SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required) for the fiscal year ended June 30, 1994 or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) for the transition period
from____________ to____________
Commission file number 0-3279
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0514506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, (812) 482-1600
including area code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Stock, par
value $.31-1/4 per share None
Class B Common Stock, par
value $.31-1/4 per share NASDAQ
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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 )
Continued....
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The number of shares outstanding of the Registrant's common stock as of August
15, 1994 was:
Class A Common Stock - 7,357,323 shares
Class B Common Stock - 13,805,491 shares
The Class A Common Stock is not publicly traded and, therefore, no market value
is available. The Registrant estimates that the aggregate market value of the
Class B Common Stock held by non-affiliates, as defined in Rule 405, on August
15, 1994 (based upon an estimate that 86.2% of the shares of Class B Common
Stock is held by non-affiliates and upon the average of the high and low prices
for Class B Common Stock on such date) was $275.2 million.
Portions of the Proxy Statement for Annual Meeting of Share Owners to be held on
October 11, 1994, are incorporated by reference into Part III of this Form 10-K.
The exhibit index is located on page 49.
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TABLE OF CONTENTS
KIMBALL INTERNATIONAL, INC.
FORM 10-K YEAR ENDED JUNE 30, 1994
PART I.
Pages
Item 1. Business 4-14
Item 2. Properties 14-16
Item 3. Legal Proceedings 16
Item 4. Submission of Matters to Vote of Security Holders 16
PART II.
Item 5. Market for the Registrant's Common Stock and
Related Share Owner Matters 18-19
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 20-23
Item 8. Financial Statements and Supplementary Data 24-40
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 40
PART III.
Item 10. Directors and Executive Officers of the Registrant 41
Item 11. Executive Compensation 41
Item 12. Security Ownership of Certain Beneficial
Owners and Management 41
Item 13. Certain Relationships and Related Transactions 41
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 42
SIGNATURES 43-44
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PART I
Item 1. - Business
As used herein, the term "Company" refers to Kimball International, Inc.,
the Registrant, and its subsidiaries unless the context indicates otherwise.
The Company was incorporated in Indiana in 1939, and present management
assumed control in 1950. The corporate headquarters is located at 1600 Royal
Street, Jasper, Indiana.
The Company operates in three principal business segments: Furniture and
Cabinets, Electronic Contract Assemblies, and Processed Wood Products and Other.
The Company utilizes a substantial degree of vertical integration, as
approximately 43% 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, England,
Austria and Mexico. In the U.S., the Company has facilities and showrooms in 15
states.
Sales by segment, after elimination of intersegment sales, for each of the
three years in the period ended June 30, 1994 are as follows:
1994 1993 1992
(dollars in thousands)
Furniture and Cabinets $548,767 $477,558 $424,840
Electronic Contract Assemblies 204,149 180,464 132,507
Processed Wood Products and Other 69,568 64,378 59,954
Total $822,484 $722,400 $617,301
Financial information by industry segment and geographic area for each of
the three years in the period ended June 30, 1994, is referred to in Note 15,
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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Segments
FURNITURE AND CABINETS
Historical Overview
The Company began manufacturing wood furniture and cabinets in 1950 and has
manufactured and marketed office furniture under the Kimball (registered trade
mark) trade name since 1970. Through an acquisition in 1969, the Company
entered into the manufacture and sale of Reproduction Victorian furniture. In
1982, the Company began the manufacture and sale of French Provincial style
furniture. In 1986 and 1987 it entered the lodging-hospitality furniture
industry and the long-term care portion of the healthcare furniture industry,
respectively. In 1992, the Company began the manufacture and sale of office
furniture to be used in the home and in 1994, expanded its residential furniture
product line to include solid oak and cherry bedroom furniture. Also in 1992,
the Company expanded its product offering with the acquisition of certain assets
and assumption of certain liabilities of Harpers, a metal office furniture
manufacturer. Harpers has marketed metal office furniture under the Harpers
(registered trademark) trade name since 1982. Kimball and Harpers office
furniture systems have broad market application, while the Kimball and National
casegoods and seating lines are more focused to the wood segment of the office
furniture industry. The Cetra (registered trademark)line of Kimball office
furniture systems was introduced during fiscal year 1989 while the Footprint
(registered trademark)line, which integrates the Cetra system and helps
designers better manage office space, was introduced in fiscal year 1992. Cetra
(registered tradedmark) and Footprint (registered trademark) both utilize TRAXX
(registered trademark), which increases space efficiency and eliminates the need
for a secondary support structure by using existing walls.
Through a predecessor acquired in 1966, L. Bosendorfer of Vienna, Austria,
the Company has been engaged in acoustical piano manufacturing and sales since
1828. Domestically, the Company has been engaged in piano manufacturing, or
sales, since 1857 through a predecessor, W.W. Kimball Co., acquired in 1959.
Piano manufacturing and sales represent a small part of the Furniture and
Cabinets Segment. Approximately three years ago the Company realigned its piano
operations in the U.S. and last year restructured its piano operations in
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Europe in response to significant declines in the U.S. and worldwide piano
markets, which are believed to be permanent.
In addition to the product lines noted above, products in this segment also
include television, audio speaker and audio component cabinets and television
stands produced and sold on a contract basis for leading manufacturers in the
home entertainment industry. The Company also produces a variety of other
original equipment manufacturer (OEM) wood related products on a contract basis
including furniture for a leading home furniture manufacturer.
Locations
Office, home, hospitality and healthcare furniture, T.V. cabinets and
related products, which make up the largest part of this segment, are produced
at sixteen plants, eleven located in Indiana and one each in Kentucky,
Mississippi, Alabama, California and England. Production at the California
plant ceased in July 1994, as the Company relocated its production of metal
office furniture from a leased facility in California to a Company owned
facility in Idaho. Of the sixteen facilities, ten produce office furniture,
one of which also manufactures healthcare furniture and one of which also
produces hospitality furniture, kitchen cabinet doors and trim accessories,
and other wood components; two produce T.V. cabinets and related products,
one of which also produces residential furniture and home furniture on a
contract basis; two produce hospitality furniture and healthcare furniture;
one produces Reproduction Victorian and French Provincial furniture; and lastly,
one produces metal beds for the healthcare product line and stamped metal parts,
which are used in other product lines of the Company as well as sold to
unaffiliated customers. Nine of the sixteen plants presently producing wood
furniture and cabinets could interchange production between these two basic
products if needed.
Acoustical pianos are produced in two facilities: one located in Indiana
and one in Austria. To utilize plant capacity at the Indiana facility,
additional OEM wood related products are manufactured and sold on a contract
basis.
Two other facilities, one located in England and the other in Mexico,
produce piano components. The Mexico facility also assembles electronic
components, electronic cable harnesses and other electronic products for the
Electronic Contract Assemblies Segment.
A facility in Jasper, Indiana houses an Education Center for dealer and
employee training, the
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Product Design and Research Center, and a Corporate showroom for product
display.
In the United States, showrooms and district warehouse facilities are
maintained in eleven cities for office furniture and five cities for home
furniture. In certain cities there are separate office and home furniture
showrooms. In addition, office furniture is maintained in a showroom in London,
England and in July 1994, an office furniture showroom opened in Toronto,
Canada. In certain showrooms other Company products are also on display.
Marketing Channels
Kimball and National office furniture is marketed through Company
salespersons to independent dealers throughout North America and England.
Harpers markets its office furniture products through Company salespersons to
independent dealers in the Western states, and primarily through independent
manufacturers' representatives to independent dealers elsewhere in the United
States. Reproduction furniture and residential furniture are generally marketed
through independent sales representatives to independent furniture dealers
throughout the United States. Cabinets and contract furniture are generally
marketed through Company employees, while hospitality and healthcare furniture
is marketed through independent manufacturers' representatives. The Company's
channel marketing strategy facilitates the sale of office furniture, upholstery
and piano product lines within the hospitality and healthcare channels. Kimball
(registered trademark), Jasper American, Conn (registered trademark),
Bosendorfer (registered trademark) and private label pianos are marketed through
Company salespersons to independent dealers. Piano components are both used
internally and sold to other piano manufacturers through Company salespersons.
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, shorter customer
lead times, "on-time" delivery to the customer, and ability to respond to
requests for special, non-standard products. The Company maintains sufficient
finished good inventories to be able to offer to domestic dealers prompt
shipment of certain lines of Kimball, National and Harpers office furniture,
thereby permitting dealers to maintain smaller inventories. Many products are
shipped through the Company's
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delivery system. The Company believes that its trucking capability enables it
to reduce damage to shipments, enhance scheduling flexibility, and improve the
capability for "on-time" deliveries, which are all key competitive factors in
the office furniture industry.
The major competitive factors in the cabinet, home furniture and OEM product
markets are quality, performance history and price. Television, audio speaker
and audio component cabinets, television stands and contract home furniture are
produced to customer specifications from specific orders and finished goods
inventories are generally small, consisting of goods awaiting shipment to a
specific customer. The Company's own line of home furniture are offered for
sale on an immediate ship basis. Competitive factors in the hospitality and
healthcare furniture markets are quality, performance history, "on-time"
delivery, and price. While the Company produces hospitality and healthcare
furniture to customers' specifications on a contract basis, the company also
offers its own line of hospitality and healthcare furniture.
The major competitive factors in the acoustical piano industry are price in
relation to quality, appearance and acoustical tone.
Competitors
There are many manufacturers of office, home, hospitality, and healthcare
furniture. The Company believes, however, that there are a limited number of
relatively large producers of wood office, hospitality and healthcare furniture,
of which the Company believes that it is one of the larger in net sales. In
many instances wood office furniture competes in the market with metal office
furniture. Based on available industry statistics, metal office furniture has a
larger share of the total market than does wood. The Company has positioned
Harpers as a vehicle to strengthen its market share in the non-wood segment of
the industry. There are two other domestic manufacturers of Reproduction
Victorian furniture and a limited number of manufacturers of French Provincial
furniture. While the Company believes it has a significant share of the
Reproduction Victorian furniture domestic market, this market in total is a very
small part of the total home furniture market, as is the market for French
Provincial Furniture.
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.
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The acoustical piano business is characterized by a number of competitors,
including, in addition to the Company, what are thought to be two major domestic
manufacturers and several international manufacturers.
Raw Material Availability
Many components used in the production of furniture, cabinets and pianos are
manufactured internally within the group or by other groups of the Company,
including processed wood parts, and on a limited basis, metal stamped parts and
certain polyurethane molded plastics. Raw materials used in the production of
wood furniture and cabinets are generally readily available. Certain metal
components used in various wood office furniture products, predominately Cetra
and seating, are purchased in a pre-fabricated stage with additional fabrication
and finishing performed by the Company. Raw materials used in the manufacture
of metal office furniture, primarily rolled steel, is readily available from
U.S. and foreign sources. Raw materials used in the Company's piano lines are
readily available.
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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 was first produced in 1963. Electronic and
electro-mechanical products (electronic assemblies) are sold on a contract basis
and produced to customers' specifications. Production takes place at three
manufacturing facilities, two located in Indiana and one in Mexico. The
facility in Mexico assembles electronic components, electronic cable harnesses
and other electronic products for sale to outside customers. In addition, and
to a lesser extent, the facility assembles piano components and sub-assemblies
for use in the Company's piano lines. Products from the Mexico facility are
accumulated at, and shipped from, a Texas warehouse.
Products are marketed by Company salespersons and independent sales
representatives on a contract basis. As contract electronic assemblies are
manufactured based on specific orders, finished goods inventories are generally
small consisting of goods awaiting shipment to a specific customer.
The competitive factors in the electronic contract assemblies market are
price, quality, production flexibility and reliability of "on-time" delivery.
The Electronics industry is very competitive, with many manufacturers of
contract electronic assemblies. The Company does not have a significant share
of the market for such products. Raw Materials for contract electronic products
are generally readily available from both domestic and foreign sources.
Included in this segment are sales to three customers which account for
21.8%, 21.4% and 17.7% of consolidated net sales in 1994, 1993 and 1992,
respectively. Included in sales to these three customers are sales of
electronic assemblies to Kelsey-Hayes Company, Inc. which accounted for
approximately 11.9% of consolidated net sales in the year ended June 30, 1994,
compared to 12.4% in the year ended June 30, 1993 and 10.8% in the year ended
June 30, 1992.
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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, four lumber yards, four dimension lumber plants, a plant
which manufactures contract wood products, a sliced veneer plant, two facilities
which produce plywood and related products and one face veneer plant.
Processed wood products manufactured by the Company are used internally as
well as sold to others. For fiscal year 1994, an estimated 43% of the total
production of these operations was for products used internally in other
segments' end products. Products sold to others are marketed principally to
furniture manufacturers, primarily through Company personnel.
The competitive factors in the processed wood products market are price,
quality and availability. In processed wood materials, the Company competes
with many integrated forest and specialty hardwood product companies and does
not have a significant share of the market for such products. Raw materials
used in this business segment are generally readily available.
Various miscellaneous products are manufactured by the Company for sales to
unaffiliated customers as well as for its own use. These include polyurethane
and polyester molded products, carbide cutting tools and related services on
cutting tools. Products and services of the Company's automotive service center
are also sold to unaffiliated customers.
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OTHER INFORMATION
BACKLOG
At June 30, 1994, the aggregate sales price of production pursuant to
worldwide open orders, which may be canceled by the customer, was $198.7 million
as compared to $167.4 million at June 30, 1993.
BACKLOG BY SEGMENT (dollars in millions)
June 30, 1994 June 30, 1993
Furniture and Cabinets $101.2 $ 89.2
Electronic Contract Assemblies 89.3 71.1
Processed Wood Products
& Other 8.2 7.1
$198.7 $167.4
Open orders of furniture and cabinets generally are not indicative of future
sales trends.
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RESEARCH, PATENTS, AND TRADEMARKS
Research costs for the fiscal year ended June 30, 1994 were approximately
$8,557,000 as compared to $5,913,000 and $3,479,000 for the years ended June 30,
1993 and 1992, respectively. Research activities include the development of
manufacturing processes for electronic sub-assemblies, major process
improvements, wood and plastic technology, and new product development.
The Company owns the Kimball (registered trademark) trademark, which it
believes is material to its office, electronic, hospitality, healthcare, piano
and home furniture businesses, and owns the following trademarks which it
believes are material to its piano business only: Bosendorfer (registered
trademark); and to the furniture business only: National (registered
trademark), Cetra (registered trademark), Footprint (registered trademark),
ARTEC (registered trademark), TRAXX (registered trademark) and Harpers
(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 material 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 associated in regard 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, 1996 will not represent a material portion of total capital
expenditures during those years.
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The Company's manufacturing operations require significant amounts of
energy, including natural gas and oil. Federal and State statutes and
regulations control the allocation of fuels available to the Company, but to
date the Company has experienced no interruption of production due to such
regulations. In its wood processing plants, significant energy requirements are
satisfied internally by the use of the Company's own wood waste products.
EMPLOYEES
At June 30, 1994, the Company had 8,463 full time employees, of which 7,539
were employed in the United States and 924 in foreign countries. The Company
has no collective bargaining agreements with respect to its domestic employees.
All of the Company's foreign operations are subject to collective bargaining
arrangements. The Company believes that its employee relations are good.
Item 2. - Properties
The location and number of the Company's major manufacturing, warehousing,
and service facilities, including the executive and administrative offices, are
as follows:
Number of Facilities
Furniture Processed
and Electronic Contract Wood
Cabinets Assemblies Products and Other Total
Indiana 16 2 12 30
Kentucky 1 3 4
Alabama 1 1
Tennessee 3 3
Mississippi 1 1
Texas 1 1
North Carolina 1 1
California 2 2
Austria 2 2
England 2 2
Mexico 1 1
These facilities have an aggregate of approximately 6,626,000 square feet,
of which approximately 5,286,000 square feet are owned in fee, 697,000 square
feet are owned through capitalized leases and 643,000 square feet are leased,
and are summarized as follows:
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Approximate Square Footage
Furniture Processed
and Electronic Contract Wood
Cabinets Assemblies Products and Other
Fee 3,293,000 437,000 1,556,000
Capitalized Leases 697,000 -0- -0-
Leased 637,000 6,000 -0-
Total 4,627,000 443,000 1,556,000
Including certain leased furniture warehousing and showroom areas excluded
from the above listing, total facilities approximate 6.8 million square feet.
(See Note 6 - Long-Term Debt of Notes to Consolidated Financial Statements, in
Item 8, for additional information concerning capitalized leases and Note 5 -
Commitments - Leases, for additional information concerning non-capitalized
leases.)
Included in Processed Wood Products and Other are executive, national sales
and administrative offices, an automotive service center, a product design and
research center, the production facility for polyurethane and polyester molded
plastic, carbide cutting tools and related services on cutting tools, and an
energy center for the Kimball Industrial Park consisting of 3 trifuel boilers,
each with 1,000 hp. capacity.
Generally, properties are utilized at normal capacity levels on a single
shift basis, with several properties utilizing a reduced second 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.
Non-capitalized leases totaling 643,000 square feet expire in fiscal years
1995 through 2012. One lease totaling 535,000 square feet which supports the
Company's production of metal office furniture in California expires in fiscal
year 1995 as the Company relocates these operations from California to a new
Company owned facility in Idaho. Substantially all of the remaining leases are
subject to renewal options on the part of the Company. Capitalized leases
expire in 1995, with ownership of the properties transferring to the Company
thereafter. In addition to the above, the Company has Company owned or leased
facilities for showrooms and/or warehouses in twelve states in the United
States, as well as two locations in London, England and one in Vienna, Austria.
In July of 1994, the Company entered into a lease for a showroom in Toronto,
Canada.
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The Company owns in fee approximately 13,862 acres of land which includes
land where various Company facilities reside, including approximately 189 acres
of land in the Kimball Industrial Park, Jasper, Indiana (a site for certain
production and other facilities and for future expansions), and approximately
12,942 acres generally for hardwood timber reserves. Included in the
approximate 13,862 acres of land are approximately 60 acres in Post Falls,
Idaho, where a new Harpers plant is located. The facility, which was completed
in July 1994, totals 461,000 square-feet and houses manufacturing and
administrative offices. This facility is in addition to the previously stated
square footage amounts as of June 30, 1994 and replaces a 535,000 square foot
lease previously listed. Relocation to the new facility and start-up operations
occurred in July 1994, with full production expected to take place by the third
quarter of fiscal 1995.
Item 3. - Legal Proceedings
The Registrant and its subsidiaries are not parties to any material pending
legal proceedings, other than ordinary routine litigation incidental to the
business.
Item 4. - Submission of Matters to Vote of Security Holders
None to Report
Executive Officers of the Registrant
The executive officers of the Registrant as of August 31, 1994 are as
follows: (Age as of August 31, 1994)
Office and Officer
Name Age Area of Responsibility Since
Thomas L. Habig 66 Chairman of the Board of Directors 1955
Douglas A. Habig 47 President and Chief Executive Officer, 1975
and Director
Arnold F. Habig 87 Assistant to the Chief Executive 1950
Officer
James C. Thyen 50 Senior Executive Vice President - Chief 1974
Financial and Administrative Officer,
Treasurer, and Director
John B. Habig 61 Senior Executive Vice President - 1958
Operations Officer, Assistant Secretary,
and Director
Ronald J. Thyen 57 Senior Executive Vice President - 1966
Operations Officer, and Director
Anthony P. Habig 69 Executive Vice President - International, 1969
and Director (and 1959 to 1966)
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John T. Thyen 56 Senior Executive Vice President -Marketing 1978
and Sales, and Director
Gary P. Critser 57 Senior Executive Vice President - Chief 1967
Accounting Officer, Secretary, and Director
Officers are elected annually by the Board of Directors.
Arnold F. Habig and Anthony P. Habig are brothers. Thomas L. Habig, John B.
Habig and Douglas A. Habig are brothers and are sons of Arnold F. Habig. James
C. Thyen, Ronald J. Thyen and John T. Thyen are brothers.
All of the executive officers have been employed by the Company for more
than the past five years in the capacity shown or some other executive
capacity.
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PART II
Item 5. - Market for the Registrant's Common Stock and Related Share Owner
Matters Market Prices: Kimball International Class B Common Stock is traded
on the over-the-counter market. The symbol is 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:
1994 1993
High Low High Low
First Quarter. . . . . . . . $30 1/2 $27 1/4 $28 1/4 $23
Second Quarter . . . . . . . $34 1/2 $28 1/4 $27 3/4 $21 1/4
Third Quarter. . . . . . . . $32 1/2 $26 3/4 $32 1/2 $25 1/4
Fourth Quarter . . . . . . . $28 1/4 $22 1/2 $32 1/2 $26 1/4
There is no active trading market for the Company's Class A Common Stock.
Dividends: There are no restrictions on the payment of dividends except that
dividends paid on Class B common stock must, by charter provisions, be on a
calendar year basis $.01 per share more than dividends paid on Class A common
stock. During fiscal year 1994 dividends declared were $17.7 million or $.83
per share on Class A Common Stock and $.84 per share on Class B Common Stock.
The dividends by quarter for 1994 compared to 1993 are as follows:
1994 1993
Class A Class B Class A Class B
First Quarter. . . . . . . . $.20 3/4 $.21 $.18 3/4 $.19
Second Quarter . . . . . . . $.20 3/4 $.21 $.18 3/4 $.19
Third Quarter. . . . . . . . $.20 3/4 $.21 $.18 3/4 $.19
Fourth Quarter . . . . . . . $.20 3/4 $.21 $.20 3/4 $.21
Totals . . . . . . . . . . $.83 $.84 $.77 $.78
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Share Owners: On July 22, 1994, the Company's Class A Common Stock was owned by
approximately 661 Share Owners of record and the Company's Class B Common Stock
by approximately 2,559 Share Owners of record, of which approximately 425 also
owned Class A Common Stock.
Item 6. - Selected Financial Data (dollars in thousands, except per share
amounts)
Year Ended June 30,
1994 1993 1992 1991 1990
Net Sales $822,484 $722,400 $617,301 $555,263 $612,956
Net Income $ 36,169 $ 30,583 $ 38,628 $ 30,017 $ 43,475
Net Income Per
Common Share:
Class A $1.70 $1.44 $1.82 $1.41 $2.04
Class B $1.71 $1.45 $1.83 $1.42 $2.05
Total Assets $471,413 $452,705 $422,023 $382,685 $337,983
Long Term Debt-Less
Current Maturities $ 811 $ 2,017 $ 3,157 $ 4,392 $ 6,873
Cash Dividends Per
Common Share:
Class A $.83 $.77 $.69 $.65 $.57
Class B $.84 $.78 $.70 $.66 $.58
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Item 7. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net sales totaled a record level of $822,484,000 in fiscal 1994, up 14% from
1993, as sales in each of the Company's three business segments--Furniture and
Cabinets, Electronic Contract Assemblies and Processed Wood Products and
Other--were above the prior year. Operating income levels increased 23% over
1993, led by improved operating income performance in wood office furniture
product lines within the Furniture and Cabinets Segment. Net income totaled
$36,169,000 in fiscal 1994, up 18% over the 1993 level. The 1994 net income
level includes the impact of adopting FASB Statement No. 109, Accounting for
Income Taxes, which increased net income by $1,200,000, or 5 cents per Class B
Share. Fiscal 1993 net income was unfavorably impacted by a $2,850,000, or 13
cents per share, charge to restructure European piano operations. Open orders
remained near record levels at June 30, 1994.
RESULTS OF OPERATIONS
1994 Discussion
The 1994 record net sales level of $822,484,000 was the result of each of the
Company's three business segments experiencing growth over fiscal 1993,
including double digit sales growth in the two largest segments--Furniture and
Cabinets and Electronic Contract Assemblies.
Sales in the Furniture and Cabinets Segment increased 15%, as all principal
product lines within this segment experienced increased sales levels over 1993.
Overall, the sales improvement was led by increased sales of office furniture
casegoods and systems product lines, in which volumes increased on both mature
and new product line offerings. Certain product lines within the Company's
total office furniture product offering experienced increases in market share.
Other product lines in the Furniture and Cabinets Segment that experienced
strong sales growth over 1993 include original equipment manufacturer (OEM)
cabinets and furniture, including a strong increase in sales of television and
speaker cabinets in wood and vinyl, and hospitality product line sales,
partially the result of large hospitality projects shipped in the first half of
the fiscal year. Sales of other OEM wood products increased over prior year
levels, as the Company's domestic piano unit increased its production and sales
of these products to utilize excess plant capacity caused by a continuing
decline in worldwide piano markets.
Sales in the Electronic Contract Assemblies Segment increased 13% over the 1993
level due to increased sales of computer and automotive electronic assemblies.
Included in this segment are sales to one customer that accounted for 12% of
consolidated net sales in 1994 and 1993.
Processed Wood Products and Other Segment sales were up 8%, largely due to
increased outside sales of wood products and plastic components. Increased
outside sales of wood products were the result of price and volume increases on
both lumber and dimension products. Increased sales of plastic components were
the result of volume increases, partially due to customer diversification.
Consolidated cost of sales as a percent of net sales in 1994 increased by .6
percentage point, due to increased material costs, resulting from both a sales
mix change within business segments and increased material prices. Labor costs
as a percent of net sales were flat, while overhead costs as a percent of net
sales were down from 1993, as the Company was able to hold fixed production
overhead costs relatively even with 1993 levels. Although selling, general and
administrative expenses as a percent of net sales continue to trend downward,
down .7 percentage point when compared to the prior year, the Company continues
to incur expenses relating to its ongoing employee training and development
programs, process re-engineering, and development and implementation of enhanced
information systems including a new
- 20 -
enterprise business and manufacturing information system. Operating income as
a percent of net sales increased .5 percentage point when compared to 1993.
Most product lines within the Furniture and Cabinets Segment experienced
improvements in operating income levels when compared to fiscal 1993. The
strongest improvement was in wood office furniture product lines, including
record operating income levels on Kimball Office Furniture product line sales.
While fiscal 1994 operating losses in the Company's European units were reduced
by approximately 41% when compared to 1993, both units are forecast to
continue to operate at a loss in the near term, as they continue to be
negatively impacted by weak economic conditions in their principal markets. The
unit in England has also been negatively impacted by some operating
inefficiencies associated with the shift in its product line focus.
The Company incurred operating losses on steel office furniture product line
sales in fiscal 1994. These losses were due to elevated relocation expenses,
increased marketing costs, and operating inefficiencies. The Company forecasts
its steel office furniture lines will continue to operate at a loss over the
first half of fiscal 1995, before approaching monthly break-even levels sometime
in the second half, at which time the Company believes key learning curve
inefficiencies associated with the relocation will be diminished.
Operating income in the Electronic Contract Assemblies Segment decreased as a
result of a changing sales mix, expenses associated with process re-engineering,
development costs associated with the next generation of existing product lines
as well as material price increases. The electronics industry remains very
competitive, which has caused the Company to experience some difficulty in
passing on higher operating costs to its customers.
In the Processed Wood Products and Other Segment, operating income increased
over 1993 levels, principally due to improved operating income on sales of
lumber and dimension products and plastic components.
Interest expense in 1994 was down from the prior year as a result of reduced
outside borrowings in the Company's European subsidiaries and interest
capitalized on the construction of the new Harpers steel furniture manufacturing
facility in Idaho. Interest income was down in 1994 due to a lower average
investment balance and lower average yields when compared to the prior year.
Other-net decreased in the current year as a result of increased commercial
truck transportation and distribution expenses and the net change in several
other income/expense items.
The 1994 effective tax rate decreased 3.5 percentage points below the 1993
level, largely due to reduced foreign operating losses, including the prior year
restructuring charge, for which no income tax benefit is available. The 1994
effective tax rate includes the impact of a 1 percentage point increase in the
U.S. statutory tax rate and the impact of adopting FASB Statement No. 109 (as
discussed below), which reduced Taxes on Income by $1.2 million and the
effective tax rate by 2.0 percentage points.
Net income in 1994 was $36,169,000, or $1.71 per share of Class B Common Stock,
up 18% from the 1993 net income level of $30,583,000, or $1.45 per Class B
Share.
1993 Discussion
The 1993 net sales level of $722,400,000 increased 17% above 1992, as sales
increased in all three of the Company's business segments.
Sales in the Furniture and Cabinets Segment increased 12%, largely due to
increased sales of office furniture systems and certain casegoods lines, lodging
furniture and the additional sales of Harpers, which was acquired in the third
quarter of fiscal 1992.
Sales of office furniture systems improved significantly over 1992 levels
primarily as a result of a
-21-
general trend throughout fiscal 1993 away from traditional casegoods to systems
and modular furniture and the additional sales of new product line offerings.
Sales of office furniture casegoods were up from 1992 levels, largely due to
increased sales of National Office Furniture casegoods product lines, which were
partially the result of new product line offerings and competitive pricing in
the marketplace.
Sales of hospitality furniture were up as the Company began to ship several
large hospitality projects in the latter half of the fiscal year. Fiscal 1993
sales of television and speaker cabinets in wood and vinyl were flat, while
sales of musical keyboard products were down in both the U.S. and abroad as a
result of depressed worldwide markets for these products.
Sales in the Electronic Contract Assemblies Segment increased 36% over the 1992
level. The increased sales levels were the result of increased sales of
computer and automotive assemblies, in part due to customer diversification.
Included in this segment are sales to one customer which accounted for 12% of
consolidated net sales.
Processed Wood Products and Other Segment sales were up, largely due to
increased outside sales of wood products, primarily a result of price increases
on both lumber and dimension products. The price increases were in response to
increased lumber material purchase costs, partially due to reduced supplies.
Consolidated cost of sales as a percent of net sales in 1993 increased 2.5
percentage points, largely due to increased material costs, resulting from both
a shifting product sales mix and increased material prices. In 1993, the most
pronounced shift in product sales mix was to higher electronic assembly sales,
which carried a lower gross margin than most other principal product lines.
Throughout 1993, the Company experienced rising material costs for electronic
component materials, lumber, veneer and other wood materials, partially due to
temporarily reduced supplies. Selling, general and administrative expenses as a
percent of net sales in 1993 decreased 1.4 percentage points when compared to
the prior year. While the percentage was down, the Company continued to incur
expenses as a result of its ongoing employee training and development programs,
process re-engineering, and development and implementation of enhanced
information systems. Operating income as a percent of net sales decreased 1.5
percentage points as stronger operating income performance in the U.S. was
offset by much weaker performance in Europe.
Operating income in the Furniture and Cabinets Segment decreased, primarily due
to significantly increased losses in the international furniture and musical
keyboard product operations, which more than offset a strong operating income
improvement in the U.S. musical keyboard product operations.
In the second quarter of 1993 the Company recorded a $2,850,000 charge to
restructure the Company's piano operations in England and Austria. While both
subsidiaries progressed in terms of their individual restructuring strategies
over the last half of fiscal 1993, both operated at a loss in 1993 as their
principal markets remained weak.
Operating income in the Electronic Contract Assemblies Segment increased due to
increased volume levels, better asset utilization and an expanded customer base.
The electronics industry remained very competitive with increasing pressure to
maintain and reduce pricing in spite of general cost increases on many component
materials.
Processed Wood Products and Other Segment operating income was down, principally
due to reduced operating income on sales of veneer and laminated wood products
and plastic components.
Interest expense increased in 1993 as a result of increased debt levels in the
international subsidiaries during the first half of the fiscal year. Interest
income decreased in 1993 in part due to lower interest rates and a higher
average investment balance in 1992 as the first half of 1992 reflected an
investment level before the acquisition of Harpers, which was funded entirely
out of
-22-
cash and short-term investments. Other income-net decreased in 1993 as
1992 included $1,961,000 of nonoperating gain, net of non-tax expenses, relating
to insurance proceeds from an accidental fire that destroyed the Chandler
Veneers plant.
In 1993 the effective tax rate increased 6.2 percentage points over the 1992
level largely due to foreign operating losses, including the restructuring
charge, for which no income tax benefit was available. The 1992 effective tax
rate benefited from the reorganization of subsidiaries in England that lowered
the rate by 1.7 percentage points. The Company's U.S. effective tax rate
remained steady.
Net income in 1993 was $30,583,000, or $1.45 per share of Class B Common Stock,
down 21% from the 1992 net income level of $38,628,000, or $1.83 per Class B
Share. The restructuring charge in 1993 decreased net income by $2,850,000, or
13 cents per Class B Share. The 1992 net income level includes the effect of a
nonoperating gain relating to the fire at the Chandler facility, which increased
net income by $1,228,000, or 6 cents per Class B Share.
LIQUIDITY AND CAPITAL RESOURCES
Cash, Cash Equivalents and Short-term Investments totaled $91.9 million at June
30, 1994, compared to $107.2 million at June 30, 1993. Working capital and the
current ratio were a strong $186.1 million and 2.8 to 1, respectively, as of
June 30, 1994, compared to $195.4 million and 3.0 to 1, respectively, in the
prior year. The Company expects to maintain this strong liquidity position
throughout fiscal 1995.
The Company generated a positive $58 million net cash from operating activities
in 1994, as positive cash flow provided by the Company's net income level was
somewhat reduced by an increased investment in accounts receivable. The
positive cash flow from operating activities was offset by the Company's
internal funding of capital investments for the future including: the
construction of a new steel furniture manufacturing facility in Idaho, continued
investment in information technology, including a new enterprise business and
manufacturing information system, and cash used to purchase other capital assets
that together totaled approximately $53 million in 1994. The Company used an
additional $22 million to fund financing activities, principally to pay
dividends. Cash flow, excluding the effect of purchases and maturities of
short-term investments, was a negative $15.3 million in 1994.
Fiscal 1994 was a period of high capital expansion for the Company, including
the construction of a new steel furniture manufacturing facility to relocate the
operations of Harpers from Torrance, California to Post Falls, Idaho. The
Company anticipates total relocation cash expenditures, including expenditures
for the new facility, will approximate $38 million. While relocation of the
operations is substantially complete, the Company forecasts cash payments
totaling approximately $10 million in the first quarter of fiscal 1995 relating
to activities surrounding the relocation. Also in fiscal 1995, the Company
plans to continue the internal funding of investments in new information
technology.
ADOPTION OF NEW ACCOUNTING STANDARD
Effective July 1, 1993, the Company adopted FASB Statement No. 109, Accounting
for Income Taxes. The impact of adopting the new statement, which, due to the
immateriality of this transaction was included in Taxes on Income in the
Consolidated Statement of Income, was $1,200,000, or 5 cents per Class B Share.
This one-time adoption impact was triggered by a lowering of the Company's net
deferred tax liability as Statement No. 109 requires all deferred tax items be
established at current enacted statutory rates.
-23-
Item 8. - Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
Report of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statement of Financial Condition as of June 30, 1994 and 1993 . . . 27
Consolidated Statement of Income for the Three Years Ended June 30, 1994 . . . . 28
Consolidated Statement of Cash Flows for the Three Years Ended June 30, 1994 . . 29
Consolidated Statement of Share Owners' Equity for the Three Years Ended
June 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 31-40
-24-
REPORT OF MANAGEMENT
The management of Kimball International, Inc. is responsible for the preparation
of the accompanying financial statements of the Company and its subsidiaries.
The financial statements, including the notes, were prepared in accordance with
generally accepted accounting principles and include estimates and judgments,
which in the opinion of management are applied on a conservative basis. All
financial information in this annual report is consistent with the financial
statements.
The Company maintains internal accounting control systems and related policies
and procedures designed to provide reasonable assurance that assets are
safeguarded, that transactions are executed in accordance with management's
authorization and properly recorded, and that accounting records may be relied
upon for the preparation of the financial statements. The design, monitoring
and revision of internal accounting control systems involve, among other things,
management's judgment with respect to the relative cost and expected benefits of
specific control measures. The system is tested and evaluated regularly by the
Company's internal auditors as well as by independent public accountants in
connection with their annual audit.
An Audit Committee of the Board of Directors, consisting of three outside
directors, meets regularly with management, the internal auditors and the
independent public accountants in connection with its review of matters relating
to the Company's internal audit program, the Company's system of internal
controls and the services of the independent public accountants. The internal
auditors and the independent accountants have free and direct access to the
Audit Committee, and they meet with the Committee periodically, without
management present, to discuss appropriate matters.
The financial statements have been audited by Arthur Andersen & Co., independent
public accountants, in accordance with generally accepted auditing standards.
As such, the independent accountants conduct such tests and related procedures
as they deem necessary to render their opinion as to the fairness of the
financial statements.
Douglas A. Habig
Douglas A. Habig
President
Chief Executive Officer
Gary P. Critser
Gary P. Critser
Senior Executive Vice President
Chief Accounting Officer
Secretary
August 3, 1994
-25-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors and Share Owners of Kimball International, Inc.
We have audited the accompanying consolidated statement of financial condition
of Kimball International, Inc. (an Indiana corporation) and subsidiaries as of
June 30, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1994, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the consolidated
statements taken as a whole. The schedules listed under Item 14 are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied to the audit of the basic
consolidated financial statements and, in our opinion, fairly stated 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
Indianapolis, Indiana
August 3, 1994
-26-
KIMBALL INTERNATIONAL,INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Amounts in Thousands Except for Per Share Data)
June 30
Assets 1994 1993
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 15,452 $ 4,625
Short-term investments at cost, estimated market value of $76,479
and $102,900, respectively . . . . . . . . . . . . . . . . . . . 76,494 102,597
Accounts and notes receivable, less allowance for possible losses
of $4,036 and $4,916, respectively . . . . . . . . . . . . . . . 96,118 87,623
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,083 84,666
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,091 15,947
Total current assets . . . . . . . . . . . . . . . . . . . . . 288,238 295,458
Property and Equipment-at cost, less accumulated depreciation. . . . 171,243 152,361
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,932 4,886
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $471,413 $452,705
Liabilities and Share Owners' Equity
Current Liabilities:
Loans payable to banks. . . . . . . . . . . . . . . . . . . . . . . $ 1,619 $ 3,479
Current maturities of long-term debt. . . . . . . . . . . . . . . . 1,196 1,802
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 33,133 38,518
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . 4,426 4,428
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 61,790 51,843
Total current liabilities . . . . . . . . . . . . . . . . . . . . 102,164 100,070
Other Liabilities:
Long-term debt, less current maturities . . . . . . . . . . . . . . 811 2,017
Deferred income taxes and other . . . . . . . . . . . . . . . . . . 17,486 17,277
Total other liabilities . . . . . . . . . . . . . . . . . . . . . 18,297 19,294
Share Owners' Equity:
Common stock-par value $.31 1/4 per share:
Class A- Shares authorized-10,504,000 (10,523,000 in 1993)
Shares issued-7,362,000 (7,381,000 in 1993) . . . . . . . 2,301 2,307
Class B- Shares authorized-30,000,000
Shares issued-14,150,000 (14,131,000 in 1993) . . . . . . 4,422 4,416
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . 791 791
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 350,304 331,839
357,818 339,353
Foreign currency translation adjustment . . . . . . . . . . . . . . 836 1,351
Less: Treasury stock-at cost:
Class A- 5,000 shares (3,000 in 1993). . . . . . . . . . . . . . . (59) (11)
Class B- 345,000 shares (335,000 in 1993). . . . . . . . . . . . . (7,643) (7,352)
(7,702) (7,363)
Total share owners' equity . . . . . . . . . . . . . . . . . . . 350,952 333,341
Total Liabilities and Share Owners' Equity . . . . . . . . . . . . . $471,413 $452,705
See Notes to Consolidated Financial Statements
-27-
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(Amounts in Thousands Except for Per Share Data)
Year Ended June 30
1994 1993 1992
Net Sales. . . . . . . . . . . . . . . . . . . . . . . $822,484 $722,400 $617,301
Cost of Sales. . . . . . . . . . . . . . . . . . . . . 588,849 512,781 422,563
Gross Profit . . . . . . . . . . . . . . . . . . . . . 233,635 209,619 194,738
Selling, Administrative and General Expenses . . . . . 176,428 160,192 145,598
Restructuring Expenses . . . . . . . . . . . . . . . . --- 2,850 ---
Operating Income . . . . . . . . . . . . . . . . . . . 57,207 46,577 49,140
Other Income (Expense):
Interest Expense. . . . . . . . . . . . . . . . . . . (202) (1,200) (991)
Interest Income . . . . . . . . . . . . . . . . . . . 2,240 4,237 7,146
Other-net . . . . . . . . . . . . . . . . . . . . . . 174 3,708 5,419
2,212 6,745 11,574
Income Before Taxes on Income. . . . . . . . . . . . . 59,419 53,322 60,714
Taxes on Income. . . . . . . . . . . . . . . . . . . . 23,250 22,739 22,086
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 36,169 $ 30,583 $ 38,628
Net Income Per Share of Common Stock, based on the
average number of shares outstanding during the year:
Class A . . . . . . . . . . . . . . . . . . . . . . . $1.70 $1.44 $1.82
Class B . . . . . . . . . . . . . . . . . . . . . . . $1.71 $1.45 $1.83
Average Number of Shares Outstanding:
Class A . . . . . . . . . . . . . . . . . . . . . . . 7,366 7,383 7,401
Class B . . . . . . . . . . . . . . . . . . . . . . . 13,799 13,816 13,750
Totals. . . . . . . . . . . . . . . . . . . . . . . 21,165 21,199 21,151
See Notes to Consolidated Financial Statements
-28-
KIMBALL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
Year Ended June 30
1994 1993 1992
Cash Flows From Operating Activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,169 $ 30,583 $ 38,628
Non-cash charges (credits) to net income:
Depreciation and amortization . . . . . . . . . . . . . . . . . 28,726 27,328 25,282
Gain on sales of and involuntary conversion of assets . . . . . (950) (761) (3,654)
Deferred income tax provision . . . . . . . . . . . . . . . . . (3,096) (235) (744)
Minority interest in subsidiary . . . . . . . . . . . . . . . . --- --- (33)
Restructuring expenses. . . . . . . . . . . . . . . . . . . . . --- 2,850 ---
Exercise of Class B stock options . . . . . . . . . . . . . . . --- --- 331
(Increase) decrease in current assets:
Accounts and notes receivable . . . . . . . . . . . . . . . . . (8,495) (11,827) (18,537)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 3,583 (12,217) (16,021)
Other current assets. . . . . . . . . . . . . . . . . . . . . . 196 (488) (1,289)
Increase (decrease) in current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . (6,860) 13,565 7,036
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . 8,946 (1,489) 7,441
Net cash provided by operating activities . . . . . . . . . . 58,219 47,309 38,440
Cash Flows From Investing Activities:
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . (46,607) (36,983) (33,096)
Proceeds from sales of and involuntary conversion of assets . . . 1,565 1,308 5,895
Purchase of minority interest . . . . . . . . . . . . . . . . . . --- --- (1,527)
Increase in other assets. . . . . . . . . . . . . . . . . . . . . (6,606) (1,171) (390)
Purchases of short-term investments . . . . . . . . . . . . . . . (28,512) (54,782) (73,512)
Maturities of short-term investments. . . . . . . . . . . . . . . 54,615 65,043 75,159
Net cash used for investing activities. . . . . . . . . . . . (25,545) (26,585) (27,471)
Cash Flows From Financing Activities:
Net change in short-term borrowings . . . . . . . . . . . . . . . (1,860) (2,461) 2,532
Reduction in long-term debt . . . . . . . . . . . . . . . . . . . (1,841) (1,010) (1,985)
Acquisition of treasury stock . . . . . . . . . . . . . . . . . . (339) (1,441) ---
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . (17,706) (16,042) (14,305)
Exercise of Class B stock options . . . . . . . . . . . . . . . . --- --- 1,457
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48) 76 569
Net cash used for financing activities. . . . . . . . . . . . (21,794) (20,878) (11,732)
Effect of Exchange Rate Change on Cash and Cash Equivalents. . . . (53) (91) 19
Net Increase (Decrease) in Cash and Cash Equivalents . . . . . . . 10,827 (245) (744)
Cash and Cash Equivalents at Beginning of Year . . . . . . . . . . 4,625 4,870 5,614
Cash and Cash Equivalents at End of Year . . . . . . . . . . . . . $ 15,452 $ 4,625 $ 4,870
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,197 $ 26,590 $ 20,836
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 518 $ 1,249 $ 972
Total Cash, Cash Equivalents and Short-Term Investments:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 15,452 $ 4,625 $ 4,870
Short-term investments. . . . . . . . . . . . . . . . . . . . . . 76,494 102,597 112,858
Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91,946 $107,222 $117,728
See Notes to Consolidated Financial Statements
-29-
KIMBALL INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHARE OWNERS' EQUITY
(Amounts in Thousands Except for Per Share Data)
Three Years Ended June 30, 1994
Common Stock - $.31 1/4 Par Value
Class A Class B
Authorized Issued Authorized Issued
Shares Shares Amount Shares Shares Amount
Amounts at June 30, 1991 . . . . . . . . . . . . . . . . 10,577 7,435 $2,324 30,000 14,077 $4,399
Net income for the year. . . . . . . . . . . . . . . . .
Exercise of Class B Common Stock Options . . . . . . . .
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . . . (48) (48) (15) 48 15
Cash dividends:
Class A ($.69 per share). . . . . . . . . . . . . . .
Class B ($.70 per share). . . . . . . . . . . . . . .
Amounts at June 30, 1992 . . . . . . . . . . . . . . . . 10,529 7,387 $2,309 30,000 14,125 $4,414
Net income for the year. . . . . . . . . . . . . . . . .
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . . . (6) (6) (2) 6 2
Treasury stock acquired-net. . . . . . . . . . . . . . .
Cash dividends:
Class A ($.77 per share). . . . . . . . . . . . . . .
Class B ($.78 per share). . . . . . . . . . . . . . .
Amounts at June 30, 1993 . . . . . . . . . . . . . . . . 10,523 7,381 $2,307 30,000 14,131 $4,416
Net income for the year. . . . . . . . . . . . . . . . .
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . . . (19) (19) (6) 19 6
Treasury stock acquired-net. . . . . . . . . . . . . . .
Cash dividends:
Class A ($.83 per share). . . . . . . . . . . . . . .
Class B ($.84 per share). . . . . . . . . . . . . . .
Amounts at June 30, 1994 . . . . . . . . . . . . . . . . 10,504 7,362 $2,301 30,000 14,150 $4,422
Additional
Paid-In Retained Treasury Stock
Capital Earnings Shares Amount
Amounts at June 30, 1991 . . . . . . . . . . . . . . . --- $293,827 (367) $(7,084)
Net income for the year. . . . . . . . . . . . . . . . 38,628
Exercise of Class B Common Stock Options . . . . . . . 791 87 1,162
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . .
Cash dividends:
Class A ($.69 per share). . . . . . . . . . . . . . (5,101)
Class B ($.70 per share). . . . . . . . . . . . . . (9,644)
Amounts at June 30, 1992 . . . . . . . . . . . . . . . $791 $317,710 (280) $(5,922)
Net income for the year. . . . . . . . . . . . . . . . 30,583
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . .
Treasury stock acquired-net. . . . . . . . . . . . . . (58) (1,441)
Cash dividends:
Class A ($.77 per share). . . . . . . . . . . . . . (5,684)
Class B ($.78 per share). . . . . . . . . . . . . . (10,770)
Amounts at June 30, 1993 . . . . . . . . . . . . . . . $791 $331,839 (338) $(7,363)
Net income for the year. . . . . . . . . . . . . . . . 36,169
Shares of Class A Common Stock converted to Class B
Common Stock pursuant to charter provisions. . . . .
Treasury stock acquired-net. . . . . . . . . . . . . . (12) (339)
Cash dividends:
Class A ($.83 per share). . . . . . . . . . . . . . (6,114)
Class B ($.84 per share). . . . . . . . . . . . . . (11,590)
Amounts at June 30, 1994 . . . . . . . . . . . . . . . $791 $350,304 (350) $(7,702)
See Notes to Consolidated Financial Statements
-30-
KIMBALL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation: The consolidated financial statements include the
accounts of all domestic and foreign subsidiaries. All significant intercompany
balances and transactions have been eliminated in the consolidation.
On January 23, 1992, the Company acquired certain assets and assumed certain
liabilities of Harpers, a manufacturer of metal office furniture. The
acquisition was accounted for as a purchase and, accordingly, operating results
of Harpers have been included in the Company's Consolidated Statement of Income
since acquisition.
Cash, Cash Equivalents and Short-Term Investments: For purposes of the
Consolidated Statement of Cash Flows, cash equivalents consist primarily of
highly liquid investments with original maturities of three months or less at
the time of acquisition. Short-term investments are cash investments, primarily
U.S. Government securities, municipal bonds, and limited partnership interests
in hedged debt and equity securities, with maturities exceeding three months at
the time of acquisition. At June 30, 1994, approximately 31% of the short-term
investment portfolio was composed of limited partnership interests in hedged
debt and equity securities. The portfolio strategy is to remain
"market-neutral" with the intent of earning rates of return in excess of current
treasury rates without taking on significantly higher degrees of risk. The
Company is in the process of liquidating its investment in the limited
partnership interests of hedged debt and equity securities. Other-net in the
Consolidated Statement of Income included net investment income on this
portfolio totaling $495,000 in 1994, $3,341,000 in 1993 and $1,763,000 in 1992.
Foreign Currency Translation: Foreign financial statements (except for Mexico,
whose functional currency is the U.S. Dollar) are translated under the
provisions of the Financial Accounting Standards Board Statement No. 52, whereby
foreign balance sheet accounts are translated at the exchange rate in effect at
year-end, income accounts are translated at the average rate of exchange during
the year, and translation gains and losses are excluded from net income by being
recorded as a component of share owners' equity (foreign currency translation
adjustment). This component of share owners' equity reflects the cumulative
effect of the translation adjustments which are excluded from net income.
Financial statements of Mexican operations are translated into U.S. Dollars
using both the current and historical exchange rates, with translation gains and
losses included in net income. The Consolidated Statement of Income includes a
net foreign exchange loss on transactions of $103,000 in 1994, a loss of
$260,000 in 1993 and a gain of $164,000 in 1992.
Inventory Pricing: Inventories are stated at cost or market, whichever is
lower. Cost includes material, labor and applicable manufacturing overhead and
is determined using the last-in, first-out (LIFO) method for the majority of
domestic inventories and the first-in, first-out (FIFO) method for the remaining
inventories.
Property, Equipment and Depreciation: Property and equipment are stated at
cost. Depreciation is provided over the estimated useful life of the assets
using the straight-line method for financial reporting purposes and accelerated
methods for income tax purposes. Maintenance, repairs and minor renewals and
betterments are expensed; major improvements are capitalized.
Capitalized Software: Purchased software and related consulting fees are
capitalized at cost and amortized over the useful life of the software using the
straight-line method for both financial reporting and income tax purposes.
Useful lives range from 2 to 7 years. Capitalized software, net of related
accumulated amortization, amounted to $7,204,000 in 1994 and $965,000 in 1993,
and is included in Other Assets.
Medical Care and Disability Benefit Plans: The Company is self-insured with
respect to certain medical care and disability benefit plans for substantially
all employees. The costs for such plans are charged against earnings in the
year incurred. The Company does not provide benefits under these plans to
retired employees.
Research and Development Costs: The costs of research and development are
expensed as incurred. These expenses were approximately, in millions, $8.6 in
1994, $5.9 in 1993 and $3.5 in 1992.
- 31 -
Income Taxes: Effective July 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the liability method as
required by Financial Accounting Standards Board Statement No. 109, Accounting
for Income Taxes. Under the new rules, deferred taxes are required to be stated
at a net realizable value using current statutory tax rates. The cumulative
effect of adopting FASB Statement No. 109 increased net income by $1.2 million
in 1994. This cumulative effect is included in 1994 Taxes on Income.
Unremitted earnings of foreign subsidiaries have been included in the
consolidated financial statements without giving effect to the United States
taxes that may be payable on distribution to the United States because it is not
anticipated such earnings will be remitted to the United States. If remitted,
the additional United States taxes paid would not be material.
Earnings Per Share: Earnings per share are based on the average number of
shares outstanding and are computed using the two-class common stock method
because of the dividend preference of Class B Common Stock. In the years ended
June 30, 1994 and 1992, outstanding stock options, if exercised, would not have
had a material dilutive effect on earnings per share. There were no stock
options outstanding during the year ended June 30, 1993.
Off-Balance Sheet Risk: The Company engages in several types of financing
arrangements with customers, primarily certain guarantees, and also has credit
risks in certain industries. However, the amount of such risks, in dollar
terms, is not considered to be significant.
NOTE 2. RESTRUCTURING CHARGE:
The Company's 1993 net income included a $2,850,000 charge, or $.13 per share,
to restructure the Company's piano operations in England and Austria. The
restructuring charge in England included provisions for workforce reductions,
the write-down of certain inventory and equipment to net realizable value and
the reorganization of certain production lines as the subsidiary shifted its
industry focus from piano components to office furniture, kitchen cabinet doors,
accessory and trim parts for kitchens and baths, and furniture components. The
restructuring charge in Austria included provisions for workforce reductions,
the write-down of certain inventory to net realizable value, production
realignment and other associated restructuring costs in response to what the
Company believed to be a permanent downward shift in the piano industry markets.
NOTE 3. INVENTORIES:
The majority of domestic inventories are valued using the lower of last-in,
first-out (LIFO) cost or market method. The remaining inventories, valued using
the lower of first-in, first-out (FIFO) cost or market method, represent
approximately 43% of consolidated inventories at June 30, 1994, 48% at June 30,
1993 and 31% at June 30, 1992.
Had the FIFO method been used for all inventories, net income would have been,
in millions, $1.2 higher in 1994, $1.0 higher in 1993, and $.03 lower in 1992.
Additionally, inventories would have been, in millions, $19.6, $17.5 and $15.8
higher at June 30, 1994, 1993 and 1992, respectively, if the FIFO method had
been used.
Inventory components at June 30 are as follows:
(Amounts in Thousands)
1994 1993 1992
Finished products. . . . . . . . . . . . . $23,780 $23,513 $22,450
Work-in-process. . . . . . . . . . . . . . 14,603 17,527 15,460
Raw materials. . . . . . . . . . . . . . . 42,700 43,626 35,002
Total inventory . . . . . . . . . . . $81,083 $84,666 $72,912
- 32 -
NOTE 4. PROPERTY AND EQUIPMENT:
Major classes of property and equipment consist of the following:
(Amounts in Thousands)
1994 1993
Land . . . . . . . . . . . . . . . . . . . $ 5,501 $ 4,150
Buildings and improvements . . . . . . . . 119,544 117,877
Machinery and equipment. . . . . . . . . . 224,792 211,550
Construction-in-progress . . . . . . . . . 26,433 3,242
Totals . . . . . . . . . . . . . . . . . 376,270 336,819
Less: Accumulated depreciation . . . 205,027 184,458
Net property and equipment . . . . . . . $171,243 $152,361
Construction-in-progress at June 30, 1994, includes $24 million of expenditures
on a new plant facility which was substantially complete at June 30, 1994.
The useful lives, based on the Company's estimate of the service life of the
classes of property, used in computing depreciation are as follows:
Years
Buildings and improvements . . . . . . . . 5 to 40
Machinery and equipment. . . . . . . . . . 3 to 15
Automotive equipment . . . . . . . . . . . 3 to 5
Office equipment . . . . . . . . . . . . . 3 to 10
Leasehold improvements . . . . . . . . . . Life of Lease
Depreciation and amortization of property and equipment totaled, in millions,
$26.9 for 1994, $26.2 for 1993 and $24.9 for 1992. Imputed interest costs,
related to the financing of certain construction projects, of $345,000, $112,000
and $84,000 were capitalized during 1994, 1993 and 1992, respectively.
NOTE 5. COMMITMENTS - LEASES:
Operating leases for certain office, showroom, warehouse and manufacturing
facilities, and equipment, which expire 1995-2012, contain provisions under
which minimum annual lease payments are, in millions, $3.9, $2.4, $2.0, $1.7 and
$1.3 for the five years ended June 30, 1999, respectively, and aggregate $8.8
million from 2000 to the expiration of the leases in 2012. The Company is
obligated under certain of the real estate leases to maintain the properties and
pay real estate taxes.
Total rental expenses (including rental expenses in prior years associated with
leases from the retirement trust - see Note 17) amounted to, in millions, $9.5,
$9.9 and $8.5 in 1994, 1993 and 1992, respectively.
NOTE 6. LONG-TERM DEBT:
Long-Term Debt includes capitalized lease obligations expiring in fiscal year
1995. These capitalized lease obligations relate to certain plant facilities
constructed or purchased with the proceeds from the sale of Industrial Revenue
Bonds and subsequently leased to the Company. The remaining long-term debt
consists of foreign borrowings. Aggregate maturities of long-term debt for the
next five years are $1,196,000, $377,000, $277,000, $157,000 and $0,
respectively. Interest rates range from 6% to 9.125%. Based upon borrowing
rates currently available to the Company, the fair value of the Company's debt
approximates the carrying value.
- 33 -
NOTE 7. RETIREMENT PLAN:
The Company has one trusteed defined contribution Retirement Plan in effect for
substantially all domestic employees meeting the eligibility requirements.
Company contributions are based on a percent of net income as defined in the
plan; the percent of contribution is determined by the Board of Directors up to
specific maximum limits. Payments by the Company to the trusteed plan are
vested and held for the sole benefit of participants. Total contributions to
the Retirement Plan for 1994, 1993 and 1992 were approximately, in millions,
$9.0, $7.5 and $7.1, 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 (1987 plan), 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 are
reserved for incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock awards, and performance share awards to be
granted to officers and other key employees of the Company and to members of the
Board of Directors who are not employees. Approximately 109 employees are
eligible to participate in the 1987 plan.
Transactions during 1994 are as follows:
Number Per Share
of Shares Option Price
Options outstanding June 30, 1993. . . . . . --- ---
Granted. . . . . . . . . . . . . . . . . . . 106,650 $29.60
Exercised. . . . . . . . . . . . . . . . . . --- ---
Expired. . . . . . . . . . . . . . . . . . . (550) $29.60
Options outstanding June 30, 1994. . . . . . 106,100 $29.60
Shares available for option June 30, 1994. . 1,712,848
NOTE 9. INCOME TAXES:
As stated in Note 1, the Company adopted Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes, effective July 1, 1993.
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. A valuation reserve is
provided for deferred tax assets relating to foreign net operating losses, due
to uncertainty surrounding the utilization of these deferred tax assets.
The components of the deferred tax assets and liabilities as of June 30, 1994,
are as follows:
(Amounts in Thousands)
Deferred tax assets:
Accounts receivable. . . . . . . . $1,688
Inventory. . . . . . . . . . . . . 1,910
Other liabilities and reserves . . 3,701
Foreign net operating losses . . . 5,785
Valuation reserve. . . . . . . . (5,785)
Other. . . . . . . . . . . . . . . 3,086
Total. . . . . . . . . . . . . $10,385
Deferred tax liabilities:
Property & equipment . . . . . . . $12,959
Other assets . . . . . . . . . . . 1,407
Other. . . . . . . . . . . . . . . 416
Total. . . . . . . . . . . . . $14,782
- 34 -
The components of income before taxes on income are as follows:
(Amounts in Thousands)
Year Ended June 30
1994 1993 1992
United States . . . . . . . . . . . . . . . . . . $64,532 $63,185 $61,715
Foreign . . . . . . . . . . . . . . . . . . . . . (5,113) (9,863) (1,001)
Total income before taxes. . . . . . . . . . $59,419 $53,322 $60,714
Taxes on income are composed of the following items:
(Amounts in Thousands)
1994 1993 1992
Currently payable:
Federal. . . . . . . . . . . . . . . . . . . $22,500 $19,351 $19,160
Foreign. . . . . . . . . . . . . . . . . . . --- --- (223)
State. . . . . . . . . . . . . . . . . . . . 3,846 3,623 3,893
26,346 22,974 22,830
Deferred:
Federal. . . . . . . . . . . . . . . . . . . (2,734) (25) (882)
Foreign. . . . . . . . . . . . . . . . . . . 7 (248) 258
State. . . . . . . . . . . . . . . . . . . . (369) 38 (120)
(3,096) (235) (744)
Total taxes on income . . . . . . . . . . $23,250 $22,739 $22,086
A reconciliation of the statutory U.S. income tax rate to the Company's
effective income tax rate follows:
Year Ended June 30
(Amounts in Thousands) 1994 1993 1992
Amount % Amount % Amount %
Taxes computed at statutory rate . . . . . . . . . . . . . . . . . $20,797 35.0% $18,130 34.0% $20,643 34.0%
State income taxes, net of Federal income tax benefit . . . . . . 2,500 4.2 2,416 4.5 2,490 4.1
Tax benefit-U.K. Reorganization. . . . . . . . . . . . . . . . . . --- --- --- --- (1,044) (1.7)
Foreign operating losses-limited tax benefit currently available . 1,796 3.0 3,105 5.8 128 .2
Adoption of FASB No. 109 . . . . . . . . . . . . . . . . . . . . . (1,200) (2.0) --- --- --- ---
Other-net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (643) (1.1) (912) (1.7) (131) (.2)
Total taxes on income . . . . . . . . . . . . . . . . . . . . $23,250 39.1% $22,739 42.6% $22,086 36.4%
NOTE 10. SHORT-TERM LINES OF CREDIT:
The Company obtains short-term funds under lines of credit extended by several
principal banks, at negotiated rates. Additional information for the years
ended June 30, 1994, 1993 and 1992 is as follows:
(Amounts in Thousands) 1994 1993 1992
Available unused short-term lines of credit at June 30 . . . . . . . . . . $5,119 $5,559 $6,824
Maximum short-term borrowings outstanding during the year. . . . . . . . . $3,499 $8,740 $7,462
Average short-term borrowings outstanding during the year. . . . . . . . . $1,823 $5,117 $6,364
Weighted average interest rate on short-term borrowings during the year. . 6.6% 9.4% 9.4%
Average interest rate on borrowings outstanding at June 30 . . . . . . . . 5.4% 7.8% 9.8%
Compensating balances on deposit at June 30. . . . . . . . . . . . . . . . --- --- $ 250
The Company maintained a compensating balance of 5% of its domestic bank lines
of credit at June 30, 1992.
- 35 -
NOTE 11. COMMON STOCK:
Shares of Class B Common Stock are entitled to dividends, out of funds legally
available therefore, in each calendar year in which dividends are paid on the
Company's Class A Common Stock, at a differential of $.01 per share, each
calendar year more than the dividends paid in such a year on 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 owner of a share of Class A Common Stock may, at their option, at any time,
convert such share into one share of Class B Common Stock. All Class A Common
Stock surrended for conversion will be cancelled and retired permanently.
If cash dividends are not paid on shares of the Company's Common Stock for a
period of thirty-six consecutive months, or if at any time the total number of
shares of Class A Common Stock issued and outstanding is less than 15% of the
total number of issued and outstanding shares of both Class A and Class B Common
Stock, then all shares of Class B Common Stock shall automatically have the same
rights and privileges as the Class A Common Stock, with full and equal voting
rights and with equal rights to receive dividends as and if declared by the
Board of Directors.
NOTE 12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Quarterly financial information is summarized as follows:
(Amounts in Thousands Except for Per Share Data)
Three Months Ended
September 30 December 31 March 31 June 30
1994:
Net Sales. . . . . . . . . . . . . . . . $197,882 $205,804 $208,576 $210,222
Gross Profit . . . . . . . . . . . . . . $ 57,135 $ 56,611 $ 58,905 $ 60,984
Net Income . . . . . . . . . . . . . . . $ 10,280 $ 8,404 $ 8,681 $ 8,804
Net Income Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.48 $.40 $.41 $.41
Class B . . . . . . . . . . . . . . . . $.48 $.40 $.42 $.41
1993:
Net Sales. . . . . . . . . . . . . . . . $171,191 $175,825 $181,715 $193,669
Gross Profit . . . . . . . . . . . . . . $ 50,610 $ 50,949 $ 52,594 $ 55,466
Net Income . . . . . . . . . . . . . . . $ 7,320 $ 4,742 $ 9,033 $ 9,488
Net Income Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.34 $.23 $.42 $.45
Class B . . . . . . . . . . . . . . . . $.34 $.23 $.43 $.45
1992:
Net Sales. . . . . . . . . . . . . . . . $138,560 $148,224 $162,524 $167,993
Gross Profit . . . . . . . . . . . . . . $ 42,651 $ 44,651 $ 50,413 $ 57,023
Net Income . . . . . . . . . . . . . . . $ 9,171 $ 8,136 $ 8,892 $ 12,429
Net Income Per Share of Common Stock:
Class A . . . . . . . . . . . . . . . . $.43 $.39 $.41 $.59
Class B . . . . . . . . . . . . . . . . $.43 $.39 $.42 $.59
Net income in the first quarter of 1994 was increased by $1,200,000, or $.05 per
share, due to the Company's adoption of FASB Statement No. 109, Accounting for
Income Taxes.
- 36 -
Net income in the second quarter of 1993 includes a restructuring charge of
$2,850,000, or $.13 per share, relating to the restructuring of the Company's
piano operations in Europe.
Net income in the fourth quarter of 1993 was reduced by $911,000, or $.04 per
share, relating to the Company's year-end inventory valuation, in part due to
the inflationary impact of LIFO costs being higher at year-end than had been
forecast during interim periods.
Net income in the first quarter of 1992 includes a nonoperating gain of
$1,228,000, or $.06 per share, relating to insurance proceeds from an accidental
fire that destroyed the Chandler Veneers plant.
Net income in the fourth quarter of 1992 was improved $647,000, or $.03 per
share, due to a downward adjustment of the LIFO inventory reserve. The
adjustment resulted from inventory quantities and cost at year-end being lower
than was forecast. In addition, net income in the fourth quarter of 1992 was
also improved $401,000, or $.02 per share, due to an inventory adjustment
resulting, in part, from certain LIFO cost estimates used to charge costs out of
inventory being higher than actual costs.
NOTE 13. SHORT-TERM INVESTMENTS:
These accounts are summarized as follows:
(Amounts in Thousands) 1994 1993
Fair Value Amortized Cost Fair Value Amortized Cost
Debt Securities:
Held-to-Maturity Securities:
U.S. Treasury Notes. . . . . . . . . . $ 35,053 $ 35,149 $ 50,895 $ 50,703
Tax Advantaged Municipal Bonds . . . . 15,282 15,186 17,479 17,368
Other Securities . . . . . . . . . . . 1,986 2,001 110 110
Total Held-to-Maturity Securities . . . 52,321 52,336 68,484 68,181
Other Investments . . . . . . . . . . . . 24,158 24,158 34,416 34,416
Total Investments . . . . . . . . . . . . $ 76,479 $ 76,494 $102,900 $102,597
Effective June 30, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 115, Accounting for Certain Investments in Debt and Equity
Securities. Under the new rules, the Company's debt securities are classified
as held-to-maturity securities. The Company's Other Investments consist of
investments in limited partnership interests in hedged debt and equity
securities. The new accounting rules are consistent with the Company's
prevailing accounting policy and, consequently, do not effect the Company's
current earnings, financial position, or cash flow.
The Company has the positive intent and financial ability to hold all securities
classified as held-to-maturity until their contractual maturity dates.
Discounts and premiums are amortized over the life of the security. Unrealized
holding gains and (losses) were $113,000 and $(128,000) at June 30, 1994, and
$318,000 and $(15,000) at June 30, 1993, respectively. Fair values are
estimated based upon the quoted market values of those, or similar instruments.
All held-to-maturity securities mature within a period of 0-14 months.
NOTE 14. ACCRUED EXPENSES:
Accrued expenses at June 30 consist of:
(Amounts in Thousands)
1994 1993
Income taxes . . . . . . . . . . . . . . $ 2,673 $ 1,468
Property taxes . . . . . . . . . . . . . 5,944 5,185
Compensation . . . . . . . . . . . . . . 23,797 18,113
Retirement plan. . . . . . . . . . . . . 9,036 7,515
Other expenses . . . . . . . . . . . . . 20,340 19,562
Total accrued expenses. . . . . . . . . $ 61,790 $ 51,843
- 37 -
NOTE 15. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION:
The Company has three business segments which are as follows:
Furniture and Cabinets: Sales include office, lodging and home furniture;
television and stereo cabinets; pianos and piano cases, keys and actions; and
other miscellaneous products. Intersegment sales are insignificant.
Electronic Contract Assemblies: Sales include electronic and electro-mechanical
products (electronic assemblies) manufactured on a contract basis to customers'
specifications. There are no intersegment sales.
Processed Wood Products and Other: Processed Wood Products include the sales of
lumber, lumber banded particleboard, dimension lumber, plywood, veneer, and
other sales. "Other" sales include plastic components, carbide cutting tools
and related services on cutting tools, fleet and automotive services, and other
miscellaneous products and services, totaling approximately 22% in 1994, 21% in
1993, and 25% in 1992, 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 pianos,
cabinets, office, home, hospitality and healthcare furniture; thus, intersegment
sales consist of sales to the Furniture and Cabinets segment.
Total United States sales by geographic area includes export sales of, in
millions, $18.4 in 1994, $18.2 in 1993, and $17.1 in 1992. Included in the
Electronic Contract Assemblies segment are sales to three customers which
account for 22%, 21% and 18% of consolidated net sales in 1994, 1993 and 1992,
respectively. One customer accounts for 11.9% of consolidated net sales in
1994, 12.4% in 1993, and 10.8% in 1992. Foreign customer sales are generally to
European customers. The eliminations from operating income are various
transactions including intercompany profit in inventories. Identifiable assets
eliminated generally consist of intercompany profit in inventories and
intercompany accounts receivable.
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.
Business Segment
(Amounts in Thousands) Year Ended June 30
1994 1993 1992
Customers Intersegment Customers Intersegment Customers Intersegment
Net Sales:
Furniture and Cabinets. . . . . . . . . $548,767 $ 501 $477,558 $ 524 $424,840 $ 781
Electronic Contract Assemblies. . . . . 204,149 --- 180,464 --- 132,507 ---
Processed Wood Products and Other . . . 69,568 52,354 64,378 44,656 59,954 41,629
Totals. . . . . . . . . . . . . . . . . $822,484 $ 52,855 $722,400 $45,180 $617,301 $ 42,410
(Amounts in Thousands) Year Ended June 30
1994 1993 1992
Net Income:
Operating Income:
Furniture and Cabinets . . . . . . . . . . . . . $ 35,842 $ 25,838 $ 36,279
Electronic Contract Assemblies . . . . . . . . . 13,638 14,830 7,119
Processed Wood Products and Other. . . . . . . . 7,727 5,898 5,903
Eliminations . . . . . . . . . . . . . . . . . . 0 11 (161)
Total Operating Income. . . . . . . . . . . . . 57,207 46,577 49,140
Net Interest Income . . . . . . . . . . . . . . . 2,038 3,037 6,155
Other Income (Expense)-Net. . . . . . . . . . . . 174 3,708 5,419
Income Before Taxes on Income . . . . . . . . . . 59,419 53,322 60,714
Taxes on Income . . . . . . . . . . . . . . . . . 23,250 22,739 22,086
Net Income . . . . . . . . . . . . . . . . . . . $ 36,169 $ 30,583 $ 38,628
Identifiable Assets:
Furniture and Cabinets. . . . . . . . . . . . . . $262,359 $241,845 $227,051
Electronic Contract Assemblies. . . . . . . . . . 79,313 65,545 45,094
Processed Wood Products and Other . . . . . . . . 42,826 42,092 40,895
Eliminations. . . . . . . . . . . . . . . . . . . (5,031) (3,999) (8,745)
Totals. . . . . . . . . . . . . . . . . . . . . 379,467 345,483 304,295
- 38 -
Unallocated Corporate Assets:
Cash, Cash Equivalents and Short-Term Investments 91,946 107,222 117,728
Total Assets. . . . . . . . . . . . . . . . . . . $471,413 $452,705 $422,023
Business Segment
(Amounts in Thousands) 1994 1993 1992
Depreciation Depreciation Depreciation
and Capital and Capital and Capital
Amortization Expenditures Amortization Expenditures Amortization Expenditures
Furniture and Cabinets . . . . . . $ 19,450 $ 36,167 $ 19,220 $24,540 $ 17,488 $28,057
Electronic Contract Assemblies . . 4,954 7,092 3,566 8,577 3,159 3,438
Processed Wood Products and Other. 4,322 3,348 4,542 3,866 4,635 2,270
Geographic Area
(Amounts in Thousands)
Year Ended June 30
1994 1993 1992
Net Sales:
United States . . . . . . . . . . . . . . . . . . . . . . . $802,117 $702,279 $591,681
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . 22,371 23,193 30,579
Eliminations. . . . . . . . . . . . . . . . . . . . . . . . (2,004) (3,072) (4,959)
Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . $822,484 $722,400 $617,301
Net Income:
Operating Income:
United States . . . . . . . . . . . . . . . . . . . . . . . $ 62,236 $ 54,920 $ 49,764
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . (5,424) (9,190) (378)
Eliminations. . . . . . . . . . . . . . . . . . . . . . . . 395 847 (246)
Total Operating Income. . . . . . . . . . . . . . . . . . . 57,207 46,577 49,140
Net Interest Income . . . . . . . . . . . . . . . . . . . . 2,038 3,037 6,155
Other Income (Expense)-Net. . . . . . . . . . . . . . . . . 174 3,708 5,419
Income Before Taxes on Income . . . . . . . . . . . . . . . 59,419 53,322 60,714
Taxes on Income . . . . . . . . . . . . . . . . . . . . . . 23,250 22,739 22,086
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . $ 36,169 $ 30,583 $ 38,628
Identifiable Assets:
United States . . . . . . . . . . . . . . . . . . . . . . . $372,440 $340,618 $286,509
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . 22,149 26,750 30,791
Eliminations. . . . . . . . . . . . . . . . . . . . . . . . (15,122) (21,885) (13,005)
Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . 379,467 345,483 304,295
Unallocated Corporate Assets:
Cash, Cash Equivalents and Short-Term Investments . . . . . 91,946 107,222 117,728
Total Assets. . . . . . . . . . . . . . . . . . . . . . . . $471,413 $452,705 $422,023
NOTE 16. SUPPLEMENTARY INCOME STATEMENT INFORMATION:
The following costs and expenses were charged against income during the three
years ended June 30:
(Amounts in Thousands)
1994 1993 1992
Maintenance and repairs. . . . . . . . . . . . . . . . . . . . $10,906 $10,722 $ 9,251
Depreciation and amortization of property and equipment. . . . 26,919 26,205 24,902
Amortization of intangibles. . . . . . . . . . . . . . . . . . 1,807 1,123 380
Taxes other than those on income and payroll . . . . . . . . . 5,457 4,891 4,241
Advertising costs. . . . . . . . . . . . . . . . . . . . . . . 7,394 8,774 6,616
Research and development . . . . . . . . . . . . . . . . . . . 8,557 5,913 3,479
Rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,502 9,917 8,540
- 39 -
NOTE 17. AFFILIATED COMPANIES AND AFFILIATED DEPOSITORY:
The Habig family owns directly or shares voting power in excess of 50% of the
Class A Common Stock of Kimball International, Inc. (See Note 11)
The Company maintains as a depository a bank; the majority of the stock of the
bank holding company is owned by officers and directors of the Company and the
Kimball International, Inc. Employee Retirement Trust. The bank renders
services to the Company; the aggregate net annual expense of such services is
not material in amount.
On June 30, 1993, the Company purchased from its Employee Retirement Trust four
parcels of real estate which the Company had previously leased from the Trust.
The purchase price of the four parcels totaled $7.7 million, which represented
the market value of the real estate at the date of purchase based upon
independent appraisals. The annual rental payments under the leases aggregated
$795,000 in each of the years ended June 30, 1993 and 1992.
Item 9. - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None
- 40 -
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 11, 1994
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 11, 1994 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 11, 1994 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 11, 1994 under the caption "Compensation
Committee Interlocks and Insider Participation".
- 41 -
PART IV
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.
Page
Report of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statement of Financial Condition as of June 30, 1994 and 1993 . . . . 27
Consolidated Statement of Income for the Three Years Ended June 30, 1994 . . . . . 28
Consolidated Statement of Cash Flows for the Three Years Ended June 30, 1994 . . . 29
Consolidated Statement of Share Owners' Equity for the Three Years Ended
June 30, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . 31-40
2. Financial Statement Schedules:
Page
I. Marketable Securities - Other Investments for the Year Ended June 30, 1994 . . 45
V. Property and Equipment for the Three Years Ended June 30, 1994 . . . . . . . . 46
VI. Accumulated Depreciation of Property and Equipment for the Three Years
Ended June 30, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
VIII. Valuation and Qualifying Accounts for the Three Years Ended June 30, 1994. . . 48
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.
3. Exhibits
See the Exhibit Index on page 49 for a list of the exhibits filed or
incorporated herein as a part of this report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of 1994.
- 42 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
KIMBALL INTERNATIONAL, INC.
by Gary P. Critser
GARY P. CRITSER
Senior Executive Vice President, Chief Accounting
Officer and Secretary
September 15, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
James C. Thyen
JAMES C. THYEN
Senior Executive Vice President - Chief
Financial and Administrative Officer
and Treasurer
September 15, 1994
Douglas A. Habig
DOUGLAS A. HABIG
President and Chief Executive Officer
September 15, 1994
Gary P. Critser
GARY P. CRITSER
Senior Executive Vice President, Chief Accounting
Officer and Secretary
September 15, 1994
- 43 -
Signature Signature
THOMAS L. HABIG* DOUGLAS A. HABIG*
Director Director
JOHN B. HABIG* JAMES C. THYEN*
Director Director
JOHN T. THYEN* ANTHONY P. HABIG*
Director Director
GARY P. CRITSER* BRIAN K. HABIG*
Director Director
CHRISTINE M. VUJOVICH* JACK R. WENTWORTH*
Director Director
* The undersigned does hereby sign this document on my behalf pursuant to
powers of attorney duly executed and filed with the Securities and Exchange
Commission, all in the capacities as indicated:
Date
September 15, 1994 Ronald J. Thyen
RONALD J. THYEN
Director
September 16, 1994 Leonard B. Marshall, Jr.
LEONARD B. MARSHALL, JR.
Director
Attorneys-In-Fact
- 44 -
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
Schedule I -- Marketable Securities - Other Investments
June 30, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Amount at which
each portfolio of
Number of shares Market Value equity security
Name of Issuer or units-principal of each Issue issues and each other
and title amount of bonds Cost of at balance security issues carried
of each issue and notes each Issue (1) sheet date (1) in the balance sheet (1)
Cash Equivalents
U.S. Government Securities $12,825,000 $12,825,000 $12,825,000 $12,825,000
Municipal Securities 3,900,000 3,900,000 3,970,452 3,900,000
Corporate Debt Securities 1,989,088 1,989,088 1,989,088 1,989,088
Bank Obligations 996,416 996,416 996,416 996,416
Total $19,710,504 $19,710,504 $19,780,956 $19,710,504
Outstanding Disbursements (4,258,892)
Total Cash & Cash Equivalents $15,451,612
Short-Term Investments
U.S. Government Securities $37,000,000 $37,649,219 $37,028,750 $37,139,639
Bank Obligations 140,104 140,104 140,104 140,104
Municipal Securities 14,905,000 16,090,793 15,281,640 15,186,363
Limited Partnership Interests in
Hedged Debt & Equity Securities 24,028,044 24,028,044 24,028,044 24,028,044
Total Short Term Investments $76,073,148 $77,908,160 $76,478,538 $76,494,150
Grand Total $95,783,652 $97,618,664 $96,259,494 $91,945,762
(1) NOTE - No individual security exceeds two percent of total consolidated net
assets.
- 45 -
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
Schedule V. -- Property and Equipment
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G
Balance at Current Year Balance
Beginning FASB 52 Additions Other at End
DESCRIPTION of Year Adjusts. (A) at Cost (B) Retirements(B) Changes of Year (C)
YEAR ENDED JUNE 30, 1994:
Property and Equipment:
Land $ 4,149,912 $ (6,003) $ 1,357,370 $ 47 $ --- $ 5,501,232
Buildings & Improvements 117,876,698 (159,847) 2,303,670 476,623 --- 119,543,898
Machinery & Equipment 211,550,108 (311,368) 19,959,680 6,406,124 --- 224,792,296
Construction in Progress 3,242,101 --- 23,190,492 --- --- 26,432,593
Totals $336,818,819 $ (477,218) $46,811,212 $ 6,882,794 $ --- $376,270,019
YEAR ENDED JUNE 30, 1993:
Property and Equipment:
Land $ 4,099,160 $ (15,248) $ 66,000 $ --- $ --- $ 4,149,912
Buildings & Improvements 107,391,042 (121,827) 10,847,952 240,469 --- 117,876,698
Machinery & Equipment 202,205,331 (643,096) 29,245,547 19,257,674 --- 211,550,108
Construction in Progress 2,586,979 --- 655,122 --- --- 3,242,101
Totals $316,282,512 $ (780,171) $40,814,621 $19,498,143 $ --- $336,818,819
YEAR ENDED JUNE 30, 1992:
Property and Equipment:
Land $ 4,091,435 $ 14,642 $ --- $ 6,917 $ --- $ 4,099,160
Buildings & Improvements 105,979,239 272,048 1,830,599 690,844 --- 107,391,042
Machinery & Equipment 180,861,585 581,061 30,398,040 9,635,355 --- 202,205,331
Construction in Progress 1,406,366 --- 1,180,613 --- --- 2,586,979
Totals $292,338,625 $ 867,751 $33,409,252 $10,333,116 $ --- $316,282,512
(A) Adjustments for the differential in exchange rates between the beginning and
end of the fiscal year for the Property and Equipment of certain
international subsidiaries.
(B) Buildings and Improvements additions at cost in 1993 include $7,652,000
related to the Company's purchase of four parcels of real estate from its
Employee Retirement Trust which the Company had previously leased from the
Trust.
Machinery and Equipment additions at cost in 1993 include expenditures to
expand production capabilities in the Electronic Contract Assemblies
Segment, primarily relating to additional surface mount technology
capability, the purchase of a new mainframe computer and the purchase of a
company plane. Both the mainframe computer and company plane purchase
included the trade-in of existing equipment reflected in the retirement
column at the original cost.
Machinery and Equipment additions at cost in the year ended June 30, 1992,
include the acquisition of Harpers.
(C) Construction in Progress at June 30, 1994, includes $24 million of
expenditures on a new plant facility which was substantially complete at
June 30, 1994.
- 46 -
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
Schedule VI. -- Accumulated Depreciation of Property and Equipment
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G
Additions
Balance at Current Year Charged Balance
Beginning FASB 52 to Cost and Other at End
DESCRIPTION of Year Adjusts. (A) Expense Retirements(B) Changes of Year
YEAR ENDED JUNE 30, 1994:
Property and Equipment:
Buildings & Improvements $ 55,720,864 $ (71,720) $ 5,558,047 $ 698,116 $ --- $ 60,509,075
Machinery & Equipment 128,737,456 (210,185) 21,361,319 5,370,666 --- 144,517,924
Totals $184,458,320 $(281,905) $26,919,366 $ 6,068,782 $ --- $205,026,999
YEAR ENDED JUNE 30, 1993:
Property and Equipment:
Buildings & Improvements $ 50,723,694 $ (19,986) $ 5,187,397 $ 170,241 $ --- $ 55,720,864
Machinery & Equipment 123,254,837 (395,741) 21,016,815 15,138,455 --- 128,737,456
Totals $173,978,531 $(415,727) $26,204,212 $15,308,696 $ --- $184,458,320
YEAR ENDED JUNE 30, 1992:
Property and Equipment:
Buildings & Improvements $ 45,909,515 $ 126,553 $ 5,211,571 $ 523,945 $ --- $ 50,723,694
Machinery & Equipment 110,671,941 385,826 19,690,433 7,493,363 --- 123,254,837
Totals $156,581,456 $ 512,379 $24,902,004 $ 8,017,308 $ --- $173,978,531
(A) Adjustments for the differential in exchange rates between the beginning and
end of the fiscal year and the weighted average depreciation rates used in
the income statement of certain international subsidiaries.
(B) Machinery and Equipment retirements in 1993 include the accumulated
depreciation on a mainframe computer and company plane that were traded-in
as part of the purchase of a new mainframe computer and company plane.
- 47 -
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
Schedule VIII. - Valuation and Qualifying Accounts
Column A Column B Column C Column D Column E
Additions
Charged Accounts
Balance at to Costs Charged Written Off Balance
Beginning and to Other Net of at End
Description of Year Expenses Accounts Recoveries of Year
YEAR ENDED JUNE 30, 1994:
Allowances for possible losses:
Bad Debts $4,916,300 $ 25,498 --- $(905,854) $4,035,944
Valuation Allowance:
**Deferred Tax Asset --- $5,784,980 --- --- $5,784,980
YEAR ENDED JUNE 30, 1993:
Allowances for possible losses:
Bad Debts $4,550,132 $1,047,718 --- $(681,550) $4,916,300
YEAR ENDED JUNE 30, 1992:
Allowances for possible losses:
Bad Debts $4,663,819 $ 471,624 $62,500* $(647,811) $4,550,132
* Amount relates to the allowance for possible losses: bad debts assumed with
the purchase of Harpers.
** The company adopted Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes, effective July 1, 1993. Upon adoption, a
valuation allowance was provided to offset the increase in deferred tax
assets, relating to foreign net operating losses, due to uncertainty
surrounding the utilization of those deferred tax assets.
- 48 -
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX OF EXHIBITS
Sequential
Page Numbers
3(a) Restated Articles of Incorporation of the Company. 50-56
3(b) Restated By-Laws of the Company. 57-74
10(a) Supplemental Bonus Plan. 75
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, 1990.)
10(c) Agreement with Directors who are also employees of the
Company concerning $25,000 payment to a named beneficiary
upon death. (Incorporated by reference to the Company's
Form 10-K for the year ended June 30, 1992.)
10(d) 1987 Stock Incentive Program. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1993.)
10(e) Amendments to 1987 Stock Incentive Program. (Incorporated
by reference to the Company's Form 10-K for the year ended
June 30, 1993.)
10(f) Form of Incentive Stock Option. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1993.)
10(g) Form of Nonqualified Stock Option. (Incorporated by reference
to the Company's Form 10-K for the year ended June 30, 1993.)
11 Computation of earnings per share. 76-77
21 Significant subsidiaries of the Company. 78
23 Consent of Independent Public Accountants. 79
24 Power of Attorney. 80
27 Financial Data Schedule 81
- 49-