EAST GREENVILLE, Pa., Oct. 15 /PRNewswire-FirstCall/ -- Knoll, Inc.
(NYSE: KNL) today announced results for the third quarter ended
September 30, 2009. Net sales were $181.3 million for the quarter,
a decrease of 36.1% from the third quarter of 2008. Operating
profit was $16.8 million, or 9.3% of net sales, a decrease of 59.1%
from the third quarter of 2008. Net income was $5.7 million, a
decrease of 76.4% over the third quarter of 2008. Diluted earnings
per share was $0.13 compared to $0.52 diluted earnings per share in
the prior year, a decrease of 75.0%. "While demand for our products
continues to be severely impacted by the global economic crisis, we
are pleased that we were able to continue to report industry
leading levels of operating profitability," stated Andrew Cogan,
CEO. "Our strategy of diversifying our sources of revenue into high
design content business continued to buffer our results. The roll
out of our innovative, award winning Generation by Knoll(TM) work
chair continued a pace in the quarter as we began commercial
shipments and placed chairs in all our North American showrooms.
Both the funnel of activity and the customer, architect and
designer response to the chair gives us great confidence that
Generation by Knoll will be a meaningful contributor to our results
in the years ahead." Third Quarter Results Third quarter 2009
financial results highlights follow: Dollars in Millions Except Per
Share Data Three Months Ended Percent 9/30/09 9/30/08 Change
--------- --------- ------ Net Sales $181.3 $283.5 (36.1) % Gross
Profit 61.3 104.2 (41.2) % Operating Expenses 44.4 63.1 (29.6) %
Operating Profit 16.8 41.1 (59.1) % Net Income 5.7 24.1 (76.4) %
Earnings Per Share - Diluted .13 .52 (75.0) % Backlog 121.7 203.1
(40.1) % Net sales for the quarter were $181.3 million, a decrease
of $102.2 million, or 36.1%, from the third quarter of 2008. The
decrease in sales for the quarter was experienced across all
product categories and geographies. The largest declines were
experienced internationally and in our office systems product
category. Backlog of unfilled orders at September 30, 2009 was
$121.7 million, a decrease of $81.4 million, or 40.1%, compared to
unfilled orders at September 30, 2008. Gross profit for the third
quarter of 2009 was $61.3 million, a decrease of $42.9 million, or
41.2%, from the same period in 2008. Gross margin decreased to
33.8% in the third quarter of 2009 from 36.8% in the same quarter
of 2008. The decrease in gross margin largely resulted from lower
absorption of our fixed costs as a direct result of the lower sales
volumes and price deterioration. Operating expenses for the quarter
were $44.4 million, or 24.5% of sales, compared to $63.1 million,
or 22.3% of sales, for the third quarter of 2008. The decrease in
operating expenses during the third quarter of 2009 was in large
part due to decreased spending in conjunction with our lower sales
volumes and a gain related to a reduction in our post retirement
medical benefits of $1.1 million. Decreased sales and performance
related compensation accounted for approximately $8.9 million of
the reduction in operating expenses. Our operating profit for the
third quarter of 2009 was $16.8 million, a decrease of $24.3
million, or 59.1%, from the same period in 2008. Operating profit
as a percentage of sales was 9.3%. Interest expense in the third
quarter of 2009 increased $0.3 million over the third quarter of
2008. The increase in interest expense is the result of two
interest rate swap agreements that went into effect at the end of
the second quarter of 2009. Other expense for the third quarter of
2009 was $3.1 million which included $3.2 million of foreign
exchange losses offset by $0.1 million of miscellaneous income.
Other income for the third quarter 2008 was $2.1 million. The
effective tax rate was 40.5% for the quarter, as compared to 39.0%
for the same period last year. The increase in the effective tax
rate is largely due to the mix of pretax income in the countries in
which we operate. Net income for the third quarter of 2009 was $5.7
million, or $0.13 diluted earnings per share, as compared to $24.1
million, or $0.52 diluted earnings per share, for the same quarter
in 2008. Cash generated from operations during the third quarter
2009 was $29.5 million, compared to $50.3 million in the same
period of 2008. Capital expenditures for the third quarter 2009
totaled $1.2 million compared to $3.2 million for 2008. We repaid
$28.1 million of debt during the third quarter of 2009 compared to
$21.0 million during 2008. We also paid a quarterly dividend of
$0.9 million, or $0.02 per share, in the third quarter of 2009
compared to $5.6 million, or $0.12 per share, in the third quarter
of 2008. "In this economic environment, a top priority continues to
be liquidity preservation and capital structure flexibility as
demonstrated by our $28 million debt pay down and our filing of a
Universal Shelf Registration Statement with the SEC earlier this
quarter," stated Barry McCabe, EVP & CFO. Conference Call
Information Knoll will host a conference call on Thursday, October
15, 2009 at 10:00 A.M. EST to discuss its financial results. The
call will include slides; participants are encouraged to listen to
and view the presentation via webcast at http://www.knoll.com/; go
to "About Knoll" and click on "Investor Relations". The conference
call may also be accessed by dialing: North America 866 515-2914
International 617 399-5128 Passcode 77439361 A replay of the
webcast can be viewed by visiting the Investor Relations section of
the Knoll corporate website. In addition, an audio replay of the
conference call will be available through October 22, 2009 by
dialing 888 286-8010. International replay: 617 801-6888 (Passcode:
82708658). About Knoll Since 1938, Knoll has been recognized
internationally for creating workplace and residential furnishings
that inspire, evolve and endure. Today, our commitment to modern
design, our understanding of the workplace and our dedication to
sustainable design has yielded a unique portfolio of products that
respond and adapt to changing needs. Knoll is aligned with the U.S.
Green Building Council and can help companies, healthcare
organizations and educational institutions achieve Leadership in
Energy and Environmental Design (LEED®) workplace certification.
Knoll is the contract furniture industry's first member of the
Chicago Climate Exchange (CCX®) and is the founding sponsor of the
World Monuments Fund Modernism at Risk program. Cautionary
Statement Regarding Forward-Looking Information This press release
includes 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. All statements
regarding Knoll, Inc.'s expected future financial position, results
of operations, revenue levels, cash flows, business strategy,
budgets, projected costs, capital expenditures, products,
competitive positions, growth opportunities, plans and objectives
of management for future operations, as well as statements that
include words such as "anticipate," "if," "believe," "plan,"
"goals, " "estimate," "expect," "intend," "may," "could," "should,"
"will," and other similar expressions are forward- looking
statements. Such forward-looking statements are inherently
uncertain, and readers must recognize that actual results may
differ materially from the expectations of Knoll management. Knoll
does not undertake a duty to update such forward-looking
statements. 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 office furniture solutions, changes in the competitive
marketplace, changes in the trends in the market for office
furniture, the financial strength and stability of our suppliers,
customers and dealers, access to capital, and other risks
identified in Knoll's annual report on Form 10-K, and other filings
with the Securities and Exchange Commission. Many of these factors
are outside of Knoll's control. Contacts Investors: Barry L. McCabe
Executive Vice President and Chief Financial Officer Tel 215
679-1301 Media: David E. Bright Senior Vice President,
Communications Tel 212 343-4135 KNOLL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
data) Three Months Ended Nine Months Ended September 30, September
30, 2009 2008 2009 2008
(Unaudited)(Unaudited)(Unaudited)(Unaudited) Sales $181,282
$283,517 $596,088 $843,861 Cost of sales 120,009 179,319 389,319
548,253 ---------- ---------- ---------- ---------- Gross profit
61,273 104,198 206,769 295,608 Selling, general, and administrative
expenses 44,366 63,109 146,271 184,087 Restructuring and other
charges 110 - 8,422 3,432 ---------- ---------- ----------
---------- Operating income 16,797 41,089 52,076 108,089 Interest
expense 4,054 3,766 9,681 12,663 Other expense (income), net 3,112
(2,137) 4,535 (1,878) ---------- ---------- ---------- ----------
Income before income tax expense 9,631 39,460 37,860 97,304 Income
tax expense 3,905 15,398 14,535 35,046 ---------- ----------
---------- ---------- Net income $5,726 $24,062 $23,325 $62,258
---------- ---------- ---------- ---------- Earnings per share:
Basic $.13 $.52 $.51 $1.32 Diluted $.13 $.52 $.51 $1.32
Weighted-average shares outstanding: Basic 45,408,555 46,291,785
45,366,081 47,014,263 Diluted 45,417,593 46,522,590 45,370,009
47,178,379 ---------- ---------- ---------- ---------- KNOLL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except
per share data) September 30, December 31, 2009 2008 ---- ----
(Unaudited) ASSETS Current assets: Cash and cash equivalents
$13,626 $14,903 Customer receivables, net 96,096 126,051
Inventories 85,341 100,225 Prepaid and other current assets 21,492
19,069 -------- -------- Total current assets 216,555 260,248
Property, plant, and equipment, net 136,394 132,168 Intangible
assets, net 299,381 299,120 Other noncurrent assets 8,054 6,124
-------- -------- Total Assets $660,384 $697,660 -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
maturities of long-term debt $141 $121 Accounts payable 63,073
78,442 Other current liabilities 86,206 116,457 -------- --------
Total current liabilities 149,420 195,020 Long-term debt 310,148
337,258 Other noncurrent liabilities 120,788 120,763 --------
-------- Total liabilities 580,356 653,041 -------- --------
Stockholders' equity 80,028 44,619 -------- -------- Total
Liabilities and Stockholders' Equity $660,384 $697,660 --------
-------- KNOLL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Dollars in thousands) Nine Months Ended September 30,
-------------------------------- 2009 2008 ---- ---- (Unaudited)
(Unaudited) Net income $23,325 $62,258 -------- -------- Cash Flows
provided by Operating Activities 42,462 97,537 Cash Flows used in
Investing Activities (12,247) (9,803) Cash Flows used in Financing
Activities (35,108) (75,471) Effect of exchange rate changes on
cash and cash equivalents 3,616 (1,590) -------- --------
(Decrease) increase in cash and cash equivalents (1,277) 10,673
Cash and cash equivalents at beginning of period 14,903 17,975
-------- -------- Cash and cash equivalents at end of period
$13,626 $28,648 -------- -------- DATASOURCE: Knoll, Inc. CONTACT:
Investors, Barry L. McCabe, Executive Vice President and Chief
Financial Officer, +1-215-679-1301, , or Media, David E. Bright,
Senior Vice President, Communications, +1-212-343-4135, , both of
Knoll, Inc. Web Site: http://www.knoll.com/
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