Key Technology (KTEC) 10-Q 13 Feb 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2017	Jan. 31, 2018
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	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		6,464,790

UNAUDITED CONDENSED CONSOLIDATE

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Sep. 30, 2017
Current assets:
Cash and cash equivalents	$ 5,344	$ 9,337
Trade accounts receivable, net of allowance for doubtful accounts of $284 and $299, respectively	21,450	20,177
Inventories:
Raw materials	14,943	12,606
Work-in-process and sub-assemblies	15,273	16,543
Finished goods	10,014	9,439
Total inventories	40,230	38,588
Deferred income taxes	0	4,770
Prepaid expenses and other assets	4,655	4,439
Total current assets	71,679	77,311
Property, plant and equipment, net	13,278	12,911
Deferred income taxes	2,899	1,299
Goodwill	10,809	10,616
Investment in Proditec	1,127	1,127
Intangibles and other assets, net	4,433	4,574
Total	104,225	107,838
Current liabilities:
Accounts payable	10,064	10,490
Accrued payroll liabilities and commissions	7,114	7,714
Customers' deposits	8,382	8,085
Accrued customer support and warranty costs	2,419	2,276
Customer purchase plans	1,155	1,039
Income taxes payable	1,359	1,357
Current portion of long-term debt	4,446	4,566
Other accrued liabilities	2,061	1,923
Total current liabilities	37,000	37,450
Deferred income taxes	0	1,514
Other long-term liabilities	205	222
Shareholders' equity:
Common stock	34,813	34,959
Retained earnings and other shareholders' equity	32,207	33,693
Total shareholders' equity	67,020	68,652
Total	$ 104,225	$ 107,838

UNAUDITED CONDENSED CONSOLIDAT3

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2017	Sep. 30, 2017
Current assets
Trade accounts receivable, allowance for doubtful accounts	$ 284	$ 299

UNAUDITED CONDENSED CONSOLIDAT4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Net sales	$ 31,272	$ 27,363
Cost of sales	22,706	18,133
Gross profit	8,566	9,230
Operating expenses:
Sales and marketing	4,650	4,318
Research and development	2,669	2,494
General and administrative	2,156	2,092
Amortization of intangibles	218	227
Total operating expenses	9,693	9,131
Gain on disposition of assets	0	2
Income (loss) from operations	(1,127)	101
Other income (expense)	(210)	(78)
Earnings (loss) before income taxes	(1,337)	23
Income tax expense	713	8
Net earnings (loss)	$ (2,050)	$ 15
Net earnings (loss) per share
- basic (in dollars per share)	$ (0.32)	$ 0
- diluted (in dollars per share)	$ (0.32)	$ 0
Shares used in per share calculations - basic (in shares)	6,476	6,375
Shares used in per share calculations - diluted (in shares)	6,476	6,375

UNAUDITED CONSOLIDATED STATEMEN

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net earnings (loss)	$ (2,050)	$ 15
Other comprehensive income (loss):
Foreign currency translation adjustment	665	(1,301)
Reclassification adjustment for foreign currency translation included in net earnings (loss)	6	6
Income tax (expense) benefit related to items of comprehensive income (loss)	(176)	441
Total comprehensive loss	$ (1,555)	$ (839)

UNAUDITED CONDENSED CONSOLIDAT6

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$ (2,050)	$ 15
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Gain on disposition of assets	0	(2)
Foreign currency exchange (gain) loss	50	(75)
Depreciation and amortization	1,009	1,016
Share based payments	231	262
Reclassification from other comprehensive income	6	6
Deferred income taxes	1,542	29
Change in fair value of derivatives	(23)	(46)
Deferred rent	1	2
Bad debt expense	18	0
Changes in assets and liabilities:
Trade accounts receivable	(1,140)	(2,652)
Inventories	(1,539)	(3,863)
Prepaid expenses and other current assets	608	(384)
Income taxes receivable	(804)	0
Accounts payable	(467)	1,530
Accrued payroll liabilities and commissions	(677)	557
Customers’ deposits	213	1,830
Accrued customer support and warranty costs	124	(91)
Income taxes payable	(36)	(24)
Other accrued liabilities	227	(524)
Other	2	(1)
Cash used in operating activities	(2,705)	(2,415)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property	0	2
Purchases of property, plant and equipment	(860)	(393)
Cash used in investing activities	(860)	(391)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt	(120)	(163)
Proceeds from issuance of common stock	10	9
Exchange of shares for statutory withholding	(387)	(212)
Cash provided by (used in) financing activities	(497)	(366)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	69	(109)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(3,993)	(3,281)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD	9,337	10,491
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	5,344	7,210
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
Cash paid during the period for interest	79	84
Cash paid during the period for income taxes	$ 7	$ 3

Unaudited condensed consolidat7

Unaudited condensed consolidated financial statements	3 Months Ended
	Dec. 31, 2017
Organization, Consolidation and Presentation of 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, 2017 . The results of operations for the three month period ended December 31, 2017 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 December 31, 2017 and the results of its operations and its cash flows for the three month periods ended December 31, 2017 and 2016 . Recently Adopted Accounting Pronouncements On October 1, 2017, the Company adopted Accounting Standard Update ("ASU") 2015-17, "Balance Sheet Classification of Deferred Taxes," which eliminated the requirement to present deferred tax liabilities and assets as current and non-current in a classified balance sheet. Instead, entities are required to classify all deferred tax assets and liabilities as non-current. The Company has elected to adopt the new guidance prospectively. As a result, the Company reclassified the net of $4.8 million of deferred tax assets in Current Assets and $1.5 million of deferred tax liabilities in Long-term liabilities that existed on its balance sheet at October 1, 2017 as long-term deferred tax assets on its Condensed Consolidated Balance Sheet. On October 1, 2017, the Company adopted ASU 2016-09, "Stock Compensation," which was intended to simplify several aspects of the accounting for share-based payment award transactions, including adjustments to the timing of when excess tax benefits should be recorded, that excess tax benefits are now recorded to earnings rather than equity, and classification in the statement of cash flows. The Company prospectively adopted the new guidance. As a result, a cumulative effect of $69,000 was recorded as a change to deferred tax assets and a credit to equity upon adoption. In addition, during the first quarter of fiscal 2018 the Company reduced income tax expense by $173,000 for excess tax benefits on shares vesting during the quarter at share prices in excess of the grant date fair value per share. On October 1, 2017, the Company adopted ASU 2015-11, "Simplifying the Measurement of Inventory" ("ASU 2015-11"). The previous standard required entities to measure inventory at the lower of cost or market, with market defined as net realizable value or replacement cost. ASU 2015-11 requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this standard did not have a material effect on the Company's financial statements, nor does the Company anticipate material future effects. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under US 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 currently analyzing the effect of the standard across all of its revenue streams to evaluate the effect of the new standard on revenue contracts. This analysis includes reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. Most of the Company's contracts for goods and services are not complex and are primarily short-term in nature, and the Company's assessment at this stage is that it does not expect the adoption of the new revenue recognition standard to have a material effect on its financial statements. The Company plans to adopt the standard in the first quarter of fiscal 2019 using the modified retrospective method by recognizing any cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings. In February 2016, the FASB issued ASU 2016-02, "Leases" (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. ASU 2016-02 will require lessees to recognize assets and liabilities for the rights and obligations created by their leases on their balance sheet. Lessees will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. ASU 2016-02 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company has not yet determined the effect that the adoption of ASU 2016-02 will have on its consolidated financial position and consolidated results of operations.

Share-based compensation

Share-based compensation	3 Months Ended
	Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation	Share-based compensation During the three months ended December 31, 2017 , the Company granted 1,000 shares of service-based stock awards. The fair value of these grants was $17.64 per share based on the fair market value of our common stock at the grant date. The restrictions on these shares lapse at the end of the required service period in November 2020 . During the three months ended December 31, 2017 , the Company also granted 48,331 shares of performance-based stock awards. The fair value of these grants was $19.02 per share based on the fair market value of our common stock at the grant date. The restrictions on these grants lapse upon achievement of performance-based objectives, or a change in control, for the three -year period ending September 30, 2020 and the continued employment of the grantee. The Company estimates that it is less than probable that the performance-based objectives on any of the performance-based awards granted in fiscal 2018 will be achieved and, therefore, has not recorded any share-based compensation expense in fiscal 2018 related to these awards. Share-based compensation expense included in the Company's results was as follows (in thousands): Three Months Ended 2017 2016 Cost of goods sold $ 41 $ 46 Operating expenses 190 216 Total share-based compensation expense $ 231 $ 262 Share-based compensation expense remaining capitalized in inventory at December 31, 2017 and 2016 was $21,000 and $22,000 , respectively.

Income taxes

Income taxes	3 Months Ended
	Dec. 31, 2017
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. In December 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted in the United States. The effects of this new tax law are wide-ranging and some of the provisions affect the Company in fiscal 2018, some in fiscal 2019, and some thereafter. The most significant impact is the reduction in the federal corporate income tax rate from 34% to 21% effective January 1, 2018. As the Company is a fiscal year company, its fiscal 2018 statutory rate will be approximately 24% which is a blended rate based on the number of days before and after the January 1, 2018 date of the enacted rate change. The enacted rate of 21% will take full effect in fiscal 2019. As a result of this rate change, the Company reduced its net United States deferred tax assets and liabilities by approximately $1.0 million which was charged to income tax expense during the first quarter of fiscal 2018. As income tax timing differences continue to change during the remainder of fiscal 2018, additional reductions to deferred tax assets and liabilities for timing differences remaining at the end of fiscal 2018 will need to be recorded due to the change in statutory rates from 24% to 21% . The company has not completed its evaluation of the impact of TCJA in future fiscal years due to the limited available time since enactment, the complexity of certain areas, and the need for IRS regulations in several areas. However, due to the reduction in the corporate income tax rate, we anticipate a lower overall corporate income tax expense in future years. In addition, in December 2017, Belgium enacted corporate tax law changes which will reduce its corporate income tax rate from 34% to 25% in 2020. This reduction is phased in and the Company's tax rate in Belgium will be 34% in fiscal 2018, 29.58% in fiscal 2019 and 2020, and 25% in fiscal 2021. As a result, the Company revalued its Belgian deferred tax assets in the first quarter of fiscal 2018 which resulted in a charge of approximately $200,000 to income tax expense during the quarter. As its Belgian deferred tax assets were approximately $2.4 million in pre-tax carryforwards, the ultimate effect of this change in tax rates will not be known until fiscal 2018-2020. The Company will reevaluate the Belgian tax rate change on a periodic basis over the next three fiscal years but believes its current estimate is materially accurate at this time.

Derivative instruments

Derivative instruments	3 Months Ended
	Dec. 31, 2017
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. 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 December 31, 2017 , the Company had an interest rate swap with a notional amount of $4.4 million that fixes the interest rate on its LIBOR-based variable rate mortgage at 6.20% . At December 31, 2017 , the fair value of the swap agreement recorded as a liability in Other long-term liabilities on the Unaudited Condensed Consolidated Balance Sheet was $37,000 . There were gains of $23,000 recognized as part of net earnings in the Unaudited Condensed Consolidated Statements of Operations related to the swap agreement during the three month period ended December 31, 2017 because the interest rate swap was not designated as a hedge due to its ineffectiveness. During the three month period ended December 31, 2017 , the Company recorded $16,000 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 July 2018. The fair value of a previous interest rate swap is being amortized into earnings from Other Comprehensive Income over the original forecasted settlement period of the swap as it is no longer designated as a hedge. As a result, the Company amortized $6,000 of losses from Other Comprehensive Income into net earnings during the three month period ended December 31, 2017 . At December 31, 2017 , the Company had a one-month undesignated forward exchange contract for €0.5 million ( $0.6 million ). Forward exchange contracts are used to manage the Company's foreign currency exchange risk related to its ongoing operations. Net foreign currency gains of $4,000 were recorded for forward exchange contracts in the three month period ended December 31, 2017 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 forward exchange contracts are generally offset by gains or losses recorded on the underlying assets or liabilities held in foreign currencies. At December 31, 2017 , the Company had liabilities of $8,000 for settlements under these forward exchange contracts in Other current liabilities on the Company's Unaudited Condensed Consolidated Balance Sheet.

Fair value measurements

Fair value measurements	3 Months Ended
	Dec. 31, 2017
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 December 31, 2017 (in thousands) Description Level 1 Level 2 Level 3 Total Assets/ Derivatives: Interest rate swap $ — $ (37 ) $ (37 ) Forward exchange contracts — — — — At December 31, 2017 , the Company also had debt of approximately $4.4 million . The Company's 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 December 31, 2017 , 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 no 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	3 Months Ended
	Dec. 31, 2017
Debt Disclosure [Abstract]
Financing arrangements	Financing arrangements The Company's domestic credit facility provides 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 credit facility also provides for a credit sub-facility of up to $4.0 million for standby letters of credit. The credit facility matures on July 19, 2018 and the Company expects to renew or refinance the credit facility in fiscal 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 a specified financial ratio. The Company's base lending rate option is the lender's base lending rate plus 0.75% , 1.00% or 1.25% per annum. The Company's LIBOR option is LIBOR plus 2.25% , 2.50% or 2.75% . At December 31, 2017, the interest rate would have been 3.82% based on the lowest of the available alternative rates. The term loan 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 rate swap agreement with the lender to fix the term loan interest rate at 6.20% . The credit 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 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 credit availability or an event of default occurs. The credit facility permits capital expenditures to a certain level and contains customary default and acceleration provisions. The credit facility also restricts, above certain levels, acquisitions, incurrence of additional indebtedness, payment of dividends and lease expenditures. At December 31, 2017 , the Company had no outstanding borrowings under the revolving line of credit and $0.7 million of outstanding standby letters of credit. The Company's Belgian subsidiary has a credit accommodation with a commercial bank in Belgium. This credit accommodation totals €2.7 million ( $3.3 million ) and includes an operating line of €800,000 ( $1.0 million ), a bank guarantee facility of €500,000 ( $0.6 million ), and loan agreement provisions of €1.4 million ( $1.7 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 December 31, 2017, the interest rate was 9.75% . At December 31, 2017 , the subsidiary had no borrowings under the operating line or loan agreement provisions. At December 31, 2017 , the subsidiary had no bank guarantees outstanding under the bank guarantee facility.

Contractual guarantees and inde

Contractual guarantees and indemnities	3 Months Ended
	Dec. 31, 2017
Guarantees [Abstract]
Contractual guarantees and indemnities	Contractual guarantees and indemnities Product warranties The Company provides warranties 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 three months ended December 31, 2017 and 2016 is as follows (in thousands): Three Months Ended 2017 2016 Beginning balance $ 1,892 $ 1,932 Warranty costs incurred (1,100 ) (567 ) Warranty expense accrued 1,268 378 Translation adjustments 21 (52 ) Ending balance $ 2,081 $ 1,691 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 December 31, 2017 , the Company had standby letters of credit totaling $0.7 million . 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 outstanding performance guarantees secured by bank guarantees under the Company's domestic 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.

Subsequent Event

Subsequent Event	3 Months Ended
	Dec. 31, 2017
Subsequent Events [Abstract]
Subsequent Event	Subsequent Event On January 25, 2018, the Company entered into a definitive merger agreement with Duravant LLC and one of its wholly owned subsidiaries pursuant to which such subsidiary will commence a tender offer to acquire all of the outstanding shares of common stock of the Company for $26.75 per share in cash in a transaction valued at approximately $175 million . The transaction is expected to close in the second fiscal quarter of 2018, subject to the tender and acceptance of at least a majority of the outstanding shares of our common stock and other customary closing conditions. Additional information about the transaction is set forth in the Company's Current Report on Form 8-K filed on January 31, 2018.

Share-based compensation (Table

Share-based compensation (Tables)	3 Months Ended
	Dec. 31, 2017
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 2017 2016 Cost of goods sold $ 41 $ 46 Operating expenses 190 216 Total share-based compensation expense $ 231 $ 262

Fair value measurements (Tables

Fair value measurements (Tables)	3 Months Ended
	Dec. 31, 2017
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 December 31, 2017 (in thousands) Description Level 1 Level 2 Level 3 Total Assets/ Derivatives: Interest rate swap $ — $ (37 ) $ (37 ) Forward exchange contracts — — — —

Contractual guarantees and in17

Contractual guarantees and indemnities (Tables)	3 Months Ended
	Dec. 31, 2017
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 three months ended December 31, 2017 and 2016 is as follows (in thousands): Three Months Ended 2017 2016 Beginning balance $ 1,892 $ 1,932 Warranty costs incurred (1,100 ) (567 ) Warranty expense accrued 1,268 378 Translation adjustments 21 (52 ) Ending balance $ 2,081 $ 1,691

Unaudited condensed consolida18

Unaudited condensed consolidated financial statements - (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2017	Oct. 01, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Excess tax benefit, amount	$ 173
Accounting Standards Update 2015-17
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred tax assets, net, current		$ 4,800
Deferred tax liabilities, net, current		1,500
Accounting Standards Update 2016-09, Excess Tax Benefit Component [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle in period of adoption		69
Retained Earnings | Accounting Standards Update 2016-09, Excess Tax Benefit Component [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle in period of adoption		$ (69)

Share-based compensation (Detai

Share-based compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 231	$ 262
Share-based compensation expense remaining capitalized in inventory	21	22
Cost of goods sold
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	41	46
Operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 190	$ 216
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period	1,000
Restricted Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of grants (in dollars per share)	$ 17.64
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period	48,331
Fair value of grants (in dollars per share)	$ 19.02
Award requisite service period	3 years

Income taxes (Details)

Income taxes (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Sep. 30, 2018
Tax Credit Carryforward [Line Items]
Tax Cuts And Jobs Act Of 2017, change in tax rate, deferred tax asset, income tax expense	$ 1,000
Scenario, Forecast
Tax Credit Carryforward [Line Items]
Statutory income rate		24.00%
BELGIUM | Foreign Tax Authority [Member]
Tax Credit Carryforward [Line Items]
Change in tax rate, deferred tax assets, income tax expense	200
Deferred tax assets in pre-tax carryforwards	$ 2,400

Derivative instruments (Details

Derivative instruments (Details) $ in Thousands, € in Millions	3 Months Ended
	Dec. 31, 2017USD ($)	Dec. 31, 2016USD ($)	Dec. 31, 2017EUR (€)	Dec. 31, 2017USD ($)
Derivative [Line Items]
Long-term debt				$ 4,400
Reclassification adjustment for foreign currency translation included in net earnings (loss)	$ (6)	$ (6)
Interest rate swap
Derivative [Line Items]
Long-term debt				4,400
Gain (Loss) on net derivative	23
Interest expense	16
Reclassification adjustment for foreign currency translation included in net earnings (loss)	6
Forward exchange contracts
Derivative [Line Items]
Gain (Loss) on net derivative	$ 4
Derivative amount			€ 0.5	600
Other long-term liabilities | Interest rate swap
Derivative [Line Items]
Fair value of the net derivative liability				(37)
Other current assets | Forward exchange contracts
Derivative [Line Items]
Derivative asset				$ (8)
LIBOR | Interest rate swap
Derivative [Line Items]
Variable interest rate on the derivative			6.20%	6.20%

Fair value measurements (Detail

Fair value measurements (Details) - USD ($)	Dec. 31, 2017	Sep. 30, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 4,400,000
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	(37,000)
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
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	(37,000)
Level 3 | Forward exchange contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives	0
Proditec SAS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying value of minority interest in Proditec SAS	$ 1,100,000

Financing arrangements (Details

Financing arrangements (Details)	3 Months Ended
	Dec. 31, 2017EUR (€)	Dec. 31, 2017USD ($)
Line of Credit | Loans Payable | Interest rate swap
Line of Credit Facility [Line Items]
Fixed interest rate	6.20%	6.20%
Domestic Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount		$ 700,000
Domestic Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		20,300,000
Domestic Credit Facility | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity		15,000,000
Line of credit, current		$ 0
Line of credit facility, interest rate at period end	3.82%	3.82%
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
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
Commercial bank in Belgium
Line of Credit Facility [Line Items]
Maximum borrowing capacity	€ 2,700,000	3,300,000
Commercial bank in Belgium | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	€ 800,000	$ 964,400
Line of credit facility, interest rate at period end	9.75%	9.75%
Outstanding at the end of the period		$ 0
Commercial bank in Belgium | Outstanding performance guarantees
Line of Credit Facility [Line Items]
Maximum borrowing capacity	€ 500,000	602,750
Outstanding at the end of the period | €	0
Commercial bank in Belgium | Commercial Loan
Line of Credit Facility [Line Items]
Maximum borrowing capacity	€ 1,400,000	$ 1,700,000
Base Rate | Line of Credit | Loans Payable
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%
LIBOR | Line of Credit | Loans Payable
Line of Credit Facility [Line Items]
Basis spread on variable rate	3.25%
Prime Rate | Minimum | Commercial bank in Belgium | Line of Credit
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.25%
Tier One | Base Rate | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.75%
Tier One | LIBOR | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.25%
Tier Two | Base Rate | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.00%
Tier Two | LIBOR | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.50%
Tier Three | Base Rate | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.25%
Tier Three | LIBOR | Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.75%

Contractual guarantees and in24

Contractual guarantees and indemnities (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Guarantor Obligations [Line Items]
Product warranty period	1 year
Reconciliation of changes in Company's allowances for warranties [Roll Forward]
Beginning balance	$ 1,892	$ 1,932
Warranty costs incurred	(1,100)	(567)
Warranty expense accrued	1,268	378
Translation adjustments	21	(52)
Ending balance	2,081	$ 1,691
Financial Standby Letter of Credit
Guarantor Obligations [Line Items]
Guarantor obligations, maximum exposure, undiscounted	$ 700
Minimum
Guarantor Obligations [Line Items]
Product warranty period	90 days
Maximum
Guarantor Obligations [Line Items]
Product warranty period	5 years

Subsequent Event (Details)

Subsequent Event (Details) - Duravant LLC - Merger Agreement With Duravant LLC - Subsequent Event $ / shares in Units, $ in Millions	Jan. 25, 2018USD ($)$ / shares
Subsequent Event [Line Items]
Share price (in dollars per share) | $ / shares	$ 26.75
Consideration transferred value | $	$ 175