®, Muuto®, KnollTextiles®, Spinneybeck® (including Filzfelt®), and Edelman® Leather. Lifestyle products, which are distributed globally, include iconic seating, lounge furniture, side, café and dining chairs as well as conference, training, dining and occasional tables, lighting, rugs, textiles, high-quality fabrics, felt, leather and related architectural products.

During the first quarter of 2019, the Company changed the structure of its internal organization which caused the composition of its reportable segments to change. As a result, DatesWeiser is now a component of the Office operating segment as opposed to the Lifestyle operating segment. As a result of this change in segment reporting, the Company retrospectively revised prior period results, by segment, to conform to current period presentation.

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

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
SALES
Office	$	223.2		$	194.6		425.4			379.7
Lifestyle	144.1			128.8			274.7			240.2
Knoll, Inc.	$	367.3		$	323.4		700.1			619.9
INTERSEGMENT SALES (1)
Office	$	0.5		$	0.5		0.9			1.0
Lifestyle	2.6			3.1			5.0			5.4
Knoll, Inc.	$	3.0		$	3.5		5.9			6.4
OPERATING PROFIT
Office (2)	$	14.3		$	10.4		28.5			19.2
Lifestyle	25.6			20.9			46.3			41.1
Corporate	(6.0		)	(6.5		)	(11.7		)	(13.1		)
Knoll, Inc.	$	33.9		$	24.8		$	63.1		$	47.2

_______________________________________________________________________________

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

(2) Knoll recorded restructuring charges of $0.1 million during the six months ended June 30, 2019 and $0.8 million and $1.4 million during the three and six months ended June 30, 2018, respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control.

The changes in the carrying amount of goodwill by reportable segment are as follows (in millions):

	Office Segment		Lifestyle Segment			Total
Balance as of December 31, 2018	$	39.1	$	281.7		$	320.8
Foreign currency translation adjustment	0.3		(1.4		)	(1.1		)
Balance as of June 30, 2019	$	39.4	$	280.3		$	319.7

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Knoll, Inc. (the “Company”) have been prepared with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and any partially-owned subsidiaries that the Company has the ability to control. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and six-month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. Beginning with the March 31, 2019 Form 10-Q, the Company began reporting all dollar amounts in millions. In certain circumstances, this change in rounding resulted in prior year disclosures being removed.

The condensed consolidated balance sheet of the Company, as of December 31, 2018, has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018.

New Accounting Pronouncements Not Yet Adopted And Adopted

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss impairment methodology for measuring and recognizing credit losses with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement. For public companies the ASU removes disclosure requirements for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds the disclosure requirement for changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2019 including interim periods within that fiscal year. Early adoption is permitted. The Company does not plan to early adopt this ASU and the Company does not believe there will be a material impact to the financial statements as a result of adopting this ASU.

Accounting Standards Adopted

In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in ASC 840, Leases. ASC 842 was effective for the Company on January 1, 2019, and the Company adopted the standard using the modified retrospective approach. The Company recorded lease liabilities of $117.2 million, with an offsetting increase to right-of-use assets of $102.4 million, for all leases with an initial term of greater than twelve months regardless of their classification as of January 1, 2019.

In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The Company has elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU 2018-11 on January 1, 2019. The Company did not elect the hindsight expedient. The adoption of the standard did not materially impact the Condensed Consolidated Statements of Operations and Comprehensive Income or Cash Flows.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock compensation (Topic 718) which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. Some of the areas for simplification apply only to nonpublic entities. The amendments specify that Topic 718 applies

to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted this ASU effective January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

Leases

Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases, (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset. The Company determines whether the contracts are considered an operating or finance lease. The Company does not currently have finance leases.

Operating leases are included in right-of-use (“ROU”) lease assets, current portion lease liability, and lease liabilities on the Condensed Consolidated Balance Sheets. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how the Company determined (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

(1) ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As the majority of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company uses the implicit rate when readily determinable.

(2) The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise.

(3) Lease payments included in the measurement of the lease liability comprise the following: fixed payments (including in-substance fixed payments), less any lease incentives paid or payable to the lessee, variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the exercise price of the Company option to purchase the underlying asset if the Company is reasonably certain to exercise.

The ROU asset is initially measured at cost, which comprises the initial measurement of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Variable lease payments associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expenses in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases.

ROU assets for operating leases are subject to the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall. As of June 30, 2019, the Company has not incurred any impairment losses.

The Company monitors for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

The Company has lease agreements which include lease and non-lease components, which are accounted for separately using a relative stand-alone price basis.

Lease expense for short-term leases are recognized on a straight-line basis over the lease term.

On January 1, 2019 the Company adopted ASC 842 using a modified retrospective transition method and elected the optional transition method as defined within ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. January 1, 2019). The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date. Further, the Company does not expect the amendments in ASU 2018-01: Land Easement Practical Expedient for Transition to Topic 842 to have an effect on the Company because it does not enter into land easement arrangements.

The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases.

Additionally, the Company applies a portfolio approach to determine the discount rate (i.e. incremental borrowing rate for leases with similar characteristics). The Company applies the incremental borrowing rate generally based on the transactional currency of the lease and the lease term.

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REVENUE (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Net Sales by Product Category

The Company’s sales by product category were as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Office Segment
Office Systems	$	114.8	$	106.0	221.1		$	210.0
Seating	34.6		34.1		65.5		65.1
Files and Storage	27.4		21.4		52.9		43.6
Ancillary	30.3		20.9		55.9		39.4
Other	16.1		12.2		30.0		21.6
Total Office Segment	223.2		194.6		425.4		379.7
Lifestyle Segment
Studio	113.3		101.0		214.8		185.0
Coverings	30.8		27.8		59.9		55.2
Total Lifestyle Segment	144.1		128.8		274.7		240.2
Total Sales	$	367.3	$	323.4	$	700.1	$	619.9

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ACQUISITION (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisition Pro Forma Information

The following table presents unaudited pro forma information for the period presented as if the acquisition had occurred as of January 1, 2017 (in millions):

	Six Months Ended June 30, 2018
Pro forma sales	$	624.1
Pro forma net earnings attributable to Knoll, Inc. stockholders	$	32.6

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Information regarding the Company’s inventories is as follows (in millions):

	June 30, 2019		December 31, 2018
Raw materials	$	58.6	$	65.1
Work-in-process	10.2		8.3
Finished goods	113.2		97.1
	$	182.0	$	170.5

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PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Tables)

6 Months Ended

Jun. 30, 2019

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Schedule of Components of the Net Periodic Benefit Cost

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

	Pension Benefits						Other Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Interest cost	2.4			2.5			0.1			—
Expected return on plan assets	(4.0		)	(4.6		)	—			—
Amortization of prior service credit	—			—			(0.2		)	(0.2		)
Recognized actuarial loss	0.2			0.4			—			—
Pension settlement charge (1)	0.5			4.6			—			—
Net periodic benefit (income) cost	$	(0.9	)	$	2.9		$	(0.1	)	$	(0.2	)

	Pension Benefits						Other Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Interest cost	4.9			5.0			0.2			0.1
Expected return on plan assets	(8.0		)	(9.2		)	—			—
Amortization of prior service credit	—			—			(0.4		)	(0.4		)
Recognized actuarial loss	0.3			0.7			—			—
Pension settlement charge (1)	0.6			4.6			—			—
Net periodic benefit (income) cost	$	(2.2	)	$	1.1		$	(0.2	)	$	(0.3	)

(1) The pension settlement charge for the periods ended June 30, 2019 related to cash payments from lump sum elections. The pension settlement charge for the six months ended June 30, 2018 was related to the purchase of annuities for certain pension plan retirees as well as cash payments from lump sum elections.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table represents the assets and liabilities, measured at fair value on a recurring basis and the basis for that measurement (in millions):

	Fair Value as of June 30, 2019								Fair Value as of December 31, 2018
Liabilities:	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate swap	$	—	$	7.5	$	—	$	7.5	$	—	$	1.7	$	—	$	1.7
Contingent purchase price payment - DatesWeiser	—		—		0.8		0.8		—		—		0.8		0.8

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DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Liabilities at Fair Value

The following table summarizes the fair value of the Company’s derivative instruments, as well as the location of these instruments on the Condensed Consolidated Balance Sheets as of the dates presented (in millions):

Derivatives designated as hedging instruments	Balance Sheet Location	June 30, 2019		December 31, 2018
Derivative liabilities:
Interest rate swap	Other current liabilities	$	2.1	$	0.3
Interest rate swap	Other noncurrent liabilities	5.4		1.4
Total derivative liabilities		$	7.5	$	1.7

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LEASES (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Components of Lease Cost

Other lease information as of and for the period ended June 30, 2019 includes:

	June 30, 2019
Weighted-average remaining lease term (in years)
Operating leases	6.2
Weighted-average discount rate
Operating leases	4.8	%

(dollars in millions)	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13.9
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	5.0

The components of lease cost for the three and six months ended June 30, 2019 are as follows (in millions):

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Lease cost:
Operating lease cost	$	6.8	$	13.7
Short-term lease cost	0.5		0.6
Sublease income	—		(0.1		)
Total lease cost	$	7.3	$	14.2

Schedule of Future Minimum Lease Payments

Future minimum lease payments under non-cancellable leases, net of sublease income, as of June 30, 2019 is as follows (in millions):

	June 30, 2019
2019 (remaining six months)	$	12.5
2020	26.0
2021	20.0
2022	17.4
2023	14.8
Thereafter	40.4
Total undiscounted lease payments	131.1
Less: imputed interest	(22.9		)
Total lease liability	$	108.2

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OTHER CURRENT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2019

Other Liabilities Disclosure [Abstract]

Schedule of Other Current Liabilities

Information regarding the Company’s other current liabilities is as follows (in millions):

	June 30, 2019		December 31, 2018
Accrued employee compensation	$	28.4	$	40.6
Customer deposits	41.3		37.7
Warranty	10.1		9.6
Other	44.1		41.0
Other current liabilities	$	123.9	$	128.9

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INDEBTEDNESS (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Summary of long-term debt

The Company’s long-term debt is summarized as follows (in millions):

	June 30, 2019		December 31, 2018
Balance of revolving credit facility	$	129.5	$	134.5
Balance of term loans	321.5		330.8
Total long-term debt	451.0		465.3
Less: Current maturities of long-term debt	17.1		17.2
Less: Deferred financing fees, net	3.7		4.2
Long-term debt	$	430.2	$	443.9

Schedule of Revolving Credit Facility

The following revolving credit facility was in place at June 30, 2019 and December 31, 2018 (in millions):

	Capacity	Amount Borrowed	Letters of Credit Outstanding	Unused Capacity
June 30, 2019	$400.0	$129.5	$5.2	$265.3
December 31, 2018	$400.0	$134.5	$5.2	$260.3

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CONTINGENT LIABILITIES AND COMMITMENTS (Tables)

6 Months Ended

Jun. 30, 2019

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, 2018	$	9.6
Provision for warranty claims	4.6
Warranty claims settled	(4.0		)
Foreign currency translation adjustment	(0.1		)
Balance, June 30, 2019	$	10.1

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of changes in stockholders equity and noncontrolling interest

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2019 (in millions except share information):

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2018	$	0.5	$	58.8		$	395.4		$	(68.4	)	$	386.3		$	0.2		$	386.5
Net earnings	—		—			18.0			—			18.0			—			18.0
Other comprehensive (loss)      income	—		—			—			(3.6		)	(3.6		)	—			(3.6		)
Stock-based compensation, net of forfeitures	—		2.2			—			—			2.2			—			2.2
Cash dividend ($0.15 per share)	—		—			(7.5		)	—			(7.5		)	—			(7.5		)
Purchase of common stock (141,738 shares)	—		(3.0		)	—			—			(3.0		)	—			(3.0		)
Other	—		0.4			—			—			0.4			(0.2		)	0.2
Balance at March 31, 2019	$	0.5	$	58.4		$	405.9		$	(72.0	)	$	392.8		$	—		$	392.8
Net earnings	—		—			21.7			—			21.7			—			21.7
Other comprehensive (loss)       income	—		—			—			—			—			—			—
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

The following table shows the change in equity attributable to Knoll, Inc. stockholders and noncontrolling interests during the six months ended June 30, 2018 (in millions except share information):

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Knoll, Inc. Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2017	$	0.5	$	54.5		$	347.3		$	(43.8	)	$	358.5		$	0.3	$	358.8
Adoption of ASU 2018-02	—		—			6.3			(6.3		)	—			—		—
Net earnings	—		—			15.3			—			15.3			—		15.3
Other comprehensive (loss) income	—		—			—			(0.8		)	(0.8		)	—		(0.8		)
Stock-based compensation, net of forfeitures	—		2.4			—			—			2.4			—		2.4
Cash dividend ($0.15 per share)	—		—			(7.3		)	—			(7.3		)	—		(7.3		)
Purchase of common stock (95,412 shares)	—		(2.0		)	—			—			(2.0		)	—		(2.0		)
Balance at March 31, 2018	$	0.5	$	54.9		$	361.5		$	(50.8	)	$	366.1		$	0.3	$	366.4
Net earnings	—		—			13.1			—			13.1			—		13.1
Other comprehensive (loss) income	—		—			—			(2.2		)	(2.2		)	—		(2.2		)
Stock-based compensation, net of forfeitures	—		2.1			—			—			2.1			—		2.1
Cash dividend ($0.15 per share)	—		—			(7.9		)	—			(7.9		)	—		(7.9		)
Purchase of common stock	—		(2.4		)	—			—			(2.4		)	—		(2.4		)
Balance at June 30, 2018	$	0.5	$	54.6		$	366.7		$	(53.0	)	$	368.8		$	0.3	$	369.1

Schedule of change in number of shares of common stock outstanding

The following table shows the change in the number of shares of common stock outstanding during the six months ended June 30, 2019 (table in thousands and excluding non-voting restricted shares):

Shares outstanding as of December 31, 2018	48,706
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes	157
Shares issued to Board of Directors in lieu of cash	1
Shares outstanding as of June 30, 2019	48,864

The following table shows the change in the number of shares of common stock outstanding during the six months ended June 30, 2018 (table in thousands and excluding non-voting restricted shares):

Shares outstanding as of December 31, 2017	48,498
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes	194
Shares issued to Board of Directors in lieu of cash	2
Shares outstanding as of June 30, 2018	48,694

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of accumulated other comprehensive income (loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2019 (in millions):

	Unrealized gains (losses) on Interest Rate Swaps			Foreign Currency Translation Adjustment			Foreign Currency Translation Adjustment on Long-term Intercompany Notes			Pension and Other Post-Employment Liability Adjustment			Total
Balance, as of December 31, 2018	$	(1.2	)	$	(18.8	)	$	(8.1	)	$	(40.3	)	$	(68.4	)
Other comprehensive income (loss) before reclassifications	(6.0		)	2.3			(2.1		)	—			(5.8		)
Amounts reclassified from accumulated other comprehensive loss	0.2			—			—			0.5			0.7
Net current-period other comprehensive income (loss) before income tax	(5.8		)	2.3			(2.1		)	0.5			(5.1		)
Income tax benefit (expense)	1.5			—			—			—			1.5
Other comprehensive income (loss)	(4.3		)	2.3			(2.1		)	0.5			(3.6		)
Balance, as of June 30, 2019	$	(5.5	)	$	(16.5	)	$	(10.2	)	$	(39.8	)	$	(72.0	)

Reclassification out of accumulated other comprehensive income

The following pension and other post-retirement benefit reclassifications were made from accumulated other comprehensive income (loss) to the Condensed Consolidated Statements of Operations and Other Comprehensive Income (in millions):

	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Amortization of pension and other post-employment liability adjustments
Prior service credits (1)	$	(0.2	)	$	(0.2	)	$	(0.4	)	$	(0.4	)
Actuarial losses (1)	0.2			0.3			0.3			0.7
Pension settlement charge	0.5			4.6			0.6			4.6
Total before tax	0.5			4.7			0.5			4.9
Tax benefit	(0.2		)	(1.3		)	—			(1.3		)
Net of tax	$	0.3		$	3.4		$	0.5		$	3.6

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension costs, and are included in Other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note 6 for additional information.

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 accumulated other comprehensive income (loss), for the three and six months ended June 30, 2019 and 2018 (in millions):

	Three Months Ended					Six Months Ended
	June 30, 2019			June 30, 2018		June 30, 2019			June 30, 2018
Unrealized gain (loss) on derivative instruments	$	(3.9	)	$	1.2	$	(6.0	)	$	1.1
Loss (gain) on derivatives reclassified into income:
Interest rate contracts	0.1			—		0.2			—
Total reclassified into income	0.1			—		0.2			—
Income tax benefit	1.0			—		1.5			—
Amounts reclassified from accumulated other comprehensive income, net of tax	1.1			—		1.7			—
Unrealized gain (loss) on derivative instruments, net of tax	$	(2.8	)	$	1.2	$	(4.3	)	$	1.1

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of reconciliation of basic to dilutive average common shares

The following table sets forth the reconciliation from basic to dilutive average common shares (in millions, except shares which are in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$	21.7	$	13.1	$	39.6	$	28.4
Denominator:
Denominator for basic earnings per shares - weighted-average shares	48,855		48,672		48,815		48,615
Effect of dilutive securities:
Potentially dilutive shares resulting from stock plans	459		459		438		523
Denominator for diluted earnings per share - weighted-average shares	49,314		49,131		49,253		49,138
Antidilutive equity awards not included in weighted-average common shares—diluted	—		—		—		—
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic	$	0.44	$	0.27	$	0.81	$	0.58
Diluted	$	0.44	$	0.27	$	0.80	$	0.58

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Information with Corporate Costs Excluded

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
SALES
Office	$	223.2		$	194.6		425.4			379.7
Lifestyle	144.1			128.8			274.7			240.2
Knoll, Inc.	$	367.3		$	323.4		700.1			619.9
INTERSEGMENT SALES (1)
Office	$	0.5		$	0.5		0.9			1.0
Lifestyle	2.6			3.1			5.0			5.4
Knoll, Inc.	$	3.0		$	3.5		5.9			6.4
OPERATING PROFIT
Office (2)	$	14.3		$	10.4		28.5			19.2
Lifestyle	25.6			20.9			46.3			41.1
Corporate	(6.0		)	(6.5		)	(11.7		)	(13.1		)
Knoll, Inc.	$	33.9		$	24.8		$	63.1		$	47.2

_______________________________________________________________________________

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

(2) Knoll recorded restructuring charges of $0.1 million during the six months ended June 30, 2019 and $0.8 million and $1.4 million during the three and six months ended June 30, 2018, respectively, within the Office segment related to an organizational realignment that will result in greater operating efficiency and control.

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 Segment		Lifestyle Segment			Total
Balance as of December 31, 2018	$	39.1	$	281.7		$	320.8
Foreign currency translation adjustment	0.3		(1.4		)	(1.1		)
Balance as of June 30, 2019	$	39.4	$	280.3		$	319.7

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BASIS OF PRESENTATION - Accounting Standards Adopted (Details) - USD ($) $ in Millions	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease liabilities	$ 108.2
Right-of-use asset	$ 94.4		$ 0.0
ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease liabilities		$ 117.2
Right-of-use asset		$ 102.4

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REVENUE - Net Sales by Product Category (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue from External Customer [Line Items]
Total Sales	$ 367.3	$ 323.4	$ 700.1	$ 619.9
Office Segment
Revenue from External Customer [Line Items]
Total Sales	223.2	194.6	425.4	379.7
Lifestyle
Revenue from External Customer [Line Items]
Total Sales	144.1	128.8	274.7	240.2
Office Systems | Office Segment
Revenue from External Customer [Line Items]
Total Sales	114.8	106.0	221.1	210.0
Seating | Office Segment
Revenue from External Customer [Line Items]
Total Sales	34.6	34.1	65.5	65.1
Files and Storage | Office Segment
Revenue from External Customer [Line Items]
Total Sales	27.4	21.4	52.9	43.6
Ancillary | Office Segment
Revenue from External Customer [Line Items]
Total Sales	30.3	20.9	55.9	39.4
Other | Office Segment
Revenue from External Customer [Line Items]
Total Sales	16.1	12.2	30.0	21.6
Studio | Lifestyle
Revenue from External Customer [Line Items]
Total Sales	113.3	101.0	214.8	185.0
Coverings | Lifestyle
Revenue from External Customer [Line Items]
Total Sales	$ 30.8	$ 27.8	$ 59.9	$ 55.2

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REVENUE - Contract Balances (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Contract liability related to customer deposits	$ 41.3	$ 37.7
Revenue recognized	$ 28.8

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ACQUISITION - Narrative (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Jan. 25, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Business Acquisition [Line Items]
Aggregate purchase price				$ 0.0	$ 304.1
Cash acquired from acquisition	$ 7.6
Inventory valuation adjustments		$ 226.6	$ 204.2	435.6	392.9
Interest expense		5.5	5.3	10.7	9.3
Loss on extinguishment of debt		0.0	0.0	0.0	1.4
Income tax expense		$ 7.2	$ 4.6	$ 13.8	10.3
Muuto Acquisition
Business Acquisition [Line Items]
Percentage of voting interests acquired	100.00%
Aggregate purchase price	$ 303.7
Acquisition costs					1.5
Interest expense					0.9
Amortization of Intangible Assets					0.1
Loss on extinguishment of debt					2.9
Income tax expense					0.9
Muuto Acquisition | Acquisition-related Costs
Business Acquisition [Line Items]
Compensation for post combination services					1.5
Muuto Acquisition | Fair Value Adjustment to Inventory
Business Acquisition [Line Items]
Inventory valuation adjustments					$ 0.9

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ACQUISITION - Pro Forma Information (Details) - Muuto Acquisition $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Business Acquisition [Line Items]
Pro forma sales	$ 624.1
Pro forma net earnings attributable to Knoll, Inc. stockholders	$ 32.6

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INVENTORIES (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 58.6	$ 65.1
Work-in-process	10.2	8.3
Finished goods	113.2	97.1
Inventories, net	$ 182.0	$ 170.5

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PENSION AND OTHER POST-EMPLOYMENT BENEFITS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Pension Benefits
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Interest cost	$ 2.4	$ 2.5	$ 4.9	$ 5.0
Expected return on plan assets	(4.0)	(4.6)	(8.0)	(9.2)
Amortization of prior service credit	0.0	0.0	0.0	0.0
Recognized actuarial loss	0.2	0.4	0.3	0.7
Pension settlement charge	0.5	4.6	0.6	4.6
Net periodic benefit (income) cost	(0.9)	2.9	(2.2)	1.1
Other Benefits
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Interest cost	0.1	0.0	0.2	0.1
Expected return on plan assets	0.0	0.0	0.0	0.0
Amortization of prior service credit	(0.2)	(0.2)	(0.4)	(0.4)
Recognized actuarial loss	0.0	0.0	0.0	0.0
Pension settlement charge	0.0	0.0	0.0	0.0
Net periodic benefit (income) cost	$ (0.1)	$ (0.2)	$ (0.2)	$ (0.3)

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Measurements, Recurring | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent purchase price payment	$ 0.8	$ 0.8
Fair Value, Measurements, Recurring | Level 1 | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent purchase price payment	0.0	0.0
Fair Value, Measurements, Recurring | Level 2 | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent purchase price payment	0.0	0.0
Fair Value, Measurements, Recurring | Level 3 | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of contingent purchase price payment	0.8	0.8
Interest Rate Swap | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap	7.5	1.7
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap	0.0	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	7.5	1.7
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap	0.0	$ 0.0
Maximum | DatesWeiser
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Maximum future contingent payments under the agreement	$ 4.0

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DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Derivatives, Fair Value [Line Items]
Loss recognized in interest expense	$ 0.1	$ 0.2
Loss expected to be reclassified in the next 12 months		2.1
Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Interest rate swap	7.5	7.5	$ 1.7
Interest Rate Swap
Derivatives, Fair Value [Line Items]
Aggregate notional amount	$ 300.0	300.0
Decrease in notional amount over time		$ 50.0
Contract rate	2.63%	2.63%
Interest Rate Swap | Designated as Hedging Instrument | Other current liabilities
Derivatives, Fair Value [Line Items]
Interest rate swap	$ 2.1	$ 2.1	0.3
Interest Rate Swap | Designated as Hedging Instrument | Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
Interest rate swap	$ 5.4	$ 5.4	$ 1.4

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LEASES - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Lease renewal term	1 month 6 days
Lease termination period	1 year
Lease not yet commenced, right-of-use asset	$ 3.3
Lease not yet commenced, liability	$ 3.3
Lease not yet commenced, term of contract	10 years
Minimum
Lessee, Lease, Description [Line Items]
Lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Lease terms	16 years
Lease renewal term	6 years

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LEASES - Components of Lease Cost (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Lease, Cost [Abstract]
Operating lease cost	$ 6.8	$ 13.7
Short-term lease cost	0.5	0.6
Sublease income	0.0	(0.1)
Total lease cost	$ 7.3	$ 14.2

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LEASES - Schedule of Other Lease Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Operating leases
Weighted-average remaining lease term (in years)	6 years 2 months 12 days
Weighted-average discount rate	4.80%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 13.9
Right-of-use assets obtained in exchange for lease liabilities, Operating leases	$ 5.0

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LEASES - Schedule of Future Minimum Lease Payments (Details) $ in Millions	Jun. 30, 2019 USD ($)
Leases [Abstract]
2019 (remaining six months)	$ 12.5
2020	26.0
2021	20.0
2022	17.4
2023	14.8
Thereafter	40.4
Total undiscounted lease payments	131.1
Less: imputed interest	(22.9)
Total lease liability	$ 108.2

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OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Other Liabilities Disclosure [Abstract]
Accrued employee compensation	$ 28.4	$ 40.6
Customer deposits	41.3	37.7
Warranty	10.1	9.6
Other	44.1	41.0
Other current liabilities	$ 123.9	$ 128.9

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INDEBTEDNESS - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Long-term debt
Total long-term debt	$ 451.0	$ 465.3
Less: current maturities of long-term debt	17.1	17.2
Less: deferred financing fees, net	3.7	4.2
Long-term debt	430.2	443.9
Term loan
Long-term debt
Long-term debt	321.5	330.8
Revolving Credit Facility | Line of credit
Long-term debt
Long-term debt	$ 129.5	$ 134.5

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INDEBTEDNESS - Schedule of Credit Facility (Details) - Credit Agreement - Revolving Credit Facility - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Line of Credit Facility [Line Items]
Capacity	$ 400,000,000.0	$ 400,000,000.0
Amount Borrowed	129,500,000	134,500,000
Letters of Credit Outstanding	5,200,000	5,200,000
Unused Capacity	$ 265,300,000	$ 260,300,000

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INDEBTEDNESS - Narrative (Details) - USD ($) $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Long-term debt
Borrowings under line of credit	$ 198.5	$ 339.0
Debt issuance costs		0.4
Write off of deferred debt issuance cost		$ 1.0
Credit Agreement | Credit Facility | Base rate
Long-term debt
Borrowings under line of credit	$ 7.0		$ 2.5
Basis spread on variable rate (as percent)	6.25%		6.25%
Credit Agreement | Credit Facility | LIBOR
Long-term debt
Borrowings under line of credit	$ 122.5		$ 132.0
Basis spread on variable rate (as percent)	4.15%		4.25%
Credit Agreement | Letter of Credit
Long-term debt
Interest rate	1.75%		1.75%
Amended Credit Agreement
Long-term debt
Deferred financing fees, net	$ 3.7		$ 4.2
Amended Credit Agreement | Term loan
Long-term debt
Interest rate	4.15%		4.27%
Amended Credit Agreement | Multicurrency Term Loan
Long-term debt
Interest rate	1.75%		1.75%

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CONTINGENT LIABILITIES AND COMMITMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Changes in warranty reserve
Balance, December 31, 2018			$ 9,600
Provision for warranty claims	$ 2,700	$ 1,900	4,600	$ 3,800
Warranty claims settled			(4,000)
Foreign currency translation adjustment			(100)
Balance, June 30, 2019	$ 10,100		$ 10,100

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EQUITY - Schedule of Change in Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 392.8	$ 386.5	$ 366.4	$ 358.8	$ 386.5	$ 358.8
Net earnings	21.7	18.0	13.1	15.3	39.6	28.4
Other comprehensive (loss) income	0.0	(3.6)	(2.2)	(0.8)	(3.6)	(2.9)
Stock-based compensation, net of forfeitures	2.4	2.2	2.1	2.4
Cash dividend	(8.6)	(7.5)	(7.9)	(7.3)
Purchase of common stock		(3.0)	(2.4)	(2.0)
Other	0.1	0.2
Ending Balance	$ 408.4	$ 392.8	$ 369.1	$ 366.4	408.4	369.1
Cash dividends (in dollars per share)	$ 0.17	$ 0.15	$ 0.15	$ 0.15
Purchase of common stock, shares (in shares)		141,738		95,412
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 0.5	$ 0.5	$ 0.5	$ 0.5	0.5	0.5
Ending Balance	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	58.4	58.8	54.9	54.5	58.8	54.5
Stock-based compensation, net of forfeitures	2.4	2.2	2.1	2.4
Purchase of common stock		(3.0)	(2.4)	(2.0)
Other	0.1	0.4
Ending Balance	60.9	58.4	54.6	54.9	60.9	54.6
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	405.9	395.4	361.5	347.3	395.4	347.3
Net earnings	21.7	18.0	13.1	15.3
Cash dividend	(8.6)	(7.5)	(7.9)	(7.3)
Ending Balance	419.0	405.9	366.7	361.5	419.0	366.7
Retained Earnings | ASU 2018-02
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of ASU 2018-02				6.3
Accumulated Other Comprehensive Income (Loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	(72.0)	(68.4)	(50.8)	(43.8)	(68.4)	(43.8)
Other comprehensive (loss) income		(3.6)	(2.2)	(0.8)
Ending Balance	(72.0)	(72.0)	(53.0)	(50.8)	(72.0)	(53.0)
Accumulated Other Comprehensive Income (Loss) | ASU 2018-02
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of ASU 2018-02				(6.3)
Total Knoll, Inc. Stockholders' Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	392.8	386.3	366.1	358.5	386.3	358.5
Net earnings	21.7	18.0	13.1	15.3
Other comprehensive (loss) income	0.0	(3.6)	(2.2)	(0.8)
Stock-based compensation, net of forfeitures	2.4	2.2	2.1	2.4
Cash dividend	(8.6)	(7.5)	(7.9)	(7.3)
Purchase of common stock		(3.0)	(2.4)	(2.0)
Other	0.1	0.4
Ending Balance	408.4	392.8	368.8	366.1	408.4	368.8
Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	0.0	0.2	0.3	0.3	0.2	0.3
Net earnings				0.0
Other		(0.2)
Ending Balance	$ 0.0	$ 0.0	$ 0.3	$ 0.3	$ 0.0	$ 0.3

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EQUITY - Schedule of Change in Number of Shares of Common Stock Outstanding (Details) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares outstanding, beginning of period (in shares)	48,706,000	48,498,000,000
Shares issued under stock incentive plan, net of awards surrendered to pay applicable taxes (in shares)	157,000	194,000,000
Shares issued to Board of Directors in lieu of cash (in shares)	1,000	2,000,000
Shares outstanding, end of period (in shares)	48,864,000	48,694,000,000

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Changes by Component (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	$ 386.5
Other comprehensive income (loss) before reclassifications	(5.8)
Amounts reclassified from accumulated other comprehensive loss	0.7
Net current-period other comprehensive income (loss) before income tax	(5.1)
Income tax benefit (expense)	1.5
Other comprehensive income (loss)	(3.6)
Ending Balance	408.4
Unrealized gains (losses) on Interest Rate Swaps
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(1.2)
Other comprehensive income (loss) before reclassifications	(6.0)
Amounts reclassified from accumulated other comprehensive loss	0.2
Net current-period other comprehensive income (loss) before income tax	(5.8)
Income tax benefit (expense)	1.5
Other comprehensive income (loss)	(4.3)
Ending Balance	(5.5)
Foreign Currency Translation Adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(18.8)
Other comprehensive income (loss) before reclassifications	2.3
Amounts reclassified from accumulated other comprehensive loss	0.0
Net current-period other comprehensive income (loss) before income tax	2.3
Income tax benefit (expense)	0.0
Other comprehensive income (loss)	2.3
Ending Balance	(16.5)
Foreign Currency Translation Adjustment on Long-term Intercompany Notes
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(8.1)
Other comprehensive income (loss) before reclassifications	(2.1)
Amounts reclassified from accumulated other comprehensive loss	0.0
Net current-period other comprehensive income (loss) before income tax	(2.1)
Income tax benefit (expense)	0.0
Other comprehensive income (loss)	(2.1)
Ending Balance	(10.2)
Pension and Other Post-Employment Liability Adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(40.3)
Other comprehensive income (loss) before reclassifications	0.0
Amounts reclassified from accumulated other comprehensive loss	0.5
Net current-period other comprehensive income (loss) before income tax	0.5
Income tax benefit (expense)	0.0
Other comprehensive income (loss)	0.5
Ending Balance	(39.8)
Total
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	(68.4)
Ending Balance	$ (72.0)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other income, net	$ 1.0		$ 2.8		$ 1.6	$ 6.8
Pension settlement charge	0.5		4.6		0.6	4.6
Income before income tax expense	28.9		17.7		53.4	38.7
Income tax expense	7.2		4.6		13.8	10.3
Net earnings	21.7	$ 18.0	13.1	$ 15.3	39.6	28.4
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Net Prior Service
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other income, net	(0.2)		(0.2)		(0.4)	(0.4)
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss)
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other income, net	(0.2)		(0.3)		(0.3)	(0.7)
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Pension Settlement Charge
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Pension settlement charge	0.5		4.6		0.6	4.6
Reclassification out of Accumulated Other Comprehensive Income | Pension and Other Post-Employment Liability Adjustment
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income before income tax expense	(0.5)		(4.7)		(0.5)	(4.9)
Income tax expense	(0.2)		(1.3)		0.0	(1.3)
Net earnings	$ (0.3)		$ (3.4)		$ (0.5)	$ (3.6)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Unrealized Gains (Losses) on Derivative Instruments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Reclassification Adjustment Out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Income tax benefit	$ (7.2)	$ (4.6)	$ (13.8)	$ (10.3)
Interest Rate Contract
Reclassification Adjustment Out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Unrealized gain (loss) on derivative instruments	(3.9)	1.2	(6.0)	1.1
Total reclassified into income	0.1	0.0	0.2	0.0
Income tax benefit	1.0	0.0	1.5	0.0
Amounts reclassified from accumulated other comprehensive income, net of tax	1.1	0.0	1.7	0.0
Unrealized gain (loss) on derivative instruments, net of tax	$ (2.8)	$ 1.2	$ (4.3)	$ 1.1

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Numerator:
Net earnings attributable to Knoll, Inc. stockholders	$ 21.7	$ 13.1	$ 39.6	$ 28.4
Denominator:
Weighted-average shares of common stock outstanding—basic (in shares)	48,855,064	48,672,144	48,815,194	48,614,733
Potentially dilutive shares resulting from stock plans (in shares)	459,000	459,000	438,000	523,000
Denominator for diluted earnings per share - weighted-average shares (in shares)	49,314,364	49,131,106	49,252,546	49,137,528
Antidilutive equity awards not included in weighted-average common shares—diluted (in shares)	0	0	0	0
Net earnings per common share attributable to Knoll, Inc. stockholders:
Basic (in dollars per share)	$ 0.44	$ 0.27	$ 0.81	$ 0.58
Diluted (in dollars per share)	$ 0.44	$ 0.27	$ 0.80	$ 0.58

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INCOME TAXES (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Effective tax rate	25.10%	26.00%	25.80%	26.60%

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SEGMENT INFORMATION - Segment Information with Corporate Costs Excluded (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) segment	Jun. 30, 2018 USD ($)
Financial information of segments
Number of reportable segments | segment			2
SALES	$ 367.3	$ 323.4	$ 700.1	$ 619.9
OPERATING PROFIT	33.9	24.8	63.1	47.2
Operating Segments
Financial information of segments
SALES	367.3	323.4	700.1	619.9
INTERSEGMENT SALES	3.0	3.5	5.9	6.4
Corporate
Financial information of segments
OPERATING PROFIT	(6.0)	(6.5)	(11.7)	(13.1)
Office
Financial information of segments
SALES	223.2	194.6	425.4	379.7
Restructuring charges		0.8	0.1	1.4
Office | Operating Segments
Financial information of segments
SALES	223.2	194.6	425.4	379.7
INTERSEGMENT SALES	0.5	0.5	0.9	1.0
OPERATING PROFIT	14.3	10.4	28.5	19.2
Lifestyle
Financial information of segments
SALES	144.1	128.8	274.7	240.2
Lifestyle | Operating Segments
Financial information of segments
SALES	144.1	128.8	274.7	240.2
INTERSEGMENT SALES	2.6	3.1	5.0	5.4
OPERATING PROFIT	$ 25.6	$ 20.9	$ 46.3	$ 41.1

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SEGMENT INFORMATION - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Goodwill [Roll Forward]
Balance at beginning of period	$ 320.8
Foreign currency translation adjustment	(1.1)
Balance at end of period	319.7
Office Segment
Goodwill [Roll Forward]
Balance at beginning of period	39.1
Foreign currency translation adjustment	0.3
Balance at end of period	39.4
Studio Segment
Goodwill [Roll Forward]
Balance at beginning of period	281.7
Foreign currency translation adjustment	(1.4)
Balance at end of period	$ 280.3