Kimball International: Automotive, industry up; medicine down

Fiscal year 2012 fourth quarter net sales in the EMS segment increased 1% compared to the fourth quarter of the prior year as increased net sales to customers in the automotive and industrial markets more than offset a decline in net sales to customers in the medical industry. The comparison to prior year for the automotive industry was aided by the unfavorable impact that the Japan earthquake had on sales to automotive customers in the fourth quarter of last year. The decline in net sales to the medical industry primarily resulted from the previously announced expiration of a contract with one large customer late in fiscal year 2011 which accounted for a $10.5 million reduction in net sales in the current year fourth quarter compared to the fourth quarter of the prior year. Excluding sales to this customer, current year fourth quarter net sales in the EMS segment increased 8% compared to the prior year. Gross profit as a percent of net sales in the EMS segment for the fourth quarter of fiscal year 2012 improved 2.0 percentage points when compared to the fourth quarter of the prior year primarily related to benefits realized related to restructuring activities in which two facilities were closed during the second quarter of fiscal year 2012, increased labor efficiencies at select facilities, and a sales mix shift to higher margin product. Selling and administrative costs in this segment declined 12% in the fiscal year 2012 fourth quarter when compared to the prior year as benefits realized from the restructuring activities were partially offset by increased profit-based incentive compensation costs. As a percent of net sales, selling and administrative costs declined 1.1 percentage points.