UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-3279
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0514506
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Royal Street, Jasper, Indiana 47549-1001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (812) 482-1600
Not Applicable
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No___
The number of shares outstanding of the Registrant's common stock as of February
9, 1999 were:
Class A Common Stock - 14,310,351 shares
Class B Common Stock - 26,326,110 shares
- 1 -
KIMBALL INTERNATIONAL, INC.
FORM 10-Q
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
- December 31, 1998 (Unaudited) and June 30, 1998 . . . . . . . 3
Consolidated Statements of Income (Unaudited)
- Three Months and Six Months Ended December 31, 1998 and 1997. 4
Consolidated Statements of Cash Flows (Unaudited)
- Six Months Ended December 31, 1998 and 1997 . . . . . . . . . 5
Notes To Consolidated Financial Statements (Unaudited). . . . . 6
Item 2. Management's Discussion and Analysis Of
Financial Condition and Results of Operations . . . . . . . . . 7-11
Item 3. Quantitative & Qualitative Disclosures about Market Risk. . . . 12
PART II OTHER INFORMATION:
Item 4(c). Submission of Matters to a Vote of Security Holders. . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . 15
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PART I.
FINANCIAL INFORMATION
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
December 31, June 30,
1998 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 784 $ 16,757
Short-term investments 132,988 156,010
Receivables, less allowances
of $4,523 and $4,023, respectively 134,747 119,170
Inventories 95,675 96,303
Other 23,460 24,697
Total Current Assets 387,654 412,937
PROPERTY AND EQUIPMENT - at cost, less
accumulated depreciation of $258,986
and $245,751, respectively 195,329 182,798
OTHER ASSETS 48,509 33,903
Total Assets $631,492 $629,638
LIABILITIES AND SHARE OWNERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 10,310 $ 4,318
Current maturities of long-term debt 446 434
Accounts payable 65,772 60,907
Dividends payable 6,441 6,521
Accrued expenses 67,668 81,030
Total Current Liabilities 150,637 153,210
OTHER LIABILITIES:
Long-term debt, less current maturities 2,391 1,856
Deferred income taxes and other 25,688 25,949
Total Other Liabilities 28,079 27,805
SHARE OWNERS' EQUITY:
Common stock 2,151 2,151
Additional paid-in capital 6,380 6,022
Retained earnings 479,497 464,880
Foreign currency translation adjustment 1,696 1,535
Unrealized gain on available-for-sale
securities 1,336 2,174
Less: Treasury stock, at cost (38,284) (28,139)
Total Share Owners' Equity 452,776 448,623
Total Liabilities and Share Owners' Equity $631,492 $629,638
See Notes to Consolidated Financial Statements
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands except per share amounts)
(unaudited) (unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net Sales $280,080 $264,524 $544,726 $510,381
Cost of Sales 197,027 184,572 383,116 356,149
Gross Profit 83,053 79,952 161,610 154,232
Selling, Administrative
and General Expenses 64,715 60,134 126,697 116,411
Operating Income 18,338 19,818 34,913 37,821
Other Income (Expense):
Interest Expense (168) ( 98) (273) (193)
Interest Income 1,570 2,309 3,534 4,587
Other - net 3,095 2,661 4,152 3,307
Other Income - net 4,497 4,872 7,413 7,701
Income Before Taxes on Income 22,835 24,690 42,326 45,522
Taxes on Income 7,900 9,205 14,828 17,008
Net Income $ 14,935 $ 15,485 $ 27,498 $ 28,514
Earnings Per Share of Common Stock:
Basic:
Class A Common Stock $ .36 $ .37 $ .67 $ .68
Class B Common Stock $ .37 $ .38 $ .68 $ .69
Diluted:
Class A Common Stock $ .36 $ .36 $ .66 $ .67
Class B Common Stock $ .37 $ .37 $ .67 $ .68
Dividends Per Share of Common Stock:
Class A Common Stock $ .155 $ .145 $ .310 $ .28875
Class B Common Stock $ .160 $ .150 $ .320 $ .295
Average total number of shares
outstanding Class A and B
Common Stock:
Basic 40,698 41,523 40,814 41,499
Diluted 40,971 41,930 41,073 41,942
See Notes to Consolidated Financial Statements
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KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Six Months Ended
December 31,
1998 1997
Cash Flows From Operating Activities:
Net income $ 27,498 $ 28,514
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 19,103 16,516
Gain on sales of assets (231) (1,835)
Deferred income tax and other deferred charges (51) (652)
Change in current assets and liabilities:
Receivables (15,577) (10,814)
Inventories (4,334) (7,143)
Other current assets 1,027 1,096
Accounts payable 4,865 (1,993)
Accrued expenses (8,089) (1,228)
Net Cash Provided By Operating Activities 24,211 22,461
Cash Flows From Investing Activities:
Capital expenditures (29,341) (16,490)
Proceeds from sales of assets 737 374
Proceeds from sale of division/subsidiary -0- 3,150
Increase in other assets (17,485) (2,132)
Purchases of held-to-maturity investments (400) (21,413)
Maturities of held-to-maturity investments 5,410 34,932
Purchases of available-for-sale securities (24,405) (20,000)
Sales and maturities of available-for-sale securities 41,580 23,000
Net Cash (Used For)/Provided By Investing Activities (23,904) 1,421
Cash Flows From Financing Activities:
Change in short-term borrowings 5,992 (49)
Net change in long-term debt 547 (281)
Dividends paid to share owners (12,962) (11,988)
Acquisition of treasury stock, net of sales (10,738) -0-
Proceeds from exercise of stock options 818 1,039
Other - net 62 (14)
Net Cash Used For Financing Activities (16,281) (11,293)
Effect of Exchange Rate Change on
Cash and Cash Equivalents 1 (10)
Net (Decrease)/Increase in Cash and Cash Equivalents (15,973) 12,579
Cash and Cash Equivalents-Beginning of Period 16,757 18,818
Cash and Cash Equivalents-End of Period $ 784 $ 31,397
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Income taxes $ 14,210 $ 15,750
Interest $ 287 $ 207
Total Cash, Cash Equivalents and
Short-Term Investments:
Cash and cash equivalents $ 784 $ 31,397
Short-term investments 132,988 133,639
Totals $133,772 $165,036
See Notes to Consolidated Financial Statements
- 5 -
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) The accompanying consolidated financial statements of Kimball
International, Inc. ("the Company") are unaudited and have been prepared
in accordance with the instructions to Form 10-Q. As such, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. All significant intercompany transactions and balances have
been eliminated. Management believes the financial statements include all
adjustments (consisting only of normal recurring adjustments) considered
necessary to present fairly the financial statements of the interim period.
It is suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K.
(2) Inventories consist of: (in thousands)
December 31, June 30,
1998 1998
Raw Materials $49,418 $51,967
Work-in-Process 12,390 12,971
Finished Goods 33,867 31,365
Total $95,675 $96,303
For interim reporting, LIFO inventories are computed based on estimated year-end
quantities and interim changes in price levels. Changes in such estimates
will be reflected in the interim financial statements in the period in
which they occur.
(3) Earnings per share are computed under the method prescribed in Financial
Accounting Standards Board Statement No. 128 for computing earnings per
share for two class common stock due to the dividend preference of Class B
Common Stock. The Company adopted FASB Statement No. 128 effective with
the second quarter of fiscal year 1998, disclosing both basic and diluted
earnings per share. The Company's outstanding stock options are
considered when calculating diluted earnings per share.
(4) Effective July 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130 - Comprehensive Income. Comprehensive income
includes all changes in equity during a period except those resulting from
investments by, and distributions to, Share Owners. Comprehensive income,
shown net of tax if applicable, for the three month and six month periods
ending December 31, 1998 and 1997 is as follows: (in thousands)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
Net Income $14,935 $15,485 $27,498 $28,514
Unrealized (Loss)/Gain on
Available-For-Sale-Securities (581) 123 (838) 481
Foreign Currency Translation Adjustment 173 70 161 (104)
Comprehensive Income $14,527 $15,678 $26,821 $28,891
(5) On September 15, 1998, the Company acquired with available cash on hand,
the assets of Transwall, Inc. Of Pennsylvania, manufacturers of systems
office furniture products. The acquisition was accounted for as a purchase
with operating results included in the Company's Consolidated Statement of
Income from the date of acquisition. Transwall's results of operations
were immaterial to the Company's Consolidated Statements of Income for
the three month and six month periods ending December 31, 1998.
(6) The Company recorded a $2.1 million pretax gain on the sale of a stock
investment of which the Company held a minor interest, during the second
quarter of the current fiscal year. This pretax gain is reported in
Other-net, and added $1.3 million to net income, or $0.03 per common share.
The per share amount applies to both basic and diluted earnings per share.
(7) The Company recorded a $1.8 million pretax gain on the sale of
real estate in the second quarter of the prior fiscal year. This
pretax gain was reported in Other-net, and added $1.0 million to net
income, or $0.02 per common share. The per share amount applies to
both basic and diluted earnings per share.
- 6 -
Management's Discussion and Analysis
of Financial Condition and Results of Operations
OVERVIEW
Net sales for the second quarter of fiscal year 1999 set a new quarterly record
of $280,080,000, an increase of 6% over the prior year second quarter. Net
sales of $544,726,000 for the six month period ending December 31, 1998
surpassed the prior year sales by 7% and also set a record for six month sales.
Net income and Class B diluted earnings per share were $14,935,000 and $0.37,
respectively, for the second quarter of fiscal 1999, a decrease of 4% from the
prior year. Current year net income and Class B diluted earnings per share for
the six month period were $27,498,000 and $0.67, respectively, a decrease of 4%
from the prior year. Fiscal year 1999 second quarter net income results include
a $1,337,000 after tax gain ($0.03 per diluted share) on the sale of a stock
investment of which the Company held a minor interest. Fiscal 1998 second
quarter results include a $1,008,000 after tax gain ($0.02 per diluted share) on
the sale of real estate.
RESULTS OF OPERATIONS - THREE AND SIX MONTHS ENDED DECEMBER 31, 1998 COMPARED TO
THREE AND SIX MONTHS ENDED DECEMBER 31, 1997
Second quarter and six month period fiscal 1999 net sales increased in two of
the Company's three business segments when compared to the prior year - the
Furniture and Cabinets segment and the Processed Wood Products and Other
segment. The Electronic Contract Assemblies segment experienced a decline in
net sales during these same time periods. Current year second quarter operating
income declined 7% to $18,338,000, from $19,818,000 in the same period of 1998.
Operating income of $34,913,000 for the six month period declined 8% when
compared to the prior year's operating income of $37,821,000.
FURNITURE AND CABINETS
Net sales in the Company's largest segment, Furniture and Cabinets, increased 9%
and 11%, respectively, for the three and six month periods when compared to one
year ago.
Net sales of office furniture increased for both the three and six month periods
of fiscal 1999 over the prior year. Sales of systems products experienced
double-digit growth while sales of casegoods products showed a moderate increase
in both periods. Second quarter office furniture sales growth outpaced the most
recent Business and Institutional Furniture Manufacturer's Association (BIFMA)
industry statistics for the three-month period ending November 1998. On
September 15, 1998, the Company finalized the purchase of Transwall, Inc., a
manufacturer of stackable panel systems and floor-to-ceiling products, which
increased its already extensive office furniture product offering. The
acquisition was accounted for as a purchase, with results of operations included
in consolidated results from the date of acquisition, and was financed with
available cash on hand. Transwall's three and six month results were not
material to the consolidated operating results.
Fiscal 1999 net sales for both the three and six month periods for cabinets and
furniture product lines outpaced 1998 levels. Increased volumes of television
cabinets attributed largely to the sales growth, as calendar year 1998 sales
were up in the television industry as a whole. In the three and six month
periods of the prior year, the Company's sales of OEM cabinets were negatively
impacted by the relocation of a large customer and its longer than anticipated
start up time, resulting in lower volumes in fiscal 1998.
- 7 -
Net sales of lodging furniture declined in the second quarter of fiscal 1999
from 1998 levels on lower volumes of both standard product offerings and
custom-made product. Select segments of the lodging industry have recently been
experiencing a softening in demand. Lodging furniture net sales for the current
year six month period are ahead of the prior year.
Operating income in the Furniture and Cabinets segment for the second quarter of
fiscal 1999 decreased from one year ago. Operating income for the six month
period remained flat with one year ago. Cost of goods sold, as a percent of net
sales, was higher in the second quarter of fiscal 1999 as material costs
increased, as a percent of net sales. Cost of goods sold, as a percent of net
sales, for the six month period also increased, as increased price discounting
in the office furniture product lines reduced profit margins. Both selling and
administrative costs for the three and six month periods were higher in dollar
terms over the prior year. Selling expenses were lower, as a percent of net
sales, in the current year second quarter primarily the result of reduced sales
incentive costs in the office furniture product lines and a more aggressive
focus on cost reductions. Administrative costs were higher on increased people
and technology investments.
ELECTRONIC CONTRACT ASSEMBLIES
Net sales in the Electronic Contract Assemblies segment for the three and six
month periods decreased 3% and 4%, respectively, from the prior year. The sales
mix in this segment has been shifting more toward electronic automotive products
and away from computer related products, as evidenced by an increase in sales of
automotive products and a decrease in computer related products in both the
three and six month periods. Fiscal 1999 six month results were unfavorably
impacted by the General Motors (GM) labor strike which was settled in July 1998,
as the Electronic Contract Assemblies segment manufactures components that are
installed in GM vehicles.
Operating income declined in this segment in both the three and six month
periods, on lower sales. Due to the competitiveness of the marketplace, the
selling prices of selected products have been reduced, therefore adversely
affecting both sales and operating margins. Cost of goods sold, as a percent of
net sales, increased for both the three and six month periods as lower material
costs, as a percent of sales, were more than offset by higher direct labor and
overhead costs. Both selling and administrative costs increased for the three
and six month periods when compared to the prior year, on higher people and
technology costs, as well as increased bad debt allowance relating to a former
customer.
Included in this segment are sales to one customer, Lucas Varity, PLC, which
accounted for 16% and 14%, respectively, of consolidated net sales in the three
and six month periods of fiscal 1999. This same customer accounted for 16%
of consolidated net sales in both the three and six month periods one year ago.
Sales to this customer represent approximately one half of total sales in the
Electronic Contract Assemblies segment, which has historically carried a higher
operating income margin than the Company's other two business segments.
Consistent with the general trend of consolidation in the automotive supplier
business, this customer has recently announced tentative plans to sell its
operations to TRW, Inc. The Company is uncertain at this time what effect,
if any, this announcement may have on the contract production levels for this
customer. This statement is a forward-looking statement under the Private
Securities Litigation Reform Act of 1995 and is subject to certain risks and
uncertainties including, but not limited to, strategic business actions taken
by this customer.
- 8 -
This segment's investment capital carries a higher degree of risk than the
Company's other segments due to rapid technological changes, the contract nature
of this industry and the importance of sales to one customer.
PROCESSED WOOD PRODUCTS AND OTHER
Outside sales in the Processed Wood Products and Other segment increased 23% and
18%, respectively, for the three and six month periods compared to the prior
year. The increase in sales resulted primarily from new product offerings and
an increased focus to grow external sales in this segment. Sales of most major
products within this segment increased in both the three and six month periods
over the prior year. Internal sales of this segment to the Company's other
operations, particularly the Furniture and Cabinets segment, provide a key link
in the Company's vertically integrated supply chain. Operating income declined
for the second quarter and the six month period of fiscal 1999 when compared to
1998. Cost of goods sold, as a percent of net sales, increased for both the
three and six month comparisons partially due to higher labor costs, as a
percent of sales.
In the first quarter of fiscal 1999, the Company completed the purchase of an
11,700-acre land parcel which nearly doubled the timberland holdings of the
Company. The acquisition was made to help support the procurement of raw
materials in this segment and to provide possible future manufacturing facility
locations. The acquisition was financed with available cash on hand.
CONSOLIDATED OPERATIONS
Consolidated selling, general and administrative expenses increased, as a
percent of sales, .4 percentage point and .5 percentage point, respectively, for
the three and six months of fiscal 1999 compared to the prior year, due to
investments made in human resources, information technology and capacity and
product line expansions to support more aggressive, long-term growth. The
Company continues to review activities, processes and costs to assess where such
could be reduced while continuing to provide quality products and services to
the marketplace.
Other income decreased in both the three and six month periods of fiscal 1999
primarily the result of a decline in interest income caused by a combination of
lower average investment balances and a shift in the Company's investment
portfolio mix more heavily weighted toward tax-free municipal bonds with lower
pre-tax interest rates. In the second quarter of fiscal 1999 the Company
recorded a $1,337,000 after tax gain ($0.03 per diluted share) on the sale of a
stock investment of which the Company held a minor interest. Fiscal 1998 second
quarter income includes a $1,008,000 after tax gain ($0.02 per diluted share) on
the sale of real estate.
The effective income tax rate decreased 2.7 percentage points for the second
quarter of fiscal 1999 and 2.4 percentage points for the six month period when
compared to the prior year, primarily due to a decrease in the effective federal
income tax rate for the quarter as the Company utilized capital losses to offset
part of the capital gain on the above mentioned sale of stock.
Net income and Class B diluted earnings per share for the second quarter were
$14,935,000 and $0.37, respectively, a decrease of 4% from the prior year
levels. Net income of $27,498,000 and Class B diluted earnings per share of
$0.67 for the six month period of fiscal 1999 decreased 4% from the prior year.
- 9 -
LIQUIDITY AND CAPITAL RESOURCES
The Company's aggregate of cash, cash equivalents, and short-term investments
decreased from $173 million at the end of fiscal 1998 to $134 million at the end
of the second quarter in fiscal 1999 due primarily to cash outlays during the
first half of the fiscal year for strategic capital investments, dividends and
Class B common stock repurchases. Working capital at December 31, 1998 was $237
million with a current ratio of 2.6, compared to working capital of $260 million
and a current ratio of 2.7 at June 30, 1998.
Operating activities generated $24 million of cash flow in the first six months
of fiscal 1999 compared to $22 million in the first six months of 1998. Net
income and non-cash charges to net income were partially offset by increases in
receivables of $16 million. The Company reinvested $47 million into capital
investments for the future, including the purchase of 11,700 acres of timber and
harvest land, Transwall, Inc., computer equipment, production equipment, and a
child development facility. Financing cash flows were primarily in the form of
$11 million in share repurchases and $13 million in dividend payments. Net cash
flow, excluding the purchases and maturities of short-term investments was an
outflow of $38 million for the six month period ending December 31, 1998.
As the Company anticipates increased investment activity in the future, it
believes that available funds on hand, borrowing capacity, and cash generated
from operations will be sufficient for working capital needs and to fund
investments and acquisitions in the future. This statement is a forward-looking
statement under the Private Securities Litigation Reform Act of 1995 and is
subject to certain risks and uncertainties including, but not limited to a
downturn in the economy, loss of key customers or suppliers, availability or
cost of raw materials, or a natural disaster or similar unforeseen event.
SUBSEQUENT EVENT
On January 8, 1999, the Company announced the purchase of Southeast Millworks, a
privately held manufacturer of store display fixtures. This acquisition will
allow the Company to pursue new, potentially high-volume store fixture markets.
The acquisition was accounted for as a purchase and was financed with available
cash on hand.
YEAR 2000 READINESS DISCLOSURE
The Company continues to focus on the Year 2000 issue. Integrated testing of
interfaces between various applications used within the Company has been
completed. Contingency plans outlining recovery strategies for possible
failures are currently being developed. The estimated completion date for Year
2000 compliance for mission critical items for a majority of the Company's
operations is the end of March 1999 with a select few foreign operations being
compliant by the end of June 1999. The total gross cost of Year 2000 compliance
remains in the $9 million to $11 million range, as disclosed in the Company's
Form 10-K for the period ending June 30, 1998. Approximately 60% of the total
costs had been incurred as of December 31, 1998, compared to 45% at September
30, 1998. Redeployed information technology resources are anticipated to
account for approximately 50% of the total costs, with the balance being
incremental costs to the Company. Approximately 30% of the total gross costs
relate to machinery and other fixed assets which will be capitalized, with the
remaining costs being expensed as incurred.
The Company has not identified any additional material key risk factors
associated with the Year 2000 beyond those disclosed in its Form 10-K for the
period ending June 30, 1998.
- 10 -
The Year 2000 disclosure includes forward-looking statements under the Private
Securities Litigation Reform Act of 1995 and is subject to risks and
uncertainties including, but not limited to such factors as the availability and
cost of human resources with expertise in this area, the ability of its
customers and suppliers to meet Year 2000 compliance, the ability to locate and
correct all relevant computer codes and time constraints.
EURO CURRENCY
The European Union's adoption of a common currency, known as the Euro, is not
expected to have a material effect on the Company's financial condition or
results of operations. As the Company continues to explore investment
opportunities abroad, it will monitor the possible effects of this currency
conversion.
ACCOUNTING STANDARDS
In July 1998, the Company adopted Financial Accounting Standards No. 130,
comprehensive income. This standard requires the disclosure of all changes in
equity during a period except those resulting from investments by, and
distributions to, Share Owners. Comprehensive income is reported in Note 4 of
the Consolidated Financial Statements.
In June, 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, which requires the recognition of all derivatives as either assets
or liabilities in the balance sheet and the measurement of those instruments at
fair value. The Company engages in limited derivative activity and currently
does not expect this new standard to have a material effect on the Company's
financial condition or results of operations.
____________________________________________________________________
This document contains certain statements which could be considered forward-
looking under the Private Securities Litigation Reform Act of 1995. Cautionary
statements regarding these statements have been included in this document, when
appropriate. Additional cautionary statements regarding these types of
Statements and other factors that could have an effect on the future performance
of the Company are contained in the Company's Form 10-K filing for the period
ending June 30, 1998.
- 11 -
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
As of December 31, 1998, the Company had an investment portfolio of fixed income
securities, excluding those classified as cash and cash equivalents, of $133
million. The Company classifies its short-term investments in accordance with
Financial Accounting Standards Board Statement No. 115, accounting for Certain
Investments in Debt and Equity Securities. Held-to-maturity securities are
stated at amortized cost and available-for-sale securities are stated at market
value with unrealized gains and losses being recorded net of tax related effect,
if any, as a component of share owners' equity. These securities, like all
fixed income instruments, are subject to interest rate risk and will decline in
value if market interest rates increase.
The Company operates internationally, and thus is subject to potentially adverse
movements in foreign currency rate changes. As of the latest fiscal year-end,
foreign sales, operating income and assets, each comprised less than 3% of
consolidated amounts. Historically, the effect of movements in the exchange
rates have been immaterial to the consolidated operating results of the Company.
- 12 -
PART II.
OTHER INFORMATION
Item 4 (c) - Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Share Owners was held on October 20, 1998.
The Board of Directors was elected in its entirety, based on the following
election results:
Nominees as Directors by
Holders of Class A Common Stock Votes For* Votes Withheld
Thomas L. Habig 13,753,921 39,440
Douglas A. Habig 13,754,561 38,800
James C. Thyen 13,754,561 38,800
John B. Habig 13,754,561 38,800
Ronald J. Thyen 13,753,537 39,824
Christine M. Vujovich 13,754,561 38,800
Brian K. Habig 13,754,561 38,800
John T. Thyen 13,754,561 38,800
Gary P. Critser 13,754,561 38,800
Alan B. Graf, Jr. 13,754,561 38,800
Polly B. Kawalek 13,754,561 38,800
* Votes for nominees as Directors by holders of Class A Common Stock
represented 96% of the total 14,382,596 Class A shares outstanding
and eligible to vote.
Nominee as Director by
Holders of Class B Common Stock Votes For* Votes Withheld
Dr. Jack R. Wentworth 23,397,204 365,680
* Votes for nominee as Director by holders of Class B Common Stock
represented 87% of the total 26,790,107 Class B shares outstanding
and eligible to vote.
- 13 -
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
(3b) Restated By-laws of the Company
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
On October 21, 1998, the Company filed a Form 8-K reporting
its press release under Item 5 - Other Events "Kimball
International holds Annual Meeting of Share Owners."
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KIMBALL INTERNATIONAL, INC.
Douglas A. Habig
DOUGLAS A. HABIG
(Chairman, Chief Executive Officer)
Roy W. Templin
ROY W. TEMPLIN
(Vice President, Corporate Controller)
Date: February 12, 1999
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Kimball International, Inc
Exhibit Index
Exhibit No. Description
3b Restated By-laws of the Company
11 Computation of Earnings Per Share
27 Financial Data schedule
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