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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, 2020
OR
o 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
kbal-20201231_g1.jpg
KIMBALL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Indiana35-0514506
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization)
1600 Royal Street, Jasper, Indiana
47546-2256
(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
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading Symbol(s)Name of each exchange on which registered
Class B Common Stock, par value $0.05 per shareKBAL
The NASDAQ Stock Market LLC

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 o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x                         Accelerated filer  o 
Non-accelerated filer  o                         Smaller reporting company  o
Emerging growth company  o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

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 28, 2021 was:
Class A Common Stock - 191,587 shares
Class B Common Stock - 36,690,325 shares



KIMBALL INTERNATIONAL, INC.
FORM 10-Q
INDEX
Page No.
 
PART I    FINANCIAL INFORMATION
 
 
PART II    OTHER INFORMATION
 

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

KIMBALL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except for Share and Per Share Data)
(Unaudited) 
December 31,
2020
June 30,
2020
ASSETS  
Current Assets:  
Cash and cash equivalents$39,720 $91,798 
Short-term investments1,505 5,294 
Receivables, net of allowances of $2,780 and $2,574, respectively
54,759 68,365 
Inventories60,199 49,857 
Prepaid expenses and other current assets17,504 16,869 
Assets held for sale 215 
Total current assets173,687 232,398 
Property and equipment, net of accumulated depreciation of $197,261 and $193,641, respectively
90,028 92,041 
Right-of-use operating lease assets18,072 16,461 
Goodwill82,958 11,160 
Other intangible assets, net of accumulated amortization of $37,030 and $40,442, respectively
68,041 13,949 
Deferred tax assets12,854 7,485 
Other assets18,460 12,773 
Total Assets$464,100 $386,267 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt$40,000 $ 
Current maturities of long-term debt1,282 27 
Accounts payable42,268 40,229 
Customer deposits28,965 19,649 
Current portion of operating lease liability6,601 4,886 
Dividends payable3,580 3,454 
Accrued expenses31,726 41,076 
Total current liabilities154,422 109,321 
Other Liabilities:
Long-term debt, less current maturities1,331 109 
Long-term operating lease liability15,527 16,610 
Contingent earn-out liability31,790  
Other17,018 15,431 
Total other liabilities65,666 32,150 
Shareholders’ Equity:
Common stock-par value $0.05 per share:
Class A - Shares authorized: 50,000,000
               Shares issued: 192,000 and 193,000, respectively
9 10 
Class B - Shares authorized: 100,000,000
               Shares issued: 42,831,000 and 42,830,000, respectively
2,142 2,141 
Additional paid-in capital4,843 3,770 
Retained earnings302,937 305,024 
Accumulated other comprehensive income2,169 2,137 
Less: Treasury stock, at cost, 6,101,000 shares and 6,110,000 shares, respectively
(68,088)(68,286)
Total Shareholders’ Equity244,012 244,796 
Total Liabilities and Shareholders’ Equity$464,100 $386,267 
See Notes to Condensed Consolidated Financial Statements
3


KIMBALL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except for Per Share Data)
(Unaudited)(Unaudited)
Three Months EndedSix Months Ended
December 31December 31
2020201920202019
Net Sales$136,197 $192,164 $284,141 $393,616 
Cost of Sales90,648 126,823 186,236 257,905 
Gross Profit45,549 65,341 97,905 135,711 
Selling and Administrative Expenses45,967 49,719 87,654 100,633 
Restructuring Expense1,616 1,396 5,856 5,746 
Operating Income (Loss)(2,034)14,226 4,395 29,332 
Other Income (Expense):
Interest income87 489 189 1,096 
Interest expense(58)(21)(86)(44)
Non-operating income (expense), net1,380 717 2,123 718 
Other income (expense), net1,409 1,185 2,226 1,770 
Income (Loss) Before Taxes on Income(625)15,411 6,621 31,102 
Provision for Income Taxes213 4,372 2,073 8,679 
Net Income (Loss)$(838)$11,039 $4,548 $22,423 
Earnings (Loss) Per Share of Common Stock:  
Basic Earnings (Loss) Per Share$(0.02)$0.30 $0.12 $0.61 
Diluted Earnings (Loss) Per Share$(0.02)$0.30 $0.12 $0.60 
Class A and B Common Stock:
Average Number of Shares Outstanding - Basic36,962 36,921 36,968 36,929 
Average Number of Shares Outstanding - Diluted36,962 37,221 37,465 37,274 
See Notes to Condensed Consolidated Financial Statements

4


KIMBALL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
(Unaudited)(Unaudited)
Three Months EndedThree Months Ended
December 31, 2020December 31, 2019
(Unaudited)Pre-taxTaxNet of TaxPre-taxTaxNet of Tax
Net income (loss)$(838)$11,039 
Other comprehensive income (loss):
Available-for-sale securities$(13)$3 $(10)$(12)$3 $(9)
Postemployment severance actuarial change124 (32)92 296 (76)220 
Reclassification to (earnings) loss:
Amortization of actuarial change(109)28 (81)(90)23 (67)
Other comprehensive income (loss)$2 $(1)$1 $194 $(50)$144 
Total comprehensive income (loss)$(837)$11,183 

(Unaudited)(Unaudited)
 Six Months EndedSix Months Ended
December 31, 2020December 31, 2019
(Unaudited)Pre-taxTaxNet of TaxPre-taxTaxNet of Tax
Net income$4,548 $22,423 
Other comprehensive income (loss):
Available-for-sale securities$(38)$10 $(28)$(20)$5 $(15)
Postemployment severance actuarial change302 (78)224 445 (115)330 
Reclassification to (earnings) loss:
Amortization of actuarial change(221)57 (164)(178)46 (132)
Other comprehensive income (loss)$43 $(11)$32 $247 $(64)$183 
Total comprehensive income$4,580 $22,606 
See Notes to Condensed Consolidated Financial Statements

5


KIMBALL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 (Unaudited)
Six Months Ended
December 31
20202019
Cash Flows From Operating Activities:
Net income$4,548 $22,423 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation7,128 7,476 
Amortization1,702 1,068 
(Gain) loss on sales of assets(177)59 
Restructuring and asset impairment charges1,462 2,763 
Deferred income tax and other deferred charges(747)(979)
Stock-based compensation2,258 2,729 
Other, net(547)2,220 
Change in operating assets and liabilities:
Receivables16,720 825 
Inventories5,376 (2,931)
Prepaid expenses and other current assets156 (2,343)
Accounts payable(5,785)(7,057)
Customer deposits7,271 7,883 
Accrued expenses(14,844)(20,734)
Net cash provided by operating activities24,521 13,402 
Cash Flows From Investing Activities:
Capital expenditures(5,895)(12,038)
Proceeds from sales of assets394 102 
Cash paid for acquisition(100,930) 
Purchases of capitalized software(3,047)(1,471)
Purchases of available-for-sale securities(10,000)(13,975)
Maturities of available-for-sale securities13,750 21,488 
Other, net(46)(853)
Net cash used for investing activities(105,774)(6,747)
Cash Flows From Financing Activities:
Proceeds from short-term debt40,000  
Repayments of long-term debt(27)(25)
Dividends paid to shareholders(6,643)(6,286)
Repurchases of Common Stock(638)(1,266)
Repurchase of employee shares for tax withholding(236)(842)
Net cash provided by (used for) financing activities32,456 (8,419)
Net Decrease in Cash, Cash Equivalents, and Restricted Cash (1)
(48,797)(1,764)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1)
92,444 73,837 
Cash, Cash Equivalents, and Restricted Cash at End of Period (1)
$43,647 $72,073 
Supplemental Disclosure of Cash Flow Information
Non-cash items:
Contingent earn-out liability for Poppin, Inc. acquisition$31,790 $ 
Cash paid during the period for:
Income taxes$6,089 $9,063 
Interest expense$29 $14 
(1) The following table reconciles cash and cash equivalents in the balance sheets to cash, cash equivalents, and restricted cash per the statements of cash flows. The restricted cash included in other assets on the balance sheet represents amounts pledged as collateral for a long-term financing arrangement as contractually required by a lender. The restriction will lapse when the related long-term debt is paid off. Restricted cash also included customer deposits held due to a foreign entity being classified as a restricted entity by a government agency subsequent to our receipt of the deposit and cash held in escrow for repayment of the Payment Protection Program loan that Poppin, Inc. obtained prior to its acquisition.
(Amounts in Thousands)December 31,
2020
June 30,
2020
December 31,
2019
June 30,
2019
Cash and Cash Equivalents$39,720 $91,798 $71,430 $73,196 
Restricted cash included in Other Assets3,927 646 643 641 
Total Cash, Cash Equivalents, and Restricted Cash at end of period$43,647 $92,444 $72,073 $73,837 
See Notes to Condensed Consolidated Financial Statements
6


KIMBALL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in Thousands, Except for Share and Per Share Data)
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders’ Equity
Three months ended December 31, 2020 (Unaudited)Class AClass B
Amounts at September 30, 2020$10 $2,141 $3,681 $307,177 $2,168 $(67,484)$247,693 
Net income (loss)(838)(838)
Other comprehensive income (loss)1 1 
Issuance of non-restricted stock (11,000 shares)
(147)147  
Conversion of Class A to Class B common stock (1,000 shares)
(1)1  
Compensation expense related to stock compensation plans1,309 1,309 
Repurchase of Common Stock (62,000 shares)
(751)(751)
Dividends declared ($0.09 per share)
(3,402)(3,402)
Amounts at December 31, 2020$9 $2,142 $4,843 $302,937 $2,169 $(68,088)$244,012 
Three months ended December 31, 2019 (Unaudited)
Amounts at September 30, 2019$12 $2,139 $2,438 $285,405 $1,976 $(66,938)$225,032 
Net income11,039 11,039 
Other comprehensive income (loss)144 144 
Issuance of non-restricted stock (6,000 shares)
(84)84  
Conversion of Class A to Class B common stock (55,000 shares)
(2)2  
Compensation expense related to stock compensation plans1,069 1,069 
Repurchase of Common Stock (65,000 shares)
(1,340)(1,340)
Dividends declared ($0.09 per share)
(3,355)(3,355)
Amounts at December 31, 2019$10 $2,141 $3,423 $293,089 $2,120 $(68,194)$232,589 
Six months ended December 31, 2020 (Unaudited)
Amounts at June 30, 2020$10 $2,141 $3,770 $305,024 $2,137 $(68,286)$244,796 
Net income4,548 4,548 
Other comprehensive income (loss)32 32 
Issuance of non-restricted stock (24,000 shares)
(315)315  
Conversion of Class A to Class B common stock (1,000 shares)
(1)1  
Compensation expense related to stock incentive plans2,258 2,258 
Restricted stock units issuance (15,000 shares)
(284)204 (80)
Relative total shareholder return performance units issuance (32,000 shares)
(586)430 (156)
Cumulative effect of change in accounting principle134134 
Repurchase of Common Stock (62,000 shares)
(751)(751)
Dividends declared ($0.18 per share)
(6,769)(6,769)
Amounts at December 31, 2020$9 $2,142 $4,843 $302,937 $2,169 $(68,088)$244,012 
Six months ended December 31, 2019 (Unaudited)
Amounts at June 30, 2019$12 $2,139 $3,570 $277,391 $1,937 $(68,559)$216,490 
Net income22,423 22,423 
Other comprehensive income (loss)183 183 
Issuance of non-restricted stock (15,000 shares)
(202)202  
Conversion of Class A to Class B common stock (57,000 shares)
(2)2  
Compensation expense related to stock incentive plans3,080 3,080 
Performance share issuance (67,000 shares)
(1,391)879 (512)
Relative total shareholder return performance units issuance (48,000 shares)
(954)624 (330)
Reclassification of equity-classified awards(680)(680)
Repurchase of Common Stock (65,000 shares)
(1,340)(1,340)
Dividends declared ($0.18 per share)
(6,725)(6,725)
Amounts at December 31, 2019$10 $2,141 $3,423 $293,089 $2,120 $(68,194)$232,589 
See Notes to Condensed Consolidated Financial Statements
7


KIMBALL INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of Kimball International, Inc. (the “Company,” “Kimball International,” “we,” “us,” or “our”) have been prepared in accordance with the instructions to Form 10-Q. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in our latest annual report on Form 10-K. Additionally, based on the duration and severity of the current global situation involving the COVID-19 pandemic, including but not limited to the prolonged reduction in travel and the speed of the recovery of economic conditions globally, the extent to which COVID-19 will impact our business and our consolidated financial results will depend on future developments, which are highly uncertain and cannot be predicted.
Note 2. Recent Accounting Pronouncements and Supplemental Information
Recently Adopted Accounting Pronouncements:
In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance on a customer’s accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor. Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. The guidance was adopted during our first quarter of fiscal year 2021 and was applied prospectively. The adoption of this guidance did not have a material effect on our condensed consolidated financial statements.
In August 2018, the FASB issued guidance which changes the fair value measurement disclosure requirements. The guidance modifies and removes certain disclosures related to the fair value hierarchy, and adds new disclosure requirements such as disclosing the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance was adopted during our first quarter of fiscal year 2021 and was applied retrospectively. The adoption of this guidance did not have a material effect on our condensed consolidated financial statements.
In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. Under the guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The guidance is also intended to reduce the complexity by decreasing the number of credit impairment models that entities use to account for debt instruments. In May 2019, the FASB amended the new standard to allow entities to elect the fair value option on certain financial instruments that were previously recorded at amortized cost. In November 2019, the FASB amended the new standard to extend the disclosure relief for accrued interest receivable balances to additional relevant disclosures involving amortized cost basis. The guidance was adopted during our first quarter of fiscal year 2021 and did not have a material effect on our condensed consolidated financial statements.
Goodwill and Other Intangible Assets:
Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset fair values resulting from business acquisitions. Goodwill is assigned to and the fair value is tested at the reporting unit level. Annually, or if conditions indicate an earlier review is necessary, we may assess qualitative factors to determine if it is more likely than not that the fair value is less than its carrying amount. We also have the option to bypass the qualitative assessment and proceed directly to performing the quantitative goodwill impairment test which compares the carrying value of the reporting unit to the reporting unit’s fair value to identify impairment. Under the quantitative assessment, if the fair value of the reporting unit is less than the carrying value, goodwill is written down to its fair value. The fair value is established primarily using a discounted cash flow analysis and secondarily a market approach utilizing current industry information. The calculation of the fair value of the reporting unit considers current market conditions existing at the assessment date. In connection with our annual impairment test, we assessed goodwill associated with the acquisitions of D’style, Inc., and David Edward Furniture, Inc. for impairment during our second quarter of fiscal year 2021, and no goodwill impairment was recognized.
8


As of December 31, 2020 and June 30, 2020 our goodwill totaled $83.0 million and $11.2 million, respectively. During fiscal year 2021, we recorded $71.8 million and $52.4 million, respectively, in goodwill and other intangible assets from the acquisition of Poppin, Inc. See Note 3 - Acquisition of Notes to Condensed Consolidated Financial Statements for more information on this acquisition.
Other Intangible Assets reported on the Condensed Consolidated Balance Sheets consist of capitalized software, customer relationships, trade names, acquired technology, patents, trademarks, and non-compete agreements. Intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. A summary of intangible assets subject to amortization is as follows:
 December 31, 2020June 30, 2020
(Amounts in Thousands)CostAccumulated
Amortization
Net ValueCostAccumulated
Amortization
Net Value
Capitalized Software$42,063 $33,202 $8,861 $43,671 $37,566 $6,105 
Customer Relationships19,050 2,378 16,672 7,050 1,871 5,179 
Trade Names36,570 1,326 35,244 3,570 952 2,618 
Acquired Technology7,000 59 6,941    
Patents and Trademarks288 2 286    
Non-Compete Agreements100 63 37 100 53 47 
Other Intangible Assets$105,071 $37,030 $68,041 $54,391 $40,442 $13,949 
Amortization expense related to intangible assets was, in thousands, $1,049 and $1,702 during the quarter and year-to-date period ended December 31, 2020, and was, in thousands, $547 and $1,068 during the quarter and year-to-date period ended December 31, 2019. Amortization expense in future periods is expected to be, in thousands, $4,918 for the remainder of fiscal year 2021, and $9,182, $8,344, $7,754, and $7,565 in the four years ending June 30, 2025, and $30,278 thereafter. The estimated useful life of capitalized software ranges from 2 to 10 years. The amortization period for customer relationship intangible assets ranges from 10 to 20 years. The estimated useful life of trade names is 10 years. The amortization period for acquired technology is 7 years. The estimated useful life of non-compete agreements is 5 years. The estimated useful life of patents is 14 years and the estimated useful life of trademarks is 15 years.
Capitalized software is stated at cost less accumulated amortization and is amortized using the straight-line method. During the software application development stage, capitalized costs include external consulting costs, cost of software licenses, and internal payroll and payroll-related costs for employees who are directly associated with a software project. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process re-engineering costs are expensed in the period in which they are incurred. 
Trade names, non-compete agreements, acquired technology, patents and trademarks are amortized on a straight-line basis over their estimated useful lives. Capitalized customer relationships are amortized based on estimated attrition rates of customers. We have no intangible assets with indefinite useful lives which are not subject to amortization.
Notes Receivable and Trade Accounts Receivable:
Notes receivable and trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. We determine on a case-by-case basis the cessation of accruing interest, the resumption of accruing interest, the method of recording payments received on non accrual receivables, and the delinquency status for our limited number of notes receivable.
Our policy for estimating the allowance for credit losses on trade accounts receivable and notes receivable considers several factors including historical write-off experience, overall customer credit quality in relation to general economic and market conditions, and specific customer account analyses to estimate the collectability of certain accounts. The specific customer account analyses considers such items as aging, credit worthiness, payment history, and historical bad debt experience. Trade accounts receivable and notes receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Our limited amount of notes receivable allows management to monitor the risks, credit quality indicators, collectability, and probability of impairment on an individual basis. Adjustments to the allowance for credit losses are recorded in
9


selling and administrative expenses. Customary terms require payment within 30 days, with terms beyond 30 days being considered extended.
Non-operating Income (Expense), net:
The non-operating income (expense), net line item includes the impact of such items as fair value adjustments on Supplemental Employee Retirement Plan (“SERP”) investments, amortization of actuarial income, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain or loss on SERP investments is offset by a change in the SERP liability that is recognized in selling and administrative expenses.
Components of the Non-operating income (expense), net line, were:
 Three Months EndedSix Months Ended
 December 31December 31
(Amounts in Thousands)2020201920202019
Gain on Supplemental Employee Retirement Plan Investments$1,381 $716 $2,139 $774 
Other(1)1 (16)(56)
 Non-operating income, net$1,380 $717 $2,123 $718 


Note 3. Acquisition
During the second quarter of fiscal year 2021, we acquired Poppin, Inc. (“Poppin”), a tech-enabled, market-leading B2B commercial furniture design company headquartered in New York City, New York. Poppin designs commercial-grade furniture that is made to mix, match, and scale in today’s modern office and work-from-home environments. The acquisition purchase price totaled $110.2 million in initial cash consideration plus additional contingent payments, if all milestones are achieved, of $70 million based on revenue and profitability milestones achieved through June 30, 2024. As of the acquisition date the fair value of the contingent earn-out was $31.8 million. The $110.2 million initial cash consideration is subject to certain post-closing working capital and other customary adjustments. Proforma financial information will be filed on a Current Report on Form 8-K/A in late February.

10


A summary of the preliminary purchase price allocation is as follows:
Purchase Price Allocation
(Amounts in Thousands)
Cash$5,768 
Receivables2,814 
Inventories15,718 
Other current assets700 
Net property and equipment975 
Other intangible assets52,394 
Goodwill71,798 
Right-of-use operating lease assets5,103 
Other long-term assets4,161 
Deferred tax assets4,664 
Total Assets$164,095 
Current maturities of long-term debt1,252 
Accounts payable7,715 
Customer deposits2,045 
Current portion of operating lease liability1,937 
Accrued expenses5,260 
Long-term debt, less current maturities1,252 
Long-term operating lease liability2,565 
Other long-term liabilities80 
Total Liabilities $22,106 
Net Assets$141,989 


Consideration
(Amounts in Thousands)
Cash$110,199 
Contingent earn-out — fair value at acquisition date31,790 
Fair value of total consideration$141,989 
Less: Acquired cash5,768 
Total consideration less acquired cash$136,221 

The operating results of this acquisition are included in our consolidated financial statements beginning on December 9, 2020. For both the quarter and year-to-date periods ended December 31, 2020, net sales and net loss related to Poppin were $2.7 million and $1.0 million, respectively. Direct costs of the acquisition during both the quarter and year-to-date periods ended December 31, 2020, of approximately $3.4 million were expensed as incurred and were included on the Selling and Administrative Expenses line of our Condensed Consolidated Statements of Income. The goodwill is not deductible for tax purposes. Goodwill is primarily attributable to the anticipated supply chain and revenue synergies including cross selling initiatives expected from the operations of the combined company. See Note 2 - Recent Accounting Pronouncements and Supplemental Information of Notes to Condensed Consolidated Financial Statements for more information on goodwill and other intangible assets. The purchase price allocation is provisional pending final valuations and purchase accounting adjustments, which were not final as of December 31,
11


2020. We utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process.
Pro Forma Information
The following unaudited pro forma financial information summarizes the combined results of operations for Kimball International, Inc. and Poppin, Inc. as if the companies were combined as of the beginning of fiscal year 2020:
(unaudited)(unaudited)
 Three Months EndedSix Months Ended
 December 31December 31
(Amounts in Thousands, Except Per Share Date)2020201920202019
Net Sales$143,500 $214,727 $304,290 $436,057 
Net Income (Loss)(1,640)7,969 1,342 16,352 
Diluted Earnings (Loss) Per Share of Common Stock$(0.04)$0.21 $0.04 $0.44 
This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments. This pro forma information is not necessarily indicative of what our results would have been had we operated the businesses since the beginning of the periods presented. The pro forma adjustments reflect the income statement effects of amortization of intangibles related to the fair value adjustments of the assets acquired, acquisition-related costs, incremental interest expense, and the related tax effects.
Note 4. Restructuring
We recognized pre-tax restructuring expense of $1.6 million and $5.9 million in the three and six months ended December 31, 2020, respectively, and recognized $1.4 million and $5.7 million for the three and six months ended December 31, 2019.
We utilized available market prices and management estimates to determine the fair value of impaired assets. Restructuring is included in the Restructuring Expense line item on our Condensed Consolidated Statements of Income.
Transformation Restructuring Plan Phase 1:
In June 2019, we announced a transformation restructuring plan to optimize resources for future growth, improve efficiency, and build capabilities across our organization. We believe phase 1 of our transformation restructuring plan has established a more cost-efficient structure to better align our operations with our long-term strategic goals. The transformation restructuring plan includes the following:
We reviewed our overall manufacturing facility footprint to reduce excess capacity and gain efficiencies by centralizing manufacturing operations. We have ceased operations at a leased seating manufacturing facility in Martinsville, Virginia, and consolidated a David Edward production facility in Red Lion, Pennsylvania into our Baltimore, Maryland facility.
The creation of center-led functions for finance, human resources, information technology and legal functions resulted in the standardization of processes and the elimination of duplication. In addition, we centralized our supply chain efforts to maximize supplier value and plan to drive more efficient practices and operations within our logistics function.
Kimball brand selling resources were reallocated to higher-growth markets. We also ceased use of four leased furniture showrooms across our brands during the first quarter of fiscal year 2020 and recognized impairment of the lease and associated leasehold improvements. Additional impairment was recognized in our fourth quarter of fiscal year 2020 due to degradation of sublease assumptions resulting from the current economic environment.
We estimate that the total pre-tax restructuring charges upon completion of the plan will be approximately $11.3 million. The restructuring charges are expected to consist of approximately $3.6 million for severance and other employee-related costs, $3.6 million for facility exit and other costs, and $4.1 million for asset impairment. Approximately 55% of the total cost estimate is expected to be cash expense.
12


A summary of the charges recorded in connection with phase 1 of the transformation restructuring plan is as follows:
Three Months EndedSix Months EndedCharges Incurred to Date
December 31December 31
(Amounts in Thousands)2020201920202019
Cash-related restructuring charges:
Severance and other employee related costs$ $785 $62 $1,991 $2,884 
Facility exit costs and other cash charges254 523 585 992 2,625 
Total cash-related restructuring charges$254 $1,308 $647 $2,983 $5,509 
Non-cash charges:
Transition stock compensation 184  654 725 
Impairment of assets and accelerated depreciation73 (147)405 2,058 4,095 
Other non-cash charges34 51 72 51 221 
Total non-cash charges$107 $88 $477 $2,763