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Electronics Production | February 08, 2011

Kimball: 2Q EMS net sales increased 9% YoY

Fiscal year 2011 second quarter net sales in the EMS segment increased 9% over the second quarter of the prior year with increased sales to customers in the medical, industrial control and public safety industries, reports US-based Kimball Electronics.
Second quarter net sales to customers in the automotive industry declined compared to the prior year, which was aided by the government stimulus programs. Compared to the fiscal year 2011 first quarter, current year second quarter net sales increased 2% on growth in the medical and automotive markets.

Gross profit as a percent of net sales in the EMS segment for the second quarter of fiscal year 2011 remained flat when compared to the second quarter of the prior year as the benefit from increased fixed cost absorption resulting from the higher sales levels and improved labor efficiencies at select units were offset by anticipated start-up costs and tighter margins associated with select new customer programs and inefficiencies related to the European restructuring activities.

Selling and administrative costs in this segment increased 6% in the fiscal year 2011 second quarter when compared to the prior year partially related to increased labor and employee benefit costs. In addition, the second quarter of the prior fiscal year was aided by a favorable adjustment to bad debt reserves. As a percent of sales, selling and administrative costs were flat in the current year second quarter when compared to the prior year.

The EMS segment recorded pre-tax Other General Income of USD 3.3 million, or USD 2.0 million after-tax, in the prior year second quarter resulting from settlement proceeds received related to an antitrust class action lawsuit of which the Company was a member. The EMS segment did not have any Other General Income in the current year second quarter.

Other Income/Expense in the EMS segment for the second quarter of fiscal year 2011 was expense of USD 1.0 million compared to income of USD 0.2 million in the prior year second quarter. The unfavorable variance from the prior year was primarily related to foreign currency exchange movement.

The EMS segment recorded USD 0.4 million of favorable net tax accrual adjustments during the second quarter of fiscal year 2011 compared to USD 0.7 million in the prior year, with both years primarily related to the research and development tax credit and a foreign deferred tax valuation allowance adjustment

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