Oct. 15, 2009 (PR Newswire) --
EAST GREENVILLE, Pa., Oct. 15 /PRNewswire-FirstCall/ -- Knoll, Inc. (NYSE: KNL) today announced results for the third quarter ended September 30, 2009. Net sales were $181.3 million for the quarter, a decrease of 36.1% from the third quarter of 2008. Operating profit was $16.8 million, or 9.3% of net sales, a decrease of 59.1% from the third quarter of 2008. Net income was $5.7 million, a decrease of 76.4% over the third quarter of 2008. Diluted earnings per share was $0.13 compared to $0.52 diluted earnings per share in the prior year, a decrease of 75.0%.
"While demand for our products continues to be severely impacted by the global economic crisis, we are pleased that we were able to continue to report industry leading levels of operating profitability," stated Andrew Cogan, CEO. "Our strategy of diversifying our sources of revenue into high design content business continued to buffer our results. The roll out of our innovative, award winning Generation by Knoll(TM) work chair continued a pace in the quarter as we began commercial shipments and placed chairs in all our North American showrooms. Both the funnel of activity and the customer, architect and designer response to the chair gives us great confidence that Generation by Knoll will be a meaningful contributor to our results in the years ahead."
Third Quarter Results
Third quarter 2009 financial results highlights follow:
Dollars in Millions Except Per
Share Data Three Months Ended Percent
9/30/09 9/30/08 Change
--------- --------- ------
Net Sales $181.3 $283.5 (36.1) %
Gross Profit 61.3 104.2 (41.2) %
Operating Expenses 44.4 63.1 (29.6) %
Operating Profit 16.8 41.1 (59.1) %
Net Income 5.7 24.1 (76.4) %
Earnings Per Share - Diluted .13 .52 (75.0) %
Backlog 121.7 203.1 (40.1) %
Net sales for the quarter were $181.3 million, a decrease of $102.2 million, or 36.1%, from the third quarter of 2008. The decrease in sales for the quarter was experienced across all product categories and geographies. The largest declines were experienced internationally and in our office systems product category.
Backlog of unfilled orders at September 30, 2009 was $121.7 million, a decrease of $81.4 million, or 40.1%, compared to unfilled orders at September 30, 2008.
Gross profit for the third quarter of 2009 was $61.3 million, a decrease of $42.9 million, or 41.2%, from the same period in 2008. Gross margin decreased to 33.8% in the third quarter of 2009 from 36.8% in the same quarter of 2008. The decrease in gross margin largely resulted from lower absorption of our fixed costs as a direct result of the lower sales volumes and price deterioration.
Operating expenses for the quarter were $44.4 million, or 24.5% of sales, compared to $63.1 million, or 22.3% of sales, for the third quarter of 2008. The decrease in operating expenses during the third quarter of 2009 was in large part due to decreased spending in conjunction with our lower sales volumes and a gain related to a reduction in our post retirement medical benefits of $1.1 million. Decreased sales and performance related compensation accounted for approximately $8.9 million of the reduction in operating expenses.
Our operating profit for the third quarter of 2009 was $16.8 million, a decrease of $24.3 million, or 59.1%, from the same period in 2008. Operating profit as a percentage of sales was 9.3%.
Interest expense in the third quarter of 2009 increased $0.3 million over the third quarter of 2008. The increase in interest expense is the result of two interest rate swap agreements that went into effect at the end of the second quarter of 2009. Other expense for the third quarter of 2009 was $3.1 million which included $3.2 million of foreign exchange losses offset by $0.1 million of miscellaneous income. Other income for the third quarter 2008 was $2.1 million.
The effective tax rate was 40.5% for the quarter, as compared to 39.0% for the same period last year. The increase in the effective tax rate is largely due to the mix of pretax income in the countries in which we operate. Net income for the third quarter of 2009 was $5.7 million, or $0.13 diluted earnings per share, as compared to $24.1 million, or $0.52 diluted earnings per share, for the same quarter in 2008.
