Kimball International, Inc. Reports Third Quarter Fiscal 2006 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 third quarter of fiscal year 2006, which ended March 31, 2006. Sales, gross margin, 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. Consolidated Overview Fiscal year 2006 third quarter 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 of $268.0 million increased 4% over net sales of $258.5 million reported for the fiscal 2005 third quarter. Third quarter net sales in the Furniture and Cabinets segment increased 7% while sales in the Electronic Contract Assemblies segment approximated the prior year. Income from continuing operations in the current year third quarter was $6.6 million or $0.17 per Class B share, inclusive of inclusive of prep. Taking into consideration or account; including. after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. 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. Excluding the 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. , income from continuing operations in the current year third quarter was $7.3 million, or $0.19 per Class B share. The Company recorded income from continuing operations in the prior year third quarter of $3.1 million, or $0.08 per Class B share. There were no restructuring charges recorded in the third quarter of the prior year. Including a gain from discontinued operations of $0.7 million after-tax or $0.02 per Class B share, fiscal year 2006 third quarter net income was $7.3 million, or $0.19 per Class B share. The gain from discontinued operations was primarily related to a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. adjustment to the previously recorded estimated loss on the disposal of a polyurethane polyurethane Any of a class of very versatile polymers that are made into flexible and rigid foams, fibres, elastomers (elastic polymers), surface coatings, and adhesives. components business operation that was completed during the third quarter and various accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. adjustments pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to previous discontinued operations. For the prior year third quarter, net income was $1.3 million, or $0.04 per Class B share, including an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. from discontinued operations of ($1.8) million after-tax, or ($0.04) per Class B share. The Company's consolidated gross margin percentage in the third quarter of fiscal year 2006 improved to 23.0%, compared to 20.7% in the prior year. The consolidated gross margin increase was attributable to improvements in the Furniture and Cabinets segment primarily due to the leverage achieved from higher sales volume, productivity gains at select units and price increases on select products within this segment. Consolidated selling, general and administrative (SG&A) costs for the third quarter of fiscal year 2006 increased in both dollars and as a percent of sales compared to the prior year as lower selling and administrative costs were offset by higher incentive compensation costs. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charges in the current year third quarter totaled ($1.1) million and included various facility exit costs, employee transition costs, asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and accelerated amortization costs within both segments. Fiscal year 2006 third quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. including restructuring charges improved to $6.2 million over the $1.5 million reported in the same quarter last year on the higher sales level and improved margins. 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 third quarter of fiscal year 2006 totaled $33.7 million compared to $33.2 million in the third quarter of last year. The Company's 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. investment balance increased to $172.2 million at March 31, 2006 compared to $117.5 million at June June: see month. 30, 2005 primarily due to the generation of positive operating cash flow and proceeds received from the sale of discontinued operations during the fiscal year. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. C. Thyen, Chief Executive Officer and President, stated, "In our second quarter earnings conference call, we discussed our strategy to grow and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our Contract Electronics segment through both organic growth and acquisitions. In early April, we announced the purchase of the manufacturing operation for Bayer HealthCare's Diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler Division located in Bridgend Coordinates: Bridgend (Welsh: Pen-y-bont ar Ogwr) is a town in the traditional county of Glamorgan and the main town in the County Borough of Bridgend in South Wales. It is roughly midway between Cardiff and Swansea. , Wales Wales, Welsh Cymru, western peninsula and political division (principality) of Great Britain (1991 pop. 2,798,200), 8,016 sq mi (20,761 sq km), west of England; politically united with England since 1536. The capital is Cardiff. , UK. This acquisition provides our Contract Electronics segment with a solid cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to for our global medical platform strategy. The Bridgend team and their capabilities will significantly add to our current package of value that we offer to our medical customers. With this acquisition, Bayer will become the largest customer of Kimball International. Because the acquisition was not completed until April, operating results of this facility are not included in our third quarter earnings." Mr. Thyen concluded, "Within our Furniture and Cabinets segment, we have seen improvement in the recent performance of our branded furniture products which includes both office furniture and hospitality furniture. This quarter was the second consecutive quarter that we experienced a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. increase in sales of our branded furniture products when compared to the applicable prior year quarter. Our strategic direction to tighten our focus on these key markets within this segment is allowing us to capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. upon current opportunities available in these markets. We have also made strides in improving our profitability in this segment. We recognize there is still more work to be done. We continue to execute our previously announced restructuring plan of consolidating our various business functions within this segment." Furniture and Cabinets Segment The Furniture and Cabinets segment fiscal year 2006 third quarter net sales of $156.9 million increased 7% from the $146.9 million reported in the prior year third quarter. Sales of branded furniture products, which include office and hospitality furniture, experienced a double-digit increase when compared to the prior year while sales of contract private label products, as planned, decreased from the prior year. Income from continuing operations in this segment for the third quarter of fiscal year 2006 increased $4.3 million from the prior year. Included in the current year third quarter earnings was ($0.5) million of after-tax restructuring costs consisting of exit costs associated with the consolidation of two Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum operations into one facility and costs resulting from the consolidation of various business functions within this segment. Gross margin as a percent of sales in this segment continued to improve over both last year third quarter and the most recent second quarter. When compared to the prior year, earnings in the current year third quarter were aided by price increases on select products and improved labor productivity. While SG&A costs increased in dollars in the third quarter when compared to last year primarily on higher incentive compensation costs, SG&A costs declined as a percent of sales. Results continued to be negatively impacted during the quarter by inefficiencies associated with the facility consolidation activities in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . Including an after-tax gain of $0.7 million from discontinued operations, net income in this segment was $5.4 million in the third quarter of fiscal year 2006. The gain from discontinued operations was primarily related to a favorable adjustment to the previously recorded estimated loss on the disposal of a polyurethane components business operation that was completed during the third quarter and various accrual adjustments pertaining to previous discontinued operations. The Company recorded a net loss of ($1.3) million in this segment for the third quarter of the prior year which included a ($1.8) million after-tax loss from discontinued operations. Electronic Contract Assemblies Segment As a result of excess capacity in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , in February February: see month. 2006 the Company approved a restructuring plan within the Electronic Contract Assemblies segment to exit a manufacturing facility located in northern Indiana Northern Indiana is the region of Indiana including 26 counties bordering parts of Illinois, Michigan, and Ohio. The area is generally sub-classified into other regions. The northwest is economically and culturally intertwined with Chicago, and is considered part of the Chicago . As part of this restructuring plan, the production for select programs will be transferred to other locations within this segment. Operations are scheduled to cease in the Company's first quarter of fiscal year 2007. The Company estimates total pre-tax restructuring charges related to this plan will be approximately ($1.6) million. The impact of pre-tax restructuring charges in the current year third quarter was ($0.4) million. The Electronic Contract Assemblies segment fiscal year 2006 third quarter net sales of $111.1 million approximated net sales of $111.3 million for the same quarter last year, as higher sales to customers in the industrial control industry were offset by lower sales to customers in the automotive and medical industries. Income from continuing operations in this segment for the third quarter of fiscal year 2006 decreased $0.7 million from the same period last year as the segment experienced a sales mix sales mix See product mix. shift to lower margin product and manufacturing inefficiencies at one facility. Partially offsetting the lower margins, the current year third quarter earnings were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by lower costs related to new product introductions and lower SG&A costs when compared to the prior year. Reclassifications The Company changed its classification of gains and losses on the sale of property and equipment, previously shown in non-operating income, to selling, general and administrative expense for each of the periods presented in the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Statements of Income. Amounts reclassified in the three and nine month periods ended March 31, 2005 were gains of, in millions, $0.2 and $0.7, respectively. In the three and nine month periods ended March 31, 2006, the Company recognized, in millions, $0.1 and $1.2, respectively, of gains on the sale of property and equipment as selling, general and administrative expense. Non-GAAP Financial Measures This press release contains non-GAAP financial measures. 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 measures used within this release are income from continuing operations excluding restructuring charges and earnings per share excluding restructuring charges. A reconciliation of the reported GAAP numbers to these non-GAAP financial measures is included in the Financial Highlights tables below. Management believes it is useful for investors to understand how its core operations performed without the effects of costs incurred in executing its restructuring plans as inclusion of these costs make results less comparable between reporting periods. Excluding these costs allows investors to meaningfully trend, analyze and benchmark the performance of the Company's core operations. Many of the Company's internal performance measures that management uses to make certain operating decisions exclude costs associated with executing its restructuring plans to enable meaningful trending of core operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. over an extended period of time. 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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, 2005. Conference Call / Webcast Kimball International will conduct its third quarter financial results conference call beginning at 2:00 PM Eastern Time today, May 4, 2006. To listen to the live conference call, dial 866-383-8008, or for international calls, dial 617-597-5341. 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 Kimball may refer to: In places in the US:
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 May 18, 2006, at 888-286-8010 or internationally at 617-801-6888. The pass code to access the replay is 83516327. About Kimball International, Inc. Kimball International, Inc. provides a variety of products from its two business segments: the Furniture and Cabinets segment and the Electronic Contract Assemblies segment. The Furniture and Cabinets segment provides furniture for the office and hospitality industries sold under the Company's family of brand names. The Furniture and Cabinets segment also provides engineering and manufacturing services which utilize common production and support capabilities on a contract basis to customers primarily in the residential furniture and cabinets industry. 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 ended March 31, 2006, follow:
Condensed Consolidated Statements of Income
(Unaudited) Three Months Ended
($000's, except per share data) March 31, March 31,
2006 2005
-------------------- -----------------
Net Sales $268,048 100.0% $258,469 100.0%
Cost of Sales 206,488 77.0% 205,012 79.3%
----------- -------- --------- -------
Gross Profit 61,560 23.0% 53,457 20.7%
Selling, General &
Administrative Expenses 54,318 20.3% 51,920 20.1%
Restructuring Expense 1,077 0.4% - 0.0%
----------- -------- --------- -------
Operating Income 6,165 2.3% 1,537 0.6%
Other Income - Net 2,785 1.1% 1,243 0.5%
----------- -------- --------- -------
Income from Continuing
Operations Before Taxes on
Income 8,950 3.4% 2,780 1.1%
Provision (Benefit) for Income
Taxes 2,315 0.9% (317) (0.1%)
----------- -------- --------- -------
Income from Continuing
Operations 6,635 2.5% 3,097 1.2%
Income (Loss) from Discontinued
Operations, Net of Tax 654 0.2% (1,778) (0.7%)
----------- -------- --------- -------
Net Income $7,289 2.7% $1,319 0.5%
=========== ======== ========= =======
Earnings Per Share of Common
Stock:
Basic from Continuing
Operations:
Class A $0.17 $0.08
Class B $0.18 $0.08
Diluted from Continuing
Operations:
Class A $0.17 $0.08
Class B $0.17 $0.08
Basic:
Class A $0.19 $0.03
Class B $0.19 $0.03
Diluted:
Class A $0.19 $0.03
Class B $0.19 $0.04
Average Shares Outstanding
Basic 38,209 38,152
Diluted 38,440 38,721
(Unaudited) Nine Months Ended
($000's, except per share data) March 31, March 31,
2006 2005
------------------- ------------------
Net Sales $809,386 100.0% $790,114 100.0%
Cost of Sales 631,003 78.0% 619,294 78.4%
---------- -------- --------- --------
Gross Profit 178,383 22.0% 170,820 21.6%
Selling, General &
Administrative Expenses 160,678 19.9% 157,186 19.9%
Restructuring Expense 8,475 1.0% 321 0.0%
---------- -------- --------- --------
Operating Income 9,230 1.1% 13,313 1.7%
Other Income - Net 6,270 0.8% 6,520 0.8%
---------- -------- --------- --------
Income from Continuing
Operations Before Taxes on
Income 15,500 1.9% 19,833 2.5%
Provision for Income Taxes 3,895 0.5% 3,266 0.4%
---------- -------- --------- --------
Income from Continuing
Operations 11,605 1.4% 16,567 2.1%
Income (Loss) from Discontinued
Operations, Net of Tax (6,944) (0.9%) (4,117) (0.5%)
---------- -------- --------- --------
Income Before Cumulative Effect
of Change in Accounting
Principle 4,661 0.5% 12,450 1.6%
Cumulative Effect of Change in
Accounting Principle 299 0.1% - 0.0%
---------- -------- --------- --------
Net Income $4,960 0.6% $12,450 1.6%
========== ======== ========= ========
Earnings Per Share of Common
Stock:
Basic from Continuing
Operations:
Class A $0.29 $0.43
Class B $0.31 $0.44
Diluted from Continuing
Operations:
Class A $0.29 $0.42
Class B $0.31 $0.43
Basic:
Class A $0.12 $0.32
Class B $0.13 $0.33
Diluted:
Class A $0.12 $0.31
Class B $0.13 $0.33
Average Shares Outstanding
Basic 38,192 38,137
Diluted 38,332 38,586
Condensed Consolidated Statements of Cash Flows
(Unaudited) Nine Months Ended
($000's) March 31, March 31,
2006 2005
---------------------
Net Cash Flow provided by Operating
Activities $55,560 $55,417
Net Cash Flow provided by (used for)
Investing Activities 4,232 (18,043)
Net Cash Flow used for Financing
Activities (10,252) (17,888)
Effect of Exchange Rates (88) 458
---------- ----------
Net Increase in Cash & Cash Equivalents 49,452 19,944
Cash & Cash Equivalents at Beginning of
Period 57,253 39,991
---------- ----------
Cash & Cash Equivalents at End of Period $106,705 $59,935
========== ==========
Cash & Cash Equivalents $106,705 $59,935
Short-Term Investments 65,543 57,816
---------- ----------
Totals $172,248 $117,751
========== ==========
Condensed Consolidated Balance Sheets
(Unaudited)
($000's) March 31, June 30,
2006 2005
-----------------------
Assets
------
Cash, Cash Equivalents and Short-Term
Investments $172,248 $117,523
Receivables, Net 122,804 125,178
Inventories 77,426 87,531
Assets Held for Sale 9,461 -
Other Current Assets 20,346 21,808
Property & Equipment, Net 145,168 176,054
Capitalized Software, Net 27,901 37,273
Other Assets 31,190 35,173
----------- -----------
Totals $606,544 $600,540
=========== ===========
Liabilities & Share Owners' Equity
----------------------------------
Current Liabilities $173,516 $148,372
Long-Term Debt, Less Current Maturities 339 350
Deferred Income Taxes & Other 15,641 23,592
Share Owners' Equity 417,048 428,226
----------- -----------
Totals $606,544 $600,540
=========== ===========
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
($000's, except per share data)
Income from Continuing Operations, excluding
Restructuring Charges
Three Months Ended
March 31, March 31,
2006 2005
---------------------
Income from Continuing Operations, as reported $6,635 $3,097
Restructuring Charges, Net of Tax 658 -
---------- ----------
Income from Continuing Operations, excluding
Restructuring Charges $7,293 $3,097
========== ==========
Earnings Per Share of Common Stock, excluding
Restructuring Charges
Diluted from Continuing Operations, Class B, as
reported $0.17 $0.08
Diluted Impact of Restructuring Charges, Class B $0.02 -
---------- ----------
Diluted from Continuing Operations, Class B,
excluding Restructuring Charges $0.19 $0.08
========== ==========
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