Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2022 | Jan. 25, 2023 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2022 | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
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 | 24,724,173 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Jun. 30, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 26,251 | $ 49,851 |
Receivables, net of allowances of $239 and $139, respectively | 265,153 | 222,857 |
Contract assets | 74,861 | 64,080 |
Inventories | 487,527 | 395,630 |
Prepaid expenses and other current assets | 34,505 | 28,665 |
Total current assets | 888,297 | 761,083 |
Property and Equipment, net of accumulated depreciation of $282,019 and $271,139, respectively | 238,862 | 206,835 |
Goodwill | 12,011 | 12,011 |
Other Intangible Assets, net of accumulated amortization of $37,158 and $35,437, respectively | 13,882 | 14,707 |
Other Assets | 42,265 | 41,131 |
Total Assets | 1,195,317 | 1,035,767 |
Current Liabilities: | ||
Current portion of borrowings under credit facilities | 38,534 | 35,580 |
Accounts payable | 337,733 | 308,617 |
Accrued expenses | 76,495 | 64,545 |
Total current liabilities | 452,762 | 408,742 |
Other Liabilities: | ||
Long-term debt under credit facilities, less current portion | 235,000 | 145,000 |
Long-term income taxes payable | 5,859 | 7,812 |
Other long-term liabilities | 20,548 | 20,242 |
Total other liabilities | 261,407 | 173,054 |
Share Owners’ Equity: | ||
Preferred stock-no par value | 0 | 0 |
Common stock-no par value | 0 | 0 |
Additional paid-in capital | 312,085 | 311,090 |
Retained earnings | 260,451 | 240,222 |
Accumulated other comprehensive loss | (14,892) | (19,672) |
Treasury stock, at cost | (76,496) | (77,669) |
Total Share Owners’ Equity | 481,148 | 453,971 |
Total Liabilities and Share Owners’ Equity | $ 1,195,317 | $ 1,035,767 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets Parentheticals - USD ($) $ in Thousands | Dec. 31, 2022 | Jun. 30, 2022 |
ASSETS | ||
Allowance for Doubtful Accounts, Premiums and Other Receivables | $ 239 | $ 139 |
Property and Equipment Accumulated Depreciation | 282,019 | 271,139 |
Other Intangible Assets Accumulated Amortization | $ 37,158 | $ 35,437 |
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 | 4,706,000 | 4,804,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net Sales | $ 436,696 | $ 315,264 | $ 842,585 | $ 607,981 |
Cost of Sales | 402,505 | 294,427 | 779,073 | 571,544 |
Gross Profit | 34,191 | 20,837 | 63,512 | 36,437 |
Selling and Administrative Expenses | 16,702 | 13,923 | 32,452 | 26,127 |
Other General Income | 0 | 0 | 0 | (1,384) |
Operating Income | 17,489 | 6,914 | 31,060 | 11,694 |
Other Income (Expense): | ||||
Interest income | 26 | 11 | 43 | 35 |
Interest expense | (4,048) | (473) | (5,968) | (868) |
Non-operating income (expense), net | 726 | 253 | 1,226 | (625) |
Other income (expense), net | (3,296) | (209) | (4,699) | (1,458) |
Income Before Taxes on Income | 14,193 | 6,705 | 26,361 | 10,236 |
Provision for Income Taxes | 3,473 | 1,592 | 6,132 | 2,559 |
Net Income | $ 10,720 | $ 5,113 | $ 20,229 | $ 7,677 |
Earnings Per Share of Common Stock: | ||||
Earnings Per Share, Basic | $ 0.43 | $ 0.20 | $ 0.81 | $ 0.30 |
Earnings Per Share, Diluted | $ 0.43 | $ 0.20 | $ 0.81 | $ 0.30 |
Weighted Average Number of Shares Outstanding, Basic | 24,881 | 25,238 | 24,854 | 25,201 |
Weighted Average Number of Shares Outstanding, Diluted | 25,000 | 25,282 | 24,985 | 25,283 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net income | $ 10,720 | $ 5,113 | $ 20,229 | $ 7,677 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, Pre-tax | 10,570 | (2,527) | 3,333 | (5,480) |
Foreign currency translation adjustments, Tax | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments, Net of Tax | 10,570 | (2,527) | 3,333 | (5,480) |
Postemployment actuarial change, Pre-tax | (148) | (137) | (158) | (100) |
Postemployment actuarial change, Tax | 51 | 41 | 44 | 26 |
Postemployment actuarial change, Net of Tax | (97) | (96) | (114) | (74) |
Derivative gain (loss), Pre-tax | 3,401 | 646 | 3,684 | (915) |
Derivative gain (loss), Tax | (772) | (148) | (733) | 169 |
Derivative gain (loss), Net of Tax | 2,629 | 498 | 2,951 | (746) |
Reclassification to (earnings) loss: | ||||
Derivatives, Reclassification to (earnings) loss, Pre-tax | (1,139) | 537 | (1,485) | 436 |
Derivatives, Reclassification to (earnings) loss, Tax | 262 | (91) | 200 | (32) |
Derivatives, Reclassification to (earnings) loss, Net of Tax | (877) | 446 | (1,285) | 404 |
Amortization of actuarial change, Pre-tax | (37) | (65) | (138) | (129) |
Amortization of actuarial change, Tax | 9 | 16 | 33 | 31 |
Amortization of actuarial change, Net of Tax | (28) | (49) | (105) | (98) |
Other comprehensive income (loss), Pre-tax | 12,647 | (1,546) | 5,236 | (6,188) |
Other comprehensive income (loss), Tax | (450) | (182) | (456) | 194 |
Other comprehensive income (loss), Net of Tax | 12,197 | (1,728) | 4,780 | (5,994) |
Total comprehensive income (loss) | 22,917 | 3,385 | 25,009 | 1,683 |
Foreign Exchange Contract | ||||
Other comprehensive income (loss): | ||||
Derivative gain (loss), Pre-tax | $ 3,401 | $ 646 | $ 3,684 | $ (915) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows $ in Thousands | 6 Months Ended | ||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | ||
Cash Flows From Operating Activities: | |||
Net income | $ 20,229 | $ 7,677 | |
Adjustments to reconcile net income to net cash used for operating activities: | |||
Depreciation and amortization | 15,608 | 15,955 | |
(Gain) loss on sales of assets | 32 | (27) | |
Deferred income taxes | (3,121) | (8) | |
Stock-based compensation | 3,357 | 2,997 | |
Other, net | (515) | 167 | |
Change in operating assets and liabilities: | |||
Receivables | (40,751) | 15,185 | |
Contract assets | (10,781) | (11,323) | |
Inventories | (88,922) | (106,861) | |
Prepaid expenses and other assets | (3,908) | (4,381) | |
Accounts payable | 23,182 | 36,255 | |
Accrued expenses and taxes payable | 13,669 | (12,099) | |
Net cash used for operating activities | (71,921) | (56,463) | |
Cash Flows From Investing Activities: | |||
Capital expenditures | (41,652) | (27,234) | |
Proceeds from sales of assets | 235 | 266 | |
Purchases of capitalized software | (507) | (629) | |
Other, net | 38 | (208) | |
Net cash used for investing activities | (41,886) | (27,805) | |
Cash Flows From Financing Activities: | |||
Proceeds from credit facilities | 75,000 | 25,000 | |
Net change in revolving credit facilities | 17,852 | 12,036 | |
Payments related to tax withholding for stock-based compensation | (1,417) | (1,571) | |
Net cash provided by financing activities | 91,435 | 35,465 | |
Effect of Exchange Rate Change on Cash and Cash Equivalents | (593) | (901) | |
Net Decrease in Cash, Cash Equivalents, and Restricted Cash | (22,965) | (49,704) | |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1) | 49,851 | [1] | 106,442 |
Cash, Cash Equivalents, and Restricted Cash at End of Period (1) | 26,886 | [1] | 56,738 |
Cash paid during the period for: | |||
Income taxes | 7,600 | 7,922 | |
Interest expense | 3,819 | 732 | |
Non-cash investing activity: | |||
Unpaid purchases of property and equipment at the end of the period | 8,110 | $ 8,244 | |
Cash and cash equivalents | $ 26,251 | ||
[1] (1) The following table reconciles cash and cash equivalents in the balance sheets to cash, cash equivalents, and restricted cash per the statements of cash flows. The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - Cash Reconciliation - USD ($) $ in Thousands | Dec. 31, 2022 | Jun. 30, 2022 | |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract] | |||
Cash and cash equivalents | $ 26,251 | $ 49,851 | |
Restricted Cash | 635 | 0 | |
Cash, Cash Equivalents, and Restricted Cash | [1] | $ 26,886 | $ 49,851 |
[1] (1) The following table reconciles cash and cash equivalents in the balance sheets to cash, cash equivalents, and restricted cash per the statements of cash flows. The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan. |
Condensed Consolidated Statem_5
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, 2021 | $ 441,972 | $ 308,123 | $ 208,969 | $ (4,883) | $ (70,237) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 7,677 | 7,677 | |||
Other Comprehensive Income (Loss), Net of Tax | (5,994) | (5,994) | |||
Stock Issued During Period, Value, Issued for Services | 125 | 67 | 58 | ||
Compensation expense related to stock compensation plan | 2,959 | 2,959 | |||
Performance Share Issuance | (1,572) | (3,153) | 1,581 | ||
Share Owners' Equity at Dec. 31, 2021 | 445,167 | 307,996 | 216,646 | (10,877) | (68,598) |
Share Owners' Equity at Sep. 30, 2021 | 439,814 | 306,086 | 211,533 | (9,149) | (68,656) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 5,113 | 5,113 | |||
Other Comprehensive Income (Loss), Net of Tax | (1,728) | (1,728) | |||
Stock Issued During Period, Value, Issued for Services | 125 | 67 | 58 | ||
Compensation expense related to stock compensation plan | 1,843 | 1,843 | |||
Share Owners' Equity at Dec. 31, 2021 | 445,167 | 307,996 | 216,646 | (10,877) | (68,598) |
Share Owners' Equity at Jun. 30, 2022 | 453,971 | 311,090 | 240,222 | (19,672) | (77,669) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 20,229 | 20,229 | |||
Other Comprehensive Income (Loss), Net of Tax | 4,780 | 4,780 | |||
Stock Issued During Period, Value, Issued for Services | 322 | 150 | 172 | ||
Compensation expense related to stock compensation plan | 3,262 | 3,262 | |||
Performance Share Issuance | (1,416) | (2,417) | 1,001 | ||
Share Owners' Equity at Dec. 31, 2022 | 481,148 | 312,085 | 260,451 | (14,892) | (76,496) |
Share Owners' Equity at Sep. 30, 2022 | 456,245 | 310,271 | 249,731 | (27,089) | (76,668) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 10,720 | 10,720 | |||
Other Comprehensive Income (Loss), Net of Tax | 12,197 | 12,197 | |||
Stock Issued During Period, Value, Issued for Services | 322 | 150 | 172 | ||
Compensation expense related to stock compensation plan | 1,664 | 1,664 | |||
Share Owners' Equity at Dec. 31, 2022 | $ 481,148 | $ 312,085 | $ 260,451 | $ (14,892) | $ (76,496) |
Condensed Consolidated Statem_6
Condensed Consolidated Statement of Share Owners' Equity Parentheticals - shares | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Performance Share Issuance, Shares | 0 | 0 | 85,000 | 144,000 |
Stock Issued During Period, Shares, Issued for Services | 14,000 | 5,000 | 14,000 | 5,000 |
Note 1. Business Description an
Note 1. Business Description and Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 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, and industrial safety end markets. We deliver a package of value that begins with our core competency of producing durable electronics and has expanded into diversified contract manufacturing services for non-electronic components, medical disposables, precision molded plastics, and production automation, test, and inspection equipment. Our design and manufacturing expertise coupled with robust processes and procedures help us ensure that we deliver the highest levels of quality, reliability, and service throughout the entire life cycle of our customers’ products. We deliver award-winning service across our highly integrated global footprint, which is enabled by our largely common operating system, procedures, and standardization. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service. Basis of Presentation: The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of December 31, 2022 and June 30, 2022, results of operations for the three and six months ended December 31, 2022 and 2021, cash flows for the six months ended December 31, 2022 and 2021, and share owners’ equity for the three and six months ended December 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, 2022 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. 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. In fiscal year 2022, a 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 December 31, 2022 were a decrease in depreciation expense of $0.6 million, an increase in net income of $0.4 million, and an increase to basic and diluted earnings per share by $0.02. The effects of this change in useful life estimate for the six months ended December 31, 2022 were a decrease in depreciation expense of $2.6 million, an increase in net income of $2.0 million, and an increase to basic and diluted earnings per share by $0.08. Revenue Recognition: Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customers’ 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 six months ended December 31, 2022 and 2021, we sold, without recourse, $225.1 million and $125.3 million of accounts receivable, respectively. Factoring fees were $1.5 million and $0.3 million for the three months ended December 31, 2022 and 2021, and $2.4 million and $0.5 million during the six months ended December 31, 2022 and 2021, respectively. Factoring fees are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. 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 assessed or 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 December 31, 2022, the Company determined there have been no indicators of impairment for goodwill and other intangible assets. See Note 11 - 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 $2.6 million at December 31, 2022 and $3.1 million at June 30, 2022, respectively. 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 six months ended December 31, 2021 included $1.4 million 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 and six months ended December 31, 2022. 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 Six Months Ended December 31 December 31 (Amounts in Thousands) 2022 2021 2022 2021 Foreign currency/derivative gain (loss) $ 719 $ (128) $ 1,253 $ (700) Gain (loss) on SERP investments 340 402 105 315 Other (333) (21) (132) (240) Non-operating income (expense), net $ 726 $ 253 $ 1,226 $ (625) 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. |
Note 2. Revenue from Contracts
Note 2. Revenue from Contracts with Customers | 6 Months Ended |
Dec. 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, and industrial applications, to the specifications and designs of our customers. Beginning in fiscal year 2023, the Company changed its presentation of revenue for the industrial and public safety end market verticals by combining them into the industrial end market vertical. Prior year periods have been recast to conform to the current year presentation. The following table disaggregates our revenue by end market vertical for the three and six months ended December 31, 2022 and 2021. Three Months Ended Six Months Ended December 31 December 31 (Amounts in Millions) 2022 2021 2022 2021 Vertical Markets: Automotive $ 200.0 $ 139.0 $ 384.5 $ 268.4 Medical 124.7 89.8 239.5 174.8 Industrial 105.0 82.6 205.9 157.6 Other 7.0 3.9 12.7 7.2 Total net sales $ 436.7 $ 315.3 $ 842.6 $ 608.0 For the three months ended December 31, 2022 and 2021, approximately 97% and 95% of our net sales, respectively, were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date. For the six months ended December 31, 2022 and 2021, approximately 96% and 95% 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 $74.9 million and $64.1 million as of December 31, 2022 and June 30, 2022, respectively. The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, tooling, or other miscellaneous services or costs. These advance payments are recognized as contract liabilities until the performance obligations are completed and are included in Accrued expenses on the Condensed Consolidated Balance Sheets, which amounted to $33.4 million and $22.5 million as of December 31, 2022 and June 30, 2022, respectively. Our performance obligations are short term in nature and therefore our contract liabilities are all expected to be settled within twelve months. |
Note 3. Inventories
Note 3. Inventories | 6 Months Ended |
Dec. 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) December 31, 2022 June 30, 2022 Finished products $ 1,060 $ 525 Work-in-process 7,510 4,911 Raw materials 478,957 390,194 Total inventory $ 487,527 $ 395,630 |
Note 4. Accumulated Other Compr
Note 4. Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Accumulated Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) During the six months ended December 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, 2022 $ (17,349) $ (2,203) $ (120) $ (19,672) Other comprehensive income (loss) before reclassifications 3,333 2,951 (114) 6,170 Reclassification to (earnings) loss — (1,285) (105) (1,390) Net current-period other comprehensive income (loss) 3,333 1,666 (219) 4,780 Balance at December 31, 2022 $ (14,016) $ (537) $ (339) $ (14,892) Balance at June 30, 2021 $ (2,223) $ (2,427) $ (233) $ (4,883) Other comprehensive income (loss) before reclassifications (5,480) (746) (74) (6,300) Reclassification to (earnings) loss — 404 (98) 306 Net current-period other comprehensive income (loss) (5,480) (342) (172) (5,994) Balance at December 31, 2021 $ (7,703) $ (2,769) $ (405) $ (10,877) The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Six Months Ended Affected Line Item in the Condensed Consolidated Statements of Income December 31 December 31 (Amounts in Thousands) 2022 2021 2022 2021 Derivative gain (loss) (1) $ 1,139 $ (537) $ 1,485 $ (436) Cost of Sales (262) 91 (200) 32 Benefit (Provision) for Income Taxes $ 877 $ (446) $ 1,285 $ (404) Net of Tax Postemployment Benefits: Amortization of actuarial gain (2) 37 65 138 129 Non-operating income (expense), net (9) (16) (33) (31) Benefit (Provision) for Income Taxes $ 28 $ 49 $ 105 $ 98 Net of Tax Total reclassifications for the period $ 905 $ (397) $ 1,390 $ (306) 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 9 - Employee Benefit Plans |
Note 5. Commitments and Conting
Note 5. Commitments and Contingent Liabilities | 6 Months Ended |
Dec. 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 regularly 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 six months ended December 31, 2022 and 2021 were as follows: Six Months Ended December 31 (Amounts in Thousands) 2022 2021 Product warranty liability at the beginning of the period $ 529 $ 610 Additions to warranty accrual (including changes in estimates) 48 (37) Settlements made (in cash or in kind) (27) (4) Product warranty liability at the end of the period $ 550 $ 569 |
Note 6. Credit Facilities
Note 6. Credit Facilities | 6 Months Ended |
Dec. 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) December 31, 2022 December 31, 2022 June 30, 2022 Primary credit facility (1) $ 35.3 $ 264.3 $ 171.4 Thailand overdraft credit facility (2) 10.1 — — China revolving credit facility (3) 7.5 — — Netherlands revolving credit facility 0.6 9.2 9.2 Total credit facilities $ 53.5 $ 273.5 $ 180.6 Less: current portion $ (38.5) $ (35.6) Long-term debt under credit facilities, less current portion (4) $ 235.0 $ 145.0 (1) The Company maintains a U.S. primary credit facility (the “primary credit facility”) 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, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 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. A commitment fee is payable on the unused portion of the credit facility at a rate that 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 primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“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 Revolving Commitment Term Benchmark spread which can range from 100.0 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 target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 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. Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board; b. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or c. 1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility); plus the Revolving Commitment ABR spread which can range from 0.0 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, 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, to be less than 3.5 to 1.0. The Company had $0.4 million in letters of credit contingently committed against the credit facility at both December 31, 2022 and June 30, 2022. (2) During the first quarter of fiscal year 2023, the Company expanded the borrowing capacity of the Thailand credit facility to $10.1 million. (3) The Company entered into a foreign credit facility for its EMS operation in China during the first quarter of fiscal year 2023 which allows for borrowings up to $7.5 million. The facility is scheduled to mature on June 30, 2023. (4) The amount of Long-term debt under credit facilities, less current maturities reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027. The weighted-average interest rate on borrowings outstanding under the credit facilities at December 31, 2022 and June 30, 2022 were 5.9% and 2.7%, respectively. Subsequent to December 31, 2022, the Company entered into a 364-day multi-currency revolving credit facility (the “secondary credit facility”) on February 3, 2023, which allows for borrowings up to $50.0 million, with a maturity date of February 2, 2024. See Note 1 4 - Subsequent Event of Notes to Condensed Consolidated Financial Statements for further information on the secondary credit facility. Also subsequent to December 31, 2022, the Company entered into a foreign credit facility for its operation in Poland which allows for borrowings up to 5.0 million Euro (approximately $5.4 million equivalent). |
Note 7. Fair Value
Note 7. Fair Value | 6 Months Ended |
Dec. 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 six months ended December 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, 2022. Recurring Fair Value Measurements: As of December 31, 2022 and June 30, 2022, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: December 31, 2022 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ — $ — $ — Derivatives: foreign exchange contracts — 3,838 3,838 Trading securities: mutual funds held in nonqualified SERP 8,227 — 8,227 Total assets at fair value $ 8,227 $ 3,838 $ 12,065 Liabilities Derivatives: foreign exchange contracts $ — $ 1,937 $ 1,937 Total liabilities at fair value $ — $ 1,937 $ 1,937 June 30, 2022 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,541 $ — $ 1,541 Derivatives: foreign exchange contracts — 1,872 1,872 Trading securities: mutual funds held in nonqualified SERP 10,364 — 10,364 Total assets at fair value $ 11,905 $ 1,872 $ 13,777 Liabilities Derivatives: foreign exchange contracts $ — $ 3,522 $ 3,522 Total liabilities at fair value $ — $ 3,522 $ 3,522 We had no level 3 assets or liabilities at December 31, 2022 and June 30, 2022, or any activity in Level 3 assets or liabilities during the six months ended December 31, 2022. 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 - Employee Benefit Plans 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 six months ended December 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, 2022. 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 | 6 Months Ended |
Dec. 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. Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies. As of December 31, 2022, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $21.4 million and to hedge currencies against the Euro in the aggregate notional amount of 61.0 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives. In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities. The fair value of outstanding derivative instruments is recognized on the Condensed Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively. 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 December 31, 2022, we estimate that approximately $1.2 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 December 31, 2022 and June 30, 2022. 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 December 31, June 30, Balance Sheet Location December 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 2,975 $ 1,189 Accrued expenses $ 1,560 $ 1,486 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 863 683 Accrued expenses 377 2,036 Total derivatives $ 3,838 $ 1,872 $ 1,937 $ 3,522 The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Six Months Ended December 31 December 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 $ 3,401 $ 646 $ 3,684 $ (915) The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended Six Months Ended (Amounts in Thousands) December 31 December 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2022 2021 2022 2021 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: Foreign exchange contracts Cost of Sales $ 1,139 $ (537) $ 1,485 $ (436) 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) $ (998) $ (115) $ 457 $ (42) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 141 $ (652) $ 1,942 $ (478) |
Note 9. Employee Benefit Plans
Note 9. Employee Benefit Plans | 6 Months Ended |
Dec. 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. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. As of December 31, 2022, both total investments and obligations under SERP were $8.2 million, of which $0.3 million were short term and $7.9 million were long term. As of June 30, 2022, both total investments and obligations under SERP were $10.4 million, of which $2.6 million were short term and $7.8 million were long term. 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 both the six months ended December 31, 2022 and 2021 was approximately $(0.2) million.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 six months ended December 31, 2022 and 2021. |
Note 10. Stock Compensation Pla
Note 10. Stock Compensation Plans | 6 Months Ended |
Dec. 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, 2022. During the first six months of fiscal year 2023, 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 184,446 $23.34 Restricted Shares (3) 1st Quarter 55,355 $23.34 Long-Term Performance Shares (4) 1st Quarter 500 $21.51 Unrestricted Shares (5) 2nd Quarter 13,842 $23.30 Deferred Share Units (6) 2nd Quarter 38,925 $23.07 (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. The awards granted in fiscal year 2023 will cliff vest at the third anniversary of the award date in fiscal year 2026. Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of 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 the weighted average stock price based on the dates of the grants. (3) Restricted shares were granted to officers and other key employees. These restricted shares were approved by the Compensation and Governance Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited. (4) Long-term performance share awards were granted to a key employee. This award granted in fiscal year 2023 will cliff vest at the first anniversary of the award date in fiscal year 2024. Shares will be issued to this participant based on the performance metrics described in (1) above. (5) Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to be paid in unrestricted shares in lieu of cash payment or deferred share units. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. (6) 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 11. Goodwill and Other Int
Note 11. Goodwill and Other Intangible Assets | 6 Months Ended |
Dec. 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) December 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: December 31, 2022 June 30, 2022 (Amounts in Thousands) Cost Accumulated Net Value Cost Accumulated Net Value Capitalized Software $ 30,787 $ (26,842) $ 3,945 $ 29,891 $ (26,209) $ 3,682 Customer Relationships 8,618 (3,274) 5,344 8,618 (3,024) 5,594 Technology 5,060 (4,311) 749 5,060 (3,805) 1,255 Trade Name 6,575 (2,731) 3,844 6,575 (2,399) 4,176 Other Intangible Assets $ 51,040 $ (37,158) $ 13,882 $ 50,144 $ (35,437) $ 14,707 During the three months ended December 31, 2022 and 2021, amortization expense of other intangible assets was $0.8 million and $0.9 million, respectively. During the six months ended December 31, 2022 and 2021, amortization expense of other intangible assets was $1.7 million. 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 12. Share Owners' Equity
Note 12. Share Owners' Equity | 6 Months Ended |
Dec. 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 six months ended December 31, 2022, the Company had no share repurchases under the Plan. Since the inception of the Plan, the Company has repurchased $88.8 million of common stock at an average cost of $15.27 per share. |
Note 13. Earnings Per Share
Note 13. Earnings Per Share | 6 Months Ended |
Dec. 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 Six Months Ended December 31 December 31 (Amounts in thousands, except per share data) 2022 2021 2022 2021 Basic and Diluted Earnings Per Share: Net Income $ 10,720 $ 5,113 $ 20,229 $ 7,677 Less: Net Income allocated to participating securities 16 7 29 11 Net Income allocated to common Share Owners $ 10,704 $ 5,106 $ 20,200 $ 7,666 Basic weighted average common shares outstanding 24,881 25,238 24,854 25,201 Dilutive effect of average outstanding stock compensation awards 119 44 131 82 Dilutive weighted average shares outstanding 25,000 25,282 24,985 25,283 Earnings Per Share of Common Stock: Basic $ 0.43 $ 0.20 $ 0.81 $ 0.30 Diluted $ 0.43 $ 0.20 $ 0.81 $ 0.30 |
Note 14. Subsequent Events
Note 14. Subsequent Events | 6 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event We entered into a 364-day multi-currency revolving credit facility agreement on February 3, 2023 (the “secondary credit facility”), which allows for borrowings up to $50 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The secondary credit facility has a maturity date of February 2, 2024. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum. The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options: • any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“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 a Revolving Commitment Term Benchmark spread of 175.0 basis points; • any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points; or • the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of ◦ Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board; ◦ 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or ◦ 1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility); plus a Revolving Commitment ABR spread of 75.0 basis points. The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility. See Note 6 - Credit Facilities of Notes to Condensed Consolidated Financial Statements for further information on the financial covenants. |
Note 1. Business Description _2
Note 1. Business Description and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 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 December 31, 2022 and June 30, 2022, results of operations for the three and six months ended December 31, 2022 and 2021, cash flows for the six months ended December 31, 2022 and 2021, and share owners’ equity for the three and six months ended December 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, 2022 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year. |
Revenue Recognition | Revenue Recognition: Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customers’ 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. |
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 assessed or 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 $2.6 million at December 31, 2022 and $3.1 million at June 30, 2022, respectively. 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 six months ended December 31, 2021 included $1.4 million 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 and six months ended December 31, 2022. |
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. |
Note 2. Revenue from Contract_2
Note 2. Revenue from Contracts with Customers (Policies) | 6 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition, Deferred Revenue | The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, tooling, or other miscellaneous services or costs. These advance payments are recognized as contract liabilities until the performance obligations are completed and are included in Accrued expenses on the Condensed Consolidated Balance Sheets |
Note 3. Inventories (Policies)
Note 3. Inventories (Policies) | 6 Months Ended |
Dec. 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) | 6 Months Ended |
Dec. 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 regularly 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) | 6 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | The amount of Long-term debt under credit facilities, less current maturities reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months. The primary credit facility matures on May 4, 2027. |
Note 7. Fair Value (Policies)
Note 7. Fair Value (Policies) | 6 Months Ended |
Dec. 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. |
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 six months ended December 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, 2022. 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) | 6 Months Ended |
Dec. 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. Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies. As of December 31, 2022, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $21.4 million and to hedge currencies against the Euro in the aggregate notional amount of 61.0 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives.In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities. |
Derivatives, Reporting of Derivative Activity | The fair value of outstanding derivative instruments is recognized on the Condensed Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively. 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. Employee Benefit Plans
Note 9. Employee Benefit Plans (Policies) | 6 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Investment | 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. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. As of December 31, 2022, both total investments and obligations under SERP were $8.2 million, of which $0.3 million were short term and $7.9 million were long term. As of June 30, 2022, both total investments and obligations under SERP were $10.4 million, of which $2.6 million were short term and $7.8 million were long term. 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 11. Goodwill and Other I_2
Note 11. Goodwill and Other Intangible Assets (Policies) | 6 Months Ended |
Dec. 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) | 6 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Components of Non-operating income (expense), net | Components of Non-operating income (expense), net: Three Months Ended Six Months Ended December 31 December 31 (Amounts in Thousands) 2022 2021 2022 2021 Foreign currency/derivative gain (loss) $ 719 $ (128) $ 1,253 $ (700) Gain (loss) on SERP investments 340 402 105 315 Other (333) (21) (132) (240) Non-operating income (expense), net $ 726 $ 253 $ 1,226 $ (625) |
Note 2. Revenue from Contract_3
Note 2. Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Dec. 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 six months ended December 31, 2022 and 2021. Three Months Ended Six Months Ended December 31 December 31 (Amounts in Millions) 2022 2021 2022 2021 Vertical Markets: Automotive $ 200.0 $ 139.0 $ 384.5 $ 268.4 Medical 124.7 89.8 239.5 174.8 Industrial 105.0 82.6 205.9 157.6 Other 7.0 3.9 12.7 7.2 Total net sales $ 436.7 $ 315.3 $ 842.6 $ 608.0 |
Note 3. Inventories (Tables)
Note 3. Inventories (Tables) | 6 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventory components were as follows: (Amounts in Thousands) December 31, 2022 June 30, 2022 Finished products $ 1,060 $ 525 Work-in-process 7,510 4,911 Raw materials 478,957 390,194 Total inventory $ 487,527 $ 395,630 |
Note 4. Accumulated Other Com_2
Note 4. Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | During the six months ended December 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, 2022 $ (17,349) $ (2,203) $ (120) $ (19,672) Other comprehensive income (loss) before reclassifications 3,333 2,951 (114) 6,170 Reclassification to (earnings) loss — (1,285) (105) (1,390) Net current-period other comprehensive income (loss) 3,333 1,666 (219) 4,780 Balance at December 31, 2022 $ (14,016) $ (537) $ (339) $ (14,892) Balance at June 30, 2021 $ (2,223) $ (2,427) $ (233) $ (4,883) Other comprehensive income (loss) before reclassifications (5,480) (746) (74) (6,300) Reclassification to (earnings) loss — 404 (98) 306 Net current-period other comprehensive income (loss) (5,480) (342) (172) (5,994) Balance at December 31, 2021 $ (7,703) $ (2,769) $ (405) $ (10,877) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income: Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Six Months Ended Affected Line Item in the Condensed Consolidated Statements of Income December 31 December 31 (Amounts in Thousands) 2022 2021 2022 2021 Derivative gain (loss) (1) $ 1,139 $ (537) $ 1,485 $ (436) Cost of Sales (262) 91 (200) 32 Benefit (Provision) for Income Taxes $ 877 $ (446) $ 1,285 $ (404) Net of Tax Postemployment Benefits: Amortization of actuarial gain (2) 37 65 138 129 Non-operating income (expense), net (9) (16) (33) (31) Benefit (Provision) for Income Taxes $ 28 $ 49 $ 105 $ 98 Net of Tax Total reclassifications for the period $ 905 $ (397) $ 1,390 $ (306) 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 9 - Employee Benefit Plans |
Note 5. Commitments and Conti_3
Note 5. Commitments and Contingent Liabilities (Tables) | 6 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability | Changes in the product warranty liability for the six months ended December 31, 2022 and 2021 were as follows: Six Months Ended December 31 (Amounts in Thousands) 2022 2021 Product warranty liability at the beginning of the period $ 529 $ 610 Additions to warranty accrual (including changes in estimates) 48 (37) Settlements made (in cash or in kind) (27) (4) Product warranty liability at the end of the period $ 550 $ 569 |
Note 6. Credit Facilities (Tabl
Note 6. Credit Facilities (Tables) | 6 Months Ended |
Dec. 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) December 31, 2022 December 31, 2022 June 30, 2022 Primary credit facility (1) $ 35.3 $ 264.3 $ 171.4 Thailand overdraft credit facility (2) 10.1 — — China revolving credit facility (3) 7.5 — — Netherlands revolving credit facility 0.6 9.2 9.2 Total credit facilities $ 53.5 $ 273.5 $ 180.6 Less: current portion $ (38.5) $ (35.6) Long-term debt under credit facilities, less current portion (4) $ 235.0 $ 145.0 (1) The Company maintains a U.S. primary credit facility (the “primary credit facility”) 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, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 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. A commitment fee is payable on the unused portion of the credit facility at a rate that 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 primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“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 Revolving Commitment Term Benchmark spread which can range from 100.0 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 target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 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. Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board; b. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or c. 1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility); plus the Revolving Commitment ABR spread which can range from 0.0 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, 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, to be less than 3.5 to 1.0. The Company had $0.4 million in letters of credit contingently committed against the credit facility at both December 31, 2022 and June 30, 2022. (2) During the first quarter of fiscal year 2023, the Company expanded the borrowing capacity of the Thailand credit facility to $10.1 million. (3) The Company entered into a foreign credit facility for its EMS operation in China during the first quarter of fiscal year 2023 which allows for borrowings up to $7.5 million. The facility is scheduled to mature on June 30, 2023. |
Note 7. Fair Value (Tables)
Note 7. Fair Value (Tables) | 6 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | As of December 31, 2022 and June 30, 2022, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows: December 31, 2022 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ — $ — $ — Derivatives: foreign exchange contracts — 3,838 3,838 Trading securities: mutual funds held in nonqualified SERP 8,227 — 8,227 Total assets at fair value $ 8,227 $ 3,838 $ 12,065 Liabilities Derivatives: foreign exchange contracts $ — $ 1,937 $ 1,937 Total liabilities at fair value $ — $ 1,937 $ 1,937 June 30, 2022 (Amounts in Thousands) Level 1 Level 2 Total Assets Cash equivalents $ 1,541 $ — $ 1,541 Derivatives: foreign exchange contracts — 1,872 1,872 Trading securities: mutual funds held in nonqualified SERP 10,364 — 10,364 Total assets at fair value $ 11,905 $ 1,872 $ 13,777 Liabilities Derivatives: foreign exchange contracts $ — $ 3,522 $ 3,522 Total liabilities at fair value $ — $ 3,522 $ 3,522 |
Note 8. Derivative Instrument_2
Note 8. Derivative Instruments (Tables) | 6 Months Ended |
Dec. 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 December 31, June 30, Balance Sheet Location December 31, June 30, Derivatives Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets $ 2,975 $ 1,189 Accrued expenses $ 1,560 $ 1,486 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Prepaid expenses and other current assets 863 683 Accrued expenses 377 2,036 Total derivatives $ 3,838 $ 1,872 $ 1,937 $ 3,522 |
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The Effect of Derivative Instruments on Other Comprehensive Income (Loss) Three Months Ended Six Months Ended December 31 December 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 $ 3,401 $ 646 $ 3,684 $ (915) The Effect of Derivative Instruments on Condensed Consolidated Statements of Income Three Months Ended Six Months Ended (Amounts in Thousands) December 31 December 31 Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2022 2021 2022 2021 Amount of Pre-Tax Gain or (Loss) Reclassified from Accumulated OCI into Income: Foreign exchange contracts Cost of Sales $ 1,139 $ (537) $ 1,485 $ (436) 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) $ (998) $ (115) $ 457 $ (42) Total Derivative Pre-Tax Gain (Loss) Recognized in Income $ 141 $ (652) $ 1,942 $ (478) |
Note 10. Stock Compensation P_2
Note 10. Stock Compensation Plans (Tables) | 6 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | During the first six months of fiscal year 2023, 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 184,446 $23.34 Restricted Shares (3) 1st Quarter 55,355 $23.34 Long-Term Performance Shares (4) 1st Quarter 500 $21.51 Unrestricted Shares (5) 2nd Quarter 13,842 $23.30 Deferred Share Units (6) 2nd Quarter 38,925 $23.07 (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. The awards granted in fiscal year 2023 will cliff vest at the third anniversary of the award date in fiscal year 2026. Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of 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 the weighted average stock price based on the dates of the grants. (3) Restricted shares were granted to officers and other key employees. These restricted shares were approved by the Compensation and Governance Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited. (4) Long-term performance share awards were granted to a key employee. This award granted in fiscal year 2023 will cliff vest at the first anniversary of the award date in fiscal year 2024. Shares will be issued to this participant based on the performance metrics described in (1) above. (5) Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to be paid in unrestricted shares in lieu of cash payment or deferred share units. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions. (6) 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 11. Goodwill and Other I_3
Note 11. Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A summary of goodwill is as follows: (Amounts in Thousands) December 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: December 31, 2022 June 30, 2022 (Amounts in Thousands) Cost Accumulated Net Value Cost Accumulated Net Value Capitalized Software $ 30,787 $ (26,842) $ 3,945 $ 29,891 $ (26,209) $ 3,682 Customer Relationships 8,618 (3,274) 5,344 8,618 (3,024) 5,594 Technology 5,060 (4,311) 749 5,060 (3,805) 1,255 Trade Name 6,575 (2,731) 3,844 6,575 (2,399) 4,176 Other Intangible Assets $ 51,040 $ (37,158) $ 13,882 $ 50,144 $ (35,437) $ 14,707 |
Note 13. Earnings Per Share (Ta
Note 13. Earnings Per Share (Tables) | 6 Months Ended |
Dec. 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 Six Months Ended December 31 December 31 (Amounts in thousands, except per share data) 2022 2021 2022 2021 Basic and Diluted Earnings Per Share: Net Income $ 10,720 $ 5,113 $ 20,229 $ 7,677 Less: Net Income allocated to participating securities 16 7 29 11 Net Income allocated to common Share Owners $ 10,704 $ 5,106 $ 20,200 $ 7,666 Basic weighted average common shares outstanding 24,881 25,238 24,854 25,201 Dilutive effect of average outstanding stock compensation awards 119 44 131 82 Dilutive weighted average shares outstanding 25,000 25,282 24,985 25,283 Earnings Per Share of Common Stock: Basic $ 0.43 $ 0.20 $ 0.81 $ 0.30 Diluted $ 0.43 $ 0.20 $ 0.81 $ 0.30 |
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 | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Foreign Currency/Derivative Gain (Loss) | $ 719 | $ (128) | $ 1,253 | $ (700) |
Gain (loss) on SERP investments | 340 | 402 | 105 | 315 |
Other | (333) | (21) | (132) | (240) |
Non-operating income (expense), net | $ 726 | $ 253 | $ 1,226 | $ (625) |
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 | 6 Months Ended | 14 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Oct. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Jun. 30, 2022 | |
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. In fiscal year 2022, a review indicated that Surface Mount Technology production equipment had actual lives that were longer than previously estimated. | ||||||
Depreciation and amortization | $ 15,608 | $ 15,955 | |||||
Net income | $ 10,720 | $ 5,113 | $ 20,229 | $ 7,677 | |||
Earnings Per Share, Diluted | $ 0.43 | $ 0.20 | $ 0.81 | $ 0.30 | |||
Accounts Receivable, Extended Payment Terms | 45 days | ||||||
Accounts Receivable Sold Without Recourse | $ 225,100 | $ 125,300 | |||||
Factoring Fees | $ 1,500 | $ 300 | 2,400 | 500 | |||
Operating Lease, Right-of-Use Asset | 2,600 | 2,600 | $ 2,600 | $ 3,100 | |||
Operating Lease, Liability | 2,600 | 2,600 | 2,600 | 3,100 | |||
Other General Income | 0 | $ 0 | 0 | $ (1,384) | |||
Tax Cuts and Jobs Act, Transition Tax for Accumulated Foreign Earnings, Liability | 7,800 | 7,800 | 7,800 | $ 8,900 | |||
Tax Cuts and Jobs Act, Transition Tax for Accumulated Foreign Earnings, Liability, Current | 1,900 | 1,900 | $ 1,900 | ||||
Service Life | |||||||
Property, Plant and Equipment, Useful Life | 10 years | ||||||
Depreciation and amortization | 600 | 2,600 | |||||
Net income | $ 400 | $ 2,000 | |||||
Earnings Per Share, Diluted | $ 0.02 | $ 0.08 | |||||
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 | 6 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
Disaggregation of Revenue | |||||
Net Sales | $ 436,696 | $ 315,264 | $ 842,585 | $ 607,981 | |
Contract assets | 74,861 | 74,861 | $ 64,080 | ||
Contract with Customer, Liability | $ 33,400 | $ 33,400 | $ 22,500 | ||
Transferred over Time | |||||
Disaggregation of Revenue | |||||
Revenue from Contract with Customer, Excluding Assessed Tax, Percentage | 97% | 95% | 96% | 95% | |
Automotive | |||||
Disaggregation of Revenue | |||||
Net Sales | $ 200,000 | $ 139,000 | $ 384,500 | $ 268,400 | |
Medical | |||||
Disaggregation of Revenue | |||||
Net Sales | 124,700 | 89,800 | 239,500 | 174,800 | |
Industrial | |||||
Disaggregation of Revenue | |||||
Net Sales | 105,000 | 82,600 | 205,900 | 157,600 | |
Other | |||||
Disaggregation of Revenue | |||||
Net Sales | $ 7,000 | $ 3,900 | $ 12,700 | $ 7,200 |
Note 3. Inventories - Inventory
Note 3. Inventories - Inventory Components (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jun. 30, 2022 |
Inventory, Finished Goods, Net of Reserves | $ 1,060 | $ 525 |
Inventory, Work in Process, Net of Reserves | 7,510 | 4,911 |
Inventory, Raw Materials, Net of Reserves | 478,957 | 390,194 |
Total inventory | $ 487,527 | $ 395,630 |
Note 4. Accumulated Other Com_3
Note 4. Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | $ 453,971 | $ 441,972 |
Other comprehensive income (loss) before reclassifications | 6,170 | (6,300) |
Reclassification to (earnings) loss | (1,390) | 306 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 4,780 | (5,994) |
Share Owners' Equity | 481,148 | 445,167 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (19,672) | (4,883) |
Share Owners' Equity | (14,892) | (10,877) |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (17,349) | (2,223) |
Other comprehensive income (loss) before reclassifications | 3,333 | (5,480) |
Reclassification to (earnings) loss | 0 | 0 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 3,333 | (5,480) |
Share Owners' Equity | (14,016) | (7,703) |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (2,203) | (2,427) |
Other comprehensive income (loss) before reclassifications | 2,951 | (746) |
Reclassification to (earnings) loss | (1,285) | 404 |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | 1,666 | (342) |
Share Owners' Equity | (537) | (2,769) |
Post Employment Benefits Net Actuarial Gain (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Share Owners' Equity | (120) | (233) |
Other comprehensive income (loss) before reclassifications | (114) | (74) |
Reclassification to (earnings) loss | (105) | (98) |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (219) | (172) |
Share Owners' Equity | $ (339) | $ (405) |
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 | 6 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Cost of Sales | $ (402,505) | $ (294,427) | $ (779,073) | $ (571,544) | |
Benefit (Provision) for Income Taxes | (3,473) | (1,592) | (6,132) | (2,559) | |
Net Income | 10,720 | 5,113 | 20,229 | 7,677 | |
Reclassification out of Accumulated Other Comprehensive Income | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) | |||||
Net Income | 905 | (397) | 1,390 | (306) | |
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] | 1,139 | (537) | 1,485 | (436) |
Benefit (Provision) for Income Taxes | [1] | (262) | 91 | (200) | 32 |
Net Income | [1] | 877 | (446) | 1,285 | (404) |
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] | 37 | 65 | 138 | 129 |
Benefit (Provision) for Income Taxes | [2] | (9) | (16) | (33) | (31) |
Net Income | [2] | $ 28 | $ 49 | $ 105 | $ 98 |
[1]See Note 8 - Derivative Instruments of Notes to Condensed Consolidated Financial Statements for further information on derivative instruments. |
Note 5. Commitments and Conti_4
Note 5. Commitments and Contingent Liabilities - Product Warranty (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Product warranty liability at the beginning of the period | $ 529 | $ 610 |
Additions to warranty accrual (including changes in estimates) | 48 | (37) |
Settlements made (in cash or in kind) | (27) | (4) |
Product warranty liability at the end of the period | $ 550 | $ 569 |
Note 6. Credit Facilities (Deta
Note 6. Credit Facilities (Details) $ in Thousands, € in Millions | 6 Months Ended | |||||
Feb. 03, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jan. 11, 2023 USD ($) | Jan. 11, 2023 EUR (€) | Jun. 30, 2022 USD ($) | ||
Line of Credit Facility | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 53,500 | |||||
Long-term Line of Credit | 273,500 | $ 180,600 | ||||
Current portion of borrowings under credit facilities | 38,534 | 35,580 | ||||
Long-term debt under credit facilities, less current portion | $ 235,000 | $ 145,000 | ||||
Debt, Weighted Average Interest Rate | 5.90% | 2.70% | ||||
Primary Credit Facility | ||||||
Line of Credit Facility | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 35,300 | ||||
Long-term Line of Credit | [1] | 264,300 | $ 171,400 | |||
Long-term debt under credit facilities, less current portion | [2] | 235,000 | 145,000 | |||
Line of Credit Facility, Maximum Borrowing Capacity | 300,000 | |||||
Line of Credit Facility, Maximum Borrowing Capacity Upon Request | $ 450,000 | |||||
Line of Credit Facility, Above the Adjusted SOFR Rate to Calculate Alternate Base Rate | 1% | |||||
Adjusted Leverage Ratio Covenant | 3 | |||||
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% | |||||
Adjusted Leverage Ratio Covenant Material Acquisition | 3.5 | |||||
Interest Coverage Ratio Covenant | 3.5 | |||||
Thailand Overdraft Credit Facility | ||||||
Line of Credit Facility | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | [3] | $ 10,100 | ||||
Current portion of borrowings under credit facilities | [3] | 0 | 0 | |||
Line of Credit Facility, Maximum Borrowing Capacity | 10,100 | |||||
China Revolving Credit Facility | ||||||
Line of Credit Facility | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | [4] | 7,500 | ||||
Current portion of borrowings under credit facilities | [4] | 0 | 0 | |||
Line of Credit Facility, Maximum Borrowing Capacity | 7,500 | |||||
Netherlands Revolving Credit Facility | ||||||
Line of Credit Facility | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | 600 | |||||
Current portion of borrowings under credit facilities | 9,200 | 9,200 | ||||
Poland Revolving Credit Facility | Subsequent Event | ||||||
Line of Credit Facility | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,400 | € 5 | ||||
Secondary Credit Facility | Subsequent Event | ||||||
Line of Credit Facility | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 50,000 | |||||
Line of Credit Facility, Commitment Fee Percentage | 0.30% | |||||
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, Above the Adjusted SOFR Rate to Calculate Alternate Base Rate | 1% | |||||
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00750 | |||||
Line of Credit Facility, Above the Federal Funds Rate to Calculate Alternate Base Rate | 0.50% | |||||
Subsequent Event, Date | Feb. 03, 2023 | |||||
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 | 0.10% | |||||
Line of Credit Facility, Term Benchmark Loans Spread for SOFR | 0.01000 | |||||
Line of Credit Facility, Term Benchmark Loans Spread for EURIBOR | 0.01000 | |||||
Line of Credit Facility, Alternate Base Rate Loans Spread | 0 | |||||
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 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 credit facility”) 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, scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 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. A commitment fee is payable on the unused portion of the credit facility at a rate that 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 primary credit facility. Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“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 Revolving Commitment Term Benchmark spread which can range from 100.0 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 target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 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. Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board; b. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility); or c. 1% per annum above the Adjusted SOFR Rate (as defined under the primary credit facility); plus the Revolving Commitment ABR spread which can range from 0.0 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, 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, to be less than 3.5 to 1.0. The Company had $0.4 million in letters of credit contingently committed against the credit facility at both December 31, 2022 and June 30, 2022. |
Note 7. Fair Value - Recurring
Note 7. Fair Value - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jun. 30, 2022 |
Recurring Fair Value Measurements: | ||
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | $ 3,838 | $ 1,872 |
Debt Securities, Trading, and Equity Securities, FV-NI | 8,200 | 10,400 |
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 1,937 | 3,522 |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 0 | 1,541 |
Debt Securities, Trading, and Equity Securities, FV-NI | 8,227 | 10,364 |
Total assets at fair value | 12,065 | 13,777 |
Total liabilities at fair value | 1,937 | 3,522 |
Fair Value, Measurements, Recurring | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 3,838 | 1,872 |
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 1,937 | 3,522 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Recurring Fair Value Measurements: | ||
Cash Equivalents, at Carrying Value | 0 | 1,541 |
Debt Securities, Trading, and Equity Securities, FV-NI | 8,227 | 10,364 |
Total assets at fair value | 8,227 | 11,905 |
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, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 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 | 3,838 | 1,872 |
Total liabilities at fair value | 1,937 | 3,522 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Foreign Exchange Contract | ||
Recurring Fair Value Measurements: | ||
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 3,838 | 1,872 |
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | $ 1,937 | $ 3,522 |
Note 7. Fair Value - Textuals (
Note 7. Fair Value - Textuals (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2022 | Jun. 30, 2022 | |
Recurring Fair Value Measurements: | ||
Fair Value, Purchases and Sales of Level 3 Assets | $ 0 | |
Fair Value, Purchases and Sales of Level 3 Liabilities | 0 | |
Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Total assets at fair value | 12,065 | $ 13,777 |
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | ||
Recurring Fair Value Measurements: | ||
Total assets at fair value | 0 | 0 |
Nonfinancial Liabilities Fair Value Disclosure | $ 0 | $ 0 |
Note 8. Derivative Instrument_3
Note 8. Derivative Instruments - Textuals (Details) - Foreign Exchange Contract € in Millions, $ in Millions | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2022 USD ($) | Jun. 30, 2022 | Dec. 31, 2022 EUR (€) | |
Derivatives, Fair Value | |||
Derivative, Notional Amount | $ 21.4 | € 61 | |
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 1.2 | ||
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 | Dec. 31, 2022 | Jun. 30, 2022 |
Derivatives, Fair Value | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | $ 1,937 | $ 3,522 |
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 3,838 | 1,872 |
Foreign Exchange Contract | Fair Value, Measurements, Recurring | ||
Derivatives, Fair Value | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 1,937 | 3,522 |
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 3,838 | 1,872 |
Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 2,975 | 1,189 |
Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | 1,560 | 1,486 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value | ||
Derivative Asset, Fair Value, Gross Asset Including Not Subject to Master Netting Arrangement | 863 | 683 |
Not Designated as Hedging Instrument | Foreign Exchange Contract | Accrued Liabilities | ||
Derivatives, Fair Value | ||
Derivative Liability, Fair Value, Gross Liability Including Not Subject to Master Netting Arrangement | $ 377 | $ 2,036 |
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 | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Derivative Instruments, Gain (Loss) | ||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 3,401 | $ 646 | $ 3,684 | $ (915) |
Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) | ||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 3,401 | $ 646 | $ 3,684 | $ (915) |
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 | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Derivative Instruments, Gain (Loss) | ||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification before Tax | $ 1,139 | $ (537) | $ 1,485 | $ (436) |
Total Derivative Pre-Tax Gain (Loss) Recognized in Income | 141 | (652) | 1,942 | (478) |
Foreign Exchange Contract | Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives Not Designated as Hedging Instruments, Pre-Tax Gain (Loss) Recognized in Income | (998) | (115) | 457 | (42) |
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 | $ 1,139 | $ (537) | $ 1,485 | $ (436) |
Note 9. Employee Benefit Plan_2
Note 9. Employee Benefit Plans (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
Components of Net Periodic Benefit Cost (before tax): | |||
Assets for Plan Benefits, Defined Benefit Plan | $ 0 | $ 0 | |
SERP investments | 8,200,000 | 10,400,000 | |
SERP obligation | 8,200,000 | 10,400,000 | |
Equity Securities, FV-NI, Unrealized Gain (Loss) | (200,000) | $ (200,000) | |
Other Current Liabilities | |||
Components of Net Periodic Benefit Cost (before tax): | |||
SERP obligation | 300,000 | 2,600,000 | |
Other Noncurrent Liabilities | |||
Components of Net Periodic Benefit Cost (before tax): | |||
SERP obligation | 7,900,000 | 7,800,000 | |
Prepaid Expenses and Other Current Assets | |||
Components of Net Periodic Benefit Cost (before tax): | |||
SERP investments | 300,000 | 2,600,000 | |
Other Noncurrent Assets | |||
Components of Net Periodic Benefit Cost (before tax): | |||
SERP investments | $ 7,900,000 | $ 7,800,000 |
Note 10. Stock Compensation P_3
Note 10. Stock Compensation Plans - Textuals (Details) - $ / shares | 3 Months Ended | ||||
Dec. 31, 2022 | Sep. 30, 2022 | 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, Award Vesting Rights, Percentage | 100% | ||||
Performance Shares | Stock Option and Incentive Plan 2014 | Grant Date - 8/19/2022 | |||||
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] | 184,446 | |||
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] | $ 23.34 | |||
Performance Shares | Stock Option and Incentive Plan 2014 | Grant Date - 8/1/2022 | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | [3] | 500 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [2],[3] | $ 21.51 | |||
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% | ||||
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% | ||||
Restricted Stock | Stock Option and Incentive Plan 2014 | Grant Date - 8/19/2022 | |||||
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] | 55,355 | |||
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] | $ 23.34 | |||
Restricted Stock Units (RSUs) | Stock Option and Incentive Plan 2014 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
ShareBasedCompensationArrangementByShareBasedPaymentAwardContractualLife | 3 years | ||||
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 | [5] | 13,842 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [2],[5] | $ 23.30 | |||
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 | [6] | 38,925 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | [2],[6] | $ 23.07 | |||
[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. The awards granted in fiscal year 2023 will cliff vest at the third anniversary of the award date in fiscal year 2026.Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of 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 the weighted average stock price based on the dates of the grants.[3]Long-term performance share awards were granted to a key employee. This award granted in fiscal year 2023 will cliff vest at the first anniversary of the award date in fiscal year 2024. Shares will be issued to this participant based on the performance metrics described in (1) above.[4]Restricted shares were granted to officers and other key employees. These restricted shares were approved by the Compensation and Governance Committee of the Board. The contractual life of the restricted shares is three years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.[5]Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to be paid in unrestricted shares in lieu of cash payment or deferred share units. Director’s fees are expensed over the period that directors earn the compensation. Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions.[6]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 11. Goodwill and Other I_4
Note 11. Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
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 | 51,040 | 51,040 | 50,144 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (37,158) | (37,158) | (35,437) | ||
Finite-Lived Intangible Assets, Net | 13,882 | 13,882 | 14,707 | ||
Amortization of Intangible Assets | 800 | $ 900 | 1,700 | $ 1,700 | |
Indefinite-lived Intangible Assets (Excluding Goodwill) | 0 | 0 | |||
Computer Software, Intangible Asset | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 30,787 | 30,787 | 29,891 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (26,842) | (26,842) | (26,209) | ||
Finite-Lived Intangible Assets, Net | 3,945 | 3,945 | 3,682 | ||
Customer Relationships | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 8,618 | 8,618 | 8,618 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (3,274) | (3,274) | (3,024) | ||
Finite-Lived Intangible Assets, Net | 5,344 | $ 5,344 | 5,594 | ||
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 | (4,311) | (4,311) | (3,805) | ||
Finite-Lived Intangible Assets, Net | 749 | $ 749 | 1,255 | ||
Finite-Lived Intangible Asset, Useful Life | 5 years | ||||
Trade Names | |||||
Indefinite-lived Intangible Assets | |||||
Finite-Lived Intangible Assets, Gross | 6,575 | $ 6,575 | 6,575 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | (2,731) | (2,731) | (2,399) | ||
Finite-Lived Intangible Assets, Net | $ 3,844 | $ 3,844 | $ 4,176 | ||
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 12. Share Owners' Equity (
Note 12. Share Owners' Equity (Details) | 6 Months Ended | 86 Months Ended |
Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares | |
Stock Repurchase Program, Authorized Amount | $ 100,000,000 | $ 100,000,000 |
Treasury Stock Acquired, Average Cost Per Share | $ / shares | $ 15.27 | |
Treasury Stock | ||
Treasury Stock, Value, Acquired, Cost Method | $ 0 | $ 88,800,000 |
Note 13. Earnings Per Share (De
Note 13. Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net income | $ 10,720 | $ 5,113 | $ 20,229 | $ 7,677 |
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | 16 | 7 | 29 | 11 |
Net Income (Loss) Available to Common Stockholders, Basic | $ 10,704 | $ 5,106 | $ 20,200 | $ 7,666 |
Weighted Average Number of Shares Outstanding, Basic | 24,881 | 25,238 | 24,854 | 25,201 |
Dilutive effect of average outstanding stock compensation awards | 119 | 44 | 131 | 82 |
Weighted Average Number of Shares Outstanding, Diluted | 25,000 | 25,282 | 24,985 | 25,283 |
Earnings Per Share, Basic | $ 0.43 | $ 0.20 | $ 0.81 | $ 0.30 |
Earnings Per Share, Diluted | $ 0.43 | $ 0.20 | $ 0.81 | $ 0.30 |
Note 14. Subsequent Events (Det
Note 14. Subsequent Events (Details) - Subsequent Event - Secondary Credit Facility $ in Millions | Feb. 03, 2023 USD ($) |
Subsequent Events [Abstract] | |
Subsequent Event, Date | Feb. 03, 2023 |
Subsequent Event | |
Subsequent Event, Date | Feb. 03, 2023 |
Line of Credit Facility, Maximum Borrowing Capacity | $ 50 |
Line of Credit Facility, Commitment Fee Percentage | 0.30% |
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, Above the Adjusted SOFR Rate to Calculate Alternate Base Rate | 1% |
Line of Credit Facility, Alternate Base Rate Loans Spread | 0.00750 |
Line of Credit Facility, Above the Federal Funds Rate to Calculate Alternate Base Rate | 0.50% |