Good morning, ladies and gentlemen. My name is Nora, and I’ll be your conference call facilitator today. At this time, I’d like to welcome everyone to the Kimball International first quarter fiscal 2009 financial results conference call. All lines have been placed on a listen-only mode to prevent any background noise. As a reminder, today’s call, November 5th, 2008, will be recorded. After the Kimball speaker’s opening remarks, there’ll be a question-and-answer period, where Kimball responds to questions from analysts. (Operator instructions) As with prior conference calls, please be aware that today’s call may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Risk factors that may influence the outcome of the forward-looking statements can be seen in the Kimball Form 10-K and today’s release. The panel for today’s is Jim Thyen, President and Chief Executive Officer of Kimball International; Bob Schneider, Chief Financial Officer of Kimball International; Dan Miller, President-Furniture; and, Don Charron, President-Kimball Electronics Group. I would now like to turn today’s call over to Jim Thyen. Mr. Thyen, you may begin.

Thank you, Nora, and welcome everyone to our first quarter conference call. We hope you had an opportunity to review our earnings release issued this morning, on the results of our first quarter ending September 30th, 2008. As in our last conference call, our format today will start with my overview and comments on the quarter, followed by Bob’s financial review. We will then open the call to your questions. As in prior calls, I’ve asked Don Charron, President of our Electronics Group, and Dan Miller, President of our furniture companies, to join us in support of disclosure, understanding our results, and providing you with appropriate information. The earnings we reported today are down from the same quarter last year due to mix changes to lower margin products, more competitive markets, and increases in fuel and commodity costs. We also have underutilized capacity, costs that we are working through our restructuring actions, particularly related to our European consolidation. We are far from pleased with our performance. With that said, I am encouraged that our first quarter net sales, gross profit, and earnings improved over the previous two quarters. While our results are moving in the right direction, I must caution that we are in a very turbulent time due to the credit and financial crisis throughout the world. The volatility and velocity in the market will likely continue into the calendar year. We have several challenges to overcome. Given the economic volatility and the geopolitical uncertainty, we know the US election alone is and will continue to drive a rapidly changing landscape well beyond the November 4 voting results. We know the past few weeks have had dramatic – have dramatically impacted consumer demand, causing uncertainty and anxiety. We know we have little visibility for business beyond the immediate quarter.…

Thanks, Jim. We reported today net sales in the first quarter of $339 million – $339.5 million, which is an increase of 2% over the same quarter of the prior year. Importantly, our gross profit declined $9.3 million or 13.7%. During the first quarter, we began our European consolidation efforts announced in April by moving a significant portion of the Ireland production into our Poland facility. In addition to the items Jim mentioned that hurt our first quarter results, this also caused some inefficiencies that we had anticipated. While our first quarter gross profit is a significant decline from a year ago, I want to remind everyone, and this is important, that the drop occurred mostly between the second and third quarters of last year. It was at that time that we saw significant increases in commodity costs, and also a mix shift to lower margin products. Since that time, our gross profit percentage has been stable, and in fact, up slightly. I point this out because the immediate trend is important, and we had discussed the drop in gross profit several quarters ago. However, as Jim said, while improving, we are still not satisfied with our performance. Another important measure is our selling, general, and administrative expenses. In the call in March, we announced a restructuring involving 150 of our management and administrative staff across the company, including corporate. I had mentioned that we were planning for most of this reduction to be completed by June 30th. And therefore, we would begin to see the benefit in the first quarter of fiscal 2009, the quarter that we just ended. That is what occurred, and our SG&A percent of net sales in the first quarter was the lowest in over a decade at 15.7%. Our SG&A spend in the first…

(Operator instructions) One moment please for the first question. And your first question comes from the line of Beth Lilly [ph]. Please proceed.

Good morning.

Good morning, Beth.

Good morning.

I wanted to ask a couple of questions. Let’s start with the restructuring that’s occurring in the furniture business that you – that you approved in the first quarter. Can you talk about – and I looked through your Q, it looks like the cost for the furniture restructuring – is it $2.4 million? Is that right?

The cost that hit the first quarter with respect to restructuring in furniture, I don’t have it right in front of me, Beth, but it was not that large. I believe the total for the whole quarter is $900,000, if I think – correction, $953,000.

Yes. No, my question is, is this going to be the total cost for this – to charge in the furniture segment for the consolidation plan. Is that $2.4 million?

No. It is not that long – that high. I don’t recall offhand, Beth, how large that is.

Okay. All right. And then on the EMS segment, is the total expected costs are $23 million, correct?

Let me go back, Beth, to your first question in terms of the furniture side of the business. The total expected consolidation costs are $1 million.

Okay.

And that is pre-taxed. The European side, the total restructuring cost within that consolidation, which we had in our last 8-K, with respect – or excuse me, the 10-K, was $20.1 million.

Okay, $20.1 million.

You add the workforce reduction that we announced, I believe is March 7th, and that was $2.5 million of restructuring cost. Some of that impacted furniture, some impacted electronics, and some was corporate.

Okay. And are you able to quantify then what kind of savings you think you’re generate from these charges in the restructurings that are occurring–?

We have not disclosed the benefits for the office furniture consolidation or the European consolidation. The workforce reduction plan that we announced in March, we said at that time that it would be $12 million to $13 million annually of savings. And that’s what we’re reporting today in the press release in terms of the benefit that we’re now seeing in the first quarter that we had anticipated, and is actually occurring on an annualized basis to get to that $12 million to $13 million.

Yes.

Okay. For competitive reasons, Beth, the other restructurings that I just mentioned, we have not disclosed the estimated cost savings.

Okay, okay. Do you think there’s going to be a point in time that you’re going to be willing to do that?

I don’t think we will. Strategically, we felt that, competitively, it just would not be beneficial for us to share that information.

Okay. In the past, you’ve talked about getting the margins in your two businesses, the furniture and the contact manufacturing, up to kind of industry levels. And I’m wondering if you’d be willing to talk about where you are with that plan? One, how long do you think it’s going to take you to get there? I guess that’s, yes. I guess that’s just the issue. Yes.

We had mentioned, Beth, I believe that was in our May conference call that in two years, which would have put us to the fourth quarter of fiscal 2010, that we would get to 8% on furniture and 4% in the electronics from an operating margin standpoint. We are looking very closely in terms of the timeline to achieve that given what has transpired from that point until today. Obviously, we have anticipated the impacts in the economy, et cetera. And so we’re – we are exploring just how long it’s going to take to get to that – to get to that – those cost measures in a two-year period.

Yes. So there’s a chance that you’re going to push that out then?

There is a chance. And important to know and I think you would agree, and all the listeners, there have been absolutely huge changes in the world economy that happened since May.

Yes, yes. Okay. The other question I want to ask you is that you’ve got – if I look at your balance sheet, you have over $2 per share in cash. Okay. And you’re about to sell this acreage. And if you look at the transaction prices, it’s all over the map, but anywhere from $2,000 to $4,000 an acre. And so, I have a couple of questions. First is that what would be the tax? How do we look at the proceeds then from those land sales that are going to occur over the next several days? At what rate do we tax them, is it a capital gains rate? And then secondarily, can you talk about the use in the cash because you’re going to – you’re going to have a lot of cash in your balance sheet come Monday morning. I mean, I know it’ll take a while to collect it, but–

Yes. The tax rate, they are capital gains. But effectively, the rate for most of the gain is going to be a 35% federal rate. We’re still exploring the ability on some of the timber, and what tax rate, any gain on the sale of that timber that has been held – I believe, the tax law indicates timber held more than 15 years might be eligible for different rates. And we’re trying to explore that. But the overall rate, we approximate for 35% from a federal standpoint. And Beth, I want to qualify one thing that you had indicated in terms of our current cash position. It is very important to look at the total cash that you had indicated, and you have noted that we always report that net of borrowings under our credit facility. And so really, when you look at September 30th, $22 million is really the more economic view in terms of a net cash position on that liquidity. And it was $30 million at June 30th as I had indicated in terms of some of their older comments.

Oh I see. Okay. Yes, okay. So it’s $25 million, which is – all right. It’s less than $1 per share.

Yes, yes.

Okay. But either way, it’s interesting because if you look on Schrader’s Web site and you look at what things are going – what per acres are going for in the different regions, I mean it’s arguably – you’re going to garner a lot of cash from these sales over the next couple of days.

Well Beth, of course, we won’t really know until the auctions are done. That’s the nature of the auction. But it certainly puts that asset in the position so the markets can speak what the value is. And yes, we’re hopeful that we have chosen the right time. And with our strategy, starting a couple of years ago when we exited the raw material hardwood component industry, we’re hoping that this is the best time and in the best interest of shareholders to convert that asset.

Can you talk about the possible priorities in the use of that cash?

Well the priorities, it’s going to go to keep our balance sheet strong and to support our growth and diversification strategy in both of our – our two main segments, furniture and electronics. And we will use it to support both growth organically as well as by acquisition. That’s not growth for growth’s sake. It’s growth to improve our margins and our profitability.

And you have a share repurchase program in effect, right? There’s a two-million share buyback.

Yes, we do.

Okay. And you’ve bought – let’s see here. As I look at your Q, you’ve bought about 33,000 shares under that program, is that correct?

Bob?

No. We have not purchased any shares. Now I want to remind, Beth, that we did buy roughly two million shares back in fiscal ’08. And it happened, I believe, some of it was in June and some it was in July of the next – of fiscal ’09. But since then, we had renewed the two million authorization, and we’ve not made any purchases under it.

Okay, okay. And is there a reason for that?

The reason for?

That you haven’t been buying back stock.

Of course, we constantly, with the Board, evaluate that alternative, and what’s the best use of our cash. And at this time, the Board of Directors has not decided in the short term to exercise that authority.

You think that as the cash comes in from these proceeds, you might look at that issue again?

We’ll constantly evaluate our options. That’s normal for our Board, constantly examine current situations and what the options are for going forward.

Okay. Great. Those are all my questions. Thank you.

Thank you, Beth.

You have no further questions at this time.

Okay. That brings us to the end of today’s call. While the volatility in the financial markets is driving tremendous uncertainty around the world, we are well positioned with strong brands, strong businesses, and a strong balance sheet to seize market opportunities as they arise. We appreciate your interest in Kimball. And we look forward to speaking with you on our next call. Thank you. Have a great day.

At this time, our listeners may simply hang up to disconnect from the call. Thank you, and have a nice day.