Key Technology (KTEC) 10-Q 7 Aug 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	KEY TECHNOLOGY INC
Entity Central Index Key	906,193
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		6,380,657

UNAUDITED CONDENSED CONSOLIDATE

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$ 8,999	$ 9,741
Trade accounts receivable, net of allowance for doubtful accounts of $370 and $415, respectively	13,132	12,557
Inventories:
Raw materials	12,949	10,321
Work-in-process and sub-assemblies	10,545	9,505
Finished goods	7,827	6,847
Total inventories	31,321	26,673
Deferred income taxes	3,818	3,809
Prepaid expenses and other assets	5,385	7,213
Total current assets	62,655	59,993
Property, plant and equipment, net	15,392	16,652
Deferred income taxes	2,538	615
Goodwill	10,163	11,222
Investment in Proditec	1,127	1,127
Intangibles and other assets, net	6,652	8,736
Total	98,527	98,345
Current liabilities:
Accounts payable	11,226	6,073
Accrued payroll liabilities and commissions	5,096	5,893
Customers' deposits	6,062	3,702
Accrued customer support and warranty costs	2,331	2,607
Customer purchase plans	1,761	1,523
Income taxes payable	1	2
Current portion of long-term debt	770	804
Other accrued liabilities	851	1,186
Total current liabilities	28,098	21,790
Long-term debt	4,085	4,733
Deferred income taxes	2,257	3,281
Other long-term liabilities	380	373
Shareholders' equity:
Common stock	32,192	31,414
Warrants	665	665
Retained earnings and other shareholders' equity	30,850	36,089
Total shareholders' equity	63,707	68,168
Total	$ 98,527	$ 98,345

UNAUDITED CONDENSED CONSOLIDAT3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Sep. 30, 2014
Current assets
Trade accounts receivable, allowance for doubtful accounts	$ 370	$ 415

UNAUDITED CONDENSED CONSOLIDAT4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Net sales	$ 30,810	$ 31,292	$ 72,482	$ 85,615
Cost of sales	21,573	23,142	52,063	61,031
Gross profit	9,237	8,150	20,419	24,584
Operating expenses:
Sales and marketing	4,146	5,126	12,342	14,550
Research and development	2,296	3,269	6,554	8,842
General and administrative	1,844	2,292	5,912	7,699
Amortization of intangibles	356	435	1,128	1,311
Total operating expenses	8,642	11,122	25,936	32,402
Gain on disposition of assets	8	2	10	3
Earnings (loss) from operations	603	(2,970)	(5,507)	(7,815)
Other income (expense)	(156)	(93)	(228)	(251)
Earnings (loss) before income taxes	447	(3,063)	(5,735)	(8,066)
Income tax expense (benefit)	152	(1,040)	(2,256)	(2,741)
Net earnings (loss)	$ 295	$ (2,023)	$ (3,479)	$ (5,325)
Net earnings (loss) per share
- basic (in dollars per share)	$ 0.05	$ (0.32)	$ (0.55)	$ (0.85)
- diluted (in dollars per share)	$ 0.05	$ (0.32)	$ (0.55)	$ (0.85)
Shares used in per share calculations - basic (in shares)	6,280	6,301	6,274	6,292
Shares used in per share calculations - diluted (in shares)	6,301	6,301	6,274	6,292

UNAUDITED CONSOLIDATED STATEMEN

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net earnings (loss)	$ 295	$ (2,023)	$ (3,479)	$ (5,325)
Other comprehensive income (loss):
Foreign currency translation adjustment	455	(116)	(2,653)	236
Unrealized changes in fair value of derivatives	51	(32)	(14)	12
Income tax (expense) benefit related to items of comprehensive income (loss)	(172)	50	907	(84)
Total comprehensive earnings (loss)	$ 629	$ (2,121)	$ (5,239)	$ (5,161)

UNAUDITED CONDENSED CONSOLIDAT6

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$ (3,479)	$ (5,325)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Gain on disposition of assets	(10)	(3)
Foreign currency exchange loss	11	14
Depreciation and amortization	3,920	4,017
Share based payments	1,000	1,119
Excess tax benefits from share based payments	(12)	(31)
Deferred income taxes	(1,759)	(483)
Deferred rent	9	10
Bad debt expense	(1)	99
Changes in assets and liabilities:
Trade accounts receivable	(1,023)	6,522
Inventories	(5,746)	(2,276)
Prepaid expenses and other current assets	(875)	66
Income taxes receivable	2,767	(2,244)
Intangibles and other long term assets	(47)	18
Accounts payable	5,326	(564)
Accrued payroll liabilities and commissions	(550)	(2,218)
Customers’ deposits	2,554	656
Accrued customer support and warranty costs	(165)	(731)
Income taxes payable	(7)	(439)
Other accrued liabilities	(49)	(170)
Other	(18)	(10)
Cash provided by (used in) operating activities	1,846	(1,973)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property	12	20
Purchases of property, plant and equipment	(1,694)	(2,097)
Cash used in investing activities	(1,682)	(2,077)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt	(559)	(671)
Excess tax benefits from share based payments	12	31
Proceeds from issuance of common stock	138	53
Exchange of shares for statutory withholding	(333)	(227)
Cash used in financing activities	(742)	(814)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(164)	14
NET DECREASE IN CASH AND CASH EQUIVALENTS	(742)	(4,850)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD	9,741	17,601
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	8,999	12,751
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
Cash paid during the period for interest	185	217
Cash paid (refunded) during the period for income taxes	$ (3,237)	$ 433

Unaudited condensed consolidat7

Unaudited condensed consolidated financial statements	9 Months Ended
	Jun. 30, 2015
Unaudited Condensed consolidated financial statements [Abstract]
Unaudited condensed consolidated financial statements	Unaudited condensed consolidated financial statements Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted from these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014 . The results of operations for the three- and nine-month periods ended June 30, 2015 are not necessarily indicative of the operating results for the full year. The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, all adjustments, consisting only of normal recurring accruals, have been made to present fairly the Company's financial position at June 30, 2015 and the results of its operations and its cash flows for the three- and nine-month periods ended June 30, 2015 and 2014 . Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company is evaluating its existing revenue recognition policies to determine whether any contracts in the scope of the guidance will be affected by the new requirements. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods therein. The FASB has recently proposed a one-year deferral of the effective date.

Share-based compensation

Share-based compensation	9 Months Ended
	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation	Share-based compensation During the nine months ended June 30, 2015 , the Company granted 49,925 shares of service-based stock awards. The fair value of these grants ranged between $12.52 and $12.65 per share based on the fair market value at the grant date. The restrictions on these shares lapse at the end of the required service periods ranging from July 2015 through June 2018 . Share-based compensation expense included in the Company's results was as follows (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Cost of goods sold $ 33 $ 63 $ 120 $ 161 Operating expenses 292 322 880 958 Total share-based compensation expense $ 325 $ 385 $ 1,000 $ 1,119 Share-based compensation expense remaining capitalized in inventory at June 30, 2015 and 2014 was $1,000 and $10,000 , respectively.

Earnings (loss) per share

Earnings (loss) per share	9 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Earnings (loss) per share	Earnings (loss) per share The calculation of the basic and diluted earnings (loss) per share (“EPS”) is as follows (in thousands, except per-share data): Three Months Ended Three Months Ended Earnings Shares Per-Share Loss Shares Per-Share Basic EPS: Net earnings (loss) $ 295 6,280 $ 0.05 $ (2,023 ) 6,301 $ (0.32 ) Effect of dilutive securities: Common stock options — — — — Warrants — 21 — — Diluted EPS: Net earnings (loss) plus assumed conversions $ 295 6,301 $ 0.05 $ (2,023 ) 6,301 $ (0.32 ) Nine Months Ended Nine Months Ended Loss Shares Per-Share Loss Shares Per-Share Basic EPS: Net loss $ (3,479 ) 6,274 $ (0.55 ) $ (5,325 ) 6,292 $ (0.85 ) Effect of dilutive securities: Common stock options — — — — Warrants — — — — Diluted EPS: Net loss plus assumed conversions $ (3,479 ) 6,274 $ (0.55 ) $ (5,325 ) 6,292 $ (0.85 ) The weighted-average number of diluted shares does not include the potential issuance of common shares which are anti-dilutive. Common stock equivalent shares for the assumed exercise of warrants are calculated using the treasury stock method. The following potentially issuable common shares at June 30, 2015 and 2014 were not included in the calculation of diluted EPS as they were anti-dilutive: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Common shares from: Assumed exercise of stock options — 15,000 10,000 15,000 Warrants — 250,000 250,000 250,000 All options expired in February 2015 . The warrants expire in March 2016.

Income taxes

Income taxes	9 Months Ended
	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Income taxes	Income taxes The provision (benefit) for income taxes is based on the estimated effective income tax rate for the year. Changes in the estimated effective income tax rate are accounted for in the period the change in estimate occurs. During the first quarter of fiscal 2015, the research and development tax credit was renewed for a one-year period retroactive to January 1, 2014. In the first quarter of fiscal 2015, income tax expense was reduced by approximately $305,000 for additional research and development tax credits related to expenditures incurred during fiscal 2014 due to the changes in tax law that were enacted during the quarter to retroactively renew these tax credits. The research and development tax credit expired December 31, 2014.

Derivative instruments

Derivative instruments	9 Months Ended
	Jun. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative instruments	Derivative instruments The Company uses derivative instruments as risk management tools but does not use derivative instruments for trading or speculative purposes. Derivatives used for interest rate swap hedging purposes are designated and effective as a cash flow hedge of the identified risk exposure related to the Company's variable rate mortgage at the inception of the contract. A hedge is deemed effective if changes in the fair value of the derivative contract are highly correlated with changes in the underlying hedged item at inception of the hedge and over the life of the hedge contract. To the extent the interest rate swap is effective, changes in fair value will be recognized in Other Comprehensive Income over the term of the derivative contract. To the extent the interest rate swap is not effective, changes in fair value will be recognized in earnings. At June 30, 2015 , the Company had an interest rate swap with a notional amount of $4.2 million that effectively fixes the interest rate on its LIBOR-based variable rate mortgage at 4.27% . At June 30, 2015 , the fair value of the swap agreement recorded as a liability in Other long-term liabilities on the Unaudited Condensed Consolidated Balance Sheet was $217,000 . There were no gains or losses recognized as part of net earnings in the Unaudited Condensed Consolidated Statements of Operations related to the swap agreement during the nine months ended June 30, 2015 , as the interest rate swap was highly effective as a cash flow hedge. Consequently, changes in the fair value of the interest rate swap of $51,000 and $(14,000) during the three- and nine-month periods ended June 30, 2015 was recorded as part of Other Comprehensive Income in the Company's Unaudited Condensed Consolidated Statements of Comprehensive Income. During the three- and nine-month periods ended June 30, 2015 , the Company recorded $28,000 and $88,000 as interest expense related to the interest rate swap reflecting actual interest payments and settlements on the interest rate swap. The interest rate swap matures in January 2024 . Subsequent to the end of the third quarter of fiscal 2015, the Company entered into a new credit agreement with another domestic lender. As a result, the interest rate swap with the previous lender has been novated. The fair value of the previous interest rate swap will be amortized into earnings from Other Comprehensive Income over the original forecasted settlement period of the swap as it will no longer be designated as a hedge. The Company entered into a new interest rate swap with its new domestic lender. The new interest rate swap will not be designated as a hedge due to its ineffectiveness and changes in the fair value on a going forward basis will be included in earnings. At June 30, 2015 , the Company had a one-month undesignated forward exchange contract for €2.4 million ( $2.7 million ). Forward exchange contracts are used to manage the Company's foreign currency exchange risk related to its ongoing operations. Net foreign currency gains ( losses ) of $(62,000) and $466,000 were recorded for forward exchange contracts in the three- and nine-month periods ended June 30, 2015 as a component of foreign currency gains or losses in Other income (expense) on the Company's Unaudited Condensed Consolidated Statements of Operations. The gains or losses on the Company's foreign exchange contracts are generally offset by gains or losses recorded on the underlying assets or liabilities held in foreign currencies. At June 30, 2015 , the Company had liabilities of $32,000 for settlements under these forward contracts in Other Accrued Liabilities on the Company's Unaudited Condensed Consolidated Balance Sheet. At September 30, 2014 , the Company had assets of $278,000 for forward contracts in Other Current Assets on the Company's Consolidated Balance Sheet.

Fair value measurements

Fair value measurements	9 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair value measurements	Fair value measurements Fair value measurements are classified under the following hierarchy: • Level 1 – Quoted prices for identical instruments in active markets. • Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets. • Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable. When available, the Company uses quoted market prices to determine fair value and classify such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market processes are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3. Derivative financial instruments Interest rate swap agreements are measured on a recurring basis based on quoted prices for similar financial instruments and other observable inputs which approximate fair value. The fair value of foreign currency forward contracts is based on the differential between contract price and the market-based forward rate. The following table presents the Company's assets and liabilities that are measured and recorded at fair value on a recurring basis consistent with the fair value hierarchy provisions: Fair Value Measurements at June 30, 2015 (in thousands) Description Level 1 Level 2 Level 3 Total Assets/ Derivatives: Interest rate swap — $ (217 ) — $ (217 ) Forward exchange contracts — — — — At June 30, 2015 , the Company also had long-term debt of approximately $4.9 million . The Company's long-term debt is recorded at historical cost and the Company has not elected to value such financial instruments at fair value. The fair value of the debt approximated its carrying value based on the borrowing rates currently available to the Company for loans with similar terms and maturities. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Forward exchange contracts had a fair value of zero at the reporting date, as these contracts were entered into as of that date. Changes in assumptions could significantly affect these estimates. At June 30, 2015 , the Company's non-controlling interest in Proditec SAS had a carrying value of approximately $1.1 million. This investment is being accounted for under the cost method. The fair value of the Company's investment in Proditec was not estimated as there were no events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment, and our management determined that it was not practicable to estimate the fair value of the investment. Further, there are not quoted market prices for the Company's investment, and sufficient information is not readily available for the Company to utilize a valuation model to determine its fair value without incurring excessive costs relative to the materiality of the investment. The Company's cost method investment is evaluated for potential other-than-temporary impairment on at least a quarterly basis or when an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment.

Financing arrangements

Financing arrangements	9 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Financing arrangements	Financing arrangements At June 30, 2015, the Company's domestic credit facility provided a revolving line of credit to the Company in the maximum principal amount of $7,500,000 which included a credit sub-facility of up to $6,000,000 for standby letters of credit, of which up to €3.0 million ( $3.3 million ) was available to our Netherlands subsidiary. The revolving line of credit matured on March 31, 2016 . The credit facility bore interest, at the Company's option, at either the bank’s prime rate or the London Interbank Offered Rate ("LIBOR") using a tiered structure depending upon the Company's achievement of a specified financial ratio. The Company's prime rate option was the bank's prime rate plus 1.25% , 1.50% or 1.75% per annum. The Company's LIBOR option was LIBOR plus 2.75% , 3.00% or 3.25% per annum. At June 30, 2015 , the interest rate would have been 3.44% based on the lowest of the available alternative rates. The revolving line of credit was secured by all U.S. accounts receivable, inventory, equipment, and fixtures. At June 30, 2015 , the Company had no borrowings outstanding under the revolving line of credit and $790,000 in outstanding standby letters of credit. The loan agreement also provided for a 15 -year term loan in the amount of $6.4 million , of which $4.2 million was outstanding as of June 30, 2015 . The term loan provided for a mortgage on the Company's Avery Street headquarters’ land and building located in Walla Walla, Washington. The term loan bore interest at the LIBOR rate plus 1.40% and matured on January 2, 2024 . The Company also simultaneously entered into an interest rate swap agreement with the lender to fix the interest rate at 4.27% . The credit facility contained covenants which required operating within a funded debt to EBITDA ratio, a fixed charge coverage ratio and minimum working capital and EBITDA levels. The loan agreement permitted capital expenditures up to a certain level, and contained customary default and acceleration provisions. The credit facility also restricted acquisitions, incurrence of additional indebtedness and lease expenditures above certain levels without the prior consent of the lender. At June 30, 2015 , the Company was in compliance with its loan covenants. Subsequent to the end of the third quarter of fiscal 2015, the Company entered into a new domestic credit facility with a new domestic lender. As a result, its previous domestic credit facility was paid off in full and terminated. The Company's new credit facility is for a maximum of $20.3 million consisting of a three-year term loan of $5.3 million and revolving loans up to the lesser of $15.0 million or a borrowing base calculated based on the outstanding amount of the Company's eligible accounts receivable and eligible inventory. The new credit facility also provides for a credit sub-facility of up to $4.0 million for standby letters of credit. The new credit facility matures on July 19, 2018 . The revolving credit facility bears interest, at the Company's option, at either the lender's base lending rate or LIBOR using a tiered structure depending on the Company's achievement of specified financial ratios. The Company's base lending rate option will be the lender's base lending rate plus 0.75% , 1.00% or 1.25% per annum. The Company's LIBOR option will be LIBOR plus 2.25% , 2.50% or 2.75% . The term loan facility bears interest, at the Company's option, at either the lender's base lending rate plus 1.75% or the one-, two-, or three-month LIBOR rate plus 3.25% . The Company also simultaneously entered into an interest swap agreement with the lender to fix the term loan interest rate at 6.20% . The new lending facility is secured by the Company's receivables, equipment and fixtures, inventory, general intangibles, subsidiary stock, securities, investment property, financial assets, real property, and certain other assets. The new credit facility contains covenants related to minimum liquidity levels and certain financial covenants that will be applicable only if the Company does not exceed certain calculated total unrestricted cash and available credit availability or an event of default occurs. The new credit facility permits capital expenditures to a certain level and contains customary default and acceleration provisions. The new credit facility also restricts, above certain levels, acquisitions, incurrence of additional indebtedness, payment of dividends and lease expenditures. The Company's Belgian subsidiary has a credit accommodation with a commercial bank in Belgium. This credit accommodation totals €2.7 million ( $3.0 million ) and includes an operating line of €800,000 ( $0.9 million ), a bank guarantee facility of €500,000 ( $0.6 million ), and loan agreement provisions of €1.4 million ( $1.6 million ). The operating line and bank guarantee facility are secured by all of the subsidiary's current assets. The Belgian operating line bears interest at the bank's prime rate, plus 1.25% . At June 30, 2015 , the interest rate was 9.75% . At June 30, 2015 , the subsidiary had no borrowings under the operating line. At June 30, 2015 , the subsidiary had various loans outstanding under the loan agreement provision totaling €0.6 million ( $0.6 million ). The fixed interest rates on these loans ranged from 2.91% to 3.98% . The loans mature between November 2016 and November 2017 . The credit accommodation contains a covenant which requires the maintenance of a minimum tangible net worth and debt to EBITDA ratio levels at the subsidiary measured at the end of its statutory fiscal year. At June 30, 2015 , the subsidiary was not in compliance with the bank covenants. The Company does not expect such non-compliance to have any material effect on its operations due to the availability and relative size of other credit facilities. At June 30, 2015 , the subsidiary had no bank guarantees outstanding under the bank guarantee facility. Additionally, the subsidiary had a subordinated loan with another European lender of €52,000 ( $58,000 ). The loan has a fixed interest rate of 4.99% and matures in March 2016.

Contractual guarantees and inde

Contractual guarantees and indemnities	9 Months Ended
	Jun. 30, 2015
Guarantees [Abstract]
Contractual guarantees and indemnities	Contractual guarantees and indemnities Product warranties The Company provides a warranty on its products ranging from ninety days to five years following the date of shipment, the majority of which are for periods of one year or less. Management establishes allowances for warranty costs based upon the types of products shipped and product warranty experience. The provision for warranty costs is charged to cost of sales at the time of sale, and it is periodically assessed for adequacy based on changes in these factors. A reconciliation of the changes in the Company’s allowances for warranties for the nine months ended June 30, 2015 and 2014 is as follows (in thousands): Nine Months Ended June 30, 2015 2014 Beginning balance $ 2,151 $ 2,736 Warranty costs incurred (2,440 ) (2,453 ) Warranty expense accrued 2,352 1,713 Translation adjustments (82 ) 8 Ending balance $ 1,981 $ 2,004 Intellectual property and general contractual indemnities The Company, in the normal course of business, provides specific, limited indemnification to its customers for liability and damages related to intellectual property rights. In addition, the Company may enter into contracts with customers where it agrees to indemnify the customer for personal injury or property damage caused by the Company's products and services. Indemnification is typically limited to replacement of the items or the actual price of the products and services. The Company maintains product liability insurance as well as errors and omissions insurance, which may provide a source of recovery in the event of an indemnification claim, but does not maintain insurance coverage for claims related to intellectual property rights. Historically, any amounts payable under these indemnifications have not had a material effect on the Company's business, financial condition, results of operations, or cash flows. The Company has not recorded any provision for future obligations under these indemnifications. If the Company determines it is probable that a loss has occurred under these indemnifications, then any such reasonably estimable loss would be recognized. Director and officer indemnities The Company has entered into indemnification agreements with its directors and certain executive officers that require the Company to indemnify such individuals against certain expenses, judgments and fines in third-party and derivative proceedings. The Company may recover, under certain circumstances, some of the expenses and liabilities that arise in connection with such indemnifications under the terms of its directors’ and officers’ insurance policies. The Company has not recorded any provision for future obligations under these indemnification agreements. Bank guarantees and letters of credit At June 30, 2015 , the Company had standby letters of credit totaling $790,000 , which includes secured bank guarantees under the Company's domestic and European credit facilities. If the Company fails to meet its contractual obligations, these bank guarantees and letters of credit may become liabilities of the Company. This amount consists of approximately $790,000 of outstanding performance guarantees secured by bank guarantees under the Company's domestic credit facility and no outstanding performance guarantees secured by bank guarantees under the Company's Belgian subsidiary's credit facility. Bank guarantees arise when the Company collects customer deposits prior to order fulfillment. The customer deposits received are recorded as current liabilities on the Company's balance sheet. The bank guarantees repayment of the customer deposit in the event an order is not completed. The bank guarantee is canceled upon shipment and transfer of title. These bank guarantees arise in the normal course of the Company's business and are not deemed to expose the Company to any significant risks since they are satisfied as part of the design and manufacturing process.

Termination Costs

Termination Costs	9 Months Ended
	Jun. 30, 2015
Restructuring and Related Activities [Abstract]
Termination Costs	Termination Costs In the second quarter of fiscal 2015 , the Company announced certain cost reduction initiatives. As a result, the Company incurred approximately $390,000 in costs related to the reduction in force, the majority of which relates to one-time termination benefits. Approximately $143,000 and $247,000 of these costs were expensed as cost of goods sold and operating expenses, respectively, in the second quarter of fiscal 2015. At June 30, 2015 , approximately $155,000 remained accrued as liabilities for amounts expensed in the second quarter of fiscal 2015 that were not paid as of June 30, 2015 . The Company expects that the majority of these amounts will be paid in the fourth quarter of fiscal 2015 .

Share-based compensation (Table

Share-based compensation (Tables)	9 Months Ended
	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation expense included in the Company's results	Share-based compensation expense included in the Company's results was as follows (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Cost of goods sold $ 33 $ 63 $ 120 $ 161 Operating expenses 292 322 880 958 Total share-based compensation expense $ 325 $ 385 $ 1,000 $ 1,119

Earnings (loss) per share (Tabl

Earnings (loss) per share (Tables)	9 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Schedule of earnings per share, basic and diluted	The calculation of the basic and diluted earnings (loss) per share (“EPS”) is as follows (in thousands, except per-share data): Three Months Ended Three Months Ended Earnings Shares Per-Share Loss Shares Per-Share Basic EPS: Net earnings (loss) $ 295 6,280 $ 0.05 $ (2,023 ) 6,301 $ (0.32 ) Effect of dilutive securities: Common stock options — — — — Warrants — 21 — — Diluted EPS: Net earnings (loss) plus assumed conversions $ 295 6,301 $ 0.05 $ (2,023 ) 6,301 $ (0.32 ) Nine Months Ended Nine Months Ended Loss Shares Per-Share Loss Shares Per-Share Basic EPS: Net loss $ (3,479 ) 6,274 $ (0.55 ) $ (5,325 ) 6,292 $ (0.85 ) Effect of dilutive securities: Common stock options — — — — Warrants — — — — Diluted EPS: Net loss plus assumed conversions $ (3,479 ) 6,274 $ (0.55 ) $ (5,325 ) 6,292 $ (0.85 )
Antidilutive securities excluded from computation of earnings per share	The following potentially issuable common shares at June 30, 2015 and 2014 were not included in the calculation of diluted EPS as they were anti-dilutive: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Common shares from: Assumed exercise of stock options — 15,000 10,000 15,000 Warrants — 250,000 250,000 250,000

Fair value measurements (Tables

Fair value measurements (Tables)	9 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Company's assets and liabilities measured and recorded at fair value on a recurring basis	The following table presents the Company's assets and liabilities that are measured and recorded at fair value on a recurring basis consistent with the fair value hierarchy provisions: Fair Value Measurements at June 30, 2015 (in thousands) Description Level 1 Level 2 Level 3 Total Assets/ Derivatives: Interest rate swap — $ (217 ) — $ (217 ) Forward exchange contracts — — — —

Contractual guarantees and in19

Contractual guarantees and indemnities (Tables)	9 Months Ended
	Jun. 30, 2015
Guarantees [Abstract]
Reconciliation of changes in Company's allowances for warranties	A reconciliation of the changes in the Company’s allowances for warranties for the nine months ended June 30, 2015 and 2014 is as follows (in thousands): Nine Months Ended June 30, 2015 2014 Beginning balance $ 2,151 $ 2,736 Warranty costs incurred (2,440 ) (2,453 ) Warranty expense accrued 2,352 1,713 Translation adjustments (82 ) 8 Ending balance $ 1,981 $ 2,004

Share-based compensation (Detai

Share-based compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service-based stock awards granted			49,925
Total share-based compensation expense	$ 325	$ 385	$ 1,000	$ 1,119
Share-based compensation expense remaining capitalized in inventory			1	10
Cost of goods sold
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	33	63	120	161
Operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 292	$ 322	$ 880	$ 958
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value			$ 12.52
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value			$ 12.65

Earnings (loss) per share (Deta

Earnings (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic EPS:
Net earnings (loss)	$ 295	$ (2,023)	$ (3,479)	$ (5,325)
Shares used in per share calculations - basic (in shares)	6,280,000	6,301,000	6,274,000	6,292,000
- basic (in dollars per share)	$ 0.05	$ (0.32)	$ (0.55)	$ (0.85)
Effect of dilutive securities:
Loss	$ 0	$ 0	$ 0	$ 0
Common stock options (in shares)	0	0	0	0
Warrants and Rights Outstanding	$ 0	$ 0	$ 0	$ 0
Warrants and Rights Outstanding (in shares)	21,000	0	0	0
Diluted EPS:
Net earnings (loss)	$ 295	$ (2,023)	$ (3,479)	$ (5,325)
Shares used in per share calculations - diluted (in shares)	6,301,000	6,301,000	6,274,000	6,292,000
- diluted (in dollars per share)	$ 0.05	$ (0.32)	$ (0.55)	$ (0.85)
Assumed exercise of stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	15,000	10,000	15,000
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	250,000	250,000	250,000

Income taxes (Details)

Income taxes (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2015USD ($)
Research Tax Credit Carryforward [Member]
Tax Credit Carryforward [Line Items]
Income tax expense reduction next quarter	$ 305

Derivative instruments (Details

Derivative instruments (Details) $ in Thousands, € in Millions	3 Months Ended	9 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2015EUR (€)	Sep. 30, 2014USD ($)
Derivative [Line Items]
Long-term debt	$ 4,900	$ 4,900
Interest rate swap
Derivative [Line Items]
Long-term debt	$ 4,200	$ 4,200
Variable interest rate on the derivative (in hundredths)	4.27%	4.27%	4.27%
Gain (Loss) on net derivative	$ 51	$ (14)
Interest expense	28	88
Forward exchange contracts
Derivative [Line Items]
Fair value of the net derivative liability	32	32
Gain (Loss) on net derivative	(62)	466
Derivative amount	2,700	2,700	€ 2.4
Fair value of the derivative asset, net				$ 278
Other long-term liabilities | Interest rate swap
Derivative [Line Items]
Fair value of the net derivative liability	$ 217	$ 217

Fair value measurements (Detail

Fair value measurements (Details) - USD ($)	Jun. 30, 2015	Sep. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 4,900,000
Carrying value of minority interest in Proditec SAS	1,127,000	$ 1,127,000
Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	(217,000)
Forward exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Level 1 | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Level 1 | Forward exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Level 2 | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	(217,000)
Level 2 | Forward exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Level 3 | Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Level 3 | Forward exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Interest rate swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	4,200,000
Proditec SAS [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying value of minority interest in Proditec SAS	$ 1,100

Financing arrangements (Details

Financing arrangements (Details)	Jul. 20, 2015USD ($)	Jun. 30, 2015USD ($)	Sep. 30, 2014	Jun. 30, 2015EUR (€)
Line of Credit Facility [Line Items]
Interest rate		4.99%		4.99%
Interest rate swap
Line of Credit Facility [Line Items]
Fixed interest rate (in hundredths)		4.27%		4.27%
Revolving Credit Facility
Line of Credit Facility [Line Items]
Maturity date		Mar. 31, 2016
Loans Payable
Line of Credit Facility [Line Items]
Maturity date		Jan. 2, 2024
Term on debt		15 years
Loan amount		$ 6,400,000
Long-term Debt, Gross		4,200,000
Notes Payable
Line of Credit Facility [Line Items]
Long-term Debt, Gross		58,000		€ 52,000
Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 7,500,000
Interest rate (in hundredths)		3.44%		3.44%
Domestic Credit Facility | Credit sub-facility standby letters of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 6,000,000
Outstanding at the end of the period		790,000
Revolving Credit Facility | Credit sub-facility standby letters of credit
Line of Credit Facility [Line Items]
Outstanding at the end of the period		0
Commercial bank in the Netherlands | Credit sub-facility standby letters of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		3,334,200		€ 3,000,000
Commercial bank in Belgium
Line of Credit Facility [Line Items]
Maximum borrowing capacity		3,000,000		2,700,000
Commercial bank in Belgium | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 889,120		€ 800,000
Interest rate (in hundredths)		9.75%		9.75%
Outstanding at the end of the period		$ 600,000		€ 600,000
Commercial bank in Belgium | Outstanding performance guarantees
Line of Credit Facility [Line Items]
Maximum borrowing capacity		555,700		500,000
Outstanding at the end of the period | €				0
Commercial bank in Belgium | Commercial Loan
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 1,600,000		€ 1,400,000
Prime Rate | Minimum | Commercial bank in Belgium | Line of Credit
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.25%
Interest rate during period		2.91%
Prime Rate | Maximum | Commercial bank in Belgium | Line of Credit
Line of Credit Facility [Line Items]
Interest rate during period		3.98%
LIBOR | Revolving credit facility term loan
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.40%
LIBOR | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Description of variable rate basis			LIBOR
Tier One | Prime Rate | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.25%
Tier One | LIBOR | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate		2.75%
Tier Two | Prime Rate | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.50%
Tier Two | LIBOR | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate		3.00%
Tier Three | Prime Rate | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.75%
Tier Three | LIBOR | Domestic Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate		3.25%
Subsequent Event | Line of Credit | Loans Payable | Interest rate swap
Line of Credit Facility [Line Items]
Fixed interest rate (in hundredths)	6.20%
Subsequent Event | Domestic Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 20,300,000
Subsequent Event | Domestic Credit Facility | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	15,000,000
Subsequent Event | Domestic Credit Facility | Line of Credit | Credit sub-facility standby letters of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	4,000,000
Subsequent Event | Domestic Credit Facility | Line of Credit | Loans Payable
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 5,300,000
Term of loan	3 years
Subsequent Event | LIBOR | Line of Credit | Loans Payable
Line of Credit Facility [Line Items]
Basis spread on variable rate	3.25%
Subsequent Event | Base Rate | Line of Credit | Loans Payable
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%
Subsequent Event | Tier One | LIBOR | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.25%
Subsequent Event | Tier One | Base Rate | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.75%
Subsequent Event | Tier Two | LIBOR | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.50%
Subsequent Event | Tier Two | Base Rate | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.00%
Subsequent Event | Tier Three | LIBOR | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.75%
Subsequent Event | Tier Three | Base Rate | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.25%

Financing arrangements Notes pa

Financing arrangements Notes payable (Details) - Jun. 30, 2015	USD ($)	EUR (€)
Debt Instrument [Line Items]
Interest rate	4.99%	4.99%
Loans Payable
Debt Instrument [Line Items]
Term on debt	15 years
Maturity date	Jan. 2, 2024
Loan amount	$ 6,400,000
Long-term Debt, Gross	4,200,000
Notes Payable
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 58,000	€ 52,000
Interest rate swap
Debt Instrument [Line Items]
Fixed interest rate (in hundredths)	4.27%	4.27%

Contractual guarantees and in27

Contractual guarantees and indemnities (Details) - USD ($)	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Guarantor Obligations [Line Items]
Product warranty period, minimum	90 days
Product warranty period, maximum	5 years
Reconciliation of changes in Company's allowances for warranties [Roll Forward]
Beginning balance	$ 2,151,000	$ 2,736,000
Warranty costs incurred	(2,440,000)	(2,453,000)
Warranty expense accrued	2,352,000	1,713,000
Translation adjustments	(82,000)	8,000
Ending balance	1,981,000	$ 2,004,000
Financial Standby Letter of Credit
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	790,000
Outstanding performance guarantees | Subsidiaries-Belgium
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	$ 0

Termination Costs (Details)

Termination Costs (Details) - Jun. 30, 2015 - Cost Reduction Initiatives - One-time Termination Benefits - USD ($) $ in Thousands	Total
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	$ 390
Restructuring Reserve	155
Cost of Goods, Total
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	143
Operating expenses
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	$ 247