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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report January 20, 1998
(Date of earliest event reported)
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
INDIANA
(State or other jurisdiction of incorporation)
0-3279 35-0514506
(Commission File Number) (IRS Employee Identification Number)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (812) 482-1600
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. Other Events
The Registrant issued the following press release on January 20, 1998.
KIMBALL INTERNATIONAL REPORTS SECOND QUARTER SALES AND EARNINGS
JASPER, Ind. (January 20, 1998) -- Kimball International, Inc. (NASDAQ
National Market: KBALB), today reported net sales of $264.5 million for the
second quarter of fiscal 1998, an all time high and a four percent increase over
sales of $253.8 million in the second quarter of fiscal 1997, which was the
previous record. Earnings for the three months ending December 31, 1997 were
$15.5 million, or $.38 per Class B share, a six percent increase over net income
of $14.6 million ($.35 per Class B share) for the three months ending December
31, 1996. Current year second quarter earnings included a $1.0 million or $.02
per share gain from the sale of real estate. Earnings per share amounts reflect
the 2-for-1 stock split in the second quarter of fiscal 1998.
"Our second quarter record revenue performance is reflective of the
underlying market strength in each of our core businesses. However, operating
earnings faltered due primarily to higher promotional expenses and increased
investments positioning the Company for future growth," said President James C.
Thyen.
Fiscal year-to-date revenues grew by two percent to $510.4 million, while
net income increased one percent to $28.5 million when compared to the prior
year.
In the Company's largest segment, Furniture and Cabinets, second quarter
sales increased three percent to $164.4 million, compared to the prior year,
while year-to-date revenues increased two percent to $318.9 million. During the
second quarter, office furniture revenues set a record, with all major product
lines posting increases over the prior year. Residential and contract furniture
sales also rose quarter over quarter.
These positive trends in office, residential and contract furniture were
tempered by lower sales volumes in hospitality furniture as well as television
cabinets. Although the Company is still taking advantage of the continued new
construction and renovation cycle in the lodging industry, project "win rates"
vary from quarter to quarter. Television cabinet sales remained lower due
largely to a major customer's start-up of a newly relocated facility.
Segment income declined during the quarter ended December 31, 1997 and
year-to-date due to competitive pricing pressures and increased promotional
expenses as well as implementation costs associated with a changeover in order
management information systems. As this implementation occurs, two information
systems must be supported, thus escalating costs for a period of time.
In the Electronic Contract Assemblies segment, second quarter revenues
increased by ten percent to a record $87.2 million when compared to the prior
year. This gain was attributable to stronger demand for both automotive and
computer products. Higher sales volumes, coupled with favorable product sales
mix changes, contributed to an increase in income for this same period.
Year-to-date sales increased three percent to $164.5 million, while earnings
decreased slightly as a result of the carryover from the somewhat sluggish first
quarter.
Sales in the Processed Wood Products and Other segment, the Company's
smallest, decreased thirteen percent to $12.9 million for the second quarter and
seven percent to $27.1 million year-to-date compared to the prior year periods.
Higher sales of laminates, metal parts and carbide tools were more than offset
by lower sales of dimension and plastic components. Segment income rose for the
second quarter and year-to-date, partially reflecting lower process
reengineering expenses in the Company's distribution services from last fiscal
year.
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The Company's balance sheet is strong and provides the Company the
flexibility to update and install next generation information systems and
state-of -the-art production equipment as well as pursue prudent business growth
opportunities.
"Results for the past six months, especially earnings, have been under our
expectations," said Chairman and CEO Douglas A. Habig. "Significant investments
have been made in acquiring and implementing information technology; advanced
production equipment and more efficient manufacturing flows; and growth-focused
promotional expenses as we position our Company for the future. These
investments resulted in a disappointing bottom line, and have had a neutralizing
effect on the positive accomplishments otherwise posted."
"The slower than anticipated pay-back on these investments, especially in
our Furniture and Cabinets segment, lower than expected sales volumes of
computer and other products in our Electronics segment, and ongoing customer
production schedule changes in our contract cabinet group have caused us to
lower our internal forecasts for fiscal year 1998," stated Habig. "Sales growth
of approximately seven percent, still driving us through the billion dollar
level, is now anticipated. Earnings per share are expected in the $1.35 to
$1.45 range. Although not pleased with the margin deterioration, we view the
long-term investments mentioned above as reinforcements and expansions to our
business plan foundations that are critical to achieving our longer-term, more
aggressive growth and economic profit targets, and ultimately...improved Share
Owner return."
Kimball is a diversified manufacturer of consumer durable goods, including
office, residential, hospitality and healthcare furniture, sold under the
Company's family of brand names. Kimball is also a major supplier of electronic
assemblies on an original equipment manufacturer (OEM) basis. It makes other OEM
products such as TV cabinets and stands, audio speaker systems, home furniture
and pool tables and produces plywood, dimension stock and other lumber products.
More information about Kimball International is available on its web site
on the Internet. The address is www.kimball.com.
Statements in this release, especially the sales and earnings forecasts,
are forward-looking. Therefore, please refer to the cautionary statement
contained in the Company's April 10, 1997 8-K filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Kimball International, Inc.
By: Robert F. Schneider
ROBERT F. SCHNEIDER
Executive Vice President,
Chief Financial Officer,
Assistant Treasurer
Date: January 20, 1998
