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Kimball International, Inc. reports 4th quarter and fiscal year 2013 results

Friday 2 August 2013

Kimball International, Inc.to day reported net sales of $318.3 million and net income of $7.1 million, or $0.18 per Class B diluted share, for the fourth quarter of fiscal year 2013 which ended June 30, 2013.

• Consolidated net sales in the fourth quarter of fiscal year 2013 increased 10% from the prior year fourth quarter on increased net sales in the Electronic Manufacturing Services (EMS) segment.
• Fourth quarter gross profit as a percent of net sales declined 1.3 percentage points from the prior year fourth quarter as the impact of lower margins in the Furniture segment more than offset improved margins in the EMS segment. A sales mix shift toward the EMS segment which carries a lower gross profit percent than the Furniture segment also negatively impacted the consolidated gross profit percent.
• Consolidated fourth quarter selling and administrative expenses increased 15% in absolute dollars compared to the prior year. The increased costs were primarily due to higher employee incentive compensation costs, higher sales and marketing costs related to growth initiatives, and an allowance recorded for notes receivable.
• Other Income/Expense for the fourth quarter of fiscal year 2013 was income of $0.7 million compared to expense of $2.1 million in the fourth quarter of the prior year. The variance in Other Income/Expense was partially driven by favorable foreign exchange movement that impacted the EMS segment. In addition, the prior year fourth quarter included a pre-tax impairment charge of $1.2 million on an investment in non-marketable equity securities and stock warrants of a privately-held company.
• The Company's effective tax rate for the fourth quarter of fiscal year 2013 was 2.4% compared to 33.0% in the prior year fourth quarter. The current year fourth quarter effective tax rate was favorably impacted by a higher mix of earnings from foreign jurisdictions with lower tax rates and by favorable state tax accrual adjustments. Also the actual annual effective tax rate for fiscal year 2013 ended lower than what the Company estimated at the end of the third quarter which resulted in a favorable year-to-date adjustment in the fourth quarter of fiscal year 2013.
• Operating cash flow for the fourth quarter of fiscal year 2013 was cash inflow of $22.5 million compared to $29.0 million in the fourth quarter of the prior year.
• The Company's cash and cash equivalents increased to $103.6 million at June 30, 2013, compared to $75.2 million at June 30, 2012. Long-term debt including current maturities remained at $0.3 million.
Fiscal year 2013 annual consolidated net sales of $1.2 billion increased 5% from fiscal year 2012 net sales of $1.1 billion. Net income for fiscal year 2013 was $19.9 million, or $0.52 per Class B diluted share, inclusive of $0.3 million, or $0.01 per Class B diluted share, of after-tax restructuring expense. Net income for fiscal year 2012 was $11.6 million, or $0.31 per Class B diluted share, inclusive of $2.1 million, or $0.06 per Class B diluted share, of after-tax restructuring expense. Operating cash flow for fiscal year 2013 was $63.9 million compared to $59.0 million in the prior fiscal year.
James C. Thyen, President and Chief Executive Officer, stated, "One of the top priorities for our EMS segment coming into fiscal year 2013 was growth and diversification of our customer base. The team's intense focus throughout the year resulted in extraordinary execution around this strategy as evidenced by a 17% sales increase in the EMS segment for the fourth quarter when compared to last year. The growth came from both existing customers and new customers and within all four of the vertical markets in which we compete. We are pleased with the accomplishments our EMS team achieved over the past year and look forward to continued success in fiscal year 2014."
Mr. Thyen concluded, "We ended the fiscal year 2013 fourth quarter with an operating loss in the Furniture segment primarily due to a mix of lower margin projects and higher freight costs. Moving beyond these events, our continued focus in fiscal year 2014 will be profitable

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