Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Mar. 31, 2017 | Apr. 24, 2017 | |
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 | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 27,127,146 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Jun. 30, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 40,056 | $ 54,738 |
Receivables, net of allowances of $211 and $192, respectively | 161,703 | 149,652 |
Inventories | 143,929 | 132,877 |
Prepaid Expense and Other Assets, Current | 26,830 | 24,944 |
Total current assets | 372,518 | 362,211 |
Property and Equipment, net of accumulated depreciation of $172,273 and $161,034, respectively | 132,131 | 120,701 |
Goodwill | 6,191 | 6,191 |
Other Intangible Assets, net of accumulated amortization of $26,384 and $25,817, respectively | 4,822 | 4,593 |
Other Assets | 17,473 | 16,869 |
Total Assets | 533,135 | 510,565 |
Current Liabilities: | ||
Line of Credit, Current | 6,500 | 9,000 |
Accounts payable | 152,385 | 142,152 |
Accrued expenses | 27,128 | 23,651 |
Total current liabilities | 186,013 | 174,803 |
Other Liabilities: | ||
Other long-term liabilities | 12,744 | 11,393 |
Total Liabilities | 198,757 | 186,196 |
Share Owners’ Equity: | ||
Preferred stock-no par value | 0 | 0 |
Common stock-no par value | 0 | 0 |
Additional paid-in capital | 301,753 | 301,581 |
Retained earnings | 74,543 | 48,492 |
Accumulated other comprehensive loss | (13,260) | (12,190) |
Treasury stock, at cost | (28,658) | (13,514) |
Total Share Owners’ Equity | 334,378 | 324,369 |
Total Liabilities and Share Owners’ Equity | $ 533,135 | $ 510,565 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets Parentheticals - USD ($) $ in Thousands | Mar. 31, 2017 | Jun. 30, 2016 |
ASSETS | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 211 | $ 192 |
Property and Equipment Accumulated Depreciation | 172,273 | 161,034 |
Other Intangible Assets Accumulated Amortization | $ 26,384 | $ 25,817 |
Share Owners' Equity | ||
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par Value Per Share | $ 0 | $ 0 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 29,430,000 | 29,430,000 |
Treasury Stock, Shares | 2,291,000 | 1,210,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Net Sales | $ 232,930 | $ 214,111 | $ 689,646 | $ 621,658 |
Cost of Sales | 214,212 | 197,926 | 632,053 | 574,078 |
Gross Profit | 18,718 | 16,185 | 57,593 | 47,580 |
Selling and Administrative Expenses | 9,179 | 9,107 | 26,996 | 26,648 |
Other General Income | 0 | 0 | (4,005) | 0 |
Operating Income | 9,539 | 7,078 | 34,602 | 20,932 |
Other Income (Expense): | ||||
Interest income | 11 | 23 | 48 | 47 |
Interest expense | (52) | (24) | (151) | (29) |
Non-operating income (expense), net | 373 | 234 | 184 | (1,039) |
Other income (expense), net | 332 | 233 | 81 | (1,021) |
Income Before Taxes on Income | 9,871 | 7,311 | 34,683 | 19,911 |
Provision (Benefit) for Income Taxes | 1,754 | (166) | 8,632 | 3,395 |
Net Income | $ 8,117 | $ 7,477 | $ 26,051 | $ 16,516 |
Earnings Per Share of Common Stock: | ||||
Earnings Per Share, Basic | $ 0.30 | $ 0.26 | $ 0.94 | $ 0.57 |
Earnings Per Share, Diluted | $ 0.30 | $ 0.26 | $ 0.94 | $ 0.57 |
Weighted Average Number of Shares Outstanding, Basic | 27,266 | 28,771 | 27,565 | 29,097 |
Weighted Average Number of Shares Outstanding, Diluted | 27,416 | 28,860 | 27,655 | 29,211 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Net income | $ 8,117 | $ 7,477 | $ 26,051 | $ 16,516 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, Pre-tax | 1,246 | 3,283 | (3,272) | 1,363 |
Foreign currency translation adjustments, Tax | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments, Net of Tax | 1,246 | 3,283 | (3,272) | 1,363 |
Postemployment severance actuarial change, Pre-tax | 89 | 183 | 401 | 451 |
Postemployment severance actuarial change, Tax | (34) | (71) | (151) | (174) |
Postemployment severance actuarial change, Net of Tax | 55 | 112 | 250 | 277 |
Derivative gain (loss), Pre-tax | 2,476 | (109) | 2,210 | (2,036) |
Derivative gain (loss), Tax | (749) | (5) | (421) | 632 |
Derivative gain (loss), Net of Tax | 1,727 | (114) | 1,789 | (1,404) |
Reclassification to (earnings) loss: | ||||
Derivatives, Reclassification to (earnings) loss, Pre-tax | (245) | 1,019 | 651 | 2,610 |
Derivatives, Reclassification to (earnings) loss, Tax | (8) | (343) | (329) | (937) |
Derivatives, Reclassification to (earnings) loss, Net of Tax | (253) | 676 | 322 | 1,673 |
Amortization of prior service cost, Pre-tax | 0 | 28 | ||
Amortization of prior service cost, Tax | 0 | (10) | ||
Amortization of prior service cost, Net of Tax | 0 | 18 | ||
Amortization of actuarial change, Pre-tax | (81) | (65) | (255) | (193) |
Amortization of actuarial change, Tax | 31 | 26 | 96 | 77 |
Amortization of actuarial change, Net of Tax | (50) | (39) | (159) | (116) |
Other comprehensive income (loss), Pre-tax | 3,485 | 4,311 | (265) | 2,223 |
Other comprehensive income (loss), Tax | (760) | (393) | (805) | (412) |
Other comprehensive income (loss), Net of Tax | 2,725 | 3,918 | (1,070) | 1,811 |
Total comprehensive income (loss) | 10,842 | 11,395 | 24,981 | 18,327 |
Foreign Exchange Contract | ||||
Other comprehensive income (loss): | ||||
Derivative gain (loss), Pre-tax | $ 2,476 | $ (109) | $ 2,210 | $ (2,036) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash Flows From Operating Activities: | ||
Net income | $ 26,051 | $ 16,516 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,501 | 14,336 |
Gain on sales of assets | (42) | (137) |
Deferred income tax and other deferred charges | (1,221) | 3,614 |
Stock-based compensation | 2,715 | 2,662 |
Excess tax benefits from stock-based compensation | 0 | (203) |
Business Combination, Bargain Purchase, Gain Recognized, Amount | (925) | 0 |
Other, net | 255 | 154 |
Change in operating assets and liabilities: | ||
Receivables | (13,559) | (8,836) |
Inventories | (10,125) | (6,178) |
Prepaid expenses and other current assets | (676) | (6,479) |
Accounts payable | 10,929 | 14,858 |
Accrued expenses | 3,839 | (2,278) |
Net cash provided by operating activities | 34,742 | 28,029 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (25,102) | (27,117) |
Proceeds from sales of assets | 203 | 200 |
Payments to Acquire Businesses, Net of Cash Acquired | (2,138) | 0 |
Purchases of capitalized software | (911) | (960) |
Other, net | 27 | 71 |
Net cash used for investing activities | (27,921) | (27,806) |
Cash Flows From Financing Activities: | ||
Proceeds from revolving credit facility | 4,000 | 3,000 |
Payments on revolving credit facility | (13,000) | 0 |
Net change in credit facilities | 6,500 | 0 |
Excess tax benefits from stock-based compensation | 0 | 203 |
Repurchases of Common Stock | (17,320) | (7,982) |
Repurchase of employee shares for tax withholding | (709) | (897) |
Net cash used for financing activities | (20,529) | (5,676) |
Effect of Exchange Rate Change on Cash and Cash Equivalents | (974) | 99 |
Net Decrease in Cash and Cash Equivalents | (14,682) | (5,354) |
Cash and Cash Equivalents at Beginning of Period | 54,738 | 65,180 |
Cash and Cash Equivalents at End of Period | 40,056 | 59,826 |
Cash paid during the period for: | ||
Income taxes | 4,394 | 6,677 |
Interest expense | $ 159 | $ 1 |
Note 1. Business Description an
Note 1. Business Description and Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2017 | |
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 end 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. Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of March 31, 2017 and June 30, 2016 , results of operations for the three and nine months ended March 31, 2017 and 2016 , and cash flows for the nine months ended March 31, 2017 and 2016 . 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, 2016 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. 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. 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 nine months ended March 31, 2017 and 2016 , we sold, without recourse, $107.8 million and $93.1 million of accounts receivable, respectively. 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 $5.6 million at March 31, 2017 and $5.7 million at June 30, 2016 , 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. Banker’s acceptance drafts sold at a discount or transferred in settlement of current accounts payable during the nine months ended March 31, 2017 and 2016 were $6.8 million and $10.1 million , respectively. See Note 5 - Commitments and Contingent Liabilities of Notes to Condensed Consolidated Financial Statements for more information on banker’s acceptance drafts. Other General Income: Other General Income in the nine months ended March 31, 2017 included $4.0 million of pre-tax income resulting from a payment received related to a class action lawsuit in which Kimball Electronics was a class member. The lawsuit alleged that certain suppliers to the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components. No Other General Income was recorded in the nine months ended March 31, 2016 . 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 non-operating income and expense items that are not directly related to operations. The Bargain purchase gain on acquisition relates to the acquisition of Aircom Manufacturing, Inc. during the nine months ended March 31, 2017 and resulted from the estimated fair values of the assets acquired and liabilities recorded being greater than the consideration paid. See Note 2 - Acquisitions of Notes to Condensed Consolidated Financial Statements for more information on the bargain purchase gain. 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 Nine Months Ended March 31 March 31 (Amounts in Thousands) 2017 2016 2017 2016 Foreign currency/derivative gain (loss) $ 37 $ 336 $ (1,433 ) $ (619 ) Gain (loss) on supplemental employee retirement plan investments 423 26 682 (170 ) Bargain purchase gain on acquisition — — 925 — Other (87 ) (128 ) 10 (250 ) Non-operating income (expense), net $ 373 $ 234 $ 184 $ (1,039 ) 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. During the quarter ended March 31, 2016, we recognized a $1.8 million discrete foreign tax benefit as a result of a favorable tax ruling related to the fiscal year 2015 capitalization of our Romania subsidiary. The Company entered into a Tax Matters Agreement with Kimball International, Inc. (our “former Parent”) that governs the Company’s rights and obligations after the spin-off from former Parent on October 31, 2014 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. At March 31, 2017 and June 30, 2016 , the Company has a receivable from Kimball International recorded for $0.6 million and $0.7 million , respectively. As of March 31, 2017 and June 30, 2016 , $0.5 million and $0.6 million , respectively, of the receivable is a long-term receivable, and was recorded in Other Assets on the Condensed Consolidated Balance Sheets, relating to benefits from domestic research and development tax credits. “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. In April 2017, the Securities and Exchange Commission adopted new rules that included an inflation-adjusted threshold in the definition of an “emerging growth company.” Under the new inflation-adjusted threshold, we would cease to be an “emerging growth company” on the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion . This is an increase of $70 million from the previous $1 billion threshold. For further information regarding additional criteria to retain the “emerging growth company” status, refer to our Annual Report on Form 10-K for the year ended June 30, 2016 . New Accounting Standards: In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on leases. The new guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases with terms of more than 12 months. Under the current guidance, only capital leases are recognized on the balance sheet. The new guidance requires additional qualitative and quantitative disclosures. The new guidance is effective for our fiscal year 2020 financial statements. 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 to 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 do not expect the adoption of this standard to have a material effect on our financial position, results of operations, or cash flows. 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 are currently assessing the impact, including changes required in our business processes and information technology systems, to adopt this guidance. We have not yet selected a transition method nor determined the effect of this guidance on our consolidated financial statements. |
Note 2. Acquisitions (Notes)
Note 2. Acquisitions (Notes) | 9 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | Acquisitions On July 18, 2016 , the Company acquired certain assets and assumed certain liabilities of Aircom Manufacturing, Inc. (“Aircom”), located in Indianapolis, Indiana, for consideration of $3.5 million , which consisted of $2.5 million in cash payments and the settlement of a $1.0 million receivable. This acquisition was accounted for as a business combination and includes assets acquired of $6.4 million and liabilities assumed of $1.4 million based on their estimated fair values as of the acquisition date. Operating results are included in the Company’s condensed consolidated financial statements beginning on July 18, 2016 and had an immaterial effect on the Company’s financial results for the three and nine months ended March 31, 2017 . Direct costs of the acquisition were not material. Consideration paid for Aircom was less than the estimated fair values of the assets acquired and liabilities assumed, which resulted in a bargain purchase gain of $0.9 million and was recorded in the Non-operating income (expense), net line item on the Condensed Consolidated Statements of Income. For tax purposes, the bargain purchase gain resulted in the reduction of the tax basis in Property and Equipment, resulting in a deferred tax liability of $0.6 million recorded on the opening balance sheet. This deferred tax liability reduced the bargain purchase gain, and the bargain purchase gain is not taxable. The Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that all assets and liabilities were recognized and the valuation procedures and resulting estimates of fair values were appropriate. The bargain purchase gain resulted from the financial distress of Aircom as they were unable to secure sufficient capital to continue operations and service their existing debt. Aircom was the former parent of Medivative Technologies, LLC, from which the Company acquired certain assets and assumed certain liabilities on May 2, 2016 (the “Medivative acquisition”). Aircom provided component parts and services to the Company subsequent to the Medivative acquisition. The Aircom acquisition is expected to add expertise in the manufacturing of precision metals and plastics to the Company’s package of value. For further information regarding the Medivative acquisition, refer to our Annual Report on Form 10-K for the year ended June 30, 2016. |
Note 3. Inventories
Note 3. Inventories | 9 Months Ended |
Mar. 31, 2017 | |
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) March 31, 2017 June 30, Finished products $ 22,256 $ 21,577 Work-in-process 14,385 10,678 Raw materials 107,288 100,622 Total inventory $ 143,929 $ 132,877 |
Note 4. Accumulated Other Compr
Note 4. Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) During the nine months ended March 31, 2017 and 2016 , 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, 2016 $ (9,653 ) $ (3,137 ) $ — $ 600 $ (12,190 ) Other comprehensive income (loss) before reclassifications (3,272 ) 1,789 — 250 (1,233 ) Reclassification to (earnings) loss — 322 — (159 ) 163 Net current-period other comprehensive income (loss) (3,272 ) 2,111 — 91 (1,070 ) Balance at March 31, 2017 $ (12,925 ) $ (1,026 ) $ — $ 691 $ (13,260 ) Balance at June 30, 2015 $ (9,113 ) $ (3,557 ) $ (18 ) $ 441 $ (12,247 ) Other comprehensive income (loss) before reclassifications 1,363 (1,404 ) — 277 236 Reclassification to (earnings) loss — 1,673 18 (116 ) 1,575 Net current-period other comprehensive income (loss) 1,363 269 18 161 1,811 Balance at March 31, 2016 $ (7,750 ) $ (3,288 ) $ — $ 602 $ (10,436 ) 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 Nine Months Ended Affected Line Item in the Condensed Consolidated Statements of Income March 31 March 31 (Amounts in Thousands) 2017 2016 2017 2016 Derivative gain (loss) (1) $ 245 $ (1,019 ) $ (645 ) $ (2,609 ) Cost of Sales — — (6 ) (1 ) Non-operating income (expense), net 8 343 329 937 Benefit (Provision) for Income Taxes $ 253 $ (676 ) $ (322 ) $ (1,673 ) Net of Tax Postemployment Benefits: Amortization of prior service costs (2) $ — $ — $ — $ (16 ) Cost of Sales — — — (12 ) Selling and Administrative Expenses — — — 10 Benefit (Provision) for Income Taxes $ — $ — $ — $ (18 ) Net of Tax Amortization of actuarial gain (2) $ 46 $ 36 $ 147 $ 109 Cost of Sales 35 29 108 84 Selling and Administrative Expenses (31 ) (26 ) (96 ) (77 ) Benefit (Provision) for Income Taxes $ 50 $ 39 $ 159 $ 116 Net of Tax Total reclassifications for the period $ 303 $ (637 ) $ (163 ) $ (1,575 ) 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 | 9 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 , we had a maximum financial exposure from unused standby letters of credit totaling $0.4 million . We don’t expect circumstances to arise that would require us to perform under any of these arrangements and believe that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect our condensed consolidated financial statements. Accordingly, no liability has been recorded as of March 31, 2017 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 People’s 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 March 31, 2017 , the drafts transferred and outstanding totaled $3.3 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 nine months ended March 31, 2017 and 2016 were as follows: Nine Months Ended March 31 (Amounts in Thousands) 2017 2016 Product warranty liability at the beginning of the period $ 605 $ 621 Additions to warranty accrual (including changes in estimates) 398 167 Settlements made (in cash or in kind) (353 ) (113 ) Product warranty liability at the end of the period $ 650 $ 675 |
Note 6. Fair Value
Note 6. Fair Value | 9 Months Ended |
Mar. 31, 2017 | |
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 nine months ended March 31, 2017 . There were also no changes in the inputs or valuation techniques used to measure fair values during the nine months ended March 31, 2017 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2016 . Recurring Fair Value Measurements: As of March 31, 2017 and June 30, 2016 , 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: March 31, 2017 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,085 $ — $ 1,085 Derivatives: foreign exchange contracts — 3,392 3,392 Trading securities: mutual funds held in nonqualified SERP 7,210 — 7,210 Total assets at fair value $ 8,295 $ 3,392 $ 11,687 Liabilities Derivatives: foreign exchange contracts $ — $ 462 $ 462 Total liabilities at fair value $ — $ 462 $ 462 June 30, 2016 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 21,225 $ — $ 21,225 Derivatives: foreign exchange contracts — 754 754 Trading securities: mutual funds held in nonqualified SERP 6,166 — 6,166 Total assets at fair value $ 27,391 $ 754 $ 28,145 Liabilities Derivatives: foreign exchange contracts $ — $ 1,300 $ 1,300 Total liabilities at fair value $ — $ 1,300 $ 1,300 We had no level 3 assets or liabilities measured at fair value during the nine months ended March 31, 2017 . 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 notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the nine months ended March 31, 2017 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2016 . 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 | 9 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 , we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $26.2 million and to hedge currencies against the Euro in the aggregate notional amount of 81.0 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 March 31, 2017 , we estimate a $1.7 million pre-tax derivative gain deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months. Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk. The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both March 31, 2017 and June 30, 2016 . 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 March 31, June 30, Balance Sheet Location March 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 2,383 $ 517 Accrued expenses $ 349 $ 1,156 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 1,009 237 Accrued expenses 113 144 Total derivatives $ 3,392 $ 754 $ 462 $ 1,300 The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Thousands) 2017 2016 2017 2016 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): Foreign exchange contracts $ 2,476 $ (109 ) $ 2,210 $ (2,036 ) The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended Nine Months Ended (Amounts in Thousands) March 31 March 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2017 2016 2017 2016 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): Foreign exchange contracts Cost of Sales $ 245 $ (1,019 ) $ (645 ) $ (2,609 ) Foreign exchange contracts Non-operating income (expense) — — (6 ) — Total $ 245 $ (1,019 ) $ (651 ) $ (2,609 ) Amount of Pre-Tax Loss Reclassified from Accumulated OCI into Income (Ineffective Portion): Foreign exchange contracts Non-operating income (expense) $ — $ — $ — $ (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) $ (157 ) $ (911 ) $ 1,505 $ (349 ) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 88 $ (1,930 ) $ 854 $ (2,959 ) |
Note 8. Investments
Note 8. Investments | 9 Months Ended |
Mar. 31, 2017 | |
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”) for executive and other key employees. 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 nine months ended March 31, 2017 and 2016 was, in thousands, $414 and $19 , respectively. SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) March 31, June 30, SERP investments - current asset $ 246 $ 214 SERP investments - other long-term asset 6,964 5,952 Total SERP investments $ 7,210 $ 6,166 SERP obligation - current liability $ 246 $ 214 SERP obligation - other long-term liability 6,964 5,952 Total SERP obligation $ 7,210 $ 6,166 |
Note 9. Postemployment Benefits
Note 9. Postemployment Benefits | 9 Months Ended |
Mar. 31, 2017 | |
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 an 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 net periodic postemployment benefit costs were not material for the three and nine months ended March 31, 2017 and 2016 . 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 Plans | 9 Months Ended |
Mar. 31, 2017 | |
Stock Compensation Plans [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments | Stock Compensation Plans 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, 2016 . On October 20, 2016, the Company’s Board of Directors (the “Board”) approved a nonqualified deferred compensation plan, the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which allows Non-Employee Directors to elect to defer all, or a portion of, their retainer fees in stock until retirement or termination from the Board or death. The Deferral Plan allows for issuance of up to 1.0 million shares of the Company’s common stock. During the first nine months of fiscal year 2017 , the following stock compensation was awarded under the Plan and the Deferral Plan to non-employee members of the Board. Unrestricted Shares (1) Quarter Awarded Shares Grant Date Fair Value Unrestricted shares (Director compensation) 2nd Quarter 10,477 $15.75 Deferred Share Units (2) Quarter Awarded Units Grant Date Fair Value Deferred share units (Director compensation) 2nd Quarter 17,779 $15.75 (1) Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of Director’s annual retainer fees as a result of the Directors’ elections to be paid in unrestricted shares in lieu of cash payment or deferred share units. 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. (2) Deferred share units were awarded to non-employee members of the Board as compensation for the portion of Director’s annual retainer fees as a result of Directors’ elections to receive deferred share units in lieu of cash payment or unrestricted shares. Director’s fees are expensed over the period that Directors earn the compensation. Deferred share units are participating securities and are payable in common stock upon a Director’s retirement or termination from the Board or death. |
Note 11. Share Owners' Equity (
Note 11. Share Owners' Equity (Notes) | 9 Months Ended |
Mar. 31, 2017 | |
Share Owners' Equity [Abstract] | |
Stockholders' Equity Note Disclosure | Share Owners’ Equity On October 21, 2015 , the Company’s Board of Directors (the “Board”) authorized an 18-month stock repurchase plan (the “Plan”) allowing a repurchase of up to $20 million worth of common stock. On September 29, 2016, the Board extended the Plan to allow the repurchase of up to an additional $20 million worth of common stock with no expiration date. 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. During the nine months ended March 31, 2017 , the Company repurchased $16.8 million of common stock at an average price of $13.66 which was recorded as Treasury stock, at cost in the Condensed Consolidated Balance Sheets. Since the inception of the Plan, the Company has repurchased $29.9 million of common stock under the Plan at an average cost of $12.43 per share. |
Note 12. Earnings Per Share (No
Note 12. Earnings Per Share (Notes) | 9 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share were calculated as follows under the two-class method: Three Months Ended Nine Months Ended March 31 March 31 (Amounts in thousands, except per share data) 2017 2016 2017 2016 Basic and Diluted Earnings Per Share: Net Income $ 8,117 $ 7,477 $ 26,051 $ 16,516 Less: Net Income allocated to participating securities $ 5 $ — $ 9 $ — Net Income allocated to common Share Owners $ 8,112 $ 7,477 $ 26,042 $ 16,516 Basic weighted average common shares outstanding 27,266 28,771 27,565 29,097 Dilutive effect of average outstanding performance shares 144 89 86 114 Dilutive effect of average outstanding deferred stock units 6 — 4 — Dilutive weighted average shares outstanding 27,416 28,860 27,655 29,211 Earnings Per Share of Common Stock: Basic $ 0.30 $ 0.26 $ 0.94 $ 0.57 Diluted $ 0.30 $ 0.26 $ 0.94 $ 0.57 |
Note 1. Business Description 19
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 and June 30, 2016 , results of operations for the three and nine months ended March 31, 2017 and 2016 , and cash flows for the nine months ended March 31, 2017 and 2016 . 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, 2016 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. |
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. 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. These drafts, which totaled $5.6 million at March 31, 2017 and $5.7 million at June 30, 2016 , 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 | 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 non-operating income and expense items that are not directly related to operations. The Bargain purchase gain on acquisition relates to the acquisition of Aircom Manufacturing, Inc. during the nine months ended March 31, 2017 and resulted from the estimated fair values of the assets acquired and liabilities recorded being greater than the consideration paid. See Note 2 - Acquisitions of Notes to Condensed Consolidated Financial Statements for more information on the bargain purchase gain. 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 February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on leases. The new guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases with terms of more than 12 months. Under the current guidance, only capital leases are recognized on the balance sheet. The new guidance requires additional qualitative and quantitative disclosures. The new guidance is effective for our fiscal year 2020 financial statements. 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 to 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 do not expect the adoption of this standard to have a material effect on our financial position, results of operations, or cash flows. 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 are currently assessing the impact, including changes required in our business processes and information technology systems, to adopt this guidance. We have not yet selected a transition method nor determined the effect of this guidance on our consolidated financial statements. |
Note 3. Inventories (Policies)
Note 3. Inventories (Policies) | 9 Months Ended |
Mar. 31, 2017 | |
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) | 9 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingent Liabilities [Abstract] | |
Product Warranties | 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. |
Note 6. Fair Value (Policies)
Note 6. Fair Value (Policies) | 9 Months Ended |
Mar. 31, 2017 | |
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 nine months ended March 31, 2017 . There were also no changes in the inputs or valuation techniques used to measure fair values during the nine months ended March 31, 2017 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2016 . |
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 notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the nine months ended March 31, 2017 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2016 . 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) | 9 Months Ended |
Mar. 31, 2017 | |
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) | 9 Months Ended |
Mar. 31, 2017 | |
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 10. Stock Compensation P25
Note 10. Stock Compensation Plans (Policies) | 9 Months Ended |
Mar. 31, 2017 | |
Stock Option and Incentive Plan 2014 | |
Share-based Compensation, Director Policy | 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. |
Non-Employee Directors Stock Compensation Deferral Plan | |
Share-based Compensation, Director Policy | Director’s fees are expensed over the period that Directors earn the compensation. Deferred share units are participating securities and are payable in common stock upon a Director’s retirement or termination from the Board or death. |
Note 1. Business Description 26
Note 1. Business Description and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Components of Non-operating income (expense), net | Components of Non-operating income (expense), net: Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Thousands) 2017 2016 2017 2016 Foreign currency/derivative gain (loss) $ 37 $ 336 $ (1,433 ) $ (619 ) Gain (loss) on supplemental employee retirement plan investments 423 26 682 (170 ) Bargain purchase gain on acquisition — — 925 — Other (87 ) (128 ) 10 (250 ) Non-operating income (expense), net $ 373 $ 234 $ 184 $ (1,039 ) |
Note 3. Inventories (Tables)
Note 3. Inventories (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventory components were as follows: (Amounts in Thousands) March 31, 2017 June 30, Finished products $ 22,256 $ 21,577 Work-in-process 14,385 10,678 Raw materials 107,288 100,622 Total inventory $ 143,929 $ 132,877 |
Note 4. Accumulated Other Com28
Note 4. Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | During the nine months ended March 31, 2017 and 2016 , 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, 2016 $ (9,653 ) $ (3,137 ) $ — $ 600 $ (12,190 ) Other comprehensive income (loss) before reclassifications (3,272 ) 1,789 — 250 (1,233 ) Reclassification to (earnings) loss — 322 — (159 ) 163 Net current-period other comprehensive income (loss) (3,272 ) 2,111 — 91 (1,070 ) Balance at March 31, 2017 $ (12,925 ) $ (1,026 ) $ — $ 691 $ (13,260 ) Balance at June 30, 2015 $ (9,113 ) $ (3,557 ) $ (18 ) $ 441 $ (12,247 ) Other comprehensive income (loss) before reclassifications 1,363 (1,404 ) — 277 236 Reclassification to (earnings) loss — 1,673 18 (116 ) 1,575 Net current-period other comprehensive income (loss) 1,363 269 18 161 1,811 Balance at March 31, 2016 $ (7,750 ) $ (3,288 ) $ — $ 602 $ (10,436 ) |
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 Nine Months Ended Affected Line Item in the Condensed Consolidated Statements of Income March 31 March 31 (Amounts in Thousands) 2017 2016 2017 2016 Derivative gain (loss) (1) $ 245 $ (1,019 ) $ (645 ) $ (2,609 ) Cost of Sales — — (6 ) (1 ) Non-operating income (expense), net 8 343 329 937 Benefit (Provision) for Income Taxes $ 253 $ (676 ) $ (322 ) $ (1,673 ) Net of Tax Postemployment Benefits: Amortization of prior service costs (2) $ — $ — $ — $ (16 ) Cost of Sales — — — (12 ) Selling and Administrative Expenses — — — 10 Benefit (Provision) for Income Taxes $ — $ — $ — $ (18 ) Net of Tax Amortization of actuarial gain (2) $ 46 $ 36 $ 147 $ 109 Cost of Sales 35 29 108 84 Selling and Administrative Expenses (31 ) (26 ) (96 ) (77 ) Benefit (Provision) for Income Taxes $ 50 $ 39 $ 159 $ 116 Net of Tax Total reclassifications for the period $ 303 $ (637 ) $ (163 ) $ (1,575 ) 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 Conti29
Note 5. Commitments and Contingent Liabilities (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingent Liabilities [Abstract] | |
Schedule of Product Warranty Liability | Changes in the product warranty accrual for the nine months ended March 31, 2017 and 2016 were as follows: Nine Months Ended March 31 (Amounts in Thousands) 2017 2016 Product warranty liability at the beginning of the period $ 605 $ 621 Additions to warranty accrual (including changes in estimates) 398 167 Settlements made (in cash or in kind) (353 ) (113 ) Product warranty liability at the end of the period $ 650 $ 675 |
Note 6. Fair Value (Tables)
Note 6. Fair Value (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Fair Value [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | As of March 31, 2017 and June 30, 2016 , 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: March 31, 2017 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,085 $ — $ 1,085 Derivatives: foreign exchange contracts — 3,392 3,392 Trading securities: mutual funds held in nonqualified SERP 7,210 — 7,210 Total assets at fair value $ 8,295 $ 3,392 $ 11,687 Liabilities Derivatives: foreign exchange contracts $ — $ 462 $ 462 Total liabilities at fair value $ — $ 462 $ 462 June 30, 2016 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 21,225 $ — $ 21,225 Derivatives: foreign exchange contracts — 754 754 Trading securities: mutual funds held in nonqualified SERP 6,166 — 6,166 Total assets at fair value $ 27,391 $ 754 $ 28,145 Liabilities Derivatives: foreign exchange contracts $ — $ 1,300 $ 1,300 Total liabilities at fair value $ — $ 1,300 $ 1,300 |
Note 7. Derivative Instrument31
Note 7. Derivative Instruments (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
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 March 31, June 30, Balance Sheet Location March 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 2,383 $ 517 Accrued expenses $ 349 $ 1,156 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 1,009 237 Accrued expenses 113 144 Total derivatives $ 3,392 $ 754 $ 462 $ 1,300 |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Thousands) 2017 2016 2017 2016 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): Foreign exchange contracts $ 2,476 $ (109 ) $ 2,210 $ (2,036 ) |
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 Nine Months Ended (Amounts in Thousands) March 31 March 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2017 2016 2017 2016 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): Foreign exchange contracts Cost of Sales $ 245 $ (1,019 ) $ (645 ) $ (2,609 ) Foreign exchange contracts Non-operating income (expense) — — (6 ) — Total $ 245 $ (1,019 ) $ (651 ) $ (2,609 ) Amount of Pre-Tax Loss Reclassified from Accumulated OCI into Income (Ineffective Portion): Foreign exchange contracts Non-operating income (expense) $ — $ — $ — $ (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) $ (157 ) $ (911 ) $ 1,505 $ (349 ) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 88 $ (1,930 ) $ 854 $ (2,959 ) |
Note 8. Investments (Tables)
Note 8. Investments (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Investments [Abstract] | |
Trading Securities (and Certain Trading Assets) | SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) March 31, June 30, SERP investments - current asset $ 246 $ 214 SERP investments - other long-term asset 6,964 5,952 Total SERP investments $ 7,210 $ 6,166 SERP obligation - current liability $ 246 $ 214 SERP obligation - other long-term liability 6,964 5,952 Total SERP obligation $ 7,210 $ 6,166 |
Note 10. Stock Compensation P33
Note 10. Stock Compensation Plans (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Stock Compensation Plans [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | During the first nine months of fiscal year 2017 , the following stock compensation was awarded under the Plan and the Deferral Plan to non-employee members of the Board. Unrestricted Shares (1) Quarter Awarded Shares Grant Date Fair Value Unrestricted shares (Director compensation) 2nd Quarter 10,477 $15.75 Deferred Share Units (2) Quarter Awarded Units Grant Date Fair Value Deferred share units (Director compensation) 2nd Quarter 17,779 $15.75 (1) Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of Director’s annual retainer fees as a result of the Directors’ elections to be paid in unrestricted shares in lieu of cash payment or deferred share units. 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. (2) Deferred share units were awarded to non-employee members of the Board as compensation for the portion of Director’s annual retainer fees as a result of Directors’ elections to receive deferred share units in lieu of cash payment or unrestricted shares. Director’s fees are expensed over the period that Directors earn the compensation. Deferred share units are participating securities and are payable in common stock upon a Director’s retirement or termination from the Board or death. |
Note 12. Earnings Per Share (Ta
Note 12. Earnings Per Share (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share were calculated as follows under the two-class method: Three Months Ended Nine Months Ended March 31 March 31 (Amounts in thousands, except per share data) 2017 2016 2017 2016 Basic and Diluted Earnings Per Share: Net Income $ 8,117 $ 7,477 $ 26,051 $ 16,516 Less: Net Income allocated to participating securities $ 5 $ — $ 9 $ — Net Income allocated to common Share Owners $ 8,112 $ 7,477 $ 26,042 $ 16,516 Basic weighted average common shares outstanding 27,266 28,771 27,565 29,097 Dilutive effect of average outstanding performance shares 144 89 86 114 Dilutive effect of average outstanding deferred stock units 6 — 4 — Dilutive weighted average shares outstanding 27,416 28,860 27,655 29,211 Earnings Per Share of Common Stock: Basic $ 0.30 $ 0.26 $ 0.94 $ 0.57 Diluted $ 0.30 $ 0.26 $ 0.94 $ 0.57 |
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 | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Foreign Currency/Derivative Gain (Loss) | $ 37 | $ 336 | $ (1,433) | $ (619) |
Gain (loss) on supplemental employee retirement plan investments | 423 | 26 | 682 | (170) |
Business Combination, Bargain Purchase, Gain Recognized, Amount | 0 | 0 | 925 | 0 |
Other non-operating income (expense) | (87) | (128) | 10 | (250) |
Non-operating income (expense), net | $ 373 | $ 234 | 184 | $ (1,039) |
Aircom | ||||
Business Combination, Bargain Purchase, Gain Recognized, Amount | $ 925 |
Note 1. Business Description 36
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Total Annual Gross Revenue on Last Day of Fiscal Year Based on Which Entity Will Cease Status of Emerging Growth Company | $ 1,070,000 | ||||
Increase to Total Annual Gross Revenue on Last Day of Fiscal Year Based on Which Entity Will Cease Status of Emerging Growth Company | 70,000 | ||||
Previous Total Annual Gross Revenue on Last Day of Fiscal Year Based on Which Entity Will Cease Status of Emerging Growth Company | 1,000,000 | ||||
Tax Adjustments, Settlements, and Unusual Provisions | $ (1,800) | ||||
Other General Income | $ 0 | $ 0 | $ (4,005) | $ 0 | |
Accounts Receivable, Extended Payment Terms | 45 days | ||||
Accounts Receivable Sold Without Recourse | $ 107,800 | 93,100 | |||
Due From Bankers Acceptance Drafts | 5,600 | 5,600 | $ 5,700 | ||
SettlementofBankersAcceptanceDrafts | $ 6,800 | $ 10,100 | |||
Minimum | |||||
Accounts Receivable, Customary Payment Terms | 30 days | ||||
Maximum | |||||
Accounts Receivable, Customary Payment Terms | 45 days | ||||
former parent | |||||
Nontrade Receivables | 600 | $ 600 | 700 | ||
Nontrade Receivables, Noncurrent | $ 500 | $ 500 | $ 600 |
Note 2. Acquisitions (Details)
Note 2. Acquisitions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jul. 18, 2016 | |
Business Acquisition [Line Items] | |||||
Business Combination, Bargain Purchase, Gain Recognized, Amount | $ 0 | $ 0 | $ 925 | $ 0 | |
Aircom | |||||
Business Acquisition [Line Items] | |||||
Business Acquisition, Date of Acquisition Agreement | Jul. 18, 2016 | ||||
Business Combination, Consideration Transferred | $ 3,500 | ||||
Payments to Acquire Businesses, Gross | 2,500 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets | $ 6,400 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | $ 1,400 | ||||
Business Combination, Bargain Purchase, Gain Recognized, Amount | 925 | ||||
Nontrade Receivable, Current | Aircom | |||||
Business Acquisition [Line Items] | |||||
Business Combination, Consideration Transferred, Other | 1,000 | ||||
Deferred Tax Liability | Aircom | |||||
Business Acquisition [Line Items] | |||||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 600 |
Note 3. Inventories - Inventory
Note 3. Inventories - Inventory Components (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Jun. 30, 2016 |
Inventory, Finished Goods, Net of Reserves | $ 22,256 | $ 21,577 |
Inventory, Work in Process, Net of Reserves | 14,385 | 10,678 |
Inventory, Raw Materials, Net of Reserves | 107,288 | 100,622 |
Total inventory | $ 143,929 | $ 132,877 |
Note 4. Accumulated Other Com39
Note 4. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | $ 324,369 | |||
Other comprehensive income (loss) before reclassifications | (1,233) | $ 236 | ||
Reclassification to (earnings) loss | $ (303) | $ 637 | 163 | 1,575 |
Net current-period other comprehensive income (loss) | (1,070) | 1,811 | ||
Accumulated other comprehensive income (loss), ending balance | 334,378 | 334,378 | ||
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (12,190) | (12,247) | ||
Accumulated other comprehensive income (loss), ending balance | (13,260) | (10,436) | (13,260) | (10,436) |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (9,653) | (9,113) | ||
Other comprehensive income (loss) before reclassifications | (3,272) | 1,363 | ||
Reclassification to (earnings) loss | 0 | 0 | ||
Net current-period other comprehensive income (loss) | (3,272) | 1,363 | ||
Accumulated other comprehensive income (loss), ending balance | (12,925) | (7,750) | (12,925) | (7,750) |
Derivative Gain (Loss) | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | (3,137) | (3,557) | ||
Other comprehensive income (loss) before reclassifications | 1,789 | (1,404) | ||
Reclassification to (earnings) loss | 322 | 1,673 | ||
Net current-period other comprehensive income (loss) | 2,111 | 269 | ||
Accumulated other comprehensive income (loss), ending balance | (1,026) | (3,288) | (1,026) | (3,288) |
Postemployment Benefits, Prior Service Costs | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | 0 | (18) | ||
Other comprehensive income (loss) before reclassifications | 0 | 0 | ||
Reclassification to (earnings) loss | 0 | 18 | ||
Net current-period other comprehensive income (loss) | 0 | 18 | ||
Accumulated other comprehensive income (loss), ending balance | 0 | 0 | 0 | 0 |
Postemployment Benefits, Net Actuarial Gain | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Accumulated other comprehensive income (loss), beginning balance | 600 | 441 | ||
Other comprehensive income (loss) before reclassifications | 250 | 277 | ||
Reclassification to (earnings) loss | (159) | (116) | ||
Net current-period other comprehensive income (loss) | 91 | 161 | ||
Accumulated other comprehensive income (loss), ending balance | $ 691 | $ 602 | $ 691 | $ 602 |
Note 4. Accumulated Other Com40
Note 4. Accumulated Other Comprehensive Income (Loss) - Reclassifications from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | $ 214,212 | $ 197,926 | $ 632,053 | $ 574,078 | |
Non-operating income (expense), net | 373 | 234 | 184 | (1,039) | |
Selling and Administrative Expenses | 9,179 | 9,107 | 26,996 | 26,648 | |
Benefit (Provision) for Income Taxes | (1,754) | 166 | (8,632) | (3,395) | |
Net income (loss) | 8,117 | 7,477 | 26,051 | 16,516 | |
Total reclassifications for the period | 303 | (637) | (163) | (1,575) | |
Derivative gain (loss) | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Total reclassifications for the period | (322) | (1,673) | |||
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] | 245 | (1,019) | (645) | (2,609) |
Non-operating income (expense), net | [1] | 0 | 0 | (6) | (1) |
Benefit (Provision) for Income Taxes | [1] | 8 | 343 | 329 | 937 |
Net income (loss) | [1] | 253 | (676) | (322) | (1,673) |
Postemployment Benefits, Amortization of prior service costs | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Total reclassifications for the period | 0 | (18) | |||
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 | 0 | 0 | (16) |
Selling and Administrative Expenses | [2] | 0 | 0 | 0 | (12) |
Benefit (Provision) for Income Taxes | [2] | 0 | 0 | 0 | 10 |
Net income (loss) | [2] | 0 | 0 | 0 | (18) |
Postemployment Benefits, Amortization of actuarial gain (loss) | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Total reclassifications for the period | 159 | 116 | |||
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] | 46 | 36 | 147 | 109 |
Selling and Administrative Expenses | [2] | 35 | 29 | 108 | 84 |
Benefit (Provision) for Income Taxes | [2] | (31) | (26) | (96) | (77) |
Net income (loss) | [2] | $ 50 | $ 39 | $ 159 | $ 116 |
[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 Conti41
Note 5. Commitments and Contingent Liabilities - Commitments and Contingent Liabilities Textuals (Details) | Mar. 31, 2017USD ($) |
Guarantor Obligations | |
Bankers acceptance drafts transferred and outstanding | $ 3,300,000 |
Financial Standby Letter of Credit | |
Guarantor Obligations | |
Letters of Credit, Amount | 400,000 |
Loss Contingency Accrual, at Carrying Value | $ 0 |
Note 5. Commitments and Conti42
Note 5. Commitments and Contingent Liabilities - Product Warranty (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Product warranty liability at the beginning of the period | $ 605 | $ 621 |
Additions to warranty accrual (including changes in estimates) | 398 | 167 |
Settlements made (in cash or in kind) | (353) | (113) |
Product warranty liability at the end of the period | $ 650 | $ 675 |
Note 6. Fair Value - Recurring
Note 6. Fair Value - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Jun. 30, 2016 |
Recurring Fair Value Measurements: | ||
Derivative Asset | $ 3,392 | $ 754 |
Derivative Liability | 462 | 1,300 |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 1,085 | 21,225 |
Trading Securities, Total | 7,210 | 6,166 |
Total assets at fair value | 11,687 | 28,145 |
Total liabilities at fair value | 462 | 1,300 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 3,392 | 754 |
Derivative Liability | 462 | 1,300 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 1,085 | 21,225 |
Trading Securities, Total | 7,210 | 6,166 |
Total assets at fair value | 8,295 | 27,391 |
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 | 3,392 | 754 |
Total liabilities at fair value | 462 | 1,300 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 3,392 | 754 |
Derivative Liability | $ 462 | $ 1,300 |
Note 6. Fair Value - Textuals (
Note 6. Fair Value - Textuals (Details) | 9 Months Ended |
Mar. 31, 2017USD ($) | |
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 Instrument45
Note 7. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract € in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($) | Jun. 30, 2016 | Mar. 31, 2017EUR (€) | Mar. 31, 2017USD ($) | |
Derivatives, Fair Value | ||||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 1.7 | |||
Derivative, Notional Amount | € 81 | $ 26.2 | ||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | 12 months | 12 months |
Note 7. Derivative Instrument46
Note 7. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Jun. 30, 2016 |
Derivatives, Fair Value | ||
Derivative Asset | $ 3,392 | $ 754 |
Derivative Liability | 462 | 1,300 |
Foreign Exchange Contract | Fair Value, Measurements, Recurring | ||
Derivatives, Fair Value | ||
Derivative Asset | 3,392 | 754 |
Derivative Liability | 462 | 1,300 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 2,383 | 517 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | 349 | 1,156 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 1,009 | 237 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | $ 113 | $ 144 |
Note 7. Derivative Instrument47
Note 7. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Derivative Instruments, Gain (Loss) | ||||
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $ 2,476 | $ (109) | $ 2,210 | $ (2,036) |
Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $ 2,476 | $ (109) | $ 2,210 | $ (2,036) |
Note 7. Derivative Instrument48
Note 7. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Derivative Instruments, Gain (Loss) | ||||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $ 88 | $ (1,930) | $ 854 | $ (2,959) |
Foreign Exchange Contract | Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | (157) | (911) | 1,505 | (349) |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion | 245 | (1,019) | (651) | (2,609) |
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 | 245 | (1,019) | (645) | (2,609) |
Cash Flow Hedging | Foreign Exchange Contract | Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion | 0 | 0 | (6) | 0 |
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net | $ 0 | $ 0 | $ 0 | $ (1) |
Note 8. Investments - Supplemen
Note 8. Investments - Supplemental Employee Retirement Investments Textuals (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Schedule of Trading Securities and Other Trading Assets | ||
Trading Securities, Change in net unrealized holding gains (losses) | $ 414 | $ 19 |
Note 8. Investments - Supplem50
Note 8. Investments - Supplemental Employee Retirement Plan Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Jun. 30, 2016 |
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | $ 7,210 | $ 6,166 |
SERP obligation | 7,210 | 6,166 |
Prepaid Expenses and Other Current Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | 246 | 214 |
Other Noncurrent Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | 6,964 | 5,952 |
Other Current Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP obligation | 246 | 214 |
Other Noncurrent Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP obligation | $ 6,964 | $ 5,952 |
Note 9. Postemployment Benefi51
Note 9. Postemployment Benefits (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Components of Net Periodic Benefit Cost (before tax): | ||
Defined Benefit Plan, Assets for Plan Benefits | $ 0 | $ 0 |
Note 10. Stock Compensation P52
Note 10. Stock Compensation Plans - Textuals (Details) - $ / shares | 3 Months Ended | |||
Dec. 31, 2016 | Oct. 20, 2016 | Oct. 03, 2014 | ||
Stock Option and Incentive Plan 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 | |||
Non-Employee Directors Stock Compensation Deferral Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 | |||
Unrestricted Shares Director Compensation | Stock Option and Incentive Plan 2014 | ||||
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] | 10,477 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [1] | $ 15.75 | ||
Deferred Share Units Director Compensation | Non-Employee Directors Stock Compensation Deferral Plan | ||||
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 | [2] | 17,779 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [2] | $ 15.75 | ||
[1] | Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of Director’s annual retainer fees as a result of the Directors’ elections to be paid in unrestricted shares in lieu of cash payment or deferred share units. 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. | |||
[2] | Deferred share units were awarded to non-employee members of the Board as compensation for the portion of Director’s annual retainer fees as a result of Directors’ elections to receive deferred share units in lieu of cash payment or unrestricted shares. Director’s fees are expensed over the period that Directors earn the compensation. Deferred share units are participating securities and are payable in common stock upon a Director’s retirement or termination from the Board or death. |
Note 11. Share Owners' Equity53
Note 11. Share Owners' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | 17 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2017 | Sep. 29, 2016 | Oct. 21, 2015 | |
Treasury Stock Acquired, Average Cost Per Share | $ 13.66 | $ 12.43 | ||
Treasury Stock | ||||
Treasury Stock, Value, Acquired, Cost Method | $ 16.8 | $ 29.9 | ||
Share Repurchase Program October 2015 | ||||
Stock Repurchase Program, Authorized Amount | $ 20 | |||
Share Repurchase Program September 2016 Extension | ||||
Stock Repurchase Program, Authorized Amount | $ 20 |
Note 12. Earnings Per Share (De
Note 12. Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Net income | $ 8,117 | $ 7,477 | $ 26,051 | $ 16,516 |
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | 5 | 0 | 9 | 0 |
Net Income (Loss) Available to Common Stockholders, Basic | $ 8,112 | $ 7,477 | $ 26,042 | $ 16,516 |
Weighted Average Number of Shares Outstanding, Basic | 27,266 | 28,771 | 27,565 | 29,097 |
Dilutive effect of average outstanding performance shares | 144 | 89 | 86 | 114 |
Incremental Common Shares Attributable to Participating Nonvested Shares with Non-forfeitable Dividend Rights | 6 | 0 | 4 | 0 |
Weighted Average Number of Shares Outstanding, Diluted | 27,416 | 28,860 | 27,655 | 29,211 |
Earnings Per Share, Basic | $ 0.30 | $ 0.26 | $ 0.94 | $ 0.57 |
Earnings Per Share, Diluted | $ 0.30 | $ 0.26 | $ 0.94 | $ 0.57 |