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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-3279
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0514506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (812) 482-1600
Not Applicable
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No___
The number of shares outstanding of the Registrant's common stock as of October
19, 1995 was:
Class A Common Stock - 7,280,204 shares
Class B Common Stock - 13,678,691 shares
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KIMBALL INTERNATIONAL, INC.
FORM 10-Q
INDEX
<CAPTION>
PAGE NO.
<S> <C>
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Statement of Financial Condition
- September 30, 1995 (Unaudited), June 30, 1995
and September 30, 1994 (Unaudited) . . . . . . . . . . . . . 3
Consolidated Statement of Income (Unaudited)
- Three Months Ended September 30, 1995 and 1994 . . . . . . . 4
Consolidated Statement of Cash Flows (Unaudited)
- Three Months Ended September 30, 1995 and 1994 . . . . . . . 5
Notes To Consolidated Financial Statements (Unaudited) . . . . 6
Item 2. Management's Discussion and Analysis Of
Financial Condition and Results of Operations. . . . . . . . . 7-9
PART II OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 10
Signatures. . . . . . . . . . . . . . 10
- Exhibit #11 - Computation of Earnings Per Share
(Part I Exhibit)
- Exhibit #27 - Financial Data Schedule (Part I Exhibit)
</TABLE>
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<TABLE>
PART I.
FINANCIAL INFORMATION
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(dollars in thousands)
<CAPTION>
(unaudited) (unaudited)
September 30, June 30, September 30,
ASSETS 1995 1995 1994
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,618 $ 15,278 $ 7,222
Short-term investments at cost, estimated
market value of $109,416, $97,956, and $79,145. 109,046 97,534 79,389
Accounts and notes receivable, less allow-
ance for possible losses of $4,087, $4,245,
and $3,788. 106,648 96,057 98,479
Inventories 78,845 76,146 87,033
Other 20,127 21,801 19,908
Total Current Assets 322,284 306,816 292,031
PROPERTY AND EQUIPMENT - at cost, less
accumulated depreciation of $217,262,
$219,395, and $208,536. 176,122 177,130 172,215
OTHER ASSETS 13,914 13,140 11,909
Total Assets $512,320 $497,086 $476,155
LIABILITIES AND SHARE OWNERS' EQUITY
CURRENT LIABILITIES:
Loans payable to banks $ 2,488 $ 1,763 $ 1,440
Current maturities of long-term debt 391 393 1,210
Accounts payable 49,514 35,328 37,971
Dividends payable 4,802 4,811 4,424
Accrued expenses 60,938 62,751 57,223
Total Current Liabilities 118,133 105,046 102,268
OTHER LIABILITIES:
Long-term debt, less current maturities 760 924 1,095
Deferred income taxes and other 19,802 19,779 17,675
Total Other Liabilities 20,562 20,703 18,770
SHARE OWNERS' EQUITY:
Common stock 6,723 6,723 6,723
Additional paid-in capital 812 812 812
Foreign currency translation adjustment 1,668 1,981 1,193
Retained earnings 377,320 373,704 354,303
Less: Treasury stock, at cost (12,898) (11,883) (7,914)
Total Share Owners' Equity 373,625 371,337 355,117
Total Liabilities and Share Owners' Equity $512,320 $497,086 $476,155
See Notes to Consolidated Financial Statements
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands except per share amounts)
<CAPTION>
(unaudited)
Three Months Ended
September 30,
1995 1994
<S> <C> <C>
Net Sales $218,933 $209,411
Cost of Sales 163,077 150,553
Gross Profit 55,856 58,858
Selling, Administrative and General Expenses 45,160 45,854
Operating Income 10,696 13,004
Other Income (Expense):
Interest Expense (88) (45)
Interest Income 1,897 1,076
Other - net 1,464 480
3,273 1,511
Income Before Taxes on Income 13,969 14,515
Taxes on Income 5,551 6,092
Net Income $ 8,418 $ 8,423
Earnings Per Share of Common Stock:
Class A Common Stock $ .40 $ .40
Class B Common Stock $ .40 $ .40
Dividends Per Share of Common Stock:
Class A Common Stock $ .22 3/4 $ .20 3/4
Class B Common Stock $ .23 $ .21
Average total number of shares outstanding
Class A and B Common Stock 20,972,043 21,157,497
See Notes to Consolidated Financial Statements
</TABLE>
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
<CAPTION>
(unaudited)
Three Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 8,418 $ 8,423
Non-cash charges (credits) to net income:
Depreciation and amortization 8,044 7,560
Gain on sales of assets (1,620) (7)
Deferred income tax and other deferred charges 466 633
(Increase) decrease in current assets:
Accounts and notes receivable (10,591) (2,361)
Inventories (2,699) (5,950)
Other current assets 1,480 (1,015)
Increase (decrease) in current liabilities:
Accounts payable 14,186 4,838
Accrued expenses (2,256) (5,040)
Net Cash Provided By Operating Activities 15,428 7,081
Cash Flows From Investing Activities:
Capital expenditures (8,706) (7,609)
Proceeds from sales of assets 3,266 216
Increase in other assets (716) (355)
Purchases of short-term investments (37,879) (43,842)
Maturities of short-term investments 26,367 40,947
Net Cash Used For Investing Activities (17,668) (10,643)
Cash Flows From Financing Activities:
Net change in short-term borrowings 726 (179)
Decrease in long-term debt (166) (73)
Dividends paid (4,812) (4,426)
Acquisition of treasury stock, net (1,015) (245)
Other - net (126) 231
Net Cash Used For Financing Activities (5,393) (4,692)
Effect of Exchange Rate Change on
Cash and Cash Equivalents (27) 24
Net Decrease in Cash and Cash Equivalents (7,660) (8,230)
Cash and Cash Equivalents-Beginning of Period 15,278 15,452
Cash and Cash Equivalents-End of Period $ 7,618 $ 7,222
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Income Taxes $ 1,306 $ 1,788
Interest $ 97 $ 85
Total Cash, Cash Equivalents and
Short-Term Investments:
Cash and cash equivalents $ 7,618 $ 7,222
Short-term investments 109,046 79,389
Totals $116,664 $ 86,611
See Notes to Consolidated Financial Statements
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) The interim financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. All significant intercompany
transactions and balances have been eliminated. Management believes the
financial statements include all adjustments of a normal, recurring nature
necessary to present fairly the financial statements of the interim period.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual
report on Form 10-K.
<TABLE>
(2) Inventories consist of: (in thousands)
<CAPTION>
September 30, June 30, September 30,
1995 1995 1994
<S> <C> <C> <C>
Raw Materials $41,380 $39,527 $41,597
Work-in-Process 13,276 12,681 14,225
Finished Goods 24,189 23,938 31,211
Total $78,845 $76,146 $87,033
</TABLE>
For interim reporting, LIFO inventories are computed based on estimated
year-end quantities and price levels. Changes in such estimates will be
reflected in the interim financial statements in the period in which they
occur.
(3) Earnings per share are computed under the method prescribed in Accounting
Principles Board Opinion No. 15 for computing earnings per share for two
class common stock due to the dividend preference of Class B Common Stock.
(4) Certain prior year amounts have been reclassified to conform with the
fiscal 1996 presentation.
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION
AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net sales for the first quarter of the 1996 fiscal year increased 5% when
compared to the first quarter of the prior year. Net income and Class B
earnings per share equaled the prior year's first quarter results despite the
increase in sales, due primarily to an unfavorable change in the product mix.
Cash flow for the first quarter was a positive $3,852,000, excluding the
purchases and maturities of short-term investments.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1994
First quarter 1996 net sales were $218,933,000, an increase of 5% when
compared to the prior year's first quarter. Additional assembly volumes in
the Electronic Contract Assemblies segment drove the increase in sales.
Sales in the Furniture and Cabinets segment decreased 2% when compared to the
first quarter in the prior year, primarily caused by lower shipments on
original equipment manufacturer (OEM) product lines. In the office furniture
product line, selling prices were impacted by increased competitive price
discounting which is occurring in the industry. Production capacity
constraints limited additional potential growth in the systems office
furniture product line. The Company is in the process of dedicating an
additional facility, which was previously utilized by another segment, to
this product line with full production levels anticipated in the latter half
of this fiscal year. Sales volumes increased in steel office furniture
product lines, when compared to the first quarter of the prior year at which
time shipment levels were negatively impacted by the relocation of the steel
office furniture production facility to Idaho. Sales of OEM cabinets and
furniture decreased from the prior year levels, as certain customers shifted
production schedules, including brief temporary reductions in shipments.
Rescheduling and production flexibility is inherent in the OEM supplier
industry and periodically causes short-term fluctuations in any given
quarter. The company's domestic piano production facility, which has
increased its production mix towards OEM production to absorb excess plant
capacity, also reported lower sales due to the rescheduling of certain OEM
product line shipments along with the continuing decline in the worldwide
piano market. Sales of hospitality furniture increased from the prior year
levels as a result of the Company focusing its marketing efforts on the
hospitality renovation market.
Sales in the Electronic Contract Assemblies segment grew 30% when compared to
the prior year's first quarter sales. Sales of new computer and computer
peripheral product assemblies from both new and existing customers added to
existing product assemblies, including electronic automotive and
telecommunication assemblies. Re-engineering of production and supporting
processes allowed the Company to add this additional business to existing
production facilities. Included in this segment are sales to one customer that
accounted for 13% of consolidated first quarter net sales in fiscal year 1996
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and 14% in 1995. Open orders increased 34% above the prior year's first
quarter level.
Sales in the Processed Wood Products and Other segment declined 17%,
primarily on lower sales volumes of processed wood product lines. Sales of
lumber and dimension wood product lines declined from the prior year,
primarily as a result of lower sales volumes to outside parties during the
first quarter of fiscal year 1996. Sales volumes on plastic components also
decreased from the prior year's first quarter.
Consolidated cost of sales as a percent of sales increased 2.6 percentage
points due in part to an unfavorable change in the product mix. The Company
continued to experience a change in sales mix towards products which contain
a higher material content, particularly those product lines in the Electronic
Contract Assemblies segment. Labor costs as a percent of sales decreased 1.2
percentage points as the change in product mix shifted to product lines
requiring less labor content. Labor efficiency was hampered as the result of
new product start-up inefficiencies and the effect of the July-August intense
heat on the production labor force during the first quarter of fiscal year
1996. Overhead costs as a percent of sales decreased 0.6 percentage point as
process improvements allowed additional production volumes to be supported by
the Company's existing production overhead structure. Selling, general and
administrative expenses as a percent of sales declined 1.3 percentage points
as these fixed costs were able to support additional sales volumes. Cost
reduction initiatives are currently being accelerated to reduce the Company's
cost structure and promote improved profitable growth.
Operating income in the Furniture and Cabinets segment declined from the
prior year's first quarter due to increased price discounting in the office
furniture market, a change in the product mix within office furniture product
lines and increased material costs. Costs were incurred in the first quarter
of the 1996 fiscal year to improve future profitability, including costs to
prepare an existing facility for redeployment to the systems office furniture
product line during this fiscal year, re-engineering and technology costs.
Steel office furniture product lines continued to operate at a loss during
the first quarter and the Company anticipates that these product lines will
continue to operate at a loss during the remainder of the 1996 fiscal year.
OEM product lines, which traditionally have variation in quarter over quarter
comparisons, reported lower operating income when compared to the same
quarter in the prior year due to lower product shipments requested by certain
customers. Operating income on hospitality product lines declined in the
quarter as production start-up costs were incurred to expand the standard
in-line product line offering. Operating losses in Europe were reduced in
this year's first quarter due to benefits derived from the Company combining
two production facilities into one during the latter half of the prior year,
thereby permanently reducing the European cost structure.
Operating income improvements in the Electronic Contract Assemblies segment
were the result of additional sales volumes from both new and existing
customers, as compared to the prior year's first quarter. These additional
volumes were produced at existing facilities, which was made possible through
the Company's re-engineering efforts to simplify and streamline various
production processes. Although the dollar amount of operating income
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increased as the result of additional assembly volumes, operating income as a
percent of sales declined, as start-up costs on certain new assemblies
reduced the operating profit generated from those sales. Operating margins
on these product lines, as a percent of sales, are generally lower than those
found on most of the Company's other product lines.
Operating income in the Processed Wood Products and Other segment declined
primarily due to lower sales volumes on lumber and dimension wood product
lines. Operating profit on metal part sales improved over the prior year's
first quarter, due to increased production efficiencies combined with product
pricing and marketing analysis.
Investment income increased due to higher average investment balances and
higher effective yields from those investments, when compared to the prior
year's first quarter. Other-net increased primarily due to increased gains
realized on the sale of certain assets, when compared to the prior year's
first quarter.
The effective income tax rate for the first quarter of fiscal year 1996
decreased 2.3 percentage points from the prior year's first quarter as a
result of lower operating losses in Europe.
Net income for the first quarter of the 1996 fiscal year was $8,418,000 or 40
cents per share, on par with last year's net income of $8,423,000 or 40 cents
per share.
LIQUIDITY AND CAPITAL RESOURCES
Cash, Cash Equivalents and Short-Term Investments total $117 million at
September 30, 1995 as compared to $87 million one year earlier. Working
capital and the current ratio continued to be a strong $204 million and 2.7
to 1, respectively, at September 30, 1995 as compared to $190 million and 2.9
to 1, respectively, one year earlier.
The Company generated $3.9 million positive cash flow during the first
quarter of the 1996 fiscal year, excluding purchases and maturities of
short-term investments. Net cash flow from operations generated a positive
$15.4 million for the first quarter. The Company invested $9.4 million in
capital additions and other assets for the future. Primary areas of
investment were production equipment upgrades, facility conversion for
planned redeployment to other product lines, and facility upgrades. The
Company incurred $5.4 million of net cash outflows for financing purposes,
primarily to pay dividends and acquire $1.0 million of treasury stock during
the first quarter.
The company expects to maintain a strong liquidity position throughout the
1996 fiscal year with cash needs being met by cash provided by operations,
cash balances and short-term investments on hand. Due to the Company's
strong financial condition and ability to generate cash from operations,
management believes there is a substantial amount of unused short-term and
long-term borrowing capacity which could be utilized if necessary.
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PART II.
OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
(11) Computation of earnings per share
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the three months
ended September 30, 1995.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KIMBALL INTERNATIONAL, INC.
Douglas A. Habig
DOUGLAS A. HABIG
(President and Chief Executive Officer)
Gary P. Critser
GARY P. CRITSER
(Senior Exec. Vice President, Chief
Accounting Officer and Secretary)
Date: October 26, 1995
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<S> <C> <C>
Net income, three months ended September 30, 1995 . . . . . . . . $8,418,000
Dividends declared:
Class A Common -- $.2275 per share . . . . . . . . . . . . . .$(1,656,000)
Class B Common -- $.23 per share . . . . . . . . . . . . . . . (3,146,000)
(4,802,000)
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . $3,616,000
Undistributed earnings divided
by 20,972,043 average number
of shares outstanding . . . . . . . . . . . . . . . . . . . . . $.1724
Class A Class B
Undistributed earnings per share . . . . . . . . . . . . . . . . $.1724 $.1724
Assumed distribution of earnings . . . . . . . . . . . . . . . . .2275 .2300
Earnings per share . . . . . . . . . . . . . . . . . . . . . . $.3999 $.4024
Rounded . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.40 $.40
</TABLE>
<TABLE>
COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<S> <C> <C>
Net income, three months ended September 30, 1994 . . . . . . . . $8,423,000
Dividends declared:
Class A Common -- $.2075 per share . . . . . . . . . . . . . .$(1,523,000)
Class B Common -- $.21 per share . . . . . . . . . . . . . . . (2,901,000)
(4,424,000)
Undistributed earnings . . . . . . . . . . . . . . . . . . . . . $3,999,000
Undistributed earnings divided
by 21,157,497 average number
of shares outstanding . . . . . . . . . . . . . . . . . . . . . $.1890
Class A Class B
Undistributed earnings per share . . . . . . . . . . . . . . . . $.1890 $.1890
Assumed distribution of earnings . . . . . . . . . . . . . . . . .2075 .2100
Earnings per share . . . . . . . . . . . . . . . . . . . . . . $.3965 $.3990
Rounded . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.40 $.40
</TABLE>
PartI-Exhibit(11)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains three month summary financial information extracted from
Kimball International, Inc. and subsidiaries 1996 first quarter Form 10-Q and
is qualified in its entirety by reference to such Form 10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 7,618
<SECURITIES> 109,046
<RECEIVABLES> 110,735
<ALLOWANCES> 4,087
<INVENTORY> 78,845
<CURRENT-ASSETS> 322,284
<PP&E> 393,384
<DEPRECIATION> 217,262
<TOTAL-ASSETS> 512,320
<CURRENT-LIABILITIES> 118,133
<BONDS> 0
<COMMON> 6,723
0
0
<OTHER-SE> 366,902
<TOTAL-LIABILITY-AND-EQUITY> 512,320
<SALES> 218,933
<TOTAL-REVENUES> 218,933
<CGS> 163,077
<TOTAL-COSTS> 163,077
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (28)
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> 13,969
<INCOME-TAX> 5,551
<INCOME-CONTINUING> 8,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,418
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
