<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
(mark one) FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to _______.
Commission file number 0-3279
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0514506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) 482-1600
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 [ ]
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
September 2, 1997 were:
Class A Common Stock - 7,216,296 shares
Class B Common Stock - 13,521,094 shares
Class A Common Stock is not publicly traded and, therefore, no market value is
available. The aggregate market value of the Class B Common Stock held by
non-affiliates, as of September 2, 1997, was $542.9 million, based upon an
estimate that 87.5% of Class B Common Stock is held by non-affiliates.
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<PAGE>
Portions of the Proxy Statement for the Annual Meeting of Share Owners to be
held on October 28, 1997, are incorporated by reference into Part III.
The exhibit index is located on page 48.
-2-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
KIMBALL INTERNATIONAL, INC.
FORM 10-K YEAR ENDED JUNE 30, 1997
Pages
<S> <C> <C>
PART I.
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 4-11
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 11-12
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to Vote of Security Holders . . . 13
PART II.
Item 5. Market for the Registrant's Common Stock and
Related Share Owner Matters . . . . . . . . . . . . . . 14
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 16-22
Item 8. Financial Statements and Supplementary Data . . . . . . 23-42
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures . . . . . . . . . . 43
PART III.
Item 10. Directors and Executive Officers of the Registrant . . . 43
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 43
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . 43
Item 13. Certain Relationships and Related Transactions . . . . . 43
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . 44
Signatures . . . . . . . . . . . . . . . . . . . . . . . 45-46
</TABLE>
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<PAGE>
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 51% 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,
Austria and France. Production in England was discontinued early in the 1997
fiscal year with the sale of that facility. In the United States, 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, 1997 are as follows:
<CAPTION>
SALES BY SEGMENT (dollars in thousands)
1997 1996 1995
<S> <C> <C> <C>
Furniture and Cabinets $617,249 $580,393 $570,219
Electronic Contract Assemblies 315,816 284,639 245,101
Processed Wood Products and Other 58,984 58,604 80,592
------- ------- -------
Total $992,049 $923,636 $895,912
</TABLE>
Financial information by industry segment and geographic area for each of
the three years in the period ended June 30, 1997, 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 manufactured on
a contract basis and sold to leading manufacturers in the home entertainment
and home furniture industries, and office furniture, which 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 (registered trademark) 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 Interworks
(registration allowed) line of office furniture systems, introduced by Harpers
in 1997, is designed to integrate easily with existing Kimball systems products
and provide more flexibility and functionality in office design.
The Company has expanded its sales and manufacture of furniture over the
years to include lodging-hospitality furniture, healthcare furniture, and
residential furniture, including two new lines of residential furniture
introduced in 1997.
Through a predecessor acquired in 1966, L. Bosendorfer of Vienna, Austria,
the Company has been engaged in acoustical piano manufacturing and sales since
1828. The prestigious Bosendorfer line of high-end pianos is sold and
recognized worldwide. The Company was also engaged in the manufacture and
sales of a domestically produced piano product line since 1857 through a
predecessor, W. W. Kimball Co., acquired in 1959, until cessation of this
product line in 1996.
Locations
Office, home, hospitality and healthcare furniture, TV 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. 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.
The company sold its piano key and action production facility located in
the United Kingdom during fiscal year 1997.
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 three cities for home furniture. In addition, office furniture
is maintained in showrooms in London, England and Toronto, Canada. In certain
showrooms other Company products are also on display. A piano showroom and
service facility is located in Vienna, Austria.
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<PAGE>
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, residential furniture and upholstery product
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, the utility of the product, customer
lead time, and ability to respond to requests for special and non-standard
products. Certain market segments are more price sensitive than others, but
all segments expect on-time, damage-free delivery. The Company maintains
sufficient finished goods inventories to be able to offer prompt shipment of
certain lines of Kimball, National and Harpers office furniture to domestic
dealers, thereby permitting the dealers to maintain smaller inventories.
Many products are shipped through the Company's delivery system, which the
Company believes offers it the ability 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
products markets are quality, performance history, price, on-time delivery
and customer lead time. Television, audio speaker and component cabinets,
television stands, display stands, and contract home furniture are produced
to customer specifications from specific orders and finished goods inventories
are generally small, consisting primarily of goods awaiting shipment to
customers. The Company's own lines of home furniture are offered for sale on
an immediate ship basis.
The hospitality and healthcare furniture markets compete on quality,
performance history, on-time delivery, 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 numerous manufacturers of office, home, hospitality, and
healthcare furniture competing within the marketplace. 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 office furniture market. The Company has positioned Harpers as a
vehicle to strengthen its market share in the non-wood segment of the industry.
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<PAGE>
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 acoustical piano industry is characterized by a limited
number of competitors, including one major competitor.
There are many manufacturers of residential furniture and the Company
does not have a significant share of this market.
Raw Material Availability
Many components used in the production of furniture and cabinets are
manufactured internally within the segment or by other segments of the
Company, including processed wood parts, and on a limited basis, metal
stamped parts and certain polyurethane and polyester 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 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 line 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. Electronics 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. One additional facility located in
Indiana is utilized for warehousing space, while another facility in Texas is
utilized to warehouse and ship product produced at the Mexican facility. The
Indiana facility assembles electronic components and products for sale to
outside customers. The facility located in Mexico assembles electronic
components and other electronic products for sale to outside customers with
accumulation and shipping of product occurring at the Texas warehouse. The
facility in California assembles product and also provides semiconductor DIE
processing, design, testing and packaging services. The French facility
provides assembly services for the European market.
Products are normally marketed by Company salespersons and independent
sales representatives on a contract basis. Contract electronic assemblies
are manufactured based on specific orders, generally resulting in a small
amount of finished goods consisting primarily of goods awaiting shipment to
specific customers. Raw materials are normally acquired for specific
customer orders and may or may not be interchangeable among products. Inherent
risks associated with rapid technological changes within this contract industry
are mitigated by procuring raw materials, for the most part, based on firm
orders.
Key competitive factors in the electronic contract assemblies market are
price, quality, production flexibility, reliability of on-time delivery and
customer lead time. Growth in the electronic contract assemblies industry
is created through the proliferation of electronic components in today's
advanced products along with the continuing trend of OEM's in the electronic
industry to subcontract the assembly process to companies with a core
competence in this area. The electronics industry is very competitive as
numerous manufacturers of contract electronic assemblies compete for business
from existing and potential customers. The Company does not have a
significant share of the market for such products.
Raw materials utilized in the manufacture of 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 25%, 24% and 23% of
consolidated net sales in 1997, 1996 and 1995, respectively. Included in
sales to these three customers are sales of electronic assemblies to
Kelsey-Hayes Company, Inc., which accounted for approximately 15% of
consolidated net sales in fiscal year 1997, compared to 14% in fiscal years
1996 and 1995. The success of this segment is contingent 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.
Processed wood and other products manufactured by the Company are used
internally as well as sold to others. For fiscal year 1997, an estimated 51%
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.
Competitive factors in the processed wood products market are price,
quality, availability, on-time delivery and 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 sale
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, 1997, the aggregate sales price of production pursuant
to worldwide open orders, which may be canceled by the customer, were
$205 million as compared to $193 million at June 30, 1996.
<TABLE>
BACKLOG BY SEGMENT
<CAPTION>
(dollars in millions)
June 30, 1997 June 30, 1996
<S> <C> <C>
Furniture and Cabinets $104 $109
Electronic Contract Assemblies 96 79
Processed Wood Products & Other 5 5
--- ---
Total Backlog $205 $193
Open orders as of June 30, 1997 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 activities include the development of manufacturing
processes, major process improvements, new product development, and electronic,
wood and plastic technologies.
<TABLE>
<CAPTION>
(dollars in millions)
fiscal years ended June 30,
1997 1996 1995
<S> <C> <C> <C>
Research and Development Costs $11.5 $10.5 $9.4
</TABLE>
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), Harpers
(registered trademark) and Interworks (registration allowed); 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, 1999, 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.
<TABLE>
EMPLOYEES
<CAPTION>
June 30, 1997 June 30, 1996
<S> <C> <C>
United States 7,389 7,284
Foreign Countries 1,560 1,439
----- -----
Total Full Time Employees at June 30 8,949 8,723
</TABLE>
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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.
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, 1997, are as follows:
<CAPTION>
------------- Number of Facilities ---------------
Furniture Electronic Processed
and Contract Wood Products
Cabinets Assemblies and Other Total
<S> <C> <C> <C> <C>
Indiana 20 2 13 35
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
France 1 1
Mexico 1 1
-- -- -- --
Total Facilities 27 6 20 53
<CAPTION>
These facilities occupy approximately 6,643,000 square feet in aggregate,
of which approximately 6,349,000 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 Electronic Processed
and Contract Wood Products
Cabinets Assemblies and Other Total
<S> <C> <C> <C> <C>
Fee 4,553,000 344,000 1,452,000 6,349,000
Leased 205,000 89,000 -0- 294,000
--------- ------- --------- ----------
Sub-total 4,758,000 433,000 1,452,000 6,643,000
Sub-leased -0- -0- (44,000) (44,000)
--------- ------- --------- ----------
Total 4,758,000 433,000 1,408,000 6,599,000
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.)
</TABLE>
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<PAGE>
Included in Processed Wood Products and Other are executive, national
sales and administrative offices, 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.
Operating leases totaling 294,000 square feet expire 1998-2007, with all
leases subject to renewal options. In addition to the above production,
warehouse and office properties, the Company has 16 leased showroom facilities
totaling 118,000 square feet, in 10 states in the United States, one location
in London, England, one location in Vienna, Austria, and one location in
Toronto, Canada.
The Company owns approximately 15,465 acres of land which includes land
where various Company facilities reside, including approximately 14,589 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.
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<PAGE>
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, 1997 are as
follows: (Age as of August 31, 1997)
<CAPTION>
Office and Officer
Name Age Area of Responsibility Since
<S> <C> <C> <C>
Thomas L. Habig 69 Vice Chairman of the Board of Directors 1955
Douglas A. Habig 50 Chairman of the Board 1975
and Chief Executive Officer
James C. Thyen 53 President and Director 1974
John B. Habig 64 Senior Executive Vice President, 1958
Operations Officer, Electronics,
and Director
Ronald J. Thyen 60 Senior Executive Vice President, 1966
Operations Officer, Furniture and
Cabinets, and Director
John T. Thyen 59 Senior Executive Vice President, 1978
Marketing and Sales, and Director
Gary P. Critser 60 Senior Executive Vice President, 1967
Secretary, Treasurer, and Director
Robert F. Schneider 36 Executive Vice President, Chief Financial 1992
Officer, Assistant Treasurer
Executive officers are elected annually by the Board of Directors.
Thomas L. Habig, John B. Habig and Douglas A. Habig are brothers. 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. Robert F. Schneider was
appointed to his current position in July 1997, having previously served the
company as Vice President and Director of Accounting.
</TABLE>
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<PAGE>
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>
------- 1997 ------ ------- 1996 ------
High Low High Low
<S> <C> <C> <C> <C>
First Quarter. . . . . . . $37 1/4 $26 1/2 $28 $24 1/2
Second Quarter . . . . . . $42 3/4 $34 3/4 $28 1/4 $24 3/4
Third Quarter. . . . . . . $45 1/4 $36 1/2 $30 5/8 $24 1/4
Fourth Quarter . . . . . . $42 1/2 $35 $31 1/4 $27
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
charter provisions that require on a fiscal year basis, shares of Class B
Common Stock are entitled to an additional $0.01 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. During fiscal year 1997
dividends declared were $22.1 million or $1.06 per share on Class A Common
Stock and $1.07 per share on Class B Common Stock. Dividends by quarter
for 1997 compared to 1996 are as follows:
<CAPTION>
------ 1997 ------ ------ 1996 ------
Class A Class B Class A Class B
<S> <C> <C> <C> <C>
First Quarter. . . . . . . $ .25 3/4 $ .26 $ .22 3/4 $ .23
Second Quarter . . . . . . $ .25 3/4 $ .26 $ .22 3/4 $ .23
Third Quarter. . . . . . . $ .25 3/4 $ .26 $ .22 3/4 $ .23
Fourth Quarter . . . . . . $ .28 3/4 $ .29 $ .25 3/4 $ .26
---- ---- ---- ----
Total Dividends. . . . . . $1.06 $1.07 $ .94 $ .95
</TABLE>
Share Owners: On July 29, 1997, the Company's Class A Common Stock was
owned by approximately 620 Share Owners of record and the Company's Class
B Common Stock by approximately 2,370 Share Owners of record, of which
approximately 380 also owned Class A Common Stock.
On August 20, 1997, the Company's Board of Directors approved a two-for-one
stock split on the Company's Class A and Class B Common Stock, subject to Share
Owner approval. Financial information contained in this report has not been
adjusted to reflect the impact of the proposed common stock split. See Note 15
- - Subsequent Event, of the Notes to Consolidated Financial Statements, which can
be found in Item 8, and it is incorporated herein by reference.
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<PAGE>
<TABLE>
Item 6. - Selected Financial Data
(dollars in thousands, except per share amounts)
<CAPTION>
-------------- Year Ended June 30, -------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Sales $992,049 $923,636 $895,912 $822,484 $722,400
Net Income $ 57,745 $ 45,095 $ 41,439 $ 36,169 $ 30,583
Earnings Per Share:
Class A $2.78 $2.15 $1.96 $1.70 $1.44
Class B $2.79 $2.16 $1.97 $1.71 $1.45
Total Assets $581,583 $538,225 $497,086 $471,413 $452,705
Long Term Debt-Less
Current Maturities $ 2,313 $ 3,016 $ 924 $ 811 $ 2,017
Cash Dividends Per Share:
Class A $1.06 $.94 $.85 $.83 $.77
Class B $1.07 $.95 $.86 $.84 $.78
</TABLE>
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<PAGE>
Item 7. - Management's Discussion and Analysis of Financial Condition
and Results of Operations
OVERVIEW
Fiscal year 1997 net sales rose 7% above 1996 sales to set a new annual record
of $992,049,000. Net income and Class B earnings per share also reached new
records of $57,745,000 and $2.79, respectively, increasing 23% above 1996
levels, excluding the effects of the Company's decision to exit the domestic
wholesale piano product line in the prior year. Operating activities generated
cash flow of $121,808,000 for the 1997 fiscal year, almost double the prior
year's $62,003,000. Open orders as of June 30, 1997 were $204,860,000.
RESULTS OF OPERATIONS - 1997 Discussion
Net sales for the 1997 fiscal year, led primarily by increases in the Furniture
and Cabinets, and Electronic Contract Assemblies segments and, to a lesser
extent, the Processed Wood Products and Other segment increased to a new record
of $992,049,000. Operating income in 1997 increased to $80,992,000, a 30%
improvement over the 1996 level of $62,511,000.
<TABLE>
Business Segments
(Amounts in millions)
<CAPTION>
------ Year Ended June 30 ----
1997 1996 1995
<S> <C> <C> <C>
Net Sales:
Furniture and Cabinets. . . . . . . . $617.2 $580.4 $570.2
Electronic Contract Assemblies. . . . 315.8 284.6 245.1
Processed Wood Products and Other . . 59.0 58.6 80.6
Operating Income:
Furniture and Cabinets. . . . . . . . $44.2 $33.5 $31.0
Electronic Contract Assemblies. . . . 29.7 21.4 20.8
Processed Wood Products and Other . . 7.1 7.6 10.1
</TABLE>
FURNITURE AND CABINETS
The Company's largest segment, Furniture and Cabinets, increased net sales 6%
above the prior year as double digit increases in office furniture and lodging
furniture were partially offset by declines in cabinets and furniture.
Office furniture product lines realized volume growth in all three major product
groupings - casegoods, seating, and systems, with growth particularly evident in
value-oriented products which had sales grow at a faster pace than that
experienced by the industry in general. Sales growth in systems also outpaced
the industry as a whole, according to statistics published by the Business and
Institutional Furniture Manufacturers Association (BIFMA).
Sales of most cabinet and furniture product lines declined when compared to the
prior year, with television cabinets and stands, audio speaker cabinets, and
residential furniture all seeing lower volumes in fiscal 1997. The Company's
fiscal 1996 decision to exit the domestic wholesale piano market also
contributed to the declining volumes in these product lines. Lower volumes of
original equipment manufacturer (OEM) cabinets and stands in the home
entertainment market are the result of some customers realizing lower retail
sales of their products. The Company has utilized the available capacity
-16-<PAGE>
<PAGE>
created by these sales declines to support and balance production schedules of
other product lines within this segment.
Sales of lodging furniture increased as volumes increased in the Company's
standard and custom-made furniture product lines. Strongest growth was seen in
product destined for use in the lodging industry in both renovated and newly
constructed facilities. Sales growth was also achieved in product utilized
within the healthcare industry and other institutional environments.
Operating income in the Furniture and Cabinets segment increased in 1997, when
compared to 1996, as higher volumes and lower costs, as a percent of sales,
combined to improve profitability during the year. The prior year included
additional one-time costs to exit the domestic wholesale piano product line and
certain facility start-up costs incurred to re-deploy an existing facility to
the production of systems office furniture to support increased volumes. Gross
profit increased in 1997 as material costs declined, as a percent of sales, when
compared to the prior year. Sales expense increased, as a percent of sales,
partially due to increases in volume and performance related expenses, including
commissions and incentives, and higher expenses incurred to promote product to
the customer, such as showroom, delivery, and other expenses. Administrative
expense in 1997 declined in absolute dollars and as a percent of sales, as
minimal changes were needed within the existing administrative infrastructure to
support the increased volumes.
The Company sold its piano key and action production facility located in the
United Kingdom, Herrburger Brooks, PLC, during the first quarter of fiscal 1997,
with the transaction resulting in no impact to consolidated 1997 net income.
ELECTRONIC CONTRACT ASSEMBLIES
Fiscal 1997 sales in the Electronic Contract Assemblies segment increased 11%
over the 1996 level. The acquisition of ELMO Semiconductor in the prior year
third quarter contributed 2% to the increased sales level. Certain large
customers in the automotive and computer industries increased their demand for
the Company's products in the current fiscal year, with volumes increasing in
electronic automotive products and internal and peripheral computer products,
when compared to the prior year. Other customers, primarily in the computer
networking market, reduced order levels. Rescheduling, production flexibility
and material availability are inherent risks in the contract electronic
assemblies market. In addition, as a supplier to customers operating within the
automotive industry, the Company has a certain degree of risk associated with
labor relations within that industry. Due to these factors, this segment's
working capital carries a higher degree of risk than the Company as a whole.
Working capital in this segment as of June 30, 1997, had been reduced from the
elevated levels present at June 30, 1996. 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. Operating income in 1997
increased primarily due to increased volumes, with product mix also contributing
to the improved results, although competitive pricing pressures remain a
constant in the industry. Included in this segment are sales to three customers
which combined accounted for 25% of consolidated sales in 1997, and 24% in 1996.
One of these customers accounted for 15% of consolidated sales in 1997 and 14%
in 1996.
PROCESSED WOOD PRODUCTS AND OTHER
Outside sales in the Processed Wood Products and Other segment improved
marginally over the prior year as increases in sales of dimension, lumber and
metal parts were offset by a decline in sales of plastic parts, veneer and
laminate products. This segment continued to provide goods and services to the
-17-<PAGE>
<PAGE>
Company's internal operations, mainly in the Furniture and Cabinets segment, in
support of the vertically integrated supply chain maintained by the Company.
Operating income declined when compared to the prior year due to higher costs
for some raw material commodities coupled with a changing customer mix.
CONSOLIDATED OPERATIONS
Consolidated cost of sales decreased 2.1 percentage points, as a percent of net
sales, primarily due to lower material costs resulting from favorable product
mix shifts within certain business segments and, to a lesser extent, the
Company's efforts to reduce costs within the manufacturing process. Labor
costs, as a percent of net sales, were unchanged from the prior year. Overhead
costs declined 0.4 percentage point as fixed costs utilization improved on
higher sales volumes and cost containment initiatives continued.
Selling, administrative and general expenses increased 1.1 percentage point, as
a percent of sales, when compared to the prior year. The increased expenses
were the result of additions to the Company's infrastructure to support the
higher sales volumes and the acquisition of ELMO Semiconductor in the latter
half of the prior fiscal year. Certain other performance based costs dependent
on Company earnings increased as a result of the Company's improved
profitability levels.
Operating income increased 30% to $80,992,000 in fiscal 1997, as compared to
$62,511,000 in fiscal 1996. Higher volumes, lower material and overhead costs,
as a percent of sales, and higher non-recurring costs in the prior year
resulting from the decision to exit the domestic wholesale piano product line,
all combined to drive improvement in operating income.
Other income declined from the prior year as an increase in interest income
earned due to higher average investment balances during the current fiscal year
was more than offset by a $3.8 million charge to Other - net, related to a
pretax loss on the sale of a foreign subsidiary in the first quarter of 1997,
which was offset by a $3.8 million income tax benefit recorded in Taxes on
Income. Other - net, also declined due to larger gains realized on sales of
assets in the prior fiscal year.
The effective income tax rate decreased 4.5 percentage points in 1997 due
primarily to the $3.8 million tax benefit received on the sale of a foreign
subsidiary in the first quarter of this fiscal year. The tax benefit was the
result of a higher U.S. tax basis due to previously nondeductible losses on the
investment in this U.K. subsidiary. Excluding this benefit, the effective
income tax rate decreased 1.8 percentage point when compared to the prior year
due to reduced European operating losses, which provide no immediate tax
benefit, and a slight reduction in the effective state tax rate.
The sale of a foreign subsidiary in the first quarter of this fiscal year
resulted in a deferred tax asset for the Company due to a capital loss
recognized in the current year as previously nondeductible losses created a
higher tax basis on this investment. Based on the Company's prior earnings
history and its expectations for future earnings, the Company has determined
that it is more likely than not that the carrying value of the deferred tax
asset will be realized in the future as part of the Company's overall tax
planning strategy under current income tax law.
The Company attained record net income and Class B earnings per share of
$57,745,000 and $2.79, respectively, in fiscal 1997, an increase of 23% over the
prior year levels of $46,965,000 and $2.25, respectively, excluding the effects
of the product line exit costs in the prior year. Including the product line
-18-<PAGE>
<PAGE>
exit costs, net income and Class B earnings per share increased 28% over the
prior year.
1996 DISCUSSION
Net sales in fiscal 1996 were $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, including a provision of $3,400,000 established in that
fiscal year to cover all incremental costs to exit the domestic wholesale piano
product line.
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 cabinet, furniture 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, according to
statistics published by BIFMA. 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.
Sales of cabinet and furniture 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 original equipment manufacturer
(OEM) cabinet customers requesting scheduling delays in order to adjust
inventory levels with less aggressive retail sales forecasts. Rescheduling and
production flexibility are inherent in the OEM supplier market and may cause
short-term fluctuations in any given period. 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 in the Furniture and Cabinets segment increased from the prior
year due primarily to increased volumes, cost reduction initiatives in sales and
manufacturing processes, reduced operating losses on certain systems product
lines, and production efficiencies associated with producing standardized
lodging product. 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
-19-<PAGE>
<PAGE>
furniture product lines were partially offset by increased selling costs
incurred to expand this product line into select markets during the year. An
existing facility that was re-deployed 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.
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. This subsidiary
was sold during the first quarter of fiscal 1997.
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
Cabinets segment.
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
-20-<PAGE>
<PAGE>
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.
Net income and Class B earnings per share of $45,095,000 and $2.16,
respectively, increased 9% when compared to the prior year levels of $41,439,000
and $1.97 per Class B 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity position improved from $114 million in cash, cash
investments, and short-term investments at the end of fiscal 1996, to $168
million at the end of fiscal 1997. Working capital increased $24 million to
$244 million as of June 30, 1997, while maintaining a current ratio of 2.8 to 1.
Operating activities generated $122 million of cash flow in 1997, compared to
$62 million created in the prior year. Net income and non-cash charges to net
income were assisted by reductions in certain components of working capital.
Decreases in receivables of $6 million and inventory of $11 million were
primarily related to an overall decline in working capital within the Electronic
Contract Assemblies segment in fiscal 1997 from the elevated level at the end of
fiscal 1996. Accrued expenses increased in part due to an increase in expenses
that vary according to Company profitability and are paid out in the following
fiscal year. The Company reinvested $45 million into capital investments for
the future, including facility and production equipment upgrades and
improvements to the Company's information technology and communications systems.
Financing cash flows of $26 million were primarily in the form of dividend
payments. Net cash flow, excluding the purchases and maturities of short-term
-21-<PAGE>
<PAGE>
investments was a positive $54 million for fiscal year 1997.
The Company anticipates maintaining a strong liquidity position for the 1998
fiscal year and believes its available funds on hand, borrowing capacity, and
cash generated from operations will be sufficient for working capital needs and
to fund investments in the Company's future.
NEW ACCOUNTING STANDARD
During fiscal year 1997, the Financial Accounting Standards Board issued FASB
Statement No. 128, Earnings per Share, which specifies computation,
presentation, and disclosure requirements for earnings per share for entities
with publicly held common stock or potential common stock. This statement
requires dual presentation of basic and diluted earnings per share on the face
of the income statement for all entities with complex capital structures and is
effective for financial statements issued for periods ending after December 15,
1997. The Company does not anticipate a material dilution in reported earnings
per share under this statement.
This discussion contains certain statements which could be considered
forward-looking under the Private Securities Litigation Reform Act of 1995.
Cautionary statements regarding these statements have been included in this
discussion, when appropriate. Additional cautionary statements regarding these
statements and other factors that could have an effect on the future performance
of the Company are contained in the Company's 8-K filing of April 10, 1997.
-22-<PAGE>
<PAGE>
<TABLE>
Item 8. - Financial Statements and Supplementary Data
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
Page
<S> <C>
Report of Management . . . . .. . . . . . . . . . . . . . . . . 24
Report of Independent Public Accountants . . . . . . . . . . . 25
Consolidated Balance Sheets
as of June 30, 1997 and 1996 . . . . . . . . . . . . . . . . 26
Consolidated Statements of Income
for the Three Years Ended June 30, 1997. . . . . . . . . . . 27
Consolidated Statements of Cash Flows
for the Three Years Ended June 30, 1997. . . . . . . . . . . 28
Consolidated Statements of Share Owners' Equity
for the Three Years Ended June 30, 1997. . . . . . . . . . . 29
Notes to Consolidated Financial Statements. . . . . . . . . . . 30-42
</TABLE>
-23-<PAGE>
<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
Chairman,
Chief Executive Officer
James C. Thyen
James C. Thyen
President
Robert F. Schneider
Robert F. Schneider
Executive Vice President,
Chief Financial Officer,
Assistant Treasurer
July 25, 1997
-24-<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 balance sheets of Kimball
International, Inc. (an Indiana corporation) and subsidiaries as of June 30,
1997 and 1996, 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,
1997. 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, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1997, 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 states 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 25, 1997
-25-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for Share Data)
June 30
1997 1996
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 18,818 $ 5,647
Short-term investments . . . . . . . . . . . . . . . . . . . . 149,677 108,425
Receivables, less allowances of
$4,017 and $4,075, respectively . . . . . . . . . . . . . . . 110,142 117,140
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 76,142 89,489
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,994 21,550
Total current assets . . . . . . . . . . . . . . . . . . . 376,773 342,251
Property and Equipment, net. . . . . . . . . . . . . . . . . . . 174,010 174,009
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 30,800 21,965
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $581,583 $538,225
Liabilities and Share Owners' Equity
Current Liabilities:
Loans payable. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,472 $ 2,282
Current maturities of long-term debt . . . . . . . . . . . . . 471 492
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 53,063 50,963
Dividends payable. . . . . . . . . . . . . . . . . . . . . . . 5,989 5,393
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 71,263 62,913
Total current liabilities. . . . . . . . . . . . . . . . . 133,258 122,043
Other Liabilities:
Long-term debt, less current maturities. . . . . . . . . . . . 2,313 3,016
Deferred income taxes and other. . . . . . . . . . . . . . . . 23,186 22,152
Total other liabilities. . . . . . . . . . . . . . . . . . 25,499 25,168
Share Owners' Equity:
Common stock-par value $.31 1/4 per share:
Class A- Shares authorized-10,416,000 (10,453,000 in 1996)
Shares issued-7,274,000 (7,311,000 in 1996). . . . . 2,273 2,285
Class B- Shares authorized-30,000,000
Shares issued-14,238,000 (14,201,000 in 1996). . . . 4,450 4,438
Additional paid-in capital . . . . . . . . . . . . . . . . . . 1,607 898
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 434,665 399,024
Foreign currency translation adjustment. . . . . . . . . . . . 1,721 1,441
Unrealized loss on available-for-sale securities . . . . . . . (73) ---
Less: Treasury stock-at cost:
Class A- 55,000 shares (1,000 in 1996) . . . . . . . . . . . (2,044) (18)
Class B- 742,000 shares (700,000 in 1996) . . . . . . . . . . (19,773) (17,054)
Total share owners' equity . . . . . . . . . . . . . . . . 422,826 391,014
Total Liabilities and Share Owners' Equity . . . . . . . . . . . $581,583 $538,225
See Notes to Consolidated Financial Statements
</TABLE>
-26-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except for Per Share Data)
Year Ended June 30
1997 1996 1995
<S> <C> <C> <C>
Net Sales. . . . . . . . . . . . . . . . . . . . . . . $992,049 $923,636 $895,912
Cost of Sales. . . . . . . . . . . . . . . . . . . . . 692,636 664,311 645,591
Gross Profit . . . . . . . . . . . . . . . . . . . . . 299,413 259,325 250,321
Selling, Administrative and General Expenses . . . . . 218,421 193,414 188,495
Product Line Exit Costs. . . . . . . . . . . . . . . . --- 3,400 ---
Operating Income . . . . . . . . . . . . . . . . . . . 80,992 62,511 61,826
Other Income (Expense):
Interest Expense . . . . . . . . . . . . . . . . . . (551) (408) (273)
Interest Income. . . . . . . . . . . . . . . . . . . 8,484 7,411 5,755
Other, Net . . . . . . . . . . . . . . . . . . . . . (359) 4,801 3,487
Other Income, Net . . . . . . . . . . . . . . . . . 7,574 11,804 8,969
Income Before Taxes on Income. . . . . . . . . . . . . 88,566 74,315 70,795
Taxes on Income. . . . . . . . . . . . . . . . . . . . 30,821 29,220 29,356
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 57,745 $ 45,095 $ 41,439
Earnings Per Share of Common Stock:
Class A. . . . . . . . . . . . . . . . . . . . . . . $2.78 $2.15 $1.96
Class B. . . . . . . . . . . . . . . . . . . . . . . $2.79 $2.16 $1.97
Average Number of Shares Outstanding:
Class A. . . . . . . . . . . . . . . . . . . . . . . 7,249 7,308 7,334
Class B. . . . . . . . . . . . . . . . . . . . . . . 13,476 13,597 13,737
Totals. . . . . . . . . . . . . . . . . . . . . . . 20,725 20,905 21,071
See Notes to Consolidated Financial Statements
</TABLE>
-27-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
Year Ended June 30
1997 1996 1995
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 57,745 $ 45,095 $ 41,439
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . 33,395 36,092 30,079
Gain on sales of assets. . . . . . . . . . . . . . . . (597) (1,235) (370)
Deferred income tax and other deferred charges . . . . (1,247) (939) 940
Product line exit costs. . . . . . . . . . . . . . . . --- 3,400 ---
Change in current assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . 6,432 (18,586) 61
Inventories . . . . . . . . . . . . . . . . . . . . 10,787 (13,343) 4,937
Other current assets. . . . . . . . . . . . . . . . 1,751 1,175 (1,730)
Accounts payable. . . . . . . . . . . . . . . . . . 4,055 13,138 2,195
Accrued expenses. . . . . . . . . . . . . . . . . . 9,487 (2,794) 762
Net cash provided by operating activities. . . . 121,808 62,003 78,313
Cash Flows From Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . (32,937) (32,793) (34,508)
Proceeds from sales of assets. . . . . . . . . . . . . . 1,366 7,282 2,267
Proceeds from sale of subsidiary . . . . . . . . . . . . 2,345 --- ---
Increase in other assets . . . . . . . . . . . . . . . . (11,810) (11,658) (2,770)
Purchases of held-to-maturity securities . . . . . . . . (34,465) (17,318) (110,926)
Maturities of held-to-maturity securities. . . . . . . . 51,446 67,249 89,886
Purchases of available-for-sale securities . . . . . . . (58,305) (60,822) ---
Sales and maturities of available-for-sale securities. . --- --- ---
Net cash used for investing activities . . . . . (82,360) (48,060) (56,051)
Cash Flows From Financing Activities:
Increase in short-term borrowings. . . . . . . . . . . . 190 519 143
Net change in long-term debt . . . . . . . . . . . . . . (724) 362 (1,061)
Acquisition of treasury stock, net . . . . . . . . . . . (4,878) (5,131) (4,160)
Dividends paid to share owners . . . . . . . . . . . . . (21,508) (19,193) (17,653)
Proceeds from exercise of stock options. . . . . . . . . 808 --- ---
Other-net. . . . . . . . . . . . . . . . . . . . . . . . (132) (105) 125
Net cash used for financing activities . . . . . (26,244) (23,548) (22,606)
Effect of Exchange Rate Changes on Cash. . . . . . . . . . (33) (26) 170
Net Increase (Decrease) in Cash and Cash Equivalents . . . 13,171 (9,631) (174)
Cash and Cash Equivalents at Beginning of Year . . . . . . 5,647 15,278 15,452
Cash and Cash Equivalents at End of Year . . . . . . . . . $ 18,818 $ 5,647 $ 15,278
Total Cash, Cash Equivalents
and Short-Term Investments:
Cash and cash equivalents. . . . . . . . . . . . . . . . $ 18,818 $ 5,647 $ 15,278
Short-term investments . . . . . . . . . . . . . . . . . 149,677 108,425 97,534
Totals . . . . . . . . . . . . . . . . . . . . . . . $168,495 $114,072 $112,812
See Notes to Consolidated Financial Statements
</TABLE>
-28-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF SHARE OWNERS' EQUITY
(Amounts in Thousands, Except for Per Share Data)
Three Years Ended June 30, 1997
---------- 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, 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
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . (37) (37) (12) 37 12
Amounts at June 30, 1997 . . . . . . . . . . . . . . . 10,416 7,274 $2,273 30,000 14,238 $4,450
<CAPTION>
Additional
Paid-In Retained -- Treasury Stock --
Capital Earnings Shares Amount
<S> <C> <C> <C> <C>
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)
Net income for the year. . . . . . . . . . . . . . . 57,745
Treasury stock acquired-net. . . . . . . . . . . . . 34 (134) (4,878)
Shares of Class A Common Stock converted to Class B
Common Stock, via treasury shares, pursuant to
charter provisions . . . . . . . . . . . . . . . . . 647 --- (647)
Exercise of stock options. . . . . . . . . . . . . . 28 38 780
Cash dividends:
Class A ($1.06 per share). . . . . . . . . . . . . (7,682)
Class B ($1.07 per share). . . . . . . . . . . . . (14,422)
Amounts at June 30, 1997 . . . . . . . . . . . . . . . $1,607 $434,665 (797) $(21,817)
See Notes to Consolidated Financial Statements
</TABLE>
-29-<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.
Acquisition of Subsidiaries: 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 Statements of Income from the
date of acquisition. ELMO's results are not material to the consolidated
operating results.
Sale of Subsidiary: The Company sold its piano key and action production
facility located in the United Kingdom, Herrburger Brooks, PLC, during the first
quarter of fiscal year 1997. Included in the consolidated statement of income
is a $3.8 million pretax loss on the sale reported in Other-net, with an
offsetting $3.8 million income tax benefit reported in Taxes on Income. This
tax benefit was the result of a higher U.S. tax basis in this subsidiary due to
previously nondeductible losses on the investment in this U.K. subsidiary. This
transaction resulted in no impact to fiscal year 1997 consolidated net income.
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 included in the consolidated
financial statements and related footnote disclosures. 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. Cash equivalents are stated at cost, which
approximate market value. Short-term investments are cash investments,
primarily U.S. Government securities and municipal bonds with maturities
exceeding three months at the time of acquisition. Held-to-maturity securities
are stated at amortized cost. Available-for-sale securities are stated at
market value, with unrealized gains and losses being excluded from net income by
being recorded net of related tax effect, if any, as a component of share
owners' equity.
Foreign Currency Translation: Assets and liabilities of foreign subsidiaries
(except for Mexico, whose functional currency is the U.S. dollar) are translated
into U.S. dollars at fiscal year-end exchange rates, income statement accounts
are translated at the weighted average exchange rate during the year, and the
resulting currency translation adjustments are recorded as a component of share
owners' equity. Financial statements of Mexican operations are translated into
U.S. dollars using both current and historical exchange rates, with translation
gains and losses included in net income.
-30-<PAGE>
<PAGE>
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
59% and 52% of consolidated inventories in 1997 and 1996, respectively.
Cost of the remaining inventories is determined using the first-in, first-out
(FIFO) method.
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, $11.5 in 1997, $10.5 in
1996, and $9.4 in 1995.
Medical Care and Disability Benefit Plans: The Company is self-insured with
respect to certain medical care and disability benefit plans for approximately
75% of covered domestic employees. The Company carries stop-loss insurance
coverage to mitigate severe losses under these plans. The balance of domestic
employees are covered under fully insured HMO 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.
Employees of foreign subsidiaries are covered by local benefit plans, the cost
of which is not significant to the consolidated financial statements.
Income Taxes: 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, 1997, 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 1997 presentation.
Stock-Based Compensation: The Company continues to account for its employee
stock option plans using Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, which results in no charge to earnings when
options are issued at fair market value. The Company has adopted the disclosure
requirements of Financial Accounting Standards Board Statement No. 123,
Accounting for Stock-Based Compensation. Compensation cost for stock
appreciation rights is recorded monthly based on the quoted market price of the
Company's stock at the end of the period.
-31-<PAGE>
<PAGE>
New Accounting Standard: During fiscal year 1997, the Financial Accounting
Standards Board issued Statement No. 128, Earnings Per Share, effective for both
interim and annual periods ending after December 15, 1997. The Company believes
the effect of this statement will be immaterial.
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. Costs have been applied against this provision as of
June 30, 1997, totaling $809,000, with the remaining amount reserved for
fulfilling long-term commitments.
NOTE 3 INVENTORIES
Inventories are valued using the lower of last-in, first-out (LIFO) cost or
market value for approximately 59% and 52% of consolidated inventories in 1997
and 1996, respectively. The remaining inventories are valued using the lower of
first-in, first-out (FIFO) cost or market value.
Had the FIFO method been used for all inventories, net income would have been,
in millions, $0.1 lower in 1997, $0.7 lower in 1996, and $0.9 higher in 1995.
Additionally, inventories would have been, in millions, $19.3 and $19.5 higher
at June 30, 1997 and 1996, respectively, if the FIFO method had been used.
During 1997 and 1996, certain inventory quantity reductions caused a liquidation
of LIFO inventory values, which were immaterial in 1997 and increased net income
by $1.5 million, or $0.07 per share in 1996.
<TABLE>
Inventory components at June 30 are as follows:
(Amounts in Thousands)
<CAPTION>
1997 1996
<S> <C> <C>
Finished products. . . . . . . . . . . . . $23,822 $24,636
Work-in-process. . . . . . . . . . . . . . 11,852 14,743
Raw materials. . . . . . . . . . . . . . . 40,468 50,110
Total inventory . . . . . . . . . . . $76,142 $89,489
</TABLE>
-32-<PAGE>
<PAGE>
NOTE 4 PROPERTY AND EQUIPMENT
<TABLE>
Major classes of property and equipment consist of the following:
(Amounts in Thousands)
<CAPTION>
1997 1996
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . $ 5,159 $ 5,146
Buildings and improvements . . . . . . . . 142,937 138,179
Machinery and equipment. . . . . . . . . . 255,586 244,502
Construction-in-progress . . . . . . . . . 7,519 7,751
Total. . . . . . . . . . . . . . . . . . 411,201 395,578
Less: Accumulated depreciation . . . (237,191) (221,569)
Property and equipment, net. . . . . . . $174,010 $174,009
</TABLE>
<TABLE>
The useful lives used in computing depreciation are based on the Company's
estimate of the service life of the classes of property, as follows:
<CAPTION>
Years
<S> <C>
Buildings and improvements . . . . . . . . 5 to 50
Machinery and equipment. . . . . . . . . . 3 to 15
Leasehold improvements . . . . . . . . . . Life of Lease
Depreciation and amortization of property and equipment totaled, in millions,
$29.4 for 1997, $30.8 for 1996, and $27.7 for 1995.
</TABLE>
NOTE 5 COMMITMENTS - LEASES
Operating leases for certain office, showroom, warehouse and manufacturing
facilities, and equipment, which expire 1998 - 2007, contain provisions under
which minimum annual lease payments are, in millions, $5.3, $4.3, $3.6, $2.7,
and $1.5 for the five years ended June 30, 2002, respectively, and aggregate
$3.2 million from 2003 to the expiration of the leases in 2007. 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, $5.9, $5.5, and $6.6 in 1997,
1996 and 1995, 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
thousands, $471, $444, $924, $300, and $94, respectively, and $551 thereafter.
Interest rates range from 3.5% to 10.0%. Interest paid was immaterial in 1997.
Based upon borrowing rates currently available to the Company, the fair value of
the Company's debt approximates the carrying value.
-33-<PAGE>
<PAGE>
NOTE 7 RETIREMENT PLANS
The Company has trusteed defined contribution Retirement Plans 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
plans; the percent of contribution is determined by the Board of Directors up
to specific maximum limits. The plans include a 401(k) feature, thereby
permitting participants to make additional voluntary contributions on a pretax
basis. Payments by the Company to the trusteed plans are vested and held for
the sole benefit of participants. Total contributions to the Retirement Plans
for 1997, 1996 and 1995 were approximately, in millions, $11.3, $8.6, 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 by the exercise of incentive stock options 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. Approximately 275 employees were eligible to participate in the program
during 1997 and 1996, and approximately 110 employees during 1995. This Stock
Incentive Program will expire in August 1997.
On June 11, 1996, the Board of Directors adopted the 1996 Stock Incentive
Program, which was approved by the Company's Share Owners on October 22, 1996.
Under this plan, 2,100,000 shares of Class B Common Stock were reserved, 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. Major
provisions of the 1996 Program are similar to the provisions of the 1987
Program. The 1996 Stock Incentive Program is a ten year plan. All options
issued after the 1996 plan was approved by the share owners are to
be issued under the 1996 plan.
There are 125,000 additional shares reserved for issuance under the Directors'
Stock Compensation and Option Plan which is available to all members of the
Board of Directors. Under terms of the plan, Directors electing to receive all,
or a portion, of their fees in the form of Company stock will also be granted a
number of stock options equal to 50% of the number of shares received for
compensation of fees. Option prices and vesting are similar to those of the
1996 Stock Incentive Program. The plan is in effect through October 2006.
-34-<PAGE>
<PAGE>
<TABLE>
Stock option transactions are as follows:
<CAPTION>
Number Per Share
of Shares Option Price
<S> <C> <C>
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
Granted. . . . . . . . . . . . . . . . . . . . 201,419 $27.25 - $39.27
Exercised. . . . . . . . . . . . . . . . . . . (45,436) $24.44 - $29.60
Forfeited. . . . . . . . . . . . . . . . . . . (17,800) $24.44 - $29.60
Options outstanding June 30, 1997. . . . . . . 688,033 $24.44 - $39.27
Number of options exercisable
at June 30, 1997 . . . . . . . . . . . . . . 215,114
Shares available for future options. . . . . . 3,204,379
For all options outstanding at June 30, 1997, the weighted average exercise
price is $26.73 and the weighted average remaining contractual life is three
years.
</TABLE>
Effective for fiscal year 1997, the Company adopted the disclosure requirements
of Financial Accounting Standards Board Statement No. 123, Accounting for
Stock-Based Compensation (FAS 123). The Company has elected to continue to
follow the provisions of Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and its related interpretations; accordingly, no
compensation cost has been reflected in the financial statements for its
incentive stock options. Had compensation cost for the Company's incentive
stock options been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of FAS 123, the Company's
net income and earnings per share would have been reduced to the pro forma
amounts indicated below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended June 30,
1997 1996
<S> <C> <C>
Net Income
As Reported . . . . . . . . . . . . . $57,745 $45,095
Pro Forma . . . . . . . . . . . . . . $56,765 $44,615
Earnings per Share of Common Stock
As Reported - Class A . . . . . . . . $2.78 $2.15
Class B . . . . . . . . $2.79 $2.16
Pro Forma - Class A . . . . . . . . . $2.73 $2.13
Class B . . . . . . . . . $2.74 $2.14
</TABLE>
-35-<PAGE>
<PAGE>
The pro forma effects on net income for the years ended June 30, 1997 and 1996
are not representative of the pro forma effect on net income in future years
because they do not take into consideration pro forma compensation expense
related to grants made prior to fiscal year 1996.
The weighted average fair value at date of grant for options granted during the
years ended June 30, 1997 and 1996 was $4.99 and $4.49 per option, respectively.
The fair value of the options at the date of grant was estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions: expected volatility of 31.4% in 1997 and 32.5% in 1996; risk-free
interest rates of 6.34% in 1997 and 6.25% in 1996; dividend yield of 2.9% in
1997 and 3.5% in 1996; and an expected life of 3.5 years in 1997 and 1996.
NOTE 9 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 in part for deferred tax assets relating to foreign net operating
losses and capital loss carryforward benefits, due to uncertainty surrounding
the utilization of these deferred tax assets. Income tax benefits associated
with the foreign net operating losses expire periodically over the next seven
years, while benefits associated with the capital loss carryforward all expire
during the 2002 fiscal year. The Company's sale of its United Kingdom
subsidiary in fiscal year 1997 resulted in a decline in the consolidated foreign
net operating loss benefit and an increase in the capital loss carryforward
benefit.
<TABLE>
The components of the deferred tax assets and liabilities as of June 30, 1997
and 1996, are as follows:
(Amounts in Thousands)
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets:
Receivables. . . . . . . . . . . . . . . . . $ 1,709 $ 1,583
Inventory. . . . . . . . . . . . . . . . . . 2,456 3,270
Employee benefits. . . . . . . . . . . . . . 5,805 4,834
Other current liabilities. . . . . . . . . . 5,261 4,522
Miscellaneous. . . . . . . . . . . . . . . . 643 669
Foreign net operating losses . . . . . . . . 2,225 7,899
Capital loss carryforward benefit. . . . . . 3,345 ---
Valuation reserve. . . . . . . . . . . . . (4,438) (7,899)
Total asset. . . . . . . . . . . . . . . $17,006 $14,878
Deferred tax liabilities:
Property & equipment . . . . . . . . . . . . $13,617 $12,681
Miscellaneous. . . . . . . . . . . . . . . . 1,329 2,451
Total liability. . . . . . . . . . . . . $14,946 $15,132
</TABLE>
-36-<PAGE>
<PAGE>
<TABLE>
The components of income before taxes on income are as follows:
(Amounts in Thousands)
<CAPTION>
------- Year Ended June 30 -----
1997 1996 1995
<S> <C> <C> <C>
United States . . . . . . . . . . . . . . . $87,626 $75,437 $76,989
Foreign . . . . . . . . . . . . . . . . . . 940 (1,122) (6,194)
Total income before taxes. . . . . . $88,566 $74,315 $70,795
</TABLE>
<TABLE>
Taxes on income are composed of the following items:
(Amounts in Thousands)
<CAPTION>
------- Year Ended June 30 -----
1997 1996 1995
<S> <C> <C> <C>
Currently payable:
Federal. . . . . . . . . . . . . . . . $28,418 $28,699 $25,119
Foreign. . . . . . . . . . . . . . . . 179 --- ---
State. . . . . . . . . . . . . . . . . 4,538 4,120 4,781
Total current. . . . . . . . . . . . 33,135 32,819 29,900
Deferred Federal. . . . . . . . . . . . . . (2,314) (3,599) (544)
Total taxes on income. . . . . . . . $30,821 $29,220 $29,356
</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 --------------
1997 1996 1995
Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate . . . . . . $30,998 35.0% $26,010 35.0% $24,778 35.0%
State income taxes,
net of Federal income tax benefit . . . . 3,179 3.6 2,678 3.6 3,107 4.4
Foreign tax effect . . . . . . . . . . . . . (329) (.4) 393 .5 2,168 3.1
Capital loss benefit . . . . . . . . . . . . (3,650) (4.1) -- -- -- --
Other-net. . . . . . . . . . . . . . . . . . 623 .7 139 .2 (697) (1.0)
Total taxes on income . . . . . . . . . $30,821 34.8% $29,220 39.3% $29,356 41.5%
</TABLE>
Cash payments for income taxes, net of refunds, were in thousands, $37,069,
$31,353, and $30,600 in 1997, 1996, and 1995, respectively.
-37-<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.
-38-<PAGE>
<PAGE>
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>
1997:
Net Sales. . . . . . . . . . . . . . . . $247,700 $253,780 $243,277 $247,292
Gross Profit . . . . . . . . . . . . . . 73,134 75,169 73,819 77,291
Net Income . . . . . . . . . . . . . . . 13,521 14,621 14,521 15,082
Earnings Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.65 $.71 $.69 $.73
Class B . . . . . . . . . . . . . . . . .65 .71 .70 .73
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
Earnings 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
Earnings Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.40 $.55 $.51 $.50
Class B . . . . . . . . . . . . . . . . .40 .55 .52 .50
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.
</TABLE>
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 are reported at carrying cost and consist primarily
of government obligations with fair values and carrying costs of, in thousands,
$30,620 and $30,622 at June 30, 1997, compared to $47,714 and $47,603 at June
30, 1996, respectively. Unrealized holding gains and losses were immaterial
at June 30, 1997 and 1996. All held-to-maturity securities mature within a
12 month period.
Available-for-sale securities are reported at fair value and consist primarily
of government obligations with fair values and carrying costs of, in thousands,
$119,055 and $119,128 at June 30, 1997, compared to $60,450, and $60,822 at
June 30, 1996, respectively. Unrealized holding gains and losses were
immaterial at June 30, 1997 and 1996. All available-for-sale securities mature
within a three year period.
-39-<PAGE>
<PAGE>
NOTE 13 ACCRUED EXPENSES
<TABLE>
Accrued expenses at June 30 consist of:
(Amounts in Thousands)
<CAPTION>
------ June 30 -------
1997 1996
<S> <C> <C>
Income taxes . . . . . . . . . . . . . . . . . $ --- $ 1,600
Property taxes . . . . . . . . . . . . . . . . 4,164 3,819
Compensation . . . . . . . . . . . . . . . . . 30,248 24,802
Retirement plan. . . . . . . . . . . . . . . . 11,072 8,507
Other expenses . . . . . . . . . . . . . . . . 25,779 24,185
Total accrued expenses. . . . . . . . . . . . $71,263 $62,913
</TABLE>
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 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, semiconductor DIE processing, testing, design and packaging
services. Intersegment sales are insignificant. Included in the Electronic
Contract Assemblies segment are sales to three customers which accounted for
25%, 24% and 23% of consolidated net sales in 1997, 1996 and 1995, respectively.
One customer accounted for 15% of consolidated net sales in 1997, and 14% in
1996 and 1995.
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 30% in 1997, 34% in 1996, and
31% in 1995, 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, and 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 receivables.
-40-<PAGE>
<PAGE>
<TABLE>
Business Segment
(Amounts in Thousands)
<CAPTION>
-------------------------- Year Ended June 30 --------------------------
------- 1997 --------- ------- 1996 --------- ------- 1995 ---------
Customers Intersegment Customers Intersegment Customers Intersegment
<S> <C> <C> <C> <C> <C> <C>
Net Sales:
Furniture and Cabinets. . . . . . . $617,249 $ 653 $580,393 $ 170 $570,219 $ 295
Electronic Contract Assemblies. . . 315,816 --- 284,639 --- 245,101 ---
Processed Wood Products and Other . 58,984 60,203 58,604 58,687 80,592 55,980
Total Net Sales . . . . . . . . $992,049 $60,856 $923,636 $58,857 $895,912 $56,275
</TABLE>
<TABLE>
Business Segment
(Amounts in Thousands)
<CAPTION>
-------- Year Ended June 30 ----------
1997 1996 1995
<S> <C> <C> <C>
Operating Income:
Furniture and Cabinets . . . . . . . . . . . $44,159 $33,467 <F1> $30,966
Electronic Contract Assemblies . . . . . . . 29,748 21,437 20,804
Processed Wood Products and Other. . . . . . 7,085 7,607 10,056
Total Operating Income . . . . . . . . . $80,992 $62,511 $61,826
<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>
Business Segment
(Amounts in Thousands)
<CAPTION>
------- June 30 -------
1997 1996
<S> <C> <C>
Identifiable Assets:
Furniture and Cabinets . . . . . . . . . . . $261,694 $261,510
Electronic Contract Assemblies . . . . . . . 114,783 127,571
Processed Wood Products and Other. . . . . . 39,324 38,153
Eliminations . . . . . . . . . . . . . . . . (2,713) (3,081)
Total. . . . . . . . . . . . . . . . . . 413,088 424,153
Unallocated Corporate Assets:
Cash, Cash Equivalents and
Short-Term Investments. . . . . . . . . . . 168,495 114,072
Total Assets . . . . . . . . . . . . . . $581,583 $538,225
</TABLE>
<TABLE>
Business Segment
(Amounts in Thousands)
<CAPTION>
--------- 1997 --------- --------- 1996 --------- --------- 1995 ---------
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 . . . . . . $21,549 $20,237 $23,511 $22,326 $19,674 $19,995
Electronic Contract Assemblies . . 7,289 8,827 7,306 7,469 5,790 9,277
Processed Wood Products and Other. 4,557 3,873 5,275 8,547 4,615 5,636
</TABLE>
-41-<PAGE>
<PAGE>
<TABLE>
Geographic Area
Total United States sales by geographic area include export sales of, in millions, $30
in 1997, $30 in 1996, and $25 in 1995. United States export sales are primarily to
European and North American customers. Foreign sales originate in Europe and are
generally sold to European customers.
Geographic Area
(Amounts in Thousands)
<CAPTION>
--------- Year Ended June 30 --------
1997 1996 1995
<S> <C> <C> <C>
Net Sales:
United States. . . . . . . . . . . . . . . . $972,335 $902,448 $873,543
Foreign. . . . . . . . . . . . . . . . . . . 20,344 22,365 23,350
Eliminations . . . . . . . . . . . . . . . . (630) (1,177) (981)
Total Net Sales. . . . . . . . . . . . . $992,049 $923,636 $895,912
Operating Income:
United States. . . . . . . . . . . . . . . . $ 81,027 $ 64,284 $ 67,285
Foreign. . . . . . . . . . . . . . . . . . . (215) (1,952) (5,889)
Eliminations . . . . . . . . . . . . . . . . 180 179 430
Total Operating Income . . . . . . . . . $ 80,992 $ 62,511 $ 61,826
Geographic Area
(Amounts in Thousands)
<CAPTION>
------- June 30 -------
1997 1996
<S> <C> <C>
Identifiable Assets:
United States. . . . . . . . . . . . . . . . $400,756 $404,232
Foreign. . . . . . . . . . . . . . . . . . . 12,557 20,620
Eliminations . . . . . . . . . . . . . . . . (225) (699)
Totals . . . . . . . . . . . . . . . . . 413,088 424,153
Unallocated Corporate Assets:
Cash, Cash Equivalents and
Short-Term Investments. . . . . . . . . . . 168,495 114,072
Total Assets . . . . . . . . . . . . . . $581,583 $538,225
</TABLE>
NOTE 15 - SUBSEQUENT EVENT
On August 20, 1997, the Company's Board of Directors approved a two-for-one
stock split on the Company's Class A and Class B Common Stock. The stock split
is contingent upon Share Owner approval at the annual meeting of Share Owners to
be held October 28, 1997, of a proposal to restate the Company's Articles of
Incorporation by increasing the number of authorized shares to 150 million
shares, reducing the par value of common stock from $.3125 to $0.05 and
increasing the dividend preference on Class B Common Stock to $0.02 per share.
If approved, the stock split will become effective on or about November 12,
1997. Financial information contained in this report has not been adjusted to
reflect the impact of the proposed common stock split.
-42-<PAGE>
<PAGE>
Item 9. - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None
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 28, 1997
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 28, 1997 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 28, 1997 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 28, 1997 under the caption
"Compensation Committee Interlocks and Insider Participation".
-43-<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 . . . . . . . . . . . . . . . . . . . . . . . . 24
Report of Independent Public Accountants . . . . . . . . . . . . . . 25
Consolidated Balance Sheets
as of June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Income
for the Three Years Ended June 30, 1997 . . . . . . . . . . . . . 27
Consolidated Statements of Cash Flows
for the Three Years Ended June 30, 1997 . . . . . . . . . . . . . 28
Consolidated Statements of Share Owners' Equity
for the Three Years Ended June 30, 1997 . . . . . . . . . . . . . 29
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 30-42
2. Financial Statement Schedules:
<CAPTION>
Page
<S> <C>
VIII. Valuation and Qualifying Accounts
for the Three Years Ended June 30, 1997 . . . . . . . . . 47
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 48 for a list of the exhibits filed or
incorporated herein as a part of this report.
(b) Reports on Form 8-K:
Form 8-K dated April 10, 1997, was filed pursuant to Item 5 (Other Events)
which contained the Company's "Safe Harbor" statements under the Private
Securities Litigation Reform Act of 1995.
Form 8-K dated June 17, 1997, was filed pursuant to Item 5 (Other Events)
which contained the Company's news release dated June 17, 1997, announcing the
Company's realignment of Senior Officers effective July 1, 1997.
-44-<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 Robert F. Schneider
ROBERT F. SCHNEIDER
Executive Vice President,
Chief Financial Officer,
Assistant Treasurer
September 5, 1997
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:
Douglas A. Habig
DOUGLAS A. HABIG
Chief Executive Officer
September 5, 1997
James C. Thyen
JAMES C. THYEN
President
September 5, 1997
Robert F. Schneider
ROBERT F. SCHNEIDER
Executive Vice President,
Chief Financial Officer,
Assistant Treasurer
September 5, 1997
Roy W. Templin
ROY W. TEMPLIN
Vice President,
Corporate Controller
September 5, 1997
-45-<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
ALAN B. GRAF, JR.*
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 15, 1997 Ronald J. Thyen
RONALD J. THYEN
Director
September 11, 1997 Jack R. Wentworth
JACK R. WENTWORTH
Director
Attorneys-In-Fact
-46-<PAGE>
<PAGE>
<TABLE>
KIMBALL INTERNATIONAL, INC.
Schedule VIII. - Valuation and Qualifying Accounts
(Amounts in Thousands)
<CAPTION>
Additions
Balance at Charged Charged Writeoffs Balance
Beginning to to Other and at End
Description of Year Expense Accounts Recoveries of Year
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1997:
Valuation Allowances:
Accounts Receivable $4,075 $ 833 $(427) $(464) $4,017
Deferred Tax Asset $7,899 $(3,461) --- --- $4,438
YEAR ENDED JUNE 30, 1996:
Valuation Allowance:
Accounts Receivable $4,245 $ 670 --- $(840) $4,075
Deferred Tax Asset $8,078 $ (179) --- --- $7,899
YEAR ENDED JUNE 30, 1995:
Valuation Allowances:
Accounts Receivable $4,036 $ 772 --- $(563) $4,245
Deferred Tax Asset $5,785 $2,293 --- --- $8,078
** Reductions to the deferred tax asset valuation allowance during fiscal year 1997
relate primarily to the sale of the Company's United Kingdom subsidiary and related
transfer of net operating loss tax benefits to the buyer.
</TABLE>
-47-<PAGE>
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC.
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.
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.
10(d)* 1996 Stock Incentive Program. (Incorporated by reference to the
Company's Schedule 14A Definitive Proxy Statement and Notice of
Annual Meeting of Share Owners to be held October 22, 1996.)
10(e)* 1996 Director Stock Compensation and Option Plan. (Incorporated
by reference to the Company's Schedule 14A Definitive Proxy
Statement and Notice of Annual Meeting of Share Owners to be
held October 22, 1996.)
10(f)* 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(g)* Supplemental Employee Retirement Plan. (Incorporated by
reference to the Company's Form 10-K for the year ended
June 30, 1995.)
10(h)* 1987 Stock Incentive Program. (Incorporated by reference to the
Company's Form 10-K for the year ended June 30, 1993.)
10(i)* Amendments to 1987 Stock Incentive Program. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1993.)
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>
-48-
<PAGE>
Exhibit 3(b)
RESTATED
BY-LAWS
OF
KIMBALL INTERNATIONAL, INC.
(reflecting all amendments through June 10, 1997)
ARTICLE I: LOCATION OF OFFICES
Section 1 - Principal Office: The principal office of the corporation
shall be at 1600 Royal Street, Jasper, Indiana.
Section 2 - Other Offices: The corporation may have and maintain such
other offices as the Board of Directors may deem expedient.
ARTICLE II: CORPORATE SEAL
Section 1 - The corporation shall have a corporate seal which shall be as
follows: A circular disc, on the outer margin of which shall appear the
corporate name and State of Incorporation, with the words "Corporate Seal"
through the center, so mounted that it may be used to impress these words in
raised letters upon paper.
ARTICLE III: FISCAL YEAR
Section 1 - The fiscal year of the corporation shall begin with the first
day of July and terminate on the thirtieth day of June of each year.
ARTICLE IV: STOCKHOLDERS' MEETINGS
Section 1 - Place of Meetings: All meetings of the stockholders shall be
held at the principal office of the corporation except such meetings as the
Board of Directors by resolution determine shall be held elsewhere, in which
case meetings may be held upon notice as hereinafter provided at such place or
places within or without the State of Indiana as said Board of Directors may
determine.
Section 2 - Annual Meeting: The annual meeting of the stockholders shall
be held on the third Tuesday of October in each year or on such other date as
may be fixed by the Board of Directors, provided such annual meeting shall be
held in any event within five (5) months after the close of each fiscal year of
the corporation, for the purpose of electing directors and for the transaction
of such other business as may regularly come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday, such meeting shall be
held on the next succeeding business day.
Section 3 - Special Meetings: Special meetings of the stockholders may be
called only by the Board of Directors.
<PAGE>
<PAGE>
Section 4 - Notices: A written or printed notice stating the place, day
and hour of either annual or special meetings and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered or mailed by the Secretary or by the officers or persons calling the
meeting to each holder of the capital stock of the corporation at the time
entitled to vote at such address as appears upon the records of the corporation
at least ten, but not more than sixty, days before the date of the meeting.
Notice of any stockholders' meeting may be waived in writing by any stockholder
if the waiver sets forth in reasonable detail the purpose or purposes for which
the meeting is called and the time and place thereof. Except as required by the
Indiana Business Corporation Law, no notice of the holding of an adjourned
meeting shall be necessary. Each stockholder who has in the manner above
provided waived notice of a stockholders' meeting or who is present in person or
represented thereat by a proxy complying with the requirements set forth in
Article IV, Section 8, shall be conclusively presumed to have been given due
notice of such meeting, except as required by the Indiana Business Corporation
Law.
Section 5 - Quorum: At any meeting of stockholders, a majority of the
shares of the capital stock outstanding and entitled by the Articles of
Incorporation to vote, represented in person or by proxy, shall constitute a
quorum for the transaction of business, but less than a majority may convene and
adjourn.
Section 6 - Voting: Stockholders entitled to vote by the Articles of
Incorporation shall be entitled to vote at all meetings in person or by proxy.
At all meetings, each share of stock entitled to vote by the Articles of
Incorporation shall be entitled to one vote on all questions, and a majority of
the votes of such stock cast at any such meeting shall be sufficient for the
adoption or rejection of any question presented (other than the election of the
Board of Directors) unless otherwise provided by law or by the Articles of
Incorporation of the corporation. The Board of Directors shall be elected by a
plurality of the votes properly cast.
For the purpose of determining stockholders entitled to vote at any meeting
of the stockholders or any adjournment thereof, or stockholders entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other purpose, only those stockholders who are stockholders
of record on the record date fixed by the Board of Directors or as provided in
Article XI, Section 2 hereof, shall be entitled to vote.
Shares standing in the name of a corporation may be voted by such officers,
agent or proxy as the Board of Directors of such corporation may appoint.
Shares held by fiduciaries may be voted by the fiduciaries in such manner as the
instrument or order appointing such fiduciaries may direct. In the absence of
any such direction or the inability of the fiduciaries to act in accordance
therewith, shares held jointly by three (3) or more fiduciaries shall be voted
in accordance with the will of the majority and, where the fiduciaries or a
majority of them cannot agree or where they are equally divided upon the
questions of voting such shares, any Court of general equity jurisdiction may,
upon petition filed by any of such fiduciaries or by any party in interest,
direct the voting of such shares as it may deem for the best interest of the
beneficiaries, and such shares shall be voted in accordance with such direction.
Shares that are pledged may, unless otherwise provided in the agreement of
pledge, be voted by the stockholder pledging the same until the shares have been
transferred to the pledgee on the books of the corporation, and, thereafter,
they may be voted by the pledgee.
<PAGE>
<PAGE>
Section 7 - Voting Lists: The officer or agent having charge of the stock
transfer book shall make, at least five (5) business days before each meeting of
stockholders, a complete list of the stockholders arranged in alphabetical order
with the address and number of shares held by each, which list shall be on file
at the principal office of the corporation and subject to inspection by any
stockholder. Such list shall be produced and kept open at the time and place of
meeting and subject to the inspection of any stockholder during the holding of
such meeting. The original stock register or transfer book, or a duplicate
thereof kept in the State of Indiana, shall be the only evidence as to who are
the stockholders entitled to examine such list or the stock ledger or transfer
book or to vote at any meeting of the stockholders.
Section 8 - Proxies: A shareholder may vote his or her shares either in
person or by proxy. A shareholder may appoint a proxy to vote or otherwise act
for the shareholder (including authorizing the proxy to receive, or to waive,
notice of any shareholders' meetings within the effective period of such proxy)
by signing an appointment form, either personally or by the shareholder's
attorney-in-fact. An appointment of a proxy is effective when received by the
Secretary or other officer or agent authorized to tabulate votes and is
effective for eleven (11) months unless a shorter or longer period is expressly
provided in the appointment form. The proxy's authority may be limited to a
particular meeting or may be general and authorize the proxy to represent the
shareholder at any meeting of shareholders held within the time provided in the
appointment form. Subject to the Indiana Business Corporation Law and to any
express limitation on the proxy's authority appearing on the face of the
appointment form, the corporation is entitled to accept the proxy's vote or
other action as that of the shareholder making the appointment.
Section 9 - Written Consent: Any action required or permitted to be taken
at a shareholders' meeting may be taken without a meeting if the action is taken
by all the shareholders entitled to vote on the action. The action must be
evidenced by one (1) or more written consents describing the action taken,
signed by all the shareholders entitled to vote on the action (facsimile
signatures may be accepted), and delivered to the corporation for inclusion in
the minutes or filing with the corporate records. Action taken under this
Section 9 is effective when the last shareholder signs the consent, unless the
consent specifies a different prior or subsequent effective date, in which case
the action is effective on or as of the specified date. Such consent shall have
the same effect as a unanimous vote of all shareholders and may be described as
such in any document.
Section 10 - Participation by Conference Telephone: Any or all
shareholders may participate in any shareholders' meeting by, or through the use
of, any means of communication, such as conference telephone, by which all
shareholders participating may simultaneously hear each other during the
meeting. Any shareholder participating in a meeting by such means is deemed to
be present in person for all purposes at the meeting.
ARTICLE V: DIRECTORS
Section 1 - Number: The Board of Directors of this corporation shall
consist of eleven (11) members, ten of whom shall be elected by holders of Class
A Common Stock, voting as a class, and one of whom shall be elected by holders
of Class B Common Stock, voting as a class.
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Section 2 - Election: Directors shall be elected annually at the annual
meeting of stockholders; provided that, in the event of failure to hold such
meeting or to hold such election thereat, they may be elected at any special
meeting of stockholders called for that purpose. At such election, the Chairman
of the Board or the Secretary may appoint inspectors or judges who shall report
to the meeting upon the validity of all proxies received and count the votes
cast and make a report thereof to the stockholders' meeting, and, in the absence
of any such appointments, the Secretary of the corporation shall report to the
meeting upon the validity of all proxies received, count the votes cast and make
a report thereof at the stockholders' meeting.
Section 3 - Term Of Office: The directors shall hold office from the date
of their election until the next succeeding annual meeting or until their
successors are elected and shall qualify.
Section 4 - Vacancies: Any vacancy, or vacancies, in the Board of
Directors, arising from any cause, shall be filled by a majority vote of the
remaining members of the Board until the next annual meeting of the
stockholders.
Section 5 - Fees: Each director of the corporation shall receive an annual
retainer in an amount, plus a sum for each of the six (6) regular meetings of
the Board, all as fixed and determined from time to time by the Board of
Directors and in addition thereto, reimbursement for expenses incurred by each
member of the Board in attending each regular, special or adjourned meeting of
the Board which has been called, whether or not a quorum is present.
ARTICLE VI: DIRECTORS' MEETINGS
Section 1 - Regular Meetings: Regular meetings of the Board of Directors
shall be held in the months of February, April, June, August, October and
December of each year on such day of the month, and at such time of day and
place, within or without the State of Indiana, as the Board of Directors may
designate or as may be determined by the Chairman of the Board or the Vice
Chairman of the Board, provided that each director shall be given at least two
(2) days' advance notice of the date, time and place of any regular meeting set
by any of the foregoing officers.
Section 2 - Special Meetings: Special meetings of the Board of Directors
may be held at any time at the principal office of the corporation or elsewhere
within or without the State of Indiana, as shall be specified in the notice of
such meeting.
The Secretary shall call a special meeting whenever and wherever so
requested by the Chairman of the Board, the Vice Chairman of the Board, the
Chief Executive Officer or the President, or by three (3) directors.
Section 3 - Organization Meeting: Immediately following the meeting of the
stockholders at which the directors are elected, the Board of Directors shall
meet and organize, and they may also transact such other business as may be
presented.
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Section 4 - Notice: No notice shall be required for a regular meeting of
the Board of Directors, except as provided in Article VI, Section 1. No notice
shall be required for an "organization meeting", if held on the same day as the
stockholders' meeting at which the directors were elected. No notice of the
holding of an adjourned meeting shall be necessary. Each director shall be
given at least two (2) days' advance notice of the date, time and place of each
special meeting of the Board of Directors. The notice of a special meeting need
not describe the purpose of such meeting. Notice of any meeting may be waived
in writing.
Section 5 - Quorum: At all meetings of the Board of Directors, a majority
of the whole Board shall be necessary to constitute a quorum for the transaction
of any business except the filling of vacancies, but less than a majority may
convene and adjourn.
Section 6 - Voting: All questions coming before any meeting of the Board
of Directors for action shall be decided by a majority vote of the directors
present at said meeting unless otherwise provided by law, by the Articles of
Incorporation or by these By-laws.
Section 7 - Written Consents: Any action required or permitted to be taken
at any meeting of the Board of Directors may be taken without a meeting if the
action is taken by all members of the Board of Directors. The action must be
evidenced by one (1) or more written consents describing the action taken,
signed by each director (facsimile signatures may be accepted), and included in
the minutes or filed with the corporate records reflecting the action taken.
Action taken under this Section 7 is effective when the last director signs the
consent, unless the consent specifies a different prior or subsequent effective
date, in which cases the action is effective on or as of the specified date. A
consent signed under this Section 7 shall have the same effect as a unanimous
vote of all members of the Board of Directors and may be described as such in
any document.
Section 8 - Participation by Conference Telephone: Any or all directors
may participate in a regular or special meeting by, or through the use of, any
means of communication, such as conference telephone, by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by such means shall be deemed to be present in person
at the meeting.
ARTICLE VII: EXECUTIVE COMMITTEE
Section 1 - Number, Qualifications, Appointment: The Board of Directors
may appoint, by a majority vote of all directors in office, not less than two
(2) directors who, together with the Chairman of the Board, the Vice Chairman of
the Board, the Chief Executive Officer (if the Chief Executive Officer is also a
director) and the President (if the President is also a director), shall
constitute the Executive Committee of the corporation. The Chairman of the
Board shall serve as chairman of said committee.
Section 2 - Powers and Duties: The Executive Committee shall advise with
and aid the officers of the corporation in all matters concerning its interests
and the management of its business, and, when the Board of Directors is not in
session, the Executive Committee shall have and may exercise all of the powers
of the Board of Directors with reference to the conduct of the business of the
corporation, except as otherwise provided by the Indiana Business Corporation
Law.
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Section 3 - Term of Office: The members of the Executive Committee shall
hold office from the date of their appointment until the next succeeding
organization meeting of the directors, provided that the Board of Directors
shall at all times have the power to remove any member of the Executive
Committee.
Section 4 - Vacancies: Any vacancy, or vacancies, in the Executive
Committee, arising from any cause, shall be filled by a majority vote of the
remaining members of the Board until the next annual or special meeting of the
shareholders.
Section 5 - Fees: Members of the Executive Committee, as such, shall not
receive any stated salary for their services, but expenses, if any, of
attendance and a fee in such an amount as may be determined by the Board of
Directors from time to time shall be paid for attendance at each such Executive
Committee meeting.
Section 6 - Meetings: The Executive Committee shall meet at such times and
places as the Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer (if the Chief Executive Officer is a member of the Executive
Committee) or the President (if the President is a member of the Executive
Committee) may designate, provided that at least one day's advance notice of
such meeting shall be given to each member of the committee. A majority of the
Executive Committee shall constitute a quorum for the transaction of all
business. All questions coming before any meeting of the Executive Committee
for action shall be decided by a majority vote of the members present at said
meeting.
Section 7 - Written Consents: Any action required or permitted to be taken
at any meeting of the Executive Committee may be taken without a meeting if the
action is taken by all members of the Executive Committee. The action must be
evidenced by one (1) or more written consents describing the action taken,
signed by each member (facsimile signatures may be accepted), and included in
the minutes or filed with the corporate records reflecting the action taken.
Action taken under this Section 7 is effective when the last member signs the
consent, unless the consent specifies a different prior or subsequent effective
date, in which cases the action is effective on or as of the specified date. A
consent signed under this Section 7 shall have the same effect as a unanimous
vote of all members of the Executive Committee and may be described as such in
any document.
Section 8 - Participation by Conference Telephone: Any or all members of
the Executive Committee may participate in any meeting of the Executive
Committee by, or through the use of, any means of communication, such as
conference telephone, by which all members participating may simultaneously hear
each other during the meeting. A member participating in a meeting by such
means shall be deemed to be present in person at the meeting.
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ARTICLE VIII: AUDIT COMMITTEE
The Board of Directors shall appoint an Audit Committee consisting of three
(3) members of the Board of Directors. At least two of the members of the Audit
Committee shall be "independent directors", meaning a person other than an
officer or employee of the corporation or its subsidiaries or any other
individual having a relationship which, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. The third member of the Audit Committee
may be an officer of the corporation who is a member of the Board of Directors
who is not either the Chairman of the Board, the Vice Chairman of the Board, the
Chief Executive Officer, the President or the Chief Financial Officer. The
committee shall have such responsibilities and powers appropriate to the nature
of said committee including review of the annual audit prepared by the
independent auditors appointed by the Board of Directors with respect to the
corporation within the scope and area of responsibility of said committee.
ARTICLE IX: OFFICERS
Section 1 - Titles: The officers of the corporation shall consist of the
Chairman of the Board, the Vice Chairman of the Board, the Chief Executive
Officer, the President, an Assistant to the Chief Executive Officer, a Chief
Financial Officer, a Chief Administrative Officer, an Assistant to the
President, one or more Chief Operations Officer(s), a Secretary, a Treasurer,
and a Chief Accounting Officer. The Board of Directors may elect, at the
request of the Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer or the President, one or more Senior Executive Vice
Presidents, Executive Vice Presidents or Vice Presidents, and one or more
Assistants to the officers of the corporation.
Section 2 - Qualifications of the Chairman of the Board and Vice Chairman
of the Board: The Chairman of the Board and the Vice Chairman of the Board
shall be chosen from among the members of the Board of Directors.
Section 3 - Election of Officers: The officers elected by the Board of
Directors shall be elected annually at the organization meeting of the Board,
provided that any officers not so elected at such meeting may be elected
subsequently at any regular or special meeting of the Board.
Section 4 - Term of Office: All officers shall serve at the pleasure of
the Board and shall hold office from the date of their election until the next
succeeding annual organization meeting of the Board of Directors or until their
successors are elected and shall qualify.
Section 5 - Vacancies: Any vacancy or vacancies among the officers,
arising from any cause, shall be filled by the Board of Directors.
Section 6 - Combining Offices: Any two or more offices may be held by the
same person except that the duties of President and Secretary shall not be
performed by the same person.
ARTICLE X: POWER AND DUTIES OF DIRECTORS AND OFFICERS
Section 1 - Directors: The business and affairs of the corporation shall
be managed by a Board of Directors except where specifically excepted by law and
these By-laws.
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Section 2 - Executive Committee: In the interim between meetings of the
Board of Directors, the Executive Committee shall have and exercise all the
powers and authority of the Board of Directors, except as otherwise provided by
the Indiana Business Corporation Law, provided that no action of the committee
shall conflict with action had or taken by the Board of Directors.
Section 3 - Officers: The Chairman of the Board, the Vice Chairman of the
Board, the Chief Executive Officer and the President, in addition to the duties
hereinafter specified, shall perform all duties incident to the office held by
them, as well as such other duties as may be assigned to them from time to time
by the Board of Directors, and, in the case of the Vice Chairman of the Board,
the Chief Executive Officer and the President, such duties as may be assigned to
them from time to time by the Chairman of the Board. Each of the other officers
of the corporation shall perform all duties incident to the office held by them,
as well as such other duties as may be assigned to them from time to time by the
Board of Directors, the Chief Executive Officer or the President.
Section 4 - Chairman of the Board: The Chairman of the Board shall preside
at all meetings of the Board of Directors and shall have general control and
management of the business of the corporation.
Section 5 - Vice Chairman of the Board: In addition to his or her other
duties, in the absence of the Chairman of the Board, the Vice Chairman of the
Board shall preside at meetings of the Board of Directors.
Section 6 - Chief Executive Officer: The Chief Executive Officer shall
have day-to-day control and management of the business and affairs of the
corporation subject to the control of the Board of Directors. He or she shall
preside at all meetings of shareholders and, in the absence of the Chairman of
the Board and the Vice Chairman of the Board, at meetings of the Board of
Directors. The Chief Executive Officer shall have specific charge and
supervision of all subordinate officers and all employees of the corporation and
may delegate or assign to such officers and employees such of his or her duties
and responsibilities as he or she may elect which are not specifically
prescribed by the By-laws or resolutions of the Board of Directors.
Section 7 - President: In the absence of the Chairman of the Board, the
Vice Chairman of the Board and the Chief Executive Officer, the President shall
have the general control and management of the business and affairs of the
corporation.
Section 8 - Assistant to the Chief Executive Officer: The Assistant to the
Chief Executive Officer shall perform such duties as may be assigned to him or
her from time to time by the Chief Executive Officer.
Section 9 - Chief Financial Officer: The Chief Financial Officer shall be
responsible for all financial matters of the corporation.
Section 10 - Chief Operations Officer(s): The Chief Operations Officer(s)
shall be responsible for all manufacturing and production of the corporation.
Section 11 - Chief Administrative Officer: The Chief Administrative
Officer shall be responsible for all administrative functions of the corporation
affecting the corporation as a whole.
Section 12 - Assistant to the President: The Assistant to the President
shall perform such duties as may be assigned to him or her from time to time by
the President.
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Section 13 - Vice Presidents: The Senior Executive Vice Presidents,
Executive Vice Presidents or other Vice Presidents shall perform such duties as
may be respectively assigned to them from time to time by the Board of
Directors, the Chief Executive Officer or the President. The Board of Directors
or Executive Committee may designate one or more of the Vice Presidents as
Senior Executive Vice Presidents or Executive Vice Presidents.
Section 14 - Secretary: Subject to the authority of the Board of
Directors, the Chief Executive Officer and the President, the Secretary shall
have the custody of the corporate seal and records of the corporation and charge
of all the records of the corporation. He or she shall act as Secretary at
meetings of the stockholders, directors and the Executive Committee and enter
the minutes of such meetings in a book provided for that purpose and shall
attend to publishing, giving and serving all official notices of the
corporation. He or she shall perform such other duties as may be assigned to
him or her.
Section 15 - Assistant Secretaries: In the absence or disability of the
Secretary, the Assistant Secretaries shall act with all the powers of the
Secretary. They shall perform such other duties as may be assigned to them.
Section 16 - Treasurer: Subject to the authority of the Board of
Directors, the Chief Executive Officer and the President, the Treasurer shall
have the custody of all negotiable instruments and securities of the corporation
and shall have responsibility for all collections and disbursements of corporate
funds. He or she may endorse all commercial documents requiring endorsement for
or on behalf of the corporation. He or she shall perform such other duties as
may be assigned to him or her.
Section 17 - Assistant Treasurers: In the absence or disability of the
Treasurer, the Assistant Treasurers shall act with all the powers of the
Treasurer. They shall perform such other duties as may be assigned to them.
Section 18 - Chief Accounting Officer: Subject to the authority of the
Board of Directors, the Chief Executive Officer and the President, the Chief
Accounting Officer shall have general supervision of the accounting of the
corporation. He or she shall perform such other duties as may be assigned to
him or her.
ARTICLE XI: STOCK
Section 1 - Stock Certificates: Each stockholder shall be entitled to a
certificate signed by the Chairman of the Board, the President or a Vice
President and by the Secretary or an Assistant Secretary of the corporation and
sealed with the corporate seal of the corporation, certifying to the number of
shares owned by him or her in the corporation. Where such certificate is also
signed by a transfer agent and a registrar, the signatures of any such Chairman
of the Board, President, Vice President, Secretary or Assistant Secretary and
the seal of the corporation may be facsimiles. In case any officer or officers
who shall have signed or whose facsimile signature shall have been used on any
such certificate or certificates shall cease to be such officer or officers of
the corporation before such certificate or certificates shall have been
delivered by the corporation, such certificate or certificates may,
nevertheless, be issued and delivered by the corporation with the same effect as
if such officer or officers had not ceased to be such at the date of its issue.
Section 2 - Transfer of Shares: Stock shall be transferable on the stock
transfer books of the corporation in person or by an attorney duly authorized
and upon surrender and cancellation of the old certificates therefor.<PAGE>
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The Board of Directors of the corporation may close its stock transfer
books for a period of time up to the maximum period of time permitted by rules
and regulations of the Securities and Exchange Commission and the Indiana
Business Corporation Law preceding the date of any meeting of stockholders or
the date for the payment of any dividend, provided, however, that in lieu of
closing the stock transfer books, the Board of Directors may fix in advance a
date pursuant to any applicable rules and regulations of the Securities and
Exchange Commission (which, as to stockholders' meetings, shall be a date not
more than seventy (70) days prior to the meeting), as the record date for the
determination of the stockholders entitled to notice of and to vote at any such
meeting, or entitled to receive payment of any such dividend, and in such case
such stockholders and only such stockholders as shall be stockholders of record
on the date so fixed shall be entitled to such notice of and to vote at such
meeting, or to receive payment of such dividend, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
such record date fixed as aforesaid. If the stock transfer books are not
closed, and no record date is fixed by the Board of Directors, no shares shall
be voted at any meeting which shall have been transferred on the books of the
corporation within ten (10) days next preceding the date of such meeting.
Section 3 - Replacing Certificates: In case of the loss or destruction of
any certificate of stock and the submission of proper proof thereof by the
owner, a new certificate may be issued in lieu thereof under such regulations
and restrictions as the Board of Directors may prescribe.
ARTICLE XII: AUTHORIZED SIGNATURES
Section 1 - Negotiable Instruments: The Chief Executive Officer, the
President or the Treasurer may authorize the use of facsimile signatures for
certain types of accounts maintained by the corporation or with respect to
checks or drafts which are less than a designated amount. The Chief Executive
Officer, the President or the Treasurer also may authorize employees of
particular business units of the corporation to sign or authorize checks,
drafts, other negotiable instruments and electronic funds transfers up to a
designated dollar amount if the corporation's Audit and Management Group (or any
successor to such Group) certifies that such business unit meets such standards
regarding internal control as may be specified by the Chief Executive Officer,
the President or the Treasurer. Except as so authorized, all checks, drafts,
other negotiable instruments and electronic funds transfers shall be made in the
name of the corporation and signed or authorized by one officer or employee of
the corporation and countersigned or counterauthorized by a different officer or
employee of the corporation. The Chief Executive Officer, the President and the
Treasurer each are authorized and empowered to designate in writing both officer
and non-officer employees of the corporation who shall be empowered to sign or
countersign checks, drafts, and negotiable instruments for and on behalf of the
corporation, and any such written designation shall have the same force and
binding legal effect on the corporation as a resolution of the Board of
Directors so empowering such officer or non-officer employees. Any such written
designation may be revoked at any time by the Chief Executive Officer, the
President or the Treasurer, and, in their absence or unavailability, any member
of the Executive Committee of the Board of Directors may revoke such written
designation.
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Section 2 - Contracts and Documents: The Chairman of the Board, the Vice
Chairman of the Board, the Chief Executive Officer or the President may, in the
corporation's name, sign all deeds, leases, contracts or similar documents that
may be authorized by the Board of Directors unless otherwise directed by the
Board of Directors or otherwise provided herein or in the Articles of
Incorporation or as otherwise required by law. The Chairman of the Board, the
Chief Executive Officer or the President is authorized and empowered to
designate in writing both officer and non-officer employees of the corporation
who shall be empowered to sign contracts or other documents for and on behalf of
the corporation, and any such written designation shall have the same force and
binding legal effect on the corporation as a resolution of the Board of
Directors so empowering such officer or non-officer employees. Any such written
designation may be revoked at any time by the Chairman of the Board, the Chief
Executive Officer or the President, and, in their absence or unavailability, any
member of the Executive Committee of the Board of Directors may revoke such
written designation.
ARTICLE XIII: FIDELITY BONDS
Section 1 - The officers and employees of the corporation shall, in the
discretion of the Board of Directors, the Chairman of the Board or the
President, give bonds for the faithful discharge of their respective duties, in
such form and such amounts as may be directed by the Board of Directors, the
Chairman of the Board or the President.
ARTICLE XIV: INDEMNIFICATION
Section 1 - Every person (and the heirs, executors and administrators of
such person) who is or was a director or officer of this corporation or of any
subsidiary of this corporation or who, at the request of the Board of Directors
of this corporation, served in any position or capacity or on any committee for
this corporation or for or in any other corporation, partnership, association,
trust, foundation, not-for-profit corporation, employee benefit plan or other
organization or entity, shall be indemnified by the corporation against any and
all liability and reasonable expense that may be incurred by him in connection
with or resulting from any claim, action, suit or proceeding in which either (i)
such person is wholly successful, thereby entitling such person to Mandatory
Indemnification, or (ii) such person is not wholly successful but it is
nevertheless determined, pursuant to the procedures set forth below in Section 2
of this Article XIV of these By-laws, that such person acted in good faith and
that such person reasonably believed that (a) in the case of conduct in his
official capacity, his conduct was in the corporation's best interests, or (b)
in all other cases, his conduct was at least not opposed to the best interests
of such corporation, entity or organization, and, in addition with respect to
any criminal action or proceeding, either had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful, thereby entitling such person to Permissive Indemnification. A person
shall be considered to have been serving an employee benefit plan at the request
of the corporation if his duties to the corporation also impose duties on, or
otherwise involve services by, him to the plan or to participants in or
beneficiaries of the plan. The terms "claim", "action", "suit" or "proceeding"
shall mean and include any threatened, pending or completed claim, action, suit
or proceeding (whether brought by or in the right of the corporation of any
other corporation or otherwise), and all appeals thereof, whether civil,
criminal, administrative or investigative, formal or informal, in which any
person described in the first sentence of this section may become involved as a
party or otherwise:
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(a) by reason of his being or having been a director or officer of the
corporation, or of any subsidiary corporation of the corporation, or
of any other corporation where he served as such at the request of the
corporation, or
(b) by reason of his acting or having acted in any position or capacity or
on any committee for this corporation or any subsidiary corporation of
this corporation, or in any position or capacity in or for a
partnership, association, trust, foundation, not-for-profit
corporation, employee benefit plan or other organization or entity
where he served as such at the request of the corporation, or
(c) by reason of any action taken or not taken by him in any such
capacity, whether or not he continues in such capacity at the time
such liability or expense shall have been incurred.
The terms "liability" and "expenses" shall include, but shall not be limited to,
counsel fees and disbursements and amounts of judgments, fines or penalties
against, and amounts paid in settlement by or on behalf of, a person, and excise
taxes assessed with respect to an employee benefit plan, but shall not in any
event include any liability or expenses on account of profits realized by him in
the purchase or sale of securities of the corporation. The term "wholly
successful" shall mean (a) termination of any action, suit or proceeding against
the person in question without any finding of liability or guilt against him,
(b) the expiration of a reasonable period of time after the making of any claim
or threat of an action, suit or proceeding without the institution of the same,
without any payment or promise made to induce a settlement, or (c) approval by a
court, with knowledge of the indemnity herein provided, of a settlement of any
claim, action, suit or proceeding. The termination of any claim, action, suit
or proceeding by judgment, order, settlement (whether with or without court
approval), or conviction or upon a plea of guilty or of nolo contendere, or its
equivalent, shall not by itself create a presumption that a person did not meet
the standards of conduct for Permissive Indemnification. The actions of a
person with respect to an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974 shall be deemed to have been taken in
what the person reasonably believed to be the best interests of the corporation
if the person reasonably believed he was acting in conformity with the
requirements of such Act or he reasonably believed his actions to be in the
interests of the participants in or beneficiaries of the plan.
Section 2 - With regard to Permissive Indemnification, the determination
that a person acted in good faith and that such person reasonably believed that
(a) in the case of conduct in his official capacity, his conduct was in the
corporation's best interests, or (b) in all other cases, his conduct was at
least not opposed to the best interests of the corporation, and, in addition,
with respect to any criminal action or proceeding, either had reasonable cause
to believe that his conduct was lawful or had no reasonable cause to believe
that his conduct was unlawful with regard to a specific claim, action, suit or
proceeding in or as to which such person is not wholly successful shall be made
by or for the Board of Directors of the corporation in the manner hereinafter
described. Any requests for such indemnification must first be proposed to the
Board of Directors of the corporation, and a motion for such indemnification may
be made by any director of the corporation, including a director who is seeking
such indemnification for himself. If a quorum of directors eligible to decide
the matter exists within the limitations and requirements of I.C. 23-1-37-12
(b)(1), such directors may either (i) decide the question themselves; (ii) refer
the matter to Special Legal Counsel for decision pursuant to I.C.
23-1-37-12(b)(3)(A); or (iii) decline to take any action to either decide the
question of such indemnification or refer the matter for decision to Special
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Legal Counsel.
If there does not exist a quorum of directors eligible to decide the matter
within the limitations and requirements of I.C. 23-1-37-12(b)(1), a majority of
the entire Board of Directors may either (i) refer the matter to a committee of
two or more directors who are eligible to vote thereon pursuant to I.C.
23-1-37-12(b)(2) who may either decide the matter themselves or refer the matter
to Special Legal Counsel for decision pursuant to I.C. 23-1-37-12(b)(3)(A); (ii)
if such a committee cannot be appointed, refer the matter to Special Legal
Counsel pursuant to the procedures described in I.C. 23-1-37-12(b)(3)(B); or
(iii) decline to take any action to refer the matter of such indemnification to
a committee or to Special Legal Counsel. Any decision on the question of
entitlement to such Permissive Indemnification by a majority of a quorum of the
Board of Directors eligible to vote pursuant to I.C. 23-1-37-12(b)(1); by a
special committee of eligible directors pursuant to I.C. 23-1-37-12(b)(2); or by
Special Legal Counsel duly appointed pursuant to the provisions of I.C.
23-1-37-12(b)(3), shall be in the sole and absolute discretion of such person or
persons who are to make such determination. If it is determined and decided
that such Permissive Indemnification should be given in a specific situation,
the authorization for such indemnification and a determination of the amount
thereof shall be made in accordance with the procedures and requirements of I.C.
23-1-37-12(c). For purposes of this Section 2 Permissive Indemnification shall
be deemed to have been denied (i) if a majority of any group of persons who are
to decide the question do not vote in favor of the proposed indemnification;
(ii) if the Board of Directors or any committee thereof declines to take any
permitted action to either decide the question, refer it to a committee, or
refer it to Special Legal Counsel; (iii) if no decision is made by the person or
persons who were to decide such question within a period of six (6) months after
such indemnification was first proposed to the Board of Directors of the
corporation; or (iv) to the extent that the dollar amount of any indemnification
to be made by the corporation is less than the total dollar amount of
indemnification proposed or requested to be made. If proposed Permissive
Indemnification is denied, the question may not be reconsidered at any
subsequent time by the corporation.
Section 3 - Expenses incurred with respect to any claim, action, suit or
proceeding may be advanced by the corporation (by action of the Board of
Directors, whether or not a disinterested quorum exists) prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount unless he is entitled to indemnification under
this Article of these By-laws.
Section 4 - The rights of mandatory and Permissive Indemnification provided
in this Article of the By-laws shall be in addition to any rights to which any
such person may otherwise be entitled by contract, as matter of law, or pursuant
to I.C. 23-1-37. Any person claiming the right to indemnification pursuant to
any provisions of these By-laws may at any time apply for indemnification to or
seek review of any decision denying indemnification or determining the amount
thereof by a court pursuant to I.C. 23-1-37-11. Persons who are not directors
or officers of the corporation but who are directors or officers of any
subsidiary may be indemnified to the extent authorized at any time or from time
to time by the Board of Directors.
Section 5 - Irrespective of the provisions of this Article of the By-laws,
the Board of Directors may, at any time or from time to time, approve
indemnification of directors and officers or other persons to the full extent
permitted by the provisions of the Indiana Business Corporation Law at the time
in effect, whether on account of past or future transactions.
<PAGE>
<PAGE>
Section 6 - To the extent not inconsistent with Indiana law as in effect
from time to time, the Board of Directors may, at any time or from time to time,
approve the purchase and maintenance of insurance on behalf of any person
described in the first sentence of Section 1 of this Article XIV against any
liability asserted against him in his capacity or arising out of his status as
such a person, whether or not the corporation would have the power to indemnify
him under the provisions of this Article of the By-laws. In the event that any
expense or liability otherwise subject to indemnification hereunder is covered
entirely or in part by any insurance, the indemnification provided for by this
Article of these By-laws shall only be available, if at all, as to any uninsured
liability or expense or that portion which is in excess of the amount of all
available insurance coverage. Under no circumstances shall any insurer or other
person making payment under such an insurance policy or contract be subrogated
to the rights of any person entitled to indemnification under this Article of
these By-laws.
Section 7 - Any and all references contained in Article XIV of these
By-laws to any provision, section, subsection or portion of the Indiana Code
(I.C.) shall mean the Indiana Code as the same existed on December 9, 1986, and
no subsequent amendment, repeal, modification, change, or judicial invalidation
of any provision of the Indiana Code subsequent to December 9, 1986, shall
alter, modify, or otherwise affect these By-laws, and these By-laws shall be
construed and interpreted under the statutory law of the State of Indiana as it
existed as of the date of adoption of these By-laws.
Section 8 - The indemnification herein required or permitted by these
amended indemnification By-laws shall be a contractual obligation, undertaking
and commitment of the corporation as to any person who either continued to serve
or commenced to serve, following the date of the adoption of these amended
indemnification By-laws, as a director or officer of this corporation or any
subsidiary of this corporation, or in any other position or capacity, at the
request of this corporation or any subsidiary corporation, on any committee,
partnership, association, trust, foundation, not-for-profit corporation,
employee benefit plan, or other organization or entity, and no subsequent
amendment or repeal of these By-laws and no judicial decision invalidating the
legislation authorizing the indemnification provided for by these By-laws or
invalidating all or any part of these indemnification By-laws shall in any
manner deny, diminish, limit, restrict, or qualify the indemnification herein
provided for, for any such person who so continued to serve or commenced to
serve with regard to any claim concerning any matter which occurred, which
commenced to occur, or which continued to occur subsequent to the adoption of
these amended indemnification By-laws and prior to any such amendment, repeal,
or judicial invalidation.
ARTICLE XV: REGULATION OF SHAREHOLDERS
Section 1 - Election not to be governed by Chapter 42 (Control Share
Acquisitions) of 1986 Indiana Business Corporation Law. This Corporation,
having filed with the Indiana Secretary of State on August 18, 1986, its
resolution electing to be governed by the Indiana Business Corporation Law, I.C.
23-1-18 through I.C. 23-1-54, effective September 15, 1986, now elects, pursuant
to the provisions of I.C. 23-1-42-5, not to be governed by the provisions of
Chapter 42 of the 1986 Indiana Business of Corporation Law (I.C. 23-1-42), the
same being Section 26 of House Enrolled Act No. 1257 as enacted by the General
Assembly of the State of Indiana at the Second Regular Session of the 104th
General Assembly.
<PAGE>
<PAGE>
Section 2 - Election not to be governed by Chapter 43 Five-Year Freeze
(Business Combinations) provisions of the 1986 Indiana Business Corporation Law.
This Corporation, having filed with the Indiana Secretary of State on August 18,
1986, its resolution electing to be governed by the Indiana Business Corporation
Law, I.C. 23-1-18 through I.C. 23-1-54, effective September 15, 1986, now,
within 30 days of the effective date of such new law and pursuant to the
provisions of I.C. 23-1-43-22(B), hereby expressly elects not to be governed by
the provisions of Chapter 43 of the 1986 Indiana Business Corporation Law (I.C.
23-1-43), the same being Section 27 of House Enrolled Act No. 1257 as enacted by
the General Assembly of the State of Indiana at the Second Regular Session of
the 104th General Assembly.
ARTICLE XVI: MISCELLANEOUS
Section 1 - Depositories: The funds of the corporation shall be deposited
in the name of the corporation with such depositories as may be designated by
the Board of Directors, the Chief Executive Officer, the President or the
Treasurer.
ARTICLE XVII: AMENDMENTS
Section 1 - These By-laws may be altered, amended or repealed by a majority
vote of the whole Board of Directors at any meeting, the notice of which
includes notice of the proposed alteration, amendment or repeal.
<PAGE>
Date
Name/Address
"
"
Dear __________:
Pursuant to a Board of Directors' resolution adopted on October 10, 1978, as a
member of the Board of Directors of Kimball International, Inc., in the event of
your death while a director and employed by Kimball International, Inc., a total
of $25,000 will be paid to the beneficiary or beneficiaries designated by you
below.
BENEFICIARY RELATIONSHIP AMOUNT
__________________ ________________ ____________
__________________ ________________ ____________
__________________ ________________ ____________
KIMBALL INTERNATIONAL, INC.
By: _________________
Douglas A. Habig
Chairman of the Board
Accepted by:
__________________
Name
__________________
Date
Exhibit 10(c)
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FISCAL YEAR ENDED JUNE 30, 1997
<S> <C> <C>
Net income, fiscal year ended June 30, 1997. . . . . $57,745,000
Dividends declared:
Class A Common -- $1.06 per share . . . . . . . .$ (7,682,000)
Class B Common -- $1.07 per share . . . . . . . . (14,422,000)
(22,104,000)
Undistributed Earnings . . . . . . . . . . . . . . . $35,641,000
Undistributed earnings divided by
20,725,207 average number of
shares outstanding . . . . . . . . . . . . . . . $1.7197
Class A Class B
------- -------
Undistributed Earnings Per Share . . . . . . . . . . $1.7197 $1.7197
Assumed Distribution of Earnings . . . . . . . . . . 1.0600 1.0700
Earnings Per Share . . . . . . . . . . . . . . . . $2.7797 $2.7897
<CAPTION>
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
Exhibit 11
Page 1 of 2<PAGE>
<PAGE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
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
</TABLE>
Exhibit 11
Page 2 of 2
<PAGE>
<TABLE>
<CAPTION>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
SIGNIFICANT SUBSIDIARIES OF REGISTRANT
As of June 30, 1997 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 U.K., Inc. Indiana 100%
</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 Numbers 33-20125 and 333-14591.
Arthur Andersen LLP
Chicago, Illinois
September 15, 1997
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, 1997, 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 20, 1997
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
Alan B. Graf, Jr.
Alan B. Graf, Jr.
Exhibit 24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Kimball
International, Inc. 1997 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-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 18,818
<SECURITIES> 149,677
<RECEIVABLES> 114,159
<ALLOWANCES> 4,017
<INVENTORY> 76,142
<CURRENT-ASSETS> 376,773
<PP&E> 411,201
<DEPRECIATION> 237,191
<TOTAL-ASSETS> 581,583
<CURRENT-LIABILITIES> 133,258
<BONDS> 0
0
0
<COMMON> 6,723
<OTHER-SE> 416,103
<TOTAL-LIABILITY-AND-EQUITY> 581,583
<SALES> 992,049
<TOTAL-REVENUES> 992,049
<CGS> 692,636
<TOTAL-COSTS> 692,636
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 833
<INTEREST-EXPENSE> 551
<INCOME-PRETAX> 88,566
<INCOME-TAX> 30,821
<INCOME-CONTINUING> 57,745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,745
<EPS-PRIMARY> 2.79
<EPS-DILUTED> 2.79
</TABLE>
