Gross profit as a percent of net sales in the EMS segment for the second quarter of fiscal year 2010 improved over the second quarter of the prior year primarily due to improved labor efficiencies at select units and a reduction of overhead costs.

Selling and administrative costs in this segment declined 4% in the second quarter when compared to the prior year primarily related to benefits realized from the salary reduction plan implemented by the Company in fiscal year 2009, lower bad debt expense, and other overall cost reduction efforts. Partially offsetting these declines were increased profit-based incentive compensation costs.

The EMS segment recorded $0.7 million of favorable net tax accrual adjustments during the second quarter of fiscal year 2010. In the second quarter of fiscal year 2009, the EMS segment recorded a $0.8 million tax benefit related to its European operations and $0.3 million of favorable net tax accrual adjustments.



The previously mentioned $2.0 million of after-tax income in the fiscal year 2010 second quarter resulting from settlement proceeds related to the antitrust class action lawsuit of which the Company was a member was recorded in the EMS segment.

Net income in the EMS segment in the prior fiscal year second quarter included $1.6 million after-tax income for advance funds retained by the Company resulting from the termination of the contract to sell the Company’s Poland building and real estate due to the buyer’s inability to close the transaction.