Pennsylvania | 25-0900168 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
600 Grant Street Suite 5100 Pittsburgh, Pennsylvania | 15219-2706 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer [X] | Accelerated filer [ ] | |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] | |
Emerging growth company [ ] |
Title of Each Class | Outstanding at April 28, 2017 | |
Capital Stock, par value $1.25 per share | 80,554,198 |
Item No. | Page No. | |
1. | ||
2. | ||
3. | ||
4. | ||
1. | ||
2. | ||
6. | ||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales | $ | 528,630 | $ | 497,837 | $ | 1,493,343 | $ | 1,577,212 | |||||||
Cost of goods sold | 342,365 | 340,484 | 1,015,926 | 1,127,828 | |||||||||||
Gross profit | 186,265 | 157,353 | 477,417 | 449,384 | |||||||||||
Operating expense | 116,939 | 121,004 | 347,808 | 373,827 | |||||||||||
Restructuring and asset impairment charges (Notes 8 and 18) | 7,169 | 7,142 | 44,230 | 128,498 | |||||||||||
Loss on divestiture (Note 5) | — | (2,557 | ) | — | 130,750 | ||||||||||
Amortization of intangibles | 4,245 | 4,429 | 12,665 | 16,315 | |||||||||||
Operating income (loss) | 57,912 | 27,335 | 72,714 | (200,006 | ) | ||||||||||
Interest expense | 7,331 | 7,113 | 21,475 | 20,895 | |||||||||||
Other expense (income), net | 1,626 | (1,938 | ) | 2,470 | (1,582 | ) | |||||||||
Income (loss) before income taxes | 48,955 | 22,160 | 48,769 | (219,319 | ) | ||||||||||
Provision (benefit) for income taxes | 9,301 | 5,465 | 22,401 | (61,499 | ) | ||||||||||
Net income (loss) | 39,654 | 16,695 | 26,368 | (157,820 | ) | ||||||||||
Less: Net income attributable to noncontrolling interests | 764 | 695 | 1,873 | 1,634 | |||||||||||
Net income (loss) attributable to Kennametal | $ | 38,890 | $ | 16,000 | $ | 24,495 | $ | (159,454 | ) | ||||||
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS | |||||||||||||||
Basic earnings (loss) per share | $ | 0.48 | $ | 0.20 | $ | 0.31 | $ | (2.00 | ) | ||||||
Diluted earnings (loss) per share | $ | 0.48 | $ | 0.20 | $ | 0.30 | $ | (2.00 | ) | ||||||
Dividends per share | $ | 0.20 | $ | 0.20 | $ | 0.60 | $ | 0.60 | |||||||
Basic weighted average shares outstanding | 80,398 | 79,871 | 80,219 | 79,814 | |||||||||||
Diluted weighted average shares outstanding | 81,381 | 80,224 | 80,965 | 79,814 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||
Net income (loss) | $ | 39,654 | $ | 16,695 | $ | 26,368 | $ | (157,820 | ) | |||||
Other comprehensive income (loss), net of tax | ||||||||||||||
Unrealized (loss) gain on derivatives designated and qualified as cash flow hedges | (866 | ) | (637 | ) | 614 | 165 | ||||||||
Reclassification of unrealized loss (gain) on expired derivatives designated and qualified as cash flow hedges | 389 | 238 | 1,158 | (1,946 | ) | |||||||||
Unrecognized net pension and other postretirement benefit (loss) gain | (725 | ) | (888 | ) | 3,376 | 1,561 | ||||||||
Reclassification of net pension and other postretirement benefit loss | 1,804 | 1,219 | 5,434 | 3,641 | ||||||||||
Foreign currency translation adjustments | 13,785 | 17,783 | (26,480 | ) | (24,705 | ) | ||||||||
Reclassification of foreign currency translation adjustment (gain) loss realized upon sale | — | (1,940 | ) | — | 15,088 | |||||||||
Total other comprehensive income (loss), net of tax | 14,387 | 15,775 | (15,898 | ) | (6,196 | ) | ||||||||
Total comprehensive income (loss) | 54,041 | 32,470 | 10,470 | (164,016 | ) | |||||||||
Less: comprehensive income attributable to noncontrolling interests | 1,734 | 1,222 | 2,203 | 1,094 | ||||||||||
Comprehensive income (loss) attributable to Kennametal Shareholders | $ | 52,307 | $ | 31,248 | $ | 8,267 | $ | (165,110 | ) |
(in thousands, except per share data) | March 31, 2017 | June 30, 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 100,817 | $ | 161,579 | |||
Accounts receivable, less allowance for doubtful accounts of $12,562 and $12,724, respectively | 376,956 | 370,916 | |||||
Inventories (Note 11) | 490,212 | 458,830 | |||||
Deferred income taxes (Note 3) | — | 26,713 | |||||
Other current assets | 75,061 | 57,303 | |||||
Total current assets | 1,043,046 | 1,075,341 | |||||
Property, plant and equipment: | |||||||
Land and buildings | 351,909 | 353,789 | |||||
Machinery and equipment | 1,541,177 | 1,511,462 | |||||
Less accumulated depreciation | (1,164,311 | ) | (1,134,611 | ) | |||
Property, plant and equipment, net | 728,775 | 730,640 | |||||
Other assets: | |||||||
Goodwill (Note 18) | 294,315 | 298,487 | |||||
Other intangible assets, less accumulated amortization of $124,163 and $114,093, respectively (Note 18) | 193,069 | 207,208 | |||||
Deferred income taxes (Note 3) | 34,481 | 14,459 | |||||
Other | 41,053 | 36,648 | |||||
Total other assets | 562,918 | 556,802 | |||||
Total assets | $ | 2,334,739 | $ | 2,362,783 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt and capital leases | $ | 253 | $ | 732 | |||
Notes payable to banks | 1,338 | 1,163 | |||||
Accounts payable | 190,841 | 182,039 | |||||
Accrued income taxes | 17,732 | 16,602 | |||||
Accrued expenses | 76,026 | 74,470 | |||||
Other current liabilities | 140,609 | 152,269 | |||||
Total current liabilities | 426,799 | 427,275 | |||||
Long-term debt and capital leases, less current maturities (Notes 3 and 12) | 694,631 | 693,548 | |||||
Deferred income taxes (Note 3) | 13,690 | 17,126 | |||||
Accrued pension and postretirement benefits | 190,434 | 201,473 | |||||
Accrued income taxes | 2,837 | 3,100 | |||||
Other liabilities | 26,777 | 24,460 | |||||
Total liabilities | 1,355,168 | 1,366,982 | |||||
EQUITY (Note 16) | |||||||
Kennametal Shareholders’ Equity: | |||||||
Preferred stock, no par value; 5,000 shares authorized; none issued | — | — | |||||
Capital stock, $1.25 par value; 120,000 shares authorized; 80,252 and 79,694 shares issued, respectively | 100,315 | 99,618 | |||||
Additional paid-in capital | 457,305 | 436,617 | |||||
Retained earnings | 757,079 | 780,597 | |||||
Accumulated other comprehensive loss | (368,737 | ) | (352,509 | ) | |||
Total Kennametal Shareholders’ Equity | 945,962 | 964,323 | |||||
Noncontrolling interests | 33,609 | 31,478 | |||||
Total equity | 979,571 | 995,801 | |||||
Total liabilities and equity | $ | 2,334,739 | $ | 2,362,783 |
Nine Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | 26,368 | $ | (157,820 | ) | ||
Adjustments for non-cash items: | |||||||
Depreciation | 68,369 | 73,297 | |||||
Amortization | 12,665 | 16,315 | |||||
Stock-based compensation expense | 17,285 | 14,705 | |||||
Restructuring and asset impairment charges (Note 8 and 18) | 1,224 | 111,922 | |||||
Deferred income tax provision | 1,300 | (85,426 | ) | ||||
Loss on divestiture (Note 5) | — | 130,750 | |||||
Other | (2,711 | ) | 239 | ||||
Changes in certain assets and liabilities: | |||||||
Accounts receivable | (12,736 | ) | 44,125 | ||||
Inventories | (38,110 | ) | 47,778 | ||||
Accounts payable and accrued liabilities | 25,789 | (16,244 | ) | ||||
Accrued income taxes | 1,087 | (12,989 | ) | ||||
Accrued pension and postretirement benefits | (18,799 | ) | (22,901 | ) | |||
Other | (1,710 | ) | 1,663 | ||||
Net cash flow provided by operating activities | 80,021 | 145,414 | |||||
INVESTING ACTIVITIES | |||||||
Purchases of property, plant and equipment | (94,095 | ) | (83,285 | ) | |||
Disposals of property, plant and equipment | 3,852 | 5,102 | |||||
Proceeds from divestiture (Note 5) | — | 61,100 | |||||
Other | 111 | 835 | |||||
Net cash flow used for investing activities | (90,132 | ) | (16,248 | ) | |||
FINANCING ACTIVITIES | |||||||
Net increase (decrease) in notes payable | 333 | (4,088 | ) | ||||
Term debt borrowings | 25,298 | 50,070 | |||||
Term debt repayments | (25,830 | ) | (94,337 | ) | |||
Purchase of capital stock | (188 | ) | (231 | ) | |||
Dividend reinvestment and the effect of employee benefit and stock plans | 7,057 | 1,713 | |||||
Cash dividends paid to Shareholders | (48,013 | ) | (47,780 | ) | |||
Other | (6,439 | ) | (55 | ) | |||
Net cash flow used for financing activities | (47,782 | ) | (94,708 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (2,869 | ) | (3,388 | ) | |||
CASH AND CASH EQUIVALENTS | |||||||
Net (decrease) increase in cash and cash equivalents | (60,762 | ) | 31,070 | ||||
Cash and cash equivalents, beginning of period | 161,579 | 105,494 | |||||
Cash and cash equivalents, end of period | $ | 100,817 | $ | 136,564 |
4. | SUPPLEMENTAL CASH FLOW DISCLOSURES |
Nine Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
Cash paid during the period for: | |||||||
Interest | $ | 20,725 | $ | 20,056 | |||
Income taxes | 20,013 | 38,429 | |||||
Supplemental disclosure of non-cash information: | |||||||
Changes in accounts payable related to purchases of property, plant and equipment | 15,404 | 16,400 |
5. | DIVESTITURE |
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
Derivatives (1) | $ | — | $ | 1,421 | $ | — | $ | 1,421 | |||||||
Total assets at fair value | $ | — | $ | 1,421 | $ | — | $ | 1,421 | |||||||
Liabilities: | |||||||||||||||
Derivatives (1) | $ | — | $ | 1,352 | $ | — | $ | 1,352 | |||||||
Total liabilities at fair value | $ | — | $ | 1,352 | $ | — | $ | 1,352 |
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
Derivatives (1) | $ | — | $ | 334 | $ | — | $ | 334 | |||||||
Total assets at fair value | $ | — | $ | 334 | $ | — | $ | 334 | |||||||
Liabilities: | |||||||||||||||
Derivatives (1) | $ | — | $ | 763 | $ | — | $ | 763 | |||||||
Contingent consideration | — | — | 6,600 | 6,600 | |||||||||||
Total liabilities at fair value | $ | — | $ | 763 | $ | 6,600 | $ | 7,363 |
7. | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
(in thousands) | March 31, 2017 | June 30, 2016 | |||||
Derivatives designated as hedging instruments | |||||||
Other current assets - range forward contracts | $ | 901 | $ | 323 | |||
Other assets - range forward contracts | 40 | — | |||||
Total derivatives designated as hedging instruments | 941 | 323 | |||||
Derivatives not designated as hedging instruments | |||||||
Other current assets - currency forward contracts | 480 | 11 | |||||
Other current liabilities - currency forward contracts | (1,352 | ) | (763 | ) | |||
Total derivatives not designated as hedging instruments | (872 | ) | (752 | ) | |||
Total derivatives | $ | 69 | $ | (429 | ) |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Other expense (income), net - currency forward contracts | $ | 538 | $ | (182 | ) | $ | 161 | $ | (116 | ) |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
(Losses) gains recognized in other comprehensive loss, net | $ | (866 | ) | $ | (914 | ) | $ | 615 | $ | (637 | ) | ||||
Losses reclassified from accumulated other comprehensive loss into other expense (income), net | $ | 390 | $ | 629 | $ | 1,158 | $ | 293 |
Instrument | Notional (EUR in thousands)(2) | Notional (USD in thousands)(2) | Maturity | ||||
Foreign currency-denominated intercompany loan payable | € | 30,046 | $ | 32,083 | June 30, 2017 | ||
Foreign currency-denominated intercompany loan payable | 26,327 | 28,112 | June 26, 2022 | ||||
Foreign currency-denominated intercompany loan payable | 8,612 | 9,196 | November 20, 2018 | ||||
Foreign currency-denominated intercompany loan payable | 2,032 | 2,169 | October 11, 2017 |
8. | RESTRUCTURING AND RELATED CHARGES |
(in thousands) | June 30, 2016 | Expense | Asset Write-Down | Translation | Cash Expenditures | March 31, 2017 | |||||||||||||||||
Industrial | |||||||||||||||||||||||
Severance | $ | 8,180 | $ | 25,359 | $ | — | $ | (313 | ) | $ | (24,395 | ) | $ | 8,831 | |||||||||
Facilities | — | 111 | (111 | ) | — | — | — | ||||||||||||||||
Other | 809 | (30 | ) | — | (10 | ) | (546 | ) | 223 | ||||||||||||||
Total Industrial | $ | 8,989 | $ | 25,440 | $ | (111 | ) | $ | (323 | ) | $ | (24,941 | ) | $ | 9,054 | ||||||||
Widia | |||||||||||||||||||||||
Severance | $ | 909 | $ | 4,820 | $ | — | $ | (60 | ) | $ | (4,637 | ) | $ | 1,032 | |||||||||
Facilities | — | 10 | (10 | ) | — | — | — | ||||||||||||||||
Other | 90 | (6 | ) | — | (1 | ) | (83 | ) | — | ||||||||||||||
Total Widia | $ | 999 | $ | 4,824 | $ | (10 | ) | $ | (61 | ) | $ | (4,720 | ) | $ | 1,032 | ||||||||
Infrastructure | |||||||||||||||||||||||
Severance | $ | 5,301 | $ | 12,838 | $ | — | $ | (159 | ) | $ | (12,351 | ) | $ | 5,629 | |||||||||
Facilities | 33 | 1,399 | (1,399 | ) | — | — | 33 | ||||||||||||||||
Other | 381 | (15 | ) | — | (5 | ) | (279 | ) | 82 | ||||||||||||||
Total Infrastructure | $ | 5,715 | $ | 14,222 | $ | (1,399 | ) | $ | (164 | ) | $ | (12,630 | ) | $ | 5,744 | ||||||||
Total | $ | 15,703 | $ | 44,486 | $ | (1,520 | ) | $ | (548 | ) | $ | (42,291 | ) | $ | 15,830 |
9. | STOCK-BASED COMPENSATION |
Risk-free interest rate | 1.4 | % | |
Expected life (years) (3) | 4.5 | ||
Expected volatility (4) | 31.7 | % | |
Expected dividend yield | 2.1 | % |
Options | Weighted Average Exercise Price | Weighted Average Remaining Life (years) | Aggregate Intrinsic value (in thousands) | |||||||||
Options outstanding, June 30, 2016 | 2,547,809 | $ | 33.72 | |||||||||
Granted | — | — | ||||||||||
Exercised | (250,366 | ) | 28.59 | |||||||||
Lapsed or forfeited | (183,249 | ) | 31.29 | |||||||||
Options outstanding, March 31, 2017 | 2,114,194 | $ | 34.53 | 4.2 | $ | 12,207 | ||||||
Options vested and expected to vest, March 31, 2017 | 2,096,072 | $ | 34.58 | 4.2 | $ | 12,017 | ||||||
Options exercisable, March 31, 2017 | 1,641,869 | $ | 35.97 | 3.1 | $ | 7,382 |
Performance Vesting Stock Units | Performance Vesting Weighted Average Fair Value | Time Vesting Stock Units | Time Vesting Weighted Average Fair Value | ||||||||||
Unvested, June 30, 2016 | 115,467 | $ | 36.96 | 1,014,744 | $ | 31.97 | |||||||
Granted | 235,241 | 26.35 | 610,633 | 25.45 | |||||||||
Vested | (17,124 | ) | 45.24 | (362,563 | ) | 35.27 | |||||||
Performance metric not achieved | (35,980 | ) | 26.35 | — | — | ||||||||
Forfeited | (17,354 | ) | 35.31 | (68,458 | ) | 27.60 | |||||||
Unvested, March 31, 2017 | 280,250 | $ | 27.62 | 1,194,356 | $ | 27.87 |
10. | BENEFIT PLANS |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Service cost | $ | 720 | $ | 1,154 | $ | 2,180 | $ | 3,473 | |||||||
Interest cost | 7,756 | 9,375 | 23,335 | 28,299 | |||||||||||
Expected return on plan assets | (14,659 | ) | (14,560 | ) | (44,088 | ) | (43,924 | ) | |||||||
Amortization of transition obligation | 22 | 19 | 67 | 61 | |||||||||||
Amortization of prior service credit | (113 | ) | (104 | ) | (339 | ) | (313 | ) | |||||||
Recognition of actuarial losses | 2,066 | 1,805 | 6,266 | 5,452 | |||||||||||
Settlement gain | (320 | ) | — | (320 | ) | — | |||||||||
Special termination benefit charge | — | — | — | 214 | |||||||||||
Net periodic pension income | $ | (4,528 | ) | $ | (2,311 | ) | $ | (12,899 | ) | $ | (6,738 | ) |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Interest cost | $ | 168 | $ | 210 | $ | 505 | $ | 630 | |||||||
Amortization of prior service credit | (6 | ) | (6 | ) | (16 | ) | (16 | ) | |||||||
Recognition of actuarial loss | 89 | 81 | 266 | 242 | |||||||||||
Net periodic other postretirement benefit cost | $ | 251 | $ | 285 | $ | 755 | $ | 856 |
11. | INVENTORIES |
(in thousands) | March 31, 2017 | June 30, 2016 | |||||
Finished goods | $ | 286,990 | $ | 284,054 | |||
Work in process and powder blends | 168,354 | 166,274 | |||||
Raw materials | 90,389 | 68,472 | |||||
Inventories at current cost | 545,733 | 518,800 | |||||
Less: LIFO valuation | (55,521 | ) | (59,970 | ) | |||
Total inventories | $ | 490,212 | $ | 458,830 |
12. | LONG-TERM DEBT |
14. | INCOME TAXES |
15. | EARNINGS PER SHARE |
Kennametal Shareholders’ Equity | |||||||||||||||||||||||
(in thousands) | Capital stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | Non- controlling interests | Total equity | |||||||||||||||||
Balance as of June 30, 2016 | $ | 99,618 | $ | 436,617 | $ | 780,597 | $ | (352,509 | ) | $ | 31,478 | $ | 995,801 | ||||||||||
Net income | — | — | 24,495 | — | 1,873 | 26,368 | |||||||||||||||||
Other comprehensive (loss) income | — | — | — | (16,228 | ) | 330 | (15,898 | ) | |||||||||||||||
Dividend reinvestment | 7 | 181 | — | — | — | 188 | |||||||||||||||||
Capital stock issued under employee benefit and stock plans(5) | 697 | 20,688 | — | — | — | 21,385 | |||||||||||||||||
Purchase of capital stock | (7 | ) | (181 | ) | — | — | — | (188 | ) | ||||||||||||||
Cash dividends paid | — | — | (48,013 | ) | — | (72 | ) | (48,085 | ) | ||||||||||||||
Balance as of March 31, 2017 | $ | 100,315 | $ | 457,305 | $ | 757,079 | $ | (368,737 | ) | $ | 33,609 | $ | 979,571 |
Kennametal Shareholders’ Equity | |||||||||||||||||||||||
(in thousands) | Capital stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | Non- controlling interests | Total equity | |||||||||||||||||
Balance as of June 30, 2015 | $ | 99,219 | $ | 419,829 | $ | 1,070,282 | $ | (243,523 | ) | $ | 29,628 | $ | 1,375,435 | ||||||||||
Net (loss) income | — | — | (159,454 | ) | — | 1,634 | (157,820 | ) | |||||||||||||||
Other comprehensive loss | — | — | — | (5,656 | ) | (540 | ) | (6,196 | ) | ||||||||||||||
Dividend reinvestment | 12 | 219 | — | — | — | 231 | |||||||||||||||||
Capital stock issued under employee benefit and stock plans(5) | 380 | 10,863 | — | — | — | 11,243 | |||||||||||||||||
Purchase of capital stock | (12 | ) | (219 | ) | — | — | — | (231 | ) | ||||||||||||||
Cash dividends paid | — | — | (47,780 | ) | — | (71 | ) | (47,851 | ) | ||||||||||||||
Balance as of March 31, 2016 | $ | 99,599 | $ | 430,692 | $ | 863,048 | $ | (249,179 | ) | $ | 30,651 | $ | 1,174,811 |
17. | ACCUMULATED OTHER COMPREHENSIVE LOSS |
Attributable to Kennametal: | Postretirement benefit plans | Currency translation adjustment | Derivatives | Total | ||||||||
Balance, June 30, 2016 | $ | (212,163 | ) | $ | (131,212 | ) | $ | (9,134 | ) | $ | (352,509 | ) |
Other comprehensive income (loss) before reclassifications | 3,376 | (26,810 | ) | 614 | (22,820 | ) | ||||||
Amounts reclassified from AOCL | 5,434 | — | 1,158 | 6,592 | ||||||||
Net current period other comprehensive income (loss) | 8,810 | (26,810 | ) | 1,772 | (16,228 | ) | ||||||
AOCL, March 31, 2017 | $ | (203,353 | ) | $ | (158,022 | ) | $ | (7,362 | ) | $ | (368,737 | ) |
Attributable to noncontrolling interests: | ||||||||||||
Balance, June 30, 2016 | $ | — | $ | (3,446 | ) | $ | — | $ | (3,446 | ) | ||
Other comprehensive income before reclassifications | — | 330 | — | 330 | ||||||||
Net current period other comprehensive income | — | 330 | — | 330 | ||||||||
AOCL, March 31, 2017 | $ | — | $ | (3,116 | ) | $ | — | $ | (3,116 | ) |
Attributable to Kennametal: | Postretirement benefit plans | Currency translation adjustment | Derivatives | Total | ||||||||
Balance, June 30, 2015 | $ | (138,793 | ) | $ | (97,309 | ) | $ | (7,421 | ) | $ | (243,523 | ) |
Other comprehensive income (loss) before reclassifications | 1,561 | (24,165 | ) | 165 | (22,439 | ) | ||||||
Amounts reclassified from AOCL | 3,641 | 15,088 | (1,946 | ) | 16,783 | |||||||
Net current period other comprehensive income (loss) | 5,202 | (9,077 | ) | (1,781 | ) | (5,656 | ) | |||||
AOCL, March 31, 2016 | $ | (133,591 | ) | $ | (106,386 | ) | $ | (9,202 | ) | $ | (249,179 | ) |
Attributable to noncontrolling interests: | ||||||||||||
Balance, June 30, 2015 | $ | — | $ | (2,258 | ) | $ | — | $ | (2,258 | ) | ||
Other comprehensive loss before reclassifications | — | (540 | ) | — | (540 | ) | ||||||
Net current period other comprehensive loss | — | (540 | ) | — | (540 | ) | ||||||
AOCL, March 31, 2016 | $ | — | $ | (2,798 | ) | $ | — | $ | (2,798 | ) |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
Details about AOCL components | 2017 | 2016 | 2017 | 2016 | Affected line item in the Income Statement | |||||||||||
Gains and losses on cash flow hedges: | ||||||||||||||||
Forward starting interest rate swaps | $ | 545 | $ | 525 | $ | 1,635 | $ | 1,574 | Interest expense | |||||||
Currency exchange contracts | (156 | ) | (141 | ) | (477 | ) | (4,713 | ) | Other expense (income), net | |||||||
Total before tax | 389 | 384 | 1,158 | (3,139 | ) | |||||||||||
Tax impact | — | (146 | ) | — | 1,193 | Provision (benefit) for income taxes | ||||||||||
Net of tax | $ | 389 | $ | 238 | $ | 1,158 | $ | (1,946 | ) | |||||||
Postretirement benefit plans: | ||||||||||||||||
Amortization of transition obligations | $ | 22 | $ | 19 | $ | 67 | $ | 61 | See note 10 for further details | |||||||
Amortization of prior service credit | (119 | ) | (110 | ) | (355 | ) | (329 | ) | See note 10 for further details | |||||||
Recognition of actuarial losses | 2,155 | 1,886 | 6,532 | 5,694 | See note 10 for further details | |||||||||||
Total before tax | 2,058 | 1,795 | 6,244 | 5,426 | ||||||||||||
Tax impact | (254 | ) | (576 | ) | (810 | ) | (1,785 | ) | Provision (benefit) for income taxes | |||||||
Net of tax | $ | 1,804 | $ | 1,219 | $ | 5,434 | $ | 3,641 | ||||||||
Foreign currency translation adjustments: | ||||||||||||||||
Released due to divestiture | $ | — | $ | (1,940 | ) | $ | — | $ | 15,088 | Loss on divestiture | ||||||
Total before taxes | — | (1,940 | ) | — | 15,088 | |||||||||||
Tax impact | — | — | — | — | Provision (benefit) for income taxes | |||||||||||
Net of tax | $ | — | $ | (1,940 | ) | $ | — | $ | 15,088 |
2017 | 2016 | |||||||||||||||||||
(in thousands) | Pre-tax | Tax impact | Net of tax | Pre-tax | Tax impact | Net of tax | ||||||||||||||
Unrealized loss on derivatives designated and qualified as cash flow hedges | $ | (866 | ) | $ | — | $ | (866 | ) | $ | (1,027 | ) | $ | 390 | $ | (637 | ) | ||||
Reclassification of unrealized loss on expired derivatives designated and qualified as cash flow hedges | 389 | — | 389 | 384 | (146 | ) | 238 | |||||||||||||
Unrecognized net pension and other postretirement benefit loss | (970 | ) | 245 | (725 | ) | (1,332 | ) | 444 | (888 | ) | ||||||||||
Reclassification of net pension and other postretirement benefit loss | 2,058 | (254 | ) | 1,804 | 1,795 | (576 | ) | 1,219 | ||||||||||||
Foreign currency translation adjustments | 13,706 | 79 | 13,785 | 19,432 | (1,649 | ) | 17,783 | |||||||||||||
Reclassification of foreign currency translation adjustment gain realized upon sale | — | — | — | (1,940 | ) | — | (1,940 | ) | ||||||||||||
Other comprehensive income | $ | 14,317 | $ | 70 | $ | 14,387 | $ | 17,312 | $ | (1,537 | ) | $ | 15,775 |
2017 | 2016 | |||||||||||||||||||
(in thousands) | Pre-tax | Tax impact | Net of tax | Pre-tax | Tax impact | Net of tax | ||||||||||||||
Unrealized gain on derivatives designated and qualified as cash flow hedges | $ | 614 | $ | — | $ | 614 | $ | 266 | $ | (101 | ) | $ | 165 | |||||||
Reclassification of unrealized loss (gain) on expired derivatives designated and qualified as cash flow hedges | 1,158 | — | 1,158 | (3,139 | ) | 1,193 | (1,946 | ) | ||||||||||||
Unrecognized net pension and other postretirement benefit gain | 4,431 | (1,055 | ) | 3,376 | 1,884 | (323 | ) | 1,561 | ||||||||||||
Reclassification of net pension and other postretirement benefit loss | 6,244 | (810 | ) | 5,434 | 5,426 | (1,785 | ) | 3,641 | ||||||||||||
Foreign currency translation adjustments | (26,559 | ) | 79 | (26,480 | ) | (25,294 | ) | 589 | (24,705 | ) | ||||||||||
Reclassification of foreign currency translation adjustment loss realized upon sale | — | — | — | 15,088 | — | 15,088 | ||||||||||||||
Other comprehensive loss | $ | (14,112 | ) | $ | (1,786 | ) | $ | (15,898 | ) | $ | (5,769 | ) | $ | (427 | ) | $ | (6,196 | ) |
18. | GOODWILL AND OTHER INTANGIBLE ASSETS |
(in thousands) | Industrial | Widia | Infrastructure | Total | |||||||||||
Gross goodwill | $ | 408,705 | $ | 40,624 | $ | 633,211 | $ | 1,082,540 | |||||||
Accumulated impairment losses | (137,204 | ) | (13,638 | ) | (633,211 | ) | (784,053 | ) | |||||||
Balance as of June 30, 2016 | $ | 271,501 | $ | 26,986 | $ | — | $ | 298,487 | |||||||
Activity for the nine months ended March 31, 2017: | |||||||||||||||
Change in gross goodwill due to translation | (4,459 | ) | 287 | — | (4,172 | ) | |||||||||
Gross goodwill | 404,246 | 40,911 | 633,211 | 1,078,368 | |||||||||||
Accumulated impairment losses | (137,204 | ) | (13,638 | ) | (633,211 | ) | (784,053 | ) | |||||||
Balance as of March 31, 2017 | $ | 267,042 | $ | 27,273 | $ | — | $ | 294,315 |
Estimated Useful Life (in years) | March 31, 2017 | June 30, 2016 | ||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||
Contract-based | 3 to 15 | $ | 7,059 | $ | (7,002 | ) | $ | 7,152 | $ | (6,886 | ) | |||||||
Technology-based and other | 4 to 20 | 45,753 | (27,822 | ) | 47,323 | (27,011 | ) | |||||||||||
Customer-related | 10 to 21 | 204,088 | (70,983 | ) | 205,471 | (66,938 | ) | |||||||||||
Unpatented technology | 10 to 30 | 31,691 | (9,967 | ) | 31,837 | (4,614 | ) | |||||||||||
Trademarks | 5 to 20 | 12,259 | (8,389 | ) | 12,668 | (8,644 | ) | |||||||||||
Trademarks | Indefinite | 16,382 | — | 16,850 | — | |||||||||||||
Total | $ | 317,232 | $ | (124,163 | ) | $ | 321,301 | $ | (114,093 | ) |
19. | SEGMENT DATA |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales: | |||||||||||||||
Industrial (6) | $ | 289,455 | $ | 274,123 | $ | 825,990 | $ | 812,892 | |||||||
Widia (6) | 46,297 | 42,249 | 130,186 | 127,696 | |||||||||||
Infrastructure | 192,878 | 181,465 | 537,167 | 636,624 | |||||||||||
Total sales | $ | 528,630 | $ | 497,837 | $ | 1,493,343 | $ | 1,577,212 | |||||||
Operating income (loss): | |||||||||||||||
Industrial (6) | $ | 38,535 | $ | 26,371 | $ | 62,138 | $ | 59,855 | |||||||
Widia (6) | 606 | (1,679 | ) | (7,797 | ) | (8,053 | ) | ||||||||
Infrastructure | 19,770 | 3,748 | 22,457 | (242,417 | ) | ||||||||||
Corporate | (999 | ) | (1,105 | ) | (4,084 | ) | (9,391 | ) | |||||||
Total operating income (loss) | 57,912 | 27,335 | 72,714 | (200,006 | ) | ||||||||||
Interest expense | 7,331 | 7,113 | 21,475 | 20,895 | |||||||||||
Other expense (income), net | 1,626 | (1,938 | ) | 2,470 | (1,582 | ) | |||||||||
Income (loss) from continuing operations before income taxes | $ | 48,955 | $ | 22,160 | $ | 48,769 | $ | (219,319 | ) |
(in thousands) | March 31, 2017 | June 30, 2016 | |||||
Industrial (6) | $ | 1,100,690 | $ | 1,019,887 | |||
Widia (6) | 191,453 | 195,339 | |||||
Infrastructure | 791,194 | 849,447 | |||||
Corporate | 251,402 | 298,110 | |||||
Total assets | $ | 2,334,739 | $ | 2,362,783 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales | $ | 289,455 | $ | 274,123 | $ | 825,990 | $ | 812,892 | |||||||
Operating income | 38,535 | 26,371 | 62,138 | 59,855 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales | $ | 46,297 | $ | 42,249 | $ | 130,186 | $ | 127,696 | |||||||
Operating income (loss) | 606 | (1,679 | ) | (7,797 | ) | (8,053 | ) |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales | $ | 192,878 | $ | 181,465 | $ | 537,167 | $ | 636,624 | |||||||
Operating income (loss) | 19,770 | 3,748 | 22,457 | (242,417 | ) |
Three Months Ended March 31, | Nine Months Ended December 31, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2016 | 2016 | |||||||||||
Corporate unallocated expense | $ | (999 | ) | $ | (1,105 | ) | $ | (4,084 | ) | $ | (9,391 | ) |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. CONTROLS AND PROCEDURES |
ITEM 1. LEGAL PROCEEDINGS |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||
January 1 through January 31, 2017 | 4,061 | $ | 34.46 | — | 10,100,100 | |||||||
February 1 through February 28, 2017 | 9,477 | 37.44 | — | 10,100,100 | ||||||||
March 1 through March 31, 2017 | 3,469 | 38.75 | — | 10,100,100 | ||||||||
Total | 17,007 | $ | 37.00 | — |
(1) | During the current period, 1,616 shares were purchased on the open market on behalf of Kennametal to fund the Company’s dividend reinvestment program. Also, during the current period employees delivered 15,391 shares of restricted stock to Kennametal, upon vesting, to satisfy tax withholding requirements. |
(2) | On July 25, 2013, the Company publicly announced an amended repurchase program for up to 17 million shares of its outstanding capital stock outside of the Company's dividend reinvestment program. |
ITEM 6. EXHIBITS |
(31) | Rule 13a-14(a)/15d-14(a) Certifications | |||
(31.1) | Certification executed by Ronald M. De Feo, President and Chief Executive Officer of Kennametal Inc. | Filed herewith. | ||
(31.2) | Certification executed by Jan Kees van Gaalen, Vice President and Chief Financial Officer of Kennametal Inc. | Filed herewith. | ||
(32) | Section 1350 Certifications | |||
(32.1) | Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Ronald M. De Feo, President and Chief Executive Officer of Kennametal Inc., and Jan Kees van Gaalen, Vice President and Chief Financial Officer of Kennametal Inc. | Filed herewith. | ||
(101) | XBRL | |||
(101.INS) | XBRL Instance Document | Filed herewith. | ||
(101.SCH) | XBRL Taxonomy Extension Schema Document | Filed herewith. | ||
(101.CAL) | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | ||
(101.DEF) | XBRL Taxonomy Definition Linkbase | Filed herewith. | ||
(101.LAB) | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith. | ||
(101.PRE) | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. |
KENNAMETAL INC. | ||||
Date: | May 9, 2017 | By: | /s/ Patrick S. Watson | |
Patrick S. Watson Vice President Finance and Corporate Controller |
1. | I have reviewed this quarterly report on Form 10-Q of Kennametal Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions) |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 9, 2017 | /s/ Ronald M. De Feo | |
Ronald M. De Feo President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kennametal Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions) |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 9, 2017 | /s/ Jan Kees van Gaalen | |
Jan Kees van Gaalen Vice President and Chief Financial Officer |
1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Corporation. |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Apr. 28, 2017 |
|
Document Information [Line Items] | ||
Entity Registrant Name | KENNAMETAL INC. | |
Entity Central Index Key | 0000055242 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 80,554,198 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement [Abstract] | ||||
Sales | $ 528,630 | $ 497,837 | $ 1,493,343 | $ 1,577,212 |
Cost of goods sold | 342,365 | 340,484 | 1,015,926 | 1,127,828 |
Gross profit | 186,265 | 157,353 | 477,417 | 449,384 |
Operating expense | 116,939 | 121,004 | 347,808 | 373,827 |
Restructuring and asset impairment charges (Notes 8 and 18) | 7,169 | 7,142 | 44,230 | 128,498 |
Loss on divestiture (Note 5) | 0 | (2,557) | 0 | 130,750 |
Amortization of intangibles | 4,245 | 4,429 | 12,665 | 16,315 |
Operating income (loss) | 57,912 | 27,335 | 72,714 | (200,006) |
Interest expense | 7,331 | 7,113 | 21,475 | 20,895 |
Other expense (income), net | 1,626 | (1,938) | 2,470 | (1,582) |
Income (loss) before income taxes | 48,955 | 22,160 | 48,769 | (219,319) |
Provision (benefit) for income taxes | 9,301 | 5,465 | 22,401 | (61,499) |
Net income (loss) | 39,654 | 16,695 | 26,368 | (157,820) |
Less: Net income attributable to noncontrolling interests | 764 | 695 | 1,873 | 1,634 |
Net income (loss) attributable to Kennametal | $ 38,890 | $ 16,000 | $ 24,495 | $ (159,454) |
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS | ||||
Basic earnings (loss) per share | $ 0.48 | $ 0.20 | $ 0.31 | $ (2.00) |
Diluted earnings (loss) per share | 0.48 | 0.20 | 0.30 | (2.00) |
Dividends per share | $ 0.20 | $ 0.20 | $ 0.60 | $ 0.60 |
Basic weighted average shares outstanding | 80,398 | 79,871 | 80,219 | 79,814 |
Diluted weighted average shares outstanding | 81,381 | 80,224 | 80,965 | 79,814 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 12,562 | $ 12,724 |
Accumulated amortization on other intangible assets | $ 124,163 | $ 114,093 |
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Capital stock, par value | $ 1.25 | $ 1.25 |
Capital stock, shares authorized | 120,000 | 120,000 |
Capital stock, shares issued | 80,252 | 79,694 |
Organization |
9 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Kennametal Inc. was incorporated in Pennsylvania in 1943. Kennametal Inc. and its subsidiaries (collectively, Kennametal or the Company) are a leading global manufacturer and supplier of tooling, engineered components and advanced materials consumed in production processes. We believe that our reputation for manufacturing excellence, as well as our technological expertise and innovation we deliver in our products and services, helps us to achieve a leading position in our primary markets. End users of our products include metalworking and machinery manufacturers and suppliers across a diverse array of industries, including the aerospace, defense, transportation, machine tool, light machinery and heavy machinery, as well as producers and suppliers in a number of equipment-intensive industries such as coal mining, road construction and quarrying, as well as oil and gas exploration, refining, production and supply. Our end users' applications range from airframes to mining operations, engines to oil wells and turbochargers to processing. In order to take advantage of the growth opportunities of our WIDIA brand, we implemented a new operating structure at the beginning of fiscal 2017. A key attribute of the new structure is the establishment of the Widia operating segment. In order to better leverage the opportunities in this business, in addition to being more agile and competitive in the marketplace, we are placing higher levels of focus, determination and leadership in this business. The Industrial and Widia segments in 2017 were formed from the 2016 Industrial segment. We now have three global reportable operating segments: Industrial, Widia, and Infrastructure. |
Basis of Presentation |
9 Months Ended |
---|---|
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The condensed consolidated financial statements, which include our accounts and those of our majority-owned subsidiaries, should be read in conjunction with our 2016 Annual Report on Form 10-K. The condensed consolidated balance sheet as of June 30, 2016 was derived from the audited balance sheet included in our 2016 Annual Report on Form 10-K. These interim statements are unaudited; however, we believe that all adjustments necessary for a fair statement of the results of the interim periods were made and all adjustments are normal recurring adjustments. The results for the nine months ended March 31, 2017 and 2016 are not necessarily indicative of the results to be expected for a full fiscal year. Unless otherwise specified, any reference to a “year” is to a fiscal year ended June 30. For example, a reference to 2017 is to the fiscal year ending June 30, 2017. When used in this Form 10-Q, unless the context requires otherwise, the terms “we,” “our” and “us” refer to Kennametal Inc. and its subsidiaries. |
New Accounting Standards |
9 Months Ended |
---|---|
Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS Adopted In January 2017, the FASB issued guidance to simplify the test for goodwill impairment by removing step two of the test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. This standard is effective for Kennametal beginning July 1, 2020; however, early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company has chosen to early adopt this guidance and does not expect the adoption of the guidance to have a material impact on our condensed consolidated financial position, results of operations and cash flows. In November 2015, the Financial Accounting Standards Board (FASB) issued guidance on balance sheet classification of deferred taxes. The amendments in this guidance require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position, in comparison to the previous practice of separating deferred income tax liabilities and assets into current and noncurrent amounts on the balance sheet. We adopted this guidance July 1, 2016 on a prospective basis. Therefore, prior period balance sheets were not retrospectively adjusted. Current deferred tax assets of $26.7 million and current deferred tax liabilities of $0.6 million are reported in the June 30, 2016 balance sheet. In April 2015, the FASB issued guidance on the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance was effective for Kennametal beginning July 1, 2016 and was retrospectively applied to all periods presented. Debt issuance costs of $5.0 million and $6.0 million are reported as direct reductions of the carrying amounts of debt liabilities in the balance sheet as of March 31, 2017 and June 30, 2016, respectively. In April 2015, the FASB issued guidance on accounting for fees paid in a cloud computing arrangement. The amendments in this update provide guidance to customers about treatment of costs as either capitalized and amortized as an intangible asset or expensed as incurred as a service contract. The amendments provide clarification that costs in arrangements that include software license should be capitalized and amortized, and costs in arrangements that do not include a software license should be expensed as incurred. This standard was effective for Kennametal beginning July 1, 2016 and was applied prospectively. The adoption of this guidance did not have a material impact on our condensed consolidated financial position, results of operations and cash flows. Issued In March 2017, the FASB issued guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This guidance is effective for Kennametal beginning July 1, 2018. We are in the process of assessing the impact the adoption of this guidance will have on our condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers: Topic 606.” This ASU replaces nearly all existing U.S. GAAP guidance on revenue recognition. The standard prescribes a five-step model for recognizing revenue, the application of which will require significant judgment. It also requires additional disclosures. We will adopt this standard on July 1, 2018. We have commenced our assessment of the new standard and developed a project plan to guide the implementation. Currently, we are analyzing the standard's impact on our customer arrangements and evaluating the new standard against our historical accounting policies and practices, including the timing of revenue recognition. We have not yet determined the impact of adoption on our condensed consolidated financial statements. |
Supplemental Cash Flow Disclosures |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES | SUPPLEMENTAL CASH FLOW DISCLOSURES
|
Divestiture Divestiture |
9 Months Ended |
---|---|
Mar. 31, 2017 | |
Divestiture [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | During the nine months ended March 31, 2016, Kennametal completed the sale of the outstanding capital stock of: Kennametal Extrude Hone LLC and its wholly owned subsidiaries, Kennametal Stellite S.r.l. (Bellusco, Italy), Kennametal Stellite S.p.A. (Milan, Italy), Kennametal Stellite GmbH (Koblenz, Germany); and all of the assets of the businesses of: Tricon (manufacturing operations in Birmingham, Alabama; Chicago, Illinois; and Elko, Nevada), Landis (manufacturing operation in Waynesboro, Pennsylvania); and all of the assets located at the Biel, Switzerland manufacturing facility ("non-core businesses") to Madison Industries for an aggregate price of $61.1 million, net. A portion of the transaction proceeds were used to pay down revolver debt and the remaining balance was held as cash on hand. The net book value of these non-core businesses was $191.9 million, which included a refinement to estimated working capital adjustment. We recognized a pre-tax loss on the sale of $133.3 million during the three months ended December 31, 2015 which included the impact of estimated working capital adjustments, deal costs and transaction costs. We recorded a pre-tax net gain on divestiture during the three months ended March 31, 2016 of approximately $2.6 million, which consisted primarily of the write-off of the currency translation adjustments of a legal entity liquidated in the March quarter, partially offset by a refinement to our estimated working capital adjustment. The pre-tax net loss on divestiture during the nine months ended March 31, 2016 was $130.8 million, of which $127.2 million and $3.6 million were recorded in the Infrastructure and Industrial segments, respectively. The pre-tax income attributable to the non-core businesses was assessed and determined to be immaterial for disclosure for the periods presented. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three levels to prioritize the inputs used in valuations, as defined below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3: Inputs that are unobservable. As of March 31, 2017, the fair values of the Company’s financial assets and financial liabilities are categorized as follows:
As of June 30, 2016, the fair values of the Company’s financial assets and financial liabilities are categorized as follows:
(1) Currency derivatives are valued based on observable market spot and forward rates and are classified within Level 2 of the fair value hierarchy. There have been no changes in classification and transfers between levels in the fair value hierarchy in the current period. The fair value of contingent consideration payable that was classified as Level 3 at June 30, 2016 related to our probability assessments of expected future milestone targets, primarily associated with product delivery, related to a previous acquisition. During the the nine months ended March 31, 2017, the Company paid the remaining $6.6 million in conjunction with achieved milestone targets. The payment is recorded in the financing activities section of our condensed consolidated statement of cash flow for the nine months ended March 31, 2017 under the caption "other." The contingent consideration was recorded in other current liabilities in our condensed consolidated balance sheet at June 30, 2016. No other changes in the expected outcome have occurred during the nine months ended March 31, 2017. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES As part of our financial risk management program, we use certain derivative financial instruments. We do not enter into derivative transactions for speculative purposes and, therefore, hold no derivative instruments for trading purposes. We account for derivative instruments as a hedge of the related asset, liability, firm commitment or anticipated transaction, when the derivative is specifically designated and qualifies as a hedge of such items. Our objective in managing foreign exchange exposures with derivative instruments is to reduce volatility in cash flow. We measure hedge effectiveness by assessing the changes in the fair value or expected future cash flows of the hedged item. The ineffective portions are recorded in other expense, net. The fair value of derivatives designated and not designated as hedging instruments in the condensed consolidated balance sheet are as follows:
Certain currency forward contracts that hedge significant cross-border intercompany loans are considered as other derivatives and therefore do not qualify for hedge accounting. These contracts are recorded at fair value in the condensed consolidated balance sheet, with the offset to other expense (income), net. Gains related to derivatives not designated as hedging instruments have been recognized as follows:
CASH FLOW HEDGES Range forward contracts (a transaction where both a put option is purchased and a call option is sold) are designated as cash flow hedges and hedge anticipated cash flows from cross-border intercompany sales of products and services. Gains and losses realized on these contracts at maturity are recorded in accumulated other comprehensive loss and are recognized as a component of other expense, net when the underlying sale of products or services is recognized into earnings. The notional amount of the contracts translated into U.S. dollars at March 31, 2017 and June 30, 2016, was $66.2 million and $53.3 million, respectively. The time value component of the fair value of range forward contracts is excluded from the assessment of hedge effectiveness. Assuming the market rates remain constant with the rates at March 31, 2017, we expect to recognize into earnings in the next 12 months $0.6 million of income on outstanding derivatives. The following represents gains and losses related to cash flow hedges:
No portion of the gains or losses recognized in earnings was due to ineffectiveness and no amounts were excluded from our effectiveness testing for the nine months ended March 31, 2017 and 2016. NET INVESTMENT HEDGES During the three months ended March 31, 2017, we designated certain foreign currency-denominated intercompany loans payable with total aggregate principal amounts of €63.0 million as net investment hedges to hedge the foreign exchange exposure of our net investment in Euro-based subsidiaries. The remeasurements of these non-derivatives designated as net investment hedges are calculated each period with changes reported in foreign currency translation adjustment within accumulated other comprehensive loss. Such amounts will remain in accumulated other comprehensive loss unless we complete or substantially complete liquidation or disposal of our investment in the underlying foreign operations. A loss of $0.5 million was recorded as a component of foreign currency translation adjustments in other comprehensive income (loss) for the three and nine months ended March 31, 2017. We did not have net investment hedges during the three and nine months ended March 31, 2016. As of March 31, 2017, the foreign currency-denominated intercompany loans payable designated as net investment hedges consisted of:
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Restructuring and Related Charges |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND RELATED CHARGES | RESTRUCTURING AND RELATED CHARGES We are implementing restructuring actions to streamline the Company's cost structure. These initiatives are expected to improve the alignment of our cost structure with the current operating environment through headcount reductions, as well as rationalization and consolidation of certain manufacturing facilities. These restructuring actions are expected to be completed by December of fiscal 2019 and are anticipated to be mostly cash expenditures. The total pre-tax charges for these programs are expected to be in the range of $165 million to $195 million, which is expected to be approximately 60 percent Industrial, 5 percent Widia, 30 percent Infrastructure and 5 percent Corporate. Total restructuring and related charges since inception of $124.5 million have been recorded for these programs through March 31, 2017: $65.4 million in Industrial, $40.7 million in Infrastructure, $11.1 million in Widia and $7.3 million in Corporate. We have recorded restructuring and related charges of $9.6 million and $14.0 million for the three months ended March 31, 2017 and 2016, respectively. Of these amounts, restructuring charges totaled $7.1 million and $7.5 million for the three months ended March 31, 2017 and 2016, respectively. Restructuring charges of $0.4 million were related to inventory and were recorded in cost of goods sold for the three months ended March 31, 2016. Restructuring-related charges of $1.7 million and $1.1 million were recorded in cost of goods sold and $0.8 million and $5.4 million in operating expense for the three months ended March 31, 2017 and 2016, respectively. We have recorded restructuring and related charges of $53.1 million and $38.0 million for the nine months ended March 31, 2017 and 2016, respectively. Of these amounts, restructuring charges totaled $44.5 million and $20.1 million, of which expense of $0.3 million and $0.1 million were related to inventory and were recorded in cost of goods sold for the nine months ended March 31, 2017 and 2016, respectively. Restructuring-related charges of $5.8 million and $4.7 million were recorded in cost of goods sold and $2.8 million and $13.2 million in operating expense for the nine months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, $13.3 million and $2.5 million of the restructuring accrual is recorded in other current liabilities and other liabilities, respectively, in our condensed consolidated balance sheet. The restructuring accrual of $15.7 million as of June 30, 2016 is recorded in other current liabilities. The amount attributable to each segment is as follows:
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock Options There were no grants made during the nine months ended March 31, 2017. The assumptions used in our Black-Scholes valuation related to grants made during the nine months ended March 31, 2016 were as follows:
(4) Expected volatility is based on the implied historical volatility of our stock. Changes in our stock options for the nine months ended March 31, 2017 were as follows:
During the nine months ended March 31, 2017 and 2016, compensation expense related to stock options was $1.3 million and $2.8 million, respectively. As of March 31, 2017, the total unrecognized compensation cost related to options outstanding was $1.1 million and is expected to be recognized over a weighted average period of 1.4 years. Weighted average fair value of options granted during the nine months ended March 31, 2016 was $6.45 per option. Fair value of options vested during the nine months ended March 31, 2017 and 2016 was $3.3 million and $2.3 million, respectively. Tax benefits relating to excess stock-based compensation deductions are presented in the condensed consolidated statements of cash flow as financing cash inflows. No tax benefits were realized resulting from stock-based compensation deductions for the nine months ended March 31, 2017 due to the valuation allowance on U.S. deferred tax assets. Tax benefits resulting from stock-based compensation deductions were less than amounts reported for financial reporting purposes by $1.8 million for the nine months ended March 31, 2016. The amount of cash received from the exercise of capital stock options during the nine months ended March 31, 2017 and 2016 was $7.2 million and $1.0 million, respectively. No related tax benefit was realized for the nine months ended March 31, 2017 due to the valuation allowance on U.S. deferred tax assets, and the related tax benefit was immaterial for the nine months ended March 31, 2016. The total intrinsic value of options exercised during the nine months ended March 31, 2017 was $1.6 million, and the total intrinsic value of options exercised during the nine months ended March 31, 2016 was immaterial. Under the provisions of the Kennametal Inc. Stock and Incentive Plan of 2010 as amended and restated on October 22, 2013 and as further amended January 27, 2015, and the Kennametal Inc. 2016 Stock and Incentive Plan, plan participants may deliver stock, owned by the holder for at least six months, in payment of the option price and receive credit for the fair market value of the shares on the date of delivery. The fair market value of shares delivered during both the nine months ended March 31, 2017 and 2016 was immaterial. Restricted Stock Units – Time Vesting and Performance Vesting Performance vesting restricted stock units are earned pro rata each year if certain performance goals are met over a three-year period and are also subject to a service condition that requires the individual to be employed by the Company at the vesting date after the three-year performance period, with the exception of retirement eligible grantees, who upon retirement are entitled to vest in any units that have been earned, including a prorated portion in the partially completed fiscal year in which the retirement occurs. Time vesting stock units are valued at the market value of the stock on the grant date. Performance vesting stock units with a market condition are valued using a Monte Carlo model. Changes in our time vesting and performance vesting restricted stock units for the nine months ended March 31, 2017 were as follows:
During the nine months ended March 31, 2017 and 2016, compensation expense related to time vesting and performance vesting restricted stock units was $15.8 million and $11.7 million, respectively. As of March 31, 2017, the total unrecognized compensation cost related to unvested time vesting and performance vesting restricted stock units was $17.0 million and is expected to be recognized over a weighted average period of 2.0 years. |
Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BENEFIT PLANS | BENEFIT PLANS We sponsor several defined benefit pension plans. Additionally, we provide varying levels of postretirement health care and life insurance benefits to some U.S. employees. The table below summarizes the components of net periodic pension income:
The settlement gain of $0.3 million during the three and nine months ended March 31, 2017 is the result of income from the settlement with several terminated Executive Retirement Plan participants. The special termination benefit charge of $0.2 million during the nine months ended March 31, 2016 is the result of lump sum payments to several terminated Executive Retirement Plan participants. The table below summarizes the components of net periodic other postretirement benefit cost:
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES We used the last-in, first-out (LIFO) method of valuing inventories for 45 percent and 44 percent of total inventories at March 31, 2017 and June 30, 2016, respectively. Since inventory valuations under the LIFO method are based on an annual determination of quantities and costs as of June 30 of each year, the interim LIFO valuations are based on our projections of expected year-end inventory levels and costs. Therefore, the interim financial results are subject to any final year-end LIFO inventory adjustments. Inventories consisted of the following:
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Long-Term Debt |
9 Months Ended |
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Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Our five-year, multi-currency, revolving credit facility, as amended and restated in April 2016 (Credit Agreement) permits revolving credit loans of up to $600 million for working capital, capital expenditures and general corporate purposes. The Credit Agreement requires us to comply with various restrictive and affirmative covenants, including two financial covenants: a maximum leverage ratio and a minimum consolidated interest coverage ratio (as those terms are defined in the agreement). We were in compliance with all covenants as of March 31, 2017. We had no borrowings outstanding under the Credit Agreement as of March 31, 2017 and June 30, 2016. Borrowings under the Credit Agreement are guaranteed by our significant domestic subsidiaries. The Credit Agreement matures in April 2021. Fixed rate debt had a fair market value of $700.7 million and $704.0 million at March 31, 2017 and June 30, 2016, respectively. The Level 2 fair value is determined based on the quoted market price of this debt as of March 31, 2017 and June 30, 2016, respectively. |
Environmental Matters |
9 Months Ended |
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Mar. 31, 2017 | |
Environmental Remediation Obligations [Abstract] | |
ENVIRONMENTAL MATTERS | ENVIRONMENTAL MATTERS The operation of our business has exposed us to certain liabilities and compliance costs related to environmental matters. We are involved in various environmental cleanup and remediation activities at certain of our locations. Superfund Sites Among other environmental laws, we are subject to the Comprehensive Environmental Response Compensation and Liability Act of 1980 (Superfund), under which we have been designated by the United States Environmental Protection Agency (USEPA) as a potentially responsible party (PRP) with respect to environmental remedial costs at certain Superfund sites. We have evaluated our claims and liabilities associated with these Superfund sites based upon best currently available information. We believe our environmental accruals are adequate to cover our portion of the environmental remedial costs at the Superfund sites where we have been designated a PRP, to the extent these expenses are probable and reasonably estimable. Other Environmental Matters We establish and maintain reserves for other potential environmental issues. At March 31, 2017 and June 30, 2016, the balances of these reserves were $12.1 million and $12.5 million, respectively. These reserves represent anticipated costs associated with the remediation of these issues. The reserves we have established for environmental liabilities represent our best current estimate of the costs of addressing all identified environmental situations, based on our review of currently available evidence, and taking into consideration our prior experience in remediation and that of other companies, as well as public information released by the USEPA, other governmental agencies and by the PRP groups in which we are participating. Although the reserves currently appear to be sufficient to cover these environmental liabilities, there are uncertainties associated with environmental liabilities, and we can give no assurance that our estimate of any environmental liability will not increase or decrease in the future. The reserved and unreserved liabilities for all environmental concerns could change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, technological changes, discovery of new information, the financial strength of other PRPs, the identification of new PRPs and the involvement of and direction taken by the government on these matters. We maintain a Corporate Environmental Health and Safety (EHS) Department to monitor compliance with environmental regulations and to oversee remediation activities. In addition, we have designated EHS coordinators who are responsible for each of our global manufacturing facilities. Our financial management team periodically meets with members of the Corporate EHS Department and the Corporate Legal Department to review and evaluate the status of environmental projects and contingencies. On a quarterly basis, we review financial provisions and reserves for environmental contingencies and adjust these reserves when appropriate. |
Income Taxes |
9 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective income tax rates for the three months ended March 31, 2017 and 2016 were 19.0 percent and 24.7 percent, respectively. The decrease is primarily driven by a prior year asset impairment charge, current quarter earnings in the U.S. that cannot be tax affected in the current year and a prior year loss on divestiture, offset partially by a favorable impact in the prior year quarter related to a U.S. provision to return adjustment that did not repeat in the current year. The effective income tax rates for the nine months ended March 31, 2017 and 2016 were 45.9 percent (provision on income) and 28.0 percent (benefit on a loss), respectively. The change was primarily driven by restructuring and related charges, a favorable impact in the prior year quarter related to a U.S. provision to return adjustment that did not repeat in the current year and current year-to-date losses in the U.S. that cannot be tax affected in the current year, offset partially by a prior year asset impairment charge and a prior year loss on divestiture. |
Earnings Per Share |
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Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed using the weighted average number of shares outstanding during the period, while diluted earnings per share is calculated to reflect the potential dilution that would occur related to the issuance of capital stock under stock option grants and restricted stock units. The difference between basic and diluted earnings per share relates solely to the effect of capital stock options and restricted stock units. For purposes of determining the number of diluted shares outstanding, weighted average shares outstanding for basic earnings per share calculations were increased due solely to the dilutive effect of unexercised capital stock options, unvested performance awards and unvested restricted stock units by 1.0 million shares and 0.4 million shares for the three months ended March 31, 2017 and 2016, respectively, and 0.7 million shares for the nine months ended March 31, 2017. Unexercised capital stock options, performance awards and restricted stock units of 1.2 million shares and 3.1 million shares for the three months ended March 31, 2017 and 2016, respectively, and 1.8 million shares for the nine months ended March 31, 2017, were not included in the computation of diluted earnings per share because the option exercise price was greater than the average market price, and therefore the inclusion would have been anti-dilutive. For the nine months ended March 31, 2016, the effect of unexercised capital stock options and unvested restricted stock units was anti-dilutive as a result of a net loss in the period and therefore has been excluded from diluted shares outstanding as well as from the diluted earnings per share calculation. |
Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY A summary of the changes in the carrying amounts of total equity, Kennametal Shareholders’ equity and equity attributable to noncontrolling interests as of March 31, 2017 and 2016 is as follows:
(5) Net of restricted stock units delivered upon vesting to satisfy tax withholding requirements. The amounts of comprehensive loss attributable to Kennametal Shareholders and noncontrolling interests are disclosed in the condensed consolidated statements of comprehensive income. |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS Total accumulated other comprehensive loss (AOCL) consists of net income (loss) and other changes in equity from transactions and other events from sources other than shareholders. It includes postretirement benefit plan adjustments, currency translation adjustments and unrealized gains and losses from derivative instruments designated as cash flow hedges. The components of, and changes in, AOCL were as follows, net of tax, for the nine months ended March 31, 2017 (in thousands):
The components of, and changes in, AOCL were as follows, net of tax, for the nine months ended March 31, 2016 (in thousands):
Reclassifications out of AOCL for the three and nine months ended March 31, 2017 and 2016 consisted of the following (in thousands):
The amount of income tax allocated to each component of other comprehensive income for the three months ended March 31, 2017 and 2016:
The amount of income tax allocated to each component of other comprehensive loss for the nine months ended March 31, 2017 and 2016:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill represents the excess of cost over the fair value of the net assets of acquired companies. Goodwill and other intangible assets with indefinite lives are tested at least annually for impairment. We perform our annual impairment tests during the June quarter in connection with our annual planning process, unless there are impairment indicators based on the results of an ongoing cumulative qualitative assessment that warrant a test prior to that. We evaluate the recoverability of goodwill for each of our reporting units by comparing the fair value of each reporting unit with its carrying value. The fair values of our reporting units are determined using a combination of a discounted cash flow analysis and market multiples based upon historical and projected financial information. We apply our best judgment when assessing the reasonableness of the financial projections used to determine the fair value of each reporting unit. We evaluate the recoverability of indefinite-lived intangible assets using a discounted cash flow analysis based on projected financial information. This evaluation is sensitive to changes in market interest rates and other external factors. Identifiable assets with finite lives are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. At the beginning of fiscal 2017, we reorganized our operating structure in a manner that changed the composition of our reporting units. The Industrial and Widia reporting units in fiscal 2017 were formed from the fiscal 2016 Industrial reporting unit. In connection with this reporting unit realignment, during the first quarter of fiscal 2017 we updated our goodwill impairment assessment based on a quantitative analysis. We evaluated the goodwill of our reporting units immediately prior to and after the realignment and concluded in both cases that there was no impairment. We allocated our goodwill from the former Industrial segment to the current Industrial and Widia segments using a relative fair value approach. The restated Industrial reporting unit passed the goodwill impairment test with fair value substantially exceeded the carrying value. The new Widia reporting unit's fair value approximates its carrying value. See Note 19 for further discussion regarding the Company's segments. We are currently exploring strategic alternatives for one of our non-core Infrastructure businesses. The estimated net book value of the business is approximately $30 million as of March 31, 2017. As the strategic direction has not yet been determined for this business, the Company cannot determine if additional impairment charges will be incurred. A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such, is as follows:
Fiscal 2016 December Quarter Impairment Charge As previously disclosed, we recorded a non-cash pre-tax impairment charge during the three months ended December 31, 2015 of $106.1 million in the Infrastructure segment, of which $105.7 million was for goodwill and $0.4 million was for an indefinite-lived trademark intangible asset. We also recorded a preliminary non-cash pre-tax impairment charge during the three months ended December 31, 2015 of $2.3 million in the Widia segment for an indefinite-lived trademark intangible asset. These impairment charges were recorded in restructuring and asset impairment charges in our condensed consolidated statements of income. Divestiture Impact on Goodwill and Other Intangible Assets During the nine months ended March 31, 2016, we completed the sale of non-core businesses, see Note 5. As a result of this transaction, goodwill decreased by $1.1 million and $6.5 million in our Industrial and Infrastructure segments, respectively. These decreases were recorded in the loss on divestiture account in our condensed consolidated statements of income. The components of our other intangible assets were as follows:
During the nine months ended March 31, 2017 and 2016, we recorded amortization expense of $12.7 million and $16.3 million, respectively, related to our other intangible assets. |
Segment Data |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT DATA | SEGMENT DATA Kennametal delivers productivity to customers seeking peak performance in demanding environments by providing innovative custom and standard wear-resistant solutions. To provide these solutions, we harness our knowledge of advanced materials and application development with a commitment to environmental sustainability. Our product offering includes a wide selection of standard and customized technologies for metalworking, such as sophisticated metal cutting tools, tooling systems and services, as well as advanced, high-performance materials, such as cemented tungsten carbide products, super alloys, coatings and investment castings to address customer demands. We offer these products through a variety of channels to meet customer-specified needs. The Company's reportable operating segments have been determined in accordance with the Company's internal management structure, which is organized based on operating activities, the manner in which we organize segments for making operating decisions and assessing performance and the availability of separate financial results. We do not allocate certain corporate expenses related to executive retirement plans, the Company’s Board of Directors and strategic initiatives, as well as certain other costs and report them in Corporate. None of our three reportable operating segments represent the aggregation of two or more operating segments. The Industrial segment generally serves customers that operate in industrial end markets such as transportation, general engineering and aerospace and defense, delivering high performance metalworking tools for specified purposes. The customers in these end markets manufacture engines, airframes, automobiles, trucks, ships and various types of industrial equipment. The technology and customization requirements for customers we serve vary by customer, application and industry. The value we deliver to our Industrial segment customers centers on our application expertise and our diverse offering of products and services, with products delivered through a diverse base including direct and indirect channels. The Widia segment generally serves customers that operate in industrial end markets, primarily in general engineering, delivering high performance metalworking tools for general purposes. Whereas the Industrial segment's core is in application expertise and specific customer needs, Widia offers a competitive alternative for general metal cutting solutions across a broader platform for application, with products delivered primarily through indirect channels. The Infrastructure segment generally serves customers that operate in the earthworks and energy sectors who support primary industries such as oil and gas, power generation, underground, surface and hard-rock mining, highway construction and road maintenance. Generally, we rely on customer intimacy to serve this segment. By gaining an in-depth understanding of our customers’ engineering and development needs, we are able to offer complete system solutions and high-performance capabilities to optimize and add value to their operations. Our sales and operating income (loss) by segment are as follows:
Total assets by segment are as follows:
(6) Amounts for the three and nine months ended March 31, 2017 and as of June 30, 2016 have been restated to reflect the change in reportable operating segments. |
Supplemental Cash Flow Disclosures (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Disclosures |
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments at fair value on recurring basis | As of March 31, 2017, the fair values of the Company’s financial assets and financial liabilities are categorized as follows:
As of June 30, 2016, the fair values of the Company’s financial assets and financial liabilities are categorized as follows:
(1) Currency derivatives are valued based on observable market spot and forward rates and are classified within Level 2 of the fair value hierarchy. |
Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments [Table Text Block] | As of March 31, 2017, the foreign currency-denominated intercompany loans payable designated as net investment hedges consisted of:
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Fair value of derivatives | The fair value of derivatives designated and not designated as hedging instruments in the condensed consolidated balance sheet are as follows:
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(Gains) losses related to derivatives not designated as hedging instruments | Gains related to derivatives not designated as hedging instruments have been recognized as follows:
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Gains and losses related to cash flow hedges | The following represents gains and losses related to cash flow hedges:
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Restructuring (Tables) |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The amount attributable to each segment is as follows:
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Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions used in our Black-Scholes valuation | The assumptions used in our Black-Scholes valuation related to grants made during the nine months ended March 31, 2016 were as follows:
(4) Expected volatility is based on the implied historical volatility of our stock. |
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Changes in stock options | Changes in our stock options for the nine months ended March 31, 2017 were as follows:
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Changes in time vesting and performance vesting restricted stock units | Changes in our time vesting and performance vesting restricted stock units for the nine months ended March 31, 2017 were as follows:
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Benefit Plans (Tables) |
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Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net periodic pension (income) | The table below summarizes the components of net periodic pension income:
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Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net periodic pension (income) | The table below summarizes the components of net periodic other postretirement benefit cost:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consisted of the following:
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Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the changes in the carrying amounts of total equity, Kennametal shareholders' equity and equity attributable to noncontrolling interests | A summary of the changes in the carrying amounts of total equity, Kennametal Shareholders’ equity and equity attributable to noncontrolling interests as of March 31, 2017 and 2016 is as follows:
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of, and changes in accumulated other comprehensive loss | The components of, and changes in, AOCL were as follows, net of tax, for the nine months ended March 31, 2017 (in thousands):
The components of, and changes in, AOCL were as follows, net of tax, for the nine months ended March 31, 2016 (in thousands):
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Reclassification out of Accumulated Other Comprehensive Loss | Reclassifications out of AOCL for the three and nine months ended March 31, 2017 and 2016 consisted of the following (in thousands):
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Income Tax Allocated to Each Component of Other Comprehensive Income [Table Text Block] | The amount of income tax allocated to each component of other comprehensive income for the three months ended March 31, 2017 and 2016:
The amount of income tax allocated to each component of other comprehensive loss for the nine months ended March 31, 2017 and 2016:
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Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The carrying amount of goodwill | A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such, is as follows:
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The components of intangible assets | The components of our other intangible assets were as follows:
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Segment Data (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and operating income (loss) by segment and segment assets | Our sales and operating income (loss) by segment are as follows:
Total assets by segment are as follows:
(6) Amounts for the three and nine months ended March 31, 2017 and as of June 30, 2016 have been restated to reflect the change in reportable operating segments. |
New Accounting Standards New Accounting Standards - Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
New Accounting Standards [Abstract] | ||
Deferred Tax Assets, Net of Valuation Allowance, Current | $ 0 | $ 26,713 |
Deferred Tax Liabilities, Net, Current | 600 | |
Debt Issuance Costs, Net | $ 5,000 | $ 6,000 |
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Cash paid during the period for: | ||
Interest | $ 20,725 | $ 20,056 |
Income taxes | 20,013 | 38,429 |
Change in accounts payable related to property, plant, and equipment | $ 15,404 | $ 16,400 |
Divestiture Divestiture (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Nov. 30, 2015 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from Divestiture of Businesses, Net of Cash Divested | $ 0 | $ 61,100 | ||||
Loss on divestiture | $ 0 | $ 2,557 | $ (133,300) | $ 0 | (130,750) | |
Non-Core Businesses Sold to Madison Industries [Member] | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Net Book Value | $ 191,900 | |||||
Infrastructure [Member] | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Loss on divestiture | 127,200 | |||||
Industrial [Member] | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Loss on divestiture | $ 3,600 |
Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives Assets | $ 1,421 | $ 334 |
Total assets at fair value | 1,421 | 334 |
Derivatives Liabilities | 1,352 | 763 |
Contingent Consideration | 6,600 | |
Total liabilities at fair value | 1,352 | 7,363 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives Assets | 1,421 | 334 |
Total assets at fair value | 1,421 | 334 |
Derivatives Liabilities | 1,352 | 763 |
Total liabilities at fair value | 1,352 | 763 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 6,600 | |
Total liabilities at fair value | $ 0 | $ 6,600 |
Fair Value Measurments - Contingent Consideration (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Jun. 30, 2016 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business Combination, Contingent Consideration, Liability | $ 6,600 | |
Contingent Consideration Paid | $ 6,600 | |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Business Combination, Contingent Consideration, Liability | $ 6,600 |
Derivative Instruments and Hedging Activities - Gains and Losses Related to Derivatives Not Designated as Hedging Instruments and to Cash Flow Hedges (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net Investment Hedging [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss on Derivative Used in Net Investment Hedge, Net of Tax | $ 500 | |||
Currency Forward Contracts [Member] | Other Expense Income Net [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, (Gain) Loss Recognized in Income, Net | ||||
Other expense (income), net - currency forward contracts | $ 538 | $ (182) | 161 | $ (116) |
Range Forward Contracts [Member] | Cash flow hedging [Member] | ||||
(Gains) losses related to cash flow hedges | ||||
(Losses) gains recognized in other comprehensive loss, net | (866) | (914) | 615 | (637) |
Losses reclassified from accumulated other comprehensive loss into other expense (income), net | $ 390 | $ 629 | $ 1,158 | $ 293 |
Stock-Based Compensation - Grants Valuation Assumptions (Details) - Stock Option [Member] |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2016 | ||||||
Assumptions used in valuation of stock options | ||||||
Risk-free interest rate | 1.40% | |||||
Expected life | 4 years 6 months | [1] | ||||
Expected volatility | 31.70% | [2] | ||||
Expected dividend yield | 2.10% | |||||
|
Benefit Plans - Components of Net Periodic Pension Income (Details) - Pension plans contribution [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net periodic pension income | ||||
Service cost | $ 720 | $ 1,154 | $ 2,180 | $ 3,473 |
Interest cost | 7,756 | 9,375 | 23,335 | 28,299 |
Expected return on plan assets | (14,659) | (14,560) | (44,088) | (43,924) |
Amortization of transition obligation | 22 | 19 | 67 | 61 |
Amortization of prior service credit | (113) | (104) | (339) | (313) |
Recognition of actuarial losses | 2,066 | 1,805 | 6,266 | 5,452 |
Settlement gain | (320) | (320) | ||
Special Termination Benefits Charge | 0 | 0 | 0 | 214 |
Net periodic pension income | $ (4,528) | $ (2,311) | $ (12,899) | $ (6,738) |
Benefit Plans - Components of Net Periodic Other Postretirement Benefit Cost (Details) - Other postretirement benefit plans [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net periodic other postretirement benefit costs | ||||
Interest cost | $ 168 | $ 210 | $ 505 | $ 630 |
Amortization of prior service credit | (6) | (6) | (16) | (16) |
Recognition of actuarial loss | 89 | 81 | 266 | 242 |
Net periodic other postretirement benefit cost | $ 251 | $ 285 | $ 755 | $ 856 |
Benefit Plans Benefit Plans - Narrative (Details) - Pension Plan [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Special Termination Benefits Charge | $ 0 | $ 0 | $ 0 | $ 214 |
Settlement gain | $ 320 | $ 320 |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Inventories | ||
Finished goods | $ 286,990 | $ 284,054 |
Work in process and powder blends | 168,354 | 166,274 |
Raw materials | 90,389 | 68,472 |
Inventories at current cost | 545,733 | 518,800 |
Less: LIFO valuation | (55,521) | (59,970) |
Total inventories | $ 490,212 | $ 458,830 |
Inventories (Textual) [Abstract] | ||
Percentage of inventories valued by using LIFO method | 45.00% | 44.00% |
Long-Term Debt (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Jun. 30, 2016 |
Apr. 15, 2016 |
---|---|---|---|
Long-Term Debt (Additional Textual) [Abstract] | |||
Fixed rate at fair market value | $ 700.7 | $ 704.0 | |
2011 Credit Agreement [Member] | |||
Long-Term Debt (Textual) [Abstract] | |||
Borrowing outstanding under 2011 Credit Agreement | $ 0.0 | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 600.0 |
Environmental Matters (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Jun. 30, 2016 |
---|---|---|
Environmental Remediation Obligations [Abstract] | ||
Reserves for Environmental Costs | $ 12.1 | $ 12.5 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Tax (Textual) [Abstract] | ||||
Effective tax rate | 19.00% | 24.70% | 45.90% | 28.00% |
Earnings Per Shares (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
|
Earnings Per Share (Textual) [Abstract] | |||
Increase in weighted average shares due to dilutive effect of unexercised capital stock options and unvested restricted stock units | 1.0 | 0.4 | 0.7 |
Unexercised capital stock options and restricted stock units excluded from computation of diluted EPS | 1.2 | 3.1 | 1.8 |
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