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Kimball Posts 3rd Quarter Loss

Wednesday 7 May 2008

Kimball International Inc. reported Wednesday that it lost $889,000 in the third quarter of its fiscal year, in part because of the slowing economy and a workforce reduction.
Kimball\'s loss compared with a $3.8 million profit in the third quarter of fiscal 2007.
Revenue, meanwhile, rose 7 percent in the quarter ending March 31 to $332.1 million.
Excluding restructuring costs, the company had net income from continuing operations of $1.5 million.
Fiscal year 2008 third quarter net sales of branded furniture products, which include office and hospitality furniture, were $151.0 million, an increase of 4% compared to the prior year net sales of $145.1 million, due to higher sales in both the office furniture and hospitality furniture industries. The company completed the planned exit of the contract private label products in fiscal year 2007 and therefore there were no net sales of contract private label products during the third quarter of fiscal year 2008 compared to net sales of $1.1 million in the prior year third quarter.
Income from continuing operations in the current year third quarter was negatively impacted by competitive market pricing pressures coupled with supply chain cost increases particularly in the hospitality industry, a sales mix shift to lower margin product, higher commodity and fuel charges, and increased investments in this segment\'s sales force. Partially offsetting these higher costs were price increases on select product, lower product marketing and promotion costs, savings realized through various cost reduction initiatives, and lower employee profit incentive compensation costs.
James C. Thyen, Chief Executive Officer and President, stated, \"Our third quarter results were disappointing. We are facing sales growth challenges with the weakening economy and increasing commodity costs. We are aggressively reviewing our processes and our entire cost structure to eliminate complexity, redundancy and inefficiencies to improve profitability. In March 2008, we announced a workforce reduction effort which will eliminate approximately 150 administrative positions worldwide over the next few months. When fully implemented, we anticipate annual savings of approximately $12.0 to $13.0 million. Also, in April 2008 we announced a plan to consolidate our three European manufacturing facilities currently located in Ireland, Wales and Poland into one new facility in Poznan, Poland. This consolidation includes the transfer of product to the new facility and will occur over the next 3.5 years. Savings will be realized incrementally as the consolidation occurs. We have confidence that our team will successfully execute these restructuring actions resulting in improvement in our profitability. We remain cautious about the potential future impact of the weakening economy.\"

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