Note J - Business Segments and Foreign Operations

12 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

J.   BUSINESS SEGMENTS AND FOREIGN OPERATIONS

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment. Principal products include marine transmissions, azimuth drives, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and controls systems. The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, energy and natural resources, government, and industrial markets.

Net sales by product group is summarized as follows:

	2021		2020
Industrial	$	23,454	$	26,343
Land-based transmissions		58,421		62,697
Marine and propulsion systems		127,243		152,501
Other		9,463		5,297
Total	$	218,581	$	246,838

Industrial products include clutches, power take-offs and pump drives sold to the agriculture, recycling, construction and oil and gas markets. The land based transmission products include applications for oil field and natural gas, military and airport rescue and fire fighting. The marine and propulsion systems include marine transmission, azimuth drives, controls, surface drives, propellers and boat management systems for the global commercial marine, pleasure craft and patrol boat markets. Other includes non-Twin Disc manufactured product sold through Company-owned distribution entities.

The Company has two reportable segments: manufacturing and distribution.  Its segment structure reflects the way management makes operating decisions and manages the growth and profitability of the business. It also corresponds with management’s approach of allocating resources and assessing the performance of its segments. The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices.  Management evaluates the performance of its segments based on net earnings.

Information about the Company's segments, before intercompany eliminations, is summarized as follows:

2021	Manufacturing			Distribution		Total
Net Sales	$	191,510		$	100,221	$	291,731
Intra-segment sales		9,436			14,746		24,182
Inter-segment sales		44,575			4,393		48,968
Interest income		172			17		189
Interest expense		2,449			1		2,450
Income taxes		(980	)		189		(791	)
Depreciation and amortization		10,455			412		10,867
Net income attributable to Twin Disc		11,016			105		11,121
Assets		364,379			46,956		411,335
Expenditures for segment assets		3,500			188		3,688

2020	Manufacturing			Distribution		Total
Net Sales	$	227,565		$	95,824	$	323,389
Intra-segment sales		14,230			12,889		27,119
Inter-segment sales		43,854			5,578		49,432
Interest income		346			22		368
Interest expense		2,128			-		2,128
Income taxes		(2,027	)		268		(1,759	)
Depreciation and amortization		11,151			379		11,530
Net (loss) income attributable to Twin Disc		(31,603	)		553		(31,050	)
Assets		365,417			43,118		408,535
Expenditures for segment assets		9,615			734		10,349

The following is a reconciliation of reportable segment net sales and net income (loss) to the Company’s consolidated totals:

	2021			2020
Net sales:
Total net sales from reportable segments	$	291,731		$	323,389
Elimination of inter-company sales		(73,150	)		(76,551	)
Total consolidated net sales	$	218,581		$	246,838
Net income (loss) attributable to Twin Disc:
Total net income (loss) from reportable segments	$	11,121		$	(31,050	)
Other adjustments and corporate expenses		(40,840	)		(8,767	)
Total consolidated net loss attributable to Twin Disc	$	(29,719	)	$	(39,817	)

Corporate expenses pertain to certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and global functional expenses.

Other significant items:         

	Segment						Consolidated
	Totals			Adjustments			Totals
2021
Interest income	$	189		$	(170	)	$	19
Interest expense		2,450			(92	)		2,358
Income taxes		(791	)		20,471			19,680
Depreciation and amortization		10,867			376			11,243
Assets		411,335			(135,922	)		275,413
Expenditures for segment assets		3,688			776			4,464
2020
Interest income	$	368		$	(290	)	$	78
Interest expense		2,128			(268	)		1,860
Income taxes		(1,759	)		(2,410	)		(4,169	)
Depreciation and amortization		11,530			395			11,925
Assets		408,535			(114,408	)		294,127
Expenditures for segment assets		10,349			350			10,699

All adjustments represent inter-company eliminations and corporate amounts.

Geographic information about the Company is summarized as follows:

	2021		2020
Net sales
United States	$	64,344	$	83,771
Netherlands		33,026		39,501
China		25,790		26,354
Australia		17,963		12,438
Italy		16,041		11,802
Austria		7,798		12,552
Other countries		53,619		60,420
Total	$	218,581	$	246,838

Net sales by geographic region are based on product shipment destination.

Long-lived assets primarily pertain to property, plant and equipment and exclude goodwill, other intangibles, and deferred income taxes. They are summarized as follows:

Long-lived assets	2021		2020
United States	$	34,629	$	41,996
Netherlands		12,447		12,659
Belgium		8,575		8,363
Italy		1,525		1,697
Switzerland		503		6,804
Other countries		5,776		5,205
Total	$	63,455	$	76,724

There were no customers that accounted for 10% of consolidated net sales in fiscal 2021. The Company had one distributor customer, primarily of its manufacturing segment, that accounted for 10% of total Company sales for fiscal 2020.

Disaggregated revenue:

The following tables present details deemed most relevant to the users of the financial statements for the years ended June 30, 2021 and June 30, 2020.

Net sales by product group for the year ended June 30, 2021 is summarized as follows:

					Elimination of
	Manufacturing		Distribution		Intercompany Sales			Total
Industrial	$	22,621	$	5,494	$	(4,661	)	$	23,454
Land-based transmissions		52,441		26,003		(20,023	)		58,421
Marine and propulsion systems		116,371		59,276		(48,404	)		127,243
Other		77		9,448		(62	)		9,463
Total	$	191,510	$	100,221	$	(73,150	)	$	218,581

Net sales by product group for the year ended June 30, 2020 is summarized as follows:

					Elimination of
	Manufacturing		Distribution		Intercompany Sales			Total
Industrial	$	24,143	$	5,634	$	(3,434	)	$	26,343
Land-based transmissions		63,523		25,699		(26,525	)		62,697
Marine and propulsion systems		139,833		59,212		(46,544	)		152,501
Other		66		5,279		(48	)		5,297
Total	$	227,565	$	95,824	$	(76,551	)	$	246,838