Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | ||
Sep. 30, 2013 | Oct. 31, 2013 | Oct. 31, 2013 | |
Common Class A [Member] | Common Class B [Member] | ||
Document Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'STARRETT L S CO | ' | ' |
Document Type | '10-Q | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 6,106,625 | 814,379 |
Amendment Flag | 'false | ' | ' |
Entity Central Index Key | '0000093676 | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Filer Category | 'Accelerated Filer | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'Q1 | ' | ' |
Consolidated_Balance_Sheets_Cu
Consolidated Balance Sheets (Current Period Unaudited) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash | $21,148 | $19,755 |
Short-term investments | 8,174 | 7,657 |
Accounts receivable (less allowance for doubtful accounts of $681 and $697, respectively) | 33,980 | 37,875 |
Inventories | 58,191 | 56,501 |
Current deferred income tax asset | 4,776 | 4,978 |
Prepaid expenses and other current assets | 8,279 | 7,182 |
Total current assets | 134,548 | 133,948 |
Property, plant and equipment, net | 50,642 | 51,200 |
Taxes receivable | 3,770 | 3,770 |
Deferred tax asset, net | 28,114 | 28,274 |
Intangible assets, net | 7,986 | 8,222 |
Goodwill | 3,034 | 3,034 |
Other assets | 2,434 | 2,346 |
Total assets | 230,528 | 230,794 |
Current liabilities: | ' | ' |
Notes payable and current maturities | 1,534 | 1,557 |
Accounts payable and accrued expenses | 16,538 | 17,084 |
Accrued compensation | 5,483 | 5,304 |
Total current liabilities | 23,555 | 23,945 |
Long-term debt net of current portion | 22,372 | 24,252 |
Other tax obligations | 10,504 | 10,514 |
Deferred tax liabilities | 2,182 | 2,182 |
Postretirement benefit and pension obligations | 43,532 | 42,386 |
Other non-current liability | ' | 773 |
Total liabilities | 102,145 | 104,052 |
Additional paid-in capital | 53,481 | 52,613 |
Retained earnings | 91,303 | 91,778 |
Accumulated other comprehensive loss | -23,316 | -24,476 |
Total stockholders' equity | 128,383 | 126,742 |
Total liabilities and stockholdersb equity | 230,528 | 230,794 |
Common Class A [Member] | ' | ' |
Current liabilities: | ' | ' |
Common Stock | 6,099 | 6,077 |
Common Class B [Member] | ' | ' |
Current liabilities: | ' | ' |
Common Stock | $816 | $750 |
Consolidated_Balance_Sheets_Cu1
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Allowance for doubtful accounts (in Dollars) | $681 | $697 |
Common Class A [Member] | ' | ' |
Par Value (in Dollars per share) | $1 | $1 |
Shares Authorized | 20,000,000 | 20,000,000 |
Shares Outstanding | 6,099,400 | 6,076,698 |
Common Class B [Member] | ' | ' |
Par Value (in Dollars per share) | $1 | $1 |
Shares Authorized | 10,000,000 | 10,000,000 |
Shares Outstanding | 815,534 | 750,563 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Current Period Unaudited) (USD $) | 3 Months Ended | |
Share data in Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Net sales | $57,487,000 | $56,937,000 |
Cost of goods sold | 39,678,000 | 39,248,000 |
Gross margin | 17,809,000 | 17,689,000 |
% of Net sales | 31.00% | 31.10% |
Selling, general and administrative expenses | 17,073,000 | 18,571,000 |
Operating income (loss) | 736,000 | -882,000 |
Other income | 109,000 | 144,000 |
Income (loss) before income taxes | 845,000 | -738,000 |
Income tax expense (benefit) | 629,000 | -387,000 |
Net Income (loss) | $216,000 | ($351,000) |
Basic and diluted Income (loss) per share (in Dollars per share) | $0.03 | ($0.05) |
Weighted average outstanding shares used in per share calculations: | ' | ' |
Basic (in Shares) | 6,895 | 6,783 |
Diluted (in Shares) | 6,931 | 6,783 |
Dividends per share (in Dollars per share) | $0.10 | $0.10 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (Current Period Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Net earnings (loss) | $216 | ($351) |
Other comprehensive income (loss), net of tax: | ' | ' |
Translation gain | 1,175 | 635 |
Pension and postretirement plans | -15 | -11 |
Other comprehensive income | 1,160 | 624 |
Total comprehensive income | $1,376 | $273 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (Current Period Unaudited) (USD $) | Common Class A [Member] | Common Class A [Member] | Common Class B [Member] | Common Class B [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | The 1984 ESOP [Member] | The 2013 ESOP [Member] | Total |
In Thousands | The 1984 ESOP [Member] | The 2013 ESOP [Member] | The 1984 ESOP [Member] | The 2013 ESOP [Member] | ||||||||
Balance at Jun. 30, 2012 | ' | $6,017 | ' | $753 | ' | ' | $51,941 | $94,661 | ($25,534) | ' | ' | $127,838 |
Total comprehensive income (loss) | ' | ' | ' | ' | ' | ' | ' | -351 | 624 | ' | ' | 273 |
Dividends | ' | ' | ' | ' | ' | ' | ' | -679 | ' | ' | ' | -679 |
Issuance of stock dividends under ESOP | 6 | ' | ' | ' | 64 | ' | ' | ' | ' | 70 | ' | ' |
Issuance of stock | ' | 2 | ' | 15 | ' | ' | 114 | ' | ' | ' | ' | 131 |
Stock-based compensation | ' | ' | ' | ' | ' | ' | 41 | ' | ' | ' | ' | 41 |
Conversion | ' | 4 | ' | -4 | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at Sep. 30, 2012 | ' | 6,029 | ' | 764 | ' | ' | 52,160 | 93,631 | -24,910 | ' | ' | 127,674 |
Balance at Jun. 30, 2013 | ' | 6,077 | ' | 750 | ' | ' | 52,613 | 91,778 | -24,476 | ' | ' | 126,742 |
Total comprehensive income (loss) | ' | ' | ' | ' | ' | ' | ' | 216 | 1,160 | ' | ' | 1,376 |
Dividends | ' | ' | ' | ' | ' | ' | ' | -691 | ' | ' | ' | -691 |
Issuance of stock dividends under ESOP | 7 | ' | 76 | ' | 62 | 697 | ' | ' | ' | 69 | 773 | ' |
Issuance of stock | ' | 5 | ' | ' | ' | ' | 54 | ' | ' | ' | ' | 59 |
Stock-based compensation | ' | ' | ' | ' | ' | ' | 55 | ' | ' | ' | ' | 55 |
Conversion | ' | 10 | ' | -10 | ' | ' | ' | ' | ' | ' | ' | ' |
Translation loss | ' | ' | ' | ' | ' | ' | ' | ' | -20,459 | ' | ' | ' |
Pension and postretirement plans net of taxes | ' | ' | ' | ' | ' | ' | ' | ' | -2,857 | ' | ' | ' |
' | ' | ' | ' | ' | ' | ' | ' | -23,316 | ' | ' | -23,316 | |
Balance at Sep. 30, 2013 | ' | $6,099 | ' | $816 | ' | ' | $53,481 | $91,303 | ($23,316) | ' | ' | $128,383 |
Consolidated_Statements_of_Sto1
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (Current Period Unaudited) (Parentheticals) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Dividends per share | $0.10 | $0.10 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Current Period Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities: | ' | ' |
Net income (loss) | $216 | ($351) |
Non-cash operating activities: | ' | ' |
Depreciation | 2,023 | 2,166 |
Amortization | 289 | 368 |
Stock-based compensation | 114 | 41 |
Net long-term tax obligations | ' | -280 |
Deferred taxes | 480 | 559 |
Unrealized transaction gain (loss) | -5 | 1 |
Income on equity method investment | -94 | -157 |
Working capital changes: | ' | ' |
Accounts receivable | 4,481 | 8,312 |
Inventories | -1,133 | -3,590 |
Other current assets | -1,074 | 86 |
Other current liabilities | -733 | -4,572 |
Postretirement benefit and pension obligations | 443 | 244 |
Other | 230 | 140 |
Net cash provided by operating activities | 5,237 | 2,967 |
Cash flows from investing activities: | ' | ' |
Additions to property, plant and equipment | -1,451 | -2,304 |
Increase in short-term investments | -26 | ' |
Net cash used in investing activities | -1,477 | -2,304 |
Cash flows from financing activities: | ' | ' |
Short-term debt repayments | -15 | -152 |
Long-term debt repayments | -1,887 | -395 |
Proceeds from common stock issued | 69 | 201 |
Dividends paid | -691 | -679 |
Net cash used in financing activities | -2,524 | -1,025 |
Effect of exchange rate changes on cash | 157 | 121 |
Net increase (decrease) in cash | 1,393 | -241 |
Cash, beginning of period | 19,755 | 17,502 |
Cash, end of period | 21,148 | 17,261 |
Supplemental cash flow information: | ' | ' |
Interest paid | 239 | 247 |
Income taxes paid, net | 1,840 | 1,025 |
2013 ESOP [Member] | ' | ' |
Supplemental disclosure of non-cash activities: | ' | ' |
Issuance of stock under 2013 ESOP | $773 | ' |
Note_1_Basis_of_Presentation_a
Note 1 - Basis of Presentation and Summary of Significant Account Policies | 3 Months Ended |
Sep. 30, 2013 | |
Disclosure Text Block [Abstract] | ' |
Basis of Presentation and Significant Accounting Policies [Text Block] | ' |
Note 1: Basis of Presentation and Summary of Significant Account Policies | |
The balance sheet as of June 30, 2013, which has been derived from audited financial statements, and the unaudited interim financial statements have been prepared by The L.S. Starrett Company (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These unaudited financial statements, which, in the opinion of management, reflect all adjustments (including normal recurring adjustments) necessary for a fair presentation, 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 year ended June 30, 2013. Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year. | |
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the consolidated financial statements and accompanying notes. Note 2 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, 2013 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. There were no changes in any of the Company’s significant accounting policies during the three months ended September 30, 2013. |
Note_2_Recent_Accounting_Prono
Note 2 - Recent Accounting Pronouncements | 3 Months Ended |
Sep. 30, 2013 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | ' |
Note 2: Recent Accounting Pronouncements | |
In July 2013, the FASB issued ASU No. 2013-11, "Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU No. 2013-11 resolves the diversity in practice regarding the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU comes into effect for the first annual period beginning after December 15, 2013. We do not expect adoption of ASU No. 2013-11 to affect our results of operations or cash flows. |
Note_3_StockBased_Compensation
Note 3 - Stock-Based Compensation | 3 Months Ended | ||||
Sep. 30, 2013 | |||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' | ||||
Note 3: Stock-based Compensation | |||||
On September 5, 2012 the Board of Directors adopted The L.S. Starrett Company 2012 Long Term Incentive Plan (the “2012 Stock Plan”). The 2012 stock plan was approved by shareholders October 17, 2012. The 2012 Stock Plan permits the granting of the following types of awards to officers, other employees and non-employee directors: stock options; restricted stock awards; unrestricted stock awards; stock appreciation rights; stock units including restricted stock units; performance awards; cash-based awards; and awards other than previously described that are convertible or otherwise based on stock. The 2012 Stock Plan provides for the issuance of up to 500,000 shares of common stock. | |||||
Options granted vest in periods ranging from one year to three years and expire ten years after the grant date. Restricted stock units (“RSU”) granted generally vest from one year to three years. Vested restricted stock units will be settled in shares of common stock. As of September 30, 2013, there were 20,500 stock options and 8,200 restricted stock units outstanding. In addition, there were 471,300 shares available for grant under the 2012 Stock Plan as of September 30, 2013. | |||||
For the stock option grant, the fair value of each grant was estimated at the date of grant using the Binomial Options pricing model. The Binomial Options pricing model utilizes assumptions related to stock volatility, the risk-free interest rate, the dividend yield and employee exercise behavior. Expected volatilities utilized in the model are based on the historic volatility of the Company’s stock price. The risk free interest rate is derived from the U.S. Treasury Yield curve in effect at the time of the grant. The expected life is determined using the average of the vesting period and contractual term of the options (Short-cut method). | |||||
The fair value of stock options as of September 30, 2013 of $3.82 was estimated using the following assumptions: | |||||
Risk-free interest rate | 1 | % | |||
Expected life (years) | 6 | ||||
Expected stock volatility | 52.3 | % | |||
Expected dividend yield | 4 | % | |||
The weighted average contractual term for stock options outstanding as of September 30, 2013 was 9.25 years. The aggregate intrinsic value of stock options outstanding as of September 30, 2013 was $0.1 million. There were no options exercisable as of September 30, 2013. | |||||
The Company accounts for RSU awards by recognizing the expense of the fair value ratably over vesting periods generally ranging from one year to three years. The related expense is included in selling, general and administrative expenses. | |||||
There were no RSU awards settled during the three months ended September 30, 2013. The aggregate intrinsic value of RSU awards outstanding as of September 30, 2013 was $0.1 million. There were no RSU awards vested as of September 30, 2013. | |||||
On February 5, 2013, the Board of Directors adopted The L.S. Starrett Company 2013 Employee Stock Ownership Plan (the “2013 ESOP”). The purpose of the plan is to supplement existing Company programs through an employer funded individual account plan dedicated to investment in common stock of the Company, thereby encouraging increased ownership of the Company while providing an additional source of retirement income. The plan is intended as an employee stock ownership plan within the meaning of Section 4975 (e) (7) of the Internal Revenue Code of 1986, as amended. U.S. employees who have completed a year of service as of December 31, 2012 are eligible to participate. | |||||
On June 5, 2013 the Board of Directors approved a contribution to the 2013 ESOP for fiscal 2013 in the amount of two percent of each participant’s compensation (as defined in the Plan). Compensation expense related to the 2013 ESOP of $.8 million was recognized in the year ended June 30, 2013. The $.8 million liability was included in other non-current liabilities on the Consolidated Balance Sheet on June 30, 2013. Shares of Class B common stock were contributed to the 2013 ESOP on July 30, 2013 in order to fund this liability. | |||||
Compensation expense related to all stock based plans for the three month period ended September 30, 2013 was $0.1 million. As of September 30, 2013, there was $0.1 million of total unrecognized compensation costs related to outstanding stock-based compensation arrangements. The cost is expected to be recognized over a weighted average period of 2.2 years. |
Note_4_Inventories
Note 4 - Inventories | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory Disclosure [Text Block] | ' | ||||||||
Note 4: Inventories | |||||||||
Inventories consist of the following (in thousands): | |||||||||
9/30/13 | 6/30/13 | ||||||||
Raw material and supplies | $ | 30,343 | $ | 29,565 | |||||
Goods in process and finished parts | 21,082 | 20,256 | |||||||
Finished goods | 37,356 | 37,507 | |||||||
88,781 | 87,328 | ||||||||
LIFO Reserve | (30,590 | ) | (30,827 | ) | |||||
Inventories | $ | 58,191 | $ | 56,501 | |||||
LIFO inventories were $12.9 million at September 30, 2013 and June 30, 2013, or approximately $30.6 million and $30.8 million, respectively, less than their balances accounted for on a FIFO basis. The use of LIFO, as compared to FIFO, resulted in a $0.2 million decrease in cost of sales for the three months ended September 30, 2013 compared to no effect in the three months ended September 30, 2012. |
Note_5_Goodwill_and_Intangible
Note 5 - Goodwill and Intangibles | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
Goodwill and Intangible Assets Disclosure [Text Block] | ' | ||||||||
Note 5: Goodwill and Intangibles | |||||||||
The Company performed a qualitative analysis in accordance with ASU 2011-08 for its Bytewise reporting unit for its October 1, 2012 annual assessment of goodwill (commonly referred to as “Step Zero”). From a qualitative perspective, in evaluating whether it is more likely than not that the fair value of the reporting units is not less than their respective carrying amount, relevant events and circumstances were taken into account, with greater weight assigned to events and circumstances that most affect the fair value of Bytewise or the carrying amounts of its assets. Items that were considered included, but were not limited to, the following: macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in management or key personnel, and other Bytewise specific events. After assessing these and other factors the Company determined that it was more likely than not that the fair value of the Bytewise reporting unit was not less than the carrying amount as of October 1, 2012. The company is currently performing its annual impairment test for fiscal 2014 and expects to have it completed by December 31, 2013. | |||||||||
Amortizable intangible assets consist of the following (in thousands): | |||||||||
9/30/13 | 6/30/13 | ||||||||
Non-compete agreement | $ | 600 | $ | 600 | |||||
Trademarks and trade names | 1,480 | 1,480 | |||||||
Completed technology | 2,010 | 2,010 | |||||||
Customer relationships | 4,950 | 4,950 | |||||||
Software development | 688 | 635 | |||||||
Other intangible assets | 325 | 325 | |||||||
Total | 10,053 | 10,000 | |||||||
Accumulated amortization | (2,067 | ) | (1,778 | ) | |||||
Total net balance | $ | 7,986 | $ | 8,222 | |||||
Amortizable intangible assets are being amortized on a straight-line basis over the period of expected economic benefit. | |||||||||
The estimated useful lives of the intangible assets subject to amortization are 14 years for trademarks and trade names, 8 years for non-compete agreements, 10 years for completed technology, 8 years for customer relationships and 5 years for software development. | |||||||||
The estimated aggregate amortization expense for the remainder of fiscal 2014, for each of the next five years and thereafter, is as follows (in thousands): | |||||||||
2014 (Remainder of year) | $ | 878 | |||||||
2015 | 1,171 | ||||||||
2016 | 1,171 | ||||||||
2017 | 1,169 | ||||||||
2018 | 1,101 | ||||||||
2019 | 1,036 | ||||||||
Thereafter | 1,460 | ||||||||
Note_6_Employee_Benefit_and_Re
Note 6 - Employee Benefit and Retirement Plans | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Compensation and Retirement Disclosure [Abstract] | ' | ||||||||
Pension and Other Postretirement Benefits Disclosure [Text Block] | ' | ||||||||
Note 6: Pension and Post-retirement Benefits | |||||||||
Net periodic benefit costs for the Company's defined benefit pension plans consist of the following (in thousands): | |||||||||
Three Months Ended | |||||||||
9/30/13 | 9/30/12 | ||||||||
Service cost | $ | 709 | $ | 738 | |||||
Interest cost | 1,715 | 1,494 | |||||||
Expected return on plan assets | (1,562 | ) | (1,602 | ) | |||||
Amortization of prior service cost | 29 | 59 | |||||||
Amortization of net loss | 3 | - | |||||||
$ | 894 | $ | 689 | ||||||
Net periodic benefit costs for the Company's postretirement medical plan and life insurance consists of the following (in thousands): | |||||||||
Three Months Ended | |||||||||
9/30/13 | 9/30/12 | ||||||||
Service cost | $ | 88 | $ | 128 | |||||
Interest cost | 133 | 136 | |||||||
Amortization of prior service credit | (126 | ) | (279 | ) | |||||
Amortization of accumulated loss | - | 40 | |||||||
$ | 95 | $ | 25 | ||||||
The Company’s pension plans use fair value as the market-related value of plan assets and recognize net actuarial gains or losses in excess of ten percent (10%) of the greater of the market-related value of plan assets or of the plans’ projected benefit obligation in net periodic (benefit) cost as of the plan measurement date, which is the same as the fiscal year end of the Company. Net actuarial gains or losses that are less than 10% of the thresholds noted above are accounted for as part of the accumulated other comprehensive income (loss). |
Note_7_Debt
Note 7 - Debt | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Debt Disclosure [Text Block] | ' | ||||||||
Note 7: Debt | |||||||||
Debt, including capitalized lease obligations, is comprised of the following (in thousands): | |||||||||
9/30/13 | 6/30/13 | ||||||||
Notes payable and current maturities | |||||||||
Loan and Security Agreement | $ | 1,364 | $ | 1,348 | |||||
Short-term foreign credit facility | 13 | 27 | |||||||
Capitalized leases | 157 | 182 | |||||||
1,534 | 1,557 | ||||||||
Long-term debt | |||||||||
Loan and Security Agreement | 22,191 | 24,037 | |||||||
Capitalized leases | 181 | 215 | |||||||
22,372 | 24,252 | ||||||||
$ | 23,906 | $ | 25,809 | ||||||
The Company executed an amendment to its Loan and Security Agreement (Line of Credit) as of April 25, 2012. The Line of Credit is effective for three years commencing April 25, 2012 and expires on April 30, 2015. The agreement continues the previous line of $23.0 million and interest rate of LIBOR plus 1.5%. On September 7, 2012, the Company completed another amendment to change the financial covenants. The material financial covenants of the amended Loan and Security Agreement are: 1) funded debt to EBITDA, excluding non-cash and retirement benefit expenses (“maximum leverage”), cannot exceed 1.45 to 1, 2) annual capital expenditures cannot exceed $15.0 million, 3) maintain a Debt Service Coverage Rate of a minimum of 1.25 to 1 and 4) maintain consolidated cash plus liquid investments of not less than $10.0 million at any time. | |||||||||
On May 9, 2013, the Company further amended the agreement to adjust the current funded debt to EBITDA ratio from 1.45 to 1, to 2.25 to 1 for the fourth quarter of fiscal 2013 and the first quarter of fiscal 2014. Thereafter, and through the end of the agreement on April 30, 2015, the funded debt to EBITDA covenant reverts to 1.45 to 1. | |||||||||
The effective interest rate on the Line of Credit under the Loan and Security Agreement for the three months ended September 30, 2013 and 2012 was 2.0% and 1.9%, respectively. | |||||||||
On November 22, 2011, in conjunction with the Bytewise acquisition, the Company entered into a $15.5 million term loan (the “Term Loan”) under the existing Loan and Security Agreement with TD Bank N.A. The term loan is a ten year loan bearing a fixed interest rate of 4.5% and is payable in fixed monthly payments of principal and interest of $160,640. The term loan, which had a balance of $13.2 million at September 30, 2013, is subject to the same financial covenants as the Loan and Security Agreement. | |||||||||
The Company was in compliance with its debt covenants as of September 30, 2013. |
Note_8_Income_Tax
Note 8 - Income Tax | 3 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Income Tax Disclosure [Text Block] | ' |
Note 8: Income Tax | |
The Company is subject to U.S. federal income tax and various state, local and foreign income taxes in numerous jurisdictions. The Company’s domestic and foreign tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files. | |
The Company provides for income taxes on an interim basis based on an estimate of the effective tax rate for the year. This estimate is reassessed on a quarterly basis. Discrete tax items are accounted for in the quarterly period in which they occur. | |
The tax expense for the first quarter of fiscal 2014 was $629,000 on a profit before tax for the quarter of $845,000 (an effective tax rate of 74.4%). The tax expense for the first quarter of fiscal 2013 was a benefit of $387,000 on a loss before tax of $738,000 (an effective tax rate of 52.4%). The primary reason for the high effective tax rate in the first quarter of fiscal 2014 is a discrete tax charge of $278,000 for the effect of a tax rate decrease in the UK applied to the net deferred tax assets in that jurisdiction. In the first quarter of fiscal 2013, a discrete tax benefit was booked reducing the Company’s net tax liability for uncertain tax positions of $91,000. | |
U.S. Federal tax returns through fiscal 2009 are generally no longer subject to review by tax authorities; however, tax loss carryforwards from years before fiscal 2010 are still subject to review. As of September 30, 2013, the Company has substantially resolved all open income tax audits and there were no other local or federal income tax audits in progress as of September 30, 2013. In international jurisdictions including Argentina, Australia, Brazil, Canada, China, Germany, Japan, Mexico, New Zealand, Singapore and the UK, which comprise a significant portion of the Company’s operations, the years that may be examined vary by country. The Company’s most significant foreign subsidiary in Brazil is subject to audit for the years 2008 – 2013. | |
The Company has identified no new uncertain tax positions during the three month period ended September 30, 2013 for which it is currently likely that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. | |
No valuation allowance has been recorded for the Company’s domestic federal net operating loss (NOL) carry forwards. The Company continues to believe that due to forecasted future taxable income and certain tax planning strategies available, it is more likely than not that it will be able to utilize the federal NOL carry forwards. The valuation allowance for subsidiary NOL’s in certain foreign countries, notably China, are being released in fiscal 2014 to the extent of forecasted taxable income in fiscal 2014. |
Note_9_Contingencies
Note 9 - Contingencies | 3 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies Disclosure [Text Block] | ' |
Note 9: Contingencies | |
The Company is involved in certain legal matters which arise in the normal course of business. These matters are not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. |
Accounting_Policies_by_Policy_
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' |
Basis of Accounting, Policy [Policy Text Block] | ' |
The balance sheet as of June 30, 2013, which has been derived from audited financial statements, and the unaudited interim financial statements have been prepared by The L.S. Starrett Company (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These unaudited financial statements, which, in the opinion of management, reflect all adjustments (including normal recurring adjustments) necessary for a fair presentation, 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 year ended June 30, 2013. Operating results are not necessarily indicative of the results that may be expected for any future interim period or for the entire fiscal year. | |
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the consolidated financial statements and accompanying notes. Note 2 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, 2013 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. There were no changes in any of the Company’s significant accounting policies during the three months ended September 30, 2013. | |
New Accounting Pronouncements, Policy [Policy Text Block] | ' |
In July 2013, the FASB issued ASU No. 2013-11, "Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." ASU No. 2013-11 resolves the diversity in practice regarding the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU comes into effect for the first annual period beginning after December 15, 2013. We do not expect adoption of ASU No. 2013-11 to affect our results of operations or cash flows. |
Note_3_StockBased_Compensation1
Note 3 - Stock-Based Compensation (Tables) | 3 Months Ended | ||||
Sep. 30, 2013 | |||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | ' | ||||
Risk-free interest rate | 1 | % | |||
Expected life (years) | 6 | ||||
Expected stock volatility | 52.3 | % | |||
Expected dividend yield | 4 | % |
Note_4_Inventories_Tables
Note 4 - Inventories (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Inventory, Current [Table Text Block] | ' | ||||||||
9/30/13 | 6/30/13 | ||||||||
Raw material and supplies | $ | 30,343 | $ | 29,565 | |||||
Goods in process and finished parts | 21,082 | 20,256 | |||||||
Finished goods | 37,356 | 37,507 | |||||||
88,781 | 87,328 | ||||||||
LIFO Reserve | (30,590 | ) | (30,827 | ) | |||||
Inventories | $ | 58,191 | $ | 56,501 |
Note_5_Goodwill_and_Intangible1
Note 5 - Goodwill and Intangibles (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
Schedule of Finite-Lived Intangible Assets [Table Text Block] | ' | ||||||||
9/30/13 | 6/30/13 | ||||||||
Non-compete agreement | $ | 600 | $ | 600 | |||||
Trademarks and trade names | 1,480 | 1,480 | |||||||
Completed technology | 2,010 | 2,010 | |||||||
Customer relationships | 4,950 | 4,950 | |||||||
Software development | 688 | 635 | |||||||
Other intangible assets | 325 | 325 | |||||||
Total | 10,053 | 10,000 | |||||||
Accumulated amortization | (2,067 | ) | (1,778 | ) | |||||
Total net balance | $ | 7,986 | $ | 8,222 | |||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | ' | ||||||||
2014 (Remainder of year) | $ | 878 | |||||||
2015 | 1,171 | ||||||||
2016 | 1,171 | ||||||||
2017 | 1,169 | ||||||||
2018 | 1,101 | ||||||||
2019 | 1,036 | ||||||||
Thereafter | 1,460 |
Note_6_Employee_Benefit_and_Re1
Note 6 - Employee Benefit and Retirement Plans (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Pension Plan, Defined Benefit [Member] | ' | ||||||||
Note 6 - Employee Benefit and Retirement Plans (Tables) [Line Items] | ' | ||||||||
Schedule of Net Benefit Costs [Table Text Block] | ' | ||||||||
Three Months Ended | |||||||||
9/30/13 | 9/30/12 | ||||||||
Service cost | $ | 709 | $ | 738 | |||||
Interest cost | 1,715 | 1,494 | |||||||
Expected return on plan assets | (1,562 | ) | (1,602 | ) | |||||
Amortization of prior service cost | 29 | 59 | |||||||
Amortization of net loss | 3 | - | |||||||
$ | 894 | $ | 689 | ||||||
Postretirement Medical and Life Insurance Plan [Member] | ' | ||||||||
Note 6 - Employee Benefit and Retirement Plans (Tables) [Line Items] | ' | ||||||||
Schedule of Net Benefit Costs [Table Text Block] | ' | ||||||||
Three Months Ended | |||||||||
9/30/13 | 9/30/12 | ||||||||
Service cost | $ | 88 | $ | 128 | |||||
Interest cost | 133 | 136 | |||||||
Amortization of prior service credit | (126 | ) | (279 | ) | |||||
Amortization of accumulated loss | - | 40 | |||||||
$ | 95 | $ | 25 |
Note_7_Debt_Tables
Note 7 - Debt (Tables) | 3 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Debt [Table Text Block] | ' | ||||||||
9/30/13 | 6/30/13 | ||||||||
Notes payable and current maturities | |||||||||
Loan and Security Agreement | $ | 1,364 | $ | 1,348 | |||||
Short-term foreign credit facility | 13 | 27 | |||||||
Capitalized leases | 157 | 182 | |||||||
1,534 | 1,557 | ||||||||
Long-term debt | |||||||||
Loan and Security Agreement | 22,191 | 24,037 | |||||||
Capitalized leases | 181 | 215 | |||||||
22,372 | 24,252 | ||||||||
$ | 23,906 | $ | 25,809 |
Note_3_StockBased_Compensation2
Note 3 - Stock-Based Compensation (Details) (USD $) | 3 Months Ended |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 |
Note 3 - Stock-Based Compensation (Details) [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares) | 500,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | '10 years |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number (in Shares) | 20,500 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in Shares) | 8,200 |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares) | 471,300 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share) | $3.82 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term | '9 years 3 months |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value (in Dollars) | $0.10 |
Allocated Share-based Compensation Expense (in Dollars) | 0.1 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars) | 0.1 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | '2 years 73 days |
Employee Stock Option [Member] | Minimum [Member] | ' |
Note 3 - Stock-Based Compensation (Details) [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '1 year |
Employee Stock Option [Member] | Maximum [Member] | ' |
Note 3 - Stock-Based Compensation (Details) [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '3 years |
Restricted Stock Units (RSUs) [Member] | ' |
Note 3 - Stock-Based Compensation (Details) [Line Items] | ' |
Share-Based Compensation Arrangement by Share-based Payment Award Equity Instruments Other Than Options Outstanding Intrinsic Value (in Dollars) | $0.10 |
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ' |
Note 3 - Stock-Based Compensation (Details) [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '1 year |
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ' |
Note 3 - Stock-Based Compensation (Details) [Line Items] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | '3 years |
Note_3_StockBased_Compensation3
Note 3 - Stock-Based Compensation (Details) - Weighted Average Assumptions | 3 Months Ended |
Sep. 30, 2013 | |
Weighted Average Assumptions [Abstract] | ' |
Risk-free interest rate | 1.00% |
Expected life (years) | '6 years |
Expected stock volatility | 52.30% |
Expected dividend yield | 4.00% |
Note_4_Inventories_Details
Note 4 - Inventories (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Inventory Disclosure [Abstract] | ' | ' | ' |
LIFO Inventory Amount | $12,900,000 | ' | $12,900,000 |
Inventory Difference Using FIFO Basis | 30,600,000 | ' | 30,800,000 |
Effect of LIFO Inventory Liquidation on Income | $200,000 | $0 | ' |
Note_4_Inventories_Details_Inv
Note 4 - Inventories (Details) - Inventory (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Inventory [Abstract] | ' | ' |
Raw material and supplies | $30,343 | $29,565 |
Goods in process and finished parts | 21,082 | 20,256 |
Finished goods | 37,356 | 37,507 |
88,781 | 87,328 | |
LIFO Reserve | -30,590 | -30,827 |
Inventories | $58,191 | $56,501 |
Note_5_Goodwill_and_Intangible2
Note 5 - Goodwill and Intangibles (Details) | 3 Months Ended |
Sep. 30, 2013 | |
Trademarks and Trade Names [Member] | ' |
Note 5 - Goodwill and Intangibles (Details) [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '14 years |
Noncompete Agreements [Member] | ' |
Note 5 - Goodwill and Intangibles (Details) [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years |
Completed Technology [Member] | ' |
Note 5 - Goodwill and Intangibles (Details) [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '10 years |
Customer Relationships [Member] | ' |
Note 5 - Goodwill and Intangibles (Details) [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years |
Software Developement [Member] | ' |
Note 5 - Goodwill and Intangibles (Details) [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '5 years |
Note_5_Goodwill_and_Intangible3
Note 5 - Goodwill and Intangibles (Details) - Finite-Lived Intangible Assets (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | $10,053 | $10,000 |
Accumulated amortization | -2,067 | -1,778 |
Total net balance | 7,986 | 8,222 |
Noncompete Agreements [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | 600 | 600 |
Trademarks and Trade Names [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | 1,480 | 1,480 |
Completed Technology [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | 2,010 | 2,010 |
Customer Relationships [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | 4,950 | 4,950 |
Software Developement [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | 688 | 635 |
Other Intangible Assets [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Intangible assets, gross | $325 | $325 |
Note_5_Goodwill_and_Intangible4
Note 5 - Goodwill and Intangibles (Details) - Estimated Aggregate Amortization Expense (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Estimated Aggregate Amortization Expense [Abstract] | ' |
2014 (Remainder of year) | $878 |
2015 | 1,171 |
2016 | 1,171 |
2017 | 1,169 |
2018 | 1,101 |
2019 | 1,036 |
Thereafter | $1,460 |
Note_6_Employee_Benefit_and_Re2
Note 6 - Employee Benefit and Retirement Plans (Details) - Net Periodic Benefit Costs For Defined Benefit Pension Plans (Pension Plan, Defined Benefit [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Pension Plan, Defined Benefit [Member] | ' | ' |
Note 6 - Employee Benefit and Retirement Plans (Details) - Net Periodic Benefit Costs For Defined Benefit Pension Plans [Line Items] | ' | ' |
Service cost | $709 | $738 |
Interest cost | 1,715 | 1,494 |
Expected return on plan assets | -1,562 | -1,602 |
Amortization of prior service cost | 29 | 59 |
Amortization of net loss | 3 | ' |
$894 | $689 |
Note_6_Employee_Benefit_and_Re3
Note 6 - Employee Benefit and Retirement Plans (Details) - Net Periodic Benefit Costs For Postretirement Medical Plan (Postretirement Medical and Life Insurance Plan [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Postretirement Medical and Life Insurance Plan [Member] | ' | ' |
Note 6 - Employee Benefit and Retirement Plans (Details) - Net Periodic Benefit Costs For Postretirement Medical Plan [Line Items] | ' | ' |
Service cost | $88 | $128 |
Interest cost | 133 | 136 |
Amortization of prior service credit | -126 | -279 |
Amortization of accumulated loss | ' | 40 |
$95 | $25 |
Note_7_Debt_Details
Note 7 - Debt (Details) (USD $) | 1 Months Ended | 3 Months Ended | 5 Months Ended | 13 Months Ended | ||||
Nov. 22, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Funded Debt to EBTIDA [Member] | Funded Debt to EBTIDA [Member] | Capital Expenditures [Member] | Debt Service Coverage Ratio [Member] | Cash and Liquid Investments [Member] | ||||
Note 7 - Debt (Details) [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity (in Dollars) | ' | $23,000,000 | ' | ' | ' | ' | ' | ' |
Debt Instrument, Basis Spread on Variable Rate | ' | 1.50% | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Covenant Terms | ' | ' | ' | 'the Company further amended the agreement to adjust the current funded debt to EBITDA ratio from 1.45 to 1, to 2.25 to 1 for the fourth quarter of fiscal 2013 and the first quarter of fiscal 2014. Thereafter, and through the end of the agreement on April 30, 2015, the funded debt to EBITDA covenant reverts to 1.45 to 1 | 'funded debt to EBITDA, excluding non-cash and retirement benefit expenses ("maximum leverage"), cannot exceed 1.45 to 1, 2) annual capital expenditures cannot exceed $15.0 million, 3) maintain a Debt Service Coverage Rate of a minimum of 1.25 to 1 | 'annual capital expenditures cannot exceed $15.0 million, 3) maintain a Debt Service Coverage Rate of a minimum of 1.25 to 1 and 4) maintain consolidated cash plus liquid investments of not less than $10.0 million | 'maintain a Debt Service Coverage Rate of a minimum of 1.25 to 1 | 'maintain consolidated cash plus liquid investments of not less than $10.0 million at any time |
Line of Credit Facility, Interest Rate During Period | ' | 2.00% | 1.90% | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount (in Dollars) | 15,500,000 | ' | ' | ' | ' | ' | ' | ' |
Term Loan Number of Years | '10 years | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Periodic Payment (in Dollars) | 160,640 | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Amount Outstanding (in Dollars) | ' | ' | $13,200,000 | ' | ' | ' | ' | ' |
Note_7_Debt_Details_Debt_Sched
Note 7 - Debt (Details) - Debt Schedule (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Debt Schedule [Abstract] | ' | ' |
Loan and Security Agreement | $1,364 | $1,348 |
Short-term foreign credit facility | 13 | 27 |
Capitalized leases | 157 | 182 |
1,534 | 1,557 | |
Loan and Security Agreement | 22,191 | 24,037 |
Capitalized leases | 181 | 215 |
22,372 | 24,252 | |
$23,906 | $25,809 |
Note_8_Income_Tax_Details
Note 8 - Income Tax (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Note 8 - Income Tax (Details) [Line Items] | ' | ' |
Income Tax Expense (Benefit) | $629,000 | ($387,000) |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | 845,000 | -738,000 |
Effective Income Tax Rate Reconciliation, Percent | 74.40% | 52.40% |
Unrecognized Tax Benefits, Period Increase (Decrease) | -91,000 | ' |
Tax Rate Decrease In UK Applied To Net Deferred Tax Assets [Member] | ' | ' |
Note 8 - Income Tax (Details) [Line Items] | ' | ' |
Income Tax Expense (Benefit) | $278,000 | ' |