Kimball International Annual Report 2000

← All annual reports

FY2000 Annual Report · Kimball International

Loading PDF…

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

0
M A I N TA I N I N G O U R F O C U S

•

EXPANDING OUR REACH

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Founded in 1950, Kimball International manufactures and markets a broad range of diversified

consumer durable products under the family of Kimball brand names. The Company also

manufactures products for other companies on an original equipment manufacturer basis.

focus I innovation I commitment I loyalty I dedication I progress I integrity I reach

The products and processes have changed since Kimball International’s beginnings, but the

founding principles remain the same—consistently exceeding our customers’ expectations

and delivering quality products to the world. We have continued to maintain our focus and

commitment to our core values. Our passion of maintaining our focus while expanding our

reach will see us through another successful fifty years.

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

f i n a n c i a l highlights

Kimball International, Inc. is a preeminent manufacturer of furniture, furniture components

and electronic assemblies, serving customers around the world. Our customers, both large

and small, receive our undivided attention,

as we treat every one as the only one. Our

touch is felt throughout daily life in both the

workplace and in the home.

Sales by Business Segments

69%

31%

Furniture and Cabinets Segment
$833.8 million dollars

Electronic Contract Assemblies Segment
$367.1 million dollars

Furniture and
Cabinets Segment

The Furniture and
Cabinets Segment of
Kimball International, Inc.

provides a vast array of products for the
office, residential, hospitality and healthcare
industries. Kimball’s Office Furniture
product lines serve the business market with
casegoods, seating and systems furniture
in both wood and metal, from traditional to
contemporary in style, produced and
marketed under the family of Kimball brand
names. Extensive product lines cover all
businesses, from multinational corporations
to small start-up companies. Kimball Home
supplies the residential market with fine
furnishings for the home, as well as home
office furniture to meet the specialized
needs of the growing work-at-home
market. Kimball Lodging and Healthcare
designs and manufactures furniture for the
hospitality, healthcare and government
markets. Kimball Store Fixtures designs,
manufactures and installs wood and
laminate store display fixtures for some of
the largest retail chains in the United States.

Net Sales
In Millions of Dollars

Net Income
In Millions of Dollars

continued >

Earnings Per Share
Of Common Stock
Diluted Class B

$ 924 $ 992 $ 1,032 $ 1,107 $ 1,201

$ 45.1 $ 57.7 $ 55.0 $ 59.7 $ 48.5

$ 1.08 $ 1.38 $ 1.32 $ 1.47 $ 1.21

$ 1,500

1,200

900

600

300

$ 60

$ 1.50

1.20

0.90

0.60

0.30

0.00

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Kimball International, Inc. and Subsidiaries

2OOOf i n a n c i a l highlights

Electronic Contract
Assemblies Segment

The Electronic Contract Assemblies
Segment provides design engineering,
manufacturing, packaging and distribution
of electronic assemblies, circuit boards,
multi-chip modules and semiconductor
components on a contract basis to
customers in the transportation, industrial,
telecommunications, computer and medical
industries.

table of contents

letter to our share owners

operational highlights

md&a

report of management

financials

board of directors/officers

other corporate data inside back cover

(Amounts in Thousands, Except for Per Share Data)
Net Sales
Net Income
Return on Capital
Earnings Per Share (Diluted)

2000
1,200,945
48,462

9.76%

1999
1,106,967
59,725

12.32%

% of Change
8.5%
(18.9%)
(20.8%)

Class A
Class B

Dividends Declared

Class A
Class B
Market Price Per Share

High
Low
Close

(17.9%)
(17.7%)

1.19
1.21

.62
.64

21.00
10.75
14.75

1.45
1.47

.62
.64

21.50
14.56
16.88

Kimball business units also produce a
variety of original equipment manufacturer
(OEM) products such as home audio
systems, television cabinets and stands,
store display fixtures, kitchen and bath
cabinet components, pool tables and home
furnishings which are marketed under
some of the world’s leading brand names.
Kimball offers a variety of products and
services such as dimension lumber,
plywood, veneer and wood components,
metal stamping and molded plastics for the
Company’s furniture manufacturing
operations as well as for sale to external
customers, both domestically and
internationally.

Share Owner Total Return
Based on $100 Investment on June 30, 1995
(including reinvested dividends)

$ 100 $ 105 $ 157 $ 146

$ 141

$ 128

$ 200

150

100

June
95

June
96

June
97

June
98

June
99

June
00

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

focus I innovation I commitment I loyalty I dedication I progress I integrity I reach

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

I M B

I N T

R N A

I O N A

I N C

•

t o o u r share owners

Maintaining our focus. Expanding our reach.

This remained the focal point of our endeavors during fiscal 2000. It was a year marked

with many milestones and accomplishments and also marked our 50 years of providing

the world with superior quality products and service.

After completing a very challenging year, we think it is
important that we open this year’s message with a brief
review of our long-term goals and strategies and a status
update on our priorities of focus. Despite disappointing
results, we did accomplish a great deal during this past
fiscal year, which gives us confidence that our financial
performance in fiscal 2001 will improve.

What, as our Vision Statement points out, is Kimball doing to
“build success”?
We are positioning your Company:

1) For accelerated growth.
2) For increased profitability.
3) To create greater Share Owner value.

In other words, we have maintained our focus on growing our
core businesses for long-term success and provided the
groundwork to expand our reach.

What is meant by “maintaining our focus”?
Simple. Despite the temptation to sacrifice our long-term goals
for the attainment of short-term results, we remained focused
in fiscal 2000. We continued to focus on opportunities for
healthy, long-term growth, rather than taking a short-term,
“harvesting” approach. We continued to emphasize quality,
reliability, value and speed in our markets – the four
ingredients to profitable growth. We continued to expand our
global footprint and North American operations. We continued
to introduce new products and offerings.

These examples boil down to our deeply-held philosophy that
“staying the same is not an option” if we want to keep our
customers. We must invest in new facilities and products even
when profits aren’t where we’d like them to be and must invest
in future growth opportunities for long-term success building.

What is meant by “expanding our reach”?
We are expanding our reach in different ways. For example, we
are expanding our geographical presence domestically and
internationally. In response to meeting customers’ needs, we
opened an electronics facility in Laem Chabang, Thailand.
Our new technologically advanced veneer mill in Chandler,
Indiana, will open new markets and expand existing ones, both
domestically and internationally. We opened our Kimball
Electronics Group New Product Introduction Center in Jasper,
Indiana, to grow customer relationships through our
specialized high-flexibility manufacturing capabilities. We

broke ground for a new microelectronics facility in Valencia,
California, to strengthen our west coast based operations.
Continuing our acquisition strategy, we acquired Jackson of
Danville to bolster our strength in the sales and marketing of
seating products to the healthcare and hospitality markets.

Expanding our reach also means expanding our product
offerings. Kimball Office Furniture and National Office Furniture
introduced a variety of new casegoods and seating products
and enhancements at this year’s NeoCon office furniture show.
Our expansive product lines marketed under our “Power of the
Package” umbrella offer customers interfacing and integration
opportunities with our diverse range of office furniture product
selections.

Kimball Home unveiled more collections for the residential
furniture market, including “Mission Viejo” and “Madison
Avenue.” Kimball Lodging established a relationship with a
well-known chain of hotels and resorts during fiscal 2000.
More importantly, our association with this company’s
worldwide renovation program will continue into fiscal 2001.
Bösendorfer recently introduced a new piano series, named
“Conservatory.” Customer interest has been so great that we
have had to increase our production to meet demand.

Expanding our reach also means growing our key leadership
base. We announced several new officer and business unit
manager appointments during fiscal 2000 to further enhance
our management team and succession planning. These leaders
were selected because of their demonstrated leadership and
managerial skills.

We also expanded our reach by increasing our sales during the
past year.

Sales in fiscal 2000 reached a record $1.2 billion, an 8% increase
in sales from fiscal 1999. Sales within our Furniture and
Cabinets Segment increased 8% to $833.8 million. Sales of our
office furniture product lines registered an increase in fiscal
2000 while establishing a new record for annual sales. Our
office furniture sales also exceeded the overall growth rate of
the office furniture industry according to the Business and
Institutional Furniture Manufacturer’s Association, for the
twelve-month period ended June 30, 2000. We continued to see
robust sales of cabinets produced for large-screen projection
televisions and our furniture components product lines

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

achieved a double-digit sales increase. We are also encouraged
by the continued rise in sales of our residential furniture.

introductions and a planned diversification of its customer base
impacted Kimball Electronics Group’s results in fiscal 2000.

Our Electronic Contract Assemblies Segment sales increased 9%
to $367.1 million. Demand for our durable electronics, including
components produced for the transportation and medical
industries, remained healthy during fiscal 2000. We have been
successful in establishing a solid reputation for producing
durable electronic components that require high reliability and
exacting tolerances.

Staying the same is not an option. At Kimball, we are

constantly challenging ourselves to find better low-cost

solutions to satisfy the needs of our customers.

Despite record sales, fiscal 2000 did not meet our earnings
expectations. Net income in fiscal 2000 was $48.5 million, a 15%
decrease from net income of $57.1 million in fiscal 1999. Our
earnings per diluted share of Class B common stock were $1.21, a
decline of 14% from earnings of $1.41 per diluted share of Class B
common stock in fiscal 1999. Net income in fiscal 1999 excludes a
$2.7 million non-operating gain from the sale of two business units.

Contributing to the decline in our net income were start-up issues
at our Juarez, Mexico manufacturing facility. It is important to
note that the brunt of the start-up issues occurred during early
fiscal 2000 and we have seen an improvement in this facility’s
financial performance on a sequential basis each quarter through-
out fiscal 2000. Start-up costs associated with our electronics
facilities in Laem Chabang, Thailand and Jasper, Indiana also
impacted our financial results. We expect production to ramp up
at these facilities in early fiscal 2001. Softness in the lodging and
healthcare markets hampered sales of our lodging and healthcare
product lines. We have increased our focus on introducing new
product lines to better position us in the lodging and healthcare
markets. Competitive pricing pressures affected the net income
of our office furniture, lodging and furniture components
product lines. Investments in new technology, new product

Considering the challenges encountered in fiscal 2000, our
focus on Kimball’s long-term growth strategies has not
diminished. We are confident that the many positive efforts
being made to grow our business and the progress we have
made in reducing our cost structure will result in an
improvement in our financial performance in fiscal 2001.

Our selling, general and administrative costs as a percentage of
sales declined during fiscal 2000 for the second consecutive
year. We are proud of this accomplishment, but we realize that
we must continue to find additional opportunities to reduce our
cost structure. Our global procurement strategy has been
enhanced to help us to reduce our raw material and component
costs. Continuous improvement processes on the
manufacturing floor are helping us reduce costs and improve
efficiency. Labor inefficiencies are being eliminated.

We are continuously driven to create Share Owner value and we
are not satisfied with the trend in our stock price. We will have
a strong focus on increasing profits in fiscal 2001 and increasing
value to our Share Owners. Through dividends and our record
setting stock buy-back program, we returned $50.0 million to
our Share Owners in fiscal 2000. In June, your Board of Directors
authorized the repurchase of an additional 2,000,000 shares of
our common stock as a sign of our long-term confidence.

Fiscal 2000 was a year of maintaining our focus and expanding
our reach. Fiscal 2001 will be a year of continued focus and
further expansion of our reach with an emphasis on executing
our business plans. We are confident that our recent
investments and acquisitions will continue to improve our
profitability and you can be confident in our commitment to
increasing Share Owner value. We would like to thank our 10,000
employees and our Share Owners for their continued loyalty.
We also hope you find the insert in this year’s annual report
regarding your Company’s 50th anniversary enjoyable.

August 2, 2000

Thomas L. Habig
Vice Chairman of the Board

Douglas A. Habig
Chairman of the Board,
Chief Executive Officer

James C. Thyen
President

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

Now in its 50th year, Kimball International, Inc. has grown from

Kimball’s drive is stronger than ever to be the supplier of

a regional cabinetmaker recognized for its quality and

choice in its markets, to achieve sales growth ranked among

craftsmanship for solid wood and veneer casegoods to a multi-

the best in these markets, to understand its capabilities and

national corporation with consolidated sales that exceeded $1.2

customer needs, and to come up with solutions that add

billion in fiscal 2000. The attention to detail that has helped build

value and build success for the Company, its people and its

Kimball’s solid reputation for all of its product lines from office

Share Owners.

furniture to durable electronic contract assemblies provides

Kimball a key competitive advantage in all of its markets.

To help achieve its long-term goals of increased sales and

Kimball International is expanding its global reach as part of

profitability, Kimball has its sights now focused on several

important markets within the Furniture and Cabinets Segment

its strategy to increase its sales growth and profitability.

and the Electronic Contract Assemblies Segment. The Furniture

and Cabinets Segment markets include office furniture, lodging

The achievements of the past and the goals for the future are

and healthcare furniture, residential furniture, products

the result of the direction and insight of Kimball’s leaders and its

manufactured on an original equipment manufacturer (OEM)

employees, both past and present, and their dedication to success.

basis, furniture components and store display fixtures. The

Electronic Contract Assemblies Segment is focused on providing

For Kimball International, “Maintaining our Focus” was a focal

durable electronic components for the transportation,

point for the entire Company in fiscal 2000 as it embarked on

industrial, medical, computer and telecommunications markets.

an ambitious campaign to expand its global reach. Overcoming

the temptation to sacrifice its goals of increasing growth,

Today, more than ever before, Kimball’s products are finding

profitability and creating greater Share Owner value for the

their way into consumers’ lifestyles. Whether it is a Kimball-

achievement of short-term results, Kimball continued to

branded office furniture product, a collection of fine furniture

maintain its focus during fiscal 2000 on its long-term strategies.

found in the home, an anti-lock braking component providing

safety for millions of drivers today or one of many other

While Kimball offers a very diverse range of products, it is

consumer products produced by Kimball, the Company is

dedicated to selective business segments and their related

rapidly expanding its global reach as part of its strategy to

markets, for these segments and markets exemplify the

increase growth and profitability.

products and services which Kimball is best at providing. In

other words, within these markets are Kimball’s existing core

In fiscal 2000, Kimball took a major step to expand its global

competencies and where its focus must be dedicated.

footprint. In response to meeting the needs of its customers,

Kimball Electronics Group (KEG) opened an electronics

In the best interest of the Company and its Share Owners,

manufacturing facility in the Export Zone of Laem Chabang,

Kimball maintains a close, on-going, undivided attention to its

Thailand. Laem Chabang, located on the eastern seaboard of

markets, measuring and evaluating its performance to ensure the

Thailand, is known as “Detroit of the East” due to the number of

highest level of competitiveness and growth.

automotive manufacturers and suppliers now located in this region

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

maintaining ourfocusDuring fiscal 2000,

Kimball International

maintained its focus on

executing its long-term

business plans and

strategies. With its focus

on quality, reliability,

value and speed in each

of the markets it serves,

Kimball is well positioned

to succeed.

>Featured: “Change,” contemporary styled,

modular casegoods from Kimball Office Furniture

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

of Thailand. This new facility is fully automated and offers a variety

manufacturing operation, which is recognized for its ability to

of manufacturing capabilities to support Kimball’s global expansion

design, manufacture, package and test microelectronic components

initiatives. KEG is well respected in the transportation market for its

that must meet demanding standards for high reliability and

durable electronic components, including electronic control

durability. The new facility will also increase manufacturing capacity

units for light and heavy trucks and sport utility vehicles. Also,

and offer expanded capabilities, including board level assembly in a

Kimball will have an international purchasing office located

high-flexibility production environment, and serve as a new product

there to lend additional support to its global procurement strategy.

introduction center to support KEG’s high volume manufacturing

Kimball International unveiled its “Power of the Package”

facilities located in Jasper, Indiana and Reynosa, Mexico.

theme at this year’s NeoCon office furniture show along with

Continuing its strategy to grow its business through strategic

new casegoods and seating products.

acquisitions, Kimball acquired Jackson of Danville in November

1999. Jackson of Danville, based in Danville, Kentucky,

In fiscal 2000, Kimball took an important strategic measure to

manufactures custom and fully-upholstered seating products

expand its manufacturing operations and strengthen its vertical

and wood framed chairs for the hospitality and healthcare

integration strategy with the completion of a new,

markets. This acquisition will help Kimball and Jackson of

technologically advanced veneer mill located in Chandler,

Danville strengthen sales and marketing of seating products to

Indiana. The 130,000 square-foot facility will lead to increased

the healthcare and hospitality markets.

yields and efficiency, reduced shipping and handling costs and

lower maintenance costs while helping to open new markets

In addition to acquisitions and new manufacturing facilities,

both domestically and internationally that Kimball was unable

Kimball also expanded its reach during fiscal 2000 with the

to serve in the past due to age and capacity restraints at its

introduction of several new products and enhancements to

former veneer facility. Kimball provides high-quality wood

existing product lines in both the Furniture and Cabinets

veneer for a variety of Kimball branded products, including

Segment and the Electronic Contract Assemblies Segment.

office, lodging and healthcare, and residential furniture, as well

as to other customers on a contract basis.

To further market Kimball as a single source supplier of choice in

the office furniture market, Kimball Office Furniture unveiled its

In keeping its commitment to meeting the needs of its

“Power of the Package” theme at this year’s NeoCon office

customers, Kimball Electronics Group opened a new high-

furniture show. “Power of the Package” supports Kimball’s focus

flexibility manufacturing facility located in Jasper, Indiana. The

on offering customers interfacing and integration opportunities

fully automated facility will allow KEG to manufacture high

with its diverse range of office furniture product selections.

mix/low volume durable electronic assemblies for its customers

with the intent to then transfer production to KEG’s high volume

A prime example of Kimball’s “Power of the Package” was the

manufacturing facility located on the same campus in Jasper.

introduction of “Change”; contemporary styled modular

casegoods promising wide appeal to a variety of users. With

Kimball Electronics Group also announced the groundbreaking

features and aesthetics capable of attracting more user-specified

for a new 40,000 square foot microelectronics facility in Valencia,

options as compared to other direct competitors, “Change” also

California. The new facility will replace KEG’s present, smaller

occupies an attractive moderate price point.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

n
a
our
our

reach

Kimball International

continues to expand its

reach with new products

and new manufacturing

facilities located around

the globe as a sign of its

commitment to serving

its customers wherever

they are located.

>Featured: “Mix-it,” a dynamic, ergonomic management chair

from National Office Furniture

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

Kimball also announced enhancements to “Skate,” its mobile,

motorized scooters and chairs for the healthcare industry.

table-based system that is compatible with a variety of other

These products give those with limited or no capacity to walk

Kimball office furniture product lines.

the capability to move freely around their total environment.

During fiscal 2000, Kimball Electronics Group continued to

Kimball Lodging designed and manufactured a complete collection

benefit from further diversification of its customer base and a

of hospitality furniture for Starwood Lodging and Resorts’ chain of

broadening of its product offerings.

Sheraton Hotels during fiscal 2000. Kimball Lodging provided

beds, tables and desks for nearly 8,000 Starwood Sheraton rooms

To complement an already impressive portfolio of wood side

designed specifically for Starwood’s worldwide renovation project.

chairs, Kimball unveiled “Acapella” at this year’s NeoCon.

Featuring three distinct visual designs and maple hardwood

Kimball Electronics Group continued to benefit from

frames, this collection can be used in any office environment.

diversification of its customer base and broadening of its

National Office Furniture introduced its “Mix-it” seating

enhance its reputation as a top-quality manufacturer of durable

collection at NeoCon 2000. “Mix-it” is a dynamic, ergonomic

electronics for the transportation, industrial and medical

management chair. This collection, complete with guest seating,

markets that require high reliability. Many of the products

provides a solution for all users in the workplace. In addition,

produced today by KEG ultimately help to make peoples’ lives

manufacturing capabilities during fiscal 2000. KEG continues to

National Office Furniture also introduced a veneer option for its

safer and more fulfilling.

popular “WaveWorks” modular casegoods product.

Also playing an important role in KEG’s business strategy is

Kimball continued to expand its impressive collections of

Kimball Electronics Design Services (KEDS). In only its second

residential furniture produced by Kimball Home Furniture. During

year in existence, KEDS is making great strides in providing

fiscal 2000, Kimball Home introduced “Mission Viejo,” featuring

immediate access to world-class design engineering services

solid hardwood construction and the distinctive look and feel

for its customers from the initial design stage right through to

associated with every Kimball Home collection. At this year’s High

the final stages of testing and production.

Point International Home Furnishings Market, Kimball Home

unveiled its latest collection of furniture for the home named

A good example of Kimball Electronics Group providing a total

“Madison Avenue.” This 40-piece contemporary collection is

solution to meet the needs of one of its customers was the

crafted in cherry veneers and select solid hardwoods as well as

collaboration between KEG, KEDS and its customer in developing

metal accents reminiscent of classic design traditions.

a revolutionary disposable hearing aid. Working closely with its

To further live up to part of Kimball International’s Vision that

concept, develop the microelectronics circuitry, software and

states, “our touch is felt throughout daily life,” Kimball Upholstered

the accompanying prescription selector device used by

Products, seeking to increase sales to its outside customers,

audiologists, manufacture, test and package the finished

began producing seating for a manufacturer and assembler of

product. The disposable hearing aid was launched in May 2000.

customer, KEG and KEDS were able to take the initial design

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Durable electronic

components that make

automobiles safer,

components that help

people cope with medical

problems, new products

and enhancements to

existing product lines.

Kimball International

continues to expand its

products and services that

in|novation

product

touch peoples’ lives everyday.

>Featured: Kimball Electronics Group manufactures durable

electronic components such as this anti-lock braking device

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

Kimball Electronics Group is also producing electronic

For the second year in a row, Honeywell-Bendix Commercial

components for an affordable medical device that measures

Vehicle Systems selected Kimball Electronics Group for their

blood insulin levels. This device, which can be purchased at

“Supplier of the Year” due to accomplishments in quality,

most drug or department stores, was also a joint effort

delivery, productivity and group support.

between KEG’s engineering and manufacturing teams.

When it comes to Kimball’s progress towards achieving its

long-term goals and strategies, staying the same is not an option.

In fiscal 2000, Kimball Electronics Group earned the State of

Indiana Quality Improvement Award, given in recognition of

outstanding leadership and achievement. Winning this award

for the third time demonstrates the dedication of Kimball’s

In addition to the array of new products that were unveiled by

employees towards continuous improvement.

Kimball throughout fiscal 2000, a number of Kimball’s business

units were recognized for their keen focus on producing a

Developing and adhering to a formal quality system helps

quality product and providing excellent customer service. Every

Kimball achieve such recognition. Kimball’s quality systems

Kimball employee takes great pride in providing customers with

were developed to document all production processes and

outstanding service and quality.

provide its business units with the ability to exceed their

customers’ expectations by being able to pinpoint opportunities

Kimball’s Heritage Hills manufacturing facility won the Toshiba

for quality improvement.

Quality Award for the third time in four years, the highest honor

achievable by a Toshiba supplier in the production of large-

Over the last few years, Kimball has been actively involved in

screen projection television cabinets. The award was created to

quality systems activities. Eighteen Kimball business units, the

acknowledge companies that rank the highest in their

latest being Jasper Furniture Company and Springs Valley

commitment to quality in the manufacturing of large-screen

Manufacturing, have quality systems modeled after and registered

projection television cabinets.

to ISO 9000, QS9000, or ISO 25 international standards. Kimball

has “raised the bar” to use its quality systems effectively for

For the fourth consecutive time, Kimball Electronics Group won

improving quality, customer satisfaction and profitability.

an award in the 2000 Service Excellence Awards for Contract

Electronics Manufacturers in the category of dependability/

Kimball was also recognized for the quality of its child

timely delivery. This is the only contest for contract electronics

developmental center, called Kimball Kids. In June, Kimball Kids

manufacturers in which the customers themselves rate suppliers

and Kimball International were honored with the first-ever

in various service areas. The Service Excellence Awards are an

Indiana Business-Childcare Award. The awards were established

exceptional opportunity for KEG to gain additional input from

by the Indiana Department of Commerce Community

its customers for continuous improvement.

Development Division to honor Indiana companies whose

support allows parents to work knowing that their children are

Kimball Lodging captured the Vendor Excellence Award presented

cared for and safe. Kimball was one of only 24 companies

by Starwood Hotels and Resorts Worldwide in recognition for its

statewide to receive the award. Kimball is especially proud of

quality and design. Kimball Lodging was one of only four

this award because its corporate culture has historically

chosen from more than 120 vendors eligible for this honor.

understood the importance of family life.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|10
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

A key ingredient to the

success of Kimball

International is the long-

commitment to

quality

term relationships that

it has established with its

customers, suppliers,

employees and Share Owners.

>Featured: Kimball Lodging designed and manufactured this

sleigh bed for Sheraton Hotels

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

Kimball also earned recognition for its commitment to the

Kimball Electronics Group has embraced “Six Sigma,” a

safety and wellness of its employees when Springs Valley

demanding management system aimed at reducing

Manufacturing and Artec Manufacturing earned the Indiana

manufacturing defects. “Sigma” is a statistical term that relates

Department of Labor Commission’s VPP STAR status, a rare

to quality. Six Sigma is the Kimball Electronics Group goal,

achievement when it comes to plant safety in the United

which means its products and processes will experience only

States. Since 1982, approximately 600 employers nationwide

3.4 defects per million opportunities. With Six Sigma, Kimball

have achieved this status. It is awarded by the Federal

Electronics’ fundamental objective is customer satisfaction

Government’s Occupational Safety and Health Administration’s

through continuous improvement in quality.

Voluntary Protection Program (VPP).

Kimball International builds success for its customers,

Information technology has always played an important role in

Kimball’s progress. Information technology is changing the way

employees, communities and Share Owners. Why? Simple.

Kimball designs, develops and builds its products. It is also

It’s all about loyalty.

changing the way Kimball interacts with its customers.

When it comes to Kimball’s progress towards achieving its long-

Kimball’s willingness to understand the uses of new technology

term goals and strategies, staying the same is not an option.

and its willingness to implement that technology to take

advantage of its uses have been critical to Kimball’s

Supporting Kimball’s progress are the various strategic

progress.. .and will continue to shape its future. One of

initiatives and tools that its business units have access to in

Kimball’s latest information technology investments is its

order to improve Kimball’s quality, reliability, value and speed;

decision to utilize SAP as its global enterprise resource

the key elements that enable Kimball to build success and

planning (ERP) solution. SAP gives Kimball the foundation from

achieve profitability.

a data perspective for its electronic business planning and is a

great example of various business units selecting a single

Of course, none of this is possible without a disciplined,

solution for the benefit of the whole Company.

undying focus on managing Kimball’s cost structure, of which its

global procurement effort is a good example. Several commodity

Kimball builds success for its customers, employees, communities

teams have reduced costs involving preferred vendors that

and Share Owners. Why? Simple. It’s all about loyalty.

supply Kimball with various components and materials needed

to make its products. These efforts will help Kimball to reduce

Loyalty to its customers is part of Kimball’s heritage.

its cost structure in fiscal 2001.

Throughout its history, Kimball has demonstrated its loyalty by

establishing long-term relationships with its customers and

Another example of Kimball’s progress in fiscal 2000 was the

suppliers. Kimball has relocated manufacturing operations and,

implementation of Demand Flow Technology (DFT) by Harpers

in some cases, ventured across the globe to establish new

Manufacturing, Artec Manufacturing and Kimball Upholstered

manufacturing facilities in order to be closer to the customer,

Products to help Kimball achieve increased efficiencies while

thus enhancing Kimball’s relationship with them.

improving quality. DFT is a manufacturing, quality and design

technology strategy driving change and continuous improvement.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|12
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

The dedication of Kimball’s

employees can be seen in the

quality and craftsmanship

that is woven into the array

of products that it

manufactures. Kimball

International “Builds

Success.”

dedication

>Featured: Variable speed, high efficiency motor control for

heating, ventilation and air conditioning (HVAC) applications
manufactured by Kimball Electronics Group.

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

•

Since the Company was founded 50 years ago, Kimball has

Kimball Lodging donated various pieces of furniture, including

demonstrated its loyalty to the many communities it serves and

beds for nurse dormitories to the Princess Margaret Hospital,

to the employees that reside there. During fiscal 2000,

located in Morant Bay, Jamaica. Kimball International helped

Kimball’s long-standing tradition of community service and

provide the financial support and Kimball employees donated

corporate citizenship continued.

their time and skills to construct a Habitat for Humanity home

Kimball’s loyalty to its employees is evident in its “work-

located near Jasper, Indiana late last year.

friendly” environment, which plays a major role in attracting

Loyalty to its employees and their families is another trademark of

and retaining valuable people.

Kimball. Kimball International continues to support higher education

through its scholarship programs. During fiscal 2000, qualified,

Kimball International made a financial grant to help build a new

dependent children of full-time Kimball employees earned college

Workforce Development/ Training Center in Batesville,

scholarships through the Kimball International Scholarship Program.

Mississippi. Kimball has operated a metal stamping and

Kimball’s ongoing Excellence through Education Trust helps

assembly facility, Batesville American Manufacturing, in the

Kimball reach a more diverse group of students. Once again in

community since 1969. The new center will provide industrial

fiscal 2000, Kimball International awarded scholarship money to

training for about 100 graduating high school students each

dozens of students through this trust in support of their efforts to

year, who might otherwise enter the local workforce without

attain a higher education. Since 1963, nearly $2.4 million in Kimball

industrial training or skills. The grant is yet another way that

scholarships have been awarded through these two programs.

Kimball International supports its goal of helping make the

communities in which it operates better places to live, one of

Kimball’s loyalty to its employees is also evident in its work-

its key Guiding Principles.

friendly environment, which plays a major role in attracting and

retaining valuable people. Kimball strives to be a flexible,

Through participation in the national “Log a Load for Kids”

family-friendly company. Flexible so that it maintains focus on the

program, Kimball International continued to donate funds to

“real needs” of its people rather than its policies. Family-friendly

the James Whitcomb Riley Hospital in Indianapolis, Indiana and

so that its policies can accommodate employee needs by balancing

Camp Riley for Youth With Physical Disabilities in Martinsville,

work and family issues. Kimball offers various time-off practices

Indiana. “Log a Load for Kids” is a fundraising opportunity for

– flexible scheduling, flexible vacations – without jeopardizing

loggers and other forestry industry personnel in conjunction

quick response and quality service to its customers. These

with forestry organizations and associations to raise money for

innovative employment policies will play an important role in

local Children’s Miracle Network Hospitals.

Kimball’s future success as it continues to expand its global reach.

Kimball Office Furniture recently announced their affiliation with

As Kimball International, Inc. celebrates its 50th anniversary, it

the Design With Care program, a cause-related marketing fund-

continues to operate under the same Guiding Principles, Vision

raiser for DIFFA (Design Industry Foundation Fighting AIDS).

and Mission statements that are responsible for the Company’s

Kimball will donate a portion of the sales of “Definition,” its

success and growth. Kimball remains focused on executing its

highly successful and award-winning casegoods product, to

strategies to guarantee its long-term success for the benefit of

DIFFA in the name of design firms nationwide.

its customers, employees and Share Owners.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|14
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

loyaltyto the customer,

The word “Loyalty” takes

on a variety of meanings

the employee and
the Share Owner

at Kimball International.

Whether it involves a

customer, supplier, or an

employee and their

family, Kimball

International has always

maintained a deep sense

of loyalty to all who

contributed to its success.

h
c
a
e
r

r
u
o

g
n
d
n
a
p
x
e

s
u
c
o

r
u
o

g
n
n
a
t
n
a
m

>Featured: “Mission Viejo,” featuring clean, pure, classic lines

manufactured by Kimball Home Furniture

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

Overview
Net sales of $1,200,945,000 reached
record levels in fiscal year 2000, topping
the prior year by 8%. Net income and
Class B diluted earnings per share were
$48,462,000 and $1.21, respectively, a
decrease of 13% and 12%, respectively,
from fiscal year 1999, excluding non-
operating gains recorded in fiscal year
1999. Fiscal year 1999 non-operating
items include a $1,337,000 after tax gain
($0.03 per diluted share) on the sale of a
stock investment of which the Company
held a minor interest and a $2,674,000
after tax gain ($0.06 per diluted share) on
the disposition of two non-core operating
facilities within the Furniture and Cabinets
Segment. Including fiscal year 1999 non-
operating gains, net income decreased
19% and Class B diluted earnings per
share decreased 18% in fiscal year 2000
when compared to the year earlier.

Results of Operations
2000 Discussion
Net sales for fiscal year 2000 surpassed
1999 net sales on increases by both of
the Company’s segments — the Furniture
and Cabinets Segment and the Electronic
Contract Assemblies Segment. Net
income for fiscal year 2000 declined from
fiscal year 1999 in both segments.

Furniture and Cabinets
Product line offerings included in the
Furniture and Cabinets Segment are office
furniture, home furniture, lodging and
healthcare furniture, store fixtures, original
equipment manufacturer (OEM) furniture
and cabinets and furniture components.
The Company’s production flexibility allows

it to utilize portions of the available
production capacity created by lower
volumes within these product lines to
support and balance increased
production schedules of other product
lines within this segment.

In fiscal year 2000, the Company
purchased Jackson of Danville, a privately
held manufacturer of custom and in-line
fully upholstered seating products and
wood framed chairs. The acquisition was
accounted for as a purchase with operating
results included in the Company’s
consolidated results from the date of
acquisition, and was financed with available
cash on hand and the Company’s Class B
Common Stock. The acquisition price and
operating results of this acquisition were
not material to the Company’s fiscal year
2000 consolidated operating results.

The Furniture and Cabinets Segment set a
new annual net sales record in fiscal year
2000 with an increase of 8% from the prior
year. Sales increased over fiscal year
1999 for all product lines, except lodging
and healthcare, within this segment.

Increased volumes in the office furniture
product line resulted in record sales in
fiscal year 2000. Sales of casegoods,
systems, and seating products within the
office furniture line all increased over
fiscal year 1999. Office furniture sales
growth, excluding prior year acquisitions,
outpaced the 5% growth in shipments
reported by the Business and
Institutional Furniture Manufacturer’s
Association (BIFMA) for the Company’s
fiscal year ending June 2000.

Furniture and Cabinets Segment
Net Sales
In Millions of Dollars

Furniture and Cabinets Segment
Net Income
In Millions of Dollars

$706.7 $771.5 $833.8

$27.9 $34.6 $27.7

$ 35

Net sales of the lodging and healthcare
product line decreased in fiscal year 2000
from the previous year. Sales of both the
Company’s custom-made products and
standard product offerings declined in
fiscal year 2000 when compared to fiscal
year 1999. Product mix continued to shift
toward lower margin custom-made
products in fiscal year 2000. Lodging and
healthcare sales are expected to improve
beginning with the first quarter of fiscal
year 2001 as evidenced by an increase in
open orders as of June 30, 2000 compared
with open orders at June 30, 1999. The
preceding statement is a forward-looking
statement under the Private Securities
Litigation Reform Act of 1995 and is subject
to certain risks and uncertainties including,
but not limited to customer order changes,
a downturn in the lodging and healthcare
markets, loss of key customers,
availability of raw materials, or a natural
disaster or similar unforeseen event.

Fiscal year 2000 outside net sales of OEM
furniture and cabinets, excluding the
acquisition of Jackson of Danville,
experienced double-digit growth when
compared to 1999. Increased volume of
OEM large-screen projection television
cabinets, including those produced at the
Company’s Juarez, Mexico facility, was the
largest single contributor to the sales growth.

Outside net sales of furniture components
increased in fiscal year 2000 primarily as a
result of increased sales of lumber products.

Net income in the Furniture and Cabinets
Segment decreased in fiscal year 2000
from fiscal year 1999 despite increased
sales. Fiscal year 1999 net income
includes an after tax gain of $2.7 million
from the sale of two non-core operating
facilities. Gross profit, as a percent of
sales, declined from 1999 primarily due
to an increase in material costs, as a
percent of sales. Lower sales margins on
the furniture components and lodging
and healthcare product lines contributed
to the decline in gross profit in fiscal year
2000 when compared to fiscal year 1999.
Also contributing to the reduced gross
profitability in fiscal year 2000 were start
up costs and inefficiencies early in fiscal
year 2000 related to the Company’s
Juarez, Mexico facility that was acquired in

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|16
|

$ 800

600

400

200

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

fiscal year 1999. The Company, however,
has seen continued improvement in
gross profitability in each quarter of
fiscal year 2000 from the Juarez facility
and is expecting continued improvement
in gross profitability from this facility in
fiscal year 2001. The preceding statement
concerning the Company’s Juarez, Mexico
facility is a forward looking statement under
the Private Securities Litigation Reform
Act of 1995 and is subject to certain risks and
uncertainties including, but not limited
to, material price changes, unexpected
manufacturing inefficiencies, a downturn in
the economy or similar unforeseen event.
Selling, general and administrative
expenses increased in dollars in fiscal year
2000 but decreased as a percent of sales
partially resulting from efforts to manage
costs. Incentive compensation costs,
which are linked to company profitability,
decreased in both dollars and as a
percent of sales also contributing to the
lower selling, general and administrative
costs, as a percent of sales.

Electronic Contract Assemblies
Net sales for fiscal year 2000 surpassed
the prior year by 9% in the Electronic
Contract Assemblies Segment. Sales of
electronic transportation products and
medical components increased while
sales of computer related products
declined when compared to the prior year.

In fiscal year 2000, the Company
embarked on a number of strategic
expansion opportunities in the Electronic
Contract Assemblies Segment. In April
2000, the Company announced the
opening of a new manufacturing facility

in the export zone of Laem Chabang,
Thailand. This fully automated facility
will serve the global requirements of its
customers and includes future expansion
possibilities. In May 2000, the Company
announced the opening of a new high-
flexibility manufacturing facility located
in Jasper, Indiana that will allow the
manufacture of high mix/low volume
assemblies as well as test capabilities to
meet the needs of its customers. The
Company also broke ground for a new
microelectronics facility located in
Valencia, California during June 2000.
The new Valencia facility will replace a
current facility located in Burbank,
California and will increase capacity and
expand manufacturing capabilities.

Net income in fiscal year 2000 decreased
from the prior year despite higher sales.
Gross profits were lower in fiscal year
2000, compared to historic margins that
were achieved on more mature product
lines, resulting from a planned
diversification of its customer base into a
variety of new products as well as
production of the next generation of
anti-lock braking components. Start up
costs associated with the new
manufacturing facilities in Jasper,
Indiana and Laem Chabang, Thailand
also contributed to the lower gross
profitability in fiscal year 2000. Selling,
general and administrative expenses
increased in dollars but decreased as a
percent of sales in fiscal year 2000
driven by lower incentive compensation
which is linked to company profitability.

Included in this segment are sales to

Electronic Contract Assemblies Segment
Net Sales
In Millions of Dollars

Electronic Contract Assemblies Segment
Net Income
In Millions of Dollars

$325.6 $335.4 $367.1

$18.1 $18.2 $14.2

$ 350

300

250

200

150

100

$ 20

Kimball International, Inc. and Subsidiaries

one customer, TRW, Inc. which
accounted for 17% and 16% of
consolidated net sales in fiscal year
2000 and 1999, respectively. Sales to
this customer represent approximately
one half of total sales in the Electronic
Contract Assemblies Segment.

This segment’s investment capital carries
a higher degree of risk than the
Company’s other segment due to rapid
technological changes, component
availability, the contract nature of this
industry and the importance of sales to
one customer.

Consolidated Operations
Consolidated selling, general and
administrative expenses decreased, as a
percent of sales, 1.1 percentage points in
fiscal year 2000 when compared to fiscal
year 1999. This reduction in selling,
general, and administrative costs, as a
percent of sales, is primarily due to lower
incentive compensation costs which are
linked to company profitability as well as
lower selling expenses and lower
administrative employee compensation
costs, as a percent of sales.

Other income decreased from the prior
year on lower interest income caused by
lower average investment balances. In
addition, fiscal year 1999 results include
a $1,337,000 after tax gain ($0.03 per
diluted share) on the sale of a stock
investment of which the Company held a
minor interest and a $2,674,000 after tax
gain ($0.06 per diluted share) on the
disposition of two non-core facilities.

The effective income tax rate decreased
0.4 percentage point in fiscal year 2000
when compared to fiscal year 1999.
Decreases in both state and federal
effective tax rates contributed to the
lower overall effective income tax rate.

Fiscal year 2000 net income and Class B
diluted earnings per share of
$48,462,000 and $1.21, respectively,
decreased 13% and 12%, respectively,
from fiscal year 1999 net income of
$55,714,000 and Class B diluted
earnings per share of $1.38, excluding
fiscal year 1999 non-operating gains.
Including fiscal year 1999 non-operating
gains, net income and Class B diluted

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|17
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

earnings per share declined 19% and
18%, respectively, from prior year levels
of $59,725,000 and $1.47, respectively.

1999 Discussion
Net sales for the 1999 fiscal year surpassed
1998 levels on increases by both of the
Company’s segments — the Furniture
and Cabinets Segment and the Electronic
Contract Assemblies Segment. Net
income for fiscal year 1999 also increased
over the prior year in both segments.

Furniture and Cabinets
In fiscal year 1999, the Company completed
a number of acquisitions included within
the Furniture and Cabinets Segment. In
September 1998, the Company acquired
the assets and assumed certain liabilities of
Transwall, Inc., a privately held
manufacturer of stackable panel office
furniture systems and floor-to-ceiling
products, which increased its already
extensive office furniture product offering. In
January 1999, the Company purchased the
assets and assumed certain liabilities of
Southeast Millwork, a privately held
manufacturer of store display fixtures. This
acquisition provided an entry point for
the Company to pursue the store fixtures
markets. These two acquisitions were
accounted for as purchases with results
of operations included in the Company’s
consolidated results from the date of
purchase. In April 1999, the Company
purchased a manufacturing facility located
in Juarez, Mexico. The results of these
acquisitions were not material to fiscal
year 1999 consolidated operating results.

The Company also completed the sale of
two of its non-core facilities in fiscal year
1999. In May 1999, the Company sold
Kimball Furniture Reproductions, a
furniture manufacturing facility located in
Montgomery, Alabama. In June 1999, the
Company sold ToolPro, a carbide cutting
tools production operation located in
Jasper, Indiana. Proceeds from the
divestitures will be used to help fund
future acquisitions and general corporate
purposes to support the Company’s growth
strategy. An after tax gain of $2,674,000
was recorded on these two dispositions.

Fiscal year 1999 net sales increased 9%
in the Furniture and Cabinets Segment,
including acquisitions, when compared
to the prior year. Sales increased for all
product lines within this segment.

Increased volumes in the office furniture
product line resulted in record sales in
fiscal year 1999. Casegoods and
systems products within the office
furniture line both increased over fiscal
year 1998, while sales of seating
products declined slightly. Excluding
acquisitions, office furniture sales growth
outpaced the 2% growth in shipments
reported by the Business and
Institutional Furniture Manufacturer’s
Association (BIFMA) for the twelve-
month period ending May 1999.

The lodging and healthcare product line
experienced increased net sales in fiscal
year 1999 over the prior year. Increased
sales of the Company’s custom-made
products more than offset sales declines
of standard product offerings. The latter
part of the fiscal year showed a general
slowing in orders from the lodging industry.

Fiscal year 1999 outside net sales of OEM
furniture and cabinets experienced double-
digit growth when compared to 1998.
Increased volume of OEM large-screen
projection television cabinets was the major
contributor to the sales growth. Fiscal year
1998 sales of these cabinets were lower due
to the relocation of a large customer and
its longer than anticipated start up time.

Outside net sales of furniture components
increased in fiscal year 1999 primarily as
a result of volume increases in furniture
component parts, mainly kitchen cabinet
doors.

Net income in the Furniture and
Cabinets Segment increased in 1999
when compared to 1998. Gross profit,
as a percent of sales, decreased from
1998 primarily due to deeper
discounting and increased material
costs, as a percent of sales. Selling,
general and administrative expenses
increased in dollars in 1999 but
decreased as a percent of sales as
focused cost reductions resulted in
lower freight, sales incentives and
people costs, as a percent of sales.

Electronic Contract Assemblies
Net sales for fiscal year 1999 in the
Electronic Contract Assemblies Segment
exceeded the prior year by 3%. Sales of
electronic transportation products
increased while sales of computer
related products declined when

compared to the prior year. The
Company continued to expand its
product line offering in the Electronic
Contract Assemblies Segment including
components for consumer electronics,
appliances, and industrial controls.

Net income in fiscal year 1999 increased
slightly over the prior year, primarily due
to higher sales volumes. Gross profit, as
a percent of net sales, remained relatively
consistent in 1999 when compared to 1998.
Selling, general and administrative costs
increased in dollars but decreased slightly,
as a percent of sales, in fiscal year 1999.
Net income was also affected by a higher
effective state income tax rate.

Included in this segment are sales to one
customer, TRW, Inc. which accounted for
16% of consolidated net sales in both
fiscal year 1999 and 1998. Sales to this
customer represented approximately one
half of total sales in the Electronic
Contract Assemblies Segment.

Consolidated Operations
Consolidated selling, general and
administrative expenses decreased, as a
percent of sales, 0.2 percentage point in
fiscal year 1999 when compared to 1998.
The Company focused on reducing costs
and continued to review activities and
processes to assess where costs could
further be reduced in fiscal year 1999
while providing quality products and
services to the marketplace.

Other income decreased from the prior
year on lower interest income caused by
lower average investment balances and a
shift in the Company’s investment portfolio
to a mix more heavily weighted toward
tax-free municipal bonds with lower pre-
tax interest rates. Partially offsetting the
decline in interest income was an increase
in miscellaneous income. In fiscal year
1999 the Company recorded a $1,337,000
after tax gain ($0.03 per diluted share)
on the sale of a stock investment of
which the Company held a minor interest
and a $2,674,000 after tax gain ($0.06

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|18
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

per diluted share) on the disposition of
two non-core facilities. Fiscal year 1998
results include a $1,008,000 after tax
gain ($0.02 per diluted share) on the
sale of real estate and a $616,000 after
tax gain ($0.01 per diluted share) on the
sale of a stock investment of which the
Company held a minor interest.

The effective income tax rate decreased
1.8 percentage points in fiscal year 1999
in comparison to 1998. An increase in
state tax rates was more than offset by a
decrease in the federal effective tax rate
as the Company utilized available capital
loss carryforwards to offset capital gains.

Net income and Class B diluted earnings
per share of $59,725,000 and $1.47,
respectively, in fiscal year 1999 increased
9% from the prior year levels of
$55,027,000 and $1.32, respectively.

Liquidity and Capital Resources
The Company’s aggregate of cash, cash
equivalents, and short-term investments
decreased from $132 million at the end of
fiscal year 1999 to $85 million at the end
of fiscal year 2000 due primarily to cash
outlays for strategic capital investments
and repurchases of the Company’s Class
B Common Stock. Working capital at
June 30, 2000 was $190 million with a
current ratio of 1.9, compared to working
capital of $218 million and a current ratio
of 2.3 at June 30, 1999.

Operating activities generated $41
million of cash flow in fiscal year 2000
compared to $98 million in fiscal year
1999. Net income and non-cash charges
to net income were partially offset by
increases in receivables of $46 million
and inventories of $17 million. The
Company reinvested $71 million into
capital investments for the future,
including new manufacturing facilities in
Chandler, Indiana and Laem Chabang
Thailand, computer equipment,
production equipment, and office
facilities. Financing cash flow activities
were primarily in the form of $26 million
in dividend payments and $24 million of
Class B Common Stock repurchases. Net
cash flow, excluding the purchases and
maturities of short-term investments was
an outflow of $47 million.

At June 30, 2000, the Company had $35
million of short-term borrowings

outstanding under its $100 million
revolving credit facility that allows for
both issuance of letters of credit and
cash borrowings. The Company did not
have any debt outstanding under this
credit facility at June 30, 1999. The credit
facility requires the Company to comply
with certain debt covenants including debt-
to-total capitalization, interest coverage
ratio, minimum net worth, and other terms
and conditions. The Company is in
compliance with these covenants at June 30,
2000 and does not expect these covenants
to limit or restrict the Company’s ability
to borrow from the credit facility in fiscal
year 2001. The preceding statement is a
forward-looking statement under the
Private Securities Litigation Reform Act of
1995 and is subject to certain risks and
uncertainties including, but not limited
to a downturn in the economy, loss of
key customers or suppliers, availability
or increased costs of raw materials, or a
natural disaster or similar unforeseen event.

The Company anticipates maintaining a
strong liquidity position for the 2001 fiscal
year and believes its available funds on
hand, unused credit line available under
the revolving credit facility and cash
generated from operations will be sufficient
for working capital needs and for funding
investments in the Company’s future.
This statement is a forward-looking
statement under the Private Securities
Litigation Reform Act of 1995 and is
subject to certain risks and uncertainties
including, but not limited to a downturn
in the economy, loss of key customers or
suppliers, availability or increased costs
of raw materials, or a natural disaster or
similar unforeseen event.

Year 2000 Disclosure
The Company implemented a plan to
alleviate any potential problems which
may have been caused by the Year 2000
which included inventory assessment,
remediation and testing. The Company has
not experienced any major interruptions
or malfunctions in its operations related
to the Year 2000 issue but will continue
to monitor throughout the remainder of
the calendar year. In addition, the
Company has currently not experienced
any interruptions caused by a lack of
Year 2000 readiness by any of its key
suppliers, distributors, customers, public
infrastructure suppliers and other vendors.

Kimball International, Inc. and Subsidiaries

The total gross cost of Year 2000
compliance approximated $8.1 million
which favorably compares to estimated
costs disclosed in the Company’s Form
10-K filing for its fiscal year ended June
30, 1999 of $9 million to $11 million.
Existing information technology
resources were redeployed, which
accounted for approximately 50% of the
total gross costs above. Approximately
30% of the above total gross costs relate
to machinery and other fixed assets
which were capitalized or in certain
situations leased, with the remaining
costs being expensed as incurred.

Accounting Standards
In June 1998, the Financial Accounting
Standards Board issued Financial
Accounting Standards No. 133,
Accounting for Derivative Instruments
and Hedging Activities, which requires
the recognition of all derivatives as either
assets or liabilities in the balance sheet
and the measurement of those instruments
at fair value. The Company did not have
any derivative instruments at June 30,
2000, however the Company periodically
engages in limited forward purchases of
foreign currency and does not expect this
new standard to have a material effect on
the Company’s financial condition or results
of operations. This standard will be
effective for the Company’s fiscal year 2001.

In July 2000, the Emerging Issues Task
Force (EITF) reached a consensus on
Issue 00-10 “Accounting for Shipping and
Handling Fees and Costs.” EITF Issue
00-10 requires that all amounts billed to
a customer in a sale transaction for
shipping and handling be classified as
revenue. The EITF did not reach a
consensus with respect to the
classification of costs related to shipping
and handling. The Company currently
classifies most all shipping and handling
revenues and costs, on a net basis, in
selling and administrative expense.
Accordingly, the Company has
determined that EITF Issue 00-10 will
require reclassification of shipping and
handling revenues and costs, but does
not believe EITF Issue 00-10 will impact
its financial position or net income. The
effective date of this standard is the
fourth quarter of the Company’s fiscal
year 2001.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|19
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Report of Management

To the Share Owners of Kimball International, Inc.

The management of Kimball International, Inc. is responsible for the preparation and integrity of the accompanying financial
statements and other related information in this report. The consolidated financial statements of the Company and its subsidiaries,
including the footnotes, were prepared in accordance with generally accepted accounting principles in the United States and include
judgements and estimates, which in the opinion of management are applied on a conservative basis.

The Company maintains a system of internal controls intended to provide reasonable assurance that assets are safeguarded from
loss or material misuse, transactions are authorized and recorded properly, and that the accounting records may be relied upon for
the preparation of the financial statements. This system is tested and evaluated regularly for adherence and effectiveness by the
Company's staff of internal auditors, as well as the independent public accountants in connection with their annual audit.

The Audit Committee of the Board of Directors, which is comprised of directors who are not employees of the Company, meets
regularly with management, the internal auditors and the independent public accountants to review the work performed and to
ensure that each is properly discharging its responsibilities. The internal auditors and the independent public accountants have free
and direct access to the Audit Committee, and they meet periodically, without management present, to discuss appropriate matters.

Douglas A. Habig
Chairman of the Board,
Chief Executive Officer

James C. Thyen
President

Robert F. Schneider
Executive Vice President,
Chief Financial Officer,
Assistant Treasurer

Report of Independent Public Accountants

To the Board of Directors and Share Owners of Kimball International, Inc.

We have audited the accompanying consolidated balance sheets of Kimball International, Inc. (an Indiana corporation) and
subsidiaries as of June 30, 2000 and 1999, and the related consolidated statements of income, cash flows and share owners’ equity
for each of the three years in the period ended June 30, 2000. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Kimball International, Inc. and subsidiaries as of June 30, 2000 and 1999, and the results of its operations and its cash flows for each
of the three years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States.

Arthur Andersen LLP

Chicago, Illinois
August 2, 2000

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|20
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Consolidated Balance Sheets

Kimball International, Inc. and Subsidiaries

(Amounts in Thousands, Except for Share Data)
Assets
Current Assets:

Cash and cash equivalents
Short-term investments
Receivables, less allowances of $4,713 and $3,816, respectively
Inventories
Other

Total current assets

Property and Equipment, net
Other Assets

Total Assets

Liabilities and Share Owners’ Equity
Current Liabilities:
Loans payable
Current maturities of long-term debt
Accounts payable
Dividends payable
Accrued expenses

Total current liabilities

Other Liabilities:

Long-term debt, less current maturities
Deferred income taxes and other

Total other liabilities

Share Owners’ Equity:

Common stock-par value $.05 per share:

Class A- Shares authorized-49,909,000 (49,945,000 in 1999)

Shares issued-14,451,000 (14,486,000 in 1999)

Class B- Shares authorized-100,000,000

Shares issued-28,574,000 (28,538,000 in 1999)

Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Less: Treasury stock-at cost:

Class A- 172,000 shares (156,000 in 1999)
Class B- 3,621,000 shares (2,542,000 in 1999)

Total Share Owners’ Equity

June 30

2000

1999

$ 5,223
79,366
180,929
117,058
30,944
413,520

248,210
61,921

$ 16,775
114,996
132,284
96,157
26,129
386,341

221,498
53,547

$723,651

$661,386

$ 37,400
1,021
102,835
6,205
75,934
223,395

2,599
29,130
31,729

722

1,429
8,056
522,041
326

(3,144)
(60,903)
468,527

$ 3,518
1,185
77,976
6,380
79,505
168,564

1,730
26,815
28,545

724

1,427
6,379
498,962
1,312

(2,877)
(41,650)
464,277

Total Liabilities and Share Owners’ Equity

$723,651

$661,386

See Notes to Consolidated Financial Statements.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|21
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Consolidated Statements of Income

(Amounts in Thousands, Except for Per Share Data)
Net Sales
Cost of Sales
Gross Profit

Selling, General and Administrative Expenses
Operating Income

Other Income (Expense):
Interest expense
Interest income
Other, net

Other income, net

Income Before Taxes on Income
Taxes on Income

2000
$1,200,945
873,954
326,991

259,864
67,127

(536)
4,709
3,102
7,275

74,402
25,940

Year Ended June 30

1999
$1,106,967
778,551
328,416

250,839
77,577

(476)
6,554
8,719
14,797

92,374
32,649

1998
$1,032,317
723,378
308,939

236,463
72,476

(424)
9,458
5,917
14,951

87,427
32,400

Net Income

$ 48,462

$ 59,725

$ 55,027

Earnings Per Share of Common Stock

Basic:

Class A
Class B

Diluted:

Class A
Class B

Average Number of Shares Outstanding

Basic:

Class A
Class B

Totals

Diluted:

Class A
Class B

Totals

See Notes to Consolidated Financial Statements.

$1.19
$1.21

14,299
25,935
40,234

14,299
26,050
40,349

$1.46
$1.48

$1.45
$1.47

14,338
26,286
40,624

14,338
26,501
40,839

$1.32
$1.33

$1.31
$1.32

14,413
27,004
41,417

14,413
27,401
41,814

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|22
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Consolidated Statements of Cash Flows

Kimball International, Inc. and Subsidiaries

(Amounts in Thousands)
Cash Flows From Operating Activities:

Net income
Adjustments to reconcile net income to net cash

provided by operating activities:
Depreciation and amortization
Gain on sales of assets
Deferred income tax and other deferred charges
Change in current assets and liabilities:

Receivables
Inventories
Other current assets
Accounts payable
Accrued expenses

Net cash provided by operating activities

Cash Flows From Investing Activities:

Capital expenditures
Proceeds from sales of assets
Proceeds from sales of divisions/subsidiaries
Increase in other assets
Purchases of held-to-maturity securities
Maturities of held-to-maturity securities
Purchases of available-for-sale securities
Sales and maturities of available-for-sale securities
Net cash used for investing activities

Cash Flows From Financing Activities:

Net change in short-term borrowings
Net change in long-term debt
Acquisition of treasury stock
Dividends paid to share owners
Proceeds from exercise of stock options
Other-net

Net cash used for financing activities

Effect of exchange rate changes on cash and cash equivalents
Net (Decrease) Increase in Cash and Cash Equivalents

Year Ended June 30

2000

1999

1998

$ 48,462

$59,725

$ 55,027

43,801
(1,059)
(595)

(45,843)
(16,800)
(2,510)
23,374
(7,434)
41,396

(61,124)
2,689
—
(10,330)
—
400
(112,101)
146,772
(33,694)

31,298
(1,103)
(24,427)
(25,558)
801
(284)
(19,273)

19
(11,552)

39,710
(3,917)
1,964

(13,114)
(4,816)
(2,529)
17,069
3,936
98,028

(76,568)
820
7,156
(25,973)
(400)
5,425
(23,191)
57,080
(55,651)

(800)
625
(17,184)
(25,784)
986
(176)
(42,333)

(26)
18

33,806
(1,986)
880

(9,028)
(15,174)
(1,413)
7,844
6,248
76,204

(41,313)
1,177
3,150
(7,359)
(21,415)
46,932
(97,120)
67,517
(48,431)

1,846
(494)
(8,323)
(24,280)
1,495
(63)
(29,819)

(15)
(2,061)

Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

16,775
$ 5,223

16,757
$ 16,775

18,818
$ 16,757

Total Cash, Cash Equivalents and Short-Term Investments:

Cash and cash equivalents
Short-term investments

Totals

See Notes to Consolidated Financial Statements.

$ 5,223
79,366
$ 84,589

$ 16,775
114,996
$131,771

$ 16,757
156,010
$172,767

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|23
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Consolidated Statements of Share Owners’ Equity

Common Stock

(Amounts in Thousands, Except for Share Data)
Amounts at June 30, 1997
Comprehensive income:

Class A
$2,273

Class B
$4,450

Three Years Ended June 30, 2000
Accumulated
Other
Additional
Retained Comprehensive
Paid-In
Income
Capital
Earnings
$1,648
$ 1,607 $434,665

Net income
Net change in unrealized gains and losses

on securities

Foreign currency translation adjustment

Comprehensive income

Treasury stock activity (378,000 shares)
Shares of Class A Common Stock converted to

Class B Common Stock (36,000 shares)
Exercise of stock options (117,000 shares)
Cash dividends:

Class A ($.58875 per share)
Class B ($.605 per share)

Change par value from $.3125 pre stock split

55,027

2,247
(186)

(3)

81
(312)

(8,483)
(16,329)

to $.05 post stock split

(1,545)

(3,027)

4,572

Total
Share
Owners’
Equity
($21,817) $422,826

Treasury
Stock

55,027

2,247
(186)
57,088

(8,213)

(8,139)

(81)
1,972

—
1,660

(8,483)
(16,329)

—

$ 725

$1,426

$6,022 $464,880

$3,709

($28,139) $448,623

Amounts at June 30, 1998
Comprehensive income:

Net income
Net change in unrealized gains and losses

on securities

Foreign currency translation adjustment

Comprehensive income

Amounts at June 30, 1999
Comprehensive income:

Net income
Net change in unrealized gains and losses

on securities

Foreign currency translation adjustment

Comprehensive income

Treasury stock activity (973,000 shares)
Shares of Class A Common Stock converted to

Class B Common Stock (22,000 shares)
Exercise of stock options (88,000 shares)
Cash dividends:

Class A ($.62 per share)
Class B ($.64 per share)

(1)

311
(31)

(8,891)
(16,752)

Treasury stock activity (1,182,000 shares)
Shares of Class A Common Stock converted to

Class B Common Stock (35,000 shares)
Exercise of stock options (87,000 shares)
Cash dividends:

Class A ($.62 per share)
Class B ($.64 per share)

(2)

1,413

27
237

(8,863)
(16,520)

59,725

(2,100)
(297)

48,462

(560)
(426)

59,725

(2,100)
(297)
57,328

(17,094)

(17,017)

(311)
1,017

—
986

(8,891)
(16,752)

48,462

(560)
(426)
47,476

(20,294)

(18,881)

(27)
801

—
1,038

(8,863)
(16,520)

$ 724

$1,427

$6,379 $498,962

$1,312

($44,527) $464,277

Amounts at June 30, 2000

$ 722

$1,429 $8,056 $522,041

$ 326 ($64,047) $468,527

See Notes to Consolidated Financial Statements.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|24
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Notes to Consolidated Financial Statements

Kimball International, Inc. and Subsidiaries

Summary of Significant Accounting Policies

Note 1
Principles of Consolidation: The consolidated financial statements include the accounts of all domestic and foreign subsidiaries. All
significant intercompany balances and transactions have been eliminated in the consolidation.

Revenue Recognition: Revenue from product sales is recognized when title passes to the customer which is generally when goods
are shipped.

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United
States requires management to make estimates and assumptions that affect the reported amounts included in the consolidated
financial statements and related footnote disclosures. While efforts are made to assure estimates used are reasonably accurate based
on management’s knowledge of current events, actual results could differ from those estimates.

Cash, Cash Equivalents and Short-Term Investments: Cash equivalents consist primarily of highly liquid investments with original
maturities of three months or less at the time of acquisition. Cash equivalents are stated at cost, which approximates market value.
Short-term investments are cash investments, primarily municipal bonds and U.S. Government securities with maturities exceeding
three months at the time of acquisition. Held-to-maturity securities are stated at amortized cost. Available-for-sale securities are
stated at market value, with unrealized gains and losses excluded from net income and recorded net of related tax effect, if any, in
Accumulated Other Comprehensive Income, as a component of Share Owners’ Equity.

Foreign Currency Translation: Assets and liabilities of foreign subsidiaries (except for Mexico and Thailand operations, whose
functional currency is the U.S. dollar) are translated into U.S. dollars at fiscal year-end exchange rates, income statement accounts
are translated at the weighted average exchange rate during the year, and the resulting currency translation adjustments are recorded
in Accumulated Other Comprehensive Income, as a component of Share Owners’ Equity. Financial statements of Mexico and Thailand
operations are translated into U.S. dollars using both current and historical exchange rates, with translation gains and losses
included in net income.

Inventories: Inventories are stated at the lower of cost or market value. Cost includes material, labor and applicable manufacturing
overhead and is determined using the last-in, first-out (LIFO) method for approximately 45% and 51% of consolidated inventories in
2000 and 1999, respectively. Cost of the remaining inventories is determined using the first-in, first-out (FIFO) method.

Property, Equipment and Depreciation: Property and equipment are stated at cost. Depreciation is provided over the estimated
useful life of the assets using the straight-line method for financial reporting purposes. Maintenance, repairs and minor renewals and
betterments are expensed; major improvements are capitalized.

Research and Development: The costs of research and development are expensed as incurred. These costs were approximately, in
millions, $13.5 in 2000, $11.6 in 1999, and $13.1 in 1998.

Medical Care and Disability Benefit Plans: The Company is self-insured with respect to certain medical care and disability benefit
plans for approximately 75% of covered domestic employees. The Company carries stop-loss insurance coverage to mitigate severe
losses under these plans. The balance of domestic employees are covered under fully insured HMO plans. The costs for such plans
are charged against earnings in the year in which the incident occurred. The Company does not provide benefits under these plans to
retired employees. Employees of foreign subsidiaries are covered by local benefit plans, the cost of which is not significant to the
consolidated financial statements.

Income Taxes: Unremitted earnings of foreign subsidiaries have been included in the consolidated financial statements without giving
effect to the United States taxes that may be payable on distribution to the United States because it is not anticipated such earnings
will be remitted to the United States. If remitted, the additional United States taxes paid would not be material.

Off-Balance Sheet Risk and Concentration of Credit Risk: The Company engages in financing arrangements with customers on a
limited basis and has business and credit risks concentrated in the transportation, computer, telecommunications, consumer
electronics and furniture industries. One customer, TRW, Inc., represented a significant portion of consolidated accounts receivable at
June 30, 2000. The Company currently does not foresee a credit risk associated with these receivables.

Reclassifications: Certain prior year amounts have been reclassified to conform with the current year presentation.

Stock-Based Compensation: The Company continues to account for its employee stock option plans using Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, which results in no charge to earnings when options are issued at
fair market value. The Company has adopted the disclosure requirements of Financial Accounting Standards Board Statement No. 123,
Accounting for Stock-Based Compensation.

New Accounting Standards: In 1998, the Financial Accounting Standards Board issued Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities, which requires the recognition of all derivatives as either assets or
liabilities in the balance sheet and the measurement of those instruments at fair value. The Company currently engages in limited
derivative activity and currently does not expect this new standard to have a material effect on the Company’s financial condition or
results of operations. This standard will be effective for the Company’s fiscal year 2001.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|25
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies (continued)

Note 1
New Accounting Standards (continued): In July 2000, the Emerging Issues Task Force (EITF) reached a consensus on Issue 00-10
“Accounting for Shipping and Handling Fees and Costs.” EITF Issue 00-10 requires that all amounts billed to a customer in a sale
transaction for shipping and handling be classified as revenue. The EITF did not reach a consensus with respect to the classification
of costs related to shipping and handling. The Company currently classifies most all shipping and handling revenues and costs,
on a net basis, in selling and administrative expense. Accordingly, the Company has determined that EITF Issue 00-10 will require
reclassification of shipping and handling revenues and costs, but does not believe EITF Issue 00-10 will impact its financial position or
net income. The effective date of this standard is the fourth quarter of the Company's fiscal year 2001.

Acquisitions and Dispositions

Note 2
Acquisitions of Subsidiaries:
In the second quarter of fiscal year 2000, the Company purchased Jackson of Danville, a privately held manufacturer of custom and
in-line fully upholstered seating products and wood framed chairs. The acquisition was accounted for as a purchase with operating
results included in the Company’s Consolidated Statements of Income from the date of acquisition, and was financed with available
cash on hand and the Company’s Class B Common Stock. The acquisition price and operating results of this acquisition were not
material to the Company’s fiscal year 2000 consolidated financial position and operating results.

During fiscal year 1999, the Company completed a number of acquisitions related to its core competencies aimed at penetrating new
markets and expanding existing markets. In the first quarter, the Company acquired the assets and assumed certain liabilities of
Transwall, Inc., a privately held manufacturer of stackable panel office furniture systems and floor-to-ceiling products. In the third
quarter, the Company acquired the assets and assumed certain liabilities of Southeast Millwork, a privately held manufacturer of
store display fixtures. These acquisitions were accounted for as purchases with operating results included in the Company’s
Consolidated Statements of Income from the date of acquisition. The results of these acquisitions were not material to fiscal year
1999 consolidated financial position and operating results.

In the fourth quarter of fiscal year 1999, the Company purchased a manufacturing facility located in Juarez, Mexico. The Juarez facility
produces projection television cabinets and will provide additional capacity for other manufacturing operations in the future.

Dispositions of Subsidiaries:
The Company sold Kimball Furniture Reproductions, a furniture manufacturing facility located in Montgomery, Alabama, and ToolPro,
a carbide cutting tools production operation located in Jasper, Indiana in the fourth quarter of fiscal year 1999. The sale of these
subsidiaries generated a $2.7 million after-tax gain which is included in 1999 consolidated financial position and operating results.

Inventories

Note 3
Inventories are valued using the lower of last-in, first-out (LIFO) cost or market value for approximately 45% and 51% of consolidated
inventories in 2000 and 1999, respectively, including approximately 80% and 85% of the Furniture and Cabinet Segment inventories
in 2000 and 1999, respectively. The cost of Electronic Contract Assemblies Segment inventories and the remaining inventories in the
Furniture and Cabinet Segment are valued using the lower of first-in, first-out (FIFO) cost or market value.

Had the FIFO method been used for all inventories, net income would have been $1.5 million higher in 2000, $0.2 million lower in
1999, and $0.6 million higher in 1998. Additionally, inventories would have been, in millions, $22.7 and $20.0 higher at June 30,
2000 and 1999, respectively, if the FIFO method had been used. During 2000 and 1999, certain inventory quantity reductions caused
a liquidation of LIFO inventory values, which were immaterial.

Inventory components at June 30 are as follows:
(Amounts in Thousands)
Finished products
Work-in-process
Raw materials

Total inventory

Property and Equipment

Note 4
Major classes of property and equipment consist of the following:
(Amounts in Thousands)
Land
Buildings and improvements
Machinery and equipment
Construction-in-progress

Total

|26
|

Less: Accumulated depreciation

Property and equipment, net

2000
$ 31,251
18,149
67,658
$117,058

2000
$ 7,326
182,587
335,396
15,399
540,708
(292,498)
$ 248,210

1999
$ 33,262
14,471
48,424
$ 96,157

1999
$ 6,931
171,504
291,432
16,772
486,639
(265,141)
$221,498

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

The useful lives used in computing depreciation are based on the Company’s estimate of the service life of the classes of property, as
follows:

Kimball International, Inc. and Subsidiaries

Buildings and improvements
Machinery and equipment
Leasehold improvements

Years
12 to 50
2 to 20
Life of Lease

Depreciation and amortization of property and equipment totaled, in millions, $37.5 for 2000, $33.4 for 1999, and $29.9 for 1998.

Lease Commitments

Note 5
Operating leases for certain office, showroom, warehouse and manufacturing facilities, land and equipment, which expire from fiscal
year 2000 to 2030, contain provisions under which minimum annual lease payments are, in millions, $5.1, $4.6, $3.9, $3.0, and $1.5
for the five years ended June 30, 2005, respectively, and aggregate $1.8 million from 2005 to the expiration of the leases in 2030. The
Company is obligated under certain real estate leases to maintain the properties and pay real estate taxes.

Total rental expenses amounted to, in millions, $7.4, $7.1, and $6.7 in 2000, 1999 and 1998, respectively.

Long-Term Debt and Credit Facility

Note 6
Long-term debt is principally obligations under long-term capitalized leases. Aggregate maturities of long-term debt for the next five
years are, in thousands, $1,021, $850, $450, $907, and $37, respectively, and aggregate $355 thereafter. Interest rates range from 0%
to 9.74%. Interest paid was immaterial in the three years ending June 30, 2000. Based upon borrowing rates currently available to the
Company, the fair value of the Company’s debt approximates the carrying value.

In fiscal year 1999, the Company established a five year revolving credit facility that provides for up to $100 million in borrowings. The
Company uses this facility for acquisitions and general corporate purposes. A commitment fee is payable on the unused portion of the
credit facility. The interest rate applicable to borrowings under the agreement is based on the London Interbank Offered Rate (LIBOR)
plus a margin. The Company is in compliance with debt covenants requiring it to maintain certain debt-to-total capitalization, interest
coverage ratio, minimum net worth, and other terms and conditions. At June 30, 2000, the Company had $35.4 million of short-term
borrowings outstanding under this facility. No debt was outstanding under this agreement at June 30, 1999.

Retirement Plans

Note 7
The Company has a trusteed defined contribution Retirement Plan in effect for substantially all domestic employees meeting the
eligibility requirements. Company contributions are based on a percent of net income as defined in the plan; the percent of
contribution is determined by the Board of Directors up to specific maximum limits. The plan includes a 401(k) feature, thereby
permitting participants to make additional voluntary contributions on a pretax basis. Payments by the Company to the trusteed plan
are vested and held for the sole benefit of participants. Total contributions to the Retirement Plans for 2000, 1999 and 1998 were
approximately, in millions, $9.1, $10.8, and $10.1, respectively.

Employees of certain foreign subsidiaries are covered by local pension or retirement plans. Annual expense and accumulated benefits
of these foreign plans are not significant to the consolidated financial statements.

Note 8 Stock Options
On August 11, 1987, the Board of Directors adopted the 1987 Stock Incentive Program, which was approved by the Company's Share
Owners on October 13, 1987. Under this plan, 3,600,000 shares of Class B Common Stock were reserved for incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock awards, and performance share awards available for grant to
officers and other key employees of the Company, and to members of the Board of Directors who are not employees. This Stock
Incentive Program expired in August 1997, with prior year grants expiring annually through July 2001.

On June 11, 1996, the Board of Directors adopted the 1996 Stock Incentive Program, which was approved by the Company’s Share
Owners on October 22, 1996. Under this plan, 4,200,000 shares of Class B Common Stock were reserved, in addition to the
approximately 2 million remaining shares currently reserved under the 1987 plan, for incentive stock options, nonqualified stock
options, stock appreciation rights, and performance share awards available for grant to officers and other key employees of the
Company, and to members of the Board of Directors who are not employees. The 1996 Stock Incentive Program is a ten year plan. The
number of employees participating in the program was 270 in fiscal year 2000 and 290 in fiscal years 1999 and 1998.

Stock options are priced at the fair market value of the stock at the date of grant. Options granted under the plans generally are
exercisable from six months to two years after the date of grant and expire five to ten years after the date of grant. Stock options are
forfeited when employment terminates, except in case of retirement, death or permanent disability.

There are 250,000 additional shares reserved for issuance under the Directors’ Stock Compensation and Option Plan which is available
to all members of the Board of Directors. Under terms of the plan, Directors electing to receive all, or a portion, of their fees in the form

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|27
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Notes to Consolidated Financial Statements

Note 8 Stock Options (continued)
of Company stock will also be granted a number of stock options equal to 50% of the number of shares received for compensation of
fees. Option prices and vesting are similar to those of the 1996 Stock Incentive Program. The plan is in effect through October 2006.

Stock option transactions are as follows:

Options outstanding June 30, 1997
Granted
Exercised
Forfeited
Options outstanding June 30, 1998
Granted
Exercised
Forfeited
Expired
Options outstanding June 30, 1999
Granted
Exercised
Forfeited
Expired
Options outstanding June 30, 2000

Shares available for future options

Number Weighted Average
Exercise Price
$13.37
21.82
13.35
14.89
16.30
18.20
13.78
16.57
14.80
17.05
19.66
12.62
18.19
12.22
$18.07

of Shares
1,376,066
588,889
(225,769)
(89,170)
1,650,016
551,521
(141,993)
(180,716)
(20,871)
1,857,957
517,418
(179,050)
(236,383)
(23,386)
1,936,556

5,265,511

Following is a status of options outstanding at June 30, 2000:

Outstanding Options

Exercisable Options

Exercise
Price Range
$12.00-$16.00
$16.00-$20.00
$20.00-$24.00
Total

Number
546,043
924,224
466,289
1,936,556

Weighted
Average
Remaining
Contractual
Life
1 year
6 years
3 years
4 years

Weighted
Average
Exercise
Price
$13.38
18.96
21.82
$18.07

Weighted
Average
Exercise
Price
$13.38
18.96
21.82
$17.49

Number
542,190
157,677
461,505
1,161,372

The Company adopted the disclosure requirements of Financial Accounting Standards Board Statement No. 123, Accounting for
Stock-Based Compensation (FAS 123). The Company has elected to continue to follow the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and its related interpretations; accordingly, no compensation cost has
been reflected in the financial statements for its incentive stock options. Had compensation cost for the Company’s incentive stock
options been determined based on the fair value at the grant dates for awards under those plans consistent with the method of FAS
123, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below (in
thousands, except per share amounts):

Net Income

As Reported
Pro Forma

Earnings per Share of Common Stock

As Reported:

Basic:

Class A
Class B

Diluted:

Class A
Class B

Pro Forma:
Basic:

Class A
Class B

Diluted:

Class A
Class B

2000

$48,462
$46,001

Year Ended June 30

1999

$59,725
$57,444

1998

$55,027
$53,343

$1.19
$1.21

$1.13
$1.15

$1.46
$1.48

$1.45
$1.47

$1.40
$1.42

$1.32
$1.33

$1.31
$1.32

$1.28
$1.29

$1.27
$1.28

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|28
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Kimball International, Inc. and Subsidiaries

The weighted average fair value at date of grant for options granted during the years ended June 30, 2000, 1999 and 1998 was $5.49,
$3.72 and $4.84 per option, respectively.

The fair value of the options at the date of grant was estimated using the Black-Scholes option pricing model with the following
weighted average assumptions: expected volatility of 38.5% in 2000, 34.0% in 1999 and 31.7% in 1998; risk-free interest rates of
5.9% in 2000, 5.4% in 1999 and 6.2% in 1998; dividend yield of 3.9% in 2000, 3.7% in 1999 and 2.9% in 1998; and an expected life of
3.5 years for all years.

Income Taxes

Note 9
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A valuation reserve is provided for deferred tax assets
relating to foreign net operating losses and U.S. capital loss carryforward benefits, due to uncertainty surrounding the utilization of
these deferred tax assets. Income tax benefits associated with the foreign net operating losses have no expiration period under
current tax laws, while benefits associated with the U.S. capital loss carryforward all expire during the 2002 fiscal year.

The components of the deferred tax assets and liabilities as of June 30, 2000 and 1999, are as follows:
(Amounts in Thousands)
Deferred tax assets:
Receivables
Inventory
Employee benefits
Other current liabilities
Miscellaneous
Foreign net operating losses
Capital loss carryforward benefit

$ 1,899
4,375
6,568
6,233
202
1,784
199
(1,983)
$ 19,277

2000

1999

Valuation reserve

Total asset

Deferred tax liabilities:

Property & equipment
Miscellaneous

Total liability

The components of income before taxes on income are as follows:

(Amounts in Thousands)
United States
Foreign

Total income before taxes

Taxes on income are composed of the following items:

(Amounts in Thousands)
Currently payable:
Federal
Foreign
State

Total current

Deferred Federal

Total taxes on income

$ 14,730
1,618
$16,348

Year Ended June 30

1999
$90,674
1,700
$92,374

Year Ended June 30

1999

$26,347
565
5,333
32,245

404
$32,649

2000
$ 73,717
685
$74,402

2000

$ 22,110
192
4,074
26,376

(436)
$25,940

$ 1,690
2,311
6,690
5,920
587
2,253
627
(2,880)
$ 17,198

$14,366
339
$14,705

1998
$87,327
100
$87,427

1998

$29,363
224
3,650
33,237

(837)
$32,400

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|29
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Notes to Consolidated Financial Statements

Income Taxes (continued)

Note 9
A reconciliation of the statutory U.S. income tax rate to the Company’s effective income tax rate follows:

(Amounts in Thousands)

2000

Taxes computed at statutory rate
State income taxes,

net of Federal income tax benefit

Foreign tax effect
Capital loss benefit
Tax-exempt interest income
Other-net

Total taxes on income

Amount
$26,041

2,648
(240)
(427)
(1,448)
(634)
$25,940

%
35.0%

3.6
(0.3)
(0.6)
(2.0)
(0.8)
34.9%

Year Ended June 30

1999

Amount
$32,331

3,466
(595)
(1,586)
(1,412)
445
$32,649

%
35.0%

3.7
(0.6)
(1.7)
(1.5)
0.4
35.3%

1998

Amount
$30,600

%
35.0%

2,373
(35)
—
(454)
(84)
$32,400

2.7
—
—
(0.5)
(0.1)
37.1%

Cash payments for income taxes, net of refunds, were in thousands, $29,826, $28,884 and $28,183 in 2000, 1999 and 1998, respectively.

Note 10 Common Stock
On a fiscal year basis, shares of Class B Common Stock are entitled to an additional $.02 per share dividend more than the dividends
paid on Class A Common Stock, provided that dividends are paid on the Company’s Class A Common Stock. The owners of both
Class A and Class B Common Stock are entitled to share pro-rata, irrespective of class, in the distribution of the Company’s available
assets upon dissolution.

Owners of Class B Common Stock are entitled to elect, as a class, one member of the Company’s Board of Directors. In addition,
owners of Class B Common Stock are entitled to full voting powers, as a class, with respect to any consolidation, merger, sale, lease,
exchange, mortgage, pledge, or other disposition of all or substantially all of the Company’s fixed assets, or dissolution of the
Company. Otherwise, except as provided by statute with respect to certain amendments to the Articles of Incorporation, the owners
of Class B Common Stock have no voting rights, and the entire voting power is vested in the Class A Common Stock, which has one
vote per share. The Habig family owns directly or shares voting power in excess of 50% of the Class A Common Stock of Kimball
International, Inc. The owner of a share of Class A Common Stock may, at their option, convert such share into one share of Class B
Common Stock at any time.

If any dividends are not paid on shares of the Company’s Class B Common Stock for a period of thirty-six consecutive months, or if at
any time the number of shares of Class A Common Stock issued and outstanding is less than 15% of the total number of issued and
outstanding shares of both Class A and Class B Common Stock, then all shares of Class B Common Stock shall automatically have
the same rights and privileges as the Class A Common Stock, with full and equal voting rights and with equal rights to receive
dividends as and if declared by the Board of Directors.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|30
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Note 11 Quarterly Financial Information (Unaudited)
Quarterly financial information is summarized as follows:

(Amounts in Thousands, Except for Per Share Data)
2000:

September 30

December 31

March 31

June 30

Three Months Ended

Kimball International, Inc. and Subsidiaries

Net Sales
Gross Profit
Net Income
Basic Earnings Per Share:

Class A
Class B

Diluted Earnings Per Share:

Class A
Class B

1999:

Net Sales
Gross Profit
Net Income
Basic Earnings Per Share:

Class A
Class B

Diluted Earnings Per Share:

Class A
Class B

1998:

Net Sales
Gross Profit
Net Income
Basic Earnings Per Share:

Class A
Class B

Diluted Earnings Per Share:

Class A
Class B

$278,402
76,775
11,559

$.28
.29

$264,646
78,557
12,563

$.31
.31

$.30
.31

$245,857
74,280
13,029

$.31
.31

$294,275
82,468
12,227

$309,495
80,802
11,551

$.30
.30

$.28
.29

$280,080
83,053
14,935

$288,054
86,433
15,189

$.36
.37

$.37
.38

$318,773
86,946
13,125

$.33
.33

$274,187
80,373
17,038

$.42
.42

$264,524
79,952
15,485

$265,001
77,732
13,702

$256,935
76,975
12,811

$.37
.38

$.36
.37

$.33
.33

$.31
.31

$.30
.31

Net income in the second quarter of fiscal 1998 was increased by, in thousands, $1,008 or $0.02 per share, representing the gain on
the sale of real estate. Net income in the third quarter of fiscal 1998 was increased by, in thousands, $616 or $0.01 per share, from
the gain on the sale of a stock investment of which the Company held a minor interest. Net income in the second quarter of fiscal
1999 was increased by, in thousands, $1,337 or $0.03 per share, representing the gain on the sale of a stock investment of which the
Company held a minor interest. Net income in the fourth quarter of fiscal 1999 was increased by, in thousands, $2,674 or $0.06 per
share, representing the gain on the sale of two subsidiaries.

Note 12 Short-Term Investments
The Company’s short-term investment portfolio consists of available-for-sale securities in fiscal year 2000 and both available-for-sale
and held-to-maturity securities in fiscal year 1999. Fair values are estimated based upon the quoted market values of those, or
similar instruments. Carrying costs reflect the original purchase price, with discounts and premiums amortized over the life of the
security.

Available-for-sale securities are reported at fair value and consist primarily of government and municipal obligations with fair values
and carrying costs of, in thousands, $79,366 and $79,852 at June 30, 2000, compared to $114,597, and $114,523 at June 30, 1999,
respectively. Unrealized holding gains and losses at June 30, 2000 were, in thousands, $22 and ($508), compared to $277 and
($203) at June 30, 1999, respectively. All available-for-sale securities mature within a four year period.

Proceeds from sales of available-for-sale securities were, in thousands, $73,087 and $17,273 for the years ended June 30, 2000 and
1999, respectively. Gross realized gains and losses on the sale of available-for-sale securities at June 30, 2000 were, in thousands,
$107 and ($283) respectively, compared to gross realized gains and losses of, in thousands, $172 and ($2) respectively, at June 30,
1999. The cost was determined on each individual security in computing the realized gain.

Held-to-maturity securities are reported at carrying cost and consist primarily of government obligations with fair value equal to
carrying cost. The Company did not have any held-to-maturity securities at June 30, 2000. At June 30, 1999 held-to-maturity
securities were, in thousands, $399. Unrealized holding gains and losses were immaterial at June 30, 1999.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|31
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Notes to Consolidated Financial Statements

Note 13 Accrued Expenses
Accrued expenses at June 30 consist of:

(Amounts in Thousands)
Income taxes
Property taxes
Compensation
Retirement plan
Other expenses

Total accrued expenses

June 30

2000
$ 1,027
4,912
25,895
8,904
35,196
$75,934

1999
$ 2,292
4,290
31,938
10,529
30,456
$79,505

Note 14 Segment and Geographic Area Information
Effective for the year ended June 30, 1999, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 131,
Disclosures about Segments of an Enterprise and Related Information. The adoption of SFAS 131 requires the presentation of
segment information which is consistent with information utilized by management for purposes of allocating resources and
assessing performance. Management organizes the Company into segments based upon differences in products and services
offered in each segment. The segments and their principal products and services are as follows:

The Furniture and Cabinets Segment manufactures furniture for the office, residential, lodging and healthcare industries and store
display fixtures, all sold under the Company’s family of brand names. Other products produced by the Furniture and Cabinets
Segment on an original equipment manufacturer basis include store fixtures, television cabinets and stands, audio speaker systems,
residential furniture and furniture components. Intersegment sales are insignificant.

The Electronic Contract Assemblies Segment is a global provider of design engineering, manufacturing, packaging and distribution
of electronic assemblies, circuit boards, multi-chip modules and semiconductor components on a contract basis to customers in the
transportation, industrial, telecommunications, computer, and medical industries. Intersegment sales are insignificant. Included in
the Electronic Contract Assemblies Segment are sales to one customer totaling in millions, $205.0, $178.9 and $168.2 in 2000, 1999
and 1998, respectively, representing 17%, 16% and 16% of consolidated net sales.

The accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies” with
additional explanation of segment allocations as follows. Corporate operating costs are allocated to the segments based on the
extent to which each segment uses a centralized function, where practicable. However, certain common costs have been allocated
among segments less precisely than would be required for stand alone financial information prepared in accordance with generally
accepted accounting principles. Unallocated corporate assets include cash and cash equivalents, short-term investments and other
assets not allocated to segments.

The Company evaluates segment performance based upon several financial measures, although the two most common include
economic profit, which incorporates a segment’s cost of capital when evaluating financial performance, and net income. Pursuant to
SFAS 131, net income is reported for each segment as it is the measure most consistent with the measurement principles used in the
Company’s consolidated financial statements.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|32
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Kimball International, Inc. and Subsidiaries

Furniture
and
Cabinets
$833,801
32,972
—
284
16,237
27,656
458,946
44,055

Furniture
and
Cabinets
$771,528
29,763
—
412
19,566
34,569
389,725
67,141

Furniture
and
Cabinets
$706,679
25,719
—
386
17,917
27,904
331,247
29,000

Electronic
Contract
Assemblies
$367,063
10,829
—
—
9,221
14,218
181,147
17,069

Electronic
Contract
Assemblies
$335,395
9,947
—
—
11,856
18,185
140,905
9,427

Electronic
Contract
Assemblies
$325,602
8,087
—
—
10,932
18,050
128,165
12,313

2000

Unallocated
Corporate and
Eliminations
$ 81
—
4,709
252
482
6,588
83,558
—

1999

Unallocated
Corporate and
Eliminations
$ 44
—
6,554
64
1,227
6,971
130,756
—

1998

Unallocated
Corporate and
Eliminations
$ 36
—
9,458
38
3,551
9,073
170,226
—

Consolidated
$1,200,945
43,801
4,709
536
25,940
48,462
723,651
61,124

Consolidated
$1,106,967
39,710
6,554
476
32,649
59,725
661,386
76,568

Consolidated
$1,032,317
33,806
9,458
424
32,400
55,027
629,638
41,313

(Amounts in Thousands)
Net sales
Depreciation and amortization
Interest income
Interest expense
Taxes on income
Net income
Total assets
Capital expenditures

Geographic Area

The following geographic area data include net sales based on product shipment destination and long-lived assets based on physical
location. Long-lived assets include property and equipment and other long-term assets such as software.

(Amounts in Thousands)
Net Sales:

United States
Foreign

Total Net Sales

Long-Lived Assets:
United States
Foreign

Total Long-Lived Assets

Year Ended June 30

2000

1999

1998

$ 1,104,705
96,240
$1,200,945

$ 261,792
27,328
$ 289,120

$1,022,943
84,024
$1,106,967

$ 233,132
26,172
$ 259,304

$ 977,716
54,601
$1,032,317

$ 199,043
7,762
$ 206,805

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|33
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Notes to Consolidated Financial Statements

Note 15 Earnings Per Share
Effective December 31, 1997, the Company adopted Financial Accounting Standards Board Statement No. 128, Earnings Per Share.
Earnings per share are computed using the two-class common stock method due to the dividend preference of Class B Common
Stock. Basic earnings per share are based on the weighted average number of shares outstanding during the period. Diluted
earnings per share are based on the weighted average number of shares outstanding plus the assumed issuance of common shares
for all potentially dilutive securities. Earnings per share of Class A and Class B Common Stock are as follows:

2000

Average
Shares

Earnings Per Share

Class A

Class B

(Amounts in Thousands, Except Per Share Data)
Net income

Distributed earnings:

Class A dividends declared
Class B dividends declared

Undistributed basic earnings
Basic Earnings Per Share
Basic Earnings Per Share (rounded)

Dilutive effect of stock options
Undistributed diluted earnings
Diluted Earnings Per Share
Diluted Earnings Per Share (rounded)

(Amounts in Thousands, Except Per Share Data)
Net income

Distributed earnings:

Class A dividends declared
Class B dividends declared

Undistributed basic earnings
Basic Earnings Per Share
Basic Earnings Per Share (rounded)

Dilutive effect of stock options
Undistributed diluted earnings
Diluted Earnings Per Share
Diluted Earnings Per Share (rounded)

$ 23,079

40,234

(74)
$ 23,005

115
40,349

Available
Income
$48,462

(8,863)
(16,520)

Available
Income
$59,725

(8,891)
(16,752)

$34,082

40,624

(138)
$33,944

215
40,839

$ .620

.574
$1.194
$1.19

.570
$1.190
$1.19

$ .640

.574
$1.214
$1.21

.570
$1.210
$1.21

$ .620

.839
$1.459
$1.46

.831
$1.451
$1.45

$ .640

.839
$1.479
$1.48

.831
$1.471
$1.47

1,377,270 of the 2,020,697 average outstanding stock options were antidilutive, and were excluded from the dilutive computation for
this period.

1999

Average
Shares

Earnings Per Share

Class A

Class B

981,902 of the 1,901,947 average outstanding stock options were antidilutive, and were excluded from the dilutive computation for
this period.

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|34
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

(Amounts in Thousands, Except Per Share Data)
Net income

Distributed earnings:

Class A dividends declared
Class B dividends declared

Undistributed basic earnings
Basic Earnings Per Share
Basic Earnings Per Share (rounded)

Dilutive effect of stock options
Undistributed diluted earnings
Diluted Earnings Per Share
Diluted Earnings Per Share (rounded)

Available
Income
$55,027

(8,483)
(16,329)

$30,215

(240)
$29,975

Kimball International, Inc. and Subsidiaries

1998

Average
Shares

Earnings Per Share

Class A

Class B

41,417

397
41,814

$ .58875

.72953
$1.31828
$ 1.32

.71687
$1.30562
$ 1.31

$ .60500

.72953
$1.33453
$1.33

.71687
$1.32187
$1.32

468,891 of the 1,685,007 average outstanding stock options were antidilutive, and were excluded from the dilutive computation for
this period.

Note 16 Comprehensive Income
Effective July 1, 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, Reporting Comprehensive
Income, which establishes new rules for the reporting and display of comprehensive income and its components; however, the
adoption had no impact on the Company’s net income or Share Owners’ Equity. Comprehensive income includes all changes in equity
during a period except those resulting from investments by, and distributions to, Share Owners. Comprehensive income consists of
net income and other comprehensive income, which includes the net change in unrealized gains and losses on securities, and foreign
currency translation adjustments. The Company has elected to disclose comprehensive income in the Consolidated Statements of
Share Owners’ Equity. Accumulated balances of other comprehensive income are as follows:

Balance at June 30, 1997

Current year change
Balance at June 30, 1998

Current year change
Balance at June 30, 1999

Current year change
Balance at June 30, 2000

Accumulated Other Comprehensive Income
(Net of tax if applicable)
Net Change in
Unrealized Gains
and Losses on
Securities
(73)

Accumulated
Other
Comprehensive
Income
$ 1,648

Foreign
Currency
Translation
Adjustments
$1,721

(186)
1,535

(297)
1,238

(426)
$ 812

2,247
2,174

(2,100)
74

(560)
$ (486)

2,061
3,709

(2,397)
1,312

(986)
$ 326

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|35
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Eleven-Year Summary of Financial Condition

(Amounts in Thousands, Except for Per Share Data and Number of Employees)
Assets:

2000

1999

1998

1997

Current Assets
Property and Equipment, net
Other Assets

Total Assets

Liabilities and Minority Interest:

Current Liabilities
Long-Term Debt, less Current Maturities
Deferred Income Taxes and Other
Minority Interest in Subsidiary

Total Liabilities and Minority Interest

$413,520
248,210
61,921
$723,651

$223,395
2,599
29,130
—
255,124

$386,341
221,498
53,547
$661,386

$168,564
1,730
26,815
—
197,109

$ 412,937
182,798
33,903
$629,638

$ 153,210
1,856
25,949
—
181,015

$376,773
174,010
30,800
$581,583

$133,258
2,313
23,186
—
158,757

Share Owners’ Equity

468,527

464,277

448,623

422,826

Total Liabilities and

Share Owners’ Equity

$723,651

$661,386

$629,638

$581,583

Other Financial Data:
Current Ratio
Working Capital

Capital Investments

1.9:1
$190,125

2.3:1
$ 217,777

2.7:1
$259,727

2.8:1
$243,515

$ 71,454

$ 102,541

$ 48,672

$ 44,747

Long-Term Debt as Percent of Share Owners’ Equity
Book Value Per Share of Common Stock Outstanding
Average Number of Employees

0.6%
$ 11.65
10,088

0.4%
$ 11.43
9,884

0.4%
$ 10.83
9,198

0.5%
10.20
8,786

Dividends:

Total Declared
Per Share Dividends Declared:

Class A
Class B

Percent of Net Income

Declared in Dividends

$ 25,383

$ 25,643

$ 24,812

$ 22,104

$ .62
$ .64

$ .58875
$ .605

$ .530
$ .535

52.4%

42.9%

45.1%

38.3%

Eleven-Year Sources of Revenue

(Amounts in Thousands)
Furniture and Cabinets

Electronic Contract Assemblies

Unallocated Corporate

Total Revenue

2000
$ 833,801
69%
367,063
31%
81
0%
$1,200,945
100%

1999
$ 771,528
70%
335,395
30%
44
0%
$1,106,967
100%

1998
$ 706,679
69%
325,602
31%
36
0%
$1,032,317
100%

1997
$ 676,218
68%
315,816
32%
15
0%
$992,049
100%

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|36
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

1996

1995

1994

$ 342,251
174,009
21,965
$538,225

$122,043
3,016
22,152
—
147,211

$306,816
177,130
13,140
$497,086

$ 105,046
924
19,779
—
125,749

$288,238
171,243
11,932
$ 471,413

$ 102,164
811
17,486
—
120,461

Kimball International, Inc. and Subsidiaries

1992

1991

1990

$275,507
142,304
4,212
$422,023

$ 80,769
3,157
16,960
—
100,886

$242,726
135,757
4,202
$382,685

$ 65,262
4,392
17,677
891
88,222

$233,856
140,766
3,361
$377,983

$ 72,371
6,873
18,338
1,050
98,632

June 30

1993

$295,458
152,361
4,886
$452,705

$ 100,070
2,017
17,277
—
119,364

391,014

371,337

350,952

333,341

321,137

294,463

279,351

$538,225

$497,086

$ 471,413

$452,705

$422,023

$382,685

$377,983

2.8:1
$220,208

2.9:1
$ 201,770

2.8:1
$ 186,074

3.0:1
$195,388

3.4:1
$194,738

3.7:1
$ 177,464

3.2:1
$ 161,485

$ 44,451

$ 37,278

$ 53,213

$ 38,154

$ 33,486

$ 20,358

$ 20,925

0.8%
9.35
8,660

0.2%
$ 8.81
8,589

0.2%
$ 8.29
8,140

0.6%
7.87
7,621

1.0%
$ 7.56
7,641

1.5%
$ 6.97
7,559

2.5%
6.59
7,971

$ 19,775

$ 18,039

$ 17,704

$ 16,454

$ 14,745

$ 13,889

$ 12,218

$ .470
$ .475

.425
$
$ .430

$ .415
.420
$

$ .385
$ .390

$ .345
$ .350

$ .325
$ .330

$
$

.285
.290

43.9%

43.5%

48.9%

53.8%

38.2%

46.3%

28.1%

1996
$638,943
69%
284,639
31%
54
0%
$923,636
100%

1995
$650,756
73%
245,101
27%
55
0%
$895,912
100%

1994
$ 618,243
75%
204,149
25%
92
0%
$822,484
100%

Year Ended June 30

1993
$ 541,871
75%
180,464
25%
65
0%
$722,400
100%

1992
$484,779
78%
132,507
22%
15
0%
$ 617,301
100%

1991
$463,085
83%
92,118
17%
60
0%
$555,263
100%

1990

$490,999
80%
121,937
20%
20
0%
$612,956
100%

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|37
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Eleven-Year Summary of Operations

(Amounts in Thousands, Except for Per Share Data)
Net Sales
Cost of Sales
Gross Profit

2000
$1,200,945
873,954
326,991

1999
$1,106,967
778,551
328,416

1998
$1,032,317
723,378
308,939

1997
$992,049
692,636
299,413

Selling, General and

Administrative Expenses

Product Line Exit Costs
Restructuring Expense
Operating Income

Other Income (Expense):

Interest Expense
Interest Income
Other, Net

Other Income, Net

Income Before Taxes on Income
Taxes on Income

Net Income
Percent of Net Sales
Earnings Per Share:

Basic:

Class A
Class B

Diluted:

Class A
Class B

Average Shares Outstanding:

Basic
Diluted

259,864
—
—
67,127

(536)
4,709
3,102
7,275

74,402
25,940

250,839
—
—
77,577

(476)
6,554
8,719
14,797

92,374
32,649

236,463
—
—
72,476

(424)
9,458
5,917
14,951

87,427
32,400

218,421
—
—
80,992

(551)
8,484
(359)
7,574

88,566
30,821

$ 48,462
4.0%

$ 59,725
5.4%

$ 55,027
5.3%

$ 57,745
5.8%

$1.19
$1.21

40,234
40,349

$1.46
$1.48

$1.45
$1.47

40,624
40,839

$1.32
$1.33

$1.31
$1.32

41,417
41,814

$1.39
$1.40

$1.38
$1.38

41,450
41,763

Manufacturing and Service Operations

Furniture and Cabinets

Artec Manufacturing
Jasper and French Lick, Indiana
Office furniture systems

Batesville American
Manufacturing
Batesville, Mississippi
Metal stampings and
assemblies, healthcare beds

Corporate Logistics Services
Jasper, Indiana
Transportation and fleet
operations

Evansville Veneer
Chandler, Indiana
Veneer

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|38
|

Facilities/Technology
Support Group
Jasper, Indiana
Product testing, property and
woodlands management,
energy production, research in
furniture finishes

Furniture Showrooms
& Service Centers
New York, Chicago, Boston,
Los Angeles, San Francisco,
Denver, Atlanta, Dallas, Seattle,
Newport Beach, High Point,
Post Falls, Tupelo, Jasper,
London, Toronto, Vienna
Product display and regional
distribution

Greensburg Manufacturing
Greensburg, Kentucky
Lumber, dimension wood,
furniture components

Harpers Manufacturing
Post Falls, Idaho
Office furniture casegoods,
systems and filing

Heritage Hills
Santa Claus, Indiana
TV and audio cabinets, TV
stands, and office furniture

Indiana Hardwoods
Chandler, Indiana
Lumber

Indiana Hardwoods Sawmill
Cloverport, Kentucky
Lumber

Jackson of Danville
Danville and Greensburg,
Kentucky
Lodging and healthcare seating

Jasper Furniture Company
Jasper and West Baden,
Indiana
Lodging and healthcare
casegoods, contract furniture
and components

Jasper Laminates
Jasper, Indiana
Flat, molded, postformed and
plastic-faced plywood,
banded flakeboard, veneer
faces

Jasper Plastics
Jasper, Indiana
Molded polyurethane,
polyester, elastomers

Kimball de Juarez, S.A. de C.V.
Juarez and Mexicali, Mexico and
El Paso, Texas
Projection television cabinets

Kimball Home Furniture
Jasper, Indiana
Residential furniture

Kimball Lodging Group
Jasper, Indiana
Lodging and healthcare
furniture

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

1996
$923,636
664,311
259,325

193,414
3,400
—
62,511

(408)
7,411
4,801
11,804

74,315
29,220

1995
$895,912
645,591
250,321

188,495
—
—
61,826

(273)
5,755
3,487
8,969

70,795
29,356

1994
$822,484
588,849
233,635

Year Ended June 30

1993
$722,400
512,781
209,619

179,981
—
—
53,654

(202)
2,240
3,727
5,765

59,419
23,250

161,984
—
2,850
44,785

(1,200)
4,237
5,500
8,537

53,322
22,739

Kimball International, Inc. and Subsidiaries

1992
$617,301
422,563
194,738

146,891
—
—
47,847

(991)
7,146
6,712
12,867

60,714
22,086

1991
$555,263
376,533
178,730

140,154
—
—
38,576

(1,085)
8,580
3,062
10,557

49,133
19,116

1990
$612,956
409,373
203,583

140,014
—
—

63,569

(1,483)
6,989
1,978
7,484

71,053
27,578

$ 45,095
4.9%

$ 41,439
4.6%

$ 36,169
4.4%

$ 30,583
4.2%

$ 38,628
6.3%

$ 30,017
5.4%

$ 43,475
7.1%

$1.08
$1.08

$1.07
$1.08

41,810
41,856

$0.98
$0.99

42,143
42,148

$0.85
$0.86

42,330
42,330

$0.72
$0.72

42,398
42,398

$0.91
$0.92

$0.71
$0.71

42,302
42,302

42,329
42,329

$1.02
$1.03

42,391
42,391

Kimball Northeast
Manufacturing
West Chester, Pennsylvania
Office furniture, stackable panel
and floor-to-ceiling systems

Kimball Office Casegoods
Manufacturing
Borden and Salem, Indiana
and Fordsville, Kentucky
Office furniture casegoods

Kimball Office Group
Jasper, Indiana and Post Falls,
Idaho
Office furniture casegoods,
systems, seating and filing

Kimball Store Fixtures
Boca Raton, Florida and
Weaverville, North Carolina
Store display fixtures

Kimball U.K.
London, England
Office furniture casegoods,
systems, seating and filing

Kimball Upholstered Products
Jasper, Indiana
Office, residential, lodging
and healthcare seating

Transwall
West Chester, Pennsylvania
Office furniture, stackable panel
and floor-to-ceiling systems

L. Bösendorfer Klavierfabrik
GmbH
Vienna and Wiener Neustadt,
Austria
Grand and vertical pianos

Electronic Contract
Assemblies

Elmo Semiconductuers SARL
Mantes La Jolie, France
Electronic assemblies

Lafayette Manufacturing
Lafayette, Tennessee
Lumber, dimension wood

Lafayette Sawmill
Gordonsville, Tennessee
Lumber

Product Design & Research
Center
Jasper, Indiana
Product design and
development

The Jasper Corporation
Jasper, Indiana
TV and audio cabinets, lodging,
office and residential furniture

Elmo Semiconductor
Corporation
Burbank, California
Electronic assemblies

Kimball Electronics Design
Services
Jasper, Indiana
Contract electronic component
design services

Kimball Electronics Thailand
Laem Chabang, Thailand
Electronic assemblies

Kimball Electronics
Jasper, Indiana
Electronic assemblies

Kimco, S.A. de C.V.
Reynosa, Mexico and McAllen,
Texas
Electronic assemblies

Corporate

Corporate Headquarters
Jasper, Indiana
Executive, administrative and
sales offices

Education Center & Corporate
Showroom
Jasper, Indiana
Training, product display

Kimball Flight Operations
Huntingburg, Indiana
Flight services

Kimball Kids
Jasper, Indiana
Child development center

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|39
|

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Board of Directors

Douglas A. Habig*
Chairman of the Board,
Chief Executive Officer
Director 27 years

Thomas L. Habig*
Vice Chairman of the Board
Director 50 years

James C. Thyen* # ‡
President
Director 19 years

John B. Habig
Chairman of the Board of Directors
of SVB&T Corporation, a Bank Holding
Company of Springs Valley Bank & Trust
Company
Director 44 years

Ronald J. Thyen*
Senior Executive Vice President,
Operations Officer,
Furniture and Cabinets Segment
Director 27 years

Corporate Officers

Randall L. Catt
Executive Vice President,
Human Resources

Donald D. Charron
Executive Vice President,
President, Kimball Electronics,
Electronics Segment

John H. Kahle
Executive Vice President,
General Counsel, Assistant Secretary

Gregory W. Kuper
Executive Vice President,
Components Group

P. Daniel Miller
Executive Vice President,
President, Kimball Office Group
Furniture and Cabinets Segment

Robert F. Schneider #
Executive Vice President,
Chief Financial Officer,
Assistant Treasurer

Gary W. Schwartz
Executive Vice President,
Chief Information Officer

J. Keith Beatty
Vice President,
Casegoods Group

Gary L. Beckman
Vice President,
Strategic Planning and Quality Systems

Officers

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

|40
|

Alan B. Hoffman
Vice President,
Corporate Risk

John T. Thyen*
Senior Executive Vice President,
Strategic Marketing
Director 10 years

Gary P. Critser* # ‡
Senior Executive Vice President,
Corporate Secretary and Treasurer
Director 10 years

Brian K. Habig
Proposal Center Manager for Kimball
Electronics Group
Director 8 years

Jack R. Wentworth+ # ‡
Arthur M. Weimer Professor Emeritus of
Business Administration, Indiana University
Director 16 years

Alan B. Graf, Jr.+ # ‡
Executive Vice President and Chief
Financial Officer, FedEx Corporation
Director 4 years

Christine M. Vujovich+ # ‡
Vice President, Environmental Policy and
Product Strategy, Cummins Engine
Company, Inc.
Director 6 years

Polly B. Kawalek+
Vice President of The Quaker Oats Company
and President, Hot Breakfast Division
Director 3 years

HHaarrrryy WW.. BBoowwmmaann+
Former President and Chief Executive
Officer of The Stiffel Company, Appointed
to the Board on August 8, 2000

* Member of the Executive

Committee of the Board

+ Member of the Audit Committee

of the Board

# Member of the Compensation Committee

of the Board

‡ Member of the Stock Option Committee

of the Board

Mona K. Hoffman
Vice President, General Manager,
National Office Furniture

George W. Manz
Vice President, Marketing and Sales,
Transwall

R. Gregory Kincer
Vice President, Assistant Treasurer,
Business Development

Dirk H. Manning
Vice President, Western Sales Manager,
Kimball Office Furniture

Ronald J. Sermersheim
Vice President,
Environmental, Health & Safety

Roy W. Templin
Vice President,
Finance and Chief Accounting Officer

Kenneth J. Van Winkle
Vice President,
Global Procurement
Furniture and Cabinets Segment

Dean M. Vonderheide
Vice President,
Seating Group

Subsidiary Officers

Dr. Rudolf Arlt
Managing Director, Bösendorfer

William N. Dykema
Vice President, General Manager,
Kimball Lodging Group

James R. Hampton
Vice President,
Raw Materials

Larry J. Knust
Vice President,
Systems Group

James R. McIntyre
Vice President, Sales,
Electronics Group

Mark Phillips
Managing Director,
Kimball United Kingdom

Ronald J. Pronyk
Vice President,
Store Fixture Group

Michael K. Sergesketter
Vice President, Chief Financial Officer,
Electronics Group

Christopher J. Thyen
Vice President,
Lodging/Healthcare Group

Mark D. Valois
Vice President, Northeast Sales Manager,
Kimball Office Furniture

Spiro Vamvakas
Vice President,
Director Design Engineering,
Electronics Group

Don W. Van Winkle
Vice President, Chief Finance and
Administrative Officer,
Kimball Office Group

Lawrence J. Kuntz
Vice President, Organization Development,
Electronics Group

Scott D. Zinn
Vice President, General Sales Manager,
Kimball Office Furniture

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

N e x t (cid:3)

Other Corporate Data

Kimball International, Inc. and Subsidiaries

Dividends:
During fiscal year 2000 dividends declared were $25.4 million or $.62 per share on Class A Common Stock and $.64 per share on
Class B Common Stock. The dividends by quarter for 2000 compared to 1999 are as follows:

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Total Dividends

2000

1999

Class A
$.155
$.155
$.155
$.155
$.62

Class B
$.16
$.16
$.16
$.16
$.64

Class A
$.155
$.155
$.155
$.155
$.62

Class B
$.16
$.16
$.16
$.16
$.64

Share Owners:
On July 31, 2000, the Company’s Class A Common Stock was owned by approximately 640 Share Owners of record and the Company’s
Class B Common Stock by approximately 2,390 Share Owners of record, of which approximately 380 also owned Class A Common Stock.

Market Prices:
Kimball International Class B Common Stock is traded on the Nasdaq Stock Market under the symbol: KBALB.
High and low price ranges by quarter for the last two fiscal years as quoted by the National Association of
Security Dealers (NASDAQ) are as follows:

First Quarter
Second Quarter
Third Quarter
Fourth Quarter
There is no active trading market for the Company’s Class A Common Stock.

$21.00
$19.938
$16.75
$17.50

2000

High

Low

$16.75
$15.125
$10.75
$11.00

1999

High

$20.375
$21.50
$20.0625
$18.8125

Low
$14.875
$14.9375
$14.75
$14.5625

Annual Meeting:
The annual meeting of Share Owners will be held at 9:30 a.m. Eastern Standard Time on October 17, 2000, at the General Office
Building, Kimball International, Inc., 1600 Royal Street, Jasper, Indiana. Share Owners are cordially invited to attend.

10-K Report:
A copy of the Company’s annual report to the Securities and Exchange Commission on Form 10-K is available, without charge, upon
written request directed to Gary P. Critser, Senior Executive Vice President, Corporate Secretary and Treasurer, at the address below.

Transfer Agent and Registrar of the Common Stock:
Share Owners with questions concerning address changes, dividend checks, registration changes, lost share certificates or
transferring shares may contact:

Class A Share Owners:
Hannah Prior
Kimball International, Inc.
1600 Royal Street
Jasper, IN 47549
Phone: (800) 482-1616
E-mail: hprior@kimball.com

Class B Share Owners:
ChaseMellon Shareholder Services L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Phone: (800) 851-9677
Internet Address: www.chasemellon.com

Analyst Contact:
Financial analysts with questions concerning the Company may contact Gregory J. Shields, Director of Investor Relations at (812) 482-8353.

Share Owner Contact:
Share Owners with general questions concerning the Company may contact Gary P. Critser, Senior Executive Vice President, Corporate
Secretary and Treasurer. All members of management welcome suggestions about the Company and its performance.

Corporate Headquarters:

1600 Royal Street
Jasper, Indiana 47549-1001
Phone: (812) 482-1600

Internet Address:
Additional information on Kimball International
is available at www.kimball.com on the Internet.

Private Securities Litigation Reform Act of 1995: This annual report contains forward-looking statements that involve risks and uncertainties regarding
Kimball International’s operations and future results. In accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995,
Kimball provides cautionary statements, detailed in the Company’s Securities and Exchange Commission filings including, without limitation, the Company’s Form
10-K, which identifies specific factors that could cause actual results or events to differ materially from those described in the forward-looking statements.

Design: Stewart Lopez Bonilla & Associates, Louisville, Ky Photography: Casalini Photography, Zionsville, In

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

(cid:2) P r e v i o u s

Ta b l e o f C o n t e n t s

1600 Royal Street

Jasper, Indiana 47549

812-482-1600

812-482-8500 TDD

www.kimball.com

•

m
o
c
.
l
l
a
b
m
i
k
.
w
w
w

h
c
a
e
r

r
u
o
g
n
d
n
a
p
x
e

s
u
c
o
f

r
u
o
g
n
n
i
a
t
n
i
a
m

•