Spin-Off Transaction

On October 31, 2014 (“Distribution Date”), we completed the spin-off of our Electronic Manufacturing Services (“EMS”) segment by distributing the related shares of Kimball Electronics, Inc. (“Kimball Electronics”), on a pro rata basis, to the Company’s Share Owners of record as of October 22, 2014 (“the Record Date”). On the Distribution Date, each of the Company’s Share Owners received three shares of Kimball Electronics for every four shares of the Company held by such Share Owner on the Record Date. After the Distribution Date, the Company no longer beneficially owns any Kimball Electronics shares and Kimball Electronics is an independent publicly traded company. Kimball International, Inc. trades on the NASDAQ under the ticker symbol “KBAL” and Kimball Electronics, Inc. trades on the NASDAQ under the ticker symbol “KE”.

The following is a summary of the assets and liabilities distributed to Kimball Electronics on the Distribution Date or shortly thereafter:



(Amounts in Millions)
Assets:
Cash and cash equivalents	$	63
Receivables	133
Inventories	124
Prepaid expenses and other current assets	19
Net property and equipment	98
Goodwill	3
Net other intangible assets	1
Other long-term assets	15
	$	456
Liabilities:
Accounts payable	$	125
Accrued expenses	22
Other long-term liabilities	9
	$	156
Net Assets Distributed to Kimball Electronics, Inc.	$	300

The Company distributed $63 million of cash to Kimball Electronics, including the cash held by its foreign facilities, as Kimball Electronics began operation as an independent company. The cash distribution occurred in several installments immediately preceding the Distribution Date or shortly thereafter. In addition, $3.5 million of accumulated other comprehensive losses, net of tax, related to foreign translation, derivatives, and the postemployment severance benefit plan was transferred to Kimball Electronics.

The EMS segment was reclassified to discontinued operations in the Consolidated Statements of Income for all periods presented. Discontinued operations did not have an impact on the financial results of fiscal year 2016. Summarized financial results of discontinued operations through the October 31, 2014 spin-off date, were as follows:



	Fiscal Year Ended
	June 30
(Amounts in Thousands, Except Per Share Data)	2015		2014
Net Sales	$	275,551	$	741,530
Income Before Taxes on Income	13,098		38,961
Provision for Income Taxes	3,941		8,919
Income from Discontinued Operations, Net of Tax	$	9,157	$	30,042
Income from Discontinued Operations per Class B Diluted Share	$	0.23	$	0.77

In connection with the spin-off of Kimball Electronics, the Company and Kimball Electronics entered into several agreements covering administrative and tax matters to provide or obtain services on a transitional basis, as needed, for varying periods after the spin-off. The administrative agreements cover various services such as information technology, human resources, taxation, and finance, and these services are substantially complete. The Company has retained all liabilities for U.S. federal, state, and local income taxes on income prior to the spin-off, as well as certain non-income taxes attributable to Kimball Electronics’ business. Kimball Electronics generally will be liable for all other taxes attributable to its business.