JASPER, IN -- Kimball International reported fiscal second-quarter net sales in its electronic manufacturing services segment plunged 18% from a year ago due to the end of a major program with a medical customer.

The contract assembler saw a contract with Bayer expire late in fiscal 2011, which reduced net sales in the current quarter by $36.6 million. Excluding sales to Bayer, sales increased 8% year-over-year.

Overall net sales fell 4% to $296.9 million, while net income jumped 265% to $3.2 million for the period ended Dec. 31.

Second-quarter EMS sales rose 4% sequentially on higher demand in the medical and automotive markets. Gross profit as a percent of net sales improved 1.2 percentage points on a shift to higher margin product.

Chief executive and president James C. Thyen said, "We made great strides in both of our segments in the second quarter. In the EMS segment, we completed the exit of our Wales UK facility and our Fremont, CA, facility as final production ceased in both facilities in November. Second quarter earnings in the EMS segment were favorably impacted by cost benefits realized in conjunction with these closures."

The company's outlook remains guarded in light of persistent global economic challenges, noting trade industry forecasts have shown a declining trend from previous forecasts."