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•	Our customer is our business. We must provide innovative products and services that excite our customers and exceed their expectations of quality, features and enduring value. We also must recognize and respond quickly and creatively to ideas of others, both internally and externally.

•	Long-term customers are more important than short-term results. We will promise only what we know can be delivered; we will strive to deliver more than was promised.

•	We seek to consistently demonstrate a sense of warmth, humor and mutual respect in our relationships with our customers, to be the company with which they most enjoy working.

•	Our people are the company. Kimball has been built upon the tradition of pride in craftsmanship, mutual trust, personal integrity, respect for dignity of the individual, a spirit of cooperation, and a sense of family and good humor. We seek to enhance this culture as we grow.

•	We cultivate a leadership style that embraces the attitudes of personal autonomy and empowerment; individual initiative and teamwork; employee involvement and continuous improvement; and open, non-defensive communication.

•	We shall foster an organizational structure, information systems and development of personal skills that maximize our peoples’ flexibility to respond to our customers on their own terms.

•	We want employees to share in their company’s success, both financially and through personal growth and fulfillment.

•	The most unfair system of all is one that blindly treats all situations the same. Therefore, we discourage rigid rules and policies in favor of a philosophy of individual responsibility and flexibility, so that real needs, rather than the rules, are met.

•	Offering ideas for improvements and new products is an opportunity we all share, a responsibility we must all accept. We seek to promote and reinforce an entrepreneurial spirit -- a conviction that growth and continuous improvement is everyone’s job.

•	We seek a diversified group of employees who can be committed to preserving and enhancing these values.

•	Suppliers are our partners, an extension of our company. They must share our commitment to total quality that exceeds our customers’ expectations.

•	The environment is our home. We will be leaders in not only protecting but enhancing our world.

•	Recognizing that an attitude of pride in the company and the community are intertwined, we seek to share, but not impose, our values within the communities in which we live. We also strive to help our communities be great places to live.

•	We believe the greatest contribution we can make to the prosperity and quality of life of the communities in which we operate lies in being a dynamic, growing company.

•	Profits are the ultimate measure of how efficiently and effectively we serve our customers and are the only true source of long-term job security.

•	Profitability and financial resources give us the freedom to shape our future and achieve our vision.

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•	Maintain alignment with our long-term strategic plan.

•	Deliver on our long term targets and key initiatives.

•	Better align ourselves with our key stakeholders by working diligently to achieve our growth and return on invested capital goals to create greater value for you as a Share Owner.

•	Be an employer of choice - success shown by rising employee satisfaction scores in our guiding principles surveys.

•	Build strong customer relationships - success shown in our customer loyalty metrics where we again increased the number of customers as well as the percentage of our sales that came from customers that we have been doing business with for over 10 years.

•	Deliver excellent service - success shown as we were again recognized by Circuits Assembly after a survey of our customers, for being among the best in our industry in customer satisfaction in 2015.

•	Make investments that will drive future growth in sales and profits - success shown in a number of initiatives:

◦	Continued to deploy new capital ($35 million) largely to support our significant new business awards and our European capacity expansion in Romania.

◦	Added strategic new accounts.

◦	Expanded our package of value with the Medivative and Aircom (July 2016) acquisitions which adds capabilities in mechanical design, plastic injection molding, and metal fabrication, positioning us well to take advantage of the growth opportunities in new and exciting product categories in the medical and biosciences markets.

◦	Returned $13 million to our shareholders by repurchasing 1.2 million shares of our common stock.

•	Consolidated net sales - $842.1 million - 3% increase over last fiscal year, with performance in our end market verticals:

◦	Automotive - up 9% on increases in all markets and new product awards.

◦	Industrial - down 7%.

◦	Medical - up 3% on increased demand and launch of next generation product.

◦	Public Safety - flat.

•	Operating income - 3.5%, below our goal of 4.0%. The startup costs associated with our greenfield expansion in Romania combined with the significant number of new program launches placed added pressure on our operating margins. Expanding our operating margins will continue to be a priority of focus for us in fiscal year 2017.

•	Consolidated net income - $22.3 million or $0.76 per diluted share.

•	Operating cash flow - $37 million, up from $28 million in fiscal year 2015.

•	Net cash - $46 million, despite significant capital expenditures, share repurchases, and an acquisition.

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•	Financial - for evaluation of financial performance, capital investments, and capital structure.

•	International - for evaluation of global operations and expansion.

•	Technology - for evaluation of technology investments and cyber-security risks.

•	Operations - for evaluation of our manufacturing operating plans and strategies.

•	Human Resources - for evaluation of our human capital resources, needs and compensation programs.

•	Public Company Experience - for evaluation of corporate governance policies, regulatory structures and Share Owner relations.

•	Marketing - for evaluation of our business development, customer relationships, and end-market strategies.

•	Risk Management - for evaluation of our business risks and mitigation strategies.

•	Leadership - for evaluation of management leadership and succession planning.

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•	Value Preservation — recognizing and mitigating as much as possible the risk of potential for loss or harm to any element of our business.

•	Value Creation — embracing the risks inherent in any business endeavor in order to reap the rewards of growth and profitability.

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(1)

Represents fees paid during fiscal year 2016, and includes the following amount of shares for which the director elected to receive Common Stock in lieu of cash: Mr. Curtis 3,429, Mr. Lampert 5,440, Ms. Repplier 3,429, Mr. Stringer 7,770, Mr. Tischhauser 1,372, and Ms. Vujovich 3,886. These shares were valued using the per share price of $10.94, the market value for such shares on November 10, 2015. The value of the shares elected to be received for each director amounted to: Mr. Curtis $37,510, Mr. Lampert $59,510, Ms. Repplier $37,510, Mr. Stringer $85,000, Mr. Tischhauser $15,006, and Ms. Vujovich $42,509.

(2)	Represents the value of the unrestricted Common Stock awards granted during the year which amounted to 3,656 shares for each non-employee director using the per share price of $10.94, the market value for such shares on November 10, 2015.

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(a)	Audit fees includes fees and out of pocket expenses paid, or expected to be paid, for the audit of the annual consolidated financial statements and for the statutory audits of international subsidiaries.

(b)	Audit-related fees consist primarily of fees paid, or expected to be paid, for the audit of various benefit plans.

(c)	Consists of fees paid for tax compliance and related tax services.

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(1)	Stock awards consist of performance shares and unrestricted shares:

•

The compensation reported in the above table represents targeted performance share compensation for each of our NEOs, which does not reflect compensation actually received or earned by the NEOs in the respective years. The amounts included above represent the value at the grant date based upon the probable outcome of the performance conditions, which is estimated based on a payout at the target (Tier 4) level, or 40% of the maximum award opportunity for Annual Performance Shares (“APS”) and 100% of the maximum award opportunity for Long-Term Performance Shares (“LTPS”).

•

In June 2014, former Parent changed its grant timing policy to grant performance shares in June. The prior policy granted performance shares in August. The new grant timing was intended to inform participants of their awards for the fiscal year 2015 performance period at or near the beginning of that fiscal year. However, this transition artificially increased the amounts reported in the “Stock Awards” column in 2014 by including awards from two separate annual grant cycles. For example, for Mr. Charron, the amount included in the “Stock Awards” column for fiscal year 2014 included performance shares granted in August 2013 for the fiscal year 2014 performance period with a grant date fair value of $372,385 and also included the performance shares granted in June 2014 for the fiscal year 2015 performance period with a grant date fair value of $414,382.

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The grant date fair value of the maximum number of performance shares that could have been earned in fiscal year 2016 was $741,365 for Mr. Charron, $564,290 for Mr. Kahle, $158,035 for Mr. Korn, $153,224 for Mr. Sergesketter, and $153,784 for Mr. Thyen. The grant date fair value of the maximum number of performance shares that could have been earned in fiscal year 2015 was $466,666 for Mr. Charron, $476,479 for Mr. Kahle, $191,479 for Mr. Korn, $169,609 for Mr. Sergesketter, and $173,511 for Mr. Thyen. The grant date fair value of the maximum number of shares that could have been earned in fiscal year 2014 was $422,110 for Mr. Charron, $428,740 for Mr. Kahle, and $103,870 for each of Messrs. Korn, Sergesketter, and Thyen. The aforementioned amounts exclude the performance shares granted in June 2014 because the fiscal year 2015 performance period had not yet begun, and thus could not have been earned during fiscal year 2014.

•	The assumptions used to calculate the grant date fair values are set forth in Note 9 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016.

(2)	Amounts consist of cash incentive compensation earned for services rendered in the applicable fiscal year. The amounts are paid in five installments over the succeeding fiscal year, pursuant to the Incentive Bonus Plan, with 50% payable in August and 12.5% payable in each of the following months of September, January, April, and June.

(3)

Includes benefits received by the NEOs from executive financial services programs, supplemental medical reimbursement, the value of the services and related benefits provided pursuant to the Executive Preventive Healthcare Program, Company or former Parent contributions earned for the Retirement Plans and SERP plans, and de minimus Christmas bonus and life insurance premiums paid by the Company or former Parent. SERP and Retirement Plan Company contribution amounts earned for fiscal year 2016 for Messrs. Charron, Kahle, Korn, Sergesketter, and Thyen were $31,395, $19,333, $14,110, $13,016, and $13,014, respectively.

(a)	Three remaining annual vesting dates beginning 8/18/2017

(b)	Three remaining annual vesting dates beginning 8/19/2016

(c)	Four remaining annual vesting dates beginning 8/19/2016

(d)	Three remaining annual vesting dates beginning 8/19/2016

(e)	Two remaining annual vesting dates beginning 8/19/2016

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(i)	base salary through the date of termination of employment;

(ii)	any deferred and unpaid cash incentive amounts due for the immediately preceding fiscal year and a prorated amount of the target cash incentive for the cash incentive period in which the executive’s last day of employment occurs;

(iii)

(a) unless the executive’s termination occurs during the one-year period before a Change in Control (as defined below) of the Company or during the two-year period following a Change in Control, severance pay equal to the sum of the executive’s annual base salary at the highest rate in effect during the three years immediately preceding the last day of employment and the higher of either the executive’s target cash incentive for the period in which the last day of employment occurs or the executive’s average annual cash incentive award for the three annual cash incentive periods immediately preceding the last day of employment, plus a reimbursement payment of $50,000 (subject to cost-of-living adjustment) in lieu of continued welfare and fringe benefits; or

(iv)	reimbursement for up to $25,000 of the costs of outplacement services during the first twelve months following the termination date;

(v)	a payment in cash, shares or a combination thereof at the Company’s discretion, in each case equal to the intrinsic value at the termination date of all options and stock appreciation rights, and the fair market value of restricted stock, performance shares, and performance units, all of which will become fully vested; and

(vi)	payment of all SERP benefit amounts, which will become fully vested.

•	the executive’s willful and continued failure to perform substantially the duties of executive’s position or to follow lawful instructions of a senior executive or the Board that continues for five days after the executive receives written notice identifying such failure;

•	the executive’s conviction of a felony or of another crime that reflects adversely on the Company;

•	the executive’s engaging in fraudulent or dishonest conduct, gross misconduct that is injurious to the Company, or any misconduct that involves moral turpitude; or

•	the executive’s material breach of his obligations under the employment agreement.

•	a material adverse change in the nature or scope of the executive’s responsibilities;

•	a reduction in the executive’s salary rate or target cash incentive amount;

•	a reduction of 5% or more in the aggregate benefits provided to the executive and his dependents under the Company’s employee benefit plans;

•	a significant diminution in the executive’s position, authority, duties or responsibilities;

•	a relocation of the executive’s principal site of employment to a location more than fifty (50) miles from the principal site of employment; or

•	failure by the Company to obtain an assumption agreement regarding the executive’s employment agreement from any successor of the Company.

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•

the acquisition, by any one person or more than one person acting as a group, of ownership interests representing more than 50% of the total fair market value or of the total voting power of all ownership interests (the “Majority Ownership”) of the Company, any affiliate of the Company that employs the executive, any entity that has a Majority Ownership of either the Company or such affiliate, or any entity in an uninterrupted chain of Majority Ownership culminating in the ownership of the Company or such affiliate (each, a “Relevant Company”) through merger, consolidation, or stock transfer;

•	the acquisition during any 12-month period, by any one person or more than one person acting as a group, of ownership interests in a Relevant Company possessing 35% or more of the total voting power of all ownership interests in the Relevant Company;

•	the acquisition of ownership during any 12-month period, by any one person or more than one person acting as a group, of 40% or more of the total gross fair market value of the assets of a Relevant Company; or

•

the replacement of a majority of members of the Board during any 12-month period, by members whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; provided, however, that any occurrence that does not constitute a change in the ownership or effective control, or in the ownership of a substantial portion of the assets, of a Relevant Entity within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code and its interpretive regulations does not constitute a “Change in Control.”

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(1)	Consists of 801,898 performance share awards. The number of performance shares assumes the maximum number of shares which the participant is eligible to receive if applicable profitability levels are achieved.

(2)	There is no exercise price for performance share awards.

(3)	Represents the number of shares remaining available for issuance under the 2014 Plan after subtracting the maximum number of performance shares which participants are eligible to receive if applicable profitability levels are achieved.

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(a)	Based upon information obtained from the executive officers, directors, and beneficial owners (according to the definition of “beneficial ownership” under the regulations of the SEC). On August 8, 2016, there were outstanding 28,170,318 shares of Common Stock.

(b)

The “Sole Voting and Investment Power” column includes shares owned by the spouses living in the households of the individuals listed. The “Shared Voting and Investment Power” column includes shares held by limited partnerships, foundations, and trusts over which listed individuals have shared voting and investment power. Beneficial ownership is disclaimed as to such shares and as to all other shares over which the named person does not have full beneficial rights.

(c)

Shares include performance shares which are receivable as of August 8, 2016, as follows: Donald D. Charron 50,226 shares; John H. Kahle 38,229 shares; Steven T. Korn 10,707 shares; Michael K. Sergesketter 10,381 shares; Christopher J. Thyen 10,419 shares and all executive officers and directors, as a group 149,805 shares. These share amounts have not been reduced by the following shares withheld to satisfy tax withholding obligations upon their vesting on August 19, 2016: Donald D. Charron 15,896 shares; John H. Kahle 12,099 shares; Steven T. Korn 3,389 shares; Michael K. Sergesketter 3,286 shares and Christopher J. Thyen 3,298 shares. The percentage of shares owned by each person, or group, is determined by including in the number of shares outstanding, those performance shares issuable to such person or group as of August 8, 2016.

(d)	Totals are under one percent of the outstanding shares.

(e)

This information is derived from the Schedule 13G/A filed by such Share Owner with the SEC on February 9, 2016, indicating beneficial ownership as of December 31, 2015. The Share Owner reports that it has the sole power to vote or direct the vote of 1,883,662 shares and the sole power to dispose or direct the disposition of 1,945,632 shares but also notes that it is an investment advisor registered under the Investment Advisors Act of 1940 and furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an advisor or sub-advisor to certain Funds. In its role as investment advisor, sub-advisor and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) possess voting and/or investment power over the securities of the Company that are owned by the Funds, and may be deemed to be the beneficial owner of the Company’s shares held by the Funds. However, all of the Company’s shares are owned by the Funds. Dimensional disclaims beneficial ownership of such securities.

(f)

This information is derived from the Schedule 13G filed by such Share Owner with the SEC on January 28, 2016, indicating beneficial ownership as of December 31, 2015. The Share Owner reports that it has the sole power to vote or direct the vote of 1,507,040 shares and the sole power to dispose or direct the disposition of 1,567,633 shares but also notes that various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Company’s shares and that no one person’s interest in the Company’s shares is more than 5% of the total outstanding shares of the Company. BlackRock, Inc. reports that the following of its subsidiaries acquired the shares: BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Schweiz AG, BlackRock Fund Advisors, and BlackRock Institutional Trust Company, N.A., and BlackRock Investment Management, LLC.

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