<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-3279
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0514506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (812) 482-1600
Not Applicable
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No___
The number of shares outstanding of the Registrant's common stock as of
April 15, 1998 were:
Class A Common Stock - 14,388,836 shares
Class B Common Stock - 26,983,135 shares
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KIMBALL INTERNATIONAL, INC.
FORM 10-Q
INDEX
<CAPTION>
PAGE NO.
<S> <C>
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
- March 31, 1998 (Unaudited) and June 30, 1997 . . . . . . . . 3
Consolidated Statements of Income (Unaudited)
- Three Months and Nine Months Ended March 31, 1998 and 1997. . 4
Consolidated Statements of Cash Flows (Unaudited)
- Nine Months Ended March 31, 1998 and 1997 . . . . . . . . . . 5
Notes To Consolidated Financial Statements (Unaudited). . . . . 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . 8-11
PART II OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . 13
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<TABLE>
PART I.
FINANCIAL INFORMATION
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<CAPTION>
(unaudited)
March 31, June 30,
<S> 1998 1997
ASSETS <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 48,547 $ 18,818
Short-term investments 131,118 149,677
Receivables, less allowances
of $4,164 and $4,017, respectively 122,485 110,142
Inventories 82,831 76,142
Other 22,858 21,994
Total Current Assets 407,839 376,773
PROPERTY AND EQUIPMENT - at cost, less
accumulated depreciation of $242,612 and
$237,191, respectively 178,739 174,010
OTHER ASSETS 32,078 30,800
Total Assets $618,656 $581,583
LIABILITIES AND SHARE OWNERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 2,663 $ 2,472
Current maturities of long-term debt 255 471
Accounts payable 58,076 53,063
Dividends payable 6,133 5,989
Accrued expenses 77,696 71,263
Total Current Liabilities 144,823 133,258
OTHER LIABILITIES:
Long-term debt, less current maturities 3,014 2,313
Deferred income taxes and other 24,582 23,186
Total Other Liabilities 27,596 25,499
SHARE OWNERS' EQUITY:
Common stock 2,151 6,723
Additional paid-in capital 6,147 1,607
Retained earnings 458,590 434,665
Foreign currency translation adjustment 1,466 1,721
Unrealized gain (loss) on available-for-sale securities 1,936 (73)
Less: Treasury stock, at cost (24,053) (21,817)
Total Share Owners' Equity 446,237 422,826
Total Liabilities and Share Owners' Equity $618,656 $581,583
See Notes to Consolidated Financial Statements
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<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share amounts)
<CAPTION>
(unaudited) (unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $265,001 $243,277 $775,382 $744,757
Cost of Sales 187,269 169,458 543,418 522,635
Gross Profit 77,732 73,819 231,964 222,122
Selling, Administrative
and General Expenses 60,414 53,282 176,825 162,236
Operating Income 17,318 20,537 55,139 59,886
Other Income (Expense):
Interest Expense (123) (212) (316) (444)
Interest Income 2,383 2,200 6,970 6,195
Other - net 1,989 802 5,296 (757)
Other Income - net 4,249 2,790 11,950 4,994
Income Before Taxes on Income 21,567 23,327 67,089 64,880
Taxes on Income 7,865 8,806 24,873 22,217
Net Income $ 13,702 $ 14,521 $ 42,216 $ 42,663
Earnings Per Share of Common Stock:
Basic:
Class A Common Stock $ .33 $ .35 $ 1.01 $ 1.03
Class B Common Stock $ .33 $ .35 $ 1.02 $ 1.03
Diluted:
Class A Common Stock $ .33 $ .34 $ 1.00 $ 1.02
Class B Common Stock $ .33 $ .34 $ 1.01 $ 1.02
Dividends Per Share of Common Stock:
Class A Common Stock $ .145 $ .12875 $ .43375 $ .38625
Class B Common Stock $ .15 $ .13 $ .445 $ .39
Average total number of shares
outstanding Class A and B
Common Stock:
Basic 41,423,152 41,392,940 41,473,547 41,465,644
Diluted 41,825,429 41,839,125 41,879,731 41,767,868
See Notes to Consolidated Financial Statements
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<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<CAPTION>
(unaudited)
Nine Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 42,216 $ 42,663
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 24,998 25,116
Gain on sales of assets (2,104) (438)
Deferred income tax and other deferred charges (74) 1,007
Change in current assets and liabilities:
Receivables (12,343) 470
Inventories (6,689) 10,830
Other current assets 606 (1,112)
Accounts payable 5,013 1,345
Accrued expenses 7,026 8,216
Net Cash Provided By Operating Activities 58,649 88,097
Cash Flows From Investing Activities:
Capital expenditures (29,005) (30,069)
Proceeds from sales of assets 834 889
Proceeds from sale of division/subsidiary 3,150 2,345
Increase in other assets (4,297) (1,317)
Purchases of held-to-maturity investments (21,750) (21,397)
Maturities of held-to-maturity investments 46,932 39,445
Purchases of available-for-sale securities (33,651) (56,931)
Sales and maturities of available-for-sale securities 29,037 - 0 -
Net Cash Used For Investing Activities (8,750) (67,035)
Cash Flows From Financing Activities:
Net increase in short-term borrowings 191 558
Net increase (decrease) in long-term debt 485 (605)
Dividends paid to share owners (18,147) (16,144)
Acquisition of treasury stock, net of sales (3,735) (4,700)
Proceeds from exercise of stock options 1,146 260
Other - net (84) 28
Net Cash Used For Financing Activities (20,144) (20,603)
Effect of Exchange Rate Change on
Cash and Cash Equivalents (26) (31)
Net Increase in Cash and Cash Equivalents 29,729 428
Cash and Cash Equivalents-Beginning of Period 18,818 5,647
Cash and Cash Equivalents-End of Period $ 48,547 $ 6,075
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Income taxes $ 24,063 $ 28,072
Interest $ 290 $ 468
Total Cash, Cash Equivalents and
Short-Term Investments:
Cash and cash equivalents $ 48,547 $ 6,075
Short-term investments 131,118 146,570
Totals $179,665 $152,645
See Notes to Consolidated Financial Statements
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) The accompanying consolidated financial statements of Kimball
International, Inc. ("the Company") are unaudited and have been prepared
in accordance with the instructions to Form 10-Q. As such, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. All significant intercompany transactions and balances have
been eliminated. Management believes the financial statements include all
adjustments (consisting only of normal recurring adjustments) considered
necessary to present fairly the financial statements of the interim
period. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included
in the Company's latest annual report on Form 10-K.
<TABLE>
(2) Inventories consist of: (in thousands)
<CAPTION>
March 31, June 30,
1998 1997
<S> <C> <C>
Raw Materials $44,448 $40,468
Work-in-Process 12,101 11,852
Finished Goods 26,282 23,822
Total $82,831 $76,142
For interim reporting, LIFO inventories are computed based on estimated year-end
quantities and interim changes in price levels. Changes in such estimates will
be reflected in the interim financial statements in the period in which they occur.
</TABLE>
(3) Earnings per share are computed under the method prescribed in Financial
Accounting Standards Board Statement No. 128 for computing earnings per
share for two class common stock due to the dividend preference of Class B
Common Stock. The Company adopted FASB Statement No. 128 effective with
the second quarter of fiscal year 1998, disclosing both basic and diluted
earnings per share. The Company's outstanding stock options are
considered when calculating diluted earnings per share. Prior period
amounts have been restated for the new disclosures.
(4) The Company recorded a $1.2 million pretax gain on the sale of a stock
investment of which the Company holds a minority interest, during the
third quarter of the current fiscal year. This pretax gain is reported
in Other-net, and added $616 thousand to net income, or $0.01 per common
share. The Company recorded a $1.8 million pretax gain on the sale of an
automotive service center in the second quarter of the current fiscal
year. This pretax gain is reported in Other-net, and added $1.0 million
to net income, or $0.02 per common share. Per share amounts apply to
both basic and diluted earnings per share.
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(5) The Company sold its piano key and action production facility located in the
United Kingdom, Herrburger Brooks, PLC, during the first quarter of the
prior fiscal year. Included in the nine month consolidated statement of
income ended March 31, 1997, 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 nine month net income.
(6) At the annual meeting held on October 28, 1997, the Company's Share Owners
approved a two-for-one stock split on the Company's Class A and Class B
Common Stock. The Share Owners also approved restating 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 annual dividend preference on Class B Common
Stock to $0.02 per share. The stock split became effective on November
12, 1997. Financial information contained in this report, including
prior period share and per share amounts, has been adjusted to reflect
the impact of the common stock split. $4,572,000 was reclassified from
common stock to additional paid-in capital during the second quarter of
the current fiscal year, to reflect the reduction in par value of common
stock from $.3125 to $0.05. Additional information may be found in the
Company's second quarter 10-Q for the six month period ended December 31,
1997, under the caption Part II Other Information: Item 2 - Changes in
Securities.
(7) Certain prior period amounts have been reclassified to conform with the
current period presentations.
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<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
OVERVIEW
Fiscal year 1998 third quarter net sales increased 9% over the prior year third
quarter and set a new quarterly record of $265,001,000. Record nine month net
sales of $775,382,000 for the period ending March 31, 1998, increased 4% over
the same period of the prior year. Third quarter net income and Class B diluted
earnings per share were $13,702,000 and $0.33, respectively, a decrease of 6%
over one year ago. Net income of $42,216,000 and diluted earnings per share of
$1.01 for the current nine month period were 1% under the prior year. Open
orders as of March 31, 1998, were $217 million.
RESULTS OF OPERATIONS - THREE AND NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO
THREE AND NINE MONTHS ENDED MARCH 31, 1997
Net sales for the three and nine month periods ending March 31, 1998 were
$265,001,000 and $775,382,000, increases of 9% and 4%, respectively, over the
same periods in the prior year. Net sales in all of the Company's segments,
including Furniture and Cabinets, Electronic Contract Assemblies, and Processed
Wood Products and Other, increased in the third quarter when compared to the
prior year. For the nine months ending March 31, 1998, net sales increased in
the Company's two largest segments, Furniture and Cabinets, and Electronic
Contract Assemblies, while sales declined slightly in the smallest segment,
Processed Wood Products and Other. Operating income was $17,318,000 in the
third quarter and $55,139,000 in the nine month period, decreases of 16% and 8%,
respectively, compared to the same periods in the prior year.
FURNITURE AND CABINETS
Net sales in the Company's largest segment, Furniture and Cabinets, increased
13% and 5%, respectively, for the three and nine month periods when compared to
one year ago. Volume increases in both the office furniture and OEM cabinets
and furniture combined for the three month increase, while office furniture
volume increases were the primary reason for the nine month increase.
Three and nine month office furniture sales growth resulted from volume
increases in all major product lines, as sales of higher-end casegoods and
seating, metal office furniture, as well as value-oriented products increased.
Office furniture net sales reached record levels in the third quarter. Internal
re-engineering efforts continue in the office furniture area, as a new order
management information system is implemented. In the interim, more than one
system is being supported, resulting in increased costs. The Company's third
quarter overall office furniture sales growth is currently above the most recent
three month industry growth rate.
Cabinets and furniture sales for the third quarter increased over the same
quarter in the prior year on increased demand of television cabinets and stands
and residential furniture. Sales for the nine month period declined over the
same period in the prior year on declines in television cabinets and stands, and
audio speaker cabinets. The Company's production flexibility allows it to
utilize portions of the available production capacity created by lower volumes
within these product lines to support and balance increased production schedules
of other product lines within this segment. The nine month results were impacted
by the relocation of a large customer resulting in a decrease in volumes of
television cabinets and stands.
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<PAGE>
Sales of lodging furniture declined in the third quarter when compared to the
prior year on lower volumes of hospitality product and furniture for healthcare
and other institutional facilities. Sales of the Company's standard furniture
lines increased for the quarter while sales of custom-made furniture declined
when compared to the third quarter one year ago. Sales for the nine month
period also declined from one year ago. The lodging industry remains
competitive, as pricing pressures are evident in the marketplace.
Operating income in the Furniture and Cabinets segment increased in the third
quarter on higher sales volumes when compared to the same period one year ago.
Operating income for the nine month period decreased from the prior year while
sales increased during the same time period. Material costs, as a percent of
sales, were lower in both the three and nine month periods primarily due to a
shift in the product mix. Sales and administrative expenses increased in the
three and nine month periods as a result of higher investments in people and
technology positioning the Company for future growth. In addition, sales
incentive costs increased due to the competitive nature of the office furniture
industry.
ELECTRONIC CONTRACT ASSEMBLIES
Three and nine month net sales in the Electronic Contract Assemblies segment
both increased 3% when compared to the prior year, as increased demand in
electronic automotive products more than offset decreased sales in
computer-related products. A temporary decline in sales to two computer product
customers occurred during the third quarter. This segment's working capital
carries a higher degree of risk than the Company's other segments due to rapid
technological changes and the contract nature of this industry. Included in
this segment are sales to three customers, which combined, accounted for 25% of
consolidated sales in both the three month and nine month periods of fiscal 1998
and 25% and 23%, respectively, in the three and nine month periods one year
ago. One of these customers accounted for 18% of consolidated sales in the
three month period and 17% in the nine month period in the current year.
This same customer accounted for 17% and 15% in the three and nine month
periods, respectively, one year ago.
Operating income declined in both the three and nine month periods even though
sales increased during the same period. Material costs, as a percent of sales,
declined from prior year in both the three and nine month periods due primarily
to a product mix shift. Increased overhead costs, as a percent of sales, and
selling and administrative expenses resulted in lower operating income for both
the three and nine month periods. Investments in people, technology, equipment
and facilities are increasing as the Company builds infrastructure to support
growth opportunities within the segment and takes advantage of the latest design
and production technologies.
PROCESSED WOOD PRODUCTS AND OTHER
Net outside sales in the Company's smallest segment, Processed Wood Products and
Other, which accounted for only 6% of consolidated outside sales in the third
quarter, increased 5% in the third quarter compared to the prior year, primarily
on increased sales for dimension products, metal parts and plastic components.
Net sales for the nine month period declined 3% over the prior year, as
decreased sales of dimension products and plastic components were only partially
offset by increases in lumber, laminate products and metal parts. Internal
sales of this segment to the Company's other operations, particularly the
Furniture and Cabinets segment, provide a key link in the Company's vertically
integrated supply chain. Operating income increased for the three and nine month
periods primarily due to higher process reengineering expenses in the prior
fiscal year related to the Company's logistics services unit.
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<PAGE>
CONSOLIDATED OPERATIONS
Other income in the three and nine month periods increased over the prior year
as interest income increased on higher average investment balances. The third
quarter of the current year includes a $616 thousand after tax gain ($1.2
million pre-tax affect), or $0.01 per diluted share, on the sale of a stock
investment of which the Company holds a minority interest. The Company also
recorded a $1.0 million after tax gain ($1.8 million pre-tax affect), or $0.02
per diluted share, on the sale of an automotive service center in the second
quarter of the current year. In addition, the prior year nine month period
included a $3.8 million pretax loss (no after tax affect) charged to Other - net
related to the sale of a foreign subsidiary.
The effective income tax rate decreased 1.3 percentage points in the third
quarter of fiscal 1998 over the prior year primarily due to lower state income
taxes. The nine month effective income tax rate increased 2.9 percentage points
due primarily to the $3.8 million tax benefit received on the sale of a foreign
subsidiary in the prior year and the decrease in the state income taxes in the
current year. Excluding this $3.8 million benefit, the effective income tax
rate decreased 0.7 percentage point when compared to the prior nine month period
due to reduced European operating losses.
Third quarter net income and Class B diluted earnings per share were $13,702,000
and $0.33, respectively, a decrease of 6% over one year ago. Net income of
$42,216,000 and diluted earnings per share of $1.01 for the nine month period of
fiscal year 1998 were 1% under the prior year. Class B basic earnings per share
for the current year three and nine month periods were $0.33 and $1.02,
respectively, compared to $0.35 and $1.03, for the same periods of the prior
year. The current quarter and nine month earnings per share amounts reflect a
two-for-one stock split which occurred during the second quarter. All prior
year amounts have been restated.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity position remained strong with $180 million in cash, cash
investments, and short-term investments at March 31, 1998, compared to $168
million at the end of fiscal 1997. Working capital at March 31, 1998 was $263
million with a current ratio of 2.8, compared to working capital of $244 million
and a current ratio of 2.8 at June 30, 1997.
Operating activities generated $59 million of cash in the first nine months of
fiscal year 1998, as the Company continues to build on record operating cash
flows from fiscal year 1997. The Company invested $33 million in capital
investments for the future, including facility and production equipment upgrades
and investments in the Company's information systems. An additional $20 million
was used for financing activities, primarily dividends to Share Owners and the
acquisition of treasury stock. Cash needs were funded by available cash
balances on hand. Net cash flow, excluding the purchases and maturities of
short-term investments was a positive $9 million for the nine month period
ending March 31, 1998.
The Company anticipates maintaining a strong liquidity position for the
remainder of 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.
_____________________________
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Management currently believes the Asian economic situation will not have a
material impact on its results of operations.
The Company is in the process of modifying its computer information systems to
prepare for the year 2000. Based upon current estimates, the Company believes
that the impact on its results of operations and financial position will not be
material. Existing information technology resources are being redeployed, which
are anticipated to account for approximately 50% of the needed resources, with
the balance being incremental costs to the Company. While there are risks
inherent in any technology project, the Company maintains executive oversight on
this issue to mitigate these risks.
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 began disclosing both basic
and diluted earnings per share, beginning with the second quarter of fiscal year
1998, and has restated the prior year, in accordance with the new pronouncement.
________________________________________________________________________________
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 Form 8-K filing dated April 10,
1997.
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<PAGE>
PART II.
OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
(3b) Restated Bylaws of the Company (restated to reflect
increase in the size of the Audit Committee from three
board members to four board members)
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K dated January 20, 1998, was filed pursuant to Item 5
(Other Events) which refers to the Company's second quarter sales and earnings,
and updated annual fiscal year 1998 earnings estimates.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KIMBALL INTERNATIONAL, INC.
Douglas A. Habig
DOUGLAS A. HABIG
(Chairman, Chief Executive Officer)
Roy W. Templin
ROY W. TEMPLIN
(Vice President, Corporate Controller)
Date: April 29, 1998
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<TABLE>
Kimball International, Inc.
Exhibit Index
<S> <C>
Exhibit No. Description
3b Restated By-laws of the Company (restated to reflect
increase in the size of the Audit Committee from three
board members to four board members)
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
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RESTATED
BY-LAWS
OF
KIMBALL INTERNATIONAL, INC.
(Reflecting all amendments through February 10, 1998)
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.
<PAGE>
<PAGE>
Section 3 - Special Meetings: Special meetings of the
stockholders may be called only by the Board of Directors.
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
<PAGE>
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.
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.
<PAGE>
ARTICLE V: DIRECTORS
Section 1 - Number: The Board of Directors of this corporation
shall consist of twelve (12) members, eleven (11) of whom shall be
elected by holders of Class A Common Stock, voting as a class, and one
(1) of whom shall be elected by holders of Class B Common Stock,
voting as a class.
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.
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
ARTICLE VIII: AUDIT COMMITTEE
The Board of Directors shall appoint an Audit Committee
consisting of four (4) members of the Board of Directors. At least
three (3) 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 fourth 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.
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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 counter authorized 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.
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
<PAGE>
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:
(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
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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>
<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
NINE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<CAPTION>
Available Average Earnings Per Share
Income Shares Class A Class B
--------- ----------- ------- --------
<S> <C> <C> <C> <C>
Net income, nine months ended 3/31/1998. . . . $42,216,000
Distributed earnings:
Class A dividends declared . . . . . . . . . (6,254,000) $ .43375
Class B dividends declared . . . . . . . . . (12,037,000) $ .44500
Undistributed basic earnings . . . . . . . . . $23,925,000 41,473,547 .57687 .57687
Basic Earnings Per Share . . . . . . . . . . . $1.01062 $1.02187
Basic Earnings Per Share (rounded) . . . . . . $1.01 $1.02
Dilutive effect of stock options . . . . . . . (273,000) 406,184
Undistributed diluted earnings . . . . . . . . $23,652,000 41,879,731 .56475 .56475
Diluted Earnings Per Share . . . . . . . . . . $ .99850 $1.00975
Diluted Earnings Per Share (rounded) . . . . . $1.00 $1.01
438,000 of the 1,691,000 average outstanding stock options were antidulitive,
and were excluded from the dilutive computation for this period. Use of the
treasury stock buy-back method reduces the dilutive effect of stock options.
</TABLE>
<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
NINE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<CAPTION>
Available Average Earnings Per Share
Income Shares Class A Class B
--------- ----------- ------- --------
<S> <C> <C> <C> <C>
Net income, nine months ended 3/31/1997. . . . $42,663,000
Distributed earnings:
Class A dividends declared . . . . . . . . . (5,606,000) $ .38625
Class B dividends declared . . . . . . . . . (10,508,000) $ .39000
Undistributed basic earnings . . . . . . . . . $26,549,000 41,465,644 .64026 .64026
Basic Earnings Per Share . . . . . . . . . . . $1.02651 $1.03026
Basic Earnings Per Share (rounded) . . . . . . $1.03 $1.03
Dilutive effect of stock options . . . . . . . (118,000) 302,224
Undistributed diluted earnings . . . . . . . . $26,431,000 41,767,868 .63281 .63281
Diluted Earnings Per Share . . . . . . . . . . $1.01906 $1.02281
Diluted Earnings Per Share (rounded) . . . . . $1.02 $1.02
237,000 of the 1,365,000 average outstanding stock options were antidulitive, and were excluded from the
dilutive computation for this period. Use of the treasury stock buy-back method reduces the dilutive effect
of stock options.
</TABLE>
Exhibit(11)
<PAGE>
<PAGE>
<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<CAPTION>
Available Average Earnings Per Share
Income Shares Class A Class B
--------- ----------- ------- --------
<S> <C> <C> <C> <C>
Net income, three months ended 3/31/1998 . . . $13,702,000
Distributed earnings:
Class A dividends declared . . . . . . . . . (2,088,000) $ .145
Class B dividends declared . . . . . . . . . (4,045,000) $ .150
Undistributed basic earnings . . . . . . . . . $ 7,569,000 41,423,152 .183 .183
Basic Earnings Per Share . . . . . . . . . . . $ .328 $ .333
Basic Earnings Per Share (rounded) . . . . . . $ .33 $ .33
Dilutive effect of stock options . . . . . . . (60,000) 402,277
Undistributed diluted earnings . . . . . . . . $ 7,509,000 41,825,429 .180 .180
Diluted Earnings Per Share . . . . . . . . . . $ .325 $ .330
Diluted Earnings Per Share (rounded) . . . . . $ .33 $ .33
583,000 of the 1,774,000 average outstanding stock options were antidulitive, and were excluded from the
dilutive computation for this period. Use of the treasury stock buy-back method
reduces the dilutive effect of stock options.
</TABLE>
<TABLE>
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<CAPTION>
Available Average Earnings Per Share
Income Shares Class A Class B
--------- ----------- ------- --------
<S> <C> <C> <C> <C>
Net income, three months ended 3/31/1997 . . . $14,521,000
Distributed earnings:
Class A dividends declared . . . . . . . . . (1,865,000) $ .12875
Class B dividends declared . . . . . . . . . (3,498,000) $ .13000
Undistributed basic earnings . . . . . . . . . $ 9,158,000 41,392,940 .22125 .22125
Basic Earnings Per Share . . . . . . . . . . . $ .35000 $ .35125
Basic Earnings Per Share (rounded) . . . . . . $ .35 $ .35
Dilutive effect of stock options . . . . . . . (167,000) 446,185
Undistributed diluted earnings . . . . . . . . $ 8,991,000 41,839,125 .21490 .21490
Diluted Earnings Per Share . . . . . . . . . . $ .34365 $ .34490
Diluted Earnings Per Share (rounded) . . . . . $ .34 $ .34
398,000 of the 1,442,000 average outstanding stock options were antidulitive, and were excluded from the
dilutive computation for this period. Use of the treasury stock buy-back method reduces the dilutive effect
of stock options.
</TABLE>
Exhibit(11)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule includes summary financial information extracted from
Kimball International, Inc., and subsidiaries 1998 third quarter Form 10-Q and
is qualified in its entirety by reference to such Form 10-Q filing. Prior
period EPS information is restated to reflect the Company's stock split.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1998 JUN-30-1998
<PERIOD-END> MAR-31-1998 DEC-31-1997 SEP-30-1997
<CASH> 48,547 31,397 12,178
<SECURITIES> 131,118 133,639 142,196
<RECEIVABLES> 126,649 125,206 128,834
<ALLOWANCES> 4,164 4,250 4,006
<INVENTORY> 82,831 83,285 83,898
<CURRENT-ASSETS> 407,839 391,728 386,311
<PP&E> 421,351 410,947 409,401
<DEPRECIATION> 242,612 236,938 234,306
<TOTAL-ASSETS> 618,656 596,693 591,804
<CURRENT-LIABILITIES> 144,823 129,513 136,088
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 2,151 2,151 6,723
<OTHER-SE> 444,086 438,768 423,938
<TOTAL-LIABILITY-AND-EQUITY> 618,656 596,693 591,804
<SALES> 775,382 510,381 245,857
<TOTAL-REVENUES> 775,382 510,381 245,857
<CGS> 543,418 356,149 171,577
<TOTAL-COSTS> 543,418 356,149 171,577
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 743 360 83
<INTEREST-EXPENSE> 316 193 95
<INCOME-PRETAX> 67,089 45,522 20,832
<INCOME-TAX> 24,873 17,008 7,803
<INCOME-CONTINUING> 42,216 28,514 13,029
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 42,216 28,514 13,029
<EPS-PRIMARY> 1.02 .69 .31
<EPS-DILUTED> 1.01 .68 .31
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule includes summary financial information extracted from
Kimball International, Inc., and subsidiaries 1998 third quarter Form 10-Q and
is qualified in its entirety by refernece to such Form 10-Q filing. Prior
period EPS information is restated to reflect the Company's stock split.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997 JUN-30-1997
<PERIOD-END> MAR-31-1997 DEC-31-1996 SEP-30-1996
<CASH> 6,075 14,178 18,548
<SECURITIES> 146,570 135,111 121,810
<RECEIVABLES> 120,012 113,634 119,635
<ALLOWANCES> 3,908 4,383 4,238
<INVENTORY> 76,100 76,880 83,483
<CURRENT-ASSETS> 367,391 358,726 362,279
<PP&E> 411,586 404,455 396,359
<DEPRECIATION> 232,557 228,756 223,145
<TOTAL-ASSETS> 567,532 555,507 557,115
<CURRENT-LIABILITIES> 129,000 125,268 132,732
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 6,723 6,723 6,723
<OTHER-SE> 406,108 398,306 392,450
<TOTAL-LIABILITY-AND-EQUITY> 567,532 555,507 557,115
<SALES> 744,757 501,480 247,700
<TOTAL-REVENUES> 744,757 501,480 247,700
<CGS> 522,635 353,177 174,566
<TOTAL-COSTS> 522,635 353,177 174,566
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 406 427 249
<INTEREST-EXPENSE> 444 232 117
<INCOME-PRETAX> 64,880 41,553 18,182
<INCOME-TAX> 22,217 13,411 4,661
<INCOME-CONTINUING> 42,663 28,142 13,521
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 42,663 28,142 13,521
<EPS-PRIMARY> 1.03 .68 .33
<EPS-DILUTED> 1.02 .67 .32
</TABLE>
