JASPER, IN -- Kimball International, Inc. today reported net sales of $270.6 million and a net loss of $(0.1) million, or $0.00 per Class B diluted share, for the first quarter of fiscal year 2012 which ended Sept. 30, 2011.

 Consolidated Overview:

Financial Highlights
(Amounts in Thousands, Except Per Share Data)

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

September 30,
2011

 

 

September 30,
2010

 

 

Percent
Change

Net Sales

 

 

 

 

$

270,635

 

 

 

$

294,676

 

 

 

(8%

)

Gross Profit

 

 

 

 

$

46,970

 

 

 

$

47,147

 

 

 

0

%

Gross Profit %

 

 

 

 

17.4

%

 

 

16.0

%

 

 

 

Selling and Administrative Expense

 

 

 

 

$

45,968

 

 

 

$

47,340

 

 

 

(3%

)

Selling and Administrative Expense %

 

 

 

 

17.1

%

 

 

16.1

%

 

 

 

Restructuring Expense

 

 

 

 

$

113

 

 

 

$

117

 

 

 

(3%

)

Operating Income (Loss)

 

 

 

 

$

889

 

 

 

$

(310

)

 

 

387

%

Operating Income (Loss) %

 

 

 

 

0.3

%

 

 

(0.1%

)

 

 

 

Net Income (Loss)

 

 

 

 

$

(146

)

 

 

$

456

 

 

 

(132%

)

Earnings (Loss) Per Class B Diluted Share

 

 

 

 

$

0.00

 

 

 

$

0.01

 

 

 

(100%

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Consolidated net sales in the first quarter of fiscal year 2012 decreased 8% from the prior year first quarter as an increase in net sales in the Furniture segment was more than offset by a decline in net sales in the Electronic Manufacturing Services (EMS) segment. Sequentially, consolidated net sales in the first quarter of fiscal year 2012 decreased 4% from the most recent fourth quarter as an increase in net sales in the Furniture segment was more than offset by a decline in net sales in the EMS segment.
  • First quarter gross profit as a percent of net sales improved 1.4 percentage points from the prior year first quarter due to a shift in sales mix towards the Furniture segment which carries a higher gross profit percentage than the EMS segment.
  • Consolidated first quarter selling and administrative expenses declined 3% compared to the prior year due to the favorable impact of the normal revaluation to fair value of the Company's Supplemental Employee Retirement Plan (SERP) liability. The SERP liability revaluation was a reduction of $2.0 million in the first quarter of the current fiscal year compared to an increase in the liability of $1.2 million in the prior year, and has an exactly offsetting impact in Other Income/Expense where the SERP investment revaluation is recorded. Excluding the SERP revaluation impact, consolidated first quarter selling and administrative expenses increased 4% on increased spending on sales and marketing initiatives to drive growth, increased labor costs, and higher commissions associated with the increased sales levels in the Furniture segment.
  • Other Income/Expense for the first quarter of fiscal year 2012 was expense of $1.2 million compared to income of $0.8 million in the prior year first quarter, with the variance primarily related to the loss on the revaluation of the SERP investment discussed above.
  • Operating cash flow for the first quarter of fiscal year 2012 was a cash outflow of $6.6 million compared to an operating cash outflow of $10.4 million in the first quarter of the prior year.
  • The Company's cash and cash equivalents declined to $35.0 million at September 30, 2011 compared to $51.4 million at June 30, 2011 primarily due to the operating cash outflow mentioned above and the reinvestment of $8.2 million into capital investments during the quarter mostly for manufacturing equipment in the EMS segment. The Company had no short-term borrowings outstanding at September 30, 2011 or June 30, 2011. Long-term debt including current maturities is $0.3 million.

James C. Thyen, chief executive officer and president, said, "The macro economic environment continues to reflect volatility and drive uncertainty as nations struggle with significant fiscal matters. The impact is reflected in all of our markets often disturbing business strategy, execution, and timing."

Thyen said, "Our Furniture segment had an encouraging start to the new fiscal year by returning to profitability in the first quarter after ending with a loss in the fourth quarter of last year. Sales in this segment were up 9% compared to last year. Furniture segment orders during the quarter increased 16% compared to last year. In the EMS segment, lower sales volumes resulted in inefficiencies during the quarter. As a result, we incurred a loss in this segment in the first quarter. The second quarter will see the completion of the European consolidation and the closing of the Wales facility. We will also complete the closing of the Fremont, California facility. Both will lessen the burden of excess capacity costs."

Electronic Manufacturing Services Segment:

 

 

Financial Highlights
(Amounts in Thousands)

 

 

Three Months Ended

 

 

 

 

 

 

 

 

September 30,
2011

 

 

September 30,
2010

 

 

Percent
Change

 

 

Net Sales

 

 

$

142,828

 

 

 

$

177,867

 

 

 

(20%

 

 

Operating Income (Loss)

 

 

$

(2,255

)

 

 

$

173

 

 

 

(1,403%

 

 

Operating Income (Loss) %

 

 

(1.6%

)

 

 

0.1

%

 

 

 

 

 

Net Loss

 

 

$

(1,103

)

 

 

$

(248

)

 

 

(345%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Fiscal year 2012 first quarter net sales in the EMS segment decreased 20% compared to the first quarter of the prior year with decreased net sales to customers in the medical and industrial control industries. The decline in net sales to the medical industry in the fiscal year 2012 first quarter was attributable to the previously announced expiration of a contract with one medical customer late in fiscal year 2011 which accounted for a $38 million decline in net sales in the current year first quarter compared to the first quarter of the prior year. Excluding this customer, first quarter net sales to the medical industry increased by a double-digit percentage over the prior year. Compared to the fiscal year 2011 fourth quarter, current year first quarter net sales in the EMS segment decreased 12% on a decline in net sales to the medical and industrial control markets.
  • Gross profit as a percent of net sales in the EMS segment for the first quarter of fiscal year 2012 decreased 0.2 percentage points when compared to the first quarter of the prior year as excess capacity and inefficiency costs related to the lower sales volumes and the European consolidation restructuring activities had an unfavorable impact to earnings in the current quarter.
  • Selling and administrative costs in this segment declined 4% in the fiscal year 2012 first quarter when compared to the prior year but increased as a percent of net sales due to the lower sales volumes.

Furniture Segment:

   

Financial Highlights
(Amounts in Thousands)

       

Three Months Ended

     
                     

September 30,
2011

   

September 30,
2010

   

Percent
Change

            Net Sales         $ 127,807       $ 116,809       9 %
            Operating Income         $ 1,812       $ 1,075       69 %
            Operating Income %         1.4 %     0.9 %      
            Net Income         $ 1,175       $ 589       99 %
                                             
  • Fiscal year 2012 first quarter net sales of furniture products increased 9% compared to the prior year on increased net sales of office furniture. Sequentially, first quarter fiscal year 2012 net sales in this segment increased 7% over the fourth quarter of fiscal year 2011 also on increases in office furniture.
  • Gross profit as a percent of net sales declined 0.3 percentage points in the Furniture segment in the first quarter of fiscal year 2012 when compared to the prior year primarily due to increased price discounting on select product as competitive pricing pressures continue, commodity cost increases, and higher freight and fuel costs. These cost increases were partially offset by the favorable impact of price increases on select product, a sales mix shift to higher margin product, and lower employee benefit costs.
  • Selling and administrative costs in the Furniture segment for the first quarter of fiscal year 2012 increased 6% when compared to the prior year on increased spending on sales and marketing initiatives to drive growth, higher labor costs, and higher commissions associated with the increased sales levels. As a percent of net sales, fiscal year 2012 first quarter selling and administrative expenses declined 0.8 percentage points compared to the prior year on the leverage from the increase in revenue.
  • On a sequential basis, the Furniture segment returned to profitability in the first quarter of fiscal year 2012 after incurring an operating loss of $1.5 million in the fourth quarter of fiscal year 2011.

 

Financial highlights for the first quarter ended September 30, 2011 are as follows:

Condensed Consolidated Statements of Income

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

Three Months Ended

(Amounts in Thousands, except per share data)

 

 

 

 

September 30, 2011

 

 

September 30, 2010

Net Sales

 

 

 

 

$

270,635

 

 

100.0

%

 

 

$

294,676

 

 

100.0

%

Cost of Sales

 

 

 

 

223,665

 

 

82.6

%

 

 

247,529

 

 

84.0

%

Gross Profit

 

 

 

 

46,970

 

 

17.4

%

 

 

47,147

 

 

16.0

%

Selling and Administrative Expenses

 

 

 

 

45,968

 

 

17.1

%

 

 

47,340

 

 

16.1

%

Restructuring Expense

 

 

 

 

113

 

 

0.0

%

 

 

117

 

 

0.0

%

Operating Income (Loss)

 

 

 

 

889

 

 

0.3

%

 

 

(310

)

 

(0.1%

)

Other Income (Expense), net

 

 

 

 

(1,202

)

 

(0.4%

)

 

 

802

 

 

0.3

%

Income (Loss) Before Taxes on Income

 

 

 

 

(313

)

 

(0.1%

)

 

 

492

 

 

0.2

%

Provision (Benefit) for Income Taxes

 

 

 

 

(167

)

 

0.0

%

 

 

36

 

 

0.0

%

Net Income (Loss)

 

 

 

 

$

(146

)

 

(0.1%

)

 

 

$

456

 

 

0.2

%

Earnings (Loss) Per Share of Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings (Loss) Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

 

 

$

(0.01

)

 

 

 

 

$

0.01

 

 

 

Class B

 

 

 

 

$

0.00

 

 

 

 

 

$

0.01

 

 

 

Diluted Earnings (Loss) Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

 

 

$

(0.01

)

 

 

 

 

$

0.01

 

 

 

Class B

 

 

 

 

$

0.00

 

 

 

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Class A and B Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

37,836

 

 

 

 

 

37,680

 

 

 

Diluted

 

 

 

 

37,836

 

 

 

 

 

37,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

 

 

 

Three Months Ended

(Unaudited)

 

 

 

 

September 30

(Amounts in Thousands)

 

 

 

 

2011

 

 

2010

Net Cash Flow used for Operating Activities

 

 

 

 

$

(6,647

)

 

 

$

(10,368

)

Net Cash Flow used for Investing Activities

 

 

 

 

(6,358

)

 

 

(6,420

)

Net Cash Flow used for Financing Activities

 

 

 

 

(2,119

)

 

 

(2,068

)

Effect of Exchange Rate Change on Cash and Cash Equivalents

 

 

 

 

(1,334

)

 

 

4,213

 

Net Decrease in Cash and Cash Equivalents

 

 

 

 

(16,458

)

 

 

(14,643

)

Cash and Cash Equivalents at Beginning of Period

 

 

 

 

51,409

 

 

 

65,342

 

Cash and Cash Equivalents at End of Period

 

 

 

 

$

34,951

 

 

 

$

50,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

Condensed Consolidated Balance Sheets

 

 

 

 

September 30,
2011

 

 

June 30,
2011

(Amounts in Thousands)

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

$

34,951

 

 

 

$

51,409

Receivables, net

 

 

 

 

143,385

 

 

 

149,753

Inventories

 

 

 

 

139,381

 

 

 

141,097

Prepaid expenses and other current assets

 

 

 

 

50,740

 

 

 

50,215

Assets held for sale

 

 

 

 

2,264

 

 

 

2,807

Property and Equipment, net

 

 

 

 

192,436

 

 

 

196,682

Goodwill

 

 

 

 

2,556

 

 

 

2,644

Other Intangible Assets, net

 

 

 

 

7,471

 

 

 

7,625

Other Assets

 

 

 

 

22,880

 

 

 

24,080

Total Assets

 

 

 

 

$

596,064

 

 

 

$

626,312

 

LIABILITIES AND SHARE OWNERS' EQUITY

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

 

 

 

$

14

 

 

 

$

12

Accounts payable

 

 

 

 

143,939

 

 

 

149,107

Dividends payable

 

 

 

 

1,842

 

 

 

1,835

Accrued expenses

 

 

 

 

50,288

 

 

 

66,316

Long-term debt, less current maturities

 

 

 

 

273

 

 

 

286

Other

 

 

 

 

19,197

 

 

 

21,357

Share Owners' Equity

 

 

 

 

380,511

 

 

 

387,399

Total Liabilities and Share Owners' Equity

 

 

 

 

$

596,064

 

 

 

$

626,312

 

Supplementary Information

 

 

 

 

 

 

 

 

Components of Other Income (Expense), net

 

 

 

 

Three Months Ended

(Unaudited)

 

 

 

 

September 30

(Amounts in Thousands)

 

 

 

 

2011

 

 

2010

Interest Income

 

 

 

 

$

120

 

 

 

$

220

 

Interest Expense

 

 

 

 

(9

)

 

 

(20

)

Foreign Currency/Derivative Gain (Loss)

 

 

 

 

744

 

 

 

(476

)

Gain (Loss) on Supplemental Employee Retirement Plan Investment

 

 

 

 

(1,962

)

 

 

1,221

 

Other Non-Operating Expense

 

 

 

 

(95

)

 

 

(143

)

Other Income (Expense), net

 

 

 

 

$

(1,202

)

 

 

$

802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Kimball International, Inc. 

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