Kimball International, Inc. Reports Fourth Quarter and Fiscal Year 2007 Results.JASPER, Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. . -- Kimball International Kimball International, Inc. NASDAQ: KBALB is a manufacturer of furniture and industrial electronics. Founded by W.W. Kimball in 1857 as a piano dealership, it was discontinued after 1996 but remains one of America's oldest and most distinguished keyboard instrument , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :KBALB) today announced financial results for the fourth quarter and fiscal year 2007, which ended June 30, 2007. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight , gross profit, selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , and income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the discussed below exclude the results of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for all periods presented. Consolidated Overview Net sales for the fourth quarter of fiscal year 2007 were $338.3 million, an increase of 3% over net sales of $328.6 million in the fourth quarter of fiscal year 2006. Fourth quarter fiscal 2007 net sales included $36.5 million of sales from an acquisition in the Company's Electronic Contract Assemblies segment that was completed in February 2007. The fourth quarter fiscal year 2007 net sales comparison to the prior year was also impacted by a $32 million reduction in the price of finished product sold to a customer in the Electronic Contract Assemblies segment. The cost of raw material which the Company purchases from this same customer was reduced by a similar amount, and therefore, this pricing change had no impact on income from continuing operations. Additionally, the Company had no sales of contract furniture private label products during the fourth quarter of fiscal year 2007 due to a planned exit of this furniture product line, compared to $7.5 million of sales in the same quarter of the prior year. Net sales for the fourth quarter of fiscal year 2007, exclusive of the above changes, increased 4% over the fourth quarter of 2006. Income from continuing operations in the fourth quarter of fiscal year 2007 was $4.4 million, or $0.11 per Class B diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, inclusive of inclusive of prep. Taking into consideration or account; including. $0.2 million, or $0.01 per Class B diluted share, of after-tax charges associated with restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities. This was a decrease of $7.1 million from income from continuing operations for the fourth quarter of the prior year of $11.5 million, or $0.30 per Class B diluted share, which included $0.5 million, or $0.01 per Class B diluted share, of after-tax restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and after-tax income of $1.3 million, or $0.03 per Class B diluted share, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc funds received as part of a Polish offset credit program for investments made in the Company's Poland operation. Consolidated gross profit as a percent of net sales was 20.4% in the current year fourth quarter compared to 20.9% in the prior year. Gross profit as a percent of net sales was down in the Furniture segment as competitive discounting in the fourth quarter of the current fiscal year on select office furniture products was greater than in the fourth quarter of last year, while product mix also shifted to lower margin product. Gross profit as a percent of net sales in the Furniture segment in the fourth quarter of fiscal year 2007 improved over the reduced percentage in the fiscal year 2007 third quarter due to leverage gained from higher volume and a change in product sales mix sales mix See product mix. . Gross profit as a percent of net sales for the fourth quarter increased in the Electronic Contract Assemblies segment compared to the prior year due to the February 2007 acquisition and the customer pricing adjustment discussed above, which more than offset a shift in product sales mix to lower-margin products. Consolidated selling, general and administrative (SG&A) costs for the fourth quarter of fiscal year 2007 increased in dollars and as a percent of net sales due to the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. SG&A costs of the acquisition in the Electronic Contract Assemblies segment and higher investments in field sales personnel and product marketing in the Furniture segment, offset in part by a decline in incentive compensation costs driven by lower earnings. Other income was $1.9 million in the fourth quarter of fiscal year 2007 compared to $4.6 million in the same period last year. The decline is primarily the result of the receipt of $2.2 million pre-tax funds in the prior year relating to the Polish offset credit program. The fiscal year 2007 fourth quarter effective tax rate was 21% compared to 18% in the prior year fourth quarter. The fiscal year 2007 fourth quarter effective tax rate was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by $0.8 million of after-tax income for adjustments to income tax accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. resulting from the closure of prior year tax audits and lower than expected state income taxes. The prior year fourth quarter effective tax rate was favorably impacted by $1.8 million of after-tax income for adjustments to income tax accruals resulting from the closure of prior year tax audits. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the fourth quarter of fiscal year 2007 was $19.8 million compared to $21.1 million in the fourth quarter of last year. The Company's net cash position from an aggregate of cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments less short-term borrowings decreased to $80.4 million at June 30, 2007 compared to $148.6 million at June 30, 2006 primarily related to the cash outflow of $46.4 million for the acquisition completed in the fiscal year 2007 third quarter. For fiscal year 2007, annual net sales were $1.3 billion, which is an increase of 16% over fiscal year 2006 annual sales of $1.1 billion. Acquisitions completed in the fourth quarter of fiscal year 2006 and in the third quarter of fiscal year 2007 within the Electronic Contract Assemblies segment contributed sales of $319.3 million in fiscal year 2007 and $61.5 million in fiscal year 2006. The fiscal year 2007 net sales comparison to prior year was also impacted by the previously mentioned reduction in the price of finished product sold to a customer, which also had a corresponding reduction to the cost of raw material purchased from this customer. The fiscal year 2007 annual impact of the pricing change was a reduction to both net sales and material cost of $64 million, but had no impact on income from continuing operations. Income from continuing operations for fiscal year 2007 was $23.3 million, or $0.60 per Class B diluted share, inclusive of after-tax restructuring charges of $0.9 million, or $0.02 per Class B diluted share. Fiscal year 2006 income from continuing operations was $28.6 million, or $0.75 per Class B diluted share, including after-tax restructuring charges of $2.8 million, or $0.07 per Class B diluted share. Operating cash flow for the fiscal year 2007 annual period was $44.4 million compared to $76.6 million in the prior fiscal year. James C. Thyen, Chief Executive Officer and President, stated, "We were pleased to see improvement in our Furniture segment over the third quarter as gross profit improved along with higher sales volumes. Our two new office systems products that were available for order late in the third quarter were gaining order volume during the fourth quarter, and our Hospitality product line continued its trend of strong year-over-year sales growth. Our new Electronics China facility has received several new program awards from multiple customers, and it achieved production certification and began shipping product late in the fourth quarter." Mr. Thyen added, "During the fourth quarter, we purchased 266,427 shares of Class B stock under a 2002 Stock Buy Back plan. We continue to see strong investment opportunities within our businesses, but will opportunistically buy-back Kimball shares when the price appears advantageous." Furniture Segment Furniture segment net sales in the fourth quarter of fiscal year 2007 of $153.2 million decreased 2% from net sales of $155.6 million in the prior year fourth quarter. Fiscal year 2007 fourth quarter net sales of branded furniture products, which include office and hospitality furniture, of $153.2 million increased 3% when compared to the prior year net sales on the strength of hospitality product sales. There were no net sales of contract private label products during the fourth quarter of fiscal year 2007 as the planned exit of this product line is complete. Contract private label product net sales totaled $7.5 million in the prior year fourth quarter. Income from continuing operations in this segment for the fourth quarter of fiscal year 2007 was $3.6 million, a decrease of $2.3 million from the same period last year. After-tax restructuring costs were $0.1 million in both the fourth quarter of fiscal year 2007 and the fourth quarter of fiscal year 2006. Gross profit as a percent of net sales in this segment for the fourth quarter declined 1.6 percentage points from the prior year primarily related to a shift in product mix to lower margin products and higher discounting on select office furniture products, which were partially offset by price increases on select product. Gross profit as a percent of net sales in the fourth quarter of fiscal year 2007 increased over the most recent third quarter due to higher volume and a change in product sales mix. Fourth quarter SG&A dollars in this segment increased 1% over the prior year as lower incentive compensation costs were more than offset by increases in other SG&A costs, including increased investments for additional sales staff and for product marketing and promotion in support of the Company's sales growth strategy. Electronic Contract Assemblies Segment During the third quarter of fiscal year 2007 the Company completed the acquisition of Reptron Electronics, Inc., a U.S. based electronics manufacturing services Electronic manufacturing services (EMS) is term used for companies that design, test, manufacture, distribute and provide return/repair services for electronic component and assemblies for original equipment manufacturers (OEMs). company which provides engineering services, electronics manufacturing services, and display integration services. This acquisition increases the capabilities and expertise of the Company's Electronic Contract Assemblies segment in the medical electronics and high-end industrial sectors. The purchase price was $50.9 million including costs to acquire the stock, the payoff of certain debt, the assumption of acquisition-related liabilities, and direct costs of the acquisition. The operating results of the acquisition are included in the Company's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge as of the acquisition date. Net sales for the fourth quarter of fiscal year 2007 in the Electronic Contract Assemblies segment of $185.1 million increased 7% over net sales of $173.0 million in the prior year. The acquisition completed in the current year third quarter contributed $36.5 million in net sales during the fourth quarter. The fourth quarter fiscal year 2007 net sales comparison to prior year for this segment was also impacted by the previously mentioned $32 million reduction in the price of finished product sold to a customer, which had a corresponding reduction to the cost of raw material purchased from this customer. Net sales to customers in the medical and industrial controls industries were higher in the fourth quarter compared to last year while net sales to customers in the automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. declined compared to the prior year. This segment generated a loss from continuing operations for the current year fourth quarter of ($0.1) million, compared to income from continuing operations of $3.6 million in the prior year fourth quarter. The prior year fourth quarter earnings in this segment include the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of the Polish offset credit funds. The decline in earnings also resulted from a decline in net sales of higher margin mature products, primarily automotive products, reaching end of life and costs related to the start-up Start-up The earliest stage of a new business venture. of a manufacturing facility in China. The Company has received final customer approval to start production in this facility. There were minimal sales recorded for the China facility during the current year fourth quarter. The earnings per share impact of the start-up losses at the China facility approximated $0.03 per Class B diluted share in the current year fourth quarter compared to $0.01 per Class B diluted share in the prior year fourth quarter. SG&A costs increased in this segment due to the incremental SG&A costs from the acquisition. There were no restructuring costs in the current year fourth quarter in this segment and $0.3 million after-tax restructuring costs in the fourth quarter of the prior fiscal year. Non-GAAP Financial Measures This press release contains a non-GAAP financial measure. A non-GAAP financial measure is a numerical numerical expressed in numbers, i.e. Arabic numerals of 0 to 9 inclusive. numerical nomenclature a numerical code is used to indicate the words, or other alphabetical signals, intended. measure of a Company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. in the statement of income, balance sheet or statement of cash flows of the Company. The non-GAAP financial measure used within this release is fourth quarter fiscal year 2007 net sales adjusted for acquisitions, contract private label sales and a customer pricing change. A reconciliation of the reported GAAP numbers to this non-GAAP financial measure is included in the Financial Highlights table below. Management believes it is useful for investors to easily see the impact of these items on net sales to assist in understanding the variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality to the fourth quarter of the prior year. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and are subject to risks and uncertainties including, but not limited to, significant volume reductions from key contract customers, loss of key customers or suppliers within specific industries, availability or cost of raw materials, increased competitive pricing pressures reflecting excess industry capacities and unexpected integration issues with acquisitions. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filing for the period ended June 30, 2006. Conference Call / Webcast Kimball International will conduct its fourth quarter financial results conference call beginning at 2:00 PM Eastern Time today, August 2, 2007. To listen to the live conference call, dial 866-700-6979, or for international calls, dial 617-213-8836. A webcast of the live conference call may be accessed by visiting Kimball's Investor Relations Investor relations The process by which the corporation communicates with its investors. website at www.ir.kimball.com. For those unable to participate in the live webcast, the call will be archived at www.ir.kimball.com within two hours of the conclusion of the live call and will remain there for approximately 90 days. A telephone replay of the conference call will be available within two hours after the conclusion of the live event through August 16, 2007, at 888-286-8010 or internationally at 617-801-6888. The pass code to access the replay is 64901681. About Kimball International, Inc. Recognized with a reputation for excellence, Kimball International is committed to a high performance culture that values personal and organizational commitment In the study of organizational behavior and Industrial/Organizational Psychology, organizational commitment is, in a general sense, the employee's psychological attachment to the organization. to quality, reliability, value, speed and ethical behavior. Kimball employees know they are part of a corporate culture that builds success for Customers while enabling employees to share in the Company's success through personal, professional and financial growth. Kimball International, Inc. provides a variety of products from its two business segments: the Furniture segment and the Electronic Contract Assemblies segment. The Furniture segment provides furniture for the office and hospitality industries sold under the Company's family of brand names. The Electronic Contract Assemblies segment provides engineering and manufacturing services which utilize common production and support capabilities to a variety of industries globally. For more information about Kimball International, Inc., visit the Company's website on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.kimball.com. "We Build Success" Financial Highlights for the quarter and fiscal year ended June 30, 2007, follow: [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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