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**UNITED STATES**SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-Q****
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(Mark One)[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

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For the quarterly period ended March 31, 2010

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

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For the transition period from              to            
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Commission File Number    0-3279
**KIMBALL INTERNATIONAL, INC.**(Exact name of registrant as specified in	its charter)**
| **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)                           |

| **(812) 482-1600**                                                                |
|-----------------------------------------------------------------------------------|
| Registrant's telephone number, including		area code                               |
|                                                                                   |
| **Not Applicable**                                                                |
| Former name, former address and former		fiscal year, if changed since last report |

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| Indicate by check mark whether the registrant (1) has filed all reports	required to be filed by Section 13 or 15(d) of the Securities Exchange Act	of 1934 during the preceding 12 months (or for such shorter period that the	registrant was required to file such reports), and (2) has been subject to	such filing requirements for the past 90 days.  	Yes 	 X     No __                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Indicate by check mark whether the registrant	has submitted electronically and posted on its corporate Web site, if any,	every Interactive Data File required to be submitted and posted pursuant to	Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such	shorter period that the registrant was required to submit and post such	files).	Yes  __   	No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Indicate by check mark whether the registrant is a large accelerated	filer, an accelerated filer, a non-accelerated filer, or a smaller reporting	company.  See	the definitions of "large accelerated filer," "accelerated filer"	and "smaller reporting company" in Rule 12b-2	of the Exchange Act.    Large accelerated filer  ___                                                                                        Accelerated filer  	 X  	Non-accelerated filer         (Do	not check if a smaller reporting company)             	Smaller reporting company         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Indicate by check mark whether the registrant is a shell company (as	defined in Rule 12b-2 of the Exchange Act).  	Yes  __   	No   X                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| The number of shares outstanding of the Registrant's common stock as of	April 21, 2010 was:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

|   | Class A Common Stock - 10,733,475 shares |
|--------|------------------------------------------|
|   | Class B Common Stock - 26,875,706 shares |
| 1      |

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**KIMBALL INTERNATIONAL, INC.FORM 10-QINDEX**

****Page No.** PART I    FINANCIAL INFORMATION Item 1. Financial Statements  Condensed Consolidated Balance Sheets      	 - March 31, 2010	(Unaudited) and June 30, 20093  Condensed Consolidated Statements of	Income (Unaudited)        -	Three and Nine Months Ended March 31, 2010 and 20094  Condensed Consolidated Statements of	Cash Flows (Unaudited)        -	Nine Months Ended March 31, 2010 and 20095  Notes to Condensed Consolidated	Financial Statements (Unaudited)6-28Item 2. Management's Discussion and	Analysis of Financial        Condition and Results of Operations	29-45Item 3. Quantitative and Qualitative	Disclosures About Market Risk	45Item 4. Controls and Procedures45 PART II    OTHER INFORMATION    Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45Item 6. Exhibits46 SIGNATURES47 EXHIBIT INDEX48**

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**PART I. FINANCIAL INFORMATIONItem 1. Financial Statements****KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in Thousands, Except forShare andPer Share Data)**

|                                                                                                                                                                           |   | (Unaudited)                                                                        |   |                                                                   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
|                                                                                                                                                                           |   | March 31,                                                                          |   | June 30,                                                               |
|                                                                                                                                                                           |   | 2010                                                                               |   | 2009                                                                   |
| ASSETS                                                                                                                                                                    |   |                                                                               |   |                                                                   |
| Current Assets:                                                                                                                                                           |   |                                                                               |   |                                                                   |
|     Cash and cash equivalents                                                                                                                              |   |  $     41,261                                        |   |  $   75,932                                        |
|     Short-term investments                                                                                                                                 |   |  15,860                                                                  |   |  25,376                                                      |
|     Receivables, net of allowances of $3,914 and $4,366,			respectively                                                                                    |   |  168,877                                                                 |   |  143,398                                                     |
|     Inventories                                                                                                                                            |   |  150,436                                                                 |   |  127,004                                                     |
|     Prepaid expenses and other current assets                                                                                                              |   |  45,073                                                                  |   |  35,720                                                      |
|     Assets held for sale                                                                                                                                   |   |  1,160                                                                   |   |  1,358                                                       |
|         Total current assets                                                                                                           |   |  422,667                                                                 |   |  408,788                                                     |
| Property and Equipment, net of accumulated depreciation of $338,203			and                                                                                                 |   |                                                                               |   |                                                                   |
|     $338,001, respectively                                                                                                                                 |   |  195,680                                                                 |   |  200,474                                                     |
| Goodwill                                                                                                                                                                  |   |  2,554                                                                   |   |  2,608                                                       |
| Other Intangible Assets, net of accumulated amortization of $63,159			and                                                                                                 |   |                                                                               |   |                                                                   |
|     $62,481, respectively                                                                                                                                  |   |  8,472                                                                   |   |  10,181                                                      |
| Other Assets                                                                                                                                                              |   |  22,481                                                                  |   |  20,218                                                      |
|         Total Assets                                                                                                                   |   |  $   651,854                                                   |   |  $ 642,269                                                   |
| LIABILITIES AND SHARE OWNERS' EQUITY                                                                                                                                  |   |                                                                               |   |                                                                   |
| Current Liabilities:                                                                                                                                                      |   |                                                                               |   |                                                                   |
|     Current maturities of long-term debt                                                                                                                   |   |  $            61  |   |  $          60  |
|     Accounts payable                                                                                                                                       |   |  183,700                                                                 |   |  165,051                                                     |
|     Borrowings under credit facilities                                                                                                                     |   |  -0-                                                                     |   |  12,677                                                      |
|     Dividends payable                                                                                                                                      |   |  1,827                                                                   |   |  2,393                                                       |
|     Accrued expenses                                                                                                                                       |   |  50,918                                                                  |   |  52,426                                                      |
|         Total current liabilities                                                                                                      |   |  236,506                                                                 |   |  232,607                                                     |
| Other Liabilities:                                                                                                                                                        |   |                                                                               |   |                                                                   |
|     Long-term debt, less current maturities                                                                                                                |   |  349                                                                     |   |  360                                                         |
|     Other                                                                                                                                                  |   |  29,268                                                                  |   |  26,948                                                      |
|         Total other liabilities                                                                                                        |   |  29,617                                                                  |   |  27,308                                                      |
| 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                                                                                                                             |   |  93                                                                      |   |  343                                                         |
|     Retained earnings                                                                                                                                      |   |  457,003                                                                 |   |  458,180                                                     |
|     Accumulated other comprehensive loss                                                                                                                   |   |  (2,291)                                                                      |   |  (501)                                                            |
|     Less: Treasury stock, at cost:                                                                                                                         |   |                                                                               |   |                                                                   |
|         Class A - 3,635,000 and 3,646,000 shares, respectively                                                                         |   |  (48,260)                                                                     |   |  (50,421)                                                         |
|         Class B - 1,781,000 and 2,093,000 shares, respectively                                                                         |   |  (22,965)                                                                     |   |  (27,398)                                                         |
|             Total Share Owners' Equity                                                                         |   |  385,731                                                                 |   |  382,354                                                     |
|                 Total Liabilities and Share Owners' Equity                                 |   |  $   651,854                                                   |   |  $ 642,269                                                   |
| See Notes to Condensed Consolidated Financial Statements                                                                                                                  |   |                                                                               |   |                                                                   |

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**KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME****(Amounts in Thousands, Except for Per ShareData)**
			(Unaudited) 			(Unaudited)			Three Months Ended 			Nine Months Ended			March 31 			March 31			2010 			2009 			2010 			2009			Net Sales			 $    282,347  			 $      268,852  			 $      832,167  			 $      935,953 			Cost of Sales			 241,970  			 226,369  			 700,465  			 778,637 			Gross Profit			 40,377  			 42,483  			 131,702  			 157,316 			Selling and Administrative Expenses			 45,008  			 44,092  			 137,690  			 146,389 			Other General Income			 (6,724) 			 (23,178) 			 (9,980) 			 (33,084)			Restructuring Expense			 933  			 689  			 1,710  			 2,705 			Goodwill Impairment			 -0-  			 14,559  			 -0-  			 14,559 			Operating Income			 1,160  			 6,321  			 2,282  			 26,747 			Other Income (Expense):       			    Interest income			 279  			 574  			 944  			 2,018 			    Interest expense			 (27) 			 (163) 			 (133) 			 (1,553)			    Non-operating income (expense)			 243  			 441  			 2,683  			 (4,246)			        Other income (expense), net			 495  			 852  			 3,494  			 (3,781)			Income Before Taxes on Income			 1,655  			 7,173  			 5,776  			 22,966 			Provision (Benefit) for Income Taxes			 (4,675) 			 3,059  			 (4,234) 			 8,486 			Net Income 			 $       6,330  			 $          4,114  			 $        10,010  			 $        14,480 
			Earnings Per Share of Common Stock:       			    Basic Earnings Per Share:       			        Class A			  $         0.17   			  $           0.11   			  $           0.26   			  $           0.38  			        Class B			  $         0.17   			  $           0.11   			  $           0.27   			  $           0.39  			    Diluted Earnings Per Share:       			        Class A			  $         0.17   			  $           0.11   			  $           0.26   			  $           0.38  			        Class B			  $         0.17   			  $           0.11   			  $           0.27   			  $           0.39         			Dividends Per Share of Common Stock:       			    Class A			  $       0.045   			  $         0.045   			  $         0.135   			  $         0.355  			    Class B			  $       0.050   			  $         0.050   			  $         0.150   			  $         0.370         			Average Number of Shares Outstanding       			    Class A and B Common Stock:       			        Basic			37,573  			37,286  			37,408  			37,119 			        Diluted			37,633  			37,374  			37,499  			37,211 			See Notes to Condensed Consolidated Financial Statements       

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**KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIES****CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Thousands)** 			(Unaudited)			Nine Months Ended			March 31			2010 			2009			Cash Flows From Operating Activities:   			    Net income 			 $  10,010  			 $ 14,480 			    Adjustments to reconcile net income to net cash provided by			operating activities:   			        Depreciation and amortization			 26,335  			 28,186 			        Gain on sales of assets			 (6,802) 			 (32,070)			        Restructuring and exit costs			 82  			 102 			        Deferred income tax and other deferred charges			 (3,371) 			 (6,549)			        Goodwill impairment			 -0-  			 14,559 			        Stock-based compensation			 1,560  			 1,687 			        Excess tax benefits from stock-based compensation			 (263) 			 (297)			        Other, net			 (31) 			 -0- 			        Change in operating assets and liabilities:   			            Receivables			 (28,420) 			 15,479 			            Inventories			 (25,712) 			 17,553 			            Prepaid expenses and other current assets			 (4,732) 			 7,144 			            Accounts payable			 21,700  			 (7,966)			            Accrued expenses			 (812) 			 (15,689)			                Net cash (used for) provided by operating activities			 (10,456) 			 36,619 			Cash Flows From Investing Activities:   			    Capital expenditures			 (26,288) 			 (37,078)			    Proceeds from sales of assets			 12,321  			 48,263 			    Payments for acquisitions			 -0-  			 (5,391)			    Purchase of capitalized software and other assets			 (316) 			 (623)			    Purchases of available-for-sale securities			 (6,555) 			 (5,449)			    Sales and maturities of available-for-sale securities			 15,644  			 9,270 			    Other, net			 310  			 (320)			        Net cash (used for) provided by investing activities			 (4,884) 			 8,672 			Cash Flows From Financing Activities:   			    Proceeds from revolving credit facility			 -0-  			 55,000 			    Payments on revolving credit facility			 (12,248) 			 (33,348)			    Additional net change in credit facilities			 -0-  			 (35,805)			    Payments on capital leases and long-term debt			 (10) 			 (477)			    Dividends paid to Share Owners			 (5,437) 			 (17,600)			    Excess tax benefits from stock-based compensation			 263  			 297 			    Repurchase of employee shares for tax withholding			 (1,201) 			 (1,209)			        Net cash used for financing activities			 (18,633) 			 (33,142)			Effect of Exchange Rate Change on Cash and Cash Equivalents			 (698) 			 (4,482)			Net (Decrease) Increase in Cash and Cash Equivalents			 (34,671) 			 7,667 			Cash and Cash Equivalents at Beginning of Period			 75,932  			 30,805 			Cash and Cash Equivalents at End of Period			 $  41,261  			 $ 38,472 			Supplemental Disclosure of Cash Flow Information   			    Cash paid (refunded) during the period for:   			        Income taxes			 $    8,070  			 $     (809)			        Interest expense			 $       201  			 $   1,706 			See Notes to Condensed Consolidated Financial Statements   

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**KIMBALL INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)**

**Note 1.Summary of Significant Accounting Policies**

***Basis of Presentation:***

The accompanying unaudited Condensed Consolidated Financial Statements of	Kimball International, Inc. (the "Company") have been prepared in accordance	with the instructions to Form 10-Q.  As such, certain information and	footnote disclosures normally included in financial statements prepared in	accordance with accounting principles generally accepted in the United	States of America (U.S. GAAP) have been condensed or omitted, although the Company	believes that the disclosures are adequate to make the information presented	not misleading. All significant intercompany transactions and balances have	been eliminated. Management believes the financial statements include all	adjustments (consisting only of normal recurring adjustments) considered	necessary to present fairly the financial statements for the interim	periods. The results of operations for the interim periods shown in this	report are not necessarily indicative of results for any future interim	period or for the entire fiscal year. It is suggested that these financial	statements be read in conjunction with the financial statements and the	notes thereto included in the Company's latest annual report on Form 10-K.

***Change in Accounting Policy:***

During the third quarter of fiscal year 2010, the Company changed its	classification of interest and penalties related to unrecognized tax	benefits, reflected in the Condensed Consolidated Statements of Income. Interest	related to unrecognized tax benefits was previously classified on either the	Interest income line or the Interest expense line. Penalties related to	unrecognized tax benefits were previously classified as Non-operating	expense. In accordance with the guidance for accounting for uncertainty in	income taxes, based on an accounting policy election, interest related to	unrecognized tax benefits may either be classified as income taxes or	interest, and penalties related to unrecognized tax benefits may either be	classified as income taxes or another expense classification. Beginning January 1, 2010, the Company	revised its accounting policy and now classifies interest and penalties	related to unrecognized tax benefits in the Provision (Benefit) for Income	Taxes line of the Condensed Consolidated Statements of Income. The Company	believes that the classification of interest and penalties in the Provision	(Benefit) for Income Taxes line is preferable because it is management's	belief that interest and penalties related to unrecognized tax benefits are	costs of managing taxes payable (as opposed to, for example, interest as a	cost of debt). Also, this presentation is	more consistent with the practice followed by most of the Company's	competitors. As a result of reclassifying interest related to unrecognized	tax benefits, the Company's interest coverage	ratio, which is a debt covenant in its revolving credit	facility, will change. This change does not impact the Company's compliance	with this debt covenant. Interest income and penalties related to unrecognized tax benefits	during the third quarter of fiscal year 2010, in thousands, was ($21) and $3,	respectively. Prior periods were not adjusted retrospectively due to	immateriality. This change had no impact on Operating Income, Net Income, or	Earnings Per Share. This change had an impact on Income Before Taxes	on Income, however the impact was not	material.

***Change in Estimates:***

The Company periodically performs assessments of the useful lives of	assets. In evaluating useful lives, the Company considers how long assets	will remain functionally efficient and effective, given levels of	technology, competitive factors, and the economic environment. If the	assessment indicates that the assets will continue to be used for a longer	period than previously anticipated, the useful life of the assets are	revised, resulting in a change in estimate. Changes in estimates are	accounted for on a prospective basis by depreciating the assets' current	carrying values over their revised remaining useful lives. 

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Effective July 1, 2009, the Company revised the useful lives of Surface	Mount Technology (SMT) production equipment from 5 years to 7 years.	Additionally, effective	October 1, 2008, the Company revised the useful lives of Enterprise Resource	Planning (ERP) software from 7	years to 10 years. The effect of these changes in estimates, compared to the	original depreciation and amortization, for the three and nine months ended	March 31,	2010 was a pre-tax reduction in depreciation and amortization expense of, in thousands,	($537) and ($1,611), respectively. The pre-tax reduction in amortization	expense for both the three and nine months ended March 31, 2009 was, in	thousands, ($460) and ($942), respectively. The pre-tax	(decrease) increase to depreciation and amortization expense in future periods	is expected to be, in thousands, ($537) for the remaining three months of fiscal year	2010, and ($1,010), $141, $1,052, and $1,272 in the four years ending June	30, 2014, and $1,756 thereafter.

***Revisions to the Earnings Per Share Calculation:***

In June 2008, the Financial Accounting Standards Board (FASB) issued	guidance on determining whether instruments granted in share-based payment	transactions are participating securities. Under the guidance, unvested	share-based payment awards that contain nonforfeitable rights to dividends	are considered to be a separate class of securities and are excluded from	the common stock EPS calculations. The Company's restricted share unit	awards meet the definition of a participating security when held by	retirement-age participants. The guidance became effective as of the	beginning of the Company's fiscal year 2010 and required that previously	reported earnings per share data be recast in financial statements issued in	periods after the effective date. The guidance impacted the Company's Class	A Common Stock earnings per share results for certain interim periods and	the annual period of fiscal year 2009. The impact on	Class A basic and diluted earnings per share for the nine months ended March 31, 2009	was a reduction from $0.39 as originally reported to $0.38. The impact on	fiscal year 2009 Class A basic earnings per share was a reduction from $0.47	as originally reported to $0.46. Class B Common Stock calculations were not	impacted significantly enough to cause a change in the earnings per share	result. 

***Goodwill and Other Intangible Assets:***

The Electronic Manufacturing Services (EMS) segment had goodwill net		of accumulated impairment losses of, in thousands, $2,554 and $2,608, as		of March 31, 2010 and June 30, 2009, respectively. Goodwill		decreased by, in thousands, $54 during the nine months ended March 31,		2010		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 fair 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 to		identify potential impairment. If		the estimated fair value of the reporting unit is less than the carrying value,		a second step is performed to determine the amount of potential goodwill		impairment. If impaired, goodwill is		written down to its estimated implied fair value. Goodwill		is assigned to and the fair value is tested at the reporting unit level.		The fair value is established primarily using a discounted cash flow analysis and		secondarily a market approach utilizing current industry information. The calculation of the fair value of the reporting units		considers current market conditions existing at the assessment date.

No goodwill impairment was recorded in the three and nine months		ended March 31, 2010. During the third quarter of fiscal year 2009, goodwill was reviewed		on an interim basis due to the continued uncertainty associated with the		economy and the significant decline in the Company's sales and order		trends during the quarter as well as the increased disparity between the		Company's market capitalization and the carrying value of its		stockholders' equity. Interim testing resulted in the recognition of		goodwill impairment in the prior year third quarter of, in thousands,		$12,826 within the EMS segment and $1,733 within the Furniture segment.		The impairment was recorded on the Goodwill Impairment line item of the		Company's Condensed Consolidated Statements of Income.  

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In addition to performing the required annual testing, the Company		will continue to monitor circumstances and events in future periods to		determine whether additional goodwill impairment testing is warranted on		an interim basis. The Company can provide no assurance that		an impairment charge for the goodwill balance,		which approximates only 0.4% of the Company's total assets, will not occur in future periods as a result of these analyses. 

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.  

A summary of other intangible assets subject to amortization by segment	was as follows:
 					March 31, 2010 					June 30, 2009					(Amounts in Thousands) 					Cost 					Accumulated					Amortization 					Net Value 					Cost 					Accumulated					Amortization 					Net Value					Electronic Manufacturing Services:            					    Capitalized Software 					  $27,424   					  $       24,719   					  $    2,705   					  $27,455   					  $       24,217   					  $    3,238  					    Customer Relationships 					  1,167   					  585   					  582   					  1,167   					  448   					  719  					        Other Intangible Assets 					  $28,591   					  $       25,304   					  $    3,287   					  $28,622   					  $       24,665   					  $    3,957              					Furniture:            					    Capitalized Software 					  $36,040   					  $       32,179   					  $    3,861   					  $37,107   					  $       32,533   					  $    4,574  					    Product Rights 					  1,160   					  436   					  724   					  1,160   					  334   					  826  					        Other Intangible Assets 					  $37,200   					  $       32,615   					  $    4,585   					  $38,267   					  $       32,867   					  $    5,400              					Unallocated Corporate:            					    Capitalized Software 					  $  5,840   					  $         5,240   					  $       600   					  $  5,773   					  $         4,949   					  $       824  					        Other Intangible Assets 					  $  5,840   					  $         5,240   					  $       600   					  $  5,773   					  $         4,949   					  $       824   					  					  					  					  					  					 					Consolidated 					  $71,631   					  $       63,159   					  $    8,472   					  $72,662   					  $       62,481   					  $  10,181  

Amortization expense related to other intangible assets was, in		thousands, $631 and $1,898 during the quarter and year-to-date periods		ended March 31, 2010, respectively. Amortization expense		related to other intangible assets was, in thousands, $726 and $3,269		during the quarter and year-to-date periods ended March 31, 2009,		respectively. Amortization expense in future periods is expected to		be, in thousands, $347 for the remainder of fiscal year 2010, and		$2,102, $1,862, $1,509, and $1,128 in the four years ending June 30,		2014, and $1,524 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.

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Internal-use software is stated at cost lessaccumulated amortization and is amortized using the straight-line method. Duringthe software application development stage, capitalized costs include externalconsulting costs, cost of software licenses, and internal payroll andpayroll-related costs for employees who are directly associated with a softwareproject. Upgrades and enhancements are capitalized if they result in addedfunctionality which enable the software to perform tasks it was previouslyincapable of performing. Software maintenance, training, data conversion,and business process reengineering costs are expensed in the period in whichthey are incurred.  

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

***Other General******Income: ***

Other General Income in fiscal year 2010 included		a gain on the sale of the Company's Poland facility and land and settlement proceeds related to an antitrust class action lawsuit of		which the Company was a class member. Other General Income in fiscal		year 2009 included a gain related to the sale of		undeveloped land and timberland holdings, as well as earnest money deposits		retained by the Company resulting from the termination of a contract		to sell and lease back the Company's Poland facility and land.
Components of Other General Income:   **Three Months Ended** **Nine Months Ended****(Amounts in Thousands)****March****31** **March 31** **2010** **2009** **2010** **2009**Gain on Sale of Poland Facility and			Land$ 6,724   $        -0-			 $ 6,724   $        -0-			Settlement Proceeds Related to			Antitrust Class Action Lawsuit-0-			  -0-			 3,256   -0-			Gain on Sale of Undeveloped Land and			Timberland Holdings-0-			 23,178   -0-			 31,156  Earnest Money Deposits Retained-0-			  -0-			 -0-			 1,928  Other General Income$ 6,724   $ 23,178   $ 9,980   $ 33,084  
***Non-operating Income (Expense): ***

Non-operating income (expense) included 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. The gain or loss on SERP investments is exactly offset by a	change in the SERP liability that is recognized in selling and	administrative expenses.
Components of Non-operating income (expense), net: **Three Months Ended** **Nine Months Ended****(Amounts in Thousands)****March 31**			 **March 31** **2010** **2009** **2010** **2009**Foreign Currency/Derivative Gain			(Loss)$ (454) $ 1,075 			 $    329 			 $        87 			Gain (Loss) on Supplemental Employee Retirement			Plan Investments540 			 (749) 2,560 			 (4,106)Other157 			 115 						 (206) (227)Non-operating income (expense), net$   243   $    441 						 $ 2,683   $ (4,246)
9

***Effective Tax Rate:***

For the third quarter fiscal year 2010 year-to-date		period,		the Company used the actual effective tax rate for the year-to-date tax		provision calculation because a reliable estimate of the full-year		effective tax rate could not be made. Relatively low pre-tax income		coupled with the mix of operating results in multiple taxing		jurisdictions and the difficulty of forecasting in certain markets		caused significant uncertainty in the estimate of the annual effective		tax rate.

The fiscal 2010 year-to-date actual effective tax rate		was (73.3%) compared to the effective tax rate for the same period of		fiscal year 2009 of 37.0%. Relatively low pre-tax income coupled with a		tax benefit due to a tax planning strategy related to the sale of a facility and land in Poland and a		favorable impact of the Company's earnings mix drove the significantly		lower effective tax rate compared to the same period of fiscal year		2009. The mix of earnings between U.S. and foreign jurisdictions		resulted in an overall tax benefit due to U.S. losses which have a higher statutory		tax rate than the Company's foreign operations which were		profitable in the first nine months of fiscal year 2010.

***New Accounting Standards:***
		In January 2010, the FASB issued guidance to improve disclosures about		fair value instruments. The guidance requires additional disclosure		about significant transfers between levels 1, 2, and 3 of the fair value		hierarchy and requires disclosure of changes in level 3 activity on a		gross basis. In addition, the guidance clarifies existing requirements		regarding the required level of disaggregation by class of assets and		liabilities and also clarifies disclosures of inputs and valuation		techniques. The guidance became effective beginning in the Company's		third quarter of fiscal year 2010, except for the requirement to		disclose level 3 activity on a gross basis, which will be effective as		of the beginning of the Company's fiscal year 2012. The adoption did not		have a material impact on the Company's consolidated financial		statements.

		In June 2009, the FASB established the FASB Accounting Standards		Codification (Codification) as the single official source of		authoritative U.S. GAAP recognized by the FASB (other than guidance		issued by the Securities and Exchange Commission). The Codification does		not change current U.S. GAAP but is intended to simplify user access to		all authoritative U.S. GAAP by providing all literature related to a		particular topic in one place. All existing FASB accounting standard		documents have been superseded.  During the first quarter of fiscal year		2010, the Company began to utilize the Codification and revised its		financial statements to no longer refer to former U.S. GAAP standards.

		In June 2009, the FASB issued guidance related to variable interest		entities (VIEs) which modifies how a company determines when VIEs should		be consolidated. The guidance clarifies that the determination of		whether a company is required to consolidate an entity is based on,		among other things, an entity's purpose and design and a company's		ability to direct the activities of the entity that most significantly		impact the entity's economic performance. The guidance requires an		ongoing reassessment of whether a company is the primary beneficiary of		a variable interest entity and requires additional disclosures about a		company's involvement in variable interest entities. The guidance will		be effective as of the beginning of the Company's fiscal year 2011. The		Company is currently evaluating the impact, if any, of adoption of the		guidance on its consolidated financial statements.

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In		April 2009, the FASB issued guidance for interim disclosures about fair		value of financial instruments. This guidance expands to interim periods		the existing annual requirement to disclose the fair value of financial		instruments that are not reflected on the balance sheet at fair value.		The guidance became effective for interim periods beginning in the		Company's first quarter of fiscal year 2010, and the required disclosure		has been provided in				Note 7 - Fair Value of Financial Assets and Liabilities of Notes to		Condensed Consolidated Financial Statements.

In June 2008, the		FASB issued guidance for determining whether instruments granted in		share-based payment transactions are participating securities. This		guidance 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. This guidance became		effective as of the beginning of the Company's fiscal year 2010 and		required that previously reported earnings per share data be recast in		financial statements issued in periods after the effective date. The		effect of adopting the guidance is disclosed under the caption		"Revisions to the Earnings Per Share Calculation" within this footnote.

In April 2008, the		FASB issued guidance for the determination of the useful life of		intangible assets. This guidance 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 the		goodwill and other intangible assets accounting principles. This new		guidance 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. 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 this guidance were adopted prospectively as of		the beginning of the Company's fiscal year 2010 and did not have an		effect on the Company's consolidated financial statements.

		In December 2007, the FASB issued  guidance on business combinations		which 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. This guidance also		broadens the definition of a business combination and expands		disclosures related to business combinations. Additionally, in April		2009, the FASB issued further guidance which requires that acquired		contingent assets and liabilities be recognized at fair value if fair		value can be reasonably estimated. If the fair value cannot be		reasonably estimated, the asset or liability will be recognized in		accordance with existing accounting principles for accounting for		contingencies and reasonable estimation of the amount of a loss. This		new guidance became effective for business combinations occurring after		the beginning of the Company's fiscal year 2010. The impact, if any, of		this guidance on the Company's financial position, results of		operations, and cash flows will depend on the extent of business		combinations completed in the future.

11

		In December 2007, the FASB issued guidance on noncontrolling interests		in consolidated financial statements. This guidance 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. This guidance became effective as of the		beginning of the Company's fiscal year 2010. The Company does not		currently have noncontrolling interests, and therefore the adoption of		this guidance did not have an impact on the Company's financial		position, results of operations, or cash flows.

In September 2006,		the FASB issued guidance on fair value measurements, which defines fair		value, establishes a framework for measuring fair value in generally		accepted accounting principles, and expands disclosures about fair value		measurements. This guidance is only applicable to existing accounting		pronouncements that require or permit fair value measurements and does		not require any new fair value measurements. The guidance, as originally		issued, was to be effective as of the beginning of the Company's fiscal		year 2009. In February 2008, the FASB issued additional guidance on fair		value measurements, approving 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. The		Company adopted the provisions of fair value measurement guidance		applicable to financial instruments as of July 1, 2008. The Company		adopted the provisions of fair value measurement guidance applicable to		non-financial assets and liabilities as of July 1, 2009 which did not		have a material effect on the Company's consolidated financial		statements. Required disclosures have been provided in				Note 7 - Fair Value of Financial Assets and Liabilities of Notes to		Condensed Consolidated Financial Statements.

**Note 2. Inventories**

Inventory components of the Company were as follows:
**March		31,****June 30,****(Amounts in Thousands)****2010****2009**Finished Products				$  37,453   				$  35,530    Work-in-Process				13,236   				11,752    Raw Materials				112,174   				93,999      Total FIFO		Inventory				$162,863   				$141,281    LIFO Reserve				(12,427)  				(14,277)     Total Inventory				$150,436   				$127,004    
For interim reporting, LIFO inventories are computed based on quantities	as of the end of the quarter 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, except in cases where LIFO inventory liquidations are	expected to be reinstated by fiscal year end. During the three and nine-month periods ended	March 31, 2010, LIFO inventory liquidations increased net	income by, in thousands, $412 and $1,379, respectively. During the three and	nine-month periods ended March 31, 2009, LIFO inventory liquidations	increased net income by, in thousands, $764 and $1,764, respectively.

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**Note 3. 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 nine-month periods ended March 31, 2010 and 2009 was as follows:
 				Three Months Ended 				March 31, 2010 				Three Months Ended				March 31, 2009				(Amounts in Thousands)				Pre-tax				 				Tax				 				Net of Tax 				Pre-tax				 				Tax				 				Net of Tax				Net income    				 $     6,330      				 $        4,114 				Other comprehensive income (loss):           				    Foreign currency translation adjustments				 $    (5,610) 				 $     1,228  				 $    (4,382) 				 $   (3,035) 				 $       (406) 				 $      (3,441)				    Postemployment severance actuarial change				 (1,823) 				 727  				 (1,096) 				 (1,690) 				 674  				 (1,016)				    Other fair value changes:           				        Available-for-sale securities				 (90) 				 36  				 (54) 				 594  				 (237) 				 357 				        Derivatives				 1,990  				 (544) 				 1,446  				 (1,135) 				 57  				 (1,078)				    Reclassification to (earnings) loss:           				        Available-for-sale securities				 (272) 				 108  				 (164) 				 (148) 				 59  				 (89)				        Derivatives				 (1,042) 				 317  				 (725) 				 2,571  				 (919) 				 1,652 				        Amortization of prior service costs				 71  				 (27) 				 44  				 71  				 (28) 				 43 				        Amortization of actuarial change				 310  				 (123) 				 187  				 169  				 (68) 				 101 				Other comprehensive income (loss)				 $    (6,466) 				 $     1,722  				 $    (4,744) 				 $   (2,603) 				 $       (868) 				 $      (3,471)				Total comprehensive income    				 $     1,586      				 $           643                                      				Nine Months Ended				March 31, 2010 				Nine Months Ended				March 31, 2009				(Amounts in Thousands)				Pre-tax				 				Tax				 				Net of Tax 				Pre-tax				 				Tax				 				Net of Tax				Net income    				 $   10,010      				 $      14,480 				Other comprehensive income (loss):           				    Foreign currency translation adjustments				 $    (3,689) 				 $        796  				 $    (2,893) 				 $   (9,330) 				 $    (1,286) 				 $    (10,616)				    Postemployment severance actuarial change				 (2,497) 				 996  				 (1,501) 				 (1,690) 				 674  				 (1,016)				    Other fair value changes:           				        Available-for-sale securities				 (134) 				 54  				 (80) 				 1,585  				 (632) 				 953 				        Derivatives				 2,844  				 (684) 				 2,160  				 (15,732) 				 4,690  				 (11,042)				    Reclassification to (earnings) loss:           				        Available-for-sale securities				 (328) 				 130  				 (198) 				 (148) 				 59  				 (89)				        Derivatives				 343  				 (117) 				 226  				 6,276  				 (2,559) 				 3,717 				        Amortization of prior service costs				 214  				 (84) 				 130  				 214  				 (85) 				 129 				        Amortization of actuarial change				 608  				 (242) 				 366  				 177  				 (71) 				 106 				Other comprehensive income (loss)				 $    (2,639) 				 $        849  				 $    (1,790) 				 $ (18,648) 				 $        790  				 $    (17,858)				Total comprehensive income (loss)    				 $     8,220      				 $      (3,378)

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				Accumulated other comprehensive loss, net				of tax effects, was as follows: 				March 31,				2010 				June 30,				2009				(Amounts in Thousands)   				Foreign currency translation adjustments				  $     4,928   				  $       7,821  				Unrealized gain (loss) from:   				    Available-for-sale securities				  185   				  463  				    Derivatives				  (3,345)  				  (5,731) 				Postemployment benefits:   				    Prior service costs				  (850)  				  (980) 				    Net actuarial loss				  (3,209)  				  (2,074) 				Accumulated other comprehensive loss				  $    (2,291)  				  $        (501) 

**Note 4. 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.

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Unallocated corporate assets include cash and cash equivalents, short-term	investments, and other assets not allocated to segments. Unallocated	corporate net income 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, 2009.
 **Three Months Ended** **Nine****Months Ended**  **March****31** **March 31** **(Amounts in Thousands) ****2010** **2009** **2010** **2009** Net Sales:         Electronic Manufacturing		Services$190,137  $140,630  $522,606  $ 490,463   Furniture			92,181  128,222  309,487  445,490   Unallocated			Corporate and Eliminations29  -0- 74  -0-  Consolidated$282,347 
 $268,852  $832,167 
 $ 935,953           Net Income (Loss):         Electronic Manufacturing		Services$  10,766 
 $ 			(9,570)			 $  13,212  
 $ (11,047)			  Furniture			(4,543)			
 (1,615)			 (3,759)			
 5,617 			  Unallocated      Corporate and Eliminations107 
 15,299 			 557 
 19,910 			  Consolidated$    6,330 
(1)$   			4,114 
(2)$  10,010  
(1)$   14,480 
(2)
(1) Net Income (Loss) included after-tax	restructuring charges, in thousands, of $549 and $1,025 in the three and nine months ended	March 31, 2010, respectively. The EMS segment recorded, in the threeand nine monthsended March 31, 2010, in thousands, $529 and $1,034, respectively, of after-tax restructuring	charges. The Furniture segment recorded, in	the three and nine months ended March 31, 2010, in thousands, $0 and $(51),respectively, of after-tax	restructuring income. Unallocated Corporate and Eliminations recorded, in the threeand nine months	ended March 31, 2010, in thousands, $20 and $42, respectively,	of after-tax restructuring charges. SeeNote 6 - Restructuring Expenseof Notes to Condensed Consolidated Financial Statements for furtherdiscussion. Additionally, the EMS segment recorded for both the three andnine months ended March 31, 2010, after-tax income of $7.7 million resultingfrom the gain on the sale of the Poland facility and land. The EMS segment also recorded for theninemonths ended March 31, 2010, after-tax income of  $2.0 million resultingfrom settlement proceeds related to an antitrust class action lawsuit of whichthe Company was a class member.(2) Net Income (Loss) included after-tax	restructuring charges, in thousands, of $420 and $1,675 in the three andnine months ended	March 31, 2009, respectively.  The EMS segment recorded, in the threeand nine monthsended March 31, 2009, in thousands, $178 and $1,077, respectively, of after-tax restructuring	charges.  The Furniture segment recorded, in	the three and nine months ended March 31, 2009, in thousands, $71 and$360, respectively, of after-tax	restructuring charges.  Unallocated Corporate and Eliminations recorded, in the threeand nine months	ended March 31, 2009, in thousands, $171 and $238, respectively,	of after-tax restructuring charges.  SeeNote 6 - Restructuring Expense of	Notes to Condensed Consolidated Financial Statements for further discussion. Additionally, the EMS segment recorded forthe nine months ended March 31, 2009, $1.6 million of after-tax incomefor earnest money deposits retained by the Company resulting from the termination of thecontract to sell the Company's Poland building and real estate.  Unallocated Corporateand Eliminations also recorded, for both thethree and nine months ended March 31, 2009, in millions, $13.9 and $18.7,respectively, of after-tax gains onthe sale of undeveloped land holdings and timberlands. Also, for both the threeand nine months ended March 31, 2009,the Company recorded $9.1 million of after-tax costs related to goodwillimpairment, consisting of $8.0 million in the EMS segment and $1.1 million inthe Furniture segment. See the Goodwill and Other Intangible Assets section ofNote 1 - Summaryof Significant Accounting Policies of Notes to Condensed ConsolidatedFinancial Statements for further discussion.
 **March 31,** **June 30,** **(Amounts in Thousands)****2010****2009**Total Assets: Electronic		Manufacturing Services$412,613 $351,506  Furniture		179,349 184,755  Unallocated      Corporate and Eliminations59,892 106,008  Consolidated		$651,854 
 $642,269 
 
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**Note5. Commitmentsand 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 March 31, 2010, the Company had a maximum financial exposure	from unused standby letters of credit totaling $4.8 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 March 31, 2010 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 nine months ended	March	31, 2010 and 2009 were as follows:
**Nine Months Ended		March 31****(Amounts in Thousands)**
**2010** **2009**Product Warranty Liability at the			beginning of the period$ 2,176 $ 1,470 			Accrual for warranties issued493  1,074  Additions (Reductions) related to pre-existing warranties (including      changes in estimates)		(77)  		157  Settlements made (in cash or in kind)		(712)		(867)Product Warranty Liability at the end of the period		$			1,880 			 		$ 1,834 			
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**Note 6. Restructuring Expense**

		The Company recognized consolidated pre-tax restructuring expense of		$0.9 million and $1.7 million in the three and nine months ended March		31, 2010, respectively, and $0.7 million and $2.7 million in the three		and nine months ended March 31, 2009, respectively. The action discussed		below represents the majority of the restructuring costs during the		period presented in the summary table on the following page. Former		restructuring plans that are substantially complete and did not have		significant expense during the period presented are included in the		summary table on the following page under the caption Other		Restructuring Plans and include the Furniture segment Office Furniture		Manufacturing Consolidation Plan and the Unallocated Corporate Gaylord		restructuring plan.

		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.

***European Consolidation Plan:***

		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 previously had one operation in Poznan. The Company successfully		completed the move of production from Longford, Ireland, into that		existing Poznan facility during the fiscal year 2009 second quarter. As		part of the plan, the Company is also consolidating 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. Construction of the new, larger		facility in Poland is complete and limited production has begun. The		plan is being executed in stages with a projected final completion of		the consolidation by mid-fiscal year 2012. The Company sold the existing		Poland facility and land during the fiscal year 2010 third quarter and		recorded a $6.7 million pre-tax gain which is included in the Other		General Income line on the Company's Condensed Consolidated Statements		of Income. The Company is leasing back a portion of the facility until		it completes the transfer of production to the new facility. The Company		currently estimates that the total pre-tax charges related to the		consolidation activities will be approximately, in millions, $21.2		consisting of  $19.6 of severance and other employee costs, $0.4 of		property and equipment asset impairment, $0.7 of lease exit costs, and		$0.5 of other exit costs. 

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				Summary of All Plans				   				  				   				   				   				   				  				 				  				Accrued				June 30,				2009 (2) 				Nine Months Ended March 31, 2010				 				Accrued				March 31,				2010 (2)				 				Total Charges				Incurred Since Plan Announcement (3)				 				Total Expected				Plan Costs (3) 				 				(Amounts in Thousands) 				Amounts				Charged (Income) Cash 				Amounts				Charged  				Non-cash 				Amounts Utilized/				Cash Paid 				Adjustments    				EMS Segment                				    FY 2008 European Consolidation Plan             				        Transition and Other Employee Costs				  $  12,288   				  $   1,489   				  $      -0-   				  $(2,041)  				  $      (992) (4)				  $10,744   				  $         19,090   				  $19,613   				        Asset Write-downs				  -0-   				  -0-   				  82   				  (82)  				  -0-   				  -0-   				  428   				  428   				        Plant Closure and Other Exit Costs				  -0-   				  154   				  -0-   				  (154)  				  -0-   				  -0-   				  611   				  1,132   				    Total EMS Segment				  $  12,288   				  $   1,643   				  $       82   				  $(2,277)  				  $      (992)  				  $10,744   				  $         20,129   				  $21,173   				Furniture Segment                				    Other Restructuring Plans (1)				  -0-   				  (83)  				  -0-   				  83   				  -0-   				  -0-   				  152   				  152   				Unallocated Corporate                				    Other Restructuring Plans (1)				  -0-   				  68   				  -0-   				  (68)  				  -0-   				  -0-   				  644   				  750   				Consolidated Total of All Plans				  $  12,288   				  $   1,628   				  $       82   				  $(2,262)  				  $      (992)  				  $10,744   				  $         20,925   				  $22,075                   				(1) Other Restructuring Plans with charges during the nine				months ended March 31, 2010 include the Office Furniture				Manufacturing Consolidation Plan initiated in fiscal year 2009				and the Unallocated Corporate Gaylord restructuring plan				initiated in fiscal year 2007. 				(2) Accrued restructuring at March 31, 2010 and June 30, 2009				was $10.7 million and $12.3 million, respectively. The balances				include $2.2 million and $3.8 million recorded in current				liabilities at March 31, 2010 and June 30, 2009, respectively,				and $8.5 million recorded in other long-term liabilities at both				March 31, 2010 and June 30, 2009.  				(3) These columns include restructuring plans that were active				during the nine months ended March 31, 2010, including the EMS				segment European Consolidation Plan initiated in fiscal year				2008, the Furniture segment Office Furniture Manufacturing				Consolidation Plan initiated in fiscal year 2009, and the				Unallocated Corporate Gaylord restructuring plan initiated in				fiscal year 2007. 				(4) The effect of changes in foreign currency exchange rates				within the EMS segment due to revaluation of the restructuring				liability is included in this amount.  

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**Note		7. Fair Value of Financial Assets and Liabilities**

The Company categorizes assets and				liabilities measured at fair value 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.

The Company invested in convertible promissory notes and				stock warrants of a privately-held company during the quarters				ended March 31, 2010 and December 31, 2009. The Company has been				chosen as the primary supplier for the privately-held company to				produce products in the future and negotiations for a definitive				supply agreement are in process.

The convertible promissory notes are classified as				available-for-sale debt securities as a result of the conversion				option and were valued using a recurring market-based method				which approximates fair value by using the amortized cost basis				of the promissory notes, with the discount amortized to interest				income over the term. The stock warrants are classified as				derivative instruments as a result of a net settlement feature				and were valued on a recurring basis using a market-based method				which utilizes the Black-Scholes valuation model with the				following inputs: risk-free interest rate, volatility, expected				life, and the estimated stock price.

See								Note 9 - Short-Term Investments of Notes to Condensed				Consolidated Financial Statements for further information				regarding the convertible debt securities. See								Note 8 - Derivative Instruments of Notes to Condensed				Consolidated Financial Statements for further information				regarding the stock warrants.  

There were no other changes in the Company's inputs or				valuation techniques used to measure fair values compared to				those disclosed in the Company's Annual Report on Form 10-K for				the fiscal year ended June 30, 2009.

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						Recurring Fair Value						Measurements:						As of March 31, 2010 and June 30, 2009, the fair values						of financial assets and liabilities that are measured at						fair value on a recurring basis using the market						approach are categorized as follows: 						March 31, 2010						(Amounts in Thousands) 						Level 1 						Level 2 						Level 3 						Total						Assets        						    Cash equivalents 						  $       25,307   						  $            -0-   						  $            -0-   						  $       25,307  						    Available-for-sale securities: Municipal securities 						  -0-   						  14,084   						  -0-   						  14,084  						    Available-for-sale securities: Convertible debt						securities 						  -0-   						  -0-   						  1,776   						  1,776  						    Derivatives: Foreign exchange contracts 						  -0-   						  1,848   						  -0-   						  1,848  						    Derivatives: Stock warrants 						  -0-   						  -0-   						  286   						  286  						    Nonqualified supplemental employee retirement plan						assets 						  13,952   						  -0-   						  -0-   						  13,952  						        Total assets at fair value 						  $       39,259   						  $       15,932   						  $         2,062   						  $       57,253  						Liabilities        						    Derivatives: Foreign exchange contracts 						  $            -0-   						  $            318   						  $            -0-   						  $            318  						        Total liabilities at fair value 						  $            -0-   						  $            318   						  $            -0-   						  $            318                   						June 30, 2009						(Amounts in Thousands) 						Level 1 						Level 2 						Level 3 						Total						Assets        						    Cash equivalents 						  $       42,114   						  $            -0-   						  $            -0-   						  $       42,114  						    Available-for-sale securities: Municipal securities 						  -0-   						  25,376   						  -0-   						  25,376  						    Derivatives: Foreign exchange contracts 						  -0-   						  784   						  -0-   						  784  						    Nonqualified supplemental employee retirement plan						assets 						  10,992   						  -0-   						  -0-   						  10,992  						        Total assets at fair value 						  $       53,106   						  $       26,160   						  $            -0-   						  $       79,266  						Liabilities        						    Derivatives: Foreign exchange contracts 						  $            -0-   						  $         3,407   						  $            -0-   						  $         3,407  						        Total liabilities at fair value 						  $            -0-   						  $         3,407   						  $            -0-   						  $         3,407          						During the three months ended March 31, 2010, the						Company purchased convertible debt securities of $0.9						million and stock warrants of $0.1 million. During the						nine months ended March 31, 2010, the Company purchased						convertible debt securities of $1.7 million and stock						warrants of $0.3 million. The changes in fair value of						Level 3 investment assets for the three and nine months						ended March 31, 2010 were immaterial.  There were no						Level 3 investments as of the fiscal year ended June 30,						2009.
***Non-Recurring Fair Value Measurements:***
					During the three and nine months ended March 31, 2010, the					Company had no fair value adjustments applicable to items					that are subject to non-recurring fair value measurement					after the initial measurement date.

20

***Disclosure of Other Financial Instruments:***

Other financial instruments that are					not reflected in the Condensed Consolidated Balance Sheets					at fair value have carrying amounts that approximate fair					value as follows:

**Assets**
							 
**Liabilities**
Certain cash and cash equivalents
 
Accounts payable
Receivables
 
Borrowings under credit facilities
Other assets not recorded at fair value
 
Dividends payable 
 
Accrued expenses
The fair value estimate for long-term debt, excluding					capital leases, was estimated using a discounted cash flow					analysis based on quoted long-term debt market rates					adjusted for the Company's non-performance risk. There was					an immaterial difference between the carrying value and					estimated fair value of long-term debt as of March 31, 2010					and June 30, 2009.

**Note 8. 	Derivative Instruments**
***Foreign Exchange Contracts:***
The Company operates		internationally and is therefore exposed to foreign currency exchange		rate fluctuations in the normal course of its business. The Company's		primary means of managing this exposure is to utilize natural hedges,		such as aligning currencies used in the supply chain with the sale		currency. To the extent natural hedging techniques do not fully offset		currency risk, the Company uses derivative instruments with the		objective of reducing the residual exposure to certain foreign currency		rate movements. Factors considered in the decision to hedge an		underlying market exposure include the materiality of the risk, the		volatility of the market, the duration of the hedge, the degree to which		the underlying exposure is committed to, and the availability,		effectiveness, and cost of derivative instruments. Derivative		instruments are only utilized for risk management purposes and are not		used for speculative or trading purposes. 

The Company uses forward contracts designated as cash flow hedges to		protect against foreign currency exchange rate risks inherent in		forecasted transactions denominated in a foreign currency. Foreign		exchange contracts are also used to hedge against foreign currency		exchange rate risks related to intercompany balances denominated in		currencies other than the functional currencies. As of March 31, 2010, the Company had		outstanding foreign exchange contracts to hedge currencies against the		U.S. dollar in the aggregate notional amount of $22.9 million and to		hedge currencies against the Euro in the aggregate notional amount of		16.0 million EUR. The notional amounts are indicators of the volume of		derivative activities but are not indicators of the potential gain or		loss on the derivatives.

In limited cases due to unexpected changes in forecasted		transactions, cash flow hedges may cease to meet the criteria to be		designated as cash flow hedges. Depending on the type of exposure		hedged, the Company may either purchase a derivative contract in the		opposite position of the undesignated hedge or may retain the hedge		until it matures if the hedge continues to provide an adequate offset in		earnings against the currency revaluation impact of foreign currency		denominated liabilities. 

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The fair value of outstanding derivative instruments is recognized on		the balance sheet as a derivative asset or liability. When derivatives		are settled with the counterparty, the derivative asset or liability is		relieved and cash flow is impacted for the net settlement. For		derivative instruments that meet the criteria of hedging instruments		under FASB guidance, the effective portions of the gain or loss on the		derivative instrument 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 or periods during which the hedged transaction is recognized in		earnings. The ineffective portion of the derivative gain or loss is		reported in the Non-operating income (expense) line item on the		Condensed Consolidated Statements of Income immediately. The gain or		loss associated with derivative instruments that are not designated as		hedging instruments or that cease to meet the criteria for hedging under		FASB guidance is also reported in the Non-operating income (expense)		line item on the Condensed Consolidated Statements of Income		immediately. 

Based on fair values as		of March 31, 2010, the Company estimates that $3.9 million of pre-tax		derivative losses deferred in Accumulated Other Comprehensive Income		(Loss) will be reclassified into earnings, along with the earnings		effects of related forecasted transactions, within the next 12 months.		Losses on foreign 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 foreign exchange contracts fluctuate partially based		on currency spot rates, the future effect on earnings of the cash flow		hedges alone is not determinable, but in conjunction with the underlying		hedged transactions, the result is expected to be a decline in currency		risk. The maximum length of time the Company had hedged its exposure to		the variability in future cash flows was 11 and 15 months as of March		31, 2010 and June 30, 2009, respectively. 

***Stock Warrants:***

In conjunction with the		Company's investment in convertible debt securities of a privately-held		company during the quarters ended March 31, 2010 and December 31, 2009,		the Company received common and preferred stock warrants which provide		the right to purchase the privately-held company's equity securities at		a specified exercise price. Specifically, the Company received stock		warrants to purchase 2,000,000 shares of common stock at a $0.15 per		share exercise price and received stock warrants to purchase a number of		shares of preferred stock based on the latest preferred stock offering		price (1,333,000 shares of preferred stock at a $1.50 per share exercise		price, based on the last offering price of outstanding preferred stock).		The value of the stock warrants will fluctuate primarily in relation to		the value of the privately-held company's underlying securities, either		providing an appreciation in value or potentially expiring with no		value. Gains and losses on the revaluation of stock warrants are		recognized in the Non-operating income (expense) line item on the		Condensed Consolidated Statements of Income. 

See				Note 7 - Fair Value of Financial Assets and Liabilities of Notes to		Condensed Consolidated Financial Statements for further information		regarding the fair value of derivative assets and liabilities and				Note 3 - Comprehensive Income (Loss) of Notes to Condensed		Consolidated Financial Statements for the amount and changes in		derivative gains and losses deferred in Accumulated Other Comprehensive		Income (Loss).

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		Information on the location and amounts of derivative fair values in the		Condensed Consolidated Balance Sheets and derivative gains and losses in		the Condensed Consolidated Statements of Income are presented below.
				Fair Values of Derivative Instruments on				the Condensed Consolidated Balance Sheets  				Asset Derivatives 				Liability Derivatives 				 				 				Fair Value As of 				 				 				Fair Value As of				(Amounts in Thousands) 				Balance Sheet Location 				March 31,				2010 				June 30,				2009 				Balance Sheet Location 				March 31,				2010 				June 30,				2009				Derivatives designated as 				hedging instruments:          				   Foreign exchange contracts 				Prepaid expenses and 				other current assets				  $ 1,662   				  $      742   				Accrued expenses 				  $    -0-   				  $ 2,581              				Derivatives not designated as 				hedging instruments:          				   Foreign exchange contracts 				Prepaid expenses and 				other current assets				  186   				  42   				Accrued expenses 				  318   				  631  				   Foreign exchange contracts      				Other liabilities (long-term) 				  -0-   				  195  				   Stock warrants 				Other assets (long-term)				  286   				  -0-        				Total derivatives   				  $ 2,134   				  $      784     				  $    318   				  $ 3,407  

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				The Effect of Derivative Instruments on				Other Comprehensive Income (Loss)              				Three Months Ended				March 31 				Nine Months Ended				March 31				(Amounts in Thousands)     				2010				 				2009 				2010				 				2009				Amount of Pre-Tax Gain or (Loss) Recognized in Other				Comprehensive 				Income (Loss) (OCI) on Derivatives (Effective Portion):				 				 				  				 				 				  				        Foreign exchange contracts   				  $    1,990   				  $  (1,135)  				  $    2,844   				  $(15,732)                                                 				The Effect of Derivative Instruments on Condensed Consolidated				Statements of Income      				(Amounts in Thousands)                  				Three Months Ended				March 31 				Nine Months Ended				March 31				Derivatives in Cash Flow Hedging Relationships				 				Location of Gain or (Loss)  				2010				 				2009 				2010				 				2009				Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated				OCI into Income (Effective Portion):				 				 				 				 				        Foreign exchange contracts 				Net Sales 				  $       -0-   				  $     (188)  				  $         12   				  $     (188) 				        Foreign exchange contracts 				Cost of Sales 				  973   				  (2,483)  				  (429)  				  (4,202) 				        Foreign exchange contracts 				Non-operating income (expense) 				  69   				  101   				  30   				  (2,030) 				        Total     				  $    1,042   				  $  (2,570)  				  $     (387)  				  $  (6,420)             				Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated				OCI into Income (Ineffective Portion):				 				 				 				 				        Foreign exchange contracts 				Non-operating income (expense) 				  $       -0-   				  $         (1)  				  $         44   				  $       144                          				Derivatives Not Designated as Hedging Instruments				 				 				 				         				Amount of Pre-Tax Gain or (Loss) Recognized in Income on				Derivatives:				 				  				 				 				 				 				 				        Foreign exchange contracts 				Non-operating income (expense) 				  $       (54)  				  $       384   				  $     (491)  				  $       384  				        Stock warrants 				Non-operating income (expense) 				  (5)  				  -0-   				  (5)  				  -0-  				        Total     				  $       (59)  				  $       384   				  $     (496)  				  $       384                          				Total Derivative Pre-Tax Gain (Loss) Recognized in Income   				  $       983   				  $  (2,187)  				  $     (839)  				  $  (5,892) 

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**Note 9.  Short-Term	Investments**

***Municipal Securities:***

The Company's short-term investment portfolio		includes available-for-sale securities which are comprised of exempt		securities issued by municipalities ("Municipal Securities") which can		be in the form of General Obligation Bonds, Revenue Bonds, Tax		Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,		pre-refunded (by U.S. Govt. or State and Local Govt.) bonds, and		short-term putable bonds. The Company's investment policy dictates that		municipal securities must be investment grade quality.

Available-for-sale securities are recorded at fair		value. See				Note 7 - Fair Value of Financial Assets and Liabilities of Notes to		Condensed Consolidated Financial Statements for more information on the		fair value of available-for-sale securities. The amortized cost basis		reflects the original purchase price, with discounts and premiums		amortized over the life of the security. Unrealized losses on debt		securities are recognized in earnings when a company has an intent to		sell or is likely to be required to sell before recovery of the loss, or		when the debt security has incurred a credit loss. Otherwise, unrealized		gains and losses are recorded net of the tax related effect as a		component of Share Owners' Equity. Municipal securities mature within a		five-year period.

				Municipal Securities    				(Amounts in Thousands) 				March 31,				2010 				June 30,				2009				Amortized cost basis 				  $   13,776   				  $   24,606  				Unrealized holding gains 				  312   				  770  				Unrealized holding losses  				  (4)  				  -0-  				Other-than-temporary impairment 				  -0-   				  -0-  				    Fair Value 				  $   14,084   				  $   25,376  			At March 31, 2010, there were no individual securities with a			material unrealized holding loss. Securities with unrealized losses have been in a continuous			loss position for less than 12 months. There were no individual			securities with an unrealized holding loss at June 30, 2009.
				Activity for the municipal securities that				were classified as available-for-sale was as follows:        				Municipal Securities 				Three Months Ended				March 31 				Nine Months Ended				March 31				(Amounts in Thousands) 				2010 				2009 				2010 				2009				Proceeds from sales 				  $       11,770   				  $         3,701   				  $       14,879   				  $         6,970  				Gross realized gains from sale of available-for-sale securities				      included in earnings 				  272   				  135   				  328   				  188  				Gross realized losses from sale of available-for-sale securities								      included in earnings 				  -0-   				  (5)  				  -0-   				  (40) 				Net unrealized holding gain (loss) included in Other 				      Comprehensive Income (Loss) 				  (90)  				  594   				  (134)  				  1,585  				Net (gains) losses reclassified out of Other 				      Comprehensive Income (Loss) 				  (272)  				  (148)  				  (328)  				  (148) 
Realized gains and losses are reported in Other			Income (Expense) category of the Condensed Consolidated Statements			of Income. The cost of each individual security was used in			computing the realized gains and losses. No other-than-temporary			impairment was recorded during the three and nine months ended March			31, 2010 and March 31, 2009.

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***Convertible Debt Securities:***

On February 1, 2010 and December 17, 2009, the			Company purchased secured convertible promissory notes from a			privately-held company with face amounts of $1.0 million for each			note. The Company has been chosen as the primary supplier for the			privately-held company to produce products in the future, and			negotiations for a definitive supply agreement are in process. The			convertible notes are accounted for as available-for-sale debt			securities and are recorded at fair value.  Interest accrues on the			debt securities at a rate of 8.00% per annum and is due with the			principal at the February 1, 2011 and December 17, 2010 maturity			dates.  The debt securities are convertible into the preferred stock			of the privately-held company upon certain events, including a			qualified financing, a nonqualified financing, initial public			offering, or a change in control.

In connection with the purchase of the debt			securities, the Company also received stock warrants to purchase the			common and preferred stock of the privately-held company at a			specified exercise price. See						Note 8 - Derivative Instruments of Notes to Condensed			Consolidated Financial Statements for further information regarding			stock warrants. 

In the aggregate, the investments, security			interest, and supply agreement do not rise to the level of a			material variable interest or a controlling interest in the			privately-held company which would require consolidation.

See						Note 7 - Fair Value of Financial Assets and Liabilities of Notes			to Condensed Consolidated Financial Statements for more information			on the fair value of available-for-sale securities.  Unrealized			losses on the debt securities will be recognized in earnings when			there is an intent to sell or is likely to be required to sell			before recovery of the loss, or when the debt securities have			incurred a credit loss. Otherwise, unrealized gains and losses are			recorded net of the tax related effect as a component of Share			Owners' Equity.

***Supplemental Employee Retirement Plan			Investments:***

The Company maintains a self-directed			supplemental employee retirement plan (SERP) for executive			employees. The SERP is structured as a rabbi trust, and therefore			assets in the SERP portfolio are subject to creditor claims in the			event of bankruptcy. The Company recognizes SERP investment assets			on the balance sheet at current fair value. A SERP liability of the			same amount is recorded on the balance sheet representing the			Company's obligation to distribute SERP funds to participants. The			SERP investment assets are classified as trading, and accordingly,			realized and unrealized gains and losses are recognized in income.			Adjustments made to revalue the SERP liability are also recognized			in income and exactly offset valuation adjustments on SERP			investment assets. The change in net unrealized holding gains and			(losses) for the nine-month periods ended March 31, 2010 and 2009			was, in thousands, $2,515 and ($3,996), respectively. SERP asset and			liability balances were as follows: 

(Amounts in Thousands) March 31,2010 June 30,2009SERP investment - current asset   $         5,220     $         3,536  SERP investment - other long-term asset   8,732     7,456      Total SERP investment   $       13,952     $       10,992      SERP obligation - current liability   $         5,220     $         3,536  SERP obligation - other long-term liability   8,732     7,456      Total SERP obligation   $       13,952     $       10,992  

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**Note 10.  AssetsHeld for Sale**

At March 31, 2010, a facility and land related to the		Gaylord, Michigan, exited operation within the EMS segment were	classified as held for sale and totaled, in thousands, $1,160. 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 year-to-date period of fiscal year 2010, the		Company sold equipment related to previously held timberlands, and the sale		had an immaterial effect on the Company's consolidated financial		statements. At June 30, 2009, the Company had, in thousands, assets		totaling $1,358 classified as held for sale.

**Note 11. Postemployment Benefits**

The Company maintains severance plans for all	domestic employees. These plans 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** **Nine Months Ended**  **March 31** **March 31** **(Amounts in Thousands)****2010** **2009** **2010** **2009** Service cost$  217  			 $  108  			 $   595  			 $ 270  			 Interest cost				122  				 46  				 				334  				 115  				 Amortization of prior service costs				71  				 71  				 				214  				 214  				 Amortization of actuarial change				310  				 169  				 				608  				 177  				 Net periodic benefit cost$ 				720  				 $				394  				 $1,751  				 $				776  				 
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 6 - 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 12.  Stock Compensation Plan**

During fiscal year 2010, the following stock		compensation was awarded to officers, key employees, and non-employee		directors. All awards were granted under the 2003 Stock Option and		Incentive Plan. For more 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, 2009.
**Performance Shares** 
**Quarter Awarded** **Maximum				Potential Shares Issuable** **Grant Date Fair Value				(4)**Annual Performance Shares - Class A				(1) 1st Quarter 240,000   $ 6.24  Long-Term Performance Shares - Class A				(2) 1st Quarter 726,350   $ 6.24  Long-Term Performance Shares - Class A				(2) 2nd Quarter 1,280   $ 7.22  Annual Performance Shares - Class A				(1) 3rd Quarter 1,167   $ 7.32  Long-Term Performance Shares - Class A				(2) 3rd Quarter 4,766   $ 7.32  
 
**Unrestricted Shares** 
**Quarter Awarded** ** Shares** **Grant Date Fair Value				(4)**Unrestricted Shares (Director Compensation) -				Class B				(3) 2nd Quarter 19,662   $ 7.63  (1)Annual performance shares were awarded to officers. Payouts				will be based upon the fiscal year 2010 cash incentive payout percentages				calculated under the Company's 2005 Profit Sharing Incentive				Bonus Plan. The				number of shares issued will be less than the maximum potential				shares issuable if the maximum cash incentive payout percentages				are not achieved. Annual performance shares vest after one year.				(2)Long-term performance shares were awarded to officers and				other key employees. Payouts will be based upon the cash				incentive payout percentages calculated under the Company's 2005				Profit Sharing Incentive Bonus Plan. 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				each annual period. The number of shares issued will be less than				the maximum potential shares issuable if the maximum cash				incentive payout percentages are not achieved. (3) Unrestricted shares were awarded to				non-employee 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. Unrestricted shares do not have vesting periods,				holding periods, restrictions on sale, or other restrictions.(4) The grant				date fair value of performance shares is based on the stock				price at the date of the award, reduced by the present value of				dividends normally paid over the vesting period which are not				payable on outstanding performance share awards. The grant date				fair value shown for long-term performance shares is applicable				to the first tranche only. The grant date fair value of the				unrestricted shares was based on the stock price at the date of				the award.
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**Item 2.  Management's Discussion and Analysis ofFinancial Condition and Results of Operations**
**Business Overview**
Kimball International, Inc. provides a		variety of products from its two business segments: the Electronic		Manufacturing Services (EMS) segment and the Furniture segment. The EMS		segment provides engineering and manufacturing services which utilize		common production and support capabilities globally to the medical,		automotive, industrial control, and public safety industries. The		Furniture segment provides furniture for the office and hospitality		industries, sold under the Company's family of brand names. 

Within both segments, most of the markets in which		the Company competes were adversely affected by the global recession and		liquidity crisis. The Company experienced declining sales and order		trends beginning in the second quarter of fiscal year 2009, but the EMS		segment open order trend has subsequently rebounded with four		consecutive quarterly increases. Open orders at March 31, 2010 were 29%		higher in the EMS segment; however, open orders were 34% lower in the		Furniture segment when compared to March 31, 2009. As compared to the		most recent quarter ending December 31, 2009, the March 31, 2010 open		orders for the EMS segment increased 16%, and the Furniture segment open		orders declined 7%.  While open orders at a point in time are not		necessarily indicative of future sales, the EMS segment improvements are		encouraging.

After experiencing 15% sales declines in calendar		year 2009, the EMS industry sales projections (by IDC, InForum, and		Electronic Trend Publications) show average forecasted growth for		calendar year 2010 of 7.2% compared to calendar year 2009. In addition,		the Semiconductor Industry Association (SIA) reported that semiconductor		sales are projected to grow approximately 10% in calendar year 2010, and		although the Company does not directly serve this market, it may be		indicative of end market demand for products utilizing electronic		components. 

 The Company continues its strategy of		diversification within the EMS segment customer base as it currently		focuses on the four key vertical markets of medical, automotive,		industrial control, and public safety. Short-term demand in the		automotive market improved during the first half of the Company's fiscal		year 2010 in conjunction with the Cash for Clunkers program. Automotive		activity in the third quarter of fiscal year 2010 remained strong with		sustained activity projected for the fourth quarter of fiscal year 2010.		Thereafter, automotive demand is expected to return to a more normal		level due to the impact of current economic conditions on durable goods		spending. Demand in the medical market has remained stable, and the		Company sees signs of growth. The industrial control vertical market is		also showing signs of stability, after benefiting from spending targeted		at energy savings technologies, and the public safety vertical market is		likewise stable. 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 of the four vertical		markets. The Company's sales to customers in the automotive industry are		diversified among more than ten domestic and foreign customers and		represented approximately 30% of the EMS segment's net sales for the		third quarter of fiscal year 2010. The amount of sales of electronic		components that relate to General Motors, Ford, and Chrysler automobiles		sold in North America were only approximately 8% of the Company's EMS		segment net sales during the third quarter of fiscal year 2010.

29

As of February 2010, the Business and Institutional		Furniture Manufacturer Association (BIFMA International) is projecting		an approximate 0.3% year-over-year decline in the office furniture		industry for calendar year 2010 after a 29% decline in calendar year		2009 with a return to positive growth expected to begin mid-calendar		year 2010. While the Company's mid-market brand has fared better than		its contract office furniture brand due to the project nature of the		contract market and the changing U.S. consumption patterns, it cannot		predict future overall office furniture order trends at this time due to		the short lead time of orders and the volatility in this market. In		addition, the hotel industry forecasts (reported by Smith Travel		Research and PricewaterhouseCoopers LLP) project occupancy rates to		increase slightly in calendar year 2010 after a 9% decline in calendar		year 2009 and project revenue per available room (RevPAR) to decline		approximately another 1% for calendar year 2010 after a 17% decline in		calendar year 2009. The Company expects order rates for hospitality		furniture to remain depressed in the near term due to the lower hotel		occupancy rates and RevPAR rates.

Competitive pricing pressures within the EMS		segment and on many projects within the Furniture segment continue to		put pressure on the Company's operating margins. 

The Company is continually assessing its strategies		in relation to the market conditions. A long-standing component of the		Company's profit sharing incentive bonus plan is that it is linked to		the performance of the Company which automatically lowers total		compensation expense when profits are down. The Company has also		implemented various initiatives in response to the market conditions		including reducing operating costs, more closely scrutinizing customer		and supply chain risk, and deferring or 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 maintain a strong balance		sheet which includes a minimal amount of long-term debt of $0.4 million		and Share Owners' equity of $386.0 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, was $152.3 million at March 31, 2010.

In addition to the above risks related to the		current market conditions, management currently considers the following		events, trends, and uncertainties to be most important to understanding		the Company's financial condition and operating performance:
- The Company will continue its focus on					preserving cash and minimizing debt. Managing working					capital in conjunction with fluctuating demand levels is					key. In addition, the Company plans to minimize capital					expenditures where appropriate but will continue to invest					in capital expenditures prudently, particularly for projects					that would enhance the Company's capabilities and					diversification while providing an opportunity for growth					and improved profitability as the economy and the Company's					markets recover.  
- While commodity prices have been					trending favorably on a year-over-year comparison basis, the					prices of steel and aluminum are expected to increase in the					near-term.  Mitigating the impact of higher commodity					and fuel prices					continues to be an area of focus within the Company.  
- Management is currently evaluating the					healthcare reform legislation that was signed into law in					March 2010 to determine the full impact on the Company. This					legislation is expected to increase the Company's healthcare					and related administrative expenses.
- Globalization continues to reshape not					only the industries in which the Company operates but also					its key customers and competitors.

30

 
- As demand within the EMS industry					increases, the availability of components used in products					manufactured by the Company is a concern.  Many suppliers					are being cautious regarding increasing their capacity and					as a result, component shortages could occur. If shortages					of components occur, the Company's production and shipment					schedules could be impacted.  
- 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. 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. While the margins vary depending on					the size of the program and the vertical market being					served, replacement programs often carry lower margins.					 
- 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. The Company's restructuring plans are					discussed in the segment discussions below.  
- The increasingly competitive					marketplace mandates that the Company continually					re-evaluate its business models.
- 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.					The Company's career development and succession planning					process helps to maintain stability in management.  
- As end markets dictate, the Company is					continually assessing under-utilized capacity and developing					plans to grow the Company's customer base and 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 complete and has reduced 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 previously had one				operation in Poznan. The Company successfully completed the move				of production from Longford, Ireland, into that existing Poznan				facility during the second quarter of fiscal year 2009. As part				of the plan, the Company is also consolidating its EMS				facilities located in Bridgend, Wales, and Poznan into a new,				larger facility in Poznan, with a projected final completion of				the consolidation by mid-fiscal year 2012. Construction of the				new, larger facility in Poland is complete and limited				production has begun. 
31

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

Certain 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.

***Financial Overview - Consolidated***

Third quarter fiscal year 2010 consolidated net sales were $282.3		million compared to third quarter fiscal year 2009 net sales of $268.9		million, a 5% increase, due to a net sales increase in the EMS segment		more than offsetting a net sales decrease in the Furniture segment. Net		income for the third quarter of fiscal year 2010 was $6.3 million, or		$0.17 per Class B diluted share, inclusive of a $7.7 million after-tax		gain, or $0.20 per Class B diluted share, related to the sale of a		facility and land in Poland, and after-tax restructuring charges of $0.6		million, or $0.01 per Class B diluted share. The third quarter fiscal		year 2010 restructuring charges were primarily related to the European		consolidation plan. The Company recorded net income for the third		quarter of fiscal year 2009 of $4.1 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. Third quarter fiscal year		2009 results also include a $13.9 million after-tax gain, or $0.37 per		Class B diluted share, related to the sale of undeveloped land holdings		and timberlands and a $9.1 million after-tax non-cash goodwill		impairment charge, or $0.24 per Class B diluted share. 

Net sales for the nine-month period ended March 31,		2010 of $832.2 million were down 11% from net sales of $936.0 million		for the same period of the prior fiscal year due to a 31% net sales		decrease in the Furniture segment more than offsetting a 7% net sales		increase in the EMS segment. Net income for the nine-month period ended		March 31, 2010 totaled $10.0 million, or $0.27 per Class B diluted		share, inclusive of a $7.7 million after-tax gain, or $0.20 per Class B		diluted share, related to the sale of a facility and land in Poland,		$2.0 million after-tax income, or $0.05 per Class B diluted share,		resulting from settlement proceeds related to an antitrust class action		lawsuit of which the Company was a class member, and $1.0 million, or		$0.03 per Class B diluted share, of after-tax restructuring costs		primarily related to the European consolidation plan. Net income for the		nine-month period ended March 31, 2009, totaled $14.5 million, or $0.39		per Class B diluted share, inclusive of $1.7 million, or $0.04 per Class		B diluted share, of after-tax restructuring costs primarily related to		the European consolidation plan. The fiscal 2009 year-to-date results		also include several non-recurring items: an $18.7 million after-tax		gain, or $0.50 per Class B diluted share, related to the sale of		undeveloped land holdings and timberlands; a $9.1 million after-tax		non-cash goodwill impairment charge, or $0.24 per Class B diluted share;		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		a termination of the contract to sell the Company's Poland facility and		land. 

32

Consolidated gross profit as a percent of net sales declined to 14.3%		for the third quarter of fiscal year 2010 from 15.8% in the third		quarter of fiscal year 2009. For the year-to-date period of fiscal year		2010, gross profit as a percent of net sales declined to 15.8% compared		to 16.8% for the year-to-date period of fiscal year 2009.  A shift in		sales mix (as depicted in the table below) toward the EMS segment which		operates at a lower gross profit percentage than the Furniture segment		contributed to the decline for the third quarter and fiscal-year-to-date		periods. The EMS segment gross profit as a percent of net sales improved		for both the third quarter and year-to-date period of fiscal year 2010. 		The Furniture segment gross profit as a percent of net sales declined in		the third quarter but improved in the year-to-date period of fiscal year		2010.  Gross profit is discussed in more detail in the segment		discussions below. 

**Segment Net Sales as a % of Consolidated**
**Three Months Ended**
**Nine Months Ended**
**Net Sales**
**March 31**
**March 31**  
**2010**
**2009**
**2010**
**2009** 
EMS segment 
				67%
				52%
				63%
				52%
Furniture segment 
				33%
				48%
				37%
				48%
Consolidated selling and administrative expense		declined as a percent of net sales for the third quarter of fiscal year		2010 as compared to the third quarter of fiscal year 2009 due to the		leverage gained with the higher sales volume.  Third quarter fiscal year		2010 consolidated selling and administrative expenses increased in		absolute dollars by 2% compared to the third quarter of fiscal year 2009		primarily due to increased incentive compensation costs at select		business units, increased severance costs due to scaling operations, and		increased costs related to the reinstatement of the Company's retirement		plan contribution for fiscal year 2010. Partially offsetting these cost		increases were lower employee salary compensation realized from the		salary reduction plan implemented by the Company late in the third		quarter of fiscal year 2009 along with lower bad debt expense. 

Consolidated selling and administrative expense		increased as a percent of net sales for the nine months ended March 31,		2010 compared to the nine months ended March 31, 2009 due to sales		volumes declining at a quicker rate than the selling and administrative		expenses. Consolidated selling and administrative expenses for the first		nine months of fiscal year 2010 declined in absolute dollars by 6%		compared to the comparable period of fiscal year 2009 primarily due to		decreased employee salary compensation, lower bad debt expense, lower		depreciation and amortization expense, and other comprehensive cost		reduction efforts throughout the Company.  The Company also experienced		increased employee benefit costs primarily related to the reinstatement		of the Company's retirement plan contribution and increased incentive		compensation costs at select business units during the fiscal 2010		year-to-date period as compared to the fiscal 2009 year-to-date period.		

In addition, in the third quarter and year-to-date		period of fiscal year 2010, the Company recorded $0.5 million and $2.6		million, respectively, of expense compared to $0.7 million and $4.1		million, respectively, of income in the third quarter and year-to-date		period of fiscal year 2009 related to the normal revaluation to fair		value of its Supplemental Employee Retirement Plan (SERP) liability. The		result for the third quarter and year-to-date period was an unfavorable		variance in selling and administrative costs of $1.3 million and $6.7		million, respectively. As the general equity markets improved, the value		of the SERP investments increased, causing additional selling and		administrative expense related to the SERP liability. The SERP expense		recorded in selling and administrative expenses was exactly offset by an		increase in SERP investment income which was recorded in Other Income		(Expense) as an investment gain; therefore, there was no effect on net		earnings. The SERP investment is primarily comprised of employee		contributions. 

33

Other General		Income in the third quarter of fiscal year 2010 included a $6.7 million		pre-tax gain within the EMS segment related to the sale of the facility		and land in Poland. The Company is leasing a portion of the facility		until it completes the transfer of production to its newly constructed		facility in Poland. In addition to the third quarter gain on the sale of		the facility and land in Poland, the fiscal 2010 year-to-date Other		General Income also included $3.3 million of pre-tax income recorded in		the EMS segment resulting from settlement proceeds related to an		antitrust class action lawsuit of which the Company was a class member.		The class action alleged the defendant sellers illegally conspired to		fix prices for electronic components purchased by a business unit within		the EMS segment. 

Other General Income in the third quarter of fiscal		year 2009 included a $23.2 million pre-tax gain on the sale of		undeveloped land holdings and timberlands. The gain on the sale of land		was included in Unallocated Corporate in segment reporting. The total		pre-tax gain on the sale of the undeveloped land holdings and		timberlands for the fiscal 2009 year-to-date period was $31.2 million.		In addition during the fiscal 2009 year-to-date period, the Company had		a conditional agreement to sell and lease back the facility that housed		its Poland operations. However, 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. 

In the prior fiscal year third quarter, the Company recorded non-cash		pre-tax goodwill impairment charges of $14.6 million as a result of		interim goodwill impairment testing which was completed during the		quarter due to the uncertainty associated with the economy and the		significant decline in the Company's sales and order trends during the		third quarter of fiscal year 2009 as well as the increased disparity		between the Company's market capitalization and the carrying value of		its Share Owners' equity. 

The Other Income (Expense) line included other income of $0.5 million		and $3.5 million during the three and nine months ended March 31, 2010,		respectively, compared to other income of $0.9 million and other expense		of $3.8 million recorded during the three and nine months ended March		31, 2009, respectively. Other Income (Expense) in the third quarter of		fiscal year 2010 included the favorable impact of the SERP appreciation		and an unfavorable impact of foreign currency movements which were		partially offset by a favorable currency impact within operating income.		The $6.7 million favorable variance in SERP investments was the primary		driver of the increased other income for the nine months ended March 31,		2010. Interest expense for the first nine months of fiscal year 2010 was		lower than the same period of fiscal year 2009 due to lower average		outstanding debt balances coupled with lower interest rates. Interest		income was likewise lower for the first nine months of fiscal year 2010		compared to the same period of fiscal year 2009 due to lower interest		rates and lower average investment balances. 

The fiscal 2010 year-to-date actual effective tax		rate was (73.3%) compared to the effective tax rate for the same period		of fiscal year 2009 of 37.0%.  Relatively low pre-tax income coupled		with a tax benefit due to a tax planning strategy related to the sale of the Poland facility and land		and a favorable impact of the Company's earnings mix drove the		significantly lower effective tax rate compared to the same period of		fiscal year 2009. The mix of earnings between U.S. and foreign		jurisdictions resulted in an overall tax benefit due to U.S. losses		which have a higher statutory tax rate than the Company's foreign		operations which were profitable in the first nine months of fiscal year		2010.

Comparing the balance sheets as of March 31, 2010		to June 30, 2009, the Company's accounts receivable balance increased		due to the higher sales volumes and due to a large customer holding		payment until early April. The Company's inventory balance as of March		31, 2010 increased from the June 30, 2009 level primarily to support the		increased EMS sales volumes and the transfer of production to the new		EMS facility in Poland from the other EMS facilities in Europe. The		Company's Accounts Payable balance increased in conjunction with the		inventory increase. The Company's Borrowings under credit facilities is		zero as of March 31, 2010 as the Company opted to pay off its short-term		debt.  

34

***Electronic Manufacturing Services Segment***

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 previously had one operation in Poznan. The		Company successfully completed the move of production from Longford,		Ireland, into that existing Poznan facility during the fiscal year 2009		second quarter. As part of the plan, the Company is also consolidating		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. Construction of		the new, larger facility in Poland is complete and limited production		has begun. The plan is being executed in stages with a projected final		completion by mid-fiscal year 2012. See				Note 6 - Restructuring Expense of Notes to Condensed Consolidated		Financial Statements for more information on restructuring charges. 

EMS segment results were as follows:
 
**At or for the				Three Months Ended**
				 
**For the				Nine Months Ended**
				  
**March 31**
				 
**March 31**
				  
				 
				 
 
**2010** 
**2009**
**% Change**
**2010** 
**2009**
**% Change**
**(Amounts in				Millions)**  
Net Sales 
				$  190.1 
				$  140.6 
				35%
				$  522.6 
				$ 490.5 
				7%
Operating				Income (Loss)
				$    10.2 
				$  (16.1)
				163%
				$   12.5 
				$  (18.2)
				169%
Net Income				(Loss) 
				$    10.8 
				$    (9.6)
				212%
				$   13.2 
				$ (11.0)
				220% 
Poland				Land/Facility Gain, net of tax
				$      7.7 
				$      0.0 
				 
				$     7.7 
				$     0.0 
				 
Goodwill				Impairment, net of tax
				 $      0.0 
				$      8.0 
				 
				$     0.0 
				$     8.0 
				 
Restructuring				Expense, net of tax
				  $      0.5 
				$      0.2 
				 
				$     1.0  
				$     1.1 
				 
Open Orders
				$  198.9 
				$  154.1 
				29%   
				 
Third quarter fiscal year 2010 EMS segment net		sales to customers in the automotive, medical, industrial control, and		public safety industries all increased compared to the third quarter of		fiscal year 2009. For the first nine months of fiscal year 2010		increased sales to customers in the automotive, medical, and industrial		control industries more than offset decreased sales to public safety		customers. While open orders increased 29% compared to March 31, 2009,		open orders at a point in time may not be indicative of future sales		trends due to the contract nature of the Company's business. 

The third quarter and year-to-date fiscal 2010 EMS		segment gross profit as a percent of net sales improved 2.9 percentage		points and 1.1 percentage points when compared to the third quarter and		year-to-date periods of fiscal year 2009, respectively. The improvements		were primarily driven by labor efficiency improvements and fixed cost		leverage associated with the increased sales. 

35

EMS segment selling and administrative expenses in		absolute dollars increased 12% in the third quarter of fiscal year 2010		and decreased 4% year-to-date in fiscal 2010.  Selling and		administrative expense as a percent of net sales declined in both the		third quarter and year-to-date period of fiscal year 2010 compared to		the same periods of fiscal year 2009 on the higher sales volumes. The		third quarter increased selling and administrative expense was primarily		related to an increase in incentive compensation costs and the		reinstatement of the Company's retirement plan contribution for fiscal		year 2010.  On a fiscal 2010 year-to-date basis the improvement was		primarily related to decreased labor expense, benefits realized from		restructuring actions, lower depreciation/amortization expense, and		other overall cost reduction efforts which were partially offset by		higher incentive compensation costs. 

EMS segment Other General Income for the three and		nine months ended March 31, 2010 included a $6.7 million pre-tax gain		from the sale of the existing Poland facility and land; including the		tax benefit related to the sale of this facility and land, the after-tax		gain was $7.7 million. In addition, Other General Income in the		year-to-date period of fiscal year 2010 included $3.3 million of pre-tax		income, or $2.0 million after-tax, resulting from settlement proceeds		related to the antitrust class action lawsuit. EMS segment Other General		Income for the fiscal 2009 year-to-date period included the $1.9 million		pre-tax, or $1.6 million after-tax, amount retained due to the buyer		being unable to close on the sale of the existing Poland facility and		land. 

The EMS segment earnings for the three and nine		months ended March 31, 2009 were also impacted by the recording of		non-cash pre-tax goodwill impairment of $12.8 million, or $8.0 million		after-tax.

As a percent of net sales, operating income was		5.3% and 2.4% for the third quarter and year-to-date period of fiscal		year 2010, respectively, and (11.5%) and (3.7%) for the third quarter		and year-to-date period of fiscal year 2009, respectively.  

EMS segment Other Income (Expense) in the third		quarter of fiscal year 2010 as compared to the third quarter of fiscal		year 2009 was unfavorably impacted by foreign currency movements which		were partially offset by a favorable currency impact within operating		income.

During the third quarter of fiscal year 2010, the EMS segment		recorded $1.0 million of tax income related to the sale of the facility		and land in Poland instead of tax expense normally associated with a		gain, due to a tax planning strategy. The fiscal year 2010 year-to-date		EMS segment income tax was also favorably impacted by $0.7 million in		favorable net tax accrual adjustments and tax benefits associated with		losses generated by U.S. EMS operations which have a higher statutory		rate than the EMS operations in foreign tax jurisdictions which		generated income.   The third quarter and year-to-date fiscal 2009 EMS		income tax was impacted by a tax benefit related to its European		operations which was primarily offset by the impact of losses in select		foreign jurisdictions which have a lower tax rate. 

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**
**Nine Months Ended** 
**March 31**
**March 31**  
**2010**
**2009**
**2010**
**2009** 
Bayer AG affiliated sales as a percent of				consolidated net sales
				16%
				14%
				15%
				12%
Bayer AG affiliated sales as a percent of				EMS segment net sales 
				23%
				26%
				24%
				23%
36

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 the EMS 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,		supplier stability, the contract nature of this industry, unexpected		integration issues with acquisitions, the concentration of sales to		large customers, and the potential for customers to choose to in-source		a greater portion of their electronics manufacturing. 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, 2009.

***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		reduced manufacturing costs and excess capacity by eliminating redundant		property and equipment, processes, and employee costs. The consolidation		is complete. See				Note 6 - 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				Nine Months Ended**
** ** 
**March 31**
** **
**March 31**
** ** 
** **
** ** 
**2010** 
**2009**
**% Change**
**2010** 
**2009**
**% Change**
**(Amounts in				Millions)**  
Net Sales 
				$    92.2  
				$ 128.2  
				(28%)
				$ 309.5  
				    $ 445.5 
				(31%)
Operating				Income (Loss)
				$    (7.2) 
				$   (1.7) 
				(323%)
				$   (6.2) 
				$     9.9 
				(163%)
Net Income				(Loss)
				$    (4.5) 
				$   (1.6) 
				(181%)
				$   (3.8)  
				$     5.6 
				(167%)
Goodwill				Impairment, net of tax
				$      0.0  
				$     1.1  
				 
				$     0.0  
				$     1.1 
				 
Restructuring				(Income) Expense, net of tax
				$      0.0  
				$     0.1  
				 
				$   (0.1)  
				$     0.4 
				 
Open Orders
				$    57.1  
				$   86.0  
				(34%)   
				 
37

The net sales decline in the Furniture segment for		the three and nine months ended March 31, 2010 compared to the same		periods of the prior fiscal year resulted from decreased net sales of		both office furniture and hospitality furniture. The decline in office		furniture sales was due to both decreased sales volumes and higher		discounting.  For the first nine months of fiscal year 2010, decreased		sales volumes of office furniture more than offset price increases net		of higher discounting when compared to the same period of fiscal year		2009. Third quarter and fiscal 2010 year-to-date sales of newly		introduced office furniture products which have been sold for less than		twelve months approximated $4.5 million and $17.1 million, respectively.		Open orders of furniture products at March 31, 2010 declined when		compared to the open orders at March 31, 2009 due to decreased open		orders for both office furniture and hospitality furniture. Open orders		at a point in time may not be indicative of future sales trends. 

Third quarter fiscal year 2010 Furniture segment		gross profit as a percent of net sales declined 1.1 percentage points as		compared to the third quarter of fiscal year 2009.  The decline was		driven by lower absorption of fixed costs associated with the lower net		sales, higher costs related to the Company's retirement plan		contribution, and increased discounting due to competitive pricing		pressures.  In addition, the favorable impact of a decrease in LIFO		inventory reserves resulting primarily from lower LIFO inventory levels		was lower in the third quarter of fiscal year 2010 as compared to the		third quarter of fiscal year 2009.  Favorable impacts to the current		year third quarter including a sales mix shift to higher margin product		and other overall cost reduction actions partially mitigated the gross		profit decline.

Year-to-date fiscal 2010 Furniture segment gross		profit as a percent of net sales improved 1.3 percentage points when		compared to the same period of fiscal year 2009. Items contributing to		the improved year-to-date gross profit as a percent of net sales		included: price increases on select product, lower commodity costs, a		sales mix shift to higher margin product, lower employee benefit costs,		and other overall cost reduction actions. In addition, the favorable		impact of a decrease in LIFO inventory reserves resulting primarily from		lower LIFO inventory levels in the fiscal-year-to-date 2010 period was		larger than the favorable impact in the fiscal-year-to-date 2009 period.		These improvements more than offset the negative impact of the lower		volumes on the gross profit percentage, increased costs related to the		reinstatement of the Company's retirement plan contribution for fiscal		year 2010, and increased discounting resulting from competitive pricing		pressures. Due to the significant decline in sales volume, the gross		profit dollars declined as compared to the year-to-date period of fiscal		year 2009. 

Third quarter and year-to-date fiscal year 2010		selling and administrative expenses decreased in absolute dollars by 9%		and 13%, respectively, but increased as a percent of net sales on the		lower sales volumes, when compared to the same periods of fiscal year		2009. The third quarter fiscal year 2010 selling and administrative		expense decline resulted from lower employee salary compensation costs		realized from past restructurings and the salary reduction plan		implemented by the Company in fiscal year 2009 and lower bad debt		expense.  Partially offsetting the lower costs were increased costs		related to the reinstatement of the Company's retirement plan		contribution and higher incentive costs at select business units and		also higher severance costs due to scaling operations.   The		year-to-date fiscal 2010 selling and administrative expense decline		results from lower labor costs realized from past restructurings and the		salary reduction plan, lower bad debt expense, and other improvements		resulting from the focus on managing all costs. Partially offsetting the		lower costs in the year-to-date period of fiscal year 2010 were		increased costs related to the reinstatement of the retirement plan		contribution and higher severance expenses due to the scaling of		operations.  

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The Furniture segment earnings for the three and		nine months ended March 31, 2009 were impacted by the recording of		non-cash pre-tax goodwill impairment of $1.8 million.

As a percent of net sales, operating income (loss)		was (7.8%) and (2.0%) for the third quarter and year-to-date period of		fiscal year 2010, respectively, and (1.3%) and 2.2% for the third		quarter and year-to-date period of fiscal year 2009, respectively.  

Risk factors within this segment include, but are		not limited to, general economic and market conditions, increased global		competition, financial stability of customers, 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, 2009.

**Liquidity and Capital Resources**

Working capital at March 31, 2010 was $186.2		million compared to working capital of $176.2 million at June 30, 2009.		The current ratio was 1.8 at both March 31, 2010 and June 30, 2009.

The Company's internal measure of Accounts		Receivable performance, also referred to as Days Sales Outstanding		(DSO), for the first nine months of fiscal year 2010 of 48.0 days		increased from the 47.2 days for the first nine months of fiscal year		2009. 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 nine months of fiscal year 2010 decreased to 62.7 days from 66.5		days for the first nine months of fiscal year 2009. Inventory levels in		the first nine months of fiscal year 2009 were unfavorably impacted by		customers delaying near-term requirements during that time period, and		the Company has since been working to align inventory levels with the		lower sales levels. The Company defines PDSOH as the average of the		monthly gross inventory divided by an average day's cost of sales.

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, totaled		$152.3 million at March 31, 2010 compared to $183.7 million at June 30,		2009. 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.

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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 $88.6 million at June		30, 2009 to $57.1 million at March 31, 2010. The Company had no		short-term borrowings as of March 31, 2010. Operating activities used		$10.5 million of cash flow in the first nine months of fiscal year 2010		compared to the $36.6 million of cash generated by operating activities		in the first nine months of fiscal year 2009. During the first nine		months of fiscal year 2010 as compared to the first nine months of		fiscal year 2009, the negative cash impact of increased accounts		receivable and inventory balances to support increased EMS sales were		partially offset by increased accounts payable. During the first nine		months of fiscal year 2010, the Company reinvested $26.6 million into		capital investments for the future, primarily for manufacturing		equipment in both segments and the new Poland facility, which is part of		the plan to consolidate the European manufacturing footprint. The		Company also had proceeds from the sale of assets of $12.3 million		 during the first nine months of fiscal year 2010 primarily related to		the sale of the Poland facility which is being replaced by the newly		constructed EMS facility also in Poland. The proceeds from the sale of		assets during the first nine months of fiscal year 2009 of $48.3 million		were primarily related to the sale of the Company's undeveloped land		holdings and timberlands. Financing cash flow activities for the first		nine months of fiscal year 2010 included $12.2 million payments on the		revolving credit facility as the Company opted to pay down the facility		to a zero balance.  The Company also had $5.4 million in dividend		payments, which was a decrease from the $17.6 million of dividends paid		during the first nine months of fiscal year 2009. The approximate 70%		decline in dividends paid was a result of reduced dividend rates		beginning in the fourth quarter of fiscal year 2009 to preserve cash.		Consistent with the Company's historical dividend policy, the Company's		Board of Directors will evaluate the appropriate dividend payment on a		quarterly basis. During the remainder of fiscal year 2010 and fiscal		year 2011, the Company expects to minimize capital expenditures where		appropriate but will continue to invest in capital expenditures		prudently, particularly for projects that would enhance the Company's		capabilities and diversification while providing an opportunity for		growth and improved profitability as the economy and the Company's		markets recover. 

At March 31, 2010, the Company had no short-term		borrowings outstanding under its $100 million credit facility described		in more detail below. The Company also has several smaller foreign		credit facilities available and likewise had no borrowings under these		facilities as of March 31, 2010. At June 30, 2009, the Company had $12.7		million of short-term borrowings outstanding.

At March 31, 2010, the Company had approximately		$4.8 million in letters of credit against the $100 million credit		facility. Total availability to borrow under the $100 million credit		facility was $95.2 million at March 31, 2010.

The Company maintains the $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 March		31, 2010.

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.

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**Covenant**
 
**At or For the Period Ended March 31, 2010**
 
**Limit As Specified in Credit Agreement**
 
**Excess**
Minimum Net Worth  
 
				$385,731,000
 
				$362,000,000
 
				$23,731,000
Interest Coverage Ratio
 
32.4
 
3.0
 
29.4
The Interest Coverage Ratio is calculated on a		rolling four-quarter basis as defined in the credit agreement.

The Company maintains a separate foreign credit		facility for its EMS segment operation in Thailand which is backed by		the $100 million revolving credit facility. In addition to the $100		million credit facility, the Company can opt to utilize foreign credit		facilities which are available to satisfy short-term cash needs at that		specific location rather than funding from intercompany sources. The		Company has a credit facility for its EMS segment operation in Poznan,		Poland, which allows for multi-currency borrowings up to 6 million Euro		equivalent (approximately $8.1 million U.S. dollars at March 31, 2010		exchange rates). These foreign credit facilities can be cancelled at any		time by either the bank or the Company. 

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 for the remainder of fiscal year 2010 and the		foreseeable future. One of the Company's sources of funds has been its		ability to generate cash from operations to meet its liquidity		obligations, which during fiscal year 2010 was hampered by lower sales		volumes and could also be adversely affected in the future 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. In		particular, 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**

During fiscal year 2010, 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 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 to value the instruments and validated		the accuracy of the instrument fair values based on historical evidence.		The Company's foreign currency 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, these 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 the		valuation of the foreign currency derivatives. 

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The Company invested in convertible promissory		notes and stock warrants of a privately-held company during fiscal year		2010 and has been chosen as the primary supplier for the privately-held		company to produce products in the future, and negotiations for a		definitive supply agreement are in process. The convertible promissory		notes, classified as available-for-sale debt securities, were valued		using a recurring market-based method which approximates fair value by		using the amortized cost basis of the promissory notes, with the		discount amortized to interest income over the term. The stock warrants,		classified as derivative instruments, were valued on a recurring basis		using a market-based method which utilizes the Black-Scholes valuation		model. The fair value measurements for the convertible promissory notes		and stock warrants were calculated using unobservable inputs and were		classified as level 3 financial assets. 

See				Note 7 - 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		fiscal year ended June 30, 2009.

**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 5 - 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.

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.

**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.

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*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.
- Sales returns and allowances - 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 March 31, 2010 and June			30, 2009, the reserve for returns and allowances was $3.1 million			and $4.4 million, respectively. The returns and allowances reserve			approximated 2% to 3% of gross trade receivables during the past two			years. 
- 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 March 31, 2010 and June 30, 2009 was $1.9			million and $3.1 million, respectively. During the preceding			two-year period, this reserve had approximated 1% of gross trade			accounts receivable except for the period March 2009 through			December 2009 during which time it approximated 2% of gross trade			accounts receivable. The higher reserve was driven by increased risk			created by deteriorating market conditions at that time.

*Excess and obsolete inventory* - Inventories were valued using		the lower of last-in, first-out (LIFO) cost or market value for		approximately 9% and 14% of consolidated inventories at March 31, 2010		and June 30, 2009, respectively, including approximately 80% and 83% of		the Furniture segment inventories at March 31, 2010 and June 30, 2009,		respectively. The remaining inventories were 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		March 31, 2010 and June 30, 2009, the Company's accrued liabilities for		self-insurance exposure were $4.4 million and $6.5 million,		respectively.

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*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 tax and other tax positions, including		accrued interest and penalties on those positions, was $3.5 million at		both March 31, 2010 and June 30, 2009.

*Goodwill*- Goodwill represents the difference between the		purchase price and the related underlying tangible and intangible net		asset fair 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 to identify potential impairment. If the estimated		fair value of the reporting unit is less than the carrying value, a		second step is performed to determine the amount of potential goodwill		impairment. If impaired, goodwill is written down to its estimated		implied fair value. Goodwill is assigned to and the fair value is tested		at the reporting unit level. The fair value is established primarily		using a discounted cash flow analysis and secondarily a market approach		utilizing current industry information. The calculation of the fair		value of the reporting units considers current market conditions		existing at the assessment date. In addition to performing the required		annual testing, the Company will continue to monitor circumstances and		events in future periods to determine whether additional goodwill		impairment testing is warranted on an interim basis. The Company can		provide no assurance that an impairment charge for the Company's		remaining goodwill balance will not occur in future periods as a result		of these analyses. At both March 31, 2010 and June 30, 2009, the		Company's goodwill, net of accumulated impairment losses, totaled $2.6		million. 

**New Accounting Standards**

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

44

**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, continuing impacts of the global 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 and		components, increased competitive pricing pressures reflecting excess		industry capacities, successful execution of restructuring plans,		changes in the regulatory environment, 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, 2009.

**Item 3.  Quantitative and Qualitative DisclosuresAbout 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" ofthe Company's Annual Report on Form 10-K for thefiscal year ended June 30, 2009.

**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 March 31, 2010, 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 March 31, 2010 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**

A share repurchase program authorized by the Board ofDirectors was announced on October 16, 2007. The program allows for the repurchase of upto two million shares of any combination of Class A and Class B shares and will remain in effect until all shares authorized havebeen repurchased. The Company did not repurchase any shares under the repurchaseprogram during the third quarter of fiscal year 2010. At March 31, 2010, twomillion shares remained available under the repurchase program.

45

**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			fiscal 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 23, 2009)

(10) Form of Employment Agreement dated March 8, 2010 between the			Company and each of Donald W. Van Winkle and Stanley C. Sapp and			dated May 1, 2006 between the Company and each of James C. Thyen,			Douglas A. Habig, Robert F. Schneider, Donald D. Charron, John H.			Kahle and Gary W. Schwartz (Incorporated by reference to Exhibit			10(c) to the Company's Form 10-Q for the period ended March 31,			2006)

(11)  Computation of Earnings Per Share

(18)  Preferability letter dated May 6, 2010 regarding			change in classification of interest and penalties on uncertain tax			positions

(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

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized. 
     KIMBALL INTERNATIONAL, INC.       By:/s/ James C. Thyen  JAMES C. THYENPresident,Chief Executive Officer  May 6, 2010             By:/s/ Robert F. Schneider  ROBERT F. SCHNEIDERExecutive Vice President, Chief Financial Officer  May 6, 2010
47

**Kimball International, Inc.Exhibit Index**
Exhibit No. Description3(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			fiscal 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 23, 2009)10 Form of Employment Agreement dated March 8, 2010 between the			Company and each of Donald W. Van Winkle and Stanley C. Sapp and			dated May 1, 2006 between the Company and each of James C. Thyen,			Douglas A. Habig, Robert F. Schneider, Donald D. Charron, John H.			Kahle and Gary W. Schwartz (Incorporated by reference to Exhibit			10(c) to the Company's Form 10-Q for the period ended March 31,			2006)11 Computation of Earnings Per Share18 Preferability letter dated May 6, 2010 regarding			change in classification of interest and penalties on uncertain tax			positions31.1 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 200231.2 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 200232.1 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 200232.2 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
48