Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Sep. 30, 2016 | Oct. 28, 2016 | |
Document Information [Line Items] | ||
Entity Registrant Name | TWIN DISC INC | |
Entity Central Index Key | 100,378 | |
Trading Symbol | twin | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 11,481,133 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Jun. 30, 2016 |
Current assets: | ||
Cash | $ 16,077,000 | $ 18,273,000 |
Trade accounts receivable, net | 25,758,000 | 25,363,000 |
Inventories | 67,128,000 | 66,569,000 |
Prepaid expenses | 7,796,000 | 7,353,000 |
Other | 6,920,000 | 7,477,000 |
Total current assets | 123,679,000 | 125,035,000 |
Property, plant and equipment, net | 50,416,000 | 51,665,000 |
Deferred income taxes | 27,192,000 | 25,870,000 |
Goodwill | 5,139,000 | 5,120,000 |
Intangible assets, net | 2,136,000 | 2,164,000 |
Other assets | 4,194,000 | 4,068,000 |
Total assets | 212,756,000 | 213,922,000 |
Current liabilities: | ||
Accounts payable | 15,215,000 | 14,716,000 |
Accrued liabilities | 20,571,000 | 21,415,000 |
Total current liabilities | 35,786,000 | 36,131,000 |
Long-term debt | 9,694,000 | 8,501,000 |
Accrued retirement benefits | 48,469,000 | 48,705,000 |
Deferred income taxes | 809,000 | 827,000 |
Other long-term liabilities | 2,302,000 | 2,705,000 |
Total liabilities | 97,060,000 | 96,869,000 |
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 | 10,476,000 | 11,761,000 |
Retained earnings | 172,966,000 | 175,662,000 |
Accumulated other comprehensive loss | (42,844,000) | (44,143,000) |
Equity before treasury stock | 140,598,000 | 143,280,000 |
Less treasury stock, at cost (1,660,895 and 1,749,294 shares, respectively) | 25,437,000 | 26,790,000 |
Total Twin Disc shareholders' equity | 115,161,000 | 116,490,000 |
Noncontrolling interest | 535,000 | 563,000 |
Total equity | 115,696,000 | 117,053,000 |
Total liabilities and equity | $ 212,756,000 | $ 213,922,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Sep. 30, 2016 | Jun. 30, 2016 |
Preferred Shares, Authorized (in shares) | 200,000 | 200,000 |
Preferred Shares, Issued (in shares) | 0 | 0 |
Preferred Shares, No Par Value (in dollars per share) | $ 0 | $ 0 |
Common Shares, Authorized (in shares) | 30,000,000 | 30,000,000 |
Common Shares, Issued (in shares) | 13,099,468 | 13,099,468 |
Common Shares, No Par Value (in dollars per share) | $ 0 | $ 0 |
Treasury Stock, Shares (in shares) | 1,660,895 | 1,749,294 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Net sales | $ 35,835 | $ 37,373 |
Cost of goods sold | 26,662 | 29,183 |
Gross profit | 9,173 | 8,190 |
Marketing, engineering and administrative expenses | 12,475 | 15,240 |
Restructuring expenses | 258 | |
Other operating expense (income) | (500) | |
Loss from operations | (3,560) | (6,550) |
Interest expense | (53) | (91) |
Other expense (income), net | 110 | (158) |
Non-operating income (expense) | 163 | (67) |
Loss before income taxes and noncontrolling interest | (3,723) | (6,483) |
Income tax benefit | (1,052) | (2,208) |
Net loss | (2,671) | (4,275) |
Less: Net earnings attributable to noncontrolling interest, net of tax | (25) | (48) |
Net loss attributable to Twin Disc | $ (2,696) | $ (4,323) |
Dividends per share (in dollars per share) | $ 0.09 | |
Loss per share data: | ||
Basic loss per share attributable to Twin Disc common shareholders (in dollars per share) | (0.24) | (0.39) |
Diluted loss per share attributable to Twin Disc common shareholders (in dollars per share) | $ (0.24) | $ (0.39) |
Weighted average shares outstanding data: | ||
Basic shares outstanding (in shares) | 11,217 | 11,313 |
Dilutive stock awards (in shares) | ||
Diluted shares outstanding (in shares) | 11,217 | 11,313 |
Comprehensive loss: | ||
Net loss | $ (2,671) | $ (4,275) |
Benefit plan adjustments, net of income taxes of $399 and $423, respectively | 672 | 739 |
Foreign currency translation adjustment | 683 | (1,805) |
Comprehensive loss | (1,316) | (5,341) |
Less: Comprehensive income attributable to noncontrolling interest | (81) | (29) |
Comprehensive loss attributable to Twin Disc | $ (1,397) | $ (5,370) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Benefit plan adjustments, tax | $ 399 | $ 423 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (2,671,000) | $ (4,275,000) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 1,916,000 | 2,221,000 |
Restructuring expenses | 219,000 | |
Provision for deferred income taxes | (1,335,000) | (7,006,000) |
Stock compensation expense and other non-cash changes, net | 325,000 | 378,000 |
Net change in operating assets and liabilities | (1,115,000) | 6,310,000 |
Net cash used by operating activities | (2,661,000) | (2,372,000) |
Cash flows from investing activities: | ||
Proceeds from sale of business (see Note L) | 3,500,000 | |
Proceeds from life insurance policy | 1,907,000 | |
Acquisitions of fixed assets | (525,000) | (1,403,000) |
Proceeds from sale of fixed assets | 8,000 | 79,000 |
Other, net | (129,000) | (185,000) |
Net cash (used) provided by investing activities | (646,000) | 3,898,000 |
Cash flows from financing activities: | ||
Borrowings under revolving loan agreement | 13,943,000 | 22,780,000 |
Repayments under revolving loan agreement | (12,751,000) | (22,315,000) |
Dividends paid to shareholders | (1,019,000) | |
Dividends paid to noncontrolling interest | (109,000) | (192,000) |
Excess tax (shortfall) benefits from stock compensation | (133,000) | 52,000 |
Payments of withholding taxes on stock compensation | (140,000) | (190,000) |
Net cash provided (used) by financing activities | 810,000 | (884,000) |
Effect of exchange rate changes on cash | 301,000 | (542,000) |
Net change in cash | (2,196,000) | 100,000 |
Cash: | ||
Beginning of period | 18,273,000 | 22,936,000 |
End of period | $ 16,077,000 | $ 23,036,000 |
Note A - Basis of Presenation
Note A - Basis of Presenation | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | A. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared by Twin Disc, Incorporated (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 statement 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 Annual Report filed on Form 10-K for June 30, 2016. 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. New Accounting Releases In August 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance to the Accounting Standards Codification (“ASC”) that addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 (the Company’s fiscal 2019), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. In March 2016, the FASB issued updated guidance to the ASC, intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (the Company’s fiscal 2018), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. In February 2016, the FASB issued guidance which replaces the existing guidance for leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The guidance is effective for fiscal years beginning after December 15, 2018 (the Company’s fiscal 2020), including interim periods within those fiscal years and requires retrospective application. The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. In July 2015, the FASB issued guidance intended to simplify the measurement of inventory and to closely align with International Financial Reporting Standards. Current guidance requires inventories to be measured at the lower of cost or market. Under this new guidance, inventories other than those measured under LIFO are to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is to be applied prospectively, and is effective for fiscal years beginning after December 15, 2016 (the Company’s fiscal 2018). The adoption of this guidance is not expected to have a material impact on the Company’s financial statements and disclosures. In July 2015, the FASB issued guidance to reduce complexity in employee benefit plan accounting, which is consistent with its Simplification Initiative of improving areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. This guidance update consists of several parts that affect the reporting of defined benefit pension plans, defined contribution pension plans, and their fair value measurements, among others. This guidance is effective for fiscal years beginning after December 15, 2015 (the Company’s fiscal 2017). The adoption of this guidance did not have a material impact on the Company’s financial statements and disclosures. In April 2015, the FASB issued guidance intended to amend current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. With regard to debt issuance costs in connection with line-of-credit arrangements, they are to be presented as an asset and amortized ratably over the term of the arrangement. 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 did not have a material impact on the Company’s financial statements and disclosures. In August 2014, the 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 statements and disclosures. In May 2014, the FASB issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing U.S. 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, 2017 (the Company’s fiscal 2019). The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. |
Note B - Inventories
Note B - Inventories | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | B. Inventor ies The major classes of inventories were as follows: September 30, 2016 June 30, 2016 Inventories: Finished parts $ 45,786 $ 45,622 Work in process 8,392 8,020 Raw materials 12,950 12,927 $ 67,128 $ 66,569 |
Note C - Warranty
Note C - Warranty | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Product Warranty Disclosure [Text Block] | 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 quarter ended September 30, 2016 and September 25, 2015: For the Quarter Ended September 30, 2016 September 25, 2015 Reserve balance, beginning of period $ 3,607 $ 5,245 Current period expense (adjustment) 182 (303 ) Payments or credits to customers (762 ) (721 ) Translation 9 (1 ) Reserve balance, end of period $ 3,036 $ 4,220 The current portion of the warranty accrual ($2,343 and $2,986 as of September 30, 2016 and September 25, 2015, respectively) is reflected in accrued liabilities, while the long-term portion ($693 and $1,234 as of September 30, 2016 and September 25, 2015, respectively) is included in other long-term liabilities on the consolidated balance sheets. |
Note D - Contingencies
Note D - Contingencies | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | 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. |
Note E - Business Segments
Note E - Business Segments | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | 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. Its segment structure reflects the way management makes operating decisions and manages the growth and profitability of the business. It also corresponds with management’s approach of allocating resources and assessing the performance of its segments. 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: For the Quarter Ended September 30, 2016 September 25, 2015 Net sales Manufacturing segment sales $ 30,499 $ 29,057 Distribution segment sales 15,395 20,724 Inter/Intra segment elimination - manufacturing (8,126 ) (8,477 ) Inter/Intra segment elimination – distribution (1,933 ) (3,931 ) $ 35,835 $ 37,373 Net loss attributable to Twin Disc Manufacturing segment net loss $ (1,420 ) $ (2,847 ) Distribution segment net earnings 271 553 Corporate and eliminations (1,547 ) (2,029 ) $ (2,696 ) $ (4,323 ) Assets September 30, 2016 June 30, 2016 Manufacturing segment assets $ 222,629 $ 221,590 Distribution segment assets 51,381 52,719 Corporate assets and elimination of intercompany assets (61,254 ) (60,387 ) $ 212,756 $ 213,922 |
Note F - Stock-based Compensati
Note F - Stock-based Compensation | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | F. Stock-Based Compensation Performance Stock Awards (“PSA”) During the first quarter of fiscal 2017 and 2016, the Company granted a target number of 99.6 and 60.5 PSAs, respectively, to various employees of the Company, including executive officers. The fiscal 2017 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average annual Earnings Per Share (“EPS”) (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2019. These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and EPS 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 149.4. Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing compensation expense for these PSAs. The fiscal 2016 PSAs will vest if the Company achieves (a) performance-based target objectives relating to average annual sales and consolidated economic profit, and (b) relative Total Shareholder Return (“TSR”) (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2018. These PSAs are subject to adjustment if the Company’s net sales, economic profit and relative TSR 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 90.7. Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing as compensation expense for the portion of the PSAs relating to the average annual sales and economic profit measures. The Company is currently accruing compensation expense for the TSR measure. Compensation expense relating to the relative TSR portion is recognized based on the grant date fair value over the vesting period. There were 171.8 and 86.4 unvested PSAs outstanding at September 30, 2016 and September 25, 2015, respectively. The fair value of the PSAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. Compensation expense of $15 was recognized for the quarter ended September 30, 2016, related to PSAs. There was no compensation expense for the quarter ended September 25, 2015, related to PSAs. The weighted average grant date fair value of the unvested awards at September 30, 2016 was $13.38. At September 30, 2016, the Company had $2,229 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2017, 2016 and 2015 awards. The total fair value of PSAs vested as of September 30, 2016 and September 25, 2015 was $0. Performance Stock Unit Awards (“PSU”) There were no grants of PSUs during the first quarter of fiscal 2017 and 2016. There were 11.4 and 29.9 unvested PSUs outstanding at September 30, 2016 and September 25, 2015, respectively. The weighted average grant date fair value of the unvested awards at September 30, 2016 was $30.16. PSUs are remeasured at fair-value based upon the Company’s stock price at the end of each reporting period. The fair-value of the PSUs is expensed over the performance period for the shares that are expected to ultimately vest. There was no compensation expense for the quarters ended September 30, 2016 and September 25, 2015, related to PSUs. At September 30, 2016, the Company had $135 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2015 awards. The total fair value of PSU awards vested as of September 30, 2016 and September 25, 2015 were $0. The PSU awards are cash based, and would therefore be recorded as a liability on the Company’s consolidated balance sheets. As of September 30, 2016 and June 30, 2016, there were no awards included in liabilities in our consolidated balance sheets due to actual results to date and the low probability of achieving any of the threshold performance levels. Restricted Stock Awards (“RS”) The Company has unvested RS awards outstanding that will vest if certain service conditions are fulfilled. The fair value of the RS grants is recorded as compensation expense over the vesting period, which is generally 1 to 3 years. During the first quarter of fiscal 2017 and 2016, the Company granted 101.3 and 68.4 service based restricted shares, respectively, to employees and non-employee directors in each year. There were 218.0 and 133.4 unvested shares outstanding at September 30, 2016 and September 25, 2015, respectively. Compensation expense of $326 and $355 was recognized for the quarters ended September 30, 2016 and September 25, 2015, respectively. The total fair value of restricted stock grants vested as of September 30, 2016 and September 25, 2015 was $265 and $461, respectively. As of September 30, 2016, the Company had $1,808 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years. |
Note G - Pension and Other Post
Note G - Pension and Other Postretirement Benefit Plans | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | 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: For the Quarter Ended September 30, 2016 September 25, 2015 Pension Benefits: Service cost $ 221 $ 130 Interest cost 1,125 1,225 Expected return on plan assets (1,442 ) (1,692 ) Amortization of transition obligation 9 9 Amortization of prior service cost 1 - Amortization of actuarial net loss 899 908 Net periodic benefit cost $ 813 $ 580 Postretirement Benefits: Service cost $ 6 $ 7 Interest cost 122 151 Amortization of actuarial net loss 182 182 Net periodic benefit cost $ 310 $ 340 The Company expects to contribute approximately $1,467 to its pension plans in fiscal 2017. As of September 30, 2016, $155 in contributions has been made. The Company has reclassified $672 (net of $399 in taxes) of benefit plan adjustments from accumulated other comprehensive loss during the quarter ended September 30, 2016. The Company has reclassified $739 (net of $423 in taxes) of benefit plan adjustments from accumulated other comprehensive loss during the quarter ended September 25, 2015. These reclassifications are included in the computation of net periodic benefit cost. |
Note H - Income Taxes
Note H - Income Taxes | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | H. Income Taxes For the quarters ended September 30, 2016 and September 25, 2015, the Company’s effective income tax rate was 28.3% and 34.1%, respectively. Expected domestic losses are lower compared to prior year by $10,180. The ratio of foreign income inclusions to a smaller domestic loss resulted in a 4.6% benefit reflected in the rate. The federal research and development credit was extended and this additional benefit was offset by reduced foreign tax credits resulting in a net decrease in the effective tax rate of 1%. 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 income in certain foreign jurisdictions with a history of generating operating losses, the company has evaluated the realizability of the net deferred tax assets related to these jurisdictions. This evaluation concluded that, based primarily upon a history of 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 for 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. 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 Company has approximately $904 of unrecognized tax benefits, including related interest and penalties, as of September 30, 2016, 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 30, 2016. It appears 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 2011 through 2016 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 2012. The state of Wisconsin income tax audit remains ongoing for the fiscal years 2010 through 2015. It is reasonably possible that other audit cycles will be completed during fiscal 2017. |
Note I - Goodwill and Other Int
Note I - Goodwill and Other Intangibles | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Goodwill and Intangible Assets Disclosure [Text Block] | I. Goodwill and Other Intangibles The Company reviews goodwill for impairment on a reporting unit basis annually as of the end of the fiscal year, and whenever events or circumstances (“triggering events”) indicate that the carrying value of goodwill may not be recoverable. The Company monitors for interim triggering events on an ongoing basis. Such triggering events include unfavorable operating results and macroeconomic trends, and market capitalization of the company below its book value. The fair value of reporting units is primarily driven by projected growth rates and operating results under the income approach using a discounted cash flow model, which applies an appropriate market-participant discount rate, and consideration of other market approach data from guideline public companies. If declining actual operating results or future operating results become indicative that the fair value of the Company’s reporting units has declined below their carrying values, an interim goodwill impairment test may need to be performed and may result in a non-cash goodwill impairment charge. If the Company’s market capitalization falls below the Company’s carrying value for a sustained period of time or if such a decline becomes indicative that the fair value of the Company’s reporting units has declined to below their carrying values, an interim goodwill impairment test may need to be performed and may result in a non-cash goodwill impairment charge. For the quarter ended September 30, 2016, the Company performed a review of potential triggering events, such as the continued market softness and operating losses experienced during the quarter, as well as its market capitalization levels, and concluded that these events were not indicative that the fair values of its reporting units had more likely than not declined to below their carrying values at September 30, 2016. As of September 30, 2016, goodwill is carried in the following reporting units: Reporting Unit US Industrial $ 2,589 European Industrial 2,550 Total $ 5,139 The changes in the carrying amount of goodwill, all of which is allocated to the manufacturing segment, for the quarter ended September 30, 2016 were as follows: Gross Carrying Amount Accumulated Impairment Net Book Value Balance at June 30, 2016 $ 16,392 $ (11,272 ) $ 5,120 Translation adjustment 19 - 19 Balance at September 30, 2016 $ 16,411 $ (11,272 ) $ 5,139 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 September 30, 2016 and June 30, 2016 were as follows: September 30, 2016 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Book Value Licensing agreements $ 3,015 $ (2,580 ) $ - $ 435 Non-compete agreements 2,128 (2,045 ) (83 ) - Trade name 1,678 (296 ) - 1,382 Other 6,617 (5,308 ) (1,194 ) 115 $ 13,438 $ (10,229 ) $ (1,277 ) $ 1,932 June 30, 2016 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Book Value Licensing agreements $ 3,015 $ (2,565 ) $ - $ 450 Non-compete agreements 2,128 (2,045 ) (83 ) - Trade name 1,668 (275 ) - 1,393 Other 6,615 (5,301 ) (1,194 ) 120 $ 13,426 $ (10,186 ) $ (1,277 ) $ 1,963 The weighted average remaining useful life of the intangible assets included in the table above is approximately 14 years. Intangible amortization expense was $43 and $37 for the quarters ended September 30, 2016, and September 25, 2015, respectively. Estimated intangible amortization expense for the remainder of fiscal 2017 and each of the next five fiscal years is as follows: Fiscal Year 2017 $ 138 2018 180 2019 168 2020 154 2021 150 2022 143 The gross carrying amount of the Company’s intangible assets that have indefinite lives and are not subject to amortization as of September 30, 2016 and June 30, 2016 was $204 and $201, respectively. These assets are comprised of acquired trade names. |
Note J - Long-term Debt
Note J - Long-term Debt | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | J. Long-term Debt Long-term debt at September 30, 2016 and June 30, 2016 consisted of the following: September 30, 2016 June 30, 2016 Revolving loan $ 9,670 $ 8,478 Other 24 23 Subtotal 9,694 8,501 Less: current maturities and short-term borrowings - - Total long-term debt $ 9,694 $ 8,501 The revolving loan agreement as of September 30, 2016 pertains to the revolving loan facility which the Company entered into on April 22, 2016 with Bank of Montreal (the “BMO Agreement”). The BMO Agreement is secured by substantially all of the Company’s personal property, including accounts receivable, inventory, and certain machinery and equipment of its primary manufacturing facility in Racine, Wisconsin, and the personal property of Mill-Log Equipment Co., Inc., a wholly-owned domestic subsidiary of the Company. The BMO Agreement provides for a borrowing base calculation to determine borrowing capacity. This capacity will be based upon eligible domestic inventory, eligible accounts receivable and machinery and equipment, subject to certain adjustments. As of September 30, 2016, the Company’s borrowing capacity under the terms of the BMO Agreement was approximately $22,273, and the Company had approximately $11,570 of available borrowings. As of September 30, 2016, the interest rate under this agreement was 2.27%. The Company’s revolving loan agreement approximates fair value at September 30, 2016 and June 30, 2016. 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. |
Note K - Shareholders' Equity
Note K - Shareholders' Equity | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | K. Shareholders’ Equity The Company from time to time makes open market purchases of its common stock under authorizations given to it by the Board of Directors, of which 315 shares as of September 30, 2016 remain authorized for purchase. The Company did not make any open market purchases of its shares during the quarter ended September 30, 2016. The following is a reconciliation of the Company’s equity balances for the first fiscal quarters of 2017 and 2016: Twin Disc, Inc. Shareholders’ Equity Accumulated Other Non- Common Retained Comprehensive Treasury Controlling Total Stock Earnings Income (Loss) Stock Interest Equity Balance, June 30, 2016 $ 11,761 $ 175,662 $ (44,143 ) $ (26,790 ) $ 563 $ 117,053 Net (loss) income (2,696 ) 25 (2,671 ) Translation adjustments 627 56 683 Benefit plan adjustments, net of tax 672 672 Cash dividends (109 ) (109 ) Compensation expense and windfall tax benefits 208 208 Shares (acquired) issued, net (1,493 ) 1,353 (140 ) Balance, September 30, 2016 $ 10,476 $ 172,966 $ (42,844 ) $ (25,437 ) $ 535 $ 115,696 Twin Disc, Inc. Shareholders’ Equity Accumulated Other Non- Common Retained Comprehensive Treasury Controlling Total Stock Earnings Income (Loss) Stock Interest Equity Balance, June 30, 2015 $ 12,259 $ 190,807 $ (35,481 ) $ (28,057 ) $ 639 $ 140,167 Net (loss) income (4,323 ) 48 (4,275 ) Translation adjustments (1,787 ) (18 ) (1,805 ) Benefit plan adjustments, net of tax 739 739 Cash dividends (1,019 ) (192 ) (1,211 ) Compensation expense and windfall tax benefits 303 303 Shares (acquired) issued, net (1,045 ) 857 (188 ) Balance, September 25, 2015 $ 11,517 $ 185,465 $ (36,529 ) $ (27,200 ) $ 477 $ 133,730 Reconciliations for the changes in accumulated other comprehensive income (loss), net of tax, by component for the quarters ended September 30, 2016, and September 25, 2015, are as follows: Translation Benefit Plan Adjustment Adjustment Balance at June 30, 2016 $ 5,158 $ (49,301 ) Translation adjustment during the quarter 627 - Amounts reclassified from accumulated other comprehensive income - 672 Net current period other comprehensive (loss) income 627 672 Balance at September 30, 2016 $ 5,785 $ (48,629 ) Translation Benefit Plan Adjustment Adjustment Balance at June 30, 2015 $ 6,740 $ (42,221 ) Translation adjustment during the quarter (1,787 ) - Amounts reclassified from accumulated other comprehensive income - 739 Net current period other comprehensive (loss) income (1,787 ) 739 Balance at September 25, 2015 $ 4,953 $ (41,482 ) Reconciliation for the reclassifications out of accumulated other comprehensive income (loss), net of tax for the quarter ended September 30, 2016 is as follows: Amount Reclassified Quarter Ended September 30, 2016 Amortization of benefit plan items Actuarial losses $ 1,061 (a) Transition asset and prior service benefit 10 (a) Total before tax benefit 1,071 Tax benefit 399 Total reclassification net of tax $ 672 (a) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note G "Pension and Other Postretirement Benefit Plans" for further details). Reconciliation for the reclassifications out of accumulated other comprehensive income (loss), net of tax for the quarter ended September 25, 2015 is as follows: Amount Reclassified Quarter Ended September 25, 2015 Amortization of benefit plan items Actuarial losses $ 1,153 (a) Transition asset and prior service benefit 9 (a) Total before tax benefit 1,162 Tax benefit 423 Total reclassification net of tax $ 739 (a) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note G "Pension and Other Postretirement Benefit Plans" for further details). |
Note L - Restructuring of Opera
Note L - Restructuring of Operations | 3 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Restructuring, Impairment, and Other Activities Disclosure [Text Block] | L. Restructuring of Operations In response to challenging global market conditions within the Company’s oil and gas, global pleasure craft and commercial marine markets, the Company undertook a series of restructuring actions starting in late fiscal 2015, and continuing into the current fiscal quarter. The following is a roll-forward of restructuring activity: Accrued restructuring liability, June 30, 2016 $ 801 Additions during the quarter 258 Payments and adjustments (385 ) Accrued restructuring liability, September 30, 2016 $ 674 The additions for the quarter ended September 30, 2016 consist of one-time special benefit payments relating to the elimination of several full-time positions in the Company’s Belgian and Italian locations, under voluntary termination programs that are expected to be in place through December 2017. Those additions do not include additional employee termination costs of $442, which were incurred by the Company’s Italian operation on September 30, 2016. The Italian operation’s reporting date for the quarter was as of August 26, 2016, which conforms to its statutory fiscal quarter reporting date and facilitates prompt reporting of consolidated amounts. This amount will be included in the Company’s second fiscal quarter financial statements. On October 19, 2016, in response to the softness in its markets, the Company’s U.S. manufacturing operation implemented a further reduction in its plant workforce. As a result, the Company expects to record restructuring expenses of $170 in the second fiscal quarter. On September 25, 2015, as part of its initiative to focus resources on core manufacturing and product development activities aimed at improving profitability, the Company sold one of its distribution entities in the U.S. The proceeds of $4,100 represent the sale of distribution rights to its southeastern U.S. territories, amounting to $600, and certain assets, consisting primarily of inventories, for $3,500. The gain on sale of $500 (before adjustment) is recorded as other operating income in the statement of operations in fiscal 2016. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Releases In August 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance to the Accounting Standards Codification (“ASC”) that addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 (the Company’s fiscal 2019), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. In March 2016, the FASB issued updated guidance to the ASC, intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (the Company’s fiscal 2018), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. In February 2016, the FASB issued guidance which replaces the existing guidance for leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The guidance is effective for fiscal years beginning after December 15, 2018 (the Company’s fiscal 2020), including interim periods within those fiscal years and requires retrospective application. The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. In July 2015, the FASB issued guidance intended to simplify the measurement of inventory and to closely align with International Financial Reporting Standards. Current guidance requires inventories to be measured at the lower of cost or market. Under this new guidance, inventories other than those measured under LIFO are to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is to be applied prospectively, and is effective for fiscal years beginning after December 15, 2016 (the Company’s fiscal 2018). The adoption of this guidance is not expected to have a material impact on the Company’s financial statements and disclosures. In July 2015, the FASB issued guidance to reduce complexity in employee benefit plan accounting, which is consistent with its Simplification Initiative of improving areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. This guidance update consists of several parts that affect the reporting of defined benefit pension plans, defined contribution pension plans, and their fair value measurements, among others. This guidance is effective for fiscal years beginning after December 15, 2015 (the Company’s fiscal 2017). The adoption of this guidance did not have a material impact on the Company’s financial statements and disclosures. In April 2015, the FASB issued guidance intended to amend current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. With regard to debt issuance costs in connection with line-of-credit arrangements, they are to be presented as an asset and amortized ratably over the term of the arrangement. 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 did not have a material impact on the Company’s financial statements and disclosures. In August 2014, the 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 statements and disclosures. In May 2014, the FASB issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing U.S. 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, 2017 (the Company’s fiscal 2019). The Company is currently evaluating the potential impact of this guidance on the Company’s financial statements and disclosures. |
Note B - Inventories (Tables)
Note B - Inventories (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | September 30, 2016 June 30, 2016 Inventories: Finished parts $ 45,786 $ 45,622 Work in process 8,392 8,020 Raw materials 12,950 12,927 $ 67,128 $ 66,569 |
Note C - Warranty (Tables)
Note C - Warranty (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Product Warranty Liability [Table Text Block] | For the Quarter Ended September 30, 2016 September 25, 2015 Reserve balance, beginning of period $ 3,607 $ 5,245 Current period expense (adjustment) 182 (303 ) Payments or credits to customers (762 ) (721 ) Translation 9 (1 ) Reserve balance, end of period $ 3,036 $ 4,220 |
Note E - Business Segments (Tab
Note E - Business Segments (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | For the Quarter Ended September 30, 2016 September 25, 2015 Net sales Manufacturing segment sales $ 30,499 $ 29,057 Distribution segment sales 15,395 20,724 Inter/Intra segment elimination - manufacturing (8,126 ) (8,477 ) Inter/Intra segment elimination – distribution (1,933 ) (3,931 ) $ 35,835 $ 37,373 Net loss attributable to Twin Disc Manufacturing segment net loss $ (1,420 ) $ (2,847 ) Distribution segment net earnings 271 553 Corporate and eliminations (1,547 ) (2,029 ) $ (2,696 ) $ (4,323 ) |
Reconciliation of Assets from Segment to Consolidated [Table Text Block] | Assets September 30, 2016 June 30, 2016 Manufacturing segment assets $ 222,629 $ 221,590 Distribution segment assets 51,381 52,719 Corporate assets and elimination of intercompany assets (61,254 ) (60,387 ) $ 212,756 $ 213,922 |
Note G - Pension and Other Po23
Note G - Pension and Other Postretirement Benefit Plans (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Net Benefit Costs [Table Text Block] | For the Quarter Ended September 30, 2016 September 25, 2015 Pension Benefits: Service cost $ 221 $ 130 Interest cost 1,125 1,225 Expected return on plan assets (1,442 ) (1,692 ) Amortization of transition obligation 9 9 Amortization of prior service cost 1 - Amortization of actuarial net loss 899 908 Net periodic benefit cost $ 813 $ 580 Postretirement Benefits: Service cost $ 6 $ 7 Interest cost 122 151 Amortization of actuarial net loss 182 182 Net periodic benefit cost $ 310 $ 340 |
Note I - Goodwill and Other I24
Note I - Goodwill and Other Intangibles (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Goodwill Carried in Reporting Units [Table Text Block] | Reporting Unit US Industrial $ 2,589 European Industrial 2,550 Total $ 5,139 |
Schedule of Goodwill [Table Text Block] | Gross Carrying Amount Accumulated Impairment Net Book Value Balance at June 30, 2016 $ 16,392 $ (11,272 ) $ 5,120 Translation adjustment 19 - 19 Balance at September 30, 2016 $ 16,411 $ (11,272 ) $ 5,139 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block] | September 30, 2016 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Book Value Licensing agreements $ 3,015 $ (2,580 ) $ - $ 435 Non-compete agreements 2,128 (2,045 ) (83 ) - Trade name 1,678 (296 ) - 1,382 Other 6,617 (5,308 ) (1,194 ) 115 $ 13,438 $ (10,229 ) $ (1,277 ) $ 1,932 June 30, 2016 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Book Value Licensing agreements $ 3,015 $ (2,565 ) $ - $ 450 Non-compete agreements 2,128 (2,045 ) (83 ) - Trade name 1,668 (275 ) - 1,393 Other 6,615 (5,301 ) (1,194 ) 120 $ 13,426 $ (10,186 ) $ (1,277 ) $ 1,963 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Fiscal Year 2017 $ 138 2018 180 2019 168 2020 154 2021 150 2022 143 |
Note J - Long-term Debt (Tables
Note J - Long-term Debt (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Debt [Table Text Block] | September 30, 2016 June 30, 2016 Revolving loan $ 9,670 $ 8,478 Other 24 23 Subtotal 9,694 8,501 Less: current maturities and short-term borrowings - - Total long-term debt $ 9,694 $ 8,501 |
Note K - Shareholders' Equity (
Note K - Shareholders' Equity (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Stockholders Equity [Table Text Block] | Twin Disc, Inc. Shareholders’ Equity Accumulated Other Non- Common Retained Comprehensive Treasury Controlling Total Stock Earnings Income (Loss) Stock Interest Equity Balance, June 30, 2016 $ 11,761 $ 175,662 $ (44,143 ) $ (26,790 ) $ 563 $ 117,053 Net (loss) income (2,696 ) 25 (2,671 ) Translation adjustments 627 56 683 Benefit plan adjustments, net of tax 672 672 Cash dividends (109 ) (109 ) Compensation expense and windfall tax benefits 208 208 Shares (acquired) issued, net (1,493 ) 1,353 (140 ) Balance, September 30, 2016 $ 10,476 $ 172,966 $ (42,844 ) $ (25,437 ) $ 535 $ 115,696 Twin Disc, Inc. Shareholders’ Equity Accumulated Other Non- Common Retained Comprehensive Treasury Controlling Total Stock Earnings Income (Loss) Stock Interest Equity Balance, June 30, 2015 $ 12,259 $ 190,807 $ (35,481 ) $ (28,057 ) $ 639 $ 140,167 Net (loss) income (4,323 ) 48 (4,275 ) Translation adjustments (1,787 ) (18 ) (1,805 ) Benefit plan adjustments, net of tax 739 739 Cash dividends (1,019 ) (192 ) (1,211 ) Compensation expense and windfall tax benefits 303 303 Shares (acquired) issued, net (1,045 ) 857 (188 ) Balance, September 25, 2015 $ 11,517 $ 185,465 $ (36,529 ) $ (27,200 ) $ 477 $ 133,730 |
Reconciliation For The Changes In Accumulated Other Comprehensive Income Loss Net Of Tax By Component [Table Text Block] | Translation Benefit Plan Adjustment Adjustment Balance at June 30, 2016 $ 5,158 $ (49,301 ) Translation adjustment during the quarter 627 - Amounts reclassified from accumulated other comprehensive income - 672 Net current period other comprehensive (loss) income 627 672 Balance at September 30, 2016 $ 5,785 $ (48,629 ) Translation Benefit Plan Adjustment Adjustment Balance at June 30, 2015 $ 6,740 $ (42,221 ) Translation adjustment during the quarter (1,787 ) - Amounts reclassified from accumulated other comprehensive income - 739 Net current period other comprehensive (loss) income (1,787 ) 739 Balance at September 25, 2015 $ 4,953 $ (41,482 ) |
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | Amount Reclassified Quarter Ended September 30, 2016 Amortization of benefit plan items Actuarial losses $ 1,061 (a) Transition asset and prior service benefit 10 (a) Total before tax benefit 1,071 Tax benefit 399 Total reclassification net of tax $ 672 Amount Reclassified Quarter Ended September 25, 2015 Amortization of benefit plan items Actuarial losses $ 1,153 (a) Transition asset and prior service benefit 9 (a) Total before tax benefit 1,162 Tax benefit 423 Total reclassification net of tax $ 739 |
Note L - Restructuring of Ope27
Note L - Restructuring of Operations (Tables) | 3 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Restructuring and Related Costs [Table Text Block] | Accrued restructuring liability, June 30, 2016 $ 801 Additions during the quarter 258 Payments and adjustments (385 ) Accrued restructuring liability, September 30, 2016 $ 674 |
Note B - Inventories - Inventor
Note B - Inventories - Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Finished parts | $ 45,786 | $ 45,622 |
Work in process | 8,392 | 8,020 |
Raw materials | 12,950 | 12,927 |
Total inventories | $ 67,128 | $ 66,569 |
Note C - Warranty (Details Text
Note C - Warranty (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 25, 2015 |
Product Warranty Accrual, Current | $ 2,343 | $ 2,986 |
Product Warranty Accrual, Noncurrent | $ 693 | $ 1,234 |
Note C - Warranty - Warranty (D
Note C - Warranty - Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Reserve balance | $ 3,607 | $ 5,245 |
Current period expense (adjustment) | 182 | (303) |
Payments or credits to customers | (762) | (721) |
Translation | 9 | (1) |
Reserve balance | $ 3,036 | $ 4,220 |
Note E - Business Segments (Det
Note E - Business Segments (Details Textual) | 3 Months Ended |
Sep. 30, 2016 | |
Number of Reportable Segments | 2 |
Note E - Business Segments - Re
Note E - Business Segments - Revenues by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Manufacturing Segment [Member] | Operating Segments [Member] | ||
Net sales | $ 30,499 | $ 29,057 |
Earnings | (1,420) | (2,847) |
Manufacturing Segment [Member] | Intersegment Eliminations [Member] | ||
Net sales | (8,126) | (8,477) |
Distribution Segment [Member] | Operating Segments [Member] | ||
Net sales | 15,395 | 20,724 |
Earnings | 271 | 553 |
Distribution Segment [Member] | Intersegment Eliminations [Member] | ||
Net sales | (1,933) | (3,931) |
Corporate, Non-Segment [Member] | ||
Earnings | (1,547) | (2,029) |
Net sales | 35,835 | 37,373 |
Earnings | $ (2,696) | $ (4,323) |
Note E - Business Segments - As
Note E - Business Segments - Assets by Segment (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Manufacturing Segment [Member] | Operating Segments [Member] | ||
Segment Assets | $ 222,629 | $ 221,590 |
Distribution Segment [Member] | Operating Segments [Member] | ||
Segment Assets | 51,381 | 52,719 |
Corporate, Non-Segment [Member] | ||
Segment Assets | (61,254) | (60,387) |
Segment Assets | $ 212,756 | $ 213,922 |
Note F - Stock-based Compensa34
Note F - Stock-based Compensation (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | 15 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | |
Performance Stock Unit Awards [Member] | |||||
Allocated Share-based Compensation Expense | $ 0 | $ 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 0 | $ 0 | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | 0 | |||
Deferred Compensation Share-based Arrangements, Liability, Current and Noncurrent | $ 0 | $ 0 | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 11,400 | 29,900 | 11,400 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 30.16 | $ 30.16 | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 135,000 | $ 135,000 | |||
Restricted Stock [Member] | Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | 1 year | |||
Restricted Stock [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | 3 years | |||
Restricted Stock [Member] | |||||
Allocated Share-based Compensation Expense | $ 326,000 | $ 355,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 265,000 | $ 461,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 101,300 | 68,400 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 218,000 | 133,400 | 218,000 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 1,808,000 | $ 1,808,000 | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 3 years | ||||
Performance Stock Awards [Member] | |||||
Allocated Share-based Compensation Expense | $ 15,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 99,600 | 60,500 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | 3 years | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 149,400 | 90,700 | 149,400 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 171,800 | 86,400 | 171,800 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 13.38 | $ 13.38 | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 2,229,000 | $ 2,229,000 |
Note G - Pension and Other Po35
Note G - Pension and Other Postretirement Benefit Plans (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Pension Plan [Member] | ||
Defined Benefit Plans, Estimated Future Employer Contributions in Next Fiscal Year | $ 1,467 | |
Defined Benefit Plan, Contributions by Employer | 155 | |
Other Comprehensive (Income) Loss, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Net of Tax | 672 | $ 739 |
Other Comprehensive (Income) Loss, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax | $ 399 | $ 423 |
Note G - Pension and Other Po36
Note G - Pension and Other Postretirement Benefit Plans - Pension and Other Postretirement Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Pension Plan [Member] | ||
Pension Benefits: | ||
Service cost | $ 221 | $ 130 |
Interest cost | 1,125 | 1,225 |
Expected return on plan assets | (1,442) | (1,692) |
Amortization of transition obligation | 9 | 9 |
Amortization of prior service cost | 1 | |
Amortization of actuarial net loss | 899 | 908 |
Net periodic benefit cost | 813 | 580 |
Other Postretirement Benefit Plan [Member] | ||
Pension Benefits: | ||
Service cost | 6 | 7 |
Interest cost | 122 | 151 |
Amortization of actuarial net loss | 182 | 182 |
Net periodic benefit cost | $ 310 | $ 340 |
Note H - Income Taxes (Details
Note H - Income Taxes (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Foreign Tax Authority [Member] | Earliest Tax Year [Member] | ||
Open Tax Year | 2,011 | |
Foreign Tax Authority [Member] | Latest Tax Year [Member] | ||
Open Tax Year | 2,016 | |
State and Local Jurisdiction [Member] | Earliest Tax Year [Member] | Wisconsin Department of Revenue [Member] | ||
Open Tax Year | 2,010 | |
State and Local Jurisdiction [Member] | Latest Tax Year [Member] | Wisconsin Department of Revenue [Member] | ||
Open Tax Year | 2,015 | |
Effective Income Tax Rate Reconciliation, Percent | 28.30% | 34.10% |
Change in Expected Domestic Losses | $ 10,180 | |
Income Tax Reconciliation, Difference Between Expected Domestic Losses and Prior Year's Domestic Losses, Percentage | 4.60% | |
Income Tax Reconciliation Reduction In Effective Tax Rate | 1.00% | |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 904 |
Note I - Goodwill and Other I38
Note I - Goodwill and Other Intangibles (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Jun. 30, 2016 | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 14 years | ||
Amortization of Intangible Assets | $ 43 | $ 37 | |
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 204 | $ 201 |
Note I - Goodwill and Other I39
Note I - Goodwill and Other Intangibles - Goodwill by Reporting Units (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Industrial [Member] | UNITED STATES | ||
Goodwill | $ 2,589 | |
Marine and Propulsion Systems [Member] | Europe [Member] | ||
Goodwill | 2,550 | |
Goodwill | $ 5,139 | $ 5,120 |
Note I - Goodwill and Other I40
Note I - Goodwill and Other Intangibles - Goodwill Rollforward (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2016USD ($) | |
Balance, Gross carrying Amount | $ 16,392 |
Balance, Net Book Value | 5,120 |
Translation Adjustment, Gross carrying Amount | 19 |
Balance, Gross carrying Amount | 16,411 |
Balance | (11,272) |
Balance, Net Book Value | $ 5,139 |
Note I - Goodwill and Other I41
Note I - Goodwill and Other Intangibles - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Licensing Agreements [Member] | ||
Gross Carrying Amount | $ 3,015 | $ 3,015 |
Accumulated Amortization | (2,580) | (2,565) |
Net Book Value | 435 | 450 |
Noncompete Agreements [Member] | ||
Gross Carrying Amount | 2,128 | 2,128 |
Accumulated Amortization | (2,045) | (2,045) |
Accumulated Impairment | (83) | (83) |
Trade Names [Member] | ||
Gross Carrying Amount | 1,678 | 1,668 |
Accumulated Amortization | (296) | (275) |
Net Book Value | 1,382 | 1,393 |
Other Intangible Assets [Member] | ||
Gross Carrying Amount | 6,617 | 6,615 |
Accumulated Amortization | (5,308) | (5,301) |
Net Book Value | 115 | 120 |
Accumulated Impairment | (1,194) | (1,194) |
Gross Carrying Amount | 13,438 | 13,426 |
Accumulated Amortization | (10,229) | (10,186) |
Net Book Value | 1,932 | 1,963 |
Accumulated Impairment | $ (1,277) | $ (1,277) |
Note I - Goodwill and Other I42
Note I - Goodwill and Other Intangibles - Estimated Intangibles (Details) $ in Thousands | Sep. 30, 2016USD ($) |
2,017 | $ 138 |
2,018 | 180 |
2,019 | 168 |
2,020 | 154 |
2,021 | 150 |
2,022 | $ 143 |
Note J - Long-term Debt (Detail
Note J - Long-term Debt (Details Textual) - Revolving Loan [Member] - Bank of Montreal [Member] $ in Thousands | Sep. 30, 2016USD ($) |
Line of Credit Facility, Current Borrowing Capacity | $ 22,273 |
Line of Credit Facility, Remaining Borrowing Capacity | $ 11,570 |
Line of Credit Facility, Interest Rate at Period End | 2.27% |
Note J - Long-term Debt - Long-
Note J - Long-term Debt - Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 |
Revolving Loan [Member] | ||
Long-term debt | $ 9,670 | $ 8,478 |
Long-term debt | 9,670 | 8,478 |
Other Long-Term Debt [Member] | ||
Long-term debt | 24 | 23 |
Long-term debt | 24 | 23 |
Long-term debt | 9,694 | 8,501 |
Long-term debt | 9,694 | 8,501 |
Less: current maturities and short-term borrowings | ||
Total long-term debt | $ 9,694 | $ 8,501 |
Note K - Shareholders' Equity45
Note K - Shareholders' Equity (Details Textual) shares in Thousands | Sep. 30, 2016shares |
Common Stock [Member] | |
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased | 315 |
Note K - Stockholders' Equity -
Note K - Stockholders' Equity - Shareholders' Equity Reconciliation (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Common Stock [Member] | ||
Balance | $ 11,761,000 | $ 12,259,000 |
Net income | ||
Translation adjustments | ||
Benefit plan adjustments, net of tax | ||
Cash dividends | ||
Compensation expense and windfall tax benefits | 208,000 | 303,000 |
Shares (acquired) issued, net | (1,493,000) | (1,045,000) |
Balance | 10,476,000 | 11,517,000 |
Retained Earnings [Member] | ||
Balance | 175,662,000 | 190,807,000 |
Net income | (2,696,000) | (4,323,000) |
Translation adjustments | ||
Benefit plan adjustments, net of tax | ||
Cash dividends | (1,019,000) | |
Compensation expense and windfall tax benefits | ||
Shares (acquired) issued, net | ||
Balance | 172,966,000 | 185,465,000 |
AOCI Attributable to Parent [Member] | ||
Balance | (44,143,000) | (35,481,000) |
Net income | ||
Translation adjustments | 627,000 | (1,787,000) |
Benefit plan adjustments, net of tax | 672,000 | 739,000 |
Cash dividends | ||
Compensation expense and windfall tax benefits | ||
Shares (acquired) issued, net | ||
Balance | (42,844,000) | (36,529,000) |
Treasury Stock [Member] | ||
Balance | (26,790,000) | (28,057,000) |
Net income | ||
Translation adjustments | ||
Benefit plan adjustments, net of tax | ||
Cash dividends | ||
Compensation expense and windfall tax benefits | ||
Shares (acquired) issued, net | 1,353,000 | 857,000 |
Balance | (25,437,000) | (27,200,000) |
Noncontrolling Interest [Member] | ||
Balance | 563,000 | 639,000 |
Net income | 25,000 | 48,000 |
Translation adjustments | 56,000 | (18,000) |
Benefit plan adjustments, net of tax | ||
Cash dividends | (109,000) | (192,000) |
Compensation expense and windfall tax benefits | ||
Shares (acquired) issued, net | ||
Balance | 535,000 | 477,000 |
Balance | 117,053,000 | 140,167,000 |
Net income | (2,671,000) | (4,275,000) |
Translation adjustments | 683,000 | (1,805,000) |
Benefit plan adjustments, net of tax | 672,000 | 739,000 |
Cash dividends | (109,000) | (1,211,000) |
Compensation expense and windfall tax benefits | 208,000 | 303,000 |
Shares (acquired) issued, net | (140,000) | (188,000) |
Balance | $ 115,696,000 | $ 133,730,000 |
Note K - Stockholders' Equity47
Note K - Stockholders' Equity - Accumulated Other Comprehensive Income (Loss), Net of Tax (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Translation Adjustment [Member] | ||
Balance | $ 5,158,000 | $ 6,740,000 |
Translation adjustment during the quarter | 627,000 | (1,787,000) |
Amounts reclassified from accumulated other comprehensive income | ||
Net current period other comprehensive income | 627,000 | (1,787,000) |
Balance | 5,785,000 | 4,953,000 |
Benefit Plan Adjustment [Member] | ||
Balance | (49,301,000) | (42,221,000) |
Translation adjustment during the quarter | ||
Amounts reclassified from accumulated other comprehensive income | 672,000 | 739,000 |
Net current period other comprehensive income | 672,000 | 739,000 |
Balance | (48,629,000) | $ (41,482,000) |
Balance | (44,143,000) | |
Balance | $ (42,844,000) |
Note K - Stockholders' Equity48
Note K - Stockholders' Equity - Reconciliation for the Reclassifications Out of Accumulated Other Comprehensive Income (Loss), Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | ||
Benefit Plan Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | |||
Actuarial losses | [1] | $ 1,061 | $ 1,153 |
Transition asset and prior service benefit | [1] | 10 | 9 |
Total before tax benefit | 1,071 | 1,162 | |
Income tax benefit | 399 | 423 | |
Net loss | 672 | 739 | |
Income tax benefit | (1,052) | (2,208) | |
Net loss | $ (2,671) | $ (4,275) | |
[1] | These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note G "Pension and Other Postretirement Benefit Plans" for further details). |
Note L - Restructuring of Ope49
Note L - Restructuring of Operations (Details Textual) - USD ($) $ in Thousands | Sep. 25, 2015 | Dec. 30, 2016 | Sep. 30, 2016 | Sep. 25, 2015 | Jun. 30, 2016 |
Workforce Reduction in Italian Operations [Member] | Scenario, Forecast [Member] | |||||
Restructuring Charges | $ 442 | ||||
Workforce Reduction in U.S Manufacturing Operations [Member] | Scenario, Forecast [Member] | |||||
Restructuring Charges | $ 170 | ||||
Disposal Group, Distribution Rights and Certain Assets [Member] | |||||
Proceeds from Sale of Productive Assets | $ 4,100 | ||||
Disposal Group, Distribution Rights [Member] | |||||
Proceeds from Sale of Productive Assets | 600 | ||||
Disposal Group, Certain Assets [Member] | |||||
Proceeds from Sale of Productive Assets | $ 3,500 | ||||
Restructuring Charges | $ 258 | ||||
Other Operating Income | $ 500 | $ 500 |
Note L - Restructuring of Ope50
Note L - Restructuring of Operations - Roll-forward of Restructuring Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Business Restructuring Reserves [Member] | ||
Additions during the quarter | $ 258 | |
Accrued restructuring liability, June 30, 2016 | 801 | |
Additions during the quarter | 258 | |
Payments and adjustments | (385) | |
Accrued restructuring liability, September 30, 2016 | $ 674 |