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0000055772-11-000003.txt : 20110204
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20110204091701
ACCESSION NUMBER: 0000055772-11-000003
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20101231
FILED AS OF DATE: 20110204
DATE AS OF CHANGE: 20110204
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: KIMBALL INTERNATIONAL INC
CENTRAL INDEX KEY: 0000055772
STANDARD INDUSTRIAL CLASSIFICATION: OFFICE FURNITURE [2520]
IRS NUMBER: 350514506
STATE OF INCORPORATION: IN
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-03279
FILM NUMBER: 11572676
BUSINESS ADDRESS:
STREET 1: 1600 ROYAL ST
CITY: JASPER
STATE: IN
ZIP: 47549
BUSINESS PHONE: 8124821600
MAIL ADDRESS:
STREET 1: 1600 ROYAL STREET
CITY: JASPER
STATE: IN
ZIP: 47549
FORMER COMPANY:
FORMER CONFORMED NAME: JASPER CORP
DATE OF NAME CHANGE: 19740826
10-Q
1
q112.htm
KIMBALL INTERNATIONAL, INC. FORM 10-Q
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, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-3279
KIMBALL INTERNATIONAL, INC.
|
(Exact name of registrant as specified in
its charter)
|
Indiana |
|
35-0514506 |
(State or other jurisdiction
of |
|
(I.R.S. Employer
Identification No.) |
incorporation or
organization) |
|
|
|
1600 Royal Street, Jasper,
Indiana |
|
47549-1001 |
(Address of principal
executive offices) |
|
(Zip Code) |
(812) 482-1600 |
Registrant's telephone number, including
area code |
|
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 __ |
|
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
Yes __
No |
|
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See
the definitions of "large accelerated filer," "accelerated filer"
and "smaller reporting company" in Rule 12b-2
of the Exchange Act.
Large accelerated filer ___ Accelerated filer
X
Non-accelerated filer (Do
not check if a smaller reporting company)
Smaller reporting company
|
|
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes __
No X |
|
The number of shares outstanding of the Registrant's common stock as of
January 20, 2011 was: |
|
Class A Common Stock - 10,478,763 shares |
|
Class B Common Stock - 27,258,770 shares |
1 |
KIMBALL INTERNATIONAL, INC.
FORM 10-Q
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for
Share and
Per Share Data)
|
|
(Unaudited) |
|
|
|
|
December 31, |
|
June 30, |
|
|
2010 |
|
2010 |
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ 45,393 |
|
$ 65,342 |
Short-term investments |
|
2,654 |
|
2,496 |
Receivables, net of allowances of $1,586 and $3,349,
respectively |
|
161,957 |
|
154,343 |
Inventories |
|
162,293 |
|
146,406 |
Prepaid expenses and other current assets |
|
50,038 |
|
43,776 |
Assets held for sale |
|
1,160 |
|
1,160 |
Total current assets |
|
423,495 |
|
413,523 |
Property and Equipment, net of accumulated depreciation of $347,725
and |
|
|
|
|
$337,251, respectively |
|
189,945 |
|
186,999 |
Goodwill |
|
2,541 |
|
2,443 |
Other Intangible Assets, net of accumulated amortization of $64,431
and |
|
|
|
|
$63,595, respectively |
|
7,752 |
|
8,113 |
Other Assets |
|
22,362 |
|
25,673 |
Total Assets |
|
$ 646,095 |
|
$ 636,751 |
LIABILITIES AND SHARE OWNERS' EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Current maturities of long-term debt |
|
$ 62 |
|
$ 61 |
Accounts payable |
|
169,704 |
|
178,693 |
Borrowings under credit facilities |
|
17,050 |
|
-0- |
Dividends payable |
|
-0- |
|
1,828 |
Accrued expenses |
|
55,460 |
|
52,923 |
Total current liabilities |
|
242,276 |
|
233,505 |
Other Liabilities: |
|
|
|
|
Long-term debt, less current maturities |
|
286 |
|
299 |
Other |
|
21,865 |
|
25,519 |
Total other liabilities |
|
22,151 |
|
25,818 |
Share Owners' Equity: |
|
|
|
|
Common stock-par value $0.05 per share: |
|
|
|
|
Class A - 49,826,000 shares authorized |
|
|
|
|
14,368,000 shares issued |
|
718 |
|
718 |
Class B - 100,000,000 shares authorized |
|
|
|
|
28,657,000 shares issued |
|
1,433 |
|
1,433 |
Additional paid-in capital |
|
63 |
|
119 |
Retained earnings |
|
450,380 |
|
454,800 |
Accumulated other comprehensive loss |
|
(3,635) |
|
(9,775) |
Less: Treasury stock, at cost: |
|
|
|
|
Class A - 3,889,000 and 3,834,000 shares, respectively |
|
(49,102) |
|
(49,415) |
Class B - 1,398,000 and 1,579,000 shares, respectively |
|
(18,189) |
|
(20,452) |
Total Share Owners' Equity |
|
381,668 |
|
377,428 |
Total Liabilities and Share Owners' Equity |
|
$ 646,095 |
|
$ 636,751 |
See Notes to Condensed Consolidated Financial Statements |
|
|
|
|
3
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except for Per Share
Data)
|
(Unaudited) |
|
(Unaudited) |
|
Three Months Ended |
|
Six Months Ended |
|
December 31 |
|
December 31 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
Net Sales |
$ 310,632 |
|
$ 275,161 |
|
$ 605,308 |
|
$ 549,820 |
Cost of Sales |
261,056 |
|
231,020 |
|
508,585 |
|
458,495 |
Gross Profit |
49,576 |
|
44,141 |
|
96,723 |
|
91,325 |
Selling and Administrative Expenses |
48,997 |
|
46,616 |
|
96,337 |
|
92,682 |
Other General Income |
-0- |
|
(3,256) |
|
-0- |
|
(3,256) |
Restructuring Expense |
368 |
|
291 |
|
485 |
|
777 |
Operating Income (Loss) |
211 |
|
490 |
|
(99) |
|
1,122 |
Other Income (Expense): |
|
|
|
|
|
|
|
Interest income |
171 |
|
388 |
|
391 |
|
665 |
Interest expense |
(50) |
|
(91) |
|
(70) |
|
(106) |
Non-operating income, net |
64 |
|
716 |
|
666 |
|
2,440 |
Other income, net |
185 |
|
1,013 |
|
987 |
|
2,999 |
Income Before Taxes on Income |
396 |
|
1,503 |
|
888 |
|
4,121 |
Provision (Benefit) for Income Taxes |
(480) |
|
(403) |
|
(444) |
|
441 |
Net Income |
$ 876 |
|
$ 1,906 |
|
$ 1,332 |
|
$ 3,680 |
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
Basic Earnings Per Share: |
|
|
|
|
|
|
|
Class A |
$ 0.02 |
|
$ 0.05 |
|
$ 0.03 |
|
$ 0.09 |
Class B |
$ 0.02 |
|
$ 0.05 |
|
$ 0.04 |
|
$ 0.10 |
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
Class A |
$ 0.02 |
|
$ 0.05 |
|
$ 0.03 |
|
$ 0.09 |
Class B |
$ 0.02 |
|
$ 0.05 |
|
$ 0.04 |
|
$ 0.10 |
|
|
|
|
|
|
|
|
Dividends Per Share of Common Stock: |
|
|
|
|
|
|
|
Class A |
$ 0.045 |
|
$ 0.045 |
|
$ 0.090 |
|
$ 0.090 |
Class B |
$ 0.050 |
|
$ 0.050 |
|
$ 0.100 |
|
$ 0.100 |
|
|
|
|
|
|
|
|
Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
Class A and B Common Stock: |
|
|
|
|
|
|
|
Basic |
37,729 |
|
37,339 |
|
37,705 |
|
37,326 |
Diluted |
37,786 |
|
37,514 |
|
37,816 |
|
37,527 |
See Notes to Condensed Consolidated Financial Statements |
|
|
|
|
|
|
|
4
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
|
(Unaudited)
Six Months Ended
December 31 |
|
2010 |
|
2009 |
Cash Flows From Operating Activities: |
|
|
|
Net income |
$ 1,332 |
|
$ 3,680 |
Adjustments to reconcile net income to net cash (used for)
provided by operating activities: |
|
|
|
Depreciation and amortization |
15,704 |
|
17,775 |
(Gain) loss on sales of assets |
(25) |
|
8 |
Deferred income tax |
1,780 |
|
(2,759) |
Stock-based compensation |
607 |
|
758 |
Other, net |
311 |
|
196 |
Change in operating assets and liabilities: |
|
|
|
Receivables |
(8,707) |
|
(1,418) |
Inventories |
(17,623) |
|
(16,679) |
Prepaid expenses and other current assets |
(4,490) |
|
(1,902) |
Accounts payable |
(7,133) |
|
2,365 |
Accrued expenses |
(2,761) |
|
(5,824) |
Net cash used for operating activities |
(21,005) |
|
(3,800) |
Cash Flows From Investing Activities: |
|
|
|
Capital expenditures |
(13,456) |
|
(20,756) |
Proceeds from sales of assets |
690 |
|
863 |
Purchase of capitalized software |
(798) |
|
(152) |
Purchases of available-for-sale securities |
-0- |
|
(4,824) |
Sales and maturities of available-for-sale securities |
-0- |
|
3,359 |
Other, net |
(64) |
|
454 |
Net cash used for investing activities |
(13,628) |
|
(21,056) |
Cash Flows From Financing Activities: |
|
|
|
Proceeds from revolving credit facility |
61,050 |
|
-0- |
Payments on revolving credit facility |
(54,000) |
|
-0- |
Additional net change in credit facilities |
10,000 |
|
1,439 |
Payments on capital leases and long-term debt |
(12) |
|
(10) |
Dividends paid to Share Owners |
(5,495) |
|
(3,623) |
Repurchase of employee shares for tax withholding |
(230) |
|
(115) |
Net cash provided by (used for) financing activities |
11,313 |
|
(2,309) |
Effect of Exchange Rate Change on Cash and Cash Equivalents |
3,371 |
|
1,341 |
Net Decrease in Cash and Cash Equivalents |
(19,949) |
|
(25,824) |
Cash and Cash Equivalents at Beginning of Period |
65,342 |
|
75,932 |
Cash and Cash Equivalents at End of Period |
$ 45,393 |
|
$ 50,108 |
Supplemental Disclosure of Cash Flow Information |
|
|
|
Cash paid during the period for: |
|
|
|
Income taxes |
$ 535 |
|
$ 8,143 |
Interest expense |
$ 83 |
|
$ 71 |
See Notes to Condensed Consolidated Financial Statements |
|
|
|
5
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1.
Summary of Significant Accounting Policies
8
Note 2. Inventories
Inventory components of the Company were as follows:
|
December
31, |
|
June 30, |
(Amounts in Thousands) |
2010 |
|
2010 |
Finished Products |
$ 38,873 |
|
$ 33,177 |
Work-in-Process |
11,672 |
|
13,209 |
Raw Materials |
125,329 |
|
112,897 |
Total FIFO
Inventory |
$175,874 |
|
$159,283 |
LIFO Reserve |
(13,581) |
|
(12,877) |
Total Inventory |
$162,293 |
|
$146,406 |
For interim reporting, LIFO inventories are computed based on quantities
as of the end of the quarter and interim changes in price levels. Changes in quantities and
price levels are reflected in the interim financial statements in the period
in which they occur, except in cases where LIFO inventory liquidations are
expected to be reinstated by fiscal year end. During the three-month period ended
December 31, 2010, there were no LIFO inventory liquidations. During the
six-month period ended December 31, 2010, LIFO inventory liquidations increased net
income by, in thousands, $199. During the three and
six-month periods ended
December 31, 2009, LIFO inventory liquidations increased net
income by, in thousands, $371 and $967, respectively.
9
Note 3. Comprehensive Income
(Loss)
Comprehensive income (loss) includes all changes in equity during a period
except those resulting from investments by and distributions to Share
Owners. Comprehensive income (loss), shown net of tax if applicable, for the
three and six-month periods ended December 31, 2010 and 2009 was as follows:
|
Three Months Ended
December 31, 2010 |
|
Three Months Ended
December 31, 2009 |
(Amounts in Thousands) |
Pre-tax |
|
Tax |
|
Net of Tax |
|
Pre-tax |
|
Tax |
|
Net of Tax |
Net income |
|
|
|
|
$ 876 |
|
|
|
|
|
$ 1,906 |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
$ (2,157) |
|
$ 398 |
|
$ (1,759) |
|
$ (1,442) |
|
$ 353 |
|
$ (1,089) |
Postemployment severance actuarial change |
117 |
|
(47) |
|
70 |
|
516 |
|
(206) |
|
310 |
Other fair value changes: |
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
-0- |
|
-0- |
|
-0- |
|
(44) |
|
18 |
|
(26) |
Derivatives |
1,092 |
|
(268) |
|
824 |
|
1,169 |
|
(350) |
|
819 |
Reclassification to (earnings) loss: |
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
-0- |
|
-0- |
|
-0- |
|
(30) |
|
12 |
|
(18) |
Derivatives |
(568) |
|
169 |
|
(399) |
|
(60) |
|
26 |
|
(34) |
Amortization of prior service costs |
72 |
|
(30) |
|
42 |
|
72 |
|
(29) |
|
43 |
Amortization of actuarial change |
210 |
|
(83) |
|
127 |
|
146 |
|
(58) |
|
88 |
Other comprehensive income (loss) |
$ (1,234) |
|
$ 139 |
|
$ (1,095) |
|
$ 327 |
|
$ (234) |
|
$ 93 |
Total comprehensive income (loss) |
|
|
|
|
$ (219) |
|
|
|
|
|
$ 1,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
December 31, 2010 |
|
Six Months Ended
December 31, 2009 |
(Amounts in Thousands) |
Pre-tax |
|
Tax |
|
Net of Tax |
|
Pre-tax |
|
Tax |
|
Net of Tax |
Net income |
|
|
|
|
$ 1,332 |
|
|
|
|
|
$ 3,680 |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
$ 6,778 |
|
$(1,562) |
|
$ 5,216 |
|
$ 1,921 |
|
$ (432) |
|
$ 1,489 |
Postemployment severance actuarial change |
487 |
|
(195) |
|
292 |
|
(674) |
|
269 |
|
(405) |
Other fair value changes: |
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
-0- |
|
-0- |
|
-0- |
|
(44) |
|
18 |
|
(26) |
Derivatives |
1,176 |
|
(321) |
|
855 |
|
854 |
|
(140) |
|
714 |
Reclassification to (earnings) loss: |
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities |
-0- |
|
-0- |
|
-0- |
|
(56) |
|
22 |
|
(34) |
Derivatives |
(807) |
|
243 |
|
(564) |
|
1,385 |
|
(434) |
|
951 |
Amortization of prior service costs |
143 |
|
(58) |
|
85 |
|
143 |
|
(57) |
|
86 |
Amortization of actuarial change |
425 |
|
(169) |
|
256 |
|
298 |
|
(119) |
|
179 |
Other comprehensive income |
$ 8,202 |
|
$(2,062) |
|
$ 6,140 |
|
$ 3,827 |
|
$ (873) |
|
$ 2,954 |
Total comprehensive income |
|
|
|
|
$ 7,472 |
|
|
|
|
|
$ 6,634 |
10
Accumulated other comprehensive loss, net
of tax effects, was as follows: |
|
December 31, |
|
June 30, |
|
2010 |
|
2010 |
(Amounts in Thousands) |
|
|
|
Foreign currency translation adjustments |
$ 2,653 |
|
$ (2,563) |
Unrealized loss from: |
|
|
|
Derivatives |
(3,716) |
|
(4,007) |
Postemployment benefits: |
|
|
|
Prior service costs |
(722) |
|
(807) |
Net actuarial loss |
(1,850) |
|
(2,398) |
Accumulated other comprehensive loss |
$ (3,635) |
|
$ (9,775) |
Note 4. Segment Information
Management organizes the Company into segments based upon differences in
products and services offered in each segment. The Electronic Manufacturing
Services (EMS) segment provides
engineering and manufacturing services which utilize common production and
support capabilities to a variety of industries globally. The EMS segment
focuses on electronic assemblies that have high durability requirements and
are sold on a contract basis and produced to customers' specifications. The
EMS segment currently sells primarily to customers in the medical,
automotive, industrial controls, and public safety industries. The Furniture
segment provides furniture for the office and hospitality industries, sold
under the Company's family of brand names. Each segment's product line
offerings consist of similar products and services sold within various
industries. Intersegment sales were
insignificant.
11
Unallocated corporate assets include cash and cash equivalents, short-term
investments, and other assets not allocated to segments. Unallocated
corporate net income consists of income not
allocated to segments for purposes of evaluating segment performance and
includes income from corporate investments and other non-operational items.
The basis of segmentation and accounting policies of the segments are
consistent with those disclosed in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2010.
|
Three Months Ended |
|
Six Months Ended |
|
|
December 31 |
|
December 31 |
|
(Amounts in Thousands) |
2010 |
|
2009 |
|
2010 |
|
2009 |
|
Net Sales: |
|
|
|
|
|
|
|
|
Electronic Manufacturing
Services |
$181,439 |
|
$166,983 |
|
$359,306 |
|
$332,469 |
|
Furniture
|
129,193 |
|
108,140 |
|
246,002 |
|
217,306 |
|
Unallocated
Corporate and Eliminations |
-0- |
|
38
|
|
-0- |
|
45
|
|
Consolidated |
$310,632 |
|
$275,161 |
|
$605,308 |
|
$549,820 |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss): |
|
|
|
|
|
|
|
|
Electronic Manufacturing
Services |
$
(109)
|
|
$
2,665 |
|
$
(357)
|
|
$
2,446 |
|
Furniture
|
801 |
|
(996)
|
|
1,390 |
|
784
|
|
Unallocated
Corporate and Eliminations |
184 |
|
237
|
|
299 |
|
450
|
|
Consolidated |
$ 876 |
(1) |
$
1,906 |
(2) |
$ 1,332 |
(1) |
$
3,680 |
(2) |
(1) Net Income (Loss) included after-tax
restructuring charges, in thousands, of $222 and $292 in the three and six months ended
December 31, 2010, respectively. The EMS segment
and Unallocated Corporate and Eliminations recorded in the three months
ended December 31, 2010, in
thousands, $206 and $16, respectively, of after-tax restructuring charges.
The EMS segment and Unallocated Corporate and
Eliminations recorded in the six months ended December 31, 2010, in thousands, $265 and $27, respectively, of after-tax restructuring
charges. The Furniture segment did not record restructuring during the
three and six months ended December 31, 2010. See
Note 6 - Restructuring Expense
of Notes to Condensed Consolidated Financial Statements for further discussion.
(2) Net Income (Loss) included after-tax
restructuring charges, in thousands, of $184 and $476 in the three and six months ended
December 31, 2009, respectively. In the three months ended December 31,
2009, the EMS segment and Unallocated Corporate and Eliminations recorded, in
thousands, $229 and $14, respectively, of after-tax restructuring
charges, and the Furniture segment recorded, in thousands, $59, of after-tax
restructuring income. In the six months ended December 31, 2009, the EMS segment and Unallocated Corporate and Eliminations recorded, in thousands, $505 and $22, respectively, of after-tax restructuring
charges, and the Furniture segment recorded, in thousands, $51 of
after-tax restructuring income. See
Note 6 - Restructuring Expense
of Notes to Condensed Consolidated Financial Statements for further discussion.
Additionally, the EMS segment recorded for both the three and six months
ended December 31, 2009 after-tax income of $2.0 million resulting from
settlement proceeds related to an antitrust class action lawsuit of which
the Company was a member.
|
December 31, |
|
June 30, |
|
(Amounts in Thousands) |
2010 |
|
2010 |
|
Total Assets: |
|
|
|
|
Electronic
Manufacturing Services |
$400,030 |
|
$384,491 |
|
Furniture
|
195,557 |
|
182,396 |
|
Unallocated
Corporate and Eliminations |
50,508 |
|
69,864 |
|
Consolidated
|
$646,095 |
|
$636,751 |
|
12
Note
5. Commitments
and Contingent Liabilities
Standby letters of credit are issued to third-party suppliers, lessors,
and
insurance and financial institutions and can only be drawn upon in the event
of the Company's failure to pay its obligations to the beneficiary. As
of December 31, 2010, the Company had a maximum financial exposure
from unused standby letters of credit totaling $5.1 million. The Company is
not aware of circumstances that
would require it to perform under any of these arrangements and believes that
the resolution of any claims that might arise in the future, either
individually or in the aggregate, would not materially affect the Company's
financial statements. Accordingly, no liability has been recorded as
of December 31, 2010 with respect to the standby letters of
credit. The Company also enters into commercial letters of credit to
facilitate payment to vendors and from customers.
The Company estimates product warranty liability at the time of sale based
on historical repair or replacement cost trends in conjunction with the length of the
warranty offered. Management refines the warranty liability in cases where
specific warranty issues become known.
Changes in the product warranty accrual for the six months ended
December
31, 2010 and 2009 were as follows:
|
Six Months Ended
December 31 |
(Amounts in Thousands) |
2010 |
|
2009 |
Product Warranty Liability at the
beginning of the period |
$ 1,818 |
|
$ 2,176
|
Additions to warranty accrual (including
changes in estimates) |
1,253 |
|
180 |
Settlements made (in cash or in kind) |
(1,133) |
|
(504) |
Product Warranty Liability at the end of the period |
$
1,938
|
|
$ 1,852
|
13
Note 6. Restructuring Expense
14
Summary of All Plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
June 30,
2010 (2) |
|
Six Months Ended December 31, 2010 |
|
Accrued
December 31,
2010 (2) |
|
Total Charges
Incurred Since Plan Announcement (3) |
|
Total Expected
Plan Costs (3) |
(Amounts in Thousands) |
|
Amounts
Charged Cash |
|
Amounts
Charged
Non-cash |
|
Amounts Utilized/
Cash Paid |
|
Adjustments |
|
|
|
EMS Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2008 European Consolidation Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Transition and Other Employee Costs |
$9,181 |
|
$ 361 |
|
$ -0- |
|
$ (796) |
|
$ 288 |
(4) |
$ 9,034 |
|
$ 19,635 |
|
$19,855 |
Asset Write-downs |
-0- |
|
-0- |
|
-0- |
|
-0- |
|
-0- |
|
-0- |
|
522 |
|
522 |
Plant Closure and Other Exit Costs |
-0- |
|
79 |
|
-0- |
|
(79) |
|
-0- |
|
-0- |
|
736 |
|
965 |
Total EMS Segment |
$9,181 |
|
$ 440 |
|
$ -0- |
|
$ (875) |
|
$ 288 |
|
$ 9,034 |
|
$ 20,893 |
|
$21,342 |
Unallocated Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Restructuring Plan (1) |
-0- |
|
45 |
|
-0- |
|
(45) |
|
-0- |
|
-0- |
|
706 |
|
779 |
Consolidated Total of All Plans |
$9,181 |
|
$ 485 |
|
$ -0- |
|
$ (920) |
|
$ 288 |
|
$ 9,034 |
|
$ 21,599 |
|
$22,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other Restructuring Plan represents the Gaylord
restructuring plan initiated in fiscal year 2007. |
(2) Accrued restructuring at December 31, 2010 and June 30, 2010
was $9.0 million and $9.2 million, respectively. The balances
include $8.0 million and $2.5 million recorded in current
liabilities and $1.0 million and $6.7 million recorded in other
long-term liabilities at December 31, 2010 and June 30, 2010,
respectively.
|
(3) These columns include restructuring plans that were active
during the six months ended December 31, 2010, including the EMS
segment European Consolidation Plan initiated in fiscal year
2008 and the Gaylord restructuring plan initiated in fiscal year
2007. |
(4) The effect of changes in foreign currency exchange rates
within the EMS segment primarily due to revaluation of the
restructuring liability is included in this amount. |
15
Note
7. Fair Value
Note 8.
Derivative Instruments
Fair Values of Derivative Instruments on
the Condensed Consolidated Balance Sheets |
|
|
Asset Derivatives |
|
Liability Derivatives |
|
|
|
|
Fair Value As of |
|
|
|
Fair Value As of |
(Amounts in Thousands) |
|
Balance Sheet Location |
|
December 31,
2010 |
|
June 30,
2010 |
|
Balance Sheet Location |
|
December 31,
2010 |
|
June 30,
2010 |
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
Prepaid expenses and
other current assets |
$ 892 |
|
$ 525 |
|
Accrued expenses |
|
$ 10 |
|
$ 339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
Prepaid expenses and
other current assets |
126 |
|
1,698 |
|
Accrued expenses |
|
1,053 |
|
53 |
Stock warrants |
|
Other assets
(long-term) |
406 |
|
395 |
|
|
|
|
|
|
Total derivatives |
|
|
|
$ 1,424 |
|
$ 2,618 |
|
|
|
$ 1,063 |
|
$ 392 |
20
The Effect of Derivative Instruments on
Other Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31 |
|
Six Months Ended
December 31 |
(Amounts in Thousands) |
|
|
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
Amount of Pre-Tax Gain or (Loss) Recognized in Other
Comprehensive
Income (Loss) (OCI) on Derivatives (Effective Portion): |
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
|
$ 1,092 |
|
$ 1,169 |
|
$ 1,176 |
|
$ 854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Derivative Instruments on Condensed Consolidated
Statements of Income |
(Amounts in Thousands) |
|
|
|
|
|
Three Months Ended
December 31 |
|
Six Months Ended
December 31 |
Derivatives in Cash Flow Hedging Relationships |
|
Location of Gain or (Loss) |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated
OCI into Income (Effective Portion): |
|
|
|
|
Foreign exchange contracts |
|
Net Sales |
|
$ -0- |
|
$ 1 |
|
$ -0- |
|
$ 12 |
Foreign exchange contracts |
|
Cost of Sales |
|
473 |
|
(186) |
|
734 |
|
(1,402) |
Foreign exchange contracts |
|
Non-operating income |
|
95 |
|
244 |
|
73 |
|
(39) |
Total |
|
|
|
|
|
$ 568 |
|
$ 59 |
|
$ 807 |
|
$ (1,429) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated
OCI into Income (Ineffective Portion): |
|
|
|
|
Foreign exchange contracts |
|
Non-operating income |
|
$ -0- |
|
$ 1 |
|
$ -0- |
|
$ 44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Pre-Tax Gain or (Loss) Recognized in Income on
Derivatives: |
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
Non-operating income |
|
$ 256 |
|
$ 400 |
|
$ (2,163) |
|
$ (437) |
Stock warrants |
|
Non-operating income |
|
17 |
|
-0- |
|
10 |
|
-0- |
Total |
|
|
|
|
|
$ 273 |
|
$ 400 |
|
$ (2,153) |
|
$ (437) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivative Pre-Tax Gain (Loss) Recognized in Income |
|
|
|
$ 841 |
|
$ 460 |
|
$ (1,346) |
|
$ (1,822) |
21
Note 9. Short-Term
Investments
24
Note 10. Assets
Held for Sale
At both December 31, 2010 and June 30, 2010, a facility and land related to the
Gaylord, Michigan, exited operation within the EMS segment were
classified as held for sale and totaled, in thousands, $1,160. The assets
were reported as unallocated corporate assets for segment reporting
purposes.
Note 11. Postemployment Benefits
The Company maintains severance plans for all
domestic employees. These plans provide severance benefits to eligible employees
meeting the plans' qualifications, primarily involuntary termination without
cause. The components of net periodic postemployment benefit cost
applicable to the Company's severance plans were as follows:
|
Three Months Ended |
|
Six Months Ended |
|
December 31 |
|
December 31 |
(Amounts in
Thousands)
|
2010 |
|
2009 |
|
2010 |
|
2009 |
Service cost |
$ 242
|
|
$ 185
|
|
$ 484
|
|
$ 378
|
Interest cost |
69
|
|
104
|
|
138
|
|
212
|
Amortization of prior service costs |
72
|
|
72
|
|
143
|
|
143
|
Amortization of actuarial change |
210
|
|
146
|
|
425
|
|
298
|
Net periodic benefit cost |
$
593
|
|
$ 507
| |
$ 1,190
|
|
$ 1,031
|
The benefit cost in the above table includes only normal recurring levels
of severance activity, as estimated using an actuarial method. Unusual
or non-recurring severance actions, such as those disclosed in
Note 6 - Restructuring Expense
of Notes to Condensed Consolidated Financial Statements, are not estimable
using actuarial methods and are expensed in accordance with the applicable
U.S. GAAP.
25
Note 12. Stock Compensation Plan
During fiscal year 2011, the following stock
compensation was awarded to officers, key employees, and non-employee
directors. All awards were granted under the 2003 Stock Option and
Incentive Plan. For more information on similar unrestricted shares and performance share awards, refer to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2010.
Performance Shares |
|
Quarter Awarded |
|
Shares |
|
Grant Date Fair Value
(4) |
Annual Performance Shares - Class A
(1) |
|
1st Quarter |
|
235,710 |
|
$ 5.09 |
Long-Term Performance Shares - Class A
(2) |
|
1st Quarter |
|
483,318 |
|
$ 5.09 |
Unrestricted Shares |
|
Quarter Awarded |
|
Shares |
|
Grant Date Fair Value
(4) |
Unrestricted Shares - Class A
(3) |
|
1st Quarter |
|
1,000 |
|
$ 5.27 |
Unrestricted Shares - Class B
(3) |
|
1st Quarter |
|
500 |
|
$ 5.27 |
Unrestricted Shares - Class B
(3) |
|
2nd Quarter |
|
1,000 |
|
$ 6.72 |
Unrestricted Shares (Director Compensation) - Class B
(3) |
|
2nd Quarter |
|
25,477 |
|
$ 6.32 |
(1) |
Annual performance shares were awarded to officers. Payouts
will be based upon the fiscal year 2011 cash incentive payout percentages
calculated under the Company's Profit Sharing Incentive
Bonus Plan. The
number of shares issued will be less than the maximum potential
shares issuable if the maximum cash incentive payout percentages
are not achieved. Annual performance shares vest after one year.
|
(2) |
Long-term performance shares were awarded to officers and
other key employees. Payouts will be based upon the cash
incentive payout percentages calculated under the Company's Profit Sharing Incentive Bonus Plan. Long-term performance
shares are based on five successive annual performance
measurement periods, with each annual tranche having a grant
date when economic profit tiers are established at the beginning
of the applicable fiscal year and a vesting date at the end of
each annual period. The number of shares issued will be less than
the maximum potential shares issuable if the maximum cash
incentive payout percentages are not achieved. |
(3) |
Unrestricted shares were awarded to
non-employee members of the Board of Directors as compensation
for director's fees, as a result of directors' elections to
receive unrestricted shares in lieu of cash payment. Director's
fees are expensed over the period that directors earn the
compensation. Other unrestricted shares were awarded to officers
as consideration for their service to the Company. Unrestricted
shares do not have vesting periods, holding periods,
restrictions on sale, or other restrictions. |
(4) |
The grant
date fair value of performance shares is based on the stock
price at the date of the award, reduced by the present value of
dividends normally paid over the vesting period which are not
payable on outstanding performance share awards. The grant date
fair value shown for long-term performance shares is applicable
to the first tranche only. The grant date fair value of the
unrestricted shares was based on the stock price at the date of
the award. |
26
Note 13.
Variable Interest Entities
The Company's involvement with variable interest entities (VIEs) is
limited to situations in which the Company is not the primary
beneficiary as the Company lacks the power to direct the activities that
most significantly impact the VIE's economic performance. Thus,
consolidation is not required.
The Company is involved with VIEs consisting of an investment in
convertible debt securities and stock warrants of a privately-held
company and a note
receivable related to the sale of an Indiana facility. For information
related to the Company's investment in the privately-held company, see
Note 9 - Short-Term
Investments and Note 8 -
Derivative Instruments of Notes to Condensed Consolidated Financial
Statements. The carrying value of the note
receivable is $1.3 million,
with no reserve, as of December 31, 2010, and is recorded on the
Receivables
line of the Company's Condensed Consolidated Balance Sheet. The Company has no
material exposure related to the VIEs in addition to the items recorded
on its Condensed Consolidated Balance Sheet.
The Company has no obligation to provide additional funding to the
VIEs, and thus its risk of loss related to the VIEs is limited to the
original funding amount. The Company did not provide any additional
financial support to the VIEs during the quarter ended December 31,
2010.
Note 14. Credit Quality and Allowance for Credit Losses of Notes
Receivable
The Company monitors credit quality and associated risks of notes
receivable on an individual basis based on criteria such as financial
stability of the party and collection experience in conjunction with general
economic and market conditions. The Company holds collateral for the note
receivable from the sale of an Indiana facility thereby mitigating the risk
of loss.
|
|
As of December 31, 2010 |
(Amounts in Thousands) |
|
Unpaid Balance |
|
Related Allowance |
|
Receivable Net of Allowance |
Note Receivable from Sale of Indiana Facility |
|
$ 1,300 |
|
$ -0- |
|
$ 1,300 |
Other Notes Receivable |
|
84 |
|
84 |
|
-0- |
Total |
|
$ 1,384 |
|
$ 84 |
|
$ 1,300 |
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Business OverviewKimball International, Inc. provides a
variety of products from its two business segments: the Electronic
Manufacturing Services (EMS) segment and the Furniture segment. The EMS
segment provides engineering and manufacturing services which utilize
common production and support capabilities globally to the medical,
automotive, industrial control, and public safety industries. The
Furniture segment provides furniture for the office and hospitality
industries, sold under the Company's family of brand names.
Overall market conditions in the EMS industry
continue to be favorable. The EMS industry sales projections (by IDC,
InForum, and New Venture Research) show average forecasted growth for
calendar year 2011 of 10.6% compared to calendar year 2010. In addition,
the Semiconductor Industry Association (SIA) reported that semiconductor
sales are projected to grow 6.0% in calendar year 2011, and although the
Company does not directly serve this market, it may be indicative of
increased end market demand for products utilizing electronic
components.
27
The Company continues its strategy of
diversification within the EMS segment customer base as it currently
focuses on the four key vertical markets of medical, automotive,
industrial control, and public safety. While automotive activity was
projected to moderate in fiscal year 2011 as the impact of the
government stimulus programs ended, industry growth above previous
expectations has occurred, in part due to the continually increasing
number of electronic components in the design of automobiles. Demand in
the medical market has remained relatively stable, but the Company has
seen some signs of growth. The industrial control market is also showing
signs of stability, after benefiting from spending targeted at energy
savings technologies, and the public safety market is likewise stable.
Sales to customers in the medical industry are the largest portion of
the Company's EMS segment with sales to customers in the automotive
industry being the second largest of the four vertical markets. The
Company's sales to customers in the automotive industry are diversified
among more than ten domestic and foreign customers and represented
approximately one-fourth of the EMS segment's net sales for the second
quarter of fiscal year 2011. The EMS segment December 31, 2010 open
orders exceeded the December 31, 2009 level by 15%.
The office furniture and hospitality furniture
markets are showing signs of improvement. As of November 2010, the Business and
Institutional Furniture Manufacturer Association (BIFMA) projected a 10%
year-over-year increase in the office furniture industry for calendar
year 2011 compared to a projected 6% increase in calendar year 2010 and a 29% decrease
in calendar year 2009. While the Company's mid-market brand has fared
better than its contract office furniture brand due to the project
nature of the contract market and the changing U.S. consumption
patterns, the Company cannot predict future overall office furniture
order trends at this time due to the short lead time of orders and the
uncertainty that still exists in this market. In addition, the hotel
industry forecasts (reported by Smith Travel Research and
PricewaterhouseCoopers LLP) project occupancy rates to increase 1% to 3%
in calendar year 2011 after an approximate 5% increase in calendar year
2010 and a 9% industry decline in calendar year 2009 and project revenue
per available room to increase 5% to 7% for calendar year 2011 after an
approximate 5% increase in calendar year 2010 and a 17% industry decline
in calendar year 2009. Furniture segment open orders as of December 31,
2010 were 30% higher than the December 31, 2009 level.
Competitive pricing pressures within the EMS
segment and on many projects within the Furniture segment continue to
put pressure on the Company's operating margins.
The Company made great strides over the last two
years in reducing its overall cost structure and thus lowering its
breakeven sales point. In addition, a long-standing component of the
Company's profit sharing incentive bonus plan is that it is linked to
the performance of the Company which automatically lowers total
compensation expense when profits are down and likewise increases total
compensation expense when profits are up. The focus on cost control
continues. At the same time, the Company has continued making prudent
investments in product development, technology, and marketing and
business development initiatives to drive profitable growth. The Company
also continues to closely monitor market changes and its liquidity in
order to proactively adjust its operating costs, discretionary capital
spending, and dividend levels as needed.
The Company continued to maintain a strong balance
sheet as of the end of the second quarter of fiscal year 2011, which
included minimal long-term debt of $0.3 million and Share Owners' equity
of $381.7 million. The Company's short-term liquidity available,
represented as cash and cash equivalents plus the unused amount of the
Company's revolving credit facility, was $123.2 million at December 31,
2010.
28
In addition to the above risks related to the
current market conditions, management currently considers the following
events, trends, and uncertainties to be most important to understanding
the Company's financial condition and operating performance:
- The Company will continue its focus on
preserving cash and minimizing debt. Managing working
capital in conjunction with fluctuating demand levels is
key. In addition, the Company plans to minimize capital
expenditures where appropriate but has been and will
continue to invest in capital expenditures for projects that
would enhance the Company's capabilities and diversification
while providing an opportunity for growth and improved
profitability as the economy and the Company's markets
continue to recover.
|
- Commodity price pressure is expected
to continue in the near-term. Mitigating the impact of
commodity and fuel prices continues to be an area of focus
within the Company.
|
- Management continues to evaluate the
healthcare reform legislation that was signed into law in
March 2010 to understand the full impact on the Company.
This legislation is expected to increase the Company's
healthcare and related administrative expenses.
|
- Globalization continues to reshape not
only the industries in which the Company operates but also
its key customers and competitors.
|
- As demand within the EMS industry
increases, the availability of components used in products
manufactured by the Company continues to be a
concern. Suppliers have not increased their production as
rapidly as demand has increased, and component shortages are
occurring. While the shortage situation appears to be
improving, if shortages of components continue or worsen,
the Company's production and shipment schedules could be
negatively impacted. In addition, pricing premiums
associated with part shortages have impacted the Company in
fiscal year 2011 and remain a concern.
|
- The nature of the EMS industry is such
that the start-up of new programs to replace departing
customers or expiring programs occurs frequently. The
Company's sales to Bayer AG are expected to begin to decline
in the fourth quarter of fiscal year 2011 as the Company's
manufacturing contract with Bayer AG reaches end-of-life.
Margins on the Bayer AG product are generally lower than the
Company's other EMS products. The success of the Company's
EMS segment is dependent on the successful replacement of
such customers or programs. Such changes usually occur
gradually over time as old programs phase out of production
while newer programs ramp up. While the margins vary
depending on the size of the program and the vertical market
being served, replacement programs generally require more
competitive pricing. Thus the Company must strive to
identify cost savings opportunities to offset the lower
pricing. Additional information on the risks related to
contract customers is contained in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2010.
|
- The increasingly competitive
marketplace mandates that the Company continually
re-evaluate its business models.
|
- The Company's employees throughout its
business operations are an integral part of the Company's
ability to compete successfully, and the stability of its
management team is critical to long-term Share Owner value.
The Company's career development and succession planning
processes help to maintain stability in management.
|
- To support growth and diversification
efforts, the Company focuses on both organic growth and
potential acquisition targets. Acquisitions allow rapid
diversification of both customers and industries served.
|
29
Certain preceding statements could be considered
forward-looking statements under the Private Securities Litigation
Reform Act of 1995 and are subject to certain risks and uncertainties
including, but not limited to, a significant change in economic
conditions, loss of key customers or suppliers, or similar unforeseen
events.
Financial Overview - Consolidated
Second quarter fiscal year 2011 consolidated net sales were $310.6
million compared to second quarter fiscal year 2010 net sales of $275.2
million, a 13% increase, driven by net sales increases in the Furniture
and EMS segments of 19% and 9%, respectively. Second quarter fiscal year
2011 net income was $0.9 million, or $0.02 per Class B diluted share,
inclusive of after-tax restructuring charges of $0.2 million, or $0.01
per Class B diluted share, compared to net income for the second quarter
of fiscal year 2010 of $1.9 million, or $0.05 per Class B diluted share,
inclusive of $2.0 million after-tax income, or $0.05 per Class B diluted
share, resulting from settlement proceeds related to an antitrust class
action lawsuit of which the Company was a class member and after-tax
restructuring charges of $0.2 million, or less than $0.01 per Class B
diluted share.
Net sales for the six-month period ended December 31, 2010 of $605.3
million were up 10% from net sales of $549.8 million for the same period
of the prior fiscal year due to a 13% net sales increase in the
Furniture segment and an 8% net sales increase in the EMS segment. Net
income for the six-month period ended December 31, 2010 totaled $1.3
million, or $0.04 per Class B diluted share, inclusive of $0.3 million,
or $0.01 per Class B diluted share, of after-tax restructuring charges.
Net income for the six-month period ended December 31, 2009 totaled $3.7
million, or $0.10 per Class B diluted share, inclusive of $0.5 million,
or $0.01 per Class B diluted share, of after-tax restructuring charges
and $2.0 million after-tax income, or $0.05 per Class B diluted share,
resulting from the settlement proceeds related to the antitrust class
action lawsuit.
Consolidated gross profit as a percent of net sales was 16.0% for the
second quarter of both fiscal year 2011 and fiscal year 2010 as lower
gross profit within the Furniture segment was largely offset on a
consolidated basis by a shift in sales mix (as depicted in the table
below) toward the Furniture segment which operates at a higher gross
profit percentage than the EMS segment. For the year-to-date period of
fiscal year 2011, gross profit as a percent of net sales declined to
16.0% compared to 16.6% for the year-to-date period of fiscal year 2010
as lower gross profit within the Furniture segment was only partially
offset on a consolidated basis by a slight shift in sales mix (as
depicted in the table below) toward the Furniture segment. Gross profit
is discussed in more detail in the following segment discussions.
|
Three Months Ended |
Six Months Ended |
|
December 31 |
December 31 |
|
|
|
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
EMS segment net sales as % of total |
58% |
61% |
59% |
60% |
Furniture segment net sales as % of total |
42% |
39% |
41% |
40% |
30
Second quarter fiscal year 2011 consolidated
selling and administrative expenses increased 5.1% in absolute dollars
but decreased as a percent of net sales compared to the second quarter
of fiscal year 2010, as sales volumes increased at a quicker rate than
the selling and administrative expenses. The increase in absolute
dollars was primarily due to higher profit-based incentive compensation
costs and higher commissions resulting from the higher Furniture segment
net sales. In addition, the Company recorded $1.1 million expense within
selling and administrative expenses due to an increase in its
Supplemental Employee Retirement Plan (SERP) liability resulting from
the normal revaluation of the liability to fair value in the second
quarter of fiscal year 2011 compared to $0.5 million expense which was
recorded in the second quarter of fiscal year 2010. As the general
equity markets improved, the value of the SERP investments increased,
causing additional selling and administrative expense related to the
SERP liability. The SERP expense recorded in selling and administrative
expenses was exactly offset by an increase in SERP investment income
which was recorded in Other Income (Expense) as an investment gain;
therefore, there was no effect on net earnings.
Consolidated selling and administrative expenses
for the first half of fiscal year 2011 also increased in absolute
dollars but decreased as a percent of net sales compared to the first
half of fiscal year 2010, as sales volumes increased at a quicker rate
than the selling and administrative expenses. The increase of 3.9% in
absolute dollars for the first half of fiscal year 2011 compared to the
first half of fiscal year 2010 was primarily due to increased employee
benefits expense, higher profit-based incentive compensation costs, and
higher commissions resulting from the higher Furniture segment net
sales.
Other General Income in the second quarter and
first half of fiscal year 2010 included $3.3 million of pre-tax income
recorded in the EMS segment resulting from settlement proceeds related
to an antitrust class action lawsuit of which the Company was a class
member. The Company did not have any Other General Income in the first
half of fiscal year 2011.
The Company recorded other income of $0.2 million and $1.0 million
during the three and six months ended December 31, 2010, respectively,
compared to other income of $1.0 million and $3.0 million recorded
during the three and six months ended December 31, 2009, respectively.
The decline in other income for the second quarter and year-to-date
periods of fiscal year 2011 compared to the same periods of fiscal year
2010 was primarily related to foreign currency exchange movement that
impacts the Company's EMS segment which was partially offset by the other
income related to the appreciation of the SERP investments.
The fiscal year 2011 year-to-date effective tax rate
was (50.0)% compared to the effective tax rate for the same period of
fiscal year 2010 of 10.7%. Relatively low pre-tax income coupled with
favorable net tax accrual adjustments of $0.7 million, primarily related
to the research and development tax credit and a foreign deferred tax
valuation allowance adjustment, drove the negative effective tax rate in
the first half of fiscal year 2011. The year-to-date period of fiscal
year 2010 included $1.1 million in favorable tax accrual adjustments resulting
from the research and development credit and a foreign deferred tax
valuation allowance adjustment.
Comparing the balance sheet as of December 31, 2010 to June 30, 2010,
the Company's inventory balance increased primarily to support
production ramp ups at select EMS facilities and to support the transfer
of production to the new EMS facility in Poland from the other EMS
facilities in Europe. The Company's borrowings under credit facilities
was $17.1 million at December 31, 2010 as the Company borrowed funds to
support short-term U.S. dollar working capital needs. The Company had no
borrowings on the credit facilities outstanding at June 30, 2010.
31
Electronic Manufacturing Services Segment
EMS segment results were as follows:
|
At or for the
Three Months Ended |
|
For the
Six Months Ended |
|
|
December 31 |
|
December 31 |
|
|
|
|
|
|
|
2010 |
|
2009 |
% Change |
2010 |
|
2009 |
% Change |
(Amounts in Millions) |
|
|
|
|
|
|
|
|
Net Sales |
$ 181.4 |
|
$ 167.0 |
9% |
$ 359.3 |
|
$ 332.5 |
8% |
Operating
Income |
$ 0.2 |
|
$ 3.1 |
(94)% |
$ 0.4 |
|
$ 2.3 |
(85)% |
Net Income
(Loss) |
$ (0.1) |
|
$ 2.7 |
(104)% |
$ (0.4) |
|
$ 2.4 |
(115)% |
Open Orders |
$ 197.2 |
|
$ 170.9 |
15% |
|
|
|
|
Second quarter and year-to-date fiscal year 2011
EMS segment net sales to customers in the medical, industrial control,
and public safety industries increased compared to the second quarter
and year-to-date period of fiscal year 2010 which more than offset a
decrease in net sales to customers in the automotive industry. While
open orders were up 15% as of December 31, 2010 compared to December 31,
2009, open orders at a point in time may not be indicative of future
sales trends due to the contract nature of the EMS segment's business.
Gross profit as a percent of net sales in the EMS
segment for the second quarter and first half of fiscal year 2011
remained flat when compared to the second quarter and first half of
fiscal year 2010. The benefit from fixed cost leverage associated with
the increased sales, benefit from a sales mix shift toward higher margin
product, lower depreciation expense, and improved labor efficiencies at
select units were offset by anticipated start-up costs and tighter
margins associated with select new customer programs, higher component
costs related to the rapid ramp up of new customer programs, and
inefficiencies related to the European restructuring activities.
EMS segment selling and administrative expenses in
the second quarter and first half of fiscal year 2011 compared to the
second quarter and first half of fiscal year 2010 increased in absolute
dollars in-line with the higher sales volumes and remained flat as a
percent of net sales. The increase in selling and administrative
expenses was primarily related to an increase in salary expense to
support sales growth and increased employee benefit expenses. In
addition, the second quarter of fiscal year 2010 was aided by a
favorable adjustment to bad debt reserves.
As the Company continues to execute its plan to
expand its European automotive electronics capabilities and to establish
a European Medical Center of Expertise near Poznan, Poland, the
consolidation of its EMS facilities has a final completion target of
mid-fiscal year 2012. The consolidation is expected to improve the
Company's margins in the very competitive EMS market. While the
restructuring charges recorded during the second quarter and first half
of fiscal year 2011 were immaterial, the EMS segment is experiencing
inefficiencies related to the consolidation.
EMS segment Other General Income in the second
quarter of the prior fiscal year included $3.3 million of pre-tax
income, or $2.0 million after-tax, resulting from settlement proceeds
related to the antitrust class action lawsuit.
32
EMS segment Other Income/Expense for the second
quarter and first half of fiscal year 2011 totaled expense of $1.0
million and $1.8 million, respectively, compared to other income of $0.2
million and $0.4 million recorded during the second quarter and first
half of fiscal year 2010, respectively. The unfavorable variance in
other income/expense for the second quarter and year-to-date periods of fiscal
year 2011 compared to the same periods of fiscal year 2010 was primarily
related to foreign currency exchange movement.
As a percent of net sales, operating income was
0.1% for both the second quarter and year-to-date period of fiscal year
2011 and 1.9% and 0.7% for the second quarter and year-to-date period of
fiscal year 2010, respectively.
The EMS segment recognized the benefit of $0.4 million and $0.5
million favorable net tax accrual adjustments in the second quarter and
first half of fiscal year 2011, respectively. The EMS segment recorded
$0.7 million of benefit in the second quarter and first half of fiscal
year 2010 resulting from favorable net tax accrual adjustments.
Included in this segment are a significant amount of sales to Bayer
AG affiliates which accounted for the following portions of consolidated
net sales and EMS segment net sales:
|
Three Months Ended |
Six Months Ended |
|
December 31 |
December 31 |
|
|
|
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Bayer AG affiliated sales as a percent of
consolidated net sales |
12% |
14% |
13% |
15% |
Bayer AG affiliated sales as a percent of
EMS segment net sales |
21% |
23% |
22% |
25% |
The Company's sales to Bayer AG are expected to
begin to decline in the fourth quarter of fiscal year 2011 as the
Company's manufacturing contract with Bayer AG reaches end-of-life.
Margins on the Bayer AG product are generally lower than the Company's
other EMS products. The nature of the electronic manufacturing services
industry is such that the start-up of new customers and new programs to
replace expiring programs occurs frequently. New customer and program
start-ups generally cause losses early in the life of a program, which
are generally recovered as the program becomes established and matures.
This segment continues to experience margin pressures related to an
overall excess capacity position in the electronics subcontracting
services market.
Risk factors within the EMS segment include, but
are not limited to, general economic and market conditions, customer
order delays, increased globalization, foreign currency exchange rate
fluctuations, rapid technological changes, component availability,
supplier stability, the contract nature of this industry, unexpected
integration issues with acquisitions, the concentration of sales to
large customers, and the potential for customers to choose to in-source
a greater portion of their electronics manufacturing. The continuing
success of this segment is dependent upon its ability to replace
expiring customers/programs with new customers/programs. Additional risk
factors that could have an effect on the Company's performance are
contained in the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 2010.
33
Furniture Segment
Furniture segment results were as follows:
|
At or for the
Three Months Ended |
|
For the
Six Months Ended |
|
|
December 31 |
|
December 31 |
|
|
|
|
|
|
|
2010 |
|
2009 |
% Change |
2010 |
|
2009 |
% Change |
(Amounts in Millions) |
|
|
|
|
|
|
|
|
Net Sales |
$ 129.2 |
|
$ 108.1 |
19% |
$ 246.0 |
|
$ 217.3 |
13% |
Operating
Income (Loss) |
$ 1.3 |
|
$ (2.0) |
164% |
$ 2.3 |
|
$ 1.0 |
142% |
Net Income
(Loss) |
$ 0.8 |
|
$ (1.0) |
180% |
$ 1.4 |
|
$ 0.8 |
77% |
Open Orders |
$ 80.0 |
|
$ 61.4 |
30% |
|
|
|
|
The second quarter fiscal year 2011 net sales
increase in the Furniture segment compared to the second quarter of
fiscal year 2010 resulted from increased net sales of both office
furniture and hospitality furniture. The Furniture segment net sales
increase for the first half of fiscal year 2011 compared to the first
half of fiscal year 2010 resulted from increased net sales of office
furniture which more than offset decreased net sales of hospitality
furniture. The increase in office furniture sales during both the second
quarter and first half of fiscal year 2011 was primarily due to
increased sales volumes which more than offset the impact of higher
discounting net of price increases. Net sales of newly introduced office
furniture products which have been sold for less than twelve months
approximated $4.2 million and $9.8 million for the second quarter and
first half of fiscal year 2011, respectively. Open orders of furniture
products at December 31, 2010 increased 30% when compared to the open
orders level as of December 31, 2009 as open orders for both office
furniture and hospitality furniture increased. Open orders at a point in
time may not be indicative of future sales trends.
Second quarter fiscal year 2011 Furniture segment
gross profit as a percent of net sales declined 1.4 percentage points
from the second quarter of fiscal year 2010. Items contributing to the
decline in gross profit as a percent of net sales included increased
discounting resulting from competitive pricing pressures and higher
employee benefit costs. In addition, the unfavorable impact of an
increase in LIFO inventory reserves resulting primarily from higher LIFO
inventory levels in the second quarter of fiscal year 2011 compared to
the favorable impact of a LIFO inventory reserve decrease in the second
quarter of fiscal year 2010 contributed to the gross profit as a percent
of net sales decline. The gross profit percentage decline was partially
offset by price increases on select product and the favorable impact of
the higher sales volumes on the gross profit.
Year-to-date fiscal 2011 Furniture segment gross
profit as a percent of net sales declined 2.4 percentage points when
compared to the same period of fiscal year 2010. Items contributing to
the decreased year-to-date gross profit as a percent of net sales
included increased discounting resulting from competitive pricing
pressures and higher employee benefit costs. In addition, the prior
year-to-date period was favorably impacted by a decrease in LIFO
inventory reserve in the year-to-date period of fiscal year 2010 which
contributed to the gross profit as a percent of net sales decline. The
gross profit percentage decline was partially offset by price increases
on select product, a sales mix shift to higher margin product, and the
favorable impact of the higher sales volumes on the gross profit.
34
Second quarter and year-to-date fiscal year 2011
Furniture segment selling and administrative expenses increased in
absolute dollars but as a percent of net sales decreased 4.3 and 2.9
percentage points, respectively, primarily due to the higher sales
volumes when compared to the second quarter and year-to-date period of
fiscal year 2010. Both the second quarter and year-to-date periods were
impacted by higher profit-based incentive compensation costs and higher
commissions resulting from the higher net sales which were partially
offset by lower selling and administrative salary expense.
As a percent of net sales, operating income (loss)
was 1.0% for both the second quarter and year-to-date periods of fiscal
year 2011 and (1.8)% and 0.4% for the second quarter and year-to-date
period of fiscal year 2010, respectively.
Risk factors within this segment include, but are
not limited to, general economic and market conditions, increased global
competition, financial stability of customers, supply chain cost
pressures, raw material availability, and relationships with strategic
customers and product distributors. Additional risk factors that could
have an effect on the Company's performance are contained in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30,
2010.
Liquidity and Capital Resources
Working capital at December 31, 2010 was $181.2
million compared to working capital of $180.0 million at June 30, 2010.
The current ratio was 1.7 at December 31, 2010 and 1.8 at June 30, 2010.
The Company's internal measure of accounts
receivable performance, also referred to as Days Sales Outstanding
(DSO), for the first half of fiscal year 2011 of 47.0 days approximated
the 47.4 days for the first half of fiscal year 2010. The Company
defines DSO as the average of monthly accounts and notes receivable
divided by an average day's net sales. The Company's Production Days
Supply on Hand (PDSOH) of inventory measure for the first half of fiscal
year 2011 increased to 67.1 days from 63.2 days for the first half of
fiscal year 2010. The increased PDSOH was primarily due to higher
inventory levels associated with the ramp up of certain programs, the
transfer of production among the Company's EMS segment facilities, and
customer-requested shipping delays during the fiscal 2011 year-to-date
period. The Company defines PDSOH as the average of the monthly gross
inventory divided by an average day's cost of sales.
The Company's short-term liquidity available,
represented as cash and cash equivalents plus the unused amount of the
Company's revolving credit facility, totaled $123.2 million at December
31, 2010 compared to $161.1 million at June 30, 2010.
35
The Company's net cash position from an aggregate
of cash and cash equivalents less short-term borrowings under credit
facilities decreased from $65.3 million at June 30, 2010 to $28.3
million at December 31, 2010. Operating activities used $21.0 million of
cash flow in the first half of fiscal year 2011 compared to the $3.8
million of cash used by operating activities in the first half of fiscal
year 2010. The cash outflow in the first half of fiscal year 2011 was
primarily driven by an increase in inventory in the EMS segment due to
higher inventory levels associated with the ramp up of certain programs
and the transfer of production among the Company's EMS segment
facilities. In addition, during the first half of fiscal year 2011, the
Company reinvested $14.3 million into capital investments for the
future, primarily for manufacturing equipment in the EMS segment. The
Company also paid $5.5 million in dividends, which was higher than dividends paid in the first half of fiscal year 2010 due to a
dividend payment occurring on December 31, 2010 rather than January as
in the prior year. Consistent with the Company's historical dividend
policy, the Company's Board of Directors will evaluate the appropriate
dividend payment on a quarterly basis. During fiscal year 2011, the
Company expects to minimize capital expenditures where appropriate but
will continue to invest in capital expenditures prudently, particularly
for projects that would enhance the Company's capabilities and
diversification while providing an opportunity for growth and improved
profitability as the economy and the Company's markets continue to
recover. At December 31, 2010, the Company had $17.1 million of
short-term borrowings outstanding under its $100 million credit facility
and no borrowings outstanding under the Company's several smaller
foreign credit facilities. The borrowings were in support of short-term
U.S. dollar working capital needs. At June 30, 2010, the Company had no
borrowings outstanding.
At December 31, 2010, the Company had $5.1 million
in letters of credit against the $100 million credit facility. Total
availability to borrow under the $100 million credit facility was $77.8
million at December 31, 2010.
The Company maintains the $100 million credit
facility with an expiration date in April 2013 that allows for both
issuances of letters of credit and cash borrowings. The $100 million
credit facility provides an option to increase the amount available for
borrowing to $150 million at the Company's request, subject to the
consent of the participating banks. The $100 million credit facility
requires the Company to comply with certain debt covenants, the most
significant of which are the interest coverage ratio and minimum net
worth. The Company was in compliance with the debt covenants at December
31, 2010.
The table below compares the actual net worth and
interest coverage ratio with the limits specified in the credit
agreement.
Covenant |
|
At or For the Period Ended December 31, 2010 |
|
Limit As Specified in Credit Agreement |
|
Excess |
Minimum Net Worth |
|
$381,668,000 |
|
$362,000,000 |
|
$19,668,000 |
Interest Coverage Ratio |
|
43.4 |
|
3.0 |
|
40.4 |
The Interest Coverage Ratio is calculated on a
rolling four-quarter basis as defined in the credit agreement.
In addition to the $100 million credit facility,
the Company can opt to utilize foreign credit facilities which are
available to satisfy short-term cash needs at that specific location
rather than funding from intercompany sources. The Company maintains a
foreign credit facility for its EMS segment operation in Thailand which
is backed by the $100 million revolving credit facility. The Company has
a credit facility for its EMS segment operation in Poland, which allows
for multi-currency borrowings up to 6 million Euro equivalent
(approximately $8.0 million U.S. dollars at December 31, 2010 exchange
rates). These foreign credit facilities can be cancelled at any time by
either the bank or the Company.
36
The Company believes its principal sources of
liquidity from available funds on hand, cash generated from operations,
and the availability of borrowing under the Company's credit facilities
will be sufficient for fiscal year 2011 and the foreseeable future. One
of the Company's sources of funds has been its ability to generate cash
from operations to meet its liquidity obligations, which during the
first half of fiscal year 2011 was hampered by the ramp up in inventory
balances, and could be adversely affected in the future by factors such
as general economic and market conditions, a decline in demand for the
Company's products, loss of key contract customers, the ability of the
Company to generate profits, and other unforeseen circumstances. In
particular, should demand for the Company's products decrease
significantly over the next 12 months, the
available cash provided by operations could be adversely impacted.
Another source of funds is the Company's credit facilities. The $100
million credit facility is contingent on complying with certain debt
covenants.
The preceding statements are forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
Certain factors could cause actual results to differ materially from
forward-looking statements.
Fair Value
During the second quarter of fiscal year 2011, no
financial assets were affected by a lack of market liquidity. For level
1 financial assets, readily available market pricing was used to value
the financial instruments. The Company's foreign currency derivatives,
which were classified as level 2 assets/liabilities, were independently
valued using a financial risk management software package using
observable market inputs such as forward interest rate yield curves,
current spot rates, and time value calculations. To verify the
reasonableness of the independently determined fair values, these
derivative fair values were compared to fair values calculated by the
counterparty banks. The Company's own credit risk and counterparty
credit risk had an immaterial impact on the valuation of the foreign
currency derivatives.
The Company invested in convertible promissory
notes and stock warrants of a privately-held company during fiscal year
2010. The convertible promissory notes, classified as available-for-sale
debt securities, were valued using a recurring market-based method which
approximates fair value by using the amortized cost basis of the
promissory notes, with the discount amortized to interest income over
the term. The stock warrants, classified as derivative instruments, were
valued on a recurring basis using a market-based method which utilizes
the Black-Scholes valuation model. The fair value measurements for the
convertible promissory notes and stock warrants were calculated using
unobservable inputs and were classified as level 3 financial assets.
See
Note 7 - Fair Value of Notes to Condensed Consolidated Financial
Statements for additional information.
37
Contractual Obligations
There have been no material changes outside the
ordinary course of business to the Company's summary of contractual
obligations under the caption, "Contractual Obligations" in Item 7
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" of the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2010.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements other than standby
letters of credit and operating leases entered into in the normal course
of business. These arrangements do not have a material current effect
and are not reasonably likely to have a material future effect on the
Company's financial condition, results of operations, liquidity, capital
expenditures, or capital resources. See
Note 5 - Commitments and Contingent Liabilities of Notes to
Condensed Consolidated Financial Statements for more information on
standby letters of credit. The Company does not have material exposures
to trading activities of non-exchange traded contracts.
The preceding statements are forward-looking statements under the
Private Securities Litigation Reform Act of 1995. Certain factors could
cause actual results to differ materially from forward-looking
statements.
Critical Accounting Policies
The Company's consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America. These principles require the use of estimates and
assumptions that affect amounts reported and disclosed in the
consolidated financial statements and related notes. Actual results
could differ from these estimates and assumptions. Management uses its
best judgment in the assumptions used to value these estimates, which
are based on current facts and circumstances, prior experience, and
other assumptions that are believed to be reasonable. The Company's
management overlays a fundamental philosophy of valuing its assets and
liabilities in an appropriately conservative manner. Management believes
the following critical accounting policies reflect the more significant
judgments and estimates used in preparation of the Company's
consolidated financial statements and are the policies that are most
critical in the portrayal of the Company's financial position and
results of operations. Management has discussed these critical
accounting policies and estimates with the Audit Committee of the
Company's Board of Directors and with the Company's independent
registered public accounting firm.
38
Revenue recognition - The Company recognizes revenue when
title and risk transfer to the customer, which under the terms and
conditions of the sale may occur either at the time of shipment or when
the product is delivered to the customer. Service revenue is recognized
as services are rendered. Shipping and handling fees billed to customers
are recorded as sales while the related shipping and handling costs are
included in cost of goods sold. The Company recognizes sales net of
applicable sales tax.
- Sales returns and allowances - At the time
revenue is recognized certain provisions may also be recorded,
including a provision for returns and allowances, which involve
estimates based on current discussions with applicable customers,
historical experience with a particular customer and/or product, and
other relevant factors. As such, these factors may change over time
causing the provisions to be adjusted accordingly. At December 31,
2010 and June 30, 2010, the reserve for returns and allowances was
$2.1 million and $2.5 million, respectively. The returns and
allowances reserve approximated 1% to 3% of gross trade receivables
during the past two fiscal years.
- Allowance for doubtful accounts - Allowance
for doubtful accounts is generally based on a percentage of aged
accounts receivable, where the percentage increases as the accounts
receivable become older. However, management judgment is utilized in
the final determination of the allowance based on several factors
including specific analysis of a customer's credit worthiness,
changes in a customer's payment history, historical bad debt
experience, and general economic and market trends. The allowance
for doubtful accounts at both December 31, 2010 and June 30, 2010
was $1.3 million. During the preceding two-year period, this reserve
had approximated 1% of gross trade accounts receivable except for
the period March 2009 through December 2009 during which time it
approximated 2% of gross trade accounts receivable. The higher
reserve was driven by increased risk created by deteriorating market
conditions during that time.
Excess and obsolete inventory - Inventories were valued using
the lower of last-in, first-out (LIFO) cost or market value for
approximately 10% and 9% of consolidated inventories at December 31,
2010 and June 30, 2010, respectively, including approximately 81% and
78% of the Furniture segment inventories at December 31, 2010 and June
30, 2010, respectively. The remaining inventories were valued at lower
of first-in, first-out (FIFO) cost or market value. Inventories recorded
on the Company's balance sheet are adjusted for excess and obsolete
inventory. In general, the Company purchases materials and finished
goods for contract-based business from customer orders and projections,
primarily in the case of long lead time items, and has a general
philosophy to only purchase materials to the extent covered by a written
commitment from its customers. However, there are times when inventory
is purchased beyond customer commitments due to minimum lot sizes and
inventory lead time requirements, or where component allocation or other
procurement issues may exist. The Company may also purchase additional
inventory to support transfers of production between manufacturing
facilities. Evaluation of excess inventory includes such factors as
anticipated usage, inventory turnover, inventory levels, and product
demand levels. Factors considered when evaluating inventory obsolescence
include the age of on-hand inventory and reduction in value due to
damage, use as showroom samples, design changes, or cessation of product
lines.
Self-insurance reserves - The Company is self-insured up to
certain limits for auto and general liability, workers' compensation,
and certain employee health benefits such as medical, short-term
disability, and dental with the related liabilities included in the
accompanying financial statements. The Company's policy is to estimate
reserves based upon a number of factors including known claims,
estimated incurred but not reported claims, and other analyses, which
are based on historical information along with certain assumptions about
future events. Changes in assumptions for such matters as increased
medical costs and changes in actual experience could cause these
estimates to change and reserve levels to be adjusted accordingly. At
December 31, 2010 and June 30, 2010, the Company's accrued liabilities
for self-insurance exposure were $4.3 million and $4.7 million,
respectively.
39
Taxes - Deferred income tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
temporary differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. These
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which the temporary differences
are expected to reverse. The Company evaluates the recoverability of its
deferred tax assets each quarter by assessing the likelihood of future
profitability and available tax planning strategies that could be
implemented to realize its deferred tax assets. If recovery is not
likely, the Company provides a valuation allowance based on its best
estimate of future taxable income in the various taxing jurisdictions
and the amount of deferred taxes ultimately realizable. Future events
could change management's assessment.
The Company operates within multiple taxing jurisdictions and is
subject to tax audits in these jurisdictions. These audits can involve
complex issues, which may require an extended period of time to resolve.
However, the Company believes it has made adequate provision for income
and other taxes for all years that are subject to audit. As tax periods
are effectively settled, the provision will be adjusted accordingly. The
liability for uncertain income tax and other tax positions, including
accrued interest and penalties on those positions, was $3.9 million and
$3.7 million at December 31, 2010 and June 30, 2010, respectively.
New Accounting Standards
See
Note 1 - Summary of Significant Accounting Policies of Notes to
Condensed Consolidated Financial Statements for information regarding
New Accounting Standards.
Forward-Looking Statements
Certain statements contained within this document
are considered forward-looking under the Private Securities Litigation
Reform Act of 1995. These statements can be identified by the use of
words such as "believes," "estimates," "projects," "expects," "intends,"
"anticipates," "forecasts," and similar expressions. These
forward-looking statements are subject to risks and uncertainties
including, but not limited to, continuing impacts of the global economic
conditions, significant volume reductions from key contract customers,
significant reduction in customer order patterns, loss of key customers
or suppliers within specific industries, financial stability of key
customers and suppliers, availability or cost of raw materials and
components, increased competitive pricing pressures reflecting excess
industry capacities, successful execution of restructuring plans,
changes in the regulatory environment, or similar unforeseen events.
Additional cautionary statements regarding other risk factors that could
have an effect on the future performance of the Company are contained in
the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 2010.
40
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
There have been no material changes to market risks from the
information disclosed in Item
7A "Quantitative and Qualitative Disclosures About Market Risk" of
the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2010.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The Company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the Company files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized, and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission and that such information is
accumulated and communicated to the Company's management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Based upon their evaluation
of those controls and procedures performed as of December 31, 2010, the
Chief Executive Officer and Chief Financial Officer of the Company
concluded that its disclosure
controls and procedures were effective.
(b) Changes in internal control over financial reporting.
There have been no changes in the
Company's internal control over financial reporting that occurred during the
quarter ended December 31, 2010 that have materially affected, or that are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
A share repurchase program authorized by the Board of
Directors was announced on October 16, 2007. The program allows for the repurchase of up
to two million shares of any combination of Class A and Class B shares and will remain in effect until all shares authorized have
been repurchased. The Company did not repurchase any shares under the repurchase
program during the second quarter of fiscal year 2011. At December 31, 2010, two
million shares remained available under the repurchase program.
41
Item 6. Exhibits
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
(3(a)) Amended and restated Articles of Incorporation of the Company
(Incorporated by reference to Exhibit 3(a) to the Company's Form 10-K for the
fiscal year ended June
30, 2007)
(3(b)) Restated By-laws of the Company (Incorporated by reference to
Exhibit 3(b) to
the Company's Form 8-K filed October 23, 2009)
(11) Computation of Earnings Per Share
(31.1) Certification filed by Chief Executive Officer pursuant to
Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(31.2) Certification filed by Chief Financial Officer pursuant to
Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(32.1) Certification furnished by the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(32.2) Certification furnished by the Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
42
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
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KIMBALL INTERNATIONAL, INC. |
|
|
|
|
|
|
|
By: |
/s/ James C. Thyen |
|
|
JAMES C. THYEN President, Chief Executive Officer |
|
|
February 4, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
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By: |
/s/ Robert F. Schneider |
|
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ROBERT F. SCHNEIDER Executive Vice President, Chief Financial Officer |
|
|
February 4, 2011 |
43
Kimball International, Inc.
Exhibit Index
Exhibit No. |
|
Description |
3(a) |
|
Amended and restated Articles of Incorporation of the Company
(Incorporated by reference to Exhibit 3(a) to the Company's Form 10-K for the
fiscal year ended
June 30, 2007) |
3(b) |
|
Restated By-laws of the Company (Incorporated by reference to Exhibit
3(b) to the
Company's Form 8-K filed October 23, 2009) |
11 |
|
Computation of Earnings Per Share |
31.1 |
|
Certification filed by Chief Executive Officer pursuant to
Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
31.2 |
|
Certification filed by Chief Financial Officer pursuant to
Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
32.1 |
|
Certification furnished by the Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 |
32.2 |
|
Certification furnished by the Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 |
44
EX-11
2
q112ex11.htm
KIMBALL INTERNATIONAL, INC. EXHIBIT 11
Exhibit 11
Exhibit 11
KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Unaudited) |
Three Months Ended
December 31, 2010 |
|
Three Months Ended
December 31, 2009 |
|
(Amounts in Thousands, Except for Per Share Data) |
Class A |
|
Class B |
|
Total |
|
Class A |
|
Class B |
|
Total |
|
Basic Earnings Per Share: |
|
|
|
|
|
|
|
|
|
Dividends Declared |
$ 473 |
|
$ 1,361 |
|
$ 1,834 |
|
$ 487 |
|
$ 1,337 |
|
$ 1,824 |
|
Less: Unvested Participating Dividends |
-0- |
|
-0- |
|
-0- |
|
(4) |
|
-0- |
|
(4) |
|
Dividends to Common Share Owners |
473 |
|
1,361 |
|
1,834 |
|
483 |
|
1,337 |
|
1,820 |
|
Undistributed Earnings (Loss) |
|
|
|
|
(958) |
|
|
|
|
|
82 |
|
Less: Earnings (Loss) Allocated to Participating Securities |
|
|
|
|
-0- |
|
|
|
|
|
-0- |
|
Undistributed Earnings (Loss) Allocated to Common Share Owners |
(267) |
|
(691) |
|
(958) |
|
23 |
|
59 |
|
82 |
|
Net Income Available to Common Share Owners |
$ 206 |
|
$ 670 |
|
$ 876 |
|
$ 506 |
|
$ 1,396 |
|
$ 1,902 |
|
Average Basic Common Shares Outstanding |
10,510 |
|
27,219 |
|
37,729 |
|
10,631 |
|
26,708 |
|
37,339 |
|
Basic Earnings Per Share |
$ 0.02 |
|
$ 0.02 |
|
|
|
$ 0.05 |
|
$ 0.05 |
|
|
|
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
Dividends Declared and Assumed Dividends on Dilutive Shares |
$ 476 |
|
$ 1,361 |
|
$ 1,837 |
|
$ 489 |
|
$ 1,337 |
|
$ 1,826 |
|
Less: Unvested Participating Dividends |
-0- |
|
-0- |
|
-0- |
|
(4) |
|
-0- |
|
(4) |
|
Dividends and Assumed Dividends to Common Share Owners |
476 |
|
1,361 |
|
1,837 |
|
485 |
|
1,337 |
|
1,822 |
|
Undistributed Earnings (Loss) |
|
|
|
|
(961) |
|
|
|
|
|
80 |
|
Less: Earnings (Loss) Allocated to Participating Securities |
|
|
|
|
-0- |
|
|
|
|
|
-0- |
|
Undistributed Earnings (Loss) Allocated to Common Share Owners |
(269) |
|
(692) |
|
(961) |
|
23 |
|
57 |
|
80 |
|
Net Income Available to Common Share Owners |
$ 207 |
|
$ 669 |
|
$ 876 |
|
$ 508 |
|
$ 1,394 |
|
$ 1,902 |
|
Average Diluted Common Shares Outstanding |
10,566 |
|
27,220 |
|
37,786 |
|
10,770 |
|
26,744 |
|
37,514 |
|
Diluted Earnings Per Share |
$ 0.02 |
|
$ 0.02 |
|
|
|
$ 0.05 |
|
$ 0.05 |
|
|
|
Reconciliation of Basic and Diluted EPS Calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Used for Basic EPS Calculation |
$ 206 |
|
$ 670 |
|
$ 876 |
|
$ 506 |
|
$ 1,396 |
|
$ 1,902 |
|
Assumed Dividends Payable on Dilutive Shares: |
|
|
|
|
|
|
|
|
|
|
|
Performance shares |
3 |
|
-0- |
|
3 |
|
2 |
|
-0- |
|
2 |
|
Increase (Reduction) of Undistributed Earnings (Loss) -
allocated |
|
|
|
|
|
|
|
|
|
|
|
based on Class A and Class B shares |
(2) |
|
(1) |
|
(3) |
|
-0- |
|
(2) |
|
(2) |
|
Net Income Used for Diluted EPS Calculation |
$ 207 |
|
$ 669 |
|
$ 876 |
|
$ 508 |
|
$ 1,394 |
|
$ 1,902 |
|
Average Shares Outstanding for Basic
EPS Calculation |
10,510 |
|
27,219 |
|
37,729 |
|
10,631 |
|
26,708 |
|
37,339 |
|
Dilutive Effect of Average Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Performance shares |
56 |
|
1 |
|
57 |
|
46 |
|
3 |
|
49 |
|
Restricted share units |
-0- |
|
-0- |
|
-0- |
|
93 |
|
33 |
|
126 |
|
Average Shares Outstanding for Diluted EPS Calculation |
10,566 |
|
27,220 |
|
37,786 |
|
10,770 |
|
26,744 |
|
37,514 |
|
Included in dividends declared for the basic and diluted earnings
per share computation for the three months ended December 31, 2009
are dividends computed and accrued on unvested Class A and Class B
restricted share units, which were paid by a conversion to the
equivalent value of common shares on the vesting date. Restricted
share units held by retirement-age participants at December 31, 2009
had a nonforfeitable right to dividends and were deducted from the
above dividends and undistributed earnings figures allocable to
common Share Owners. There were no restricted share units
outstanding as of December 31, 2010. |
|
All of the 620,000 and 708,000 average outstanding stock options
were antidilutive and were excluded from the dilutive calculation
for the quarters ended December 31, 2010 and 2009, respectively. |
|
(Unaudited) |
Six Months Ended
December 31, 2010 |
|
Six Months Ended
December 31, 2009 |
|
(Amounts in Thousands, Except for Per Share Data) |
Class A |
|
Class B |
|
Total |
|
Class A |
|
Class B |
|
Total |
|
Basic Earnings Per Share: |
|
|
|
|
|
|
|
|
|
Dividends Declared |
$ 950 |
|
$ 2,717 |
|
$ 3,667 |
|
$ 979 |
|
$ 2,664 |
|
$ 3,643 |
|
Less: Unvested Participating Dividends |
-0- |
|
-0- |
|
-0- |
|
(9) |
|
-0- |
|
(9) |
|
Dividends to Common Share Owners |
950 |
|
2,717 |
|
3,667 |
|
970 |
|
2,664 |
|
3,634 |
|
Undistributed Earnings (Loss) |
|
|
|
|
(2,335) |
|
|
|
|
|
37 |
|
Less: Earnings (Loss) Allocated to Participating Securities |
|
|
|
|
-0- |
|
|
|
|
|
-0- |
|
Undistributed Earnings (Loss) Allocated to Common Share Owners |
(653) |
|
(1,682) |
|
(2,335) |
|
11 |
|
26 |
|
37 |
|
Net Income Available to Common Share Owners |
$ 297 |
|
$ 1,035 |
|
$ 1,332 |
|
$ 981 |
|
$ 2,690 |
|
$ 3,671 |
|
Average Basic Common Shares Outstanding |
10,543 |
|
27,162 |
|
37,705 |
|
10,681 |
|
26,645 |
|
37,326 |
|
Basic Earnings Per Share |
$ 0.03 |
|
$ 0.04 |
|
|
|
$ 0.09 |
|
$ 0.10 |
|
|
|
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
Dividends Declared and Assumed Dividends on Dilutive Shares |
$ 960 |
|
$ 2,717 |
|
$ 3,677 |
|
$ 986 |
|
$ 2,664 |
|
$ 3,650 |
|
Less: Unvested Participating Dividends |
-0- |
|
-0- |
|
-0- |
|
(9) |
|
-0- |
|
(9) |
|
Dividends and Assumed Dividends to Common Share Owners |
960 |
|
2,717 |
|
3,677 |
|
977 |
|
2,664 |
|
3,641 |
|
Undistributed Earnings (Loss) |
|
|
|
|
(2,345) |
|
|
|
|
|
30 |
|
Less: Earnings (Loss) Allocated to Participating Securities |
|
|
|
|
-0- |
|
|
|
|
|
-0- |
|
Undistributed Earnings (Loss) Allocated to Common
Share Owners |
(661) |
|
(1,684) |
|
(2,345) |
|
9 |
|
21 |
|
30 |
|
Net Income Available to Common Share Owners |
$ 299 |
|
$ 1,033 |
|
$ 1,332 |
|
$ 986 |
|
$ 2,685 |
|
$ 3,671 |
|
Average Diluted Common Shares Outstanding |
10,653 |
|
27,163 |
|
37,816 |
|
10,847 |
|
26,680 |
|
37,527 |
|
Diluted Earnings Per Share |
$ 0.03 |
|
$ 0.04 |
|
|
|
$ 0.09 |
|
$ 0.10 |
|
|
|
Reconciliation of Basic and Diluted EPS Calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Used for Basic EPS Calculation |
$ 297 |
|
$ 1,035 |
|
$ 1,332 |
|
$ 981 |
|
$ 2,690 |
|
$ 3,671 |
|
Assumed Dividends Payable on Dilutive Shares: |
|
|
|
|
|
|
|
|
|
|
|
Performance shares |
10 |
|
-0- |
|
10 |
|
7 |
|
-0- |
|
7 |
|
Increase (Reduction) of Undistributed Earnings (Loss) -
allocated based on Class A and Class B shares |
(8) |
|
(2) |
|
(10) |
|
(2) |
|
(5) |
|
(7) |
|
Net Income Used for Diluted EPS Calculation |
$ 299 |
|
$ 1,033 |
|
$ 1,332 |
|
$ 986 |
|
$ 2,685 |
|
$ 3,671 |
|
Average Shares Outstanding for Basic
EPS Calculation |
10,543 |
|
27,162 |
|
37,705 |
|
10,681 |
|
26,645 |
|
37,326 |
|
Dilutive Effect of Average Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Performance shares |
110 |
|
1 |
|
111 |
|
79 |
|
2 |
|
81 |
|
Restricted share units |
-0- |
|
-0- |
|
-0- |
|
87 |
|
33 |
|
120 |
|
Average Shares Outstanding for Diluted EPS Calculation |
10,653 |
|
27,163 |
|
37,816 |
|
10,847 |
|
26,680 |
|
37,527 |
|
Included in dividends declared for the basic and diluted earnings
per share computation for the six months ended December 31, 2009 are
dividends computed and accrued on unvested Class A and Class B
restricted share units, which were paid by a conversion to the
equivalent value of common shares on the vesting date. Restricted
share units held by retirement-age participants at December 31, 2009
had a nonforfeitable right to dividends and were deducted from the
above dividends and undistributed earnings figures allocable to
common Share Owners. There were no restricted share units
outstanding as of December 31, 2010. |
|
All of the 629,000 and 721,000 average stock options outstanding
were antidilutive and were excluded from the dilutive calculation
for the six months ended December 31, 2010 and 2009, respectively. |
|
EX-31
3
exhibit311.htm
KIMBALL INTERNATIONAL, INC. EXHIBIT 31.1
Exhibit 31.1
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James C. Thyen, certify that:
1. |
I have reviewed this quarterly report on Form
10-Q of Kimball International, Inc.; |
|
|
2. |
Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
Based on my knowledge, the financial
statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
The registrant's other certifying officer and
I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
(a) Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period
in which this report is being prepared; |
|
|
|
(b) Designed such internal
control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles; |
|
|
|
(c) Evaluated the effectiveness
of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on
such evaluation; and |
|
|
|
(d) Disclosed in this report any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and |
|
|
5. |
The registrant's other certifying officer and
I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions): |
|
|
|
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and |
|
|
|
(b) Any fraud, whether or not material, that
involves management or other employees who have a significant role in the
registrant's internal control over financial reporting. |
|
|
Date: February 4, 2011 |
|
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|
|
/s/ James C. Thyen |
|
|
JAMES C. THYEN
President,
Chief Executive Officer |
|
|
|
EX-31
4
exhibit312.htm
KIMBALL INTERNATIONAL, INC. EXHIBIT 31.2
Exhibit 31.2
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert F. Schneider, certify that:
1. |
I have reviewed this quarterly report on Form
10-Q of Kimball International, Inc.; |
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2. |
Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this report; |
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3. |
Based on my knowledge, the financial
statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
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4. |
The registrant's other certifying officer and
I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
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(a) Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period
in which this report is being prepared; |
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(b) Designed such internal
control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles; |
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(c) Evaluated the effectiveness
of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on
such evaluation; and |
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(d) Disclosed in this report any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and |
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5. |
The registrant's other certifying officer and
I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions): |
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(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and |
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(b) Any fraud, whether or not material, that
involves management or other employees who have a significant role in the
registrant's internal control over financial reporting. |
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Date: February 4, 2011 |
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/s/ Robert F. Schneider |
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ROBERT F. SCHNEIDER
Executive Vice
President,
Chief Financial Officer |
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EX-32
5
exhibit321.htm
KIMBALL INTERNATIONAL, INC. EXHIBIT 32.1
Exhibit 32.1
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Kimball International,
Inc. (the "Company") on Form 10-Q for the period ending December 31, 2010 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, James C. Thyen, President and Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 4, 2011 |
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/s/ James C. Thyen |
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JAMES C. THYEN
President,
Chief Executive Officer |
EX-32
6
exhibit322.htm
KIMBALL INTERNATIONAL, INC. EXHIBIT 32.2
Exhibit 32.2
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Kimball International,
Inc. (the "Company") on Form 10-Q for the period ending December 31, 2010 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert F. Schneider, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 4, 2011 |
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/s/ Robert F. Schneider |
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ROBERT F. SCHNEIDER
Executive Vice President,
Chief Financial Officer |
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