(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

December 31, June 30,

(Amounts in Thousands) 2008 2008

Electronic Manufacturing Services $15,430      $ 13,622

Furniture 1,733      1,733

  Consolidated $17,163      $ 15,355

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In the Electronic Manufacturing Services (EMS) segment, goodwill increased in the aggregate by, in thousands, $1,808 during the six months ended December 31, 2008 due to a $1,965 increase for the acquisition of Genesis Electronics Manufacturing. See Note 2 - Acquisition of Notes to Condensed Consolidated Financial Statements for further discussion. Goodwill was offset by, in thousands, a $157 reduction due to the effect of changes in foreign currency exchange rates.

Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset values resulting from business acquisitions. Annually, or if conditions indicate an earlier review is necessary, the Company compares the carrying value of the reporting unit to an estimate of the reporting unit's fair value. If the estimated fair value is less than the carrying value, goodwill is impaired and will be written down to its estimated fair value. Goodwill is assigned to and the fair value is tested at the reporting unit level. During the Company's second quarter of fiscal year 2009, the annual impairment tests were performed for several of the Company's reporting units. Goodwill was also reviewed on an interim basis during the second quarter of fiscal year 2009 due to the disparity between the Company's market capitalization and the carrying value of its stockholders' equity and the uncertainty associated with the economy. The results of the analyses indicated that the Company did not have an impairment of goodwill for any reporting units. The calculation of the fair value of the reporting units considers current market conditions existing at the assessment date. The Company will continue to monitor circumstances and events in future periods to determine whether additional goodwill impairment testing is warranted. The Company can provide no assurance that a material impairment charge will not occur in future periods as a result of these analyses.

A summary of other intangible assets subject to amortization by segment is as follows:

December 31, 2008 June 30, 2008

(Amounts in Thousands) Cost Accumulated
Amortization Net
Value Cost Accumulated
Amortization Net
Value

Electronic Manufacturing Services:

Capitalized Software $ 27,278 $ 23,775    $ 3,503   $27,228 $ 22,531 $ 4,697

Customer Relationships 1,167 342 825 937 247 690

     Other Intangible Assets $ 28,445 $ 24,117    $ 4,328   $28,165 $ 22,778 $ 5,387

Furniture:

Capitalized Software $ 37,360 $ 32,233    $ 5,127   $43,868 $ 37,895 $ 5,973

Product Rights 1,160 267 893 1,160 210 950

     Other Intangible Assets $ 38,520 $ 32,500    $ 6,020   $45,028 $ 38,105 $ 6,923

Unallocated Corporate:

Capitalized Software $   6,424 $   5,455    $   969   $ 6,267 $   5,204 $ 1,063

     Other Intangible Assets $   6,424 $   5,455    $   969   $  6,267 $   5,204 $ 1,063

Consolidated $ 73,389 $ 62,072    $11,317   $79,460 $ 66,087 $13,373

The customer relationship intangible asset increased by, in thousands, $230 during the six months ended December 31, 2008 due to the acquisition of Genesis Electronics Manufacturing.

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Amortization expense related to other intangible assets was, in thousands, $872 and $2,543 during the quarter and year-to-date periods ended December 31, 2008, respectively. Amortization expense related to other intangible assets was, in thousands, $2,171 and $4,201 during the quarter and year-to-date periods ended December 31, 2007, respectively. Amortization expense in future periods is expected to be, in thousands, $1,353 for the remainder of fiscal year 2009, and $2,367, $1,974, $1,734, and $1,472 in the four years ending June 30, 2013, and $2,417 thereafter. The amortization period for product rights is 7 years. The amortization periods for customer relationship intangible assets range from 10 to 16 years. The estimated useful life of internal-use software ranges from 3 to 10 years.

Other intangible assets consist of capitalized software, product rights, and customer relationships and are reported as Other Intangible Assets on the Condensed Consolidated Balance Sheets. Intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets.

Internal-use software is stated at cost less accumulated amortization and is amortized using the straight-line method. During the software application development stage, capitalized costs include external consulting costs, cost of software licenses, and internal payroll and payroll-related costs for employees who are directly associated with a software project. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred.

Product rights to produce and sell certain products are amortized on a straight-line basis over their estimated useful lives, and capitalized customer relationships are amortized on the estimated attrition rate of customers. The Company has no intangible assets with indefinite useful lives which are not subject to amortization.
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Effective Tax Rate:

In determining the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which the Company operates. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.

Non-Operating Income (Expense):

Non-operating Income (Expense) includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on Supplemental Employee Retirement Plan (SERP) investments, non-production rent income, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations.

Components of Non-operating Income (Expense), net:

Three Months Ended Six Months Ended

(Amounts in Thousands) December 31, December 31,

2008 2007 2008 2007

Foreign Currency/Derivative Gain (Loss) $(1,499) $ 667 $   (988) $   752

Loss on Supplemental Employee Retirement Plan Investment (2,234) (354) (3,357) (205)

Polish offset credit program 0 0 0 1,324

Other (176) (184) (342) 111

Non-operating Income (Expense), net $(3,909) $ 129 $(4,687) $1,982

Derivative Instruments and Hedging Activities:

The Company uses forward exchange contracts to reduce the effect of currency risk in the financial statements. The fair value of derivative financial instruments recorded on the balance sheet as of December 31, 2008 and June 30, 2008 was, in thousands, $714 and $1,307, recorded in assets, and $14,458 and $2,582 recorded in liabilities, respectively. The fair value of derivative financial instruments recorded on the balance sheet declined by $12.5 million from June 30, 2008 to December 31, 2008, consisting of a $0.6 million decline in derivative assets and a $11.9 million increase in derivative liabilities due to the strengthening of the Company's functional currencies relative to its hedged currencies. The majority of derivative instruments are classified as cash flow hedges and are accounted for such that gains or losses are initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners' Equity, and are subsequently reclassified into earnings in the period during which the underlying hedged transaction is recognized in earnings. The derivative losses that are deferred in Accumulated Other Comprehensive Income (Loss) increased from June 30, 2008 to December 31, 2008 by $10.9 million pre-tax, or $7.9 million net of tax. Losses on forward exchange contracts are generally offset by gains in operating costs in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on forward contracts fluctuate based on currency spot rates, the future effect on earnings of the hedges alone is not determinable, but in conjunction with the underlying hedged transactions the result is expected to be a decline in currency risk. See Note 4 - Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for further detail of the balances and changes in Accumulated Other Comprehensive Income (Loss).

9

New Accounting Standards:

In October 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, (FSP FAS 157-3). This FSP clarifies the application of Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP FAS 157-3 was effective for the Company upon issuance and did not have an impact on the Company's financial position or results of operations because the Company currently has no financial instruments in inactive markets.

In June 2008, the FASB issued an FSP on Emerging Issues Task Force (EITF) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (FSP EITF 03-6-1). FSP EITF 03-6-1 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The two-class method is an earnings allocation method for computing earnings per share when an entity's capital structure includes multiple classes of common stock and participating securities. FSP EITF 03-6-1 is effective as of the beginning of the Company's fiscal year 2010 and requires that previously reported earnings per share data be recast in financial statements issued in periods after the effective date. The Company is currently evaluating the impact of FSP EITF 03-6-1 on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (FAS 162). FAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the United States. This statement did not change existing practices. This statement became effective on November 15, 2008 and did not have a material effect on the Company's consolidated financial statements.

In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. FSP FAS 142-3 allows an entity to use its own historical experience in renewing or extending similar arrangements, adjusted for entity-specific factors, in developing assumptions about renewal or extension used to determine the useful life of a recognized intangible asset. As a result, the determination of intangible asset useful lives is now consistent with the method used to determine the period of expected cash flows used to measure the fair value of the intangible assets, as described in other accounting principles. The guidance for determining the useful life of a recognized intangible asset is to be applied prospectively to intangible assets acquired after the effective date. Disclosure requirements are to be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. The provisions of FSP FAS 142-3 are effective as of the beginning of the Company's fiscal year 2010 and are currently not expected to have a material effect on the Company's consolidated financial statements.

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In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161). FAS 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and requires entities to provide enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair values and amounts of gains and losses on derivative contracts, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 will be effective as of the Company's third quarter of fiscal year 2009. The Company is currently evaluating the financial statement disclosures required under FAS 161.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (FAS 141(R)). FAS 141(R) requires that the fair value of the purchase price of an acquisition including the issuance of equity securities be determined on the acquisition date; requires that all assets, liabilities, noncontrolling interests, contingent consideration, contingencies, and in-process research and development costs of an acquired business be recorded at fair value at the acquisition date; requires that acquisition costs generally be expensed as incurred; requires that restructuring costs generally be expensed in periods subsequent to the acquisition date; and requires that changes in deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. FAS 141(R) also broadens the definition of a business combination and expands disclosures related to business combinations. FAS 141(R) will be applied prospectively to business combinations occurring after the beginning of the Company's fiscal year 2010, except that business combinations consummated prior to the effective date must apply FAS 141(R) income tax requirements immediately upon adoption. The Company is currently evaluating the impact of FAS 141(R) on its financial position, results of operations, and cash flows.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51 (FAS 160). FAS 160 requires that noncontrolling interests be reported as a separate component of equity, that net income attributable to the parent and to the noncontrolling interest be separately identified in the consolidated statements of income, that changes in a parent's ownership interest be accounted for as equity transactions, and that, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. FAS 160 will be applied prospectively, except for presentation and disclosure requirements which will be applied retrospectively, as of the beginning of the Company's fiscal year 2010. The Company does not currently have noncontrolling interests, and therefore the adoption of FAS 160 is not expected to have an impact on the Company's financial position, results of operations, or cash flows.

In June 2007, the FASB ratified the EITF consensus on Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF 06-11). EITF 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for nonvested equity-classified employee share-based payment awards as an increase to additional paid-in capital. The realized income tax benefit recognized in additional paid-in capital should be included in the pool of excess tax benefits available to absorb future tax deficiencies on share-based payment awards. EITF 06-11 was adopted on a prospective basis for income tax benefits on dividends declared after the beginning of the Company's fiscal year 2009. The adoption of EITF 06-11 did not have a material impact on the Company's financial position, results of operations, or cash flows.

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In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 (FAS 159). FAS 159 expands the use of fair value accounting, but does not affect existing standards which require assets or liabilities to be carried at fair value. Under FAS 159, a company may elect to use fair value to measure financial instruments and certain other items, which may reduce the need to apply complex hedge accounting provisions in order to mitigate volatility in reported earnings. The fair value election is irrevocable and is generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. FAS 159 became effective as of the beginning of the Company's fiscal year 2009. The Company has determined that it will not elect to use fair value accounting for any eligible items, and therefore FAS 159 will have no impact on its financial position, results of operations, or cash flows.

In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R) (FAS 158). FAS 158 requires employers to recognize the overfunded or underfunded status of a defined benefit plan as an asset or liability in its statement of financial position, recognize through comprehensive income changes in that funded status in the year in which the changes occur, and measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year. At the end of fiscal year 2007, the Company adopted the provisions of FAS 158 related to recognition of plan assets, benefit liabilities, and comprehensive income. The Company has adopted the provisions of this rule that require measurement of plan assets and benefit obligations as of the year end balance sheet date for the Company's fiscal year 2009, and it will not have a material impact on the Company's financial position, results of operations, or cash flows. This rule impacts the accounting for the Company's unfunded noncontributory postemployment severance plans.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (FAS 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. FAS 157 is only applicable to existing accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The standard, as originally issued, was to be effective as of the beginning of the Company's fiscal year 2009. With the issuance in February 2008 of FSP No. FAS 157-2, Effective Date of FASB Statement No. 157, the FASB approved a one-year deferral to the beginning of the Company's fiscal year 2010 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis at least annually. In addition, the FASB has excluded leases from the scope of FAS 157 with the issuance of FSP No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements that Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13. FAS 157 will be applied prospectively. The Company's adoption of the provisions of FAS 157 applicable to financial instruments as of July 1, 2008, did not have a material impact on the Company's financial position, results of operations, or cash flows. The Company is currently evaluating the effect of applying FAS 157 to non-financial assets and liabilities in fiscal year 2010.

Note 2. Acquisition

During the first quarter of fiscal year 2009, the Company acquired privately-held Genesis Electronics Manufacturing located in Tampa, Florida. The acquisition supports the Company's growth and diversification strategy, bringing new customers in key target markets. The acquisition purchase price totaled $5.4 million. Assets acquired were $7.7 million, which included $2.0 million of goodwill, and liabilities assumed were $2.3 million. Goodwill was allocated to the EMS segment of the Company. Direct costs of the acquisition were not material. The operating results of this acquisition are included in the Company's consolidated financial statements beginning on September 1, 2008 and had an immaterial impact on the second quarter and year-to-date fiscal year 2009 financial results. The purchase price allocation is final.

Note 3. Inventories

Inventory components of the Company were as follows:

December 31, June 30,

(Amounts in Thousands) 2008 2008

Finished Products $ 44,879       $ 42,201

Work-in-Process 14,576       14,363

Raw Materials 115,470       126,583

  Total FIFO Inventory $174,925       $183,147

LIFO Reserve (18,841)     (18,186)

  Total Inventory $156,084       $164,961

For interim reporting, LIFO inventories are computed based on year-to-date quantities and interim changes in price levels. Changes in quantities and price levels are reflected in the interim financial statements in the period in which they occur.

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Note 4. Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in equity during a period except those resulting from investments by and distributions to Share Owners. Comprehensive income (loss), shown net of tax if applicable, for the three and six-month periods ended December 31, 2008 and 2007 is as follows:

Three Months Ended
December 31, 2008 Three Months Ended
December 31, 2007

(Amounts in Thousands) Pre-tax Tax Net Pre-tax Tax Net

Net income $    8,182 $    4,240

Other comprehensive income (loss):

    Foreign currency translation adjustments $    (1,003) $    (880) $ (1,883) $ 1,753 $ -0- $    1,753

    Postemployment severance actuarial change 196 (78) 118 205 (81) 124

    Other fair value changes:

        Available-for-sale securities 956 (385) 571 407 (162) 245

        Derivatives (14,653) 4,557 (10,096) (1,324) 564 (760)

    Reclassification to earnings:

        Available-for-sale securities 31 (12) 19 (73) 29 (44)

        Derivatives 3,337 (1,398) 1,939 515 (184) 331

        Amortization of prior service costs 72 (29) 43 72 (29) 43

        Amortization of actuarial change (2) 1 (1) (1) -0- (1)

Other comprehensive income (loss) $ (11,066) $ 1,776 $    (9,290) $ 1,554 $ 137 $    1,691

Total comprehensive income (loss) $    (1,108) $    5,931

Six Months Ended
December 31, 2008 Six Months Ended
December 31, 2007

(Amounts in Thousands) Pre-tax Tax Net Pre-tax Tax Net

Net income $ 10,366 $ 10,678

Other comprehensive income (loss):

    Foreign currency translation adjustments $    (6,295) $    (880) $ (7,175) $ 4,618 $ -0- $    4,618

    Postemployment severance actuarial change -0- -0- -0- (183) 73 (110)

    Other fair value changes:

        Available-for-sale securities 991 (395) 596 977 (389) 588

        Derivatives (14,597) 4,633 (9,964) (2,717) 1,012 (1,705)

    Reclassification to earnings:

        Available-for-sale securities -0- -0- -0- (89) 35 (54)

        Derivatives 3,705 (1,640) 2,065 751 (233) 518

        Amortization of prior service costs 143 (57) 86 143 (57) 86

        Amortization of actuarial change 8 (3) 5 12 (5) 7

Other comprehensive income (loss) $ (16,045) $ 1,658 $ (14,387) $ 3,512 $ 436 $    3,948

Total comprehensive income (loss) $    (4,021) $ 14,626

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Accumulated other comprehensive income (loss), net of tax effects, was as follows:

December 31,
2008 June 30,
2008

(Amounts in Thousands)

Foreign currency translation adjustments $    6,680   $   13,855

Unrealized gain (loss) from:

    Available-for-sale securities 848   252

    Derivatives (8,479) (580)

Postemployment benefits:

    Prior service costs (1,065) (1,151)

    Net actuarial loss (63) (68)

Accumulated other comprehensive income (loss) $   (2,079) $   12,308

Note 5. Segment Information

Management organizes the Company into segments based upon differences in products and services offered in each segment. The EMS segment provides engineering and manufacturing services which utilize common production and support capabilities to a variety of industries globally. The EMS segment focuses on electronic assemblies that have high durability requirements and are sold on a contract basis and produced to customers' specifications. The EMS segment currently sells primarily to customers in the medical, automotive, industrial controls, and public safety industries. The Furniture segment provides furniture for the office and hospitality industries, sold under the Company's family of brand names. Each segment's product line offerings consist of similar products and services sold within various industries. Intersegment sales are insignificant.

Unallocated corporate assets include cash and cash equivalents, short-term investments, and other assets not allocated to segments. Unallocated corporate income from continuing operations consists of income not allocated to segments for purposes of evaluating segment performance and includes income from corporate investments and other non-operational items. The basis of segmentation and accounting policies of the segments are consistent with those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Three Months Ended Six Months Ended

December 31, December 31,

(Amounts in Thousands) 2008 2007 2008 2007

Net Sales:

Electronic Manufacturing Services $166,912 $177,362 $349,833 $355,409

Furniture 160,694 170,432 317,268 326,322

Consolidated $327,606

$347,794 $667,101

$681,731

Income (Loss) from Continuing Operations:

Electronic Manufacturing Services $    (709)

$ (2,102) $ (1,477)

$ (1,323)

Furniture 4,049

5,801 7,232

10,882

Unallocated Corporate and Eliminations 4,842

541 4,611

1,243

Consolidated $   8,182
[1]
$   4,240
[2]
$ 10,366
[1]
$  10,802
[2]

December 31, June 30,

(Amounts in Thousands) 2008 2008

Total Assets:

Electronic Manufacturing Services $379,492 $396,773

Furniture 222,103 240,674

Unallocated Corporate and Eliminations 97,759 85,220

Consolidated $699,354

$722,667

[1] Income (Loss) from Continuing Operations included after-tax restructuring charges, in thousands, of $661 and $1,255 in the three and six months ended December 31, 2008, respectively. The EMS segment recorded, in the three and six months ended December 31, 2008, in thousands, $464 and $899, respectively, of after-tax restructuring charges. The Furniture segment recorded, in the three and six months ended December 31, 2008, in thousands, $143 and $289, respectively, of after-tax restructuring charges. Unallocated Corporate and Eliminations recorded, in the three and six months ended December 31, 2008, in thousands, $54 and $67, respectively, of after-tax restructuring charges. See Note 7 - Restructuring Expense of Notes to Condensed Consolidated Financial Statements for further discussion. Additionally, the EMS segment recorded for both the three and six months ended December 31, 2008, $1.6 million of after-tax income for earnest money deposits retained by the Company resulting from the termination of the contract to sell the Company's Poland building and real estate. Unallocated Corporate and Eliminations also recorded, for both the three and six months ended December 31, 2008, after-tax gains of $4.8 million on the sale of undeveloped land holdings and timberlands which were closed on during the quarter. The Company expects to close the majority of the land and timberland sales during the third quarter of fiscal year 2009.

[2] Income (Loss) from Continuing Operations included after-tax restructuring charges, in thousands, of $375 and $568 in the three and six months ended December 31, 2007, respectively. The EMS segment recorded, in thousands, $133 for both the three and six months ended December 31, 2007 of after-tax restructuring charges. The Furniture segment recorded, in the three and six months ended December 31, 2007, in thousands, $151 and $274, respectively, of after-tax restructuring charges. Unallocated Corporate and Eliminations recorded, in the three and six months ended December 31, 2007, in thousands, $91 and $161, respectively, of after-tax restructuring charges. See Note 7 - Restructuring Expense of Notes to Condensed Consolidated Financial Statements for further discussion. The EMS segment also recorded, in the six months ended December 31, 2007, $0.7 million of after-tax income received as part of a Polish offset credit program for investments made in the Company's Poland operation.

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Note 6. Commitments and Contingent Liabilities

Standby letters of credit are issued to third-party suppliers, lessors, and insurance and financial institutions and can only be drawn upon in the event of the Company's failure to pay its obligations to the beneficiary. As of December 31, 2008, the Company had a maximum financial exposure from unused standby letters of credit totaling $5.0 million. The Company is not aware of circumstances that would require it to perform under any of these arrangements and believes that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect the Company's financial statements. Accordingly, no liability has been recorded as of December 31, 2008 with respect to the standby letters of credit. The Company also enters into commercial letters of credit to facilitate payment to vendors and from customers.

The Company estimates product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability in cases where specific warranty issues become known.

Changes in the product warranty accrual for the six months ended December 31, 2008 and 2007 were as follows:

Six Months Ended
December 31,

(Amounts in Thousands)
2008

2007

Product Warranty Liability at the beginning of the period $ 1,470 $ 2,147

Accrual for warranties issued 619 226

Additions (reductions) related to pre-existing warranties (including changes in estimates) (4) 211

Settlements made (in cash or in kind) (498) (597)

Product Warranty Liability at the end of the period $ 1,587 $ 1,987

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Note 7. Restructuring Expense

The Company recognized consolidated pre-tax restructuring expense of $1.0 million and $2.0 million in the three and six months ended December 31, 2008, respectively, and $0.6 million and $0.9 million in the three and six months ended December 31, 2007, respectively. The actions discussed below represent the majority of the restructuring costs during the current fiscal year. Former restructuring plans that are substantially complete, including a workforce restructuring plan and the Gaylord and Hibbing restructuring plans in the EMS segment, are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008 and are included in the summary table on the following page under Other Restructuring Plans.

The Company utilizes available market prices and management estimates to determine the fair value of impaired fixed assets. Restructuring charges are included in the Restructuring Expense line item on the Company's Condensed Consolidated Statements of Income.

Office Furniture Manufacturing Consolidation Plan

During the first quarter of fiscal year 2009, the Company approved a restructuring plan to consolidate production of select office furniture manufacturing departments. The consolidation is expected to reduce manufacturing costs and excess capacity by eliminating redundant property and equipment, processes, and employee costs. The consolidation is expected to be substantially complete by the end of fiscal year 2009. The Company estimates that the pre-tax charges related to the consolidation activities will be approximately, in millions, $1.1 consisting of $0.4 of severance and other employee costs, $0.1 of property and equipment asset impairment, and $0.6 of other consolidation costs.

European Consolidation Plan

Because of evolving customer preferences for EMS operations in low-cost regions, during the fourth quarter of fiscal year 2008, the Company approved a plan to expand its European automotive electronics capabilities and to establish a European Medical Center of Expertise in Poznan, Poland. The Company presently has an operation in Poznan. The Company completed the move of production from Longford, Ireland into the existing Poznan facility during the fiscal year 2009 second quarter. As part of the plan, the Company will also consolidate its EMS facilities located in Bridgend, Wales, and Poznan, Poland, into a new larger facility in Poznan, which is expected to improve the Company's margins in the very competitive EMS market. The Company intends to sell the existing Poland facility and real estate. The plan is being executed in stages with a projected completion date of December 2011. The Company currently estimates that the pre-tax charges related to the consolidation activities will be approximately, in millions, $20.2 consisting of $18.8 of severance and other employee costs, $0.3 of property and equipment asset impairment, $0.8 of lease exit costs, and $0.3 of other exit costs.

Summary of All Plans
	Accrued June 30, 2008 ⁽⁴⁾	Six Months Ended December 31, 2008				Accrued December 31, 2008 ⁽⁴⁾	Total Charges Incurred Since Plan Announcement		Total Expected Plan Costs
(Amounts in Thousands)	Accrued June 30, 2008 ⁽⁴⁾	Amounts Charged-Cash	Amounts Charged- Non-cash	Amounts Utilized/ Cash Paid		Accrued December 31, 2008 ⁽⁴⁾	Total Charges Incurred Since Plan Announcement		Total Expected Plan Costs
EMS Segment
European Consolidation Plan
Transition and Other Employee Costs	$ 15,117	$ 1,076	$ -0-	$ (6,179)	⁽⁶⁾	$ 10,014	$ 16,826		$ 18,809
Asset Write-downs	-0-	-0-	(156)	156		-0-	253		253
Plant Closure and Other Exit Costs	-0-	293	-0-	(160)	⁽⁶⁾	133	356		1,093
Total	$ 15,117	$ 1,369	$ (156)	$ (6,183)		$ 10,147	$ 17,435		$ 20,155
Other Restructuring Plans ⁽¹⁾	521	252	(41)	(732)		-0-	2,933	⁽⁵⁾	2,933	⁽⁵⁾
Total EMS Segment	$ 15,638	$ 1,621	$ (197)	$ (6,915)		$ 10,147	$ 20,368		$ 23,088
Furniture Segment
Office Furniture Manufacturing Consolidation Plan
Transition and Other Employee Costs	$ -0-	$ 417	$ -0-	$ (184)		$ 233	$ 417		$ 417
Asset Write-downs	-0-	-0-	84	(84)		-0-	84		152
Plant Closure and Other Exit Costs	-0-	5	-0-	(5)		-0-	5		569
Total	$ -0-	$ 422	$ 84	$ (273)		$ 233	$ 506		$ 1,138
Other Restructuring Plans ⁽²⁾	487	(25)	-0-	(359)		103	1,165		1,431
Total Furniture Segment	$ 487	$ 397	$ 84	$ (632)		$ 336	$ 1,671		$ 2,569
Unallocated Corporate
Other Restructuring Plans ⁽³⁾	183	111	-0-	(294)		-0-	585		777
Consolidated Total of All Plans	$ 16,308	$ 2,129	$ (113)	$ (7,841)		$ 10,483	$ 22,624		$ 26,434

(1) EMS segment fiscal year 2009 other restructuring plan charges include miscellaneous wrap-up activities related to the workforce restructuring plan and the Hibbing restructuring plan. Total Charges Incurred Since Plan Announcement and Total Expected Plan Costs include the workforce restructuring plan and the Gaylord and Hibbing restructuring plans.
(2) Furniture segment other restructuring plan charges include miscellaneous wrap-up activities related to the workforce restructuring plan.
(3) Unallocated Corporate other restructuring plan charges include miscellaneous wrap-up activities related to the workforce restructuring plan and the Gaylord restructuring plan.
(4) Accrued restructuring at December 31, 2008 and June 30, 2008 was $10.5 million and $16.3 million, respectively. The balances include $3.8 million and $6.7 million recorded in current liabilities and $6.7 million and $9.6 million recorded in other long-term liabilities at December 31, 2008 and June 30, 2008, respectively.
(5) In addition to the incurred charges and total expected plan costs in the EMS segment shown above, an additional $0.8 million increase in restructuring reserves was recognized as an adjustment to the purchase price allocation of the acquisition of Reptron Electronics, Inc. during fiscal years 2007 and 2008.
(6) The effect of changes in foreign currency exchange rates within the EMS segment primarily due to revaluation of the restructuring liability is included in these amounts.

Note 8. Fair Value of Financial Assets and Liabilities

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (FAS 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of FAS 157 were effective for the Company as of July 1, 2008, however, the FASB deferred the effective date of FAS 157 until the beginning of the Company's fiscal year 2010, as it relates to fair value measurement requirements for non-financial assets and liabilities that are not measured at fair value on a recurring basis. Accordingly, the Company adopted FAS 157 for financial assets and liabilities measured at fair value on a recurring basis at July 1, 2008. The adoption did not have a material impact on the Company's financial statements.

The fair value framework as established in FAS 157 requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3: Unobservable inputs reflecting management's own assumptions about the inputs used in pricing the asset or liability.

As of December 31, 2008, the fair values of financial assets and liabilities that were valued using the market approach are categorized as follows:

(Amounts in Thousands) Level 1 Level 2 Level 3 Total

Assets

Cash Equivalents $ 10,083 $       -0- $    -0-   $ 10,083

Available-for-sale securities 350 51,608 -0-   51,958

Derivatives -0- 714 -0-   714

Nonqualified supplemental employee retirement plan assets 10,022 -0- -0-   10,022

Total assets at fair value $ 20,455 $ 52,322 $    -0-   $ 72,777

Liabilities

Derivatives $       -0- $ 14,458 $    -0-   $  14,458

Total liabilities at fair value $       -0- $ 14,458 $    -0-   $ 14,458

There were no changes in the Company's valuation techniques used to measure fair values on a recurring basis as a result of adopting FAS 157.

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Note 9. Assets Held for Sale

At December 31, 2008, in thousands, assets totaling $15,081 were classified as held for sale and consisted of $13,707 for undeveloped land holdings and timberlands and $1,374 for a facility and land related to the Gaylord, Michigan, exited operation within the EMS segment. All of the assets were reported as unallocated corporate assets for segment reporting purposes. The Company expects to sell these assets during the next 12 months.

During the quarter ended September 30, 2008, the Company decided to sell its undeveloped land holdings and timberlands using an auction approach. Only a portion of the land qualified for held for sale classification as of September 30, 2008. The auction took place during November 2008. A portion of the land tracts sold via the auction were finalized during December 2008. The remainder of the land tracts sold via the auction have final closings scheduled to be complete in the Company's fiscal year 2009 third quarter and are classified as held for sale as of December 31, 2008.

During the quarter ended September 30, 2008, the Company decided to sell one of its aircraft and replace it with a smaller, more efficient aircraft, and it met the criteria for held for sale classification. As of December 31, 2008, due to inactivity in the aircraft market, the Company's aircraft no longer meets the criteria for held for sale classification. The impact of reclassifying the asset to held and used was immaterial to the Company's results of operations.

No impairment was recorded during the three and six month months ended December 31, 2008 as the net carrying values of the assets held for sale were less than the estimated fair market value less costs to sell.

At June 30, 2008, the Company had, in thousands, assets totaling $1,374 classified as held for sale.

Note 10. Postemployment Benefits

The Company maintains severance plans for substantially all domestic employees which provide severance benefits to eligible employees meeting the plans' qualifications, primarily involuntary termination without cause. The components of net periodic postemployment benefit cost applicable to the Company's severance plans were as follows:

Three Months Ended Six Months Ended

December 31, December 31,

(Amounts in Thousands) 2008 2007 2008 2007

Service cost $ 48   $   66   $ 162   $ 148

Interest cost 21   28   69   63

Amortization of prior service costs 72   72   143   143

Amortization of actuarial change (2) (1) 8   12

Net periodic benefit cost $ 139   $ 165   $ 382   $ 366

The benefit cost in the above table includes only normal recurring levels of severance activity, as estimated using an actuarial method. Unusual or non-recurring severance actions, such as those disclosed in Note 7 - Restructuring Expense of Notes to Condensed Consolidated Financial Statements, are not estimable using actuarial methods and are expensed in accordance with the applicable U.S. GAAP.

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Note 11. Stock Compensation Plans

During the second quarter of fiscal year 2009, the Company granted 27,117 unrestricted shares of Class B common stock to non-employee directors at a grant date fair value of $163,516, which was based on the stock price of $6.03 at the date of the grant. These shares were issued to members of the Board of Directors as compensation for director's fees, as a result of directors' elections to receive unrestricted shares in lieu of cash payment. Director's fees are expensed over the period that directors earn the compensation.

Also during the second quarter of fiscal year 2009, the Company granted 250 unrestricted shares of Class B common stock to one key employee at a grant date fair value of $2,153, which was based on the stock price of $8.61 at the date of the grant.

During the first quarter of fiscal year 2009, the Company awarded annual performance shares and long-term performance shares to officers and other key employees. These awards entitle the employees to receive shares of the Company's Class A common stock. Payouts under these awards are based upon the cash incentive payout percentages calculated under the Company's 2005 Profit Sharing Incentive Bonus Plan. The maximum potential shares issuable are 442,600 shares. The number of shares issued will be less if the maximum cash incentive payout percentages are not achieved. The contractual life of annual performance shares is one year and five years for the long-term performance shares. Annual performance shares are based on an annual performance measurement period and vest after one year. Long-term performance shares are based on five successive annual performance measurement periods, with each annual tranche having a grant date when economic profit tiers are established at the beginning of the applicable fiscal year and a vesting date at the end of the annual period. The grant date fair value for the annual performance share awards and the first tranche of the long-term performance share awards granted August 19, 2008 was $10.41.

Also, during the first quarter of fiscal year 2009, the Company granted 2,178 unrestricted shares of Class B common stock to two key employees at a grant date fair value of $24,982. The grant date fair value of the unrestricted shares was based on the stock price of $11.47 at the date of the grant.

All awards were granted under the 2003 Stock Option and Incentive Plan. For information on similar unrestricted shares and performance share awards, refer to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Note 12. Subsequent Event

The Company entered into agreements to sell undeveloped land holdings and timberlands which approximate 27,200 acres. The sale was conducted utilizing an auction approach. The auctions began on November 6, 2008, and negotiations concluded on November 13, 2008. These agreements are with numerous buyers, and the combined purchase price for all buyers was $50.6 million for the entire acreage. These agreements are not contingent upon buyers obtaining financing. In addition to the $8 million pre-tax gain recognized in the second quarter of fiscal year 2009 for the closings that occurred during the quarter, the Company expects to record a pre-tax gain of approximately $23 million during the third quarter of fiscal year 2009 for the remainder of the closings. Gains are net of applicable selling and other expenses including the buyer's premium.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

Kimball International, Inc. provides a variety of products from its two business segments: the Furniture segment and the Electronic Manufacturing Services (EMS) segment. The Furniture segment provides furniture for the office and hospitality industries, sold under the Company's family of brand names. The EMS segment provides engineering and manufacturing services which utilize common production and support capabilities globally to medical, automotive, industrial control, and public safety industries.

Both of the Company's segments have been adversely impacted by the continued weakening in the global economy. The Company experienced reduced order trends during its fiscal year 2009 second quarter ending December 31, 2008. Open orders at December 31, 2008 were 16% lower in the EMS segment and 11% lower in the Furniture segment compared to the beginning of the second quarter.

The EMS industry sales projection for calendar year 2009 (the average projection by IDC, iSuppli, and Technology Forecasters) is for growth of 3.2%. Semiconductor sales, though, are expected to decline approximately 7% in calendar year 2009 representing declines in end market demand for products utilizing electronic components. Generally, as electronics end markets decline, EMS industry sales improve as customers outsource a greater portion of their electronics manufacturing to free up capital for design and marketing programs and to gain cost advantages. However, if customers elect to in-source a greater portion of their electronics manufacturing during this economic downturn, the EMS industry could see negative growth in calendar year 2009.

The Company continues its strategy of diversification within the EMS segment customer base as it focuses on the four key vertical markets of medical, automotive, industrial control, and public safety. The state of the automotive vertical market is the most uncertain at this time. The Company expects the automotive demand to continue to decline but is uncertain as to how long and to what extent. The industrial control vertical market is showing weakness due to the slowing of commercial activity along with reduced residential construction and remodeling. The medical vertical market and the public safety vertical market both continue to send signals of strength. Sales to customers in the medical industry are the largest portion of the Company's EMS segment with sales to customers in the automotive industry being the second largest. The Company's sales to customers in the automotive industry are diversified between more than ten domestic and foreign customers and represented approximately 29% of the EMS segment's net sales for the quarter ended December 31, 2008. The amount of sales of electronic components that relate to General Motors, Ford, and Chrysler automobiles sold in North America were approximately 11% of the Company's EMS segment net sales during the quarter ended December 31, 2008.

Within the Furniture segment, order volumes continue to tighten and decline in both the office furniture and hospitality furniture industries. The Business and Institutional Furniture Manufacturer Association (BIFMA International) is projecting an approximate 10% year-over-year decline in the office furniture industry for calendar year 2009. While the Company expects its contract office furniture brand to decline at a more rapid pace than its mid-market brand due to the project nature of the contract market, it cannot predict future overall office furniture order trends at this time due to the short lead time of orders and the volatility in the global economy. The Company expects a continued decline in order rates for hospitality furniture also as hotel occupancy rates and per room revenue rates are declining on lower consumer spending.

Competitive pricing pressures within the EMS segment and on select projects within the Furniture segment continue to put pressure on the Company's operating margins. In addition, demand for several of the Company's office furniture products which carry a lower profit margin is outpacing demand for other higher margin products, and the office furniture sales mix is thus shifting to a less profitable mix of products.

The current economic conditions and the tightening of the credit markets have also increased the risk of uncollectible accounts and notes receivables. Accordingly, the Company heightened its monitoring of receivables and related credit risks during the quarter ended December 31, 2008. The Company believes its accounts and notes receivables allowance for uncollectible accounts is adequate as of December 31, 2008. Given the current market conditions and limited credit availability, the economy could decline further potentially requiring the Company to record additional allowances.

The Company is continually assessing its strategies in relation to the significant macroeconomic challenges including the instability in the financial markets, credit availability, and demand for products. The Company implemented various initiatives during the fiscal year 2009 second quarter in response to the deteriorating market conditions including reducing operating costs, more closely scrutinizing customer and supply chain risk, and deferring and cancelling capital expenditures that are not immediately required to support customer requirements. The Company will continue to closely monitor market changes and its liquidity in order to proactively adjust its operating costs, discretionary capital spending, and dividend levels as needed.

The Company continues to have a strong balance sheet which includes a minimal amount of long-term debt of $0.4 million and Share Owners' equity of $377.7 million. The Company's short-term liquidity available, represented as cash, cash equivalents, and short-term investments plus the unused amount of the Company's revolving credit facility amounts to $110.6 million at December 31, 2008.

In addition to the above risks related to the current economic conditions, management currently considers the following events, trends, and uncertainties to be most important to understanding the Company's financial condition and operating performance:

Although the Company has seen recent moderate declines in the cost of some commodities, commodity and fuel prices are expected to be a challenge the Company will continue to address in the near term.

The Company currently has under-utilized capacity at select operations.

Globalization continues to reshape not only the industries in which the Company operates but also its key customers.

The nature of the electronic manufacturing services industry is such that the start-up of new programs to replace departing customers or expiring programs occurs frequently, and the new programs often carry lower margins. The success of the Company's EMS segment is dependent on the successful replacement of such customers or programs. Such changes usually occur gradually over time as old programs phase out of production while newer programs ramp up.

Successful execution of the Company's restructuring plans is critical to the Company's future performance. The success of the restructuring initiatives is dependent on accomplishing the plans in a timely and effective manner. A critical component of the restructuring initiatives is the transfer of production among facilities which contributed to some manufacturing inefficiencies and excess working capital. The Company's restructuring plans are discussed in the segment discussions below.

The EMS segment's operation in China started production in June 2007. The continued success of this start-up operation is critical for securing additional customers and increasing facility utilization.

The increasingly competitive marketplace mandates that the Company continually re-evaluate its business models.

The regulatory and business environment for U.S. public companies requires that the Company continually evaluate and enhance its practices in the areas of corporate governance and management practices.

The Company's employees throughout its business operations are an integral part of the Company's ability to compete successfully, and the stability of its management team is critical to long-term Share Owner value.

To address these and other trends and events, the Company has taken, or continues to consider and take, the following actions:

As end markets dictate, the Company is continually assessing under-utilized capacity and developing plans to better utilize manufacturing operations, including shifting manufacturing capacity to lower cost venues as necessary.

o During the first quarter of fiscal year 2009, the Company approved a restructuring plan to consolidate production of select office furniture manufacturing departments. The consolidation is expected to reduce manufacturing costs and excess capacity by eliminating redundant property and equipment, processes, and employee costs.

o During the fourth quarter of fiscal year 2008, the Company approved a plan to expand its European automotive electronics capabilities and to establish a European Medical Center of Expertise in Poznan, Poland. The Company presently has an operation in Poznan. The Company completed the move of production from Longford, Ireland, into the existing Poznan facility during the second quarter of fiscal year 2009. As part of the plan, the Company will also consolidate its EMS facilities located in Bridgend, Wales, and Poznan into a new, larger facility in Poznan.

o In fiscal year 2008, the Company also completed the consolidation of U.S. manufacturing facilities within the EMS segment due to excess capacity resulting in the exit of two facilities.

To support diversification efforts, the Company has focused on both organic growth and acquisition activities. Acquisitions allow rapid diversification of both customers and industries served.

The Company has taken a number of steps to conform its corporate governance to evolving national and industry-wide best practices among U.S. public companies, not only to comply with new legal requirements, but also to enhance the decision-making process of the Board of Directors.

The preceding statements could be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties including, but not limited to, a significant change in economic conditions, loss of key customers or suppliers, or similar unforeseen events.

The following discussions are based on income from continuing operations and therefore exclude all income statement activity of the prior year discontinued operations.

Financial Overview - Consolidated

Second quarter fiscal year 2009 consolidated net sales were $327.6 million compared to the second quarter fiscal year 2008 net sales of $347.8 million, a 6% decrease which was due to decreased net sales in both the EMS segment and the Furniture segment. The Company recorded income from continuing operations for the second quarter of fiscal year 2009 of $8.2 million, or $0.22 per Class B diluted share, inclusive of after-tax restructuring charges of $0.7 million, or $0.02 per Class B diluted share. The second quarter fiscal year 2009 restructuring charges were primarily related to the European consolidation plan. Second quarter fiscal year 2009 results also include two non-recurring income items: a $4.8 million after-tax gain, or $0.13 per Class B diluted share, related to the sale of a portion of the Company's undeveloped land holdings and timberlands; and $1.6 million of after-tax income, or $0.04 per Class B diluted share, for earnest money deposits retained by the Company resulting from the termination of the contract to sell the Company's Poland building and real estate. Second quarter fiscal year 2008 income from continuing operations was $4.2 million, or $0.11 per Class B diluted share, inclusive of after-tax restructuring charges of $0.4 million, or $0.01 per Class B diluted share.

Net sales for the six-month period ended December 31, 2008, of $667.1 million were down 2% from net sales of $681.7 million for the same period of the prior year due to declines in both segments. Income from continuing operations for the six-month period ended December 31, 2008, totaled $10.4 million, or $0.28 per Class B diluted share, inclusive of $1.3 million, or $0.03 per Class B diluted share, of after-tax restructuring costs primarily related to the European consolidation plan; $4.8 million after-tax gain, or $0.13 per Class B diluted share, related to the sale of a portion of the Company's undeveloped land holdings and timberlands; and $1.6 million of after-tax income, or $0.04 per Class B diluted share, for earnest money deposits retained by the Company resulting from the termination of the contract to sell the Company's Poland building and real estate. Income from continuing operations for the six-month period ended December 31, 2007 totaled $10.8 million, or $0.29 per Class B diluted share, inclusive of $0.6 million, or $0.01 per Class B diluted share, of after-tax restructuring costs.

Consolidated gross profit as a percent of net sales declined 2.0 percentage points to 17.2% for the second quarter of fiscal year 2009 from 19.2% for the second quarter of fiscal year 2008. For the year-to-date period of fiscal year 2009 gross profit as a percent of net sales declined to 17.2% compared to 19.7% for the year-to-date period of fiscal year 2008. Both the EMS segment and the Furniture segment contributed to the declines as discussed in more detail in the segment discussions below.

Consolidated selling and administrative costs for the three and six months ended December 31, 2008 declined 19% and 15%, respectively, compared to the three and six months ended December 31, 2007. The improvements were primarily related to benefits realized as a result of the previously announced restructurings; lower incentive compensation and certain employee benefit costs which are linked to Company profitability; lower sales and marketing incentive costs; and lower travel costs. Partially offsetting these cost declines were increases in employee healthcare costs and bad debt expense. Additionally, during the second quarter and year-to-date period of fiscal year 2009, the Company recorded $2.2 million and $3.4 million, respectively, of favorable adjustments due to a reduction in its Supplemental Employee Retirement Plan (SERP) liability resulting from the normal revaluation of the liability to fair value compared to the $0.3 million and $0.2 million income, respectively, that was recorded in the second quarter and year-to-date period of fiscal year 2008. The result for the second quarter and year-to-date period was a favorable variance in selling and administrative costs of $1.9 million and $3.2 million, respectively. The gain resulting from the reduction of the SERP liability that was recognized in selling and administrative costs was exactly offset by a decline in the SERP investment which was recorded in Other Income as non-operating income/(expense), and thus there was no effect on net earnings. The SERP investment is primarily comprised of employee contributions.

Other General Income in the second quarter of fiscal year 2009 included the $8.0 million pre-tax gain on the sale of a portion of the Company's undeveloped land holdings and timberlands. The gain was included in Unallocated Corporate in segment reporting. The auction took place during November 2008. A portion of the land tracts sold via the auction were finalized during December 2008. The remainder of the land tracts sold via the auction have final closings scheduled to be complete in the Company's fiscal year 2009 third quarter with an estimated approximate additional pre-tax gain of $23 million. In addition, the Company had a conditional agreement to sell and lease back the facilities and real estate that house its current Poland operations. However, during the second quarter of fiscal year 2009, the buyer was unable to close the transaction. As a result, the Company was entitled to retain approximately $1.9 million of the deposit funds held by the Company which was recorded as pre-tax income in Other General Income. This income was recorded in the EMS segment.

The Company recorded other expense of $3.9 million and $4.6 million during the three and six months ended December 31, 2008 compared to other income of $0.3 million and $2.6 million during the three and six months ended December 31, 2007, respectively. The aforementioned $1.9 million and $3.2 million variance in SERP investments contributed to the increased other expense. In addition, Other income/expense was unfavorably impacted by foreign currency movements when compared to the prior year which are partially offset by a favorable impact within operating income. First quarter fiscal year 2008 other income also included $1.3 million pre-tax income relating to funds received as part of a Polish offset credit program for investments made in the Company's Poland operation.

The Company's effective tax rate of 34.4% for the six months ended December 31, 2008 was comparable to the rate for the six months ended December 31, 2007. The fiscal year 2009 rate was favorably impacted by a $0.9 million tax benefit related to its European operations and a $0.5 million adjustment to the research and development tax credit. The effective tax rate for fiscal year 2009 was negatively impacted by losses generated in select foreign jurisdictions which have a lower tax rate.

Comparing the balance sheets as of December 31, 2008 to June 30, 2008, the Company's accounts receivable, inventory, and accounts payable balances all declined. The decrease in the Company's inventory balance is driven by a focus on managing working capital. At June 30, 2008, the Company's accounts payable and accounts receivable balances were high due to an agreement with select customers from which the Company also purchases materials that allowed the Company to extend accounts payable terms if those customers extended the timeframe in which they paid the Company. The Company's accounts payable balance also decreased since June 30, 2008 in relation to the declining inventory balances. The assets held for sale line increased as the tracts of undeveloped land holdings and timberlands that were auctioned in November 2008 for which the closings had not occurred as of December 31, 2008 have been classified as held for sale as of December 31, 2008. The land was previously shown on the other assets line of the balance sheet. The increase in property and equipment is primarily due to the construction of the new EMS segment facility in Poland and other EMS segment manufacturing equipment. Accrued expenses as of December 31, 2008 declined when compared to June 30, 2008 primarily due to a significant portion of accrued bonus related to the prior year being paid, a reduction in the restructuring accrual and funding to the retirement trust occurring during the first half of fiscal year 2009. Borrowings under credit facilities increased since June 30, 2008 in order to fund short-term cash needs.

The variance in the additional paid-in capital and treasury stock lines was primarily attributable to the fulfillment of requests by Share Owners to convert approximately 876,000 shares from Class A shares to Class B shares. The decline in Accumulated Other Comprehensive Income (Loss) was related to the Company's derivative financial instruments. See Note 1 - Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for more information on Derivative Instruments and Hedging Activities.

Results of Operations by Segment - Three and Six Months Ended December 31, 2008 Compared to Three and Six Months Ended December 31, 2007

Electronic Manufacturing Services Segment

During the first quarter of fiscal year 2009, the Company acquired privately-held Genesis Electronics Manufacturing of Tampa, Florida. The acquisition supports the Company's growth and diversification strategy, bringing new customers in key target markets. The operating results of this acquisition were included in the Company's consolidated financial statements beginning on September 1, 2008 and had an immaterial impact on the fiscal year-to-date 2009 financial results. See Note 2 - Acquisition of Notes to Condensed Consolidated Financial Statements for more information on the acquisition.

During the fourth quarter of fiscal year 2008, the Company approved a plan to expand its European automotive electronics capabilities and to establish a European Medical Center of Expertise in Poznan, Poland. The Company completed the move of production from Longford, Ireland, into the existing Poznan facility during the fiscal year 2009 second quarter. As part of the plan, the Company will also consolidate its EMS facilities located in Bridgend, Wales, and Poznan, Poland, into a new, larger facility in Poznan, which is expected to improve the Company's margins in the very competitive EMS market. The plan is being executed in stages with a projected completion date of December 2011.

See Note 7 - Restructuring Expense of Notes to Condensed Consolidated Financial Statements for more information on restructuring charges.

Also during the fourth quarter of fiscal year 2008, the Company had signed a conditional agreement to sell and lease back the facilities and real estate that house its current Poland operations. The Company planned to lease back the building until December 2011 at which time it will have completed the consolidation of its European operations into a newly constructed facility in Poland. The closing on the sale of the existing Poland facility was expected to occur before December 31, 2008. The buyer was unable to close the transaction. Pursuant to the agreement, the Company was entitled to retain approximately $1.9 million of the deposit funds held by the Company which was recorded as pre-tax other general income in the Company's second quarter of fiscal year 2009. The Company will continue to market the facilities and real estate.

EMS segment results were as follows:

	At or for the Three Months Ended			For the Six Months Ended
	December 31,			December 31,

	2008	2007	% Change	2008	2007	% Change
(Amounts in Millions)
Net Sales	$ 166.9	$ 177.4	(6%)	$ 349.8	$ 355.4	(2%)
Income (Loss) from Continuing Operations	$ (0.7)	$ (2.1)	66%	$ (1.5)	$ (1.3)	(12%)
Restructuring Expense, net of tax	$ 0.5	$ 0.1		$ 0.9	$ 0.1
Open Orders	$ 167.7	$ 179.3	(7%)

Net sales to customers in the public safety industry were higher in the second quarter of fiscal year 2009 compared to last year while net sales to customers in the automotive and industrial control industries experienced double digit percentage declines compared to the prior year. Sales to customers in the medical industry declined slightly when compared to the second quarter of fiscal year 2008. The decreased EMS segment net sales for the first half of fiscal year 2009 as compared to the first half of fiscal year 2008 are due to decreased sales to customers in the automotive and industrial control industries more than offsetting increased sales to customers in the public safety and medical industry. Due to the contract nature of the Company's business, open orders at a point in time may not be indicative of future sales trends.

Second quarter and year-to-date fiscal year 2009 EMS segment gross profit as a percent of net sales declined 1.0 and 1.7 percentage points compared to the second quarter and year-to-date fiscal year 2008, respectively. The EMS segment gross profit decline is primarily related to lower volumes and the segment's European operations which are currently being consolidated into one facility. Contractual customer price reductions on select products also negatively impacted gross profit. Partially mitigating the lower margins are benefits the segment realized on the North American consolidation activities which were completed late in fiscal year 2008.

Despite the lower sales volumes and reduction in gross margins, the EMS segment reduced its net loss in the second quarter fiscal year 2009 compared to the prior year due to a 26% reduction in selling and administrative costs. On a year-to-date basis, selling and administrative costs were reduced 21%. Costs for the three and six months ended December 31, 2008 as compared to the three and six months ended December 31, 2007 decreased in both absolute dollars and as a percent of net sales, and the improvement was primarily related to benefits realized from restructuring activities, reduced spending on travel, lower incentive compensation costs which are linked to Company profitability, and lower depreciation/amortization expense.

The restructuring expense recorded in the second quarter and year-to-date periods of fiscal year 2009 was primarily related to the European consolidation plan.

Other General Income for the second quarter of fiscal year 2009 included the aforementioned $1.9 million pre-tax, which equated to $1.6 million after-tax, amount retained due to the buyer being unable to close on the sale of the existing Poland building.

The year-to-date fiscal year 2008 income from continuing operations included $1.3 million of pre-tax, or $0.7 million after-tax, income relating to funds received as part of a Polish offset credit program for investments made in the Company's Poland operation.

Included in this segment are a significant amount of sales to Bayer AG affiliates which accounted for the following portions of consolidated net sales and EMS segment net sales:

	Three Months Ended		Six Months Ended
	December 31,		December 31,

	2008	2007	2008	2007

Bayer AG affiliated sales as a percent of consolidated net sales	10%	10%	11%	10%
Bayer AG affiliated sales as a percent of EMS segment net sales	20%	20%	22%	20%

The nature of the electronic manufacturing services industry is such that the start-up of new customers and new programs to replace expiring programs occurs frequently. New customer and program start-ups generally cause losses early in the life of a program, which are generally recovered as the program matures and becomes established. This segment continues to experience margin pressures related to an overall excess capacity position in the electronics subcontracting services market.

Risk factors within this segment include, but are not limited to, general economic and market conditions, customer order delays, increased globalization, foreign currency exchange rate fluctuations, rapid technological changes, component availability, the contract nature of this industry, unexpected integration issues with acquisitions, and the importance of sales to large customers. The continuing success of this segment is dependent upon its ability to replace expiring customers/programs with new customers/programs. Additional risk factors that could have an effect on the Company's performance are contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Furniture Segment

During the first quarter of fiscal year 2009, the Company approved a restructuring plan to consolidate production of select office furniture manufacturing departments. The consolidation is expected to reduce manufacturing costs and excess capacity by eliminating redundant property and equipment, processes, and employee costs. The consolidation is expected to be substantially complete by the end of fiscal year 2009. The Company estimates that the pre-tax charges related to the consolidation activities will be approximately $1.1 million, consisting of severance and other employee costs, property and equipment asset impairment, and other consolidation costs.

See Note 7 - Restructuring Expense of Notes to Condensed Consolidated Financial Statements for more information on restructuring charges.

Furniture segment results were as follows:

	At or for the Three Months Ended			For the Six Months Ended
	December 31,			December 31,

	2008	2007	% Change	2008	2007	% Change
(Amounts in Millions)
Net Sales	$ 160.7	$ 170.4	(6%)	$ 317.3	$ 326.3	(3%)
Income from Continuing Operations	$ 4.0	$ 5.8	(30%)	$ 7.2	$ 10.9	(34%)
Restructuring Expense, net of tax	$ 0.2	$ 0.2		$ 0.3	$ 0.3
Open Orders	$ 111.1	$ 111.5	(0%)

Decreased net sales of office furniture and flat net sales of hospitality furniture resulted in a net sales decline in the Furniture segment for the second quarter of fiscal year 2009 compared to the second quarter of fiscal year 2008. Price increases net of higher discounting contributed approximately $3.1 million to net sales during the second quarter of fiscal year 2009 when compared to the second quarter of fiscal year 2008. Second quarter fiscal year 2009 sales of newly introduced office furniture products which have been sold for less than twelve months approximated $7.1 million. For the fiscal year-to-date period, decreased net sales of office furniture more than offset increased net sales of hospitality furniture. Price increases net of higher discounting contributed approximately $6.4 million to net sales during the first half of fiscal year 2009 when compared to the first half of fiscal year 2008. Year-to-date fiscal year 2009 sales of newly introduced office furniture products which have been sold for less than twelve months approximated $15.1 million. Furniture products open orders at December 31, 2008 were similar to the open orders at December 31, 2007 due to increased hospitality furniture open orders offsetting a decline in office furniture open orders. Open orders at a point in time may not be indicative of future sales trends.

Second quarter fiscal year 2009 gross profit as a percent of net sales declined 3.0 percentage points when compared to the second quarter of fiscal year 2008. In addition to the impact of the lower net sales level for the second quarter of fiscal year 2009 compared to the second quarter of fiscal year 2008, gross profit was negatively impacted by higher commodity and freight costs, increased discounting on select product, and a sales mix shift to lower margin product. Partially offsetting the higher costs were price increases on select office furniture products and a decrease in LIFO inventory reserves resulting from lower inventory levels which positively impacted the second quarter fiscal year 2009 gross profit. Gross profit as a percent of net sales for the six months ended December 31, 2008, declined 3.2 percentage points when compared to the six months ended December 31, 2007 primarily due to higher commodity and freight costs, increased discounting on select product, and a sales mix shift to lower margin product.

Selling and administrative expenses for the three and six months ended December 31, 2008 as compared to the three and six months ended December 31, 2007, decreased in both absolute dollars and as a percent of net sales as the Furniture segment incurred lower sales and marketing incentive costs, lower incentive compensation costs which are linked to Company profitability, and also realized benefits related to the previously announced workforce reduction restructuring activities.

The Furniture segment earnings for the three and six months ended December 31, 2008 were also impacted by higher employee healthcare costs and lower certain other employee benefit costs which are linked to Company profitability.

Risk factors within this segment include, but are not limited to, general economic and market conditions, increased global competition, supply chain cost pressures, and relationships with strategic customers and product distributors. Additional risk factors that could have an effect on the Company's performance are contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Liquidity and Capital Resources

Working capital at December 31, 2008 was $157 million compared to working capital of $163 million at June 30, 2008. The current ratio was 1.5 at both December 31, 2008 and June 30, 2008.

The Company's short-term liquidity available, represented as cash, cash equivalents, and short-term investments plus the unused amount of the Company's revolving credit facility amounts to $110.6 million at December 31, 2008. The credit facility provides an option to increase the amount available by an additional $50 million at the Company's request, subject to participating banks' consent.

The Company's internal measure of Accounts Receivable performance, also referred to as Days Sales Outstanding (DSO), for the first six months of fiscal year 2009 of 45.7 days approximated the 46.1 days for the first six months of fiscal year 2008. The Company defines DSO as the average of monthly accounts and notes receivable divided by an average day's net sales. The Company's Production Days Supply on Hand (PDSOH) of inventory measure for the first six months of fiscal year 2009 increased to 64.2 from 57.6 for the first six months of fiscal year 2008. The increased PDSOH was driven by EMS segment increased average inventory balances for the first half of fiscal year 2009 as compared to the first half of fiscal year 2008 primarily due to customers delaying near-term requirements which in turn has postponed the reduction of inventory that was held in support of transfers of production between manufacturing facilities within the EMS segment. The Company defines PDSOH as the average of the monthly gross inventory divided by an average day's cost of sales.

The Company's net cash position from an aggregate of cash, cash equivalents, and short-term investments less short-term borrowings under credit facilities decreased from $29.8 million at June 30, 2008 to $7.6 million at December 31, 2008, as cash flow generated from operations and from the sale of assets was more than offset by cash payments during the first six months of fiscal year 2009 for capital expenditures, the acquisition within the EMS segment, and dividends. Operating activities generated $12.9 million of cash flow in the first six months of fiscal year 2009 compared to $29.8 million in the first six months of fiscal year 2008. Proceeds from the sale of assets of $11.2 million were received during the first six months of fiscal year 2009, primarily related to the tracts of land which sold prior to December 31, 2008. The Company reinvested $27.6 million into capital investments for the future, primarily for manufacturing equipment, the new Poland facility under construction which is part of the plan to consolidate the European manufacturing footprint, and other facility improvements during the first six months of fiscal year 2009. The Company also expended $5.4 million for the acquisition within the EMS segment during the first six months of fiscal year 2009. Financing cash flow activities for the first six months of fiscal year 2009 included $11.7 million in dividend payments, which remained flat with the first six months of fiscal year 2008. During fiscal year 2009, the Company expects to minimize capital expenditures where appropriate and will complete construction of the new EMS manufacturing facility in Poland. The land and new facility are expected to cost approximately $35 million of which approximately $8 million was spent prior to December 31, 2008. The Company plans to sell its current Poland facility in the future. The remainder of the undeveloped land and timber sold via auction in November is expected to close in the Company's third quarter of fiscal year 2009 generating additional cash proceeds of $37 million in the third quarter of fiscal year 2009, and estimated cash outflow of $8 million for taxes on the related gain will be paid during the remainder of fiscal year 2009.

At December 31, 2008, the Company had $72.3 million of short-term borrowings outstanding under several credit facilities described in more detail below. At June 30, 2008, the Company had $52.6 million of short-term borrowings outstanding. Cash and cash equivalents and short-term investments exceeded the short-term revolver borrowings by $7.6 million at December 31, 2008 and by $29.8 million at June 30, 2008.

The Company maintains a $100 million credit facility with an expiration date in April 2013 that allows for both issuances of letters of credit and cash borrowings. The $100 million credit facility provides an option to increase the amount available for borrowing to $150 million at the Company's request, subject to the group of participating banks' consent. The $100 million credit facility requires the Company to comply with certain debt covenants including interest coverage ratio, minimum net worth, and other terms and conditions. The Company was in compliance with these covenants at December 31, 2008.

The Company believes the most significant covenants under its $100 million credit facility are minimum net worth and interest coverage ratio. The table below compares the actual net worth and interest coverage ratio with the limits specified in the credit agreement.

Covenant	At or for the Period Ended December 31, 2008	Limit As Specified in Credit Agreement	Excess

Minimum Net Worth	$377,723,000	$362,000,000	$15,723,000
Interest Coverage Ratio	8.9	3.0	5.9

The Interest Coverage Ratio is calculated on a rolling four-quarter basis as defined in the credit agreement.

The outstanding balance under the $100 million credit facility consisted of $7.0 million for a Euro currency borrowing, which provides a natural currency hedge against a Euro denominated intercompany note between the U.S. parent and Euro functional currency subsidiaries, and an additional $57.3 million borrowing, which funded the short-term investments and short-term cash needs. In addition, at December 31, 2008, the Company had $0.7 million of short-term borrowings outstanding under a separate Thailand credit facility which is backed by the $100 million credit facility. The Company also had an additional $4.3 million in letters of credit against the credit facility. Total availability to borrow under the $100 million credit facility was $30.7 million at December 31, 2008.

The Company also has a credit facility for its electronics operation in Wales, United Kingdom, which allows for multi-currency borrowings up to 2 million Sterling equivalent (approximately $2.9 million U.S. dollars at December 31, 2008 exchange rates) and is available to cover bank overdrafts. The facility will be reviewed by the bank in November 2009 and will expire at that time if not renewed. Bank overdrafts may be deemed necessary to satisfy short-term cash needs at the Company's Wales location rather than funding from intercompany sources. At December 31, 2008, the Company had no borrowings outstanding under this overdraft facility.

The Company also has a credit facility for its electronics operation in Poznan, Poland, which allows for multi-currency borrowings up to 6 million Euro equivalent (approximately $8.4 million U.S. dollars at December 31, 2008 exchange rates) and is available to cover bank overdrafts. Bank overdrafts may be deemed necessary to satisfy short-term cash needs at the Company's Poznan location rather than funding from intercompany sources. This overdraft facility can be cancelled at any time by either the bank or the Company. At December 31, 2008, the Company had $7.3 million US dollar equivalent of Euro denominated short-term borrowings outstanding under this overdraft facility.

The Company believes its principal sources of liquidity from available funds on hand, cash generated from operations, and the availability of borrowing under the Company's credit facilities will be sufficient in fiscal year 2009 and the foreseeable future. One of the Company's primary sources of funds is its ability to generate cash from operations to meet its liquidity obligations, which could be affected by factors such as general economic and market conditions, a decline in demand for the Company's products, loss of key contract customers, the ability of the Company to generate profits, and other unforeseen circumstances. Should demand for the Company's products decrease significantly over the next 12 months due to the weakened economy, the available cash provided by operations could be adversely impacted. Another source of funds is the Company's credit facilities. The $100 million credit facility is contingent on complying with certain debt covenants.

The preceding statements are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Certain factors could cause actual results to differ materially from forward-looking statements.

Fair Value

The Company adopted the provisions of SFAS No. 157, Fair Value Measurements, which defines fair value, for financial assets and liabilities measured at fair value on a recurring basis at July 1, 2008. The adoption had an immaterial impact on the Company's financial statements. During the first six months of fiscal year 2009, no financial assets were affected by a lack of market liquidity. For level 1 financial assets, readily available market pricing was used to value the financial instruments. For available-for-sale securities classified as level 2 assets, the Company's investment portfolio custodians use a pricing service to value the instruments. The fair values are determined based on observable market inputs which use evaluated pricing models that vary by asset class and incorporate available trade, bid, and other market information. The Company evaluated the inputs used by the pricing service to value the instruments and validated the accuracy of the instrument fair values based on historical evidence. The Company's derivatives, which were classified as level 2 assets/liabilities, were independently valued using a financial risk management software package using observable market inputs such as forward interest rate yield curves, current spot rates, and time value calculations. To verify the reasonableness of the independently determined fair values, the derivative fair values were compared to fair values calculated by the counterparty banks. The Company's own credit risk and counterparty credit risk had an immaterial impact on valuation of derivatives. See Note 8 - Fair Value of Financial Assets and Liabilities of Notes to Condensed Consolidated Financial Statements for more information.

Contractual Obligations

There have been no material changes outside the ordinary course of business to the Company's summary of contractual obligations under the caption "Contractual Obligations" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K for the year ended June 30, 2008.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements other than standby letters of credit and operating leases entered into in the normal course of business. These arrangements do not have a material current effect and are not reasonably likely to have a material future effect on the Company's financial condition, results of operations, liquidity, capital expenditures, or capital resources. See Note 6 - Commitments and Contingent Liabilities of Notes to Condensed Consolidated Financial Statements for more information on standby letters of credit. The Company does not have material exposures to trading activities of non-exchange traded contracts.

Critical Accounting Policies

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and related notes. Actual results could differ from these estimates and assumptions. Management uses its best judgment in the assumptions used to value these estimates, which are based on current facts and circumstances, prior experience, and other assumptions that are believed to be reasonable. The Company's management overlays a fundamental philosophy of valuing its assets and liabilities in an appropriately conservative manner. Management believes the following critical accounting policies reflect the more significant judgments and estimates used in preparation of the Company's consolidated financial statements and are the policies that are most critical in the portrayal of the Company's financial position and results of operations. Management has discussed these critical accounting policies and estimates with the Audit Committee of the Company's Board of Directors and with the Company's independent registered public accounting firm.

Revenue recognition - The Company recognizes revenue when title and risk transfer to the customer, which under the terms and conditions of the sale may occur either at the time of shipment or when the product is delivered to the customer. Service revenue is recognized as services are rendered. Shipping and handling fees billed to customers are recorded as sales while the related shipping and handling costs are included in cost of goods sold. The Company recognizes sales net of applicable sales tax.

Allowance for sales returns - At the time revenue is recognized certain provisions may also be recorded, including returns and allowances, which involve estimates based on current discussions with applicable customers, historical experience with a particular customer and/or product, and other relevant factors. As such, these factors may change over time causing the provisions to be adjusted accordingly. At December 31, 2008 and June 30, 2008, the reserve for returns and allowances was $3.8 million and $3.3 million, respectively. Over the past two years, the returns and allowances reserve has approximated 2% of gross trade receivables.
Allowance for doubtful accounts - Allowance for doubtful accounts is generally based on a percentage of aged accounts receivable, where the percentage increases as the accounts receivable become older. However, management judgment is utilized in the final determination of the allowance based on several factors including specific analysis of a customer's credit worthiness, changes in a customer's payment history, historical bad debt experience, and general economic and market trends. The allowance for doubtful accounts at December 31, 2008 and June 30, 2008 was $1.7 million and $0.8 million, respectively. The December 31, 2008 allowance for doubtful accounts balance is 1% of gross trade accounts receivable while over the preceding two years, this reserve had been less than 1% of gross trade accounts receivable. The increased reserve is driven by the current market conditions.

Excess and obsolete inventory - Inventories were valued using the lower of last-in, first-out (LIFO) cost or market value for approximately 15% and 17% of consolidated inventories at December 31, 2008 and June 30, 2008, respectively, including approximately 79% and 85% of the Furniture segment inventories at December 31, 2008 and June 30, 2008, respectively. The remaining inventories are valued at lower of first-in, first-out (FIFO) cost or market value. Inventories recorded on the Company's balance sheet are adjusted for excess and obsolete inventory. In general, the Company purchases materials and finished goods for contract-based business from customer orders and projections, primarily in the case of long lead time items, and has a general philosophy to only purchase materials to the extent covered by a written commitment from its customers. However, there are times when inventory is purchased beyond customer commitments due to minimum lot sizes and inventory lead time requirements, or where component allocation or other procurement issues may exist. The Company may also purchase additional inventory to support transfers of production between manufacturing facilities. Evaluation of excess inventory includes such factors as anticipated usage, inventory turnover, inventory levels, and product demand levels. Factors considered when evaluating inventory obsolescence include the age of on-hand inventory and reduction in value due to damage, use as showroom samples, design changes, or cessation of product lines.

Self-insurance reserves - The Company is self-insured up to certain limits for auto and general liability, workers' compensation, and certain employee health benefits such as medical, short-term disability, and dental with the related liabilities included in the accompanying financial statements. The Company's policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims, and other analyses, which are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as increased medical costs and changes in actual experience could cause these estimates to change and reserve levels to be adjusted accordingly. At December 31, 2008 and June 30, 2008, the Company's accrued liabilities for self-insurance exposure were $6.3 million and $6.6 million, respectively, excluding immaterial amounts held in a voluntary employees' beneficiary association (VEBA) trust.

Taxes - Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. The Company evaluates the recoverability of its deferred tax assets each quarter by assessing the likelihood of future profitability and available tax planning strategies that could be implemented to realize its deferred tax assets. If recovery is not likely, the Company provides a valuation allowance based on its best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management's assessment.

The Company operates within multiple taxing jurisdictions and is subject to tax audits in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. However, the Company believes it has made adequate provision for income and other taxes for all years that are subject to audit. As tax periods are effectively settled, the provision will be adjusted accordingly. The liability for uncertain income and other tax positions was $2.4 million at both December 31, 2008 and June 30, 2008.

Goodwill - Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset values resulting from business acquisitions. Annually, or if conditions indicate an earlier review is necessary, the Company compares the carrying value of the reporting unit to an estimate of the reporting unit's fair value. If the estimated fair value is less than the carrying value, goodwill is impaired and will be written down to its estimated fair value. Goodwill is assigned to and the fair value is tested at the reporting unit level. During the Company's second quarter of fiscal year 2009, the annual impairment tests were performed for several of the Company's reporting units. Goodwill was also reviewed on an interim basis during the second quarter of fiscal year 2009 due to the disparity between the Company's market capitalization and the carrying value of its stockholders' equity and the uncertainty associated with the economy. The results of the analyses indicated that the Company did not have an impairment of goodwill for any reporting units. The calculation of the fair value of the reporting units considers current market conditions existing at the assessment date. The Company will continue to monitor circumstances and events in future periods to determine whether additional goodwill impairment testing is warranted. The Company can provide no assurance that a material impairment charge will not occur in future periods as a result of these analyses. At December 31, 2008 and June 30, 2008, the Company's goodwill totaled, in millions, $17.2 and $15.4, respectively.

New Accounting Standards

See Note 1 - Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for information regarding New Accounting Standards.

Forward-Looking Statements

Certain statements contained within this document are considered forward-looking under the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of words such as "believes," "estimates," "projects," "expects," "anticipates," "forecasts," and similar expressions. These forward-looking statements are subject to risks and uncertainties including, but not limited to, current economic global turmoil, other general economic conditions, significant volume reductions from key contract customers, significant reduction in customer order patterns, loss of key customers or suppliers within specific industries, financial stability of key customers and suppliers, availability or cost of raw materials, increased competitive pricing pressures reflecting excess industry capacities, successful execution of restructuring plans, or similar unforeseen events. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to market risks from the information disclosed in Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

37

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon their evaluation of those controls and procedures performed as of December 31, 2008, the Chief Executive Officer and Chief Financial Officer of the Company concluded that its disclosure controls and procedures were effective.
(b) Changes in internal control over financial reporting.

There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended December 31, 2008 that have materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents a summary of share repurchases made by the Company:

Period Total Number
of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs [1]
Month #1 (October 1-October 31, 2008) -0-     $    -0-     -0- 2,000,000
Month #2 (November 1-November 30, 2008) -0-     $    -0-     -0- 2,000,000
Month #3 (December 1-December 31, 2008) -0-     $ -0-     -0- 2,000,000
Total -0-     $ -0-     -0-

[1] The share repurchase program authorized by the Board of Directors was announced on October 16, 2007. The program allows for the repurchase of up to 2 million of any combination of Class A or Class B shares and will remain in effect until all shares have been repurchased.

38

Item 4. Submission of Matters to a Vote of Security Holders

The Company's Annual Meeting of Share Owners was held on October 21, 2008. The Board of Directors was elected in its entirety, based on the following election results:

Nominees as Directors by Holders of Class A Common Stock Votes For* Votes Withheld
   Douglas A. Habig 10,509,346 418,426
   James C. Thyen 10,036,445 891,327
   Christine M. Vujovich 10,508,274 419,498
   Polly B. Kawalek 10,505,274 422,498
   Harry W. Bowman 10,506,346 421,426
   Geoffrey L. Stringer 10,505,274 422,498
   Thomas J. Tischhauser 10,505,274 422,498

There were no broker non-votes for the above nominees as Directors.
*Votes for nominees as Directors by holders of Class A Common Stock represented an average of 89% of the total 11,673,845 Class A shares outstanding and eligible to vote.

Nominee as Director by Holders of Class B Common Stock Votes For** Votes Withheld
   Dr. Jack R. Wentworth 21,321,583 1,625,847
          There were no broker non-votes for the above nominee as Director.

**Votes for nominee as Director by holders of Class B Common Stock represented 84% of the total 25,291,736 Class B shares outstanding and eligible to vote.

The appointment of the Deloitte Entities, an independent registered public accounting firm, as the Company's independent auditors for the fiscal year ended June 30, 2009 was approved by holders of Class A Common Stock based on the following voting results:
   Votes for***: 10,849,436              Votes Against: 61,800              Votes Abstaining: 16,536
          There were no broker non-votes for the appointment of the Deloitte Entities proposal.

***Votes for the appointment of the Deloitte Entities as the Company's independent auditors represented 93% of the total 11,673,845 Class A shares outstanding and eligible to vote.

The 2003 Stock Option & Incentive Plan was approved and affirmed by holders of Class A Common Stock based on the following voting results:
   Votes for****: 10,106,479              Votes Against: 331,733              Votes Abstaining: 414,952
          Broker non-votes totaled 74,608 shares for the 2003 Stock Option & Incentive Plan proposal.

****Votes for the 2003 Stock Option & Incentive Plan proposal represented 87% of the total 11,673,845 Class A shares outstanding and eligible to vote.

Item 6. Exhibits

Exhibits (numbered in accordance with Item 601 of Regulation S-K)

(3(a)) Amended and restated Articles of Incorporation of the Company (Incorporated by reference to Exhibit 3(a) to the Company's Form 10-K for the year ended June 30, 2007)
(3(b)) Restated By-laws of the Company (Incorporated by reference to Exhibit 3(b) to the Company's Form 8-K filed October 21, 2008)
(10(a)) Summary of Director and Named Executive Officer Compensation

(10(b)) Contract to Purchase Real Estate at Public Auction (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed November 14, 2008)
(10(c)) Supplemental Employee Retirement Plan (2009 Revision)
(10(d)) 2003 Stock Option and Incentive Plan
(11) Computation of Earnings Per Share
(31.1) Certification filed by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31.2) Certification filed by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32.1) Certification furnished by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(32.2) Certification furnished by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		KIMBALL INTERNATIONAL, INC.


	By:	/s/ James C. Thyen
		JAMES C. THYEN President, Chief Executive Officer
		February 6, 2009




	By:	/s/ Robert F. Schneider
		ROBERT F. SCHNEIDER Executive Vice President, Chief Financial Officer
		February 6, 2009

Kimball International, Inc.
Exhibit Index

Exhibit No.		Description
3(a)		Amended and restated Articles of Incorporation of the Company (Incorporated by reference to Exhibit 3(a) to the Company's Form 10-K for the year ended June 30, 2007)
3(b)		Restated By-laws of the Company (Incorporated by reference to Exhibit 3(b) to the Company's Form 8-K filed October 21, 2008)
10(a)		Summary of Director and Named Executive Officer Compensation
10(b)		Contract to Purchase Real Estate at Public Auction (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed November 14, 2008)
10(c)		Supplemental Employee Retirement Plan (2009 Revision)
10(d)		2003 Stock Option and Incentive Plan
11		Computation of Earnings Per Share
31.1		Certification filed by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification filed by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification furnished by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification furnished by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-10 2 exhibit10a.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 10(A) Exhibit 10 Exhibit 10(a)

SUMMARY OF DIRECTOR AND NAMED EXECUTIVE OFFICER COMPENSATION

This summary sets forth the compensation of the Directors of Kimball International, Inc. (the "Company"). The summary also includes compensation of the Chief Executive Officer, Chief Financial Officer, and three most highly compensated executive officers (the "Named Executive Officers") of the Company as identified in the Company's most recent Proxy Statement filed with the Securities and Exchange Commission.

For a detailed description of the compensation arrangements that the Directors and Named Executive Officers participate in, refer to the Company's most recent Proxy Statement filed with the Securities and Exchange Commission.

Director Compensation
All Outside (non-employee) Directors receive annual compensation of $40,000 for the year for service as Directors. The Chairperson of the Audit Committee of the Board of Directors receives $5,000 per committee meeting, and other Audit Committee members receive $3,500 per committee meeting. The Chairperson of the Compensation and Governance Committee receives $3,500 per committee meeting, and other members of the Compensation and Governance Committee receive $2,000 per committee meeting. Members of the Strategic Planning Committee receive $3,500 per committee meeting.

The Directors can elect to receive all of their annual retainer and/or meeting fees in shares of Class B Common Stock under the Company's 2003 Stock Option and Incentive Plan. Directors are also reimbursed for travel expenses incurred in connection with Board and Committee meeting attendance.

An Outside Director is a director who is not an employee of the Company or one of its subsidiaries. James C. Thyen, President and Chief Executive Officer, and Douglas A. Habig, Chairman of the Board, are Directors of the Company but do not receive compensation for their services as Directors.

Named Executive Officers

Base Pay
Periodically, the Compensation and Governance Committee ("the Committee") of the Board of Directors reviews and approves the salaries that are paid to the Company's executive officers. The following are the current annualized base salaries for the Company's Named Executive Officers:

	James C. Thyen, President and Chief Executive Officer	$900,900
	Douglas A. Habig, Chairman of the Board	$270,920
	Donald D. Charron, Executive Vice President, President-Kimball Electronics Group	$532,220
	P. Daniel Miller, Executive Vice President, President-Furniture	$503,620
	Robert F. Schneider, Executive Vice President, Chief Financial Officer	$430,820

Cash Incentive Compensation
Each of the Named Executive Officers was eligible to participate in the Company's 2005 Profit Sharing Incentive Bonus Plan (the "Plan"). Under the Plan, cash incentives are accrued annually and paid in five installments over the succeeding fiscal year. Except for provisions relating to retirement, death, permanent disability, and certain other circumstances described in a participant's employment agreement, participants must be actively employed on each payment date to be eligible to receive any unpaid cash incentive installment. The total amount of cash incentives accrued and authorized to be paid to the Named Executive Officers based on the Company's fiscal year 2008 results is listed below. The Named Executive Officers received an installment of 50% of the payment in August 2008, 12.5% was paid in September 2008, 12.5% was paid in January 2009, and the remaining portions will be paid in equal installments in April 2009, and June 2009.

	James C. Thyen, President and Chief Executive Officer	$160,142
	Douglas A. Habig, Chairman of the Board	$108,386
	Donald D. Charron, Executive Vice President, President-Kimball Electronics Group	$ 54,120
	P. Daniel Miller, Executive Vice President, President-Furniture	$180,880
	Robert F. Schneider, Executive Vice President, Chief Financial Officer	$ 77,292

Effective July 1, 2008, Douglas A. Habig no longer participates in the Company's 2005 Profit Sharing Incentive Bonus Plan.

Donald D. Charron was awarded $60,000 in fiscal year 2008 under the Supplemental Bonus Plan because of leadership work completed regarding the EMS segment reorganization to improve longer term profitability. The award is paid in installments in accordance with the Company's 2005 Profit Sharing Incentive Bonus Plan.

Stock Compensation
The Named Executive Officers may also receive a variety of stock incentive benefits under the 2003 Stock Option and Incentive Plan consisting of: restricted stock, restricted share units, unrestricted share grants, incentive stock options, nonqualified stock options, stock appreciation rights, performance shares, and performance units. The only form of award granted to Named Executive Officers for fiscal year 2009 was performance shares. Performance shares include both an annual performance share ("APS") award and a long-term performance share ("LTPS") award with one-fifth (1/5) of the LTPS award vesting annually over the succeeding five-year period. No other form of award has been granted to the Named Executive Officers since July 2005.

The following table summarizes the performance shares issued in Class A Common Stock during August 2008 to the Company's Named Executive Officers pursuant to their fiscal year 2008 performance share awards:

	APS Award	LTPS Award
	(number of shares issued)	(number of shares issued)

James C. Thyen, President and Chief Executive Officer	15,095	22,534
Douglas A. Habig, Chairman of the Board	-0-	9,860
Donald D. Charron, Executive Vice President, President-Kimball Electronics Group	440	4,389
P. Daniel Miller, Executive Vice President, President-Furniture	1,520	3,819
Robert F. Schneider, Executive Vice President, Chief Financial Officer	760	3,819

The following table summarizes the maximum number of performance shares awarded in August 2008 to the Company's Named Executive Officers identified in the last Proxy Statement for fiscal year 2009:

	APS Award	LTPS Award
	(number of shares)	(number of shares)

James C. Thyen, President and Chief Executive Officer	79,450	82,400
Douglas A. Habig, Chairman of the Board	-0-	-0-
Donald D. Charron, Executive Vice President, President-Kimball Electronics Group	4,000	48,400
P. Daniel Miller, Executive Vice President, President-Furniture	4,000	13,400
Robert F. Schneider, Executive Vice President, Chief Financial Officer	4,000	13,400

The number of shares to be issued will be dependent upon the percentage payout under the Plan. Refer to the Company's Proxy Statement for further details.

Retirement Plans
The Named Executive Officers participate in a defined contribution, participant-directed retirement plan with a 401(k) provision that all domestic employees are eligible to participate in (the "Retirement Plan"). The Retirement Plan provides for voluntary employee contributions as well as a discretionary annual Company contribution based on a percent of net income as determined by the Board of Directors. Each eligible employee's Company contribution is defined as a percent of eligible compensation, the percent being identical for all eligible employees, including Named Executive Officers. Participant contributions are fully vested immediately, and Company contributions are fully vested after five years of participation. All Named Executive Officers are fully vested. The Retirement Plan is fully funded. For those eligible employees who, under the 1986 Tax Reform Act, are deemed to be highly compensated, their individual Company contribution under the Retirement Plan is reduced. For employees who are eligible, including all Named Executive Officers, there is a nonqualified, Supplemental Employee Retirement Plan (SERP) in which the Company contributes to the account of each individual an amount equal to the reduction in the contribution under the Retirement Plan arising from the provisions of the 1986 Tax Reform Act. The SERP investment is primarily composed of employee contributions.

Other
The Named Executive Officers receive nominal benefits such as financial counseling, medical reimbursement, executive preventive healthcare program, tax preparation, and other miscellaneous items. The Named Executive Officers may use the Company aircraft for transportation related to the executive preventive healthcare program and for limited personal reasons. The exact amounts received from these benefits are not predetermined and are disclosed annually in the Company's Proxy Statement.

EX-10 3 exhibit10c.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 10(C)

Exhibit 10(c)

KIMBALL INTERNATIONAL, INC.

SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
(SERP)
(2009 Revision)

TABLE OF CONTENTS

Article 1 -- Name and Purpose of Plan	1
Article 2 -- Effective Date of Plan; Plan Year; Fiscal Year	1
Article 3 -- Participants	1
Article 4 -- Deferral Election	2
Article 5 -- Deferred Compensation Accounts	2
Article 6 -- Distribution of Deferred Compensation Accounts	3
Article 7 -- Retirement Plan "Makeups"	4
Article 8 -- Participant's Rights	5
Article 9 -- Nonalienability and Nontransferability	5
Article 10 -- Administration of Plan	5
Article 11 -- Amendment and Termination of Plan	5
Article 12 -- Rabbi Trust	6
Article 13 -- General Provisions	6

KIMBALL INTERNATIONAL, INC.

SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
(SERP)
(2009 Revision)

Article 1 -- Name and Purpose of Plan

The name of this Plan is the Kimball International, Inc. Supplemental Employee Retirement Plan (the "Plan" or the "SERP" ), formerly called the Supplemental Executive Retirement Plan. Its purpose is to provide a select group of United States officers and senior managers employed by Kimball International, Inc. (the Company) with the opportunity to defer cash compensation otherwise payable to them as employees of the Company. The Plan shall be administered by the SERP Committee as provided in Article 10.

Article 2 -- Effective Date of Plan; Plan Year; Fiscal Year

The Plan shall be effective as of July 1,1994--the first day of the Company's 1994-95 fiscal year. Beginning January 1, 1996 and prior to 2005 the Plan Year was the calendar year. Beginning in 2005 the Plan effectively will be administered on a July 1 through June 30 fiscal year basis.

Article 3 -- Participants

Each person who is a United States officer of the Company on or after the Effective Date and the following senior managers (unless and until such senior manager is declared ineligible by the Chief Executive Officer of the Company): Julie Dutchess; Terry Flick; Dennis Gerber; Tom Heeke; John Kaufmann; Joan Lubbers; Lonnie Nicholson; Sandy Smith; Chris Thyen; Kurt Vonderheide; Keith Beatty; Sherril Lueken; and Wendell Sloan (each such officer and named senior manager being a "specified employee" under Internal Revenue Code Section 409A and hereinafter referred to as an "Eligible Employee") shall be eligible to participate in the Plan, but, except as provided below, only during the period of time that he is and remains an Eligible Employee. Any Eligible Employee who elects to participate in the Plan, and any Eligible Employee who is subject to less of an allocation under the Company's Retirement Plan because of the application of Internal Revenue Code Section 401(a)(17) and/or Internal Revenue Code Section 415, shall hereinafter be called a "Participant." Any deferral election made by a Participant

under Article 4 and any Retirement Plan make-up incident thereto shall continue in full and binding effect even if the Participant should cease to be an Eligible Employee following such deferral election. The Company shall establish for each Participant a deferred compensation account, as specified in Article 5.

Article 4 -- Deferral Election

Each Participant shall be entitled to make an advance written irrevocable election to defer receipt of up to 50% of the cash compensation otherwise payable by the Company to him for the 1994-95 fiscal year of the Company, and up to 25% (10% before January 1, 2002) of the cash compensation otherwise payable by the Company to him for any later year. Such election may be expressed in terms of a percentage or percentages of compensation, or if permitted by the SERP Committee, a specified dollar amount. This written election shall include elections as to the period of deferral, the form of payment, and a beneficiary. The written irrevocable election must be received by the Company by May 31, 1994 for the 1994-95 fiscal year, by December 31, 1994 for the period from July 1, 1995 through December 31, 1995, by December 31 of the years 1995 through 2003 for the following calendar year, by December 31, 2004 for the 18-month period starting January 1, 2005 and ending June 30, 2006, which includes the last six months of the Company's 2004-2005 fiscal year and the entire 12 months of the Company's 2005-2006 fiscal year, and by the December 31 six months preceding the beginning of any later fiscal year of the Company.

A Participant may elect:

a. Before the December 31 specified above, to change the amount of cash compensation to be deferred for the following period, and, subject to the provisions of Article 6, the period of deferral and/or the form of payment thereof; and/or

b. At any time, to change his beneficiary designation.

Article 5 -- Deferred Compensation Accounts

A separate account within the financial records of the Company shall be established and maintained for each Participant. This account shall reflect the cash compensation deferred by the Participant, and any Retirement Plan make-ups and investment earnings or losses credited thereto from time to time.

The cash compensation deferred hereunder by a Participant and any Retirement Plan make-ups made pursuant to Article 7 shall be credited with deemed investment earnings or losses. In particular, the SERP Committee may treat all or a portion of a Participant's account as though it were invested in the same manner as the Participant's account in the

Company's Retirement Plan. The Participant shall receive a statement of account at least annually.

Article 6 -- Distribution of Deferred Compensation Accounts

Form of Payment; Separation from Company Service. For all purposes of this Plan the date of a Participant's separation from Company and affiliated entity service shall be determined in accordance with Internal Revenue Code Section 409A and the U.S. Treasury Regulations and applicable Internal Revenue Service guidance issued thereunder, and shall be referred to as the Participant's "Separation Date;" and the date six months after that Separation Date shall be referred to as the Participant's "Initial Payment Date." Subject to the following provisions of this Article 6 and to the provisions of Article 7, a Participant's deferred compensation account shall be payable to the Participant in cash in accordance with the Participant's elections made under Article 4 - in a lump sum or in annual installment payments over a period of either 5 or 10 years, the payment of which (or first installment of which) shall be made as soon as administratively practical, but in no circumstances ever longer than 60 days, following the Participant's Initial Payment Date (and for installment payments, continuing annually thereafter, payable as soon as administratively practical, but in no circumstances ever longer than 60 days, following the appropriate anniversary of that Initial Payment Date); provided, however, that in none of the 60-day periods mentioned above may the Participant have any right or discretion to designate the taxable year of payment. The amount of any installment payment shall be determined through dividing the remaining applicable amount credited to the Participant on or about the time of payment by the number of installments remaining. For example, in the case of 5-year annual installments, the amount of the first installment shall be equal to the applicable amount credited to the Participant's deferred compensation account divided by 5; the amount of the second installment shall be equal to the remainder thereof divided by 4; and so on. No distribution of a Participant's deferred compensation account shall be made except as provided in this Article 6 or in Article 7.

Death. If the Participant dies before receiving all amounts credited to his deferred compensation account, then the unpaid amounts in the Participant's account shall be paid in cash to the Participant's designated beneficiary in a single lump sum within the 90-day period beginning three months following the Participant's date of death. If the Participant has no surviving or existing designated beneficiary, then the amounts shall be paid to the Participant's estate.

Unforeseeable Emergency. Notwithstanding the deferral election made by a Participant pursuant to Article 4, a Participant may request an earlier distribution for an unforeseeable emergency as determined in accordance with Internal Revenue Code Section 409A and the U.S. Treasury Regulations and applicable Internal Revenue Service guidance issued thereunder. The SERP Committee, in its sole discretion (after consulting with Company legal counsel, to the extent it deems necessary), shall make the determination of whether a severe financial hardship to a Participant resulting from

illness, accident or other casualty beyond the control of the Participant constitutes such an unforeseeable emergency; and the amount of any such distribution shall not exceed the amount necessary to meet the emergency, after taking into consideration the extent to which other sources may be used to relieve the financial impact of it.

Article 7 -- Retirement Plan "Make-ups"

Prior to distribution, a Participant's compensation that is deferred under this Plan, as well as a Participant's compensation in excess of the Internal Revenue Code Section 401(a)(17) limits, will not be eligible compensation for purposes of calculating the amount of the Participant's allocations under the Company's Retirement Plan. In addition, Internal Revenue Code Section 415 may further limit the amount of Company contributions that can be allocated to the account of a Participant under the Retirement Plan.

Pursuant to rules and procedures established by the SERP Committee, any loss of Company contributions under the Company's Retirement Plan for a Company fiscal year due to the deferral of compensation under this Plan or to the application of Internal Revenue Code Section 401(a)(17) and/or Section 415 may be compensated for by the Company through a credit by the Company to the Participant's deferred compensation account in an amount equal to the lost Company contribution that would otherwise have been allocated to the Participant's account under that Plan for that fiscal year if there had been no deferral of compensation made under this Plan and if the limitations of Internal Revenue Code Sections 401(a)(17) and 415 did not exist. Such credit and investment earnings or losses credited thereto shall be subject to the applicable vesting provisions of Article 8, and shall be forfeited to the extent that the SERP Committee determines the lost Company contribution is compensated for by a later Company contribution under the Retirement Plan which is based on compensation that the Participant deferred under this Plan.

The vested portion of a Participant's deferred compensation account attributable to a Company credit made under this Article 7 for a Company fiscal year shall be distributed in exactly the same manner as the elective deferred compensation of the Participant for the period in which that fiscal year ends is distributed under Article 6; provided that if no deferral election was made by the Participant under Article 4 for such period, then distribution of the Participant's vested portion of this Article 7 credit for that fiscal year shall be made in cash in lump sum payable to the Participant as soon as administratively practical, but in no circumstances longer than 60 days, following the Participant's Initial Payment Date (as defined in Article 6), with no right or discretion on the part of the Participant to designate the taxable year of payment.

Article 8 -- Participant's Rights

The establishment of this Plan shall not be construed as giving any Participant the right to be retained in the Company's service or employ, or the right to receive any benefits not specifically provided by the Plan. A Participant shall have an immediate 100% vested interest in the portion of his deferred compensation account attributable to his deferrals elected pursuant to Article 4 (including investment earnings or losses credited under Article 5); and a Participant shall have the same percentage vested interest in the Company contributions made to his account under Article 7 (including investment earnings or losses credited under Article 5) that he has in the Company contributed portion of his account under the Company's Retirement Plan.

Article 9 -- Nonalienability and Nontransferability

The rights of a Participant to the distribution of his deferred compensation account shall not be assignable or transferable, or be subject in any manner to alienation, anticipation, pledge, encumbrance or charge. No Participant may borrow against his account. No account shall be subject in any manner to garnishment, execution, or levy of any kind, whether voluntary or involuntary, including but not limited to any liability that is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of a Participant, except to the extent lawfully ordered by a domestic relations court, provided that no such order may require payment of benefits under this Plan in any form, or at any time, not otherwise permitted under Article 6, Article 7 and/or Article 11 of the Plan.

Article 10 -- Administration of Plan

This Plan shall be administered by the SERP Committee appointed by the Board of Directors of the Company. That Committee shall have authority to adopt rules and regulations for administering the Plan, to interpret, construe, and implement the provisions hereof, and in particular, to insure full compliance with the American Jobs Creation Act of 2004. Any decision or interpretation of any provision of the Plan adopted by that Committee shall be final and conclusive. A Participant who is a member of that Committee shall not participate in any decision involving a request made by him or relating specifically to his rights, duties, and obligations as a Participant.

Article 11 -- Amendment and Termination of Plan

The Plan may, at any time and from time to time, be amended, modified, or terminated by the SERP Committee; provided, however, that in no event may an amendment, modification, or termination of the Plan adversely affect any Participant's rights with respect to amounts then-accrued in his deferred compensation account or result in any payment or distribution under the Plan to a Participant at a time earlier that that provided

under Article 6 or Article 7. Unless this Plan is subsequently amended (consistent with the provisions of Internal Revenue Code Section 409A and governmental guidance issued thereunder), the restrictions on distribution contained in Article 6 and Article 7 shall continue to apply even in the case of a change-in-control event.

Article 12 -- Rabbi Trust

Any and all compensation deferred by a Participant may be held, in the discretion of the Company, under a grantor trust (i.e., a "rabbi trust") established for this Plan and located solely within the United States of America, as required by Internal Revenue Code Section 409A. Plan Participants and beneficiaries shall have no interest in the assets of the trust or in any specific assets of the Company relative to rights and/or benefits under this Plan; and the rights to deferred amounts in the trust shall be subject to the nonalienability and nontransferability restrictions set forth in Article 9. Participants shall have rights under this Plan no greater than the rights of a general, unsecured creditor of the Company.

Article 13 -- General Provisions

a.         Controlling Law. Except to the extent superseded by federal law, the laws of the State of Indiana shall be controlling in all matters relating the Plan, including construction and performance hereof; but to insure full compliance with the American Jobs Creation Act of 2004, after 2004 all provisions of this Plan shall be interpreted and administered in accordance with Internal Revenue Code Section 409A and the U.S. Treasury Regulations and applicable Internal Revenue Service guidance issued thereunder.

b.         Captions. The captions of articles and paragraphs of this Plan are for convenience of reference only. They shall not control or affect the meaning or construction of any of the Plan's provisions.

c.         Facility of Payment. Any amounts payable hereunder to any person who is under legal disability or who, in the judgment of the SERP Committee, is unable to manage his financial affairs, may be paid to the legal representative of such person or may be applied for the benefit of such person in any manner that the SERP Committee may select. Any such payment shall be deemed to be payment for such person's account, and shall be a complete discharge of all liability of the Company with respect to the amount so paid.

d.         Withholding Payroll Taxes. To the extent required by the laws in effect at the time when compensation is deferred, and at the time amounts are distributed from a Participant's deferred compensation account, the Company shall withhold from compensation, or from payments made hereunder, any taxes required to be withheld under federal, state, or local law.

e.         Administrative Expenses. All out-of-pocket expenses of administering the Plan shall be borne by the Participant through appropriate debits to the Participant's deferred compensation account.

f.         Survival of Nonprohibited Provisions. Any provision of this Plan prohibited by the law of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition without invalidating the remaining provisions hereof.

g.         Protection of SERP Committee, Etc. Except as otherwise expressly provided by law, no member of the Company's Board of Directors or SERP Committee, and no officer, employee, or agent of the Company, shall have any liability to any person, firm, or corporation based on or arising out of the Plan except in the case of gross negligence or fraud.

* * * * *

IN WITNESS WHEREOF, Kimball International, Inc. has caused this 2009 Revision of the Plan to be signed this 30th day of December, 2008, to be effective as of December 31, 2008.

	KIMBALL INTERNATIONAL, INC.

By		/s/ John H. Kahle
		John H. Kahle

Print Name and Title:		John H. Kahle
		Chairman, Retirement Plan Advisory Committee Executive Vice President

EX-10 4 exhibit10d.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 10(D)

Exhibit 10(d)

KIMBALL INTERNATIONAL, INC.
2003 STOCK OPTION AND INCENTIVE PLAN

1. Plan Purpose. The purpose of the Kimball International, Inc. 2003 Stock Option and Incentive Plan is (i) to align the personal interests of Plan Participants with those of the shareholders of the Company, (ii) to encourage key individuals to accept or continue employment or service with the Company and its subsidiaries, and (iii) to furnish incentive to such key individuals to improve operations and increase profits by providing such key individuals the opportunity to acquire Common Stock of the Company or to receive monetary payments based on the value of such Common Stock. It is intended that certain Awards granted under the Plan will qualify as performance-based compensation within the meaning of section 162(m) of the Code, to the extent applicable.

2. Definitions. The following definitions are applicable to the Plan:

"Affiliate" means any "parent corporation" or "subsidiary corporation" of the Company as such terms are defined in Code sections 424(e) and (f), respectively.

"Award" means the grant by the Committee of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Unrestricted Shares, Restricted Shares, Deferred Share Units, Performance Shares, Performance Units, Exchange Rights or any combination thereof, as provided in the Plan.

"Award Agreement" means the written agreement setting forth the terms and provisions applicable to each Award granted under the Plan.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended, and its interpretive regulations.

"Committee" means the Committee appointed by the Board pursuant to Section 3 of the Plan.

"Common Stock" means shares of Class A common stock, par value of $.05 per share, of the Company and/or shares of Class B common stock, par value of $.05 per share, of the Company, as constituted on the effective date of the Plan, and any other shares into which such Common Stock shall thereafter be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or the like.

"Company" means Kimball International, Inc., an Indiana corporation.

"Continuous Service" means, in the case of an Employee, the absence of any interruption or termination of service as an Employee of the Company or an Affiliate; and in the case of an individual who is not an Employee, the absence of any interruption or termination of the service relationship between the individual and the Company or an Affiliate. Service will not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of a Participant's transfer between the Company and an Affiliate or any successor to the Company.

"Deferred Share Unit" means an Award, granted to a Participant pursuant to Section 14 of the Plan, of a right to receive a payment in the future based on the value of Common Stock.

"Director" means any individual who is a member of the Board.

"EBITDA" means earnings before interest, taxes, depreciation and amortization.

"Economic Profit" means net income of the Company less the Company's cost of capital. Economic Profit shall be calculated under this Plan in the same manner in which it is calculated for purposes of the Company's Annual Profit Sharing Bonus Plan.

"Employee" means any person, including an officer, who is employed by the Company or any Affiliate.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exchange Rights" means an Award granted to a Participant pursuant to Section 16 of the Plan.

"Exercise Price" means the price per Share at which the Shares subject to an Option may be purchased upon exercise of the Option.

"Incentive Stock Option" means an option to purchase Shares granted by the Committee pursuant to the terms of the Plan that is intended to qualify under Code section 422.

"Market Value" means, with respect to any Share of Common Stock (regardless of whether it is Class A common stock or Class B common stock), the average of the last reported sale prices during the ten trading-day period preceding the date in question of one Share of Class B common stock on the Nasdaq National Market, or, if the Shares of Class B common stock are not then listed on the Nasdaq National Market, on the principal exchange on which the Shares of Class B common stock are then listed for trading, or, if no Shares of Class B common stock are then listed for trading on any exchange, the average of the means between the closing high bid and low asked quotations of one Share of Class B common stock during the ten reporting-day period preceding the date in question as reported by NASDAQ or any similar system then in use, or, if no such quotations are available, the fair market value on such date of one Share of Common Stock as the Committee shall determine consistently with the standards for determining fair market value under Code section 409A and its interpretive regulations.

"Non-Qualified Stock Option" means an option to purchase Shares granted by the Committee pursuant to the terms of the Plan, which option is not intended to qualify under Code section 422.

"Option" means an Incentive Stock Option or a Non-Qualified Stock Option.

"Participant" means any individual selected by the Committee to receive an Award.

"Performance Cycle" means the period of time, designated by the Committee, over which Performance Shares or Performance Units may be earned.

"Performance Shares" means Shares awarded pursuant to Section 15 of the Plan.

"Performance Unit" means an Award granted to a Participant pursuant to Section 15 of the Plan.

"Plan" means the Kimball International, Inc. 2003 Stock Option and Incentive Plan.

"Reorganization" means the liquidation or dissolution of the Company, or any merger, share exchange, consolidation or combination of the Company (other than a merger, share exchange, consolidation or combination in which the Company is the continuing entity and which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property or any combination thereof).

"Restricted Period" means the period of time selected by the Committee for the purpose of determining when restrictions are in effect under Section 13 of the Plan with respect to Restricted Shares.

"Restricted Shares" means Shares that have been contingently awarded to a Participant by the Committee subject to the restrictions referred to in Section 13 of the Plan, so long as such restrictions are in effect.

"Securities Act" means the Securities Act of 1933, as amended.

"Shares" means the shares of Common Stock.

"Stock Appreciation Rights" means an Award granted to a Participant pursuant to Section 12 the Plan.

"Unrestricted Shares" means Shares awarded to a Participant by the Committee without any restrictions.

3. Administration. The Plan will be administered by a Committee of the Board, which will consist of three or more members of the Board, each of whom will be a "non-employee director" as provided under Rule 16b-3 of the Exchange Act, and an "outside director" as provided under Code section 162(m). The members of the Committee will be appointed by the Board. Except as limited by the express provisions of the Plan, the Committee will have sole and complete authority and discretion to (a) select Participants and grant Awards; (b) determine the number of Shares to be subject to types of Awards generally, as well as to individual Awards granted under the Plan; (c) determine the terms and conditions upon which Awards will be granted under the Plan; (d) prescribe the form and terms of Award Agreements; (e) establish procedures and regulations for the administration of the Plan; (f) interpret the Plan; and (g) make all determinations deemed necessary or advisable for the administration of the Plan.

Notwithstanding the foregoing, the Committee may delegate to certain executive officers of the Company selected by the Committee the authority to grant Awards to Employees or consultants of the Company or its Affiliates, subject to specified volume limitations and other conditions determined by the Committee. The Committee may not delegate authority to grant Awards to any "Officer," as such term is defined in Rule 16a-1(f) of the Exchange Act.

A majority of the Committee will constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all members of the Committee without a meeting, will be acts of the Committee. All determinations and decisions made by the Committee pursuant to the provisions of the Plan will be final, conclusive, and binding on all persons, and will be given the maximum deference permitted by law.

4. Participants. The Committee may select from time to time Participants in the Plan from those Directors, Employees or consultants of the Company or its Affiliates who, in the opinion of the Committee, have the capacity for contributing in a substantial measure to the successful performance of the Company or its Affiliates.

5. Substitute Options. In the event the Company or an Affiliate consummates a transaction described in Code Section 424(a), persons who become Employees or Directors on account of such transaction may be granted Options in substitution for Options granted by the former employer. The Committee, in its sole discretion and consistent with Code Section 424(a) shall determine the Exercise Price of the substitute Options.

6. Shares Subject to Plan and Limitations on Grants. Subject to adjustment by the operation of Section 17 hereof:

(a) The maximum number of Shares that may be issued with respect to Awards made under the Plan is Two Million Five Hundred Thousand (2,500,000) Shares. The number of Shares that may be granted under the Plan to any Participant during any year under all forms of Awards will not exceed 400,000 Shares.

(b) The Shares with respect to which Awards may be made under the Plan may either be authorized and unissued Shares or issued Shares heretofore or hereafter reacquired and held as treasury Shares. Any Award that expires, terminates or is surrendered for cancellation, or with respect to Restricted Shares, which is forfeited (so long as any cash dividends paid on such Shares are also forfeited), may be subject to new Awards under the Plan with respect to the number of Shares as to which an expiration, termination, cancellation or forfeiture has occurred. Additionally, Shares that are withheld by the Company or delivered by the Participant to the Company in order to satisfy payment of the Exercise Price or any tax withholding obligation and Shares granted pursuant to an Award Agreement which is subsequently settled in cash rather than Shares, may be subject to new Awards under the Plan.

7. General Terms and Conditions of Options.

(a) The Committee will have full and complete authority and discretion, except as expressly limited by the Plan, to grant Options and to prescribe the terms and conditions (which need not be identical among Participants) of the Options. Each Option will be evidenced by an Award Agreement that will specify: (i) the Exercise Price, (ii) the number of Shares subject to the Option, (iii) the expiration date of the Option, (iv) the manner, time and rate (cumulative or otherwise) of exercise of the Option, (v) the restrictions, if any, to be placed upon the Option or upon Shares that may be issued upon exercise of the Option, (vi) the conditions, if any, under which a Participant may transfer or assign Options, and (vii) any other terms and conditions as the Committee, in its sole discretion, may determine.

(b) The Committee shall not, without the further approval of the shareholders of the Company, authorize the amendment of any outstanding Option Award Agreement to reduce the Exercise Price. Furthermore, no Option shall be cancelled and replaced with an Option having a lower Exercise Price without further approval of the shareholders of the Company. Notwithstanding any other provision under the Plan, the Exercise Price for any Option awarded under the Plan may not be less than the Market Value of the Shares on the date of grant.

8. Exercise of Options.

(a) Except as provided in Section 19, an Option granted under the Plan will be exercisable only by the Participant, and except as provided in Section 9 of the Plan or as otherwise set forth in the Award Agreement, no Option may be exercised unless at the time the Participant exercises the Option, the Participant has maintained Continuous Service since the date of the grant of the Option.

(b) To exercise an Option under the Plan, the Participant must give written notice to the Company specifying the number of Shares with respect to which the Participant elects to exercise the Option together with full payment of the Exercise Price. The date of exercise will be the date on which the notice is received by the Company. Payment may be made either (i) in cash (including check, bank draft or money order), (ii) by tendering Shares already owned by the Participant for at least six (6) months prior to the date of exercise and having a Market Value on the date of exercise equal to part or all of the Exercise Price, (iii) by the delivery of a certificate of ownership in which the Participant certifies ownership of Shares already owned by the Participant for at least six (6) months prior to the date of exercise and having a Market Value on the date of exercise equal to part or all of the Exercise Price (in which case the Company shall withhold the number of Shares certified from the number delivered pursuant to such exercise), or (iv) by any other means determined by the Committee in its sole discretion.

9. Termination of Options. Unless otherwise specifically provided elsewhere in the Plan or by the Committee in the Award Agreement or any amendment thereto, Options will terminate as provided in this Section.

                    (a) Unless sooner terminated under the provisions of this Section, Options will expire on the earlier of the date specified in the Award Agreement or the expiration of ten (10) years from the date of grant.

                    (b) If the Continuous Service of a Participant is terminated by the Company for any reason whatsoever, or is terminated by the Participant for any reason other than death, disability or retirement, all rights under any Options granted to the Participant will terminate immediately upon the Participant's cessation of Continuous Service.

                    (c) In the event of the Participant's death or disability, the Participant or the Participant's beneficiary, as the case may be, may exercise outstanding Options to the extent that the Participant was entitled to exercise the Options at the date of cessation of Continuous Service, but only within the one-year period immediately succeeding the Participant's cessation of Continuous Service by reason of death or disability, and in no event after the applicable expiration date of the Options.

                    (d) In the event of the Participant's retirement, all of the Participant's outstanding Options shall vest immediately and become exercisable, but only within the two-year period immediately succeeding the date of retirement, and in no event after the applicable expiration date of the Options.

                    (e) Notwithstanding the provisions of the foregoing paragraphs of this Section 9, the Committee may, in its sole discretion, establish different terms and conditions pertaining to the effect of the cessation of Continuous Service, to the extent permitted by applicable federal and state law and in no event after the applicable expiration date of the Options.

10. Restrictive Covenants. In its discretion, the Committee may condition the grant of any Option under the Plan upon the Participant agreeing to reasonable covenants in favor of the Company and/or any Affiliate (including, without limitation, covenants not to compete, not to solicit employees and customers, and not to disclose confidential information) that may have effect following the termination of employment with the Company or any Affiliate, and after the Option has been exercised, including, without limitation, the requirement to disgorge any profit, gain or other benefit received upon exercise of the Option prior to any breach of any covenant.

11. Incentive Stock Options.

(a) The maximum number of Shares that may be issued with respect to Incentive Stock Options under the Plan is Two Million Five Hundred Thousand (2,500,000) Shares. Incentive Stock Options may be granted only to Participants who are Employees. Any provisions of the Plan to the contrary notwithstanding, (i) no Incentive Stock Option will be granted more than ten (10) years from the earlier of the date the Plan is adopted by the Board or approved by the Company's shareholders, (ii) no Incentive Stock Option will be exercisable more than ten (10) years from the date the Incentive Stock Option is granted, (iii) the Exercise Price of any Incentive Stock Option will not be less than the Market Value per Share on the date such Incentive Stock Option is granted, (iv) any Incentive Stock Option will not be transferable by the Participant to whom such Incentive Stock Option is granted other than by will or the laws of descent and distribution and will be exercisable during the Participant's lifetime only by such Participant, (v) no Incentive Stock Option will be granted that would permit a Participant to acquire, through the exercise of Incentive Stock Options in any calendar year, under all plans of the Company and its Affiliates, Shares having an aggregate Market Value (determined as of the time any Incentive Stock Option is granted) in excess of $100,000 (determined by assuming that the Participant will exercise each Incentive Stock Option on the date that such Option first becomes exercisable), and (vi) no Incentive Stock Option may be exercised more than three (3) months after the Participant's cessation of Continuous Service for any reason other than death or disability. Notwithstanding the foregoing, in the case of any Participant who, at the date of grant, owns shares possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or any Affiliate, the Exercise Price of any Incentive Stock Option will not be less than 110% of the Market Value per Share on the date such Incentive Stock Option is granted and such Incentive Stock Option shall not be exercisable more than five years from the date such Incentive Stock Option is granted.

(b) Notwithstanding any other provisions of the Plan, if for any reason an Option granted under the Plan that is intended to be an Incentive Stock Option fails to qualify as an Incentive Stock Option, such Option will be deemed to be a Non-Qualified Stock Option, and such Option will be deemed to be fully authorized and validly issued under the Plan.

12. Stock Appreciation Rights. The Committee may, in its discretion, grant Stock Appreciation Rights in connection with all or any part of an Option granted under the Plan. Each Stock Appreciation Right shall be subject to such terms and conditions consistent with the Plan as the Committee shall determine from time to time and as may be set forth in an Award Agreement, including the following:

                    (a) A Stock Appreciation Right may be made part of an Option at the time of its grant or at any time thereafter during the Option term.

                    (b) Each Stock Appreciation Right will entitle the holder to elect to receive, in lieu of exercising the Option to which it relates, an amount (in cash or in Common Stock, or a combination thereof, all in the sole discretion of the Committee) equal to 100% of the excess of:

                    (i) the Market Value per Share of the Common Stock on the date of exercise of such right, multiplied by the number of Shares with respect to which the right is being exercised, over

                    (ii) the aggregate Exercise Price for such number of Shares.

                    (c) Each Stock Appreciation Right will be exercisable at the time, in the manner and to the extent the Option to which it relates is exercisable.

                    (d) Upon exercise of a Stock Appreciation Right, the Option (or portion thereof) with respect to which such right is exercised shall be surrendered and shall not thereafter be exercisable.

                    (e) Exercise of a Stock Appreciation Right will reduce the number of Shares purchasable pursuant to the related Option and available for issuance under the Plan to the extent of the number of Shares with respect to which the right is exercised, whether or not any portion of the payment made upon exercise of such right is made in Common Stock.

13. Terms and Conditions of Unrestricted Shares and Restricted Shares. The Committee will have full and complete authority, subject to the limitations of the Plan, to grant Awards of Unrestricted Shares and Restricted Shares and to prescribe the terms and conditions (which need not be identical among Participants) in respect of the Awards. Unless the Committee otherwise specifically provides in the Award Agreement, an Award of Restricted Shares will be subject to the following provisions:

                    (a) At the time of an Award of Restricted Shares, the Committee will establish for each Participant a Restricted Period during which, or at the expiration of which, the Restricted Shares will vest. The vesting of Restricted Shares may also be conditioned upon the attainment of specified Performance Goals (as defined in Section 15) within specified Performance Cycles. Subject to paragraph (f) of this Section, the Participant will have all the rights of a shareholder with respect to the Restricted Shares, including, but not limited to, the right to receive all dividends paid on the Restricted Shares and the right to vote the Restricted Shares. The Committee will have the authority, in its discretion, to accelerate the time at which any or all of the restrictions will lapse with respect to any Restricted Shares prior to the expiration of the Restricted Period, or to remove any or all restrictions, whenever it may determine that such action is appropriate by reason of changes in applicable tax or other laws or other changes in circumstances occurring after the commencement of the Restricted Period.

                    (b) If a Participant ceases Continuous Service for any reason other than death, disability or retirement, before the Restricted Shares have vested, a Participant's rights with respect to the unvested portion of the Restricted Shares will terminate and be returned to the Company.

                    (c) If a Participant ceases Continuous Service by reason of death, disability or retirement before any Restricted Period has expired, the Restricted Shares will become fully vested.

                    (d) Each certificate issued in respect to Restricted Shares will be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Company and will bear the following (or a similar) legend:

"The transferability of this certificate and the shares represented hereby are subject to the terms and conditions (including forfeiture) contained in the Kimball International, Inc. 2003 Stock Option and Incentive Plan, and an Award Agreement entered into between the registered owner and Kimball International, Inc. Copies of the Plan and Award Agreement are on file in the office of the Secretary of Kimball International, Inc."

                    (e) At the time of an Award of Restricted Shares, the Participant will enter into an Award Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the Award.

                    (f) At the time of an Award of Restricted Shares, the Committee may, in its discretion, determine that the payment to the Participant of dividends declared or paid on the Restricted Shares by the Company, or a specified portion thereof, will be deferred until the earlier to occur of (i) the lapsing of the restrictions imposed with respect to the Restricted Shares, or (ii) the forfeiture of such Restricted Shares under paragraph (b) of this Section, and will be held by the Company for the account of the Participant until such time. In the event of deferral, there will be credited at the end of each year (or portion thereof) interest on the amount of the account at the beginning of the year at a rate per annum as the Committee, in its discretion, may determine. Payment of deferred dividends, together with accrued interest, will be made at the end of the applicable Restriction Period as originally established, and any Committee decision, under paragraph (a) of this Section, to accelerate the lapse of restrictions on the Restricted Shares will not accelerate the payment of deferred dividends and accrued interest.

                    (g) At the expiration of the restrictions imposed by this Section, the Company will redeliver to the Participant the certificate(s) and stock powers, deposited with the Company pursuant to paragraph (d) of this Section and the Shares represented by the certificate(s) will be free of all restrictions.

                    (h) No Award of Restricted Shares may be assigned, transferred or encumbered.

14. Terms and Conditions of Deferred Share Units. The Committee will have full and complete authority, subject to the limitations of the Plan, to grant Awards of Deferred Share Units and to prescribe the terms and conditions (which need not be identical among Participants) in respect of the Awards, which shall be evidenced by an Award Agreement. Unless the Committee otherwise specifically provides in the Award Agreement, an Award of Deferred Share Units will be subject to the following provisions:

                    (a) At the time of an Award of Deferred Share Units, the Committee will establish for each Participant the number of shares of Common Stock subject to the Award and the period or periods at which the Award will be paid. Payment of the Award may also be conditioned upon the attainment of specified Performance Goals (as defined in Section 15) within specified Performance Cycles.

                    (b) If a Participant ceases Continuous Service for any reason other than death, disability or retirement, before the payment date of any portion of the Deferred Share Units, a Participant's rights with respect to the unvested portion of the Deferred Share Units will terminate.

                    (c) If a Participant ceases Continuous Service by reason of death, disability or retirement before the payment date of the Deferred Share Units has arrived, the Deferred Share Units will become fully vested and payable.

                    (d) The Committee shall determine whether payment shall be made in cash, Common Stock, or a combination of the two. Unless the Committee determines otherwise, payment will be equal to the number of Deferred Share Units payable multiplied by (i) the Market Value of a share of Common Stock at the time of vesting, plus (ii) the sum of all dividends credited on a share of Common Stock during the period commencing on the date of the Deferred Share Unit Award and ending on the date of vesting.

                    (e) Subject to the terms of Section 23 for any Deferred Shares Units intended to qualify as performance-based compensation, the Committee may, in its sole discretion when it finds that such an action would be in the best interests of the Company, waive in whole or in part any or all remaining time-based restrictions with respect to the Deferred Share Units of a Participant who terminates employment before the Deferred Share Units are fully vested. If the Committee waives any such restrictions, the affected Deferred Share Units will continue to be paid at the time originally established under paragraph (a) of this Section, without acceleration.

                    (f) Deferred Share Units are not transferable, except that a Participant may designate a beneficiary to receive any amount payable with respect to Deferred Share Units on the Participant's death.

15. Performance Shares and Performance Units.

                    (a) The Committee, in its sole discretion, may from time to time authorize the grant of Performance Shares and Performance Units upon the achievement of performance goals (which may be cumulative and/or alternative) within a designated Performance Cycle as may be established, in writing, by the Committee based on any one or any combination of the following business criteria (the "Performance Goals"): (i) Economic Profit; (ii) earnings per share; (iii) return on equity; (iv) return on assets; (v) operating income; (vi) market value per share; (vii) EBITDA; (viii) cash flow; (ix) net income (before or after taxes); (x) revenues; (xi) cost reduction goals; (xii) market share; and (xiii) total return to shareholders.

                    (b) In the case of Performance Units, the Committee shall determine the value of Performance Units under each Award.

                    (c) As determined in the discretion of the Committee, Performance Goals may differ among Participants and/or relate to performance on a Company-wide or divisional basis.

                    (d) At such time as it is certified, in writing, by the Committee that the Performance Goals established by the Committee have been attained or otherwise satisfied within the Performance Cycle, the Committee will authorize the payment of Performance Shares or Performance Units in the form of cash or Shares registered in the name of the Participant, or a combination of cash and Shares, equal to the value of the Performance Shares or Performance Units at the end of the Performance Cycle. Payment shall be made in a lump sum following the close of the applicable Performance Cycle.

                    (e) The grant of an Award of Performance Shares or Performance Units will be evidenced by an Award Agreement containing the terms and conditions of the Award as determined by the Committee. To the extent required under Code section 162(m), the business criteria under which Performance Goals are determined by the Committee will be resubmitted to shareholders for reapproval no later than the first shareholder meeting that occurs in the fifth year following the year in which shareholders previously approved the Plan.

                    (f) If the Participant ceases Continuous Service before the end of a Performance Cycle for any reason other than disability, death or retirement, the Participant will forfeit all rights with respect to any Performance Shares or Performance Units that were being earned during the Performance Cycle. The Committee, in its sole discretion, may establish guidelines providing that if a Participant ceases Continuous Service before the end of a Performance Cycle by reason of disability, death or retirement, the Participant will be entitled to a prorated payment, following the close of the applicable Performance Cycle, with respect to any Performance Shares or Performance Units that were being earned during the Performance Cycle.

16. Exchange Rights.

                    (a) The Committee, in its sole discretion, may from time to time authorize the grant of Exchange Rights to certain key Employees under the Plan. An Exchange Right will entitle the holder to exchange Shares of Class B common stock for Shares of Class A common stock on a one-for-one basis, subject to such terms and conditions as are established by the Committee.

                    (b) Each Exchange Right under the Plan shall relate to a specified number of Shares of Class B common stock which may be exchangeable for the same number of Shares of Class A common stock, and shall specify the period or periods for the exercise of the Exchange Right. Upon the exercise of an Exchange Right, the aggregate number of Shares available under the Plan shall be reduced by the number of Shares of Class A common stock issued in exchange for Shares of Class B common stock.

                    (c) The grant of an Award of Exchange Rights will be evidenced by an Award Agreement containing the terms and conditions of the Award as determined by the Committee.

                    (d) If the Participant ceases Continuous Service for any reason before the Participant exercises any Exchange Right (or portion thereof) granted to such Participant, then such Participant will forfeit all rights with respect to any remaining Exchange Right (or portion thereof) existing immediately before such cessation of Continuous Service.

17. Adjustments Upon Changes in Capitalization. In the event of any change in the outstanding Shares subsequent to the effective date of the Plan by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation or any change in the corporate structure or Shares of the Company, the maximum aggregate number and class of Shares as to which Awards may be granted under the Plan and the number and class of Shares, and the exercise price of Options, with respect to which Awards theretofore have been granted under the Plan will be appropriately adjusted by the Committee to prevent the dilution or enlargement of Awards and to preserve the availability of Shares (or other securities) for future grants under the Plan. The Committee's determination with respect to any adjustments will be conclusive. Any Shares or other securities received, as a result of any of the foregoing, by a Participant with respect to Restricted Shares will be subject to the same restrictions and the certificate(s) or other instruments representing or evidencing the Shares or other securities will be legended and deposited with the Company in the manner provided in Section 13 of this Plan. To the extent that any adjustment will affect an Award that constitutes deferred compensation subject to Code section 409A, or that would cause an Award to become deferred compensation subject to Code section 409A, the Committee will adjust the Award in a manner that will not constitute the grant of a new stock right or a change in the form of payment under Code section 409A and its interpretive regulations.

18. Effect of Reorganization. Unless otherwise provided by the Committee in the Award Agreement, Awards will be affected by a Reorganization as follows:

(a) If the Reorganization is a dissolution or liquidation of the Company then (i) the restrictions on Restricted Shares will lapse and (ii) each outstanding Option Award will terminate, but each Participant to whom the Option was granted will have the right, immediately prior to the dissolution or liquidation, to exercise the Option in full, notwithstanding the provisions of Section 11, and the Company will notify each Participant of such right within a reasonable period of time prior to any dissolution or liquidation.

(b) If the Reorganization is a merger, share exchange, consolidation or combination, upon the effective date of the Reorganization (i) each Participant will be entitled, upon exercise of an Option in accordance with all of the terms and conditions of the Plan, to receive in lieu of Shares, such shares or other securities or consideration as the holders of Shares are entitled to receive pursuant to the terms of the Reorganization (the "Acquisition Consideration"); (ii) each Participant will be entitled, upon exercise of a Stock Appreciation Right in accordance with all the terms and conditions of the Plan, to receive the difference between (A) the aggregate fair market value, on the applicable date, of the Acquisition Consideration receivable upon such Reorganization by a holder of the number of Shares which might have been obtained upon exercise of the Option to which the Stock Appreciation Right relates ( or any portion thereof) immediately prior to such Reorganization and (B) the aggregate Exercise Price of such Option (or portion thereof); (iii) each holder of Performance Shares or Performance Units (with respect to Shares, if any, covered by such Award) will be entitled to receive on the date set forth in such Award, the Acquisition Consideration receivable upon such Reorganization by a holder of the number of Shares which are covered by such Award; and (iv) each holder of Restricted Shares or Deferred Share Units will be entitled to receive such shares or other securities as the holders of Shares received upon such Reorganization, which, in the case of Restricted Shares will be subject to the restrictions set forth in Section 13 (unless the Committee accelerates the lapse of such restrictions) and the certificate(s) or other instruments representing or evidencing the shares or other securities shall be legended and deposited with the Company in the manner provided in Section 13 of this Plan.

The adjustments contained in this Section and the manner of application of such provisions will be determined solely by the Committee.

19. Assignments and Transfers. No Award nor any right or interest of a Participant in any Award under the Plan may be assigned, encumbered or transferred otherwise than by will or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, set forth in an Award Agreement at the time of grant or thereafter, that the Award (other than Incentive Stock Options) may be transferred to members of the Participant's immediate family, to one or more trusts solely for the benefit of such immediate family members and to partnerships in which such family members or trusts are the only partners. For this purpose, immediate family means the Participant's spouse, parents, children, step-children, grandchildren and legal dependents. Any transfer of an Award under this provision will not be effective until notice of such transfer is delivered to the Company.

20. No Implied Rights. No officer, Director, Employee or other person will have a right to be selected as a Participant nor, having been so selected, to be selected again as a Participant, and no officer, Director, Employee or other person will have any claim or right to be granted an Award under the Plan or under any other incentive or similar plan of the Company or any Affiliate. Neither the Plan nor any action taken under the Plan will be construed as giving any Employee any right to be retained in the employ of the Company or any Affiliate.

21. Delivery and Registration of Shares. The Company's obligation to deliver Shares with respect to an Award will, if the Committee requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant to whom such Shares are to be delivered, in such form as the Committee will determine to be necessary or advisable to comply with the provisions of the Securities Act or any other applicable federal or state securities laws. It may be provided that any representation requirement will become inoperative upon a registration of the Shares or other action eliminating the necessity of the representation under the Securities Act or other applicable federal or state securities laws. The Company will not be required to deliver any Shares under the Plan prior to (a) the admission of such Shares to listing on any stock exchange or quotation system on which Shares may then be listed or quoted, and (b) the completion of any registration or other qualification of the Shares under any state or federal law, rule or regulation, as the Company determines to be necessary or advisable.

22. Income Tax Withholding. In order to comply with all applicable federal, state or local income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state or local payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all federal and state taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (i) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (but only to the extent of the minimum amount required to be withheld under applicable laws or regulations) or (ii) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (but only to the extent of the minimum amount required to be withheld under applicable laws or regulations). The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.

23. Waiver of Restrictions and Requirements. Notwithstanding any other provision of the Plan, the Committee may permit the lapse or waiver of restrictions with respect to Deferred Share Units or Restricted Shares or the satisfaction of any requirements or goals with respect to Performance Units or Performance Shares. With respect, however, to Deferred Share Units, Performance Units, or Performance Shares that are intended to qualify as performance-based compensation under Code section 162(m), the Committee may not take any action under this Section that will cause those Deferred Share Units, Performance Units, or Performance shares to fail to qualify as performance-based compensation.

24. Termination, Amendment and Modification of Plan. The Board may at any time terminate, and may at any time and from time to time and in any respect amend or modify the Plan; provided, however, that to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act, Code section 162(m), or Code section 422 (or any other applicable law or regulation, including requirements of any stock exchange or quotation system on which the Company's common stock is listed or quoted), shareholder approval of any Plan amendment will be obtained in the manner and to the degree as is required by the applicable law or regulation; and provided further, that no termination, amendment or modification of the Plan will in any manner affect any Award theretofore granted pursuant to the Plan without the consent of the Participant to whom the Award was granted or the transferee of the Award.

25. Code Section 409A. The Plan and all Awards will be interpreted and applied in a manner consistent with the applicable standards for nonqualified deferred compensation plans established by Code section 409A and its interpretive regulations and other regulatory guidance. To the extent that any terms of the Plan or an Award would subject a Participant to gross income inclusion, interest, or additional tax pursuant to Code section 409A, those terms are to that extent superseded by, and shall be adjusted to the minimum extent necessary to satisfy or to be exempt from, the Code section 409A standards. If as of the date his employment terminates, an Employee is a "specified employee," within the meaning of Code section 409A, and if the Company has stock that is publicly traded on an established securities market or otherwise, any payment of deferred compensation, within the meaning of Code section 409A, otherwise payable because of employment termination will be suspended until, and will be paid to the Employee on, the first day of the seventh month following the month in which the Employee's last day of employment occurs.

26. Effective Date and Term of Plan. The Plan became effective upon its adoption by the Board of Directors and shareholders of the Company. Unless sooner terminated pursuant to Section 24, no further Awards may be made under the Plan after ten (10) years from the effective date of the Plan. The Plan was amended and restated effective December 15, 2008.

27. Governing Law. The Plan and Award Agreements will be construed in accordance with and governed by the internal laws of the State of Indiana.

28. Shareholder Rights. Except to the extent provided with respect to an Award of Restricted Shares in accordance with Section 13, no Participant shall have any of the rights or privileges of a shareholder of the Company with respect to any Shares issuable pursuant to an Award unless and until certificates representing the Shares shall have been issued and delivered to the Participant.

EX-11 5 q092ex11.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 11 Exhibit 11

Exhibit 11

KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE

EARNINGS PER SHARE FROM CONTINUING OPERATIONS
	(Unaudited) Three Months Ended December 31, 2008			(Unaudited) Three Months Ended December 31, 2007
(Amounts in Thousands, Except for Per Share Data)	Class A	Class B	Total	Class A	Class B	Total
Basic Earnings Per Share from Continuing Operations:
Dividends Declared	$ 1,748	$ 4,208	$ 5,956	$ 1,867	$ 4,059	$ 5,926
Undistributed Earnings (Loss)	654	1,572	2,226	(535)	(1,151)	(1,686)
Income from Continuing Operations	$ 2,402	$ 5,780	$ 8,182	$ 1,332	$ 2,908	$ 4,240
Average Basic Shares Outstanding	10,883	26,176	37,059	11,720	25,206	36,926
Basic Earnings Per Share from Continuing Operations	$ 0.22	$ 0.22		$ 0.11	$ 0.12
Diluted Earnings Per Share from Continuing Operations:
Dividends Declared and Assumed
Dividends on Dilutive Shares	$ 1,748	$ 4,208	$ 5,956	$ 1,893	$ 4,061	$ 5,954
Undistributed Earnings (Loss)	666	1,560	2,226	(557)	(1,157)	(1,714)
Income from Continuing Operations	$ 2,414	$ 5,768	$ 8,182	$ 1,336	$ 2,904	$ 4,240
Average Diluted Shares Outstanding	11,217	26,273	37,490	12,137	25,295	37,432
Diluted Earnings Per Share from Continuing Operations	$ 0.22	$ 0.22		$ 0.11	$ 0.11
Reconciliation of Basic and Diluted EPS from
Continuing Operations Calculations:
Income from Continuing Operations
Used for Basic EPS Calculation	$ 2,402	$ 5,780	$ 8,182	$ 1,332	$ 2,908	$ 4,240
Assumed Dividends Payable on Dilutive Shares:
Stock options	-0-	-0-	-0-	-0-	-0-	-0-
Performance shares	-0-	-0-	-0-	26	2	28
Increase (Reduction) of Undistributed
Earnings (Loss) - allocated based on
Class A and Class B shares	12	(12)	-0-	(22)	(6)	(28)
Income from Continuing Operations Used for Diluted EPS Calculation	$ 2,414	$ 5,768	$ 8,182	$ 1,336	$ 2,904	$ 4,240
Average Shares Outstanding for Basic EPS Calculation	10,883	26,176	37,059	11,720	25,206	36,926
Dilutive Effect of Average Outstanding:
Stock options	-0-	-0-	-0-	-0-	-0-	-0-
Performance shares	-0-	-0-	-0-	165	14	179
Restricted share units	334	97	431	252	75	327
Average Shares Outstanding for Diluted EPS Calculation	11,217	26,273	37,490	12,137	25,295	37,432

Included in dividends declared for the basic and diluted earnings per share computation are dividends computed and accrued on unvested Class A and Class B restricted share units, which will be paid by a conversion to the equivalent value of common shares after a vesting period.
All of the 749,000 and 785,000 average outstanding stock options were antidilutive and were excluded from the dilutive calculations for the quarters ended December 31, 2008 and 2007, respectively. In addition, 127,000 performance shares were antidilutive and were excluded from the dilutive calculation for the quarter ended December 31, 2008.

EARNINGS PER SHARE FROM CONTINUING OPERATIONS
	(Unaudited) Six Months Ended December 31, 2008			(Unaudited) Six Months Ended December 31, 2007
(Amounts in Thousands, Except for Per Share Data)	Class A	Class B	Total	Class A	Class B	Total
Basic Earnings Per Share from Continuing Operations:
Dividends Declared	$ 3,627	$ 8,280	$11,907	$ 3,747	$ 8,112	$11,859
Undistributed Loss	(470)	(1,071)	(1,541)	(332)	(725)	(1,057)
Income from Continuing Operations	$ 3,157	$ 7,209	$10,366	$ 3,415	$ 7,387	$10,802
Average Basic Shares Outstanding	11,298	25,738	37,036	11,710	25,569	37,279
Basic Earnings Per Share from Continuing Operations	$ 0.28	$ 0.28		$ 0.29	$ 0.29
Diluted Earnings Per Share from Continuing Operations:
Dividends Declared and Assumed
Dividends on Dilutive Shares	$ 3,647	$ 8,281	$11,928	$ 3,804	$ 8,116	$11,920
Undistributed Loss	(486)	(1,076)	(1,562)	(360)	(758)	(1,118)
Income from Continuing Operations	$ 3,161	$ 7,205	$10,366	$ 3,444	$ 7,358	$10,802
Average Diluted Shares Outstanding	11,685	25,834	37,519	12,130	25,656	37,786
Diluted Earnings Per Share from Continuing Operations	$ 0.27	$ 0.28		$ 0.28	$ 0.29
Reconciliation of Basic and Diluted EPS from
Continuing Operations Calculations:
Income from Continuing Operations
Used for Basic EPS Calculation	$ 3,157	$ 7,209	$10,366	$ 3,415	$ 7,387	$10,802
Assumed Dividends Payable on Dilutive Shares:
Stock options	-0-	-0-	-0-	-0-	-0-	-0-
Performance shares	20	1	21	57	4	61
Reduction of Undistributed
Loss - allocated based on
Class A and Class B shares	(16)	(5)	(21)	(28)	(33)	(61)
Income from Continuing Operations Used for Diluted EPS Calculation	$ 3,161	$ 7,205	$10,366	$ 3,444	$ 7,358	$10,802
Average Shares Outstanding for Basic EPS Calculation	11,298	25,738	37,036	11,710	25,569	37,279
Dilutive Effect of Average Outstanding:
Stock options	-0-	-0-	-0-	-0-	-0-	-0-
Performance shares	62	3	65	180	15	195
Restricted share units	325	93	418	240	72	312
Average Shares Outstanding for Diluted EPS Calculation	11,685	25,834	37,519	12,130	25,656	37,786

Included in dividends declared for the basic and diluted earnings per share computation are dividends computed and accrued on unvested Class A and Class B restricted share units, which will be paid by a conversion to the equivalent value of common shares after a vesting period.
All of the 759,000 and 799,000 average outstanding stock options were antidilutive and were excluded from the dilutive calculations for the six months ended December 31, 2008 and 2007, respectively.

KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE

LOSS PER SHARE FROM DISCONTINUED OPERATIONS
	(Unaudited)	(Unaudited)
	Three Months Ended	Three Months Ended
	December 31, 2008	December 31, 2007
Basic:
Class A	$ 0.00	$ 0.00
Class B	$ 0.00	$ 0.00
Diluted:
Class A	$ 0.00	$ 0.00
Class B	$ 0.00	$ 0.00


	(Unaudited)	(Unaudited)
	Six Months Ended	Six Months Ended
	December 31, 2008	December 31, 2007
Basic:
Class A	$ 0.00	$ 0.00
Class B	$ 0.00	$ 0.00
Diluted:
Class A	$ 0.00	$ 0.00
Class B	$ 0.00	$ (0.01)

KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE

EARNINGS PER SHARE (INCLUDING DISCONTINUED OPERATIONS)
	(Unaudited) Three Months Ended December 31, 2008			(Unaudited) Three Months Ended December 31 2007
(Amounts in Thousands, Except for Per Share Data)	Class A	Class B	Total	Class A	Class B	Total
Basic Earnings Per Share:
Dividends Declared	$ 1,748	$ 4,208	$ 5,956	$ 1,867	$ 4,059	$ 5,926
Undistributed Earnings (Loss)	654	1,572	2,226	(535)	(1,151)	(1,686)
Net Income	$ 2,402	$ 5,780	$ 8,182	$ 1,332	$ 2,908	$ 4,240
Average Basic Shares Outstanding	10,883	26,176	37,059	11,720	25,206	36,926
Basic Earnings Per Share	$ 0.22	$ 0.22		$ 0.11	$ 0.12
Diluted Earnings Per Share:
Dividends Declared and Assumed
Dividends on Dilutive Shares	$ 1,748	$ 4,208	$ 5,956	$ 1,893	$ 4,061	$ 5,954
Undistributed Earnings (Loss)	666	1,560	2,226	(557)	(1,157)	(1,714)
Net Income	$ 2,414	$ 5,768	$ 8,182	$ 1,336	$ 2,904	$ 4,240
Average Diluted Shares Outstanding	11,217	26,273	37,490	12,137	25,295	37,432
Diluted Earnings Per Share	$ 0.22	$ 0.22		$ 0.11	$ 0.11
Included in dividends declared for the basic and diluted earnings per share computation are dividends computed and accrued on unvested Class A and Class B restricted share units, which will be paid by a conversion to the equivalent value of common shares after a vesting period.
All of the 749,000 and 785,000 average outstanding stock options were antidilutive and were excluded from the dilutive calculations for the quarters ended December 31, 2008 and 2007, respectively. In addition, 127,000 performance shares were antidilutive and were excluded from the dilutive calculation for the quarter ended December 31, 2008.

	(Unaudited) Six Months Ended December 31, 2008			(Unaudited) Six Months Ended December 31, 2007


(Amounts in Thousands, Except for Per Share Data)	Class A	Class B	Total	Class A	Class B	Total
Basic Earnings Per Share:
Dividends Declared	$ 3,627	$ 8,280	$11,907	$ 3,747	$ 8,112	$11,859
Undistributed Loss	(470)	(1,071)	(1,541)	(371)	(810)	(1,181)
Net Income	$ 3,157	$ 7,209	$10,366	$ 3,376	$ 7,302	$10,678
Average Basic Shares Outstanding	11,298	25,738	37,036	11,710	25,569	37,279
Basic Earnings Per Share	$ 0.28	$ 0.28		$ 0.29	$ 0.29
Diluted Earnings Per Share:
Dividends Declared and Assumed
Dividends on Dilutive Shares	$ 3,647	$ 8,281	$11,928	$ 3,804	$ 8,116	$11,920
Undistributed Loss	(486)	(1,076)	(1,562)	(400)	(842)	(1,242)
Net Income	$ 3,161	$ 7,205	$10,366	$ 3,404	$ 7,274	$10,678
Average Diluted Shares Outstanding	11,685	25,834	37,519	12,130	25,656	37,786
Diluted Earnings Per Share	$ 0.27	$ 0.28		$ 0.28	$ 0.28
Included in dividends declared for the basic and diluted earnings per share computation are dividends computed and accrued on unvested Class A and Class B restricted share units, which will be paid by a conversion to the equivalent value of common shares after a vesting period.
All of the 759,000 and 799,000 average outstanding stock options were antidilutive and were excluded from the dilutive calculations for the six months ended December 31, 2008 and 2007, respectively.

EX-31 6 exhibit311.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 31.1 Exhibit 31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James C. Thyen, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Kimball International, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 6, 2009
		/s/ James C. Thyen
		JAMES C. THYEN President, Chief Executive Officer

EX-31 7 exhibit312.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 31.2 Exhibit 31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert F. Schneider, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Kimball International, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 6, 2009
		/s/ Robert F. Schneider
		ROBERT F. SCHNEIDER Executive Vice President, Chief Financial Officer

EX-32 8 exhibit321.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 32.1 Exhibit 32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Kimball International, Inc. (the "Company") on Form 10-Q for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James C. Thyen, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 6, 2009
		/s/ James C. Thyen
		JAMES C. THYEN President, Chief Executive Officer

EX-32 9 exhibit322.htm KIMBALL INTERNATIONAL, INC. EXHIBIT 32.2 Exhibit 32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Kimball International, Inc. (the "Company") on Form 10-Q for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert F. Schneider, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 6, 2009
		/s/ Robert F. Schneider
		ROBERT F. SCHNEIDER Executive Vice President, Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----

Indiana		35-0514506
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

1600 Royal Street, Jasper, Indiana		47549-1001
(Address of principal executive offices)		(Zip Code)

	(Unaudited)
	December 31,	June 30,
	2008	2008
ASSETS
Current Assets:
Cash and cash equivalents	$ 27,963	$ 30,805
Short-term investments	51,958	51,635
Receivables, net of allowances of $2,312 and $1,057, respectively	172,331	180,307
Inventories	156,084	164,961
Prepaid expenses and other current assets	35,157	37,227
Assets held for sale	15,081	1,374
Total current assets	458,574	466,309
Property and Equipment, net of accumulated depreciation of $340,958 and
$340,076, respectively	197,813	189,904
Goodwill	17,163	15,355
Other Intangible Assets, net of accumulated amortization of $62,072 and
$66,087, respectively	11,317	13,373
Other Assets	14,487	37,726
Total Assets	$ 699,354	$ 722,667
LIABILITIES AND SHARE OWNERS' EQUITY
Current Liabilities:
Current maturities of long-term debt	$ 60	$ 470
Accounts payable	157,228	174,575
Borrowings under credit facilities	72,279	52,620
Dividends payable	7,169	6,989
Accrued expenses	64,447	69,053
Total current liabilities	301,183	303,707
Other Liabilities:
Long-term debt, less current maturities	410	421
Other	20,038	26,072
Total other liabilities	20,448	26,493
Share Owners' Equity:
Common stock-par value $0.05 per share:
Class A - 49,826,000 shares authorized
14,368,000 shares issued	718	718
Class B - 100,000,000 shares authorized
28,657,000 shares issued	1,433	1,433
Additional paid-in capital	6,808	14,531
Retained earnings	454,872	456,413
Accumulated other comprehensive income (loss)	(2,079)	12,308
Less: Treasury stock, at cost:
Class A - 3,499,000 and 2,691,000 shares, respectively	(51,123)	(46,517)
Class B - 2,458,000 and 3,372,000 shares, respectively	(32,906)	(46,419)
Total Share Owners' Equity	377,723	392,467
Total Liabilities and Share Owners' Equity	$ 699,354	$ 722,667
See Notes to Condensed Consolidated Financial Statements

	(Unaudited) Six Months Ended December 31,
	2008	2007
Cash Flows From Operating Activities:
Net income	$ 10,366	$ 10,678
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,120	19,752
Gain on sales of assets	(8,367)	(335)
Restructuring and exit costs	(113)	782
Deferred income tax and other deferred charges	2	(7,851)
Stock-based compensation	1,562	2,524
Excess tax benefits from stock-based compensation	(2)	-0-
Change in operating assets and liabilities:
Receivables	3,710	(114)
Inventories	7,042	(22,914)
Prepaid expenses and other current assets	5,142	1,004
Accounts payable	(9,832)	28,565
Accrued expenses	(15,736)	(2,278)
Net cash provided by operating activities	12,894	29,813
Cash Flows From Investing Activities:
Capital expenditures	(27,080)	(19,104)
Proceeds from sales of assets	11,232	1,991
Payments for acquisitions	(5,391)	(4,566)
Purchase of capitalized software and other assets	(503)	(448)
Purchases of available-for-sale securities	(3,938)	(18,847)
Sales and maturities of available-for-sale securities	4,588	40,367
Other, net	5	-0-
Net cash used for investing activities	(21,087)	(607)
Cash Flows From Financing Activities:
Proceeds from revolving credit facility	40,000	-0-
Payments on revolving credit facility	(23,348)	-0-
Additional net change in credit facilities	4,232	6,735
Payments on capital leases and long-term debt	(477)	(690)
Repurchases of common stock	-0-	(24,844)
Dividends paid to Share Owners	(11,723)	(11,997)
Excess tax benefits from stock-based compensation	2	-0-
Repurchase of employee shares for tax withholding	(374)	-0-
Other, net	-0-	(2)
Net cash provided by (used for) financing activities	8,312	(30,798)
Effect of Exchange Rate Change on Cash and Cash Equivalents	(2,961)	2,569
Net (Decrease) Increase in Cash and Cash Equivalents	(2,842)	977
Cash and Cash Equivalents at Beginning of Period	30,805	35,027
Cash and Cash Equivalents at End of Period	$ 27,963	$ 36,004
Supplemental Disclosure of Cash Flow Information
Cash (refunded) paid during the period for:
Income taxes	$ (1,726)	$ 5,608
Interest expense	$ 1,401	$ 869
See Notes to Condensed Consolidated Financial Statements

	Class A Common Stock - 10,867,452 shares
	Class B Common Stock - 26,200,347 shares

		Page No.

PART I FINANCIAL INFORMATION

	Item 1. Financial Statements
	Condensed Consolidated Balance Sheets - December 31, 2008 (Unaudited) and June 30, 2008	3
	Condensed Consolidated Statements of Income (Unaudited) - Three and Six Months Ended December 31, 2008 and 2007	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended December 31, 2008 and 2007	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6-22
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	23-37
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4. Controls and Procedures	38

PART II OTHER INFORMATION
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
	Item 4. Submission of Matters to a Vote of Security Holders	39
	Item 6. Exhibits	40

SIGNATURES		41

EXHIBIT INDEX		42

	December 31,	June 30,
(Amounts in Thousands)	2008	2008
Electronic Manufacturing Services	$15,430	$ 13,622
Furniture	1,733	1,733
Consolidated	$17,163	$ 15,355

	December 31, 2008			June 30, 2008
(Amounts in Thousands)	Cost	Accumulated Amortization	Net Value	Cost	Accumulated Amortization	Net Value
Electronic Manufacturing Services:
Capitalized Software	$ 27,278	$ 23,775	$ 3,503	$27,228	$ 22,531	$ 4,697
Customer Relationships	1,167	342	825	937	247	690
Other Intangible Assets	$ 28,445	$ 24,117	$ 4,328	$28,165	$ 22,778	$ 5,387

Furniture:
Capitalized Software	$ 37,360	$ 32,233	$ 5,127	$43,868	$ 37,895	$ 5,973
Product Rights	1,160	267	893	1,160	210	950
Other Intangible Assets	$ 38,520	$ 32,500	$ 6,020	$45,028	$ 38,105	$ 6,923

Unallocated Corporate:
Capitalized Software	$ 6,424	$ 5,455	$ 969	$ 6,267	$ 5,204	$ 1,063
Other Intangible Assets	$ 6,424	$ 5,455	$ 969	$ 6,267	$ 5,204	$ 1,063

Consolidated	$ 73,389	$ 62,072	$11,317	$79,460	$ 66,087	$13,373

Components of Non-operating Income (Expense), net:
	Three Months Ended		Six Months Ended
(Amounts in Thousands)	December 31,		December 31,
	2008	2007	2008	2007
Foreign Currency/Derivative Gain (Loss)	$(1,499)	$ 667	$ (988)	$ 752
Loss on Supplemental Employee Retirement Plan Investment	(2,234)	(354)	(3,357)	(205)
Polish offset credit program	0	0	0	1,324
Other	(176)	(184)	(342)	111
Non-operating Income (Expense), net	$(3,909)	$ 129	$(4,687)	$1,982

	Three Months Ended December 31, 2008			Three Months Ended December 31, 2007
(Amounts in Thousands)	Pre-tax	Tax	Net	Pre-tax	Tax	Net
Net income			$ 8,182			$ 4,240
Other comprehensive income (loss):
Foreign currency translation adjustments	$ (1,003)	$ (880)	$ (1,883)	$ 1,753	$ -0-	$ 1,753
Postemployment severance actuarial change	196	(78)	118	205	(81)	124
Other fair value changes:
Available-for-sale securities	956	(385)	571	407	(162)	245
Derivatives	(14,653)	4,557	(10,096)	(1,324)	564	(760)
Reclassification to earnings:
Available-for-sale securities	31	(12)	19	(73)	29	(44)
Derivatives	3,337	(1,398)	1,939	515	(184)	331
Amortization of prior service costs	72	(29)	43	72	(29)	43
Amortization of actuarial change	(2)	1	(1)	(1)	-0-	(1)
Other comprehensive income (loss)	$ (11,066)	$ 1,776	$ (9,290)	$ 1,554	$ 137	$ 1,691
Total comprehensive income (loss)			$ (1,108)			$ 5,931



	Six Months Ended December 31, 2008			Six Months Ended December 31, 2007
(Amounts in Thousands)	Pre-tax	Tax	Net	Pre-tax	Tax	Net
Net income			$ 10,366			$ 10,678
Other comprehensive income (loss):
Foreign currency translation adjustments	$ (6,295)	$ (880)	$ (7,175)	$ 4,618	$ -0-	$ 4,618
Postemployment severance actuarial change	-0-	-0-	-0-	(183)	73	(110)
Other fair value changes:
Available-for-sale securities	991	(395)	596	977	(389)	588
Derivatives	(14,597)	4,633	(9,964)	(2,717)	1,012	(1,705)
Reclassification to earnings:
Available-for-sale securities	-0-	-0-	-0-	(89)	35	(54)
Derivatives	3,705	(1,640)	2,065	751	(233)	518
Amortization of prior service costs	143	(57)	86	143	(57)	86
Amortization of actuarial change	8	(3)	5	12	(5)	7
Other comprehensive income (loss)	$ (16,045)	$ 1,658	$ (14,387)	$ 3,512	$ 436	$ 3,948
Total comprehensive income (loss)			$ (4,021)			$ 14,626

Accumulated other comprehensive income (loss), net of tax effects, was as follows:
	December 31, 2008	June 30, 2008
(Amounts in Thousands)
Foreign currency translation adjustments	$ 6,680	$ 13,855
Unrealized gain (loss) from:
Available-for-sale securities	848	252
Derivatives	(8,479)	(580)
Postemployment benefits:
Prior service costs	(1,065)	(1,151)
Net actuarial loss	(63)	(68)
Accumulated other comprehensive income (loss)	$ (2,079)	$ 12,308

	Six Months Ended December 31,
(Amounts in Thousands)	2008	2007
Product Warranty Liability at the beginning of the period	$ 1,470	$ 2,147
Accrual for warranties issued	619	226
Additions (reductions) related to pre-existing warranties (including changes in estimates)	(4)	211
Settlements made (in cash or in kind)	(498)	(597)
Product Warranty Liability at the end of the period	$ 1,587	$ 1,987

(Amounts in Thousands)	Level 1	Level 2	Level 3	Total
Assets
Cash Equivalents	$ 10,083	$ -0-	$ -0-	$ 10,083
Available-for-sale securities	350	51,608	-0-	51,958
Derivatives	-0-	714	-0-	714
Nonqualified supplemental employee retirement plan assets	10,022	-0-	-0-	10,022
Total assets at fair value	$ 20,455	$ 52,322	$ -0-	$ 72,777
Liabilities
Derivatives	$ -0-	$ 14,458	$ -0-	$ 14,458
Total liabilities at fair value	$ -0-	$ 14,458	$ -0-	$ 14,458

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs [1]
Month #1 (October 1-October 31, 2008)	-0-	$ -0-	-0-	2,000,000
Month #2 (November 1-November 30, 2008)	-0-	$ -0-	-0-	2,000,000
Month #3 (December 1-December 31, 2008)	-0-	$ -0-	-0-	2,000,000
Total	-0-	$ -0-	-0-

The Company's Annual Meeting of Share Owners was held on October 21, 2008. The Board of Directors was elected in its entirety, based on the following election results:

Nominees as Directors by Holders of Class A Common Stock	Votes For*	Votes Withheld
Douglas A. Habig	10,509,346	418,426
James C. Thyen	10,036,445	891,327
Christine M. Vujovich	10,508,274	419,498
Polly B. Kawalek	10,505,274	422,498
Harry W. Bowman	10,506,346	421,426
Geoffrey L. Stringer	10,505,274	422,498
Thomas J. Tischhauser	10,505,274	422,498

	There were no broker non-votes for the above nominees as Directors.
	*Votes for nominees as Directors by holders of Class A Common Stock represented an average of 89% of the total 11,673,845 Class A shares outstanding and eligible to vote.


Nominee as Director by Holders of Class B Common Stock	Votes For**	Votes Withheld
Dr. Jack R. Wentworth	21,321,583	1,625,847
There were no broker non-votes for the above nominee as Director.
**Votes for nominee as Director by holders of Class B Common Stock represented 84% of the total 25,291,736 Class B shares outstanding and eligible to vote.

The appointment of the Deloitte Entities, an independent registered public accounting firm, as the Company's independent auditors for the fiscal year ended June 30, 2009 was approved by holders of Class A Common Stock based on the following voting results:
Votes for***: 10,849,436 Votes Against: 61,800 Votes Abstaining: 16,536
There were no broker non-votes for the appointment of the Deloitte Entities proposal.
***Votes for the appointment of the Deloitte Entities as the Company's independent auditors represented 93% of the total 11,673,845 Class A shares outstanding and eligible to vote.

The 2003 Stock Option & Incentive Plan was approved and affirmed by holders of Class A Common Stock based on the following voting results:
Votes for****: 10,106,479 Votes Against: 331,733 Votes Abstaining: 414,952
Broker non-votes totaled 74,608 shares for the 2003 Stock Option & Incentive Plan proposal.
****Votes for the 2003 Stock Option & Incentive Plan proposal represented 87% of the total 11,673,845 Class A shares outstanding and eligible to vote.