Document and Entity Information
Document and Entity Information Document - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Aug. 13, 2019 | Dec. 31, 2018 | |
Document Information | |||
Entity Registrant Name | Kimball Electronics, Inc. | ||
Entity Central Index Key | 0001606757 | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 25,418,807 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 380,399,000 | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 49,276 | $ 46,428 |
Receivables, net of allowances of $270 and $482, respectively | 225,555 | 173,559 |
Contract Assets | 51,929 | 0 |
Inventories | 203,840 | 201,596 |
Prepaid expenses and other current assets | 24,713 | 15,405 |
Total current assets | 555,313 | 436,988 |
Property and Equipment, net of accumulated depreciation of $216,955 and $198,672, respectively | 143,629 | 137,210 |
Goodwill | 18,104 | 6,191 |
Other Intangible Assets, net of accumulated amortization of $29,874 and $27,276 respectively | 22,188 | 4,375 |
Other Assets | 24,877 | 23,994 |
Total Assets | 764,111 | 608,758 |
Current Liabilities: | ||
Current portion of borrowings under credit facilities | 34,713 | 8,337 |
Accounts payable | 197,001 | 187,788 |
Accrued expenses | 43,196 | 32,446 |
Total current liabilities | 274,910 | 228,571 |
Other Liabilities: | ||
Long-term debt under credit facilities, less current portion | 91,500 | 0 |
Long-term income taxes payable | 9,765 | 12,361 |
Other long-term liabilities | 18,082 | 12,299 |
Total other liabilities | 119,347 | 24,660 |
Share Owners’ Equity: | ||
Preferred Stock, Value, Issued | 0 | 0 |
Common Stock, Value, Issued | 0 | 0 |
Additional Paid in Capital | 305,917 | 304,215 |
Retained earnings | 133,982 | 99,374 |
Accumulated other comprehensive loss | (7,628) | (6,899) |
Treasury Stock, Value | (62,417) | (41,163) |
Total Share Owners’ Equity | 369,854 | 355,527 |
Total Liabilities and Share Owners’ Equity | $ 764,111 | $ 608,758 |
Consolidated Balance Sheets Par
Consolidated Balance Sheets Parentheticals - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
ASSETS | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 270 | $ 482 |
Property and Equipment Accumulated Depreciation | 216,955 | 198,672 |
Other Intangible Assets Accumulated Amortization | $ 29,874 | $ 27,276 |
Share Owners' Equity | ||
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
Common Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Shares, Issued | 29,430,000 | 29,430,000 |
Treasury Stock, Shares | 4,011,000 | 2,898,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net Sales | $ 1,181,844 | $ 1,072,061 | $ 930,914 |
Cost of Sales | 1,093,438 | 986,031 | 855,479 |
Gross Profit | 88,406 | 86,030 | 75,435 |
Selling and Administrative Expenses | 46,653 | 43,992 | 36,660 |
Other General Income | (307) | 0 | (4,005) |
Operating Income | 42,060 | 42,038 | 42,780 |
Other Income (Expense): | |||
Interest income | 62 | 73 | 64 |
Interest expense | (4,069) | (527) | (271) |
Non-operating income | 1,483 | 3,647 | 2,596 |
Non-operating expense | (1,051) | (456) | (914) |
Other income (expense), net | (3,575) | 2,737 | 1,475 |
Income Before Taxes on Income | 38,485 | 44,775 | 44,255 |
Provision for Income Taxes | 6,927 | 28,023 | 10,076 |
Net Income | $ 31,558 | $ 16,752 | $ 34,179 |
Earnings Per Share of Common Stock: | |||
Earnings Per Share, Basic | $ 1.22 | $ 0.63 | $ 1.25 |
Earnings Per Share, Diluted | $ 1.21 | $ 0.62 | $ 1.24 |
Average Number of Shares Outstanding: | |||
Average Number of Shares Outstanding, Basic | 25,857 | 26,745 | 27,413 |
Average Number of Shares Outstanding, Diluted | 26,082 | 27,007 | 27,530 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net Income | $ 31,558 | $ 16,752 | $ 34,179 |
Other Comprehensive Income (Loss): | |||
Foreign currency translation adjustments, Pre-tax | (2,491) | 2,519 | 2,777 |
Foreign currency translation adjustments, Tax | 0 | 0 | 0 |
Foreign currency translation adjustments, Net of Tax | (2,491) | 2,519 | 2,777 |
Postemployment severance actuarial change, Pre-tax | 447 | 533 | 285 |
Postemployment severance actuarial change, Tax | (108) | (188) | (107) |
Postemployment severance actuarial change, Net of Tax | 339 | 345 | 178 |
Derivative gain (loss), Pre-tax | 3,337 | (2,669) | 779 |
Derivative gain (loss), Tax | (699) | 704 | (256) |
Derivative gain (loss), Net of Tax | 2,638 | (1,965) | 523 |
Reclassification to (earnings) loss: | |||
Derivatives, Reclassification to (earnings) loss, Pre-tax | (1,066) | 1,668 | (13) |
Derivatives, Reclassification to (earnings) loss, Tax | 209 | (213) | (161) |
Derivatives, Reclassification to (earnings) loss, Net of Tax | (857) | 1,455 | (174) |
Amortization of actuarial change, Pre-tax | (472) | (358) | (317) |
Amortization of actuarial change, Tax | 114 | 140 | 119 |
Amortization of actuarial change, Net of Tax | (358) | (218) | (198) |
Other comprehensive income (loss), Pre-tax | (245) | 1,693 | 3,511 |
Other comprehensive income (loss), Tax | (484) | 443 | (405) |
Other comprehensive income (loss), Net of Tax | (729) | 2,136 | 3,106 |
Total Comprehensive Income | $ 30,829 | $ 18,888 | $ 37,285 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows From Operating Activities: | |||
Net Income | $ 31,558 | $ 16,752 | $ 34,179 |
Adjustments to reconcile net income to net cash (used for) provided by operating activities: | |||
Depreciation and amortization | 28,873 | 26,376 | 23,904 |
Gain on sales of assets | (4) | (7) | (33) |
Deferred income tax and other deferred charges | (1,541) | 1,213 | (115) |
Deferred Tax Valuation Allowance | 20 | (638) | 0 |
Stock-based compensation | 5,678 | 5,299 | 3,484 |
Bargain purchase gain | 0 | 0 | (925) |
Other, net | 431 | 487 | 359 |
Change in operating assets and liabilities: | |||
Receivables | (36,535) | (2,876) | (19,267) |
Contract assets | (8,688) | 0 | 0 |
Inventories | (35,094) | (55,769) | (8,549) |
Prepaid expenses and other current assets | (6,284) | 5,092 | (3,976) |
Accounts payable | 8,001 | 33,272 | 9,486 |
Accrued expenses and taxes payable | 6,837 | 10,999 | 8,207 |
Net cash (used for) provided by operating activities | (6,748) | 40,200 | 46,754 |
Cash Flows From Investing Activities: | |||
Capital expenditures | (24,665) | (25,876) | (33,254) |
Proceeds from sales of assets | 1,036 | 261 | 490 |
Payments for acquisitions, net of cash acquired | (43,889) | 0 | (2,138) |
Purchases of capitalized software | (1,178) | (643) | (1,018) |
Other, net | (13) | 44 | 211 |
Net cash used for investing activities | (68,709) | (26,214) | (35,709) |
Cash Flows From Financing Activities: | |||
Proceeds from credit facilities | 91,500 | 0 | 4,000 |
Payments on credit facilities | (12,843) | 0 | (13,000) |
Additional net change in revolving credit facilities | 26,415 | (1,542) | 10,000 |
Repurchases of common stock | (23,431) | (9,553) | (22,325) |
Payments related to tax withholding for stock-based compensation | (1,766) | (1,508) | (709) |
Debt issuance costs | (445) | 0 | 0 |
Net cash provided by (used for) financing activities | 79,430 | (12,603) | (22,034) |
Effect of Exchange Rate Change on Cash and Cash Equivalents | (1,125) | 490 | 806 |
Net Increase (Decrease) in Cash and Cash Equivalents | 2,848 | 1,873 | (10,183) |
Cash and Cash Equivalents at Beginning of Year | 46,428 | 44,555 | 54,738 |
Cash and Cash Equivalents at End of Year | $ 49,276 | $ 46,428 | $ 44,555 |
Consolidated Statements of Shar
Consolidated Statements of Share Owners' Equity - USD ($) $ in Thousands | Total | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | |
Share Owner's Equity at Jun. 30, 2016 | $ 324,369 | $ 301,581 | $ 48,492 | $ (12,190) | $ (13,514) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income | 34,179 | 34,179 | ||||
Other comprehensive income (loss), Net of Tax | 3,106 | 3,106 | ||||
Issuance of non-restricted stock | 165 | 46 | 119 | |||
Compensation expense related to stock compensation plan | 3,246 | 3,246 | ||||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | (888) | (2,390) | 1,502 | |||
Treasury Stock, Value, Acquired, Cost Method | (21,905) | (21,905) | ||||
Share Owner's Equity at Jun. 30, 2017 | 342,272 | 302,483 | 82,671 | (9,084) | (33,798) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income | 16,752 | 16,752 | ||||
Other comprehensive income (loss), Net of Tax | 2,136 | 2,136 | ||||
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings | 0 | (49) | 49 | [1] | ||
Issuance of non-restricted stock | 155 | 65 | 90 | |||
Compensation expense related to stock compensation plan | 5,138 | 5,138 | ||||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | (1,508) | (3,471) | 1,963 | |||
Treasury Stock, Value, Acquired, Cost Method | (9,418) | (9,418) | ||||
Share Owner's Equity at Jun. 30, 2018 | 355,527 | 304,215 | 99,374 | (6,899) | (41,163) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income | 31,558 | 31,558 | ||||
Other comprehensive income (loss), Net of Tax | (729) | (729) | ||||
Cumulative effect of accounting change | 3,050 | 3,050 | ||||
Issuance of non-restricted stock | 72 | 28 | 44 | |||
Compensation expense related to stock compensation plan | 5,569 | 5,569 | ||||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | (1,762) | (3,895) | 2,133 | |||
Treasury Stock, Value, Acquired, Cost Method | (23,431) | (23,431) | ||||
Share Owner's Equity at Jun. 30, 2019 | $ 369,854 | $ 305,917 | $ 133,982 | $ (7,628) | $ (62,417) | |
[1] | During fiscal year 2018, the Company adopted a new accounting standard on accounting for the reclassification of certain tax effects from accumulated other comprehensive income related to Tax Reform. |
Consolidated Statements of Sh_2
Consolidated Statements of Share Owners' Equity Parentheticals - shares | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock Issued During Period, Shares, Issued for Services | 4,000 | 8,000 | 10,000 |
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 203,000 | 174,000 | 136,000 |
Treasury Stock, Shares, Acquired | 1,320,000 | 488,000 | 1,528,000 |
Note 1. Business Description an
Note 1. Business Description and Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2019 | |
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, multifaceted manufacturing solutions provider. We provide contract electronics manufacturing services (“EMS”) and diversified manufacturing services, including engineering and supply chain support, to customers in 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 further offer diversified contract manufacturing services for non-electronic components, medical disposables, and precision molded plastics. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service. The Company acquired GES Holdings, Inc., Global Equipment Services and Manufacturing, Inc., and its subsidiaries (collectively referred to as “GES”) on October 1, 2018, which specialize in design, production, and servicing of automation, test, and inspection equipment for industrial applications in the semiconductor, electronics, and life sciences industries. Kimball Electronics was a wholly owned subsidiary of Kimball International, Inc. (“former Parent” or “Kimball International”) and on October 31, 2014 became a stand-alone public company upon the completion of a spin-off from former Parent. Principles of Consolidation: The Consolidated Financial Statements include the accounts of all domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation. The operating results of the GES acquisition are included in the Company’s consolidated financial statements beginning as of the acquisition date of October 1, 2018. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts included in the Consolidated Financial Statements and related note disclosures. While efforts are made to assure estimates used are reasonably accurate based on management’s knowledge of current events, actual results could differ from those estimates. Segment Information: As of June 30, 2018, Kimball Electronics had business units located in the United States, China, Mexico, Poland, Romania, and Thailand, and each of our business units qualified as an operating segment and met the aggregation criteria to be aggregated into one reportable segment. On October 1, 2018, we completed the GES acquisition, which has operations located in the United States, China, India, Japan, and Vietnam. The GES operations qualify as a single operating segment with its group results regularly reviewed by our chief operating decision maker, which is our Chief Executive Officer. See Note 2 - Acquisitions of Notes to Consolidated Financial Statements for more information on this acquisition. Our operating segments meet the aggregation criteria under the current accounting guidance for segment reporting. As of June 30, 2019 , all of our operating segments provide contract manufacturing services, including engineering and supply chain support, for the production of electronic assemblies and other products including medical disposables, precision molded plastics, and automation, test, and inspection equipment primarily in automotive, medical, industrial, and public safety applications, to the specifications and designs of our customers. The nature of the products, the production process, the type of customers, and the methods used to distribute the products have similar characteristics. Each of our operating segments service customers in multiple markets, and many of our customers’ programs are manufactured and serviced by multiple operating segments. We leverage global processes such as component procurement and customer pricing that provide commonality and consistency among the various regions in which we operate. All of our operating segments have similar long-term economic characteristics, and as such, have been aggregated into one reportable segment. Revenue Recognition: We recognize revenue in accordance with the new standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments (“New Revenue Guidance”). Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term, but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short-term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract where we offer our customer a rebate once specific volume thresholds have been met; in these cases, the rebates are accounted for as variable consideration. The majority of our revenue is recognized over time as manufacturing services are performed as we manufacture a product to customer specifications with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize. Estimated costs include material, direct and indirect labor, and appropriate applied overheads. Costs based input methods are considered a faithful depiction of our efforts and progress toward satisfying our performance obligations for manufacturing services and for which we believe we are entitled to payment for performance completed to date. The cumulative effect of revisions to estimates related to net contract revenues or costs are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated services and products. Accordingly, we record customer payments of shipping and handling costs as a component of net sales and classify such costs as a component of cost of sales. We recognize sales net of applicable sales or value add taxes. Based on estimated product returns and price concessions, a reserve for returns and allowances is recorded at the time revenue is recognized, resulting in a reduction of net revenue. Direct incremental costs to obtain and fulfill a contract are capitalized as a contract asset only if they are material, expected to be recovered, and are not accounted for in accordance with other guidance. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred. See section entitled “New Accounting Standards” below for information on the adoption of the New Revenue Guidance. Prior to fiscal year 2019, we recognized revenue when persuasive evidence of an arrangement existed, delivery occurred, the sales price was fixed or determinable, and collectability was reasonably assured. Delivery was not considered to have occurred until the title and the risk of loss passed to the customer according to the terms of the contract. Title and risk of loss were considered transferred upon shipment to or receipt at our customers’ locations, or in limited circumstances, as determined by other specific sales terms of the transaction. Cash and Cash Equivalents: Cash equivalents consist primarily of highly liquid investments with original maturities of three months or less at the time of acquisition. Cash and cash equivalents consist of bank accounts and money market funds. Bank accounts are stated at cost, which approximates fair value, and money market funds are stated at fair value. Notes Receivable and Trade Accounts Receivable: The Company’s notes receivable and trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. We determine on a case-by-case basis the cessation of accruing interest, the resumption of accruing interest, the method of recording payments received on nonaccrual receivables, and the delinquency status for our limited number of notes receivable. Our policy for estimating the allowance for credit losses on trade accounts receivable and notes receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to determine the final allowance for credit losses on the trade accounts receivable and notes receivable. Trade accounts receivable and notes receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Our limited amount of notes receivable allows management to monitor the risks, credit quality indicators, collectability, and probability of impairment on an individual basis. Adjustments to the allowance for credit losses are recorded in selling and administrative expenses. In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days , with any terms beyond 45 days being considered extended payment terms. We may utilize accounts receivable factoring arrangements with third-party financial institutions in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. During the fiscal years ended June 30, 2019 and 2018 , we sold, without recourse, $261.2 million and $181.5 million of accounts receivable, respectively. Factoring fees were $1.7 million and $1.1 million during fiscal years 2019 and 2018 , respectively, and were included in Selling and Administrative Expense on the Consolidated Statements of Income. Factoring fees were not material in fiscal year 2017 . One of the Company’s China operations, 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 $4.2 million and $3.8 million at June 30, 2019 and 2018 , respectively, are reflected in Receivables on the 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 fiscal years 2019 and 2018 were $2.7 million and $5.5 million , respectively. See Note 7 - Commitments and Contingent Liabilities of Notes to Consolidated Financial Statements for more information on banker’s acceptance drafts. Inventories: Inventories are stated at the lower of cost and net realizable value. Cost includes material, labor, and applicable manufacturing overhead. Costs associated with underutilization of capacity are expensed as incurred. Inventories are valued using the first-in, first-out (“FIFO”) method. Inventories are adjusted for excess and obsolete inventory. Evaluation of excess inventory includes such factors as anticipated usage, inventory turnover, inventory levels, and product demand levels. Factors considered when evaluating obsolescence include the age of on-hand inventory and reduction in value due to damage, design changes, or cessation of product lines. Property, Equipment, and Depreciation: Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful life of the assets using the straight-line method for financial reporting purposes. Major maintenance activities and improvements are capitalized; other maintenance and repairs are expensed. Depreciation and expenses for maintenance and repairs are included in both Cost of Sales and Selling and Administrative Expense on the Consolidated Statements of Income. Impairment of Long-Lived Assets: We perform reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment is recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. When an impairment is identified, the carrying amount of the asset is reduced to its estimated fair value. Assets to be disposed of are recorded at the lower of net book value or fair market value less cost to sell at the date management commits to a plan of disposal. Impairment of long-lived assets was not material during fiscal years 2019 , 2018 , and 2017 . Goodwill and Other Intangible Assets: Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset fair values resulting from business acquisitions. Annually, or if conditions indicate an earlier review is necessary, we may assess qualitative factors to determine if it is more likely than not that the fair value is less than its carrying amount and if it is necessary to perform the quantitative two-step goodwill impairment test. We also have the option to bypass the qualitative assessment and proceed directly to performing the first step of the quantitative goodwill impairment test. If the first step is determined to be necessary, we compare the carrying value of the reporting unit to an estimate of the reporting unit’s fair value to identify potential impairment. If the estimated fair value of the reporting unit is less than the carrying value, a second step is performed to determine the amount of potential goodwill impairment. If impaired, goodwill is written down to its estimated implied fair value. Goodwill is assigned to and the fair value is tested at the reporting unit level. The fair value is established primarily using a discounted cash flow analysis and secondarily a market approach utilizing current industry information. The calculation of the fair value of the reporting units considers current market conditions existing at the assessment date. In addition to performing the required annual testing, we will continue to monitor circumstances and events in future periods to determine whether additional goodwill impairment testing is warranted on an interim basis. Other Intangible Assets reported on the Consolidated Balance Sheets consist of capitalized software, customer relationships, technology, and trade name. Intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Internal-use software is stated at cost less accumulated amortization and is amortized using the straight-line method. During the software application development stage, capitalized costs include external consulting costs, cost of software licenses, and internal payroll and payroll-related costs for employees who are directly associated with a software project. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred. We have not recognized impairment on intangible assets during fiscal years 2019 , 2018 , or 2017 . Research and Development: The costs of research and development are expensed as incurred. Research and development costs were approximately, in millions, $15 , $11 , and $10 in fiscal years 2019 , 2018 , and 2017 , respectively. Insurance and Self-insurance: We are self-insured up to certain limits for general liability, workers’ compensation, and certain employee health benefits including medical, short-term disability, and dental, with the related liabilities included in the accompanying financial statements. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims, and other analyses, which are based on historical information along with certain assumptions about future events. Approximately 20% of the workforce is covered under self-insured medical and short-term disability plans. At June 30, 2019 and 2018 , accrued liabilities for self-insurance exposure were $1.7 million and $1.4 million , respectively. We carry external medical and disability insurance coverage for the remainder of our eligible workforce not covered by self-insured plans. Insurance benefits are not provided to retired employees. Income Taxes: Deferred income tax assets and liabilities, recorded in Other Assets and Other long-term liabilities, respectively, in the Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. We evaluate the recoverability of deferred tax assets each quarter by assessing the likelihood of future taxable income and available tax planning strategies that could be implemented to realize our deferred tax assets. If recovery is not likely, we provide a valuation allowance based on our best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management’s assessment. We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex uncertain tax positions, which may require an extended period of time to resolve. A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. We maintain a liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions. As tax positions are effectively settled, the tax liability is adjusted accordingly. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Consolidated Statements of Income. The Company entered into a Tax Matters Agreement with former Parent that governs the Company’s rights and obligations after the spin-off with respect to tax liabilities and benefits, tax attributes, tax contests, and other tax sharing regarding income taxes, other tax matters, and related tax returns. The Company will continue to have joint and several liabilities with former Parent with the IRS and certain U.S. state tax authorities for U.S. federal income and state taxes for the taxable periods in which the Company was a part of former Parent’s consolidated group. The tax matters agreement specifies the portion, if any, of this liability for which the Company bears responsibility, and former Parent has agreed to indemnify the Company against any amounts for which the Company is not responsible. As of June 30, 2019 and 2018 , the Company has a receivable from Kimball International recorded for $0.4 million and $0.5 million , respectively, relating to benefits from domestic research and development tax credits. As of June 30, 2019 and 2018 , $0.3 million and $0.4 million , respectively, of the receivable is long-term and was recorded in Other Assets on the Consolidated Balance Sheets. Concentrations of Credit Risk: We have business and credit risks associated with our customers concentrated in the automotive, medical, industrial, and public safety industries. The Company monitors credit quality and associated risks of receivables on an individual basis based on criteria such as financial stability of the party and collection experience in conjunction with general economic and market conditions. A summary of significant customers’ net sales and trade receivables as a percentage of consolidated net sales and consolidated trade receivables is as follows: At or For the Year Ended At or For the Year Ended June 30, 2019 June 30, 2018 Net Sales Trade Receivables Net Sales Trade Receivables Philips 14% * 13% * ZF 12% 14% 15% 17% Nexteer Automotive 12% 16% 13% 16% Regal Beloit Corporation * 10% * 11% * amount is less than 10% of total Off-Balance Sheet Risk: Off-balance sheet arrangements are limited to banker’s acceptance drafts transferred with recourse provisions at one of the Company’s China operations, standby letters of credit, and operating leases entered into in the normal course of business as described in Note 7 - Commitments and Contingent Liabilities of Notes to Consolidated Financial Statements. Other General Income: Other General Income in fiscal years 2019 and 2017 consisted of $0.3 million and $4.0 million , respectively, resulting from payments received related to class action lawsuits in which Kimball Electronics was a class member. We recorded no Other General Income during fiscal year 2018. Non-operating Income and Expense: Non-operating income and expense include 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, government subsidies, bank charges, bargain purchase gain on acquisition, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain or loss on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expense. Foreign Currency Translation: The Company predominantly uses the U.S. dollar and Euro as its functional currencies. Foreign currency assets and liabilities are remeasured into functional currencies at end-of-period exchange rates, except for nonmonetary assets and equity, which are remeasured at historical exchange rates. Revenue and expenses are remeasured at the weighted average exchange rate during the fiscal year, except for expenses related to nonmonetary assets, which are remeasured at historical exchange rates. Gains and losses from foreign currency remeasurement are reported in Non-operating income or expense on the Consolidated Statements of Income. For business units whose functional currency is other than the U.S. dollar, the translation of functional currency statements to U.S. dollar statements uses end-of-period exchange rates for assets and liabilities, weighted average exchange rates for revenue and expenses, and historical rates for equity. The resulting currency translation adjustment is recorded in Accumulated Other Comprehensive Income (Loss), as a component of Share Owners’ Equity. Derivative Instruments and Hedging Activities: Derivative financial instruments are recognized on the balance sheet as assets and liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated Other Comprehensive Income (Loss), depending on whether a derivative is designated and effective as part of a hedge transaction, and if it is, the type of hedge transaction. Hedge accounting is utilized when a derivative is expected to be highly effective upon execution and continues to be highly effective over the duration of the hedge transaction. Hedge accounting permits gains and losses on derivative instruments to be deferred in Accumulated Other Comprehensive Income (Loss) and subsequently included in earnings in the periods in which earnings are affected by the hedged item, or when the derivative is determined to be ineffective. We use derivatives primarily for forward purchases of foreign currency to manage exposure to the variability of cash flows, primarily related to the foreign exchange rate risks inherent in forecasted transactions denominated in foreign currency. Cash receipts and cash payments related to derivative instruments are recorded in the same category as the cash flows from the items being hedged on the Consolidated Statements of Cash Flows. See Note 14 - Derivative Instruments of Notes to Consolidated Financial Statements for more information on derivative instruments and hedging activities. Stock-Based Compensation: As described in Note 10 - Stock Compensation Plans of Notes to Consolidated Financial Statements, the Company maintains the 2014 Stock Option and Incentive Plan, which allows for the issuance of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units for grant to officers and other key employees, and to members of the Board of Directors who are not employees. The Company also maintains 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. We recognize the cost resulting from share-based payment transactions using a fair-value-based method. The estimated fair value of outstanding performance shares is based on the stock price at the date of the grant. Stock-based compensation expense is recognized for the portion of the award for which performance targets have been established and is expected to vest. The Company has elected to account for forfeitures by reversing the compensation costs at the time a forfeiture occurs. New Accounting Standards: Adopted in Fiscal Year 2019: In August 2018, the FASB issued guidance on changes to the disclosure requirements for fair value measurement. The new guidance modifies the disclosure requirements on fair value measurement which includes among other changes eliminating the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, eliminating the requirement to disclose the policy for timing of transfers between levels, and added a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. We adopted this guidance early, as permitted, in fiscal year 2019. As this guidance only impacts disclosures related to fair value measurement, the adoption did not impact our consolidated financial position, results of operations, or cash flows. In March 2017, the FASB issued guidance on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance changes how employers that sponsor defined benefit pension plans and other postretirement plans present net periodic benefit costs in the income statement. An employer is required to report the service cost component in the same line item as other compensation costs arising from services rendered by the affected employees during the period. Other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The update also allows only the service cost component to be eligible for capitalization, when applicable. The amendments in this guidance were to be applied retrospectively for the presentation of the service cost component and the other components of the net benefit cost in the income statement, and prospectively for the capitalization of the service cost component in assets. We adopted this guidance in fiscal year 2019 on a retrospective basis for the presentation of the service cost component and the other components of the net benefit cost in the income statement. The prior period presentation has been restated. The retrospective adoption for the presentation of the service cost component and the other components of the net benefit cost in the income statement decreased our Operating income and increased our Non-operating income (expense), net by the same amount on our Consolidated Statements of Income of $0.4 million, $0.3 million, $0.3 million and for fiscal years ended 2019, 2018, and 2017, respectively. There was no effect to Net income or Earnings per share for the retrospective adoption for the presentation of the service cost component and the other components of the net benefit cost. The impact from the prospective adoption for the capitalization of only the service cost component in assets was not material. In May 2014, the FASB issued guidance on the recognition of Revenue from Contracts with Customers. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted the New Revenue Guidance for all contracts using the modified retrospective transition method. We recognized the net cumulative effect of initially applying the New Revenue Guidance as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. A majority of our sales revenue under the New Revenue Guidance is recognized over time as manufacturing services are performed. This represents a change from our previous revenue recognition pattern as revenue was historically recognized at a point in time when title and risk of loss passed to the customer according to the terms of the contract. The remaining sales revenue for manufactured products will be recognized at a point in time when the customer obtains control of the product if the criteria to recognize revenue over time is not met for a specific contract. The effect of the adoption of the New Revenue Guidance on our Consolidated Balance Sheet as of July 1, 2018, our Conso |
Note 2. Acquisitions (Notes)
Note 2. Acquisitions (Notes) | 12 Months Ended |
Jun. 30, 2019 | |
Acquisitions [Abstract] | |
Business Combination Disclosure | Acquisitions Fiscal Year 2019 Acquisition: On October 1, 2018 , the Company completed the acquisition of GES Holdings, Inc., Global Equipment Services and Manufacturing, Inc., and its subsidiaries (collectively referred to as “GES”). The acquisition included purchasing substantially all of the assets and assuming certain liabilities of GES Holdings, Inc., Global Equipment Services and Manufacturing, Inc., GES Infotek Pvt. Ltd., (India), GES Japan KK, Global Equipment Services and Manufacturing (Suzhou) Co., Ltd., (China), Suzhou Global Equipment Services and Trading Co., Ltd. (China), and acquiring 100% of the capital stock of Global Equipment Services & Manufacturing Vietnam Company Limited. This acquisition supported the Company’s strategy for growth and diversification into a multifaceted manufacturing solutions company. GES specializes in design, production, and servicing of automation, test, and inspection equipment for industrial applications in the semiconductor, electronics, and life sciences industries. Incremental costs expensed as incurred directly related to the acquisition has totaled $1.4 million , of which $0.5 million and $0.9 million were expensed during the fiscal years ended June 30, 2019 and June 30, 2018 , respectively. These costs were recorded in Selling and Administrative Expenses on our Consolidated Statements of Income. The operating results of this acquisition are included in the Company’s consolidated financial statements beginning on the acquisition date of October 1, 2018. The GES acquisition was accounted for as a business combination. As of June 30, 2019 , the Company has recorded a net adjusted purchase price of $42.4 million which includes a reduction for an estimated net working capital adjustment of $7.6 million . Cash paid, net of cash acquired, is $43.9 million , and a net receivable due from the seller has been recognized for $3.8 million . The net working capital adjustment has been disputed by the sellers of GES and is currently being resolved through the dispute resolution procedure provided for under the terms of the asset purchase agreement, and therefore, as of June 30, 2019 , the purchase price is not final. The acquisition was primarily funded with the Company’s primary credit facility. The Company has determined this acquisition is not a significant subsidiary. The following table summarizes the preliminary purchase price allocation to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess allocated to goodwill. For tax purposes, $3.9 million of the goodwill recorded as of June 30, 2019 is expected to be deductible. The fair values of the assets acquired and the liabilities assumed presented in these financial statements are preliminary and may differ from the final purchase price allocation for changes associated with the net working capital adjustment, certain tax estimates, and additional information the Company may obtain during the measurement period, which will end no later than one year from the acquisition date. (Amounts in Thousands) October 1, 2018 Cash $ 2,257 Receivables 15,656 Inventories 6,454 Prepaid expenses and other current assets 1,424 Property and Equipment 9,100 Other Intangible Assets 19,259 Other Assets 498 Goodwill 11,913 Total assets acquired $ 66,561 Borrowings under Credit Facilities $ 12,843 Accounts payable 4,113 Accrued expenses 1,340 Other long-term liabilities 5,884 Total liabilities assumed $ 24,180 Net assets acquired $ 42,381 Income tax liabilities, indirect tax liabilities, and liabilities for unrecognized tax benefits, including interest and penalties, of $4.2 million have been recorded related to pre-closing tax periods of Global Equipment Services & Manufacturing Vietnam Company Limited of which $3.9 million is in Other long-term liabilities and $0.3 million is included in Accrued expenses. This reflects management’s best assessment of the estimated taxes, interest, and penalties that are more likely than not to be paid, or for indirect taxes the probable amounts due to the tax authorities, including interest and penalties, under the applicable laws in the various jurisdictions. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is significantly different from our current estimate of the tax liabilities. Included in Receivables is a related indemnification asset of $4.2 million for these estimated tax liabilities. The seller has agreed to indemnify the buyer in the purchase agreements for all taxes allocable to all pre-closing tax periods. Other Intangible Assets include the estimated fair values for finite-lived intangible assets acquired and are listed in the table below along with their estimated useful lives which are being amortized on a straight-line basis. (Amounts in Thousands) Estimated Fair Value Estimated useful life (years) Software $ 379 3 to 7 Technology 5,060 5 Trade name 6,369 10 Customer relationships 7,451 15 Total other intangible assets $ 19,259 Fiscal Year 2017 Acquisition: 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. The Aircom acquisition was accounted for as a business combination and included assets acquired of $6.4 million and liabilities assumed of $1.4 million based on their estimated fair values as of the acquisition date. 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 Non-operating income on the Consolidated Statements of Income. 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. The Aircom acquisition added expertise in the manufacturing of precision molded plastics to our package of value. Operating results are included in the Company’s consolidated financial statements beginning from the date of acquisition. Direct transaction costs of the Aircom acquisition were not material and were expensed as incurred. |
Note 3. Revenue from Contracts
Note 3. Revenue from Contracts with Customers (Notes) | 12 Months Ended |
Jun. 30, 2019 | |
Revenue from Contracts with Customers [Abstract] | |
Revenue from Contract with Customer | Revenue from Contracts with Customers We recognize revenue in accordance with the New Revenue Guidance. See Note 1 – Business Description and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for more information regarding our revenue recognition policies and on the adoption of the New Revenue Guidance, including the impact on our Consolidated Balance Sheet and Consolidated Statement of Income. Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, electronic and non-electronic components, medical disposables, precision molded plastics, and automation, test, and inspection equipment in automotive, medical, industrial, and public safety applications, to the specifications and designs of our customers. The following table disaggregates our revenue by end market vertical for the fiscal year ended June 30, 2019. Fiscal Year Ended (Amounts in Millions) June 30, 2019 Vertical Markets: Automotive $ 474.3 Medical 367.5 Industrial 255.9 Public Safety 66.2 Other 17.9 Total net sales $ 1,181.8 Approximately 70% of our net sales were recognized over time under the New Revenue Guidance for fiscal year 2019 as manufacturing services were performed. The remaining net sales were primarily recognized when the customer obtained control of the manufactured product under the New Revenue Guidance if the criteria to recognize revenue over time was not met for a specific contract. Revenue recognized for tooling, excess inventory, and other services was not material for fiscal year 2019 . The timing differences of revenue recognition, billings to our customers, and cash collections from our customers result in billed accounts receivable and unbilled accounts receivable. Contract assets on the Consolidated Balance Sheet relate to unbilled accounts receivable and occur when revenue is recognized over time as manufacturing services are provided and the billing to the customer has not yet occurred as of the balance sheet date. The Contract assets as of June 30, 2019 of $51.9 million increased from the Contract assets recognized as of the initial adoption of the New Revenue Guidance on July 1, 2018 of $43.2 million as a result of increased production volumes. In limited circumstances, the Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for tooling or other miscellaneous services or costs. These advance payments are recognized as contract liabilities until the performance obligations are completed and are included in Accrued expenses on the Consolidated Balance Sheets, which amounted to $6.3 million and $1.7 million as of June 30, 2019 and June 30, 2018, respectively. |
Note 4. Inventories
Note 4. Inventories | 12 Months Ended |
Jun. 30, 2019 | |
Inventories [Abstract] | |
Inventory Disclosure | Inventories Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. Following are inventory components at June 30: (Amounts in Thousands) 2019 2018 Finished products $ 2,708 $ 25,552 Work-in-process 4,119 17,254 Raw materials 197,013 158,790 Total inventory $ 203,840 $ 201,596 As a result of the adoption of the New Revenue Guidance, inventories as of June 30, 2019 have been reduced for the contracts which have been recognized in revenue over time as manufacturing services are performed. Total inventory as of June 30, 2019 is $46.8 million lower than it would have been if we had not adopted the New Revenue Guidance. Inventories as of June 30, 2018 have not been restated and continue to be reported under the accounting guidance in effect at that time. See Note 1 - Business Description and Summary of Significant Accounting Policies and Note 3 - Revenue from Contracts with Customers for further information on adoption of the New Revenue Guidance. |
Note 5. Property and Equipment
Note 5. Property and Equipment | 12 Months Ended |
Jun. 30, 2019 | |
Property and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure | Property and Equipment Major classes of property and equipment consist of the following at June 30: (Amounts in Thousands) 2019 2018 Land and land use rights $ 11,836 $ 10,321 Buildings and improvements 78,508 71,385 Machinery and equipment 255,978 246,758 Construction-in-progress 14,262 7,418 Total $ 360,584 $ 335,882 Less: Accumulated depreciation (216,955 ) (198,672 ) Property and equipment, net $ 143,629 $ 137,210 The useful lives used in computing depreciation are based on estimated service lives for classes of property, as follows: Years Buildings and improvements 5 to 40 Machinery and equipment 3 to 11 Land use rights 39 Leasehold improvements Lesser of Useful Life or Term of Lease Depreciation of property and equipment totaled, in millions, $26.3 for fiscal year 2019 , $25.5 for fiscal year 2018 , and $23.0 for fiscal year 2017 . |
Note 6. Goodwill and Other Inta
Note 6. Goodwill and Other Intangible Assets (Notes) | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Other Intangible Assets [Abstract] | |
Goodwill and Intangible Assets Disclosure | Goodwill and Other Intangible Assets A summary of goodwill is as follows: (Amounts in Thousands) Balance as of June 30, 2017 Goodwill $ 19,017 Accumulated impairment (12,826 ) Goodwill, net 6,191 Balance as of June 30, 2018 Goodwill 19,017 Accumulated impairment (12,826 ) Goodwill, net 6,191 Goodwill Acquired 11,913 Balance as of June 30, 2019 Goodwill 30,930 Accumulated impairment (12,826 ) Goodwill, net $ 18,104 During fiscal year 2019, we acquired $11.9 million in goodwill resulting from the GES acquisition. See Note 2 - Acquisitions of Notes to Consolidated Financial Statements for more information on this acquisition. We had no acquired goodwill in fiscal year 2018. During fiscal years 2019 , 2018 , and 2017 , no goodwill impairment was recognized. A summary of other intangible assets subject to amortization is as follows: June 30, 2019 June 30, 2018 (Amounts in Thousands) Cost Accumulated Amortization Net Value Cost Accumulated Amortization Net Value Capitalized Software $ 32,015 $ 27,124 $ 4,891 $ 30,484 $ 26,154 $ 4,330 Customer Relationships 8,618 1,506 7,112 1,167 1,122 45 Technology 5,060 766 4,294 — — — Trade Name 6,369 478 5,891 — — — Other Intangible Assets $ 52,062 $ 29,874 $ 22,188 $ 31,651 $ 27,276 $ 4,375 During fiscal years 2019 , 2018 , and 2017 , amortization expense of other intangible assets was, in millions, $2.6 , $0.9 , and $0.9 , respectively. Amortization expense in future periods is expected to be, in millions, $3.1 , $3.1 , $2.9 , $2.9 , and $2.1 in the five years ending June 30, 2024 , and $8.1 thereafter. The estimated useful life of internal-use software ranges from 3 to 10 years . The amortization period for the customer relationships, technology, and trade name intangible assets is 15 years , 5 years, and 10 years, respectively. We have no intangible assets with indefinite useful lives which are not subject to amortization. Software, customer relationships, technology, and trade name intangible assets were acquired in fiscal year 2019 as a result of the GES acquisition. See Note 2 - Acquisitions of Notes to Consolidated Financial Statements for more information on this acquisition. No customer relationships, technology, and trade name intangible assets were acquired in fiscal year 2018. |
Note 7. Commitments and Conting
Note 7. Commitments and Contingent Liabilities | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingent Liabilities [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingent Liabilities Leases: The Company leases certain office, manufacturing, and warehouse facilities under operating leases, in addition to land on which certain office and manufacturing facilities reside. These operating leases expire from fiscal year 2020 to 2057 and contain minimum lease payments, in millions, of $0.8 , $0.7 , $0.6 , $0.1 , and $0.1 for the five years ending June 30, 2024 , respectively, and $0.5 million thereafter. We are obligated under certain real estate leases to maintain the properties and pay real estate taxes. Certain leases include renewal options and escalation clauses. Total rental expense amounted to, in millions, $1.1 , $0.7 , and $0.7 in fiscal years 2019 , 2018 , and 2017 , respectively. As of June 30, 2019 , capital leases were immaterial. As of June 30, 2018 , the Company had no capital leases. Guarantees: As of June 30, 2019 and 2018 , we had no guarantees issued which were contingent on the future performance of another entity. Standby letters of credit may be issued to third-party suppliers and insurance institutions and can only be drawn upon in the event of the Company’s failure to pay its obligations to the beneficiary. We had a maximum financial exposure from unused standby letters of credit totaling $0.4 million as of both June 30, 2019 and 2018 . 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 consolidated financial statements. Accordingly, no liability has been recorded as of June 30, 2019 and 2018 with respect to the standby letters of credit. We also may enter into commercial letters of credit to facilitate payments to vendors and from customers. Banker’s Acceptance Drafts: One of the Company’s China operations, 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, the draft would revert back to our China operation and we would be required to satisfy the obligation with the transferee. At June 30, 2019 and 2018 , the drafts transferred and outstanding totaled $0.9 million and $2.0 million , respectively. 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 Consolidated Financial Statements. Product Warranties: The Company provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer. 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 during fiscal years 2019 , 2018 , and 2017 were as follows: (Amounts in Thousands) 2019 2018 2017 Product Warranty Liability at the beginning of the year $ 656 $ 593 $ 605 Additions to warranty accrual (including changes in estimates) 361 346 415 Settlements made (in cash or in kind) (59 ) (283 ) (427 ) Product Warranty Liability at the end of the year $ 958 $ 656 $ 593 |
Note 8. Credit Facilities
Note 8. Credit Facilities | 12 Months Ended |
Jun. 30, 2019 | |
Long-Term Debt and Credit Facilities [Abstract] | |
Debt Disclosure | Credit Facilities Credit facilities consisted of the following: Unused Borrowings at Borrowings Outstanding at Borrowings Outstanding at (Amounts in Millions, in U.S Dollar Equivalents) June 30, 2019 June 30, 2019 June 30, 2018 Primary credit facility (1) $ 26.8 $ 122.8 $ 6.0 Thailand overdraft credit facility (2) 2.9 — — China revolving credit facility (3) 7.5 — — Netherlands revolving credit facility (4) 7.1 3.4 2.3 Poland revolving credit facility (5) 17.1 — — Total credit facilities $ 61.4 126.2 8.3 Less: current portion (34.7 ) (8.3 ) Long-term debt under credit facilities, less current portion (6) $ 91.5 $ — (1) At June 30, 2019 , the Company maintained a U.S. primary credit facility (the “primary facility”). On July 27, 2018, the Company entered into an amended and restated credit agreement among the Company, the lenders party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Documentation Agent. The credit agreement amends and restates the Company’s primary credit facility, which was scheduled to mature on October 31, 2019. The credit agreement has a maturity date of July 27, 2023 and allows for $150 million in borrowings, with an option to increase the amount available for borrowing to $225 million at the Company’s request, subject to the consent of each lender participating in such increase. The Company incurred $0.4 million of debt issuance costs associated with the amended and restated credit agreement. This facility is maintained for working capital and general corporate purposes of the Company including capital expenditures and acquisitions. A commitment fee is payable on the unused portion of the credit facility which was immaterial to our operating results in fiscal years 2019 , 2018 , and 2017 . The commitment fee on the unused portion of principal amount of the credit facility is payable at a rate that ranges from 20.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary facility. Types of borrowings available on the primary facility include revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings is dependent on the type of borrowings and will be one of the following two options: • the London Interbank Offered Rate (“LIBOR”) in effect two business days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Eurocurrency Loans spread which can range from 125.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or • the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of a. JPMorgan’s prime rate; b. 1% per annum above the Adjusted LIBOR Rate (as defined in the Credit Agreement); or c. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined in the Credit Agreement ); plus the ABR Loans spread which can range from 25.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. The Company’s financial covenants under the primary credit facility require: • a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, and • a fixed charge coverage ratio, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be less than 1.10 to 1.00. The Company had $0.4 million in letters of credit contingently committed against the credit facility at both June 30, 2019 and 2018. (2) The Company also maintains a foreign credit facility for its operation in Thailand which allows for borrowings of up to 90.0 million Thai Baht (approximately $2.9 million at June 30, 2019 exchange rates). This credit facility can be terminated at any time by either the Company or the bank by giving prior written notice of at least 15 days to the other party. Interest on borrowing under this facility is charged at a rate of interest determined by the bank in accordance with relevant laws and regulations for charging interest on an overdraft facility. (3) The Company also maintains a foreign revolving credit facility for one of its China operations. The China credit facility allows for borrowings of up to $7.5 million , which borrowings can be made in either Chinese Renminbi (RMB) or U.S. dollars. The availability of this uncommitted facility is at the sole discretion of the bank and is subject to the availability of funds and other relevant conditions. The bank may, at its sole discretion, agree to provide the facility on such terms and conditions as the bank deems appropriate. Further, the availability of the facility is also subject to the determination by the bank of the borrower’s actual need for such facility. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest determined by the bank and is dependent on the denomination of the currency borrowed. The facility matures on May 31, 2020 . (4) The Company established an uncommitted revolving credit facility in fiscal year 2017 for our Netherlands subsidiary. The Netherlands credit facility allows for borrowings of up to 9.2 million Euro (approximately $10.5 million at June 30, 2019 exchange rates), which borrowings can be made in Euro, U.S. dollars, or other optional currency. The availability of funds under this facility is at the sole discretion of the bank. Proceeds from the facility are to be used for general corporate purposes. Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed. The facility matures on June 21, 2020 . (5) During the current fiscal year, the Company established an uncommitted revolving credit facility for our Poland operation, which allows for borrowings up to 15 million Euro (approximately $17.1 million at June 30, 2019 exchange rates) that can be drawn in Euro, U.S. dollars, or Polish Zloty. The availability of funds under this uncommitted facility is at the sole discretion of the bank. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed. The facility matures on December 20, 2019 . (6) The amount of Long-term debt under credit facilities, less current maturities at June 30, 2019 reflects the borrowings on the primary facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The weighted-average interest rate on short-term borrowings outstanding under the credit facilities at June 30, 2019 and June 30, 2018 were 4.5% and 2.7% , respectively. Cash payments for interest on borrowings in fiscal years 2019 , 2018 , and 2017 were, in millions, $3.0 , $0.4 , and $0.3 , respectively. Capitalized interest expense was immaterial during fiscal years 2019 , 2018 , and 2017 . |
Note 9. Employee Benefit Plans
Note 9. Employee Benefit Plans | 12 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Postemployment Benefits Disclosure | Employee Benefit Plans Defined Contribution Retirement Plans: The Company maintains a trusteed defined contribution retirement plan which is in effect for substantially all domestic employees meeting the eligibility requirements. The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis in excess of IRS limitations. The SERP is structured as a rabbi trust, and therefore assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. The discretionary employer contribution for domestic employees is determined annually by the Compensation and Governance Committee of the Company’s Board of Directors. Total expense related to employer contributions to the domestic retirement plans was, in millions, $2.1 , $2.0 , and $1.7 for fiscal years 2019 , 2018 , and 2017 , respectively. Defined Benefit Postemployment Plans: The Company established and maintains severance plans for all domestic employees and other postemployment plans for certain foreign subsidiaries. There are no statutory requirements for the Company 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. Domestic: The domestic severance plans provide severance benefits to eligible employees meeting the plans’ qualifications, primarily involuntary termination without cause. 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 components and changes in the Benefit Obligation, Accumulated Other Comprehensive Income (Loss), and Net Periodic Benefit Cost, for the domestic severance plans, are as follows: June 30 (Amounts in Thousands) 2019 2018 Changes and Components of Benefit Obligation: Benefit obligation at beginning of year $ 1,658 $ 1,808 Service cost 318 364 Interest cost 42 49 Actuarial gain for the period (447 ) (533 ) Benefits paid (122 ) (30 ) Benefit obligation at end of year $ 1,449 $ 1,658 Balance in current liabilities $ 308 $ 353 Balance in noncurrent liabilities 1,141 1,305 Total benefit obligation recognized in the Consolidated Balance Sheets $ 1,449 $ 1,658 June 30 (Amounts in Thousands) 2019 2018 Changes and Components in Accumulated Other Comprehensive Income (Loss) (before tax): Accumulated Other Comprehensive Income (Loss) at beginning of year $ (1,104 ) $ (929 ) Net change in unrecognized actuarial (gain) loss 25 (175 ) Accumulated Other Comprehensive Income (Loss) at end of year $ (1,079 ) $ (1,104 ) (Amounts in Thousands) Year Ended June 30 Components of Net Periodic Benefit Cost (before tax): 2019 2018 2017 Service cost $ 318 $ 364 $ 302 Interest cost 42 49 39 Amortization of actuarial (gain) loss (472 ) (358 ) (317 ) Net periodic benefit cost recognized in the Consolidated Statements of Income $ (112 ) $ 55 $ 24 The benefit cost in the above table includes only normal recurring levels of severance activity, as estimated using an actuarial method. Unusual or non-recurring severance actions are not estimable using actuarial methods and are expensed in accordance with other applicable U.S. GAAP. Actuarial (gain) loss is amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plan. The estimated actuarial net (gain) loss for the severance plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $(436) thousand . Assumptions used to determine fiscal year end benefit obligations for both fiscal year 2019 and 2018 included a discount rate of 2.8% and a compensation growth rate of 3.0% . Weighted average assumptions used to determine fiscal year net periodic benefit costs included a discount rate of 2.8% , 2.8% , and 2.4% for fiscal years 2019 , 2018 , and 2017 , respectively, and a compensation growth rate of 3.0% for each of the fiscal years 2019 , 2018 , and 2017 . Foreign: The foreign postemployment plans include local pension, retirement, or severance plans. The components and changes in the Benefit Obligation and Net Periodic Benefit Cost, for the foreign postemployment plans, are as follows: June 30 (Amounts in Thousands) 2019 2018 Changes and Components of Benefit Obligation: Benefit obligation at beginning of year $ 1,235 $ 1,136 Service cost 350 212 Interest cost 87 56 Actuarial loss (gain) for the period 479 (72 ) Benefits paid (246 ) (97 ) Benefit obligation at end of year $ 1,905 $ 1,235 The benefit obligation is recorded in Other long-term liabilities in the Consolidated Balance Sheets. (Amounts in Thousands) Year Ended June 30 Components of Net Periodic Benefit Cost (before tax): 2019 2018 2017 Service cost $ 350 $ 212 $ 106 Interest cost 87 56 46 Recognition of actuarial (gain) loss 479 (72 ) 219 Net periodic benefit cost recognized in the Consolidated Statements of Income $ 916 $ 196 $ 371 The benefit cost in the above table includes only normal recurring levels of severance activity, as estimated using an actuarial method. Unusual or non-recurring severance actions are not estimable using actuarial methods and are expensed in accordance with other applicable U.S. GAAP. No estimated actuarial net (gain) losses for the severance plans will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year. Assumptions used to determine fiscal year end benefit obligations for both fiscal year 2019 and 2018 included a discount rate of 4.8% and 4.7% , respectively, and a compensation growth rate of 4.5% for each fiscal year. Weighted average assumptions used to determine fiscal year net periodic benefit costs included a discount rate of 4.8% , 4.7% , and 6.1% for fiscal years 2019, 2018, and 2017, respectively, and a compensation growth rate of 4.5% for each of the fiscal years 2019, 2018, and 2017. |
Note 10. Stock Compensation Pla
Note 10. Stock Compensation Plans | 12 Months Ended |
Jun. 30, 2019 | |
Stock Compensation Plans [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments | Stock Compensation Plans A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on October 3, 2014. The Kimball Electronics, Inc. 2014 Stock Option and Incentive Plan (the “Plan”) allows for the issuance of up to 4.5 million shares and may be awarded in the form of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units. The Plan is a ten-year plan with no further awards allowed to be made under the Plan after October 1, 2024. Prior to the spin-off, former Parent maintained stock compensation plans in which our executives and certain key employees participated. All awards granted under the former Parent plans were based on former Parent’s Common Stock. Performance share awards issued and outstanding to Kimball Electronics employees under the former Parent plans as of the spin-off date were amended, in accordance with the terms of the plans, to provide an equitable adjustment as a result of the spin-off. On October 20, 2016, the Board approved a nonqualified deferred stock 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. Pre-tax stock compensation charged against income in fiscal years 2019 , 2018 , and 2017 was $5.7 million , $5.3 million , and $3.5 million , respectively. These costs are included in Selling and Administrative Expenses. Performance Shares: The Company awards performance shares to officers and other key employees. Under these awards granted prior to fiscal year 2016, a number of shares will be issued to each participant based upon the attainment of the applicable bonus percentage calculated under the Company’s profit sharing incentive bonus plan as applied to a total potential share award made and approved by the Compensation and Governance Committee of the Board. Under these awards granted in and subsequent to fiscal year 2016, a number of shares will be issued to each participant based upon a combination of the bonus percentage attainment component above, adjusted to a three-year average bonus percentage, and a growth attainment component, which is the Company’s growth in sales revenue based on comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. Performance shares are vested when shares of the Company’s Common Stock are issued shortly after the end of the fiscal year in which the performance measurement period is complete. Certain outstanding performance shares are applicable to performance measurement periods in future fiscal years and will be measured at fair value when the performance targets are established in future fiscal years. The contractual life of performance shares ranges from one year to five years . If a participant is not employed on the date shares are issued, the performance share award is forfeited, except in the case of death, retirement at age 62 or older, total permanent disability, or certain other circumstances described in the Plan. On December 2, 2014, Performance Share Awards issued and outstanding to Kimball Electronics employees under the former Parent plans were amended, in accordance with the terms of the plans, to provide an equitable adjustment as a result of the spin-off. The awards have been or will be granted in shares of the Company’s Common Stock, instead of Kimball International, Inc. shares, under the Kimball Electronics Plan. The amended awards retained the same terms and conditions, vesting schedule, issuance dates, and expiration dates of the original Kimball International awards. A summary of the Company’s performance share activity during fiscal year 2019 is presented below: Number of Shares Weighted Average Grant Date Fair Value Performance shares outstanding at July 1, 2018 556,428 $ 14.11 Granted 198,868 $ 20.03 Vested (292,175 ) $ 13.30 Forfeited (15,861 ) $ 17.08 Performance shares outstanding at June 30, 2019 447,260 $ 17.16 As of June 30, 2019 , there was approximately $4.4 million of unrecognized compensation cost related to performance shares, based on the latest estimated attainment of performance goals. That cost is expected to be recognized over annual performance periods ending August 2019 through August 2021, with a weighted average vesting period of nine months . The fair value of performance shares is based on the stock price at the date of grant. During fiscal years 2019 , 2018 , and 2017 , respectively, 292,175 , 255,757 , and 194,624 performance shares vested at a fair value of $3.9 million , $2.9 million , and $2.0 million . The performance shares vested represent the total number of shares vested prior to the reduction of shares withheld to satisfy tax withholding obligations. The number of shares presented in the above table, the amounts of unrecognized compensation, and the weighted average period include performance shares awarded that are applicable to future performance measurement periods and will be measured at fair value when the performance targets are established in future fiscal years. Unrestricted Share Grants: Unrestricted shares may be granted to employees and members of the Board as consideration for services rendered. Unrestricted share grants do not have vesting periods, holding periods, restrictions on sale, or other restrictions. The fair value of unrestricted shares is based on the stock price at the date of the award. During fiscal years 2019 , 2018 , and 2017 , respectively, the Company granted a total of 4,236 , 7,694 , and 10,477 unrestricted shares at an average grant date fair value of $17.69 , $20.15 , and $15.75 for a total fair value of $0.1 million , $0.2 million , and $0.2 million . Unrestricted shares were awarded to non-employee members of the Board as compensation for director’s fees, including directors’ elections to receive unrestricted shares in lieu of cash payment. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares were also awarded to a key employee which were expensed immediately. Deferred Share Units: Deferred share units may be granted to non-employee members of the Board under the Deferral Plan as compensation for the portion of their annual retainer fees resulting from their election 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. During fiscal years 2019 , 2018 , and 2017 , respectively, 32,758 , 12,159 , and 19,207 deferred share units were granted to non-employee members of the Board at an average grant date fair value of $17.40 , $20.15 , and $15.79 for a total fair value of $0.6 million , $0.2 million , and $0.3 million . |
Note 11. Income Taxes
Note 11. Income Taxes | 12 Months Ended |
Jun. 30, 2019 | |
Income Taxes [Abstract] | |
Income Tax Disclosure | Income Taxes The U.S. Tax Cuts and Jobs Act (“Tax Reform”) was enacted into law on December 22, 2017. Tax Reform makes broad and complex changes to the U.S. tax code, for which complete guidance may have not yet been issued. Tax Reform changes included, but were not limited to, (i) reducing the U.S. corporate statutory tax rate, (ii) requiring a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period, (iii) eliminating U.S. federal income taxes on dividends from foreign subsidiaries, and (iv) bonus depreciation that will allow for full expensing of qualifying property. Tax Reform reduces the U.S. corporate statutory tax rate from 35% to 21% . For our fiscal year ended June 30, 2018, we had a blended U.S. corporate tax rate of 28.1% , which was based on the applicable tax rates before and after Tax Reform and the number of days in the fiscal year. Accounting guidance provides a measurement period of one year from the Tax Reform enactment date, during which a company could complete the accounting for the impacts of Tax Reform. In accordance with the accounting guidance, the Company recorded provisional tax expense of $17.8 million related to Tax Reform for fiscal year 2018, including $4.4 million for the revaluation of the net deferred tax assets and $13.4 million for the deemed repatriation tax. In accordance with the expiration of the one-year measurement period, the Company completed the assessment of the income tax effects of Tax Reform in the second quarter of fiscal year 2019. In finalizing the tax expense resulting from Tax Reform, the Company reversed $0.4 million of previous tax expense for the deemed repatriation tax. At June 30, 2019, $9.8 million was recorded in Long-term income taxes payable on the Consolidated Balance Sheet for the deemed repatriation tax. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the deferred tax assets and liabilities as of June 30, 2019 and 2018 , were as follows: (Amounts in Thousands) 2019 2018 Deferred Tax Assets: Receivables $ 105 $ 158 Inventory 1,914 1,153 Employee benefits 193 194 Deferred compensation 6,149 6,496 Other current liabilities 1,275 830 Tax credit carryforwards 1,638 1,251 Goodwill 268 655 Net operating loss carryforward 2,339 2,376 Net foreign currency losses 11 — Miscellaneous 2,970 2,394 Valuation Allowance (658 ) (638 ) Total asset $ 16,204 $ 14,869 Deferred Tax Liabilities: Other intangible assets $ 1,412 $ — Property and equipment 1,116 565 Net foreign currency gains — 12 Miscellaneous 477 300 Total liability $ 3,005 $ 877 Net Deferred Income Taxes $ 13,199 $ 13,992 Income tax benefits associated with the net operating loss carryforwards expire from fiscal year 2023 to 2039 . Income tax benefits associated with tax credit carryforwards primarily expire from fiscal year 2020 to 2028 . A valuation allowance was provided as of June 30, 2019 and 2018 for deferred tax assets related to certain state credits of, in thousands, $658 and $638 . Except as reserved for in the valuation allowance, we believe our tax credit and net operating loss carryforwards are more likely than not to be realized in the future. The components of income before taxes on income are as follows: Year Ended June 30 (Amounts in Thousands) 2019 2018 2017 United States $ 11,191 $ 5,609 $ 10,051 Foreign 27,294 39,166 34,204 Total income before taxes on income $ 38,485 $ 44,775 $ 44,255 Tax Reform changes included, but were not limited to, (i) requiring a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period, and (ii) eliminating U.S. federal income taxes on dividends from foreign subsidiaries. The aggregate unremitted earnings of the Company’s foreign subsidiaries were approximately $240 million as of June 30, 2019 . Most of these accumulated unremitted foreign earnings have been invested in active non-U.S. business operations, and it is not anticipated such earnings will be remitted to the United States. Our intent is to permanently reinvest these funds outside of the United States. However, if such funds were repatriated, a portion of the funds remitted may be subject to applicable non-U.S. income and withholding taxes. The provision for income taxes is composed of the following items: Year Ended June 30 (Amounts in Thousands) 2019 2018 2017 Current Taxes: Federal $ 872 $ 13,132 $ 2,696 Foreign 7,545 11,982 8,130 State 203 459 134 Total payable $ 8,620 $ 25,573 $ 10,960 Deferred Taxes: Federal $ 67 $ 5,015 $ 6 Foreign (1,177 ) (2,427 ) (631 ) State (603 ) (776 ) (259 ) Valuation allowance 20 638 — Total deferred $ (1,693 ) $ 2,450 $ (884 ) Total provision for income taxes $ 6,927 $ 28,023 $ 10,076 A reconciliation of the statutory U.S. income tax rate to the Company’s effective income tax rate follows: Year Ended June 30 2019 2018 2017 (Amounts in Thousands) Amount % Amount % Amount % Tax computed at U.S. federal statutory rate $ 8,082 21.0 % $ 12,582 28.1 % $ 15,489 35.0 % State income taxes, net of federal income tax benefit (320 ) (0.8 ) (408 ) (0.9 ) (81 ) (0.2 ) Foreign tax rate differential 313 0.8 (1,615 ) (3.6 ) (3,832 ) (8.7 ) Impact of foreign exchange rates on foreign income taxes 156 0.4 180 0.4 (613 ) (1.4 ) Valuation allowance 20 0.1 638 1.4 — — Research credit (627 ) (1.6 ) (378 ) (0.8 ) (348 ) (0.8 ) Deemed repatriation (416 ) (1.1 ) 13,436 30.0 — — Revaluation of net deferred tax assets (10 ) — 4,357 9.7 — — Other - net (271 ) (0.8 ) (769 ) (1.7 ) (539 ) (1.1 ) Total provision for income taxes $ 6,927 18.0 % $ 28,023 62.6 % $ 10,076 22.8 % Net cash payments for income taxes were, in thousands, $10,172 , $14,724 and $5,896 in fiscal years 2019 , 2018 , and 2017 , respectively. Changes in the unrecognized tax benefit, excluding accrued interest and penalties, during fiscal years 2019 , 2018 , and 2017 were as follows: (Amounts in Thousands) 2019 2018 2017 Beginning balance - July 1 $ 160 $ 102 $ 46 Tax positions related to prior fiscal years: Additions 758 78 56 Reductions — (20 ) — Tax positions related to current fiscal year: Additions — — — Reductions — — — Settlements — — — Lapses in statute of limitations (14 ) — — Ending balance - June 30 $ 904 $ 160 $ 102 Portion that, if recognized, would reduce tax expense and effective tax rate $ 214 $ 137 $ 85 We do not expect the change in the amount of unrecognized tax benefits in the next 12 months to have a significant impact on our results of operations or financial position. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Consolidated Statements of Income. Interest and penalties accrued for unrecognized tax benefits as of June 30, 2019 was $1.6 million . Interest and penalties accrued for unrecognized tax benefits as of June 30, 2018 and 2017 and expenses related to interest and penalties in fiscal years 2019 , 2018 , and 2017 were not material. Liabilities for unrecognized tax benefits, including interest and penalties, have been recorded as a result of the GES acquisition related to pre-closing tax periods of Global Equipment Services & Manufacturing Vietnam Company Limited. This reflects management’s best assessment of the estimated taxes, interest, and penalties that are more likely than not to be paid under the applicable laws in the various jurisdictions. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. See Note 2 - Acquisitions of Notes to Consolidated Financial Statements for more information related to the GES acquisition. In connection with the spin-off, the Company entered into a Tax Matters Agreement with former Parent that governs the Company’s rights and obligations after the spin-off with respect to tax liabilities and benefits, tax attributes, tax contests, and other tax sharing regarding income taxes, other tax matters, and related tax returns. The Company will continue to have joint and several liabilities with former Parent with the IRS and certain U.S. state tax authorities for U.S. federal income and state taxes for the taxable periods in which the Company was a part of former Parent’s consolidated group. For additional information, see Note 1 – Business Description and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements. Former Parent is no longer subject to any significant U.S. federal tax examinations by tax authorities for years which the Company was part of former Parent’s consolidated group. Former Parent is subject to various state and local income tax examinations by tax authorities for years after June 30, 2014. The Company or its wholly-owned subsidiaries file U.S. federal income tax returns and income tax returns in various state, local, and foreign jurisdictions. We are no longer subject to any significant U.S. federal tax examinations by tax authorities for years before fiscal year 2016. We are subject to various state and local income tax examinations by tax authorities for years after June 30, 2014, and various foreign jurisdictions for years after June 30, 2013. Global Equipment Services & Manufacturing Vietnam Company Limited is subject to U.S. federal tax examinations and various state and local jurisdictions by tax authorities for years after December 31, 2007 and for various foreign jurisdictions for years after December 31, 2008 relating to periods prior to the acquisition date. |
Note 12. Share Owners' Equity
Note 12. Share Owners' Equity | 12 Months Ended |
Jun. 30, 2019 | |
Common Stock [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. Then, separately on each of September 29, 2016, August 23, 2017, and November 8, 2018, the Board extended and increased the Plan to allow the repurchase of up to an additional $20 million worth of common stock with no expiration date, which brought the total authorized stock repurchases under the Plan to $80 million . 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 fiscal year 2019 , the Company repurchased $23.4 million of common stock under the Plan at an average price of $17.75 per share, which was recorded as Treasury stock, at cost in the Consolidated Balance Sheet. Since the inception of the Plan, the Company has repurchased $67.9 million of common stock under that Plan at an average cost of $15.04 per share. |
Note 13. Fair Value
Note 13. Fair Value | 12 Months Ended |
Jun. 30, 2019 | |
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. There were no changes in the inputs or valuation techniques used to measure fair values during fiscal year 2019 . Financial Instruments Recognized at Fair Value: The following methods and assumptions were used to measure fair value: Financial Instrument Level Valuation Technique/Inputs Used Cash Equivalents 1 Market - Quoted market prices Derivative Assets: Foreign exchange contracts 2 Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk Trading securities: Mutual funds held in SERP 1 Market - Quoted market prices Derivative Liabilities: Foreign exchange contracts 2 Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk Recurring Fair Value Measurements: As of June 30, 2019 and 2018 , 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: June 30, 2019 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,123 $ — $ 1,123 Derivatives: foreign exchange contracts — 1,832 1,832 Trading securities: mutual funds held in nonqualified SERP 9,268 — 9,268 Total assets at fair value $ 10,391 $ 1,832 $ 12,223 Liabilities Derivatives: foreign exchange contracts $ — $ 299 $ 299 Total liabilities at fair value $ — $ 299 $ 299 June 30, 2018 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,099 $ — $ 1,099 Derivatives: foreign exchange contracts — 1,713 1,713 Trading securities: mutual funds held in nonqualified SERP 8,769 — 8,769 Total assets at fair value $ 9,868 $ 1,713 $ 11,581 Liabilities Derivatives: foreign exchange contracts $ — $ 1,867 $ 1,867 Total liabilities at fair value $ — $ 1,867 $ 1,867 We had no Level 3 assets or liabilities during fiscal years 2019 and 2018 . The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund. The SERP investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants. See Note 15 - Investments of Notes to Consolidated Financial Statements for further information regarding the SERP. Financial Instruments Not Carried At Fair Value: Financial instruments that are not reflected in the Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following: Financial Instrument Level Valuation Technique/Inputs Used Notes receivable 2 Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account non-performance risk Borrowings under credit facilities 2 Market - Based on observable market rates, taking into account Kimball Electronics’ non-performance risk The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to their relatively short maturity and immaterial non-performance risk. |
Note 14. Derivative Instruments
Note 14. Derivative Instruments | 12 Months Ended |
Jun. 30, 2019 | |
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 our 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 June 30, 2019 , we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $32.3 million and to hedge currencies against the Euro in the aggregate notional amount of 75.4 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 Non-operating income or expense on the 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 Non-operating income or expense on the Consolidated Statements of Income immediately. Based on fair values as of June 30, 2019 , we estimate that approximately $0.6 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the fiscal year ending June 30, 2020 . Gains on foreign exchange contracts are generally offset by losses in operating costs 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 June 30, 2019 and June 30, 2018 . See Note 13 - Fair Value of Notes to Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 19 - Accumulated Other Comprehensive Income (Loss) of Notes to Consolidated Financial Statements for the amount and changes in derivative gains and losses deferred in Accumulated Other Comprehensive Income (Loss). Information on the location and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Statements of Income are presented below. Fair Values of Derivative Instruments on the Consolidated Balance Sheets Asset Derivatives Liability Derivatives Fair Value As of Fair Value As of (Amounts in Thousands) Balance Sheet Location June 30 June 30 Balance Sheet Location June 30 June 30 Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 1,136 $ 758 Accrued expenses $ 278 $ 1,857 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 696 955 Accrued expenses 21 10 Total derivatives $ 1,832 $ 1,713 $ 299 $ 1,867 The Effect of Derivative Instruments on Other Comprehensive Income (Loss) June 30 (Amounts in Thousands) 2019 2018 2017 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): Foreign exchange contracts $ 3,337 $ (2,669 ) $ 779 The Effect of Derivative Instruments on Consolidated Statements of Income (Amounts in Thousands) Year Ended June 30 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2019 2018 2017 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): Foreign exchange contracts Cost of Sales $ 1,061 $ (1,648 ) $ 18 Foreign exchange contracts Non-operating income (expense) — (11 ) (5 ) Total $ 1,061 $ (1,659 ) $ 13 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Ineffective Portion): Foreign exchange contracts Non-operating income (expense) $ 5 $ (9 ) $ — 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) $ 2,766 $ 796 $ (42 ) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 3,832 $ (872 ) $ (29 ) |
Note 15. Investments
Note 15. Investments | 12 Months Ended |
Jun. 30, 2019 | |
Investments [Abstract] | |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | Investments Supplemental Employee Retirement Plan Investments: The Company 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. We recognize 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 fiscal years ended June 30, 2019 , 2018 , and 2017 was, in thousands, $35 , $552 , and $789 , respectively. SERP asset and liability balances applicable to Kimball Electronics participants were as follows: June 30 (Amounts in Thousands) 2019 2018 SERP investments - current asset $ 1,728 $ 294 SERP investments - other long-term asset 7,540 8,475 Total SERP investments $ 9,268 $ 8,769 SERP obligation - current liability $ 1,728 $ 294 SERP obligation - other long-term liability 7,540 8,475 Total SERP obligation $ 9,268 $ 8,769 |
Note 16. Accrued Expenses
Note 16. Accrued Expenses | 12 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses [Abstract] | |
Accrued Liabilities Disclosure | Accrued Expenses Accrued expenses consisted of: June 30 (Amounts in Thousands) 2019 2018 Taxes $ 5,760 $ 2,803 Compensation 19,046 18,008 Customer advance payments 6,345 1,729 Retirement plan 1,959 1,791 Insurance 1,675 1,375 Other expenses 8,411 6,740 Total accrued expenses $ 43,196 $ 32,446 |
Note 17. Geographic Information
Note 17. Geographic Information | 12 Months Ended |
Jun. 30, 2019 | |
Geographic Information [Abstract] | |
Segment Reporting Disclosure | Geographic Information The following geographic area data includes net sales based on the country location of the Company’s business unit providing the manufacturing or other service and long-lived assets based on physical location. In fiscal year 2019, the Company changed its presentation of net sales by country, which were previously disclosed based on the destination of the product shipped. The change to disclose net sales by country based on the business unit location is to better reflect where the performance obligations are performed and the revenue is earned. Long-lived assets include property and equipment and capitalized software. Prior year periods have been restated to conform to the current year presentation. At or For the Year Ended June 30 (Amounts in Thousands) 2019 2018 2017 Net Sales: United States $ 321,805 $ 224,834 $ 189,184 Mexico 282,400 256,537 219,585 Poland 251,635 282,847 254,448 China 146,332 177,930 172,117 Other Foreign 179,672 129,913 95,580 Total net sales $ 1,181,844 $ 1,072,061 $ 930,914 Long-Lived Assets: United States $ 43,887 $ 39,465 $ 41,308 Mexico 31,238 30,733 30,235 Poland 29,736 33,629 32,315 Romania 19,546 19,394 16,468 China 12,138 14,546 17,106 Other Foreign 11,975 3,773 4,629 Total long-lived assets $ 148,520 $ 141,540 $ 142,061 |
Note 18. Earnings Per Share
Note 18. Earnings Per Share | 12 Months Ended |
Jun. 30, 2019 | |
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: (Amounts in thousands, except per share data) Year Ended June 30 2019 2018 2017 Basic and Diluted Earnings Per Share: Net Income $ 31,558 $ 16,752 $ 34,179 Less: Net Income allocated to participating securities 32 9 15 Net Income allocated to common Share Owners $ 31,526 $ 16,743 $ 34,164 Basic weighted average common shares outstanding 25,857 26,745 27,413 Dilutive effect of average outstanding performance shares 200 255 110 Dilutive effect of average outstanding deferred stock units 25 7 7 Dilutive weighted average shares outstanding 26,082 27,007 27,530 Earnings Per Share of Common Stock: Basic $ 1.22 $ 0.63 $ 1.25 Diluted $ 1.21 $ 0.62 $ 1.24 |
Note 19. Accumulated Other Comp
Note 19. Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Jun. 30, 2019 | |
Comprehensive Income [Abstract] | |
Comprehensive Income (Loss) Note | Accumulated Other Comprehensive Income (Loss) The changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows: (Amounts in Thousands) Foreign Currency Translation Adjustments Derivative Gain (Loss) Postemployment Benefits Net Actuarial Gain (Loss) Accumulated Other Comprehensive Income (Loss) Balance at June 30, 2017 $ (6,876 ) $ (2,788 ) $ 580 $ (9,084 ) Other comprehensive income (loss) before reclassifications 2,519 (1,965 ) 345 899 Reclassification to (earnings) loss — 1,455 (218 ) 1,237 Net current-period other comprehensive income (loss) $ 2,519 $ (510 ) $ 127 $ 2,136 Tax Reform impact (1) — (81 ) 130 49 Balance at June 30, 2018 $ (4,357 ) $ (3,379 ) $ 837 $ (6,899 ) Other comprehensive income (loss) before reclassifications (2,491 ) 2,638 339 486 Reclassification to (earnings) loss — (857 ) (358 ) (1,215 ) Net current-period other comprehensive income (loss) (2,491 ) 1,781 (19 ) (729 ) Balance at June 30, 2019 $ (6,848 ) $ (1,598 ) $ 818 $ (7,628 ) (1) During fiscal year 2018, the Company adopted a new accounting standard on accounting for the reclassification of certain tax effects from accumulated other comprehensive income related to Tax Reform. The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Consolidated Statements of Income Year Ended June 30 (Amounts in Thousands) 2019 2018 Derivative Gain (Loss) (1) $ 1,061 $ (1,648 ) Cost of Sales 5 (20 ) Non-operating income (expense), net (209 ) 213 Benefit (Provision) for Income Taxes $ 857 $ (1,455 ) Net of Tax Postemployment Benefits: Amortization of Actuarial Gain (Loss) (2) $ 472 $ 358 Non-operating income (114 ) (140 ) Benefit (Provision) for Income Taxes $ 358 $ 218 Net of Tax Total Reclassifications for the Period $ 1,215 $ (1,237 ) Net of Tax Amounts in parentheses indicate reductions to income. (1) See Note 14 - Derivative Instruments of Notes to Consolidated Financial Statements for further information on derivative instruments. (2) See Note 9 - Employee Benefit Plans of Notes to Consolidated Financial Statements for further information on postemployment benefit plans. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation in the table above due to the adoption of new guidance issued by the FASB. |
Note 20. Quarterly Financial In
Note 20. Quarterly Financial Information (Unaudited) | 12 Months Ended |
Jun. 30, 2019 | |
Quarterly Financial Information (Unaudited) [Abstract] | |
Quarterly Financial Information | Quarterly Financial Information (Unaudited) Three Months Ended (Amounts in Thousands, Except for Per Share Data) September 30 December 31 March 31 June 30 Fiscal Year 2019: Net Sales $ 265,620 $ 284,149 $ 313,454 $ 318,621 Gross Profit 18,186 20,444 26,554 23,222 Operating Income 7,032 10,212 14,497 10,319 Net Income 5,069 7,115 11,849 7,525 Basic Earnings Per Share $ 0.19 $ 0.27 $ 0.46 $ 0.30 Diluted Earnings Per Share $ 0.19 $ 0.27 $ 0.46 $ 0.29 Fiscal Year 2018: Net Sales $ 253,204 $ 258,151 $ 283,938 $ 276,768 Gross Profit (1) 19,453 20,921 22,881 22,775 Operating Income (1) 9,523 10,119 11,130 11,266 Net Income (2) 8,480 (8,347 ) 10,835 5,784 Basic Earnings Per Share $ 0.32 $ (0.31 ) $ 0.41 $ 0.22 Diluted Earnings Per Share $ 0.31 $ (0.31 ) $ 0.40 $ 0.22 (1) Prior period has been restated to reflect the retrospective adoption of new accounting guidance issued by the FASB on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation. There was no effect to Net Income or Diluted Earnings per Share. (2) Net income for the quarter ended December 31, 2017 included income tax expense of $16.6 million ( $0.62 per diluted share) due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was enacted into law in December 2017 and relates to the deemed repatriation of unremitted foreign earnings and the revaluation of net deferred tax assets. |
Schedule II Valuation and Quali
Schedule II Valuation and Qualifying Accounts | 12 Months Ended |
Jun. 30, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts Disclosure | Valuation and Qualifying Accounts Description Balance at Beginning of Year Additions (Reductions) to Expense Adjustments to Other Accounts Write-offs and Recoveries Balance at End of Year (Amounts in Thousands) Year Ended June 30, 2019 Valuation Allowances: Receivables $ 482 $ 184 $ 14 $ (410 ) $ 270 Deferred Tax Asset $ 638 $ 20 $ — $ — $ 658 Year Ended June 30, 2018 Valuation Allowances: Receivables $ 284 $ 259 $ (51 ) $ (10 ) $ 482 Deferred Tax Asset $ — $ 638 $ — $ — $ 638 Year Ended June 30, 2017 Valuation Allowances: Receivables $ 192 $ 129 $ (37 ) $ — $ 284 |
Note 1. Business Description _2
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation: The Consolidated Financial Statements include the accounts of all domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation. |
Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts included in the Consolidated Financial Statements and related note disclosures. While efforts are made to assure estimates used are reasonably accurate based on management’s knowledge of current events, actual results could differ from those estimates. |
Segment Reporting | Segment Information: As of June 30, 2018, Kimball Electronics had business units located in the United States, China, Mexico, Poland, Romania, and Thailand, and each of our business units qualified as an operating segment and met the aggregation criteria to be aggregated into one reportable segment. On October 1, 2018, we completed the GES acquisition, which has operations located in the United States, China, India, Japan, and Vietnam. The GES operations qualify as a single operating segment with its group results regularly reviewed by our chief operating decision maker, which is our Chief Executive Officer. See Note 2 - Acquisitions of Notes to Consolidated Financial Statements for more information on this acquisition. Our operating segments meet the aggregation criteria under the current accounting guidance for segment reporting. As of June 30, 2019 , all of our operating segments provide contract manufacturing services, including engineering and supply chain support, for the production of electronic assemblies and other products including medical disposables, precision molded plastics, and automation, test, and inspection equipment primarily in automotive, medical, industrial, and public safety applications, to the specifications and designs of our customers. The nature of the products, the production process, the type of customers, and the methods used to distribute the products have similar characteristics. Each of our operating segments service customers in multiple markets, and many of our customers’ programs are manufactured and serviced by multiple operating segments. We leverage global processes such as component procurement and customer pricing that provide commonality and consistency among the various regions in which we operate. All of our operating segments have similar long-term economic characteristics, and as such, have been aggregated into one reportable segment. |
Revenue Recognition | Revenue Recognition: We recognize revenue in accordance with the new standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments (“New Revenue Guidance”). Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term, but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short-term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract where we offer our customer a rebate once specific volume thresholds have been met; in these cases, the rebates are accounted for as variable consideration. The majority of our revenue is recognized over time as manufacturing services are performed as we manufacture a product to customer specifications with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize. Estimated costs include material, direct and indirect labor, and appropriate applied overheads. Costs based input methods are considered a faithful depiction of our efforts and progress toward satisfying our performance obligations for manufacturing services and for which we believe we are entitled to payment for performance completed to date. The cumulative effect of revisions to estimates related to net contract revenues or costs are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated services and products. Accordingly, we record customer payments of shipping and handling costs as a component of net sales and classify such costs as a component of cost of sales. We recognize sales net of applicable sales or value add taxes. Based on estimated product returns and price concessions, a reserve for returns and allowances is recorded at the time revenue is recognized, resulting in a reduction of net revenue. Direct incremental costs to obtain and fulfill a contract are capitalized as a contract asset only if they are material, expected to be recovered, and are not accounted for in accordance with other guidance. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred. See section entitled “New Accounting Standards” below for information on the adoption of the New Revenue Guidance. Prior to fiscal year 2019, we recognized revenue when persuasive evidence of an arrangement existed, delivery occurred, the sales price was fixed or determinable, and collectability was reasonably assured. Delivery was not considered to have occurred until the title and the risk of loss passed to the customer according to the terms of the contract. Title and risk of loss were considered transferred upon shipment to or receipt at our customers’ locations, or in limited circumstances, as determined by other specific sales terms of the transaction. |
Cash and Cash Equivalents | Cash and Cash Equivalents: Cash equivalents consist primarily of highly liquid investments with original maturities of three months or less at the time of acquisition. Cash and cash equivalents consist of bank accounts and money market funds. Bank accounts are stated at cost, which approximates fair value, and money market funds are stated at fair value. |
Notes Receivable and Trade Accounts Receivable | Notes Receivable and Trade Accounts Receivable: The Company’s notes receivable and trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. We determine on a case-by-case basis the cessation of accruing interest, the resumption of accruing interest, the method of recording payments received on nonaccrual receivables, and the delinquency status for our limited number of notes receivable. Our policy for estimating the allowance for credit losses on trade accounts receivable and notes receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to determine the final allowance for credit losses on the trade accounts receivable and notes receivable. Trade accounts receivable and notes receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Our limited amount of notes receivable allows management to monitor the risks, credit quality indicators, collectability, and probability of impairment on an individual basis. Adjustments to the allowance for credit losses are recorded in selling and administrative expenses. In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days , with any terms beyond 45 days being considered extended payment terms. We may utilize accounts receivable factoring arrangements with third-party financial institutions in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. |
Banker's Acceptance Drafts | One of the Company’s China operations, 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. |
Inventories | Inventories: Inventories are stated at the lower of cost and net realizable value. Cost includes material, labor, and applicable manufacturing overhead. Costs associated with underutilization of capacity are expensed as incurred. Inventories are valued using the first-in, first-out (“FIFO”) method. Inventories are adjusted for excess and obsolete inventory. Evaluation of excess inventory includes such factors as anticipated usage, inventory turnover, inventory levels, and product demand levels. Factors considered when evaluating obsolescence include the age of on-hand inventory and reduction in value due to damage, design changes, or cessation of product lines. |
Property, Equipment, and Depreciation | Property, Equipment, and Depreciation: Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful life of the assets using the straight-line method for financial reporting purposes. Major maintenance activities and improvements are capitalized; other maintenance and repairs are expensed. Depreciation and expenses for maintenance and repairs are included in both Cost of Sales and Selling and Administrative Expense on the Consolidated Statements of Income. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets: We perform reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment is recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. When an impairment is identified, the carrying amount of the asset is reduced to its estimated fair value. Assets to be disposed of are recorded at the lower of net book value or fair market value less cost to sell at the date management commits to a plan of disposal. |
Goodwill | Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset fair values resulting from business acquisitions. Annually, or if conditions indicate an earlier review is necessary, we may assess qualitative factors to determine if it is more likely than not that the fair value is less than its carrying amount and if it is necessary to perform the quantitative two-step goodwill impairment test. We also have the option to bypass the qualitative assessment and proceed directly to performing the first step of the quantitative goodwill impairment test. If the first step is determined to be necessary, we compare the carrying value of the reporting unit to an estimate of the reporting unit’s fair value to identify potential impairment. If the estimated fair value of the reporting unit is less than the carrying value, a second step is performed to determine the amount of potential goodwill impairment. If impaired, goodwill is written down to its estimated implied fair value. Goodwill is assigned to and the fair value is tested at the reporting unit level. The fair value is established primarily using a discounted cash flow analysis and secondarily a market approach utilizing current industry information. The calculation of the fair value of the reporting units considers current market conditions existing at the assessment date. In addition to performing the required annual testing, we will continue to monitor circumstances and events in future periods to determine whether additional goodwill impairment testing is warranted on an interim basis. |
Other Intangible Assets | Other Intangible Assets reported on the Consolidated Balance Sheets consist of capitalized software, customer relationships, technology, and trade name. Intangible assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Internal-use software is stated at cost less accumulated amortization and is amortized using the straight-line method. During the software application development stage, capitalized costs include external consulting costs, cost of software licenses, and internal payroll and payroll-related costs for employees who are directly associated with a software project. Upgrades and enhancements are capitalized if they result in added functionality which enable the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred. |
Research and Development | Research and Development: The costs of research and development are expensed as incurred. |
Insurance and Self-insurance | Insurance and Self-insurance: We are self-insured up to certain limits for general liability, workers’ compensation, and certain employee health benefits including medical, short-term disability, and dental, with the related liabilities included in the accompanying financial statements. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims, and other analyses, which are based on historical information along with certain assumptions about future events. Approximately 20% of the workforce is covered under self-insured medical and short-term disability plans. At June 30, 2019 and 2018 , accrued liabilities for self-insurance exposure were $1.7 million and $1.4 million , respectively. We carry external medical and disability insurance coverage for the remainder of our eligible workforce not covered by self-insured plans. Insurance benefits are not provided to retired employees. |
Income Taxes | Income Taxes: Deferred income tax assets and liabilities, recorded in Other Assets and Other long-term liabilities, respectively, in the Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. We evaluate the recoverability of deferred tax assets each quarter by assessing the likelihood of future taxable income and available tax planning strategies that could be implemented to realize our deferred tax assets. If recovery is not likely, we provide a valuation allowance based on our best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management’s assessment. |
Income Tax Uncertainties | We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex uncertain tax positions, which may require an extended period of time to resolve. A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. We maintain a liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions. As tax positions are effectively settled, the tax liability is adjusted accordingly. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Consolidated Statements of Income. |
Concentration of Credit Risk | Concentrations of Credit Risk: We have business and credit risks associated with our customers concentrated in the automotive, medical, industrial, and public safety industries. The Company monitors credit quality and associated risks of receivables on an individual basis based on criteria such as financial stability of the party and collection experience in conjunction with general economic and market conditions. |
Off-Balance-Sheet Risk | Off-Balance Sheet Risk: Off-balance sheet arrangements are limited to banker’s acceptance drafts transferred with recourse provisions at one of the Company’s China operations, standby letters of credit, and operating leases entered into in the normal course of business as described in Note 7 - Commitments and Contingent Liabilities of Notes to Consolidated Financial Statements. |
Other General Income | Other General Income: Other General Income in fiscal years 2019 and 2017 consisted of $0.3 million and $4.0 million , respectively, resulting from payments received related to class action lawsuits in which Kimball Electronics was a class member. We recorded no Other General Income during fiscal year 2018. |
Non-operating Income and Expense | Non-operating Income and Expense: Non-operating income and expense include 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, government subsidies, bank charges, bargain purchase gain on acquisition, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain or loss on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expense. |
Foreign Currency Translation | Foreign Currency Translation: The Company predominantly uses the U.S. dollar and Euro as its functional currencies. Foreign currency assets and liabilities are remeasured into functional currencies at end-of-period exchange rates, except for nonmonetary assets and equity, which are remeasured at historical exchange rates. Revenue and expenses are remeasured at the weighted average exchange rate during the fiscal year, except for expenses related to nonmonetary assets, which are remeasured at historical exchange rates. Gains and losses from foreign currency remeasurement are reported in Non-operating income or expense on the Consolidated Statements of Income. For business units whose functional currency is other than the U.S. dollar, the translation of functional currency statements to U.S. dollar statements uses end-of-period exchange rates for assets and liabilities, weighted average exchange rates for revenue and expenses, and historical rates for equity. The resulting currency translation adjustment is recorded in Accumulated Other Comprehensive Income (Loss), as a component of Share Owners’ Equity |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities: Derivative financial instruments are recognized on the balance sheet as assets and liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated Other Comprehensive Income (Loss), depending on whether a derivative is designated and effective as part of a hedge transaction, and if it is, the type of hedge transaction. Hedge accounting is utilized when a derivative is expected to be highly effective upon execution and continues to be highly effective over the duration of the hedge transaction. Hedge accounting permits gains and losses on derivative instruments to be deferred in Accumulated Other Comprehensive Income (Loss) and subsequently included in earnings in the periods in which earnings are affected by the hedged item, or when the derivative is determined to be ineffective. We use derivatives primarily for forward purchases of foreign currency to manage exposure to the variability of cash flows, primarily related to the foreign exchange rate risks inherent in forecasted transactions denominated in foreign currency. Cash receipts and cash payments related to derivative instruments are recorded in the same category as the cash flows from the items being hedged on the Consolidated Statements of Cash Flows. See Note 14 - Derivative Instruments of Notes to Consolidated Financial Statements for more information on derivative instruments and hedging activities. |
Stock-Based Compensation | Stock-Based Compensation: As described in Note 10 - Stock Compensation Plans of Notes to Consolidated Financial Statements, the Company maintains the 2014 Stock Option and Incentive Plan, which allows for the issuance of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units for grant to officers and other key employees, and to members of the Board of Directors who are not employees. The Company also maintains 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. We recognize the cost resulting from share-based payment transactions using a fair-value-based method. The estimated fair value of outstanding performance shares is based on the stock price at the date of the grant. Stock-based compensation expense is recognized for the portion of the award for which performance targets have been established and is expected to vest. The Company has elected to account for forfeitures by reversing the compensation costs at the time a forfeiture occurs. |
New Accounting Standards | New Accounting Standards: Adopted in Fiscal Year 2019: In August 2018, the FASB issued guidance on changes to the disclosure requirements for fair value measurement. The new guidance modifies the disclosure requirements on fair value measurement which includes among other changes eliminating the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, eliminating the requirement to disclose the policy for timing of transfers between levels, and added a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. We adopted this guidance early, as permitted, in fiscal year 2019. As this guidance only impacts disclosures related to fair value measurement, the adoption did not impact our consolidated financial position, results of operations, or cash flows. In March 2017, the FASB issued guidance on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance changes how employers that sponsor defined benefit pension plans and other postretirement plans present net periodic benefit costs in the income statement. An employer is required to report the service cost component in the same line item as other compensation costs arising from services rendered by the affected employees during the period. Other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The update also allows only the service cost component to be eligible for capitalization, when applicable. The amendments in this guidance were to be applied retrospectively for the presentation of the service cost component and the other components of the net benefit cost in the income statement, and prospectively for the capitalization of the service cost component in assets. We adopted this guidance in fiscal year 2019 on a retrospective basis for the presentation of the service cost component and the other components of the net benefit cost in the income statement. The prior period presentation has been restated. The retrospective adoption for the presentation of the service cost component and the other components of the net benefit cost in the income statement decreased our Operating income and increased our Non-operating income (expense), net by the same amount on our Consolidated Statements of Income of $0.4 million, $0.3 million, $0.3 million and for fiscal years ended 2019, 2018, and 2017, respectively. There was no effect to Net income or Earnings per share for the retrospective adoption for the presentation of the service cost component and the other components of the net benefit cost. The impact from the prospective adoption for the capitalization of only the service cost component in assets was not material. In May 2014, the FASB issued guidance on the recognition of Revenue from Contracts with Customers. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted the New Revenue Guidance for all contracts using the modified retrospective transition method. We recognized the net cumulative effect of initially applying the New Revenue Guidance as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. A majority of our sales revenue under the New Revenue Guidance is recognized over time as manufacturing services are performed. This represents a change from our previous revenue recognition pattern as revenue was historically recognized at a point in time when title and risk of loss passed to the customer according to the terms of the contract. The remaining sales revenue for manufactured products will be recognized at a point in time when the customer obtains control of the product if the criteria to recognize revenue over time is not met for a specific contract. The effect of the adoption of the New Revenue Guidance on our Consolidated Balance Sheet as of July 1, 2018, our Consolidated Statements of Income for the year ended June 30, 2019 , and our Consolidated Balance Sheet as of June 30, 2019 , resulting primarily from the change to recognize a majority of our revenue over time as manufacturing services are performed, were as follows: (Amounts in Thousands) Balance at June 30, 2018 Adjustments from Adoption of New Revenue Guidance Balance at July 1, 2018 ASSETS Contract assets $ — $ 43,241 $ 43,241 Inventories 201,596 (39,169 ) 162,427 Other Assets 23,994 (871 ) 23,123 LIABILITIES AND SHARE OWNERS’ EQUITY Accrued expenses 32,446 151 32,597 Retained earnings 99,374 3,050 102,424 At or For the Year Ended June 30, 2019 (Amounts in Thousands) As Reported Amounts Excluding Changes Related to New Revenue Guidance Effect of Change Income Statement Net Sales $ 1,181,844 $ 1,173,156 $ 8,688 Cost of Sales 1,093,438 1,085,824 7,614 Gross Profit 88,406 87,332 1,074 Operating Income 42,060 40,986 1,074 Income Before Taxes on Income 38,485 37,411 1,074 Provision for Income Taxes 6,927 6,702 225 Net Income $ 31,558 $ 30,709 $ 849 Earnings Per Share of Common Stock Basic $ 1.22 $ 1.19 $ 0.03 Diluted $ 1.21 $ 1.18 $ 0.03 Balance Sheet ASSETS Contract assets $ 51,929 $ — $ 51,929 Inventories 203,840 250,651 (46,811 ) Other Assets 24,877 24,877 — LIABILITIES AND SHARE OWNERS’ EQUITY Accrued expenses $ 43,196 $ 41,978 $ 1,218 Retained earnings $ 133,982 $ 130,083 $ 3,899 Not Yet Adopted: In August 2018, the FASB issued guidance on Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This new guidance amends the accounting for implementation, setup, and other upfront costs incurred in a cloud computing hosting arrangement. The amendment aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendment also requires companies to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, including options to extend the agreement that is in control of the customer. The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The guidance is to be adopted either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. In August 2017, the FASB issued guidance on Derivatives and Hedging. The pronouncement expands and refines hedge accounting, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. We do not expect the adoption of this standard will have a material effect on our consolidated financial statements. In February 2016, the FASB issued guidance on leases with subsequent amendments to this new guidance in January 2018, July 2018, and December 2018. The new guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases and requires additional qualitative and quantitative disclosures. Under the current guidance, only capital leases are recognized on the balance sheet. The guidance is effective for us as of July 1, 2019, the beginning of our first quarter of fiscal year 2020. As allowed by the July 2018 amendment, the Company will elect not to recast the comparative periods when transitioning to the new guidance, and if applicable, recognize a cumulative effect adjustment to the beginning balance of retained earnings in fiscal year 2020. We have completed our preliminary assessment of adopting the standard. We expect the effects of adoption will include the recognition of less than $5 million of new right-of-use assets and lease liabilities on our balance sheet, primarily for our real estate operating leases, and new disclosures about our leasing activities beginning with the Quarterly Report on Form 10-Q for the first quarter of fiscal year 2020. It is not expected to have a material effect on our financial position, results of operations, or cash flows. We expect no retained earnings adjustment. The standard provides a number of optional practical expedients and accounting elections for an entity’s transition and ongoing accounting. We have elected the “package of practical expedients,” which permits us not to reassess under the new standard our prior conclusions about lease identification, classification, and initial direct costs. We expect to elect the short-term lease recognition exemption, permitting us not to recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less and do not include a purchase option whose exercise is reasonably certain. |
Note 2. Acquisitions Policies (
Note 2. Acquisitions Policies (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Business Acquisition [Line Items] | |
Intangible Assets, Finite-Lived, Policy | The estimated useful life of internal-use software ranges from 3 to 10 years . The amortization period for the customer relationships, technology, and trade name intangible assets is 15 years , 5 years, and 10 years, respectively |
GES | |
Business Acquisition [Line Items] | |
Intangible Assets, Finite-Lived, Policy | Other Intangible Assets include the estimated fair values for finite-lived intangible assets acquired and are listed in the table below along with their estimated useful lives which are being amortized on a straight-line basis. |
Note 3. Revenue from Contract_2
Note 3. Revenue from Contracts with Customers (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Revenue from Contracts with Customers [Abstract] | |
Revenue Recognition, Deferred Revenue | In limited circumstances, the Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for tooling or other miscellaneous services or costs. These advance payments are recognized as contract liabilities until the performance obligations are completed and are included in Accrued expenses on the Consolidated Balance Sheets, |
Note 6. Goodwill and Other In_2
Note 6. Goodwill and Other Intangible Assets Policies (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Other Intangible Assets [Abstract] | |
Intangible Assets, Finite-Lived, Policy | The estimated useful life of internal-use software ranges from 3 to 10 years . The amortization period for the customer relationships, technology, and trade name intangible assets is 15 years , 5 years, and 10 years, respectively |
Note 7. Commitments and Conti_2
Note 7. Commitments and Contingent Liabilities (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingent Liabilities [Abstract] | |
Product Warranties | The Company provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer. 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 8. Credit Facilities (Poli
Note 8. Credit Facilities (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Long-Term Debt and Credit Facilities [Abstract] | |
Debt, Policy | The amount of Long-term debt under credit facilities, less current maturities at June 30, 2019 reflects the borrowings on the primary facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. |
Note 9. Employee Benefit Plans
Note 9. Employee Benefit Plans (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Defined Benefit Plan Disclosure | |
Postemployment Benefit Plans | Unusual or non-recurring severance actions are not estimable using actuarial methods and are expensed in accordance with other applicable U.S. GAAP. |
Domestic | |
Defined Benefit Plan Disclosure | |
Postemployment Benefit Plans | Actuarial (gain) loss is amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plan. |
Note 13. Fair Value (Policies)
Note 13. Fair Value (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
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. There were no changes in the inputs or valuation techniques used to measure fair values during fiscal year 2019 . Financial Instruments Recognized at Fair Value: The following methods and assumptions were used to measure fair value: Financial Instrument Level Valuation Technique/Inputs Used Cash Equivalents 1 Market - Quoted market prices Derivative Assets: Foreign exchange contracts 2 Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk Trading securities: Mutual funds held in SERP 1 Market - Quoted market prices Derivative Liabilities: Foreign exchange contracts 2 Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk |
Fair Value of Financial Instruments Not Carried at Fair Value | Financial Instruments Not Carried At Fair Value: Financial instruments that are not reflected in the Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following: Financial Instrument Level Valuation Technique/Inputs Used Notes receivable 2 Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account non-performance risk Borrowings under credit facilities 2 Market - Based on observable market rates, taking into account Kimball Electronics’ non-performance risk The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to their relatively short maturity and immaterial non-performance risk. |
Note 14. Derivative Instrumen_2
Note 14. Derivative Instruments (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments [Abstract] | |
Derivatives, Hedge Discontinuances, Anticipated Transactions | 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 Non-operating income or expense on the 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 Non-operating income or expense on the Consolidated Statements of Income immediately. |
Note 15. Investments (Policies)
Note 15. Investments (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
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. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in income in the Other Income (Expense) category. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. |
Note 1. Business Description _3
Note 1. Business Description and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedules of Concentration of Risk, by Risk Factor | A summary of significant customers’ net sales and trade receivables as a percentage of consolidated net sales and consolidated trade receivables is as follows: At or For the Year Ended At or For the Year Ended June 30, 2019 June 30, 2018 Net Sales Trade Receivables Net Sales Trade Receivables Philips 14% * 13% * ZF 12% 14% 15% 17% Nexteer Automotive 12% 16% 13% 16% Regal Beloit Corporation * 10% * 11% * amount is less than 10% of total |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The effect of the adoption of the New Revenue Guidance on our Consolidated Balance Sheet as of July 1, 2018, our Consolidated Statements of Income for the year ended June 30, 2019 , and our Consolidated Balance Sheet as of June 30, 2019 , resulting primarily from the change to recognize a majority of our revenue over time as manufacturing services are performed, were as follows: (Amounts in Thousands) Balance at June 30, 2018 Adjustments from Adoption of New Revenue Guidance Balance at July 1, 2018 ASSETS Contract assets $ — $ 43,241 $ 43,241 Inventories 201,596 (39,169 ) 162,427 Other Assets 23,994 (871 ) 23,123 LIABILITIES AND SHARE OWNERS’ EQUITY Accrued expenses 32,446 151 32,597 Retained earnings 99,374 3,050 102,424 At or For the Year Ended June 30, 2019 (Amounts in Thousands) As Reported Amounts Excluding Changes Related to New Revenue Guidance Effect of Change Income Statement Net Sales $ 1,181,844 $ 1,173,156 $ 8,688 Cost of Sales 1,093,438 1,085,824 7,614 Gross Profit 88,406 87,332 1,074 Operating Income 42,060 40,986 1,074 Income Before Taxes on Income 38,485 37,411 1,074 Provision for Income Taxes 6,927 6,702 225 Net Income $ 31,558 $ 30,709 $ 849 Earnings Per Share of Common Stock Basic $ 1.22 $ 1.19 $ 0.03 Diluted $ 1.21 $ 1.18 $ 0.03 Balance Sheet ASSETS Contract assets $ 51,929 $ — $ 51,929 Inventories 203,840 250,651 (46,811 ) Other Assets 24,877 24,877 — LIABILITIES AND SHARE OWNERS’ EQUITY Accrued expenses $ 43,196 $ 41,978 $ 1,218 Retained earnings $ 133,982 $ 130,083 $ 3,899 |
Note 2. Acquisitions (Tables)
Note 2. Acquisitions (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Acquisitions [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary purchase price allocation to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess allocated to goodwill. For tax purposes, $3.9 million of the goodwill recorded as of June 30, 2019 is expected to be deductible. The fair values of the assets acquired and the liabilities assumed presented in these financial statements are preliminary and may differ from the final purchase price allocation for changes associated with the net working capital adjustment, certain tax estimates, and additional information the Company may obtain during the measurement period, which will end no later than one year from the acquisition date. (Amounts in Thousands) October 1, 2018 Cash $ 2,257 Receivables 15,656 Inventories 6,454 Prepaid expenses and other current assets 1,424 Property and Equipment 9,100 Other Intangible Assets 19,259 Other Assets 498 Goodwill 11,913 Total assets acquired $ 66,561 Borrowings under Credit Facilities $ 12,843 Accounts payable 4,113 Accrued expenses 1,340 Other long-term liabilities 5,884 Total liabilities assumed $ 24,180 Net assets acquired $ 42,381 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | Other Intangible Assets include the estimated fair values for finite-lived intangible assets acquired and are listed in the table below along with their estimated useful lives which are being amortized on a straight-line basis. (Amounts in Thousands) Estimated Fair Value Estimated useful life (years) Software $ 379 3 to 7 Technology 5,060 5 Trade name 6,369 10 Customer relationships 7,451 15 Total other intangible assets $ 19,259 |
Note 3. Revenue from Contract_3
Note 3. Revenue from Contracts with Customers (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Revenue from Contracts with Customers [Abstract] | |
Disaggregation of Revenue | The following table disaggregates our revenue by end market vertical for the fiscal year ended June 30, 2019. Fiscal Year Ended (Amounts in Millions) June 30, 2019 Vertical Markets: Automotive $ 474.3 Medical 367.5 Industrial 255.9 Public Safety 66.2 Other 17.9 Total net sales $ 1,181.8 |
Note 4. Inventories (Tables)
Note 4. Inventories (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Inventories [Abstract] | |
Schedule of Inventory, Current | Following are inventory components at June 30: (Amounts in Thousands) 2019 2018 Finished products $ 2,708 $ 25,552 Work-in-process 4,119 17,254 Raw materials 197,013 158,790 Total inventory $ 203,840 $ 201,596 |
Note 5. Property and Equipment
Note 5. Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Property and Equipment [Abstract] | |
Components of Property and Equipment | Major classes of property and equipment consist of the following at June 30: (Amounts in Thousands) 2019 2018 Land and land use rights $ 11,836 $ 10,321 Buildings and improvements 78,508 71,385 Machinery and equipment 255,978 246,758 Construction-in-progress 14,262 7,418 Total $ 360,584 $ 335,882 Less: Accumulated depreciation (216,955 ) (198,672 ) Property and equipment, net $ 143,629 $ 137,210 |
Property, Plant and Equipment | The useful lives used in computing depreciation are based on estimated service lives for classes of property, as follows: Years Buildings and improvements 5 to 40 Machinery and equipment 3 to 11 Land use rights 39 Leasehold improvements Lesser of Useful Life or Term of Lease |
Note 6. Goodwill and Other In_3
Note 6. Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Other Intangible Assets [Abstract] | |
Schedule of Goodwill | A summary of goodwill is as follows: (Amounts in Thousands) Balance as of June 30, 2017 Goodwill $ 19,017 Accumulated impairment (12,826 ) Goodwill, net 6,191 Balance as of June 30, 2018 Goodwill 19,017 Accumulated impairment (12,826 ) Goodwill, net 6,191 Goodwill Acquired 11,913 Balance as of June 30, 2019 Goodwill 30,930 Accumulated impairment (12,826 ) Goodwill, net $ 18,104 |
Schedule of Other Intangible Assets | A summary of other intangible assets subject to amortization is as follows: June 30, 2019 June 30, 2018 (Amounts in Thousands) Cost Accumulated Amortization Net Value Cost Accumulated Amortization Net Value Capitalized Software $ 32,015 $ 27,124 $ 4,891 $ 30,484 $ 26,154 $ 4,330 Customer Relationships 8,618 1,506 7,112 1,167 1,122 45 Technology 5,060 766 4,294 — — — Trade Name 6,369 478 5,891 — — — Other Intangible Assets $ 52,062 $ 29,874 $ 22,188 $ 31,651 $ 27,276 $ 4,375 |
Note 7. Commitments and Conti_3
Note 7. Commitments and Contingent Liabilities (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingent Liabilities [Abstract] | |
Schedule of Product Warranty Liability | Changes in the product warranty accrual during fiscal years 2019 , 2018 , and 2017 were as follows: (Amounts in Thousands) 2019 2018 2017 Product Warranty Liability at the beginning of the year $ 656 $ 593 $ 605 Additions to warranty accrual (including changes in estimates) 361 346 415 Settlements made (in cash or in kind) (59 ) (283 ) (427 ) Product Warranty Liability at the end of the year $ 958 $ 656 $ 593 |
Note 8. Credit Facilities (Tabl
Note 8. Credit Facilities (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Long-Term Debt and Credit Facilities [Abstract] | |
Schedule of Line of Credit Facilities | Credit facilities consisted of the following: Unused Borrowings at Borrowings Outstanding at Borrowings Outstanding at (Amounts in Millions, in U.S Dollar Equivalents) June 30, 2019 June 30, 2019 June 30, 2018 Primary credit facility (1) $ 26.8 $ 122.8 $ 6.0 Thailand overdraft credit facility (2) 2.9 — — China revolving credit facility (3) 7.5 — — Netherlands revolving credit facility (4) 7.1 3.4 2.3 Poland revolving credit facility (5) 17.1 — — Total credit facilities $ 61.4 126.2 8.3 Less: current portion (34.7 ) (8.3 ) Long-term debt under credit facilities, less current portion (6) $ 91.5 $ — (1) At June 30, 2019 , the Company maintained a U.S. primary credit facility (the “primary facility”). On July 27, 2018, the Company entered into an amended and restated credit agreement among the Company, the lenders party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Documentation Agent. The credit agreement amends and restates the Company’s primary credit facility, which was scheduled to mature on October 31, 2019. The credit agreement has a maturity date of July 27, 2023 and allows for $150 million in borrowings, with an option to increase the amount available for borrowing to $225 million at the Company’s request, subject to the consent of each lender participating in such increase. The Company incurred $0.4 million of debt issuance costs associated with the amended and restated credit agreement. This facility is maintained for working capital and general corporate purposes of the Company including capital expenditures and acquisitions. A commitment fee is payable on the unused portion of the credit facility which was immaterial to our operating results in fiscal years 2019 , 2018 , and 2017 . The commitment fee on the unused portion of principal amount of the credit facility is payable at a rate that ranges from 20.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary facility. Types of borrowings available on the primary facility include revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings is dependent on the type of borrowings and will be one of the following two options: • the London Interbank Offered Rate (“LIBOR”) in effect two business days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Eurocurrency Loans spread which can range from 125.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or • the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of a. JPMorgan’s prime rate; b. 1% per annum above the Adjusted LIBOR Rate (as defined in the Credit Agreement); or c. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined in the Credit Agreement ); plus the ABR Loans spread which can range from 25.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. The Company’s financial covenants under the primary credit facility require: • a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, and • a fixed charge coverage ratio, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be less than 1.10 to 1.00. The Company had $0.4 million in letters of credit contingently committed against the credit facility at both June 30, 2019 and 2018. (2) The Company also maintains a foreign credit facility for its operation in Thailand which allows for borrowings of up to 90.0 million Thai Baht (approximately $2.9 million at June 30, 2019 exchange rates). This credit facility can be terminated at any time by either the Company or the bank by giving prior written notice of at least 15 days to the other party. Interest on borrowing under this facility is charged at a rate of interest determined by the bank in accordance with relevant laws and regulations for charging interest on an overdraft facility. (3) The Company also maintains a foreign revolving credit facility for one of its China operations. The China credit facility allows for borrowings of up to $7.5 million , which borrowings can be made in either Chinese Renminbi (RMB) or U.S. dollars. The availability of this uncommitted facility is at the sole discretion of the bank and is subject to the availability of funds and other relevant conditions. The bank may, at its sole discretion, agree to provide the facility on such terms and conditions as the bank deems appropriate. Further, the availability of the facility is also subject to the determination by the bank of the borrower’s actual need for such facility. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest determined by the bank and is dependent on the denomination of the currency borrowed. The facility matures on May 31, 2020 . (4) The Company established an uncommitted revolving credit facility in fiscal year 2017 for our Netherlands subsidiary. The Netherlands credit facility allows for borrowings of up to 9.2 million Euro (approximately $10.5 million at June 30, 2019 exchange rates), which borrowings can be made in Euro, U.S. dollars, or other optional currency. The availability of funds under this facility is at the sole discretion of the bank. Proceeds from the facility are to be used for general corporate purposes. Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed. The facility matures on June 21, 2020 . (5) During the current fiscal year, the Company established an uncommitted revolving credit facility for our Poland operation, which allows for borrowings up to 15 million Euro (approximately $17.1 million at June 30, 2019 exchange rates) that can be drawn in Euro, U.S. dollars, or Polish Zloty. The availability of funds under this uncommitted facility is at the sole discretion of the bank. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed. The facility matures on December 20, 2019 . (6) The amount of Long-term debt under credit facilities, less current maturities at June 30, 2019 reflects the borrowings on the primary facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. |
Note 9. Employee Benefit Plan_2
Note 9. Employee Benefit Plans (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Schedule of Changes in Projected Benefit Obligations | June 30 (Amounts in Thousands) 2019 2018 Changes and Components of Benefit Obligation: Benefit obligation at beginning of year $ 1,235 $ 1,136 Service cost 350 212 Interest cost 87 56 Actuarial loss (gain) for the period 479 (72 ) Benefits paid (246 ) (97 ) Benefit obligation at end of year $ 1,905 $ 1,235 June 30 (Amounts in Thousands) 2019 2018 Changes and Components of Benefit Obligation: Benefit obligation at beginning of year $ 1,658 $ 1,808 Service cost 318 364 Interest cost 42 49 Actuarial gain for the period (447 ) (533 ) Benefits paid (122 ) (30 ) Benefit obligation at end of year $ 1,449 $ 1,658 Balance in current liabilities $ 308 $ 353 Balance in noncurrent liabilities 1,141 1,305 Total benefit obligation recognized in the Consolidated Balance Sheets $ 1,449 $ 1,658 |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | June 30 (Amounts in Thousands) 2019 2018 Changes and Components in Accumulated Other Comprehensive Income (Loss) (before tax): Accumulated Other Comprehensive Income (Loss) at beginning of year $ (1,104 ) $ (929 ) Net change in unrecognized actuarial (gain) loss 25 (175 ) Accumulated Other Comprehensive Income (Loss) at end of year $ (1,079 ) $ (1,104 ) |
Schedule of Net Benefit Costs | (Amounts in Thousands) Year Ended June 30 Components of Net Periodic Benefit Cost (before tax): 2019 2018 2017 Service cost $ 318 $ 364 $ 302 Interest cost 42 49 39 Amortization of actuarial (gain) loss (472 ) (358 ) (317 ) Net periodic benefit cost recognized in the Consolidated Statements of Income $ (112 ) $ 55 $ 24 (Amounts in Thousands) Year Ended June 30 Components of Net Periodic Benefit Cost (before tax): 2019 2018 2017 Service cost $ 350 $ 212 $ 106 Interest cost 87 56 46 Recognition of actuarial (gain) loss 479 (72 ) 219 Net periodic benefit cost recognized in the Consolidated Statements of Income $ 916 $ 196 $ 371 |
Note 10. Stock Compensation P_2
Note 10. Stock Compensation Plans (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Stock Compensation Plans [Abstract] | |
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Performance-Based Units, Vested and Expected to Vest | A summary of the Company’s performance share activity during fiscal year 2019 is presented below: Number of Shares Weighted Average Grant Date Fair Value Performance shares outstanding at July 1, 2018 556,428 $ 14.11 Granted 198,868 $ 20.03 Vested (292,175 ) $ 13.30 Forfeited (15,861 ) $ 17.08 Performance shares outstanding at June 30, 2019 447,260 $ 17.16 |
Note 11. Income Taxes (Tables)
Note 11. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Income Taxes [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The components of the deferred tax assets and liabilities as of June 30, 2019 and 2018 , were as follows: (Amounts in Thousands) 2019 2018 Deferred Tax Assets: Receivables $ 105 $ 158 Inventory 1,914 1,153 Employee benefits 193 194 Deferred compensation 6,149 6,496 Other current liabilities 1,275 830 Tax credit carryforwards 1,638 1,251 Goodwill 268 655 Net operating loss carryforward 2,339 2,376 Net foreign currency losses 11 — Miscellaneous 2,970 2,394 Valuation Allowance (658 ) (638 ) Total asset $ 16,204 $ 14,869 Deferred Tax Liabilities: Other intangible assets $ 1,412 $ — Property and equipment 1,116 565 Net foreign currency gains — 12 Miscellaneous 477 300 Total liability $ 3,005 $ 877 Net Deferred Income Taxes $ 13,199 $ 13,992 |
Schedule of Income before Income Tax, Domestic and Foreign | The components of income before taxes on income are as follows: Year Ended June 30 (Amounts in Thousands) 2019 2018 2017 United States $ 11,191 $ 5,609 $ 10,051 Foreign 27,294 39,166 34,204 Total income before taxes on income $ 38,485 $ 44,775 $ 44,255 |
Schedule of Components of Income Tax Expense (Benefit) | The provision for income taxes is composed of the following items: Year Ended June 30 (Amounts in Thousands) 2019 2018 2017 Current Taxes: Federal $ 872 $ 13,132 $ 2,696 Foreign 7,545 11,982 8,130 State 203 459 134 Total payable $ 8,620 $ 25,573 $ 10,960 Deferred Taxes: Federal $ 67 $ 5,015 $ 6 Foreign (1,177 ) (2,427 ) (631 ) State (603 ) (776 ) (259 ) Valuation allowance 20 638 — Total deferred $ (1,693 ) $ 2,450 $ (884 ) Total provision for income taxes $ 6,927 $ 28,023 $ 10,076 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the statutory U.S. income tax rate to the Company’s effective income tax rate follows: Year Ended June 30 2019 2018 2017 (Amounts in Thousands) Amount % Amount % Amount % Tax computed at U.S. federal statutory rate $ 8,082 21.0 % $ 12,582 28.1 % $ 15,489 35.0 % State income taxes, net of federal income tax benefit (320 ) (0.8 ) (408 ) (0.9 ) (81 ) (0.2 ) Foreign tax rate differential 313 0.8 (1,615 ) (3.6 ) (3,832 ) (8.7 ) Impact of foreign exchange rates on foreign income taxes 156 0.4 180 0.4 (613 ) (1.4 ) Valuation allowance 20 0.1 638 1.4 — — Research credit (627 ) (1.6 ) (378 ) (0.8 ) (348 ) (0.8 ) Deemed repatriation (416 ) (1.1 ) 13,436 30.0 — — Revaluation of net deferred tax assets (10 ) — 4,357 9.7 — — Other - net (271 ) (0.8 ) (769 ) (1.7 ) (539 ) (1.1 ) Total provision for income taxes $ 6,927 18.0 % $ 28,023 62.6 % $ 10,076 22.8 % |
Summary of Income Tax Contingencies | Changes in the unrecognized tax benefit, excluding accrued interest and penalties, during fiscal years 2019 , 2018 , and 2017 were as follows: (Amounts in Thousands) 2019 2018 2017 Beginning balance - July 1 $ 160 $ 102 $ 46 Tax positions related to prior fiscal years: Additions 758 78 56 Reductions — (20 ) — Tax positions related to current fiscal year: Additions — — — Reductions — — — Settlements — — — Lapses in statute of limitations (14 ) — — Ending balance - June 30 $ 904 $ 160 $ 102 Portion that, if recognized, would reduce tax expense and effective tax rate $ 214 $ 137 $ 85 |
Note 13. Fair Value (Tables)
Note 13. Fair Value (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Fair Value [Abstract] | |
Fair Value Measurements, Recurring, Valuation Techniques | The following methods and assumptions were used to measure fair value: Financial Instrument Level Valuation Technique/Inputs Used Cash Equivalents 1 Market - Quoted market prices Derivative Assets: Foreign exchange contracts 2 Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk Trading securities: Mutual funds held in SERP 1 Market - Quoted market prices Derivative Liabilities: Foreign exchange contracts 2 Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | As of June 30, 2019 and 2018 , 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: June 30, 2019 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,123 $ — $ 1,123 Derivatives: foreign exchange contracts — 1,832 1,832 Trading securities: mutual funds held in nonqualified SERP 9,268 — 9,268 Total assets at fair value $ 10,391 $ 1,832 $ 12,223 Liabilities Derivatives: foreign exchange contracts $ — $ 299 $ 299 Total liabilities at fair value $ — $ 299 $ 299 June 30, 2018 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,099 $ — $ 1,099 Derivatives: foreign exchange contracts — 1,713 1,713 Trading securities: mutual funds held in nonqualified SERP 8,769 — 8,769 Total assets at fair value $ 9,868 $ 1,713 $ 11,581 Liabilities Derivatives: foreign exchange contracts $ — $ 1,867 $ 1,867 Total liabilities at fair value $ — $ 1,867 $ 1,867 |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques | Financial instruments that are not reflected in the Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following: Financial Instrument Level Valuation Technique/Inputs Used Notes receivable 2 Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account non-performance risk Borrowings under credit facilities 2 Market - Based on observable market rates, taking into account Kimball Electronics’ non-performance risk |
Note 14. Derivative Instrumen_3
Note 14. Derivative Instruments (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Fair Values of Derivative Instruments on the Consolidated Balance Sheets Asset Derivatives Liability Derivatives Fair Value As of Fair Value As of (Amounts in Thousands) Balance Sheet Location June 30 June 30 Balance Sheet Location June 30 June 30 Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 1,136 $ 758 Accrued expenses $ 278 $ 1,857 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 696 955 Accrued expenses 21 10 Total derivatives $ 1,832 $ 1,713 $ 299 $ 1,867 |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The Effect of Derivative Instruments on Other Comprehensive Income (Loss) June 30 (Amounts in Thousands) 2019 2018 2017 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion): Foreign exchange contracts $ 3,337 $ (2,669 ) $ 779 |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The Effect of Derivative Instruments on Consolidated Statements of Income (Amounts in Thousands) Year Ended June 30 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2019 2018 2017 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion): Foreign exchange contracts Cost of Sales $ 1,061 $ (1,648 ) $ 18 Foreign exchange contracts Non-operating income (expense) — (11 ) (5 ) Total $ 1,061 $ (1,659 ) $ 13 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income (Ineffective Portion): Foreign exchange contracts Non-operating income (expense) $ 5 $ (9 ) $ — 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) $ 2,766 $ 796 $ (42 ) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 3,832 $ (872 ) $ (29 ) |
Note 15. Investments (Tables)
Note 15. Investments (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Investments [Abstract] | |
Trading Securities (and Certain Trading Assets) | SERP asset and liability balances applicable to Kimball Electronics participants were as follows: June 30 (Amounts in Thousands) 2019 2018 SERP investments - current asset $ 1,728 $ 294 SERP investments - other long-term asset 7,540 8,475 Total SERP investments $ 9,268 $ 8,769 SERP obligation - current liability $ 1,728 $ 294 SERP obligation - other long-term liability 7,540 8,475 Total SERP obligation $ 9,268 $ 8,769 |
Note 16. Accrued Expenses (Tabl
Note 16. Accrued Expenses (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses [Abstract] | |
Schedule of Accrued Liabilities | Accrued expenses consisted of: June 30 (Amounts in Thousands) 2019 2018 Taxes $ 5,760 $ 2,803 Compensation 19,046 18,008 Customer advance payments 6,345 1,729 Retirement plan 1,959 1,791 Insurance 1,675 1,375 Other expenses 8,411 6,740 Total accrued expenses $ 43,196 $ 32,446 |
Note 17. Geographic Informati_2
Note 17. Geographic Information (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Geographic Information [Abstract] | |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | The following geographic area data includes net sales based on the country location of the Company’s business unit providing the manufacturing or other service and long-lived assets based on physical location. In fiscal year 2019, the Company changed its presentation of net sales by country, which were previously disclosed based on the destination of the product shipped. The change to disclose net sales by country based on the business unit location is to better reflect where the performance obligations are performed and the revenue is earned. Long-lived assets include property and equipment and capitalized software. Prior year periods have been restated to conform to the current year presentation. At or For the Year Ended June 30 (Amounts in Thousands) 2019 2018 2017 Net Sales: United States $ 321,805 $ 224,834 $ 189,184 Mexico 282,400 256,537 219,585 Poland 251,635 282,847 254,448 China 146,332 177,930 172,117 Other Foreign 179,672 129,913 95,580 Total net sales $ 1,181,844 $ 1,072,061 $ 930,914 Long-Lived Assets: United States $ 43,887 $ 39,465 $ 41,308 Mexico 31,238 30,733 30,235 Poland 29,736 33,629 32,315 Romania 19,546 19,394 16,468 China 12,138 14,546 17,106 Other Foreign 11,975 3,773 4,629 Total long-lived assets $ 148,520 $ 141,540 $ 142,061 |
Note 18. Earnings Per Share (Ta
Note 18. Earnings Per Share (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
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: (Amounts in thousands, except per share data) Year Ended June 30 2019 2018 2017 Basic and Diluted Earnings Per Share: Net Income $ 31,558 $ 16,752 $ 34,179 Less: Net Income allocated to participating securities 32 9 15 Net Income allocated to common Share Owners $ 31,526 $ 16,743 $ 34,164 Basic weighted average common shares outstanding 25,857 26,745 27,413 Dilutive effect of average outstanding performance shares 200 255 110 Dilutive effect of average outstanding deferred stock units 25 7 7 Dilutive weighted average shares outstanding 26,082 27,007 27,530 Earnings Per Share of Common Stock: Basic $ 1.22 $ 0.63 $ 1.25 Diluted $ 1.21 $ 0.62 $ 1.24 |
Note 19. Accumulated Other Co_2
Note 19. Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Comprehensive Income [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows: (Amounts in Thousands) Foreign Currency Translation Adjustments Derivative Gain (Loss) Postemployment Benefits Net Actuarial Gain (Loss) Accumulated Other Comprehensive Income (Loss) Balance at June 30, 2017 $ (6,876 ) $ (2,788 ) $ 580 $ (9,084 ) Other comprehensive income (loss) before reclassifications 2,519 (1,965 ) 345 899 Reclassification to (earnings) loss — 1,455 (218 ) 1,237 Net current-period other comprehensive income (loss) $ 2,519 $ (510 ) $ 127 $ 2,136 Tax Reform impact (1) — (81 ) 130 49 Balance at June 30, 2018 $ (4,357 ) $ (3,379 ) $ 837 $ (6,899 ) Other comprehensive income (loss) before reclassifications (2,491 ) 2,638 339 486 Reclassification to (earnings) loss — (857 ) (358 ) (1,215 ) Net current-period other comprehensive income (loss) (2,491 ) 1,781 (19 ) (729 ) Balance at June 30, 2019 $ (6,848 ) $ (1,598 ) $ 818 $ (7,628 ) (1) During fiscal year 2018, the Company adopted a new accounting standard on accounting for the reclassification of certain tax effects from accumulated other comprehensive income related to Tax Reform. |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Consolidated Statements of Income Year Ended June 30 (Amounts in Thousands) 2019 2018 Derivative Gain (Loss) (1) $ 1,061 $ (1,648 ) Cost of Sales 5 (20 ) Non-operating income (expense), net (209 ) 213 Benefit (Provision) for Income Taxes $ 857 $ (1,455 ) Net of Tax Postemployment Benefits: Amortization of Actuarial Gain (Loss) (2) $ 472 $ 358 Non-operating income (114 ) (140 ) Benefit (Provision) for Income Taxes $ 358 $ 218 Net of Tax Total Reclassifications for the Period $ 1,215 $ (1,237 ) Net of Tax Amounts in parentheses indicate reductions to income. (1) See Note 14 - Derivative Instruments of Notes to Consolidated Financial Statements for further information on derivative instruments. (2) See Note 9 - Employee Benefit Plans of Notes to Consolidated Financial Statements for further information on postemployment benefit plans. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation in the table above due to the adoption of new guidance issued by the FASB. |
Note 20. Quarterly Financial _2
Note 20. Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Quarterly Financial Information (Unaudited) [Abstract] | |
Schedule of Quarterly Financial Information | Three Months Ended (Amounts in Thousands, Except for Per Share Data) September 30 December 31 March 31 June 30 Fiscal Year 2019: Net Sales $ 265,620 $ 284,149 $ 313,454 $ 318,621 Gross Profit 18,186 20,444 26,554 23,222 Operating Income 7,032 10,212 14,497 10,319 Net Income 5,069 7,115 11,849 7,525 Basic Earnings Per Share $ 0.19 $ 0.27 $ 0.46 $ 0.30 Diluted Earnings Per Share $ 0.19 $ 0.27 $ 0.46 $ 0.29 Fiscal Year 2018: Net Sales $ 253,204 $ 258,151 $ 283,938 $ 276,768 Gross Profit (1) 19,453 20,921 22,881 22,775 Operating Income (1) 9,523 10,119 11,130 11,266 Net Income (2) 8,480 (8,347 ) 10,835 5,784 Basic Earnings Per Share $ 0.32 $ (0.31 ) $ 0.41 $ 0.22 Diluted Earnings Per Share $ 0.31 $ (0.31 ) $ 0.40 $ 0.22 (1) Prior period has been restated to reflect the retrospective adoption of new accounting guidance issued by the FASB on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation. There was no effect to Net Income or Diluted Earnings per Share. (2) Net income for the quarter ended December 31, 2017 included income tax expense of $16.6 million ( $0.62 per diluted share) due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was enacted into law in December 2017 and relates to the deemed repatriation of unremitted foreign earnings and the revaluation of net deferred tax assets. |
Schedule II Valuation and Qua_2
Schedule II Valuation and Qualifying Accounts (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts | Valuation and Qualifying Accounts Description Balance at Beginning of Year Additions (Reductions) to Expense Adjustments to Other Accounts Write-offs and Recoveries Balance at End of Year (Amounts in Thousands) Year Ended June 30, 2019 Valuation Allowances: Receivables $ 482 $ 184 $ 14 $ (410 ) $ 270 Deferred Tax Asset $ 638 $ 20 $ — $ — $ 658 Year Ended June 30, 2018 Valuation Allowances: Receivables $ 284 $ 259 $ (51 ) $ (10 ) $ 482 Deferred Tax Asset $ — $ 638 $ — $ — $ 638 Year Ended June 30, 2017 Valuation Allowances: Receivables $ 192 $ 129 $ (37 ) $ — $ 284 |
Note 1. Business Description _4
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | [1] | Dec. 31, 2017 | [1] | Sep. 30, 2017 | [1] | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jul. 01, 2019 | ||
Accounts Receivable Sold Without Recourse | $ 261,200 | $ 181,500 | ||||||||||||||
Accounts Receivable, Extended Payment Terms | 45 days | |||||||||||||||
Factoring Fees | $ 1,700 | 1,100 | ||||||||||||||
DueFromBankersAcceptanceDrafts | $ 4,200 | $ 3,800 | 4,200 | 3,800 | ||||||||||||
SettlementofBankersAcceptanceDrafts | 2,700 | 5,500 | ||||||||||||||
Research and Development Costs | $ 15,000 | 11,000 | $ 10,000 | |||||||||||||
Self-Insured Workforce Coverage Percent | 20.00% | 20.00% | ||||||||||||||
Self Insurance Reserve, Current | $ 1,700 | 1,400 | $ 1,700 | 1,400 | ||||||||||||
Other General Income | (307) | 0 | (4,005) | |||||||||||||
Operating Income (Loss) | 10,319 | $ 14,497 | $ 10,212 | $ 7,032 | 11,266 | [1] | $ 11,130 | $ 10,119 | $ 9,523 | $ 42,060 | 42,038 | 42,780 | ||||
Minimum | ||||||||||||||||
Accounts Receivable, Customary Payment Terms | 30 days | |||||||||||||||
Maximum | ||||||||||||||||
Accounts Receivable, Customary Payment Terms | 45 days | |||||||||||||||
former parent | ||||||||||||||||
Nontrade Receivables | 400 | 500 | $ 400 | 500 | ||||||||||||
Nontrade Receivables, Noncurrent | $ 300 | $ 400 | 300 | 400 | ||||||||||||
Accounting Standards Update 2017-07 | ||||||||||||||||
Operating Income (Loss) | (400) | (300) | (300) | |||||||||||||
Nonoperating Income (Expense) | $ 400 | $ 300 | $ 300 | |||||||||||||
Accounting Standards Update 2016-02 | Scenario, Forecast | ||||||||||||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 0 | |||||||||||||||
Accounting Standards Update 2016-02 | Maximum | Scenario, Forecast | ||||||||||||||||
Operating Lease, Right-of-Use Asset | 5,000 | |||||||||||||||
Operating Lease, Liability | $ 5,000 | |||||||||||||||
[1] | Prior period has been restated to reflect the retrospective adoption of new accounting guidance issued by the FASB on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation. There was no effect to Net Income or Diluted Earnings per Share. |
Note 1. Business Description _5
Note 1. Business Description and Summary of Significant Accounting Policies - Summary of Concentration Risk (Details) - Customer Concentration Risk | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Philips | Sales Revenue, Net | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 14.00% | 13.00% |
ZF | Sales Revenue, Net | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 12.00% | 15.00% |
ZF | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 14.00% | 17.00% |
Nexteer Automotive | Sales Revenue, Net | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 12.00% | 13.00% |
Nexteer Automotive | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 16.00% | 16.00% |
Regal Beloit Corporation | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10.00% | 11.00% |
Note 1. Business Description _6
Note 1. Business Description and Summary of Significant Accounting Policies Revenue Recognition Topic 606 Adoption (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jul. 01, 2018 | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||||||
Net Sales | $ 318,621 | $ 313,454 | $ 284,149 | $ 265,620 | $ 276,768 | $ 283,938 | $ 258,151 | $ 253,204 | $ 1,181,844 | $ 1,072,061 | $ 930,914 | |||||
Cost of Sales | 1,093,438 | 986,031 | 855,479 | |||||||||||||
Gross Profit | 23,222 | 26,554 | 20,444 | 18,186 | 22,775 | [1] | 22,881 | [1] | 20,921 | [1] | 19,453 | [1] | 88,406 | 86,030 | 75,435 | |
Operating Income (Loss) | 10,319 | 14,497 | 10,212 | 7,032 | 11,266 | [1] | 11,130 | [1] | 10,119 | [1] | 9,523 | [1] | 42,060 | 42,038 | 42,780 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | 38,485 | 44,775 | 44,255 | |||||||||||||
Provision for Income Taxes | 6,927 | 28,023 | 10,076 | |||||||||||||
Net Income (Loss) | $ 7,525 | $ 11,849 | $ 7,115 | $ 5,069 | $ 5,784 | $ 10,835 | $ (8,347) | [2] | $ 8,480 | $ 31,558 | $ 16,752 | $ 34,179 | ||||
Earnings Per Share, Basic | $ 0.30 | $ 0.46 | $ 0.27 | $ 0.19 | $ 0.22 | $ 0.41 | $ (0.31) | $ 0.32 | $ 1.22 | $ 0.63 | $ 1.25 | |||||
Earnings Per Share, Diluted | $ 0.29 | $ 0.46 | $ 0.27 | $ 0.19 | $ 0.22 | $ 0.40 | $ (0.31) | $ 0.31 | $ 1.21 | $ 0.62 | $ 1.24 | |||||
Contract Assets | $ 51,929 | $ 0 | $ 51,929 | $ 0 | $ 43,241 | |||||||||||
Inventories | 203,840 | 201,596 | 203,840 | 201,596 | 162,427 | |||||||||||
Other Assets | 24,877 | 23,994 | 24,877 | 23,994 | 23,123 | |||||||||||
Accrued expenses | 43,196 | 32,446 | 43,196 | 32,446 | 32,597 | |||||||||||
Retained earnings | 133,982 | $ 99,374 | 133,982 | $ 99,374 | 102,424 | |||||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | ||||||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||||||
Net Sales | 1,173,156 | |||||||||||||||
Cost of Sales | 1,085,824 | |||||||||||||||
Gross Profit | 87,332 | |||||||||||||||
Operating Income (Loss) | 40,986 | |||||||||||||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | 37,411 | |||||||||||||||
Provision for Income Taxes | 6,702 | |||||||||||||||
Net Income (Loss) | $ 30,709 | |||||||||||||||
Earnings Per Share, Basic | $ 1.19 | |||||||||||||||
Earnings Per Share, Diluted | $ 1.18 | |||||||||||||||
Contract Assets | 0 | $ 0 | ||||||||||||||
Inventories | 250,651 | 250,651 | ||||||||||||||
Other Assets | 24,877 | 24,877 | ||||||||||||||
Accrued expenses | 41,978 | 41,978 | ||||||||||||||
Retained earnings | 130,083 | 130,083 | ||||||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||||||
Net Sales | 8,688 | |||||||||||||||
Cost of Sales | 7,614 | |||||||||||||||
Gross Profit | 1,074 | |||||||||||||||
Operating Income (Loss) | 1,074 | |||||||||||||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest | 1,074 | |||||||||||||||
Provision for Income Taxes | 225 | |||||||||||||||
Net Income (Loss) | $ 849 | |||||||||||||||
Earnings Per Share, Basic | $ 0.03 | |||||||||||||||
Earnings Per Share, Diluted | $ 0.03 | |||||||||||||||
Contract Assets | 51,929 | $ 51,929 | 43,241 | |||||||||||||
Inventories | (46,811) | (46,811) | (39,169) | |||||||||||||
Other Assets | 0 | 0 | (871) | |||||||||||||
Accrued expenses | 1,218 | 1,218 | 151 | |||||||||||||
Retained earnings | $ 3,899 | $ 3,899 | $ 3,050 | |||||||||||||
[1] | Prior period has been restated to reflect the retrospective adoption of new accounting guidance issued by the FASB on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation. There was no effect to Net Income or Diluted Earnings per Share. | |||||||||||||||
[2] | Net income for the quarter ended December 31, 2017 included income tax expense of $16.6 million ($0.62 per diluted share) due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was enacted into law in December 2017 and relates to the deemed repatriation of unremitted foreign earnings and the revaluation of net deferred tax assets. |
Note 2. Acquisitions (Details)
Note 2. Acquisitions (Details) - USD ($) | Oct. 01, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jul. 18, 2016 |
Finite-lived Intangible Assets Acquired | $ 0 | ||||
Payments for acquisitions, net of cash acquired | $ 43,889,000 | 0 | $ 2,138,000 | ||
Goodwill | 18,104,000 | 6,191,000 | 6,191,000 | ||
Business Combination, Bargain Purchase, Gain Recognized, Amount | 0 | 0 | 925,000 | ||
GES | |||||
Finite-lived Intangible Assets Acquired | $ 19,259,000 | ||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 3,900,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | 2,257,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 15,656,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 6,454,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | 1,424,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 9,100,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 19,259,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets | 498,000 | ||||
Business Acquisition, Date of Acquisition Agreement | Oct. 1, 2018 | ||||
Business Combination, Consideration Transferred | $ 42,400,000 | ||||
Net Working Capital Adjustment for Acquisition | 7,600,000 | ||||
Payments for acquisitions, net of cash acquired | 43,900,000 | ||||
Goodwill | 11,913,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets | 66,561,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 24,180,000 | ||||
Business Acquisition, Transaction Costs | 1,400,000 | ||||
Business Combination, Acquisition Related Costs | $ 500,000 | $ 900,000 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Long-term Debt | 12,843,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | 4,113,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other | 1,340,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | 5,884,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 42,381,000 | ||||
Business Combination, Tax Liabilities Including Interest and Penalties Assumed, Liabilities | 4,200,000 | ||||
Business Combination, Tax Liabilities Including Interest and Penalties Assumed, Noncurrent Liabilities | 3,900,000 | ||||
Business Combination, Tax Liabilities Including Interest and Penalties Assumed, Current Liabilities | 300,000 | ||||
Business Combination, Indemnification Assets, Amount as of Acquisition Date | 4,200,000 | ||||
Aircom | |||||
Business Acquisition, Date of Acquisition Agreement | Jul. 18, 2016 | ||||
Business Combination, Consideration Transferred | 3,500,000 | ||||
Payments to Acquire Businesses, Gross | 2,500,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets | $ 6,400,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | $ 1,400,000 | ||||
Business Combination, Bargain Purchase, Gain Recognized, Amount | 900,000 | ||||
Nontrade Receivables, Current | GES | |||||
Business Combination, Consideration Transferred, Other | $ 3,800,000 | ||||
Nontrade Receivables, Current | Aircom | |||||
Business Combination, Consideration Transferred, Other | $ 1,000,000 | ||||
Computer Software, Intangible Asset | GES | |||||
Finite-lived Intangible Assets Acquired | 379,000 | ||||
Technology-Based Intangible Assets | GES | |||||
Finite-lived Intangible Assets Acquired | $ 5,060,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | ||||
Trade Names | GES | |||||
Finite-lived Intangible Assets Acquired | $ 6,369,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | ||||
Customer Relationships | GES | |||||
Finite-lived Intangible Assets Acquired | $ 7,451,000 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | ||||
Minimum | Computer Software, Intangible Asset | GES | |||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | ||||
Maximum | Computer Software, Intangible Asset | GES | |||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years |
Note 3. Revenue from Contract_4
Note 3. Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jul. 01, 2018 | |
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | $ 318,621 | $ 313,454 | $ 284,149 | $ 265,620 | $ 276,768 | $ 283,938 | $ 258,151 | $ 253,204 | $ 1,181,844 | $ 1,072,061 | $ 930,914 | |
Customer advance payments | 6,345 | 1,729 | 6,345 | 1,729 | ||||||||
Contract Assets | 51,929 | $ 0 | $ 51,929 | $ 0 | $ 43,241 | |||||||
Transferred over Time | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | 70.00% | |||||||||||
Automotive | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | $ 474,300 | |||||||||||
Medical | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | 367,500 | |||||||||||
Industrial | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | 255,900 | |||||||||||
Public Safety | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | 66,200 | |||||||||||
Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | 17,900 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Net Sales | 8,688 | |||||||||||
Contract Assets | $ 51,929 | $ 51,929 | $ 43,241 |
Note 4. Inventories - Inventory
Note 4. Inventories - Inventory Textuals (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Inventory, Net | $ 203,840 | $ 162,427 | $ 201,596 |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Inventory, Net | $ (46,811) | $ (39,169) |
Note 4. Inventories - Invento_2
Note 4. Inventories - Inventory Components (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Inventory, Finished Goods, Net of Reserves | $ 2,708 | $ 25,552 | |
Inventory, Work in Process, Net of Reserves | 4,119 | 17,254 | |
Inventory, Raw Materials, Net of Reserves | 197,013 | 158,790 | |
Total inventory | $ 203,840 | $ 162,427 | $ 201,596 |
Note 5. Property and Equipmen_2
Note 5. Property and Equipment - Property and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Property and Equipment | ||
Total Property and Equipment | $ 360,584 | $ 335,882 |
Less: Accumulated depreciation | (216,955) | (198,672) |
Property and equipment, net | 143,629 | 137,210 |
Land and Land Use Rights | ||
Property and Equipment | ||
Total Property and Equipment | 11,836 | 10,321 |
Building and Building Improvements | ||
Property and Equipment | ||
Total Property and Equipment | 78,508 | 71,385 |
Machinery and Equipment | ||
Property and Equipment | ||
Total Property and Equipment | 255,978 | 246,758 |
Construction in Progress | ||
Property and Equipment | ||
Total Property and Equipment | $ 14,262 | $ 7,418 |
Note 5. Property and Equipmen_3
Note 5. Property and Equipment - Asset Lives (Details) | 12 Months Ended |
Jun. 30, 2019 | |
Leasehold Improvements, Range of Lives | Lesser of Useful Life or Term of Lease |
Building and Building Improvements | Minimum | |
Property, Plant and Equipment, Useful Life | 5 years |
Building and Building Improvements | Maximum | |
Property, Plant and Equipment, Useful Life | 40 years |
Machinery and Equipment | Minimum | |
Property, Plant and Equipment, Useful Life | 3 years |
Machinery and Equipment | Maximum | |
Property, Plant and Equipment, Useful Life | 11 years |
Land Use Rights | |
Property, Plant and Equipment, Useful Life | 39 years |
Note 5. Property and Equipmen_4
Note 5. Property and Equipment - Textuals (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Depreciation of property and equipment | $ 26.3 | $ 25.5 | $ 23 |
Note 6. Goodwill and Other In_4
Note 6. Goodwill and Other Intangible Assets Goodwill (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Oct. 01, 2018 | |
Goodwill | ||||
Goodwill, Impairment Loss | $ 0 | $ 0 | $ 0 | |
Goodwill, Acquired During Period | 0 | |||
Goodwill, Gross | 30,930,000 | 19,017,000 | 19,017,000 | |
Accumulated impairment | (12,826,000) | (12,826,000) | (12,826,000) | |
Goodwill | 18,104,000 | $ 6,191,000 | $ 6,191,000 | |
GES | ||||
Goodwill | ||||
Goodwill, Acquired During Period | $ 11,913,000 | |||
Goodwill | $ 11,913,000 |
Note 6. Goodwill and Other In_5
Note 6. Goodwill and Other Intangible Assets Finite-Lived Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Other Intangible Assets | |||
Other Intangible Assets, Cost | $ 52,062,000 | $ 31,651,000 | |
Other Intangible Assets, Accumulated Amortization | 29,874,000 | 27,276,000 | |
Other Intangible Assets, Net Value | 22,188,000 | 4,375,000 | |
Other Intangible Assets, Amortization Expense | 2,600,000 | 900,000 | $ 900,000 |
Other Intangible Assets, Future Amortization Expense, Year One | 3,100,000 | ||
Other Intangible Assets, Future Amortization Expense, Year Two | 3,100,000 | ||
Other Intangible Assets, Future Amortization Expense, Year Three | 2,900,000 | ||
Other Intangible Assets, Future Amortization Expense, Year Four | 2,900,000 | ||
Other Intangible Assets, Future Amortization Expense, Year Five | 2,100,000 | ||
Other Intangible Assets, Future Amortization Expense, after Year Five | 8,100,000 | ||
Indefinite-lived Intangible Assets (Excluding Goodwill) | 0 | ||
Finite-lived Intangible Assets Acquired | 0 | ||
Computer Software, Intangible Asset | |||
Other Intangible Assets | |||
Other Intangible Assets, Cost | 32,015,000 | 30,484,000 | |
Other Intangible Assets, Accumulated Amortization | 27,124,000 | 26,154,000 | |
Other Intangible Assets, Net Value | $ 4,891,000 | 4,330,000 | |
Computer Software, Intangible Asset | Minimum | |||
Other Intangible Assets | |||
Finite-Lived Intangible Asset, Useful Life | 3 years | ||
Computer Software, Intangible Asset | Maximum | |||
Other Intangible Assets | |||
Finite-Lived Intangible Asset, Useful Life | 10 years | ||
Customer Relationships | |||
Other Intangible Assets | |||
Other Intangible Assets, Cost | $ 8,618,000 | 1,167,000 | |
Other Intangible Assets, Accumulated Amortization | 1,506,000 | 1,122,000 | |
Other Intangible Assets, Net Value | $ 7,112,000 | 45,000 | |
Finite-Lived Intangible Asset, Useful Life | 15 years | ||
Technology-Based Intangible Assets | |||
Other Intangible Assets | |||
Other Intangible Assets, Cost | $ 5,060,000 | 0 | |
Other Intangible Assets, Accumulated Amortization | 766,000 | 0 | |
Other Intangible Assets, Net Value | $ 4,294,000 | 0 | |
Finite-Lived Intangible Asset, Useful Life | 5 years | ||
Trade Names | |||
Other Intangible Assets | |||
Other Intangible Assets, Cost | $ 6,369,000 | 0 | |
Other Intangible Assets, Accumulated Amortization | 478,000 | 0 | |
Other Intangible Assets, Net Value | $ 5,891,000 | $ 0 | |
Finite-Lived Intangible Asset, Useful Life | 10 years |
Note 7. Commitments and Conti_4
Note 7. Commitments and Contingent Liabilities - Leases Textuals (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Operating Leased Assets | |||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 800 | ||
Operating Leases, Future Minimum Payments, Due in Two Years | 700 | ||
Operating Leases, Future Minimum Payments, Due in Three Years | 600 | ||
Operating Leases, Future Minimum Payments, Due in Four Years | 100 | ||
Operating Leases, Future Minimum Payments, Due in Five Years | 100 | ||
Operating Leases, Future Minimum Payments, Due Thereafter | 500 | ||
Rental expenses | $ 1,100 | $ 700 | $ 700 |
Capital Lease Obligations | $ 0 |
Note 7. Commitments and Conti_5
Note 7. Commitments and Contingent Liabilities - Guarantees Textuals (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Contingent Liabilities | ||
Other Commitment | $ 900,000 | $ 2,000,000 |
Guarantee Obligations | ||
Contingent Liabilities | ||
Loss Contingency Accrual, at Carrying Value | 0 | 0 |
Financial Standby Letter of Credit | ||
Contingent Liabilities | ||
Unused standby letters of credit | 400,000 | 400,000 |
Loss Contingency Accrual, at Carrying Value | $ 0 | $ 0 |
Note 7. Commitments and Conti_6
Note 7. Commitments and Contingent Liabilities - Product Warranties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Product Warranty Liability at the beginning of the year | $ 656 | $ 593 | $ 605 |
Additions to warranty accrual (including changes in estimates) | 361 | 346 | 415 |
Settlements made (in cash or in kind) | (59) | (283) | (427) |
Product Warranty Liability at the end of the year | $ 958 | $ 656 | $ 593 |
Note 8. Credit Facilities - Tex
Note 8. Credit Facilities - Textuals (Details) $ in Thousands, € in Millions, ฿ in Millions | 12 Months Ended | ||||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2019EUR (€) | Jun. 30, 2019USD ($) | Jun. 30, 2019THB (฿) | ||
Credit Facility, Availability to Borrow | $ 61,400 | ||||||
Long-term Line of Credit | $ 8,300 | 126,200 | |||||
Current portion of borrowings under credit facilities | (8,337) | (34,713) | |||||
Long-term debt under credit facilities, less current portion | $ 0 | $ 91,500 | |||||
Debt, Weighted Average Interest Rate | 2.70% | 4.50% | 4.50% | 4.50% | |||
Interest Paid on Borrowings | $ 3,000 | $ 400 | $ 300 | ||||
Financial Standby Letter of Credit | |||||||
Unused standby letters of credit | 400 | $ 400 | |||||
Primary Credit Facility | |||||||
Credit Facility, Maximum Borrowing Capacity | 150,000 | ||||||
Credit Facility, Availability to Borrow | [1] | 26,800 | |||||
Long-term Line of Credit | [1] | 6,000 | 122,800 | ||||
Long-term debt under credit facilities, less current portion | [2] | 0 | 91,500 | ||||
Thailand Overdraft Credit Facility | |||||||
Credit Facility, Maximum Borrowing Capacity | 2,900 | ฿ 90 | |||||
Credit Facility, Availability to Borrow | [3] | 2,900 | |||||
Current portion of borrowings under credit facilities | [3] | 0 | 0 | ||||
China Revolving Credit Facility | |||||||
Credit Facility, Maximum Borrowing Capacity | 7,500 | ||||||
Credit Facility, Availability to Borrow | [4] | 7,500 | |||||
Current portion of borrowings under credit facilities | [4] | 0 | 0 | ||||
Netherlands Revolving Credit Facility | |||||||
Credit Facility, Maximum Borrowing Capacity | € 9.2 | 10,500 | |||||
Credit Facility, Availability to Borrow | [5] | 7,100 | |||||
Current portion of borrowings under credit facilities | [5] | (2,300) | (3,400) | ||||
Poland Revolving Credit Facility | |||||||
Credit Facility, Maximum Borrowing Capacity | € 15 | 17,100 | |||||
Credit Facility, Availability to Borrow | [6] | 17,100 | |||||
Current portion of borrowings under credit facilities | [6] | $ 0 | $ 0 | ||||
[1] | the Company maintained a U.S. primary credit facility (the “primary facility”). On July 27, 2018, the Company entered into an amended and restated credit agreement among the Company, the lenders party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Documentation Agent. The credit agreement amends and restates the Company’s primary credit facility, which was scheduled to mature on October 31, 2019. The credit agreement has a maturity date of July 27, 2023 and allows for $150 million in borrowings, with an option to increase the amount available for borrowing to $225 million at the Company’s request, subject to the consent of each lender participating in such increase. The Company incurred $0.4 million of debt issuance costs associated with the amended and restated credit agreement. This facility is maintained for working capital and general corporate purposes of the Company including capital expenditures and acquisitions. A commitment fee is payable on the unused portion of the credit facility which was immaterial to our operating results in fiscal years 2019, 2018, and 2017. The commitment fee on the unused portion of principal amount of the credit facility is payable at a rate that ranges from 20.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary facility. Types of borrowings available on the primary facility include revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings is dependent on the type of borrowings and will be one of the following two options:•the London Interbank Offered Rate (“LIBOR”) in effect two business days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Eurocurrency Loans spread which can range from 125.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or •the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher ofa.JPMorgan’s prime rate;b.1% per annum above the Adjusted LIBOR Rate (as defined in the Credit Agreement); orc.1/2 of 1% per annum above the Federal Funds Effective Rate (as defined in the Credit Agreement);plus the ABR Loans spread which can range from 25.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA.The Company’s financial covenants under the primary credit facility require:•a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, and•a fixed charge coverage ratio, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be less than 1.10 to 1.00. The Company had $0.4 million in letters of credit contingently committed against the credit facility at both June 30, 2019 and 2018. | ||||||
[2] | The amount of Long-term debt under credit facilities, less current maturities at June 30, 2019 reflects the borrowings on the primary facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. | ||||||
[3] | The Company also maintains a foreign credit facility for its operation in Thailand which allows for borrowings of up to 90.0 million Thai Baht (approximately $2.9 million at June 30, 2019 exchange rates). This credit facility can be terminated at any time by either the Company or the bank by giving prior written notice of at least 15 days to the other party. Interest on borrowing under this facility is charged at a rate of interest determined by the bank in accordance with relevant laws and regulations for charging interest on an overdraft facility. | ||||||
[4] | The Company also maintains a foreign revolving credit facility for one of its China operations. The China credit facility allows for borrowings of up to $7.5 million, which borrowings can be made in either Chinese Renminbi (RMB) or U.S. dollars. The availability of this uncommitted facility is at the sole discretion of the bank and is subject to the availability of funds and other relevant conditions. The bank may, at its sole discretion, agree to provide the facility on such terms and conditions as the bank deems appropriate. Further, the availability of the facility is also subject to the determination by the bank of the borrower’s actual need for such facility. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest determined by the bank and is dependent on the denomination of the currency borrowed. The facility matures on May 31, 2020. | ||||||
[5] | The Company established an uncommitted revolving credit facility in fiscal year 2017 for our Netherlands subsidiary. The Netherlands credit facility allows for borrowings of up to 9.2 million Euro (approximately $10.5 million at June 30, 2019 exchange rates), which borrowings can be made in Euro, U.S. dollars, or other optional currency. The availability of funds under this facility is at the sole discretion of the bank. Proceeds from the facility are to be used for general corporate purposes. Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed. The facility matures on June 21, 2020. | ||||||
[6] | During the current fiscal year, the Company established an uncommitted revolving credit facility for our Poland operation, which allows for borrowings up to 15 million Euro (approximately $17.1 million at June 30, 2019 exchange rates) that can be drawn in Euro, U.S. dollars, or Polish Zloty. The availability of funds under this uncommitted facility is at the sole discretion of the bank. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed. The facility matures on December 20, 2019. |
Note 8. Credit Facilities - Pri
Note 8. Credit Facilities - Primary Credit Facility Textuals (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | |
Payments of Debt Issuance Costs | $ 445 | $ 0 | $ 0 |
Primary Credit Facility | |||
Line of Credit Facility, Maximum Borrowing Capacity | 150,000 | ||
Line of Credit Facility, Maximum Borrowing Capacity Upon Request | $ 225,000 | ||
Line of Credit Facility, Commitment Fee Basis Points, Minimum | 20 | ||
Line of Credit Facility, Commitment Fee Basis Points, Maximum | 25 | ||
Line of Credit Facility, Eurocurrency Loans Spread, Minimum | 125 | ||
Line of Credit Facility, Eurocurrency Loans Spread, Maximum | 175 | ||
Line of Credit Facility, Above the Adjusted LIBOR Rate to Calculate Alternate Base Rate | 1.00% | ||
Line of Credit Facility, Above the Federal Funds Rate to Calculate Alternate Base Rate | 0.50% | ||
Line of Credit Facility, ABR Loans Spread, Minimum | 25 | ||
Line of Credit Facility, ABR Loans Spread, Maximum | 75 | ||
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash | $ 15,000 | ||
Adjusted Leverage Ratio Covenant | 3 | ||
Fixed Charge Coverage Ratio Covenant | 1.10 |
Note 9. Employee Benefit Plan_3
Note 9. Employee Benefit Plans - Retirement Plans Textuals for Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Domestic Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Cost | $ 2.1 | $ 2 | $ 1.7 |
Note 9. Employee Benefit Plan_4
Note 9. Employee Benefit Plans Postemployment Plans - Components and Changes of Benefit Obligation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Domestic | |||
Changes and Components of Benefit Obligation: | |||
Benefit obligation at beginning of year | $ 1,658 | $ 1,808 | |
Service cost | 318 | 364 | $ 302 |
Interest cost | 42 | 49 | 39 |
Actuarial gain for the period | (447) | (533) | |
Benefits Paid | (122) | (30) | |
Benefit obligation at end of year | 1,449 | 1,658 | 1,808 |
Balance in current liabilities | 308 | 353 | |
Balance in noncurrent liabilities | 1,141 | 1,305 | |
Total benefit obligation recognized in the Consolidated Balance Sheets | 1,449 | 1,658 | |
Foreign Plan | |||
Changes and Components of Benefit Obligation: | |||
Benefit obligation at beginning of year | 1,235 | 1,136 | |
Service cost | 350 | 212 | 106 |
Interest cost | 87 | 56 | 46 |
Actuarial gain for the period | 479 | (72) | |
Benefits Paid | (246) | (97) | |
Benefit obligation at end of year | $ 1,905 | $ 1,235 | $ 1,136 |
Note 9. Employee Benefit Plan_5
Note 9. Employee Benefit Plans - Postemployment Plans - Changes and Components in Accumulated Other Comprehensive Income (Loss) (before tax) (Details) - Domestic - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Changes and Components in Accumulated Other Comprehensive Income (Loss) (before tax): | ||
Accumulated Other Comprehensive Income (Loss) at beginning of year | $ (1,104) | $ (929) |
Net change in unrecognized actuarial (gain) loss | 25 | (175) |
Accumulated Other Comprehensive Income (Loss) at end of year | $ (1,079) | $ (1,104) |
Note 9. Employee Benefit Plan_6
Note 9. Employee Benefit Plans - Postemployment Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Domestic | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | |||
Service cost | $ 318 | $ 364 | $ 302 |
Interest cost | 42 | 49 | 39 |
Amortization of actuarial (gain) loss | (472) | (358) | (317) |
Net periodic benefit cost recognized in the Consolidated Statements of Income | (112) | 55 | 24 |
Foreign Plan | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | |||
Service cost | 350 | 212 | 106 |
Interest cost | 87 | 56 | 46 |
Amortization of actuarial (gain) loss | 479 | (72) | 219 |
Net periodic benefit cost recognized in the Consolidated Statements of Income | $ 916 | $ 196 | $ 371 |
Note 9. Employee Benefit Plan_7
Note 9. Employee Benefit Plans - Postemployment Plans Textuals (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Defined Benefit Plan Disclosure | |
Assets for Plan Benefits, Defined Benefit Plan | $ 0 |
Domestic | |
Defined Benefit Plan, Expected Amortization, Next Fiscal Year | |
Estimated actuarial net (gain) loss that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year | $ (436) |
Note 9. Employee Benefit Plan_8
Note 9. Employee Benefit Plans - Postemployment Plan Assumptions, Fiscal Year End (Details) | Jun. 30, 2019 | Jun. 30, 2018 |
Domestic | ||
Defined Benefit Plan, Assumptions Used in Calculations | ||
Discount Rate | 2.80% | 2.80% |
Rate of Compensation Increase | 3.00% | 3.00% |
Foreign Plan | ||
Defined Benefit Plan, Assumptions Used in Calculations | ||
Discount Rate | 4.80% | 4.70% |
Rate of Compensation Increase | 4.50% | 4.50% |
Note 9. Employee Benefit Plan_9
Note 9. Employee Benefit Plans - Postemployment Plan Assumptions, Weighted Average (Details) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Domestic | |||
Defined Benefit Plan, Assumptions Used in Calculations | |||
Discount Rate | 2.80% | 2.80% | 2.40% |
Rate of Compensation Increase | 3.00% | 3.00% | 3.00% |
Foreign Plan | |||
Defined Benefit Plan, Assumptions Used in Calculations | |||
Discount Rate | 4.80% | 4.70% | 6.10% |
Rate of Compensation Increase | 4.50% | 4.50% | 4.50% |
Note 10. Stock Compensation P_3
Note 10. Stock Compensation Plans - Textuals (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Oct. 20, 2016 | Oct. 03, 2014 | |
Stock Compensation Plan, Pre-tax Compensation Cost | $ 5.7 | $ 5.3 | $ 3.5 | ||
Non-Employee Directors Stock Compensation Deferral Plan | |||||
Stock Compensation Plan, Shares Reserved | 1,000,000 | ||||
Stock Option and Incentive Plan 2014 | |||||
Stock Compensation Plan, Shares Reserved | 4,500,000 |
Note 10. Stock Compensation P_4
Note 10. Stock Compensation Plans - Performance Share Activity (Details) - Performance Shares - Stock Option and Incentive Plan 2014 - $ / shares | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangements | |||
Performance Shares, Shares Outstanding, Beginning of Period | 556,428 | ||
Share-based Compensation Arrangements, Grants in Period | 198,868 | ||
Performance Shares, Shares Vested | (292,175) | (255,757) | (194,624) |
Performance Shares, Shares Forfeited | (15,861) | ||
Performance Shares, Shares Outstanding, End of Period | 447,260 | 556,428 | |
Performance Shares, Weighted Average Grant Date Fair Value of Shares Outstanding, Beginning of Period | $ 14.11 | ||
Share-based Compensation Arrangements, Grants in Period, Weighted Average Grant Date Fair Value | 20.03 | ||
Performance Shares, Weighted Average Grant Date Fair Value of Shares Vested | 13.30 | ||
Performance Shares, Weighted Average Grant Date Fair Value of Shares Forfeited | 17.08 | ||
Performance Shares, Weighted Average Grant Date Fair Value of Shares Outstanding, End of Period | $ 17.16 | $ 14.11 |
Note 10. Stock Compensation P_5
Note 10. Stock Compensation Plans - Performance Shares Textuals (Details) - Performance Shares - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock Option and Incentive Plan 2014 | |||
Share-based Compensation Arrangements | |||
Performance Shares, Unrecognized Compensation Cost | $ 4.4 | ||
Performance Shares, Average Vesting Period for Unrecognized Compensation Cost | 9 months | ||
Performance Shares, Shares Vested | 292,175 | 255,757 | 194,624 |
Share-based Compensation Arrangements, Vested in Period, Fair Value | $ 3.9 | $ 2.9 | $ 2 |
Minimum | |||
Share-based Compensation Arrangements | |||
Share Based Compensation Arrangement By Share Based Payment Award Contractual Life | 1 year | ||
Maximum | |||
Share-based Compensation Arrangements | |||
Share Based Compensation Arrangement By Share Based Payment Award Contractual Life | 5 years |
Note 10. Stock Compensation P_6
Note 10. Stock Compensation Plans - Unrestricted Share Grants Textuals (Details) - Unrestricted Shares Director Compensation - Stock Option and Incentive Plan 2014 - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangements | |||
Share-based Compensation Arrangements, Grants in Period | 4,236 | 7,694 | 10,477 |
Share-based Compensation Arrangements, Grants in Period, Weighted Average Grant Date Fair Value | $ 17.69 | $ 20.15 | $ 15.75 |
Share-based Compensation Arrangements, Vested in Period, Fair Value | $ 0.1 | $ 0.2 | $ 0.2 |
Note 10. Stock Compensation P_7
Note 10. Stock Compensation Plans Deferred Share Units (Details) - Non-Employee Directors Stock Compensation Deferral Plan - Deferred Share Units Director Compensation - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangements | |||
Share-based Compensation Arrangements, Grants in Period | 32,758 | 12,159 | 19,207 |
Share-based Compensation Arrangements, Grants in Period, Weighted Average Grant Date Fair Value | $ 17.40 | $ 20.15 | $ 15.79 |
Share-based Compensation Arrangements, Vested in Period, Fair Value | $ 0.6 | $ 0.2 | $ 0.3 |
Note 11. Income Taxes - Textual
Note 11. Income Taxes - Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 21.00% | 28.10% | 35.00% | |
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense (Benefit) | $ 16,600 | $ 17,800 | |||
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Change in Tax Rate, Net Deferred Tax Assets, Provisional Income Tax Expense (Benefit) | 4,400 | ||||
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Transition Tax for Accumulated Foreign Earnings, Provisional Income Tax Expense (Benefit) | 13,400 | ||||
Tax Cuts and Jobs Act of 2017, Transition Tax for Accumulated Foreign Earnings Adjustment, Provisional Income Tax Expense (Benefit) | $ 400 | ||||
Long-term income taxes payable | 9,765 | 12,361 | |||
Deferred Tax Assets, Valuation Allowance | 658 | 638 | |||
Undistributed Earnings of Foreign Subsidiaries | 240,000 | ||||
Income Taxes Paid (Refunded), Net | $ 10,172 | $ 14,724 | $ 5,896 |
Note 11. Income Taxes - Compone
Note 11. Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Deferred Tax Assets: | ||
Deferred Tax Assets, Receivables | $ 105 | $ 158 |
Deferred Tax Assets, Inventory | 1,914 | 1,153 |
Deferred Tax Assets, Employee Benefits | 193 | 194 |
Deferred Tax Assets, Deferred Compensation | 6,149 | 6,496 |
Deferred Tax Assets, Other Current Liabilities | 1,275 | 830 |
Deferred Tax Assets, Tax Credit Carryforwards | 1,638 | 1,251 |
Deferred Tax Assets, Goodwill | 268 | 655 |
Deferred Tax Assets, Net Operating Loss Carryforwards | 2,339 | 2,376 |
Deferred Tax Assets, Unrealized Currency Losses | 11 | 0 |
Deferred Tax Assets, Miscellaneous | 2,970 | 2,394 |
Deferred Tax Assets, Valuation Allowance | (658) | (638) |
Deferred Tax Assets | 16,204 | 14,869 |
Deferred Tax Liabilities: | ||
Deferred Tax Liabilities, Intangible Assets | 1,412 | 0 |
Deferred Tax Liabilities, Property, Plant and Equipment | 1,116 | 565 |
Deferred Tax Liabilities, Unrealized Currency Transaction Gains | 0 | 12 |
Deferred Tax Liabilities, Miscellaneous | 477 | 300 |
Deferred Tax Liabilities, Net | 3,005 | 877 |
Net Deferred Income Taxes | $ 13,199 | $ 13,992 |
Note 11. Income Taxes - Compo_2
Note 11. Income Taxes - Components of Income Before Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income (Loss) Before Taxes on Income, United States | $ 11,191 | $ 5,609 | $ 10,051 |
Income (Loss) Before Taxes on Income, Foreign | 27,294 | 39,166 | 34,204 |
Income Before Taxes on Income | $ 38,485 | $ 44,775 | $ 44,255 |
Note 11. Income Taxes - Compo_3
Note 11. Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Current Taxes: | |||
Current Federal Income Tax Expense (Benefit) | $ 872 | $ 13,132 | $ 2,696 |
Current Foreign Income Tax Expense (Benefit) | 7,545 | 11,982 | 8,130 |
Current State Income Tax Expense (Benefit) | 203 | 459 | 134 |
Current Income Tax Expense (Benefit) | 8,620 | 25,573 | 10,960 |
Deferred Taxes: | |||
Deferred Federal Income Tax Expense (Benefit) | 67 | 5,015 | 6 |
Deferred Foreign Income Tax Expense (Benefit) | (1,177) | (2,427) | (631) |
Deferred State Income Tax Expense (Benefit) | (603) | (776) | (259) |
Income Tax Expense (Benefit), Valuation Allowance | 20 | 638 | 0 |
Deferred Income Tax Expense (Benefit) | (1,693) | 2,450 | (884) |
Provision for Income Taxes | $ 6,927 | $ 28,023 | $ 10,076 |
Note 11. Income Taxes - Reconci
Note 11. Income Taxes - Reconciliation of Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Reconciliation, Income Tax Expense (Benefit), Tax Computed at U.S. Federal Statutory Rate | $ 8,082 | $ 12,582 | $ 15,489 | |
Effective Income Tax Rate Reconciliation, Tax Computed at U.S. Federal Statutory Rate | 35.00% | 21.00% | 28.10% | 35.00% |
Income Tax Reconciliation, State Income Taxes, Net of Federal Income Tax Benefit | $ (320) | $ (408) | $ (81) | |
Effective Income Tax Rate Reconciliation, State Income Taxes, Net of Federal Income Tax Benefit | (0.80%) | (0.90%) | (0.20%) | |
Income Tax Reconciliation, Foreign Tax Effect | $ 313 | $ (1,615) | $ (3,832) | |
Effective Income Tax Rate Reconciliation, Foreign Tax Effect | 0.80% | (3.60%) | (8.70%) | |
Income Tax Rate Reconciliation, Impact of Foreign Exchange Rates, Amount | $ 156 | $ 180 | $ (613) | |
Effective Income Tax Rate Reconciliation Impact of Foreign Exchange Rates, Foreign, Percent | 0.40% | 0.40% | (1.40%) | |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ 20 | $ 638 | $ 0 | |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 0.10% | 1.40% | 0.00% | |
Income Tax Reconciliation, Research Credit | $ (627) | $ (378) | $ (348) | |
Effective Income Tax Rate Reconciliation, Research Credit | (1.60%) | (0.80%) | (0.80%) | |
Effective Income Tax Rate Reconciliation, Tax Cuts and Jobs Act of 2017, Transition Tax for Accumulated Foreign Earnings Adjustment, Provisional Income Tax Expense (Benefit), Amount | $ (416) | |||
Effective Income Tax Rate Reconciliation, Tax Cuts and Jobs Act of 2017, Transition Tax for Accumulated Foreign Earnings Adjustment, Provisional Income Tax Expense (Benefit), Percent | (1.10%) | |||
Income Tax Reconciliation, Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Transition Tax for Accumulated Foreign Earnings, Provisional Income Tax Expense (Benefit), Amount | $ 13,436 | $ 0 | ||
Effective Income Tax Rate Reconciliation, Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Transition Tax for Accumulated Foreign Earnings, Provisional Income Tax Expense (Benefit), Percent | 30.00% | 0.00% | ||
Effective Income Tax Reconciliation, Tax Cuts and Jobs Act 2017, Change in Tax Rate Net Deferred Tax Assets Adjustment, Provisional Income Tax Expense (Benefit), Amount | $ (10) | |||
Effective Income Tax Reconciliation, Tax Cuts and Jobs Act 2017, Change in Tax Rate Net Deferred Tax Assets Adjustment, Provisional Income Tax Expense (Benefit), Percent | 0.00% | |||
Effective Income Tax Rate Reconciliation, Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Change in Tax Rate, Net Deferred Tax Assets, Provisional Income Tax Expense (Benefit), Amount | $ 4,357 | $ 0 | ||
Effective Income Tax Rate Reconciliation, Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Change in Tax Rate, Net Deferred Tax Assets, Provisional Income Tax Expense (Benefit), Percent | 9.70% | 0.00% | ||
Income Tax Reconciliation, Other-Net | $ (271) | $ (769) | $ (539) | |
Effective Income Tax Rate Reconciliation, Other-Net | (0.80%) | (1.70%) | (1.10%) | |
Provision for Income Taxes | $ 6,927 | $ 28,023 | $ 10,076 | |
Effective Income Tax Rate | 18.00% | 62.60% | 22.80% |
Note 11. Income Taxes - Recon_2
Note 11. Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Unrecognized Tax Benefits, Beginning Balance | $ 160 | $ 102 | $ 46 |
Unrecognized Tax Benefits, Additions Resulting from Prior Period Tax Positions | 758 | 78 | 56 |
Unrecognized Tax Benefits, Reductions Resulting from Prior Period Tax Positions | 0 | (20) | 0 |
Unrecognized Tax Benefits, Additions Resulting from Current Period Tax Positions | 0 | 0 | 0 |
Unrecognized Tax Benefits, Reductions Resulting from Current Period Tax Positions | 0 | 0 | 0 |
Unrecognized Tax Benefits, Reductions Resulting from Settlements with Taxing Authorities | 0 | 0 | 0 |
Unrecognized Tax Benefits, Reductions Resulting from Lapse of Applicable Statute of Limitations | (14) | 0 | 0 |
Unrecognized Tax Benefits, Ending Balance | 904 | 160 | 102 |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 214 | $ 137 | $ 85 |
Note 11. Income Taxes - Accrued
Note 11. Income Taxes - Accrued Interest and Penalties Related to Unrecognized Tax Benefits (Details) $ in Millions | Jun. 30, 2019USD ($) |
Income Tax Contingency | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 1.6 |
Note 12. Share Owners' Equity -
Note 12. Share Owners' Equity - Textuals (Details) - USD ($) | 12 Months Ended | 44 Months Ended | ||||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2019 | Nov. 08, 2018 | Aug. 23, 2017 | Sep. 29, 2016 | Oct. 21, 2015 | |
Stock Repurchase Program, Authorized Amount | $ 80,000,000 | $ 80,000,000 | ||||||
Treasury Stock, Value, Acquired, Cost Method | $ 23,431,000 | $ 9,418,000 | $ 21,905,000 | |||||
Treasury Stock Acquired, Average Cost Per Share | $ 17.75 | $ 15.04 | ||||||
Treasury Stock | ||||||||
Treasury Stock, Value, Acquired, Cost Method | $ 23,431,000 | $ 9,418,000 | $ 21,905,000 | $ 67,900,000 | ||||
share repurchase plan September 2016 extension | ||||||||
Stock Repurchase Program, Authorized Amount | $ 20,000,000 | |||||||
Share Repurchase Program August 2017 Extension | ||||||||
Stock Repurchase Program, Authorized Amount | $ 20,000,000 | |||||||
Share Repurchase Program November 2018 Extension | ||||||||
Stock Repurchase Program, Authorized Amount | $ 20,000,000 | |||||||
share repurchase program October 2015 | ||||||||
Stock Repurchase Program, Authorized Amount | $ 20,000,000 |
Note 13. Fair Value - Textuals
Note 13. Fair Value - Textuals (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Fair Value, Purchases and Sales of Level 3 Assets | $ 0 | $ 0 |
Fair Value, Purchases and Sales of Level 3 Liabilities | $ 0 | $ 0 |
Note 13. Fair Value - Recurring
Note 13. Fair Value - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Recurring Fair Value Measurments: | ||
Derivative Asset | $ 1,832 | $ 1,713 |
Debt Securities, Trading, and Equity Securities, FV-NI | 9,268 | 8,769 |
Derivative Liability | 299 | 1,867 |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurments: | ||
Cash equivalents | 1,123 | 1,099 |
Debt Securities, Trading, and Equity Securities, FV-NI | 9,268 | 8,769 |
Total assets at fair value | 12,223 | 11,581 |
Total liabilities at fair value | 299 | 1,867 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ||
Recurring Fair Value Measurments: | ||
Derivative Asset | 1,832 | 1,713 |
Derivative Liability | 299 | 1,867 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Recurring Fair Value Measurments: | ||
Cash equivalents | 1,123 | 1,099 |
Debt Securities, Trading, and Equity Securities, FV-NI | 9,268 | 8,769 |
Total assets at fair value | 10,391 | 9,868 |
Total liabilities at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Foreign Exchange Contract | ||
Recurring Fair Value Measurments: | ||
Derivative Asset | 0 | 0 |
Derivative Liability | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Recurring Fair Value Measurments: | ||
Cash equivalents | 0 | 0 |
Debt Securities, Trading, and Equity Securities, FV-NI | 0 | 0 |
Total assets at fair value | 1,832 | 1,713 |
Total liabilities at fair value | 299 | 1,867 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ||
Recurring Fair Value Measurments: | ||
Derivative Asset | 1,832 | 1,713 |
Derivative Liability | $ 299 | $ 1,867 |
Note 14. Derivative Instrumen_4
Note 14. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract € in Millions, $ in Millions | 12 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018 | Jun. 30, 2019EUR (€) | Jun. 30, 2019USD ($) | |
Derivatives, Fair Value | ||||
Derivative, Notional Amount | € 75.4 | $ 32.3 | ||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 0.6 | |||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Maximum Time to Transfer | 12 months | 12 months |
Note 14. Derivative Instrumen_5
Note 14. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Derivatives, Fair Value | ||
Derivative Asset | $ 1,832 | $ 1,713 |
Derivative Liability | 299 | 1,867 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 1,136 | 758 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | 278 | 1,857 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 696 | 955 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | $ 21 | $ 10 |
Note 14. Derivative Instrumen_6
Note 14. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative Instruments, Gain (Loss) | |||
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $ 3,337 | $ (2,669) | $ 779 |
Foreign Exchange Contract | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Instruments, Pre-Tax Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion | $ 3,337 | $ (2,669) | $ 779 |
Note 14. Derivative Instrumen_7
Note 14. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative Instruments, Gain (Loss) | |||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $ 3,832 | $ (872) | $ (29) |
Foreign Exchange Contract | Nonoperating Income (Expense) | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | 2,766 | 796 | (42) |
Cash Flow Hedging | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Gain (Loss) | 1,061 | (1,659) | 13 |
Cash Flow Hedging | Foreign Exchange Contract | Cost of Sales | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Gain (Loss) | 1,061 | (1,648) | 18 |
Cash Flow Hedging | Foreign Exchange Contract | Nonoperating Income (Expense) | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Gain (Loss) | 0 | (11) | (5) |
Derivatives, Pre-Tax Gain (Loss) Reclassified from Accumulated OCI into Income, Ineffective Portion | $ 5 | $ (9) | $ 0 |
Note 15. Investments - Investme
Note 15. Investments - Investments-Supplemental Employee Retirement Plan Investments Textuals (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Schedule of Trading Securities and Other Trading Assets | |||
Trading Securities, Change in net unrealized holding gains (losses) | $ 35 | $ 552 | $ 789 |
Note 15. Investments - Suppleme
Note 15. Investments - Supplemental Employee Retirement Plan Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Schedule of Trading Securities and Other Trading Assets | ||
SERP Investment | $ 9,268 | $ 8,769 |
SERP Obligation | 9,268 | 8,769 |
Prepaid Expenses and Other Current Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP Investment | 1,728 | 294 |
Other Noncurrent Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP Investment | 7,540 | 8,475 |
Other Current Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP Obligation | 1,728 | 294 |
Other Noncurrent Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP Obligation | $ 7,540 | $ 8,475 |
Note 16. Accrued Expenses - Acc
Note 16. Accrued Expenses - Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Taxes | $ 5,760 | $ 2,803 | |
Compensation | 19,046 | 18,008 | |
Customer advance payments | 6,345 | 1,729 | |
Retirement plan | 1,959 | 1,791 | |
Insurance | 1,675 | 1,375 | |
Other expenses | 8,411 | 6,740 | |
Total accrued expenses | $ 43,196 | $ 32,597 | $ 32,446 |
Note 17. Geographic Informati_3
Note 17. Geographic Information - Segments, Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net Sales | $ 318,621 | $ 313,454 | $ 284,149 | $ 265,620 | $ 276,768 | $ 283,938 | $ 258,151 | $ 253,204 | $ 1,181,844 | $ 1,072,061 | $ 930,914 |
Long-Lived Assets: | 148,520 | 141,540 | 148,520 | 141,540 | 142,061 | ||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net Sales | 321,805 | 224,834 | 189,184 | ||||||||
Long-Lived Assets: | 43,887 | 39,465 | 43,887 | 39,465 | 41,308 | ||||||
MEXICO | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net Sales | 282,400 | 256,537 | 219,585 | ||||||||
Long-Lived Assets: | 31,238 | 30,733 | 31,238 | 30,733 | 30,235 | ||||||
Poland | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net Sales | 251,635 | 282,847 | 254,448 | ||||||||
Long-Lived Assets: | 29,736 | 33,629 | 29,736 | 33,629 | 32,315 | ||||||
CHINA | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net Sales | 146,332 | 177,930 | 172,117 | ||||||||
Long-Lived Assets: | 12,138 | 14,546 | 12,138 | 14,546 | 17,106 | ||||||
ROMANIA | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Long-Lived Assets: | 19,546 | 19,394 | 19,546 | 19,394 | 16,468 | ||||||
Other Foreign | |||||||||||
Revenues from External Customers and Long-Lived Assets | |||||||||||
Net Sales | 179,672 | 129,913 | 95,580 | ||||||||
Long-Lived Assets: | $ 11,975 | $ 3,773 | $ 11,975 | $ 3,773 | $ 4,629 |
Note 18. Earnings Per Share Sta
Note 18. Earnings Per Share Statement (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Net Income (Loss) | $ 7,525 | $ 11,849 | $ 7,115 | $ 5,069 | $ 5,784 | $ 10,835 | $ (8,347) | [1] | $ 8,480 | $ 31,558 | $ 16,752 | $ 34,179 |
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | 32 | 9 | 15 | |||||||||
Net Income (Loss) Available to Common Stockholders, Basic | $ 31,526 | $ 16,743 | $ 34,164 | |||||||||
Weighted Average Number of Shares Outstanding, Basic | 25,857 | 26,745 | 27,413 | |||||||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 200 | 255 | 110 | |||||||||
Incremental Common Shares Attributable to Participating Nonvested Shares with Non-forfeitable Dividend Rights | 25 | 7 | 7 | |||||||||
Weighted Average Number of Shares Outstanding, Diluted | 26,082 | 27,007 | 27,530 | |||||||||
Earnings Per Share, Basic | $ 0.30 | $ 0.46 | $ 0.27 | $ 0.19 | $ 0.22 | $ 0.41 | $ (0.31) | $ 0.32 | $ 1.22 | $ 0.63 | $ 1.25 | |
Earnings Per Share, Diluted | $ 0.29 | $ 0.46 | $ 0.27 | $ 0.19 | $ 0.22 | $ 0.40 | $ (0.31) | $ 0.31 | $ 1.21 | $ 0.62 | $ 1.24 | |
[1] | Net income for the quarter ended December 31, 2017 included income tax expense of $16.6 million ($0.62 per diluted share) due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was enacted into law in December 2017 and relates to the deemed repatriation of unremitted foreign earnings and the revaluation of net deferred tax assets. |
Note 19. Accumulated Other Co_3
Note 19. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Share Owner's Equity | $ 355,527 | $ 342,272 | |
Other comprehensive income (loss) before reclassifications | 486 | 899 | |
Reclassification to (earnings) loss | (1,215) | 1,237 | |
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings | 0 | ||
Share Owner's Equity | 369,854 | 355,527 | |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (729) | 2,136 | |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Share Owner's Equity | (6,899) | (9,084) | |
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings | [1] | 49 | |
Share Owner's Equity | (7,628) | (6,899) | |
Foreign Currency Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Share Owner's Equity | (4,357) | (6,876) | |
Other comprehensive income (loss) before reclassifications | (2,491) | 2,519 | |
Reclassification to (earnings) loss | 0 | 0 | |
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings | [1] | 0 | |
Share Owner's Equity | (6,848) | (4,357) | |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (2,491) | 2,519 | |
Derivative Gain (Loss) | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Share Owner's Equity | (3,379) | (2,788) | |
Other comprehensive income (loss) before reclassifications | 2,638 | (1,965) | |
Reclassification to (earnings) loss | (857) | 1,455 | |
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings | [1] | (81) | |
Share Owner's Equity | (1,598) | (3,379) | |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 1,781 | (510) | |
Postemployment Benefits, Net Actuarial Gain | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Share Owner's Equity | 837 | 580 | |
Other comprehensive income (loss) before reclassifications | 339 | 345 | |
Reclassification to (earnings) loss | (358) | (218) | |
Tax Cuts and Jobs Act of 2017, Reclassification from AOCI to Retained Earnings | [1] | 130 | |
Share Owner's Equity | 818 | 837 | |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | $ (19) | $ 127 | |
[1] | During fiscal year 2018, the Company adopted a new accounting standard on accounting for the reclassification of certain tax effects from accumulated other comprehensive income related to Tax Reform. |
Note 19. Accumulated Other Co_4
Note 19. Accumulated Other Comprehensive Income (Loss) - Reclassification from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | [1] | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income | |||||||||||||
Cost of Sales | $ (1,093,438) | $ (986,031) | $ (855,479) | ||||||||||
Selling and Administrative Expenses | (46,653) | (43,992) | (36,660) | ||||||||||
Benefit (Provision) for Income Taxes | (6,927) | (28,023) | (10,076) | ||||||||||
Net Income (Loss) | $ 7,525 | $ 11,849 | $ 7,115 | $ 5,069 | $ 5,784 | $ 10,835 | $ (8,347) | $ 8,480 | 31,558 | 16,752 | $ 34,179 | ||
Reclassification out of Accumulated Other Comprehensive Income | |||||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income | |||||||||||||
Net Income (Loss) | 1,215 | (1,237) | |||||||||||
Reclassification out of Accumulated Other Comprehensive Income | Derivative Gain (Loss) | Foreign Exchange Contract | |||||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income | |||||||||||||
Cost of Sales | [2] | 1,061 | (1,648) | ||||||||||
Nonoperating Income (Expense) | [2] | 5 | (20) | ||||||||||
Benefit (Provision) for Income Taxes | [2] | (209) | 213 | ||||||||||
Net Income (Loss) | [2] | 857 | (1,455) | ||||||||||
Reclassification out of Accumulated Other Comprehensive Income | Postemployment Benefits, Amortization of actuarial gain (loss) | |||||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income | |||||||||||||
Nonoperating Income (Expense) | 472 | 358 | |||||||||||
Benefit (Provision) for Income Taxes | [3] | (114) | (140) | ||||||||||
Net Income (Loss) | [3] | $ 358 | $ 218 | ||||||||||
[1] | Net income for the quarter ended December 31, 2017 included income tax expense of $16.6 million ($0.62 per diluted share) due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was enacted into law in December 2017 and relates to the deemed repatriation of unremitted foreign earnings and the revaluation of net deferred tax assets. | ||||||||||||
[2] | See Note 14 - Derivative Instruments of Notes to Consolidated Financial Statements for further information on derivative instruments. | ||||||||||||
[3] | See Note 9 - Employee Benefit Plans of Notes to Consolidated Financial Statements for further information on postemployment benefit plans. |
Note 20. Quarterly Financial _3
Note 20. Quarterly Financial Information (Unaudited) - Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |||||
Net Sales | $ 318,621 | $ 313,454 | $ 284,149 | $ 265,620 | $ 276,768 | $ 283,938 | $ 258,151 | $ 253,204 | $ 1,181,844 | $ 1,072,061 | $ 930,914 | ||||
Gross Profit | 23,222 | 26,554 | 20,444 | 18,186 | 22,775 | [1] | 22,881 | [1] | 20,921 | [1] | 19,453 | [1] | 88,406 | 86,030 | 75,435 |
Operating Income (Loss) | 10,319 | 14,497 | 10,212 | 7,032 | 11,266 | [1] | 11,130 | [1] | 10,119 | [1] | 9,523 | [1] | 42,060 | 42,038 | 42,780 |
Net Income (Loss) | $ 7,525 | $ 11,849 | $ 7,115 | $ 5,069 | $ 5,784 | $ 10,835 | $ (8,347) | [2] | $ 8,480 | $ 31,558 | $ 16,752 | $ 34,179 | |||
Earnings Per Share, Basic | $ 0.30 | $ 0.46 | $ 0.27 | $ 0.19 | $ 0.22 | $ 0.41 | $ (0.31) | $ 0.32 | $ 1.22 | $ 0.63 | $ 1.25 | ||||
Earnings Per Share, Diluted | $ 0.29 | $ 0.46 | $ 0.27 | $ 0.19 | $ 0.22 | $ 0.40 | $ (0.31) | $ 0.31 | $ 1.21 | $ 0.62 | $ 1.24 | ||||
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense (Benefit) | $ 16,600 | $ 17,800 | |||||||||||||
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense (Benefit), Per Share | $ 0.62 | ||||||||||||||
[1] | Prior period has been restated to reflect the retrospective adoption of new accounting guidance issued by the FASB on improving the presentation of net periodic pension cost and net periodic postretirement benefit cost. See Note 1 - Business Description and Summary of Significant Accounting Policies for further information on the restatement of the prior period presentation. There was no effect to Net Income or Diluted Earnings per Share. | ||||||||||||||
[2] | Net income for the quarter ended December 31, 2017 included income tax expense of $16.6 million ($0.62 per diluted share) due to the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was enacted into law in December 2017 and relates to the deemed repatriation of unremitted foreign earnings and the revaluation of net deferred tax assets. |
Schedule II Valuation and Qua_3
Schedule II Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
SEC Schedule, 12-09, Allowance, Credit Loss | |||
Movement in Valuation Allowances [Roll Forward] | |||
Valuation Allowances, Balance at Beginning of Year | $ 482 | $ 284 | $ 192 |
Valuation Allowances, Additions to Expense | 184 | 259 | 129 |
Valuation Allowances, Adjustments to Other Accounts | 14 | (51) | (37) |
Valuation Allowances, Write-offs and Recoveries | (410) | (10) | 0 |
Valuation Allowances, Balance at End of Year | 270 | 482 | 284 |
Deferred Tax Asset | |||
Movement in Valuation Allowances [Roll Forward] | |||
Valuation Allowances, Balance at Beginning of Year | 638 | 0 | |
Valuation Allowances, Additions to Expense | 20 | 638 | |
Valuation Allowances, Adjustments to Other Accounts | 0 | 0 | |
Valuation Allowances, Write-offs and Recoveries | 0 | 0 | |
Valuation Allowances, Balance at End of Year | $ 658 | $ 638 | $ 0 |