Exhibit 13.01


                                 KellerFurniture
                     The Keller Manufacturing Company, Inc.





















                                  Annual Report
                                      2001
<PAGE>

--------------------------------------------------------------------------------

                               TO OUR SHAREHOLDERS


On behalf of our employees, managers, officers and directors, I report to you on
fiscal year 2001.

The year 2001 was a very  challenging one for Keller and the furniture  industry
in general.  This year we lost $0.40 a share vs.  earning $0.36 a share in 2000.
Our net loss was $2.3 million vs. a net profit of $2.0 million in 2000.  Our net
sales for the year ended December 31, 2001 decreased 22% to $43.4 million,  down
from $55.4 million during the year ended December 31, 2000.

We have  historically  conducted a physical  inventory in the fourth  quarter of
each year.  During  the  fourth  quarter  of 2001,  we  recorded a $2.8  million
after-tax charge for the write down of inventory in accordance with the physical
inventory.  During the fourth quarter of 2000 we recorded a similar $0.6 million
after-tax charge. The increased write-down in 2001 is attributed to not properly
accounting  for excess labor and  overhead  included in inventory as a result of
our  decision  to  retain  employees   despite  falling  demand  and  decreasing
production  in 2001 caused by the  recession.  To avoid this  adjustment  in the
future,  we plan to take a physical  inventory  count on a  quarterly  basis and
adjust  inventory,  if  necessary.  During  the  fourth  quarter of 2001 we also
adjusted  accrued  expenses for sales returns,  health claims and vacation time,
totaling $0.8 million in after tax charges.

The  reduction of net sales  throughout  2001 created  difficulty  in the timely
reduction of costs and  expenditures.  However,  the plans of action that we set
forth in 2001  yielded  good  results.  The amount of parts that were  discarded
because  of defects  was  reduced by 22%.  The amount of usable  lumber  (yield)
improved  from 48% to 50%.  Our budgeted  indirect  labor was reduced by 17%. On
average we delivered  furniture to our  customers in 28 days or less compared to
56 days on average in 2000. We increased  throughput  in our Indiana  plants and
will be  implementing  lean  manufacturing  into our Virginia  facility in 2002.
These  improvements  were offset by the negative  effect of declining net sales.
Our  manufacturing  facilities  are now operating at the  appropriate  level for
incoming  orders.  Our goal is to  continue  our efforts to  implement  the lean
manufacturing concept throughout 2002.

We ended  2001 with a strong  balance  sheet,  no short or long term  debt,  and
increased  cash flow. We bought back 220,000 shares of our common stock over the
course of 2001.  As future  opportunities  arise,  we will  continue to purchase
shares  according to the  three-year,  500,000-share  buyback plan authorized by
your Board of Directors.

Generating  sales is our top  priority  for 2002.  Our  strategy  is  focused on
exploiting our three major advantages:  1) Solid wood value; 2) Made in America;
and 3)  Quality  construction.  Our  order  generation  plan  has  many  aspects
including increased product selection, introducing two new lines of furniture in
2002,  increasing  our dealer base and the business of our current  retailers by
implementing  in-store  solid wood  specialty  areas,  and  providing  extensive
product sales training.  We have restructured the sales and marketing management
responsibilities  along with our field salespeople to place the emphasis on this
sales directive for 2002.

The Keller team looks  forward to the  challenges  before us in 2002. We believe
2002 will be a year in which the benefits of our investment in our employees and
facilities will take hold.

Visit us at our website www.kellerfurniture.com. for other news and information.

                                   Sincerely,

                                   /s/ Steven W. Robertson

                                   Steven W. Robertson
                                   President/CEO

<PAGE>

Selected Financial Data

The following  table sets forth selected  financial data as of and for the years
ended  December 31, 2001,  2000,  1999,  1998, and 1997 and are derived from the
audited,  consolidated  financial  statements  of the  Company.  These  selected
financial  data are not covered by the  auditors'  report and are  qualified  in
their  entirety  by  reference  to,  and  should  be read in  conjunction  with,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  and the Consolidated  Financial  Statements of the Company and the
related notes thereto included herein.

<TABLE>
<CAPTION>
                                                                             YEAR ENDED
Statements of Income Data:                --------------------------------------------------------------------------------
                                                                            December 31,
                                             2001              2000            1999              1998             1997
                                              ----              ----            ----              ----             ----
<S>                                       <C>              <C>              <C>              <C>              <C>
Net Sales                                 $ 43,363,064     $ 55,391,644     $ 55,751,215     $ 60,144,243     $ 58,736,617
Cost of Goods Sold                          38,649,281       43,406,132       41,670,927       43,459,950       40,095,515
                                          ------------     ------------     ------------     ------------     ------------
Gross Profit                                 4,713,783       11,985,512       14,080,288       16,684,293       17,781,102
Selling, General and Administrative          8,316,758        8,724,051        8,282,022        7,965,041        8,834,796
Other Income, Net                               75,846          142,674          359,997          451,503                0
                                          ------------     ------------     ------------     ------------     ------------
Income (Loss) Before Income Taxes           (3,527,129)       3,404,135        6,158,263        9,170,755        8,946,306
Income Taxes (Benefit)                      (1,276,718)       1,382,046        2,377,494        3,514,750        3,488,011
Net Income (Loss)                         $ (2,250,411)    $  2,022,089     $  3,780,769     $  5,656,005      $ 5,498,295
                                          ============     ============     ============     ============     ============

Net Income (Loss) Per Share
  Of Common Stock -
  (Basic and Dilutive)                    $      (0.40)    $       0.36     $       0.66     $       0.97     $       0.94
Weighted Average Number of
  Shares Outstanding                         5,565,780        5,611,354        5,753,211        5,853,954        5,847,325
Cash Dividends Declared Per
  Common Share                            $       0.14     $       0.14     $       0.14     $       0.18     $       0.16


Balance Sheet Data:                                                         December 31,
                                              2001              2000            1999              1998             1997
                                              ----              ----            ----              ----             ----
Working Capital 1                         $ 21,235,613     $ 23,994,084     $ 23,531,588     $ 22,158,510     $ 19,168,410
Property, Plant and Equipment             $ 10,050,750     $ 10,898,743     $ 10,045,302     $  9,798,174     $  8,707,855
Investment Security Available  For Sale                                                      $    500,000
Other Assets                              $  1,775,509     $  1,851,928     $  1,835,335     $  1,760,759     $  1,584,469
Total Assets                              $ 35,983,056     $ 41,913,198     $ 39,688,056     $ 39,471,045     $ 35,545,608
Long Term Debt                            $        ---     $        ---     $        ---     $        ---     $        ---

<FN>
1    Reflects the excess of current assets over current liabilities as set forth in the Consolidated Financial Statements
</FN>
</TABLE>

RECLASSIFICATIONS  - Certain  Reclassifications  have been made to 1998 and 1999
amounts to conform to the 2001 Classifications.


                                     - 1 -
<PAGE>
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

Certain Items of this Annual Report or Form 10-K (the "Report")  contain certain
statements that are  "forward-looking  statements" within the meaning of Section
27A of the Securities  Act of and Section 21E of the Securities  Exchange Act of
1934, as amended.  Those statements  appear in a number of places in this Report
and may include statements regarding the intent,  belief or current expectations
of the  Company or its  officers  with  respect to (i) the  Company's  strategic
plans,  (ii)  the  policies  of  the  Company  regarding  capital  expenditures,
financing and other matters,  and (iii) industry trends  affecting the Company's
financial  condition  or  results  of  operations.  Readers  of this  Report are
cautioned  that reliance on any  forward-looking  statement  involves  risks and
uncertainties.  Although The Keller Manufacturing  Company, Inc. (the "Company")
believes that the assumptions on which the forward-looking  statements contained
herein are based are  reasonable,  any of those  assumptions  could  prove to be
inaccurate   given  the  inherent   uncertainties   as  to  the   occurrence  or
nonoccurrence  of future  events.  There can be no  assurance  that the  forward
looking  statements  contained  in this  Report will prove to be  accurate.  The
inclusion  of a  forward-looking  statement  herein  should not be regarded as a
representation by the Company that the Company's  objectives will be achieved. .

Critical Accounting Policies and Estimates

The preparation of our  consolidated  financial  statements  requires us to make
estimates and assumptions  that affect the reported  amounts.  The estimates and
assumptions  are  evaluated  on an  on-going  basis and are based on  historical
experience  and on various  other  factors that are  believed to be  reasonable.
Estimates  and  assumptions  include,  but are not  limited  to,  allowance  for
accounts  receivables,  sales returns,  health insurance claims not yet paid and
accrued  vacation.  During the  fourth  quarter of 2001,  the  Company  adjusted
accruals for sales  returns,  health  insurance  claims not yet paid and accrued
vacation, totaling approximately $.8 million in after tax charges.

As discussed in Note 1 to the Consolidated Financial Statements, inventories are
stated  at the  lower  of cost  (first-in,  first-out  method)  or  market.  The
Company's  current  inventory  accounting  procedures  include the  recording of
additions to inventory at actual cost and reductions to inventory  (i.e.  sales)
at standard cost.

Management has also implemented the following procedures:

1)   Record additions to inventory at standard cost.

2)   Analyze inventory variance accounts on a monthly basis.

3)   Perform quarterly physical inventory counts.

4)   Evaluate  the  reasonableness  of  standard  costs  on a  quarterly  basis,
     utilizing the actual expenses incurred in the quarter.

5)   Reconcile  inventory  per the G/L to the  perpetual  inventory on a monthly
     basis.



                                     - 2 -
<PAGE>

Results of Operations

The  following  table  sets  forth,  for  the  periods  indicated,  consolidated
statements of operations as a percentage of net sales.

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                        -----------------------------------
                                        2001      2000      1999      1998
                                        ----      ----      ----      ----
<S>                                    <C>       <C>       <C>       <C>
Net Sales                              100.0%    100.0%    100.0%    100.0%
Cost of Sales                           89.1%     78.4%     74.7%     72.3%
Gross Profit                            10.9%     21.6%     25.3%     27.7%
Selling, General and Administrative     19.0%     15.5%     14.8%     13.2%
Operating Income (Loss)                 (8.1%)     6.1%     10.5%     14.5%
Income Before Taxes  (Benefit)          (8.1%)     6.1%     11.1%     15.2%
Income Taxes (Benefit)                  (2.9%)     2.5%      4.3%      5.8%
Net Income  (Loss)                      (5.2%)     3.6%      6.8%      9.4%
</TABLE>

RECLASSIFICATIONS  - Certain  Reclassifications  have been made to 1998 and 1999
amounts to conform to the 2001 Classifications.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net Sales.  The Company had an  approximate  21.7% decrease in net sales in 2001
compared  to 2000.  This was mostly  due to a decrease  in orders due to reduced
dealer response in a weakening economy.

Orders received in 2001 were down  approximately 9.0% from 2000, due to the weak
economy  of  the  last  fourteen   months.   This  compares  to  a  decrease  of
approximately 15.0% for the industry.

Cost of Sales.  Cost of sales as a percent  of net sales  increased  to 89.1% in
2001  compared  to  78.4%  in  2000.   Actual  cost  of  sales   decreased  from
approximately  $43.4 million in 2000 to approximately  $38.6 million in 2001. In
the previous two years,  employee  turnover  resulted in  inefficiencies  in the
manufacturing  process,  creating  higher cost of sales.  However,  in 2001, the
decline  in net sales  resulted  in higher  cost of sales as a percent of sales.
Employee benefit costs have also continued to increase, largely due to increased
health care costs.  The  Company  had health  care costs of  approximately  $1.6
million in 2001,  compared to approximately  $1.4 million in 2000.  During 2001,
the  Company  offset  rising  health  care costs by raising  employee  premiums.
Material cost and direct labor cost remained  approximately  the same as that of
2000.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  decreased in 2001 by  approximately  $0.4 million from
$8.7 million in 2000 to $8.3 million in 2001.  The decrease was largely due to a
reduction in salesmen commissions which resulted from the decline in sales. As a
percent of net sales,  selling,  general and  administrative  expenses increased
from  15.5%  in 2000 to  19.0%  in 2001.  Selling,  general  and  administrative
expenses  increased as a percentage of net sales primarily due to the decline in
net sales.

Net  Income.  As a  result  of the  above  factors,  the net  loss  for 2001 was
approximately  $2.3  million as  compared  to net income of  approximately  $2.0
million in 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Net Sales.  The Company had an  approximate  0.6%  decrease in net sales in 2000
compared to 1999.  This was mostly due to an increase in returns and allowances;
which  increased  from 1.85% in 1999 to 3.53% in 2000.  Returns  and  allowances
increased  partially  due to quality  issues  related to employee  turnover  and
dealer response to a weakening economy.



                                     - 3 -
<PAGE>

Orders  received  in 2000 were down 14.2% from  1999,  partially  due to delayed
shipments  during the first six months and  partially  due to the cooling of the
economy the last two months of 2000.

Cost of Sales.  Cost of sales as a percent  of net sales  increased  to 78.4% in
2000  compared  to  74.7%  in  1999.   Actual  cost  of  sales   increased  from
approximately  $41.7 million in 1999 to approximately $43.4 million in 2000. The
employee  turnover  continued  throughout  the year.  This  required  additional
training and continued to result in inefficiencies in the manufacturing process.
The  inefficiencies  have resulted in higher cost of indirect labor,  parts loss
due to poor quality and higher  supervision  cost due to an added second  shift.
The employee  benefit  costs have also  continued  to  increase,  largely due to
increased health care costs and worker's  compensation costs. The Company agreed
to absorb  approximately  $.6 million more in increased health care costs rather
than raise employee premiums.  The worker's  compensation cost also increased by
approximately  $.2 million  compared  to 1999 due to an increase in claims.  The
material cost and direct labor cost remained  approximately  the same as that of
1999.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  increased in 2000 by approximately  $.4 million.  As a
percent of net sales,  selling,  general and  administrative  expenses increased
from 14.8% in 1999 to 15.5% in 2000. Most of the increase was due to higher cost
of  bad  debts  and   professional   fees.  The  largest  bad  debt  was  Heilig
Meyer/Homemaker  at  approximately  $235,000.  The  professional fee increase is
mostly due to programming cost of the new Information System by Co-Venture.

Net  Income.  As a result  of the above  factors,  the net  income  for 2000 was
approximately  $2.0 million.  This is approximately  $1.8 million less than 1999
income of approximately $3.8 million.

Liquidity and Capital Resources

The Company's  principal source of cash is income from  operations.  The Company
has no material  outstanding  debt and is not expecting to incur any significant
debt in the near  future.  The cash account has  increased  over $2.4 million in
2001 compared to 2000, while accounts  receivable  decreased  approximately $2.9
million and inventories by approximately $5.7 million.

The  Company's   liquidity  ratio  (cash  and  cash  equivalents  plus  accounts
receivable  divided  by  current  liabilities)  increased  to 2.8 in 2001.  This
compares to 1.7 in 2000 and 2.22 in 1999.  The increase in  liquidity  ratio was
primarily  due to a  significant  decrease  of nearly  $2.2  million  in current
liabilities.

Total capital expenditures for the Company were approximately $0.6 million and
$2.4 million for 2001 and 2000, respectively. Capital expenditures include
purchases of equipment, hardware or software, and expansion of facilities. All
capital expenditures for the Company are tracked separately for each of the
three locations.

In 2001, Corydon spent approximately $0.2 million for capital expenditures.  The
largest expenditures were for a planer sander,  tenoner and paint booth filters.
Culpeper also spent approximately $0.2 million for a concrete paint storage area
and storage bins. Most of New Salisbury's  capital  expenditures  were for stock
assembly layout changes that also totaled approximately $0.2 million.

In 2000, Corydon spent  approximately $1.0 million in capital  expenditures with
the Planer/Sander being the largest expenditure at an approximately cost of $0.3
million.  Corydon also  purchased a Newman Rough Planer for  approximately  $0.2
million.  At Culpeper,  a molder and profiler  grinder cost  approximately  $0.3
million which was the largest  expenditure out of the  approximate  $0.4 million
capital  expenditure.  The largest  capital  expenditure for the Company and New
Salisbury was a warehouse  with an  approximate  cost of $0.5 million,  this was
approximately $0.1 million less than budgeted. Another large capital expenditure
was the purchase of a Shoda CNC Machine Center for approximately $0.3 million.


                                     - 4 -
<PAGE>

The product turnover ratio (net sales divided by inventories) increased from 2.8
in 2000 to 3.1 in 2001.  This was due to a 21.7%  decrease  in net  sales and  a
29.4% decrease in inventory.  There was a reduction in  productivity in 2001 due
to a slow down in orders as a result of the weak economy.

The Company has had no material short term or long term debt since 1994 compared
to 2001's 14.8%  industry  average of long term debt in relation to net worth in
2000,  according to Dun &  Bradstreet's  Business Scope Report dated January 25,
2002. This has helped the Company  maintain its cash flow and liquidity  levels.
Because  of  Keller's  financial  stability,  the  Company  does  not  currently
anticipate  the need to issue any new stock  other  than stock  bonus  awards or
pursuant to the  exercise of employee  stock  options.  The Company  anticipates
funding its growth strategy with cash generated from operations. Construction of
a new  facility is not  currently  part of the  Company's  growth  strategy.  As
mentioned  previously,  there was an  expansion to the New  Salisbury  warehouse
facilities at an approximate cost of $0.5 million in 2000.

The Company has available lines of credit totaling $5.0 million. This includes a
$3.0 million line of credit with Union  Planters Bank of Corydon,  Indiana which
expires  July 31,  2002.  Interest  is charged at the prime  lending  rate.  The
Company  also has a $2.0  million  line of  credit  available  with  Bank One of
Louisville,  Kentucky which expires July 31, 2002.  Interest is charged at LIBOR
plus 1.5%.  These lines are not  collateralized.  As of December 31, 2001, these
lines of credit were unused.

Inflation

The Company  believes that it cannot afford to increase  prices by a margin much
more than the rate of inflation and still remain competitive. The price increase
for the years 2000 and 2001 were approximately 2.4% and 2.9%, respectively, with
inflation for the same period at 3.4% and 2.8% as reported in the Consumer Price
Index.  The Company  believes  that this  pricing  policy has not had a material
adverse effect on its net sales and has  contributed to the Company  remaining a
viable competitor.

To date,  the Company  believes that the effects of inflation,  mostly in health
care  expenses,  have had an  effect on its  business.  The  Company  recognized
approximately  $.6 million in  increases in health costs during 2000 and another
$.7 million during 2001. Property, Casualty and Workman's Compensation Insurance
premium increases also continue to hurt the bottom line.

Risk Factors

1.  Competition

    The furniture industry is characterized by highly intense  competition.  The
    Company competes with many nationally recognized and financially  successful
    manufacturers  of high  quality  furniture.  Many  companies  with which the
    Company  competes,  both  domestic and foreign,  have  substantially  larger
    production capacities, distribution networks and greater financial resources
    than the Company.

    The furniture industry is a segmented  industry whereby design,  quality and
    price place each  manufacturer  into one or more competitive  market niches.
    The  Company  competes in the middle to  upper-middle  price  market,  which
    normally  requires a larger  number of items in the  product  line,  smaller
    production  lot  sizes and  higher  inventory  requirements  to  maintain  a
    competitive  delivery cycle.  Certain of the Company's  competitors may have
    greater  financial  and  other  resources  than the  Company  in  particular
    industry  segments.   Competition  could  materially  adversely  affect  the
    Company's operating results by forcing it to reduce its sales prices,  offer
    enhanced credit terms,  increase customer discounts or incentives,  increase
    spending for co-operative advertising arrangements with customers or provide
    other services.


                                     - 5 -
<PAGE>

2.  Industry Conditions.

    The  furniture  industry  historically  has been  cyclical,  with  operating
    results fluctuating sharply with the business cycle of the national economy.
    During economic downturns, the furniture industry tends to experience longer
    periods of recession and greater declines than does the general economy. The
    Company  believes that the industry is influenced  significantly by economic
    conditions   generally  and  more  specifically  by  consumer  behavior  and
    confidence,  the level of personal discretionary spending, housing activity,
    interest  rates and credit  availability.  These factors affect not only the
    ultimate  consumer,  but also furniture  retailers,  the industry's  primary
    direct  customers.  The  cyclical  nature of the  industry  has  contributed
    historically  to fluctuations  in the Company's  results of operations,  and
    such fluctuations can be expected to occur in the future.

3.  Employee Turnover.

    The Company  experienced  unusually high employee turnover during 1999 which
    continued into the third quarter of 2000. This caused  inefficiencies in the
    manufacturing  process and  contributed  to higher  cost of sales.  With the
    slowdown in the economy, we have noticed a decrease in employee turnover for
    2001.  While the Company  has also  implemented  programs to address  issues
    raised by employee  turnover,  there can, however,  be no guarantee that the
    Company  will not  experience  significant  employee  turnover in the future
    which could materially  adversely affect the Company's financial  condition,
    results of operations and prospects.

4.  Governmental Regulations and Environmental Considerations.

    The  Company's  operations  must  meet  extensive  federal,  state and local
    regulatory  standards  in the  areas of  safety,  health  and  environmental
    pollution  controls.  Historically,  these standards have not had a material
    adverse effect on the Company's sales or operations. Under the provisions of
    the Clean Air Act  Amendments  of 1990 (the "CAA"),  in December  1995,  the
    United States  Environmental  Protection  Agency  promulgated  hazardous air
    emission standards for the wood furniture industry. These regulations, known
    as the National Emission Standards for Hazardous Air Pollutants ("NESHAPs"),
    require  the  Company  to  reduce  emissions  of  certain  volatile  organic
    compounds. Procedural and record keeping improvements have been put in place
    to prevent air quality violations. Other environmental projects completed in
    2001 include  construction  of a finish  material  storage  structure at the
    Culpeper plant and installation of improved monitoring  equipment on the New
    Salisbury sewage  treatment plant. The Company expects these  regulations to
    become  even more  stringent  in the future and cannot  predict the costs of
    effects on its operations  which will result from its compliance  with these
    regulations.

5.  Fluctuations in Price and Supply of Raw Materials.

    The Company is dependent upon outside  suppliers for all of its raw material
    needs and, therefore,  is subject to price increases and delays in receiving
    supplies of such  materials.  An increase in demand for raw materials  could
    increase  delivery times for supplies and possibly further affect prices. No
    assurance  can be given that the Company  will  continue  to have  available
    necessary raw  materials at a reasonable  price or that any increases in raw
    material costs would not have a material adverse effect on the Company.

6.  Potential Stock Price Volatility.

    Currently there is one brokerage firm, Hilliard,  Lyons, Inc. in Louisville,
    Kentucky,  making a market in the Company's  Common Shares.  There can be no
    guarantee  that this firm will  continue  to make a market in the  Company's
    Common Shares, nor can there be any assurances that an active trading market
    will develop or be sustained in its absence.



                                     - 6 -
<PAGE>

    The  market  price of the  Company's  Common  Shares  has  experienced  some
    significant fluctuations in response to variations in operating results from
    quarter to  quarter,  changes in  earnings  estimates  by  analysts,  market
    conditions in the industry and general economic conditions. Furthermore, the
    stock  market has  experienced  significant  price and  volume  fluctuations
    unrelated to the operating performance of particular companies. These market
    fluctuations  may have a material  adverse effect on the market price of the
    Company's Common Shares.

7.  Dividend Policy.

    The Board of Directors has  traditionally  approved four (4) cash  dividends
    per year to holders of its Common Shares.  The amount of these dividends for
    2000 and 2001 is reflected in Market Price and Dividends on the  Registrants
    Common  Equity  and  Related  Stockholder  Matters,   below.  The  Board  of
    Directors,  however is not bound in any manner to continue  such  dividends.
    Any future  determination as to the payment of dividends will be made at the
    discretion  of the Board of  Directors  and will depend  upon the  Company's
    operating  results,  financial  condition,  capital  requirements,   general
    business  conditions and such other factors as the Board of Directors  deems
    relevant.

Market  Price  and  Dividends  on the  Registrants  Common  Equity  and  Related
Stockholder Matters

The  Company's  Common  Stock  has  been  traded  on  the  NASDAQ  Stock  Market
over-the-counter  bulletin  board  (OTC:BB)  through  Hilliard,  Lyons,  Inc. in
Louisville,  Kentucky.  The  following  prices have been  provided by  Hilliard,
Lyons,  Inc.  based upon actual  trades  (selling  price  during the  applicable
period).  As of December 31, 2001, there were 481 record  shareholders of Keller
Common Stock.

<TABLE>
<CAPTION>
               1st Qtr          2nd Qtr.           3rd Qtr.        4th Qtr.
             High    Low       High  Low          High  Low       High  Low
            -------------    -------------      -------------   -------------
<S>         <C>     <C>      <C>     <C>        <C>     <C>     <C>     <C>
   2001     3.750   3.380    3.720   3.250      3.700   3.150   3.150   2.620
   2000     6.125   4.438    6.000   4.375      4.130   3.380   3.750   3.060
</TABLE>

<TABLE>
<CAPTION>
                          Quarterly Dividends Per Share

                    1st Qtr     2nd Qtr.    3rd Qtr.    4th Qtr.    Total
                    -------     --------    --------    --------    -----
<S>        <C>       <C>         <C>         <C>         <C>         <C>
           2001      .035        .035        .035        .035        .14
           2000      .035        .035        .035        .035        .14
</TABLE>


                                     - 7 -
<PAGE>
INDEPENDENT AUDITOR'S REPORT


Board of Directors
The Keller Manufacturing Company, Inc. and Subsidiary
Corydon, Indiana

We have  audited  the  accompanying  consolidated  balance  sheets of The Keller
Manufacturing Company, Inc. and subsidiary (the Company) as of December 31, 2001
and 2000, and the related consolidated  statements of operations,  stockholders'
equity,  and cash flows for each of the three years in the period ended December
31, 2001.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  consolidated  financial  position  of the  The  Keller
Manufacturing Company, Inc. and subsidiary as of December 31, 2001 and 2000, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2001 in conformity with  accounting  principles
generally accepted in the United States of America.


/s/ Deloitte & Touche LLP

February 15, 2002
Louisville, Kentucky



                                     - 8 -
<PAGE>
<TABLE>
<CAPTION>
THE KELLER MANUFACTURING COMPANY, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000


                                                                  2001              2000
                                                                  ----              ----
<S>                                                           <C>               <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                   $ 2,591,312       $   406,186
  Accounts receivable, less allowance for doubtful              5,477,814         8,396,438
    accounts of $287,000 (2001) and $221,000 (2000)
  Inventories                                                  13,826,149        19,575,157
  Current deferred tax asset                                      527,210           621,146
  Income taxes receivable                                       1,576,296               ---
  Other current assets                                            158,016           163,600
                                                              -----------       -----------
      Total                                                    24,156,797        29,162,527

PROPERTY, PLANT AND EQUIPMENT  net                             10,050,750        10,898,743

PREPAID PENSION COSTS                                           1,775,509         1,851,928
                                                              -----------       -----------
TOTAL                                                         $35,983,056       $41,913,198
                                                              ===========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                           $   524,919       $ 1,575,979
   Commissions, salaries and withholdings                         513,127           926,208
   Accrued vacation                                               643,699           486,881
   Income taxes payable                                               ---           259,051
   Allowance for sales returns                                    245,000           956,903
   Other current liabilities                                      994,439           963,421
                                                              -----------       -----------
      Total                                                     2,921,184         5,168,443

LONG TERM LIABILITIES
   Deferred tax liability                                       1,267,005         1,337,312
                                                              -----------       -----------
      Total                                                     4,188,189         6,505,755
                                                              -----------       -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Common stock no par value, authorized,
     40,000,000 shares                                          1,746,646         1,728,513
   Retained earnings                                           30,048,221        33,678,930
                                                              -----------       -----------
      Total                                                    31,794,867        35,407,443
                                                              -----------       -----------
TOTAL                                                         $35,983,056       $41,913,198
                                                              ===========       ===========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

                                            - 9 -
<PAGE>
<TABLE>
<CAPTION>

THE KELLER MANUFACTURING COMPANY, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


                                                                  2001              2000              1999
                                                                  ----              ----              ----

<S>                                                           <C>               <C>               <C>
NET SALES                                                     $43,363,064       $55,391,644       $55,751,215

COST OF SALES                                                  38,649,281        43,406,132        41,670,927
                                                              -----------       -----------       -----------

GROSS PROFIT                                                    4,713,783        11,985,512        14,080,288

SELLING, GENERAL AND ADMINISTRATIVE                             8,316,758         8,724,051         8,282,022
                                                              -----------       -----------       -----------

OPERATING INCOME (LOSS)                                        (3,602,975)        3,261,461         5,798,266

OTHER INCOME (EXPENSE):
   Interest income                                                 33,490            92,593           153,692
   Interest expense                                               (14,371)          (52,956)             (571)
   Other                                                           56,727           103,037           206,876
                                                              -----------       -----------       -----------

      Other income, net                                            75,846           142,674           359,997
                                                              -----------       -----------       -----------

INCOME (LOSS) BEFORE INCOME TAXES                              (3,527,129)        3,404,135         6,158,263

INCOME TAXES (BENEFIT)                                         (1,276,718)        1,382,046         2,377,494
                                                              -----------       -----------       -----------

NET INCOME (LOSS)                                             $(2,250,411)      $ 2,022,089       $ 3,780,769
                                                              -----------       -----------       -----------

NET INCOME (LOSS) PER SHARE OF COMMON STOCK,
  basic and dilutive
  based on weighted average number of shares
  outstanding of 5,565.780 (2001), 5,611,354 (2000),
  and 5,753,211 (1999)                                        $     (0.40)      $      0.36       $      0.66
      ========= =====                                         ===========       ===========       ===========


<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

                                                    - 10 -
<PAGE>

<TABLE>
<CAPTION>
THE KELLER MANUFACTURING COMPANY, INC. AND SUBSIDIARY


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

                                                                Common Stock
                                                           --------------------------          Retained
                                                            Shares          Amount             Earnings               Total
                                                            ------          ------             --------               -----

<S>                                                        <C>           <C>                 <C>                  <C>
BALANCE, JANUARY 1, 1999                                   5,851,767     $  1,437,276        $ 31,695,113         $  33,132,389

  Net Income                                                                                    3,780,769             3,780,769
  Cash dividends declared ($.18 per share)                                                       (802,045)             (802,045)
  Stock issued as awards                                       2,600           26,000                                    26,000
  Stock issued under employee incentive plan                  28,166          281,660                                   281,660
  Redemptions of common stock                               (263,170)         (32,298)         (2,170,467)           (2,202,765)
                                                           ---------     ------------        ------------         -------------

BALANCE, DECEMBER 31, 1999                                 5,619,363        1,712,638          32,503,370            34,216,008

  Net Income                                                                                    2,022,089             2,022,089
  Cash dividends declared ($.14 per share)                                                       (787,030)             (787,030)
  Stock issued under employee incentive plan                   2,863           17,357                                    17,357
  Redemptions of common stock                                (12,069)          (1,482)            (59,499)              (60,981)
                                                           ---------     ------------        ------------         -------------

BALANCE, DECEMBER 31, 2000                                 5,610,157        1,728,513          33,678,930            35,407,443

  Net Loss                                                                                     (2,250,411)           (2,250,411)
  Cash dividends declared ($.14 per share)                                                       (781,052)             (781,052)
  Stock issued as awards                                       1,000            3,380                                     3,380
  Stock issued under employee incentive plan                  22,954           77,585                                    77,585
  Redemptions of common stock                               (220,000)         (62,832)           (599,246)             (662,078)
                                                           ---------     ------------        ------------         -------------


BALANCE, DECEMBER 31, 2001                                 5,414,411     $  1,746,646        $ 30,048,221         $  31,794,867
                                                           =========     ============        ============         =============

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>


                                                             - 11 -
<PAGE>
<TABLE>
<CAPTION>
THE KELLER MANUFACTURING COMPANY, INC. AND SUBSIDIARY


CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

                                                                        2001              2000              1999
                                                                        ----              ----              ----
<S>                                                                 <C>               <C>               <C>
OPERATING ACTIVITIES:
  Net income (loss)                                                 $ (2,250,411)     $ 2,022,089       $ 3,780,769
  Adjustments to reconcile net income (loss)
    to net cash provided by  operating activities:
      Gain on sale of property, plant, and equipment                     (10,000)            (600)              ---
      Depreciation                                                     1,471,428        1,589,293         1,655,277
      Deferred income taxes                                               23,629         (378,119)          268,764
      Common stock awards                                                 80,965           17,357           307,660
      Changes in assets and liabilities:
        Accounts receivable                                            2,918,624       (1,736,958)         (374,963)
        Inventories                                                    5,749,008       (1,881,725)       (1,626,942)
        Income taxes receivable/payable                               (1,835,347)         689,496          (151,583)
        Other current assets                                               5,584          (81,712)          455,036
        Prepaid pension costs                                             76,419          (16,593)          (74,576)
        Accounts payable                                              (1,051,060)         (94,370)         (154,994)
        Commissions, salaries and withholdings and
          accrued vacation                                              (256,263)        (155,297)         (449,532)
        Allowance for sales returns                                     (711,903)         956,903
        Other current liabilities                                         31,018          (73,675)         (373,245)
                                                                    ------------      -----------       -----------
          Net cash provided by  operating activities                   4,241,691          856,089         3,261,671
                                                                    ------------      -----------       -----------
INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                            (623,435)      (2,442,734)       (1,902,405)
  Proceeds from sale of  property, plant and equipment                    10,000              600
  Sale of investment security available-for-sale                                                            500,000
                                                                    ------------      -----------       -----------
          Net cash used in investing activities                         (613,435)      (2,442,134)       (1,402,405)
                                                                    ------------      -----------       -----------

FINANCING ACTIVITIES:
  Redemptions of common stock                                           (662,078)         (60,981)       (2,202,765)
  Dividends paid                                                        (781,052)        (787,030)         (802,045)
                                                                    ------------      -----------       -----------
          Net cash used in financing activities                       (1,443,130)        (848,011)       (3,004,810)
                                                                    ------------      -----------       -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   2,185,126       (2,434,056)       (1,145,544)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             406,186        2,840,242         3,985,786
                                                                    ------------      -----------       -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                              $  2,591,312      $   406,186       $ 2,840,242
                                                                    ============      ===========       ===========

CASH PAID DURING THE YEAR FOR:
  Interest                                                          $     11,000      $    52,000       $       ---
                                                                    ============      ===========       ===========
  Income Taxes                                                      $    535,000      $ 1,131,000       $ 2,241,000
                                                                    ============      ===========       ===========

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

                                                       - 12 -
<PAGE>
THE KELLER MANUFACTURING COMPANY, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


1.   BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

     Business - The  Company  operates  in one  business  segment,  which is the
     manufacturing  of  dining  room and  bedroom  furniture.  Sales are made to
     retailers located in approximately 30 states across the United States on an
     unsecured basis.

     Basis of Presentation - The consolidated  financial  statements include the
     accounts of The Keller  Manufacturing  Company,  Inc. and its  wholly-owned
     subsidiary,   Keller  Dedicated  Transportation  Company.  All  significant
     intercompany transactions and balances have been eliminated.

     Significant  Customers - The Company had one  significant  customer,  which
     accounted  for  approximately   $6,307,000  (15%),  $8,592,000  (16%),  and
     $8,851,000  (16%) of net sales and  percentage  of total net sales in 2001,
     2000 and 1999, respectively.  At December 31, 2001, 2000 and 1999, accounts
     receivable from the significant  customer totaled  approximately  $781,000,
     $1,355,000 and $1,070,000, respectively.

     Cash and Cash Equivalents - Cash and cash equivalents is defined as cash in
     banks and investment  instruments having maturities of three months or less
     from their acquisition date.

     Inventories  -  Inventories  are  stated  at the  lower of cost  (first-in,
     first-out method) or market.

     Property,  Plant,  and  Equipment  - Property,  plant,  and  equipment  are
     recorded at cost.

     Depreciation  is provided by the  straight-line  method over the  estimated
     useful lives of the depreciable assets. Estimated lives are 10-45 years for
     buildings and leasehold improvements,  3-20 years for land improvements and
     3-15 years for machinery and equipment.

     Revenue  Recognition  - Sales are recorded  when goods are delivered to the
     customer.   The  Company  provides  for  estimated   customer  returns  and
     allowances by reducing sales in the period of the sale.

     Shipping Costs - Shipping costs are recorded in cost of sales.

     Research,   Development,  and  Engineering  -  Research,  development,  and
     engineering  expenditures  for  the  creation  and  application  of new and
     improved products and manufacturing  processes were approximately  $380,000
     in 2001, $370,000 in 2000 and $670,000 in 1999.  Research,  development and
     engineering costs are charged to operations as incurred.

     Income  Taxes - The  Company  follows  Statement  of  Financial  Accounting
     Standards  (SFAS) No. 109 "Accounting for Income Taxes," which requires the
     recognition of deferred tax assets and  liabilities for the expected future
     tax  consequences of events that have been  recognized in the  consolidated
     financial statements or income tax return.

     Fair Value of  Financial  Instruments  - The fair  values of the  Company's
     current assets and current liabilities  approximate their reported carrying
     values, due to their short-term maturities.

     Recent Accounting Pronouncements - In August 2001, the Financial Accounting
     Standards  Board  (FASB)  issued  Statement  No. 144,  "Accounting  for the
     Impairment or Disposal of  Long-Lived  Assets."  This  Statement  addresses
     financial  accounting  and  reporting  for the  impairment  or  disposal of
     long-lived assets. The Company will adopt this statement  effective January
     1, 2002.  Management has concluded that the adoption of this statement will
     not have a material effect on the Company's financial position,  results of
     operations, or cash flows.


                                     - 13 -
<PAGE>

     In June 2001, the FASB issued Statement No. 141,  "Business  Combinations,"
     and  Statement  No. 142,  "Goodwill  and Other  Intangible  Assets."  These
     statements  require  the use of the  purchase  method  to  account  for all
     business  combinations  and broaden the  criteria  for  recording  acquired
     intangible assets separate from goodwill.  The statements also do not allow
     goodwill or intangible assets with indefinite lives, such as trademarks, to
     be amortized and require companies to test goodwill for impairment as least
     annually.  The Company  will adopt these  statements  effective  January 1,
     2002.  Management has concluded that the adoption of these  statements will
     not have a material effect on the Company's financial position,  results of
     operations or cash flows.

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities,"  establishes  accounting  and reporting  standards for hedging
     activities and for derivative  instruments,  including  certain  derivative
     instruments  embedded  in  other  contracts  (collectively  referred  to as
     derivatives).  Under SFAS 133,  certain  contracts  that were not  formerly
     considered  derivatives  may now meet the  definition of a derivative.  The
     Company adopted SFAS 133 effective January 1, 2001. The Company  determined
     that with the adoption of this new standard,  there was no material  impact
     on its financial position or results of operations.

     Disclosure of Certain Significant Risks and Uncertainties - The preparation
     of financial statements in conformity with accounting  principles generally
     accepted  in the  United  States of  America  requires  management  to make
     certain  estimates  and  assumptions  that affect the  reported  amounts of
     assets and liabilities and disclosure of contingent  assets and liabilities
     at the date of the  consolidated  financial  statements,  and the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from these estimates.  The Company's  periodic filings
     with the  Securities and Exchange  Commission  include,  where  applicable,
     disclosures of estimates, assumptions,  uncertainties and concentrations in
     products,  sources  of supply and  markets  that  affect  the  consolidated
     financial statements and future operations of the Company.

2.   INVENTORIES

                                          2001              2000
                                          ----              ----
          Raw Materials               $ 4,563,468       $ 6,869,777
          Work-in-process               6,126,523         8,901,915
          Finished Goods                3,046,158         3,803,465
                                      -----------       -----------
          Net Inventories             $13,826,149       $19,575,157
                                      ===========       ===========



                                     - 14 -
<PAGE>

3.   PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                     2001               2000
                                                     ----               ----

<S>                                              <C>                <C>
     Land                                        $    337,535       $    337,535
     Land improvements                                876,528            792,663
     Buildings and leasehold improvements           8,016,808          7,923,514
     Machinery and equipment                       15,084,334         14,708,617
     Construction in progress                          72,282             29,998
                                                 ------------       ------------
     Total                                         24,387,487         23,792,327
     Less accumulated depreciation                (14,336,737)       (12,893,584)
                                                 ------------       ------------
     Net                                         $ 10,050,750       $ 10,898,743
                                                 ============       ============
</TABLE>

4.   LINES OF CREDIT

     At December 31, 2001, the Company had unsecured  line of credit  agreements
     that provide for borrowings up to an aggregate of $5,000,000, with variable
     interest  rates based on prime rate of 4.75% at December 31, 2001,  or 1.5%
     in excess of the LIBOR rate of 2.44% at December  31,  2001.  There were no
     borrowings on the line of credit agreements at December 31, 2001 and 2000.

5.   INCOME TAXES

<TABLE>
<CAPTION>
     Income tax expense (benefit) consists of:

                                                     2001               2000               1999
                                                     ----               ----               ----
<S>                                              <C>                <C>                <C>
     Currently payable (receivable):
       Federal                                   $ (1,138,788)      $  1,569,882       $ 2,016,918
       State                                         (161,559)           190,283            91,812
                                                 ------------       ------------       -----------
         Total currently payable                   (1,300,347)         1,760,165         2,108,730
                                                 ------------       ------------       -----------

     Deferred:
       Federal                                         30,047           (471,910)          249,950
       State                                           (6,418)            93,791            18,814
                                                 ------------       ------------       -----------
         Total deferred                               (23,629)          (378,119)          268,764
                                                 ------------       ------------       -----------

     Total                                       $ (1,276,718)      $  1,382,046       $ 2,377,494
                                                 ============       ============       ===========
</TABLE>


                                     - 15 -
<PAGE>

     The state income tax expense for 1999 includes refunds of prior years state
     taxes  paid.  The tax  effect of  temporary  differences  that give rise to
     significant  portions of the net defgerred tax liability at December 31 are
     as follows:

<TABLE>
<CAPTION>
                                                     2001               2000
                                                     ----               ----

<S>                                              <C>                <C>
     Deferred tax current assets:
       Allowance for sales returns               $     93,970       $    371,987
       Accrued vacation                               200,185            150,397
       Allowance for doubtful accounts                110,319             85,961
       Other                                          122,736             12,801
                                                 ------------       ------------
     Total deferred tax current assets           $    527,210       $    621,146
                                                 ------------       ------------

     Deferred tax noncurrent assets -
       Other                                     $     54,929       $     31,889
                                                 ------------       ------------

     Deferred tax long-term liabilities:
       Pension costs                                  680,998            719,920
       Depreciation                                   578,734            457,018
       Other                                           62,202            192,263
                                                 ------------       ------------
     Total deferred tax long-term liabilities       1,321,934          1,369,201
                                                 ------------       ------------
     Net deferred tax noncurrent liabilities     $  1,267,005       $  1,337,312
                                                 ============       ============
</TABLE>

<TABLE>
<CAPTION>
     The difference between taxes computed at the federal statutory tax rate and
     the Company's effective tax rate are as follows:

                                                     2001        2000      1999
                                                     ----        ----      ----
<S>                                                 <C>          <C>       <C>
     Statuatory federal income tax rate             34.0%        34.0%     34.0%
     State taxes, net of federal income
       tax benefit                                   2.9          5.6       5.0
     Other                                          (0.7)         1.0      (0.4)
                                                    ----         ----      ----
     Effective income tax rate                      36.2%        40.6%     38.6%
                                                    ====         ====      ====
</TABLE>



                                     - 16 -
<PAGE>

6.   PENSION PLANS

<TABLE>
<CAPTION>
     The Company has a defined  benefit plan that provides  retirement  benefits
     for  substantially  all  employees.  Annual  contributions  to the plan are
     sufficient to satisfy legal  funding  requirements.  The changes in benefit
     obligations  and plan assets,  as well as the funded  status of the plan at
     December 31, 2001 and 2000 were as follows:

                                                     2001               2000
                                                     ----               ----
<S>                                              <C>                <C>
     Change in benefit obligation:
       Benefit obligation at beginning of year   $ 11,459,375       $ 11,076,425
       Service cost                                   385,009            395,226
       Interest cost                                  838,227            809,897
       Benefits paid                                 (974,665)          (556,891)
       Acturial (gain) loss                           289,867           (265,282)
                                                 ------------       ------------
         Benefit obligation at the end of year   $ 11,997,813       $ 11,459,375

     Change in plan assets:
       Fair value of plan assets at the
         beginning of year                       $ 10,992,239       $ 10,988,323
       Actual return on plan assets                   371,688            132,033
       Employer contributions                         420,138            428,774
       Benefits paid                                 (974,655)          (556,891)
                                                 ------------       ------------
         Fair value of plan assets
           at the end of year.                   $ 10,809,410       $ 10,992,239
                                                 ============       ============

     Funded status                               $ (1,188,403)        $ (467,136)
     Unrecognized net acturial loss                 2,985,144          2,370,856
     Unrecognized prior service cost                  (21,232)           (37,881)
     Unrecognized net asset                               ---            (13,911)
                                                 ------------       ------------
       Prepaid pension cost                      $  1,775,509        $ 1,851,928
                                                 ============        ===========
</TABLE>

     The  following  weighted-average  assumptions  were used to  determine  the
     Company's obligations under the plan:

       Weighted-average assumptions as of December 31:
       Discount rate                                     7.25%      7.50%
       Expected return on plan assets                    7.50%      7.50%
       Rate of compensation increase                     3.50%      3.50%

<TABLE>
<CAPTION>
     The components of net pension expense are as follows:

                                                     2001                2000              1999
                                                     ----                ----              ----
<S>                                              <C>                <C>                <C>
       Components of net periodic benefit cost:
         Service cost - benefits earned
           during the year                       $    385,009       $    395,226       $   442,270
         Interest cost on projected
           benefit obligation                         838,227            809,897           794,068
         Expected return on plan assets              (796,761)          (799,399)         (882,312)
         Net amortization and deferral                 70,082              6,457            12,190
                                                 ------------       ------------       -----------
         Net pension expense                     $    496,557       $    412,181       $   366,216
                                                 ============       ============       ===========
</TABLE>

                                     - 17 -
<PAGE>

     The Company has implemented a defined  contribution  savings plan under the
     provisions  of Section  401(k) of the Internal  Revenue Code that  provides
     retirement   benefits  to  substantially   all  employees.   The  Company's
     contribution,  which is based upon the salary redirection  contributions of
     the eligible employees,  totaled approximately $23,000, $30,000 and $38,000
     in 2001, 2000 and 1999, respectively.

7.   LEASE COMMITMENTS

     The Company has  operating  lease  agreements  for  marketing  showroom and
     trucking  equipment.  The equipment lease requires additional rentals based
     upon miles driven at varying  fixed rates per mile and requires the Company
     to pay for maintenance, tires, taxes, licenses and permits.

     Minimum annual rental payments are as follows:

                    Year Ended
                    December 31

                    2002                        $  801,261
                    2003                           752,803
                    2004                           617,691
                    2005                           376,697
                    2006                            53,761
                    2007 and thereafter             52,153
                                                ----------
                    Total                       $2,654,366
                                                ==========

     Total rental  expense was  approximately  $815,000  (including  $111,000 of
     contingent  rentals) for 2001,  $843,000  (including $127,000 of contingent
     rentals) for 2000 and $851,000  (including  $136,000 of contingent rentals)
     for 1999.

8.   EMPLOYEE INCENTIVE AND AWARD PROGRAMS

     The Company has incentive programs for executives and key middle management
     personnel.  The programs  provide for payment of profit sharing in cash and
     common stock in amounts not to exceed 12% of the annual pre-tax  profits of
     the Company before interest expense and incentive  expense.  As the Company
     experienced  a net loss in 2001 there was no profit  sharing  accrued.  The
     profit sharing  accrued for 2000, and 1999 was  approximately  $457,000 and
     $815,000,  respectively,  which  represents the fair value of 22,954 (2000)
     and 2,863 (1999) shares of common stock and the cash incentive.

     Additionally, the Company has award programs which involve the distribution
     of common  stock to employees  based on  outstanding  service.  The cost of
     these  awards  for  2001 and 1999 was  approximately  $3,000  and  $26,000,
     respectively,  which  represents  the fair value of 1,000  (2001) and 2,600
     (1999) shares of common stock issued. No such awards were given in 2000.

9.   EMPLOYEE HEALTH PLAN

     The Company has a medical  indemnity  plan  providing  comprehensive  major
     medical  benefits for  eligible  employees  and members of their  immediate
     families  (participants)  and is subject to the  provisions of the Employee
     Retirement Income Security Act of 1974. The Company's  contribution,  which
     is based upon the contributions of currently employed  participants and any
     additional  amounts  required to pay  benefits  for  participants,  totaled
     approximately $1,491,000,  $1,322,000 and $756,600 in 2001, 2000, and 1999,
     respectively.



                                     - 18 -
<PAGE>

10.  STOCK OPTION PLAN

<TABLE>
<CAPTION>
     In January 1999, a stock option plan for eligible employees was approved by
     the  Company.  Under the terms of the plan,  the Company is  authorized  to
     grant options of common shares,  not to exceed 200,000 shares,  to eligible
     employees and members of the Board of Directors.  Options  outstanding  are
     generally exercisable  immediately upon grant date. All options expire four
     years after the date of the grant. The following is a summary of the option
     transactions under the plan:

                                                        Weighted average
                                                            exercise
                                             Shares        per share
                                             ------     ----------------
<S>                                          <C>             <C>
     Granted in 1999                         34,700          $ 8.00
     Forfeited                                 (850)           8.00
                                             ------
     Balance at December 31, 1999            33,850            8.00
     Granted                                 32,800            3.50
     Forfeited                               (2,700)           7.50
                                             ------
     Balance at December 31, 2000            63,950            5.72
     Granted                                 31,700            3.00
     Forefeited                              (6,100)           5.43
                                             ------
     Balance at December 31, 2001            89,550            4.78
                                             ======
</TABLE>

     A total of 84,300,  58,450 and 28,350 shares at an average option price per
     share of $4.89, $5.93 and $8.00 were exercisable at December 31, 2001, 2000
     and 1999, respectively. At December 31, 2001, 110,450 shares were available
     for future grants.

     In 2001, 89,550 stock options were excluded from the computation of diluted
     earnings per share due to their antidilutive effect.

<TABLE>
<CAPTION>
     The following table summarizes  information about stock options outstanding
     at December 31, 2001:

               Options outstanding                        Options Exercisable
    --------------------------------------------       ------------------------
                   Number           Remaining                        Number
    Exercise    Outstanding     Contractual Life       Exercise    Exercisable
     Price     at 12/31/2001         (Years)             Price    at 12/31/2001

    <S>            <C>                <C>                <C>          <C>
     $8.00         28,950             1.70               $8.00        28,950
     $3.50         29,200             2.71               $3.50        29,200
     $3.00         31,400             3.71               $3.00        26,150
</TABLE>

     The weighted  average fair value of options  granted during 2001,  2000 and
     1999 was $.99, $1.95 and $3.75, respectively.

     The fair value of each stock option  grant was  estimated as of the date of
     the grant using the Black-Scholes  option-pricing  model with the following
     assumptions for 2001, 2000 and 1999, respectively: quarterly dividend yield
     of 1%,  1% and  .44%;  volatility  factor  of 40%,  68% and 43%;  risk-free
     interest rate of 3.75%, 6.0% and 6.6%; and expected life of 4 years for all
     years.


                                     - 19 -
<PAGE>

<TABLE>
<CAPTION>
     In accordance with Accounting Principle Board No. 25, "Accounting for Stock
     Issued to Employees",  the Company has not recognized any compensation cost
     for the stock option plan. Had  compensation  cost for the Company's  stock
     optioni plan been determined  based on the fair value at the grant date for
     awards  under  the  plan  consistent  with  the  method  of SFAS  No.  123,
     "Accounting  for  Stock-Based  Compensation,"  the Company's net income and
     earnings  per share  would  have  been  reduced  to the pro  gorma  amounts
     indicated below:

                                            2001           2000          1999
                                            ----           ----          ----
<S>                                    <C>             <C>           <C>
     Net Income (loss)
              As reported              $ (2,250,411)   $ 2,022,089   $ 3,780,769
              Pro forma                $ (2,281,867)   $ 1,958,005   $ 3,653,864
     Earnings (loss) per share
              As reported                   $ (0.40)        $ 0.36        $ 0.66
              Pro forma                     $ (0.41)        $ 0.35        $ 0.64
</TABLE>

     The  effects  of  applying  SFAS 123 in this pro forma  disclosure  are not
     indicative of future amounts.

11.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         Three months ended
                                              ---------------------------------------------------------------------
                                              Mar. 31, 2001     June 30, 2001     Sept. 30, 2001      Dec. 31, 2001       Total

<S>                                            <C>               <C>               <C>                 <C>             <C>
     For the year ended December 31, 2001
     Net sales                                 $ 11,459,954      $ 10,943,962      $ 11,674,459        $ 9,284,689     $ 43,363,064
     Gross profit (loss)                          2,555,772         2,787,183         3,158,112         (3,787,284)       4,713,783
     Net income (loss)                              364,826           524,906           651,769         (3,791,912)      (2,250,411)
     Net income (loss) per common share
       basic and dilutive                              0.06              0.09              0.12              (0.67)           (0.40)

     Dividends per common share                       0.035             0.035             0.035              0.035             0.14

                                                                         Three months ended
                                              ---------------------------------------------------------------------
                                              Mar. 31, 2001     June 30, 2001     Sept. 30, 2001      Dec. 31, 2001       Total

     For the year ended December 31, 2000
     Net sales                                 $ 14,682,577      $ 14,941,529      $ 13,147,371        $12,620,167     $ 55,391,644
     Gross profit                                 3,453,310         3,699,866         3,299,261          1,533,075       11,985,512
     Net income (loss)                              821,536           884,801           616,411           (300,659)       2,022,089
     Net income (loss) per common share
       basic and dilutive                              0.15              0.16              0.11              (0.06)            0.36
     Dividends per common share                       0.035             0.035             0.035              0.035             0.14
</TABLE>

     During  the  fourth  quarter  of 2001,  the  Company  recorded  a charge of
     approximately  $4.3 million  ($2.8 million after tax) for the write down of
     inventory as a result of a physical  inventory count  conducted  during the
     fourth  quarter.  The Company also  adjusted  accruals  for sales  returns,
     health  insurance  claims  not yet  paid  and  accrued  vacation,  totaling
     approximately $1.3 million $.8 million after tax). The Company is unable to
     determine  the  impact,  if any, of the write down of  inventory  and other
     charges to previous  quarters and accordingly,  has recorded the amounts in
     the fourth quarter of 2001.


                                     - 20 -
<PAGE>

CORPORATE DATA


CORPORATE HEADQUARTERS                      GENERAL COUNSEL
701 N. WATER ST.                            ICE MILLER LEGAL & BUSINESS ADVISORS
CORYDON, IN 47112                           INDIANAPOLIS, IN

PRODUCTION FACILITIES                       TRANSFER AGENT
701 NORTH WATER ST., CORYDON, IN 47112      FIFTH THIRD BANK
1010 KELLER DR., NEW SALISBURY, IN 46161    CORPORATE TRUST SERVICES
601 GERMANNA HWY., CULPEPER, VA 22701       38 FOUNTAIN SQ. PLAZA
                                            CINCINNATI, OH 45202
                                            (800) 837-2755

                                            AUDITORS
                                            DELOITTE & TOUCHE LLP
                                            Louisville, KY


<PAGE>

                     THE KELLER MANUFACTURING COMPANY, INC.


BOARD OF DIRECTORS
AND OFFICERS               EXECUTIVE OFFICERS          BOARD OF DIRECTORS
------------               ------------------          ------------------

Robert W. Byrd             John Heishman               John C. Schenkenfelder
Chairman of the Board      Vice President of           First Vice President of
                             Manufacturing               Investments
Steven W. Robertson                                    UBS Paine Webber, Inc.
President and Chief        David Jenkins
  Executive Officer        Vice President of           Bradford T. Ray
                             Engineering               Vice Chairman and Chief
Marvin C. Miller                                         Executive Officer
Chief Operating Officer                                Steel Technologies, Inc.
                           Keith R. Meriwether
Danny L. Utz               Vice President of Sales     Ronald W. Humin
Vice President of            and Marketing             Chief Executive Officer
Finance, Secretary                                     Flexible Materials, Inc.
  and Treasurer
                                                       Philip L. Jacobs
Scott A. Armstrong                                     President
Sr. Vice President of                                  Evans Furniture Showrooms
  Sales and Marketing





                                    Form 10-K
                A copy of the Company's Form 10-K Annual Report,
              filed with the Securities and Exchange Commission, is
          available upon written request to Danny L. Utz at The Keller
           Manufacturing Company, Inc., P.O. Box 8, Corydon, Indiana,
              47112. The 10-K and 10-Q reports can also be accessed
                   on the Internet at http://www.freedgar.com



<PAGE>


                                 KellerFurniture
                     The Keller Manufacturing Company, Inc.