Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2022 | Apr. 25, 2022 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Information | ||
Entity Registrant Name | KIMBALL ELECTRONICS, INC. | |
Entity Central Index Key | 0001606757 | |
Entity File Number | 001-36454 | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 35-2047713 | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Addresses | ||
Entity Address, Address Line One | 1205 Kimball Boulevard | |
Entity Address, City or Town | Jasper | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 47546 | |
City Area Code | 812 | |
Local Phone Number | 634-4000 | |
Entity Listings | ||
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | KE | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 24,850,155 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Jun. 30, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 35,603 | $ 106,442 |
Receivables, net of allowances of $162 and $177, respectively | 224,216 | 203,382 |
Contract assets | 63,761 | 45,863 |
Inventories | 338,375 | 200,386 |
Prepaid expenses and other current assets | 31,302 | 27,320 |
Total current assets | 693,257 | 583,393 |
Property and Equipment, net of accumulated depreciation of $272,991 and $264,907, respectively | 191,370 | 163,251 |
Goodwill | 12,011 | 12,011 |
Other Intangible Assets, net of accumulated amortization of $34,776 and $35,813, respectively | 15,117 | 17,008 |
Other Assets | 41,665 | 38,398 |
Total Assets | 953,420 | 814,061 |
Current Liabilities: | ||
Current portion of borrowings under credit facilities | 42,096 | 26,214 |
Accounts payable | 275,799 | 216,544 |
Accrued expenses | 58,733 | 58,016 |
Total current liabilities | 376,628 | 300,774 |
Other Liabilities: | ||
Long-term debt under credit facilities, less current portion | 95,000 | 40,000 |
Long-term income taxes payable | 7,812 | 8,854 |
Other long-term liabilities | 20,246 | 22,461 |
Total other liabilities | 123,058 | 71,315 |
Share Owners’ Equity: | ||
Preferred stock-no par value | 0 | 0 |
Common stock-no par value | 0 | 0 |
Additional paid-in capital | 309,466 | 308,123 |
Retained earnings | 230,284 | 208,969 |
Accumulated other comprehensive loss | (12,566) | (4,883) |
Treasury stock, at cost | (73,450) | (70,237) |
Total Share Owners’ Equity | 453,734 | 441,972 |
Total Liabilities and Share Owners’ Equity | $ 953,420 | $ 814,061 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets Parentheticals - USD ($) $ in Thousands | Mar. 31, 2022 | Jun. 30, 2021 |
ASSETS | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 162 | $ 177 |
Property and Equipment Accumulated Depreciation | 272,991 | 264,907 |
Other Intangible Assets Accumulated Amortization | $ 34,776 | $ 35,813 |
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 | 4,581,000 | 4,473,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Net Sales | $ 368,057 | $ 310,329 | $ 976,038 | $ 962,682 |
Cost of Sales | 334,113 | 284,323 | 905,657 | 876,428 |
Gross Profit | 33,944 | 26,006 | 70,381 | 86,254 |
Selling and Administrative Expenses | 13,667 | 11,744 | 39,794 | 38,347 |
Other General Income | 0 | (376) | (1,384) | (717) |
Operating Income | 20,277 | 14,638 | 31,971 | 48,624 |
Other Income (Expense): | ||||
Interest income | 31 | 38 | 66 | 71 |
Interest expense | (669) | (370) | (1,537) | (1,809) |
Non-operating income (expense), net | (1,465) | (309) | (2,090) | 5,643 |
Other income (expense), net | (2,103) | (641) | (3,561) | 3,905 |
Income Before Taxes on Income | 18,174 | 13,997 | 28,410 | 52,529 |
Provision for Income Taxes | 4,536 | 3,525 | 7,095 | 10,184 |
Net Income | $ 13,638 | $ 10,472 | $ 21,315 | $ 42,345 |
Earnings Per Share of Common Stock: | ||||
Earnings Per Share, Basic | $ 0.54 | $ 0.42 | $ 0.84 | $ 1.68 |
Earnings Per Share, Diluted | $ 0.54 | $ 0.41 | $ 0.84 | $ 1.67 |
Weighted Average Number of Shares Outstanding, Basic | 25,175 | 25,049 | 25,192 | 25,101 |
Weighted Average Number of Shares Outstanding, Diluted | 25,272 | 25,217 | 25,291 | 25,288 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Net income | $ 13,638 | $ 10,472 | $ 21,315 | $ 42,345 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, Pre-tax | (2,432) | (5,177) | (7,912) | 4,262 |
Foreign currency translation adjustments, Tax | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments, Net of Tax | (2,432) | (5,177) | (7,912) | 4,262 |
Postemployment actuarial change, Pre-tax | (19) | 18 | (119) | (508) |
Postemployment actuarial change, Tax | 7 | (5) | 33 | 159 |
Postemployment actuarial change, Net of Tax | (12) | 13 | (86) | (349) |
Derivative gain (loss), Pre-tax | 1,063 | (1,108) | 148 | (230) |
Derivative gain (loss), Tax | (271) | 254 | (102) | (64) |
Derivative gain (loss), Net of Tax | 792 | (854) | 46 | (294) |
Reclassification to (earnings) loss: | ||||
Derivatives, Reclassification to (earnings) loss, Pre-tax | (22) | 5 | 414 | 1,047 |
Derivatives, Reclassification to (earnings) loss, Tax | 31 | 18 | (1) | (175) |
Derivatives, Reclassification to (earnings) loss, Net of Tax | 9 | 23 | 413 | 872 |
Amortization of actuarial change, Pre-tax | (61) | (77) | (190) | (341) |
Amortization of actuarial change, Tax | 15 | 20 | 46 | 83 |
Amortization of actuarial change, Net of Tax | (46) | (57) | (144) | (258) |
Other comprehensive income (loss), Pre-tax | (1,471) | (6,339) | (7,659) | 4,230 |
Other comprehensive income (loss), Tax | (218) | 287 | (24) | 3 |
Other comprehensive income (loss), Net of Tax | (1,689) | (6,052) | (7,683) | 4,233 |
Total comprehensive income (loss) | 11,949 | 4,420 | 13,632 | 46,578 |
Foreign Exchange Contract | ||||
Other comprehensive income (loss): | ||||
Derivative gain (loss), Pre-tax | $ 1,063 | $ (1,108) | $ 148 | $ (230) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flows From Operating Activities: | ||
Net income | $ 21,315 | $ 42,345 |
Adjustments to reconcile net income to net cash (used for) provided by operating activities: | ||
Depreciation and amortization | 22,452 | 25,245 |
Loss on sales of assets | 104 | 28 |
Deferred income taxes | (538) | (4,675) |
Stock-based compensation | 4,538 | 2,767 |
Other, net | 800 | 625 |
Change in operating assets and liabilities: | ||
Receivables | (25,176) | (22,986) |
Contract assets | (17,898) | 17,179 |
Inventories | (142,516) | 37,635 |
Prepaid expenses and other assets | (6,705) | (6,603) |
Accounts payable | 61,120 | 7,431 |
Accrued expenses and taxes payable | (2,161) | 4,764 |
Net cash (used for) provided by operating activities | (84,665) | 103,755 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (49,454) | (22,704) |
Proceeds from sales of assets | 297 | 391 |
Purchases of capitalized software | (675) | (702) |
Other, net | (191) | 43 |
Net cash used for investing activities | (50,023) | (22,972) |
Cash Flows From Financing Activities: | ||
Proceeds from credit facilities | 50,000 | 0 |
Payments on credit facilities | 0 | (34,500) |
Net change in revolving credit facilities | 21,186 | (23,419) |
Settlements on previous year acquisition | 0 | 2,957 |
Repurchases of common stock | (4,726) | (2,996) |
Payments related to tax withholding for stock-based compensation | (1,579) | (771) |
Debt issuance costs | (25) | 0 |
Net cash provided by (used for) financing activities | 64,856 | (58,729) |
Effect of Exchange Rate Change on Cash and Cash Equivalents | (1,007) | 2,607 |
Net (Decrease) Increase in Cash and Cash Equivalents | (70,839) | 24,661 |
Cash and Cash Equivalents at Beginning of Period | 106,442 | 64,990 |
Cash and Cash Equivalents at End of Period | 35,603 | 89,651 |
Cash paid during the period for: | ||
Income taxes | 12,779 | 10,818 |
Interest expense | 1,077 | 2,197 |
Non-cash investing activity: | ||
Unpaid purchases of property and equipment at the end of the period | $ 5,060 | $ 2,734 |
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, 2020 | $ 379,365 | $ 306,808 | $ 152,178 | $ (10,551) | $ (69,070) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 42,345 | 42,345 | |||
Other Comprehensive Income (Loss), Net of Tax | 4,233 | 4,233 | |||
Stock Issued During Period, Value, Issued for Services | 65 | 19 | 46 | ||
Compensation expense related to stock compensation plan | 2,724 | 2,724 | |||
Performance Share Issuance | (771) | (2,524) | 1,753 | ||
Deferred Share Issuance | 0 | (30) | 30 | ||
Treasury Stock, Value, Acquired, Cost Method | (2,996) | (2,996) | |||
Share Owners' Equity at Mar. 31, 2021 | 424,965 | 306,997 | 194,523 | (6,318) | (70,237) |
Share Owners' Equity at Dec. 31, 2020 | 419,638 | 306,120 | 184,051 | (266) | (70,267) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 10,472 | 10,472 | |||
Other Comprehensive Income (Loss), Net of Tax | (6,052) | (6,052) | |||
Compensation expense related to stock compensation plan | 907 | 907 | |||
Deferred Share Issuance | 0 | (30) | 30 | ||
Share Owners' Equity at Mar. 31, 2021 | 424,965 | 306,997 | 194,523 | (6,318) | (70,237) |
Share Owners' Equity at Jun. 30, 2021 | 441,972 | 308,123 | 208,969 | (4,883) | (70,237) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 21,315 | 21,315 | |||
Other Comprehensive Income (Loss), Net of Tax | (7,683) | (7,683) | |||
Stock Issued During Period, Value, Issued for Services | 125 | 67 | 58 | ||
Compensation expense related to stock compensation plan | 4,474 | 4,474 | |||
Performance Share Issuance | (1,560) | (3,126) | 1,566 | ||
Restricted Share Units Issuance | (18) | (40) | 22 | ||
Deferred Share Issuance | 0 | (32) | 32 | ||
Treasury Stock, Value, Acquired, Cost Method | (4,891) | (4,891) | |||
Share Owners' Equity at Mar. 31, 2022 | 453,734 | 309,466 | 230,284 | (12,566) | (73,450) |
Share Owners' Equity at Dec. 31, 2021 | 445,167 | 307,996 | 216,646 | (10,877) | (68,598) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 13,638 | 13,638 | |||
Other Comprehensive Income (Loss), Net of Tax | (1,689) | (1,689) | |||
Compensation expense related to stock compensation plan | 1,515 | 1,515 | |||
Restricted Share Units Issuance | (6) | (13) | 7 | ||
Deferred Share Issuance | 0 | (32) | 32 | ||
Treasury Stock, Value, Acquired, Cost Method | (4,891) | (4,891) | |||
Share Owners' Equity at Mar. 31, 2022 | $ 453,734 | $ 309,466 | $ 230,284 | $ (12,566) | $ (73,450) |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Share Owners' Equity Parentheticals - shares | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Performance Share Issuance, Shares | 0 | 0 | 143,000 | 156,000 |
Restricted Share Units Issuance, Shares | 1,000 | 2,000 | ||
Deferred Share Issuance, Shares | 3,000 | 3,000 | 3,000 | 3,000 |
Stock Issued During Period, Shares, Issued for Services | 0 | 0 | 5,000 | 4,000 |
Treasury Stock, Shares, Acquired | 259,000 | 0 | 259,000 | 193,000 |
Note 1. Business Description an
Note 1. Business Description and Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2022 | |
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 devices, medical disposables, precision molded plastics, and production automation, test, and inspection equipment. We are consistently recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service. Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of March 31, 2022 and June 30, 2021, results of operations for the three and nine months ended March 31, 2022 and 2021, cash flows for the nine months ended March 31, 2022 and 2021, and share owners’ equity for the three and nine months ended March 31, 2022 and 2021. 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, 2021 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. Certain prior period amounts have been reclassified to conform to current period presentation in the Condensed Consolidated Statements of Cash Flow within the Cash Flows from Operating Activities section. Deferred tax valuation allowance is now included with Deferred income taxes while the other deferred charges have been reclassified to Other, net. Change in Estimates: The Company reviews the estimated useful lives of its fixed assets on an ongoing basis. In evaluating useful lives, the Company considers how long assets will remain functionally efficient and effective, given levels of technology, competitive factors, and the economic environment. If the assessment indicates that the assets will continue to be used for a longer period than previously anticipated, the useful life of the assets is revised, resulting in a change in estimate. Changes in estimates are accounted for on a prospective basis by depreciating the assets’ current carrying values over their revised remaining useful lives. The most recent review indicated that Surface Mount Technology production equipment had actual lives that were longer than previously estimated. As a result of these findings, the Company changed its estimates of useful lives on these assets to 10 years, from lives of 5 or 7 years. The change was effective and accounted for prospectively beginning on November 1, 2021. The effects of this change in useful life estimate for the three months ended March 31, 2022 were a decrease in depreciation expense of $2.4 million, an increase in net income of $1.9 million, and an increase to basic and diluted earnings per share by $0.07. The effects of this change in useful life estimate for the nine months ended March 31, 2022 were a decrease in depreciation expense of $4.1 million, an increase in net income of $3.2 million, and an increase to basic and diluted earnings per share by $0.13. Revenue Recognition: Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives; in these cases, the rebates or incentives 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 anticipated margins to estimate the corresponding amount of revenue to recognize. Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads. Anticipated margins are determined based on historical or quoted customer pricing. 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. Trade Accounts Receivable: The Company’s trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. Our policy for estimating the allowance for credit losses on trade accounts receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to estimate expected credit losses. Management believes that historical loss information generally provides a basis for its assessment of expected credit losses. Trade accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Adjustments to the allowance for credit losses are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. 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 utilize factoring arrangements for certain of our accounts receivables with third-party financial institutions in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the nine months ended March 31, 2022 and 2021, we sold, without recourse, $201.5 million and $246.3 million of accounts receivable, respectively. Factoring fees were $0.4 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively, and $0.9 million and $1.0 million during the nine months ended March 31, 2022 and 2021, respectively. Factoring fees are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. One of our China operations, in limited circumstances, may receive banker’s acceptance drafts from customers as payment on account. 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. We did not hold any drafts at March 31, 2022, and the drafts totaled less than $0.1 million at June 30, 2021. These drafts were reflected in Receivables on the Condensed Consolidated Balance Sheets until the banker’s drafts were sold at a discount, transferred in settlement of current accounts payable, or cash was received at maturity. Banker’s acceptance drafts sold at a discount or transferred in settlement of current accounts payable during the nine months ended March 31, 2022 and 2021 were less than $0.1 million and $1.8 million, respectively. Goodwill and Other Intangible Assets: Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset fair values resulting from business acquisitions. Annually, or if conditions indicate an earlier review is necessary, goodwill is tested at the reporting unit level. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is written down to its estimated fair value. Other Intangible Assets consist of capitalized software, customer relationships, technology, and trade name, and are reviewed for impairment, and their remaining useful lives evaluated for revision, when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. As of March 31, 2022, the Company determined there have been no indicators of impairment for goodwill and other intangible assets. See Note 12 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial statements for more information on Goodwill and Other Intangible Assets. Leases: The Company leases certain office, manufacturing, and warehouse facilities under operating leases, in addition to land on which certain office and manufacturing facilities resides. Operating lease costs and cash payments for operating leases are immaterial to the Condensed Consolidated Statements of Income and our Condensed Consolidated Statements of Cash Flows. Lease right-of-use assets and lease liabilities each totaled $3.4 million at March 31, 2022 and $1.6 million at June 30, 2021. Lease right-of-use assets are included in Other Assets and lease liabilities are included in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets. Other General Income: Other General Income in the nine months ended March 31, 2022 and 2021 included $1.4 million and $0.7 million, respectively, of pre-tax income resulting from payments received related to class action lawsuits in which Kimball Electronics was a class member. These lawsuits alleged that certain suppliers to the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components. No Other General Income was recorded in three months ended March 31, 2022, and $0.4 million in the three months ended March 31, 2021. 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, amortization of actuarial gains (losses), 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 Nine Months Ended March 31 March 31 (Amounts in Thousands) 2022 2021 2022 2021 Foreign currency/derivative gain (loss) $ (625) $ (637) $ (1,325) $ 4,330 Gain (loss) on SERP investments (719) 164 (404) 1,525 Adjustments after measurement period of GES acquisition — 335 — 53 Other (121) (171) (361) (265) Non-operating income (expense), net $ (1,465) $ (309) $ (2,090) $ 5,643 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, making broad and complex changes to the U.S. tax code, for which complete guidance may have not yet been issued. Tax Reform, in addition to other changes, required a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period. As of March 31, 2022 and June 30, 2021, the remaining provision recorded for the one-time deemed repatriation tax was $8.9 million and $9.8 million, respectively, payable through fiscal year 2026, with the long-term portion recorded in Long-term income taxes payable on the Condensed Consolidated Balance Sheets. As of March 31, 2022, $1.1 million of the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheet. New Accounting Standards: Adopted in fiscal year 2022: In December 2019, the FASB issued guidance on Simplifying the Accounting for Income Taxes, intended to simplify various aspects related to the accounting for income taxes. We adopted this standard effective July 1, 2021, the beginning of our first quarter of fiscal year 2022, and the adoption did not have a material effect on our Condensed Consolidated Financial Statements. |
Note 2. Revenue from Contracts
Note 2. Revenue from Contracts with Customers | 9 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer | Revenue from Contracts with Customers Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, electronic and non-electronic components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment in automotive, medical, industrial, and public safety applications, to the specifications and designs of our customers. The following table disaggregates our revenue by end market vertical for the three and nine months ended March 31, 2022 and 2021. Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Millions) 2022 2021 2022 2021 Vertical Markets: Automotive $ 161.5 $ 139.6 $ 429.8 $ 409.7 Medical 102.9 85.4 277.7 299.7 Industrial 84.4 69.2 220.1 207.0 Public Safety 13.8 13.5 35.7 37.3 Other 5.5 2.6 12.7 9.0 Total net sales $ 368.1 $ 310.3 $ 976.0 $ 962.7 For both the three months ended March 31, 2022 and 2021, approximately 95% of our net sales 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. For the nine months ended March 31, 2022 and 2021, approximately 95% and 89% of our net sales, respectively, were recognized over time. The remaining sales revenues were recognized at a point in time when the customer obtained control of the products. 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, which are generally transferred to receivables in the next fiscal quarter due to the short-term nature of the manufacturing cycle. Contract assets were $63.8 million and $45.9 million as of March 31, 2022 and June 30, 2021, respectively. |
Note 3. Inventories
Note 3. Inventories | 9 Months Ended |
Mar. 31, 2022 | |
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) March 31, 2022 June 30, 2021 Finished products $ 895 $ 769 Work-in-process 7,336 5,149 Raw materials 330,144 194,468 Total inventory $ 338,375 $ 200,386 |
Note 4. Accumulated Other Compr
Note 4. Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Accumulated Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) During the nine months ended March 31, 2022 and 2021, 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 Accumulated Other Comprehensive Income (Loss) Balance at June 30, 2021 $ (2,223) $ (2,427) $ (233) $ (4,883) Other comprehensive income (loss) before reclassifications (7,912) 46 (86) (7,952) Reclassification to (earnings) loss — 413 (144) 269 Net current-period other comprehensive income (loss) (7,912) 459 (230) (7,683) Balance at March 31, 2022 $ (10,135) $ (1,968) $ (463) $ (12,566) Balance at June 30, 2020 $ (7,894) $ (3,254) $ 597 $ (10,551) Other comprehensive income (loss) before reclassifications 4,262 (294) (349) 3,619 Reclassification to (earnings) loss — 872 (258) 614 Net current-period other comprehensive income (loss) 4,262 578 (607) 4,233 Balance at March 31, 2021 $ (3,632) $ (2,676) $ (10) $ (6,318) The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended Affected Line Item in the Condensed Consolidated Statements of Income March 31 March 31 (Amounts in Thousands) 2022 2021 2022 2021 Derivative gain (loss) (1) $ 22 $ (5) $ (414) $ (1,047) Cost of Sales (31) (18) 1 175 Benefit (Provision) for Income Taxes $ (9) $ (23) $ (413) $ (872) Net of Tax Postemployment Benefits: Amortization of actuarial gain (2) 61 77 190 341 Non-operating income (expense), net (15) (20) (46) (83) Benefit (Provision) for Income Taxes $ 46 $ 57 $ 144 $ 258 Net of Tax Total reclassifications for the period $ 37 $ 34 $ (269) $ (614) Net of Tax Amounts in parentheses indicate reductions to income. (1) See Note 8 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. (2) See Note 10 - Employee Benefit Plans |
Note 5. Commitments and Conting
Note 5. Commitments and Contingent Liabilities | 9 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingent Liabilities The Company typically 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. Product warranty liability is recorded in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets. Changes in the product warranty liability for the nine months ended March 31, 2022 and 2021 were as follows: Nine Months Ended March 31 (Amounts in Thousands) 2022 2021 Product warranty liability at the beginning of the period $ 610 $ 647 Additions to warranty accrual (including changes in estimates) (64) (31) Settlements made (in cash or in kind) (13) (58) Product warranty liability at the end of the period $ 533 $ 558 |
Note 6. Credit Facilities
Note 6. Credit Facilities | 9 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt Disclosure | Credit Facilities Credit facilities consisted of the following: Available Borrowings Outstanding at Borrowings Outstanding at (Amounts in Millions, in U.S Dollar Equivalents) March 31, 2022 March 31, 2022 June 30, 2021 Primary credit facility (1) $ 21.9 $ 127.7 $ 62.7 Secondary credit facility (2) 20.0 — — Thailand overdraft credit facility 0.1 — — Netherlands revolving credit facility 0.8 9.4 3.5 Total credit facilities $ 42.8 $ 137.1 $ 66.2 Less: current portion $ (42.1) $ (26.2) Long-term debt under credit facilities, less current portion (3) $ 95.0 $ 40.0 (1) The Company maintains a U.S. primary credit facility (the “primary facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature July 27, 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. On November 8, 2021, the primary facility was amended to provide, among other things, (1) the interest rate calculation method will generally transition from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) on the transition date of December 31, 2021 on applicable borrowings; (2) the Eurocurrency borrowings are replaced with Term Benchmark borrowings; (3) if any Term Benchmark borrowing is denominated Euros, the Euro Interbank Offered Rate (“EURIBOR”) shall be utilized; and (4) all ABR borrowings will be denominated in U.S. Dollars. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • prior to the transition date of December 31, 2021, any Term Benchmark borrowing denominated in U.S. Dollars will utilize 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 Term Benchmark 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; • after the transition date of December 31, 2021, any existing or future Term Benchmark borrowing denominated in U.S. Dollars will utilize SOFR which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Term Benchmark 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; • any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) 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 Term Benchmark 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 LIBO Rate (as defined under the primary credit facility); or c. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); 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 both March 31, 2022 and June 30, 2021. Subsequent to March 31, 2022, the Company amended and restated this primary facility on May 4, 2022. See Note 15 - Sub sequent Event of Notes to Condensed Consolidated Financial Statements for further information on the amended and restated primary facility. (2) The Company entered into a credit agreement on March 16, 2022 (the “secondary credit facility”), which allows for borrowings up to $20 million. This secondary credit facility was established for working capital purposes and had a maturity date of the earlier of June 30, 2022 or the date upon which the primary credit facility was refinanced. As noted above, the primary credit facility was amended and restated on May 4, 2022, and the secondary credit facility was terminated on the same date. (3) The amount of Long-term debt under credit facilities, less current maturities 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 primary credit facility matures on July 27, 2023. The weighted-average interest rate on borrowings outstanding under the credit facilities at March 31, 2022 and June 30, 2021 were 2.3% and 2.0%, respectively. |
Note 7. Fair Value
Note 7. Fair Value | 9 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [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 nine months ended March 31, 2022. 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, 2021. Recurring Fair Value Measurements: As of March 31, 2022 and June 30, 2021, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: March 31, 2022 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,540 $ — $ 1,540 Derivatives: foreign exchange contracts — 1,585 1,585 Trading securities: mutual funds held in nonqualified SERP 11,905 — 11,905 Total assets at fair value $ 13,445 $ 1,585 $ 15,030 Liabilities Derivatives: foreign exchange contracts $ — $ 1,883 $ 1,883 Total liabilities at fair value $ — $ 1,883 $ 1,883 June 30, 2021 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,540 $ — $ 1,540 Derivatives: foreign exchange contracts — 1,468 1,468 Trading securities: mutual funds held in nonqualified SERP 12,644 — 12,644 Total assets at fair value $ 14,184 $ 1,468 $ 15,652 Liabilities Derivatives: foreign exchange contracts $ — $ 1,702 $ 1,702 Total liabilities at fair value $ — $ 1,702 $ 1,702 We had no level 3 assets or liabilities at March 31, 2022 and June 30, 2021. 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 9 - Investments of Notes to Condensed Consolidated Financial Statements for further information regarding the SERP. Financial Instruments Not Carried At Fair Value: Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the nine months ended March 31, 2022. 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, 2021. The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to the relatively short maturity and immaterial non-performance risk. |
Note 8. Derivative Instruments
Note 8. Derivative Instruments | 9 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure | Derivative Instruments Foreign Exchange Contracts: We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of business. Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes. We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances denominated in currencies other than the functional currencies. As of March 31, 2022, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $39.2 million and to hedge currencies against the Euro in the aggregate notional amount of 41.1 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 is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is 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 reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income. Based on fair values as of March 31, 2022, we estimate that approximately $0.1 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 March 31, 2022 and June 30, 2021. See Note 7 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 4 - Accumulated Other Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for the changes in deferred derivative gains and losses. Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets and derivative gains and losses in the Condensed Consolidated Statements of Income are presented below. Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets Asset Derivatives Liability Derivatives Fair Value As of Fair Value As of (Amounts in Thousands) Balance Sheet Location March 31, June 30, Balance Sheet Location March 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 1,202 $ 1,158 Accrued expenses $ 901 $ 1,549 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 383 310 Accrued expenses 982 153 Total derivatives $ 1,585 $ 1,468 $ 1,883 $ 1,702 The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Thousands) 2022 2021 2022 2021 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives: Foreign exchange contracts $ 1,063 $ (1,108) $ 148 $ (230) The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended Nine Months Ended (Amounts in Thousands) March 31 March 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2022 2021 2022 2021 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: Foreign exchange contracts Cost of Sales $ 22 $ (5) $ (414) $ (1,047) 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) $ (388) $ 1,403 $ (430) $ (1,137) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ (366) $ 1,398 $ (844) $ (2,184) |
Note 9. Investments
Note 9. Investments | 9 Months Ended |
Mar. 31, 2022 | |
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 the Other Income (Expense) category on our Condensed Consolidated Statements of Income. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. The change in net unrealized holding gains for the nine months ended March 31, 2022 and 2021 was approximately $(1.1) million and $0.9 million, respectively. SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) March 31, June 30, SERP investments - current asset $ 3,494 $ 3,095 SERP investments - other long-term asset 8,411 9,549 Total SERP investments $ 11,905 $ 12,644 SERP obligation - current liability $ 3,494 $ 3,095 SERP obligation - other long-term liability 8,411 9,549 Total SERP obligation $ 11,905 $ 12,644 |
Note 10. Employee Benefit Plans
Note 10. Employee Benefit Plans | 9 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Postemployment Benefits Disclosure | Employee Benefit PlansThe Company maintains a trusteed defined contribution retirement plan which is in effect for substantially all domestic employees meeting the eligibility requirements. The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis in excess of IRS limitations. The SERP is structured as a rabbi trust, and therefore, assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy.The Company established and maintains severance plans for all domestic employees and other postemployment plans for certain foreign subsidiaries. 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. Net periodic benefit costs were not material for the nine months ended March 31, 2022 and 2021. |
Note 11. Stock Compensation Pla
Note 11. Stock Compensation Plans | 9 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments | Stock Compensation Plans A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on October 3, 2014. The Kimball Electronics, Inc. 2014 Stock Option and Incentive Plan (the “Plan”) allows for the issuance of up to 4.5 million shares and may be granted 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. On October 20, 2016, the Board approved a nonqualified deferred stock compensation plan, the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which allows Non-Employee Directors to elect to defer all, or a portion of, their retainer fees in stock until retirement or termination from the Board or death. The Deferral Plan allows for issuance of up to 1.0 million shares of the Company’s common stock. 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, 2021. During the first nine months of fiscal year 2022, the following stock compensation was granted under the Plan and the Deferral Plan. Stock Compensation Granted Quarter Granted Shares/Units Grant Date Fair Value (2) Long-Term Performance Shares (1) 1st Quarter 287,312 $23.41 Long-Term Performance Shares (1) 2nd Quarter 600 $26.79 Unrestricted shares (3) 2nd Quarter 5,027 $24.87 Deferred share units (4) 2nd Quarter 34,480 $24.87 (1) Long-term performance share awards were granted to officers and other key employees. These annual performance share awards were approved by the Compensation and Governance Committee of the Board. Beginning with awards granted in fiscal year 2022 that will vest in fiscal year 2025, awards cliff vest at the third anniversary of the award date. To avoid a gap in the vesting of awards due to the transition from grants that vested annually in three equal installments to ones that vest after three years, two smaller bridge awards were also granted for fiscal year 2022 and fiscal year 2022-2023 performance periods. The bridge award for the fiscal year 2022 performance period cliff vests at the first anniversary of the grant. The bridge award for the fiscal year 2022-2023 performance period cliff vests at the second anniversary of the grant. The award for the fiscal year 2022-2024 performance period, and future performance share awards, cliff vest at the third anniversary of the grant. Under these awards, a number of shares will be issued to each participant based upon a combination of a profitability attainment component, based on the Company’s operating income plan, and a growth attainment component, based on the Company’s growth in sales revenue, comparing its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100% of one or both of the above-mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric. The number of shares issued will exceed the number of targeted shares issuable (up to a maximum of 125%) if the Company exceeds 100% of one or both of the above-mentioned incentive metrics. (2) The grant date fair value is based on the stock price at the date of the grant. (3) Unrestricted shares were awarded to a non-employee member of the Board as compensation for the portion of their annual retainer fees resulting from their election to be paid in unrestricted shares in lieu of cash payment or deferred share units. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. (4) Deferred share units were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to receive deferred share units in lieu of cash payment or unrestricted shares. Director’s fees are expensed over the period that directors earn the compensation. Deferred share units are participating securities and are payable in common stock in a lump sum or installments in accordance with deferral elections upon a Director’s retirement or termination from the Board or death. |
Note 12. Goodwill and Other Int
Note 12. Goodwill and Other Intangible Assets | 9 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure | Goodwill and Other Intangible Assets A summary of goodwill is as follows: (Amounts in Thousands) March 31, June 30, Goodwill $ 32,762 $ 32,762 Accumulated impairment (20,751) (20,751) Goodwill, net $ 12,011 $ 12,011 A summary of other intangible assets subject to amortization is as follows: March 31, 2022 June 30, 2021 (Amounts in Thousands) Cost Accumulated Net Value Cost Accumulated Net Value Capitalized Software $ 29,846 $ (26,095) $ 3,751 $ 32,774 $ (28,751) $ 4,023 Customer Relationships 8,618 (2,898) 5,720 8,618 (2,520) 6,098 Technology 5,060 (3,552) 1,508 5,060 (2,790) 2,270 Trade Name 6,369 (2,231) 4,138 6,369 (1,752) 4,617 Other Intangible Assets $ 49,893 $ (34,776) $ 15,117 $ 52,821 $ (35,813) $ 17,008 During the three months ended March 31, 2022 and 2021, amortization expense of other intangible assets was $0.8 million and $0.9 million, respectively. During the nine months ended March 31, 2022 and 2021, amortization expense of other intangible assets was $2.6 million and $2.5 million, 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 13. Share Owners' Equity
Note 13. Share Owners' Equity | 9 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure | Share Owners’ Equity The Company has a Board-authorized stock repurchase plan (the “Plan”) allowing the repurchase of up to $100 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Plan has no expiration date but may be suspended or discontinued at any time. During the nine months ended March 31, 2022, the Company repurchased $4.9 million of common stock under the Plan at an average price of $18.87 per share, which was recorded as Treasury stock, at cost in the Condensed Consolidated Balance Sheet. Since the inception of the Plan, the Company has repurchased $84.6 million of common stock at an average cost of $15.13 per share. |
Note 14. Earnings Per Share
Note 14. Earnings Per Share | 9 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share were calculated as follows under the two-class method: Three Months Ended Nine Months Ended March 31 March 31 (Amounts in thousands, except per share data) 2022 2021 2022 2021 Basic and Diluted Earnings Per Share: Net Income $ 13,638 $ 10,472 $ 21,315 $ 42,345 Less: Net Income allocated to participating securities 19 17 31 61 Net Income allocated to common Share Owners $ 13,619 $ 10,455 $ 21,284 $ 42,284 Basic weighted average common shares outstanding 25,175 25,049 25,192 25,101 Dilutive effect of average outstanding stock compensation awards 97 168 99 187 Dilutive weighted average shares outstanding 25,272 25,217 25,291 25,288 Earnings Per Share of Common Stock: Basic $ 0.54 $ 0.42 $ 0.84 $ 1.68 Diluted $ 0.54 $ 0.41 $ 0.84 $ 1.67 |
Note 15.Subsequent Event
Note 15.Subsequent Event | 9 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event On May 4, 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The Credit Agreement amends and restates the Company’s primary credit facility, which was scheduled to mature on July 27, 2023. The Credit Agreement has a maturity date of May 4, 2027 and allows for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million at the Company’s request, subject to the consent of each lender participating in such increase. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee of the unused portion of principal amount of the credit facility is payable at a rate that now ranges from 10.0 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 Credit Agreement. The interest rate on borrowings is dependent on the type and currencies of borrowings. The Term Benchmark borrowings will continue to use SOFR or EURIBOR plus the Term Benchmark Loans spread which has been updated to range from 100.0 to 175.0 basis points, and the ABR borrowings will continue to use ABR plus the ABR Loans spread which has been updated to range from 0.0 to 75.0 basis points. Both the Term Benchmark Loans spread and ABR spread will continue to be based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. The Company’s financial covenants under the Credit Agreement require: • a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the 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; provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the Credit Agreement, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and • an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters ending during any period set forth below, to be less than 3.5 to 1.0. |
Note 1. Business Description _2
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of March 31, 2022 and June 30, 2021, results of operations for the three and nine months ended March 31, 2022 and 2021, cash flows for the nine months ended March 31, 2022 and 2021, and share owners’ equity for the three and nine months ended March 31, 2022 and 2021. 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, 2021 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. Certain prior period amounts have been reclassified to conform to current period presentation in the Condensed Consolidated Statements of Cash Flow within the Cash Flows from Operating Activities section. Deferred tax valuation allowance is now included with Deferred income taxes while the other deferred charges have been reclassified to Other, net. |
Revenue Recognition | Revenue Recognition: Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications. Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order is provided, which is generally short term in nature. Customer purchase orders primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives; in these cases, the rebates or incentives 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 anticipated margins to estimate the corresponding amount of revenue to recognize. Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads. Anticipated margins are determined based on historical or quoted customer pricing. 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. |
Trade Accounts Receivable | Trade Accounts Receivable: The Company’s trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. Our policy for estimating the allowance for credit losses on trade accounts receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to estimate expected credit losses. Management believes that historical loss information generally provides a basis for its assessment of expected credit losses. Trade accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Adjustments to the allowance for credit losses are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. |
Banker's Acceptance Drafts | One of our China operations, in limited circumstances, may receive banker’s acceptance drafts from customers as payment on account. 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. |
Goodwill | Goodwill represents the difference between the purchase price and the related underlying tangible and intangible net asset fair values resulting from business acquisitions. Annually, or if conditions indicate an earlier review is necessary, goodwill is tested at the reporting unit level. If the estimated fair value of the reporting unit is less than the carrying value, goodwill is written down to its estimated fair value. |
Intangible Assets | Other Intangible Assets consist of capitalized software, customer relationships, technology, and trade name, and are reviewed for impairment, and their remaining useful lives evaluated for revision, when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. |
Leases | The Company leases certain office, manufacturing, and warehouse facilities under operating leases, in addition to land on which certain office and manufacturing facilities resides. Operating lease costs and cash payments for operating leases are immaterial to the Condensed Consolidated Statements of Income and our Condensed Consolidated Statements of Cash Flows. Lease right-of-use assets and lease liabilities each totaled $3.4 million at March 31, 2022 and $1.6 million at June 30, 2021. Lease right-of-use assets are included in Other Assets and lease liabilities are included in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets. |
Other General Income | Other General Income:Other General Income in the nine months ended March 31, 2022 and 2021 included $1.4 million and $0.7 million, respectively, of pre-tax income resulting from payments received related to class action lawsuits in which Kimball Electronics was a class member. These lawsuits alleged that certain suppliers to the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components. No Other General Income was recorded in three months ended March 31, 2022, and $0.4 million in the three months ended March 31, 2021. |
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, amortization of actuarial gains (losses), 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 | 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 2022: In December 2019, the FASB issued guidance on Simplifying the Accounting for Income Taxes, intended to simplify various aspects related to the accounting for income taxes. We adopted this standard effective July 1, 2021, the beginning of our first quarter of fiscal year 2022, and the adoption did not have a material effect on our Condensed Consolidated Financial Statements. |
Note 2. Revenue from Contract_2
Note 2. Revenue from Contracts with Customers (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [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, material price variances, 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 3. Inventories (Policies)
Note 3. Inventories (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. |
Note 5. Commitments and Conti_2
Note 5. Commitments and Contingent Liabilities (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Product Warranties | The Company typically 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. Product warranty liability is recorded in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets. |
Note 6. Credit Facilities (Poli
Note 6. Credit Facilities (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | The amount of Long-term debt under credit facilities, less current maturities 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 primary credit facility matures on July 27, 2023. |
Note 7. Fair Value (Policies)
Note 7. Fair Value (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [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 nine months ended March 31, 2022. 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, 2021. |
Fair Value of Financial Instruments Not Carried at Fair Value | Financial Instruments Not Carried At Fair Value: Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the nine months ended March 31, 2022. 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, 2021. The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to the relatively short maturity and immaterial non-performance risk. |
Note 8. Derivative Instruments
Note 8. Derivative Instruments (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [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. As of March 31, 2022, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $39.2 million and to hedge currencies against the Euro in the aggregate notional amount of 41.1 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. |
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 is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is 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 reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income. |
Note 9. Investments (Policies)
Note 9. Investments (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
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 the Other Income (Expense) category on our Condensed Consolidated Statements of Income. 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 12. Goodwill and Other I_2
Note 12. Goodwill and Other Intangible Assets (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [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) | 9 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Components of Non-operating income (expense), net | Components of Non-operating income (expense), net: Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Thousands) 2022 2021 2022 2021 Foreign currency/derivative gain (loss) $ (625) $ (637) $ (1,325) $ 4,330 Gain (loss) on SERP investments (719) 164 (404) 1,525 Adjustments after measurement period of GES acquisition — 335 — 53 Other (121) (171) (361) (265) Non-operating income (expense), net $ (1,465) $ (309) $ (2,090) $ 5,643 |
Note 2. Revenue from Contract_3
Note 2. Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates our revenue by end market vertical for the three and nine months ended March 31, 2022 and 2021. Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Millions) 2022 2021 2022 2021 Vertical Markets: Automotive $ 161.5 $ 139.6 $ 429.8 $ 409.7 Medical 102.9 85.4 277.7 299.7 Industrial 84.4 69.2 220.1 207.0 Public Safety 13.8 13.5 35.7 37.3 Other 5.5 2.6 12.7 9.0 Total net sales $ 368.1 $ 310.3 $ 976.0 $ 962.7 |
Note 3. Inventories (Tables)
Note 3. Inventories (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventory components were as follows: (Amounts in Thousands) March 31, 2022 June 30, 2021 Finished products $ 895 $ 769 Work-in-process 7,336 5,149 Raw materials 330,144 194,468 Total inventory $ 338,375 $ 200,386 |
Note 4. Accumulated Other Com_2
Note 4. Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | During the nine months ended March 31, 2022 and 2021, 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 Accumulated Other Comprehensive Income (Loss) Balance at June 30, 2021 $ (2,223) $ (2,427) $ (233) $ (4,883) Other comprehensive income (loss) before reclassifications (7,912) 46 (86) (7,952) Reclassification to (earnings) loss — 413 (144) 269 Net current-period other comprehensive income (loss) (7,912) 459 (230) (7,683) Balance at March 31, 2022 $ (10,135) $ (1,968) $ (463) $ (12,566) Balance at June 30, 2020 $ (7,894) $ (3,254) $ 597 $ (10,551) Other comprehensive income (loss) before reclassifications 4,262 (294) (349) 3,619 Reclassification to (earnings) loss — 872 (258) 614 Net current-period other comprehensive income (loss) 4,262 578 (607) 4,233 Balance at March 31, 2021 $ (3,632) $ (2,676) $ (10) $ (6,318) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended Affected Line Item in the Condensed Consolidated Statements of Income March 31 March 31 (Amounts in Thousands) 2022 2021 2022 2021 Derivative gain (loss) (1) $ 22 $ (5) $ (414) $ (1,047) Cost of Sales (31) (18) 1 175 Benefit (Provision) for Income Taxes $ (9) $ (23) $ (413) $ (872) Net of Tax Postemployment Benefits: Amortization of actuarial gain (2) 61 77 190 341 Non-operating income (expense), net (15) (20) (46) (83) Benefit (Provision) for Income Taxes $ 46 $ 57 $ 144 $ 258 Net of Tax Total reclassifications for the period $ 37 $ 34 $ (269) $ (614) Net of Tax Amounts in parentheses indicate reductions to income. (1) See Note 8 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. (2) See Note 10 - Employee Benefit Plans |
Note 5. Commitments and Conti_3
Note 5. Commitments and Contingent Liabilities (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability | Changes in the product warranty liability for the nine months ended March 31, 2022 and 2021 were as follows: Nine Months Ended March 31 (Amounts in Thousands) 2022 2021 Product warranty liability at the beginning of the period $ 610 $ 647 Additions to warranty accrual (including changes in estimates) (64) (31) Settlements made (in cash or in kind) (13) (58) Product warranty liability at the end of the period $ 533 $ 558 |
Note 6. Credit Facilities (Tabl
Note 6. Credit Facilities (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Line of Credit Facilities | Credit facilities consisted of the following: Available Borrowings Outstanding at Borrowings Outstanding at (Amounts in Millions, in U.S Dollar Equivalents) March 31, 2022 March 31, 2022 June 30, 2021 Primary credit facility (1) $ 21.9 $ 127.7 $ 62.7 Secondary credit facility (2) 20.0 — — Thailand overdraft credit facility 0.1 — — Netherlands revolving credit facility 0.8 9.4 3.5 Total credit facilities $ 42.8 $ 137.1 $ 66.2 Less: current portion $ (42.1) $ (26.2) Long-term debt under credit facilities, less current portion (3) $ 95.0 $ 40.0 (1) The Company maintains a U.S. primary credit facility (the “primary facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature July 27, 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. On November 8, 2021, the primary facility was amended to provide, among other things, (1) the interest rate calculation method will generally transition from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) on the transition date of December 31, 2021 on applicable borrowings; (2) the Eurocurrency borrowings are replaced with Term Benchmark borrowings; (3) if any Term Benchmark borrowing is denominated Euros, the Euro Interbank Offered Rate (“EURIBOR”) shall be utilized; and (4) all ABR borrowings will be denominated in U.S. Dollars. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • prior to the transition date of December 31, 2021, any Term Benchmark borrowing denominated in U.S. Dollars will utilize 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 Term Benchmark 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; • after the transition date of December 31, 2021, any existing or future Term Benchmark borrowing denominated in U.S. Dollars will utilize SOFR which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Term Benchmark 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; • any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) 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 Term Benchmark 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 LIBO Rate (as defined under the primary credit facility); or c. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); 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 both March 31, 2022 and June 30, 2021. Subsequent to March 31, 2022, the Company amended and restated this primary facility on May 4, 2022. See Note 15 - Sub sequent Event of Notes to Condensed Consolidated Financial Statements for further information on the amended and restated primary facility. (2) The Company entered into a credit agreement on March 16, 2022 (the “secondary credit facility”), which allows for borrowings up to $20 million. This secondary credit facility was established for working capital purposes and had a maturity date of the earlier of June 30, 2022 or the date upon which the primary credit facility was refinanced. As noted above, the primary credit facility was amended and restated on May 4, 2022, and the secondary credit facility was terminated on the same date. |
Note 7. Fair Value (Tables)
Note 7. Fair Value (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | As of March 31, 2022 and June 30, 2021, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: March 31, 2022 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,540 $ — $ 1,540 Derivatives: foreign exchange contracts — 1,585 1,585 Trading securities: mutual funds held in nonqualified SERP 11,905 — 11,905 Total assets at fair value $ 13,445 $ 1,585 $ 15,030 Liabilities Derivatives: foreign exchange contracts $ — $ 1,883 $ 1,883 Total liabilities at fair value $ — $ 1,883 $ 1,883 June 30, 2021 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,540 $ — $ 1,540 Derivatives: foreign exchange contracts — 1,468 1,468 Trading securities: mutual funds held in nonqualified SERP 12,644 — 12,644 Total assets at fair value $ 14,184 $ 1,468 $ 15,652 Liabilities Derivatives: foreign exchange contracts $ — $ 1,702 $ 1,702 Total liabilities at fair value $ — $ 1,702 $ 1,702 |
Note 8. Derivative Instrument_2
Note 8. Derivative Instruments (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets Asset Derivatives Liability Derivatives Fair Value As of Fair Value As of (Amounts in Thousands) Balance Sheet Location March 31, June 30, Balance Sheet Location March 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 1,202 $ 1,158 Accrued expenses $ 901 $ 1,549 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 383 310 Accrued expenses 982 153 Total derivatives $ 1,585 $ 1,468 $ 1,883 $ 1,702 |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended March 31 March 31 (Amounts in Thousands) 2022 2021 2022 2021 Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives: Foreign exchange contracts $ 1,063 $ (1,108) $ 148 $ (230) The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended Nine Months Ended (Amounts in Thousands) March 31 March 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2022 2021 2022 2021 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: Foreign exchange contracts Cost of Sales $ 22 $ (5) $ (414) $ (1,047) 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) $ (388) $ 1,403 $ (430) $ (1,137) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ (366) $ 1,398 $ (844) $ (2,184) |
Note 9. Investments (Tables)
Note 9. Investments (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Trading Securities (and Certain Trading Assets) | SERP asset and liability balances applicable to Kimball Electronics participants were as follows: (Amounts in Thousands) March 31, June 30, SERP investments - current asset $ 3,494 $ 3,095 SERP investments - other long-term asset 8,411 9,549 Total SERP investments $ 11,905 $ 12,644 SERP obligation - current liability $ 3,494 $ 3,095 SERP obligation - other long-term liability 8,411 9,549 Total SERP obligation $ 11,905 $ 12,644 |
Note 11. Stock Compensation P_2
Note 11. Stock Compensation Plans (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | During the first nine months of fiscal year 2022, the following stock compensation was granted under the Plan and the Deferral Plan. Stock Compensation Granted Quarter Granted Shares/Units Grant Date Fair Value (2) Long-Term Performance Shares (1) 1st Quarter 287,312 $23.41 Long-Term Performance Shares (1) 2nd Quarter 600 $26.79 Unrestricted shares (3) 2nd Quarter 5,027 $24.87 Deferred share units (4) 2nd Quarter 34,480 $24.87 (1) Long-term performance share awards were granted to officers and other key employees. These annual performance share awards were approved by the Compensation and Governance Committee of the Board. Beginning with awards granted in fiscal year 2022 that will vest in fiscal year 2025, awards cliff vest at the third anniversary of the award date. To avoid a gap in the vesting of awards due to the transition from grants that vested annually in three equal installments to ones that vest after three years, two smaller bridge awards were also granted for fiscal year 2022 and fiscal year 2022-2023 performance periods. The bridge award for the fiscal year 2022 performance period cliff vests at the first anniversary of the grant. The bridge award for the fiscal year 2022-2023 performance period cliff vests at the second anniversary of the grant. The award for the fiscal year 2022-2024 performance period, and future performance share awards, cliff vest at the third anniversary of the grant. Under these awards, a number of shares will be issued to each participant based upon a combination of a profitability attainment component, based on the Company’s operating income plan, and a growth attainment component, based on the Company’s growth in sales revenue, comparing its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100% of one or both of the above-mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric. The number of shares issued will exceed the number of targeted shares issuable (up to a maximum of 125%) if the Company exceeds 100% of one or both of the above-mentioned incentive metrics. (2) The grant date fair value is based on the stock price at the date of the grant. (3) Unrestricted shares were awarded to a non-employee member of the Board as compensation for the portion of their annual retainer fees resulting from their election to be paid in unrestricted shares in lieu of cash payment or deferred share units. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. (4) Deferred share units were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to receive deferred share units in lieu of cash payment or unrestricted shares. Director’s fees are expensed over the period that directors earn the compensation. Deferred share units are participating securities and are payable in common stock in a lump sum or installments in accordance with deferral elections upon a Director’s retirement or termination from the Board or death. |
Note 12. Goodwill and Other I_3
Note 12. Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A summary of goodwill is as follows: (Amounts in Thousands) March 31, June 30, Goodwill $ 32,762 $ 32,762 Accumulated impairment (20,751) (20,751) Goodwill, net $ 12,011 $ 12,011 |
Schedule of Finite-Lived Intangible Assets | A summary of other intangible assets subject to amortization is as follows: March 31, 2022 June 30, 2021 (Amounts in Thousands) Cost Accumulated Net Value Cost Accumulated Net Value Capitalized Software $ 29,846 $ (26,095) $ 3,751 $ 32,774 $ (28,751) $ 4,023 Customer Relationships 8,618 (2,898) 5,720 8,618 (2,520) 6,098 Technology 5,060 (3,552) 1,508 5,060 (2,790) 2,270 Trade Name 6,369 (2,231) 4,138 6,369 (1,752) 4,617 Other Intangible Assets $ 49,893 $ (34,776) $ 15,117 $ 52,821 $ (35,813) $ 17,008 |
Note 14. Earnings Per Share (Ta
Note 14. Earnings Per Share (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share were calculated as follows under the two-class method: Three Months Ended Nine Months Ended March 31 March 31 (Amounts in thousands, except per share data) 2022 2021 2022 2021 Basic and Diluted Earnings Per Share: Net Income $ 13,638 $ 10,472 $ 21,315 $ 42,345 Less: Net Income allocated to participating securities 19 17 31 61 Net Income allocated to common Share Owners $ 13,619 $ 10,455 $ 21,284 $ 42,284 Basic weighted average common shares outstanding 25,175 25,049 25,192 25,101 Dilutive effect of average outstanding stock compensation awards 97 168 99 187 Dilutive weighted average shares outstanding 25,272 25,217 25,291 25,288 Earnings Per Share of Common Stock: Basic $ 0.54 $ 0.42 $ 0.84 $ 1.68 Diluted $ 0.54 $ 0.41 $ 0.84 $ 1.67 |
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 | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Foreign Currency/Derivative Gain (Loss) | $ (625) | $ (637) | $ (1,325) | $ 4,330 |
Gain (loss) on SERP investments | (719) | 164 | (404) | 1,525 |
Adjustments after measurement period of GES acquisition | 0 | 335 | 0 | 53 |
Other | (121) | (171) | (361) | (265) |
Non-operating income (expense), net | $ (1,465) | $ (309) | $ (2,090) | $ 5,643 |
Note 1. Business Description _5
Note 1. Business Description and Summary of Significant Accounting Policies - Textuals (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Oct. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Jun. 30, 2021 | |
Change in Accounting Estimate, Description | Change in Estimates: The Company reviews the estimated useful lives of its fixed assets on an ongoing basis. In evaluating useful lives, the Company considers how long assets will remain functionally efficient and effective, given levels of technology, competitive factors, and the economic environment. If the assessment indicates that the assets will continue to be used for a longer period than previously anticipated, the useful life of the assets is revised, resulting in a change in estimate. Changes in estimates are accounted for on a prospective basis by depreciating the assets’ current carrying values over their revised remaining useful lives. The most recent review indicated that Surface Mount Technology production equipment had actual lives that were longer than previously estimated. | ||||||
Depreciation and amortization | $ 22,452 | $ 25,245 | |||||
Net income | $ 13,638 | $ 10,472 | $ 21,315 | $ 42,345 | |||
Earnings Per Share, Diluted | $ 0.54 | $ 0.41 | $ 0.84 | $ 1.67 | |||
Accounts Receivable, Extended Payment Terms | 45 days | ||||||
Accounts Receivable Sold Without Recourse | $ 201,500 | $ 246,300 | |||||
Factoring Fees | $ 400 | $ 200 | 900 | 1,000 | |||
Due From Bankers Acceptance Drafts | 0 | $ 0 | 0 | $ 100 | |||
SettlementofBankersAcceptanceDrafts | 100 | 1,800 | |||||
Operating Lease, Right-of-Use Asset | 3,400 | 3,400 | 3,400 | 1,600 | |||
Operating Lease, Liability | 3,400 | 3,400 | 3,400 | 1,600 | |||
Other General Income | 0 | $ (376) | (1,384) | $ (717) | |||
Tax Cuts and Jobs Act, Transition Tax for Accumulated Foreign Earnings, Liability | 8,900 | 8,900 | 8,900 | $ 9,800 | |||
Tax Cuts and Jobs Act, Transition Tax for Accumulated Foreign Earnings, Liability, Current | 1,100 | $ 1,100 | 1,100 | ||||
Service Life | |||||||
Property, Plant and Equipment, Useful Life | 10 years | ||||||
Depreciation and amortization | 2,400 | 4,100 | |||||
Net income | $ 1,900 | $ 3,200 | |||||
Earnings Per Share, Diluted | $ 0.07 | $ 0.13 | |||||
Minimum | |||||||
Accounts Receivable, Customary Payment Terms | 30 days | ||||||
Minimum | Service Life | |||||||
Property, Plant and Equipment, Useful Life | 5 years | ||||||
Maximum | |||||||
Accounts Receivable, Customary Payment Terms | 45 days | ||||||
Maximum | Service Life | |||||||
Property, Plant and Equipment, Useful Life | 7 years |
Note 2. Revenue from Contract_4
Note 2. Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Jun. 30, 2021 | |
Disaggregation of Revenue | |||||
Net Sales | $ 368,057 | $ 310,329 | $ 976,038 | $ 962,682 | |
Contract assets | 63,761 | 63,761 | $ 45,863 | ||
Contract with Customer, Liability | $ 17,200 | $ 17,200 | $ 7,600 | ||
Transferred over Time | |||||
Disaggregation of Revenue | |||||
Revenue from Contract with Customer, Excluding Assessed Tax, Percentage | 95.00% | 95.00% | 95.00% | 89.00% | |
Automotive | |||||
Disaggregation of Revenue | |||||
Net Sales | $ 161,500 | $ 139,600 | $ 429,800 | $ 409,700 | |
Medical | |||||
Disaggregation of Revenue | |||||
Net Sales | 102,900 | 85,400 | 277,700 | 299,700 | |
Industrial | |||||
Disaggregation of Revenue | |||||
Net Sales | 84,400 | 69,200 | 220,100 | 207,000 | |
Public Safety | |||||
Disaggregation of Revenue | |||||
Net Sales | 13,800 | 13,500 | 35,700 | 37,300 | |
Other | |||||
Disaggregation of Revenue | |||||
Net Sales | $ 5,500 | $ 2,600 | $ 12,700 | $ 9,000 |
Note 3. Inventories - Inventory
Note 3. Inventories - Inventory Components (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Jun. 30, 2021 |
Inventory, Finished Goods, Net of Reserves | $ 895 | $ 769 |
Inventory, Work in Process, Net of Reserves | 7,336 | 5,149 |
Inventory, Raw Materials, Net of Reserves | 330,144 | 194,468 |
Total inventory | $ 338,375 | $ 200,386 |
Note 4. Accumulated Other Com_3
Note 4. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | $ 441,972 | $ 379,365 |
Other comprehensive income (loss) before reclassifications | (7,952) | 3,619 |
Reclassification to (earnings) loss | 269 | 614 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (7,683) | 4,233 |
Share Owners' Equity | 453,734 | 424,965 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (4,883) | (10,551) |
Share Owners' Equity | (12,566) | (6,318) |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (2,223) | (7,894) |
Other comprehensive income (loss) before reclassifications | (7,912) | 4,262 |
Reclassification to (earnings) loss | 0 | 0 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (7,912) | 4,262 |
Share Owners' Equity | (10,135) | (3,632) |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (2,427) | (3,254) |
Other comprehensive income (loss) before reclassifications | 46 | (294) |
Reclassification to (earnings) loss | 413 | 872 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 459 | 578 |
Share Owners' Equity | (1,968) | (2,676) |
Post Employment Benefits Net Actuarial Gain (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (233) | 597 |
Other comprehensive income (loss) before reclassifications | (86) | (349) |
Reclassification to (earnings) loss | (144) | (258) |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (230) | (607) |
Share Owners' Equity | $ (463) | $ (10) |
Note 4. Accumulated Other Com_4
Note 4. Accumulated Other Comprehensive Income (Loss) - Reclassifications from Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | $ (334,113) | $ (284,323) | $ (905,657) | $ (876,428) | |
Benefit (Provision) for Income Taxes | (4,536) | (3,525) | (7,095) | (10,184) | |
Net Income | 13,638 | 10,472 | 21,315 | 42,345 | |
Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Net Income | 37 | 34 | (269) | (614) | |
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Foreign Exchange Contract | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | [1] | 22 | (5) | (414) | (1,047) |
Benefit (Provision) for Income Taxes | [1] | (31) | (18) | 1 | 175 |
Net Income | [1] | (9) | (23) | (413) | (872) |
Reclassification out of Accumulated Other Comprehensive Income | Postemployment Benefits, Amortization of actuarial gain (loss) | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Non-operating income (expense), net | [2] | 61 | 77 | 190 | 341 |
Benefit (Provision) for Income Taxes | [2] | (15) | (20) | (46) | (83) |
Net Income | [2] | $ 46 | $ 57 | $ 144 | $ 258 |
[1] | See Note 8 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. | ||||
[2] | See Note 10 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information on postemployment benefit plans. |
Note 5. Commitments and Conti_4
Note 5. Commitments and Contingent Liabilities - Product Warranty (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Product warranty liability at the beginning of the period | $ 610 | $ 647 |
Additions to warranty accrual (including changes in estimates) | (64) | (31) |
Settlements made (in cash or in kind) | (13) | (58) |
Product warranty liability at the end of the period | $ 533 | $ 558 |
Note 6. Credit Facilities (Deta
Note 6. Credit Facilities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2022 | Jun. 30, 2021 | ||
Line of Credit Facility | |||
Line of Credit Facility, Remaining Borrowing Capacity | $ 42,800 | ||
Long-term Line of Credit | 137,100 | $ 66,200 | |
Current portion of borrowings under credit facilities | 42,096 | 26,214 | |
Long-term debt under credit facilities, less current portion | $ 95,000 | $ 40,000 | |
Debt, Weighted Average Interest Rate | 2.30% | 2.00% | |
Primary Credit Facility | |||
Line of Credit Facility | |||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 21,900 | |
Long-term Line of Credit | [1] | 127,700 | $ 62,700 |
Long-term debt under credit facilities, less current portion | [2] | 95,000 | 40,000 |
Line of Credit Facility, Maximum Borrowing Capacity | 150,000 | ||
Line of Credit Facility, Maximum Borrowing Capacity Upon Request | $ 225,000 | ||
Line of Credit Facility, Above the Adjusted LIBO Rate to Calculate Alternate Base Rate | 1.00% | ||
Adjusted Leverage Ratio Covenant | 3 | ||
Fixed Charge Coverage Ratio Covenant | 1.1 | ||
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash | $ 15,000 | ||
Line of Credit Facility, Above the Federal Funds Rate to Calculate Alternate Base Rate | 0.50% | ||
Secondary Credit Facility | |||
Line of Credit Facility | |||
Line of Credit Facility, Remaining Borrowing Capacity | [3] | $ 20,000 | |
Current portion of borrowings under credit facilities | [3] | 0 | 0 |
Line of Credit Facility, Maximum Borrowing Capacity | 20,000 | ||
Thailand Overdraft Credit Facility | |||
Line of Credit Facility | |||
Line of Credit Facility, Remaining Borrowing Capacity | 100 | ||
Current portion of borrowings under credit facilities | 0 | 0 | |
Netherlands Revolving Credit Facility | |||
Line of Credit Facility | |||
Line of Credit Facility, Remaining Borrowing Capacity | 800 | ||
Current portion of borrowings under credit facilities | 9,400 | 3,500 | |
Financial Standby Letter of Credit | |||
Line of Credit Facility | |||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 400 | $ 400 | |
Minimum | Primary Credit Facility | |||
Line of Credit Facility | |||
Line of Credit Facility, Commitment Fee Percentage | 0.20% | ||
Line of Credit Facility, Term Benchmark Loans Spread for LIBOR | 0.01250 | ||
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01250 | ||
Line of Credit Facility, Term Benchmark Loans Spread for EURIBOR | 0.01250 | ||
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00250 | ||
Maximum | Primary Credit Facility | |||
Line of Credit Facility | |||
Line of Credit Facility, Commitment Fee Percentage | 0.25% | ||
Line of Credit Facility, Term Benchmark Loans Spread for LIBOR | 0.01750 | ||
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01750 | ||
Line of Credit Facility, Term Benchmark Loans Spread for EURIBOR | 0.01750 | ||
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00750 | ||
[1] | The Company maintains a U.S. primary credit facility (the “primary facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, National Association, as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature July 27, 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. On November 8, 2021, the primary facility was amended to provide, among other things, (1) the interest rate calculation method will generally transition from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) on the transition date of December 31, 2021 on applicable borrowings; (2) the Eurocurrency borrowings are replaced with Term Benchmark borrowings; (3) if any Term Benchmark borrowing is denominated Euros, the Euro Interbank Offered Rate (“EURIBOR”) shall be utilized; and (4) all ABR borrowings will be denominated in U.S. Dollars. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • prior to the transition date of December 31, 2021, any Term Benchmark borrowing denominated in U.S. Dollars will utilize 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 Term Benchmark 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; • after the transition date of December 31, 2021, any existing or future Term Benchmark borrowing denominated in U.S. Dollars will utilize SOFR which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Term Benchmark 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; • any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) 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 Term Benchmark 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 LIBO Rate (as defined under the primary credit facility); or c. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); 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 both March 31, 2022 and June 30, 2021. Subsequent to March 31, 2022, the Company amended and restated this primary facility on May 4, 2022. See Note 15 - Sub sequent Event of Notes to Condensed Consolidated Financial Statements for further information on the amended and restated primary facility. | ||
[2] | The amount of Long-term debt under credit facilities, less current maturities 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 primary credit facility matures on July 27, 2023. | ||
[3] | The Company entered into a credit agreement on March 16, 2022 (the “secondary credit facility”), which allows for borrowings up to $20 million. This secondary credit facility was established for working capital purposes and had a maturity date of the earlier of June 30, 2022 or the date upon which the primary credit facility was refinanced. As noted above, the primary credit facility was amended and restated on May 4, 2022, and the secondary credit facility was terminated on the same date. |
Note 7. Fair Value - Recurring
Note 7. Fair Value - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Jun. 30, 2021 |
Recurring Fair Value Measurements: | ||
Derivative Asset | $ 1,585 | $ 1,468 |
Debt Securities, Trading, and Equity Securities, FV-NI | 11,905 | 12,644 |
Derivative Liability | 1,883 | 1,702 |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 1,540 | 1,540 |
Debt Securities, Trading, and Equity Securities, FV-NI | 11,905 | 12,644 |
Total assets at fair value | 15,030 | 15,652 |
Total liabilities at fair value | 1,883 | 1,702 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 1,585 | 1,468 |
Derivative Liability | 1,883 | 1,702 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 1,540 | 1,540 |
Debt Securities, Trading, and Equity Securities, FV-NI | 11,905 | 12,644 |
Total assets at fair value | 13,445 | 14,184 |
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 | 1,585 | 1,468 |
Total liabilities at fair value | 1,883 | 1,702 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset | 1,585 | 1,468 |
Derivative Liability | 1,883 | 1,702 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Recurring Fair Value Measurements: | ||
Total assets at fair value | 0 | 0 |
Total liabilities at fair value | $ 0 | $ 0 |
Note 8. Derivative Instrument_3
Note 8. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract € in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2022USD ($) | Jun. 30, 2021 | Mar. 31, 2022EUR (€) | |
Derivatives, Fair Value | |||
Derivative, Notional Amount | $ 39.2 | € 41.1 | |
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 0.1 | ||
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | 12 months | 12 months |
Note 8. Derivative Instrument_4
Note 8. Derivative Instruments - Fair Values of Derivative Instruments on the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Jun. 30, 2021 |
Derivatives, Fair Value | ||
Derivative Asset | $ 1,585 | $ 1,468 |
Derivative Liability | 1,883 | 1,702 |
Foreign Exchange Contract | Fair Value, Measurements, Recurring | ||
Derivatives, Fair Value | ||
Derivative Asset | 1,585 | 1,468 |
Derivative Liability | 1,883 | 1,702 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 1,202 | 1,158 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | 901 | 1,549 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset | 383 | 310 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability | $ 982 | $ 153 |
Note 8. Derivative Instrument_5
Note 8. Derivative Instruments - The Effect of Derivative Instruments on Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Derivative Instruments, Gain (Loss) | ||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 1,063 | $ (1,108) | $ 148 | $ (230) |
Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) | ||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 1,063 | $ (1,108) | $ 148 | $ (230) |
Note 8. Derivative Instrument_6
Note 8. Derivative Instruments - The Effect of Derivative Instruments on Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Derivative Instruments, Gain (Loss) | ||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification before Tax | $ 22 | $ (5) | $ (414) | $ (1,047) |
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | (366) | 1,398 | (844) | (2,184) |
Foreign Exchange Contract | Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | (388) | 1,403 | (430) | (1,137) |
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 | $ 22 | $ (5) | $ (414) | $ (1,047) |
Note 9. Investments - Supplemen
Note 9. Investments - Supplemental Employee Retirement Investments Textuals (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of Trading Securities and Other Trading Assets | ||
Equity Securities, FV-NI, Unrealized Gain (Loss) | $ (1,100) | $ 900 |
Note 9. Investments - Supplem_2
Note 9. Investments - Supplemental Employee Retirement Plan Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Jun. 30, 2021 |
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | $ 11,905 | $ 12,644 |
SERP obligation | 11,905 | 12,644 |
Prepaid Expenses and Other Current Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | 3,494 | 3,095 |
Other Noncurrent Assets | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP investments | 8,411 | 9,549 |
Other Current Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP obligation | 3,494 | 3,095 |
Other Noncurrent Liabilities | ||
Schedule of Trading Securities and Other Trading Assets | ||
SERP obligation | $ 8,411 | $ 9,549 |
Note 10. Employee Benefit Pla_2
Note 10. Employee Benefit Plans (Details) - USD ($) | Mar. 31, 2022 | Jun. 30, 2021 |
Components of Net Periodic Benefit Cost (before tax): | ||
Assets for Plan Benefits, Defined Benefit Plan | $ 0 | $ 0 |
Note 11. Stock Compensation P_3
Note 11. Stock Compensation Plans - Textuals (Details) - $ / shares | 3 Months Ended | ||||
Dec. 31, 2021 | Sep. 30, 2021 | 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] | 600 | 287,312 | ||
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] | $ 26.79 | $ 23.41 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 100.00% | ||||
Performance Shares | Stock Option and Incentive Plan 2014 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 125.00% | ||||
Performance Shares | Stock Option and Incentive Plan 2014 | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 0.00% | ||||
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] | 5,027 | |||
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] | $ 24.87 | |||
Deferred Share Units Director Compensation | Non-Employee Directors Stock Compensation Deferral Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | [4] | 34,480 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [2],[4] | $ 24.87 | |||
[1] | Long-term performance share awards were granted to officers and other key employees. These annual performance share awards were approved by the Compensation and Governance Committee of the Board. Beginning with awards granted in fiscal year 2022 that will vest in fiscal year 2025, awards cliff vest at the third anniversary of the award date. To avoid a gap in the vesting of awards due to the transition from grants that vested annually in three equal installments to ones that vest after three years, two smaller bridge awards were also granted for fiscal year 2022 and fiscal year 2022-2023 performance periods. The bridge award for the fiscal year 2022 performance period cliff vests at the first anniversary of the grant. The bridge award for the fiscal year 2022-2023 performance period cliff vests at the second anniversary of the grant. The award for the fiscal year 2022-2024 performance period, and future performance share awards, cliff vest at the third anniversary of the grant. Under these awards, a number of shares will be issued to each participant based upon a combination of a profitability attainment component, based on the Company’s operating income plan, and a growth attainment component, based on the Company’s growth in sales revenue, comparing its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR. The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100% of one or both of the above-mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric. The number of shares issued will exceed the number of targeted shares issuable (up to a maximum of 125%) if the Company exceeds 100% of one or both of the above-mentioned incentive metrics. | ||||
[2] | The grant date fair value is based on the stock price at the date of the grant. | ||||
[3] | Unrestricted shares were awarded to a non-employee member of the Board as compensation for the portion of their annual retainer fees resulting from their election to be paid in unrestricted shares in lieu of cash payment or deferred share units. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. | ||||
[4] | Deferred share units were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to receive deferred share units in lieu of cash payment or unrestricted shares. Director’s fees are expensed over the period that directors earn the compensation. Deferred share units are participating securities and are payable in common stock in a lump sum or installments in accordance with deferral elections upon a Director’s retirement or termination from the Board or death. |
Note 12. Goodwill and Other I_4
Note 12. Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Jun. 30, 2021 | |
Goodwill | |||||
Goodwill | $ 12,011 | $ 12,011 | $ 12,011 | ||
Goodwill, Impaired, Accumulated Impairment Loss | (20,751) | (20,751) | (20,751) | ||
Goodwill, Gross | 32,762 | 32,762 | 32,762 | ||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 49,893 | 49,893 | 52,821 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (34,776) | (34,776) | (35,813) | ||
Finite-Lived Intangible Assets, Net | 15,117 | 15,117 | 17,008 | ||
Amortization of Intangible Assets | 800 | $ 900 | 2,600 | $ 2,500 | |
Indefinite-lived Intangible Assets (Excluding Goodwill) | 0 | 0 | |||
Computer Software, Intangible Asset | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 29,846 | 29,846 | 32,774 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (26,095) | (26,095) | (28,751) | ||
Finite-Lived Intangible Assets, Net | 3,751 | 3,751 | 4,023 | ||
Customer Relationships | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 8,618 | 8,618 | 8,618 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (2,898) | (2,898) | (2,520) | ||
Finite-Lived Intangible Assets, Net | 5,720 | $ 5,720 | 6,098 | ||
Finite-Lived Intangible Asset, Useful Life | 15 years | ||||
Technology-Based Intangible Assets | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 5,060 | $ 5,060 | 5,060 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (3,552) | (3,552) | (2,790) | ||
Finite-Lived Intangible Assets, Net | 1,508 | $ 1,508 | 2,270 | ||
Finite-Lived Intangible Asset, Useful Life | 5 years | ||||
Trade Names | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 6,369 | $ 6,369 | 6,369 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (2,231) | (2,231) | (1,752) | ||
Finite-Lived Intangible Assets, Net | $ 4,138 | $ 4,138 | $ 4,617 | ||
Finite-Lived Intangible Asset, Useful Life | 10 years | ||||
Maximum | Computer Software, Intangible Asset | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Asset, Useful Life | 10 years | ||||
Minimum | Computer Software, Intangible Asset | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Asset, Useful Life | 3 years |
Note 13. Share Owners' Equity (
Note 13. Share Owners' Equity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 77 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | |
Stock Repurchase Program, Authorized Amount | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |
Treasury Stock, Value, Acquired, Cost Method | 4,891,000 | $ 4,891,000 | $ 2,996,000 | |
Treasury Stock Acquired, Average Cost Per Share | $ 18.87 | $ 15.13 | ||
Treasury Stock | ||||
Treasury Stock, Value, Acquired, Cost Method | $ 4,891,000 | $ 4,891,000 | $ 2,996,000 | $ 84,600,000 |
Note 14. Earnings Per Share (De
Note 14. Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Net income | $ 13,638 | $ 10,472 | $ 21,315 | $ 42,345 |
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | 19 | 17 | 31 | 61 |
Net Income (Loss) Available to Common Stockholders, Basic | $ 13,619 | $ 10,455 | $ 21,284 | $ 42,284 |
Weighted Average Number of Shares Outstanding, Basic | 25,175 | 25,049 | 25,192 | 25,101 |
Dilutive effect of average outstanding stock compensation awards | 97 | 168 | 99 | 187 |
Weighted Average Number of Shares Outstanding, Diluted | 25,272 | 25,217 | 25,291 | 25,288 |
Earnings Per Share, Basic | $ 0.54 | $ 0.42 | $ 0.84 | $ 1.68 |
Earnings Per Share, Diluted | $ 0.54 | $ 0.41 | $ 0.84 | $ 1.67 |
Note 15.Subsequent Event (Detai
Note 15.Subsequent Event (Details) - Primary Credit Facility - USD ($) $ in Thousands | May 04, 2022 | Mar. 31, 2022 |
Subsequent Event | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000 | |
Line of Credit Facility, Maximum Borrowing Capacity Upon Request | 225,000 | |
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash | $ 15,000 | |
Adjusted Leverage Ratio Covenant | 3 | |
Minimum | ||
Subsequent Event | ||
Line of Credit Facility, Commitment Fee Percentage | 0.20% | |
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01250 | |
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00250 | |
Maximum | ||
Subsequent Event | ||
Line of Credit Facility, Commitment Fee Percentage | 0.25% | |
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01750 | |
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00750 | |
Subsequent Event | ||
Subsequent Event | ||
Subsequent Event, Date | May 4, 2022 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 300,000 | |
Line of Credit Facility, Maximum Borrowing Capacity Upon Request | 450,000 | |
Adjusted Leverage Ratio, Indebtedness Reduction For Excess Cash | $ 15,000 | |
Adjusted Leverage Ratio Covenant | 3 | |
Adjusted Leverage Ratio Covenant Material Acquisition | 3.5 | |
Interest Coverage Ratio Covenant | 3.5 | |
Subsequent Event | Minimum | ||
Subsequent Event | ||
Line of Credit Facility, Commitment Fee Percentage | 0.10% | |
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01000 | |
Line of Credit Facility, Alternate Base Rate Loans Spread | 0 | |
Subsequent Event | Maximum | ||
Subsequent Event | ||
Line of Credit Facility, Commitment Fee Percentage | 0.25% | |
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01750 | |
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00750 |