<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required) for the fiscal year ended June 30, 1996 or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) 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 Number)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, (812) 482-1600
including area code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Stock, par
value $.31-1/4 per share None
Class B Common Stock, par
value $.31-1/4 per share NASDAQ
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 ___
Continued....
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<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( X )
The number of shares outstanding of the Registrant's common stock as of August
30, 1996 were:
Class A Common Stock - 7,276,270 shares
Class B Common Stock - 13,508,475 shares
The Class A Common Stock is not publicly traded and, therefore, no market value
is available. The Registrant estimates that the aggregate market value of the
Class B Common Stock held by non-affiliates, as defined in Rule 405, on August
30, 1996 (based upon an estimate that 87.4% of the shares of Class B Common
Stock is held by non-affiliates and upon the average of the high and low prices
for Class B Common Stock on such date) was $390.9 million.
Portions of the Proxy Statement for the Annual Meeting of Share Owners to be
held on October 22, 1996, are incorporated by reference into Part III of this
Form 10-K.
The exhibit index is located on page 42.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
KIMBALL INTERNATIONAL, INC.
FORM 10-K YEAR ENDED JUNE 30, 1996
Pages
<S> <C> <C>
PART I.
Item 1. Business 4-10
Item 2. Properties 11-12
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to Vote of Security Holders 12
PART II.
Item 5. Market for the Registrant's Common Stock and
Related Share Owner Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-19
Item 8. Financial Statements and Supplementary Data 20-36
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 36
PART III.
Item 10. Directors and Executive Officers of the Registrant 37
Item 11. Executive Compensation 37
Item 12. Security Ownership of Certain Beneficial
Owners and Management 37
Item 13. Certain Relationships and Related Transactions 37
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 38
SIGNATURES 39-40
</TABLE>
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PART I
Item 1. - Business
As used herein, the term "Company" refers to Kimball International, Inc.,
the Registrant, and its subsidiaries unless the context indicates otherwise.
The Company was incorporated in Indiana in 1939, and present management
assumed control in 1950. The corporate headquarters is located at 1600 Royal
Street, Jasper, Indiana.
The Company operates in three principal business segments: Furniture and
Cabinets, Electronic Contract Assemblies, and Processed Wood Products and Other.
The Company utilizes a substantial degree of vertical integration, as
approximately 50% of the final products of the Processed Wood Products and Other
Segment are used in the manufacturing processes in the Furniture and Cabinets
Segment.
The Company does not consider seasonal fluctuations to be significant.
Production is carried on in facilities located in the United States, Mexico,
England, Austria and France. In the U.S., the Company has facilities and
showrooms in 15 states.
<TABLE>
Sales by segment, after elimination of intersegment sales, for each of the
three years in the period ended June 30, 1996 are as follows:
<CAPTION>
(dollars in thousands)
1996 1995 1994
<S> <C> <C> <C>
Furniture and Cabinets $580,393 $570,219 $544,719
Electronic Contract Assemblies 284,639 245,101 204,149
Processed Wood Products and Other 58,604 80,592 73,616
Total $923,636 $895,912 $822,484
</TABLE>
Financial information by industry segment and geographic area for each of
the three years in the period ended June 30, 1996, is included in Note 14,
Business Segment and Geographic Area Information, of the Notes to Consolidated
Financial Statements, which can be found in Item 8, and is incorporated herein
by reference.
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<PAGE>
Segments
FURNITURE AND CABINETS
Historical Overview
Since 1950, the Company has produced wood furniture and cabinets, which
continue to be a significant part of the business. Products in this segment
include cabinets for televisions, audio speakers and audio components,
television stands, furniture and other wood related products produced on a
contract basis and sold to leading manufacturers in the home entertainment and
home furniture industries. Office furniture has been manufactured and sold
under the Kimball (registered trademark) trade name since 1970. In 1992, the
Company expanded its product offering with the acquisition of Harpers, a metal
office furniture manufacturer. Harpers has marketed metal office furniture
under the Harpers (registered trademark) trade name since 1982. Kimball and
Harpers office furniture systems have broad market application, while the
Kimball and National casegoods and seating lines are more focused to the wood
segment of the office furniture industry. The Cetra (registered trademark) and
Footprint (registered trademark) lines of Kimball office furniture systems
provide flexible configurations and help architects and designers optimize space
planning by utilizing Traxx (registered trademark), which increases space
efficiency and eliminates the need for a secondary support structure by using
existing walls.
The Company has expanded its sales and manufacture of furniture over the
years to include lodging-hospitality furniture, healthcare furniture designed
for long-term care, and residential furniture.
Through a predecessor acquired in 1966, L. Bosendorfer of Vienna, Austria,
the Company has been engaged in acoustical piano manufacturing and sales since
1828. Due to the continued decline in the domestic piano market, a decision was
reached in 1996 to cease sales and production of the Company's domestic piano
product line, which the Company had previously been engaged in since 1857
through a predecessor, W. W. Kimball Co., acquired in 1959. The Company
continues to offer the prestigious Bosendorfer line of high-end pianos for sale
worldwide.
Locations
Office, home, hospitality and healthcare furniture, T.V. cabinets and
related products, which make up the largest part of this segment, are produced
at sixteen plants, thirteen located in Indiana and one each in Kentucky, Alabama
and Idaho. Included in these locations is one Indiana facility which previously
manufactured domestic pianos up until the exit of this product line during 1996;
this facility continues to expand its manufacture and sale of Original Equipment
Manufacturer (OEM) wood related products on a contract basis, including wood
piano cabinets to the international piano industry. Nine of the sixteen plants
presently producing furniture and cabinets could interchange production between
these two basic products if needed.
Acoustical pianos are produced at a facility located in Austria.
One facility located in England primarily produces piano components and also
produces kitchen and bathroom wood products.
A facility in Jasper, Indiana houses an Education Center for dealer and
employee training, the Product Design and Research Center, and a Corporate
showroom for product display.
In the United States, showrooms are maintained in eleven cities for office
furniture and four cities for home furniture. In certain cities there are
separate office and home furniture showrooms. In addition, office furniture is
maintained in showrooms in London, England and Toronto, Canada. Piano showrooms
are located in London, England and Vienna, Austria. In certain showrooms other
Company products are also on display.
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Marketing Channels
Kimball and National office furniture is marketed through Company
salespersons to independent dealers throughout North America and England.
Harpers office furniture is marketed through Company salespersons to independent
dealers in North America. Cabinets and contract furniture are generally
marketed through Company salespersons, while hospitality and healthcare
furniture is marketed through independent manufacturers' representatives. The
Company's channel marketing strategy facilitates the sale of related office
furniture and upholstery within the hospitality and healthcare channels. Period
Reproduction furniture and residential furniture are generally marketed through
independent sales representatives to independent furniture dealers throughout
the United States. Bosendorfer (registered trademark) pianos are marketed
through Company salespersons and agents to independent dealers.
Major Competitive Factors
The major competitive factors in the office furniture industry are price in
relation to quality and appearance with certain low-priced product lines more
price sensitive, the utility of the product, reduced customer lead time, on-time
damage-free delivery to the customer, and ability to respond to requests for
special non-standard products. The Company maintains sufficient finished good
inventories to be able to offer to domestic dealers prompt shipment of certain
lines of Kimball, National and Harpers office furniture, thereby permitting
dealers to maintain smaller inventories. Many products are shipped through the
Company's delivery system. The Company believes that its trucking capability
enables it to reduce damage to shipments, enhance scheduling flexibility, and
improve the capability for on-time deliveries, which are all key competitive
factors in the office furniture industry. The major competitive factors in the
cabinet, home furniture and OEM product markets are quality, performance
history, price, on-time delivery and reduced customer lead time. Television,
audio speaker and audio component cabinets, television stands and contract home
furniture are produced to customer specifications from specific orders and
finished goods inventories are generally small, consisting of goods awaiting
shipment to a specific customer. The Company's own line of home furniture is
offered for sale on an immediate ship basis. Competitive factors in the
hospitality and healthcare furniture markets are quality, performance history,
on-time delivery, reduced customer lead time and price. The Company offers its
own line of hospitality and healthcare furniture as well as producing custom
hospitality and healthcare furniture to customers' specifications. Certain
finished goods in the hospitality and healthcare furniture lines are carried for
immediate shipment.
The major competitive factors in the high-end acoustical piano industry are
quality, acoustical tone and appearance.
Competitors
There are many manufacturers of office, home, hospitality, and healthcare
furniture. The Company believes, however, that there are a limited number of
relatively large producers of wood office, hospitality and healthcare furniture,
of which the Company believes that it is one of the larger in net sales. In
many instances wood office furniture competes in the market with metal office
furniture. Based on available industry statistics, metal office furniture has a
larger share of the total market than does wood. The Company has positioned
Harpers as a vehicle to strengthen its market share in the non-wood segment of
the industry.
The Company believes that it is one of the largest independent domestic
manufacturers of television and audio speaker cabinets, but certain
manufacturers of televisions and audio speakers, including some customers of the
Company, produce cabinets for their own use.
The high-end of the acoustical piano industry is characterized by a limited
number of competitors, including one major competitor.
There are many manufacturers of residential furniture. The Company does not
have a significant share of this market.
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Raw Material Availability
Many components used in the production of furniture, cabinets and pianos are
manufactured internally within the group or by other groups of the Company,
including processed wood parts, and on a limited basis, metal stamped parts and
certain polyurethane molded plastics. Raw materials used in the production of
wood furniture and cabinets are generally readily available. Certain metal
components used in various wood office furniture products, predominately Cetra
and seating, are purchased in a pre-fabricated stage with additional fabrication
and finishing performed by the Company. Raw materials used in the manufacture
of metal office furniture, primarily rolled steel, is readily available in the
world market. Certain pre-fabricated components used in the Company's piano
lines are available from a limited number of sources, although no interruptions
in supplies have been experienced.
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<PAGE>
ELECTRONIC CONTRACT ASSEMBLIES
The Company entered the electronic contract assemblies market in 1985 with
knowledge acquired from the production of electrical keyboards for musical
instruments, which were first produced in 1963. Electronic and
electro-mechanical products (electronic assemblies) are sold on a contract basis
and produced to customers' specifications. The Company expanded its
capabilities to include semiconductor DIE processing, design, testing and
packaging through an acquisition in 1996.
Production takes place at four manufacturing facilities located in Indiana,
California, Mexico and France. An additional facility located in Indiana is
utilized for warehousing space. The Indiana facility assembles electronic
components and products for sale to outside customers. The facility in Mexico
assembles electronic components, electronic cable harnesses and other electronic
products for sale to outside customers. Products from the Mexico facility are
accumulated at, and shipped from, a Texas warehouse. The facility in California
provides semiconductor DIE processing, design, testing and packaging, in
addition to assembly services. The French facility provides assembly services
for the European market.
Products are marketed by Company salespersons and independent sales
representatives on a contract basis. As contract electronic assemblies are
manufactured based on specific orders, finished goods inventories are generally
small consisting of goods awaiting shipment to a specific customer. Raw
materials are acquired for specific customer orders and may not be
interchangeable among products. Working capital in this segment carries a
higher degree of risk than the Company's other business segments, due to the
rapid technological changes and contract nature of this industry.
The competitive factors in the electronic contract assemblies market are
price, quality, production flexibility, reliability of on-time delivery and
reduced customer lead time. The trend of OEM's in the electronic industry to
subcontract the assembly process to companies with a core competence in this
area, combined with the proliferation of electronic components in today's
technologically advanced products has created growth in the electronic contract
assemblies industry. The Electronics industry is very competitive, with many
manufacturers of contract electronic assemblies, as well as in-house
capabilities of existing and potential customers. The Company does not have a
significant share of the market for such products.
Raw Materials for contract electronic products are generally readily
available from both domestic and foreign sources, although from time to time the
industry experiences allocations of certain components due to supply and demand
forces, combined with rapid product life cycles of certain components.
While the total electronic assemblies market has broad applications, the
Company's customers are concentrated in the automotive (automobiles and light
trucks), computer and telecommunications industries. Included in this segment
are sales to three customers which account for 24%, 23% and 22% of consolidated
net sales in 1996, 1995 and 1994, respectively. Included in sales to these
three customers are sales of electronic assemblies to Kelsey-Hayes Company, Inc.
which accounted for approximately 14% of consolidated net sales in the year
ended June 30, 1996, compared to 14% in the year ended June 30, 1995 and 12% in
the year ended June 30, 1994. The success of this segment is dependent on the
success of our customers' products.
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<PAGE>
PROCESSED WOOD PRODUCTS AND OTHER
The Company's manufacture and sale of processed wood products includes
unprocessed lumber, dimension lumber, plywood and veneer. The Company owns and
operates four sawmills, three lumber yards, three dimension lumber plants, a
plant which manufactures contract wood products, a sliced veneer plant and two
facilities which process plywood and related products. The Company reduced its
production capacity during the year, related to products which are sold to
outside customers.
Processed wood and other products manufactured by the Company are used
internally as well as sold to others. For fiscal year 1996, an estimated 50% of
the total production of these operations was for products used internally in the
Furniture and Cabinets segment. Products sold to others are marketed
principally to furniture manufacturers, primarily through Company personnel.
The competitive factors in the processed wood products market are price,
quality, availability, on-time delivery and reduced customer lead time. In
processed wood materials, the Company competes with many integrated forest and
specialty hardwood product companies and does not have a significant share of
the market for such products. Raw materials used in this business segment are
generally readily available.
Various miscellaneous products are manufactured by the Company for sales to
unaffiliated customers as well as for its own use. These include polyurethane
and polyester molded products, stamped metal parts, carbide cutting tools and
related services on cutting tools. Services of the Company's trucking fleet are
also sold to unaffiliated customers.
OTHER INFORMATION
BACKLOG
At June 30, 1996, the aggregate sales price of production pursuant to
worldwide open orders, which may be canceled by the customer, were $193 million
as compared to $230 million at June 30, 1995.
<TABLE>
BACKLOG BY SEGMENT
<CAPTION>
(dollars in millions)
June 30, 1996 June 30, 1995
<S> <C> <C>
Furniture and Cabinets $109 $100
Electronic Contract Assemblies 79 123
Processed Wood Products & Other 5 7
Totals $193 $230
The decrease in open orders in the Electronic Contract Assemblies segment is due
in part to certain customers reducing the time horizon in which they commit
orders.
Open orders as of June 30, 1996 are expected to be filled within the next fiscal
year. Open orders generally are not indicative of future sales trends.
</TABLE>
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<PAGE>
RESEARCH, PATENTS, AND TRADEMARKS
Research and development costs for the fiscal years ended June 30 were
approximately, in millions, $10.5 in 1996, $9.4 in 1995 and $8.6 in 1994.
Research and development activities include the development of manufacturing
processes, major process improvements, new product development, and wood,
electronic and plastic technology.
The Company owns the Kimball (registered trademark) trademark, which it
believes is significant to its office, electronic, hospitality, healthcare and
home furniture businesses, and owns the following trademarks which it believes
are significant to its furniture business only: National (registered
trademark), Cetra (registered trademark), Footprint (registered trademark),
Artec (registered trademark), Traxx (registered trademark) and Harpers
(registered trademark); and to the piano business only: Bosendorfer (registered
trademark). The Company also owns certain patents and other trademarks and has
certain other patent applications pending, which in the Company's opinion are
not significant to its business.
ENVIRONMENT AND ENERGY MATTERS
The Company's operations are subject to various Federal, State and Local
laws and regulations with respect to environmental matters. The Company
believes that it is in substantial compliance with present laws and regulations
and that there are no material liabilities related to such items.
The Company is dedicated to excellence, leadership and stewardship in
matters of protecting the environment and communities in which the Company has
operations. The Company believes that continued compliance with Federal, State
and Local laws and regulations which have been enacted relating to the
protection of the environment will not have a material effect on its capital
expenditures, earnings or competitive position. Management believes capital
expenditures for environmental control equipment during the two fiscal years
ending June 30, 1998, will not represent a material portion of total capital
expenditures during those years.
The Company's manufacturing operations require significant amounts of
energy, including natural gas and oil. Federal and State statutes and
regulations control the allocation of fuels available to the Company, but to
date the Company has experienced no interruption of production due to such
regulations. In its wood processing plants, significant energy requirements are
satisfied internally by the use of the Company's own wood waste products.
EMPLOYEES
At June 30, 1996, the Company had 8,723 full time employees, of which 7,284
were employed in the United States and 1,439 in foreign countries. The Company
has no collective bargaining agreements with respect to its domestic employees.
All of the Company's foreign operations are subject to collective bargaining
arrangements. The Company believes that its employee relations are good.
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Item 2. - Properties
<TABLE>
The location and number of the Company's major manufacturing, warehousing,
and service facilities, including the executive and administrative offices, as
of June 30, 1996, are as follows:
<CAPTION>
------------------ Number of Facilities -------------------
Furniture Processed
and Electronic Contract Wood
Cabinets Assemblies Products and Other Total
<S> <C> <C> <C> <C>
Indiana 20 2 12 34
Kentucky 1 3 4
Tennessee 3 3
California 2 1 3
Alabama 1 1
Idaho 1 1
Mississippi 1 1
Texas 1 1
Austria 2 2
England 1 1
France 1 1
Mexico 1 1
</TABLE>
<TABLE>
These facilities occupy approximately 6,701,000 square feet in aggregate,
of which approximately 6,407,000 square feet are owned in fee and 294,000 square
feet are leased. Square footage of these facilities are summarized as follows:
<CAPTION>
-------- Approximate Square Footage ----------
Furniture Processed
and Electronic Contract Wood
Cabinets Assemblies Products and Other
<S> <C> <C> <C>
Fee 4,630,000 344,000 1,433,000
Leased 205,000 89,000 -0-
Sub-total 4,835,000 433,000 1,433,000
Sub-leased -0- -0- (44,000)
Total 4,835,000 433,000 1,389,000
</TABLE>
Including certain leased furniture showroom areas excluded from the above
listing, total facilities approximate 6.8 million square feet. (See Note 5 -
Commitments - Leases of Notes to Consolidated Financial Statements in Item 8,
for additional information concerning leases.)
Included in Processed Wood Products and Other are executive, national sales
and administrative offices, a product design and research center, the production
facility for polyurethane and polyester molded plastic, the production facility
for stamped metal products, the production and service facility for carbide
cutting tools, a facility used in managing the Company's trucking fleet, and an
energy center for the Kimball Industrial Park consisting of 3 trifuel boilers.
Properties are generally utilized at normal capacity levels on a single
shift basis, with certain facilities operating a second shift, while other
facilities utilize a reduced second or third shift to meet increased demand
levels. At times, certain facilities were not utilized at normal capacity
levels during the fiscal year, because of declines in sales. The Energy Center
is not operating at full capacity.
Any loss of income resulting from a facility catastrophe would be partially
offset by business interruption insurance coverage.
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Operating leases totaling 294,000 square feet expire 1996-1999, with all
leases subject to renewal options. In addition to the above production,
warehouse and office properties, the Company has 18 leased showroom facilities
totaling 122,000 square feet, in 10 states in the United States, two locations
in London, England, one location in Vienna, Austria, and one location in
Toronto, Canada.
The Company owns approximately 15,128 acres of land which includes land
where various Company facilities reside, including approximately 14,249 acres
generally for hardwood timber reserves, approximately 196 acres of land in the
Kimball Industrial Park, Jasper, Indiana (a site for certain production and
other facilities, and for possible future expansions), and approximately 60
acres in Post Falls, Idaho, where the Harpers plant is located.
Item 3. - Legal Proceedings
The Registrant and its subsidiaries are not parties to any material pending
legal proceedings, other than ordinary routine litigation incidental to the
business.
Item 4. - Submission of Matters to Vote of Security Holders
None to Report
<TABLE>
Executive Officers of the Registrant
The executive officers of the Registrant as of August 31, 1996 are as
follows: (Age as of August 31, 1996)
<CAPTION>
Office and Officer
Name Age Area of Responsibility Since
<S> <C> <C> <C>
Thomas L. Habig 68 Chairman of the Board of Directors 1955
Douglas A. Habig 49 President and Chief Executive Officer, 1975
and Director
Arnold F. Habig 89 Assistant to the Chief Executive 1950
Officer
James C. Thyen 52 Senior Executive Vice President - Chief 1974
Financial and Administrative Officer,
Treasurer, and Director
John B. Habig 63 Senior Executive Vice President - 1958
Operations Officer, Assistant Secretary,
and Director
Ronald J. Thyen 59 Senior Executive Vice President - 1966
Operations Officer, and Director
John T. Thyen 58 Senior Executive Vice President -Marketing 1978
and Sales, and Director
Gary P. Critser 59 Senior Executive Vice President - Chief 1967
Accounting Officer, Secretary, and Director
Executive officers are elected annually by the Board of Directors. Thomas
L. Habig, John B. Habig and Douglas A. Habig are brothers and are sons of Arnold
F. Habig. James C. Thyen, Ronald J. Thyen and John T. Thyen are brothers. All
of the executive officers have been employed by the Company for more than the
past five years in the capacity shown or some other executive capacity.
</TABLE>
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PART II
Item 5. - Market for the Registrant's Common Stock and Related Share Owner
Matters
<TABLE>
Market Prices: The Company's Class B Common Stock trades on The Nasdaq Stock
Market under the symbol: KBALB. High and low price ranges by quarter for the
last two fiscal years as quoted by the National Association of Security Dealers
(NASDAQ) are as follows:
<CAPTION>
------- 1996 ------ ------- 1995 ------
High Low High Low
<S> <C> <C> <C> <C>
First Quarter. . . . . . . . $28 $24 1/2 $26 1/4 $21 3/8
Second Quarter . . . . . . . $28 1/4 $24 3/4 $26 $23
Third Quarter. . . . . . . . $30 5/8 $24 1/4 $28 1/4 $23 3/4
Fourth Quarter . . . . . . . $31 1/4 $27 $28 3/4 $25
There is no active trading market for the Company's Class A Common Stock.
</TABLE>
<TABLE>
Dividends: There are no restrictions on the payment of dividends except that
dividends paid on Class B common stock must, by charter provisions, be on a
fiscal year basis $.01 per share more than dividends paid on Class A Common
Stock, during those fiscal years when dividends are paid on Class A Common
Stock. During fiscal year 1996 dividends declared were $19.8 million or $.94
per share on Class A Common Stock and $.95 per share on Class B Common Stock.
The dividends by quarter for 1996 compared to 1995 are as follows:
<CAPTION>
------ 1996 ------ ------ 1995 ------
Class A Class B Class A Class B
<S> <C> <C> <C> <C>
First Quarter. . . . . . . . $.22 3/4 $.23 $.20 3/4 $.21
Second Quarter . . . . . . . $.22 3/4 $.23 $.20 3/4 $.21
Third Quarter. . . . . . . . $.22 3/4 $.23 $.20 3/4 $.21
Fourth Quarter . . . . . . . $.25 3/4 $.26 $.22 3/4 $.23
Totals . . . . . . . . . . . $.94 $.95 $.85 $.86
</TABLE>
Share Owners: On July 26, 1996, the Company's Class A Common Stock was owned by
approximately 640 Share Owners of record and the Company's Class B Common Stock
by approximately 2,430 Share Owners of record, of which approximately 390 also
owned Class A Common Stock.
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<PAGE>
<TABLE>
Item 6. - Selected Financial Data (dollars in thousands, except per share
amounts)
<CAPTION>
Year Ended June 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Sales $923,636 $895,912 $822,484 $722,400 $617,301
Net Income $ 45,095 $ 41,439 $ 36,169 $ 30,583 $ 38,628
Net Income Per
Common Share:
Class A $2.15 $1.96 $1.70 $1.44 $1.82
Class B $2.16 $1.97 $1.71 $1.45 $1.83
Total Assets $538,225 $497,086 $471,413 $452,705 $422,023
Long Term Debt-Less
Current Maturities $ 3,016 $ 924 $ 811 $ 2,017 $ 3,157
Cash Dividends Per
Common Share:
Class A $.94 $.85 $.83 $.77 $.69
Class B $.95 $.86 $.84 $.78 $.70
</TABLE>
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<PAGE>
Item 7. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
Fiscal year 1996 net sales set a new record of $923,636,000, an increase of 3%
above 1995 sales. Net income and Class B earnings per share set new records of
$45,095,000 and $2.16, respectively, increases of 9% above 1995 levels. Cash
flow generated from operations was $62,003,000 for the 1996 fiscal year. Open
orders were $192,758,000 at June 30, 1996.
RESULTS OF OPERATIONS
1996 DISCUSSION
Net sales for the 1996 fiscal year reached a new record of $923,636,000 as
sales expanded in the larger two of the Company's three business segments -
Furniture and Cabinets, and Electronic Contract Assemblies. Net sales in the
Processed Wood Products and Other segment declined from the prior year.
Operating income for fiscal year 1996 was $62,511,000.
<TABLE>
Business Segments
(Amounts in Millions)
<CAPTION>
------ Year Ended June 30 ----
1996 1995 1994
<S> <C> <C> <C>
Net Sales:
Furniture and Cabinets. . . . . . . . . $580.4 $570.2 $544.7
Electronic Contract Assemblies. . . . . 284.6 245.1 204.1
Processed Wood Products and Other . . . 58.6 80.6 73.6
Operating Income:
Furniture and Cabinets. . . . . . . . . $ 33.5 $ 31.0 $ 33.0
Electronic Contract Assemblies. . . . . 21.4 20.8 13.5
Processed Wood Products and Other . . . 7.6 10.1 7.1
</TABLE>
FURNITURE AND CABINETS
Sales in the Company's largest segment, Furniture and Cabinets, increased 2%
above the prior year as sales increases on office furniture and lodging product
lines were partially offset by lower sales of Original Equipment Manufacturer
(OEM) and piano product lines.
Certain systems, casegoods and seating office furniture product lines
experienced volume growth, primarily on the Company's established product line
offering, including market share gain on several product lines. Leading the
increase in office furniture sales were the Company's value-oriented office
furniture product lines, which continued to increase at a rate above the general
industry. Operating income in the office furniture product line increased from
the prior year due primarily to increased volumes, cost reduction initiatives in
sales and manufacturing processes, and reduced operating losses on steel office
furniture product lines. The effect of material price increases has diminished
from the prior year. Administration costs increased during the year, due in
part to costs that were incurred to improve processes through information
technology. Increased volumes and manufacturing efficiency improvements on
steel office furniture product lines were partially offset by increased selling
costs incurred to expand this product line into select markets during the year.
The Company anticipates overall operating losses to decline further on steel
office furniture product lines during the 1997 fiscal year. An existing
facility that was redeployed to systems office furniture became operational
during the latter half of the 1996 fiscal year. This facility was dedicated to
fulfill the long-term growth that management anticipates in this product line.
Start-up costs incurred by this facility were expensed during the first part of
the fiscal year.
Sales of OEM product lines, primarily television cabinets and stands, audio
speaker cabinets, and residential furniture, decreased when compared to the
strong sales level achieved during the prior year. Lower product demand was
partly attributed to certain cabinet customers requesting scheduling delays in
order to adjust inventory levels with less aggressive retail sales forecasts.
- 15 -
<PAGE>
Rescheduling and production flexibility are inherent in the OEM supplier market
and may cause short-term fluctuations in any given period. Operating profits
decreased on the lower sales volume. Some production capacity was utilized to
assist in the production of certain other product lines within this segment.
The Company reached a strategic decision to exit the domestic wholesale piano
product line during the third quarter of 1996, due to the continuing decline in
the domestic piano market. This product line accounted for less than 1% of
consolidated sales during the 1996 fiscal year and less than 2% during 1995.
This production facility will now concentrate its resources on increasing
production and sales of OEM wood products, including piano cases to other OEM
piano manufacturers, lodging furniture products and home entertainment products.
Sales of hospitality product lines continued to increase as the result of the
Company's strategy to market standard product lines of furniture to the
hospitality market for renovated and newly constructed facilities. The Company
continues to selectively pursue sales and manufacturing of custom-made
furniture, which is produced to a customer's unique specification. Operating
income improved over the prior year due to increased volume and production
efficiencies associated with producing standardized products. Costs were
incurred to expand the standard product offering during the first half of the
fiscal year, which allowed additional sales and profits to be generated during
the latter half of the year.
A United Kingdom subsidiary sharply reduced their operating loss from the year
earlier period, due to benefits derived from combining two production facilities
into one facility and other operating efficiency improvements. Costs to combine
these two facilities were included in the prior year results.
ELECTRONIC CONTRACT ASSEMBLIES
Sales in the Company's second largest segment, Electronic Contract Assemblies,
increased 16% during 1996, when compared to 1995 levels. Additional volumes
from new computer and telecommunication customers combined with increased
volumes from certain existing electronic-automotive and computer customers
fueled this growth. Operating profits increased at a slower rate than sales, as
competitive pricing pressures continued to impede profit margin growth.
However, these additional volumes were produced using less facility square
footage when compared to the prior year, as the result of re-engineering
assembly and support processes. Additional investments in working capital,
primarily inventory and accounts receivable, were required to support this
segment. The Company purchased certain assets of California-based ELMO
Semiconductor Corporation and all the capital stock of France-based ELMO
Semiconductuers, SARL as of March 29, 1996. The design, testing and packaging
technologies acquired, including multichip modules, will be combined to enhance
and expand the Company's existing core competencies in servicing the contract
electronic market. The acquisition was accounted for as a purchase, with
results of operations included in consolidated results from the date of
acquisition, and are immaterial to the 1996 consolidated results. Included in
this segment are sales to three customers which accounted for 24% of
consolidated sales in 1996 and 23% in 1995. One of these customers accounted
for 14% of consolidated sales in 1996 and 1995. This segment's working capital
carries a higher degree of risk than other segments, due to rapid technological
changes and the contract nature of this industry. As in other segments, the
Company records reserves in response to these risks as they arise based upon
estimates derived from available information known at that time.
PROCESSED WOOD PRODUCTS AND OTHER
Sales in the Company's smallest segment, Processed Wood Products and Other,
declined 27% in 1996, when compared to the prior year, due primarily to reduced
volumes of processed wood products as the result of the Company reducing its
production capacity of processed wood products sold to outside customers,
combined with an industry-wide softening in demand for processed wood products,
which management believes to be temporary. Sales of plastic components also
declined from the prior year on decreased volumes. Operating profits declined
on lower sales volumes. The effect of material price increases has diminished
from the prior year. This segment continues to supply a significant portion of
its production output for use as production components in the Furniture and
Cabinet segment.
- 16 -
<PAGE>
CONSOLIDATED OPERATIONS
Consolidated cost of sales as a percent of sales decreased 0.2 percentage point
when compared to 1995. A sales mix change within the Company's largest segment,
Furniture and Cabinets, resulted in lower labor costs as a percent of sales
within this segment. Material costs as a percent of sales increased, as the
consolidated sales mix continued to shift towards the Electronic Contract
Assemblies segment, which carries higher material costs than other product lines
of the Company. A decrement in LIFO inventory layers helped to mitigate the
higher material costs. The effect of material component price increases,
primarily on wood component products, has diminished when compared to the prior
year.
Consolidated selling, administrative and general expenses as a percent of sales
continued to decline, down 0.1 percentage point when compared to 1995, due in
part to additional sales volumes having little effect on the fixed portion of
these costs combined with cost reduction initiatives, which were partially
offset by increased costs associated with improving processes through
information technology in certain product lines.
A provision of $3,400,000 was established to cover all incremental costs to exit
the domestic wholesale piano product line during the third quarter of 1996.
Final production related to this product line was completed prior to the end of
April 1996 and sales were completed prior to the end of May 1996.
Operating income was $62,511,000 in 1996, a 1% increase over the 1995 amount of
$61,826,000, primarily due to increased volumes and operating efficiency
improvements on office furniture product lines and lodging product lines, and
operating improvements in the Company's European operations.
Other income increased above the prior year due primarily to increased interest
income earned on higher average investment balances and gains on the sale of
certain assets during the current year.
The effective income tax rate decreased 2.2 percentage points, due primarily to
lower operating losses in Europe during 1996. Higher operating losses in Europe
during the prior year provided little immediate tax benefit during 1995.
The Company achieved record net income and Class B earnings per share of
$45,095,000 and $2.16, respectively, increases of 9% when compared to the prior
year levels of $41,439,000 and $1.97 per share. Excluding the product line exit
costs, net income and Class B earnings per share would have been $46,965,000 and
$2.25, respectively.
1995 DISCUSSION
1995 net sales were $895,912,000, a 9% increase above the prior year sales, as
sales increased in all three of the Company's business segments. Net income and
Class B earnings per share increased 15% above the prior year to $41,439,000 and
$1.97, respectively. The prior year included the impact of adopting FASB
Statement No. 109, Accounting for Income Taxes, which increased 1994 net income
by $1,200,000 or 5 cents per Class B share.
FURNITURE AND CABINETS
Sales in the Furniture and Cabinets segment increased 5% when compared to the
prior year, as sales increases on most major product lines were partially offset
by declines in steel office furniture product line sales.
Certain systems, casegoods and seating office furniture experienced growth as
the result of increases on both new and mature product line offerings, including
market share gains in several product lines. Increased volume levels accounted
for most of the product line increases, as pricing remained competitive in the
office furniture industry. Production capacity constraints in systems office
furniture prompted the Company to initiate redeployment of an additional
facility, previously utilized by another segment, to this product line. Sales
of steel office furniture product lines declined from the prior year level, due
to reduced production capacity during the start-up phase at the new Idaho
production facility during the 1995 fiscal year. Operating income decreased
from the prior year due to material price increases and increased selling
costs. Steel office furniture product lines continued to incur operating
losses on lower sales volumes.
- 17 -
<PAGE>
Double digit volume increases were experienced on OEM television and speaker
cabinet product lines from existing customers, while volume increases in OEM
home furniture product lines resulted from both new and existing customers.
Operating income improved on volume increases and re-engineered processes that
allowed additional volumes to be produced utilizing existing resources, while
improving cost structures.
The Company's domestic piano unit continued to focus on increasing sales and
production of OEM wood products to absorb excess production capacity resulting
from the continuing decline in the piano market.
Sales of hospitality furniture increased as a result of the Company's market
strategy to link its own standardized product lines of furniture to the
hospitality renovation market. Operating income improved on the additional
volumes and the product mix shift towards standardized products.
Operating losses in Europe widened as costs were incurred during the latter half
of the fiscal year to consolidate two production facilities in the United
Kingdom into one facility, permanently lowering both fixed costs and future
break-even sales levels.
ELECTRONIC CONTRACT ASSEMBLIES
Sales in the Electronic Contract Assemblies segment increased 20% above the
prior-year level as volume increases were experienced on new product assemblies
including computer peripheral and telecommunication assemblies, and existing
product assemblies including automotive electronic assemblies. Included in this
segment are sales to one customer that accounted for 14% of consolidated net
sales in 1995 and 12% in 1994. Operating income increased on additional
volumes, due in part to process re-engineering initiatives begun in prior years
that allowed additional volumes and additional product assemblies to be added
during the 1995 fiscal year. Competitive pricing pressures continued in this
segment, as operating margins on these product lines were generally lower than
those found on most of the Company's other major product lines.
PROCESSED WOOD PRODUCTS AND OTHER
Sales in the Processed Wood Products and Other segment increased by 9%, led by
an increase in outside sales of processed wood products and plastic components.
Increases in processed wood product lines were primarily volume increases in
lumber and to a lesser extent, price increases which were triggered by increased
material costs. Increased sales of plastic components were the result of volume
increases with new and existing customers. Operating income increased as the
result of additional volumes and process improvements. Material cost price
increases, particularly on processed wood product lines, were passed along to
customers on a delayed basis.
CONSOLIDATED OPERATIONS
Consolidated cost of sales as a percent of sales increased 0.5 percentage point
due in part to a change in the sales mix. A larger portion of consolidated
sales was derived from the Electronic Contract Assemblies segment, which carries
a higher cost of sales percentage than most of the Company's other major product
lines. Increased material costs resulted from a sales mix change within and
among business segments to product lines that require a higher level of material
components, and increased material component prices. Labor costs as a percent
of sales decreased from a change in sales mix towards products which require
less labor content and efficiencies derived from the Company's process
improvement initiatives. Overhead costs as a percent of sales decreased as
additional production volumes were realized by improving utilization of fixed
overhead costs and reduced inventory carrying costs, both resulting from process
improvements.
Selling, administrative and general expenses as a percent of sales continued to
decline, down 0.8 percentage point, as process improvements allowed additional
sales volumes to be supported by moderate additions to the Company's existing
overall infrastructure.
Operating income as a percent of sales increased 0.4 percentage point when
compared to the prior year.
- 18 -
<PAGE>
Other income increased over the prior year due to increased interest income from
higher average investment balances and higher investment yields. The
devaluation of the Mexican peso during the 1995 fiscal year had an immaterial
effect on earnings, due to the Company's capital and financing structure of its
Mexican operations.
The income tax rate for 1995 increased 2.4 percentage points over the prior
year, mainly due to the adoption of FASB Statement No. 109, Accounting for
Income Taxes, which reduced the prior year's taxes by $1.2 million and reduced
the prior year's effective income tax rate by 2.0 percentage points. Increased
losses in Europe, due to the facility combination costs, accounted for the
remaining increase, as there were no current tax benefits available on these
losses.
Net income for 1995 was $41,439,000, or $1.97 per Class B share, up 15% from the
1994 net income level of $36,169,000, or $1.71 per Class B share.
LIQUIDITY AND CAPITAL RESOURCES
The Company continued to maintain a strong liquidity position, ending the 1996
fiscal year with cash, cash equivalents and short-term investments of $114
million, as compared to $113 million one year earlier. Working capital and the
current ratio continued to be strong at $220 million and 2.8 to 1, respectively,
at June 30, 1996 as compared to $202 million and 2.9 to 1, respectively, one
year earlier.
The Company generated $62 million of cash flow from operations for the 1996
fiscal year, compared to $78 million generated the year before, as net income
and non-cash charges to net income were partially reduced by additional
investments in working capital. Increases in accounts receivable of $21
million, inventory of $13 million, and accounts payable of $16 million were
primarily attributed to supporting the Electronic Contract Assemblies segment.
The Company reinvested $44 million into capital investments for the future,
including the acquisition of certain assets of ELMO Semiconductor Corporation
and all the capital stock of ELMO Semiconductuers SARL and related technological
capabilities, production equipment upgrades, facility conversion costs for
planned redeployment, facility upgrades, information technology, and trucking
fleet upgrades for product delivery. Financing cash flows of $24 million
consisted primarily of dividend payments. Net cash flows, excluding the
purchases and maturities of short-term investments, amounted to a positive $1
million for the 1996 fiscal year.
The Company plans to maintain a strong liquidity position for the 1997 fiscal
year and believes its available funds on hand and cash generated from operations
will be sufficient for working capital needs and to fund investments for the
Company's future.
NEW ACCOUNTING STANDARD
The Company currently accounts for its employee stock option plans using APB
Opinion No. 25, Accounting for Stock Issued to Employees, which results in no
charge to earnings when options are issued at market value. During 1995, the
Financial Accounting Standards Board issued FASB Statement No. 123, Accounting
for Stock-Based Compensation, which considers stock options as compensation
expense to the Company. Under this new standard, which is effective for the
Company's 1997 fiscal year, the Company has the option of accounting for
employee stock option plans as it currently does, or it may use the new method.
The Company intends to continue to use the existing method, adopting the
disclosure requirements of FASB Statement No. 123 effective with the 1997 fiscal
year reporting.
- 19 -<PAGE>
<PAGE>
<TABLE>
Item 8. - Financial Statements and Supplementary Data
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
Page
<S> <C>
Report of Management . . . . .. . . . . . . . . . . . . . . . . . . . . . 21
Report of Independent Public Accountants . . . . . . . . . . . . . . . . 22
Consolidated Statement of Financial Condition
as of June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 23
Consolidated Statement of Income
for the Three Years Ended June 30, 1996. . . . . . . . . . . . . . . . 24
Consolidated Statement of Cash Flows
for the Three Years Ended June 30, 1996. . . . . . . . . . . . . . . . 25
Consolidated Statement of Share Owners' Equity
for the Three Years Ended June 30, 1996. . . . . . . . . . . . . . . . 26
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . 27-36
</TABLE>
-20-
<PAGE>
REPORT OF MANAGEMENT
To the Share Owners of Kimball International, Inc.
The management of Kimball International, Inc. is responsible for the preparation
and integrity of the accompanying financial statements and other related
information in this report. The consolidated financial statements of the
Company and its subsidiaries, including the footnotes, were prepared in
accordance with generally accepted accounting principles and include judgement
and estimates, which in the opinion of management are applied on a conservative
basis.
The Company maintains a system of internal controls intended to provide
reasonable assurance that assets are safeguarded from loss or material misuse,
transactions are authorized and recorded properly, and that the accounting
records may be relied upon for the preparation of the financial statements.
This system is tested and evaluated regularly for adherence and effectiveness by
the Company's staff of internal auditors, as well as the independent public
accountants in connection with their annual audit.
The Audit Committee of the Board of Directors, which is comprised of directors
who are not employees of the Company, meets regularly with management, the
internal auditors and the independent public accountants to review the work
performed and to ensure that each is properly discharging its responsibilities.
The internal auditors and the independent public accountants have free and
direct access to the Audit Committee, and they meet periodically, without
management present, to discuss appropriate matters.
Douglas A. Habig
Douglas A. Habig
President
Chief Executive Officer
Gary P. Critser
Gary P. Critser
Senior Executive Vice President
Chief Accounting Officer
Secretary
July 26, 1996
-21-<PAGE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Share Owners of Kimball International, Inc.
We have audited the accompanying consolidated statement of financial condition
of Kimball International, Inc. (an Indiana corporation) and subsidiaries as of
June 30, 1996 and 1995, and the related consolidated statements of income, cash
flows and share owners' equity for each of the three years in the period ended
June 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Kimball
International, Inc. and subsidiaries as of June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1996, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The schedule listed under Item 14 is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected
to the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 26, 1996
-22-
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Amounts in Thousands, Except for Share Data)
June 30
1996 1995
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 5,647 $ 15,278
Short-term investments-at cost, estimated market
values of $108,164 and $97,956, respectively. . . . . . . . 108,425 97,534
Accounts and notes receivable, less allowance for
possible losses of $4,075 and $4,245, respectively. . . . . 117,140 96,057
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 89,489 76,146
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,550 21,801
Total current assets . . . . . . . . . . . . . . . . . . . 342,251 306,816
Property and Equipment-at cost, less accumulated depreciation. . 174,009 177,130
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 21,965 13,140
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $538,225 $497,086
Liabilities and Share Owners' Equity
Current Liabilities:
Loans payable to banks . . . . . . . . . . . . . . . . . . . . $ 2,282 $ 1,763
Current maturities of long-term debt . . . . . . . . . . . . . 492 393
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 50,963 35,328
Dividends payable. . . . . . . . . . . . . . . . . . . . . . . 5,393 4,811
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 62,913 62,751
Total current liabilities. . . . . . . . . . . . . . . . . 122,043 105,046
Other Liabilities:
Long-term debt, less current maturities. . . . . . . . . . . . 3,016 924
Deferred income taxes and other. . . . . . . . . . . . . . . . 22,152 19,779
Total other liabilities. . . . . . . . . . . . . . . . . . 25,168 20,703
Share Owners' Equity:
Common stock-par value $.31 1/4 per share:
Class A- Shares authorized-10,453,000 (10,477,000 in 1995)
Shares issued-7,311,000 (7,335,000 in 1995). . . . . 2,285 2,292
Class B- Shares authorized-30,000,000
Shares issued-14,201,000 (14,177,000 in 1995). . . . 4,438 4,431
Additional paid-in capital . . . . . . . . . . . . . . . . . . 898 812
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 399,024 373,704
Foreign currency translation adjustment. . . . . . . . . . . . 1,441 1,981
Less: Treasury stock-at cost:
Class A- 1,000 shares (15,000 in 1995). . . . . . . . . . . . (18) (325)
Class B- 700,000 shares (499,000 in 1995) . . . . . . . . . . (17,054) (11,558)
Total share owners' equity . . . . . . . . . . . . . . . . 391,014 371,337
Total Liabilities and Share Owners' Equity . . . . . . . . . . . $538,225 $497,086
See Notes to Consolidated Financial Statements
</TABLE>
-23-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands, Except for Per Share Data)
Year Ended June 30
1996 1995 1994
<S> <C> <C> <C>
Net Sales. . . . . . . . . . . . . . . . . . . . . . . $923,636 $895,912 $822,484
Cost of Sales. . . . . . . . . . . . . . . . . . . . . 664,311 645,591 588,849
Gross Profit . . . . . . . . . . . . . . . . . . . . . 259,325 250,321 233,635
Selling, Administrative and General Expenses . . . . . 193,414 188,495 179,981
Product Line Exit Costs. . . . . . . . . . . . . . . . 3,400 --- ---
Operating Income . . . . . . . . . . . . . . . . . . . 62,511 61,826 53,654
Other Income (Expense):
Interest Expense . . . . . . . . . . . . . . . . . . (408) (273) (202)
Interest Income. . . . . . . . . . . . . . . . . . . 7,411 5,755 2,240
Other, Net . . . . . . . . . . . . . . . . . . . . . 4,801 3,487 3,727
Other Income, Net . . . . . . . . . . . . . . . . . 11,804 8,969 5,765
Income Before Taxes on Income. . . . . . . . . . . . . 74,315 70,795 59,419
Taxes on Income. . . . . . . . . . . . . . . . . . . . 29,220 29,356 23,250
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 45,095 $ 41,439 $ 36,169
Net Income Per Share of Common Stock, based on the
average number of shares outstanding during the year:
Class A. . . . . . . . . . . . . . . . . . . . . . . $2.15 $1.96 $1.70
Class B. . . . . . . . . . . . . . . . . . . . . . . $2.16 $1.97 $1.71
Average Number of Shares Outstanding:
Class A. . . . . . . . . . . . . . . . . . . . . . . 7,308 7,334 7,366
Class B. . . . . . . . . . . . . . . . . . . . . . . 13,597 13,737 13,799
Totals . . . . . . . . . . . . . . . . . . . . . . 20,905 21,071 21,165
See Notes to Consolidated Financial Statements
</TABLE>
-24-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
Year Ended June 30
1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . $ 45,095 $ 41,439 $ 36,169
Non-cash charges (credits) to net income:
Depreciation and amortization. . . . . . . . . . . 36,092 30,079 28,726
Gain on sales of assets. . . . . . . . . . . . . . (1,235) (370) (950)
Deferred income tax and other deferred charges . . (939) 940 (3,096)
Product line exit costs. . . . . . . . . . . . . . 3,400 --- ---
(Increase) decrease in current assets:
Accounts and notes receivable. . . . . . . . . . . (18,586) 61 (8,495)
Inventories. . . . . . . . . . . . . . . . . . . . (13,343) 4,937 3,583
Other current assets . . . . . . . . . . . . . . . 1,175 (1,730) 196
Increase (decrease) in current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . 13,138 2,195 (6,860)
Accrued expenses . . . . . . . . . . . . . . . . . (2,794) 762 8,946
Net cash provided by operating activities. . . . 62,003 78,313 58,219
Cash Flows From Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . (32,793) (34,508) (46,607)
Proceeds from sales of assets. . . . . . . . . . . . 7,282 2,267 1,565
Increase in other assets . . . . . . . . . . . . . . (11,658) (2,770) (6,606)
Purchases of short-term investments. . . . . . . . . (78,140) (110,926) (28,512)
Maturities of short-term investments . . . . . . . . 67,249 89,886 54,615
Net cash used for investing activities . . . . . (48,060) (56,051) (25,545)
Cash Flows From Financing Activities:
Net change in short-term borrowings. . . . . . . . . 519 143 (1,860)
Net change in long-term debt . . . . . . . . . . . . 362 (1,061) (1,841)
Acquisition of treasury stock, net . . . . . . . . . (5,131) (4,160) (339)
Dividends paid . . . . . . . . . . . . . . . . . . . (19,193) (17,653) (17,706)
Other-net. . . . . . . . . . . . . . . . . . . . . . (105) 125 (48)
Net cash used for financing activities . . . . . (23,548) (22,606) (21,794)
Effect of Exchange Rate Change
on Cash and Cash Equivalents . . . . . . . . . . . . (26) 170 (53)
Net (Decrease) Increase in Cash and Cash Equivalents . (9,631) (174) 10,827
Cash and Cash Equivalents at Beginning of Year . . . . 15,278 15,452 4,625
Cash and Cash Equivalents at End of Year . . . . . . . $ 5,647 $ 15,278 $ 15,452
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Income taxes . . . . . . . . . . . . . . . . . . . $ 31,353 $ 30,600 $ 25,197
Interest . . . . . . . . . . . . . . . . . . . . . $ 391 $ 281 $ 518
Total Cash, Cash Equivalents
and Short-Term Investments:
Cash and cash equivalents. . . . . . . . . . . . . . $ 5,647 $ 15,278 $ 15,452
Short-term investments . . . . . . . . . . . . . . . 108,425 97,534 76,494
Totals . . . . . . . . . . . . . . . . . . . . . $114,072 $112,812 $ 91,946
See Notes to Consolidated Financial Statements
</TABLE>
-25- <PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHARE OWNERS' EQUITY
(Amounts in Thousands, Except for Per Share Data)
Three Years Ended June 30, 1996
---------- Common Stock - $.31 1/4 Par Value -----------
-------- Class A ---------- -------- Class B ---------
Authorized Issued Authorized Issued
Shares Shares Amount Shares Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Amounts at June 30, 1993 . . . . . . . . . . . . . . . 10,523 7,381 $2,307 30,000 14,131 $4,416
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . (19) (19) (6) 19 6
Amounts at June 30, 1994 . . . . . . . . . . . . . . . 10,504 7,362 $2,301 30,000 14,150 $4,422
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . (27) (27) (9) 27 9
Amounts at June 30, 1995 . . . . . . . . . . . . . . . 10,477 7,335 $2,292 30,000 14,177 $4,431
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . (24) (24) (7) 24 7
Amounts at June 30, 1996 . . . . . . . . . . . . . . . 10,453 7,311 $2,285 30,000 14,201 $4,438
<CAPTION>
Additional
Paid-In Retained -- Treasury Stock --
Capital Earnings Shares Amount
<S> <C> <C> <C> <C>
Amounts at June 30, 1993 . . . . . . . . . . . . . . . $791 $331,839 (338) $ (7,363)
Net income for the year. . . . . . . . . . . . . . . 36,169
Treasury stock acquired-net. . . . . . . . . . . . . (12) (339)
Cash dividends:
Class A ($.83 per share) . . . . . . . . . . . . . (6,114)
Class B ($.84 per share) . . . . . . . . . . . . . (11,590)
Amounts at June 30, 1994 . . . . . . . . . . . . . . . $791 $350,304 (350) $ (7,702)
Net income for the year. . . . . . . . . . . . . . . 41,439
Treasury stock acquired-net. . . . . . . . . . . . . 21 (164) (4,181)
Cash dividends:
Class A ($.85 per share) . . . . . . . . . . . . . (6,230)
Class B ($.86 per share) . . . . . . . . . . . . . (11,809)
Amounts at June 30, 1995 . . . . . . . . . . . . . . . $812 $373,704 (514) $(11,883)
Net income for the year. . . . . . . . . . . . . . . 45,095
Treasury stock acquired-net. . . . . . . . . . . . . 86 (187) (5,189)
Cash dividends:
Class A ($.94 per share) . . . . . . . . . . . . . (6,870)
Class B ($.95 per share) . . . . . . . . . . . . . (12,905)
Amounts at June 30, 1996 . . . . . . . . . . . . . . . $898 $399,024 (701) $(17,072)
See Notes to Consolidated Financial Statements
</TABLE>
-26-<PAGE>
<PAGE>
KIMBALL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of all domestic and foreign subsidiaries. All significant intercompany
balances and transactions have been eliminated in the consolidation.
On March 29, 1996, the Company acquired with available cash on hand, certain
assets of ELMO Semiconductor Corporation of California and all of the
outstanding capital stock of ELMO Semiconducteurs SARL of France, providers of
semiconductor DIE processing, testing, design and packaging. The acquisition
was accounted for as a purchase with operating results included in the Company's
Consolidated Statement of Income from the date of acquisition. ELMO's results
are not material to the consolidated operating results.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. While efforts are made to assure estimates used are
reasonably accurate based on management's knowledge of current events, actual
results could differ from those estimates.
Cash, Cash Equivalents and Short-Term Investments: Cash equivalents consist
primarily of highly liquid investments with original maturities of three months
or less at the time of acquisition. Short-term investments are cash
investments, primarily U.S. Government securities and municipal bonds with
maturities exceeding three months at the time of acquisition and are stated at
amortized cost. Cash equivalents are stated at cost, which approximate market
value.
Foreign Currency Translation: Foreign financial statements (except for Mexico,
whose functional currency is the U.S. Dollar) are translated under the
provisions of the Financial Accounting Standards Board Statement No. 52, whereby
foreign balance sheet accounts are translated at the exchange rate in effect at
year-end, income statement accounts are translated at the average rate of
exchange during the year, and translation gains and losses are excluded from net
income by being recorded as a component of share owners' equity (foreign
currency translation adjustment). This component of share owners' equity
reflects the cumulative effect of the translation adjustments which are excluded
from net income. Financial statements of Mexican operations are translated into
U.S. Dollars using both the current and historical exchange rates, with
translation gains and losses included in net income.
Inventory Pricing: Inventories are stated at the lower of cost or market
value. Cost includes material, labor and applicable manufacturing overhead
and is determined using the last-in, first-out (LIFO) method for
approximately half of consolidated inventories and the first-in, first-out
(FIFO) method for the remaining inventories.
Property, Equipment and Depreciation: Property and equipment are stated at
cost. Depreciation is provided over the estimated useful life of the assets
using the straight-line method for financial reporting purposes. Maintenance,
repairs and minor renewals and betterments are expensed; major improvements are
capitalized.
Research and Development: The costs of research and development are expensed as
incurred. These costs were approximately, in millions, $10.5 in 1996, $9.4 in
1995, and $8.6 in 1994.
Medical Care and Disability Benefit Plans: The Company is self-insured with
respect to certain medical care and disability benefit plans for substantially
all employees. The Company carries stop-loss insurance coverage to mitigate
severe losses under these plans. The costs for such plans are charged against
earnings in the year in which the incident occurred. The Company does not
provide benefits under these plans to retired employees.
-27-
<PAGE>
Income Taxes: Effective in the 1994 fiscal year, the Company changed its method
of accounting for income taxes from the deferred method to the liability method
as required by Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. Under the new rules, deferred taxes are required
to be stated at a net realizable value using current statutory tax rates. The
cumulative effect of adopting FASB Statement No. 109 increased net income by
$1.2 million in 1994. This cumulative effect is included in 1994 Taxes on
Income.
Unremitted earnings of foreign subsidiaries have been included in the
consolidated financial statements without giving effect to the United States
taxes that may be payable on distribution to the United States because it is not
anticipated such earnings will be remitted to the United States. If remitted,
the additional United States taxes paid would not be material.
Earnings Per Share: Earnings per share are based on the average number of
shares outstanding and are computed using the two-class common stock method
because of the dividend preference of Class B Common Stock. In the three years
ended June 30, 1996, outstanding stock options, if exercised, would not have had
a material dilutive effect on earnings per share.
Off-Balance Sheet Risk: The Company engages in several types of financing
arrangements with customers, primarily certain guarantees, and also has business
and credit risks concentrated in the automotive, computer, telecommunication,
consumer electronic and wood industries.
Reclassifications: Certain prior year amounts have been reclassified to conform
with the 1996 presentation.
New Accounting Standard: The Company currently accounts for its employee stock
option plans using APB Opinion No. 25, Accounting for Stock Issued to Employees,
which results in no charge to earnings when issued at fair market value. During
1995, the Financial Accounting Standards Board issued FASB Statement No. 123,
Accounting for Stock-Based Compensation (FAS 123), which considers the stock
options as compensation expense to the Company. Under this new standard, the
Company has the option of accounting for employee stock option plans as it
currently does, or it may use the new method. The Company intends to continue
to use the existing method, but will adopt the disclosure requirements of FAS
123 effective with the 1997 fiscal year reporting.
NOTE 2 PRODUCT LINE EXIT COSTS
The Company announced a strategic decision during the 1996 fiscal year to cease
production and sales of its domestic wholesale piano product line, due to the
continuing decline in the domestic piano market. This product line accounted
for less than 2% of consolidated sales in 1995 and 1996. A pretax provision of
$3,400,000, which equates to a net income effect of $1,870,000, or $0.09 per
share, was established during 1996, to cover all estimated costs associated with
exiting this product line. The Company ceased production of domestic wholesale
pianos as of April 1996, and has substantially completed the sale of inventory
as of May 1996, as planned. $660,000 of costs have been applied against this
provision as of June 30, 1996.
-28-<PAGE>
<PAGE>
NOTE 3 INVENTORIES
Approximately half of consolidated inventories are valued using the lower of
last-in, first-out (LIFO) cost or market value. The remaining inventories,
valued using the lower of first-in, first-out (FIFO) cost or market value,
represent approximately 48% of consolidated inventories at June 30, 1996, and
38% at June 30, 1995.
Had the FIFO method been used for all inventories, net income would have been,
in millions, $0.7 lower in 1996, $0.9 higher in 1995, and $1.2 higher in 1994.
Additionally, inventories would have been, in millions, $19.5 and $21.1 higher
at June 30, 1996 and 1995, respectively, if the FIFO method had been used.
During 1996, certain inventory quantity reductions caused a liquidation of LIFO
inventory values. This liquidation increased net income by $1.5 million, or
$0.07 per share.
<TABLE>
Inventory components at June 30 are as follows:
(Amounts in Thousands)
<CAPTION>
1996 1995
<S> <C> <C>
Finished products. . . . . . . . . . . . . $24,636 $23,938
Work-in-process. . . . . . . . . . . . . . 14,743 12,681
Raw materials. . . . . . . . . . . . . . . 50,110 39,527
Total inventory . . . . . . . . . . . $89,489 $76,146
</TABLE>
NOTE 4 PROPERTY AND EQUIPMENT
<TABLE>
Major classes of property and equipment consist of the following:
(Amounts in Thousands)
<CAPTION>
1996 1995
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . $ 5,146 $ 6,058
Buildings and improvements . . . . . . . . 138,179 140,285
Machinery and equipment. . . . . . . . . . 244,502 241,112
Construction-in-progress . . . . . . . . . 7,751 9,070
Total. . . . . . . . . . . . . . . . . . 395,578 396,525
Less: Accumulated depreciation . . . (221,569) (219,395)
Net property and equipment . . . . . . . $174,009 $177,130
</TABLE>
<TABLE>
The useful lives, based on the Company's estimate of the service life of the
classes of property, used in computing depreciation are as follows:
<CAPTION>
Years
<S> <C>
Buildings and improvements . . . . . . . . 5 to 50
Machinery and equipment. . . . . . . . . . 3 to 15
Leasehold improvements . . . . . . . . . . Life of Lease
</TABLE>
Depreciation and amortization of property and equipment totaled, in millions,
$30.8 for 1996, $27.7 for 1995 and $26.9 for 1994. Imputed interest costs of
$345,000, related to the financing of certain construction projects, were
capitalized during 1994. No interest costs were capitalized during 1996 or
1995.
-29-<PAGE>
<PAGE>
NOTE 5 COMMITMENTS - LEASES
Operating leases for certain office, showroom, warehouse and manufacturing
facilities, and equipment, which expire 1997-2005, contain provisions under
which minimum annual lease payments are, in millions, $4.2, $3.3, $2.4, $1.4 and
$1.3 for the five years ended June 30, 2001, respectively, and aggregate $3.6
million from 2002 to the expiration of the leases in 2005. The Company is
obligated under certain of the real estate leases to maintain the properties and
pay real estate taxes.
Total rental expenses amounted to, in millions, $5.5, $6.6 and $6.9 in 1996,
1995 and 1994, respectively.
NOTE 6 LONG-TERM DEBT
Long-Term Debt is principally obligations under long term capitalized leases.
Aggregate maturities of long-term debt for the next five years are in millions,
$0.5, $0.5, $0.5, $1.0, and $0.3, respectively, and $0.7 thereafter. Interest
rates range from 3.5% to 10.375%. Based upon borrowing rates currently
available to the Company, the fair value of the Company's debt approximates the
carrying value.
NOTE 7 RETIREMENT PLAN
The Company has a trusteed defined contribution Retirement Plan in effect for
substantially all domestic employees meeting the eligibility requirements.
Company contributions are based on a percent of net income as defined in the
plan; the percent of contribution is determined by the Board of Directors up to
specific maximum limits. The plan includes a 401(k) feature, thereby permitting
participants to make additional voluntary contributions on a pretax basis.
Payments by the Company to the trusteed plan are vested and held for the sole
benefit of participants. Total contributions to the Retirement Plan for 1996,
1995 and 1994 were approximately, in millions, $8.6, $9.0 and $9.0,
respectively.
Employees of certain foreign subsidiaries are covered by local pension or
retirement plans. Annual expense and accumulated benefits of these foreign
plans are not significant to the consolidated financial statements.
NOTE 8 INCENTIVE STOCK OPTIONS
On August 11, 1987, the Board of Directors adopted the 1987 Stock Incentive
Program, which was approved by the Company's Share Owners on October 13, 1987.
Under this plan, 1,800,000 shares of Class B Common Stock were reserved for
incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock awards, and performance share awards available for grant to
officers and other key employees of the Company, and to members of the Board of
Directors who are not employees. Stock options are priced at the fair market
value of the stock at the date of grant and are exercisable beginning two years
after the date of grant and expire five years after the date of grant. Shares
of stock issued under the incentive stock option plan, when exercised, must be
held for a five year period before being sold. Stock options are forfeited when
employment terminates, except in certain situations. No shares were exercisable
during 1995 or 1994. Approximately 275 employees were eligible to participate
in the program during 1996 and approximately 110 employees during 1995 and
1994. Approximately 275 employees are expected to be eligible to participate
in the program during 1997.
The current Stock Incentive Program will expire in August 1997, prior to the
1997 Annual Share Owners Meeting. As such, a new 1996 Stock Incentive Program
has been approved by the Board of Directors and will be presented for approval
at the 1996 Annual Share Owners Meeting. If approved, the 1996 plan will
reserve 2,100,000 shares of Class B Common Stock, in addition to remaining
shares reserved under the 1987 plan, for incentive stock options, nonqualified
stock options, stock appreciation rights, and performance share awards available
for grant to officers and other key employees of the Company, and to members of
the Board of Directors who are not employees. The plan's duration will extend
through the year 2005.
-30-<PAGE>
<PAGE>
<TABLE>
Stock option transactions are as follows:
<CAPTION>
Number Per Share
of Shares Option Price
<S> <C> <C>
Options outstanding June 30, 1993. . . . . . . --- ---
Granted. . . . . . . . . . . . . . . . . . . . 106,650 $29.60
Exercised. . . . . . . . . . . . . . . . . . . --- ---
Forfeited. . . . . . . . . . . . . . . . . . . (550) $29.60
Options outstanding June 30, 1994. . . . . . . 106,100 $29.60
Granted. . . . . . . . . . . . . . . . . . . . 171,500 $24.44
Exercised. . . . . . . . . . . . . . . . . . . --- ---
Forfeited. . . . . . . . . . . . . . . . . . . (6,200) $24.44 - $29.60
Options outstanding June 30, 1995. . . . . . . 271,400 $24.44 - $29.60
Granted. . . . . . . . . . . . . . . . . . . . 290,200 $25.54 - $28.75
Exercised. . . . . . . . . . . . . . . . . . . --- ---
Forfeited. . . . . . . . . . . . . . . . . . . (11,750) $24.44 - $29.60
Options outstanding June 30, 1996. . . . . . . 549,850 $24.44 - $29.60
Number of options exercisable
at June 30, 1996 . . . . . . . . . . . . . . 99,950
Shares available for future options. . . . . . 1,162,998
</TABLE>
NOTE 9 INCOME TAXES
As stated in Note 1, the Company adopted Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes, effective with the 1994 fiscal
year, and therefore uses the liability method to account for income taxes.
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. A valuation reserve is
provided for deferred tax assets relating to foreign net operating losses, due
to uncertainty surrounding the utilization of these deferred tax assets.
<TABLE>
The components of the deferred tax assets and liabilities as of June 30, 1996
and 1995, are as follows:
(Amounts in Thousands)
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets:
Accounts receivable. . . . . . . . . . . . . $ 1,583 $ 1,751
Inventory. . . . . . . . . . . . . . . . . . 3,270 2,175
Employee benefits. . . . . . . . . . . . . . 4,834 3,964
Other. . . . . . . . . . . . . . . . . . . . 5,191 4,266
Foreign net operating losses . . . . . . . . 7,899 8,078
Valuation reserve. . . . . . . . . . . . . (7,899) (8,078)
Total asset. . . . . . . . . . . . . . . $14,878 $12,156
Deferred tax liabilities:
Property & equipment . . . . . . . . . . . . $12,681 $12,240
Other. . . . . . . . . . . . . . . . . . . . 2,451 3,769
Total liability. . . . . . . . . . . . . $15,132 $16,009
</TABLE>
-31-
<PAGE>
<PAGE>
<TABLE>
The components of income before taxes on income are as follows:
(Amounts in Thousands)
<CAPTION>
------- Year Ended June 30 -----
1996 1995 1994
<S> <C> <C> <C>
United States . . . . . . . . . . . . . . . $75,437 $76,989 $64,532
Foreign . . . . . . . . . . . . . . . . . . (1,122) (6,194) (5,113)
Total income before taxes. . . . . . $74,315 $70,795 $59,419
</TABLE>
<TABLE>
Taxes on income are composed of the following items:
(Amounts in Thousands)
<CAPTION>
------- Year Ended June 30 -----
1996 1995 1994
<S> <C> <C> <C>
Currently payable:
Federal. . . . . . . . . . . . . . . . $28,699 $25,119 $22,500
Foreign. . . . . . . . . . . . . . . . --- --- ---
State. . . . . . . . . . . . . . . . . 4,120 4,781 3,846
Total current. . . . . . . . . . . . 32,819 29,900 26,346
Deferred:
Federal. . . . . . . . . . . . . . . . (3,599) (544) (2,734)
Foreign. . . . . . . . . . . . . . . . --- --- 7
State. . . . . . . . . . . . . . . . . --- --- (369)
Total deferred . . . . . . . . . . . (3,599) (544) (3,096)
Total taxes on income. . . . . . . . $29,220 $29,356 $23,250
</TABLE>
<TABLE>
A reconciliation of the statutory U.S. income tax rate to the Company's
effective income tax rate follows:
(Amounts in Thousands)
<CAPTION>
-------------- Year Ended June 30 --------------
1996 1995 1994
Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate . . . . . . $26,010 35.0% $24,778 35.0% $20,797 35.0%
State income taxes,
net of Federal income tax benefit . . . . 2,678 3.6 3,107 4.4 2,500 4.2
Foreign operating losses - limited
tax benefit currently available. . . . . . 393 .5 2,168 3.1 1,796 3.0
Adoption of FASB No. 109 . . . . . . . . . . --- --- --- --- (1,200) (2.0)
Other-net. . . . . . . . . . . . . . . . . . 139 .2 (697) (1.0) (643) (1.1)
Total taxes on income . . . . . . . . . $29,220 39.3% $29,356 41.5% $23,250 39.1%
</TABLE>
-32-<PAGE>
<PAGE>
NOTE 10 COMMON STOCK
On a fiscal year basis, shares of Class B Common Stock are entitled to an
additional $.01 per share dividend more than the dividends paid on Class A
Common Stock, provided that dividends are paid on the Company's Class A Common
Stock. The owners of both Class A and Class B Common Stock are entitled to
share pro-rata, irrespective of class, in the distribution of the Company's
available assets upon dissolution.
Owners of Class B Common Stock are entitled to elect, as a class, one member of
the Company's Board of Directors. In addition, owners of Class B Common Stock
are entitled to full voting powers, as a class, with respect to any
consolidation, merger, sale, lease, exchange, mortgage, pledge, or other
disposition of all or substantially all of the Company's fixed assets, or
dissolution of the Company. Otherwise, except as provided by statute with
respect to certain amendments to the Articles of Incorporation, the owners of
Class B Common Stock have no voting rights, and the entire voting power is
vested in the Class A Common Stock, which has one vote per share. The Habig
family owns directly or shares voting power in excess of 50% of the Class A
Common Stock of Kimball International, Inc. The owner of a share of Class A
Common Stock may, at their option, convert such share into one share of Class B
Common Stock at any time.
If cash dividends are not paid on shares of the Company's Common Stock for a
period of thirty-six consecutive months, or if at any time the total number of
shares of Class A Common Stock issued and outstanding is less than 15% of the
total number of issued and outstanding shares of both Class A and Class B Common
Stock, then all shares of Class B Common Stock shall automatically have the same
rights and privileges as the Class A Common Stock, with full and equal voting
rights and with equal rights to receive dividends as and if declared by the
Board of Directors.
NOTE 11 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
Quarterly financial information is summarized as follows:
(Amounts in Thousands, Except for Per Share Data)
<CAPTION>
------------------ Three Months Ended --------------
September 30 December 31 March 31 June 30
<S> <C> <C> <C> <C>
1996:
Net Sales. . . . . . . . . . . . . . . . $218,933 $234,539 $223,915 $246,249
Gross Profit . . . . . . . . . . . . . . $ 55,856 $ 64,725 $ 64,124 $ 74,620
Net Income . . . . . . . . . . . . . . . $ 8,418 $ 12,291 $ 9,969 $ 14,417
Net Income Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.40 $.59 $.47 $.69
Class B . . . . . . . . . . . . . . . . $.40 $.59 $.48 $.69
1995:
Net Sales. . . . . . . . . . . . . . . . $209,411 $230,088 $236,819 $219,594
Gross Profit . . . . . . . . . . . . . . $ 58,858 $ 65,030 $ 63,888 $ 62,545
Net Income . . . . . . . . . . . . . . . $ 8,423 $ 11,660 $ 10,831 $ 10,525
Net Income Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.40 $.55 $.51 $.50
Class B . . . . . . . . . . . . . . . . $.40 $.55 $.52 $.50
1994:
Net Sales. . . . . . . . . . . . . . . . $197,882 $205,804 $208,576 $210,222
Gross Profit . . . . . . . . . . . . . . $ 57,135 $ 56,611 $ 58,905 $ 60,984
Net Income . . . . . . . . . . . . . . . $ 10,280 $ 8,404 $ 8,681 $ 8,804
Net Income Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.48 $.40 $.41 $.41
Class B . . . . . . . . . . . . . . . . $.48 $.40 $.42 $.41
Net income in the third quarter of 1996 was reduced by $1,870,000, or $.09 per
share, for estimated costs associated with exiting sales and production of the
Company's domestic wholesale piano product line.
Net income in the first quarter of 1994 was increased by $1,200,000, or $.05 per
share, due to the Company's adoption of FASB Statement No. 109, Accounting for
Income Taxes.
</TABLE>
-33-<PAGE>
<PAGE>
NOTE 12 SHORT-TERM INVESTMENTS
The Company classifies its short-term investments in accordance with Financial
Accounting Standards Board Statement No. 115, Accounting for Certain Investments
in Debt and Equity Securities. Fair values are estimated based upon the quoted
market values of those, or similar instruments. Carrying costs reflect the
original purchase price, with discounts and premiums amortized over the life of
the security.
Held-to-maturity securities consist of U.S. Government and federal agency
obligations with fair values and carrying costs of, in thousands, $45,648 and
$45,542 at June 30, 1996 compared to $91,395 and $91,005 at June 30, 1995,
respectively, and tax-advantaged municipal bonds with fair values and carrying
costs of, in thousands, $2,066 and $2,061 at June 30, 1996, compared to $6,561
and $6,529 at June 30, 1995, respectively. Unrealized holding gains and
(losses) were, in thousands, $140 and $(29) at June 30, 1996, and $550 and
$(128) at June 30, 1995, respectively. All held-to-maturity securities mature
within a period of 0-12 months.
Available-for-sale securities consist of U.S. Government and federal agency
obligations with fair values and carrying costs of, in thousands, $44,812 and
$45,101 at June 30, 1996, and tax-advantaged municipal bonds with fair values
and carrying costs of, in thousands, $15,638 and $15,721 at June 30, 1996.
Unrealized holding gains and (losses) were, in thousands, $4 and $(376) at June
30, 1996. All available-for-sale securities mature within a period of 13-29
months.
NOTE 13 ACCRUED EXPENSES
<TABLE>
Accrued expenses at June 30 consist of:
(Amounts in Thousands)
<CAPTION>
------ June 30 -------
1996 1995
<S> <C> <C>
Income taxes . . . . . . . . . . . . . . . . . $ 1,600 $ 1,573
Property taxes . . . . . . . . . . . . . . . . 3,819 5,982
Compensation . . . . . . . . . . . . . . . . . 24,802 24,463
Retirement plan. . . . . . . . . . . . . . . . 8,507 8,877
Other expenses . . . . . . . . . . . . . . . . 24,185 21,856
Total accrued expenses. . . . . . . . . . . . $62,913 $62,751
</TABLE>
-34-<PAGE>
<PAGE>
NOTE 14 BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company has three business segments which are listed below.
Furniture and Cabinets: Sales include office, hospitality, healthcare and home
furniture; television and stereo cabinets; pianos and piano cases, keys and
actions; and other miscellaneous products. Intersegment sales are
insignificant.
Electronic Contract Assemblies: Sales include electronic and electro-mechanical
products (electronic assemblies) manufactured on a contract basis to customers'
specifications. Effective in 1996, this segment began offering semiconductor
DIE processing, testing, design and packaging services. There are no
intersegment sales. Included in the Electronic Contract Assemblies segment are
sales to three customers which accounted for 24%, 23% and 22% of consolidated
net sales in 1996, 1995 and 1994, respectively. One customer accounted for 14%
of consolidated net sales in 1996 and 1995, and 12% in 1994.
Processed Wood Products and Other: Processed Wood Products include the sales of
lumber, dimension lumber, plywood, veneer, and other miscellaneous wood product
sales. "Other" sales include plastic components, stamped metal products,
carbide cutting tools and related services on cutting tools, and other
miscellaneous services, totaling approximately 34% in 1996, 31% in 1995 and 22%
in 1994, of the total customer sales of this segment. Intersegment sales
include these same basic wood products, assembled components and miscellaneous
products, which are used in the final production of office, home, hospitality
and healthcare furniture, cabinets and piano cabinets; thus, intersegment sales
consist of sales to the Furniture and Cabinets segment.
Intersegment sales are generally priced at cost plus a percentage mark-up, and
are generally thought to be marginally less than prices which would be charged
for the same product to unaffiliated customers. The eliminations from operating
income are various transactions including intercompany profit in inventories.
Identifiable assets eliminated generally consist of intercompany profit in
inventories and intercompany accounts receivable.
<TABLE>
Business Segment
(Amounts in Thousands)
<CAPTION>
-------------------------- Year Ended June 30 --------------------------
------- 1996 --------- ------- 1995 --------- ------- 1994 ---------
Customers Intersegment Customers Intersegment Customers Intersegment
<S> <C> <C> <C> <C> <C> <C>
Net Sales:
Furniture and Cabinets. . . . . . . $580,393 $ 170 $570,219 $ 295 $544,719 $ 501
Electronic Contract Assemblies. . . 284,639 --- 245,101 --- 204,149 ---
Processed Wood Products and Other . 58,604 58,687 80,592 55,980 73,616 54,597
Total Net Sales . . . . . . . . $923,636 $58,857 $895,912 $56,275 $822,484 $55,098
</TABLE>
<TABLE>
Business Segment
(Amounts in Thousands)
<CAPTION>
-------- Year Ended June 30 ----------
1996 1995 1994
<S> <C> <C> <C>
Operating Income:
Furniture and Cabinets . . . . . . . . . . . $33,467 <F1> $30,966 $33,034
Electronic Contract Assemblies . . . . . . . 21,437 20,804 13,496
Processed Wood Products and Other. . . . . . 7,607 10,056 7,124
Total Operating Income . . . . . . . . . $62,511 $61,826 $53,654
<FN>
<F1>
Included in Furniture and Cabinets operating income for 1996 is a pretax provision of
$3.4 million, which was established to cover all estimated costs associated with exiting
the domestic wholesale piano product line.
</FN>
- 35 -<PAGE>
<PAGE>
<CAPTION>
------- June 30 -------
1996 1995
<S> <C> <C>
Identifiable Assets:
Furniture and Cabinets . . . . . . . . . . . $261,510 $253,597
Electronic Contract Assemblies . . . . . . . 127,571 90,235
Processed Wood Products and Other. . . . . . 38,153 43,159
Eliminations . . . . . . . . . . . . . . . . (3,081) (2,717)
Total. . . . . . . . . . . . . . . . . . 424,153 384,274
Unallocated Corporate Assets:
Cash, Cash Equivalents and
Short-Term Investments. . . . . . . . . . . 114,072 112,812
Total Assets . . . . . . . . . . . . . . $538,225 $497,086
</TABLE>
<TABLE>
Business Segment
(Amounts in Thousands)
<CAPTION>
--------- 1996 --------- --------- 1995 --------- --------- 1994 ---------
Depreciation Depreciation Depreciation
and Capital and Capital and Capital
Amortization Expenditures Amortization Expenditures Amortization Expenditures
<S> <C> <C> <C> <C> <C> <C>
Furniture and Cabinets . . . . . . $23,511 $22,326 $19,674 $19,995 $19,062 $36,051
Electronic Contract Assemblies . . 7,306 7,469 5,790 9,277 4,954 7,092
Processed Wood Products and Other. 5,275 8,547 4,615 5,636 4,710 3,464
</TABLE>
<TABLE>
Geographic Area
Total United States sales by geographic area includes export sales of, in millions, $30 in 1996, $25
in 1995 and $18 in 1994. Export sales were primarily to European and North American customers in
1996 and primarily to North American customers in 1995 and 1994. Foreign sales are generally to
European customers.
Geographic Area
(Amounts in Thousands)
<CAPTION>
--------- Year Ended June 30 --------
1996 1995 1994
<S> <C> <C> <C>
Net Sales:
United States. . . . . . . . . . . . . . . . $902,448 $873,543 $802,117
Foreign. . . . . . . . . . . . . . . . . . . 22,365 23,350 22,371
Eliminations . . . . . . . . . . . . . . . . (1,177) (981) (2,004)
Total Net Sales. . . . . . . . . . . . . $923,636 $895,912 $822,484
Operating Income:
United States. . . . . . . . . . . . . . . . $ 64,284 $ 67,285 $ 58,933
Foreign. . . . . . . . . . . . . . . . . . . (1,952) (5,889) (5,674)
Eliminations . . . . . . . . . . . . . . . . 179 430 395
Total Operating Income . . . . . . . . . $ 62,511 $ 61,826 $ 53,654
<CAPTION>
------- June 30 -------
1996 1995
<S> <C> <C>
Identifiable Assets:
United States. . . . . . . . . . . . . . . . $404,232 $365,088
Foreign. . . . . . . . . . . . . . . . . . . 20,620 19,415
Eliminations . . . . . . . . . . . . . . . . (699) (229)
Totals . . . . . . . . . . . . . . . . . 424,153 384,274
Unallocated Corporate Assets:
Cash, Cash Equivalents and
Short-Term Investments. . . . . . . . . . . 114,072 112,812
Total Assets . . . . . . . . . . . . . . $538,225 $497,086
</TABLE>
Item 9. - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None
- 36 -<PAGE>
<PAGE>
PART III
Item 10. - Directors and Executive Officers of the Registrant
Directors
The information called for by this item with respect to Directors is
incorporated by reference to the material contained in the Registrant's Proxy
Statement for its annual meeting of share owners to be held October 22, 1996
under the captions - "Election of Directors"; "Information Concerning the Board
of Directors and Committees"; and "Compensation of Executive Officers".
Executive Officers of the Registrant
The information called for by this item with respect to Executive Officers
of the Registrant is included at the end of Part I and is incorporated herein by
reference.
Item 11. - Executive Compensation
The information called for by this item is incorporated by reference to the
material contained in the Registrant's Proxy Statement for its annual meeting of
share owners to be held October 22, 1996 under the caption "Compensation of
Executive Officers".
Item 12. - Security Ownership of Certain Beneficial Owners and Management
The information called for by this item is incorporated by reference to the
material contained in the Registrant's Proxy Statement for its annual meeting of
share owners to be held October 22, 1996 under the caption "Share Ownership
Information".
Item 13. - Certain Relationships and Related Transactions
The information called for by this item is incorporated by reference to the
material contained in the Registrant's Proxy Statement for its annual meeting of
share owners to be held October 22, 1996 under the caption "Compensation
Committee Interlocks and Insider Participation".
-37-<PAGE>
<PAGE>
PART IV
<TABLE>
Item 14. - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements:
The following consolidated financial statements of the Registrant are found
in Item 8 and incorporated herein.
<CAPTION>
Page
<S> <C>
Report of Management . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Report of Independent Public Accountants . . . . . . . . . . . . . . . . 22
Consolidated Statement of Financial Condition
as of June 30, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . 23
Consolidated Statement of Income
for the Three Years Ended June 30, 1996 . . . . . . . . . . . . . . . 24
Consolidated Statement of Cash Flows
for the Three Years Ended June 30, 1996 . . . . . . . . . . . . . . . 25
Consolidated Statement of Share Owners' Equity
for the Three Years Ended June 30, 1996 . . . . . . . . . . . . . . . 26
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 27-36
2. Financial Statement Schedules:
<CAPTION>
Page
<S> <C>
VIII. Valuation and Qualifying Accounts
for the Three Years Ended June 30, 1996. . . . . . . . . . . . 41
Schedules other than those listed above are omitted because they are either
not required or not applicable, or the required information is presented in the
Consolidated Financial Statements.
</TABLE>
3. Exhibits
See the Exhibit Index on page 42 for a list of the exhibits filed or
incorporated herein as a part of this report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the 1996 fiscal
year.
-38-<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
by Gary P. Critser
GARY P. CRITSER
Senior Executive Vice President,
Chief Accounting Officer and Secretary
September 4, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
James C. Thyen
JAMES C. THYEN
Senior Executive Vice President,
Chief Financial and Administrative Officer
and Treasurer
September 4, 1996
Douglas A. Habig
DOUGLAS A. HABIG
President and Chief Executive Officer
September 4, 1996
Gary P. Critser
GARY P. CRITSER
Senior Executive Vice President,
Chief Accounting Officer and Secretary
September 4, 1996
-39-<PAGE>
<PAGE>
Signature Signature
THOMAS L. HABIG* DOUGLAS A. HABIG*
Director Director
JOHN B. HABIG* JAMES C. THYEN*
Director Director
JOHN T. THYEN* CHRISTINE M. VUJOVICH*
Director Director
GARY P. CRITSER* BRIAN K. HABIG*
Director Director
* The undersigned does hereby sign this document on my behalf pursuant to
powers of attorney duly executed and filed with the Securities and Exchange
Commission, all in the capacities as indicated:
Date
September 5, 1996 Ronald J. Thyen
RONALD J. THYEN
Director
September 6, 1996 Jack R. Wentworth
JACK R. WENTWORTH
Director
Attorneys-In-Fact
-40-<PAGE>
<PAGE>
<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
Schedule VIII. - Valuation and Qualifying Accounts
(Amounts in Thousands)
<CAPTION>
Column A Column B Column C Column D Column E
-----Additions-----
Charged Accounts
Balance at to Costs Charged Written Off Balance
Beginning and to Other Net of at End
Description of Year Expenses Accounts Recoveries of Year
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1996:
Valuation Allowance:
Accounts Receivable $4,245 $ 670 --- $(840) $4,075
Valuation Allowance:
Deferred Tax Asset $8,078 $ (179) --- --- $7,899
YEAR ENDED JUNE 30, 1995:
Valuation Allowance:
Accounts Receivable $4,036 $ 772 --- $(563) $4,245
Valuation Allowance:
Deferred Tax Asset $5,785 $2,293 --- --- $8,078
YEAR ENDED JUNE 30, 1994:
Valuation Allowance:
Accounts Receivable $4,916 $ 26 --- $(906) $4,036
Valuation Allowance:
**Deferred Tax Asset --- $5,785 --- --- $5,785
** The company adopted Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes, effective July 1, 1993. Upon adoption, a
valuation allowance was provided to offset the increase in deferred tax
assets relating to foreign net operating losses, due to uncertainty
surrounding the utilization of those deferred tax assets. Subsequent
changes to foreign deferred tax assets are provided for by offsetting changes
to the valuation account.
</TABLE>
-41-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX OF EXHIBITS
<S> <C>
3(a) Restated Articles of Incorporation of the Company. (Incorporated by
reference to the Company's Form 10-K for the year ended June 30, 1994.)
3(b) Restated Bylaws of the Company. (Incorporated by reference to the
company's Form 10-Q for the period ended December 31, 1995.)
10(a)* Supplemental Bonus Plan. (Incorporated by reference to the Company's
Form 10-K for the year ended June 30, 1994.)
10(b)* Employment Contract with Arnold F. Habig dated June 12, 1990.
Incorporated by reference to the Company's Form 10-K for the year
ended June 30, 1995.)
10(c)* Agreement with Directors who are also employees of the Company
concerning $25,000 payment to a named beneficiary upon death.
(Incorporated by reference to the Company's Form 10-K for the
year ended June 30, 1992.)
10(d)* 1987 Stock Incentive Program. (Incorporated by reference to the
Company's Form 10-K for the year ended June 30, 1993.)
10(e)* Amendments to 1987 Stock Incentive Program. (Incorporated
by reference to the Company's Form 10-K for the year ended
June 30, 1993.)
10(f)* Form of Incentive Stock Option. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1993.)
10(g)* Form of Nonqualified Stock Option. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1993.)
10(h)* Form of Split Dollar Life Insurance Contract. (Incorporated by
reference to the Company's Form 10-K for the year ended June 30, 1995.)
10(i)* Supplemental Employee Retirement Plan. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1995.)
11 Computation of Earnings Per Share.
21 Significant Subsidiaries of the Company.
23 Consent of Independent Public Accountants.
24 Power of Attorney.
27 Financial Data Schedule.
* = constitutes management contract or compensatory arrangement.
</TABLE>
-42-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FISCAL YEAR ENDED JUNE 30, 1996
<S> <C> <C>
Net income, fiscal year ended June 30, 1996. . . . . $45,095,000
Dividends declared:
Class A Common -- $.94 per share . . . . . . . . $(6,870,000)
Class B Common -- $.95 per share . . . . . . . . (12,905,000)
(19,775,000)
Undistributed Earnings . . . . . . . . . . . . . . . $25,320,000
Undistributed earnings divided by
20,905,120 average number of
shares outstanding . . . . . . . . . . . . . . . $1.2112
Class A Class B
------- -------
Undistributed Earnings Per Share . . . . . . . . . . $1.2112 $1.2112
Assumed Distribution of Earnings . . . . . . . . . . 0.9400 0.9500
Earnings Per Share . . . . . . . . . . . . . . . . $2.1512 $2.1612
<CAPTION>
COMPUTATION OF EARNINGS PER SHARE
FISCAL YEAR ENDED JUNE 30, 1995
<S> <C> <C>
Net income, fiscal year ended June 30, 1995. . . . . $41,439,000
Dividends declared:
Class A Common -- $.85 per share . . . . . . . . $(6,230,000)
Class B Common -- $.86 per share . . . . . . . . (11,809,000)
(18,039,000)
Undistributed Earnings . . . . . . . . . . . . . . . $23,400,000
Undistributed earnings divided by
21,071,445 average number of
shares outstanding . . . . . . . . . . . . . . . $1.1105
Class A Class B
------- -------
Undistributed Earnings Per Share . . . . . . . . . . $1.1105 $1.1105
Assumed Distribution of Earnings . . . . . . . . . . 0.8500 0.8600
Earnings Per Share . . . . . . . . . . . . . . . . $1.9605 $1.9705
Exhibit 11
Page 1 of 2<PAGE>
<PAGE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FISCAL YEAR ENDED JUNE 30, 1994
<S> <C> <C>
Net income, fiscal year ended June 30, 1994. . . . . $36,169,000
Dividends declared:
Class A Common -- $.83 per share . . . . . . . . $(6,114,000)
Class B Common -- $.84 per share . . . . . . . . (11,590,000)
(17,704,000)
Undistributed Earnings . . . . . . . . . . . . . . . $18,465,000
Undistributed earnings divided by
21,164,905 average number of
shares outstanding . . . . . . . . . . . . . . . $0.8724
Class A Class B
------- -------
Undistributed Earnings Per Share . . . . . . . . . . $ .8724 $ .8724
Assumed Distribution of Earnings . . . . . . . . . . .8300 .8400
Earnings Per Share . . . . . . . . . . . . . . . . $1.7024 $1.7124
</TABLE>
Exhibit 11
Page 2 of 2
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
SIGNIFICANT SUBSIDIARIES OF REGISTRANT
As of June 30, 1996 the significant subsidiaries of the Registrant were as
follows:
Percent Of
State of Voting Stock
Owned
Incorporation By the
Registrant
<S> <C> <C>
Kimball International Marketing, Inc. Indiana 100%
Kimball International Manufacturing, Inc. Indiana 100%
Kimball Electronics, Inc. Delaware 100%
Kimball, Inc. Delaware 100%
Kimball Hospitality Furniture, Inc. Indiana 100%
McAllen-American Corporation Texas 100%
Kimball International Transit, Inc. Indiana 100%
Elmo Semiconductor Corporation Indiana 100%
Elmo Semiconducteurs SARL France 100%
Kimco, S.A. de C.V. Mexico 100%
L. Bosendorfer Klavierfabrik GmbH Austria 100%
Kimball Europe P.L.C. (1) England 100%
Each of the above subsidiaries is included in the Registrant's consolidated
financial statements for the year ended June 30, 1996.
(1) The name of Kimball Europe P.L.C. has been changed to Herrburger Brooks,
P.L.C., subsequent to June 30, 1996.
</TABLE>
Exhibit
21
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 33-20125.
Arthur Andersen LLP
Chicago, Illinois
September 6, 1996
Exhibit 23
<PAGE>
POWER OF ATTORNEY
The undersigned does hereby constitute and appoint JACK R. WENTWORTH and
RONALD J. THYEN, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, to sign the Form 10-K Annual Report of Kimball
International, Inc. (and each amendment thereto, if any) pursuant to Section 13
or 15 (d) of the Securities Exchange Act of 1934, for the fiscal year ended June
30, 1996, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto the attorneys-in-fact full power and authority to sign such document on
behalf of the undersigned and to make such filing, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that the attorneys-in-fact, or their substitutes, may lawfully do
or cause to be done by virtue hereof.
Dated: August 13, 1996
Thomas L. Habig Douglas A. Habig
Thomas L. Habig Douglas A. Habig
James C. Thyen Brian K. Habig
James C. Thyen Brian K. Habig
John B. Habig John T. Thyen
John B. Habig John T. Thyen
Ronald J. Thyen Gary P. Critser
Ronald J. Thyen Gary P. Critser
Christine M. Vujovich Jack R. Wentworth
Christine M. Vujovich Jack R. Wentworth
Exhibit 24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Kimball
International, Inc. 1996 Form 10-K and is qualified in its entirety by
reference to such Form 10-K filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,647
<SECURITIES> 108,425
<RECEIVABLES> 121,215
<ALLOWANCES> 4,075
<INVENTORY> 89,489
<CURRENT-ASSETS> 342,251
<PP&E> 395,578
<DEPRECIATION> 221,569
<TOTAL-ASSETS> 538,225
<CURRENT-LIABILITIES> 122,043
<BONDS> 0
0
0
<COMMON> 6,723
<OTHER-SE> 384,291
<TOTAL-LIABILITY-AND-EQUITY> 538,225
<SALES> 923,636
<TOTAL-REVENUES> 923,636
<CGS> 664,311
<TOTAL-COSTS> 664,311
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 670
<INTEREST-EXPENSE> 408
<INCOME-PRETAX> 74,315
<INCOME-TAX> 29,220
<INCOME-CONTINUING> 45,095
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,095
<EPS-PRIMARY> 2.16
<EPS-DILUTED> 2.16
</TABLE>
