Document_and_Entity_Informatio
Document and Entity Information Document | 3 Months Ended | |
Sep. 30, 2014 | Nov. 10, 2014 | |
Document Information | ' | ' |
Entity Registrant Name | 'Kimball Electronics, Inc. | ' |
Entity Central Index Key | '0001606757 | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 29,143,049 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets: | ' | ' |
Cash | $20,701 | $26,260 |
Receivables, net of allowances of $246 and $352, respectively | 135,989 | 128,425 |
Inventories | 120,604 | 116,159 |
Prepaid Expense and Other Assets, Current | 23,089 | 20,490 |
Total current assets | 300,383 | 291,334 |
Property and Equipment, net of accumulated depreciation of $145,622 and $151,747, respectively | 97,898 | 97,934 |
Goodwill | 2,564 | 2,564 |
Other Intangible Assets, net of accumulated amortization of $28,397 and $28,606, respectively | 1,844 | 1,830 |
Other Assets | 14,696 | 15,068 |
Total Assets | 417,385 | 408,730 |
Current Liabilities: | ' | ' |
Accounts payable | 123,522 | 119,853 |
Accrued expenses | 21,549 | 26,602 |
Total current liabilities | 145,071 | 146,455 |
Other Liabilities: | ' | ' |
Other long-term liabilities | 9,922 | 9,903 |
Total Liabilities | 154,993 | 156,358 |
Share Owners’ Equity: | ' | ' |
Preferred stock-no par value | 0 | 0 |
Common stock-no par value | 0 | 0 |
Additional paid-in capital | 260,104 | 0 |
Net Parent investment | 0 | 250,753 |
Retained earnings | 5,391 | 0 |
Accumulated other comprehensive income (loss) | -3,103 | 1,619 |
Total Share Owners’ Equity | 262,392 | 252,372 |
Total Liabilities and Share Owners’ Equity | $417,385 | $408,730 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets Parentheticals (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
ASSETS | ' | ' |
Allowance for Doubtful Accounts, Premiums and Other Receivables | $246 | $352 |
Property and Equipment Accumulated Depreciation | 145,622 | 151,747 |
Other Intangible Assets Accumulated Amortization | $28,397 | $28,606 |
Share Owners' Equity | ' | ' |
Common Stock, Par Value Per Share | $0 | $0 |
Preferred Stock, Par or Stated Value Per Share | $0 | $0 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 |
Common Stock, Shares, Issued | 29,143,000 | 29,143,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Average Number of Shares Outstanding: | ' | ' |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 29,143,000 | 29,143,000 |
Common Stock, Shares, Issued | 29,143,000 | ' |
Statement [Line Items] | ' | ' |
Net Sales | $203,803 | $175,637 |
Cost of Sales | 185,900 | 163,212 |
Gross Profit | 17,903 | 12,425 |
Selling and Administrative Expenses | 10,116 | 7,739 |
Other General Income | 0 | -5,022 |
Restructuring Expense | 0 | 402 |
Operating Income | 7,787 | 9,306 |
Other Income (Expense): | ' | ' |
Interest income | 4 | 13 |
Interest expense | -4 | 0 |
Non-operating income (expense), net | -497 | 178 |
Other income (expense), net | -497 | 191 |
Income Before Taxes on Income | 7,290 | 9,497 |
Provision for Income Taxes | 1,899 | 1,799 |
Net Income | $5,391 | $7,698 |
Basic Earnings Per Share: | ' | ' |
Basic and diluted earnings per share | $0.18 | $0.26 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Income Parentheticals (Subsequent Event [Member]) | 0 Months Ended |
In Thousands, unless otherwise specified | Oct. 31, 2014 |
Subsequent Event [Member] | ' |
Common Stock Dividends, Shares | 29,143 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Net income | $5,391 | $7,698 |
Other comprehensive income (loss): | ' | ' |
Foreign currency translation adjustments, Pre-tax | -5,586 | 3,102 |
Foreign currency translation adjustments, Tax | 0 | -81 |
Foreign currency translation adjustments, Net of Tax | -5,586 | 3,021 |
Postemployment severance actuarial change, Pre-tax | 107 | 127 |
Postemployment severance actuarial change, Tax | -40 | -48 |
Postemployment severance actuarial change, Net of Tax | 67 | 79 |
Derivative gain (loss), Pre-tax | 2,231 | -505 |
Derivative gain (loss), Tax | -354 | 125 |
Derivative gain (loss), Net of Tax | 1,877 | -380 |
Reclassification to (earnings) loss: | ' | ' |
Derivatives, Reclassification to (earnings) loss, Pre-tax | -1,354 | 350 |
Derivatives, Reclassification to (earnings) loss, Tax | 271 | -63 |
Derivatives, Reclassification to (earnings) loss, Net of Tax | -1,083 | 287 |
Amortization of prior service cost, Pre-tax | 10 | 10 |
Amortization of prior service cost, Tax | -4 | -4 |
Amortization of prior service cost, Net of Tax | 6 | 6 |
Amortization of actuarial change, Pre-tax | -4 | 10 |
Amortization of actuarial change, Tax | 1 | -4 |
Amortization of actuarial change, Net of Tax | -3 | 6 |
Other comprehensive income (loss), Pre-tax | -4,596 | 3,094 |
Other comprehensive income (loss), Tax | -126 | -75 |
Other comprehensive income (loss), Net of Tax | -4,722 | 3,019 |
Total comprehensive income (loss) | 669 | 10,717 |
Foreign Exchange Contract | ' | ' |
Other comprehensive income (loss): | ' | ' |
Derivative gain (loss), Pre-tax | $2,231 | ($505) |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash Flows From Operating Activities: | ' | ' |
Net income | $5,391 | $7,698 |
Adjustments to reconcile net income to net cash (used for) provided by operating activities: | ' | ' |
Depreciation and amortization | 4,794 | 4,491 |
(Gain) loss on sales of assets | -27 | 52 |
Restructuring | 0 | 311 |
Deferred income tax and other deferred charges | -743 | 282 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 0 | -529 |
Stock-based compensation | 1,524 | 743 |
Other, net | 81 | -154 |
Change in operating assets and liabilities: | ' | ' |
Receivables | -8,834 | 5,301 |
Inventories | -5,615 | -6,390 |
Prepaid expenses and other current assets | -1,160 | 137 |
Accounts payable | 4,690 | -4,698 |
Accrued expenses | -4,606 | -1,654 |
Net cash (used for) provided by operating activities | -4,505 | 5,590 |
Cash Flows From Investing Activities: | ' | ' |
Capital expenditures | -7,677 | -3,856 |
Proceeds from sales of assets | 95 | 82 |
Purchases of capitalized software | -186 | -15 |
Other, net | 49 | 187 |
Net cash used for investing activities | -7,719 | -3,602 |
Cash Flows From Financing Activities: | ' | ' |
Payments of Distributions to Affiliates | 7,827 | -6,080 |
Net cash provided by (used for) financing activities | 7,827 | -6,080 |
Effect of Exchange Rate Change on Cash | -1,162 | 213 |
Net Decrease in Cash | -5,559 | -3,879 |
Cash at Beginning of Period | 26,260 | 18,424 |
Cash at End of Period | $20,701 | $14,545 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statement of Equity Statement (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Additional Paid in Capital | $260,104 |
Retained earnings | 5,391 |
Net Parent Investment | 0 |
Net Income (Loss) Attributable to Parent | 5,391 |
Other Comprehensive Income (Loss), Net of Tax | -4,722 |
Net Parent Contribution | ' |
Accumulated other comprehensive income (loss) | -3,103 |
Total Share Owners’ Equity | 262,392 |
Retained Earnings | ' |
Net Income (Loss) Attributable to Parent | 5,391 |
Accumulated Other Comprehensive Income (Loss) | ' |
Other Comprehensive Income (Loss), Net of Tax | -4,722 |
Additional Paid-in Capital | ' |
Net Parent Contribution | 9,351 |
Conversion of Net Parent Investment to Additional Paid In Capital | 250,753 |
Parent | ' |
Conversion of Net Parent Investment to Additional Paid In Capital | -250,753 |
Stockholders' Equity, Total | ' |
Conversion of Net Parent Investment to Additional Paid In Capital | $0 |
Note_1_Business_Description_an
Note 1. Business Description and Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Summary of Significant Accounting Policies [Abstract] | ' | |||||||
Significant Accounting Policies | ' | |||||||
Business Description and Summary of Significant Accounting Policies | ||||||||
Business Description: | ||||||||
Kimball Electronics, Inc. (also referred to herein as “Kimball Electronics”, the “Company”, “we”, “us” or “our”) is a global contract electronic manufacturing services (“EMS”) company that specializes in producing durable electronics for the automotive, medical, industrial, and public safety markets. We offer a package of value that begins with our core competency of producing “durable electronics” and includes our set of robust processes and procedures that help us ensure that we deliver the highest levels of quality, reliability, and service throughout the entire life cycle of our customers’ products. We have been producing safety critical electronic assemblies for our automotive customers for over 30 years. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service. | ||||||||
Kimball Electronics, Inc. was a wholly owned subsidiary of Kimball International, Inc. (“former Parent”) and as of October 31, 2014 became a stand-alone public company upon the completion of a spin-off from former Parent. In conjunction with the spin-off, on October 31, 2014, Kimball International distributed 29.1 million shares of Kimball Electronics common stock to Kimball International Share Owners. Holders of Kimball International common stock received three shares of Kimball Electronics common stock for every four shares of Kimball International common stock held on October 22, 2014. Kimball International structured the distribution to be tax free to its U.S. Share Owners for U.S. federal income tax purposes. For additional information regarding the spin-off, see Note 13 - Subsequent Events of Notes to Condensed Consolidated Financial Statements. | ||||||||
Basis of Presentation: | ||||||||
The Condensed Consolidated Financial Statements presented herein have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Kimball International, Inc. The Condensed Consolidated Financial Statements reflect the consolidated financial position, results of operations, and cash flows of Kimball Electronics as of and for the three months ended September 30, 2014 and 2013. The financial data presented herein is unaudited and should be read in conjunction with the annual Combined Financial Statements as of and for the year then ended June 30, 2014 and related notes thereto included in our registration statement on Form 10, which the SEC declared effective on October 7, 2014 (“Form 10”). As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year. | ||||||||
On September 30, 2014, the shares of Kimball Electronics Mexico, S.A. de C.V., a wholly owned subsidiary of former Parent, were contributed in a capital transaction to Kimball Electronics Mexico, Inc., a wholly owned subsidiary of Kimball Electronics, Inc. The financial results for Kimball Electronics Mexico, S.A. de C.V. are included in the Condensed Consolidated Financial Statements herein for all periods presented. Assets and liabilities were recorded at historical costs or carrying value. | ||||||||
The Condensed Consolidated Financial Statements include allocations from former Parent for direct costs and indirect costs attributable to the operations of Kimball Electronics. These allocations were made on a direct usage or cost incurred basis when appropriate, with the remainder allocated using various drivers including average capital deployed, payroll, revenue less material costs, headcount or other measures. While we believe such allocations are reasonable, these financial statements do not purport to reflect what the results of operations, comprehensive income, financial position, equity or cash flows would have been had Kimball Electronics operated as a stand-alone public company for the periods presented. Note 2 - Related Party Transactions of Notes to Condensed Consolidated Financial Statements provides information regarding direct and indirect cost allocations. | ||||||||
Notes Receivable and Trade Accounts Receivable: | ||||||||
Notes receivable and trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. We determine on a case-by-case basis the cessation of accruing interest, the resumption of accruing interest, the method of recording payments received on nonaccrual receivables, and the delinquency status for our limited number of notes receivable. | ||||||||
Our policy for estimating the allowance for credit losses on trade accounts receivable and notes receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to determine the final allowance for credit losses on the trade accounts receivable and notes receivable. Trade accounts receivable and notes receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Our limited amount of notes receivable allows management to monitor the risks, credit quality indicators, collectability, and probability of impairment on an individual basis. Adjustments to the allowance for credit losses are recorded in selling and administrative expenses. | ||||||||
In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We may utilize accounts receivable factoring arrangements with third-party financial institutions in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2014 and 2013, respectively, we sold, without recourse, $30.8 million and $53.8 million of accounts receivable. Factoring fees were not material. | ||||||||
Other General Income: | ||||||||
Other General Income in the first quarter of fiscal year 2014 included $5.0 million of pre-tax income resulting from settlements received related to two antitrust class action lawsuits in which Kimball Electronics was a class member. The lawsuits alleged that certain suppliers of the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components. No Other General Income was recorded during the first quarter of fiscal year 2015. | ||||||||
Non-operating Income (Expense), net: | ||||||||
The non-operating income (expense), net line item includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on Supplemental Employee Retirement Plan (“SERP”) investments, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in selling and administrative expenses. | ||||||||
Components of Non-operating income (expense), net: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||
Foreign Currency/Derivative Gain (Loss) | $ | (327 | ) | $ | 95 | |||
Gain (Loss) on Supplemental Employee Retirement Plan Investments | (93 | ) | 170 | |||||
Other | (77 | ) | (87 | ) | ||||
Non-operating income (expense), net | $ | (497 | ) | $ | 178 | |||
Income Taxes: | ||||||||
In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur. | ||||||||
In September 2013, the United States Treasury Department and the Internal Revenue Service (IRS) issued final regulations effective for our first quarter of fiscal year 2015, which provide guidance on a number of matters with regard to tangible property, including whether expenditures qualify as deductible repairs, the treatment of materials and supplies, capitalization of tangible property, dispositions of property, and related elections. The regulations as issued did not have a material effect on our condensed consolidated financial statements. | ||||||||
“Emerging Growth Company” Reporting Requirements: | ||||||||
Kimball Electronics qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as a company is deemed to be an “emerging growth company,” it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). | ||||||||
Section 107 of the JOBS Act also provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. | ||||||||
We would cease to be an “emerging growth company” upon the earliest of: | ||||||||
• | the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement filed under the Securities Act; | |||||||
• | the last day of the fiscal year in which our total annual gross revenues exceed $1 billion; | |||||||
• | the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or | |||||||
• | the date on which we become a “large accelerated filer,” as defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock held by non-affiliates exceeds $700 million as of the last day of our most recently completed second fiscal quarter. | |||||||
New Accounting Standards: | ||||||||
In June 2014, the Financial Accounting Standards Board (“FASB”) provided explicit guidance on how to account for share-based payments granted to employees in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The guidance will be applied prospectively for our first quarter fiscal year 2017 financial statements. We do not expect the adoption to have a material effect on our financial statements. | ||||||||
In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The guidance is effective for our fiscal year 2019 financial statements using either of two acceptable adoption methods: (i) retrospective adoption to each prior reporting period presented with the option to elect certain practical expedients; or (ii) adoption with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing certain additional disclosures. We have not yet selected a transition method nor determined the effect of this guidance on our financial statements. | ||||||||
In April 2014, the FASB issued guidance on reporting discontinued operations and disclosures of disposals of components of an entity. Under the new guidance, a disposal that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results is a discontinued operation. The new guidance requires expanded disclosures that will provide more information about the assets, liabilities, income, and expenses of discontinued operations, and also requires disclosures of significant disposals that do not qualify for discontinued operations reporting. The guidance is effective prospectively for disposals or components of our business classified as held for sale during fiscal year 2016. We are currently evaluating the impact of the adoption of this guidance on our financial statements. | ||||||||
In July 2013, the FASB issued guidance to eliminate the diversity in practice related to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The guidance became effective prospectively for our first quarter fiscal year 2015 financial statements. The adoption did not have a material effect on our Condensed Consolidated Financial Statements. |
Note_2_Related_Party_Transacti
Note 2. Related Party Transactions (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions Disclosure [Text Block] | ' |
Related Party Transactions | |
Services Provided by Kimball International, Inc.: | |
Prior to the spin-off on October 31, 2014, Kimball Electronics operated as a reportable segment within Kimball International. The Condensed Consolidated Financial Statements include allocations of general corporate expenses from former Parent including, but not limited to, spin-off costs, finance, legal, information technology, human resources, employee benefits administration, treasury, risk management, and other shared services. The allocations were primarily made using various drivers including average capital deployed, payroll, revenue less material costs, headcount or other measures, with the remainder allocated on a direct usage or cost incurred basis when appropriate. Former Parent charged us approximately $3.0 million and $2.7 million in the three months ended September 30, 2014 and 2013, respectively, for such services and indirect general and corporate overhead expenses. Additionally, former Parent charged us approximately $1.7 million and $1.3 million in the three months ended September 30, 2014 and 2013, respectively, for corporate incentive plan expenses, including stock-based compensation. These costs are primarily included in Selling and Administrative Expenses. | |
We consider the basis on which the expenses were allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly traded company for the periods presented. Actual costs that might have been incurred had we been a stand-alone company would depend on a number of factors, including what functions we might have performed ourselves or outsourced and strategic decisions we might have made in areas such as information technology and infrastructure. As an independent public company, we will perform these functions using our own resources or purchased services from third parties, or, for a limited time, former Parent. | |
Cash Management: | |
For purposes of the historical Condensed Consolidated Financial Statements, former Parent did not allocate to us the cash and cash equivalents held at former Parent’s corporate level for any of the periods presented. Cash in our Condensed Consolidated Balance Sheets primarily represents cash held by international entities at the local level. In connection with the spin-off, net distributions of cash were made from former Parent to us of approximately $45 million on or around October 31, 2014. We began operations as an independent company with approximately $63 million, including cash held by our foreign facilities. | |
Former Parent provided centralized treasury functions for us, whereby, former Parent regularly transferred cash both to and from our subsidiaries, as necessary. Intercompany receivables/payables from/to related parties arising from the corporate overhead activity described above were included in Net Parent Investment in the Condensed Consolidated Financial Statements. As of July 1, 2014, Net Parent Investment was converted to Additional Paid-In Capital. For additional information, see Note 1 – Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements. |
Note_3_Inventories
Note 3. Inventories | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventories [Abstract] | ' | |||||||
Inventory Disclosure | ' | |||||||
Inventories | ||||||||
Inventories are valued using the lower of first-in, first-out (FIFO) cost or market value. Inventory components were as follows: | ||||||||
(Amounts in Thousands) | September 30, 2014 | June 30, | ||||||
2014 | ||||||||
Finished products | $ | 18,765 | $ | 18,818 | ||||
Work-in-process | 13,215 | 12,530 | ||||||
Raw materials | 88,624 | 84,811 | ||||||
Total inventory | $ | 120,604 | $ | 116,159 | ||||
Note_4_Accumulated_Other_Compr
Note 4. Accumulated Other Comprehensive Income (Loss) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Abstract] | ' | |||||||||||||||||||
Accumulated Comprehensive Income (Loss) | ' | |||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||
During the three months ended September 30, 2014 and 2013, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows: | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Postemployment Benefits | |||||||||||||||||||
(Amounts in Thousands) | Foreign Currency Translation Adjustments | Derivative Gain (Loss) | Prior Service Costs | Net Actuarial Gain | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||
Balance at June 30, 2014 | $ | 4,925 | $ | (3,406 | ) | $ | (35 | ) | $ | 135 | $ | 1,619 | ||||||||
Other comprehensive income (loss) before reclassifications | (5,586 | ) | 1,877 | — | 67 | (3,642 | ) | |||||||||||||
Reclassification to (earnings) loss | — | (1,083 | ) | 6 | (3 | ) | (1,080 | ) | ||||||||||||
Net current-period other comprehensive income (loss) | (5,586 | ) | 794 | 6 | 64 | (4,722 | ) | |||||||||||||
Balance at September 30, 2014 | $ | (661 | ) | $ | (2,612 | ) | $ | (29 | ) | $ | 199 | $ | (3,103 | ) | ||||||
Balance at June 30, 2013 | $ | 1,038 | $ | (4,360 | ) | $ | (59 | ) | $ | 105 | $ | (3,276 | ) | |||||||
Other comprehensive income (loss) before reclassifications | 3,021 | (380 | ) | — | 79 | 2,720 | ||||||||||||||
Reclassification to (earnings) loss | — | 287 | 6 | 6 | 299 | |||||||||||||||
Net current-period other comprehensive income (loss) | 3,021 | (93 | ) | 6 | 85 | 3,019 | ||||||||||||||
Balance at September 30, 2013 | $ | 4,059 | $ | (4,453 | ) | $ | (53 | ) | $ | 190 | $ | (257 | ) | |||||||
The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: | ||||||||||||||||||||
Reclassifications from Accumulated Other Comprehensive Income (Loss) | Three Months Ended | Affected Line Item in the Condensed Consolidated Statements of Income | ||||||||||||||||||
September 30, | ||||||||||||||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||||||||||||||
Derivative Gain (Loss) (1) | $ | 206 | $ | (171 | ) | Cost of Sales | ||||||||||||||
1,148 | (179 | ) | Non-operating income (expense), net | |||||||||||||||||
(271 | ) | 63 | Benefit (Provision) for Income Taxes | |||||||||||||||||
$ | 1,083 | $ | (287 | ) | Net of Tax | |||||||||||||||
Postemployment Benefits: | ||||||||||||||||||||
Amortization of Prior Service Costs (2) | $ | (7 | ) | $ | (7 | ) | Cost of Sales | |||||||||||||
(3 | ) | (3 | ) | Selling and Administrative Expenses | ||||||||||||||||
4 | 4 | Benefit (Provision) for Income Taxes | ||||||||||||||||||
$ | (6 | ) | $ | (6 | ) | Net of Tax | ||||||||||||||
Amortization of Actuarial Gain (Loss) (2) | $ | 3 | $ | (7 | ) | Cost of Sales | ||||||||||||||
1 | (3 | ) | Selling and Administrative Expenses | |||||||||||||||||
(1 | ) | 4 | Benefit (Provision) for Income Taxes | |||||||||||||||||
$ | 3 | $ | (6 | ) | Net of Tax | |||||||||||||||
Total Reclassifications for the Period | $ | 1,080 | $ | (299 | ) | Net of Tax | ||||||||||||||
Amounts in parentheses indicate reductions to income. | ||||||||||||||||||||
(1) See Note 7 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. | ||||||||||||||||||||
(2) See Note 9 - Postemployment Benefits of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. |
Note_5_Commitments_and_Conting
Note 5. Commitments and Contingent Liabilities | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingent Liabilities [Abstract] | ' | |||||||
Commitments and Contingencies Disclosure | ' | |||||||
Commitments and Contingent Liabilities | ||||||||
Kimball Electronics and certain of its subsidiaries guaranteed former Parent’s obligations under a Parent credit facility. As of September 30, 2014, and June 30, 2014, former Parent had no borrowings under its credit facility, and as a result the potential obligation under this guarantee was not deemed to be material and no liability was recorded. No other guarantees existed which were contingent on the future performance of another entity as of September 30, 2014 and June 30, 2014. | ||||||||
Standby letters of credit are issued to third-party suppliers, lessors, and insurance institutions and can only be drawn upon in the event of Kimball Electronics’ failure to pay its obligations to a beneficiary. As of September 30, 2014, we had a maximum financial exposure from unused standby letters of credit totaling $0.1 million. We are not aware of circumstances that would require us to perform under any of these arrangements and believe that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect our condensed consolidated financial statements. Accordingly, no liability has been recorded as of September 30, 2014 with respect to the standby letters of credit. Former Parent also entered into commercial letters of credit on behalf of Kimball Electronics to facilitate payments to vendors and from customers. | ||||||||
As of October 31, 2014, in connection with the spin-off, Kimball Electronics and former Parent entered into new credit facilities, and Kimball Electronics no longer guarantees former Parent’s obligations under former Parent’s credit facility. For additional information, see Note 13 - Subsequent Events of Notes to Condensed Consolidated Financial Statements. | ||||||||
We maintain a provision for limited warranty repair or replacement of products manufactured and sold, which is established in specific manufacturing contract agreements. We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability periodically based on changes in historical cost trends and in certain cases where specific warranty issues become known. | ||||||||
Changes in the product warranty accrual for the three months ended September 30, 2014 and 2013 were as follows: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||
Product Warranty Liability at the beginning of the period | $ | 911 | $ | 507 | ||||
Additions to warranty accrual (including changes in estimates) | 51 | (241 | ) | |||||
Settlements made (in cash or in kind) | (395 | ) | (13 | ) | ||||
Product Warranty Liability at the end of the period | $ | 567 | $ | 253 | ||||
Note_6_Fair_Value
Note 6. Fair Value | 3 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Fair Value [Abstract] | ' | ||||||||||||
Fair Value Disclosures | ' | ||||||||||||
Fair Value | |||||||||||||
Kimball Electronics categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows: | |||||||||||||
• | Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities. | ||||||||||||
• | Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. | ||||||||||||
• | Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. | ||||||||||||
Our policy is to recognize transfers between these levels as of the end of each quarterly reporting period. There were no transfers between these levels during the three months ended September 30, 2014. There were also no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2014. | |||||||||||||
Financial Instruments Recognized at Fair Value: | |||||||||||||
The following methods and assumptions were used to measure fair value: | |||||||||||||
Financial Instrument | Level | Valuation Technique/Inputs Used | |||||||||||
Derivative Assets: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk. | |||||||||||
Trading securities: Mutual funds held by nonqualified supplemental employee retirement plan (SERP) | 1 | Market - Quoted market prices within active markets. | |||||||||||
Derivative Liabilities: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk. | |||||||||||
Recurring Fair Value Measurements: | |||||||||||||
As of September 30, 2014 and June 30, 2014, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: | |||||||||||||
September 30, 2014 | |||||||||||||
(Amounts in Thousands) | Level 1 | Level 2 | Total | ||||||||||
Assets | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 3,336 | $ | 3,336 | |||||||
Trading Securities: Mutual funds held in nonqualified SERP | 5,338 | — | 5,338 | ||||||||||
Total assets at fair value | $ | 5,338 | $ | 3,336 | $ | 8,674 | |||||||
Liabilities | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 397 | $ | 397 | |||||||
Total liabilities at fair value | $ | — | $ | 397 | $ | 397 | |||||||
June 30, 2014 | |||||||||||||
(Amounts in Thousands) | Level 1 | Level 2 | Total | ||||||||||
Assets | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 800 | $ | 800 | |||||||
Trading Securities: Mutual funds held in nonqualified SERP | 5,260 | — | 5,260 | ||||||||||
Total assets at fair value | $ | 5,260 | $ | 800 | $ | 6,060 | |||||||
Liabilities | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 699 | $ | 699 | |||||||
Total liabilities at fair value | $ | — | $ | 699 | $ | 699 | |||||||
We had no purchases or sales of Level 3 assets during the three months ended September 30, 2014. | |||||||||||||
Former Parent’s nonqualified supplemental employee retirement plan (SERP) assets consist primarily of equity funds, balanced funds, a bond fund, and a money market fund. The SERP investment assets are offset by a SERP liability which represents Kimball Electronics’ obligation to distribute SERP funds to participants. See Note 8 - Investments of Notes to Condensed Consolidated Financial Statements for further information regarding the SERP. | |||||||||||||
Non-Recurring Fair Value Measurements: | |||||||||||||
During the three months ended September 30, 2014, we had no fair value adjustments applicable to items that are subject to non-recurring fair value measurement after the initial measurement date. | |||||||||||||
Financial Instruments Not Carried At Fair Value: | |||||||||||||
Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following: | |||||||||||||
Financial Instrument | Level | Valuation Technique/Inputs Used | |||||||||||
Notes receivable | 2 | Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account the customer’s non-performance risk | |||||||||||
The carrying value of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximates fair value due to the relatively short maturity and immaterial non-performance risk. |
Note_7_Derivative_Instruments
Note 7. Derivative Instruments | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Derivative Instruments [Abstract] | ' | |||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure | ' | |||||||||||||||||||
Derivative Instruments | ||||||||||||||||||||
Foreign Exchange Contracts: | ||||||||||||||||||||
We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of business. Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes. | ||||||||||||||||||||
We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances denominated in currencies other than the functional currencies. As of September 30, 2014, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $28.4 million and to hedge currencies against the Euro in the aggregate notional amount of 45.2 million Euro. The notional amounts are indicators of the volume of derivative activities but are not indicators of the potential gain or loss on the derivatives. | ||||||||||||||||||||
In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities. | ||||||||||||||||||||
The fair value of outstanding derivative instruments is recognized on the balance sheet as a derivative asset or liability. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the effective portions of the gain or loss on the derivative instrument are initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Equity, and are subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings. The ineffective portion of the derivative gain or loss is reported in the Non-operating income (expense), net line item on the Condensed Consolidated Statements of Income immediately. The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is also reported in the Non-operating income (expense), net line item on the Condensed Consolidated Statements of Income immediately. | ||||||||||||||||||||
Based on fair values as of September 30, 2014, we estimate that $0.7 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months. Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk. The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both September 30, 2014 and June 30, 2014. | ||||||||||||||||||||
See Note 6 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and the Condensed Consolidated Statements of Comprehensive Income for the changes in deferred derivative gains and losses. Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets and derivative gains and losses in the Condensed Consolidated Statements of Income are presented below. | ||||||||||||||||||||
Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets | ||||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
Fair Value As of | Fair Value As of | |||||||||||||||||||
(Amounts in Thousands) | Balance Sheet Location | September 30, | June 30, | Balance Sheet Location | September 30, | June 30, | ||||||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 1,580 | $ | 599 | Accrued expenses | $ | 397 | $ | 241 | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | 1,756 | 201 | Accrued expenses | — | 458 | ||||||||||||||
Total derivatives | $ | 3,336 | $ | 800 | $ | 397 | $ | 699 | ||||||||||||
The Effect of Derivative Instruments on Other Comprehensive Income (Loss) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30 | ||||||||||||||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||||||||||||||
Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): | ||||||||||||||||||||
Foreign exchange contracts | $ | 2,231 | $ | (505 | ) | |||||||||||||||
The Effect of Derivative Instruments on Condensed Consolidated Statements of Income | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
(Amounts in Thousands) | September 30 | |||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Location of Gain or (Loss) | 2014 | 2013 | |||||||||||||||||
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): | ||||||||||||||||||||
Foreign exchange contracts | Cost of Sales | $ | 206 | $ | (171 | ) | ||||||||||||||
Foreign exchange contracts | Non-operating income (expense) | 1,148 | (179 | ) | ||||||||||||||||
Total | $ | 1,354 | $ | (350 | ) | |||||||||||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||||
Amount of Pre-Tax Gain or (Loss) Recognized in Income on Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Non-operating income (expense) | $ | 924 | $ | (544 | ) | ||||||||||||||
Total | $ | 924 | $ | (544 | ) | |||||||||||||||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $ | 2,278 | $ | (894 | ) | |||||||||||||||
Note_8_Investments
Note 8. Investments | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Investments [Abstract] | ' | |||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | ' | |||||||
Investments | ||||||||
Former Parent maintains a self-directed supplemental employee retirement plan (SERP) in which Kimball Electronics’ executive employees are eligible to participate. The SERP utilizes a rabbi trust, and therefore assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. Kimball Electronics recognizes SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in income in the Other Income (Expense) category. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. The change in net unrealized holding gains (losses) for the three months ended September 30, 2014 and 2013 was, in thousands, $(102) and $154, respectively. | ||||||||
SERP asset and liability balances applicable to Kimball Electronics participants were as follows: | ||||||||
(Amounts in Thousands) | September 30, | June 30, | ||||||
2014 | 2014 | |||||||
SERP investments - current asset | $ | 166 | $ | 167 | ||||
SERP investments - other long-term asset | 5,172 | 5,093 | ||||||
Total SERP investments | $ | 5,338 | $ | 5,260 | ||||
SERP obligation - current liability | $ | 166 | $ | 167 | ||||
SERP obligation - other long-term liability | 5,172 | 5,093 | ||||||
Total SERP obligation | $ | 5,338 | $ | 5,260 | ||||
Note_9_Postemployment_Benefits
Note 9. Postemployment Benefits | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Postemployment Benefits [Abstract] | ' | |||||||
Postemployment Benefits Disclosure | ' | |||||||
Postemployment Benefits | ||||||||
Kimball Electronics employees participated in severance plans sponsored by former Parent. These plans cover domestic employees and provide severance benefits to eligible employees meeting the plans’ qualifications, primarily involuntary termination without cause. There are no statutory requirements for us or former Parent to contribute to the plans, nor do employees contribute to the plans. The plans hold no assets. Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment. Benefits are based upon on employee’s years of service and accumulate up to certain limits specified in the plans and include both salary and an allowance for medical benefits. The benefit obligation for periods prior to the spin-off was determined in total for each of the plans and allocated by the number of Kimball Electronics domestic employees participating in the plans. In conjunction with the spin-off, these plans are being legally separated. | ||||||||
The components of net periodic postemployment benefit cost applicable to Kimball Electronics participants were as follows: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||
Service cost | $ | 64 | $ | 66 | ||||
Interest cost | 8 | 10 | ||||||
Amortization of prior service costs | 10 | 10 | ||||||
Amortization of actuarial loss | (4 | ) | 10 | |||||
Net periodic benefit cost | $ | 78 | $ | 96 | ||||
The benefit cost in the above table includes only normal recurring levels of severance activity. Unusual or non-recurring severance actions are not estimable using actuarial methods and are expensed in accordance with the applicable U.S. GAAP. |
Note_10_Stock_Compensation_Pla
Note 10. Stock Compensation Plan | 3 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Stock Compensation Plan [Abstract] | ' | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments | ' | |||||||||
Stock Compensation Plan | ||||||||||
During the first three months of fiscal year 2015, the following stock compensation for directors was allocated to Kimball Electronics. All awards were granted under former Parent’s Amended and Restated 2003 Stock Option and Incentive Plan. As of September 30, 2014, all stock compensation awards held by employees of Kimball Electronics were granted by former Parent under various Parent sponsored plans. | ||||||||||
Unrestricted Shares (1) | Quarter Awarded | Shares | Grant Date Fair Value | |||||||
Unrestricted Shares (Director Compensation) – Class B | 1st Quarter | 8,147 | $16.01 | |||||||
(1)Represents Kimball Electronics’ allocated portion of unrestricted shares which were awarded to non-employee members of former Parent’s Board of Directors as compensation for director’s fees as a result of directors’ elections to receive unrestricted shares in lieu of cash payment. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sale, or other restrictions. |
Note_11_Share_Owners_Equity_No
Note 11. Share Owners' Equity (Notes) | 3 Months Ended |
Sep. 30, 2014 | |
Share Owners' Equity [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
Share Owners’ Equity | |
Effective October 16, 2014, the Company’s authorized capital was increased to 165 million shares comprised of 15 million preferred shares without par value and 150 million common shares without par value. In addition, 50 thousand common shares outstanding were split into 29.1 million common shares. On October 31, 2014, Kimball International, Inc., the Company’s sole Share Owner, distributed all 29.1 million outstanding shares of Kimball Electronics common stock to Kimball International Share Owners in connection with the spin-off. Upon the spin-off, holders of Kimball International common stock received three shares of Kimball Electronics common stock for every four shares of Kimball International common stock held on October 22, 2014. Preferred and common shares were retrospectively restated for the number of Kimball Electronics shares authorized and outstanding immediately following these events. | |
A stock compensation plan similar to the former Parent plan was created and adopted by the Company’s Board of Directors on October 3, 2014. The Kimball Electronics, Inc. 2014 Stock Option and Incentive Plan (the “Plan”) allows for the issuance of up to 4.5 million shares and may be awarded in the form of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units. The Plan is a ten-year plan with no further awards allowed to be made under the Plan after October 1, 2024. | |
Net Parent Investment in the Condensed Consolidated Financial Statements represents Kimball International’s historical investment in us, our accumulated net earnings after taxes, and the net effect of the transactions with and allocations from former Parent. As of July 1, 2014, Net Parent Investment was converted to Additional Paid-In Capital. For additional information, see Note 1 – Business Description and Summary of Significant Accounting Policies, as well as Note 2 – Related Party Transactions of Notes to Condensed Consolidated Financial Statements. |
Note_12_Earnings_Per_Share_Not
Note 12. Earnings Per Share (Notes) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Earnings Per Share [Text Block] | ' | |||||||
Earnings Per Share | ||||||||
Basic and diluted earnings per share were calculated as follows: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in thousands, except per share data) | 2014 | 2013 | ||||||
Net Income | $ | 5,391 | $ | 7,698 | ||||
Basic and diluted earnings per share | $ | 0.18 | $ | 0.26 | ||||
Basic and diluted average shares outstanding | 29,143 | 29,143 | ||||||
Basic and diluted earnings per common share and the average number of common shares outstanding were retrospectively restated adjusting the number of Kimball Electronics shares outstanding for the stock split effective on October 16, 2014. See Note 11 - Share Owners’ Equity of Notes to Condensed Consolidated Financial Statements for more information regarding the stock split. The same number of shares was used to calculate basic and diluted earnings per share since no Kimball Electronics stock-based awards were outstanding prior to the spin-off. Diluted earnings per share subsequent to the spin-off will reflect the potential dilution of any Kimball Electronics stock-based awards. |
Note_13_Subsequent_Events
Note 13. Subsequent Events | 3 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
Spin-off Transaction: | |
On October 31, 2014, Kimball International, Inc. completed the spin-off of its Electronics Manufacturing Services segment into the separate publicly-traded company Kimball Electronics, Inc. Kimball Electronics is a leading global provider of electronic manufacturing services to the automotive, medical, industrial, and public safety markets. | |
In conjunction with the spin-off, on October 31, 2014, Kimball International distributed a stock dividend of 29.1 million shares of Kimball Electronics common stock to Kimball International Share Owners. Holders of Kimball International common stock received three shares of Kimball Electronics common stock for every four shares of Kimball International common stock held on October 22, 2014. Kimball International structured the distribution to be tax free to its U.S. Share Owners for U.S. federal income tax purposes. | |
As part of the spin-off, the Company entered into various agreements with former Parent which provide for the allocation between the Company and former Parent of the assets, liabilities, and obligations, of former Parent and its subsidiaries, and govern the relationship between former Parent and the Company after the spin-off. These agreements became effective on October 31, 2014 and included the following: | |
Separation and Distribution Agreement: | |
The Separation and Distribution Agreement, among other things, (1) provides for the transfers of assets and assumptions of liabilities; (2) governs the rights and obligations of the parties regarding the distribution; (3) provides that following the spin-off the Company is responsible for obtaining and maintaining its own insurance coverage; and (4) governs other matters, including, but not limited to access and provision of records, intellectual property, confidentiality, treatment of outstanding guarantees and similar credit support and dispute resolution procedures. | |
Tax Matters Agreement: | |
The Tax Matters Agreement governs the Company’s obligations after the spin-off with respect to tax liabilities and benefits, tax attributes, tax contests and other tax matters regarding income taxes, other taxes and related tax returns. The Company will continue to have following the spin-off, joint and several liabilities with former Parent with the Internal Revenue Service and certain U.S. state tax authorities for U.S. federal income and state taxes for the taxable periods in which the Company was a part of former Parent’s consolidated group. The tax matters agreement specifies the portion of this liability for which the Company bears responsibility, and former Parent has agreed to indemnify the Company against any amounts for which the Company is not responsible. | |
Employee Matters Agreement: | |
The Employee Matters Agreement provides (1) that generally the Company has responsibility for its own employees and compensation plans, subject to certain exceptions; (2) that following the spin-off, the Company’s employees will generally participate in various retirement, welfare, and other employee benefit and compensation plans established and maintained by the Company; (3) for the treatment of outstanding equity awards in connection with the spin-off; (4) for the assumption of certain employment related contracts that the Company’s employees originally entered into with former Parent; and (5) the allocation of certain employee liabilities and the cooperation between the Company and former Parent. in sharing employee information. | |
Transition Services Agreement: | |
The Transition Services Agreement provides the Company and former Parent will provide to each other specified services on a transitional basis to help ensure an orderly transition following the spin-off. These services include information technology, financial, telecommunications, benefits support services and other specified services. The services will be provided at cost, and are planned to extend for a period of six to eighteen months in most circumstances. | |
Conversion of Kimball International Performance Share Awards: | |
Performance Share Awards issued and outstanding to Kimball Electronics employees under the previous Kimball International Incentive Plans will be “equitably” adjusted going forward using a formula based on the volume weighted average price for the five trading days immediately preceding the distribution date for Kimball International Class B Common stock and the five trading days immediately following the distribution date for Kimball Electronics Common stock. Converted awards will retain the same terms and conditions and vesting schedule, issuance dates and expiration dates of the original Kimball International awards. | |
Cash Distribution: | |
In connection with the spin-off, net distributions of cash were made by former Parent to us of approximately $45 million on or around October 31, 2014. We began operations as an independent company with approximately $63 million, including cash held by our foreign facilities. | |
JPMorgan Credit Agreement: | |
In connection with the spin-off, Kimball Electronics, Inc. entered into a credit agreement dated as of October 31, 2014 and related collateral and guarantee documentation (collectively, the “Credit Agreement”) with JPMorgan Chase Bank National Association, as administrative agent, and other lenders party hereto. The Credit Agreement has a maturity date of October 31, 2019 and allows for up to $50 million in borrowings, with an option to increase the amount available for borrowing to $75 million at the Company’s request, subject to participating banks’ consent. | |
The revolving credit loans under the Credit Agreement may consist of, at the Company’s election, advances in U.S. dollars or advances in any other currency that is agreed to by the lenders. The proceeds of the revolving credit loans are to be used for general corporate purposes of the Company including acquisitions. A portion of the credit facility, not to exceed $15 million of the principal amount, will be available for the issuance of letters of credit. A commitment fee on the unused portion of the principal amount of the credit facility is payable at a rate that ranges from 20.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. | |
The interest rate on borrowings is dependent on the type of borrowings and will be one of the following two options: | |
•The London Interbank Offered Rate (“LIBOR”) in effect two business days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Eurocurrency Loans margin which can range from 125.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or | |
•The Alternate Base Rate, which is defined as the highest of the fluctuating rate per annum equal to the higher of | |
a.JPMorgan’s prime rate; | |
b.1% per annum above the Adjusted LIBO rate (as defined in the Credit Agreement); or | |
c.1/2% per annum above the Federal funds rate; | |
plus the ABR Loans spread which can range from 25.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. | |
The Company’s financial covenants under the Credit Agreement require: | |
•a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the U.S. in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, and | |
•a fixed charge coverage ratio, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be less than 1.10 to 1.00. | |
Poland Credit Facility: | |
The Company maintained a foreign credit facility for the Poland operation that allowed for multi-currency borrowings up to 6.0 million Euro equivalent (approximately $7.6 million U.S. dollars at September 30, 2014 exchange rates). The facility could be canceled at anytime by the bank or us. Effective October 31, 2014, the Poland credit facility was canceled by a mutual agreement between the Company and the bank. The Poland facility has not been replaced. |
Note_1_Business_Description_an1
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2014 | |
Summary of Significant Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation: | |
The Condensed Consolidated Financial Statements presented herein have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Kimball International, Inc. The Condensed Consolidated Financial Statements reflect the consolidated financial position, results of operations, and cash flows of Kimball Electronics as of and for the three months ended September 30, 2014 and 2013. The financial data presented herein is unaudited and should be read in conjunction with the annual Combined Financial Statements as of and for the year then ended June 30, 2014 and related notes thereto included in our registration statement on Form 10, which the SEC declared effective on October 7, 2014 (“Form 10”). As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year. | |
On September 30, 2014, the shares of Kimball Electronics Mexico, S.A. de C.V., a wholly owned subsidiary of former Parent, were contributed in a capital transaction to Kimball Electronics Mexico, Inc., a wholly owned subsidiary of Kimball Electronics, Inc. The financial results for Kimball Electronics Mexico, S.A. de C.V. are included in the Condensed Consolidated Financial Statements herein for all periods presented. Assets and liabilities were recorded at historical costs or carrying value. | |
The Condensed Consolidated Financial Statements include allocations from former Parent for direct costs and indirect costs attributable to the operations of Kimball Electronics. These allocations were made on a direct usage or cost incurred basis when appropriate, with the remainder allocated using various drivers including average capital deployed, payroll, revenue less material costs, headcount or other measures. While we believe such allocations are reasonable, these financial statements do not purport to reflect what the results of operations, comprehensive income, financial position, equity or cash flows would have been had Kimball Electronics operated as a stand-alone public company for the periods presented. Note 2 - Related Party Transactions of Notes to Condensed Consolidated Financial Statements provides information regarding direct and indirect cost allocations. | |
Notes Receivable and Trade Accounts Receivable | ' |
Notes Receivable and Trade Accounts Receivable: | |
Notes receivable and trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. We determine on a case-by-case basis the cessation of accruing interest, the resumption of accruing interest, the method of recording payments received on nonaccrual receivables, and the delinquency status for our limited number of notes receivable. | |
Our policy for estimating the allowance for credit losses on trade accounts receivable and notes receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to determine the final allowance for credit losses on the trade accounts receivable and notes receivable. Trade accounts receivable and notes receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Our limited amount of notes receivable allows management to monitor the risks, credit quality indicators, collectability, and probability of impairment on an individual basis. Adjustments to the allowance for credit losses are recorded in selling and administrative expenses. | |
In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We may utilize accounts receivable factoring arrangements with third-party financial institutions in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. | |
Other General Income | ' |
Other General Income: | |
Other General Income in the first quarter of fiscal year 2014 included $5.0 million of pre-tax income resulting from settlements received related to two antitrust class action lawsuits in which Kimball Electronics was a class member. The lawsuits alleged that certain suppliers of the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components. No Other General Income was recorded during the first quarter of fiscal year 2015. | |
Non-operating Income (Expense), net | ' |
Non-operating Income (Expense), net: | |
The non-operating income (expense), net line item includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on Supplemental Employee Retirement Plan (“SERP”) investments, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in selling and administrative expenses. | |
Income Taxes | ' |
Income Taxes: | |
In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur. | |
In September 2013, the United States Treasury Department and the Internal Revenue Service (IRS) issued final regulations effective for our first quarter of fiscal year 2015, which provide guidance on a number of matters with regard to tangible property, including whether expenditures qualify as deductible repairs, the treatment of materials and supplies, capitalization of tangible property, dispositions of property, and related elections. The regulations as issued did not have a material effect on our condensed consolidated financial statements. | |
Emerging Growth Company Reporting Requirements [Policy Text Block] | ' |
“Emerging Growth Company” Reporting Requirements: | |
Kimball Electronics qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as a company is deemed to be an “emerging growth company,” it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). | |
Section 107 of the JOBS Act also provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. | |
New Accounting Standards | ' |
New Accounting Standards: | |
In June 2014, the Financial Accounting Standards Board (“FASB”) provided explicit guidance on how to account for share-based payments granted to employees in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The guidance will be applied prospectively for our first quarter fiscal year 2017 financial statements. We do not expect the adoption to have a material effect on our financial statements. | |
In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The guidance is effective for our fiscal year 2019 financial statements using either of two acceptable adoption methods: (i) retrospective adoption to each prior reporting period presented with the option to elect certain practical expedients; or (ii) adoption with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing certain additional disclosures. We have not yet selected a transition method nor determined the effect of this guidance on our financial statements. | |
In April 2014, the FASB issued guidance on reporting discontinued operations and disclosures of disposals of components of an entity. Under the new guidance, a disposal that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results is a discontinued operation. The new guidance requires expanded disclosures that will provide more information about the assets, liabilities, income, and expenses of discontinued operations, and also requires disclosures of significant disposals that do not qualify for discontinued operations reporting. The guidance is effective prospectively for disposals or components of our business classified as held for sale during fiscal year 2016. We are currently evaluating the impact of the adoption of this guidance on our financial statements. | |
In July 2013, the FASB issued guidance to eliminate the diversity in practice related to the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The guidance became effective prospectively for our first quarter fiscal year 2015 financial statements. The adoption did not have a material effect on our Condensed Consolidated Financial Statements. |
Note_3_Inventories_Policies
Note 3. Inventories (Policies) | 3 Months Ended |
Sep. 30, 2014 | |
Inventories [Abstract] | ' |
Inventory | ' |
Inventories are valued using the lower of first-in, first-out (FIFO) cost or market value. |
Note_5_Commitments_and_Conting1
Note 5. Commitments and Contingent Liabilities (Policies) | 3 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingent Liabilities [Abstract] | ' |
Product Warranties | ' |
We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability periodically based on changes in historical cost trends and in certain cases where specific warranty issues become known. |
Note_6_Fair_Value_Policies
Note 6. Fair Value (Policies) | 3 Months Ended | ||||
Sep. 30, 2014 | |||||
Fair Value [Abstract] | ' | ||||
Fair Value | ' | ||||
Kimball Electronics categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows: | |||||
• | Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities. | ||||
• | Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. | ||||
• | Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. | ||||
Our policy is to recognize transfers between these levels as of the end of each quarterly reporting period. There were no transfers between these levels during the three months ended September 30, 2014. There were also no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2014. | |||||
Financial Instruments Recognized at Fair Value: | |||||
The following methods and assumptions were used to measure fair value: | |||||
Financial Instrument | Level | Valuation Technique/Inputs Used | |||
Derivative Assets: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk. | |||
Trading securities: Mutual funds held by nonqualified supplemental employee retirement plan (SERP) | 1 | Market - Quoted market prices within active markets. | |||
Derivative Liabilities: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk. | |||
Fair Value of Financial Instruments Not Carried at Fair Value | ' | ||||
Financial Instruments Not Carried At Fair Value: | |||||
Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following: | |||||
Financial Instrument | Level | Valuation Technique/Inputs Used | |||
Notes receivable | 2 | Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account the customer’s non-performance risk | |||
The carrying value of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximates fair value due to the relatively short maturity and immaterial non-performance risk. |
Note_7_Derivative_Instruments_
Note 7. Derivative Instruments (Policies) | 3 Months Ended |
Sep. 30, 2014 | |
Derivative Instruments [Abstract] | ' |
Derivatives, Hedge Discontinuances | ' |
In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities. | |
Derivatives, Reporting of Derivative Activity | ' |
The fair value of outstanding derivative instruments is recognized on the balance sheet as a derivative asset or liability. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the effective portions of the gain or loss on the derivative instrument are initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Equity, and are subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings. The ineffective portion of the derivative gain or loss is reported in the Non-operating income (expense), net line item on the Condensed Consolidated Statements of Income immediately. The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is also reported in the Non-operating income (expense), net line item on the Condensed Consolidated Statements of Income immediately. |
Note_1_Business_Description_an2
Note 1. Business Description and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Summary of Significant Accounting Policies [Abstract] | ' | |||||||
Components of Non-operating income (expense), net | ' | |||||||
Components of Non-operating income (expense), net: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||
Foreign Currency/Derivative Gain (Loss) | $ | (327 | ) | $ | 95 | |||
Gain (Loss) on Supplemental Employee Retirement Plan Investments | (93 | ) | 170 | |||||
Other | (77 | ) | (87 | ) | ||||
Non-operating income (expense), net | $ | (497 | ) | $ | 178 | |||
Note_3_Inventories_Tables
Note 3. Inventories (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventories [Abstract] | ' | |||||||
Schedule of Inventory, Current | ' | |||||||
Inventories are valued using the lower of first-in, first-out (FIFO) cost or market value. Inventory components were as follows: | ||||||||
(Amounts in Thousands) | September 30, 2014 | June 30, | ||||||
2014 | ||||||||
Finished products | $ | 18,765 | $ | 18,818 | ||||
Work-in-process | 13,215 | 12,530 | ||||||
Raw materials | 88,624 | 84,811 | ||||||
Total inventory | $ | 120,604 | $ | 116,159 | ||||
Note_4_Accumulated_Other_Compr1
Note 4. Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Abstract] | ' | |||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||||||||||
During the three months ended September 30, 2014 and 2013, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows: | ||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Postemployment Benefits | |||||||||||||||||||
(Amounts in Thousands) | Foreign Currency Translation Adjustments | Derivative Gain (Loss) | Prior Service Costs | Net Actuarial Gain | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||
Balance at June 30, 2014 | $ | 4,925 | $ | (3,406 | ) | $ | (35 | ) | $ | 135 | $ | 1,619 | ||||||||
Other comprehensive income (loss) before reclassifications | (5,586 | ) | 1,877 | — | 67 | (3,642 | ) | |||||||||||||
Reclassification to (earnings) loss | — | (1,083 | ) | 6 | (3 | ) | (1,080 | ) | ||||||||||||
Net current-period other comprehensive income (loss) | (5,586 | ) | 794 | 6 | 64 | (4,722 | ) | |||||||||||||
Balance at September 30, 2014 | $ | (661 | ) | $ | (2,612 | ) | $ | (29 | ) | $ | 199 | $ | (3,103 | ) | ||||||
Balance at June 30, 2013 | $ | 1,038 | $ | (4,360 | ) | $ | (59 | ) | $ | 105 | $ | (3,276 | ) | |||||||
Other comprehensive income (loss) before reclassifications | 3,021 | (380 | ) | — | 79 | 2,720 | ||||||||||||||
Reclassification to (earnings) loss | — | 287 | 6 | 6 | 299 | |||||||||||||||
Net current-period other comprehensive income (loss) | 3,021 | (93 | ) | 6 | 85 | 3,019 | ||||||||||||||
Balance at September 30, 2013 | $ | 4,059 | $ | (4,453 | ) | $ | (53 | ) | $ | 190 | $ | (257 | ) | |||||||
Reclassification out of Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||||||||||
The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: | ||||||||||||||||||||
Reclassifications from Accumulated Other Comprehensive Income (Loss) | Three Months Ended | Affected Line Item in the Condensed Consolidated Statements of Income | ||||||||||||||||||
September 30, | ||||||||||||||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||||||||||||||
Derivative Gain (Loss) (1) | $ | 206 | $ | (171 | ) | Cost of Sales | ||||||||||||||
1,148 | (179 | ) | Non-operating income (expense), net | |||||||||||||||||
(271 | ) | 63 | Benefit (Provision) for Income Taxes | |||||||||||||||||
$ | 1,083 | $ | (287 | ) | Net of Tax | |||||||||||||||
Postemployment Benefits: | ||||||||||||||||||||
Amortization of Prior Service Costs (2) | $ | (7 | ) | $ | (7 | ) | Cost of Sales | |||||||||||||
(3 | ) | (3 | ) | Selling and Administrative Expenses | ||||||||||||||||
4 | 4 | Benefit (Provision) for Income Taxes | ||||||||||||||||||
$ | (6 | ) | $ | (6 | ) | Net of Tax | ||||||||||||||
Amortization of Actuarial Gain (Loss) (2) | $ | 3 | $ | (7 | ) | Cost of Sales | ||||||||||||||
1 | (3 | ) | Selling and Administrative Expenses | |||||||||||||||||
(1 | ) | 4 | Benefit (Provision) for Income Taxes | |||||||||||||||||
$ | 3 | $ | (6 | ) | Net of Tax | |||||||||||||||
Total Reclassifications for the Period | $ | 1,080 | $ | (299 | ) | Net of Tax | ||||||||||||||
Amounts in parentheses indicate reductions to income. | ||||||||||||||||||||
(1) See Note 7 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. | ||||||||||||||||||||
(2) See Note 9 - Postemployment Benefits of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. |
Note_5_Commitments_and_Conting2
Note 5. Commitments and Contingent Liabilities (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingent Liabilities [Abstract] | ' | |||||||
Schedule of Product Warranty Liability | ' | |||||||
Changes in the product warranty accrual for the three months ended September 30, 2014 and 2013 were as follows: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||
Product Warranty Liability at the beginning of the period | $ | 911 | $ | 507 | ||||
Additions to warranty accrual (including changes in estimates) | 51 | (241 | ) | |||||
Settlements made (in cash or in kind) | (395 | ) | (13 | ) | ||||
Product Warranty Liability at the end of the period | $ | 567 | $ | 253 | ||||
Note_6_Fair_Value_Tables
Note 6. Fair Value (Tables) | 3 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Fair Value [Abstract] | ' | ||||||||||||
Fair Value Measurements, Recurring, Valuation Techniques | ' | ||||||||||||
The following methods and assumptions were used to measure fair value: | |||||||||||||
Financial Instrument | Level | Valuation Technique/Inputs Used | |||||||||||
Derivative Assets: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk. | |||||||||||
Trading securities: Mutual funds held by nonqualified supplemental employee retirement plan (SERP) | 1 | Market - Quoted market prices within active markets. | |||||||||||
Derivative Liabilities: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk. | |||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ||||||||||||
As of September 30, 2014 and June 30, 2014, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: | |||||||||||||
September 30, 2014 | |||||||||||||
(Amounts in Thousands) | Level 1 | Level 2 | Total | ||||||||||
Assets | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 3,336 | $ | 3,336 | |||||||
Trading Securities: Mutual funds held in nonqualified SERP | 5,338 | — | 5,338 | ||||||||||
Total assets at fair value | $ | 5,338 | $ | 3,336 | $ | 8,674 | |||||||
Liabilities | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 397 | $ | 397 | |||||||
Total liabilities at fair value | $ | — | $ | 397 | $ | 397 | |||||||
June 30, 2014 | |||||||||||||
(Amounts in Thousands) | Level 1 | Level 2 | Total | ||||||||||
Assets | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 800 | $ | 800 | |||||||
Trading Securities: Mutual funds held in nonqualified SERP | 5,260 | — | 5,260 | ||||||||||
Total assets at fair value | $ | 5,260 | $ | 800 | $ | 6,060 | |||||||
Liabilities | |||||||||||||
Derivatives: Foreign exchange contracts | $ | — | $ | 699 | $ | 699 | |||||||
Total liabilities at fair value | $ | — | $ | 699 | $ | 699 | |||||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques | ' | ||||||||||||
Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following: | |||||||||||||
Financial Instrument | Level | Valuation Technique/Inputs Used | |||||||||||
Notes receivable | 2 | Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account the customer’s non-performance risk |
Note_7_Derivative_Instruments_1
Note 7. Derivative Instruments (Tables) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Derivative Instruments [Abstract] | ' | |||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | ' | |||||||||||||||||||
Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets | ||||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||||
Fair Value As of | Fair Value As of | |||||||||||||||||||
(Amounts in Thousands) | Balance Sheet Location | September 30, | June 30, | Balance Sheet Location | September 30, | June 30, | ||||||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 1,580 | $ | 599 | Accrued expenses | $ | 397 | $ | 241 | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | 1,756 | 201 | Accrued expenses | — | 458 | ||||||||||||||
Total derivatives | $ | 3,336 | $ | 800 | $ | 397 | $ | 699 | ||||||||||||
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | ' | |||||||||||||||||||
The Effect of Derivative Instruments on Other Comprehensive Income (Loss) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30 | ||||||||||||||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||||||||||||||
Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): | ||||||||||||||||||||
Foreign exchange contracts | $ | 2,231 | $ | (505 | ) | |||||||||||||||
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | ' | |||||||||||||||||||
The Effect of Derivative Instruments on Condensed Consolidated Statements of Income | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
(Amounts in Thousands) | September 30 | |||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Location of Gain or (Loss) | 2014 | 2013 | |||||||||||||||||
Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): | ||||||||||||||||||||
Foreign exchange contracts | Cost of Sales | $ | 206 | $ | (171 | ) | ||||||||||||||
Foreign exchange contracts | Non-operating income (expense) | 1,148 | (179 | ) | ||||||||||||||||
Total | $ | 1,354 | $ | (350 | ) | |||||||||||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||||
Amount of Pre-Tax Gain or (Loss) Recognized in Income on Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Non-operating income (expense) | $ | 924 | $ | (544 | ) | ||||||||||||||
Total | $ | 924 | $ | (544 | ) | |||||||||||||||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $ | 2,278 | $ | (894 | ) | |||||||||||||||
Note_8_Investments_Tables
Note 8. Investments (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Investments [Abstract] | ' | |||||||
Trading Securities (and Certain Trading Assets) | ' | |||||||
SERP asset and liability balances applicable to Kimball Electronics participants were as follows: | ||||||||
(Amounts in Thousands) | September 30, | June 30, | ||||||
2014 | 2014 | |||||||
SERP investments - current asset | $ | 166 | $ | 167 | ||||
SERP investments - other long-term asset | 5,172 | 5,093 | ||||||
Total SERP investments | $ | 5,338 | $ | 5,260 | ||||
SERP obligation - current liability | $ | 166 | $ | 167 | ||||
SERP obligation - other long-term liability | 5,172 | 5,093 | ||||||
Total SERP obligation | $ | 5,338 | $ | 5,260 | ||||
Note_9_Postemployment_Benefits1
Note 9. Postemployment Benefits (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Postemployment Benefits [Abstract] | ' | |||||||
Schedule of Changes in Projected Benefit Obligations | ' | |||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in Thousands) | 2014 | 2013 | ||||||
Service cost | $ | 64 | $ | 66 | ||||
Interest cost | 8 | 10 | ||||||
Amortization of prior service costs | 10 | 10 | ||||||
Amortization of actuarial loss | (4 | ) | 10 | |||||
Net periodic benefit cost | $ | 78 | $ | 96 | ||||
Note_10_Stock_Compensation_Pla1
Note 10. Stock Compensation Plan (Tables) | 3 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Stock Compensation Plan [Abstract] | ' | |||||||||
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Grants in Period | ' | |||||||||
Unrestricted Shares (1) | Quarter Awarded | Shares | Grant Date Fair Value | |||||||
Unrestricted Shares (Director Compensation) – Class B | 1st Quarter | 8,147 | $16.01 | |||||||
(1)Represents Kimball Electronics’ allocated portion of unrestricted shares which were awarded to non-employee members of former Parent’s Board of Directors as compensation for director’s fees as a result of directors’ elections to receive unrestricted shares in lieu of cash payment. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sale, or other restrictions. |
Note_12_Earnings_Per_Share_Tab
Note 12. Earnings Per Share (Tables) | 3 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | |||||||
Basic and diluted earnings per share were calculated as follows: | ||||||||
Three Months Ended | ||||||||
September 30 | ||||||||
(Amounts in thousands, except per share data) | 2014 | 2013 | ||||||
Net Income | $ | 5,391 | $ | 7,698 | ||||
Basic and diluted earnings per share | $ | 0.18 | $ | 0.26 | ||||
Basic and diluted average shares outstanding | 29,143 | 29,143 | ||||||
Note_1_Business_Description_an3
Note 1. Business Description and Summary of Significant Accounting Policies - Components of Non-operating income (expense), net (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Foreign Currency/Derivative Gain (Loss) | ($327) | $95 |
Gain (Loss) on Supplemental Employee Retirement Plan Investments | -93 | 170 |
Other | -77 | -87 |
Non-operating income (expense), net | ($497) | $178 |
Note_1_Business_Description_an4
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) (USD $) | 3 Months Ended | 3 Months Ended | 0 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2014 | |
Minimum | Maximum | Subsequent Event [Member] | ||||
Accounts Receivable, Extended Payment Terms | '45 days | ' | ' | ' | ' | ' |
Common Stock Dividends, Shares | ' | ' | ' | ' | ' | 29,143,000 |
Common Stock, Shares, Issued | 29,143,000 | ' | 29,143,000 | ' | ' | ' |
Accounts Receivable, Customary Payment Terms | ' | ' | ' | '30 days | '45 days | ' |
Accounts Receivable Sold Without Recourse | $30,800,000 | $53,800,000 | ' | ' | ' | ' |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 29,143,000 | 29,143,000 | ' | ' | ' | ' |
Total Annual Gross Revenue on Last Day of Fiscal Year Based on Which Entity Will Cease Status of Emerging Growth Company | 1,000,000,000 | ' | ' | ' | ' | ' |
Other General Expense | 0 | -5,022,000 | ' | ' | ' | ' |
Non-Convertible Debt Securities Issued in Specified Period upon Which Company Will Cease Status of Emerging Growth Company | 1,000,000,000 | ' | ' | ' | ' | ' |
Market Value of Common Stock Held by Non-Affiliates upon Which Company Will Cease Status of Emerging Growth Company | $700,000,000 | ' | ' | ' | ' | ' |
Note_2_Related_Party_Transacti1
Note 2. Related Party Transactions (Details) (USD $) | 3 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Oct. 31, 2014 | |
Subsequent Event [Member] | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' |
Cash | $20,701,000 | $14,545,000 | $26,260,000 | $18,424,000 | $63,000,000 |
Cash Distribution from Parent | ' | ' | ' | ' | 45,000,000 |
Related Party Transactions Selling and Administrative Expenses Excluding Incentive Compensation | 3,000,000 | 2,700,000 | ' | ' | ' |
Related Party Transactions Selling and Administrative Incentive Compensation | $1,700,000 | $1,300,000 | ' | ' | ' |
Note_3_Inventories_Inventory_C
Note 3. Inventories - Inventory Components (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Inventory, Finished Goods, Net of Reserves | $18,765 | $18,818 |
Inventory, Work in Process, Net of Reserves | 13,215 | 12,530 |
Inventory, Raw Materials, Net of Reserves | 88,624 | 84,811 |
Total inventory | $120,604 | $116,159 |
Note_4_Accumulated_Other_Compr2
Note 4. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' |
Accumulated Other Comprehensive Income (Loss) | $1,619 | ($3,276) |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | -3,642 | 2,720 |
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | 1,877 | -380 |
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Net of Tax | 67 | 79 |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax | -5,586 | 3,021 |
Reclassification to (earnings) loss | -1,080 | 299 |
Net current-period other comprehensive income (loss) | -4,722 | 3,019 |
Accumulated Other Comprehensive Income (Loss) | -3,103 | -257 |
Foreign Currency Translation Adjustments | ' | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' |
Accumulated Other Comprehensive Income (Loss) | 4,925 | 1,038 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | -5,586 | 3,021 |
Reclassification to (earnings) loss | 0 | 0 |
Net current-period other comprehensive income (loss) | -5,586 | 3,021 |
Accumulated Other Comprehensive Income (Loss) | -661 | 4,059 |
Derivative Gain (Loss) | ' | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' |
Accumulated Other Comprehensive Income (Loss) | -3,406 | -4,360 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 1,877 | -380 |
Reclassification to (earnings) loss | -1,083 | 287 |
Net current-period other comprehensive income (loss) | 794 | -93 |
Accumulated Other Comprehensive Income (Loss) | -2,612 | -4,453 |
Postemployment Benefits, Prior Service Costs | ' | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' |
Accumulated Other Comprehensive Income (Loss) | -35 | -59 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 0 | 0 |
Reclassification to (earnings) loss | 6 | 6 |
Net current-period other comprehensive income (loss) | 6 | 6 |
Accumulated Other Comprehensive Income (Loss) | -29 | -53 |
Postemployment Benefits, Net Actuarial Gain (Loss) | ' | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' |
Accumulated Other Comprehensive Income (Loss) | 135 | 105 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 67 | 79 |
Reclassification to (earnings) loss | -3 | 6 |
Net current-period other comprehensive income (loss) | 64 | 85 |
Accumulated Other Comprehensive Income (Loss) | $199 | $190 |
Note_4_Accumulated_Other_Compr3
Note 4. Accumulated Other Comprehensive Income (Loss) - Reclassifications from Accumulated Other Comprehensive Income (Loss) (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Amortization of Prior Service Costs | ($10) | ($10) | ||
Amortization of Actuarial Gain (Loss) | 4 | -10 | ||
Net Income (Loss) Attributable to Parent | 5,391 | 7,698 | ||
Cost of Sales | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Amortization of Prior Service Costs | -7 | [1] | -7 | [1] |
Amortization of Actuarial Gain (Loss) | 3 | [1] | -7 | [1] |
Selling and Administrative Expenses | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Amortization of Prior Service Costs | -3 | [1] | -3 | [1] |
Amortization of Actuarial Gain (Loss) | 1 | [1] | -3 | [1] |
Benefit (Provision) for Income Taxes | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Amortization of Prior Service Costs | 4 | 4 | ||
Amortization of Actuarial Gain (Loss) | -1 | 4 | ||
Net of Tax | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Amortization of Prior Service Costs | -6 | -6 | ||
Amortization of Actuarial Gain (Loss) | 3 | -6 | ||
Net Income (Loss) Attributable to Parent | 1,080 | -299 | ||
Cash Flow Hedging | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Derivative Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 1,354 | -350 | ||
Foreign Exchange Contract | Cash Flow Hedging | Cost of Sales | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Derivative Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 206 | [2] | -171 | [2] |
Foreign Exchange Contract | Cash Flow Hedging | Non-Operating Income (Expense) | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Derivative Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 1,148 | [2] | -179 | [2] |
Foreign Exchange Contract | Cash Flow Hedging | Benefit (Provision) for Income Taxes | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Derivative Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | -271 | 63 | ||
Foreign Exchange Contract | Cash Flow Hedging | Net of Tax | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ||
Derivative Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | $1,083 | ($287) | ||
[1] | See Note 9 - Postemployment Benefits of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. | |||
[2] | See Note 7 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. |
Note_5_Commitments_and_Conting3
Note 5. Commitments and Contingent Liabilities - Commitments and Contingent Liabilities Textuals (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
Guarantor Obligations | ' | ' |
Line of Credit, Current | $0 | $0 |
Financial Standby Letter of Credit | ' | ' |
Guarantor Obligations | ' | ' |
Letters of Credit, Amount | 100,000 | ' |
Loss Contingency Accrual, at Carrying Value | 0 | ' |
Guarantee Obligations | ' | ' |
Guarantor Obligations | ' | ' |
Loss Contingency Accrual, at Carrying Value | $0 | $0 |
Note_5_Commitments_and_Conting4
Note 5. Commitments and Contingent Liabilities - Product Warranty (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Product Warranty Liability at the beginning of the period | $911 | $507 |
Additions to warranty accrual (including changes in estimates) | 51 | -241 |
Settlements made (in cash or in kind) | -395 | -13 |
Product Warranty Liability at the end of the period | $567 | $253 |
Note_6_Fair_Value_Recurring_Fa
Note 6. Fair Value - Recurring Fair Value Measurments (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Recurring Fair Value Measurements: | ' | ' |
Derivative Asset | $3,336 | $800 |
Trading Securities: Mutual Funds and Nonqualified SERP | 166 | 167 |
Derivative Liability | 397 | 699 |
Fair Value, Measurements, Recurring | ' | ' |
Recurring Fair Value Measurements: | ' | ' |
Trading Securities: Mutual Funds and Nonqualified SERP | 5,338 | 5,260 |
Total assets at fair value | 8,674 | 6,060 |
Total liabilities at fair value | 397 | 699 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ' | ' |
Recurring Fair Value Measurements: | ' | ' |
Derivative Asset | 3,336 | 800 |
Derivative Liability | 397 | 699 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ' | ' |
Recurring Fair Value Measurements: | ' | ' |
Trading Securities: Mutual Funds and Nonqualified SERP | 5,338 | 5,260 |
Total assets at fair value | 5,338 | 5,260 |
Total liabilities at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Foreign Exchange Contract | ' | ' |
Recurring Fair Value Measurements: | ' | ' |
Derivative Asset | ' | ' |
Derivative Liability | ' | ' |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ' | ' |
Recurring Fair Value Measurements: | ' | ' |
Trading Securities: Mutual Funds and Nonqualified SERP | ' | ' |
Total assets at fair value | 3,336 | 800 |
Total liabilities at fair value | 397 | 699 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ' | ' |
Recurring Fair Value Measurements: | ' | ' |
Derivative Asset | 3,336 | 800 |
Derivative Liability | $397 | $699 |
Note_6_Fair_Value_Textuals_Det
Note 6. Fair Value - Textuals (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ' |
Fair Value, Purchases and Sales of Level 3 Assets | $0 |
Fair Value, Transfers Between Levels, Amount | 0 |
Property, Plant and Equipment, Other Types | Fair Value, Measurements, Nonrecurring | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ' |
Impairment of Long-Lived Assets to be Disposed of | $0 |
Note_7_Derivative_Instruments_2
Note 7. Derivative Instruments - Textuals (Details) (Foreign Exchange Contract) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 |
USD ($) | EUR (€) | ||
Derivatives, Fair Value | ' | ' | ' |
Derivative, Notional Amount | $28.40 | ' | € 45.20 |
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $0.70 | ' | ' |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | '12 months | '12 months | ' |
Note_7_Derivative_Instruments_3
Note 7. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheet (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Derivatives, Fair Value | ' | ' |
Derivative Asset | $3,336 | $800 |
Derivative Liability | 397 | 699 |
Foreign Exchange Contract | Fair Value, Measurements, Recurring | ' | ' |
Derivatives, Fair Value | ' | ' |
Derivative Asset | 3,336 | 800 |
Derivative Liability | 397 | 699 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ' | ' |
Derivatives, Fair Value | ' | ' |
Derivative Asset | 1,580 | 599 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ' | ' |
Derivatives, Fair Value | ' | ' |
Derivative Liability | 397 | 241 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ' | ' |
Derivatives, Fair Value | ' | ' |
Derivative Asset | 1,756 | 201 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ' | ' |
Derivatives, Fair Value | ' | ' |
Derivative Liability | $0 | $458 |
Note_7_Derivative_Instruments_4
Note 7. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Derivative Instruments, Gain (Loss) | ' | ' |
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $2,231 | ($505) |
Foreign Exchange Contract | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' |
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $2,231 | ($505) |
Note_7_Derivative_Instruments_5
Note 7. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $2,278 | ($894) | ||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | 924 | -544 | ||
Foreign Exchange Contract | Non-Operating Income (Expense) | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | 924 | -544 | ||
Cash Flow Hedging | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion | 1,354 | -350 | ||
Cash Flow Hedging | Foreign Exchange Contract | Cost of Sales | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion | 206 | [1] | -171 | [1] |
Cash Flow Hedging | Foreign Exchange Contract | Non-Operating Income (Expense) | ' | ' | ||
Derivative Instruments, Gain (Loss) | ' | ' | ||
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion | $1,148 | [1] | ($179) | [1] |
[1] | See Note 7 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. |
Note_8_Investments_Supplementa
Note 8. Investments - Supplemental Employee Retirement Investments Textuals (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Schedule of Trading Securities and Other Trading Assets | ' | ' |
Trading Securities, Change in net unrealized holding gains (losses) | ($102) | $154 |
Note_8_Investments_Supplementa1
Note 8. Investments - Supplemental Employee Retirement Plan Investments (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Schedule of Trading Securities and Other Trading Assets | ' | ' |
SERP investments - current asset | $166 | $167 |
SERP investments - other long-term asset | 5,172 | 5,093 |
Total SERP investments | 5,338 | 5,260 |
SERP obligation - current liability | 166 | 167 |
SERP obligation - other long-term liability | 5,172 | 5,093 |
Total SERP obligation | $5,338 | $5,260 |
Note_9_Postemployment_Benefits2
Note 9. Postemployment Benefits (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Components of Net Periodic Benefit Cost (before tax): | ' | ' |
Defined Benefit Plan, Assets for Plan Benefits | $0 | ' |
Service cost | 64,000 | 66,000 |
Interest cost | 8,000 | 10,000 |
Amortization of prior service costs | 10,000 | 10,000 |
Amortization of actuarial loss | -4,000 | 10,000 |
Net periodic benefit cost | $78,000 | $96,000 |
Note_10_Stock_Compensation_Pla2
Note 10. Stock Compensation Plan - Stock Compensation Awards (Details) (Unrestricted Shares Director Compensation, Class B Common Stock, USD $) | 3 Months Ended |
Sep. 30, 2014 | |
Unrestricted Shares Director Compensation | Class B Common Stock | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' |
Stock Compensation, Shares Awarded | 8,147 |
Stock Compensation, Grant Date Fair Value | $16.01 |
Note_11_Share_Owners_Equity_De
Note 11. Share Owners' Equity (Details) | Sep. 30, 2014 | Jun. 30, 2014 | Oct. 31, 2014 | Nov. 03, 2014 | Oct. 16, 2014 | Oct. 16, 2014 | Oct. 16, 2014 |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Prior to Stock Split [Domain] | Subsequent to Stock Split [Domain] | |||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Total Shares Authorized | ' | ' | ' | ' | 165,000,000 | ' | ' |
Common Stock, Shares, Outstanding | ' | ' | ' | ' | ' | 50,000 | 29,100,000 |
Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 | ' | ' | 15,000,000 | ' | ' |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | ' | ' | 150,000,000 | ' | ' |
Common Stock Dividends, Shares | ' | ' | 29,143,000 | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | ' | ' | ' | 4,500,000 | ' | ' | ' |
Note_12_Earnings_Per_Share_Det
Note 12. Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Net Income (Loss) Attributable to Parent | $5,391 | $7,698 |
Basic and diluted earnings per share | $0.18 | $0.26 |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 29,143 | 29,143 |
Note_12_Earnings_Per_Share_Tex
Note 12. Earnings Per Share Textuals (Details) | Oct. 30, 2014 |
Subsequent Event [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 0 |
Note_13_Subsequent_Events_Deta
Note 13. Subsequent Events (Details) | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2013 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 |
USD ($) | USD ($) | USD ($) | USD ($) | Subsequent Event [Member] | Subsequent Event [Member] | Primary Credit Facility [Member] | Poland Overdraft Credit Facility [Member] | Poland Overdraft Credit Facility [Member] | Minimum [Member] | Maximum [Member] | Federal Funds Rate [Member] | London Interbank Offered Rate (LIBOR) [Member] | |
USD ($) | Subsequent Event [Member] | USD ($) | EUR (€) | Primary Credit Facility [Member] | Primary Credit Facility [Member] | Primary Credit Facility [Member] | Primary Credit Facility [Member] | ||||||
USD ($) | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Dividends, Shares | ' | ' | ' | ' | 29,143,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | ' | ' | ' | ' | ' | ' | $50,000,000 | $7,600,000 | € 6,000,000 | ' | ' | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity Upon Request | ' | ' | ' | ' | ' | ' | 75,000,000 | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Amount Available for Letters of Credit | ' | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Commitment Fee Basis Points | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20 | 25 | ' | ' |
Line of Credit Facility, Eurocurrency Loans Margin Basis Points | ' | ' | ' | ' | ' | ' | ' | ' | ' | 125 | 175 | ' | ' |
Debt Instrument, Basis Spread on Variable Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | 1.00% |
Line of Credit Facility, Alternate Base Rate Spread Basis Points | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25 | 75 | ' | ' |
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash | ' | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' |
Adjusted Leverage Ratio Covenant | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' |
Fixed Charge Coverage Ratio Covenant | ' | ' | ' | ' | ' | ' | 1.1 | ' | ' | ' | ' | ' | ' |
Stock Dividend Ratio | ' | ' | ' | ' | 0.75 | ' | ' | ' | ' | ' | ' | ' | ' |
Cash Distribution from Parent | ' | ' | ' | ' | ' | 45,000,000 | ' | ' | ' | ' | ' | ' | ' |
Cash | $20,701,000 | $26,260,000 | $14,545,000 | $18,424,000 | ' | $63,000,000 | ' | ' | ' | ' | ' | ' | ' |