ARC Group Worldwide (ARCW) 10-Q 14 Nov 18 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2018	Nov. 14, 2018
Document and Entity Information
Entity Registrant Name	ARC Group Worldwide, Inc.
Entity Central Index Key	826,326
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		23,349,478
Document Fiscal Year Focus	2,019
Document Fiscal Period Focus	Q1
Entity Small Business	true
Entity Emerging Growth Company	false

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Consolidated Statements of Operations
Sales	$ 20,566	$ 19,085
Cost of sales	17,456	17,893
Gross profit	3,110	1,192
Selling, general and administrative	3,134	3,315
Loss from operations	(24)	(2,123)
Other income (expense), net	26	(37)
Interest expense, net	(931)	(976)
Loss before income taxes	(929)	(3,136)
Income tax expense	(35)	(172)
Net loss from continuing operations	(964)	(3,308)
Loss on sale of subsidiaries and loss from discontinued operations, net of tax	(732)	(247)
Net loss	$ (1,696)	$ (3,555)
Net loss per common share, basic and diluted:
Continuing operations (in dollars per share)	$ (0.04)	$ (0.18)
Discontinued operations (in dollars per share)	(0.03)	(0.02)
ARC Group Worldwide, Inc. (in dollars per share)	$ (0.07)	$ (0.20)
Weighted average common shares outstanding:
Basic and diluted (in shares)	23,336,610	18,194,091

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Current assets:
Cash	$ 348	$ 365
Accounts receivable, net	11,532	11,103
Inventories, net	13,743	12,102
Prepaid expenses and other current assets	1,953	2,781
Current assets of discontinued operations	3,529	547
Total current assets	31,105	26,898
Property and equipment, net	37,276	36,879
Goodwill	6,412	6,412
Intangible assets, net	15,426	16,270
Other	336	347
Long-term assets of discontinued operations		3,127
Total assets	90,555	89,933
Current liabilities:
Accounts payable	10,099	11,345
Accrued expenses and other current liabilities	2,393	2,000
Deferred revenue	870	825
Bank borrowings, current portion of long-term debt	1,718	1,721
Capital lease obligations, current portion	1,339	456
Accrued escrow obligations, current portion	943	943
Current liabilities of discontinued operations	1,639	1,422
Total current liabilities	19,001	18,712
Long-term debt, net of current portion	38,609	37,013
Capital lease obligations, net of current portion	1,487	617
Other long-term liabilities	977	965
Long-term liabilities of discontinued operations		462
Total liabilities	60,074	57,769
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.0005 par value, 250,000,000 shares authorized; 23,357,879 shares issued and 23,349,478 shares issued and outstanding at September 30, 2018, and 23,324,316 shares issued and 23,315,915 shares issued and outstanding at June 30, 2018	12	12
Treasury stock, at cost; 8,401 shares at September 30, 2018 and June 30, 2018	(94)	(94)
Additional paid-in capital	41,890	41,829
Accumulated deficit	(11,324)	(9,627)
Accumulated other comprehensive income (loss)	(3)	44
Total stockholders' equity	30,481	32,164
Total liabilities and stockholders' equity	$ 90,555	$ 89,933

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Jun. 30, 2018
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0005	$ 0.0005
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	23,357,879	23,324,316
Common stock, shares outstanding	23,349,478	23,315,915
Treasury stock, at cost, shares	8,401	8,401

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Cash flows from operating activities:
Net loss	$ (1,696)	$ (3,555)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,644	2,516
Share-based compensation expense	61	287
Loss on sale of asset	23
Loss on sale of subsidiaries		109
Bad debt expense and other	6	83
Changes in working capital:
Accounts receivable	(461)	(1,645)
Inventory	(1,624)	(253)
Prepaid expenses and other assets	900	546
Accounts payable	(1,196)	820
Accrued expenses and other current liabilities	440	(437)
Deferred revenue	44	3
Net cash used in operating activities	(859)	(1,526)
Cash flows from investing activities:
Purchases of property and equipment	(44)	(957)
Proceeds from sale of subsidiary		3,000
Net cash (used in) provided by investing activities	(44)	2,043
Cash flows from financing activities:
Proceeds from debt issuance	19,094	27,073
Repayments of long-term debt and capital lease obligations	(18,130)	(28,073)
Issuance of common stock under employee stock purchase plan and exercise of stock options		92
Net cash provided by (used in) financing activities	964	(908)
Effect of exchange rates on cash	(78)	195
Net decrease in cash	(17)	(196)
Cash, Beginning of period	365	593
Cash, End of period	348	397
Supplemental disclosures of cash flow information:
Cash paid for interest	732	955
Cash paid for income taxes, net of refunds	$ 1	$ 27

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	3 Months Ended
	Sep. 30, 2018
Nature of Operations and Basis of Presentation
Nature of Operations and Basis of Presentation	NOTE 1 – Nature of Operations and Basis of Presentation Nature of Operations ARC Group Worldwide, Inc. (the “Company” or “ARC”) is a global advanced manufacturer offering a full suite of products and services to our customers, with specific expertise in metal injection molding (“MIM”). To further advance and support our core capabilities, the Company also offers complementary services including: (i) precision metal stamping; (ii) traditional and clean room plastic injection molding; and (iii) advanced rapid and conformal tooling. Through its diverse product offering, the Company provides its customers with a holistic prototyping and full-run production solution for both precision metal and plastic fabrication. The Company further differentiates itself from its competitors by providing innovative, custom capabilities which improve high-precision manufacturing efficiency and speed-to-market for its customers. Basis of Presentation The Company’s fiscal year begins July 1 and ends June 30, and the quarters for interim reporting consist of thirteen weeks; therefore, the quarter end will not always coincide with the date of the calendar month-end. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The consolidated balance sheet as of June 30, 2018, was derived from the audited financial statements as of that date, but does not include all disclosures, including notes required by GAAP. As such, this quarterly report should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. The Company follows the same accounting policies for preparing quarterly and annual reports. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of ARC and its controlled subsidiaries. All material intercompany transactions have been eliminated in consolidation. Correction of Immaterial Errors In the first quarter of fiscal year 2019, the Company's management determined that there was an error with respect to the recording of the full cost absorption adjustment for inventory. The Company assessed the materiality of the misstatement both quantitatively and qualitatively and determined that the error was immaterial to all prior consolidated financial statements taken as a whole. Accordingly, prior period amounts have not been adjusted to reflect the correction of the error. The correction resulted in an increase in gross profit for the three months ended September 30, 2018 of $1.0 million. All statement of operations totals following were also impacted by the increase.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Sep. 30, 2018
Significant Accounting Policies
Significant Accounting Policies	NOTE 2 – Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Due to the inherent uncertainties in making estimates, actual results could differ from those estimates and such differences may be material to the consolidated financial statements. Comprehensive Income (Loss) For each of the quarters ended September 30, 2018 and October 1, 2017, there were no material differences between net income (loss) and comprehensive income (loss). Accounting Pronouncements Adopted in the Current Period. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (“ASU 2014-09”), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 which defers the effective date for one year beyond the originally specified effective date. ASU 2014-09 is effective in the Company’s first quarter of fiscal 2019 and may transition to the standard using either the full retrospective approach or retrospectively with a cumulative effect of initially applying the amendments recognized at the date of initial application. The Company has adopted ASU 2014-09 as of July 1, 2018 and no cumulative effect of the adoption recognized. We obtained an understanding of the new standard and determined that the Company will retain much of the same accounting treatment used to recognize revenue as compared to current standards. See below for the Company’s updated revenue recognition policy. Revenue Recognition Revenues are measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns. The Company recognizes revenue when the earnings process is complete. This generally occurs when products are shipped to the customer in accordance with the contract or purchase order, ownership and risk of loss have passed to the customer, collectability is reasonably assured, and pricing is fixed and determinable. In instances where title does not pass to the customer upon shipment, the Company recognizes revenue upon delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing maintenance and engineering activities, are recognized as services are performed. Products are generally shipped free-on-board from our facilities, the customer pays freight costs and assumes all liability. Deferred revenue consists of customer deposits for the development of the tooling part component for the purpose of manufacturing the assembly part. However, as this does not trigger any income as no products have changed hands and this is done more as a collectability measure with the Customer, no other actions other than recording the deposit occur at the time of the transaction. The Company recognizes revenue and the related expenses when the customer approves and accepts delivery the tooling part component, which is the time when the performance obligation of providing product to the customer occurs. Costs incurred related to tooling part components in the process of being developed are deferred and are included as a current assets on the balance sheet. In regards to the assembly parts, revenue is recognized when the assembly parts are shipped at the Company’s loading dock which is when the customer takes control of the goods and the performance obligation is satisfied. We did not record any adjustments to our financial statements as part of the adoption of ASU 2014-09. The Company reported segment disclosures at Note 12 presents disaggregated revenue information for financial reporting purposes. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases: Topic 842 (“ASU 2016-02”), to supersede nearly all existing lease guidance under GAAP. ASU 2016-02 requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases. ASU 2016-02 also requires qualitative disclosures along with specific quantitative disclosures and is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements. While we continue to evaluate the effect of the standard on our consolidated financial statements, the adoption of the ASU will result in the recognition of a right of use asset and related liability with an estimated immaterial effect to our retained earnings. The Company is evaluating the requirements of this guidance and has not yet determined the impact of the adoption on its consolidated financial position, results of operations and cash flows; however, the Company’s operating lease commitments are disclosed in Note 11, Commitments and Contingencies, of the Company’s Form 10-Q for the fiscal quarter ended September 30, 2018. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses Topic 326 (“ASU 2016-13”), which requires entities to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted. The adoption of ASU 2016-03 is not expected to have a material effect on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: Topic 350 (“ASU 2017-04”), which eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative step, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for all public businesses that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2017-04 on the financial statements. There was no impairment noted during first quarter 2019, but the Company expects that this standard will impact the financial statements if an impairment is indicated.

Divestitures

Divestitures	3 Months Ended
	Sep. 30, 2018
Divestitures
Divestitures	NOTE 3 – Divestitures General Flange & Forge LLC (“GF&F”) On September 15, 2017, the Company sold substantially all of the assets of GF&F to GFFC Holdings, LLC (“GFFC”) for $3.0 million in cash. GFFC is owned, in part, by Quadrant Management Inc., which is an affiliate of the Company. The sale of GF&F was therefore a related party transaction. The GF&F sale was made pursuant to an industry-wide auction undertaken on behalf of the Company by a registered investment banking organization that managed the sale process with prospective bidders. GFFC entered into the bidding for the GF&F assets only after the first rounds of the auction indicated uncertainty both in respect to the timing for closing any prospective sale and achieving the Company’s valuation objectives. Mr. Alan Quasha, CEO of Quadrant Management Inc. and Chairman of the Company’s Board of Directors, recused himself from any deliberations or voting by the Board of Directors in respect of the sale of the GF&F assets to GFFC. The Board of Directors appointed a special committee consisting solely of independent directors to oversee and negotiate the sale process. The special committee engaged its own independent legal counsel to advise the special committee in respect of the drafting of the asset sale agreement and ancillary transaction documents in accordance with customary terms and conditions for transactions of this type. In this manner, the special committee was able to conclude that the sale price and the terms and conditions for the transaction were superior to any other offers, as well as fair and reasonable to the Company and its shareholders. The condensed consolidated statement of operations for the three months ended October 1, 2017, includes the results of operations of GF&F through the sale date of September 15, 2017 and the loss on the sale of GF&F. Financial information for discontinued operations for the three months ended October 1, 2017 is as follows (in thousands): October 1, 2017 Sales $ 726 Cost of sales (615) Gross profit 111 Selling, general and administrative (108) Income from discontinued operations, before income taxes 3 Loss on sale of discontinued operations (482) Total (loss) income from discontinued operations, before income taxes (479) Income tax benefit on discontinued operations 209 Income (loss) from discontinued operations, net of tax $ (270) Cash flows from GF&F for the three months ended October 1, 2017 are combined with the cash flows from operations within each of the categories presented on the condensed consolidated statements of cash flows. 3D Material Technologies (“3DMT”) On July 25, 2018, the Board of Directors voted to sell its 3DMT division. The Company is currently actively seeking a buyer for 3DMT while still operating until the sale. The condensed consolidated statements of operations for the three months ended September 30, 2018 and October 1, 2017, respectively, include the results of operations of 3DMT. Financial information for discontinued operations for the three months ended September 30, 2018 and October 1, 2017 are as follows (in thousands): September 30, 2018 October 1, 2017 Sales $ 336 $ 865 Cost of sales (898) (634) Gross profit (562) 231 Selling, general and administrative (158) (172) Loss from discontinued operations, before income taxes (720) 59 Interest expense (13) (36) Total income (loss) from discontinued operations, before income taxes (733) 23 Income tax benefit on discontinued operations 1 — Income (loss) from discontinued operations, net of tax $ (732) $ 23 The condensed consolidated balance sheets for September 30, 2018 and June 30, 2018 include assets related to discontinued operations as follows (in thousands): September 30, 2018 June 30, 2018 Current assets: Accounts receivable, net $ 173 $ 148 Inventories, net 209 225 Prepaid expenses and other current assets 193 174 Total current assets 575 547 Property and equipment, net 2,928 3,101 Other Assets 26 26 Total assets of discontinued operations $ 3,529 $ 3,674 Current liabilities: Accounts payable and accrued expenses $ 535 $ 449 Capital lease obligations, current portion 762 973 Total current liabilities 1,297 1,422 Capital lease obligations, net of current portion 342 462 Total liabilities of discontinued operations $ 1,639 $ 1,884 The Company did not reclassify its Statements of Cash Flows to reflect the various discontinued operations. Cash flows from 3DMT for the three months ended September 30, 2018 and October 1, 2017 are combined within each of the categories presented. September 30, 2018 October 1, 2017 Net Cash Used in Operating Activities $ 502 $ 6 Net Cash Used in Investing Activities — 4 Net Cash Used in Financing Activities 331 229

Inventory

Inventory	3 Months Ended
	Sep. 30, 2018
Inventory
Inventory	NOTE 4– Inventory Inventories consisted of the following (in thousands): September 30, 2018 June 30, 2018 Raw materials and supplies $ 5,350 $ 5,414 Work-in-process 6,665 5,907 Finished goods 3,132 3,144 15,147 14,465 Reserve for obsolescence (1,404) Inventory of discontinued operations — (225) $ 13,743 $ 12,102 During the fourth quarter of fiscal 2017, the Company increased its inventory reserves for excess and obsolete inventory due to a change in business strategy related to the Company’s pricing structure, returned parts that the Company determined could not be profitably re-worked and sold, and increased reserves for slow moving inventory as a result of lower forecasted demand from certain customers, primarily related to the firearms industry. This higher level of inventory reserves was continued during fiscal year 2018 related to continuing lower demand primarily related to the firearms industry.

Property and Equipment

Property and Equipment	3 Months Ended
	Sep. 30, 2018
Property and Equipment
Property and Equipment	NOTE 5 – Property and Equipment Property and equipment consisted of the following (in thousands): Depreciable Life September 30, June 30, (in years) 2018 2018 Land — $ 1,264 $ 1,264 Building and improvements 7 - 40 18,258 18,188 Machinery and equipment 3 - 12 44,094 42,899 Office furniture and equipment 3 - 10 1,339 1,267 Construction-in-process — 2,094 2,735 Assets acquired under capital lease 5,208 3,910 72,257 Accumulated depreciation (33,637) (32,124) Accumulated amortization on capital leases (1,344) (1,260) $ $ Depreciation expense totaled $1.8 million and $1.7 million for the three months ended September 30, 2018 and October 1, 2017, respectively.

Goodwill and Intangible Assets

Goodwill and Intangible Assets	3 Months Ended
	Sep. 30, 2018
Goodwill and Intangible Assets
Goodwill and Intangible Assets	NOTE 6 – Goodwill and Intangible Assets Goodwill Total goodwill of $6.4 million is assigned to the Company’s Precision Components Group. The Company performs a goodwill impairment assessment on at least an annual basis. The Company conducts its annual goodwill impairment assessment during the fourth quarter, or more frequently, if indicators of impairment exist. During the fiscal quarter ended September 30, 2018, the Company assessed whether any such indicators of impairment existed and concluded there were none. Intangible Assets The following table summarizes the Company's intangible assets (in thousands): As of September 30, 2018 As of June 30, 2018 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Intangible assets: Amount Amortization Amount Amount Amortization Amount Patents and tradenames $ 3,418 (1,002) $ 2,416 $ 3,418 $ (945) $ 2,473 Customer relationships 24,077 (11,443) 12,634 24,077 (10,838) 13,239 Non-compete agreements 3,654 (3,278) 376 3,654 (3,096) 558 Total $ 31,149 $ (15,723) $ 15,426 $ 31,149 $ (14,879) $ 16,270 Intangible assets are amortized using the straight-line method over estimated useful lives ranging from five to fifteen years. Amortization expense for identifiable intangible assets totaled $0.8 million for the three months ended September 30, 2018 and October 1, 2017. Estimated future amortization expense for the next five years as of September 30, 2018, is as follows (in thousands): Fiscal Years Amount 2019 $ 2,348 2020 2,636 2021 2,636 2022 2,636 2023 2,636 Thereafter 2,534 Total $ 15,426 There were no impairments of long-lived assets during the three and nine months ended September 30, 2018 and October 1, 2017.

Debt

Debt	3 Months Ended
	Sep. 30, 2018
Debt
Debt	NOTE 7 – Debt Long-term debt payable consists of the following (in thousands): Balance as of September 30, 2018 June 30, 2018 Senior secured revolving loan $ 7,825 $ 5,692 Senior secured mortgage-based term loans 18,146 18,765 Subordinated term loan 15,000 15,000 Total debt 40,971 39,457 Unamortized deferred financing costs (644) (723) Total debt, net 40,327 38,734 Current portion of long-term debt, net of unamortized deferred financing costs (1,718) (1,721) Long-term debt, net of current portion and unamortized deferred financing costs $ 38,609 $ 37,013 Senior Credit Agreement On September 29, 2016, the Company and certain of its subsidiaries, entered into a new senior asset-based lending credit agreement with Citizens Bank, N.A. subsequently amended by amendments one through five (collectively, the “Senior ABL Credit Facility”). The Senior ABL Credit Facility provides the Company with the following extensions of credit and loans: (1) a Revolving Commitment in the principal amount of $25.0 million (the “Revolving Loan”) and (2) a mortgage-based Term Loan Commitment in the principal amount of $17.5 million (the “Term Loan”). The loans under the Senior ABL Credit Facility are secured by liens on substantially all domestic assets of the Company and guaranteed by the Company’s domestic subsidiaries who are not borrowers under the Senior ABL Credit Facility. The aggregate amount of revolving loans permitted under the Senior ABL Credit Facility may not exceed a borrowing base consisting of: (i) the sum of 85% of certain eligible accounts receivable, plus (ii) the lesser of 65% of the value of certain eligible inventory and 85% of the net orderly liquidation value of certain eligible inventory, plus (iii) an amount not to exceed $4.2 million, which amount will be adjusted based on the face amount of certain letters of credit issued to Citizens Bank, N.A. in connection with certain operating leases and capitalized leases, minus (iv) reserves for any amounts which the lender deems necessary or appropriate. Borrowings under the Senior ABL Credit Facility may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate loans will bear interest at the fluctuating rate per annum equal to (i) the highest of (a) the Federal Funds Rate plus 1/2 of 1.00%, (b) Citizens own prime rate; and (c) the adjusted Eurodollar rate on such day for an interest period of one (1) month plus 1.00%; and (ii) plus the Applicable Rate, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate; plus (ii) the Applicable Rate. The “Applicable Rate” will be (a) 2.50% with respect to Base Rate Loans that are Term Loans and 3.50% with respect to Eurodollar Rate Loans that are Term Loans, and (b) 2.50% with respect to Base Rate Loans that are Revolving Loans and 3.50% with respect to Eurodollar Rate Loans that are Revolving Loans, in each case until December 31, 2016, and thereafter the Applicable Rate will be adjusted quarterly, responsive to the Company’s Quarterly Average Availability Percentage, ranging from 1.25% to 1.75% with respect to Base Rate Loans that are Revolving Loans and from 2.25% to 2.75% with respect to Eurodollar Rate Loans that are Revolving Loans. In addition to interest payments on the Senior ABL Credit Facility loans, the Company will pay commitment fees to the lender of 0.375% per quarter on undrawn Revolving Loans. The Company will also pay other customary fees and reimbursements of costs and disbursements to the lender. The Maturity Date with respect to the Revolving Loan and the Term Loan is November 10, 2019, provided, however, upon repayment of Company subordinated indebtedness the maturity date will automatically extend to five years after the Closing Date for Revolving Loans and Revolving Commitments, and with respect to the Term Loans, the earlier of the date that is (i) ten years after the Closing Date and (ii) the maturity date of the Revolving Loans. The Senior ABL Credit Facility contains certain mandatory prepayment provisions, including mandatory prepayments due in respect of sales of assets, sales of equity securities, events of default and other customary events, with exceptions for non-core business dispositions. The Senior ABL Credit Facility contains customary covenants and negative covenants regarding operation of the Company’s business, including maintenance of certain financial ratios, as well as restrictions on dispositions of Company assets. In connection with the Senior ABL Credit Facility, the Company and the Borrowers together with certain subsidiaries (collectively, the “Guarantors”), have entered into an Amended and Restated Guarantee and Collateral Agreement with Citizens Bank, N.A. dated as of September 29, 2016, which secures all of the loans and credits drawn from the Senior ABL Credit Facility by the Borrowers. The security interests established under the Amended and Restated Guarantee and Collateral Agreement include senior secured liens on substantially all of the assets of the Guarantors. The Guarantors have agreed to guarantee the unconditional payment and performance to the lender of all obligations of the Borrowers under the Senior ABL Credit Facility. On March 21, 2017, the Company entered into a first amendment to the Senior ABL Credit Facility to modify various definitions, including Consolidated EBITDA and the fixed charge coverage ratio, and amend prepayment provisions. On May 12, 2017, the Company entered into a second amendment to the Senior ABL Credit Facility to amend the definition of capital expenditures and amend the fixed charge coverage ratio effective with the fiscal quarter ending April 2, 2017. On September 21, 2017, the Company entered into a third amendment to the Senior ABL Credit Facility to amend the definition of Consolidated EBITDA. On November 12, 2017, the Company entered into the Fourth Amendment to the Senior ABL Credit Facility (the “Fourth Amendment”). The Fourth Amendment suspends the Company’s fixed charge coverage ratio covenant through December 31, 2018. The suspension of the fixed charge coverage ratio covenant was effective as of October 1, 2017. The Fourth Amendment also adds a minimum revolving credit availability financial covenant. The Fourth Amendment also permits the Company to make infusions of junior capital, which may consist of subordinated debt and/or equity issuances. The junior capital infusions made under the Fourth Amendment will not be subject to mandatory prepayment of the Senior ABL Credit Facility, but subject to certain limitations in respect of outstanding subordinated indebtedness. Under the terms of the Fourth Amendment, the initial infusion of junior capital in amount of not less than $5.0 million must be completed by the Company no later than January 31, 2018. The minimum revolving credit availability covenant requires the Company to maintain the following availability: (a) at least $1,250,000 in revolving credit availability until the earlier of (i) the initial closing of the infusion of $5.0 million in junior capital and (ii) January 31, 2018; and (b) thereafter, at least $3,500,000 in such revolving credit availability. The Fourth Amendment also reduces the Line Cap (consisting of the lesser of the aggregate revolving credit commitment and the borrowing base) in respect of certain prepayment obligations and conditions precedent to borrowing, by reducing the borrowing base by $1,250,000. The Fourth Amendment contains customary representations and warranties regarding the status of the Company and compliance with all terms and conditions of the Senior ABL Credit Facility. On November 13, 2018, the Company entered into the Fifth Amendment to the Senior ABL Credit Facility (the “Fifth Amendment”). The Fifth Amendment extended the maturity date of the Senior ABL Credit Facility from August 10, 2019 to November 11, 2019. The Company was in compliance with all covenants as of September 30, 2018. Subordinated Term Loan Credit Agreement On November 10, 2014, the Company and certain of its subsidiaries entered into a $20.0 million, five-year Subordinated Term Loan Credit Agreement (“Subordinated Loan Agreement”) with McLarty Capital Partners SBIC, L.P. (“McLarty”), which bears interest at 11% annually ; subsequently the Company entered into amendments one through five. In May 2018, McLarty rebranded to become The Firmament Group (“Firmament”). Upon an event of default under the Subordinated Loan Agreement, the interest rate increases automatically by 2.00% annually. The proceeds were used to repay certain outstanding loans under the Company’s previous credit facility. ARC’s Chairman is indirectly related to McLarty; therefore, the Board of Directors appointed a special committee consisting solely of independent directors to assure that the Subordinated Loan Agreement is fair and reasonable to the Company and its shareholders. The Subordinated Loan Agreement has been subordinated to the Senior ABL Credit Facility pursuant to a First Lien Subordination Agreement. The Subordinated Loan Agreement contains customary representations and warranties, events of default, affirmative covenants, negative covenants, and prepayment terms that are similar to those contained in the Senior ABL Credit Facility described above. On September 22, 2017, the Company entered into a fourth amendment to the Subordinated Loan Agreement to amend the definition of Consolidated EBITDA and the Maximum Total Leverage Ratio. On February 9, 2018, the Company entered into a fifth amendment to the Subordinated Loan Agreement to authorize discretionary omission by the administrative agent of certain non-cash items from the definition of Consolidated EBITDA and to include cash proceeds from the Rights Offering as excluded contributions of capital that will not be subject to mandatory prepayment under the terms of the Subordinated Loan Agreement. On November 13, 2018, the Company entered into the Fifth Amendment to the Subordinated Loan Agreement (the “Fifth Amendment”). The Fifth Amendment extended the maturity date of the Subordianated Loan Agreement from November 11, 2019 to February 11, 2020. As of September 30, 2018, the Company was in compliance with its debt covenants under the Subordinated Credit Facility, after giving effect to the fifth amendment discussed above. Loan Contract On March 23, 2016, AFT-Hungary Kft. (“AFT Hungary”), a wholly owned subsidiary of the Company, entered into a Loan Contract with Erste Bank Hungary Zrt. in an amount equal to €4.0 million (“Loan Contract”). The initial funding of €4.0 million drawn on the Loan Contract occurred on March 31, 2016. Approximately $3.0 million of the net proceeds from the Loan Contract were used to partially repay obligations outstanding under the Amended & Restated Credit Agreement, with the remaining net proceeds to be used for capital expenditures and other investments to facilitate the export of goods and services provided by AFT Hungary. The loan matures on March 7, 2021, and bears interest at a fixed rate of 0.98% per annum. The Company is required to make semi-annual principal payments in an amount equal to approximately €400,000 along with monthly interest payments. The Loan Contract is secured by certain of AFT Hungary’s assets, including the real estate and selected machinery and equipment located in Retsag, Hungary. Future Debt Payments The following schedule represents the Company’s future debt payments as of September 30, 2018 (in thousands): 2019 (1) $ 1,193 2020 38,848 2021 930 2022 — Total $ 40,971 (1) Represents long-term debt principal payments for the nine months ending June 30, 2019.

Income Taxes

Income Taxes	3 Months Ended
	Sep. 30, 2018
Income Taxes
Income Taxes	NOTE 8 – Income Taxes The income tax receivable was $ 0.5 million and $0.5 million at September 30, 2018 and June 30, 2018, respectively, which are included in other current assets. The long-term income tax receivable was $0.3 million at September 30, 2018, which is included in other non-current assets. The Company had unrecognized tax benefits for uncertain tax positions of $1.0 million on September 30, 2018 and June 30, 2018, respectively, which are included in other long-term liabilities. On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law by the President of the United States. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the Tax Reform Act, the Company recorded tax expense of $1.4 million due to a remeasurement of deferred tax assets and liabilities at a blended rate in the three months ended December 31, 2017, which is fully offset by a reduction in valuation allowance. In addition, the Company recorded a tax benefit of $0.3 million due to a reduction in the valuation allowance previously recognized on alternative minimum tax (“AMT”) credit carryforwards. Under the Tax Reform Act, AMT credit carryforwards are refundable credits. The tax expense and benefit are provisional amounts and the Company’s current best estimate. Any adjustments recorded to the provisional amounts will be included in income from operations as an adjustment to tax expense, net of any related valuation allowance. The provisional amount incorporates assumptions made based upon the Company’s current interpretation of the Tax Reform Act and may change as the Company receives additional clarification and implementation guidance.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Sep. 30, 2018
Earnings Per Share
Earnings Per Share	NOTE 9 – Earnings Per Share Net Income (Loss) Per Share – Basic and Diluted Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income available to common stockholders by the diluted weighted-average shares of common stock outstanding during each period. As a result of the Company’s net loss from continuing operations, f or the three months ended September 30, 2018 and October 1, 2017, approximately 45,362 and 146,634 shares, respectively, were considered anti-dilutive and were excluded from the computation of diluted earnings per share.

Share-Based Compensation

Share-Based Compensation	3 Months Ended
	Sep. 30, 2018
Share-Based Compensation.
Share-Based Compensation	NOTE 10 – Share-Based Compensation The Company’s share-based compensation arrangements include grants of stock options under the ARC Group Worldwide, Inc. 2015 Equity Incentive Plan and the 2016 ARC Group Worldwide, Inc. Equity Incentive Plan and the Employee Stock Purchase Plan. The share-based compensation expense recognized during the three months ended September 30, 2018 and October 1, 2017 was $0.1 million and $0.3 million, and is included in selling, general and administrative expense. As of September 30, 2018, there was $0.7 million of total unrecognized compensation expense related to non-vested stock options, which is expected to be recognized over a weighted-average period of 2.3 years.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Sep. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	NOTE 11 – Commitments and Contingencies The Company leases land, facilities, and equipment under various non-cancellable operating lease agreements expiring through 2022, which contain various renewal options. The Company also leases equipment and a building under non-cancellable capital lease agreements expiring through 2024. The capital leases have interest rates ranging from 2.95% to 8.72%. From time to time, the Company is a party to various litigation matters incidental to the conduct of its business. As of September 30, 2018, the Company is not presently a party to any legal proceedings, the resolution of which, management believes, would have a material adverse effect on its business, operating results, financial condition, or cash flows.

Segment Information

Segment Information	3 Months Ended
	Sep. 30, 2018
Segment Information
Segment Information	NOTE 12 – Segment Information During fiscal 2017, the Company sold its non-core subsidiaries, Tekna Seal and ARC Wireless. Subsequently, in September 2017, the Company sold its non-core subsidiary, GF&F, which comprised the Flanges and Fittings Group segment. The completed divestiture of these non-core businesses has changed the way in which management and its chief operating decision maker evaluate performance and allocate resources. As a result, during the quarter ended June 30, 2018, the Company revised its business segments, consistent with its management of the business and internal financial reporting structure. Specifically, the Precision Components Group now includes the results of its plastic injection molding operations and its tooling product line, which were previously included within the 3DMT Group. During July 2018, the Company entered into an agreement to market 3DMT for possible sale which is now being reported as discontinued operations. In addition, its precision metal stamping operations are now reported within the newly created Stamping Group, which were previously included in the Precision Components Group. As a result of the above transactions, the Company will report two segments as part of continuing operations: the Precision Components Group and the Stamping Group. · The Precision Components Group companies provide highly engineered, precision metal components using processes consisting of metal injection molding. It also includes our tooling product line and plastic injection molding. Industries served include aerospace, automotive, consumer durables, electronic devices, firearms and defense, and medical and dental devices. · The Stamping Group consists of our precision metal stamping operations, primarily servicing the automotive industry. Summarized segment information for the three months ended September 30, 2018 and October 1, 2017 is as follows (in thousands): Three months ended September 30, October 1, 2018 2017 Sales: Precision Components Group $ 15,685 $ Stamping Group Consolidated sales $ 20,566 $ Operating costs: Precision Components Group $ 14,789 $ Stamping Group Consolidated operating costs $ 19,727 $ Segment operating income (loss): Precision Components Group $ 896 $ Stamping Group Corporate (1) Total segment operating loss $ $ Interest expense, net Other income, net Non-operating expense Consolidated loss before income taxes and non-controlling interest $ $ (1) Corporate expense includes compensation and benefits, insurance, legal, accounting, consulting, and board of directors fees.

Significant Customers

Significant Customers	3 Months Ended
	Sep. 30, 2018
Significant Customers
Significant Customers	NOTE 13 – Significant Customers The concentration of the Company’s business with a relatively small number of customers may expose it to a material adverse effect if one or more of these large customers were to experience financial difficulty or were to cease being a customer for non-financial related issues. The Company’s revenue concentrations of 5% or greater are as follows: Percentage of Sales Customer 2019 2018 1 (a) 13.1 % 6.0 % 2 (b) 10.8 % 9.1 % 3 (a) 10.6 % 5.5 % 4 (a) 8.2 % 10.2 % 5 (b) ** 6.2 % Total 42.7 % 37.0 % ** Customer represented less than 5% of sales for the periods presented. (a) Revenue from this customer is generated through our Precision Components Group segment. (b) Revenue from this customer is generated through our Stamping Group segment. The Company’s accounts receivable concentrations of 5% or greater for the above-listed customers are as follows: Percentage of Receivables Customer 2019 2018 1 10.5 % 8.6 % 2 9.4 % 8.8 % 3 5.8 % 11.5 % 4 10.0 % ** % 5 ** % ** % 6 ** % 5.3 % Total 35.7 % 34.2 % ** Customer represented less than 5% of accounts receivable for the periods presented.

Subsequent Events

Subsequent Events	3 Months Ended
	Sep. 30, 2018
Subsequent Events
Subsequent Events	NOTE 14 – Subsequent Events The Company has evaluated subsequent events through November 14, 2018, the date the financial statements were available for release.

Significant Accounting Polici_2

Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2018
Significant Accounting Policies
Basis of Presentation	Basis of Presentation The Company’s fiscal year begins July 1 and ends June 30, and the quarters for interim reporting consist of thirteen weeks; therefore, the quarter end will not always coincide with the date of the calendar month-end. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The consolidated balance sheet as of June 30, 2018, was derived from the audited financial statements as of that date, but does not include all disclosures, including notes required by GAAP. As such, this quarterly report should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. The Company follows the same accounting policies for preparing quarterly and annual reports.
Principles of Consolidation	Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of ARC and its controlled subsidiaries. All material intercompany transactions have been eliminated in consolidation.
Correction of Immaterial Errors	Correction of Immaterial Errors In the first quarter of fiscal year 2019, the Company's management determined that there was an error with respect to the recording of the full cost absorption adjustment for inventory. The Company assessed the materiality of the misstatement both quantitatively and qualitatively and determined that the error was immaterial to all prior consolidated financial statements taken as a whole. Accordingly, prior period amounts have not been adjusted to reflect the correction of the error. The correction resulted in an increase in gross profit for the three months ended September 30, 2018 of $1.0 million. All statement of operations totals following were also impacted by the increase.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Due to the inherent uncertainties in making estimates, actual results could differ from those estimates and such differences may be material to the consolidated financial statements.
Comprehensive Income (Loss)	Comprehensive Income (Loss) For each of the quarters ended September 30, 2018 and October 1, 2017, there were no material differences between net income (loss) and comprehensive income (loss).
Revenue Recognition	Revenue Recognition Revenues are measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns. The Company recognizes revenue when the earnings process is complete. This generally occurs when products are shipped to the customer in accordance with the contract or purchase order, ownership and risk of loss have passed to the customer, collectability is reasonably assured, and pricing is fixed and determinable. In instances where title does not pass to the customer upon shipment, the Company recognizes revenue upon delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing maintenance and engineering activities, are recognized as services are performed. Products are generally shipped free-on-board from our facilities, the customer pays freight costs and assumes all liability. Deferred revenue consists of customer deposits for the development of the tooling part component for the purpose of manufacturing the assembly part. However, as this does not trigger any income as no products have changed hands and this is done more as a collectability measure with the Customer, no other actions other than recording the deposit occur at the time of the transaction. The Company recognizes revenue and the related expenses when the customer approves and accepts delivery the tooling part component, which is the time when the performance obligation of providing product to the customer occurs. Costs incurred related to tooling part components in the process of being developed are deferred and are included as a current assets on the balance sheet. In regards to the assembly parts, revenue is recognized when the assembly parts are shipped at the Company’s loading dock which is when the customer takes control of the goods and the performance obligation is satisfied. We did not record any adjustments to our financial statements as part of the adoption of ASU 2014-09. The Company reported segment disclosures at Note 12 presents disaggregated revenue information for financial reporting purposes.
Accounting Pronouncements Adopted in the Current Period and Recent Accounting Pronouncements	Accounting Pronouncements Adopted in the Current Period. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (“ASU 2014-09”), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14 which defers the effective date for one year beyond the originally specified effective date. ASU 2014-09 is effective in the Company’s first quarter of fiscal 2019 and may transition to the standard using either the full retrospective approach or retrospectively with a cumulative effect of initially applying the amendments recognized at the date of initial application. The Company has adopted ASU 2014-09 as of July 1, 2018 and no cumulative effect of the adoption recognized. We obtained an understanding of the new standard and determined that the Company will retain much of the same accounting treatment used to recognize revenue as compared to current standards. See below for the Company’s updated revenue recognition policy. Revenue Recognition Revenues are measured at the fair value of the consideration received or receivable net of sales tax, trade discounts and customer returns. The Company recognizes revenue when the earnings process is complete. This generally occurs when products are shipped to the customer in accordance with the contract or purchase order, ownership and risk of loss have passed to the customer, collectability is reasonably assured, and pricing is fixed and determinable. In instances where title does not pass to the customer upon shipment, the Company recognizes revenue upon delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing maintenance and engineering activities, are recognized as services are performed. Products are generally shipped free-on-board from our facilities, the customer pays freight costs and assumes all liability. Deferred revenue consists of customer deposits for the development of the tooling part component for the purpose of manufacturing the assembly part. However, as this does not trigger any income as no products have changed hands and this is done more as a collectability measure with the Customer, no other actions other than recording the deposit occur at the time of the transaction. The Company recognizes revenue and the related expenses when the customer approves and accepts delivery the tooling part component, which is the time when the performance obligation of providing product to the customer occurs. Costs incurred related to tooling part components in the process of being developed are deferred and are included as a current assets on the balance sheet. In regards to the assembly parts, revenue is recognized when the assembly parts are shipped at the Company’s loading dock which is when the customer takes control of the goods and the performance obligation is satisfied. We did not record any adjustments to our financial statements as part of the adoption of ASU 2014-09. The Company reported segment disclosures at Note 12 presents disaggregated revenue information for financial reporting purposes. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases: Topic 842 (“ASU 2016-02”), to supersede nearly all existing lease guidance under GAAP. ASU 2016-02 requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases. ASU 2016-02 also requires qualitative disclosures along with specific quantitative disclosures and is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach. We are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements. While we continue to evaluate the effect of the standard on our consolidated financial statements, the adoption of the ASU will result in the recognition of a right of use asset and related liability with an estimated immaterial effect to our retained earnings. The Company is evaluating the requirements of this guidance and has not yet determined the impact of the adoption on its consolidated financial position, results of operations and cash flows; however, the Company’s operating lease commitments are disclosed in Note 11, Commitments and Contingencies, of the Company’s Form 10-Q for the fiscal quarter ended September 30, 2018. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses Topic 326 (“ASU 2016-13”), which requires entities to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted. The adoption of ASU 2016-03 is not expected to have a material effect on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: Topic 350 (“ASU 2017-04”), which eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative step, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for all public businesses that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2017-04 on the financial statements. There was no impairment noted during first quarter 2019, but the Company expects that this standard will impact the financial statements if an impairment is indicated.

Divestitures (Tables)

Divestitures (Tables)	3 Months Ended
	Sep. 30, 2018
GF&F | Discontinued Operations, Disposed of by Sale
Schedule of discontinued operations results	Financial information for discontinued operations for the three months ended October 1, 2017 is as follows (in thousands): October 1, 2017 Sales $ 726 Cost of sales (615) Gross profit 111 Selling, general and administrative (108) Income from discontinued operations, before income taxes 3 Loss on sale of discontinued operations (482) Total (loss) income from discontinued operations, before income taxes (479) Income tax benefit on discontinued operations 209 Income (loss) from discontinued operations, net of tax $ (270)
3DMT | Discontinued Operations, Held-for-sale
Schedule of discontinued operations results	Financial information for discontinued operations for the three months ended September 30, 2018 and October 1, 2017 are as follows (in thousands): September 30, 2018 October 1, 2017 Sales $ 336 $ 865 Cost of sales (898) (634) Gross profit (562) 231 Selling, general and administrative (158) (172) Loss from discontinued operations, before income taxes (720) 59 Interest expense (13) (36) Total income (loss) from discontinued operations, before income taxes (733) 23 Income tax benefit on discontinued operations 1 — Income (loss) from discontinued operations, net of tax $ (732) $ 23
Schedule of assets and liabilities classified as held for sale	The condensed consolidated balance sheets for September 30, 2018 and June 30, 2018 include assets related to discontinued operations as follows (in thousands): September 30, 2018 June 30, 2018 Current assets: Accounts receivable, net $ 173 $ 148 Inventories, net 209 225 Prepaid expenses and other current assets 193 174 Total current assets 575 547 Property and equipment, net 2,928 3,101 Other Assets 26 26 Total assets of discontinued operations $ 3,529 $ 3,674 Current liabilities: Accounts payable and accrued expenses $ 535 $ 449 Capital lease obligations, current portion 762 973 Total current liabilities 1,297 1,422 Capital lease obligations, net of current portion 342 462 Total liabilities of discontinued operations $ 1,639 $ 1,884
Schedule of cash flows of discontinued operations	September 30, 2018 October 1, 2017 Net Cash Used in Operating Activities $ 502 $ 6 Net Cash Used in Investing Activities — 4 Net Cash Used in Financing Activities 331 229

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Sep. 30, 2018
Inventory
Schedule of inventories	Inventories consisted of the following (in thousands): September 30, 2018 June 30, 2018 Raw materials and supplies $ 5,350 $ 5,414 Work-in-process 6,665 5,907 Finished goods 3,132 3,144 15,147 14,465 Reserve for obsolescence (1,404) Inventory of discontinued operations — (225) $ 13,743 $ 12,102

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Sep. 30, 2018
Property and Equipment
Schedule of property and equipment	Property and equipment consisted of the following (in thousands): Depreciable Life September 30, June 30, (in years) 2018 2018 Land — $ 1,264 $ 1,264 Building and improvements 7 - 40 18,258 18,188 Machinery and equipment 3 - 12 44,094 42,899 Office furniture and equipment 3 - 10 1,339 1,267 Construction-in-process — 2,094 2,735 Assets acquired under capital lease 5,208 3,910 72,257 Accumulated depreciation (33,637) (32,124) Accumulated amortization on capital leases (1,344) (1,260) $ $

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	3 Months Ended
	Sep. 30, 2018
Goodwill and Intangible Assets
Summary of intangible assets	The following table summarizes the Company's intangible assets (in thousands): As of September 30, 2018 As of June 30, 2018 Gross Gross Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying Intangible assets: Amount Amortization Amount Amount Amortization Amount Patents and tradenames $ 3,418 (1,002) $ 2,416 $ 3,418 $ (945) $ 2,473 Customer relationships 24,077 (11,443) 12,634 24,077 (10,838) 13,239 Non-compete agreements 3,654 (3,278) 376 3,654 (3,096) 558 Total $ 31,149 $ (15,723) $ 15,426 $ 31,149 $ (14,879) $ 16,270
Schedule of estimated future amortization expense of intangible assets	Estimated future amortization expense for the next five years as of September 30, 2018, is as follows (in thousands): Fiscal Years Amount 2019 $ 2,348 2020 2,636 2021 2,636 2022 2,636 2023 2,636 Thereafter 2,534 Total $ 15,426

Debt (Tables)

Debt (Tables)	3 Months Ended
	Sep. 30, 2018
Debt
Schedule of long-term debt payable	Long-term debt payable consists of the following (in thousands): Balance as of September 30, 2018 June 30, 2018 Senior secured revolving loan $ 7,825 $ 5,692 Senior secured mortgage-based term loans 18,146 18,765 Subordinated term loan 15,000 15,000 Total debt 40,971 39,457 Unamortized deferred financing costs (644) (723) Total debt, net 40,327 38,734 Current portion of long-term debt, net of unamortized deferred financing costs (1,718) (1,721) Long-term debt, net of current portion and unamortized deferred financing costs $ 38,609 $ 37,013
Schedule of future debt payments	The following schedule represents the Company’s future debt payments as of September 30, 2018 (in thousands): 2019 (1) $ 1,193 2020 38,848 2021 930 2022 — Total $ 40,971 (1) Represents long-term debt principal payments for the nine months ending June 30, 2019.

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Sep. 30, 2018
Segment Information
Summary of segment information	Summarized segment information for the three months ended September 30, 2018 and October 1, 2017 is as follows (in thousands): Three months ended September 30, October 1, 2018 2017 Sales: Precision Components Group $ 15,685 $ Stamping Group Consolidated sales $ 20,566 $ Operating costs: Precision Components Group $ 14,789 $ Stamping Group Consolidated operating costs $ 19,727 $ Segment operating income (loss): Precision Components Group $ 896 $ Stamping Group Corporate (1) Total segment operating loss $ $ Interest expense, net Other income, net Non-operating expense Consolidated loss before income taxes and non-controlling interest $ $ Corporate expense includes compensation and benefits, insurance, legal, accounting, consulting, and board of directors fees.

Significant Customers (Tables)

Significant Customers (Tables)	3 Months Ended
	Sep. 30, 2018
Significant Customers
Schedule of sales and accounts receivable customer concentration risk	Percentage of Sales Customer 2019 2018 1 (a) 13.1 % 6.0 % 2 (b) 10.8 % 9.1 % 3 (a) 10.6 % 5.5 % 4 (a) 8.2 % 10.2 % 5 (b) ** 6.2 % Total 42.7 % 37.0 % ** Customer represented less than 5% of sales for the periods presented. (a) Revenue from this customer is generated through our Precision Components Group segment. (b) Revenue from this customer is generated through our Stamping Group segment. The Company’s accounts receivable concentrations of 5% or greater for the above-listed customers are as follows: Percentage of Receivables Customer 2019 2018 1 10.5 % 8.6 % 2 9.4 % 8.8 % 3 5.8 % 11.5 % 4 10.0 % ** % 5 ** % ** % 6 ** % 5.3 % Total 35.7 % 34.2 % ** Customer represented less than 5% of accounts receivable for the periods presented.

Nature of Operations and Basi_2

Nature of Operations and Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Correction of immaterial errors
Gross Profit	$ 3,110	$ 1,192
Basis of Presentation
Length of interim quarterly reporting periods	91 days
Adjustment
Correction of immaterial errors
Gross Profit	$ 1,000

Divestitures - GF&F Sale (Detai

Divestitures - GF&F Sale (Details) $ in Millions	Sep. 15, 2017USD ($)
GF&F | Discontinued Operations, Disposed of by Sale | QMI
Discontinued Operations
Gross proceeds	$ 3

Divestitures - GF&F Operation R

Divestitures - GF&F Operation Results (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Financial data
Income (loss) from discontinued operations, net of tax	$ (732)	$ (247)
GF&F | QMI | Discontinued Operations, Disposed of by Sale
Financial data
Sales		726
Cost of sales		(615)
Gross profit		111
Selling, general and administrative		(108)
Income (loss) from discontinued operations, before income taxes		3
Loss on sale of discontinued operations		(482)
Total income (loss) from discontinued operations, before income taxes		(479)
Income tax benefit on discontinued operations		209
Income (loss) from discontinued operations, net of tax		$ (270)

Divestitures - 3DMT Discontinue

Divestitures - 3DMT Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Financial data
Income (loss) from discontinued operations, net of tax	$ (732)	$ (247)
3DMT | Discontinued Operations, Held-for-sale
Financial data
Sales	336	865
Cost of sales	(898)	(634)
Gross profit	(562)	231
Selling, general and administrative	(158)	(172)
Income (loss) from discontinued operations, before income taxes	(720)	59
Interest expense	(13)	(36)
Total income (loss) from discontinued operations, before income taxes	(733)	23
Income tax benefit on discontinued operations	1
Income (loss) from discontinued operations, net of tax	$ (732)	$ 23

Divestitures - 3DMT Held for Sa

Divestitures - 3DMT Held for Sale Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Current assets:
Inventories, net		$ 225
Total current assets	$ 3,529	547
Current liabilities
Total current liabilities	1,639	1,422
3DMT | Discontinued Operations, Held-for-sale
Current assets:
Accounts receivable, net	173	148
Inventories, net	209	225
Prepaid expenses and other current assets	193	174
Total current assets	575	547
Property and equipment, net	2,928	3,101
Other Assets	26	26
Total assets of discontinued operations	3,529	3,674
Current liabilities
Accounts payable and accrued expenses	535	449
Capital lease obligations, current portion	762	973
Total current liabilities	1,297	1,422
Capital lease obligations, net of current portion	342	462
Total liabilities of discontinued operations	$ 1,639	$ 1,884

Divestitures - 3DMT Held for _2

Divestitures - 3DMT Held for Sale Cash Flows (Details) - 3DMT - Discontinued Operations, Held-for-sale - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Discontinued operations - cash flows
Net Cash Used in Operating Activities	$ 502	$ 6
Net Cash Used in Investing Activities		4
Net Cash Used in Financing Activities	$ 331	$ 229

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Inventory
Raw materials and supplies	$ 5,350	$ 5,414
Work-in-process	6,665	5,907
Finished goods	3,132	3,144
Inventories, gross	15,147	14,465
Reserve for obsolescence	(1,404)	(2,138)
Inventory of discontinued operations		(225)
Inventories, net	$ 13,743	$ 12,102

Property and Equipment (Details

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017	Jun. 30, 2018
Property and equipment
Property and equipment, gross	$ 72,257		$ 70,263
Assets acquired under capital lease	5,208		3,910
Accumulated depreciation	(33,637)		(32,124)
Accumulated amortization on capital leases	(1,344)		(1,260)
Property and equipment, net	37,276		36,879
Depreciation expense	1,800	$ 1,700
Capital expenditures	44	957
Proceeds from debt issuance	19,094	$ 27,073
Land
Property and equipment
Property and equipment, gross	1,264		1,264
Building and improvements
Property and equipment
Property and equipment, gross	$ 18,258		18,188
Building and improvements | Minimum
Property and equipment
Depreciable Life	7 years
Building and improvements | Maximum
Property and equipment
Depreciable Life	40 years
Machinery and equipment
Property and equipment
Property and equipment, gross	$ 44,094		42,899
Machinery and equipment | Minimum
Property and equipment
Depreciable Life	3 years
Machinery and equipment | Maximum
Property and equipment
Depreciable Life	12 years
Office furniture and equipment
Property and equipment
Property and equipment, gross	$ 1,339		1,267
Office furniture and equipment | Minimum
Property and equipment
Depreciable Life	3 years
Office furniture and equipment | Maximum
Property and equipment
Depreciable Life	10 years
Construction-in-process
Property and equipment
Property and equipment, gross	$ 2,094		$ 2,735

Goodwill and Intangible Asset_2

Goodwill and Intangible Assets - Goodwill (Details) $ in Millions	Sep. 30, 2018USD ($)
Precision Components Group
Goodwill
Goodwill	$ 6.4

Goodwill and Intangible Asset_3

Goodwill and Intangible Assets - Intangible Assets Summary and Future Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017	Jun. 30, 2018
Intangible assets
Gross Carrying Amount	$ 31,149		$ 31,149
Accumulated Amortization	(15,723)		(14,879)
Net Carrying Amount	15,426		16,270
Amortization expense	800	$ 800
Estimated future amortization expense
2,019	2,348
2,020	2,636
2,021	2,636
2,022	2,636
2,023	2,636
Thereafter	2,534
Net Carrying Amount	15,426		16,270
Impairments of long-lived assets	$ 0	$ 0
Minimum
Intangible assets
Estimated useful life	5 years
Maximum
Intangible assets
Estimated useful life	15 years
Patents and tradenames
Intangible assets
Gross Carrying Amount	$ 3,418		3,418
Accumulated Amortization	(1,002)		(945)
Net Carrying Amount	2,416		2,473
Estimated future amortization expense
Net Carrying Amount	2,416		2,473
Customer relationships
Intangible assets
Gross Carrying Amount	24,077		24,077
Accumulated Amortization	(11,443)		(10,838)
Net Carrying Amount	12,634		13,239
Estimated future amortization expense
Net Carrying Amount	12,634		13,239
Non-compete agreements
Intangible assets
Gross Carrying Amount	3,654		3,654
Accumulated Amortization	(3,278)		(3,096)
Net Carrying Amount	376		558
Estimated future amortization expense
Net Carrying Amount	$ 376		$ 558

Debt - Long-term Debt Payable (

Debt - Long-term Debt Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Debt
Total debt	$ 40,971	$ 39,457
Unamortized deferred financing costs	(644)	(723)
Total debt, net	40,327	38,734
Current portion of long-term debt, net of unamortized deferred financing costs	(1,718)	(1,721)
Long-term debt, net of current portion and unamortized deferred financing costs	38,609	37,013
Senior Secured Revolving Loan
Debt
Total debt	7,825	5,692
Senior secured mortgage-based term loans
Debt
Total debt	18,146	18,765
Subordinated term loan
Debt
Total debt	$ 15,000	$ 15,000

Debt - Senior Credit Agreement

Debt - Senior Credit Agreement (Details) - USD ($)	Nov. 12, 2017	Sep. 29, 2016
Senior ABL Credit Facility
Debt
Initial junior capital amount that must be completed by January 31, 2018	$ 5,000,000
Minimum revolving credit availability until the initial junior capital infusion is completed	1,250,000
Minimum revolving credit availability after the initial junior capital infusion is completed	3,500,000
Decrease in borrow base	$ 1,250,000
Senior ABL Credit Facility | Federal Funds Rate
Debt
Spread on variable rate basis (as a percent)		0.50%
Senior ABL Credit Facility | Eurodollar Rate
Debt
Spread on variable rate basis (as a percent)		1.00%
Senior ABL Credit Facility | Senior Secured Revolving Loan
Debt
Percentage of eligible accounts receivable for determining borrowing base		85.00%
Percentage of eligible inventory for determining borrowing base		65.00%
Percentage of net orderly liquidation value of eligible inventory for determining borrowing base		85.00%
Maximum amount added to borrowing base formula		$ 4,200,000
Senior ABL Credit Facility | Base Rate Loans | Senior Secured Revolving Loan | ICE Benchmark Administration LIBOR Rate
Debt
Spread on variable rate basis (as a percent)		2.50%
Senior ABL Credit Facility | Base Rate Loans | Senior Secured Revolving Loan | ICE Benchmark Administration LIBOR Rate | Minimum
Debt
Spread on variable rate basis (as a percent)		1.25%
Senior ABL Credit Facility | Base Rate Loans | Senior Secured Revolving Loan | ICE Benchmark Administration LIBOR Rate | Maximum
Debt
Spread on variable rate basis (as a percent)		1.75%
Senior ABL Credit Facility | Base Rate Loans | Senior secured term loan | ICE Benchmark Administration LIBOR Rate
Debt
Spread on variable rate basis (as a percent)		2.50%
Senior ABL Credit Facility | Eurodollar Rate Loans | Senior Secured Revolving Loan | ICE Benchmark Administration LIBOR Rate
Debt
Spread on variable rate basis (as a percent)		3.50%
Senior ABL Credit Facility | Eurodollar Rate Loans | Senior Secured Revolving Loan | ICE Benchmark Administration LIBOR Rate | Minimum
Debt
Spread on variable rate basis (as a percent)		2.25%
Senior ABL Credit Facility | Eurodollar Rate Loans | Senior Secured Revolving Loan | ICE Benchmark Administration LIBOR Rate | Maximum
Debt
Spread on variable rate basis (as a percent)		2.75%
Senior ABL Credit Facility | Eurodollar Rate Loans | Senior secured term loan | ICE Benchmark Administration LIBOR Rate
Debt
Spread on variable rate basis (as a percent)		3.50%
Senior Secured Revolving Loan
Debt
Maximum borrowing capacity		$ 25,000,000
Commitment fees (as a percent)		0.375%
Extension of maturity of debt if certain conditions are met		5 years
Term Loan
Debt
Loan amount		$ 17,500,000
Extension of maturity of debt if certain conditions are met		10 years

Debt - Subordinated Term Loan (

Debt - Subordinated Term Loan (Details) - Subordinated term loan - Firmament - Lender indirectly related to an officer and director $ in Millions	Nov. 10, 2014USD ($)
Debt
Loan amount	$ 20
Maturity term	5 years
Interest rate (as a percent)	11.00%
Interest rate increase upon an event of default (as a percent)	2.00%

Debt - Loan Contract (Details)

Debt - Loan Contract (Details) $ in Thousands	Mar. 31, 2016EUR (€)	Mar. 31, 2016USD ($)	Mar. 23, 2016EUR (€)	Sep. 30, 2018USD ($)	Oct. 01, 2017USD ($)
Debt
Proceeds from debt issuance | $				$ 19,094	$ 27,073
AFT Hungary | Loan Contract | Erste Bank Hungary
Debt
Loan amount			€ 4,000,000
Proceeds from debt issuance	€ 4,000,000
Interest rate (as a percent)			0.98%
Semi-annual payment of debt			€ 400,000
Frequency of payments			semi-annual
AFT Hungary | Loan Contract | Erste Bank Hungary | Amended & Restated Credit Agreement
Debt
Repayment of debt obligations | $		$ 3,000

Debt - Future Debt Payments (De

Debt - Future Debt Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Future debt payments:
2019 (1)	$ 1,193
2,020	38,848
2,021	930
Total	$ 40,971	$ 39,457

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	Jan. 01, 2018	Sep. 30, 2018	Jun. 30, 2018
Income tax receivable
Current income tax receivable		$ 0.5	$ 0.5
Long-term income tax receivable		$ 0.3
Tax Reform Act
Federal income tax rate	21.00%	35.00%
Income tax expense due to remeasurement of deferred tax assets and liabilities		$ 1.4
Income tax benefit due to reduction in the valuation allowance previously recognized on AMT credit carryforwards		(0.3)
Other Long-term Liabilities
Income tax receivable
Uncertain tax positions		$ 1	$ 1

Earnings Per Share (Details)

Earnings Per Share (Details) - shares	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Earnings Per Share
Potentially dilutive stock options	45,362	146,634

Share-Based Compensation (Detai

Share-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Stock-based compensation
Compensation expense	$ 61	$ 287
Unrecognized compensation cost	$ 700
Weighted-average period that cost is expected to be recognized	2 years 3 months 18 days
Selling, general and administrative costs
Stock-based compensation
Compensation expense	$ 100	$ 300

Commitments and Contingencies (

Commitments and Contingencies (Details) - Capital lease agreements	Sep. 30, 2018
Minimum
Commitments and contingencies
Interest rate (as a percent)	2.95%
Maximum
Commitments and contingencies
Interest rate (as a percent)	8.72%

Segment Information - Summarize

Segment Information - Summarized (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2018USD ($)segment	Oct. 01, 2017USD ($)	Jun. 30, 2018USD ($)
Segment information
Reportable business segments | segment	2
Sales	$ 20,566	$ 19,085
Operating costs	19,727	20,271
Segment operating loss	(24)	(2,123)
Interest expense, net	(931)	(976)
Other income, net	26	(37)
Non-operating expense	(905)	(1,013)
Loss before income taxes	(929)	(3,136)
Depreciation and amortization	2,644	2,516
Assets	90,555		$ 89,933
Corporate
Segment information
Segment operating loss	(863)	(937)
Precision Components Group | Total segments
Segment information
Sales	15,685	14,333
Operating costs	14,789	15,270
Segment operating loss	896	(937)
Stamping Group | Total segments
Segment information
Sales	4,881	4,752
Operating costs	4,938	5,001
Segment operating loss	$ (57)	$ (249)

Significant Customers (Details)

Significant Customers (Details)	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Significant customers
Concentration percentage, disclosure threshold	5.00%	5.00%
Customers | Sales
Significant customers
Concentration percentage	42.70%	37.00%
Customers | Receivables
Significant customers
Concentration percentage	35.70%	34.20%
Customers | Receivables | Customer 1
Significant customers
Concentration percentage	10.50%	8.60%
Customers | Receivables | Customer 2
Significant customers
Concentration percentage	9.40%	8.80%
Customers | Receivables | Customer 3
Significant customers
Concentration percentage	5.80%	11.50%
Customers | Receivables | Customer 4
Significant customers
Concentration percentage	10.00%
Customers | Receivables | Customer 6
Significant customers
Concentration percentage		5.30%
Precision Components Group | Customers | Sales | Customer 1
Significant customers
Concentration percentage	13.10%	6.00%
Precision Components Group | Customers | Sales | Customer 3
Significant customers
Concentration percentage	10.60%	5.50%
Precision Components Group | Customers | Sales | Customer 4
Significant customers
Concentration percentage	8.20%	10.20%
Stamping Group | Customers | Sales | Customer 2
Significant customers
Concentration percentage	10.80%	9.10%
Stamping Group | Customers | Sales | Customer 5
Significant customers
Concentration percentage		6.20%

Subsequent event (Details)

Subsequent event (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Oct. 01, 2017
Subsequent Events
Estimated sale price	$ 20,566	$ 19,085