<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
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 number: ____________
KNOLL, INC.
(Exact name of registrant as specified in its charter)
Delaware 25-1648603
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
<TABLE>
<S> <C> <C>
T.K.G. Acquisition Corp Delaware 13-3873847
Knoll Overseas, Inc. Delaware 25-1648603
Spinneybeck Enterprises, Inc. New York 16-1159029
(Exact name of registrants as (State or other jurisdiction of (I.R.S. Employer Identification No.)
specified in their charter) incorporation or organization)
</TABLE>
1235 Water Street, East Greenville, PA 18041
(Address of principal executive offices)
(Zip Code)
(215) 679-7991
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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 [X]
The number of outstanding shares of the registrant's common stock, par value
$1.00 per share, as of June 30, 1996 was 1,000.
Page 1 of 18
<PAGE>2
KNOLL, INC.
INDEX TO FORM 10-Q
Page
PART I -- FINANCIAL INFORMATION ----
ITEM 1 -- Financial Statements
Consolidated Balance Sheets
Knoll, Inc. as of June 30, 1996.................................3
The Knoll Group, Inc. (Predecessor)
as of December 31, 1995....................................3
Consolidated Statements of Operations
Knoll, Inc. for the three months ended June 30, 1996............4
The Knoll Group, Inc. (Predecessor) for the three
months ended June 30, 1995.................................4
Knoll, Inc. for the four months ended June 30, 1996.............5
The Knoll Group, Inc. (Predecessor) for the two
months ended February 29, 1996.............................5
The Knoll Group, Inc. (Predecessor) for the six
months ended June 30, 1995.................................5
Pro Forma Consolidated Statements of Operations
Three months ended June 30, 1996 (Actual).......................6
Three months ended June 30, 1995................................6
Six months ended June 30, 1996..................................6
Six months ended June 30, 1995..................................6
Consolidated Statements of Cash Flows
Knoll, Inc. for the four months ended June 30, 1996.............7
The Knoll Group, Inc. (Predecessor) for the two
months ended February 29, 1996.............................7
The Knoll Group, Inc. (Predecessor) for the six
months ended June 30, 1995.................................7
Notes to Consolidated Financial Statements..............................8
ITEM 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations...........................11
PART II -- OTHER INFORMATION
ITEM 6 -- Exhibits and Reports on Form 8-K..............................14
Signature Pages.........................................................15
<PAGE>3
KNOLL, INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
The Knoll Group, Inc.
(Predecessor)
June 30, December 31,
1996 1995
(Unaudited) (Audited)
----------- ---------------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 19,988 $ 1,569
Accounts receivable, net 111,497 114,592
Inventories
Finished goods 16,852 14,842
Work in process 7,352 8,718
Raw materials 38,520 38,749
Reserves (5,654) (2,666)
---------- ----------
Total inventories 57,070 59,643
Deferred income taxes 7,941 18,273
Prepaid and other current assets 4,163 8,465
--------- ---------
Total current assets 200,659 202,542
Property, plant, and equipment at cost 193,138 283,765
Less accumulated depreciation 8,057 119,132
--------- -------
Net property, plant and equipment 185,081 164,633
Goodwill and other intangible assets 309,516 240,772
Other noncurrent assets 12,928 48,763
Total assets $708,184 $656,710
========= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable $ 37,842 $ 46,263
Accrued payroll 14,737 19,486
Accrued interest payable 10,569 0
Income taxes payable 3,489 13,973
Current portion of long term debt 10,615 3,287
Other current liabilities 33,666 36,835
-------- --------
Total current liabilities 110,918 119,844
Long term debt 400,234 251
Postretirement benefits obligation 24,624 20,593
Deferred income taxes 0 29,574
Other noncurrent liabilities 4,085 5,997
-------- --------
Total liabilities 539,861 176,259
STOCKHOLDERS' EQUITY:
Cumulative translation adjustment 347 (22,866)
Parent company investment 0 503,317
Common stock, $1.00 par value; authorized
and issued 1,000 shares 1 0
Additional paid-in capital 159,999 0
Retained earnings 7,976 0
------- -------
Total stockholders' equity 168,323 480,451
Total liabilities and stockholders' equity $ 708,184 $ 656,710
======= =======
</TABLE>
See accompanying notes.
<PAGE>4
KNOLL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
($ in thousands)
<TABLE>
<CAPTION>
The Knoll Group, Inc.
(Predecessor)
Three Months Ended Three Months Ended June
June 30, 1996 30, 1995
------------------ -----------------------
<S> <C> <C>
Sales........................ $166,520 $159,352
Cost of sales................ 109,956 110,548
------- -------
Gross profit................. 56,564 48,804
Selling, general and
administrative expenses... 34,132 35,995
Allocated corporate
expenses.................. 0 2,500
-------- --------
Operating income............. 22,432 10,309
Interest expense............. 10,350 493
Other income (expense)....... 389 (70)
------- --------
Income before income
taxes..................... 12,471 9,746
Income taxes................. 4,944 3,801
------- -------
Net income................... $ 7,527 $5,945
======= ======
</TABLE>
See accompanying notes.
<PAGE>5
KNOLL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
($ in thousands)
<TABLE>
<CAPTION>
The Knoll Group, Inc The Knoll Group, Inc.
(Predecessor) (Predecessor)
Four Months Ended Two Months Ended Six Months Ended
June 30, 1996 February 29, 1996 June 30, 1995
----------------- -------------------- ---------------------
<S> <C> <C> <C>
Sales........................ $214,600 $90,232 $306,762
Cost of sales................ 142,964 60,598 217,167
------- ------ -------
Gross profit................. 71,636 29,634 89,595
Selling, general and
administrative expenses... 44,666 20,372 69,042
Allocated corporate
expenses.................. 0 921 4,700
Westinghouse long term
incentive compensation.... 0 47,900 0
------- ------ -------
Operating income (loss)...... 26,970 (39,559) 15,853
Interest expense............. 13,952 340 639
Other income (expense)....... 340 (296) 578
-------- --------- --------
Income (loss) before income
taxes..................... 13,358 (40,195) 15,792
Income taxes................. 5,382 (16,107) 8,631
----- -------- -----
Net income (loss)............ $7,976 $(24,088) $7,161
====== ========= ======
</TABLE>
See accompanying notes.
<PAGE>6
KNOLL, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
($ in thousands)
<TABLE>
<CAPTION>
Actual Pro Forma Pro Forma
Three Months Ended Three Months Ended Six Months Ended June 30,
June 30, 1996 June 30, 1995 1996 1995
------------------ ------------------ --------- ----------
<S> <C> <C> <C> <C>
Sales........................ $166,520 $159,352 $304,832 $306,762
Cost of sales................ 109,956 111,607 204,666 220,839
------- ------- ------- --------
Gross profit................. 56,564 47,745 100,166 85,923
Selling, general and
administrative expenses... 34,132 37,744 66,070 71,511
Allocated corporate
expenses.................. 0 1,000 0 2,000
-------- ------- -------- --------
Operating income............. 22,432 9,001 34,096 12,412
Interest expense............. 10,350 10,110 21,030 20,727
Other income (expense)....... 389 (70) 44 578
------- --------- - -------- --------
Income (loss) before income
taxes..................... 12,471 (1,179) 13,110 (7,737)
Income taxes................. 4,944 (695) 5,386 (2,370)
------- -------- --------- ---------
Net income (loss)............ $ 7,527 $ (484) $ 7,724 $ (5,367)
======= ===== ====== ========
</TABLE>
See accompanying notes.
<PAGE>7
KNOLL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
($ in thousands)
<TABLE>
<CAPTION>
The Knoll Group, The Knoll Group,
Inc. (Predecessor) Inc. (Predecessor)
Four Months Two Months Six Months
Ended Ended Ended
June 30, 1996 February 29, 1996 June 30, 1995
------------- ----------------- -------------
<S> <C> <C> <C>
CASH FROM OPERATIONS
Net income (loss) $7,976 $ (24,088) $ 7,161
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 10,936 4,317 13,643
Non-cash interest expense 600 -- --
Changes in working capital:
Accounts receivable (5,704) 8,798 (17,072)
Inventories 471 671 (2,293)
Accounts payable 7,700 (15,292) 3,764
Other working capital, net 15,226 (21,534) 3,492
Other assets and liabilities 601 (6,911) 12,931
------------ ------------ ------------
Net cash provided by (used in) operating activities 37,806 (54,039) 21,626
INVESTING ACTIVITIES
Purchases of property, plant and equipment (3,885) (2,296) (9,085)
-------------- ------------- ------------
Net cash used in investing activities (3,885) (2,296) (9,085)
FINANCING ACTIVITIES
Decrease in short term borrowings (2,349) (3,805) (5,238)
Decrease in long term borrowings (14,266) 0 (728)
Net receipts from (payments to) parent company 0 60,848 (12,884)
------------- ------------ ------------
Net cash provided by (used in) financing activities (16,615) 57,043 (18,850)
------------- ------------ ------------
Effect of exchange rate on cash 347 58 825
------------ ----------- ------------
Increase (decrease) in cash 17,653 766 (5,484)
Cash and cash equivalents at beginning of period 2,335 1,569 5,484
------------ ----------- ------------
Cash and cash equivalents at end of period $ 19,988 $ 2,335 $ 0
============ =========== ==============
</TABLE>
See accompanying notes.
<PAGE>8
KNOLL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited, consolidated financial statements of
Knoll, Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Therefore, 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
results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's registration statement on Form
S-4.
The pro forma statements of operations for the three and six months
ended June 30, 1995 and six months ended June 30, 1996, reflect the
acquisition of The Knoll Group, Inc. as if the acquisition occurred at the
beginning of the applicable year.
Note 2: Acquisition of Knoll
T.K.G. Acquisition Corp. ("TKG") was formed in December 1995 in
connection with the acquisition of The Knoll Group, Inc. and related entities
("Knoll") from Westinghouse Electric Corporation ("Westinghouse"). TKG does
not have any significant assets, liabilities, or operations other than those
incident to its formation, capitalization and acquisition of Knoll.
On February 29, 1996, TKG issued and sold an aggregate of 1,000,000
shares of common stock, $.01 par value per share; and 1,599,000 shares of
Series A 12% Participating Convertible Preferred Stock, $1.00 par value per
share, for $100,000 and $159,900,000, respectively.
On February 29, 1996, T.K.G. Acquisition Sub, Inc., a wholly owned
subsidiary of TKG, acquired all of the outstanding capital stock of Knoll. On
the same date, T.K.G. Acquisition Sub, Inc. and The Knoll Group, Inc. merged
with and into Knoll North America, Inc., which thereupon changed its name to
Knoll, Inc. As a result of these transactions, Knoll, Inc. became a direct
wholly owned subsidiary of TKG. In addition to an equity contribution, the
acquisition was funded through borrowings under the Company's credit
facilities and the issuance of the Company's Senior Subordinated Notes. The
specifics of the credit facilities and the Company's Senior Subordinated notes
are:
$160,000,000 term loan facility with a group of banks with
interest at LIBOR plus 2.5% due $5,000,000 in 1996,
$20,000,000 in 1997, $23,000,000 in 1998, $27,000,000 in
1999, $34,000,000 in 2000, $40,500,000 in 2001, and
$10,500,000 in 2002.
$100,000,000 term loan facility with a group of banks with
interest at LIBOR plus 3% due $250,000 in 1996, $1,000,000
in 1997, $1,000,000 in 1998, $1,000,000 in 1999, $1,000,000
in 2000, $1,000,000 in 2001, $47,500,000 in 2002 and
$47,250,000 in 2003.
$165,000,000 principal amount of 10-7/8% Senior Subordinated
Notes due in 2006.
The credit facilities and Senior Subordinated Notes of Knoll are
unconditionally guaranteed by TKG.
<PAGE>9
The cost of the acquisition, subject to certain post-closing
adjustments, and the allocation of the purchase price on a preliminary basis
is as follows:
Net working capital $103,232,000
Property, plant and equipment 191,379,000
Other non-current liabilities, net (15,547,000)
Goodwill and other intangibles 305,936,000
--------------
Total $585,000,000
Note 3: Income Taxes
Income taxes for the three and four-month periods ended June 30, 1996
were computed using the effective tax rates estimated to be applicable for the
full fiscal year, which is subject to ongoing review and evaluation by
management. In 1995, and for the first two months of 1996, Knoll is included
in a consolidated U.S. income tax return with Westinghouse and its
subsidiaries. In accordance with SFAS 109, income taxes were provided for the
three and six months ended June 30, 1995 and the two months ended February 29,
1996 as if Knoll had filed a separate tax return. The pro forma effective tax
rates were 58.9% and 30.6% for the three month and six month periods ended
June 30, 1995, respectively. The effective rates differ from U.S. statutory
rates due to pro forma losses before income taxes generated in Europe for
which no tax benefit has been recorded.
Note 4: Stock Incentive Plan
Effective February 29, 1996, TKG established the T.K.G. Acquisition
Corp. 1996 Stock Incentive Plan (the "Plan") to increase its ability to
attract and retain key employees of the Company. Under the Plan, awards
denominated or payable in shares of the TKG stock may be granted to employees
of the Company. The maximum number of shares that may be granted under the
Plan are 1,500,000 shares of common stock. A Stock Plan Committee of TKG's
Board of Directors has sole discretion concerning administration of the Plan
including: selection of individuals to receive awards, types of awards, the
terms and conditions of the awards and the time at which awards will be
granted. The Plan may be terminated at any time at the discretion of the Board
of Directors.
Note 5: Goodwill and Other Intangibles
The Company reviews the carrying value of goodwill and other
intangibles on an ongoing basis if the facts and circumstances suggest that it
may be impaired. Management uses an estimate of the undiscounted cash flows of
the asset over the remaining life of the asset in measuring whether the
intangible asset is recoverable. If such analysis indicates that an impairment
has in fact occurred, the carrying value of the intangible asset is reduced to
its estimated fair value.
Note 6: Financial Instruments
In managing interest rate exposure under the Company's term loan
facilities, the Company has entered into interest rate collar agreements that
effectively set the LIBOR component of the interest rate at a maximum ranging
from 7.5% to 7.99% and at a minimum ranging from 5.00% to 5.50% during the
three month period ended June 30, 1996. The interest rate collar agreements
have a total notional principal amount of $200 million at June 30, 1996 and
are with major financial institutions.
The Company continually monitors its positions and the credit ratings
of its counterparties and does not anticipate nonperformance by the
counterparties.
<PAGE>10
The aggregate maturities of the Company's interest rate collars are
as follows (in thousands):
Year Amount
---- -------
1998 $ 35,000
1999 165,000
-------
$200,000
Note 7: Corporate Services
For the two month period ended February 29, 1996, the three month
period ended June 30, 1995 and the six month period ended June 30, 1995,
charges related to services provided by Westinghouse totaled $510,000,
$826,000 and $1,652,000 respectively and are included in selling, general and
administrative expenses.
Note 8: Westinghouse Long-Term Incentive Compensation
The results of operations for the two-month period ended February 29,
1996 include $47,900,000 of incentive compensation payable to the Company's
employees as a result of consummation of the acquisition of Knoll from
Westinghouse, which triggered the payment of awards and established the
amounts of payments due under Westinghouse's long-term incentive plans.
<PAGE>11
KNOLL, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The Company is a leading manufacturer of office furniture, focusing
on the middle to high end segments of the contract furniture market. The
Company offers a broad range of office furniture and accessories, including
office systems, seating, storage solutions and filing cabinets, desks and
casegoods, and tables.
The Company maintains manufacturing sites in the United States,
Canada and Italy. The Company generally conducts its business in local
currencies and reports its consolidated financial results in U.S. dollars.
Fluctuations in the currency exchange rates of the countries in which the
Company operates, such as the decline in the average exchange rate of the U.S.
dollar to the Italian lire, can affect the Company's consolidated U.S.
dollar-denominated financial results. The Company has no operations in
countries that have experienced highly inflationary economies.
The Company was formed in connection with its acquisition of the
Knoll business unit ("Knoll") of Westinghouse Electric Corporation
("Westinghouse") on February 29, 1996. Prior to the acquisition, Knoll's
results of operations are included in the consolidated U.S. federal income tax
return of Westinghouse. The income tax expense and other tax-related
information included in the financial statements are presented as if Knoll
were not included in the consolidated tax returns of Westinghouse and require
certain assumptions, allocations and significant estimates that management
believes are reasonable to measure the tax consequences as if Knoll were a
stand-alone taxpayer.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations has been prepared using the unaudited actual results for
the three months ended June 30, 1996, the unaudited pro forma results for the
six months ended June 30, 1996 and the unaudited pro forma results for the
three and six months ended June 30, 1995. The unaudited pro forma consolidated
statements of operations for these periods give effect to the acquisition of
Knoll from Westinghouse as if the acquisition occurred at the beginning of the
applicable year. This presentation provides information about the continuing
impact of the acquisition by showing how it might have affected historical
financial statements if the acquisition had been consummated at an earlier
time. Management believes that a comparison between actual and pro forma
results for the three months ended June 30, 1996 is more meaningful than a
comparison between actual results due to the significance of the acquisition.
The following discussion should be read in conjunction with the
consolidated financial statements and related notes of Knoll, as predecessor
to the Company, and the unaudited pro forma consolidated financial statements
and related notes of the Company.
Results of Operations
Comparison of Second Quarter and Pro Forma Six Months Ended June 30,
1996 to Pro Forma Second Quarter and Pro Forma Six Months Ended June
30, 1995.
Sales. Sales for the Second Quarter of 1996 were $166.5 million, an
increase of $7.1 million, or 4.5%, above sales of $159.4 million for the Second
Quarter of 1995. Sales for the first six months of 1996 were $304.8 million, a
decrease of $2.0 million, or less than 1.0%, below the $306.8 million for the
same period in 1995. This decrease was principally due to the discontinuance,
announced in late 1994, of products that continued to be shipped during the
first six months of 1995, which was substantially offset by higher sales of
the Company's core products.
Gross Profit. Gross profit was $56.6 million for the Second Quarter
of 1996, an increase of $8.9 million, or 18.7%, above the $47.7 million for
the Second Quarter of 1995. For the first six months of 1996, gross profit
<PAGE>12
was $100.2 million, an increase of $14.3 million, or 16.7%, above the $85.9
million for the first six months of 1995. These increases were principally due
to improved margins from better pricing and sales mix, factory cost reductions
and improved operating efficiencies. The gross profit margin, as a percentage
of sales, increased to 34.0% for the Second Quarter of 1996 from 30.0% for the
Second Quarter 1995 and increased 32.9% for the first six months of 1996 from
28.0% for the first six months of 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $34.1 million for the Second Quarter of 1996, a
decrease of $3.6 million, or 9.6%, below the $37.7 million for the Second
Quarter of 1995. Selling, general and administrative expenses were $66.1
million for the first six months of 1996, a decrease of $5.4 million, or 7.6%,
below the $71.5 million of the first six months of 1995. This decrease is
primarily attributable to the ongoing savings and operating efficiencies
derived from the consolidation and centralization efforts begun in mid-1994.
As a percentage of sales, selling, general and administrative expenses
decreased to 20.5% for the Second Quarter of 1996 from 23.7% for the Second
Quarter 1995 and decreased to 21.7% for the first six months of 1996 from
23.3% for the first six months of 1995.
Operating Income. Operating income increased to $22.4 million for the
Second Quarter of 1996, an increase of $13.4 million, as compared to $9.0
million for the Second Quarter 1995. For the first six months of 1996,
operating income was $34.1 million, an increase of $21.7 million over the
$12.4 million for the first six months of 1995. This improvement was driven by
better pricing, cost reductions, and improved operating efficiencies. As a
percentage of sales, operating income increased to 13.5% for the Second
Quarter of 1996 from 5.7% for the Second Quarter 1995 and increased to 11.2%
for the first six months of 1996 from 4.1% for the first six months of 1995.
Interest Expense. Interest expense was calculated on a pro forma
basis for the Second Quarter of 1995 and for the first six months of 1996 and
1995 to approximate the capital structure that existed at the time of the
acquisition.
Other Income (Expense). Other income (expense) primarily represents
foreign exchange gains and losses in Europe.
Income Taxes. Income taxes were $4.9 million for the Second Quarter
of 1996 as compared to $(0.7) million the Second Quarter of 1995 and $5.4
million for the first six months of 1996 compared to $(2.4) million for the
first six months of 1995. The increase in income taxes was the result of
higher pre-tax earnings in 1996.
Liquidity and Capital Resources
Net working capital at June 30, 1996 was $89.7 million, which
reflects an increase of $7.0 million over the year-end net working capital.
During the four months ended June 30, 1996, the Company generated cash flows
of $37.8 million from operating activities. Cash provided by operations
resulted primarily from net earnings, depreciation and amortization, and
changes in other working capital. The $15.2 million of changes in other
working capital included increased accruals of $10.6 million for interest,
$2.2 million for taxes and $1.0 for payroll. Also contributing to cash flow
from operations during this period was an increase in accounts payable, which
was substantially offset by an increase in accounts receivable.
The Company's investing activities used $3.9 million during the four
months ended June 30, 1996 for capital expenditures. The $16.6 million used by
the Company in its financing activities during the four months ended June 30,
1996 included $15.0 million for the repayment of senior bank debt.
As of June 30, 1996, the Company had available lines of credit of $50
million, all of which was available and unused. The Company believes that
internally generated cash flow, together with borrowings under its lines of
credit, will be sufficient to meet its cash needs for the next 12 months.
<PAGE>13
Backlog
As of June 30, 1996, the Company's backlog of unfilled orders was
$82.8 million. At June 30, 1995, the Company's backlog totaled $85.7 million.
The Company expects to fill substantially all of the orders comprising its
backlog by December 31, 1996, as the Company manufactures substantially all of
its products to order and its average manufacturing lead time is approximately
five weeks. As a result, backlog is not significant to the Company's business.
Statement Regarding Forward Looking Disclosure
Certain portions of this Form 10-Q, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contain various forward looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which represent the Company's expectations or beliefs concerning future
events. The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward looking statements, including, without limitation, the
high level of the Company's indebtedness, which requires a substantial portion
of the Company's cash flow from operations to be dedicated to debt service,
making such cash flow unavailable for other purposes, and which could limit
the Company's flexibility in reacting to changes in its industry or economic
conditions generally. In addition, these statements are further qualified by
other important factors that could cause actual results to differ materially
from those in the forward looking statements, including, without limitation,
the ability of the Company to sustain the cost savings achieved through its
restructuring program; the Company's dependence on key personnel; the highly
competitive nature of the markets in which the Company competes; the ability
of the Company to maintain its relationships with its dealers; environmental
laws and regulations, including those that may be enacted in the future, that
affect the ownership and operation of Company's manufacturing plants;
fluctuations in foreign currency exchange rates; and fluctuations in industry
revenues driven by a variety of macroeconomic factors, including white collar
employment levels, corporate cash flows, and non-residential commercial
construction, as well as by a variety of industry factors such as corporate
reengineering and restructuring, technology demands, ergonomic, health and
safety concerns and corporate relocations.
<PAGE>14
PART II - OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
3.1* Certificate of Incorporation.
3.2* By-Laws of the Registrant.
4.1* Indenture, dated as of February 29, 1996, by and among T.K.G.
Acquisition Sub, Inc., T.K.G. Acquisition Corp., The Knoll Group,
Inc., Knoll North America, Inc., Spinneybeck Enterprises, Inc. and
Knoll Overseas, Inc., as guarantors, and IBJ Schroder Bank & Trust
Company, as trustee, relating to $165,000,000 principal amount of
10-7/8% Senior Subordinated Notes due 2006, including form of
Initial Global Note.
4.2* Supplemental Indenture, dated as of February 29, 1996, by and
among the Company, as successor to T.K.G. Acquisition Sub, Inc.,
T.K.G. Acquisition Corp., The Knoll Group, Inc., Knoll North
America, Inc., Spinneybeck Enterprises, Inc. and Knoll Overseas,
Inc., as guarantors, and IBJ Schroder Bank & Trust Company, as
trustee, relating to $165,000,000 principal amount of 10-7/8%
Senior Subordinated Notes due 2006, including form of Initial
Global Note.
4.3* Credit Agreement, dated as of February 29, 1996, by and among
T.K.G. Acquisition Sub, Inc., T.K.G. Acquisition Corp., The Knoll
Group, Inc., Knoll North America, Inc., Spinneybeck Enterprises,
Inc. and Knoll Overseas, Inc., as guarantors, NationsBank
N.A., Chemical Bank and other lending institutions.
4.4* Security Agreement, dated as of February 29, 1996, by and among
T.K.G. Acquisition Sub, Inc., T.K.G. Acquisition Corp., The Knoll
Group, Inc., Knoll North America, Inc., Spinneybeck Enterprises,
Inc. and Knoll Overseas, Inc., as guarantors, NationsBank N.A and
other lending institutions.
4.5* Registration Rights Agreement, dated as of February 29, 1996, by
and among T.K.G. Acquisition Sub, Inc., T.K.G. Acquisition
Corp., The Knoll Group, Inc., Knoll North America, Inc.,
Spinneybeck Enterprises, Inc. and Knoll Overseas, Inc., as
guarantors, and NationsBank Capital Markets, Inc., as Initial
Purchaser.
10.1* Stock Purchase Agreement, dated as of December 20, 1995, by and
between Westinghouse and T.K.G. Acquisition Corp.
10.2* T.K.G. Acquisition Corp. 1996 Stock Incentive Plan.
27 Financial Data Schedule.
- ------------------
* Incorporated by reference to the Company's Registration Statement in Form
S-4 (File No. 333-2972), which was declared effective by the Commission
on June 12, 1996.
b. Current Reports on Form 8-K:
The Registrant did not file any reports on Form 8-K during the
period beginning March 31, 1996 and ending June 30, 1996.
<PAGE>15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
KNOLL, INC.
Date: August 13, 1996 By: /s/ Burton B. Staniar
---------------------
Burton B. Staniar
Chairman of the Board and
Chief Executive Officer
Date: August 13, 1996 By: /s/ Barry L. McCabe
--------------------
Barry L. McCabe
Vice President, Chief
Financial Officer, Treasurer,
Assistant Secretary and
Controller (Principal
Financial Officer and
Principal Accounting Officer)
<PAGE>16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
T.K.G. ACQUISITION CORP.
Date: August 13, 1996 By: /s/ Burton B. Staniar
---------------------
Burton B. Staniar
Chairman of the Board and
Chief Executive Officer
Date: August 13, 1996 By: /s/ Barry L. McCabe
-------------------
Barry L. McCabe Vice President,
Chief Financial Officer,
Treasurer and Assistant
Secretary (Principal Financial
Officer and Principal Accounting
Officer)
<PAGE>17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
KNOLL OVERSEAS, INC.
Date: August 13, 1996 By: /s/ Burton B. Staniar
---------------------
Burton B. Staniar
Chairman of the Board and
Chief Executive Officer
Date: August 13, 1996 By: /s/ Barry L. McCabe
-------------------
Barry L. McCabe
Vice President, Treasurer and
Assistant Secretary (Principal
Financial Officer and Principal
Accounting Officer)
<PAGE>18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SPINNEYBECK ENTERPRISES, INC.
Date: August 13, 1996 By: /s/ Roger B. Wall
------------------
Roger B. Wall
President
Date: August 13, 1996 By: /s/ Barry L. McCabe
-------------------
Barry L. McCabe Vice President,
Treasurer and Assistant
Secretary (Principal Financial
Officer and Principal
Accounting Officer)
<PAGE>
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<ARTICLE> 5
<CIK> 0001011570
<NAME> KNOLL, INC.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
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0
0
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