Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Sep. 30, 2019 | Oct. 23, 2019 | |
Document Information | ||
Entity Registrant Name | Kimball Electronics, Inc. | |
Entity Central Index Key | 0001606757 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 25,199,305 | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 55,351 | $ 49,276 |
Receivables, net of allowances of $301 and $270, respectively | 185,771 | 225,555 |
Contract assets | 60,800 | 51,929 |
Inventories | 200,753 | 203,840 |
Prepaid expenses and other current assets | 25,377 | 24,713 |
Total current assets | 528,052 | 555,313 |
Property and Equipment, net of accumulated depreciation of $219,573 and $216,955, respectively | 142,895 | 143,629 |
Goodwill | 19,936 | 18,104 |
Other Intangible Assets, net of accumulated amortization of $30,639 and $29,874, respectively | 21,505 | 22,188 |
Other Assets | 27,507 | 24,877 |
Total Assets | 739,895 | 764,111 |
Current Liabilities: | ||
Current portion of borrowings under credit facilities | 18,067 | 34,713 |
Accounts payable | 193,300 | 197,001 |
Accrued expenses | 38,210 | 43,196 |
Total current liabilities | 249,577 | 274,910 |
Other Liabilities: | ||
Long-term debt under credit facilities, less current portion | 91,500 | 91,500 |
Long-term income taxes payable | 9,765 | 9,765 |
Other long-term liabilities | 19,800 | 18,082 |
Total other liabilities | 121,065 | 119,347 |
Share Owners’ Equity: | ||
Preferred stock-no par value | 0 | 0 |
Common stock-no par value | 0 | 0 |
Additional paid-in capital | 304,112 | 305,917 |
Retained earnings | 140,580 | 133,982 |
Accumulated other comprehensive loss | (11,572) | (7,628) |
Treasury stock, at cost | (63,867) | (62,417) |
Total Share Owners’ Equity | 369,253 | 369,854 |
Total Liabilities and Share Owners’ Equity | $ 739,895 | $ 764,111 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets Parentheticals - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
ASSETS | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 301 | $ 270 |
Property and Equipment Accumulated Depreciation | 219,573 | 216,955 |
Other Intangible Assets Accumulated Amortization | $ 30,639 | $ 29,874 |
Share Owners' Equity | ||
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 15,000,000 | 15,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par Value Per Share | $ 0 | $ 0 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 29,430,000 | 29,430,000 |
Treasury Stock, Shares | 4,060,000 | 4,011,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Net Sales | $ 313,385 | $ 265,620 |
Cost of Sales | 291,192 | 247,434 |
Gross Profit | 22,193 | 18,186 |
Selling and Administrative Expenses | 11,078 | 11,246 |
Other General Income | 0 | (92) |
Operating Income | 11,115 | 7,032 |
Other Income (Expense): | ||
Interest income | 18 | 6 |
Interest expense | (1,208) | (389) |
Non-operating income (expense), net | (1,212) | (171) |
Other income (expense), net | (2,402) | (554) |
Income Before Taxes on Income | 8,713 | 6,478 |
Provision for Income Taxes | 2,115 | 1,409 |
Net Income | $ 6,598 | $ 5,069 |
Earnings Per Share of Common Stock: | ||
Earnings Per Share, Basic | $ 0.26 | $ 0.19 |
Earnings Per Share, Diluted | $ 0.26 | $ 0.19 |
Weighted Average Number of Shares Outstanding, Basic | 25,495 | 26,507 |
Weighted Average Number of Shares Outstanding, Diluted | 25,609 | 26,628 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Net income | $ 6,598 | $ 5,069 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments, Pre-tax | (3,665) | (658) |
Foreign currency translation adjustments, Tax | 0 | 0 |
Foreign currency translation adjustments, Net of Tax | (3,665) | (658) |
Postemployment severance actuarial change, Pre-tax | (165) | 213 |
Postemployment severance actuarial change, Tax | 52 | (52) |
Postemployment severance actuarial change, Net of Tax | (113) | 161 |
Derivative gain (loss), Pre-tax | 275 | 1,947 |
Derivative gain (loss), Tax | (32) | (424) |
Derivative gain (loss), Net of Tax | 243 | 1,523 |
Reclassification to (earnings) loss: | ||
Derivatives, Reclassification to (earnings) loss, Pre-tax | (411) | 100 |
Derivatives, Reclassification to (earnings) loss, Tax | 80 | (27) |
Derivatives, Reclassification to (earnings) loss, Net of Tax | (331) | 73 |
Amortization of actuarial change, Pre-tax | (102) | (111) |
Amortization of actuarial change, Tax | 24 | 27 |
Amortization of actuarial change, Net of Tax | (78) | (84) |
Other comprehensive income (loss), Pre-tax | (4,068) | 1,491 |
Other comprehensive income (loss), Tax | 124 | (476) |
Other comprehensive income (loss), Net of Tax | (3,944) | 1,015 |
Total comprehensive income (loss) | $ 2,654 | $ 6,084 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows From Operating Activities: | ||
Net income | $ 6,598 | $ 5,069 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Depreciation and amortization | 7,312 | 6,755 |
Gain on sales of assets | (12) | (70) |
Deferred income tax and other deferred charges | (746) | (1,645) |
Deferred tax valuation allowance | 135 | 0 |
Stock-based compensation | 1,252 | 1,452 |
Other, net | 33 | 76 |
Change in operating assets and liabilities: | ||
Receivables | 38,885 | 3,697 |
Contract assets | (8,871) | (378) |
Inventories | 2,357 | (25,925) |
Prepaid expenses and other current assets | 667 | 343 |
Accounts payable | (1,788) | 4,693 |
Accrued expenses and taxes payable | (6,203) | (4,080) |
Net cash provided by (used for) operating activities | 39,619 | (10,013) |
Cash Flows From Investing Activities: | ||
Capital expenditures | (11,589) | (4,675) |
Proceeds from sales of assets | 30 | 172 |
Purchases of capitalized software | (108) | (159) |
Other, net | (58) | 16 |
Net cash used for investing activities | (11,725) | (4,646) |
Cash Flows From Financing Activities: | ||
Net change in revolving credit facilities | (16,486) | 50,950 |
Repurchases of common stock | (3,090) | (5,028) |
Payments related to tax withholding for stock-based compensation | (1,012) | (1,763) |
Debt issuance costs | 0 | (445) |
Net cash (used for) provided by financing activities | (20,588) | 43,714 |
Effect of Exchange Rate Change on Cash and Cash Equivalents | (1,231) | (514) |
Net Increase in Cash and Cash Equivalents | 6,075 | 28,541 |
Cash and Cash Equivalents at Beginning of Period | 49,276 | 46,428 |
Cash and Cash Equivalents at End of Period | 55,351 | 74,969 |
Cash paid during the period for: | ||
Income taxes | 2,305 | 1,501 |
Interest expense | $ 1,665 | $ 149 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Share Owners' Equity Statement - USD ($) $ in Thousands | Total | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock |
Share Owners' Equity at Jun. 30, 2018 | $ 355,527 | $ 304,215 | $ 99,374 | $ (6,899) | $ (41,163) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 5,069 | 5,069 | |||
Other Comprehensive Income (Loss), Net of Tax | 1,015 | 1,015 | |||
New Accounting Pronouncement or Change in Accounting Principle, Prior Period Not Restated | 3,050 | 3,050 | |||
Compensation expense related to stock compensation plan | 1,409 | 1,409 | |||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | (1,762) | (3,895) | 2,133 | ||
Treasury Stock, Value, Acquired, Cost Method | (5,424) | (5,424) | |||
Share Owners' Equity at Sep. 30, 2018 | 358,884 | 301,729 | 107,493 | (5,884) | (44,454) |
Share Owners' Equity at Jun. 30, 2019 | 369,854 | 305,917 | 133,982 | (7,628) | (62,417) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 6,598 | 6,598 | |||
Other Comprehensive Income (Loss), Net of Tax | (3,944) | (3,944) | |||
Stock Issued During Period, Value, Issued for Services | 5 | 1 | 4 | ||
Compensation expense related to stock compensation plan | 1,230 | 1,230 | |||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | (1,009) | (3,036) | 2,027 | ||
Treasury Stock, Value, Acquired, Cost Method | (3,481) | (3,481) | |||
Share Owners' Equity at Sep. 30, 2019 | $ 369,253 | $ 304,112 | $ 140,580 | $ (11,572) | $ (63,867) |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Share Owners' Equity Parentheticals - shares | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Issued During Period, Shares, Issued for Services | 1,000 | 0 |
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 181,000 | 203,000 |
Treasury Stock, Shares, Acquired | 230,000 | 277,000 |
Note 1. Business Description an
Note 1. Business Description and Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 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, precision molded plastics, and production automation, test, and inspection equipment. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service. Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2019 and June 30, 2019 , results of operations for the three months ended September 30, 2019 and 2018 , cash flows for the three months ended September 30, 2019 and 2018 , and share owners’ equity for the three months ended September 30, 2019 and 2018 . The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2019 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year. Revenue Recognition: Our revenue is generated from contracts with customers primarily for manufacturing services provided for the production of electronic assemblies, components, medical disposables, and automation, test, and inspection equipment all 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. 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. In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We may utilize accounts receivable factoring arrangements with third-party financial institutions in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2019 and 2018 , we sold, without recourse, $76.0 million and $60.7 million of accounts receivable, respectively. Factoring fees were $0.6 million and $0.4 million during the three months ended September 30, 2019 and 2018 , respectively, and are primarily recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. 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 $2.9 million at September 30, 2019 and $4.2 million at June 30, 2019 , are reflected in Receivables on the Condensed Consolidated Balance Sheets until the banker’s drafts are sold at a discount, transferred in settlement of current accounts payable, or cash is received at maturity. Banker’s acceptance drafts sold at a discount or transferred in settlement of current accounts payable during the three months ended September 30, 2019 and 2018 were $0.3 million and $0.7 million , respectively. See Note 6 - Commitments and Contingent Liabilities of Notes to Condensed Consolidated Financial Statements for more information on banker’s acceptance drafts. Other General Income: Other General Income in the three months ended September 30, 2018 included $0.1 million of pre-tax income resulting from a payment received related to a class action lawsuit in which Kimball Electronics was a class member. No Other General Income was recorded in the three months ended September 30, 2019 . Non-operating Income (Expense), net: Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expenses. Components of Non-operating income (expense), net: Three Months Ended September 30 (Amounts in Thousands) 2019 2018 Foreign currency/derivative loss $ (1,113 ) $ (700 ) Gain (loss) on supplemental employee retirement plan investments (22 ) 119 Foreign government subsidies — 466 Other (77 ) (56 ) Non-operating income (expense), net $ (1,212 ) $ (171 ) Income Taxes: In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur. Deferred income tax assets and liabilities, recorded in Other Assets and Other long-term liabilities, respectively, in the Condensed 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 Condensed Consolidated Statements of Income. The U.S. Tax Cuts and Jobs Act (“Tax Reform”) was enacted into law on December 22, 2017. Tax Reform made 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. As of September 30, 2019 and June 30, 2019 , the remaining provision recorded for the one-time deemed repatriation tax was $9.8 million recorded in Long-term income taxes payable on the Condensed Consolidated Balance Sheets. New Accounting Standards: Adopted in fiscal year 2020: In February 2016, the Financial Accounting Standards Board (“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 previous guidance, only capital leases were recognized on the balance sheet. We adopted this standard on July 1, 2019, the beginning of our first quarter of fiscal year 2020, under the modified retrospective method. As allowed by the July 2018 amendment, the Company has not recast the comparative periods. We 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 also elected 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. Lease assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate, unless the implicit rate is readily determinable. The estimated incremental borrowing rate is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The adoption resulted in the recognition of $2.6 million of right-of-use assets and lease liabilities on our Condensed Consolidated Balance Sheet, primarily for our real estate operating leases. The adoption did not have a material effect on our results of operations or cash flows. There was no cumulative-effect adjustment to equity. See Note 14 - Leases of Notes to Condensed Consolidated Financial Statements for more information on leases. 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 Company adopted this during the first quarter of fiscal year 2020 with an immaterial effect on our Condensed Consolidated Financial Statements. 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. |
Note 2. Acquisition (Notes)
Note 2. Acquisition (Notes) | 3 Months Ended |
Sep. 30, 2019 | |
Acquisition [Abstract] | |
Business Combination Disclosure | 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 directly related to the acquisition totaled $1.5 million , which were expensed as incurred, including $0.1 million during each of the three months ended September 30, 2019 and 2018 and these costs were recorded in Selling and Administrative Expenses on our Condensed 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 September 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 . The net working capital adjustment as provided for in the agreement is being disputed by the sellers of GES and is continuing to be resolved through the dispute resolution procedure provided for under the terms of the asset purchase agreement. 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 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 final 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. Measurement period adjustments during the first quarter of fiscal year 2020 included a reduction of $2.0 million to Property and Equipment as a result of additional information obtained related to the valuation of certain equipment as of the acquisition date and a $0.2 million reduction in Other long-term liabilities to adjust deferred tax liabilities on the equipment. These measurement period adjustments to the purchase price allocation in the first quarter of fiscal year 2020 increased Goodwill by $1.8 million . The twelve-month measurement period ended on September 30, 2019. Any subsequent adjustments related to the purchase price allocation, specifically as it relates to an adjustment for the final resolution of the net working capital adjustment, as applicable, will be recorded in earnings during the period of resolution and will not be reflected in goodwill. For tax purposes, $4.5 million of the goodwill recorded is expected to be deductible. (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 7,037 Other Intangible Assets 19,259 Other Assets 498 Goodwill 13,745 Total assets acquired $ 66,330 Borrowings under Credit Facilities $ 12,843 Accounts payable 4,113 Accrued expenses 1,340 Other long-term liabilities 5,653 Total liabilities assumed $ 23,949 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 $ 19,259 |
Note 3. Revenue from Contracts
Note 3. Revenue from Contracts with Customers (Notes) | 3 Months Ended |
Sep. 30, 2019 | |
Revenue from Contracts with Customers [Abstract] | |
Revenue from Contract with Customer | Revenue from Contracts with Customers The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2019 and 2018 . Three Months Ended September 30 (Amounts in Millions) 2019 2018 Vertical Markets: Automotive $ 124.4 $ 105.9 Medical 101.3 82.2 Industrial 64.7 57.4 Public Safety 17.1 17.1 Other 5.9 3.0 Total net sales $ 313.4 $ 265.6 For the three months ended September 30, 2019 and 2018 , approximately 69% and 73% of our net sales, respectively, were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining sales revenue was primarily recognized at a point in time when the customer obtained control of the manufactured product. 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 Condensed Consolidated Balance Sheets 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. Contract assets were $60.8 million and $51.9 million as of September 30, 2019 and June 30, 2019 , respectively. 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 Condensed Consolidated Balance Sheets, which amounted to $5.5 million and $6.3 million as of September 30, 2019 and June 30, 2019 , respectively. |
Note 4. Inventories
Note 4. Inventories | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure | Inventories Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. Inventory components were as follows: (Amounts in Thousands) September 30, 2019 June 30, Finished products $ 5,213 $ 2,708 Work-in-process 1,900 4,119 Raw materials 193,640 197,013 Total inventory $ 200,753 $ 203,840 |
Note 5. Accumulated Other Compr
Note 5. Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Sep. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) During the three months ended September 30, 2019 and 2018 , the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows: Accumulated Other Comprehensive Income (Loss) (Amounts in Thousands) Foreign Currency Translation Adjustments Derivative Gain (Loss) Post Employment Benefits Net Actuarial Gain (Loss) Accumulated Other Comprehensive Income (Loss) Balance at June 30, 2019 $ (6,848 ) $ (1,598 ) $ 818 $ (7,628 ) Other comprehensive income (loss) before reclassifications (3,665 ) 243 (113 ) (3,535 ) Reclassification to (earnings) loss — (331 ) (78 ) (409 ) Net current-period other comprehensive income (loss) (3,665 ) (88 ) (191 ) (3,944 ) Balance at September 30, 2019 $ (10,513 ) $ (1,686 ) $ 627 $ (11,572 ) Balance at June 30, 2018 $ (4,357 ) $ (3,379 ) $ 837 $ (6,899 ) Other comprehensive income (loss) before reclassifications (658 ) 1,523 161 1,026 Reclassification to (earnings) loss — 73 (84 ) (11 ) Net current-period other comprehensive income (loss) (658 ) 1,596 77 1,015 Balance at September 30, 2018 $ (5,015 ) $ (1,783 ) $ 914 $ (5,884 ) The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Affected Line Item in the Condensed Consolidated Statements of Income September 30 (Amounts in Thousands) 2019 2018 Derivative gain (loss) (1) $ 411 $ (117 ) Cost of Sales — 17 Non-operating income (expense), net (80 ) 27 Benefit (Provision) for Income Taxes $ 331 $ (73 ) Net of Tax Postemployment Benefits: Amortization of actuarial gain (2) 102 111 Non-operating income (expense), net (24 ) (27 ) Benefit (Provision) for Income Taxes $ 78 $ 84 Net of Tax Total reclassifications for the period $ 409 $ 11 Net of Tax Amounts in parentheses indicate reductions to income. (1) See Note 9 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. (2) See Note 11 - Postemployment Benefits of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. |
Note 6. Commitments and Conting
Note 6. Commitments and Contingent Liabilities | 3 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingent Liabilities [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingent Liabilities 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 a beneficiary. As of September 30, 2019 , we had a maximum financial exposure from unused standby letters of credit totaling $0.4 million . We don’t expect circumstances to arise that would require us to perform under any of these arrangements and believe that the resolution of any claims that might arise in the future, either individually or in the aggregate, would not materially affect our condensed consolidated financial statements. Accordingly, no liability has been recorded as of September 30, 2019 with respect to the standby letters of credit. The Company also may enter into commercial letters of credit to facilitate payments to vendors and from customers. 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 September 30, 2019 , the drafts transferred and outstanding totaled $0.3 million . No transferee has exercised their recourse rights against us. For additional information on banker’s acceptance drafts, see Note 1 – Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements. 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 for the three months ended September 30, 2019 and 2018 were as follows: Three Months Ended September 30 (Amounts in Thousands) 2019 2018 Product warranty liability at the beginning of the period $ 958 $ 656 Additions to warranty accrual (including changes in estimates) 24 115 Settlements made (in cash or in kind) (23 ) (4 ) Product warranty liability at the end of the period $ 959 $ 767 |
Note 7. Credit Facilities (Note
Note 7. Credit Facilities (Notes) | 3 Months Ended |
Sep. 30, 2019 | |
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) September 30, 2019 September 30, 2019 June 30, 2019 Primary credit facility (1) $ 44.4 $ 105.2 $ 122.8 Thailand overdraft credit facility (2) 2.9 — — China revolving credit facility (2) 7.5 — — Netherlands revolving credit facility (2) 5.6 4.4 3.4 Poland revolving credit facility (2) 16.4 — — Total credit facilities $ 76.8 $ 109.6 $ 126.2 Less: current portion $ (18.1 ) $ (34.7 ) Long-term debt under credit facilities, less current portion (3) $ 91.5 $ 91.5 (1) At September 30, 2019 , the Company maintains a U.S. primary credit facility (the “primary facility”) dated as of July 27, 2018 and scheduled to mature in July 2023 . The primary facility provides for $150 million in borrowings, with an option to increase the amount available for borrowing to $225 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company including capital expenditures and potential acquisitions. A commitment fee is payable on the unused portion of the credit facility 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 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 1.1 to 1.0. The Company had $0.4 million in letters of credit contingently committed against the credit facility at September 30, 2019 . (2) At September 30, 2019 , the Company also maintains foreign credit facilities in Thailand, China, Poland, and the Netherlands. For more information on these foreign credit facilities, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . (3) The amount of Long-term debt, less current maturities at September 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 the borrowings outstanding under the credit facilities at September 30, 2019 was 4.1% . |
Note 8. Fair Value
Note 8. Fair Value | 3 Months Ended |
Sep. 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 the three months ended September 30, 2019 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . Recurring Fair Value Measurements: As of September 30, 2019 and June 30, 2019 , the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: September 30, 2019 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,129 $ — $ 1,129 Derivatives: foreign exchange contracts — 2,777 2,777 Trading securities: mutual funds held in nonqualified SERP 9,472 — 9,472 Total assets at fair value $ 10,601 $ 2,777 $ 13,378 Liabilities Derivatives: foreign exchange contracts $ — $ 597 $ 597 Total liabilities at fair value $ — $ 597 $ 597 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 We had no level 3 assets or liabilities measured at fair value during the three months ended September 30, 2019 . 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 10 - Investments of Notes to Condensed Consolidated Financial Statements for further information regarding the SERP. Financial Instruments Not Carried At Fair Value: Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2019 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . The carrying value of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximates fair value due to the relatively short maturity and immaterial non-performance risk. |
Note 9. Derivative Instruments
Note 9. Derivative Instruments | 3 Months Ended |
Sep. 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 business. Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes. We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances denominated in currencies other than the functional currencies. As of September 30, 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 77.0 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives. In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities. The fair value of outstanding derivative instruments is recognized on the balance sheet as a derivative asset or liability. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the 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 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 immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income. Based on fair values as of September 30, 2019 , we estimate that approximately $0.4 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months. Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk. The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both September 30, 2019 and June 30, 2019 . See Note 8 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and the Condensed Consolidated Statements of Comprehensive Income for the changes in deferred derivative gains and losses. Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets and derivative gains and losses in the Condensed Consolidated Statements of Income are presented below. We adopted a new accounting standard effective July 1, 2019 which eliminated the requirement to separately measure and report hedge ineffectiveness. See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for more information on the adoption of this new accounting standard. Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets Asset Derivatives Liability Derivatives Fair Value As of Fair Value As of (Amounts in Thousands) Balance Sheet Location September 30, June 30, Balance Sheet Location September 30, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 1,139 $ 1,136 Accrued expenses $ 597 $ 278 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 1,638 696 Accrued expenses — 21 Total derivatives $ 2,777 $ 1,832 $ 597 $ 299 The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended September 30 (Amounts in Thousands) 2019 2018 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives: Foreign exchange contracts $ 275 $ 1,947 The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended (Amounts in Thousands) September 30 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2019 2018 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: Foreign exchange contracts Cost of Sales $ 411 $ (117 ) Foreign exchange contracts Non-operating income (expense) — 17 Total $ 411 $ (100 ) 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) $ 1,698 $ 564 Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 2,109 $ 464 |
Note 10. Investments
Note 10. Investments | 3 Months Ended |
Sep. 30, 2019 | |
Investments [Abstract] | |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | 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. The Company recognizes SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in income in the other income (expense) category. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. The (decrease)/increase in net unrealized holding gains for the three months ended September 30, 2019 and 2018 was, in thousands, $(53) and $91 , respectively. SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) September 30, June 30, SERP investments - current asset $ 1,760 $ 1,728 SERP investments - other long-term asset 7,712 7,540 Total SERP investments $ 9,472 $ 9,268 SERP obligation - current liability $ 1,760 $ 1,728 SERP obligation - other long-term liability 7,712 7,540 Total SERP obligation $ 9,472 $ 9,268 |
Note 11. Postemployment Benefit
Note 11. Postemployment Benefits | 3 Months Ended |
Sep. 30, 2019 | |
Defined Benefit Plan [Abstract] | |
Postemployment Benefits Disclosure | Postemployment Benefits The Company maintains severance plans for all domestic employees and other statutory required postemployment plans for certain foreign subsidiaries. The domestic severance plans provide severance benefits to eligible employees meeting the plans’ qualifications, primarily involuntary termination without cause. The foreign postemployment plans include local pension, retirement, or severance plans. There are no statutory requirements for us to contribute to the plans, nor do employees contribute to the plans. The plans hold no assets. Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment. The net periodic postemployment benefit costs were not material for the three months ended September 30, 2019 and 2018 . Unusual or non-recurring severance actions are not estimable using actuarial methods and are expensed in accordance with the applicable U.S. GAAP. |
Note 12. Stock Compensation Pla
Note 12. Stock Compensation Plans | 3 Months Ended |
Sep. 30, 2019 | |
Stock Compensation Plans [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments | Stock Compensation Plans The Company maintains a stock compensation plan, the Kimball Electronics, Inc. 2014 Stock Option and Incentive Plan (the “Plan”), which allows for the issuance of up to 4.5 million shares and may be awarded in the form of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units. The Plan is a ten-year plan with no further awards allowed to be made under the Plan after October 1, 2024. The Company also maintains 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 of the Company’s Board of Directors (the “Board”) 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. For more information on the Plan and the Deferral Plan, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . During the first three months of fiscal year 2020 , the following stock compensation was awarded under the Plan. No awards were issued under the Deferral Plan during the period. Stock Compensation Awarded Quarter Awarded Shares/Units Grant Date Fair Value (2) Long-Term Performance Shares (1) 1st Quarter 252,878 $14.39 Unrestricted shares (3) 1st Quarter 500 $14.39 (1) Long-term performance shares were awarded to officers and other key employees. Payouts will be based upon a combination of a bonus percentage attainment component calculated under the Company’s profit sharing incentive bonus plan, 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. The long-term performance shares awarded are based on three successive annual performance measurement periods, with each annual tranche having a grant date when economic profit tiers are established and approved by the Compensation and Governance Committee of the Board near the beginning of the applicable fiscal year and a vesting date shortly after the end of each annual period. The number of shares issued will be less than the maximum shares issuable if one or both of the above-mentioned incentive metric maximum thresholds are not obtained. (2) The grant date fair value is based on the stock price at the date of the award and for long-term performance shares is applicable to the first tranche only. (3) Unrestricted shares were awarded under the Plan to a key employee which were expensed immediately. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. |
Note 13. Goodwill and Other Int
Note 13. Goodwill and Other Intangible Assets (Notes) | 3 Months Ended |
Sep. 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, 2019 Goodwill $ 30,930 Accumulated impairment (12,826 ) Goodwill, net 18,104 Goodwill, Additions 1,832 Balance as of September 30, 2019 Goodwill 32,762 Accumulated impairment (12,826 ) Goodwill, net $ 19,936 During the first three months of fiscal year 2020, we added $1.8 million to goodwill resulting from measurement period adjustments to the purchase price allocation of the GES acquisition. See Note 2 - Acquisition of Notes to Condensed Consolidated Financial Statements for more information on this acquisition. A summary of other intangible assets subject to amortization is as follows: September 30, 2019 June 30, 2019 (Amounts in Thousands) Cost Accumulated Amortization Net Value Cost Accumulated Net Value Capitalized Software $ 32,097 $ 27,351 $ 4,746 $ 32,015 $ 27,124 $ 4,891 Customer Relationships 8,618 1,633 6,985 8,618 1,506 7,112 Technology 5,060 1,018 4,042 5,060 766 4,294 Trade Name 6,369 637 5,732 6,369 478 5,891 Other Intangible Assets $ 52,144 $ 30,639 $ 21,505 $ 52,062 $ 29,874 $ 22,188 During the three months ended September 30, 2019 and September 30, 2018 , amortization expense of other intangible assets was, in millions, $0.8 and $0.2 , respectively. The estimated useful life of internal-use software ranges from 3 years 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. |
Note 14. Leases (Notes)
Note 14. Leases (Notes) | 3 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases of Lessee Disclosure | Leases The Company determines if a contract is or contains a lease at inception. 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. The Company has a minimal number of finance leases with an immaterial impact on its condensed consolidated financial statements. Operating lease costs for the three months ended September 30, 2019 were $0.3 million , including short-term and variable lease costs. Cash payments for operating leases included in the measurement of lease liabilities for the three months ended September 30, 2019 were $0.2 million , which is included in Cash Flows from Operating Activities in the Condensed Consolidated Statement of Cash Flows. The lease assets and liabilities, which exclude leases with terms of 12 months or less, as of September 30, 2019 were as follows: (Amounts in Thousands) Operating lease right-of-use assets (included in Other Assets) $ 2,406 Operating lease liability, current (included in Accrued expenses) $ 793 Operating lease liability, noncurrent (included in Other long-term liabilities) $ 1,613 Weighted average remaining lease term - operating leases 5.3 Weighted average discount rate - operating leases 3.5 % Future lease payments as of September 30, 2019 are as follows: (Amounts in Thousands) 2020 (1) $ 632 2021 710 2022 575 2023 95 2024 95 Thereafter 475 Total undiscounted lease payments $ 2,582 Less: imputed interest 176 Total lease liabilities $ 2,406 (1) Represents estimated lease payments for the remaining nine-month period ending June 30, 2020 . As reported under the previous lease accounting standard, the aggregate future minimum rental payments on our operating leases, as of June 30, 2019, were, in millions, $0.8 , $0.7 , $0.6 , $0.1 , and $0.1 for the five years ending June 30, 2024, respectively, and $0.5 thereafter. |
Note 15. Share Owners' Equity (
Note 15. Share Owners' Equity (Notes) | 3 Months Ended |
Sep. 30, 2019 | |
Share Owners' Equity [Abstract] | |
Stockholders' Equity Note Disclosure | Share Owners’ Equity On October 21, 2015 , the Board authorized an 18-month stock repurchase plan (the “Stock Repurchase 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 Stock Repurchase 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 Stock Repurchase Plan may be suspended or discontinued at any time. During the three months ended September 30, 2019 , the Company repurchased $3.5 million of common stock at an average price of $15.10 which was recorded as Treasury stock, at cost in the Condensed Consolidated Balance Sheets. Since the inception of the Stock Repurchase Plan, the Company has repurchased $71.4 million of common stock under the Stock Repurchase Plan at an average cost of $15.04 per share. |
Note 16. Earnings Per Share (No
Note 16. Earnings Per Share (Notes) | 3 Months Ended |
Sep. 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: Three Months Ended September 30 (Amounts in thousands, except per share data) 2019 2018 Basic and Diluted Earnings Per Share: Net Income $ 6,598 $ 5,069 Less: Net Income allocated to participating securities 8 2 Net Income allocated to common Share Owners $ 6,590 $ 5,067 Basic weighted average common shares outstanding 25,495 26,507 Dilutive effect of average outstanding performance shares 90 111 Dilutive effect of average outstanding deferred stock units 24 10 Dilutive weighted average shares outstanding 25,609 26,628 Earnings Per Share of Common Stock: Basic $ 0.26 $ 0.19 Diluted $ 0.26 $ 0.19 |
Note 1. Business Description _2
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2019 and June 30, 2019 , results of operations for the three months ended September 30, 2019 and 2018 , cash flows for the three months ended September 30, 2019 and 2018 , and share owners’ equity for the three months ended September 30, 2019 and 2018 . The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2019 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year. |
Revenue Recognition, Policy | Revenue Recognition: Our revenue is generated from contracts with customers primarily for manufacturing services provided for the production of electronic assemblies, components, medical disposables, and automation, test, and inspection equipment all 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. |
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. 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. |
Other General Income | Other General Income: Other General Income in the three months ended September 30, 2018 included $0.1 million of pre-tax income resulting from a payment received related to a class action lawsuit in which Kimball Electronics was a class member. No Other General Income was recorded in the three months ended September 30, 2019 . |
Non-operating Income (Expense), net | Non-operating Income (Expense), net: Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expenses. |
Income Taxes | Income Taxes: In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur. Deferred income tax assets and liabilities, recorded in Other Assets and Other long-term liabilities, respectively, in the Condensed 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, Policy | 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 Condensed Consolidated Statements of Income. |
New Accounting Standards | New Accounting Standards: Adopted in fiscal year 2020: In February 2016, the Financial Accounting Standards Board (“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 previous guidance, only capital leases were recognized on the balance sheet. We adopted this standard on July 1, 2019, the beginning of our first quarter of fiscal year 2020, under the modified retrospective method. As allowed by the July 2018 amendment, the Company has not recast the comparative periods. We 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 also elected 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. Lease assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate, unless the implicit rate is readily determinable. The estimated incremental borrowing rate is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The adoption resulted in the recognition of $2.6 million of right-of-use assets and lease liabilities on our Condensed Consolidated Balance Sheet, primarily for our real estate operating leases. The adoption did not have a material effect on our results of operations or cash flows. There was no cumulative-effect adjustment to equity. See Note 14 - Leases of Notes to Condensed Consolidated Financial Statements for more information on leases. 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 Company adopted this during the first quarter of fiscal year 2020 with an immaterial effect on our Condensed Consolidated Financial Statements. 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. |
Short-term Leases | We also elected 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. |
Lessee, Leases | Lease assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate, unless the implicit rate is readily determinable. The estimated incremental borrowing rate is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. |
Note 2. Acquisition (Policies)
Note 2. Acquisition (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
GES | |
Business Acquisition [Line Items] | |
Intangible Assets | 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) | 3 Months Ended |
Sep. 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 Condensed Consolidated Balance Sheets |
Note 4. Inventories (Policies)
Note 4. Inventories (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. |
Note 6. Commitments and Conti_2
Note 6. Commitments and Contingent Liabilities (Policies) | 3 Months Ended |
Sep. 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 7. Credit Facilities (Poli
Note 7. Credit Facilities (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Credit Facilities [Abstract] | |
Debt, Policy | The amount of Long-term debt, less current maturities at September 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 8. Fair Value (Policies)
Note 8. Fair Value (Policies) | 3 Months Ended |
Sep. 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 the three months ended September 30, 2019 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . |
Fair Value of Financial Instruments Not Carried at Fair Value | Financial Instruments Not Carried At Fair Value: Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2019 . For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . The carrying value of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximates fair value due to the relatively short maturity and immaterial non-performance risk. |
Note 9. Derivative Instruments
Note 9. Derivative Instruments (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments [Abstract] | |
Derivatives | Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes. We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances denominated in currencies other than the functional currencies. |
Derivatives, Hedge Discontinuances | In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities. |
Derivatives, Reporting of Derivative Activity | The fair value of outstanding derivative instruments is recognized on the balance sheet as a derivative asset or liability. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the 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 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 immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income. |
Note 10. Investments (Policies)
Note 10. Investments (Policies) | 3 Months Ended |
Sep. 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. The Company recognizes SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in income in the other income (expense) category. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. |
Note 11. Postemployment Benef_2
Note 11. Postemployment Benefits (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Defined Benefit Plan [Abstract] | |
Postemployment Benefit Plans | Unusual or non-recurring severance actions are not estimable using actuarial methods and are expensed in accordance with the applicable U.S. GAAP. |
Note 13. Goodwill and Other I_2
Note 13. Goodwill and Other Intangible Assets (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangible Assets [Abstract] | |
Intangible Assets, Finite-Lived | The estimated useful life of internal-use software ranges from 3 years 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 1. Business Description _3
Note 1. Business Description and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Components of Non-operating income (expense), net | Components of Non-operating income (expense), net: Three Months Ended September 30 (Amounts in Thousands) 2019 2018 Foreign currency/derivative loss $ (1,113 ) $ (700 ) Gain (loss) on supplemental employee retirement plan investments (22 ) 119 Foreign government subsidies — 466 Other (77 ) (56 ) Non-operating income (expense), net $ (1,212 ) $ (171 ) |
Note 2. Acquisition (Tables)
Note 2. Acquisition (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the final 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. Measurement period adjustments during the first quarter of fiscal year 2020 included a reduction of $2.0 million to Property and Equipment as a result of additional information obtained related to the valuation of certain equipment as of the acquisition date and a $0.2 million reduction in Other long-term liabilities to adjust deferred tax liabilities on the equipment. These measurement period adjustments to the purchase price allocation in the first quarter of fiscal year 2020 increased Goodwill by $1.8 million . The twelve-month measurement period ended on September 30, 2019. Any subsequent adjustments related to the purchase price allocation, specifically as it relates to an adjustment for the final resolution of the net working capital adjustment, as applicable, will be recorded in earnings during the period of resolution and will not be reflected in goodwill. For tax purposes, $4.5 million of the goodwill recorded is expected to be deductible. (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 7,037 Other Intangible Assets 19,259 Other Assets 498 Goodwill 13,745 Total assets acquired $ 66,330 Borrowings under Credit Facilities $ 12,843 Accounts payable 4,113 Accrued expenses 1,340 Other long-term liabilities 5,653 Total liabilities assumed $ 23,949 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 $ 19,259 |
Note 3. Revenue from Contract_3
Note 3. Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Revenue from Contracts with Customers [Abstract] | |
Disaggregation of Revenue | The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2019 and 2018 . Three Months Ended September 30 (Amounts in Millions) 2019 2018 Vertical Markets: Automotive $ 124.4 $ 105.9 Medical 101.3 82.2 Industrial 64.7 57.4 Public Safety 17.1 17.1 Other 5.9 3.0 Total net sales $ 313.4 $ 265.6 |
Note 4. Inventories (Tables)
Note 4. Inventories (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventory components were as follows: (Amounts in Thousands) September 30, 2019 June 30, Finished products $ 5,213 $ 2,708 Work-in-process 1,900 4,119 Raw materials 193,640 197,013 Total inventory $ 200,753 $ 203,840 |
Note 5. Accumulated Other Com_2
Note 5. Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | During the three months ended September 30, 2019 and 2018 , the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows: Accumulated Other Comprehensive Income (Loss) (Amounts in Thousands) Foreign Currency Translation Adjustments Derivative Gain (Loss) Post Employment Benefits Net Actuarial Gain (Loss) Accumulated Other Comprehensive Income (Loss) Balance at June 30, 2019 $ (6,848 ) $ (1,598 ) $ 818 $ (7,628 ) Other comprehensive income (loss) before reclassifications (3,665 ) 243 (113 ) (3,535 ) Reclassification to (earnings) loss — (331 ) (78 ) (409 ) Net current-period other comprehensive income (loss) (3,665 ) (88 ) (191 ) (3,944 ) Balance at September 30, 2019 $ (10,513 ) $ (1,686 ) $ 627 $ (11,572 ) Balance at June 30, 2018 $ (4,357 ) $ (3,379 ) $ 837 $ (6,899 ) Other comprehensive income (loss) before reclassifications (658 ) 1,523 161 1,026 Reclassification to (earnings) loss — 73 (84 ) (11 ) Net current-period other comprehensive income (loss) (658 ) 1,596 77 1,015 Balance at September 30, 2018 $ (5,015 ) $ (1,783 ) $ 914 $ (5,884 ) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Affected Line Item in the Condensed Consolidated Statements of Income September 30 (Amounts in Thousands) 2019 2018 Derivative gain (loss) (1) $ 411 $ (117 ) Cost of Sales — 17 Non-operating income (expense), net (80 ) 27 Benefit (Provision) for Income Taxes $ 331 $ (73 ) Net of Tax Postemployment Benefits: Amortization of actuarial gain (2) 102 111 Non-operating income (expense), net (24 ) (27 ) Benefit (Provision) for Income Taxes $ 78 $ 84 Net of Tax Total reclassifications for the period $ 409 $ 11 Net of Tax Amounts in parentheses indicate reductions to income. (1) See Note 9 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. (2) See Note 11 - Postemployment Benefits of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. |
Note 6. Commitments and Conti_3
Note 6. Commitments and Contingent Liabilities (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingent Liabilities [Abstract] | |
Schedule of Product Warranty Liability | Changes in the product warranty accrual for the three months ended September 30, 2019 and 2018 were as follows: Three Months Ended September 30 (Amounts in Thousands) 2019 2018 Product warranty liability at the beginning of the period $ 958 $ 656 Additions to warranty accrual (including changes in estimates) 24 115 Settlements made (in cash or in kind) (23 ) (4 ) Product warranty liability at the end of the period $ 959 $ 767 |
Note 7. Credit Facilities (Tabl
Note 7. Credit Facilities (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
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) September 30, 2019 September 30, 2019 June 30, 2019 Primary credit facility (1) $ 44.4 $ 105.2 $ 122.8 Thailand overdraft credit facility (2) 2.9 — — China revolving credit facility (2) 7.5 — — Netherlands revolving credit facility (2) 5.6 4.4 3.4 Poland revolving credit facility (2) 16.4 — — Total credit facilities $ 76.8 $ 109.6 $ 126.2 Less: current portion $ (18.1 ) $ (34.7 ) Long-term debt under credit facilities, less current portion (3) $ 91.5 $ 91.5 (1) At September 30, 2019 , the Company maintains a U.S. primary credit facility (the “primary facility”) dated as of July 27, 2018 and scheduled to mature in July 2023 . The primary facility provides for $150 million in borrowings, with an option to increase the amount available for borrowing to $225 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company including capital expenditures and potential acquisitions. A commitment fee is payable on the unused portion of the credit facility 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 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 1.1 to 1.0. The Company had $0.4 million in letters of credit contingently committed against the credit facility at September 30, 2019 . (2) At September 30, 2019 , the Company also maintains foreign credit facilities in Thailand, China, Poland, and the Netherlands. For more information on these foreign credit facilities, refer to our Annual Report on Form 10-K for the year ended June 30, 2019 . (3) The amount of Long-term debt, less current maturities at September 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 8. Fair Value (Tables)
Note 8. Fair Value (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Fair Value [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | As of September 30, 2019 and June 30, 2019 , the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: September 30, 2019 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,129 $ — $ 1,129 Derivatives: foreign exchange contracts — 2,777 2,777 Trading securities: mutual funds held in nonqualified SERP 9,472 — 9,472 Total assets at fair value $ 10,601 $ 2,777 $ 13,378 Liabilities Derivatives: foreign exchange contracts $ — $ 597 $ 597 Total liabilities at fair value $ — $ 597 $ 597 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 |
Note 9. Derivative Instrument_2
Note 9. Derivative Instruments (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets Asset Derivatives Liability Derivatives Fair Value As of Fair Value As of (Amounts in Thousands) Balance Sheet Location September 30, June 30, Balance Sheet Location September 30, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 1,139 $ 1,136 Accrued expenses $ 597 $ 278 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 1,638 696 Accrued expenses — 21 Total derivatives $ 2,777 $ 1,832 $ 597 $ 299 |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended September 30 (Amounts in Thousands) 2019 2018 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives: Foreign exchange contracts $ 275 $ 1,947 The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended (Amounts in Thousands) September 30 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2019 2018 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: Foreign exchange contracts Cost of Sales $ 411 $ (117 ) Foreign exchange contracts Non-operating income (expense) — 17 Total $ 411 $ (100 ) 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) $ 1,698 $ 564 Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 2,109 $ 464 |
Note 10. Investments (Tables)
Note 10. Investments (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Investments [Abstract] | |
Trading Securities (and Certain Trading Assets) | SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) September 30, June 30, SERP investments - current asset $ 1,760 $ 1,728 SERP investments - other long-term asset 7,712 7,540 Total SERP investments $ 9,472 $ 9,268 SERP obligation - current liability $ 1,760 $ 1,728 SERP obligation - other long-term liability 7,712 7,540 Total SERP obligation $ 9,472 $ 9,268 |
Note 12. Stock Compensation P_2
Note 12. Stock Compensation Plans (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Stock Compensation Plans [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | During the first three months of fiscal year 2020 , the following stock compensation was awarded under the Plan. No awards were issued under the Deferral Plan during the period. Stock Compensation Awarded Quarter Awarded Shares/Units Grant Date Fair Value (2) Long-Term Performance Shares (1) 1st Quarter 252,878 $14.39 Unrestricted shares (3) 1st Quarter 500 $14.39 (1) Long-term performance shares were awarded to officers and other key employees. Payouts will be based upon a combination of a bonus percentage attainment component calculated under the Company’s profit sharing incentive bonus plan, 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. The long-term performance shares awarded are based on three successive annual performance measurement periods, with each annual tranche having a grant date when economic profit tiers are established and approved by the Compensation and Governance Committee of the Board near the beginning of the applicable fiscal year and a vesting date shortly after the end of each annual period. The number of shares issued will be less than the maximum shares issuable if one or both of the above-mentioned incentive metric maximum thresholds are not obtained. (2) The grant date fair value is based on the stock price at the date of the award and for long-term performance shares is applicable to the first tranche only. (3) Unrestricted shares were awarded under the Plan to a key employee which were expensed immediately. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. |
Note 13. Goodwill and Other I_3
Note 13. Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Sep. 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, 2019 Goodwill $ 30,930 Accumulated impairment (12,826 ) Goodwill, net 18,104 Goodwill, Additions 1,832 Balance as of September 30, 2019 Goodwill 32,762 Accumulated impairment (12,826 ) Goodwill, net $ 19,936 |
Schedule of Finite-Lived Intangible Assets | A summary of other intangible assets subject to amortization is as follows: September 30, 2019 June 30, 2019 (Amounts in Thousands) Cost Accumulated Amortization Net Value Cost Accumulated Net Value Capitalized Software $ 32,097 $ 27,351 $ 4,746 $ 32,015 $ 27,124 $ 4,891 Customer Relationships 8,618 1,633 6,985 8,618 1,506 7,112 Technology 5,060 1,018 4,042 5,060 766 4,294 Trade Name 6,369 637 5,732 6,369 478 5,891 Other Intangible Assets $ 52,144 $ 30,639 $ 21,505 $ 52,062 $ 29,874 $ 22,188 |
Note 14. Leases (Tables)
Note 14. Leases (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease, Cost | The lease assets and liabilities, which exclude leases with terms of 12 months or less, as of September 30, 2019 were as follows: (Amounts in Thousands) Operating lease right-of-use assets (included in Other Assets) $ 2,406 Operating lease liability, current (included in Accrued expenses) $ 793 Operating lease liability, noncurrent (included in Other long-term liabilities) $ 1,613 Weighted average remaining lease term - operating leases 5.3 Weighted average discount rate - operating leases 3.5 % |
Lessee, Operating Lease, Liability, Maturity | Future lease payments as of September 30, 2019 are as follows: (Amounts in Thousands) 2020 (1) $ 632 2021 710 2022 575 2023 95 2024 95 Thereafter 475 Total undiscounted lease payments $ 2,582 Less: imputed interest 176 Total lease liabilities $ 2,406 (1) Represents estimated lease payments for the remaining nine-month period ending June 30, 2020 . |
Note 16. Earnings Per Share (Ta
Note 16. Earnings Per Share (Tables) | 3 Months Ended |
Sep. 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: Three Months Ended September 30 (Amounts in thousands, except per share data) 2019 2018 Basic and Diluted Earnings Per Share: Net Income $ 6,598 $ 5,069 Less: Net Income allocated to participating securities 8 2 Net Income allocated to common Share Owners $ 6,590 $ 5,067 Basic weighted average common shares outstanding 25,495 26,507 Dilutive effect of average outstanding performance shares 90 111 Dilutive effect of average outstanding deferred stock units 24 10 Dilutive weighted average shares outstanding 25,609 26,628 Earnings Per Share of Common Stock: Basic $ 0.26 $ 0.19 Diluted $ 0.26 $ 0.19 |
Note 1. Business Description _4
Note 1. Business Description and Summary of Significant Accounting Policies - Components of Non-operating income (expense), net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Foreign Currency/Derivative Gain (Loss) | $ (1,113) | $ (700) |
Gain (loss) on supplemental employee retirement plan investments | (22) | 119 |
Foreign government subsidies | 0 | 466 |
Other non-operating income (expense) | (77) | (56) |
Non-operating income (expense), net | $ (1,212) | $ (171) |
Note 1. Business Description _5
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) - USD ($) | 3 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Jul. 01, 2019 | Jun. 30, 2019 | |
Accounts Receivable, Extended Payment Terms | 45 days | |||
Accounts Receivable Sold Without Recourse | $ 76,000,000 | $ 60,700,000 | ||
Factoring Fees | 600,000 | 400,000 | ||
Due From Bankers Acceptance Drafts | 2,900,000 | $ 4,200,000 | ||
SettlementofBankersAcceptanceDrafts | 300,000 | 700,000 | ||
Other General Income | 0 | $ (92,000) | ||
Long-term income taxes payable | 9,765,000 | $ 9,765,000 | ||
Operating Lease, Right-of-Use Asset | 2,406,000 | |||
Operating Lease, Liability | $ 2,406,000 | |||
Minimum | ||||
Accounts Receivable, Customary Payment Terms | 30 days | |||
Maximum | ||||
Accounts Receivable, Customary Payment Terms | 45 days | |||
Accounting Standards Update 2016-02 | ||||
Lease, Practical Expedients, Package | true | |||
Operating Lease, Right-of-Use Asset | $ 2,600,000 | |||
Operating Lease, Liability | 2,600,000 | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 0 |
Note 2. Acquisition (Details)
Note 2. Acquisition (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Oct. 01, 2018 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 19,936 | $ 18,104 | ||
GES | ||||
Business Acquisition [Line Items] | ||||
Business Acquisition, Date of Acquisition Agreement | Oct. 1, 2018 | |||
Business Acquisition, Transaction Costs | $ 1,500 | |||
Business Combination, Acquisition Related Costs | 100 | $ 100 | ||
Business Combination, Consideration Transferred | 42,400 | |||
Net Working Capital Adjustment for Acquisition | 7,600 | |||
Payments to Acquire Businesses, Net of Cash Acquired | 43,900 | |||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Property, Plant, and Equipment | 2,000 | |||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Financial Liabilities | 200 | |||
Goodwill, Purchase Accounting Adjustments | 1,832 | |||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 4,500 | |||
Cash | $ 2,257 | |||
Receivables | 15,656 | |||
Inventories | 6,454 | |||
Prepaid expenses and other current assets | 1,424 | |||
Property and Equipment | 7,037 | |||
Other Intangible Assets | 19,259 | |||
Other Assets | 498 | |||
Goodwill | 13,745 | |||
Total assets acquired | 66,330 | |||
Borrowings under Credit Facilities | 12,843 | |||
Accounts payable | 4,113 | |||
Accrued expenses | 1,340 | |||
Other long-term liabilities | 5,653 | |||
Total liabilities assumed | 23,949 | |||
Net assets acquired | 42,381 | |||
Business Combination, Tax Liabilities Including Interest and Penalties Assumed, Liabilities | 4,200 | |||
Business Combination, Tax Liabilities Including Interest and Penalties Assumed, Noncurrent Liabilities | 3,900 | |||
Business Combination, Tax Liabilities Including Interest and Penalties Assumed, Current Liabilities | 300 | |||
Business Combination, Indemnification Assets, Amount as of Acquisition Date | 4,200 | |||
Nontrade Receivables, Current | GES | ||||
Business Acquisition [Line Items] | ||||
Business Combination, Consideration Transferred, Other | $ 3,800 | |||
Computer Software, Intangible Asset | GES | ||||
Business Acquisition [Line Items] | ||||
Other Intangible Assets | 379 | |||
Computer Software, Intangible Asset | Minimum | GES | ||||
Business Acquisition [Line Items] | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | |||
Computer Software, Intangible Asset | Maximum | GES | ||||
Business Acquisition [Line Items] | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years | |||
Technology-Based Intangible Assets | GES | ||||
Business Acquisition [Line Items] | ||||
Other Intangible Assets | 5,060 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||
Trade Names | GES | ||||
Business Acquisition [Line Items] | ||||
Other Intangible Assets | 6,369 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||
Customer Relationships | GES | ||||
Business Acquisition [Line Items] | ||||
Other Intangible Assets | $ 7,451 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years |
Note 3. Revenue from Contract_4
Note 3. Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Net Sales | $ 313,385 | $ 265,620 | |
Contract assets | 60,800 | $ 51,929 | |
Contract with Customer, Liability | $ 5,500 | $ 6,300 | |
Transferred over Time | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax, Percentage | 69.00% | 73.00% | |
Automotive | |||
Disaggregation of Revenue [Line Items] | |||
Net Sales | $ 124,400 | $ 105,900 | |
Medical | |||
Disaggregation of Revenue [Line Items] | |||
Net Sales | 101,300 | 82,200 | |
Industrial | |||
Disaggregation of Revenue [Line Items] | |||
Net Sales | 64,700 | 57,400 | |
Public Safety | |||
Disaggregation of Revenue [Line Items] | |||
Net Sales | 17,100 | 17,100 | |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Net Sales | $ 5,900 | $ 3,000 |
Note 4. Inventories - Inventory
Note 4. Inventories - Inventory Components (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Inventory, Finished Goods, Net of Reserves | $ 5,213 | $ 2,708 |
Inventory, Work in Process, Net of Reserves | 1,900 | 4,119 |
Inventory, Raw Materials, Net of Reserves | 193,640 | 197,013 |
Total inventory | $ 200,753 | $ 203,840 |
Note 5. Accumulated Other Com_3
Note 5. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | $ 369,854 | $ 355,527 |
Other comprehensive income (loss) before reclassifications | (3,535) | 1,026 |
Reclassification to (earnings) loss | (409) | (11) |
Net current-period other comprehensive income (loss) | (3,944) | 1,015 |
Share Owners' Equity | 369,253 | 358,884 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (7,628) | (6,899) |
Share Owners' Equity | (11,572) | (5,884) |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (6,848) | (4,357) |
Other comprehensive income (loss) before reclassifications | (3,665) | (658) |
Reclassification to (earnings) loss | 0 | 0 |
Net current-period other comprehensive income (loss) | (3,665) | (658) |
Share Owners' Equity | (10,513) | (5,015) |
Derivative Gain (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (1,598) | (3,379) |
Other comprehensive income (loss) before reclassifications | 243 | 1,523 |
Reclassification to (earnings) loss | (331) | 73 |
Net current-period other comprehensive income (loss) | (88) | 1,596 |
Share Owners' Equity | (1,686) | (1,783) |
Postemployment Benefits, Net Actuarial Gain | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | 818 | 837 |
Other comprehensive income (loss) before reclassifications | (113) | 161 |
Reclassification to (earnings) loss | (78) | (84) |
Net current-period other comprehensive income (loss) | (191) | 77 |
Share Owners' Equity | $ 627 | $ 914 |
Note 5. Accumulated Other Com_4
Note 5. Accumulated Other Comprehensive Income (Loss) - Reclassifications from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||
Cost of Sales | $ (291,192) | $ (247,434) | |
Non-operating income (expense), net | (1,212) | (171) | |
Benefit (Provision) for Income Taxes | (2,115) | (1,409) | |
Net Income | 6,598 | 5,069 | |
Total reclassifications for the period | 409 | 11 | |
Derivative gain (loss) | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||
Total reclassifications for the period | 331 | (73) | |
Derivative gain (loss) | Reclassification out of Accumulated Other Comprehensive Income | Foreign Exchange Contract | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||
Cost of Sales | [1] | 411 | (117) |
Non-operating income (expense), net | [1] | 0 | 17 |
Benefit (Provision) for Income Taxes | [1] | (80) | 27 |
Net Income | [1] | 331 | (73) |
Postemployment Benefits, Amortization of actuarial gain (loss) | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||
Total reclassifications for the period | 78 | 84 | |
Postemployment Benefits, Amortization of actuarial gain (loss) | Reclassification out of Accumulated Other Comprehensive Income | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||
Non-operating income (expense), net | [2] | 102 | 111 |
Benefit (Provision) for Income Taxes | [2] | (24) | (27) |
Net Income | [2] | $ 78 | $ 84 |
[1] | See Note 9 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. | ||
[2] | See Note 11 - Postemployment Benefits of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. |
Note 6. Commitments and Conti_4
Note 6. Commitments and Contingent Liabilities - Commitments and Contingent Liabilities Textuals (Details) | Sep. 30, 2019USD ($) |
Guarantor Obligations | |
Bankers acceptance drafts transferred and outstanding | $ 300,000 |
Financial Standby Letter of Credit | |
Guarantor Obligations | |
Letters of Credit, Amount | 400,000 |
Loss Contingency Accrual, at Carrying Value | $ 0 |
Note 6. Commitments and Conti_5
Note 6. Commitments and Contingent Liabilities - Product Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Product warranty liability at the beginning of the period | $ 958 | $ 656 |
Additions to warranty accrual (including changes in estimates) | 24 | 115 |
Settlements made (in cash or in kind) | (23) | (4) |
Product warranty liability at the end of the period | $ 959 | $ 767 |
Note 7. Credit Facilities (Deta
Note 7. Credit Facilities (Details) $ in Thousands | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Remaining Borrowing Capacity | $ 76,800 | ||
Long-term Line of Credit | 109,600 | $ 126,200 | |
Current portion of borrowings under credit facilities | 18,067 | 34,713 | |
Long-term debt under credit facilities, less current portion | $ 91,500 | 91,500 | |
Debt, Weighted Average Interest Rate | 4.10% | ||
Primary Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 44,400 | |
Long-term Line of Credit | [1] | 105,200 | 122,800 |
Long-term debt under credit facilities, less current portion | [2] | 91,500 | 91,500 |
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 | 1.1 | ||
Thailand Overdraft Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Remaining Borrowing Capacity | [3] | $ 2,900 | |
Current portion of borrowings under credit facilities | [3] | 0 | 0 |
China Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Remaining Borrowing Capacity | [3] | 7,500 | |
Current portion of borrowings under credit facilities | [3] | 0 | 0 |
Netherlands Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Remaining Borrowing Capacity | [3] | 5,600 | |
Current portion of borrowings under credit facilities | [3] | 4,400 | 3,400 |
Poland Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Remaining Borrowing Capacity | 16,400 | ||
Current portion of borrowings under credit facilities | 0 | $ 0 | |
Financial Standby Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 400 | ||
[1] | At September 30, 2019, the Company maintains a U.S. primary credit facility (the “primary facility”) dated as of July 27, 2018 and scheduled to mature in July 2023. The primary facility provides for $150 million in borrowings, with an option to increase the amount available for borrowing to $225 million upon request, subject to the consent of each lender participating in such increase. This facility is maintained for working capital and general corporate purposes of the Company including capital expenditures and potential acquisitions. A commitment fee is payable on the unused portion of the credit facility 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 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 1.1 to 1.0. The Company had $0.4 million in letters of credit contingently committed against the credit facility at September 30, 2019. | ||
[2] | The amount of Long-term debt, less current maturities at September 30, 2019 reflects the borrowings on the primary facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. | ||
[3] | At September 30, 2019, the Company also maintains foreign credit facilities in Thailand, China, Poland, and the Netherlands. For more information on these foreign credit facilities, refer to our Annual Report on Form 10-K for the year ended June 30, 2019. |
Note 8. Fair Value - Recurring
Note 8. Fair Value - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Recurring Fair Value Measurements: | ||
Derivative Asset | $ 2,777 | $ 1,832 |
Debt Securities, Trading, and Equity Securities, FV-NI | 9,472 | 9,268 |
Derivative Liability | 597 | 299 |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 1,129 | 1,123 |
Debt Securities, Trading, and Equity Securities, FV-NI | 9,472 | 9,268 |
Total assets at fair value | 13,378 | 12,223 |
Total liabilities at fair value | 597 | 299 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 2,777 | 1,832 |
Derivative Liability | 597 | 299 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 1,129 | 1,123 |
Debt Securities, Trading, and Equity Securities, FV-NI | 9,472 | 9,268 |
Total assets at fair value | 10,601 | 10,391 |
Total liabilities at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 0 | 0 |
Derivative Liability | 0 | 0 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 0 | 0 |
Debt Securities, Trading, and Equity Securities, FV-NI | 0 | 0 |
Total assets at fair value | 2,777 | 1,832 |
Total liabilities at fair value | 597 | 299 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 2,777 | 1,832 |
Derivative Liability | $ 597 | $ 299 |
Note 8. Fair Value - Textuals (
Note 8. Fair Value - Textuals (Details) | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Fair Value, Purchases and Sales of Level 3 Assets | $ 0 |
Fair Value, Purchases and Sales of Level 3 Liabilities | $ 0 |
Note 9. Derivative Instrument_3
Note 9. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($) | Jun. 30, 2019 | Sep. 30, 2019EUR (€) | Sep. 30, 2019USD ($) | |
Derivatives, Fair Value | ||||
Notional Amount of Derivatives | € 77 | $ 32.3 | ||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 0.4 | |||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | 12 months | 12 months |
Note 9. Derivative Instrument_4
Note 9. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Derivatives, Fair Value | ||
Derivative Asset | $ 2,777 | $ 1,832 |
Derivative Liability | 597 | 299 |
Foreign Exchange Contract | Fair Value, Measurements, Recurring | ||
Derivatives, Fair Value | ||
Derivative Asset | 2,777 | 1,832 |
Derivative Liability | 597 | 299 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 1,139 | 1,136 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | 597 | 278 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 1,638 | 696 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | $ 0 | $ 21 |
Note 9. Derivative Instrument_5
Note 9. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Foreign Exchange Contract | ||
Derivative Instruments, Gain (Loss) | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 275 | $ 1,947 |
Note 9. Derivative Instrument_6
Note 9. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative Instruments, Gain (Loss) | ||
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | $ 2,109 | $ 464 |
Foreign Exchange Contract | Nonoperating Income (Expense) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | 1,698 | 564 |
Cash Flow Hedging | Foreign Exchange Contract | ||
Derivative Instruments, Gain (Loss) | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | 411 | (100) |
Cash Flow Hedging | Foreign Exchange Contract | Cost of Sales | ||
Derivative Instruments, Gain (Loss) | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | 411 | (117) |
Cash Flow Hedging | Foreign Exchange Contract | Nonoperating Income (Expense) | ||
Derivative Instruments, Gain (Loss) | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | $ 0 | $ 17 |
Note 10. Investments - Suppleme
Note 10. Investments - Supplemental Employee Retirement Investments Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Schedule of Trading Securities and Other Trading Assets | ||
Trading Securities, Change in net unrealized holding gains (losses) | $ (53) | $ 91 |
Note 10. Investments - Supple_2
Note 10. Investments - Supplemental Employee Retirement Plan Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 |
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | $ 9,472 | $ 9,268 |
SERP obligation | 9,472 | 9,268 |
Prepaid Expenses and Other Current Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | 1,760 | 1,728 |
Other Noncurrent Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | 7,712 | 7,540 |
Other Current Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP obligation | 1,760 | 1,728 |
Other Noncurrent Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP obligation | $ 7,712 | $ 7,540 |
Note 11. Postemployment Benef_3
Note 11. Postemployment Benefits (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Components of Net Periodic Benefit Cost (before tax): | ||
Assets for Plan Benefits, Defined Benefit Plan | $ 0 | $ 0 |
Note 12. Stock Compensation P_3
Note 12. Stock Compensation Plans - Textuals (Details) - $ / shares | 3 Months Ended | |||
Sep. 30, 2019 | Oct. 20, 2016 | Oct. 03, 2014 | ||
Stock Option and Incentive Plan 2014 | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 4,500,000 | |||
Non-Employee Directors Stock Compensation Deferral Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 | |||
Performance Shares | Stock Option and Incentive Plan 2014 | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | [1] | 252,878 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [1],[2] | $ 14.39 | ||
Unrestricted Shares | Stock Option and Incentive Plan 2014 | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | [3] | 500 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [2],[3] | $ 14.39 | ||
[1] | Long-term performance shares were awarded to officers and other key employees. Payouts will be based upon a combination of a bonus percentage attainment component calculated under the Company’s profit sharing incentive bonus plan, 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. The long-term performance shares awarded are based on three successive annual performance measurement periods, with each annual tranche having a grant date when economic profit tiers are established and approved by the Compensation and Governance Committee of the Board near the beginning of the applicable fiscal year and a vesting date shortly after the end of each annual period. The number of shares issued will be less than the maximum shares issuable if one or both of the above-mentioned incentive metric maximum thresholds are not obtained. | |||
[2] | The grant date fair value is based on the stock price at the date of the award and for long-term performance shares is applicable to the first tranche only. | |||
[3] | Unrestricted shares were awarded under the Plan to a key employee which were expensed immediately. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. |
Note 13. Goodwill and Other I_4
Note 13. Goodwill and Other Intangible Assets (Details) - USD ($) | 3 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Oct. 01, 2018 | |
Goodwill [Line Items] | ||||
Goodwill | $ 19,936,000 | $ 18,104,000 | ||
Goodwill, Impaired, Accumulated Impairment Loss | (12,826,000) | (12,826,000) | ||
Goodwill, Gross | 32,762,000 | 30,930,000 | ||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Gross | 52,144,000 | 52,062,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 30,639,000 | 29,874,000 | ||
Finite-Lived Intangible Assets, Net | 21,505,000 | 22,188,000 | ||
Amortization of Intangible Assets | 800,000 | $ 200,000 | ||
Indefinite-lived Intangible Assets (Excluding Goodwill) | 0 | 0 | ||
Computer Software, Intangible Asset | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Gross | 32,097,000 | 32,015,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 27,351,000 | 27,124,000 | ||
Finite-Lived Intangible Assets, Net | 4,746,000 | 4,891,000 | ||
Customer Relationships | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Gross | 8,618,000 | 8,618,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 1,633,000 | 1,506,000 | ||
Finite-Lived Intangible Assets, Net | $ 6,985,000 | 7,112,000 | ||
Finite-Lived Intangible Asset, Useful Life | 15 years | |||
Technology-Based Intangible Assets | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Gross | $ 5,060,000 | 5,060,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 1,018,000 | 766,000 | ||
Finite-Lived Intangible Assets, Net | $ 4,042,000 | 4,294,000 | ||
Finite-Lived Intangible Asset, Useful Life | 5 years | |||
Trade Names | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Assets, Gross | $ 6,369,000 | 6,369,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 637,000 | 478,000 | ||
Finite-Lived Intangible Assets, Net | $ 5,732,000 | $ 5,891,000 | ||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||
Maximum | Computer Software, Intangible Asset | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||
Minimum | Computer Software, Intangible Asset | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Finite-Lived Intangible Asset, Useful Life | 3 years | |||
GES | ||||
Goodwill [Line Items] | ||||
Goodwill, Purchase Accounting Adjustments | $ 1,832,000 | |||
Goodwill | $ 13,745,000 |
Note 14. Leases (Details)
Note 14. Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2019 | ||
Lessee, Lease, Description [Line Items] | |||
Lease, Cost | $ 300 | ||
Operating Lease, Payments | 200 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position | 2,406 | ||
Operating Lease, Liability, Current, Statement of Financial Position | 793 | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position | $ 1,613 | ||
Operating Lease, Weighted Average Remaining Lease Term | 5 years 4 months | ||
Operating Lease, Weighted Average Discount Rate, Percent | 3.50% | ||
Lessee, Operating Lease, Liability, Payments, Due Next Twelve Months | [1] | $ 632 | |
Lessee, Operating Lease, Liability, Payments, Due Year Two | 710 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 575 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Four | 95 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Five | 95 | ||
Lessee, Operating Lease, Liability, Payments, Due after Year Five | 475 | ||
Lessee, Operating Lease, Liability, Payments, Due | 2,582 | ||
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | 176 | ||
Operating Lease, Liability | $ 2,406 | ||
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 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position | us-gaap:OtherAssetsNoncurrent | ||
Operating Lease, Liability, Current, Statement of Financial Position | us-gaap:AccruedLiabilitiesCurrent | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position | us-gaap:OtherLiabilitiesNoncurrent | ||
[1] | (1) Represents estimated lease payments for the remaining nine-month period ending June 30, 2020. |
Note 15. Share Owners' Equity_2
Note 15. Share Owners' Equity (Details) - USD ($) | 3 Months Ended | 47 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 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 | $ 3,481,000 | $ 5,424,000 | |||||
Treasury Stock Acquired, Average Cost Per Share | $ 15.10 | $ 15.04 | |||||
Treasury Stock | |||||||
Treasury Stock, Value, Acquired, Cost Method | $ 3,481,000 | $ 5,424,000 | $ 71,400,000 | ||||
Share Repurchase Program October 2015 | |||||||
Stock Repurchase Program, Authorized Amount | $ 20,000,000 | ||||||
Share Repurchase Program 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 |
Note 16. Earnings Per Share (De
Note 16. Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Net income | $ 6,598 | $ 5,069 |
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | 8 | 2 |
Net Income (Loss) Available to Common Stockholders, Basic | $ 6,590 | $ 5,067 |
Weighted Average Number of Shares Outstanding, Basic | 25,495 | 26,507 |
Dilutive effect of average outstanding performance shares | 90 | 111 |
Incremental Common Shares Attributable to Participating Nonvested Shares with Non-forfeitable Dividend Rights | 24 | 10 |
Weighted Average Number of Shares Outstanding, Diluted | 25,609 | 26,628 |
Earnings Per Share, Basic | $ 0.26 | $ 0.19 |
Earnings Per Share, Diluted | $ 0.26 | $ 0.19 |