Document and Entity Information
Document and Entity Information Document - shares | 6 Months Ended | |
Dec. 31, 2015 | Jan. 25, 2016 | |
Document Information | ||
Entity Registrant Name | Kimball Electronics, Inc. | |
Entity Central Index Key | 1,606,757 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 28,940,961 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 60,499 | $ 65,180 |
Receivables, net of allowances of $140 and $236, respectively | 134,451 | 139,892 |
Inventories | 127,876 | 125,198 |
Prepaid Expense and Other Assets, Current | 23,716 | 23,922 |
Total current assets | 346,542 | 354,192 |
Property and Equipment, net of accumulated depreciation of $156,014 and $151,504, respectively | 115,148 | 106,779 |
Goodwill | 2,564 | 2,564 |
Other Intangible Assets, net of accumulated amortization of $25,368 and $24,952, respectively | 4,985 | 4,509 |
Other Assets | 14,724 | 15,213 |
Total Assets | 483,963 | 483,257 |
Current Liabilities: | ||
Accounts payable | 130,958 | 133,409 |
Borrowings under credit facilities | 3,000 | 0 |
Accrued expenses | 21,764 | 26,545 |
Total current liabilities | 155,722 | 159,954 |
Other Liabilities: | ||
Other long-term liabilities | 11,199 | 10,854 |
Liabilities | 166,921 | 170,808 |
Share Owners’ Equity: | ||
Preferred stock-no par value | 0 | 0 |
Common stock-no par value | 0 | 0 |
Additional paid-in capital | 300,351 | 298,491 |
Retained earnings | 35,244 | 26,205 |
Accumulated other comprehensive loss | (14,354) | (12,247) |
Treasury stock, at cost | (4,199) | 0 |
Total Share Owners’ Equity | 317,042 | 312,449 |
Total Liabilities and Share Owners’ Equity | $ 483,963 | $ 483,257 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets Parentheticals - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
ASSETS | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 140 | $ 236 |
Property and Equipment Accumulated Depreciation | 156,014 | 151,504 |
Other Intangible Assets Accumulated Amortization | $ 25,368 | $ 24,952 |
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 | 29,430,000 | 29,172,000 |
Treasury Stock, Shares | 373,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net Sales | $ 207,129 | $ 207,563 | $ 407,547 | $ 411,366 |
Cost of Sales | 191,014 | 189,705 | 376,152 | 375,605 |
Gross Profit | 16,115 | 17,858 | 31,395 | 35,761 |
Selling and Administrative Expenses | 9,182 | 9,161 | 17,541 | 19,277 |
Operating Income | 6,933 | 8,697 | 13,854 | 16,484 |
Other Income (Expense): | ||||
Interest income | 12 | 8 | 24 | 12 |
Interest expense | (4) | (1) | (5) | (5) |
Non-operating income (expense), net | (596) | 147 | (1,273) | (350) |
Other income (expense), net | (588) | 154 | (1,254) | (343) |
Income Before Taxes on Income | 6,345 | 8,851 | 12,600 | 16,141 |
Provision for Income Taxes | 1,781 | 2,622 | 3,561 | 4,521 |
Net Income | $ 4,564 | $ 6,229 | $ 9,039 | $ 11,620 |
Earnings Per Share of Common Stock: | ||||
Earnings Per Share, Basic | $ 0.16 | $ 0.21 | $ 0.31 | $ 0.40 |
Earnings Per Share, Diluted | $ 0.16 | $ 0.21 | $ 0.31 | $ 0.40 |
Weighted Average Number of Shares Outstanding, Basic | 29,228 | 29,162 | 29,260 | 29,153 |
Weighted Average Number of Shares Outstanding, Diluted | 29,278 | 29,294 | 29,350 | 29,317 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net income | $ 4,564 | $ 6,229 | $ 9,039 | $ 11,620 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, Pre-tax | (2,144) | (2,925) | (1,920) | (8,511) |
Foreign currency translation adjustments, Tax | 0 | (16) | 0 | (16) |
Foreign currency translation adjustments, Net of Tax | (2,144) | (2,941) | (1,920) | (8,527) |
Postemployment severance actuarial change, Pre-tax | 154 | 141 | 268 | 248 |
Postemployment severance actuarial change, Tax | (59) | (55) | (103) | (95) |
Postemployment severance actuarial change, Net of Tax | 95 | 86 | 165 | 153 |
Derivative gain (loss), Pre-tax | 579 | (347) | (1,927) | 1,884 |
Derivative gain (loss), Tax | (60) | 293 | 637 | (61) |
Derivative gain (loss), Net of Tax | 519 | (54) | (1,290) | 1,823 |
Reclassification to (earnings) loss: | ||||
Derivatives, Reclassification to (earnings) loss, Pre-tax | 813 | (749) | 1,591 | (2,103) |
Derivatives, Reclassification to (earnings) loss, Tax | (279) | 98 | (594) | 369 |
Derivatives, Reclassification to (earnings) loss, Net of Tax | 534 | (651) | 997 | (1,734) |
Amortization of prior service cost, Pre-tax | 0 | 10 | 28 | 20 |
Amortization of prior service cost, Tax | 0 | (3) | (10) | (7) |
Amortization of prior service cost, Net of Tax | 0 | 7 | 18 | 13 |
Amortization of actuarial change, Pre-tax | (65) | (41) | (128) | (45) |
Amortization of actuarial change, Tax | 26 | 17 | 51 | 18 |
Amortization of actuarial change, Net of Tax | (39) | (24) | (77) | (27) |
Other comprehensive income (loss), Pre-tax | (663) | (3,911) | (2,088) | (8,507) |
Other comprehensive income (loss), Tax | (372) | 334 | (19) | 208 |
Other comprehensive income (loss), Net of Tax | (1,035) | (3,577) | (2,107) | (8,299) |
Total comprehensive income (loss) | 3,529 | 2,652 | 6,932 | 3,321 |
Foreign Exchange Contract | ||||
Other comprehensive income (loss): | ||||
Derivative gain (loss), Pre-tax | $ 579 | $ (347) | $ (1,927) | $ 1,884 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash Flows From Operating Activities: | ||
Net income | $ 9,039 | $ 11,620 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 9,779 | 9,817 |
Gain on sales of assets | (150) | (85) |
Deferred income tax and other deferred charges | 3,312 | (713) |
Stock-based compensation | 1,916 | 2,149 |
Excess tax benefits from stock-based compensation | (203) | 0 |
Other, net | 95 | 73 |
Change in operating assets and liabilities: | ||
Receivables | 2,967 | (9,172) |
Inventories | (3,206) | (10,225) |
Prepaid expenses and other current assets | (2,664) | (1,722) |
Accounts payable | (189) | 6,560 |
Accrued expenses | (4,377) | (4,761) |
Net cash provided by operating activities | 16,319 | 3,541 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (18,579) | (13,962) |
Proceeds from sales of assets | 175 | 238 |
Purchases of capitalized software | (907) | (2,917) |
Other, net | 49 | 52 |
Net cash used for investing activities | (19,262) | (16,589) |
Cash Flows From Financing Activities: | ||
Proceeds from revolving credit facility | 3,000 | 0 |
Excess tax benefits from stock-based compensation | 203 | 0 |
Payments for Repurchase of Common Stock | (3,499) | 0 |
Repurchase of employee shares for tax withholding | (897) | 0 |
Net transfers from Kimball International, Inc. | 0 | 50,295 |
Payments of Debt Issuance Costs | 0 | (123) |
Net cash (used for) provided by financing activities | (1,193) | 50,172 |
Effect of Exchange Rate Change on Cash and Cash Equivalents | (545) | (1,720) |
Net (Decrease) Increase in Cash and Cash Equivalents | (4,681) | 35,404 |
Cash and Cash Equivalents at Beginning of Period | 65,180 | 26,260 |
Cash and Cash Equivalents at End of Period | 60,499 | 61,664 |
Cash paid during the period for: | ||
Income taxes | 4,034 | 3,235 |
Interest expense | $ 1 | $ 5 |
Note 1. Business Description an
Note 1. Business Description and Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2015 | |
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” or “Kimball International”) and on 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, 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. Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of December 31, 2015 and June 30, 2015 , results of operations for the three and six months ended December 31, 2015 and 2014 , and cash flows for the six months ended December 31, 2015 and 2014 . The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2015 and related notes thereto included in our Annual Report on Form 10-K. 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. The Condensed Consolidated Financial Statements include allocations from former Parent for direct costs and indirect costs attributable to the operations of the Company through October 31, 2014, the spin-off date. 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, or cash flows would have been had the Company operated as a stand-alone public company for the periods prior to the spin-off. 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 six months ended December 31, 2015 and 2014 , respectively, we sold, without recourse, $60.2 million and $65.1 million of accounts receivable. Factoring fees were not material. The Company’s China operation, in limited circumstances, may receive banker’s acceptance drafts from customers as payment for their trade accounts receivable. The banker’s acceptance drafts are non-interest bearing and primarily mature within six months from the origination date. The Company has the ability to sell the drafts at a discount or transfer the drafts in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $2.9 million at December 31, 2015 and $4.3 million at June 30, 2015 , are reflected in the Receivables line on the Condensed Consolidated Balance Sheets until the banker’s drafts are sold at a discount, transferred in settlement of current accounts payable, or cash is received at maturity. 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 Six Months Ended December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Foreign currency/derivative gain (loss) $ (731 ) $ 96 $ (955 ) $ (231 ) Gain (loss) on supplemental employee retirement plan investments 258 142 (196 ) 49 Other (123 ) (91 ) (122 ) (168 ) Non-operating income (expense), net $ (596 ) $ 147 $ (1,273 ) $ (350 ) 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. “Emerging Growth Company” Reporting Requirements: The Company 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. For further information regarding our status as an “emerging growth company,” refer to our Annual Report on Form 10-K for the year ended June 30, 2015. New Accounting Standards: In January 2016, the Financial Accounting Standards Board (“FASB”) issued guidance for the Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including, among other items: requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk; and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. The guidance is effective for our fiscal year 2020 annual financial statements and interim periods for our fiscal year 2021. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. In November 2015, the FASB issued guidance on the balance sheet classification of deferred taxes. Under the current guidance, deferred tax liabilities and assets must be separated into current and noncurrent amounts in a classified statement of financial position. The new guidance requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The new guidance does not change the requirement that deferred tax liabilities and assets of a tax-paying component of an entity to be offset and presented as a single amount. The guidance is effective for our fiscal year 2019 annual financial statements and interim periods within annual periods for our fiscal year 2020, with earlier application permitted as of the beginning of an interim or annual reporting period. The guidance offers two acceptable adoption methods: (i) retrospective adoption to all periods presented; or (ii) prospective adoption to all deferred tax liabilities and assets. We do not expect the adoption of this standard will have a material effect on our financial position, results of operations, or cash flows. In July 2015, the FASB issued guidance on Simplifying the Measurement of Inventory. The guidance amends the subsequent measurement of inventory from the lower of cost or market to the lower of cost and net realizable value. Under the current guidance, market value could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. Within the scope of the new guidance, an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for our fiscal year 2018 financial statements. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. In April 2015, the FASB issued guidance to customers of cloud computing arrangements about whether an arrangement includes a software license. If a software license exists in the arrangement, the guidance requires the software license element of the arrangement to be accounted for consistently with the acquisition of other software licenses by the customer. Otherwise, the customer should account for the arrangement as a service contract. The guidance is effective for our fiscal year 2017 financial statements using either of two acceptable adoption methods: (i) retrospective adoption; or (ii) prospective adoption to all arrangements entered into or materially modified after the effective date. We do not expect the adoption to have a material effect on our consolidated financial statements. In June 2014, the 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 consolidated 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. In August 2015, the FASB issued additional guidance deferring the effective date for one year while allowing entities the option to adopt one year early. The guidance is effective for our fiscal year 2020 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 consolidated 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 for our fiscal year 2016 annual financial statements. As we currently do not have discontinued operations or had any significant disposals during the six-month period ended December 31, 2015 , we do not expect the adoption to have a material effect on our consolidated financial statements. |
Note 2. Related Party Transacti
Note 2. Related Party Transactions (Notes) | 6 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure | 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 for such services and indirect general and corporate overhead expenses of approximately $1.5 million and $4.5 million for the three and six months ended December 31, 2014 , respectively. Additionally, former Parent charged us approximately $0.4 million and $2.1 million for the three and six months ended December 31, 2014 , respectively, for corporate incentive plan expenses, including stock-based compensation. These costs which were charged through October 31, 2014, the spin-off date, 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 through the spin-off date. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly traded company for the periods prior to the spin-off. Taxes: The Company entered into a Tax Matters Agreement with former Parent that governs the Company’s rights and obligations after the spin-off with respect to tax liabilities and benefits, tax attributes, tax contests, and other tax sharing regarding income taxes, other tax matters, and related tax returns. The Company will continue to have joint and several liabilities with former Parent with the IRS 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, if any, 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. As of December 31, 2015 and June 30, 2015 , the Company has a receivable from Kimball International recorded for $0.8 million , of which $0.6 million is a long-term receivable and was recorded in Other Assets on the Condensed Consolidated Balance Sheets, relating to benefits from federal and state research and development tax credits. 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 prior to the spin-off. Our cash balance prior to the spin-off primarily represented 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 $44.3 million on or around October 31, 2014. We began operations as an independent company with approximately $63 million of cash, including cash held by our foreign facilities. |
Note 3. Inventories
Note 3. Inventories | 6 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [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) December 31, 2015 June 30, Finished products $ 22,558 $ 21,415 Work-in-process 10,859 13,029 Raw materials 94,459 90,754 Total inventory $ 127,876 $ 125,198 |
Note 4. Accumulated Other Compr
Note 4. Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) During the six months ended December 31, 2015 and 2014 , 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, 2015 $ (9,113 ) $ (3,557 ) $ (18 ) $ 441 $ (12,247 ) Other comprehensive income (loss) before reclassifications (1,920 ) (1,290 ) — 165 (3,045 ) Reclassification to (earnings) loss — 997 18 (77 ) 938 Net current-period other comprehensive income (loss) (1,920 ) (293 ) 18 88 (2,107 ) Balance at December 31, 2015 $ (11,033 ) $ (3,850 ) $ — $ 529 $ (14,354 ) Balance at June 30, 2014 $ 4,925 $ (3,406 ) $ (35 ) $ 135 $ 1,619 Other comprehensive income (loss) before reclassifications (8,527 ) 1,823 — 153 (6,551 ) Reclassification to (earnings) loss — (1,734 ) 13 (27 ) (1,748 ) Net current-period other comprehensive income (loss) (8,527 ) 89 13 126 (8,299 ) Balance at December 31, 2014 $ (3,602 ) $ (3,317 ) $ (22 ) $ 261 $ (6,680 ) 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 Six Months Ended Affected Line Item in the Condensed Consolidated Statements of Income December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Derivative gain (loss) (1) $ (813 ) $ 173 $ (1,590 ) $ 379 Cost of Sales — 576 (1 ) 1,724 Non-operating income (expense), net 279 (98 ) 594 (369 ) Benefit (Provision) for Income Taxes $ (534 ) $ 651 $ (997 ) $ 1,734 Net of Tax Postemployment Benefits: Amortization of prior service costs (2) $ — $ (6 ) $ (16 ) $ (13 ) Cost of Sales — (4 ) (12 ) (7 ) Selling and Administrative Expenses — 3 10 7 Benefit (Provision) for Income Taxes $ — $ (7 ) $ (18 ) $ (13 ) Net of Tax Amortization of actuarial gain (loss) (2) $ 37 $ 25 $ 73 $ 28 Cost of Sales 28 16 55 17 Selling and Administrative Expenses (26 ) (17 ) (51 ) (18 ) Benefit (Provision) for Income Taxes $ 39 $ 24 $ 77 $ 27 Net of Tax Total reclassifications for the period $ (495 ) $ 668 $ (938 ) $ 1,748 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 | 6 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingent Liabilities [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingent Liabilities Standby letters of credit are issued to third-party suppliers, lessors, and insurance institutions and can only be drawn upon in the event of the Company’s failure to pay its obligations to a beneficiary. As of December 31, 2015 , we had a maximum financial exposure from unused standby letters of credit totaling $0.4 million . We are not aware of circumstances that would require us to perform under any of these arrangements. We believe that the resolution of any claims related to these standby letters of credit 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 December 31, 2015 with respect to the standby letters of credit. The Company also may enter into commercial letters of credit to facilitate payments to vendors and from customers. The Company’s China operation, in limited circumstances, receives banker’s acceptance drafts from customers as settlement for their trade accounts receivable. We in turn may transfer the acceptance drafts to a supplier of ours in settlement of current accounts payable. These drafts contain certain recourse provisions afforded to the transferee under laws of The Peoples Republic of China. If a transferee were to exercise its available recourse rights, our China operation would be required to satisfy the obligation with the transferee and the draft would revert back to our China operation. At December 31, 2015 , the drafts transferred and outstanding totaled $1.2 million . No transferee has exercised their recourse rights against us. For additional information on banker’s acceptance drafts, see Note 1 – Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements. We maintain a provision for limited warranty repair or replacement of products manufactured and sold, which has been 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 six months ended December 31, 2015 and 2014 were as follows: Six Months Ended December 31 (Amounts in Thousands) 2015 2014 Product warranty liability at the beginning of the period $ 621 $ 911 Additions to warranty accrual (including changes in estimates) 220 408 Settlements made (in cash or in kind) (88 ) (751 ) Product warranty liability at the end of the period $ 753 $ 568 |
Note 6. Fair Value
Note 6. Fair Value | 6 Months Ended |
Dec. 31, 2015 | |
Fair Value [Abstract] | |
Fair Value Disclosures | Fair Value The Company 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 six months ended December 31, 2015 . There were also no changes in the inputs or valuation techniques used to measure fair values during the six months ended December 31, 2015 . Financial Instruments Recognized at Fair Value: The following methods and assumptions were used to measure fair value: Financial Instrument Level Valuation Technique/Inputs Used Cash equivalents 1 Market - Quoted market prices 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 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 December 31, 2015 and June 30, 2015 , 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: December 31, 2015 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 16,986 $ — $ 16,986 Derivatives: foreign exchange contracts — 711 711 Trading securities: mutual funds held in nonqualified SERP 5,877 — 5,877 Total assets at fair value $ 22,863 $ 711 $ 23,574 Liabilities Derivatives: foreign exchange contracts $ — $ 2,193 $ 2,193 Total liabilities at fair value $ — $ 2,193 $ 2,193 June 30, 2015 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 28,722 $ — $ 28,722 Derivatives: foreign exchange contracts — 3,004 3,004 Trading securities: mutual funds held in nonqualified SERP 5,813 — 5,813 Total assets at fair value $ 34,535 $ 3,004 $ 37,539 Liabilities Derivatives: foreign exchange contracts $ — $ 2,318 $ 2,318 Total liabilities at fair value $ — $ 2,318 $ 2,318 We had no Level 3 assets or liabilities during the six months ended December 31, 2015 . 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. 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 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 | 6 Months Ended |
Dec. 31, 2015 | |
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 December 31, 2015 , we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $28.9 million and to hedge currencies against the Euro in the aggregate notional amount of 62.6 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be 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 Share Owners’ 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 December 31, 2015 , we estimate a $0.8 million pre-tax derivative loss 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. Losses on foreign exchange contracts are generally offset by gains 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 December 31, 2015 and June 30, 2015 . 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 December 31, June 30, Balance Sheet Location December 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 492 $ 1,255 Accrued expenses $ 2,064 $ 2,143 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 219 1,749 Accrued expenses 129 175 Total derivatives $ 711 $ 3,004 $ 2,193 $ 2,318 The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Six Months Ended December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): Foreign exchange contracts $ 579 $ (347 ) $ (1,927 ) $ 1,884 The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended Six Months Ended (Amounts in Thousands) December 31 December 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2015 2014 2015 2014 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): Foreign exchange contracts Cost of Sales $ (813 ) $ 173 $ (1,590 ) $ 379 Foreign exchange contracts Non-operating income (expense) — 577 — 1,725 Total $ (813 ) $ 750 $ (1,590 ) $ 2,104 Amount of Pre-Tax Loss Reclassified from Accumulated OCI into Income (Ineffective Portion): Foreign exchange contracts Non-operating income (expense) $ — $ (1 ) $ (1 ) $ (1 ) 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) $ 599 $ 117 $ 562 $ 1,041 Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ (214 ) $ 866 $ (1,029 ) $ 3,144 |
Note 8. Investments
Note 8. Investments | 6 Months Ended |
Dec. 31, 2015 | |
Investments [Abstract] | |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | Investments The Company established and maintains a self-directed supplemental employee retirement plan (“SERP”), similar to former Parent’s plan, for executive and other key employees. Subsequent to the spin-off, the assets and liabilities of former Parent’s SERP related to Kimball Electronics’ employees were transferred to the Company sponsored SERP. The Company SERP utilizes a rabbi trust, and therefore assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. The Company 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 six months ended December 31, 2015 and 2014 was, in thousands, $30 and $(156) , respectively. SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) December 31, June 30, SERP investments - current asset $ 199 $ 192 SERP investments - other long-term asset 5,678 5,621 Total SERP investments $ 5,877 $ 5,813 SERP obligation - current liability $ 199 $ 192 SERP obligation - other long-term liability 5,678 5,621 Total SERP obligation $ 5,877 $ 5,813 |
Note 9. Postemployment Benefits
Note 9. Postemployment Benefits | 6 Months Ended |
Dec. 31, 2015 | |
Postemployment Benefits [Abstract] | |
Postemployment Benefits Disclosure | Postemployment Benefits The Company maintains severance plans for all domestic employees. 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 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 were legally separated and were remeasured. There were no significant changes to the actuarial assumptions used in the remeasurement. The components of net periodic postemployment benefit cost applicable to Kimball Electronics participants were as follows: Three Months Ended Six Months Ended December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Service cost $ 84 $ 84 $ 170 $ 148 Interest cost 13 14 27 22 Amortization of prior service costs — 10 28 20 Amortization of actuarial gain (65 ) (41 ) (128 ) (45 ) Net periodic benefit cost $ 32 $ 67 $ 97 $ 145 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 | 6 Months Ended |
Dec. 31, 2015 | |
Stock Compensation Plan [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments | Stock Compensation Plan The Company maintains a stock compensation plan, the Kimball Electronics, Inc. 2014 Stock Option and Incentive Plan (the “Plan”), which 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. For more information on our Plan, refer to our Annual Report on Form 10-K for the year ended June 30, 2015. During the first six months of fiscal year 2016 , the following stock compensation was awarded under the Plan to non-employee members of the Company’s Board of Directors. Unrestricted Shares (1) Quarter Awarded Shares Grant Date Fair Value Unrestricted shares (director compensation) 2nd Quarter 47,262 $10.94 (1) Unrestricted shares which were awarded to non-employee members of the Company’s Board of Directors as compensation for the portion of director’s fees prescribed to be paid in unrestricted shares in addition to the portion of director’s fees to be paid in unrestricted shares 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 sales, or other restrictions. |
Note 11. Share Owners' Equity (
Note 11. Share Owners' Equity (Notes) | 6 Months Ended |
Dec. 31, 2015 | |
Share Owners' Equity [Abstract] | |
Stockholders' Equity Note Disclosure | 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. On the same day, 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. On October 21, 2015 , the Company’s Board of Directors authorized an 18 -month stock repurchase plan (the “Plan”) allowing a repurchase of up to $20 million worth of common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Plan may be suspended or discontinued at any time. The Company repurchased $3.8 million of common stock under the Plan during the quarter ended December 31, 2015 at an average cost of $11.22 per share. During the six months ended December 31, 2015 , the Company acquired an additional 78 thousand shares of its common stock, recorded as Treasury stock, at cost in the Condensed Consolidated Balance Sheet. These shares were not acquired in open market purchases as part of the Plan but were acquired in connection with automatically withholding shares from employees upon the vesting of performance share awards to satisfy minimum statutory withholding tax obligations. Prior to the spin-off, Share Owners’ Equity included a Net Parent investment component that represented former Parent’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. During the six months ended December 31, 2014 , Net contribution from Parent was $45.7 million , which included non-cash net transfers to Parent of $4.6 million , and was recorded in 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 (No
Note 12. Earnings Per Share (Notes) | 6 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share were calculated as follows: Three Months Ended Six Months Ended December 31 December 31 (Amounts in thousands, except per share data) 2015 2014 2015 2014 Basic and Diluted Earnings Per Share: Net Income $ 4,564 $ 6,229 $ 9,039 $ 11,620 Basic weighted average common shares outstanding 29,228 29,162 29,260 29,153 Dilutive effect of average outstanding performance shares 50 132 90 164 Dilutive weighted average shares outstanding 29,278 29,294 29,350 29,317 Earnings Per Share of Common Stock: Basic $ 0.16 $ 0.21 $ 0.31 $ 0.40 Diluted $ 0.16 $ 0.21 $ 0.31 $ 0.40 |
Note 1. Business Description 19
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of December 31, 2015 and June 30, 2015 , results of operations for the three and six months ended December 31, 2015 and 2014 , and cash flows for the six months ended December 31, 2015 and 2014 . The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2015 and related notes thereto included in our Annual Report on Form 10-K. 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. The Condensed Consolidated Financial Statements include allocations from former Parent for direct costs and indirect costs attributable to the operations of the Company through October 31, 2014, the spin-off date. 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, or cash flows would have been had the Company operated as a stand-alone public company for the periods prior to the spin-off. 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. |
Banker's Acceptance Drafts | The Company’s China operation, in limited circumstances, may receive banker’s acceptance drafts from customers as payment for their trade accounts receivable. The banker’s acceptance drafts are non-interest bearing and primarily mature within six months from the origination date. The Company has the ability to sell the drafts at a discount or transfer the drafts in settlement of current accounts payable prior to the scheduled maturity date. |
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. |
Emerging Growth Company Reporting Requirements | “Emerging Growth Company” Reporting Requirements: The Company 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 January 2016, the Financial Accounting Standards Board (“FASB”) issued guidance for the Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including, among other items: requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk; and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. The guidance is effective for our fiscal year 2020 annual financial statements and interim periods for our fiscal year 2021. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. In November 2015, the FASB issued guidance on the balance sheet classification of deferred taxes. Under the current guidance, deferred tax liabilities and assets must be separated into current and noncurrent amounts in a classified statement of financial position. The new guidance requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The new guidance does not change the requirement that deferred tax liabilities and assets of a tax-paying component of an entity to be offset and presented as a single amount. The guidance is effective for our fiscal year 2019 annual financial statements and interim periods within annual periods for our fiscal year 2020, with earlier application permitted as of the beginning of an interim or annual reporting period. The guidance offers two acceptable adoption methods: (i) retrospective adoption to all periods presented; or (ii) prospective adoption to all deferred tax liabilities and assets. We do not expect the adoption of this standard will have a material effect on our financial position, results of operations, or cash flows. In July 2015, the FASB issued guidance on Simplifying the Measurement of Inventory. The guidance amends the subsequent measurement of inventory from the lower of cost or market to the lower of cost and net realizable value. Under the current guidance, market value could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. Within the scope of the new guidance, an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for our fiscal year 2018 financial statements. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. In April 2015, the FASB issued guidance to customers of cloud computing arrangements about whether an arrangement includes a software license. If a software license exists in the arrangement, the guidance requires the software license element of the arrangement to be accounted for consistently with the acquisition of other software licenses by the customer. Otherwise, the customer should account for the arrangement as a service contract. The guidance is effective for our fiscal year 2017 financial statements using either of two acceptable adoption methods: (i) retrospective adoption; or (ii) prospective adoption to all arrangements entered into or materially modified after the effective date. We do not expect the adoption to have a material effect on our consolidated financial statements. In June 2014, the 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 consolidated 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. In August 2015, the FASB issued additional guidance deferring the effective date for one year while allowing entities the option to adopt one year early. The guidance is effective for our fiscal year 2020 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 consolidated 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 for our fiscal year 2016 annual financial statements. As we currently do not have discontinued operations or had any significant disposals during the six-month period ended December 31, 2015 , we do not expect the adoption to have a material effect on our consolidated financial statements. |
Note 3. Inventories (Policies)
Note 3. Inventories (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventories are valued using the lower of first-in, first-out (FIFO) cost or market value. |
Note 5. Commitments and Conti21
Note 5. Commitments and Contingent Liabilities (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
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) | 6 Months Ended |
Dec. 31, 2015 | |
Fair Value [Abstract] | |
Fair Value | The Company 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 six months ended December 31, 2015 . There were also no changes in the inputs or valuation techniques used to measure fair values during the six months ended December 31, 2015 . Financial Instruments Recognized at Fair Value: The following methods and assumptions were used to measure fair value: Financial Instrument Level Valuation Technique/Inputs Used Cash equivalents 1 Market - Quoted market prices 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 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 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) | 6 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments [Abstract] | |
Derivatives | 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. |
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 Share Owners’ 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 8. Investments (Policies)
Note 8. Investments (Policies) | 6 Months Ended |
Dec. 31, 2015 | |
Investments [Abstract] | |
Investment | The Company SERP utilizes a rabbi trust, and therefore assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. The Company 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. |
Note 1. Business Description 25
Note 1. Business Description and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Components of Non-operating income (expense), net | Components of Non-operating income (expense), net: Three Months Ended Six Months Ended December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Foreign currency/derivative gain (loss) $ (731 ) $ 96 $ (955 ) $ (231 ) Gain (loss) on supplemental employee retirement plan investments 258 142 (196 ) 49 Other (123 ) (91 ) (122 ) (168 ) Non-operating income (expense), net $ (596 ) $ 147 $ (1,273 ) $ (350 ) |
Note 3. Inventories (Tables)
Note 3. Inventories (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventory components were as follows: (Amounts in Thousands) December 31, 2015 June 30, Finished products $ 22,558 $ 21,415 Work-in-process 10,859 13,029 Raw materials 94,459 90,754 Total inventory $ 127,876 $ 125,198 |
Note 4. Accumulated Other Com27
Note 4. Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | During the six months ended December 31, 2015 and 2014 , 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, 2015 $ (9,113 ) $ (3,557 ) $ (18 ) $ 441 $ (12,247 ) Other comprehensive income (loss) before reclassifications (1,920 ) (1,290 ) — 165 (3,045 ) Reclassification to (earnings) loss — 997 18 (77 ) 938 Net current-period other comprehensive income (loss) (1,920 ) (293 ) 18 88 (2,107 ) Balance at December 31, 2015 $ (11,033 ) $ (3,850 ) $ — $ 529 $ (14,354 ) Balance at June 30, 2014 $ 4,925 $ (3,406 ) $ (35 ) $ 135 $ 1,619 Other comprehensive income (loss) before reclassifications (8,527 ) 1,823 — 153 (6,551 ) Reclassification to (earnings) loss — (1,734 ) 13 (27 ) (1,748 ) Net current-period other comprehensive income (loss) (8,527 ) 89 13 126 (8,299 ) Balance at December 31, 2014 $ (3,602 ) $ (3,317 ) $ (22 ) $ 261 $ (6,680 ) |
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 Six Months Ended Affected Line Item in the Condensed Consolidated Statements of Income December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Derivative gain (loss) (1) $ (813 ) $ 173 $ (1,590 ) $ 379 Cost of Sales — 576 (1 ) 1,724 Non-operating income (expense), net 279 (98 ) 594 (369 ) Benefit (Provision) for Income Taxes $ (534 ) $ 651 $ (997 ) $ 1,734 Net of Tax Postemployment Benefits: Amortization of prior service costs (2) $ — $ (6 ) $ (16 ) $ (13 ) Cost of Sales — (4 ) (12 ) (7 ) Selling and Administrative Expenses — 3 10 7 Benefit (Provision) for Income Taxes $ — $ (7 ) $ (18 ) $ (13 ) Net of Tax Amortization of actuarial gain (loss) (2) $ 37 $ 25 $ 73 $ 28 Cost of Sales 28 16 55 17 Selling and Administrative Expenses (26 ) (17 ) (51 ) (18 ) Benefit (Provision) for Income Taxes $ 39 $ 24 $ 77 $ 27 Net of Tax Total reclassifications for the period $ (495 ) $ 668 $ (938 ) $ 1,748 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 Conti28
Note 5. Commitments and Contingent Liabilities (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingent Liabilities [Abstract] | |
Schedule of Product Warranty Liability | Changes in the product warranty accrual for the six months ended December 31, 2015 and 2014 were as follows: Six Months Ended December 31 (Amounts in Thousands) 2015 2014 Product warranty liability at the beginning of the period $ 621 $ 911 Additions to warranty accrual (including changes in estimates) 220 408 Settlements made (in cash or in kind) (88 ) (751 ) Product warranty liability at the end of the period $ 753 $ 568 |
Note 6. Fair Value (Tables)
Note 6. Fair Value (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
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 Cash equivalents 1 Market - Quoted market prices 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 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 December 31, 2015 and June 30, 2015 , 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: December 31, 2015 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 16,986 $ — $ 16,986 Derivatives: foreign exchange contracts — 711 711 Trading securities: mutual funds held in nonqualified SERP 5,877 — 5,877 Total assets at fair value $ 22,863 $ 711 $ 23,574 Liabilities Derivatives: foreign exchange contracts $ — $ 2,193 $ 2,193 Total liabilities at fair value $ — $ 2,193 $ 2,193 June 30, 2015 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 28,722 $ — $ 28,722 Derivatives: foreign exchange contracts — 3,004 3,004 Trading securities: mutual funds held in nonqualified SERP 5,813 — 5,813 Total assets at fair value $ 34,535 $ 3,004 $ 37,539 Liabilities Derivatives: foreign exchange contracts $ — $ 2,318 $ 2,318 Total liabilities at fair value $ — $ 2,318 $ 2,318 |
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 non-performance risk |
Note 7. Derivative Instrument30
Note 7. Derivative Instruments (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
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 December 31, June 30, Balance Sheet Location December 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 492 $ 1,255 Accrued expenses $ 2,064 $ 2,143 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 219 1,749 Accrued expenses 129 175 Total derivatives $ 711 $ 3,004 $ 2,193 $ 2,318 |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Six Months Ended December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): Foreign exchange contracts $ 579 $ (347 ) $ (1,927 ) $ 1,884 |
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 Six Months Ended (Amounts in Thousands) December 31 December 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2015 2014 2015 2014 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): Foreign exchange contracts Cost of Sales $ (813 ) $ 173 $ (1,590 ) $ 379 Foreign exchange contracts Non-operating income (expense) — 577 — 1,725 Total $ (813 ) $ 750 $ (1,590 ) $ 2,104 Amount of Pre-Tax Loss Reclassified from Accumulated OCI into Income (Ineffective Portion): Foreign exchange contracts Non-operating income (expense) $ — $ (1 ) $ (1 ) $ (1 ) 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) $ 599 $ 117 $ 562 $ 1,041 Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ (214 ) $ 866 $ (1,029 ) $ 3,144 |
Note 8. Investments (Tables)
Note 8. Investments (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Investments [Abstract] | |
Trading Securities (and Certain Trading Assets) | SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) December 31, June 30, SERP investments - current asset $ 199 $ 192 SERP investments - other long-term asset 5,678 5,621 Total SERP investments $ 5,877 $ 5,813 SERP obligation - current liability $ 199 $ 192 SERP obligation - other long-term liability 5,678 5,621 Total SERP obligation $ 5,877 $ 5,813 |
Note 9. Postemployment Benefi32
Note 9. Postemployment Benefits (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Postemployment Benefits [Abstract] | |
Schedule of Net Benefit Costs | The components of net periodic postemployment benefit cost applicable to Kimball Electronics participants were as follows: Three Months Ended Six Months Ended December 31 December 31 (Amounts in Thousands) 2015 2014 2015 2014 Service cost $ 84 $ 84 $ 170 $ 148 Interest cost 13 14 27 22 Amortization of prior service costs — 10 28 20 Amortization of actuarial gain (65 ) (41 ) (128 ) (45 ) Net periodic benefit cost $ 32 $ 67 $ 97 $ 145 |
Note 10. Stock Compensation P33
Note 10. Stock Compensation Plan (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Stock Compensation Plan [Abstract] | |
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value [Table Text Block] | During the first six months of fiscal year 2016 , the following stock compensation was awarded under the Plan to non-employee members of the Company’s Board of Directors. Unrestricted Shares (1) Quarter Awarded Shares Grant Date Fair Value Unrestricted shares (director compensation) 2nd Quarter 47,262 $10.94 (1) Unrestricted shares which were awarded to non-employee members of the Company’s Board of Directors as compensation for the portion of director’s fees prescribed to be paid in unrestricted shares in addition to the portion of director’s fees to be paid in unrestricted shares 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 sales, or other restrictions. |
Note 12. Earnings Per Share (Ta
Note 12. Earnings Per Share (Tables) | 6 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share were calculated as follows: Three Months Ended Six Months Ended December 31 December 31 (Amounts in thousands, except per share data) 2015 2014 2015 2014 Basic and Diluted Earnings Per Share: Net Income $ 4,564 $ 6,229 $ 9,039 $ 11,620 Basic weighted average common shares outstanding 29,228 29,162 29,260 29,153 Dilutive effect of average outstanding performance shares 50 132 90 164 Dilutive weighted average shares outstanding 29,278 29,294 29,350 29,317 Earnings Per Share of Common Stock: Basic $ 0.16 $ 0.21 $ 0.31 $ 0.40 Diluted $ 0.16 $ 0.21 $ 0.31 $ 0.40 |
Note 1. Business Description 35
Note 1. Business Description and Summary of Significant Accounting Policies - Components of Non-operating income (expense), net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Foreign Currency/Derivative Gain (Loss) | $ (731) | $ 96 | $ (955) | $ (231) |
Gain (loss) on supplemental employee retirement plan investments | 258 | 142 | (196) | 49 |
Other | (123) | (91) | (122) | (168) |
Non-operating income (expense), net | $ (596) | $ 147 | $ (1,273) | $ (350) |
Note 1. Business Description 36
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) - USD ($) shares in Millions, $ in Millions | Oct. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 |
Common Stock Dividends, Shares | 29.1 | |||
Accounts Receivable, Extended Payment Terms | 45 days | |||
Accounts Receivable Sold Without Recourse | $ 60.2 | $ 65.1 | ||
Due From Bankers Acceptance Drafts | $ 2.9 | $ 4.3 | ||
Minimum | ||||
Accounts Receivable, Customary Payment Terms | 30 days | |||
Maximum | ||||
Accounts Receivable, Customary Payment Terms | 45 days |
Note 2. Related Party Transac37
Note 2. Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2015 | Jun. 30, 2015 | Oct. 31, 2014 | Jun. 30, 2014 | |
Related Party Transaction [Line Items] | ||||||
Related Party Transactions Selling and Administrative Expenses Excluding Incentive Compensation | $ 1,500 | $ 4,500 | ||||
Related Party Transactions Selling and Administrative Incentive Compensation | 400 | 2,100 | ||||
Cash and cash equivalents | $ 61,664 | $ 61,664 | $ 60,499 | $ 65,180 | $ 63,000 | $ 26,260 |
Cash Distribution from Parent | $ 44,300 |
Note 2. Related Party Transac38
Note 2. Related Party Transactions Former Parent (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Jun. 30, 2015 |
Nontrade Receivables | $ 0.8 | $ 0.8 |
Nontrade Receivables, Noncurrent | $ 0.6 | $ 0.6 |
Note 3. Inventories - Inventory
Note 3. Inventories - Inventory Components (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
Inventory, Finished Goods, Net of Reserves | $ 22,558 | $ 21,415 |
Inventory, Work in Process, Net of Reserves | 10,859 | 13,029 |
Inventory, Raw Materials, Net of Reserves | 94,459 | 90,754 |
Total inventory | $ 127,876 | $ 125,198 |
Note 4. Accumulated Other Com40
Note 4. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | $ 312,449 | |||
Other comprehensive income (loss) before reclassifications | (3,045) | $ (6,551) | ||
Reclassification to (earnings) loss | $ 495 | $ (668) | 938 | (1,748) |
Net current-period other comprehensive income (loss) | (2,107) | (8,299) | ||
Accumulated other comprehensive income (loss), ending balance | 317,042 | 317,042 | ||
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (12,247) | 1,619 | ||
Accumulated other comprehensive income (loss), ending balance | (14,354) | (6,680) | (14,354) | (6,680) |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (9,113) | 4,925 | ||
Other comprehensive income (loss) before reclassifications | (1,920) | (8,527) | ||
Reclassification to (earnings) loss | 0 | 0 | ||
Net current-period other comprehensive income (loss) | (1,920) | (8,527) | ||
Accumulated other comprehensive income (loss), ending balance | (11,033) | (3,602) | (11,033) | (3,602) |
Derivative Gain (Loss) | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (3,557) | (3,406) | ||
Other comprehensive income (loss) before reclassifications | (1,290) | 1,823 | ||
Reclassification to (earnings) loss | 997 | (1,734) | ||
Net current-period other comprehensive income (loss) | (293) | 89 | ||
Accumulated other comprehensive income (loss), ending balance | (3,850) | (3,317) | (3,850) | (3,317) |
Postemployment Benefits, Prior Service Costs | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (18) | (35) | ||
Other comprehensive income (loss) before reclassifications | 0 | 0 | ||
Reclassification to (earnings) loss | 18 | 13 | ||
Net current-period other comprehensive income (loss) | 18 | 13 | ||
Accumulated other comprehensive income (loss), ending balance | 0 | (22) | 0 | (22) |
Postemployment Benefits, Net Actuarial Gain | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | 441 | 135 | ||
Other comprehensive income (loss) before reclassifications | 165 | 153 | ||
Reclassification to (earnings) loss | (77) | (27) | ||
Net current-period other comprehensive income (loss) | 88 | 126 | ||
Accumulated other comprehensive income (loss), ending balance | $ 529 | $ 261 | $ 529 | $ 261 |
Note 4. Accumulated Other Com41
Note 4. Accumulated Other Comprehensive Income (Loss) - Reclassifications from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | $ 191,014 | $ 189,705 | $ 376,152 | $ 375,605 | |
Non-operating income (expense), net | (596) | 147 | (1,273) | (350) | |
Selling and Administrative Expenses | 9,182 | 9,161 | 17,541 | 19,277 | |
Benefit (Provision) for Income Taxes | (1,781) | (2,622) | (3,561) | (4,521) | |
Net income (loss) | 4,564 | 6,229 | 9,039 | 11,620 | |
Total reclassifications for the period | (495) | 668 | (938) | 1,748 | |
Derivative gain (loss) | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Total reclassifications for the period | (997) | 1,734 | |||
Derivative gain (loss) | Reclassification out of Accumulated Other Comprehensive Income | Foreign Exchange Contract | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | [1] | (813) | 173 | (1,590) | 379 |
Non-operating income (expense), net | [1] | 0 | 576 | (1) | 1,724 |
Benefit (Provision) for Income Taxes | [1] | 279 | (98) | 594 | (369) |
Net income (loss) | [1] | (534) | 651 | (997) | 1,734 |
Postemployment Benefits, Amortization of prior service costs | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Total reclassifications for the period | (18) | (13) | |||
Postemployment Benefits, Amortization of prior service costs | Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | [2] | 0 | (6) | (16) | (13) |
Selling and Administrative Expenses | [2] | 0 | (4) | (12) | (7) |
Benefit (Provision) for Income Taxes | [2] | 0 | 3 | 10 | 7 |
Net income (loss) | [2] | 0 | (7) | (18) | (13) |
Postemployment Benefits, Amortization of actuarial gain (loss) | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Total reclassifications for the period | 77 | 27 | |||
Postemployment Benefits, Amortization of actuarial gain (loss) | Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | [2] | 37 | 25 | 73 | 28 |
Selling and Administrative Expenses | [2] | 28 | 16 | 55 | 17 |
Benefit (Provision) for Income Taxes | [2] | (26) | (17) | (51) | (18) |
Net income (loss) | [2] | $ 39 | $ 24 | $ 77 | $ 27 |
[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 Conti42
Note 5. Commitments and Contingent Liabilities - Commitments and Contingent Liabilities Textuals (Details) | Dec. 31, 2015USD ($) |
Guarantor Obligations | |
Bankers acceptance drafts transferred and outstanding | $ 1,200,000 |
Financial Standby Letter of Credit | |
Guarantor Obligations | |
Letters of Credit, Amount | 400,000 |
Loss Contingency Accrual, at Carrying Value | $ 0 |
Note 5. Commitments and Conti43
Note 5. Commitments and Contingent Liabilities - Product Warranty (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Product warranty liability at the beginning of the period | $ 621 | $ 911 |
Additions to warranty accrual (including changes in estimates) | 220 | 408 |
Settlements made (in cash or in kind) | (88) | (751) |
Product warranty liability at the end of the period | $ 753 | $ 568 |
Note 6. Fair Value - Recurring
Note 6. Fair Value - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
Recurring Fair Value Measurements: | ||
Derivative Asset | $ 711 | $ 3,004 |
Trading Securities, Total | 5,877 | 5,813 |
Derivative Liability | 2,193 | 2,318 |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 16,986 | 28,722 |
Trading Securities, Total | 5,877 | 5,813 |
Total assets at fair value | 23,574 | 37,539 |
Total liabilities at fair value | 2,193 | 2,318 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 711 | 3,004 |
Derivative Liability | 2,193 | 2,318 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 16,986 | 28,722 |
Trading Securities, Total | 5,877 | 5,813 |
Total assets at fair value | 22,863 | 34,535 |
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 | 0 | 0 |
Derivative Liability | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 0 | 0 |
Trading Securities, Total | 0 | 0 |
Total assets at fair value | 711 | 3,004 |
Total liabilities at fair value | 2,193 | 2,318 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 711 | 3,004 |
Derivative Liability | $ 2,193 | $ 2,318 |
Note 6. Fair Value - Textuals (
Note 6. Fair Value - Textuals (Details) | 6 Months Ended |
Dec. 31, 2015USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Fair Value, Transfers Between Levels, Amount | $ 0 |
Fair Value, Purchases and Sales of Level 3 Assets | 0 |
Fair Value, Purchases and Sales of Level 3 Liabilities | $ 0 |
Note 7. Derivative Instrument46
Note 7. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract € in Millions, $ in Millions | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Jun. 30, 2015 | Dec. 31, 2015EUR (€) | Dec. 31, 2015USD ($) | |
Derivatives, Fair Value | ||||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ (0.8) | |||
Derivative, Notional Amount | € 62.6 | $ 28.9 | ||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | 12 months | 12 months |
Note 7. Derivative Instrument47
Note 7. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
Derivatives, Fair Value | ||
Derivative Asset | $ 711 | $ 3,004 |
Derivative Liability | 2,193 | 2,318 |
Foreign Exchange Contract | Fair Value, Measurements, Recurring | ||
Derivatives, Fair Value | ||
Derivative Asset | 711 | 3,004 |
Derivative Liability | 2,193 | 2,318 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 492 | 1,255 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | 2,064 | 2,143 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 219 | 1,749 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | $ 129 | $ 175 |
Note 7. Derivative Instrument48
Note 7. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative Instruments, Gain (Loss) | ||||
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $ 579 | $ (347) | $ (1,927) | $ 1,884 |
Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $ 579 | $ (347) | $ (1,927) | $ 1,884 |
Note 7. Derivative Instrument49
Note 7. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |||
Derivative Instruments, Gain (Loss) | ||||||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $ (214) | $ 866 | $ (1,029) | $ 3,144 | ||
Foreign Exchange Contract | Non-Operating Income (Expense) | ||||||
Derivative Instruments, Gain (Loss) | ||||||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | 599 | 117 | 562 | 1,041 | ||
Cash Flow Hedging | ||||||
Derivative Instruments, Gain (Loss) | ||||||
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion | (813) | 750 | (1,590) | 2,104 | ||
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 | (813) | 173 | (1,590) | [1] | 379 | [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 | 0 | 577 | 0 | [1] | 1,725 | [1] |
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net | $ 0 | $ (1) | $ (1) | $ (1) | ||
[1] | See Note 7 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. |
Note 8. Investments - Supplemen
Note 8. Investments - Supplemental Employee Retirement Investments Textuals (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Trading Securities and Other Trading Assets | ||
Trading Securities, Change in net unrealized holding gains (losses) | $ 30 | $ (156) |
Note 8. Investments - Supplem51
Note 8. Investments - Supplemental Employee Retirement Plan Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jun. 30, 2015 |
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments - current asset | $ 199 | $ 192 |
SERP investments - other long-term asset | 5,678 | 5,621 |
Total SERP investments | 5,877 | 5,813 |
SERP obligation - current liability | 199 | 192 |
SERP obligation - other long-term liability | 5,678 | 5,621 |
Total SERP obligation | $ 5,877 | $ 5,813 |
Note 9. Postemployment Benefi52
Note 9. Postemployment Benefits (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Components of Net Periodic Benefit Cost (before tax): | |||||
Defined Benefit Plan, Assets for Plan Benefits | $ 0 | $ 0 | $ 0 | ||
Service cost | 84,000 | $ 84,000 | 170,000 | $ 148,000 | |
Interest cost | 13,000 | 14,000 | 27,000 | 22,000 | |
Amortization of prior service costs | 0 | 10,000 | 28,000 | 20,000 | |
Amortization of actuarial gain | (65,000) | (41,000) | (128,000) | (45,000) | |
Net periodic benefit cost | $ 32,000 | $ 67,000 | $ 97,000 | $ 145,000 |
Note 10. Stock Compensation P53
Note 10. Stock Compensation Plan - Textuals (Details) - $ / shares | 3 Months Ended | ||
Dec. 31, 2015 | Oct. 03, 2014 | ||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 4,500,000 | ||
Unrestricted Shares Director Compensation | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | [1] | 47,262 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [1] | $ 10.94 | |
[1] | Unrestricted shares which were awarded to non-employee members of the Company’s Board of Directors as compensation for the portion of director’s fees prescribed to be paid in unrestricted shares in addition to the portion of director’s fees to be paid in unrestricted shares 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 sales, or other restrictions. |
Note 11. Share Owners' Equity54
Note 11. Share Owners' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Oct. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 21, 2017 | Oct. 21, 2015 | Jun. 30, 2015 | Oct. 16, 2014 |
Treasury Shares Paid for Tax Withholding for Share Based Compensation | 78,000 | |||||||
Total Shares Authorized | 165,000,000 | |||||||
Common Stock, Shares, Outstanding | 29,100,000 | |||||||
Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 | 15,000,000 | 15,000,000 | ||||
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | 150,000,000 | 150,000,000 | ||||
Common Shares Outstanding Prior to Stock Split | 50,000 | |||||||
Common Stock Dividends, Shares | 29,100,000 | |||||||
Stock Repurchase Program, Period in Force | 18 months | |||||||
Stock Repurchase Program, Authorized Amount | $ 20 | |||||||
Treasury Stock, Value, Acquired, Cost Method | $ 3.8 | |||||||
Treasury Stock Acquired, Average Cost Per Share | $ 11.22 | |||||||
Additional Paid-in Capital | ||||||||
Net Parent Contribution | $ 45.7 | |||||||
Net Parent Contribution, Non-Cash | $ (4.6) |
Note 12. Earnings Per Share (De
Note 12. Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net income | $ 4,564 | $ 6,229 | $ 9,039 | $ 11,620 |
Weighted Average Number of Shares Outstanding, Basic | 29,228 | 29,162 | 29,260 | 29,153 |
Dilutive effect of average outstanding performance shares | 50 | 132 | 90 | 164 |
Weighted Average Number of Shares Outstanding, Diluted | 29,278 | 29,294 | 29,350 | 29,317 |
Earnings Per Share, Basic | $ 0.16 | $ 0.21 | $ 0.31 | $ 0.40 |
Earnings Per Share, Diluted | $ 0.16 | $ 0.21 | $ 0.31 | $ 0.40 |