|(Amounts in Thousands, Except Per Share Data)|
|Three Months Ended|
|December 31, 2012||December 31, 2011||Percent Change|
|Gross Profit %||18.7||%||18.3||%|
|Selling and Administrative Expenses||$||49,006||$||48,597||1||%|
|Selling and Administrative Expenses %||16.6||%||16.4||%|
|Operating Income %||2.1||%||1.4||%|
|Adjusted Operating Income *||$||6,151||$||5,723||7||%|
|Adjusted Operating Income % *||2.1||%||1.9||%|
|Adjusted Net Income *||$||4,198||$||4,087||3||%|
|Earnings Per Class B Diluted Share||$||0.11||$||0.09||22||%|
|Adjusted Earnings Per Class B Diluted Share *||$||0.11||$||0.11||0||%|
|* Items indicated represent Non-GAAP measurements. See "Reconciliation of Non-GAAP Financial Measures" below.|
- Consolidated net sales in the second quarter of fiscal year 2013 decreased 1% from the prior year second quarter as increased net sales in the Electronic Manufacturing Services (EMS) segment were more than offset by lower net sales in the Furniture segment. The Furniture segment saw growth in several market verticals offset by a double digit decline in office furniture sales to the federal government and a decline in hospitality furniture sales due to the prior year including sales from two unusually large projects.
- Second quarter gross profit as a percent of net sales improved 0.4 percentage points from the prior year second quarter on improved margins in both the EMS segment and the Furniture segment. The Company recorded a $1.1 million inventory reserve in the EMS segment in the second quarter of fiscal year 2013 relating to a customer that notified the Company they are going out of business. Sales to this customer were immaterial.
- Consolidated second quarter selling and administrative expenses increased 1% compared to the prior year. Lower sales and marketing costs and lower commissions related to the volume declines in the Furniture segment were more than offset by increased incentive compensation costs.
- Other Income/Expense for the second quarter of fiscal year 2013 was expense of $1.4 million compared to income of $1.4 million in the prior year second quarter. During the current year second quarter, the Company recorded a non-cash pre-tax impairment charge of $1.5 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 second quarter of fiscal year 2013 was 12.3% compared to 43.8% in the prior year second quarter. The current year effective tax rate was favorably impacted by the mix of earnings between U.S. and foreign jurisdictions as the Company had a greater share of income from foreign operations with lower tax rates.
- Operating cash flow for the second quarter of fiscal year 2013 was a cash inflow of $20.5 million compared to an operating cash inflow of $7.8 million in the second quarter of the prior year.
- The Company's cash and cash equivalents increased to $88.1 million at December 31, 2012, compared to $75.2 million at June 30, 2012. The Company had no short-term borrowings outstanding at December 31, 2012 or June 30, 2012. Long-term debt including current maturities remains at less than $0.3 million.