Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Mar. 28, 2014 | Apr. 28, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'TWIN DISC INC | ' |
Entity Central Index Key | '0000100378 | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 11,264,873 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 28-Mar-14 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Mar. 28, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash | $26,360 | $20,724 |
Trade accounts receivable, net | 33,489 | 46,331 |
Inventories, net | 105,049 | 102,774 |
Deferred income taxes | 5,221 | 5,280 |
Other | 13,055 | 13,363 |
Total current assets | 183,174 | 188,472 |
Property, plant and equipment, net | 60,986 | 62,315 |
Goodwill, net | 13,526 | 13,232 |
Deferred income taxes | 6,322 | 7,614 |
Intangible assets, net | 2,947 | 3,149 |
Other assets | 8,891 | 10,676 |
Total assets | 275,846 | 285,458 |
Current liabilities: | ' | ' |
Short-term borrowings and current maturities of long-term debt | 3,625 | 3,681 |
Accounts payable | 19,665 | 20,651 |
Accrued liabilities | 32,496 | 39,171 |
Total current liabilities | 55,786 | 63,503 |
Long-term debt | 21,422 | 23,472 |
Accrued retirement benefits | 45,803 | 48,290 |
Deferred income taxes | 2,589 | 2,925 |
Other long-term liabilities | 3,881 | 3,706 |
Total liabilities | 129,481 | 141,896 |
Commitments and contingencies (Note D) | ' | ' |
Twin Disc shareholders' equity: | ' | ' |
Preferred shares authorized: 200,000; issued: none; no par value | 0 | 0 |
Common shares authorized: 30,000,000; issued: 13,099,468; no par value | 11,676 | 13,183 |
Retained earnings | 182,385 | 184,110 |
Accumulated other comprehensive loss | -20,256 | -25,899 |
Shareholders' equity before treasury stock | 173,805 | 171,394 |
Less treasury stock, at cost (1,834,595 and 1,886,516 shares, respectively) | 28,095 | 28,890 |
Total Twin Disc shareholders' equity | 145,710 | 142,504 |
Noncontrolling interest | 655 | 1,058 |
Total equity | 146,365 | 143,562 |
Total liabilities and equity | $275,846 | $285,458 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) | Mar. 28, 2014 | Jun. 30, 2013 |
Twin Disc shareholders' equity: | ' | ' |
Preferred Stock, Shares Authorized (in shares) | 200,000 | 200,000 |
Preferred Stock, Shares Issued (in shares) | 0 | 0 |
Preferred Stock, No Par Value (in dollars per share) | $0 | $0 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 13,099,468 | 13,099,468 |
Common stock, no par value (in dollars per share) | $0 | $0 |
Treasury stock, shares (in shares) | 1,834,595 | 1,886,516 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract] | ' | ' | ' | ' |
Net sales | $60,705 | $68,232 | $190,343 | $209,351 |
Cost of goods sold | 44,177 | 50,558 | 134,604 | 149,949 |
Gross profit | 16,528 | 17,674 | 55,739 | 59,402 |
Marketing, engineering and administrative expenses | 16,870 | 17,405 | 49,572 | 50,795 |
Restructuring of operations | 0 | 0 | 1,094 | 0 |
(Loss) earnings from operations | -342 | 269 | 5,073 | 8,607 |
Interest expense | 220 | 366 | 697 | 1,001 |
Other (income) expense, net | 68 | -129 | -85 | -24 |
Other income (expense) total | 288 | 237 | 612 | 977 |
(Loss) earnings before income taxes and noncontrolling interest | -630 | 32 | 4,461 | 7,630 |
Income taxes | -188 | 640 | 2,973 | 3,552 |
Net (loss) earnings | -442 | -608 | 1,488 | 4,078 |
Less: Net earnings attributable to noncontrolling interest, net of tax | -33 | -149 | -168 | -243 |
Net (loss) earnings attributable to Twin Disc | -475 | -757 | 1,320 | 3,835 |
Dividends per share (in dollars per share) | $0.09 | $0.09 | $0.27 | $0.27 |
(Loss) earnings per share data: | ' | ' | ' | ' |
Basic (loss) earnings per share attributable to Twin Disc common shareholders | ($0.04) | ($0.07) | $0.12 | $0.34 |
Diluted (loss) earnings per share attributable to Twin Disc common shareholders | ($0.04) | ($0.07) | $0.12 | $0.34 |
Weighted average shares outstanding data: | ' | ' | ' | ' |
Basic shares outstanding (in shares) | 11,265 | 11,243 | 11,256 | 11,327 |
Dilutive stock awards (in shares) | 0 | 0 | 6 | 73 |
Diluted shares outstanding (in shares) | 11,265 | 11,243 | 11,262 | 11,400 |
Comprehensive income (loss): | ' | ' | ' | ' |
Net (loss) earnings | -442 | -608 | 1,488 | 4,078 |
Benefit plan adjustments, net of income taxes of $354, $376, $1,060 and $1,160, respectively | 528 | 676 | 1,506 | 1,996 |
Foreign currency translation adjustment | 1,054 | -874 | 4,053 | 2,520 |
Comprehensive income (loss) | 1,140 | -806 | 7,047 | 8,594 |
Less: comprehensive income attributable to noncontrolling interest | -33 | -149 | -168 | -243 |
Comprehensive income (loss) attributable to Twin Disc | $1,107 | ($955) | $6,879 | $8,351 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 |
Other comprehensive income, net: | ' | ' | ' | ' |
Benefit plan adjustments, tax | $354 | $376 | $1,060 | $1,160 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Mar. 28, 2014 | Mar. 29, 2013 |
Cash flows from operating activities: | ' | ' |
Net earnings | $1,488 | $4,078 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 7,940 | 8,025 |
Restructuring of operations | 1,094 | 0 |
Other non-cash changes, net | 441 | 1,679 |
Net change in working capital, excluding cash | 6,824 | -2,980 |
Net cash provided by operating activities | 17,787 | 10,802 |
Cash flows from investing activities: | ' | ' |
Acquisitions of fixed assets | -5,183 | -5,118 |
Proceeds from sale of fixed assets | 121 | 181 |
Other, net | -244 | -232 |
Net cash used by investing activities | -5,306 | -5,169 |
Cash flows from financing activities: | ' | ' |
Proceeds from notes payable | 0 | 38 |
Payments of notes payable | -59 | -96 |
Payments of long term debt | 0 | -95 |
Borrowings under revolving loan agreement | 48,550 | 65,200 |
Repayments under revolving loan agreement | -50,600 | -62,500 |
Proceeds from exercise of stock options | 0 | 189 |
Dividends paid to shareholders | -3,045 | -3,066 |
Dividends paid to noncontrolling interest | -487 | -204 |
Acquisition of treasury stock | 0 | -3,069 |
Excess tax benefits from stock compensation | 524 | 1,276 |
Payments of withholding taxes on stock compensation | -2,170 | -1,700 |
Net cash used by financing activities | -7,287 | -4,027 |
Effect of exchange rate changes on cash | 442 | -146 |
Net change in cash | 5,636 | 1,460 |
Cash: | ' | ' |
Beginning of period | 20,724 | 15,701 |
End of period | $26,360 | $17,161 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended | |
Mar. 28, 2014 | ||
Basis of Presentation [Abstract] | ' | |
Basis of Presentation | ' | |
A. | Basis of Presentation | |
The unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of the Company, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation of results for each period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest Annual Report. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. | ||
In the course of closing the Company’s books for April 2014, the Company discovered certain accounting irregularities relating to the quarter ended March 28, 2014, at its Belgian subsidiary, Twin Disc International S.A. (“TWINSA”). Specifically, the number of hours worked on manufacturing certain products included in TWINSA’s inventory was artificially inflated. The value of those hours totaled $82,000, and have been properly reflected as cost of goods sold in the Company's statement of operations for the quarter ended March 28, 2014. Prior to the filing of this Form 10-Q, the Company's Audit Committee completed an investigation of the accounting irregularities. The investigation did not identify any additional irregularities requiring adjustment to the Company's current or prior financial statements. The Company has taken appropriate actions related to certain of the personnel involved, and is considering what further actions may be necessary, which will likely include additional training and controls. | ||
During the first quarter of fiscal 2014, the Company recorded out-of-period adjustments related to the correction of errors identified late in the year-end closing process of fiscal 2013 that were deemed immaterial for adjustment to the fiscal 2013 financial statements. The impact of these corrections to the fiscal 2014 first quarter and nine month results was to increase earnings before income taxes and noncontrolling interest by $437,000 and increase net earnings attributable to Twin Disc by $69,000 (after considering applicable tax effects). The nature of these errors is as follows: | ||
• | The Company had over accrued for certain payroll related items totaling $337,000 as of June 30, 2013, resulting in an increase to earnings from operations. | |
• | The Company had overstated its warranty accrual by $217,000 as of June 30, 2013, resulting in an increase to earnings from operations. | |
• | The Company determined that work-in-process inventory had been overstated by $117,000 as of June 30, 2013. As a result, additional cost of goods sold was recorded in the first quarter of fiscal 2014, resulting in a decrease to earnings from operations. | |
• | The Company's deferred tax liabilities were understated by $285,000 as of June 30, 2013, resulting in additional tax expense. | |
The Company does not believe these errors are material to its financial statements for any prior period, nor that the correction of these errors is material to the nine months ended March 28, 2014 or its projected full year results for fiscal 2014. | ||
New Accounting Releases | ||
In July 2013, the Financial Accounting Standards Board ("FASB") issued guidance stating that, except in certain defined circumstances, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013 (the Company's fiscal 2015). The adoption of this guidance is not expected to have a material impact on the Company's financial disclosures. | ||
In March 2013, the FASB issued guidance on the parent company's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance clarifies the circumstances under which the related cumulative translation adjustment should be released into net income. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013 (the Company's fiscal 2015). The adoption of this guidance is not expected to have a material impact on the Company's financial results. |
Inventory
Inventory | 9 Months Ended | ||||||||
Mar. 28, 2014 | |||||||||
Inventory [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
B. | Inventory | ||||||||
The major classes of inventories were as follows (in thousands): | |||||||||
March 28, | June 30, | ||||||||
2014 | 2013 | ||||||||
Inventories: | |||||||||
Finished parts | $ | 69,364 | $ | 68,594 | |||||
Work in process | 13,469 | 11,880 | |||||||
Raw materials | 22,216 | 22,300 | |||||||
$ | 105,049 | $ | 102,774 |
Warranty
Warranty | 9 Months Ended | ||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||
Warranty [Abstract] | ' | ||||||||||||||||
Warranty | ' | ||||||||||||||||
C. Warranty | |||||||||||||||||
The Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers. However, its warranty obligation is affected by product failure rates, the number of units affected by the failure and the expense involved in satisfactorily addressing the situation. The warranty reserve is established based on our best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. When evaluating the adequacy of the reserve for warranty costs, management takes into consideration the term of the warranty coverage, historical claim rates and costs of repair, knowledge of the type and volume of new products and economic trends. While we believe the warranty reserve is adequate and that the judgment applied is appropriate, such amounts estimated to be due and payable in the future could differ materially from what actually transpires. The following is a listing of the activity in the warranty reserve during the three and nine month periods ended March 28, 2014 and March 29, 2013 (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
Mar. 28, | Mar. 29, | Mar. 28, | Mar. 29, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Reserve balance, beginning of period | $ | 5,800 | $ | 5,533 | $ | 5,701 | $ | 5,745 | |||||||||
Current period expense | 399 | 561 | 1,541 | 2,528 | |||||||||||||
Payments or credits to customers | (498 | ) | (706 | ) | (1,646 | ) | (2,957 | ) | |||||||||
Foreign currency translation | 11 | (39 | ) | 116 | 33 | ||||||||||||
Reserve balance, end of period | $ | 5,712 | $ | 5,349 | $ | 5,712 | $ | 5,349 | |||||||||
The current portion of the warranty accrual ($3,766,000) is reflected in accrued liabilities, while the long-term portion ($1,946,000) is included in other long-term liabilities on the Consolidated Balance Sheets as of March 28, 2014. |
Contingencies
Contingencies | 9 Months Ended | |
Mar. 28, 2014 | ||
Contingencies [Abstract] | ' | |
Contingencies | ' | |
D. | Contingencies | |
The Company is involved in litigation of which the ultimate outcome and liability to the Company, if any, is not presently determinable. Management believes that final disposition of such litigation will not have a material impact on the Company's results of operations, financial position or cash flows. |
Business_Segments
Business Segments | 9 Months Ended | ||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||
Business Segments [Abstract] | ' | ||||||||||||||||
Business Segments | ' | ||||||||||||||||
E. Business Segments | |||||||||||||||||
The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment. Principal products include marine transmissions, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and controls systems. The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government and industrial markets. | |||||||||||||||||
The Company has two reportable segments: manufacturing and distribution. These segments are managed separately because each provides different services and requires different technology and marketing strategies. The accounting practices of the segments are the same as those described in the summary of significant accounting policies included in the Company's Annual Report on Form 10-K. Transfers among segments are at established inter-company selling prices. Management evaluates the performance of its segments based on net earnings. | |||||||||||||||||
Information about the Company's segments is summarized as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
Mar. 28, | Mar. 29, | Mar. 28, | Mar. 29, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Manufacturing segment sales | $ | 52,957 | $ | 56,678 | $ | 163,224 | $ | 181,874 | |||||||||
Distribution segment sales | 28,441 | 31,237 | 90,018 | 95,982 | |||||||||||||
Inter/Intra segment elimination - manufacturing | (18,233 | ) | (15,124 | ) | (54,452 | ) | (54,203 | ) | |||||||||
Inter/Intra segment elimination - distribution | (2,460 | ) | (4,559 | ) | (8,447 | ) | (14,302 | ) | |||||||||
Net sales | $ | 60,705 | $ | 68,232 | $ | 190,343 | $ | 209,351 | |||||||||
Manufacturing segment net earnings | $ | (9 | ) | $ | (75 | ) | $ | 3,662 | $ | 7,814 | |||||||
Distribution segment net earnings | 1,516 | 2,105 | 4,818 | 4,808 | |||||||||||||
Corporate and eliminations | (1,982 | ) | (2,787 | ) | (7,160 | ) | (8,787 | ) | |||||||||
Net (loss) earnings attributable to Twin Disc | $ | (475 | ) | $ | (757 | ) | $ | 1,320 | $ | 3,835 | |||||||
Mar. 28, | June 30, | ||||||||||||||||
Assets | 2014 | 2013 | |||||||||||||||
Manufacturing segment assets | $ | 264,308 | $ | 258,617 | |||||||||||||
Distribution segment assets | 56,340 | 56,965 | |||||||||||||||
Corporate assets and elimination | |||||||||||||||||
of intercompany assets | (44,802 | ) | (30,124 | ) | |||||||||||||
Total assets | $ | 275,846 | $ | 285,458 |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |
Mar. 28, 2014 | ||
Stock-Based Compensation [Abstract] | ' | |
Stock-Based Compensation | ' | |
F. | Stock-Based Compensation | |
In the first nine months of fiscal 2014 and 2013, the Company granted a target number of 43,154 and 28,255 performance stock unit awards, respectively, to various employees of the Company, including executive officers. The performance stock unit awards granted in fiscal 2014 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Unit Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2016. The performance stock unit awards granted in fiscal 2014 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance stock units that can be awarded if the target objective is exceeded is 25,943. Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing the performance stock unit awards granted in fiscal 2014. The performance stock unit awards granted in fiscal 2013 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Unit Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2015. The performance stock unit awards granted in fiscal 2013 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance stock units that can be awarded if the target objective is exceeded is 23,449. Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing the performance stock unit awards granted in fiscal 2013 and has reversed previously recognized expenses related to these awards during the second quarter of fiscal 2013. There were 54,874 and 161,734 unvested stock unit awards outstanding at March 28, 2014 and March 29, 2013, respectively. The weighted average grant date fair value of the unvested awards at March 28, 2014 was $26.65. The performance stock unit awards are remeasured at fair-value based upon the Company's stock price at the end of each reporting period. The fair-value of the stock unit awards are expensed over the performance period for the shares that are expected to ultimately vest. The compensation expense for the three and nine months ended March 28, 2014, related to the performance stock unit awards were $0. The compensation expense for the three and nine months ended March 29, 2013, related to the performance stock unit awards, approximated $988,000 and $1,108,000 respectively. At March 28, 2014, the Company had $1,436,000 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2014, 2013 and 2012 awards. The total fair value of performance stock unit awards vested as of March 28, 2014 and March 29, 2013 were $0. The performance stock unit awards are cash based, and are thus recorded as a liability on the Company's Consolidated Balance Sheets. As of March 28, 2014, these awards are $0. As of June 30, 2013, these awards are included in "Accrued liabilities" ($2,787,000) due to the awards having a performance period ending in less than one year. | ||
In the first nine months of fiscal 2014 and 2013, the Company granted a target number of 17,312 and 28,535 performance stock awards, respectively, to various employees of the Company, including executive officers. The performance stock awards granted in fiscal 2014 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2016. The performance stock awards granted in fiscal 2014 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 20,774. Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing the performance stock awards granted in fiscal 2014. The performance stock awards granted in fiscal 2013 will vest if the Company achieves a specified target objective relating to consolidated economic profit (as defined in the Performance Stock Award Grant Agreement) in the cumulative three fiscal year period ending June 30, 2015. The performance stock awards granted in fiscal 2013 are subject to adjustment if the Company's economic profit for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 32,880. Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing the performance stock awards granted in fiscal 2013 and has reversed previously recognized expenses related to these awards during the second quarter of fiscal 2013. There were 59,453 and 130,926 unvested stock awards outstanding at March 28, 2014 and March 29, 2013, respectively. The fair value of the stock awards (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. The compensation expense for the three and nine months ended March 28, 2014, related to performance stock awards were $0. The compensation expense for the three and nine months ended March 29, 2013, related to performance stock awards, approximated $97,000 and $112,000, respectively. The weighted average grant date fair value of the unvested awards at March 28, 2014 was $26.12. At March 28, 2014, the Company had $1,553,000 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2014, 2013 and 2012 awards. The total fair value of performance stock awards vested as of March 28, 2014 and March 29, 2013 were $0. | ||
In addition to the performance shares mentioned above, the Company has unvested restricted stock outstanding that will vest if certain service conditions are fulfilled. The fair value of the restricted stock grants is recorded as compensation over the vesting period, which is generally 1 to 4 years. During the nine months of fiscal 2014 and 2013, the Company granted 51,004 and 83,729 service based restricted shares, respectively, to employees and non-employee directors in each year. There were 119,297 and 220,343 unvested shares outstanding at March 28, 2014 and March 29, 2013, respectively. The compensation expense for the three and nine months ended March 28, 2014, related to these service-based awards approximated $308,000 and $934,000, respectively. The compensation expense for the three and nine months ended March 29, 2013, related to these service-based awards approximated $403,000 and $1,191,000, respectively. The total fair value of restricted stock grants vested as of March 28, 2014 and March 29, 2013 was $3,053,000 and $2,177,000, respectively. As of March 28, 2014, the Company had $1,478,000 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years. |
Pension_and_Other_Postretireme
Pension and Other Postretirement Benefit Plans | 9 Months Ended | ||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||
Pension and Other Postretirement Benefit Plans [Abstract] | ' | ||||||||||||||||
Pension and Other Postretirement Benefit Plans | ' | ||||||||||||||||
G. Pension and Other Postretirement Benefit Plans | |||||||||||||||||
The Company has non-contributory, qualified defined benefit plans covering substantially all domestic employees hired prior to October 1, 2003 and certain foreign employees. Additionally, the Company provides health care and life insurance benefits for certain domestic retirees. Components of net periodic benefit cost for the defined benefit pension plans and the other postretirement benefit plan are as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
Mar. 28, | Mar. 29, | Mar. 28, | Mar. 29, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Pension Benefits: | |||||||||||||||||
Service cost | $ | 135 | $ | 88 | $ | 402 | $ | 257 | |||||||||
Interest cost | 1,357 | 1,334 | 4,068 | 3,996 | |||||||||||||
Expected return on plan assets | (1,648 | ) | (1,598 | ) | (4,942 | ) | (4,785 | ) | |||||||||
Amortization of transition obligation | 19 | 9 | 57 | 27 | |||||||||||||
Amortization of net actuarial loss | 714 | 845 | 2,141 | 2,536 | |||||||||||||
Net periodic benefit cost | $ | 577 | $ | 678 | $ | 1,726 | $ | 2,031 | |||||||||
Postretirement Benefits: | |||||||||||||||||
Service cost | $ | 9 | $ | 8 | $ | 28 | $ | 25 | |||||||||
Interest cost | 165 | 191 | 494 | 574 | |||||||||||||
Amortization of net actuarial loss | 150 | 198 | 451 | 594 | |||||||||||||
Net periodic benefit cost | $ | 324 | $ | 397 | $ | 973 | $ | 1,193 | |||||||||
The Company expects to contribute approximately $2,632,000 to its pension plans in fiscal 2014. As of March 28, 2014, $1,890,000 in contributions have been made. | |||||||||||||||||
The Company has reclassified $528,000 (net of $354,000 in taxes) and $1,506,000 (net of $1,060,000 in taxes) of benefit plan adjustments from accumulated other comprehensive loss during the three and nine months ended March 28, 2014. The Company has reclassified $676,000 (net of $376,000 in taxes) and $1,996,000 (net of $1,160,000 in taxes) of benefit plan adjustments from accumulated other comprehensive loss during the three and nine months ended March 29, 2013. These reclassifications are included in the computation of net periodic benefit cost. |
Income_Taxes
Income Taxes | 9 Months Ended | |
Mar. 28, 2014 | ||
Income Taxes [Abstract] | ' | |
Income Taxes | ' | |
H. | Income Taxes | |
The effective tax rate for the first nine months of fiscal 2014 is 66.6%, which is higher than the prior year's 46.6%. The fiscal 2014 rate reflects the impact of the valuation allowance on a continued reduced earnings base and increased net foreign earnings. Decreased domestic sales were offset by a reduced Section 199 benefit and reduced research and development tax credit resulting from the expiration of the credit. | ||
The Company maintains valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, the Company takes into account such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. Due to recent operating losses in a certain foreign jurisdiction, the Company has evaluated the realizability of the net deferred tax assets related to this jurisdiction. This evaluation concluded that, based primarily upon recent losses in this jurisdiction and failure to achieve targeted levels of improvement, a full valuation allowance continues to be necessary. | ||
The Company has not provided additional U.S. income taxes on cumulative earnings of consolidated foreign subsidiaries that are considered to be reinvested indefinitely. The Company reaffirms its position that these earnings remain permanently invested, and has no plans to repatriate funds to the U.S. for the foreseeable future. Such earnings could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation. It is not practicable to estimate the amount of unrecognized withholding taxes and deferred tax liability on such earnings. The Company's intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax effective through the utilization of foreign tax credits. | ||
Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. Under this effective tax rate methodology, the Company applies an estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The impact of the Company's operations in certain foreign locations is removed from the overall effective tax rate methodology and recorded directly based upon year-to-date results as these operations anticipate net operating losses for the year for which no tax benefit can be recognized. | ||
The Company has approximately $1,900,000 of unrecognized tax benefits, including related interest and penalties, as of March 28, 2014, which if recognized, would favorably impact the effective tax rate. There was no significant change in the total unrecognized tax benefits due to the settlement of audits or the expiration of statutes of limitations during the quarter ended March 28, 2014. It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months due to on-going audit activity. | ||
Annually, the Company files income tax returns in various taxing jurisdictions inside and outside the United States. In general, the tax years that remain subject to examination are 2009 through 2013 for the major operations in Italy, Belgium and Japan. The tax years open to federal examination in the U.S. are for the years subsequent to fiscal 2011. The state of Wisconsin income tax audit remains ongoing for fiscal years 2001 through 2009. It is reasonably possible that at least one of these audit cycles will be completed during fiscal 2014. |
Goodwill_and_Other_Intangibles
Goodwill and Other Intangibles | 9 Months Ended | ||||||||
Mar. 28, 2014 | |||||||||
Goodwill and Other Intangibles [Abstract] | ' | ||||||||
Goodwill and Other Intangibles | ' | ||||||||
I. Goodwill and Other Intangibles | |||||||||
The changes in the carrying amount of goodwill, all of which is allocated to the manufacturing segment, for the nine months ended March 28, 2014 were as follows (in thousands): | |||||||||
Balance at June 30, 2013 | $ | 13,232 | |||||||
Translation adjustment | 294 | ||||||||
Balance at March 28, 2014 | $ | 13,526 | |||||||
The gross carrying amount and accumulated amortization of the Company's intangible assets that have definite useful lives and are subject to amortization as of March 28, 2014 and June 30, 2013 were as follows (in thousands): | |||||||||
March 28, | June 30, | ||||||||
2014 | 2013 | ||||||||
Intangible assets with finite lives: | |||||||||
Licensing agreements | $ | 3,015 | $ | 3,015 | |||||
Non-compete agreements | 2,050 | 2,050 | |||||||
Trade name | 2,596 | - | |||||||
Other | 5,991 | 5,991 | |||||||
13,652 | 11,056 | ||||||||
Accumulated amortization | (9,657 | ) | (9,301 | ) | |||||
Accumulated impairment charge | (1,277 | ) | (1,277 | ) | |||||
Foreign currency translation | 2 | 546 | |||||||
Total | $ | 2,720 | $ | 1,024 | |||||
The weighted average remaining useful life of the intangible assets included in the table above is approximately 16 years. | |||||||||
Intangible amortization expense was $121,000 and $356,000 for the three and nine months ended March 28, 2014, and $184,000 and $538,000 for the three and nine months ended March 29, 2013, respectively. Estimated intangible amortization expense for the remainder of fiscal 2014 and each of the next five fiscal years is as follows (in thousands): | |||||||||
Fiscal Year | |||||||||
2014 | $ | 121 | |||||||
2015 | 253 | ||||||||
2016 | 166 | ||||||||
2017 | 162 | ||||||||
2018 | 162 | ||||||||
2019 | 162 | ||||||||
The gross carrying amount of the Company's intangible assets that have indefinite lives and are not subject to amortization as of March 28, 2014 and June 30, 2013 are $227,000 and $2,125,000, respectively. These assets are comprised of acquired trade names. Based on the Company's reassessment of the useful lives assigned to intangible assets during the first quarter, it was determined that certain indefinite lived trade names should be reclassified to definite lived. As such, the Company assigned a 20-year useful life to the trade names. |
Longterm_Debt
Long-term Debt | 9 Months Ended | ||||||||
Mar. 28, 2014 | |||||||||
Long-term Debt [Abstract] | ' | ||||||||
Long-term Debt | ' | ||||||||
J. | Long-term Debt | ||||||||
Long-term debt at March 28, 2014 and June 30, 2013 consisted of the following (in thousands): | |||||||||
March 28, | June 30, | ||||||||
2014 | 2013 | ||||||||
Revolving loan | $ | 14,250 | $ | 16,300 | |||||
10-year unsecured senior notes | 10,714 | 10,714 | |||||||
Other | 83 | 139 | |||||||
Subtotal | 25,047 | 27,153 | |||||||
Less: current maturities and short-term borrowings | (3,625 | ) | (3,681 | ) | |||||
Total long-term debt | $ | 21,422 | $ | 23,472 | |||||
The revolving loan and unsecured senior notes listed above are subject to certain covenants, including restrictions on investments, acquisitions and indebtedness. Financial covenants, as defined, include a minimum consolidated net worth, a minimum EBITDA for the most recent four fiscal quarters, and a maximum total funded debt to EBITDA ratio. As of March 28, 2014, the Company was in compliance with these covenants. However, due to the Company’s late filing of its Form 10-Q for the third quarter of fiscal 2014, it was not able to comply with its covenants under the revolving loan and unsecured senior notes to provide quarterly financial statements for the quarter ended March 28, 2014, and to provide a Compliance Certificate demonstrating compliance with financial covenants, by May 12, 2014. The Company received consents from the lender and the holders of the notes delaying the Company’s obligation to provide such financial statements and Compliance Certificates until June 20, 2014. The Company complied with these covenants by providing the lender and the holders of the notes with its quarterly financial statements for the quarter ended March 28, 2014 and Compliance Certificates on June 20, 2014. | |||||||||
The fair value of long-term debt is estimated by discounting the future cash flows at rates offered to the Company for similar debt instruments of comparable maturities. This rate was represented by the US Treasury Three-Year Yield Curve Rate (0.93% and 0.66% for March 28, 2014 and June 30, 2013, respectively), plus the current add-on related to the revolving loan agreement (1.65% for March 28, 2014 and June 30, 2013) resulting in a total rate of 2.58% and 2.31% for March 28, 2014 and June 30, 2013, respectively. The fair value of the Company's 10-year unsecured senior notes due April 10, 2016 was approximately $11,214,000 and $11,536,000 at March 28, 2014 and June 30, 2013, respectively. The Company's revolving loan agreement approximates fair value at March 28, 2014 and June 30, 2013. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy. |
Shareholders_Equity
Shareholders' Equity | 9 Months Ended | ||||||||||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||||||||||
Shareholders' Equity [Abstract] | ' | ||||||||||||||||||||||||
Shareholders' Equity | ' | ||||||||||||||||||||||||
K. | Shareholders' Equity | ||||||||||||||||||||||||
On February 1, 2008, the Board of Directors authorized the purchase of 500,000 shares of Common Stock at market values. On July 27, 2012, the Board of Directors authorized the purchase of an additional 375,000 shares of Common Stock at market values. These authorizations have no expiration. The Company made open market purchases of 125,000 shares of its outstanding Common Stock during fiscal 2012 and 185,000 shares during fiscal 2013. | |||||||||||||||||||||||||
The following is a reconciliation of the Company's equity balances for the first fiscal nine months of 2013 and 2014 (in thousands): | |||||||||||||||||||||||||
Twin Disc, Inc. Shareholders' Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Non- | ||||||||||||||||||||||||
Common | Retained | Comprehensive | Treasury | Controlling | Total | ||||||||||||||||||||
Stock | Earnings | Income (Loss) | Stock | Interest | Equity | ||||||||||||||||||||
Balance –June 30, 2012 | $ | 12,759 | $ | 184,306 | $ | (34,797 | ) | $ | (26,781 | ) | $ | 1,022 | $ | 136,509 | |||||||||||
Net income | 3,835 | 243 | 4,078 | ||||||||||||||||||||||
Translation adjustments | 2,557 | (37 | ) | 2,520 | |||||||||||||||||||||
Benefit plan adjustments, net of tax | 1,996 | 1,996 | |||||||||||||||||||||||
Cash dividends | (3,067 | ) | (205 | ) | (3,272 | ) | |||||||||||||||||||
Compensation expense and | |||||||||||||||||||||||||
windfall tax benefits | 2,579 | 2,579 | |||||||||||||||||||||||
Shares (acquired) issued, net | (2,937 | ) | (1,642 | ) | (4,579 | ) | |||||||||||||||||||
Balance-March 29, 2013 | $ | 12,401 | $ | 185,074 | $ | (30,244 | ) | $ | (28,423 | ) | $ | 1,023 | $ | 139,831 | |||||||||||
Twin Disc, Inc. Shareholders' Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Non- | ||||||||||||||||||||||||
Common | Retained | Comprehensive | Treasury | Controlling | Total | ||||||||||||||||||||
Stock | Earnings | Income (Loss) | Stock | Interest | Equity | ||||||||||||||||||||
Balance-June 30, 2013 | $ | 13,183 | $ | 184,110 | $ | (25,899 | ) | $ | (28,890 | ) | $ | 1,058 | $ | 143,562 | |||||||||||
Net income | 1,320 | 168 | 1,488 | ||||||||||||||||||||||
Translation adjustments | 4,137 | (84 | ) | 4,053 | |||||||||||||||||||||
Benefit plan adjustments, net of tax | 1,506 | 1,506 | |||||||||||||||||||||||
Cash dividends | (3,045 | ) | (487 | ) | (3,532 | ) | |||||||||||||||||||
Compensation expense and | |||||||||||||||||||||||||
windfall tax benefits | 1,457 | 1,457 | |||||||||||||||||||||||
Shares (acquired) issued, net | (2,964 | ) | 795 | (2,169 | ) | ||||||||||||||||||||
Balance-March 28, 2014 | $ | 11,676 | $ | 182,385 | $ | (20,256 | ) | $ | (28,095 | ) | $ | 655 | $ | 146,365 |
Restructuring_of_Operations
Restructuring of Operations | 9 Months Ended | |
Mar. 28, 2014 | ||
Restructuring of Operations [Abstract] | ' | |
Restructuring of Operations | ' | |
L. | Restructuring of Operations | |
During the first quarter of fiscal 2014, the Company recorded a pre-tax restructuring charge of $1,094,000 representing the incremental cost above the minimum legal indemnity for a targeted workforce reduction at its Belgian operation, following finalization of negotiations with the local labor union. The minimum legal indemnity of $548,000 was recorded in the fourth quarter of fiscal 2013, upon announcement of the intended restructuring action. During the first nine months of fiscal 2014, the Company made cash payments of $832,000, resulting in an accrual balance at March 28, 2014 of $856,000. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 9 Months Ended |
Mar. 28, 2014 | |
Basis of Presentation [Abstract] | ' |
New Accounting Releases | ' |
New Accounting Releases | |
In July 2013, the Financial Accounting Standards Board ("FASB") issued guidance stating that, except in certain defined circumstances, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013 (the Company's fiscal 2015). The adoption of this guidance is not expected to have a material impact on the Company's financial disclosures. | |
In March 2013, the FASB issued guidance on the parent company's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance clarifies the circumstances under which the related cumulative translation adjustment should be released into net income. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013 (the Company's fiscal 2015). The adoption of this guidance is not expected to have a material impact on the Company's financial results. |
Inventory_Tables
Inventory (Tables) | 9 Months Ended | ||||||||
Mar. 28, 2014 | |||||||||
Inventory [Abstract] | ' | ||||||||
Major Classes of Inventories | ' | ||||||||
The major classes of inventories were as follows (in thousands): | |||||||||
March 28, | June 30, | ||||||||
2014 | 2013 | ||||||||
Inventories: | |||||||||
Finished parts | $ | 69,364 | $ | 68,594 | |||||
Work in process | 13,469 | 11,880 | |||||||
Raw materials | 22,216 | 22,300 | |||||||
$ | 105,049 | $ | 102,774 |
Warranty_Tables
Warranty (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||
Warranty [Abstract] | ' | ||||||||||||||||
Warranty Reserve | ' | ||||||||||||||||
The following is a listing of the activity in the warranty reserve during the three and nine month periods ended March 28, 2014 and March 29, 2013 (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
Mar. 28, | Mar. 29, | Mar. 28, | Mar. 29, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Reserve balance, beginning of period | $ | 5,800 | $ | 5,533 | $ | 5,701 | $ | 5,745 | |||||||||
Current period expense | 399 | 561 | 1,541 | 2,528 | |||||||||||||
Payments or credits to customers | (498 | ) | (706 | ) | (1,646 | ) | (2,957 | ) | |||||||||
Foreign currency translation | 11 | (39 | ) | 116 | 33 | ||||||||||||
Reserve balance, end of period | $ | 5,712 | $ | 5,349 | $ | 5,712 | $ | 5,349 | |||||||||
The current portion of the warranty accrual ($3,766,000) is reflected in accrued liabilities, while the long-term portion ($1,946,000) is included in other long-term liabilities on the Consolidated Balance Sheets as of March 28, 2014. |
Business_Segments_Tables
Business Segments (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||
Business Segments [Abstract] | ' | ||||||||||||||||
Summarized Information about Company's Segments | ' | ||||||||||||||||
Information about the Company's segments is summarized as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
Mar. 28, | Mar. 29, | Mar. 28, | Mar. 29, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Manufacturing segment sales | $ | 52,957 | $ | 56,678 | $ | 163,224 | $ | 181,874 | |||||||||
Distribution segment sales | 28,441 | 31,237 | 90,018 | 95,982 | |||||||||||||
Inter/Intra segment elimination - manufacturing | (18,233 | ) | (15,124 | ) | (54,452 | ) | (54,203 | ) | |||||||||
Inter/Intra segment elimination - distribution | (2,460 | ) | (4,559 | ) | (8,447 | ) | (14,302 | ) | |||||||||
Net sales | $ | 60,705 | $ | 68,232 | $ | 190,343 | $ | 209,351 | |||||||||
Manufacturing segment net earnings | $ | (9 | ) | $ | (75 | ) | $ | 3,662 | $ | 7,814 | |||||||
Distribution segment net earnings | 1,516 | 2,105 | 4,818 | 4,808 | |||||||||||||
Corporate and eliminations | (1,982 | ) | (2,787 | ) | (7,160 | ) | (8,787 | ) | |||||||||
Net (loss) earnings attributable to Twin Disc | $ | (475 | ) | $ | (757 | ) | $ | 1,320 | $ | 3,835 | |||||||
Mar. 28, | June 30, | ||||||||||||||||
Assets | 2014 | 2013 | |||||||||||||||
Manufacturing segment assets | $ | 264,308 | $ | 258,617 | |||||||||||||
Distribution segment assets | 56,340 | 56,965 | |||||||||||||||
Corporate assets and elimination | |||||||||||||||||
of intercompany assets | (44,802 | ) | (30,124 | ) | |||||||||||||
Total assets | $ | 275,846 | $ | 285,458 |
Pension_and_Other_Postretireme1
Pension and Other Postretirement Benefit Plans (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||
Pension and Other Postretirement Benefit Plans [Abstract] | ' | ||||||||||||||||
Components of Net Periodic Benefit Cost | ' | ||||||||||||||||
Components of net periodic benefit cost for the defined benefit pension plans and the other postretirement benefit plan are as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
Mar. 28, | Mar. 29, | Mar. 28, | Mar. 29, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Pension Benefits: | |||||||||||||||||
Service cost | $ | 135 | $ | 88 | $ | 402 | $ | 257 | |||||||||
Interest cost | 1,357 | 1,334 | 4,068 | 3,996 | |||||||||||||
Expected return on plan assets | (1,648 | ) | (1,598 | ) | (4,942 | ) | (4,785 | ) | |||||||||
Amortization of transition obligation | 19 | 9 | 57 | 27 | |||||||||||||
Amortization of net actuarial loss | 714 | 845 | 2,141 | 2,536 | |||||||||||||
Net periodic benefit cost | $ | 577 | $ | 678 | $ | 1,726 | $ | 2,031 | |||||||||
Postretirement Benefits: | |||||||||||||||||
Service cost | $ | 9 | $ | 8 | $ | 28 | $ | 25 | |||||||||
Interest cost | 165 | 191 | 494 | 574 | |||||||||||||
Amortization of net actuarial loss | 150 | 198 | 451 | 594 | |||||||||||||
Net periodic benefit cost | $ | 324 | $ | 397 | $ | 973 | $ | 1,193 |
Goodwill_and_Other_Intangibles1
Goodwill and Other Intangibles (Tables) | 9 Months Ended | ||||||||
Mar. 28, 2014 | |||||||||
Goodwill and Other Intangibles [Abstract] | ' | ||||||||
Changes in Carrying Amount of Goodwill | ' | ||||||||
The changes in the carrying amount of goodwill, all of which is allocated to the manufacturing segment, for the nine months ended March 28, 2014 were as follows (in thousands): | |||||||||
Balance at June 30, 2013 | $ | 13,232 | |||||||
Translation adjustment | 294 | ||||||||
Balance at March 28, 2014 | $ | 13,526 | |||||||
Acquired Intangible Assets with Finite Lives | ' | ||||||||
The gross carrying amount and accumulated amortization of the Company's intangible assets that have definite useful lives and are subject to amortization as of March 28, 2014 and June 30, 2013 were as follows (in thousands): | |||||||||
March 28, | June 30, | ||||||||
2014 | 2013 | ||||||||
Intangible assets with finite lives: | |||||||||
Licensing agreements | $ | 3,015 | $ | 3,015 | |||||
Non-compete agreements | 2,050 | 2,050 | |||||||
Trade name | 2,596 | - | |||||||
Other | 5,991 | 5,991 | |||||||
13,652 | 11,056 | ||||||||
Accumulated amortization | (9,657 | ) | (9,301 | ) | |||||
Accumulated impairment charge | (1,277 | ) | (1,277 | ) | |||||
Foreign currency translation | 2 | 546 | |||||||
Total | $ | 2,720 | $ | 1,024 | |||||
Estimated Intangible Amortization Expense | ' | ||||||||
Estimated intangible amortization expense for the remainder of fiscal 2014 and each of the next five fiscal years is as follows (in thousands): | |||||||||
Fiscal Year | |||||||||
2014 | $ | 121 | |||||||
2015 | 253 | ||||||||
2016 | 166 | ||||||||
2017 | 162 | ||||||||
2018 | 162 | ||||||||
2019 | 162 |
Longterm_Debt_Tables
Long-term Debt (Tables) | 9 Months Ended | ||||||||
Mar. 28, 2014 | |||||||||
Long-term Debt [Abstract] | ' | ||||||||
Long-term Debt | ' | ||||||||
Long-term debt at March 28, 2014 and June 30, 2013 consisted of the following (in thousands): | |||||||||
March 28, | June 30, | ||||||||
2014 | 2013 | ||||||||
Revolving loan | $ | 14,250 | $ | 16,300 | |||||
10-year unsecured senior notes | 10,714 | 10,714 | |||||||
Other | 83 | 139 | |||||||
Subtotal | 25,047 | 27,153 | |||||||
Less: current maturities and short-term borrowings | (3,625 | ) | (3,681 | ) | |||||
Total long-term debt | $ | 21,422 | $ | 23,472 |
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Mar. 28, 2014 | |||||||||||||||||||||||||
Shareholders' Equity [Abstract] | ' | ||||||||||||||||||||||||
Reconciliation of Equity Balances | ' | ||||||||||||||||||||||||
The following is a reconciliation of the Company's equity balances for the first fiscal nine months of 2013 and 2014 (in thousands): | |||||||||||||||||||||||||
Twin Disc, Inc. Shareholders' Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Non- | ||||||||||||||||||||||||
Common | Retained | Comprehensive | Treasury | Controlling | Total | ||||||||||||||||||||
Stock | Earnings | Income (Loss) | Stock | Interest | Equity | ||||||||||||||||||||
Balance –June 30, 2012 | $ | 12,759 | $ | 184,306 | $ | (34,797 | ) | $ | (26,781 | ) | $ | 1,022 | $ | 136,509 | |||||||||||
Net income | 3,835 | 243 | 4,078 | ||||||||||||||||||||||
Translation adjustments | 2,557 | (37 | ) | 2,520 | |||||||||||||||||||||
Benefit plan adjustments, net of tax | 1,996 | 1,996 | |||||||||||||||||||||||
Cash dividends | (3,067 | ) | (205 | ) | (3,272 | ) | |||||||||||||||||||
Compensation expense and | |||||||||||||||||||||||||
windfall tax benefits | 2,579 | 2,579 | |||||||||||||||||||||||
Shares (acquired) issued, net | (2,937 | ) | (1,642 | ) | (4,579 | ) | |||||||||||||||||||
Balance-March 29, 2013 | $ | 12,401 | $ | 185,074 | $ | (30,244 | ) | $ | (28,423 | ) | $ | 1,023 | $ | 139,831 | |||||||||||
Twin Disc, Inc. Shareholders' Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Non- | ||||||||||||||||||||||||
Common | Retained | Comprehensive | Treasury | Controlling | Total | ||||||||||||||||||||
Stock | Earnings | Income (Loss) | Stock | Interest | Equity | ||||||||||||||||||||
Balance-June 30, 2013 | $ | 13,183 | $ | 184,110 | $ | (25,899 | ) | $ | (28,890 | ) | $ | 1,058 | $ | 143,562 | |||||||||||
Net income | 1,320 | 168 | 1,488 | ||||||||||||||||||||||
Translation adjustments | 4,137 | (84 | ) | 4,053 | |||||||||||||||||||||
Benefit plan adjustments, net of tax | 1,506 | 1,506 | |||||||||||||||||||||||
Cash dividends | (3,045 | ) | (487 | ) | (3,532 | ) | |||||||||||||||||||
Compensation expense and | |||||||||||||||||||||||||
windfall tax benefits | 1,457 | 1,457 | |||||||||||||||||||||||
Shares (acquired) issued, net | (2,964 | ) | 795 | (2,169 | ) | ||||||||||||||||||||
Balance-March 28, 2014 | $ | 11,676 | $ | 182,385 | $ | (20,256 | ) | $ | (28,095 | ) | $ | 655 | $ | 146,365 |
Basis_of_Presentation_Details
Basis of Presentation (Details) (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 27, 2013 | Mar. 28, 2014 | |
Basis of Presentation [Abstract] | ' | ' |
Value of inflated hours, hours included in inventory | ' | $82,000 |
Revision of Prior Period Financial Statements [Abstract] | ' | ' |
Impact of errors correction on earnings | 437,000 | 437,000 |
Impact of errors correction on earnings net of tax attributable to parent | 69,000 | 69,000 |
Overstatement of Payroll Accrual [Member] | ' | ' |
Revision of Prior Period Financial Statements [Abstract] | ' | ' |
Impact of errors correction on earnings | ' | 337,000 |
Overstatement of Warranty Accrual [Member] | ' | ' |
Revision of Prior Period Financial Statements [Abstract] | ' | ' |
Impact of errors correction on earnings | ' | 217,000 |
Overstatement of Work in Progress Inventory [Member] | ' | ' |
Revision of Prior Period Financial Statements [Abstract] | ' | ' |
Impact of errors correction on earnings | ' | -117,000 |
Understatement of Deferred tax liabilities [Member] | ' | ' |
Revision of Prior Period Financial Statements [Abstract] | ' | ' |
Impact of errors correction on earnings | ' | $285,000 |
Inventory_Details
Inventory (Details) (USD $) | Mar. 28, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Major classes of inventories [Abstract] | ' | ' |
Finished parts | $69,364 | $68,594 |
Work in process | 13,469 | 11,880 |
Raw materials | 22,216 | 22,300 |
Total Inventories | $105,049 | $102,774 |
Warranty_Details
Warranty (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | |
Activity in warranty reserve [Abstract] | ' | ' | ' | ' |
Reserve balance, beginning of period | $5,800,000 | $5,533,000 | $5,701,000 | $5,745,000 |
Current period expense | 399,000 | 561,000 | 1,541,000 | 2,528,000 |
Payments or credits to customers | -498,000 | -706,000 | -1,646,000 | -2,957,000 |
Foreign currency translation | 11,000 | -39,000 | 116,000 | 33,000 |
Reserve balance, end of period | 5,712,000 | 5,349,000 | 5,712,000 | 5,349,000 |
Current portion of warranty accrual | -3,766,000 | ' | -3,766,000 | ' |
Long-term portion of warranty accrual | ($1,946,000) | ' | ($1,946,000) | ' |
Business_Segments_Details
Business Segments (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Jun. 30, 2013 |
Segment | |||||
Business Segments [Abstract] | ' | ' | ' | ' | ' |
Number of reportable segments | ' | ' | 2 | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | $60,705 | $68,232 | $190,343 | $209,351 | ' |
Net (loss) earnings attributable to Twin Disc | -475 | -757 | 1,320 | 3,835 | ' |
Assets | 275,846 | ' | 275,846 | ' | 285,458 |
Corporate and Eliminations [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net (loss) earnings attributable to Twin Disc | -1,982 | -2,787 | -7,160 | -8,787 | ' |
Assets | -44,802 | ' | -44,802 | ' | -30,124 |
Manufacturing Segment [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | 52,957 | 56,678 | 163,224 | 181,874 | ' |
Net (loss) earnings attributable to Twin Disc | -9 | -75 | 3,662 | 7,814 | ' |
Assets | 264,308 | ' | 264,308 | ' | 258,617 |
Manufacturing Segment [Member] | Inter/Intra Segment Elimination [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | -18,233 | -15,124 | -54,452 | -54,203 | ' |
Distribution Segment [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | 28,441 | 31,237 | 90,018 | 95,982 | ' |
Net (loss) earnings attributable to Twin Disc | 1,516 | 2,105 | 4,818 | 4,808 | ' |
Assets | 56,340 | ' | 56,340 | ' | 56,965 |
Distribution Segment [Member] | Inter/Intra Segment Elimination [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | ($2,460) | ($4,559) | ($8,447) | ($14,302) | ' |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Jun. 30, 2013 | |
Performance Stock Unit Awards [Member] | ' | ' | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' | ' | ' |
Stock awards granted (in shares) | ' | ' | 43,154 | 28,255 | ' |
Stock awards vesting period | ' | ' | '3 years | '3 years | ' |
Number of shares of common stock that can be granted, maximum (in shares) | 25,943 | 23,449 | 25,943 | 23,449 | ' |
Unvested stock awards outstanding (in shares) | 54,874 | 161,734 | 54,874 | 161,734 | ' |
Compensation cost, recognized | $0 | $988,000 | $0 | $1,108,000 | ' |
Weighted average grant date fair value of unvested awards (in dollars per share) | $26.65 | ' | $26.65 | ' | ' |
Total fair value of stock awards vested | ' | ' | 0 | 0 | ' |
Accrued liabilities, employee benefits | 0 | ' | 0 | ' | 2,787,000 |
Unrecognized compensation expense related to unvested shares | 1,436,000 | ' | 1,436,000 | ' | ' |
Performance Stock Awards [Member] | ' | ' | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' | ' | ' |
Stock awards granted (in shares) | ' | ' | 17,312 | 28,535 | ' |
Stock awards vesting period | ' | ' | '3 years | '3 years | ' |
Number of shares of common stock that can be granted, maximum (in shares) | 20,774 | 32,880 | 20,774 | 32,880 | ' |
Unvested stock awards outstanding (in shares) | 59,453 | 130,926 | 59,453 | 130,926 | ' |
Compensation cost, recognized | 0 | 97,000 | 0 | 112,000 | ' |
Weighted average grant date fair value of unvested awards (in dollars per share) | $26.12 | ' | $26.12 | ' | ' |
Total fair value of stock awards vested | ' | ' | 0 | 0 | ' |
Unrecognized compensation expense related to unvested shares | 1,553,000 | ' | 1,553,000 | ' | ' |
Restricted Stock [Member] | ' | ' | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' | ' | ' |
Stock awards granted (in shares) | ' | ' | 51,004 | 83,729 | ' |
Unvested stock awards outstanding (in shares) | 119,297 | 220,343 | 119,297 | 220,343 | ' |
Compensation cost, recognized | 308,000 | 403,000 | 934,000 | 1,191,000 | ' |
Total fair value of stock awards vested | ' | ' | 3,053,000 | 2,177,000 | ' |
Unrecognized compensation expense related to unvested shares | $1,478,000 | ' | $1,478,000 | ' | ' |
Recognition period for unrecognized compensation expense | ' | ' | '3 years | ' | ' |
Restricted Stock [Member] | Minimum [Member] | ' | ' | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' | ' | ' |
Stock awards vesting period | ' | ' | '1 year | ' | ' |
Restricted Stock [Member] | Maximum [Member] | ' | ' | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' | ' | ' |
Stock awards vesting period | ' | ' | '4 years | ' | ' |
Pension_and_Other_Postretireme2
Pension and Other Postretirement Benefit Plans (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 |
Components of Net Periodic Benefit Cost [Abstract] | ' | ' | ' | ' |
Benefit plan adjustments, net of tax | $528 | $676 | $1,506 | $1,996 |
Tax on reclassified benefit plan adjustments from accumulated other comprehensive loss | 354 | 376 | 1,060 | 1,160 |
Pension Benefits [Member] | ' | ' | ' | ' |
Components of Net Periodic Benefit Cost [Abstract] | ' | ' | ' | ' |
Service cost | 135 | 88 | 402 | 257 |
Interest cost | 1,357 | 1,334 | 4,068 | 3,996 |
Expected return on plan assets | -1,648 | -1,598 | -4,942 | -4,785 |
Amortization of transition obligation | 19 | 9 | 57 | 27 |
Amortization of net actuarial loss | 714 | 845 | 2,141 | 2,536 |
Net periodic benefit cost | 577 | 678 | 1,726 | 2,031 |
Expected contributions to its pension plan in 2014 | ' | ' | 2,632 | ' |
Contributions made during period | ' | ' | 1,890 | ' |
Postretirement Benefits [Member] | ' | ' | ' | ' |
Components of Net Periodic Benefit Cost [Abstract] | ' | ' | ' | ' |
Service cost | 9 | 8 | 28 | 25 |
Interest cost | 165 | 191 | 494 | 574 |
Amortization of net actuarial loss | 150 | 198 | 451 | 594 |
Net periodic benefit cost | $324 | $397 | $973 | $1,193 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 9 Months Ended | |
Mar. 28, 2014 | Mar. 29, 2013 | |
Income Taxes [Abstract] | ' | ' |
Effective income tax rate (in hundredths) | 66.60% | 46.60% |
Unrecognized tax benefits if recognized would favorably impact effective tax rate | $1,900,000 | ' |
Italy, Canada, Belgium, and Japan [Member] | ' | ' |
Income Tax Examination [Line Items] | ' | ' |
Tax years that remain subject to examination | '2009 through 2013 | ' |
U.S. [Member] | ' | ' |
Income Tax Examination [Line Items] | ' | ' |
Tax years that remain subject to examination | 'subsequent to fiscal 2011 | ' |
Wisconsin State [Member] | ' | ' |
Income Tax Examination [Line Items] | ' | ' |
Tax years that remain subject to examination | '2001 through 2009 | ' |
Goodwill_and_Other_Intangibles2
Goodwill and Other Intangibles (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Jun. 30, 2013 | |
Goodwill [Roll Forward] | ' | ' | ' | ' | ' |
Balance at June 30, 2013 | ' | ' | $13,232,000 | ' | ' |
Translation adjustment | ' | ' | 294,000 | ' | ' |
Net balance at March 28, 2014 | 13,526,000 | ' | 13,526,000 | ' | 13,232,000 |
Intangible assets with finite lives [Abstract] | ' | ' | ' | ' | ' |
Licensing agreements | 3,015,000 | ' | 3,015,000 | ' | 3,015,000 |
Non-compete agreements | 2,050,000 | ' | 2,050,000 | ' | 2,050,000 |
Trade name | 2,596,000 | ' | 2,596,000 | ' | 0 |
Other | 5,991,000 | ' | 5,991,000 | ' | 5,991,000 |
Intangible assets, gross | 13,652,000 | ' | 13,652,000 | ' | 11,056,000 |
Accumulated amortization | -9,657,000 | ' | -9,657,000 | ' | -9,301,000 |
Accumulated impairment charge | ' | ' | -1,277,000 | ' | -1,277,000 |
Foreign currency translation | ' | ' | 2,000 | ' | 546,000 |
Total | 2,720,000 | ' | 2,720,000 | ' | 1,024,000 |
Weighted average remaining useful life | ' | ' | '16 years | ' | ' |
Intangible amortization expense | 121,000 | 184,000 | 356,000 | 538,000 | ' |
Estimated intangible amortization expense [Abstract] | ' | ' | ' | ' | ' |
2014 | 121,000 | ' | 121,000 | ' | ' |
2015 | 253,000 | ' | 253,000 | ' | ' |
2016 | 166,000 | ' | 166,000 | ' | ' |
2017 | 162,000 | ' | 162,000 | ' | ' |
2018 | 162,000 | ' | 162,000 | ' | ' |
2019 | 162,000 | ' | 162,000 | ' | ' |
Carrying amount of indefinite lived intangible assets, gross | $227,000 | ' | $227,000 | ' | $2,125,000 |
Useful life, Trade Names | ' | ' | '20 years | ' | ' |
Longterm_Debt_Details
Long-term Debt (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Mar. 28, 2014 | Jun. 30, 2013 | |
Quarter | ||
Debt Instrument [Line Items] | ' | ' |
Subtotal | $25,047,000 | $27,153,000 |
Less: current maturities and short-term borrowings | -3,625,000 | -3,681,000 |
Total long-term debt | 21,422,000 | 23,472,000 |
Number of recent quarters considered for minimum EBITDA | 4 | ' |
US treasury yield curve rate (in hundredths) | 0.93% | 0.66% |
Add-on-to reference rate to calculate discount rate (in hundredths) | 1.65% | 1.65% |
Total rate of interest (in hundredths) | 2.58% | 2.31% |
Revolving Loan [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Subtotal | 14,250,000 | 16,300,000 |
10-year Unsecured Senior Notes [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Subtotal | 10,714,000 | 10,714,000 |
Maturity period of unsecured senior notes | '10 years | ' |
Maturity date of note agreement | 10-Apr-16 | ' |
Fair value of long term debt | 11,214,000 | 11,536,000 |
Other [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Subtotal | $83,000 | $139,000 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | ||||||||||||||
In Thousands, except Share data, unless otherwise specified | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jul. 27, 2012 | Feb. 01, 2008 | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 |
Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Retained Earnings [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Treasury Stock [Member] | Non-Controlling Interest [Member] | Non-Controlling Interest [Member] | |||||
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares authorize to repurchase (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 375,000 | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock repurchased during period (in shares) | ' | ' | ' | ' | ' | ' | 185,000 | 125,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance, beginning of period | ' | ' | $143,562 | $136,509 | $13,183 | $12,759 | $12,759 | ' | ' | ' | $184,110 | $184,306 | ($25,899) | ($34,797) | ($28,890) | ($26,781) | $1,058 | $1,022 |
Net income | -442 | -608 | 1,488 | 4,078 | ' | ' | ' | ' | ' | ' | 1,320 | 3,835 | ' | ' | ' | ' | 168 | 243 |
Translation adjustments | 1,054 | -874 | 4,053 | 2,520 | ' | ' | ' | ' | ' | ' | ' | ' | 4,137 | 2,557 | ' | ' | -84 | -37 |
Benefit plan adjustments, net of tax | 528 | 676 | 1,506 | 1,996 | ' | ' | ' | ' | ' | ' | ' | ' | 1,506 | 1,996 | ' | ' | ' | ' |
Cash dividends | ' | ' | -3,532 | -3,272 | ' | ' | ' | ' | ' | ' | -3,045 | -3,067 | ' | ' | ' | ' | -487 | -205 |
Compensation expense and windfall tax benefits | ' | ' | 1,457 | 2,579 | 1,457 | 2,579 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares (acquired) issued, net | ' | ' | -2,169 | -4,579 | -2,964 | -2,937 | ' | ' | ' | ' | ' | ' | ' | ' | 795 | -1,642 | ' | ' |
Balance, end of period | $146,365 | $139,831 | $146,365 | $139,831 | $11,676 | $12,401 | $13,183 | $12,759 | ' | ' | $182,385 | $185,074 | ($20,256) | ($30,244) | ($28,095) | ($28,423) | $655 | $1,023 |
Restructuring_of_Operations_De
Restructuring of Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Mar. 28, 2014 | Jun. 30, 2013 | Mar. 29, 2013 | Mar. 28, 2014 | Mar. 29, 2013 | |
Restructuring of Operations [Abstract] | ' | ' | ' | ' | ' |
Pre-tax restructuring charge | $0 | $548,000 | $0 | $1,094,000 | $0 |
Cash payments | ' | ' | ' | 832,000 | ' |
Accrual balance of restructuring charge | $856,000 | ' | ' | $856,000 | ' |