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 March 31, 1999
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.
A Delaware Corporation I.R.S. Employer No. 13-3873847
1235 Water Street
East Greenville, PA 18041
Telephone Number (215)679-7991
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 X No
--- ---
As of May 7, 1999, there were 40,645,363 shares of the Registrant's common
stock, par value $0.01 per share, outstanding.
<PAGE>
KNOLL, INC.
TABLE OF CONTENTS FOR FORM 10-Q
Item Page
---- ----
PART I -- FINANCIAL INFORMATION
1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets at March 31, 1999
and December 31, 1998..................................... 3
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1999 and 1998................ 4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1999 and 1998................ 5
Notes to the Condensed Consolidated Financial Statements.... 6
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 8
3. Quantitative and Qualitative Disclosures about Market Risk...... 11
PART II -- OTHER INFORMATION
1. Legal Proceedings............................................... 12
2. Changes in Securities and Use of Proceeds....................... 12
6. Exhibits and Reports on Form 8-K................................ 12
Signatures.......................................................... 13
Exhibit Index....................................................... 14
2
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
- ----------------------------------------------------------------
KNOLL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......... $ 17,906 $ 17,465
Customer receivables, net.......... 116,686 137,956
Inventories........................ 79,682 77,113
Deferred income taxes.............. 19,925 21,067
Prepaid and other current assets... 10,163 9,842
-------- --------
Total current assets........... 244,362 263,443
Property, plant and equipment.......... 261,361 257,970
Accumulated depreciation............... (78,473) (71,803)
-------- --------
Property, plant and
equipment, net............... 182,888 186,167
Intangible assets...................... 282,242 282,197
Accumulated amortization............... (24,123) (22,154)
-------- --------
Intangible assets, net......... 258,119 260,043
Other noncurrent assets................ 4,440 4,374
-------- --------
Total Assets................... $689,809 $714,027
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt............................. $ -- $ 10,000
Accounts payable................... 50,113 59,551
Income taxes payable............... 6,927 7,096
Other current liabilities.......... 58,588 91,756
-------- --------
Total current liabilities...... 115,628 168,403
Long-term debt......................... 194,205 159,255
Postretirement benefits other than
pension.............................. 18,769 18,450
Other noncurrent liabilities........... 26,856 24,069
-------- --------
Total liabilities.............. 355,458 370,177
-------- --------
Stockholders' equity:
Common stock, $0.01 par value;
100,000,000 shares authorized;
40,645,363 shares issued and
outstanding (net of 2,894,700
treasury shares) in 1999 and
41,799,499 shares issued and
outstanding (net of 1,707,700
treasury shares) in 1998......... 406 418
Additional paid-in-capital......... 153,783 181,792
Unearned stock grant compensation.. (642) (712)
Retained earnings.................. 189,380 170,986
Accumulated other comprehensive
income........................... (8,576) (8,634)
-------- --------
Total stockholders' equity..... 334,351 343,850
-------- --------
Total Liabilities and
Stockholders' Equity......... $689,809 $714,027
======== ========
</TABLE>
See accompanying notes.
3
<PAGE>
KNOLL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales........................................ $209,210 $220,775
Cost of sales................................ 127,663 133,452
-------- --------
Gross profit................................. 81,547 87,323
Selling, general and administrative
expenses................................... 45,413 49,273
-------- --------
Operating income............................. 36,134 38,050
Interest expense............................. 4,222 4,583
Other expense, net........................... 398 418
-------- --------
Income before income tax expense............. 31,514 33,049
Income tax expense........................... 13,120 13,239
-------- --------
Net income................................... $ 18,394 $ 19,810
======== ========
Earnings per share:
Basic.................................... $ 0.47 $ 0.48
Diluted.................................. $ 0.45 $ 0.45
Weighted average shares of common stock
outstanding:
Basic................................. 39,553 41,181
Diluted............................... 41,225 43,859
</TABLE>
See accompanying notes.
4
<PAGE>
KNOLL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................... $ 18,394 $ 19,810
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization.......... 8,553 9,579
Other noncash items.................... 620 376
Changes in assets and liabilities:
Customer receivables............... 20,709 (184)
Inventories........................ (2,928) (6,728)
Accounts payable................... (8,918) (212)
Current and deferred income taxes.. 2,230 2,677
Other current assets and
liabilities...................... (33,596) (14,660)
Other noncurrent assets and
liabilities...................... 2,248 661
-------- --------
Cash provided by operating activities........ 7,312 11,319
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment... (3,573) (5,483)
Proceeds from sale of assets................. 66 7
-------- --------
Cash used in investing activities............ (3,507) (5,476)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayment of) revolving
credit facility, net....................... 25,000 (10,000)
Net proceeds from issuance of stock.......... 649 3,290
Purchase of common stock..................... (28,675) --
-------- --------
Cash used in financing activities............ (3,026) (6,710)
-------- --------
Effect of exchange rate changes on cash
and cash equivalents....................... (338) (231)
-------- --------
Increase (decrease) in cash and cash
equivalents................................ 441 (1,098)
Cash and cash equivalents at beginning of
period..................................... 17,465 10,790
-------- --------
Cash and cash equivalents at end of period... $ 17,906 $ 9,692
======== ========
</TABLE>
See accompanying notes.
5
<PAGE>
KNOLL, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Knoll, Inc. (the "Company" or "Knoll") 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 and
therefore 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 are reflected in the
condensed consolidated financial statements. The condensed consolidated
balance sheet as of December 31, 1998 is derived from the Company's 1998
audited financial statements. The unaudited condensed consolidated financial
statements and notes thereto should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Company's
annual report on Form 10-K for the year ended December 31, 1998. The results
of operations for the three months ended March 31, 1999 are not necessarily
indicative of the results to be expected for the full year ending December 31,
1999.
2. Proposal to Acquire Shares Owned by Public Stockholders
On March 23, 1999, the Company received a proposal from Warburg, Pincus
Ventures, L.P. ("Warburg") and certain members of Knoll management to acquire
all of the outstanding shares of the Company's common stock owned by public
stockholders for a price of $25.00 per share. The Board of Directors has
authorized the appointment of a special committee, consisting of independent
members of the Board of Directors, to consider the proposal. Consummation of
the proposed transaction is subject to approval by the Board of Directors and
stockholders of Knoll, as well as to the receipt of financing, the execution
of a definitive merger agreement and other conditions customary in a
transaction of this type. If the proposed transaction is consummated, the
Company's common stock will cease to be listed on the New York Stock Exchange,
Inc. and will be deregistered under the Securities Exchange Act of 1934, as
amended.
Five class action complaints relating to the proposal were filed on or about
March 24, 1999. The Company is among the defendants. At this time, the
Company is unable to predict what impact, if any, such litigation may have on
the Company or the proposed transaction. The financial statements do not
reflect any effects of the litigation or the proposed transaction.
3. Inventories
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(In Thousands)
<S> <C> <C>
Raw materials................. $41,559 $42,625
Work in process............... 11,619 11,827
Finished goods................ 26,504 22,661
------- -------
Inventories................... $79,682 $77,113
======= =======
</TABLE>
6
<PAGE>
4. Earnings Per Share
The following table sets forth a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Weighted
Net Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- --------------- ---------
<S> <C> <C> <C>
Three Months Ended March 31, 1999:
Basic earnings per share........... $18,394 39,553 $0.47
=====
Effect of dilutive potential
common shares:
Stock options................ -- 245
Nonvested restricted
stock grants............... -- 1,427
------- ------
Diluted earnings per share......... $18,394 41,225 $0.45
======= ====== =====
Three Months Ended March 31, 1998:
Basic earnings per share........... $19,810 41,181 $0.48
=====
Effect of dilutive potential
common shares:
Stock options............... -- 609
Nonvested restricted
stock grants.............. -- 2,069
------- ------
Diluted earnings per share........ $19,810 43,859 $0.45
======= ====== =====
</TABLE>
Options to purchase 1,093,000 shares of common stock that were outstanding as
of March 31, 1999 were not included in the calculation of diluted earnings per
share for the three months ended March 31, 1999. Such options were excluded
from the calculation because their exercise prices exceeded the average market
price of the common stock for the appropriate period and, therefore, the
effect on earnings per share would have been antidilutive.
5. Share Repurchase Program
During the three months ended March 31, 1999, the Company purchased 1,187,000
shares of its common stock for $28.7 million, or an average price of $24.16.
Since the inception of the share repurchase program in September 1998, the
Company has purchased 2,894,700 shares of its common stock for $67.5 million,
or an average price of $23.33 per share.
6. Comprehensive Income
Total comprehensive income for the three months ended March 31, 1999 and 1998
was $18.5 million and $19.8 million, respectively.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------------------------------------------------------------------------
Results of Operations
---------------------
The following discussion should be read in conjunction with the accompanying
unaudited condensed consolidated financial statements and notes thereto and
in conjunction with the Company's annual report on Form 10-K for the year
ended December 31, 1998.
Results of Operations
Comparison of First Quarter Ended March 31, 1999 to First Quarter Ended
March 31, 1998
Sales. Sales for the first quarter of 1999 were $209.2 million, a decrease of
5.3%, or $11.6 million, from first quarter 1998 sales of $220.8 million. Sales
in the first quarter of 1999 were down primarily as a result of a slowdown in
industry sales levels.
Gross Profit and Operating Income. As a result of the Company's continued
focus on cost control, the Company's gross profit and operating income as a
percentage of sales remained strong despite lower sales volume. As a
percentage of sales, gross profit was 39.0% for the first quarter of 1999 and
39.6% for the first quarter of 1998 and operating income was 17.3% for the
first quarter of 1999 and 17.2% for the first quarter of 1998.
Selling, general and administrative expenses for the first quarter of 1999
were $45.4 million, a decrease of 7.9%, or $3.9 million, from $49.3 million
for the first quarter of 1998. This decrease was primarily due to lower
employee costs related to reduced sales and profit levels. As a percentage of
sales, the Company's selling, general and administrative expenses decreased to
21.7% for the first quarter of 1999 from 22.3% for the first quarter of 1998.
Interest Expense. The Company's interest expense for the first quarter of
1999 was $4.2 million compared to $4.6 million for the first quarter of 1998.
The decrease in interest expense is principally due to lower outstanding debt
balances during the first quarter of 1999 compared to the first quarter of
1998.
Income Tax Expense. The Company's effective tax rate is directly affected by
the mix of pretax income and the varying effective tax rates attributable to
the countries in which it operates. This changing mix is primarily
responsible for the change in the effective tax rate to 41.6% for the first
quarter of 1999 from 40.1% for the first quarter of 1998. Additionally, the
change in the effective tax rate has been impacted by the increased effect of
nondeductible expenses with the decrease in pretax income.
Earnings Per Share. The Company's diluted earnings per share for the first
quarter of 1999 is unchanged from the first quarter of 1998 as lower net
income was offset by the effect of the reduced number of common shares
outstanding that resulted from the repurchase of shares of common stock by the
Company under its share repurchase program that was implemented in September
1998.
Liquidity and Capital Resources
During the three months ended March 31, 1999, the Company generated cash flow
from operations of $7.3 million. Cash provided by operations resulted
primarily from earnings before depreciation and amortization offset by cash
used for working capital purposes, which was principally for the payment of
December 31, 1998 accruals for employee costs related to 1998 sales and
profits.
The Company borrowed $25.0 million under its revolving credit facility during
the first quarter of 1999. These borrowings together with cash generated from
operations were used to fund $3.6 million in capital expenditures and
repurchase 1.2 million shares of the Company's common stock for $28.7 million.
As of March 31, 1999, the Company's ratio of debt to total capitalization was
36.7%, and the Company had an aggregate of $197.0 million available for
borrowing under its U.S. and European revolving credit facilities. The
Company believes that existing cash balances and internally generated cash
flows, together with borrowings available under the revolving credit facility,
will be sufficient to fund working capital needs, capital spending requirements
and debt service requirements for at least the next twelve months. The
Company's debt instruments contain certain covenants that, among other things,
limit the Company's ability to incur additional indebtedness, pay dividends and
purchase Company stock as well as require the Company to maintain certain
financial ratios.
8
<PAGE>
If the transaction discussed in Note 2 to the unaudited condensed consolidated
financial statements is consummated, the Company would incur significant
additional debt under new financing arrangements. Management believes that
the Company's cash flows would be sufficient to service such additional debt
as well as continue to fund working capital needs and capital expenditures.
Backlog
The Company's backlog of unfilled orders was $161.7 million at March 31, 1999
and $149.5 million at March 31, 1998. The Company manufactures substantially
all of its products to order and expects to fill substantially all outstanding
unfilled orders within the next twelve months. As such, backlog is not a
significant factor used to predict the Company's long-term business prospects.
Year 2000 Readiness Disclosure
The Company continues to implement its strategic project to replace and
enhance its existing manufacturing and business information systems (software
and hardware) in North America with a new fully integrated system, which the
Company believes to be year 2000 compliant. Additionaly, the Company has
completed an evaluation of the information systems currently being used by its
European operations and other potential European year 2000 issues and is
taking actions to address the year 2000 issues that have been identified.
Based upon information presently known, the Company does not expect its
European year 2000 issues to have a material adverse effect upon its results
of operations.
In North America, the Company has installed and is utilizing the financial
applications of the new system at all of its sites and has installed and is
utilizing the new manufacturing application at two of four sites. In
addition, the Company has completed an inventory of its manufacturing
equipment to identify equipment that contains embedded chips and is taking
actions to address issues related to embedded chips that the Company has
determined may not be year 2000 compliant. The Company anticipates that all
of the system applications will be installed and in use and problems related
to embedded chips that are not year 2000 compliant will be remedied, through
replacement or other satisfactory measures, by the third quarter of 1999. If
the Company successfully implements the new system and addresses issues
associated with noncompliant embedded chips by the third quarter of 1999, the
year 2000 issues associated with its information systems and manufacturing
equipment would not be expected to have a material adverse effect on the
Company's operations.
In the event the Company is unable to complete the implementation of the
project on a timely basis, the Company's ability to take customer orders,
manufacture and deliver product on a timely basis, invoice customers and
collect payments may be impaired. The Company can not reasonably estimate at
this time the amount of lost revenue or additional expenses that might be
expected in this scenario. Failure to implement the project on a timely basis
could have a material adverse effect on the Company.
The Company currently does not have a contingency plan in place. However,
the Company continually evaluates the status of completion and whether or not
a contingency plan is or may be necessary. The Company would tailor any
contingency plan to address the issue in question and attempt to minimize the
impact upon the Company's operations and customers.
The Company estimates that the total project cost will be approximately $32.7
million, of which approximately 70.0% will be expensed and 30.0% will be
capitalized. Through March 31, 1999, the Company incurred expenditures of
approximately $25.6 million ($18.2 million expense and $7.4 million capital)
related to the project. The project is being funded with cash flows from
operations. The estimated cost of the project has not constrained the
Company's information systems budget or materially affected other necessary
information systems activities.
The costs and completion date of the project are based on the best estimates
of management, which were derived utilizing numerous assumptions of future
events, including the continued availability of certain technical and
consulting resources. There can be no guarantee that these estimates are
accurate. Actual results could differ materially from those anticipated and,
therefore, could have a material adverse effect on the Company's operations.
9
<PAGE>
As the year 2000 issue is a global concern, the Company's operations could be
materially adversely affected by circumstances beyond its control. Disruptions
in the economy generally resulting from year 2000 issues could materially
adversely affect the Company. Additionally, the year 2000 readiness of the
Company's vendors, dealers and other third parties (such as utility companies,
the U.S. government and customers) on which it relies could impact the
Company's operations. Although the Company's systems do not interface directly
with those of third parties, the inability of these other parties to complete
their year 2000 initiatives in a timely manner could have a material adverse
effect on the Company.
The Company has no means of ensuring that its vendors, dealers and other third
parties will be year 2000 compliant in a timely manner. However, the Company
is actively working to determine the year 2000 readiness of these parties and
to determine the actions, if any, that would be necessary to help minimize any
potential adverse impact on the Company. The Company is formally communicating
with vendors, dealers and certain other third parties through questionnaires
and on-site visits. For those vendors that the Company deems to be at risk of
not being adequately prepared for the year 2000, the Company has or will
attempt to seek alternate sources for procuring product or supplies, build
inventories or develop an appropriate contingency plan. To date, the Company
is not aware of any third-party year 2000 issue that is expected to materially
adversely impact the Company's operations.
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, and Section 21E of the Securities Exchange Act of
1934, as amended, which represent the Company's expectations or beliefs
concerning future events. Forward-looking statements relate to future
operations, strategies, financial results or other developments and are not
based on historical information. In particular, statements using verbs such as
"anticipates," "believes," "estimates," "expects" or words of similar meaning
generally involve forward-looking statements.
The Company cautions that its forward-looking statements are further qualified
by important factors that could cause actual results to differ materially from
those in the forward-looking statements. Such factors include, without
limitation, the highly competitive nature of the market in which the Company
competes, including the introduction of new products, pricing changes by the
Company's competitors and growth rates of the office systems category; risks
associated with the Company's growth strategy, including the risk that the
Company's introduction of new products will not achieve the same degree of
success achieved historically by the Company's products; implementation of the
Company's information systems project, which could impair the Company's
operations if not implemented successfully or on time; the Company's dependence
on key personnel; the ability of the Company to maintain its relationships with
its dealers; the Company's indebtedness, which requires a 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; the Company's reliance on its patents and other
intellectual property; environmental laws and regulations, including those that
may be enacted in the future, that affect the ownership and operation of the
Company's manufacturing plants; risks relating to potential labor disruptions;
fluctuations in foreign currency exchange rates; possible risks relating to
year 2000 issues; and fluctuations in industry revenues driven by a variety of
macroeconomic factors, including white-collar employment levels and corporate
cash flows, 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.
10
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
During the normal course of business, the Company is routinely subjected to
market risk associated with interest rate movements and foreign currency
exchange rate movements. Interest rate risk arises from the Company's debt
obligations and related interest rate collar agreements. Foreign currency
exchange rate risk arises from the Company's foreign operations and purchases
of inventory from foreign suppliers.
With the exception of the Company's variable rate debt obligation, there has
been no material change in the carrying amounts or fair values of the Company's
financial instruments or its exposure to market risk since the disclosure in
the Company's annual report on Form 10-K for the year ended December 31, 1998.
Regarding the variable rate debt, the Company had $86.0 million of such debt
outstanding at March 31, 1999, which is an increase of $25.0 million from
December 31, 1998. The fair value of this debt continues to approximate its
carrying amount.
11
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
On or about March 24, 1999, five class action complaints (Stark v. Knoll, Inc.,
---------------------
et al., No. 17049NC; Guido v. Warburg, Pincus & Co., et al., No. 17052NC;
- ------ --------------------------------------
Marotta v. Knoll, Inc., et al., No. 17053NC; Finkelstein v. Knoll, Inc., et
- ------------------------------ ------------------------------
al., No. 17055NC; Rausch v. Knoll, Inc., et al., No 17059NC) were filed in the
- --- -----------------------------
Court of Chancery for the State of Delaware, New Castle County, relating to the
proposal by Warburg and certain members of Knoll management to purchase all
of the outstanding shares of the Company's common stock owned by public
stockholders for a price of $25.00 per share, which was previously discussed
in Note 2 to the unaudited condensed consolidated financial statements. The
defendants named in the complaints are the Company, Burton B. Staniar, John W.
Amerman, Robert J. Dolan, Jeffrey A. Harris, Sidney Lapidus, Kewsong Lee,
John L. Vogelstein, John H. Lynch, Warburg, Pincus & Co., Warburg and E.M.
Warburg, Pincus & Co., LLC. The complaints allege breach of fiduciary duty on
the part of Warburg and the Company's management in the proposed purchase of
such shares of common stock and seek a preliminary injunction, damages and
rescission. Due to the very early stage of the litigation at this time, and
the inherent uncertainties in litigation, the Company is unable to predict
what impact, if any, such litigation may have on the Company or the proposed
transaction.
Item 2. Changes in Securities and Use of Proceeds
- --------------------------------------------------
Restrictions on Dividends
The credit agreement governing the Company's revolving credit facility and the
indenture relating to the Company's 10.875% Senior Subordinated Notes due 2006
limit the Company's ability to pay dividends to its stockholders. The Company
has not paid any dividends on its common stock, and any future determination
to pay dividends will depend on the Company's results of operations, financial
condition, capital requirements, contractual restrictions and other factors
deemed relevant by the Board of Directors.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a. Exhibits:
27 Financial Data Schedule
b. Current Reports on Form 8-K:
On March 24, 1999, the Company filed a report on Form 8-K dated March 23,
1999. In that Form 8-K under Item 5 -- Other Events, the Company reported
that it had issued a press release announcing that it had received a
proposal from Warburg and certain members of the Company's management to
acquire all of the outstanding shares of the Company's common stock owned
by public shareholders for a price of $25.00 per share. The press release
and the letter from Warburg making such proposal were included as exhibits
to the Form 8-K.
12
<PAGE>
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.
Date: May 14, 1999 By: /s/ Burton B. Staniar
-------------------------
Burton B. Staniar
Chairman of the Board
Date: May 14, 1999 By: /s/ Douglas J. Purdom
-------------------------
Douglas J. Purdom
Senior Vice President and
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -------------
27 Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 17,906
<SECURITIES> 0
<RECEIVABLES> 116,686
<ALLOWANCES> 0
<INVENTORY> 79,682
<CURRENT-ASSETS> 244,362
<PP&E> 261,361
<DEPRECIATION> 78,473
<TOTAL-ASSETS> 689,809
<CURRENT-LIABILITIES> 115,628
<BONDS> 194,205
0
0
<COMMON> 406
<OTHER-SE> 333,945
<TOTAL-LIABILITY-AND-EQUITY> 689,809
<SALES> 209,210
<TOTAL-REVENUES> 209,210
<CGS> 127,663
<TOTAL-COSTS> 127,663
<OTHER-EXPENSES> 45,413
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,222
<INCOME-PRETAX> 31,514
<INCOME-TAX> 13,120
<INCOME-CONTINUING> 18,394
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,394
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.45
</TABLE>
