Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 26, 2014 | Oct. 23, 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 | ' | 11,264,734 |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 26-Sep-14 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Sep. 26, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash | $25,700 | $24,757 |
Trade accounts receivable, net | 39,120 | 40,219 |
Inventories, net | 97,452 | 97,579 |
Deferred income taxes | 4,677 | 4,779 |
Other | 11,988 | 12,763 |
Total current assets | 178,937 | 180,097 |
Property, plant and equipment, net | 58,980 | 60,267 |
Goodwill, net | 13,314 | 13,463 |
Deferred income taxes | 1,434 | 2,556 |
Intangible assets, net | 2,659 | 2,797 |
Other assets | 8,227 | 7,805 |
Total assets | 263,551 | 266,985 |
Current liabilities: | ' | ' |
Short-term borrowings and current maturities of long-term debt | 3,575 | 3,604 |
Accounts payable | 20,781 | 22,111 |
Accrued liabilities | 29,730 | 31,265 |
Total current liabilities | 54,086 | 56,980 |
Long-term debt | 19,998 | 14,800 |
Accrued retirement benefits | 32,734 | 37,006 |
Deferred income taxes | 1,408 | 1,778 |
Other long-term liabilities | 4,247 | 4,110 |
Total liabilities | 112,473 | 114,674 |
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 | 11,708 | 11,973 |
Retained earnings | 186,723 | 183,695 |
Accumulated other comprehensive loss | -19,792 | -15,943 |
Shareholders' equity before treasury stock | 178,639 | 179,725 |
Less treasury stock, at cost (1,834,734 and 1,837,595 shares, respectively) | 28,097 | 28,141 |
Total Twin Disc shareholders' equity | 150,542 | 151,584 |
Noncontrolling interest | 536 | 727 |
Total equity | 151,078 | 152,311 |
Total liabilities and equity | $263,551 | $266,985 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) | Sep. 26, 2014 | Jun. 30, 2014 |
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) | 1,834,734 | 1,837,595 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Sep. 26, 2014 | Sep. 27, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract] | ' | ' |
Net sales | $64,824 | $66,426 |
Cost of goods sold | 42,435 | 45,759 |
Gross profit | 22,389 | 20,667 |
Marketing, engineering and administrative expenses | 15,910 | 15,517 |
Restructuring of operations | 0 | 1,094 |
Earnings from operations | 6,479 | 4,056 |
Interest expense | 164 | 254 |
Other (income) expense, net | -340 | -34 |
Other income (expense) total | -176 | 220 |
Earnings before income taxes and noncontrolling interest | 6,655 | 3,836 |
Income taxes | 2,593 | 2,472 |
Net earnings | 4,062 | 1,364 |
Less: Net earnings attributable to noncontrolling interest, net of tax | -19 | -87 |
Net earnings attributable to Twin Disc | 4,043 | 1,277 |
Dividends per share (in dollars per share) | $0.09 | $0.09 |
Earnings per share data: | ' | ' |
Basic earnings per share attributable to Twin Disc common shareholders (in dollars per share) | $0.36 | $0.11 |
Diluted earnings per share attributable to Twin Disc common shareholders (in dollars per share) | $0.36 | $0.11 |
Weighted average shares outstanding data: | ' | ' |
Basic shares outstanding (in shares) | 11,270 | 11,234 |
Dilutive stock awards (in shares) | 6 | 6 |
Diluted shares outstanding (in shares) | 11,276 | 11,240 |
Comprehensive income: | ' | ' |
Net earnings | 4,062 | 1,364 |
Benefit plan adjustments, net of income taxes of $290 and $352, respectively | 488 | 450 |
Foreign currency translation adjustment | -4,328 | 1,880 |
Comprehensive income | 222 | 3,694 |
Less: comprehensive income attributable to noncontrolling interest | -28 | -41 |
Comprehensive income attributable to Twin Disc | $194 | $3,653 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 26, 2014 | Sep. 27, 2013 |
Other comprehensive income, net: | ' | ' |
Benefit plan adjustments, tax | $290 | $352 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 26, 2014 | Sep. 27, 2013 |
Cash flows from operating activities: | ' | ' |
Net earnings | $4,062 | $1,364 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 2,564 | 2,603 |
Restructuring of operations | 0 | 1,094 |
Other non-cash changes, net | 962 | 2,323 |
Net change in operating assets and liabilities | -7,209 | 2,338 |
Net cash provided by operating activities | 379 | 9,722 |
Cash flows from investing activities: | ' | ' |
Acquisitions of fixed assets | -2,175 | -866 |
Proceeds from sale of fixed assets | 89 | 0 |
Other, net | -166 | 0 |
Net cash used by investing activities | -2,252 | -866 |
Cash flows from financing activities: | ' | ' |
Payments of notes payable | -29 | -14 |
Borrowings under revolving loan agreement | 21,750 | 16,600 |
Repayments under revolving loan agreement | -16,550 | -18,905 |
Proceeds from exercise of stock options | 15 | 0 |
Dividends paid to shareholders | -1,015 | -1,015 |
Dividends paid to noncontrolling interest | -219 | -486 |
Excess tax (shortfall) benefits from stock compensation | -31 | 435 |
Payments of withholding taxes on stock compensation | -314 | -2,126 |
Net cash provided (used) by financing activities | 3,607 | -5,511 |
Effect of exchange rate changes on cash | -791 | -7 |
Net change in cash | 943 | 3,338 |
Cash: | ' | ' |
Beginning of period | 24,757 | 20,724 |
End of period | $25,700 | $24,062 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended | |
Sep. 26, 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. | ||
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 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 in the first quarter of fiscal 2014. | |
· | The Company had overstated its warranty accrual by $217,000 as of June 30, 2013, resulting in an increase to earnings from operations in the first quarter of fiscal 2014. | |
· | 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 in the first quarter of fiscal 2014. | |
· | The Company’s deferred tax liabilities were understated by $285,000 as of June 30, 2013, resulting in additional tax expense in the first quarter of fiscal 2014. | |
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 quarter ended September 27, 2013. | ||
New Accounting Releases | ||
In August 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern. The amendments in this guidance are effective for fiscal years ending after December 15, 2016 (the Company’s fiscal 2017), and interim periods within fiscal years beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company’s financial disclosures. | ||
In June 2014, the FASB issued stock compensation guidance requiring that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 (the Company’s fiscal 2017). The adoption of this guidance is not expected to have a material impact on the Company’s financial disclosures. | ||
In May 2014, the FASB issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing US GAAP guidance, including most industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance identifies steps to apply in achieving this principle. This updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (the Company’s fiscal 2018). The Company is currently evaluating the potential impact of this guidance on the Company’s financial disclosures and results. | ||
In April 2014, the FASB issued updated guidance on the reporting for discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. The new guidance also requires expanded financial disclosures about discontinued operations. The amendments in this updated guidance are effective for the first quarter of the Company’s fiscal 2016. The adoption of this guidance is not expected to have a material impact on the Company’s financial disclosures. | ||
In July 2013, the 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 did not have a material impact on the Company’s financial disclosures. |
Inventory
Inventory | 3 Months Ended | ||||||||
Sep. 26, 2014 | |||||||||
Inventory [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
B. | Inventory | ||||||||
The major classes of inventories were as follows (in thousands): | |||||||||
September 26, | June 30, | ||||||||
2014 | 2014 | ||||||||
Inventories: | |||||||||
Finished parts | $ | 65,169 | $ | 66,418 | |||||
Work in process | 12,200 | 12,419 | |||||||
Raw materials | 20,083 | 18,742 | |||||||
$ | 97,452 | $ | 97,579 |
Warranty
Warranty | 3 Months Ended | ||||||||
Sep. 26, 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 month periods ended September 26, 2014 and September 27, 2013 (in thousands): | |||||||||
Three Months Ended | |||||||||
Sept. 26, | Sept. 27, | ||||||||
2014 | 2013 | ||||||||
Reserve balance, beginning of period | $ | 5,968 | $ | 5,701 | |||||
Current period expense | 546 | 371 | |||||||
Payments or credits to customers | (541 | ) | (381 | ) | |||||
Translation | (138 | ) | (27 | ) | |||||
Reserve balance, end of period | $ | 5,835 | $ | 5,664 | |||||
The current portion of the warranty accrual ($3,661,000 and $4,096,000 for fiscal 2015 and 2014, respectively) is reflected in accrued liabilities, while the long-term portion ($2,154,000 and $1,568,000 for fiscal 2015 and 2014, respectively) is included in other long-term liabilities on the Consolidated Balance Sheets. |
Contingencies
Contingencies | 3 Months Ended | |
Sep. 26, 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 | 3 Months Ended | ||||||||
Sep. 26, 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. 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 | |||||||||
Sept. 26, | Sept. 27, | ||||||||
2014 | 2013 | ||||||||
Manufacturing segment sales | $ | 60,274 | $ | 53,258 | |||||
Distribution segment sales | 24,011 | 31,014 | |||||||
Inter/Intra segment elimination - manufacturing | (17,394 | ) | (13,768 | ) | |||||
Inter/Intra segment elimination - distribution | (2,067 | ) | (4,078 | ) | |||||
Net sales | $ | 64,824 | $ | 66,426 | |||||
Manufacturing segment net earnings | $ | 5,171 | $ | 2,017 | |||||
Distribution segment net earnings | 1,178 | 1,881 | |||||||
Corporate and eliminations | (2,306 | ) | (2,621 | ) | |||||
Net earnings attributable to Twin Disc | $ | 4,043 | $ | 1,277 | |||||
Sept. 26, | June 30, | ||||||||
Assets | 2014 | 2014 | |||||||
Manufacturing segment assets | $ | 258,867 | $ | 254,652 | |||||
Distribution segment assets | 56,206 | 57,233 | |||||||
Corporate assets and elimination of inter‑company assets | (51,522 | ) | (44,900 | ) | |||||
$ | 263,551 | $ | 266,985 |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |
Sep. 26, 2014 | ||
Stock-Based Compensation [Abstract] | ' | |
Stock-Based Compensation | ' | |
F. | Stock-Based Compensation | |
In the first quarter of fiscal 2015 and 2014, the Company granted a target number of 15,561 and 43,154 performance stock unit awards, respectively, to various employees of the Company, including executive officers. The performance stock unit awards granted in fiscal 2015 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, 2017. The performance stock unit awards granted in fiscal 2015 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 15,796. 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 2015. 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 23,862. 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. There were 52,041 and 86,116 unvested stock unit awards outstanding at September 26, 2014 and September 27, 2013, respectively. The weighted average grant date fair value of the unvested awards at September 26, 2014 was $24.99. 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. There was no compensation expense for the three months ended September 26, 2014 and September 27, 2013, related to the performance stock unit award grants. At September 26, 2014, the Company had $1,386,000 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2015, 2014 and 2013 awards. The total fair value of performance stock unit awards vested as of September 26, 2014 and September 27, 2017 were $0. The performance stock unit awards are cash based, and would therefore be recorded as a liability on the Company’s Consolidated Balance Sheets. As of September 26, 2014, these awards are $0. As of June 30, 2014, there were no awards included in “Liabilities” due to actual results to date and the low probability of achieving any of the threshold performance levels. | ||
In the first quarter of fiscal 2015 and 2014, the Company granted a target number of 15,561 and 17,312 performance stock awards, respectively, to various employees of the Company, including executive officers. The performance stock awards granted in fiscal 2015 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, 2017. The performance stock awards granted in fiscal 2015 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 15,796. 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 2015. 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 18,694. 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. There were 54,863 and 59,453 unvested stock awards outstanding at September 26, 2014 and September 27, 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. There was no compensation expense for the three months ended September 26, 2014 and September 27, 2013, related to performance stock awards. The weighted average grant date fair value of the unvested awards at September 26, 2014 was $24.39. At September 26, 2014, the Company had $1,338,000 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2015, 2014 and 2013 awards. The total fair value of performance stock awards vested as of September 26, 2014 and September 27, 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 first quarter of fiscal 2015 and 2014, the Company granted 31,122 and 39,874 service based restricted shares, respectively, to employees in each year. There were 105,642 and 130,905 unvested shares outstanding at September 26, 2014 and September 27, 2013, respectively. Compensation expense of $108,000 and $318,000 was recognized for the three months ended September 26, 2014 and September 27, 2013, respectively. The total fair value of restricted stock grants vested as of September 26, 2014 and September 27, 2013 was $654,000 and $2,464,000, respectively. As of September 26, 2014, the Company had $1,479,000 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 | 3 Months Ended | ||||||||
Sep. 26, 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 | |||||||||
Sept. 26, | Sept. 27, | ||||||||
2014 | 2013 | ||||||||
Pension Benefits: | |||||||||
Service cost | $ | 119 | $ | 133 | |||||
Interest cost | 1,222 | 1,355 | |||||||
Expected return on plan assets | (1,681 | ) | (1,647 | ) | |||||
Amortization of transition obligation | 9 | 19 | |||||||
Amortization of net loss | 609 | 713 | |||||||
Net periodic benefit cost | $ | 278 | $ | 573 | |||||
Postretirement Benefits: | |||||||||
Service cost | $ | 8 | $ | 10 | |||||
Interest cost | 145 | 165 | |||||||
Amortization of net actuarial loss | 159 | 150 | |||||||
Net periodic benefit cost | $ | 312 | $ | 325 | |||||
The Company expects to contribute approximately $6,172,000 to its pension plans in fiscal 2015. As of September 26, 2014, $3,950,000 in contributions have been made. | |||||||||
The Company has reclassified $488,000 (net of $290,000 in taxes) of benefit plan adjustments from accumulated other comprehensive loss during the three months ended September 26, 2014. The Company has reclassified $530,000 (net of $352,000 in taxes) of benefit plan adjustments from accumulated other comprehensive loss during the three months ended September 27, 2013. These reclassifications are included in the computation of net periodic benefit cost. |
Income_Taxes
Income Taxes | 3 Months Ended | |
Sep. 26, 2014 | ||
Income Taxes [Abstract] | ' | |
Income Taxes | ' | |
H. | Income Taxes | |
For the three months ended September 26, 2014 and September 27, 2013, the Company’s effective income tax rate was 39.0% and 64.4% respectively. Both periods were impacted by non-deductible operating losses in a certain foreign jurisdiction that is subject to a full valuation allowance. The fiscal 2014 rate was unfavorably impacted by adjustments to tax on foreign earnings (Canada and Italy) recorded in the first quarter. | ||
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 certain foreign jurisdictions, the company has evaluated the realizability of the net deferred tax assets related to these jurisdictions. 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. | ||
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 $1,950,000 of unrecognized tax benefits, including related interest and penalties, as of September 26, 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, the expiration of statutes of limitations or for other items during the quarter ended September 26, 2014. It appears 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, Canada, Belgium, and Japan. The tax years open to examination in the U.S. are for years subsequent to fiscal 2011. The State of Wisconsin income tax audit remains ongoing for the fiscal years 2001 through 2009. The Company has not been notified of any other tax examinations covering open periods. It is reasonably possible that at least one of these audit cycles will be completed during fiscal 2015. |
Goodwill_and_Other_Intangibles
Goodwill and Other Intangibles | 3 Months Ended | ||||||||||||||||
Sep. 26, 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 three months ended September 26, 2014 were as follows (in thousands): | |||||||||||||||||
Gross | Accumulated | Net Book | |||||||||||||||
Carrying | Impairment | Value | |||||||||||||||
Amount | |||||||||||||||||
Balance at June 30, 2014 | $ | 17,133 | $ | (3,670 | ) | $ | 13,463 | ||||||||||
Translation adjustment | (149 | ) | - | (149 | ) | ||||||||||||
Balance at September 26, 2014 | $ | 16,984 | $ | (3,670 | ) | $ | 13,314 | ||||||||||
The gross carrying amount and accumulated amortization of the Company’s intangible assets that have defined useful lives and are subject to amortization as of September 26, 2014 and June 30, 2014 were as follows (in thousands): | |||||||||||||||||
26-Sep-14 | |||||||||||||||||
Gross | Accumulated | Accumulated | Net Book | ||||||||||||||
Carrying | Amortization | Impairment | Value | ||||||||||||||
Amount | |||||||||||||||||
Licensing agreements | $ | 3,015 | $ | (2,460 | ) | $ | - | $ | 555 | ||||||||
Non-compete agreements | 2,128 | ( 2,045 | ) | ( 83 | ) | - | |||||||||||
Trade name | 1,940 | ( 125 | ) | - | 1,815 | ||||||||||||
Other | 6,479 | ( 5,215 | ) | ( 1,194 | ) | 70 | |||||||||||
$ | 13,562 | $ | (9,845 | ) | $ | (1,277 | ) | $ | 2,440 | ||||||||
30-Jun-14 | |||||||||||||||||
Gross | Accumulated | Accumulated | Net Book | ||||||||||||||
Carrying | Amortization | Impairment | Value | ||||||||||||||
Amount | |||||||||||||||||
Licensing agreements | $ | 3,015 | $ | (2,445 | ) | $ | - | $ | 570 | ||||||||
Non-compete agreements | 2,128 | ( 2,045 | ) | ( 83 | ) | - | |||||||||||
Trade name | 2,009 | ( 100 | ) | - | 1,909 | ||||||||||||
Other | 6,482 | ( 5,193 | ) | ( 1,194 | ) | 95 | |||||||||||
$ | 13,634 | $ | (9,783 | ) | $ | (1,277 | ) | $ | 2,574 | ||||||||
The weighted average remaining useful life of the intangible assets included in the table above is approximately 16 years. | |||||||||||||||||
Intangible amortization expense was $62,000 for the three months ended September 26, 2014, and $116,000 for the three months ended September 27, 2013, respectively. Estimated intangible amortization expense for the remainder of fiscal 2015 and each of the next five fiscal years is as follows (in thousands): | |||||||||||||||||
Fiscal Year | |||||||||||||||||
2015 | $ | 183 | |||||||||||||||
2016 | 161 | ||||||||||||||||
2017 | 157 | ||||||||||||||||
2018 | 157 | ||||||||||||||||
2019 | 157 | ||||||||||||||||
2020 | 157 | ||||||||||||||||
The gross carrying amount of the Company’s intangible assets that have indefinite lives and are not subject to amortization as of September 26, 2014 and June 30, 2014 are $219,000 and $223,000, 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 of fiscal 2014, 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 | 3 Months Ended | ||||||||
Sep. 26, 2014 | |||||||||
Long-term Debt [Abstract] | ' | ||||||||
Long-term Debt | ' | ||||||||
J. | Long-term Debt | ||||||||
Long-term debt at September 26, 2014 and June 30, 2014 consisted of the following (in thousands): | |||||||||
September 26, | June 30, | ||||||||
2014 | 2014 | ||||||||
Revolving loan | $ | 16,400 | $ | 11,200 | |||||
10-year unsecured senior notes | 7,143 | 7,143 | |||||||
Other | 30 | 61 | |||||||
Subtotal | 23,573 | 18,404 | |||||||
Less: current maturities and short-term borrowings | (3,575 | ) | (3,604 | ) | |||||
Total long-term debt | $ | 19,998 | $ | 14,800 | |||||
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 September 26, 2014, the Company was in compliance with these covenants. | |||||||||
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 (1.08% and 0.88% for September 26, 2014 and June 30, 2014, respectively), plus the current add-on related to the revolving loan agreement (1.00% for September 26, 2014 and June 30, 2014) resulting in a total rate of 2.08% and 1.88% for September 26, 2014 and June 30, 2014, respectively. The fair value of the Company’s 10-year unsecured senior notes due April 10, 2016 was approximately $7,517,000 and $7,605,000 at September 26, 2014 and June 30, 2014, respectively. The Company’s revolving loan agreement approximates fair value at September 26, 2014 and June 30, 2014. 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 | 3 Months Ended | ||||||||||||||||||||||||
Sep. 26, 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 three months of 2014 and 2015 (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, 2013 | $ | 13,183 | $ | 184,110 | $ | (25,899 | ) | $ | (28,890 | ) | $ | 1,058 | $ | 143,562 | |||||||||||
Net income | 1,277 | 87 | 1,364 | ||||||||||||||||||||||
Translation adjustments | 1,926 | (46 | ) | 1,880 | |||||||||||||||||||||
Benefit plan adjustments, net of tax | 450 | 450 | |||||||||||||||||||||||
Cash dividends | (1,015 | ) | (486 | ) | (1,501 | ) | |||||||||||||||||||
Compensation expense and windfall tax benefits | 753 | 753 | |||||||||||||||||||||||
Shares (acquired) issued, net | (2,777 | ) | 652 | (2,125 | ) | ||||||||||||||||||||
Balance-September 27, 2013 | $ | 11,159 | $ | 184,372 | $ | (23,523 | ) | $ | (28,238 | ) | $ | 613 | $ | 144,383 | |||||||||||
Twin Disc, Inc. Shareholders’ Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Non- | ||||||||||||||||||||||||
Common | Retained | Comprehensive | Treasury | Controlling | Total | ||||||||||||||||||||
Stock | Earnings | Income (Loss) | Stock | Interest | Equity | ||||||||||||||||||||
Balance-June 30, 2014 | $ | 11,973 | $ | 183,695 | $ | (15,943 | ) | $ | (28,141 | ) | $ | 727 | $ | 152,311 | |||||||||||
Net income | 4,043 | 19 | 4,062 | ||||||||||||||||||||||
Translation adjustments | (4,337 | ) | 9 | (4,328 | ) | ||||||||||||||||||||
Benefit plan adjustments, net of tax | 488 | 488 | |||||||||||||||||||||||
Cash dividends | (1,015 | ) | (219 | ) | (1,234 | ) | |||||||||||||||||||
Compensation expense and windfall tax benefits | 77 | 77 | |||||||||||||||||||||||
Shares (acquired) issued, net | (342 | ) | 44 | (298 | ) | ||||||||||||||||||||
Balance-September 26, 2014 | $ | 11,708 | $ | 186,723 | $ | (19,792 | ) | $ | (28,097 | ) | $ | 536 | $ | 151,078 |
Restructuring_of_Operations
Restructuring of Operations | 3 Months Ended | |
Sep. 26, 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 fiscal 2014, the Company made cash payments of $857,000, resulting in an accrual balance at June 30, 2014 of $785,000. The Company made additional payments of $6,000 in the first quarter of fiscal 2015, resulting in a September 26, 2014 balance of $721,000 after a foreign exchange impact of $58,000. This remaining obligation relates to increased pension benefits agreed to as part of the restructuring and is expected to be paid out over the next several years. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 3 Months Ended |
Sep. 26, 2014 | |
Basis of Presentation [Abstract] | ' |
New Accounting Releases | ' |
In August 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern. The amendments in this guidance are effective for fiscal years ending after December 15, 2016 (the Company’s fiscal 2017), and interim periods within fiscal years beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company’s financial disclosures. | |
In June 2014, the FASB issued stock compensation guidance requiring that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 (the Company’s fiscal 2017). The adoption of this guidance is not expected to have a material impact on the Company’s financial disclosures. | |
In May 2014, the FASB issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing US GAAP guidance, including most industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance identifies steps to apply in achieving this principle. This updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (the Company’s fiscal 2018). The Company is currently evaluating the potential impact of this guidance on the Company’s financial disclosures and results. | |
In April 2014, the FASB issued updated guidance on the reporting for discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. The new guidance also requires expanded financial disclosures about discontinued operations. The amendments in this updated guidance are effective for the first quarter of the Company’s fiscal 2016. The adoption of this guidance is not expected to have a material impact on the Company’s financial disclosures. | |
In July 2013, the 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 did not have a material impact on the Company’s financial disclosures. |
Inventory_Tables
Inventory (Tables) | 3 Months Ended | ||||||||
Sep. 26, 2014 | |||||||||
Inventory [Abstract] | ' | ||||||||
Major Classes of Inventories | ' | ||||||||
The major classes of inventories were as follows (in thousands): | |||||||||
September 26, | June 30, | ||||||||
2014 | 2014 | ||||||||
Inventories: | |||||||||
Finished parts | $ | 65,169 | $ | 66,418 | |||||
Work in process | 12,200 | 12,419 | |||||||
Raw materials | 20,083 | 18,742 | |||||||
$ | 97,452 | $ | 97,579 |
Warranty_Tables
Warranty (Tables) | 3 Months Ended | ||||||||
Sep. 26, 2014 | |||||||||
Warranty [Abstract] | ' | ||||||||
Warranty Reserve | ' | ||||||||
The following is a listing of the activity in the warranty reserve during the three month periods ended September 26, 2014 and September 27, 2013 (in thousands): | |||||||||
Three Months Ended | |||||||||
Sept. 26, | Sept. 27, | ||||||||
2014 | 2013 | ||||||||
Reserve balance, beginning of period | $ | 5,968 | $ | 5,701 | |||||
Current period expense | 546 | 371 | |||||||
Payments or credits to customers | (541 | ) | (381 | ) | |||||
Translation | (138 | ) | (27 | ) | |||||
Reserve balance, end of period | $ | 5,835 | $ | 5,664 |
Business_Segments_Tables
Business Segments (Tables) | 3 Months Ended | ||||||||
Sep. 26, 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 | |||||||||
Sept. 26, | Sept. 27, | ||||||||
2014 | 2013 | ||||||||
Manufacturing segment sales | $ | 60,274 | $ | 53,258 | |||||
Distribution segment sales | 24,011 | 31,014 | |||||||
Inter/Intra segment elimination - manufacturing | (17,394 | ) | (13,768 | ) | |||||
Inter/Intra segment elimination - distribution | (2,067 | ) | (4,078 | ) | |||||
Net sales | $ | 64,824 | $ | 66,426 | |||||
Manufacturing segment net earnings | $ | 5,171 | $ | 2,017 | |||||
Distribution segment net earnings | 1,178 | 1,881 | |||||||
Corporate and eliminations | (2,306 | ) | (2,621 | ) | |||||
Net earnings attributable to Twin Disc | $ | 4,043 | $ | 1,277 | |||||
Sept. 26, | June 30, | ||||||||
Assets | 2014 | 2014 | |||||||
Manufacturing segment assets | $ | 258,867 | $ | 254,652 | |||||
Distribution segment assets | 56,206 | 57,233 | |||||||
Corporate assets and elimination of inter‑company assets | (51,522 | ) | (44,900 | ) | |||||
$ | 263,551 | $ | 266,985 |
Pension_and_Other_Postretireme1
Pension and Other Postretirement Benefit Plans (Tables) | 3 Months Ended | ||||||||
Sep. 26, 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 | |||||||||
Sept. 26, | Sept. 27, | ||||||||
2014 | 2013 | ||||||||
Pension Benefits: | |||||||||
Service cost | $ | 119 | $ | 133 | |||||
Interest cost | 1,222 | 1,355 | |||||||
Expected return on plan assets | (1,681 | ) | (1,647 | ) | |||||
Amortization of transition obligation | 9 | 19 | |||||||
Amortization of net loss | 609 | 713 | |||||||
Net periodic benefit cost | $ | 278 | $ | 573 | |||||
Postretirement Benefits: | |||||||||
Service cost | $ | 8 | $ | 10 | |||||
Interest cost | 145 | 165 | |||||||
Amortization of net actuarial loss | 159 | 150 | |||||||
Net periodic benefit cost | $ | 312 | $ | 325 |
Goodwill_and_Other_Intangibles1
Goodwill and Other Intangibles (Tables) | 3 Months Ended | ||||||||||||||||
Sep. 26, 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 three months ended September 26, 2014 were as follows (in thousands): | |||||||||||||||||
Gross | Accumulated | Net Book | |||||||||||||||
Carrying | Impairment | Value | |||||||||||||||
Amount | |||||||||||||||||
Balance at June 30, 2014 | $ | 17,133 | $ | (3,670 | ) | $ | 13,463 | ||||||||||
Translation adjustment | (149 | ) | - | (149 | ) | ||||||||||||
Balance at September 26, 2014 | $ | 16,984 | $ | (3,670 | ) | $ | 13,314 | ||||||||||
Acquired Intangible Assets with Finite Lives | ' | ||||||||||||||||
The gross carrying amount and accumulated amortization of the Company’s intangible assets that have defined useful lives and are subject to amortization as of September 26, 2014 and June 30, 2014 were as follows (in thousands): | |||||||||||||||||
26-Sep-14 | |||||||||||||||||
Gross | Accumulated | Accumulated | Net Book | ||||||||||||||
Carrying | Amortization | Impairment | Value | ||||||||||||||
Amount | |||||||||||||||||
Licensing agreements | $ | 3,015 | $ | (2,460 | ) | $ | - | $ | 555 | ||||||||
Non-compete agreements | 2,128 | ( 2,045 | ) | ( 83 | ) | - | |||||||||||
Trade name | 1,940 | ( 125 | ) | - | 1,815 | ||||||||||||
Other | 6,479 | ( 5,215 | ) | ( 1,194 | ) | 70 | |||||||||||
$ | 13,562 | $ | (9,845 | ) | $ | (1,277 | ) | $ | 2,440 | ||||||||
30-Jun-14 | |||||||||||||||||
Gross | Accumulated | Accumulated | Net Book | ||||||||||||||
Carrying | Amortization | Impairment | Value | ||||||||||||||
Amount | |||||||||||||||||
Licensing agreements | $ | 3,015 | $ | (2,445 | ) | $ | - | $ | 570 | ||||||||
Non-compete agreements | 2,128 | ( 2,045 | ) | ( 83 | ) | - | |||||||||||
Trade name | 2,009 | ( 100 | ) | - | 1,909 | ||||||||||||
Other | 6,482 | ( 5,193 | ) | ( 1,194 | ) | 95 | |||||||||||
$ | 13,634 | $ | (9,783 | ) | $ | (1,277 | ) | $ | 2,574 | ||||||||
Estimated Intangible Amortization Expense | ' | ||||||||||||||||
Estimated intangible amortization expense for the remainder of fiscal 2015 and each of the next five fiscal years is as follows (in thousands): | |||||||||||||||||
Fiscal Year | |||||||||||||||||
2015 | $ | 183 | |||||||||||||||
2016 | 161 | ||||||||||||||||
2017 | 157 | ||||||||||||||||
2018 | 157 | ||||||||||||||||
2019 | 157 | ||||||||||||||||
2020 | 157 |
Longterm_Debt_Tables
Long-term Debt (Tables) | 3 Months Ended | ||||||||
Sep. 26, 2014 | |||||||||
Long-term Debt [Abstract] | ' | ||||||||
Long-term Debt | ' | ||||||||
Long-term debt at September 26, 2014 and June 30, 2014 consisted of the following (in thousands): | |||||||||
September 26, | June 30, | ||||||||
2014 | 2014 | ||||||||
Revolving loan | $ | 16,400 | $ | 11,200 | |||||
10-year unsecured senior notes | 7,143 | 7,143 | |||||||
Other | 30 | 61 | |||||||
Subtotal | 23,573 | 18,404 | |||||||
Less: current maturities and short-term borrowings | (3,575 | ) | (3,604 | ) | |||||
Total long-term debt | $ | 19,998 | $ | 14,800 |
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Sep. 26, 2014 | |||||||||||||||||||||||||
Shareholders' Equity [Abstract] | ' | ||||||||||||||||||||||||
Reconciliation of Equity Balances | ' | ||||||||||||||||||||||||
The following is a reconciliation of the Company’s equity balances for the first fiscal three months of 2014 and 2015 (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, 2013 | $ | 13,183 | $ | 184,110 | $ | (25,899 | ) | $ | (28,890 | ) | $ | 1,058 | $ | 143,562 | |||||||||||
Net income | 1,277 | 87 | 1,364 | ||||||||||||||||||||||
Translation adjustments | 1,926 | (46 | ) | 1,880 | |||||||||||||||||||||
Benefit plan adjustments, net of tax | 450 | 450 | |||||||||||||||||||||||
Cash dividends | (1,015 | ) | (486 | ) | (1,501 | ) | |||||||||||||||||||
Compensation expense and windfall tax benefits | 753 | 753 | |||||||||||||||||||||||
Shares (acquired) issued, net | (2,777 | ) | 652 | (2,125 | ) | ||||||||||||||||||||
Balance-September 27, 2013 | $ | 11,159 | $ | 184,372 | $ | (23,523 | ) | $ | (28,238 | ) | $ | 613 | $ | 144,383 | |||||||||||
Twin Disc, Inc. Shareholders’ Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Non- | ||||||||||||||||||||||||
Common | Retained | Comprehensive | Treasury | Controlling | Total | ||||||||||||||||||||
Stock | Earnings | Income (Loss) | Stock | Interest | Equity | ||||||||||||||||||||
Balance-June 30, 2014 | $ | 11,973 | $ | 183,695 | $ | (15,943 | ) | $ | (28,141 | ) | $ | 727 | $ | 152,311 | |||||||||||
Net income | 4,043 | 19 | 4,062 | ||||||||||||||||||||||
Translation adjustments | (4,337 | ) | 9 | (4,328 | ) | ||||||||||||||||||||
Benefit plan adjustments, net of tax | 488 | 488 | |||||||||||||||||||||||
Cash dividends | (1,015 | ) | (219 | ) | (1,234 | ) | |||||||||||||||||||
Compensation expense and windfall tax benefits | 77 | 77 | |||||||||||||||||||||||
Shares (acquired) issued, net | (342 | ) | 44 | (298 | ) | ||||||||||||||||||||
Balance-September 26, 2014 | $ | 11,708 | $ | 186,723 | $ | (19,792 | ) | $ | (28,097 | ) | $ | 536 | $ | 151,078 |
Basis_of_Presentation_Details
Basis of Presentation (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||
Sep. 27, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | |
Overstatement of Payroll Accrual [Member] | Overstatement of Warranty Accrual [Member] | Overstatement of Work in Progress Inventory [Member] | Understatement of Deferred tax liabilities [Member] | ||
Revision of Prior Period Financial Statements [Abstract] | ' | ' | ' | ' | ' |
Impact of errors correction on earnings | $437,000 | $337,000 | $217,000 | ($117,000) | $285,000 |
Impact of errors correction on earnings net of tax attributable to parent | $69,000 | ' | ' | ' | ' |
Inventory_Details
Inventory (Details) (USD $) | Sep. 26, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Inventories [Abstract] | ' | ' |
Finished parts | $65,169 | $66,418 |
Work in process | 12,200 | 12,419 |
Raw materials | 20,083 | 18,742 |
Total Inventories | $97,452 | $97,579 |
Warranty_Details
Warranty (Details) (USD $) | 3 Months Ended | |
Sep. 26, 2014 | Sep. 27, 2013 | |
Activity in warranty reserve [Abstract] | ' | ' |
Reserve balance, beginning of period | $5,968,000 | $5,701,000 |
Current period expense | 546,000 | 371,000 |
Payments or credits to customers | -541,000 | -381,000 |
Translation | -138,000 | -27,000 |
Reserve balance, end of period | 5,835,000 | 5,664,000 |
Current portion of warranty accrual | 3,661,000 | 4,096,000 |
Long-term portion of warranty accrual | $2,154,000 | $1,568,000 |
Business_Segments_Details
Business Segments (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 26, 2014 | Sep. 27, 2013 | Jun. 30, 2014 |
Segment | |||
Business Segments [Abstract] | ' | ' | ' |
Number of reportable segments | 2 | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales | $64,824 | $66,426 | ' |
Net earnings attributable to Twin Disc | 4,043 | 1,277 | ' |
Assets | 263,551 | ' | 266,985 |
Corporate and Eliminations [Member] | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net earnings attributable to Twin Disc | -2,306 | -2,621 | ' |
Assets | -51,522 | ' | -44,900 |
Manufacturing Segment [Member] | Inter/Intra Segment Elimination [Member] | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales | -17,394 | -13,768 | ' |
Manufacturing Segment [Member] | Reportable Segment [Member] | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales | 60,274 | 53,258 | ' |
Net earnings attributable to Twin Disc | 5,171 | 2,017 | ' |
Assets | 258,867 | ' | 254,652 |
Distribution Segment [Member] | Inter/Intra Segment Elimination [Member] | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales | -2,067 | -4,078 | ' |
Distribution Segment [Member] | Reportable Segment [Member] | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales | 24,011 | 31,014 | ' |
Net earnings attributable to Twin Disc | 1,178 | 1,881 | ' |
Assets | $56,206 | ' | $57,233 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | ||
Sep. 26, 2014 | Sep. 27, 2013 | Jun. 30, 2014 | |
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) | 15,561 | 43,154 | ' |
Stock awards vesting period | '3 years | '3 years | ' |
Number of shares of common stock that can be granted, maximum (in shares) | 15,796 | 23,862 | ' |
Unvested stock awards outstanding (in shares) | 52,041 | 86,116 | ' |
Compensation cost, recognized | $0 | $0 | ' |
Weighted average grant date fair value of unvested awards (in dollars per share) | $24.99 | ' | ' |
Total fair value of stock awards vested | 0 | 0 | ' |
Accrued liabilities, employee benefits | 0 | ' | 0 |
Unrecognized compensation expense related to unvested shares | 1,386,000 | ' | ' |
Performance Stock Awards [Member] | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' |
Stock awards granted (in shares) | 15,561 | 17,312 | ' |
Stock awards vesting period | '3 years | '3 years | ' |
Number of shares of common stock that can be granted, maximum (in shares) | 15,796 | 18,694 | ' |
Unvested stock awards outstanding (in shares) | 54,863 | 59,453 | ' |
Compensation cost, recognized | 0 | 0 | ' |
Weighted average grant date fair value of unvested awards (in dollars per share) | $24.39 | ' | ' |
Total fair value of stock awards vested | 0 | 0 | ' |
Unrecognized compensation expense related to unvested shares | 1,338,000 | ' | ' |
Restricted Stock [Member] | ' | ' | ' |
Schedule of Share Based Compensation Arrangements by Options Activity and Exercise Price Range [Line Items] | ' | ' | ' |
Stock awards granted (in shares) | 31,122 | 39,874 | ' |
Unvested stock awards outstanding (in shares) | 105,642 | 130,905 | ' |
Compensation cost, recognized | 108,000 | 318,000 | ' |
Total fair value of stock awards vested | 654,000 | 2,464,000 | ' |
Unrecognized compensation expense related to unvested shares | $1,479,000 | ' | ' |
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 | |
In Thousands, unless otherwise specified | Sep. 26, 2014 | Sep. 27, 2013 |
Components of Net Periodic Benefit Cost [Abstract] | ' | ' |
Benefit plan adjustments reclassified from accumulated other comprehensive loss | $488 | $530 |
Tax on reclassified benefit plan adjustments from accumulated other comprehensive loss | 290 | 352 |
Pension Benefits [Member] | ' | ' |
Components of Net Periodic Benefit Cost [Abstract] | ' | ' |
Service cost | 119 | 133 |
Interest cost | 1,222 | 1,355 |
Expected return on plan assets | -1,681 | -1,647 |
Amortization of transition obligation | 9 | 19 |
Amortization of net actuarial loss | 609 | 713 |
Net periodic benefit cost | 278 | 573 |
Expected contributions to its pension plan in 2015 | 6,172 | ' |
Contributions made during period | 3,950 | ' |
Postretirement Benefits [Member] | ' | ' |
Components of Net Periodic Benefit Cost [Abstract] | ' | ' |
Service cost | 8 | 10 |
Interest cost | 145 | 165 |
Amortization of net actuarial loss | 159 | 150 |
Net periodic benefit cost | $312 | $325 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
Sep. 26, 2014 | Sep. 27, 2013 | |
Income Taxes [Abstract] | ' | ' |
Effective income tax rate (in hundredths) | 39.00% | 64.40% |
Unrecognized tax benefits if recognized would favorably impact effective tax rate | $1,950,000 | ' |
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 | 12 Months Ended | |
Sep. 26, 2014 | Sep. 27, 2013 | Jun. 30, 2014 | |
Intangible assets with finite lives [Abstract] | ' | ' | ' |
Gross Carrying Amount | $13,562,000 | ' | $13,634,000 |
Accumulated amortization | -9,845,000 | ' | -9,783,000 |
Accumulated Impairment | -1,277,000 | ' | -1,277,000 |
Net book value | 2,440,000 | ' | 2,574,000 |
Goodwill [Roll Forward] | ' | ' | ' |
Gross Carrying Amount | 16,984,000 | ' | 17,133,000 |
Accumulated Impairment | -3,670,000 | ' | -3,670,000 |
Translation adjustment | -149,000 | ' | ' |
Net Book Value | 13,314,000 | ' | 13,463,000 |
Intangible amortization expense | 62,000 | 116,000 | ' |
Estimated intangible amortization expense [Abstract] | ' | ' | ' |
2015 | 183,000 | ' | ' |
2016 | 161,000 | ' | ' |
2017 | 157,000 | ' | ' |
2018 | 157,000 | ' | ' |
2019 | 157,000 | ' | ' |
2020 | 157,000 | ' | ' |
Carrying amount of indefinite lived intangible assets, gross | 219,000 | ' | 223,000 |
Weighted average remaining useful life | '16 years | ' | ' |
Licensing agreements [Member] | ' | ' | ' |
Intangible assets with finite lives [Abstract] | ' | ' | ' |
Gross Carrying Amount | 3,015,000 | ' | 3,015,000 |
Accumulated amortization | -2,460,000 | ' | -2,445,000 |
Accumulated Impairment | 0 | ' | 0 |
Net book value | 555,000 | ' | 570,000 |
Non-compete agreements [Member] | ' | ' | ' |
Intangible assets with finite lives [Abstract] | ' | ' | ' |
Gross Carrying Amount | 2,128,000 | ' | 2,128,000 |
Accumulated amortization | -2,045,000 | ' | -2,045,000 |
Accumulated Impairment | -83,000 | ' | -83,000 |
Net book value | 0 | ' | 0 |
Trade Names [Member] | ' | ' | ' |
Intangible assets with finite lives [Abstract] | ' | ' | ' |
Gross Carrying Amount | 1,940,000 | ' | 2,009,000 |
Accumulated amortization | -125,000 | ' | -100,000 |
Accumulated Impairment | 0 | ' | 0 |
Net book value | 1,815,000 | ' | 1,909,000 |
Useful life, Trade Names | '20 years | ' | ' |
Other [Member] | ' | ' | ' |
Intangible assets with finite lives [Abstract] | ' | ' | ' |
Gross Carrying Amount | 6,479,000 | ' | 6,482,000 |
Accumulated amortization | -5,215,000 | ' | -5,193,000 |
Accumulated Impairment | -1,194,000 | ' | -1,194,000 |
Net book value | $70,000 | ' | $95,000 |
Longterm_Debt_Details
Long-term Debt (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Sep. 26, 2014 | Jun. 30, 2014 | |
Quarter | ||
Debt Instrument [Line Items] | ' | ' |
Subtotal | $23,573,000 | $18,404,000 |
Less: current maturities and short-term borrowings | -3,575,000 | -3,604,000 |
Total long-term debt | 19,998,000 | 14,800,000 |
Number of recent quarters considered for minimum EBITDA | 4 | ' |
US treasury yield curve rate (in hundredths) | 1.08% | 0.88% |
Add-on-to reference rate to calculate discount rate (in hundredths) | 1.00% | 1.00% |
Total rate of interest (in hundredths) | 2.08% | 1.88% |
Revolving Loan [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Subtotal | 16,400,000 | 11,200,000 |
10-year Unsecured Senior Notes [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Subtotal | 7,143,000 | 7,143,000 |
Maturity period of unsecured senior notes | '10 years | ' |
Maturity date of note agreement | 10-Apr-16 | ' |
Fair value of long term debt | 7,517,000 | 7,605,000 |
Other [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Subtotal | $30,000 | $61,000 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Sep. 26, 2014 | Sep. 27, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jul. 27, 2012 | Feb. 01, 2008 |
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' |
Balance, beginning of period | $152,311 | $143,562 | ' | ' | ' | ' |
Net income | 4,062 | 1,364 | ' | ' | ' | ' |
Translation adjustments | -4,328 | 1,880 | ' | ' | ' | ' |
Benefit plan adjustments, net of tax | 488 | 450 | ' | ' | ' | ' |
Cash dividends | -1,234 | -1,501 | ' | ' | ' | ' |
Compensation expense and windfall tax benefits | 77 | 753 | ' | ' | ' | ' |
Shares (acquired) issued, net | -298 | -2,125 | ' | ' | ' | ' |
Balance, end of period | 151,078 | 144,383 | ' | ' | ' | ' |
Common Stock [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 | 11,973 | 13,183 | ' | ' | ' | ' |
Compensation expense and windfall tax benefits | 77 | 753 | ' | ' | ' | ' |
Shares (acquired) issued, net | -342 | -2,777 | ' | ' | ' | ' |
Balance, end of period | 11,708 | 11,159 | 13,183 | ' | ' | ' |
Retained Earnings [Member] | ' | ' | ' | ' | ' | ' |
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' |
Balance, beginning of period | 183,695 | 184,110 | ' | ' | ' | ' |
Net income | 4,043 | 1,277 | ' | ' | ' | ' |
Cash dividends | -1,015 | -1,015 | ' | ' | ' | ' |
Balance, end of period | 186,723 | 184,372 | ' | ' | ' | ' |
Accumulated Other Comprehensive Income (Loss) [Member] | ' | ' | ' | ' | ' | ' |
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' |
Balance, beginning of period | -15,943 | -25,899 | ' | ' | ' | ' |
Translation adjustments | -4,337 | 1,926 | ' | ' | ' | ' |
Benefit plan adjustments, net of tax | 488 | 450 | ' | ' | ' | ' |
Balance, end of period | -19,792 | -23,523 | ' | ' | ' | ' |
Treasury Stock [Member] | ' | ' | ' | ' | ' | ' |
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' |
Balance, beginning of period | -28,141 | -28,890 | ' | ' | ' | ' |
Shares (acquired) issued, net | 44 | 652 | ' | ' | ' | ' |
Balance, end of period | -28,097 | -28,238 | ' | ' | ' | ' |
Non-Controlling Interest [Member] | ' | ' | ' | ' | ' | ' |
Stockholders Equity [Line Items] | ' | ' | ' | ' | ' | ' |
Balance, beginning of period | 727 | 1,058 | ' | ' | ' | ' |
Net income | 19 | 87 | ' | ' | ' | ' |
Translation adjustments | 9 | -46 | ' | ' | ' | ' |
Cash dividends | -219 | -486 | ' | ' | ' | ' |
Balance, end of period | $536 | $613 | ' | ' | ' | ' |
Restructuring_of_Operations_De
Restructuring of Operations (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Sep. 26, 2014 | Sep. 27, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | |
Restructuring of Operations [Abstract] | ' | ' | ' | ' |
Pre-tax restructuring charge | $0 | $1,094,000 | $548,000 | ' |
Cash payments | 6,000 | ' | ' | 857,000 |
Accrual balance of restructuring charge | 721,000 | ' | ' | 785,000 |
Foreign exchange impact | $58,000 | ' | ' | ' |