JASPER — Kimball International (NASDAQ: KBALB) today reported net sales of $336.8 million and net income of $7.8 million, or 20 cents per Class B diluted share, for the fourth quarter of fiscal year 2014, which ended June 30.
Consolidated net sales in the fourth quarter of fiscal year 2014 increased 6 percent from the fourth quarter of fiscal year 2013 on increased net sales in both the electronic manufacturing services segment and the furniture segment.
Fourth-quarter gross profit as a percent of net sales increased 1.4 percentage points from the fourth quarter of the prior year on improved margins in both the electronic manufacturing services segment and the furniture segment.
Consolidated selling and administrative expenses in the fourth quarter of fiscal year 2014 increased 9 percent in absolute dollars compared to the prior year partially because of higher profit-based incentive compensation costs and higher salary and employee benefit costs. Selling and administrative expenses in the fourth quarter of fiscal year 2014 also included $2 million of incremental costs related to the spin-off of the company’s electronic manufacturing services segment. In addition, the company recorded $700,000 of expense in the fourth quarter of fiscal year 2014 related to the normal revaluation to fair value of its Supplemental Employee Retirement Plan liability compared to less than $100,000 of expense in the fourth quarter of the prior fiscal year. This expense related to the change in the Supplemental Employee Retirement Plan liability is offset with income related to the revaluation of the plan’s investment which was recorded within other income/expense, so there was no effect on net income. Partially offsetting these higher costs was a $1.7 million pre-tax gain recognized on the sale of an idle facility in the furniture segment during the fourth quarter of fiscal year 2014.
Other income/expense was income of $200,000 for the fourth quarter of fiscal year 2014 compared to income of $700,000 for the fourth quarter of the prior year.
The company’s effective tax rate for the fourth quarter of fiscal year 2014 of 25.2 percent was favorably impacted by a higher mix of earnings in foreign jurisdictions which carry a lower tax rate than the U.S. The effect of $1.1 million of favorable state tax accrual adjustments during the fourth quarter of fiscal year 2014 was offset by the negative effect of the non-deductible nature of specific spin-off related costs. The prior year fourth quarter effective tax rate of 2.4 percent was favorably impacted by a higher mix of earnings from foreign jurisdictions with lower tax rates and by favorable state and other tax accrual adjustments.
Operating cash flow for the fourth quarter of fiscal year 2014 was $5 million compared to $22.5 million in the fourth quarter of the prior year.
The company’s cash and cash equivalents increased to $136.6 million at June 30, 2014, compared to $103.6 million at June 30, 2013. The company had no short-term borrowings outstanding at June 30, 2014 or June 30, 2013. Long-term debt including current maturities was less than $300,000 at June 30, 2014.
Fiscal year 2014 annual consolidated net sales of $1.3 billion increased 7 percent from fiscal year 2013 net sales of $1.2 billion. Net income for fiscal year 2014 was $33.5 million, or $0.86 per Class B diluted share. Net income for fiscal year 2013 was $19.9 million, or $0.52 per Class B diluted share. Operating cash flow for fiscal year 2014 was $69.9 million compared to $63.9 million in the prior fiscal year.
“Fiscal year 2014 was a pivotal year for our furniture segment,” company CEO and president James C. Thyen said, “It was important for us to deliver on our commitment for this fiscal year to improve financial performance and increase our focus on providing innovative products and an exceptional customer experience. The efforts of our entire Furniture team resulted in margin improvement in both the fourth quarter and the fiscal year. Our new product introductions during the year have been very well received in the market and position us well as we move into fiscal year 2015.
“The automotive, industrial and medical markets we serve within our EMS segment remain strong. The EMS segment ended the fiscal year with solid performance in the fourth quarter, with increased volume and operating income of 4.5 percent. We anticipate the planned spin-off of the EMS segment will be complete around the end of October 2014.”
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