/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ohio | 34-0553950 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
970 East 64th Street, Cleveland Ohio | 44103 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
(216) 881-8600 | ||||||
(Registrant’s telephone number, including area code) | ||||||
Securities Registered Pursuant to Section 12(b) of the Act: | ||||||
Common Shares, $1 Par Value | NYSE American | |||||
(Title of each class) | (Name of each exchange on which registered) |
Item Number | ||
PART I | ||
1 | ||
2 | ||
3 | ||
4 | ||
PART II | ||
5 | ||
7 | ||
8 | ||
9 | ||
9A | ||
9B | ||
PART III | ||
10 | ||
11 | ||
12 | ||
13 | ||
14 | ||
PART IV | ||
15 | ||
A. | The Company |
B. | Principal Products and Services |
• | SIFCO supplies new and spare components for commercial aircraft, principally for large aircraft produced by Boeing and Airbus. A continued increase in passenger travel demand will drive customers' orders for new aircraft. Demand for more fuel-efficient aircraft, particularly the Boeing 737Max, 787, 777X and the Airbus A320/A321neo and A350, remains strong with both companies reporting healthy backlogs. |
• | SIFCO supplies new and spare components to the U.S. military for aircraft, helicopters, vehicles, and munitions. While the defense budget in the United States varies from year to year, certain programs in which the Company participates have been favorable and are expected to continue to increase. |
• | SIFCO supplies new and spare components to the energy industry, particularly the industrial gas and steam turbine markets. The industrial gas and steam turbine markets have experienced a downturn in demand for new units in the near term. The overall market is forecasting to be down due to green technology alternatives gaining greater market share. SIFCO has positioned itself to support OEM production in a more limited role, but with flexibility to address the demand cycle in this segment as well as continuing to support the aftermarket. |
C. | Environmental Regulations |
D. | Employees |
E. | Non-U.S. Operations |
F. | Available Information |
• | SIFCO operates and manufactures in multiple facilities—(i) an owned 240,000 square foot facility located in Cleveland, Ohio, which is also the site of the Company’s corporate headquarters, (ii) an owned 450,000 square foot facility located in Alliance, Ohio, (iii) leased facilities aggregating approximately 70,000 square feet located in Orange, California after the expansion and consolidation, and (iv) owned facilities aggregating approximately 91,000 square feet located in Maniago, Italy. As of September 30, 2018, the Alliance building continues to be classified as an asset held for sale and as discussed in Note 12, Subsequent Events, of the consolidated financial statements, a purchase agreement with a buyer was executed on November 1, 2018. |
• | The Company sold its building located in Cork, Ireland (59,000 square feet) on December 15, 2017. |
• | Peter W. Knapper - President and Chief Executive Officer |
• | Thomas R. Kubera - Chief Financial Officer (August 8, 2018 to present). |
Name | Age | Title and Business Experience | |
Peter W. Knapper | 57 | President and Chief Executive Officer since June 2016. Prior to his appointment, Mr. Knapper worked for the TECT Corporation from 2007 to 2016 and was the Director of Strategy and Site Development. TECT offers the aerospace, power-generation, transportation, marine, and medical industries a combination of capabilities unique among metal component manufacturers. Prior to this role, Mr. Knapper, served as President of TECT Aerospace and Vice President of Operations of TECT Power. In addition, Mr. Knapper spent five years at Rolls Royce Energy Systems, Inc., a subsidiary of Rolls-Royce Holdings plc, as the Director of Component Manufacturing and Assembly. Mr. Knapper brings his strategic and industry experience to his role in management and to the Board of the Company. | |
Thomas R. Kubera | 59 | Chief Financial Officer since August 8, 2018 and Interim Chief Financial Officer since July 1, 2017. Mr. Kubera was Corporate Controller since May 2014 and Chief Accounting Officer since January 31, 2018. Mr. Kubera served as Interim Chief Financial Officer from April 2015 to May 2015. Prior to joining SIFCO, Mr. Kubera was previously at Cleveland-Cliffs Inc. (previously known as Cliffs Natural Resources), Inc. from April 2005 through 2014, most recently as the Controller of Global Operations Services. He also held several assistant controller positions and was a Senior Manager of External Reporting while at Cleveland-Cliffs, Inc. |
(Dollars in millions) | Years Ended September 30, | Increase (Decrease) | |||||||||
Net Sales | 2018 | 2017 | |||||||||
Aerospace components for: | |||||||||||
Fixed wing aircraft | $ | 57.0 | $ | 58.3 | $ | (1.3 | ) | ||||
Rotorcraft | 22.0 | 19.7 | 2.3 | ||||||||
Energy components for power generation units | 20.8 | 34.1 | (13.3 | ) | |||||||
Commercial product and other revenue | 11.4 | 9.4 | 2.0 | ||||||||
Total | $ | 111.2 | $ | 121.5 | $ | (10.3 | ) |
Weighted Average Interest Rate Years Ended September 30, | Weighted Average Outstanding Balance Years Ended September 30, | ||||||||
2018 | 2017 | 2018 | 2017 | ||||||
Revolving credit agreement | 5.5 | % | 4.8 | % | $ 18.6 million | $ 21.2 million | |||
Term note | 5.5 | % | 5.3 | % | $ 2.8 million | $ 5.8 million | |||
Foreign term debt | 2.9 | % | 2.8 | % | $ 7.7 million | $ 9.3 million |
• | Neither EBITDA nor Adjusted EBITDA reflects the interest expense, or the cash requirements necessary to service interest payments, on indebtedness; |
• | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects any cash requirements for such replacements; |
• | The omission of the substantial amortization expense associated with the Company’s intangible assets further limits the usefulness of EBITDA and Adjusted EBITDA; and |
• | Neither EBITDA nor Adjusted EBITDA includes the payment of taxes, which is a necessary element of operations. |
(Dollars in thousands) | Years Ended September 30, | |||||||
2018 | 2017 | |||||||
Net loss | $ | (7,170 | ) | $ | (14,209 | ) | ||
Adjustments: | ||||||||
Depreciation and amortization expense | 8,459 | 9,988 | ||||||
Interest expense, net | 2,131 | 2,152 | ||||||
Income tax expense (benefit) | (361 | ) | 1,069 | |||||
EBITDA | 3,059 | (1,000 | ) | |||||
Adjustments: | ||||||||
Foreign currency exchange (gain)/loss, net (1) | (114 | ) | 47 | |||||
Other income, net (2) | (400 | ) | (593 | ) | ||||
(Gain)/loss on disposal and impairment of assets (3) | (905 | ) | 4,957 | |||||
Equity compensation expense (4) | 608 | 404 | ||||||
Pension settlement/curtailment benefit (5) | — | (48 | ) | |||||
LIFO impact (6) | 560 | 293 | ||||||
Orange expansion (7) | — | 2,170 | ||||||
CEO relocation (8) | 145 | — | ||||||
Adjusted EBITDA | $ | 2,953 | $ | 6,230 |
(1) | Represents the gain or loss from changes in the exchange rates between the functional currency and the foreign currency in which the transaction is denominated. |
(2) | Represents miscellaneous non-operating income or expense, primarily consisted of rental income from the Company's Irish subsidiary (through the first quarter of fiscal 2018 when the building was sold). Included in fiscal 2018 was grant income that was realized that relates to Company's Irish subsidiary. |
(3) | Represents the difference between the proceeds from the sale of an asset and the carrying value shown on the Company’s books or asset impairment of long-lived assets. |
(4) | Represents the equity-based compensation recognized by the Company under its 2016 Long-Term Incentive Plan (as the amendment and restatement of, and successor to, the 2007 Long-Term Incentive Plan) due to granting of awards, awards not vesting and/or forfeitures. |
(5) | Represents expense (benefit) incurred by a defined benefit pension plan related to settlement of pension obligations. |
(6) | Represents the increase in the reserve for inventories for which cost is determined using the last in, first out ("LIFO") method. |
(7) | Represents costs related to expansion of one of the plant locations that are required to be expensed as incurred. |
(8) | Represents costs related to executive relocation costs. |
Impact on Fiscal 2018 Benefits Expense | Impact on September 30, 2018 Projected Benefit Obligation for Pension Plans | |||||||
Change in Assumptions | ||||||||
(In thousands) | ||||||||
25 basis point decrease in discount rate | $ | 47 | $ | 684 | ||||
25 basis point increase in discount rate | $ | (47 | ) | $ | (684 | ) | ||
100 basis point decrease in expected long-term rate of return on assets | $ | 210 | $ | — | ||||
100 basis point increase in expected long-term rate of return on assets | $ | (210 | ) | $ | — |
Years Ended September 30, | |||||
2018 | 2017 | ||||
Discount rate for expenses | 3.6 | % | 3.1 | % | |
Expected return on assets | 7.7 | % | 7.9 | % |
• | applying the new guidance only to contracts that are not completed as of October 1, 2018; and |
• | expensing the incremental costs to obtain a contract as incurred when the expected amortization period is one year or less. |
Years Ended September 30, | ||||||||
2018 | 2017 | |||||||
Net sales | $ | 111,212 | $ | 121,458 | ||||
Cost of goods sold | 101,110 | 108,094 | ||||||
Gross profit | 10,102 | 13,364 | ||||||
Selling, general and administrative expenses | 15,216 | 17,773 | ||||||
Amortization of intangible assets | 1,705 | 2,168 | ||||||
(Gain) loss on disposal and impairment of assets | (905 | ) | 4,957 | |||||
Operating loss | (5,914 | ) | (11,534 | ) | ||||
Interest income | (8 | ) | (56 | ) | ||||
Interest expense | 2,139 | 2,208 | ||||||
Foreign currency exchange (gain) loss, net | (114 | ) | 47 | |||||
Other income, net | (400 | ) | (593 | ) | ||||
Loss from operations before income tax expense (benefit) | (7,531 | ) | (13,140 | ) | ||||
Income tax expense (benefit) | (361 | ) | 1,069 | |||||
Net loss | $ | (7,170 | ) | $ | (14,209 | ) | ||
Net loss per share: | ||||||||
Basic | $ | (1.30 | ) | $ | (2.59 | ) | ||
Diluted | $ | (1.30 | ) | $ | (2.59 | ) | ||
Weighted-average number of common shares (basic) | 5,523 | 5,487 | ||||||
Weighted-average number of common shares (diluted) | 5,523 | 5,487 |
Years Ended September 30, | ||||||||
2018 | 2017 | |||||||
Net loss | $ | (7,170 | ) | $ | (14,209 | ) | ||
Other comprehensive income (loss), net of tax: | ||||||||
Foreign currency translation adjustment, net of tax $0 and $0, respectively | (348 | ) | 1,016 | |||||
Retirement plan liability adjustment, net of tax $0 and $0, respectively | 974 | 2,549 | ||||||
Interest rate swap agreement adjustment, net of tax $0 and $0, respectively | (4 | ) | 34 | |||||
Comprehensive loss | $ | (6,548 | ) | $ | (10,610 | ) |
September 30, | ||||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,252 | $ | 1,399 | ||||
Receivables, net of allowance for doubtful accounts of $520 and $330, respectively | 28,001 | 25,894 | ||||||
Inventories, net | 18,269 | 20,381 | ||||||
Refundable income taxes | 126 | 292 | ||||||
Prepaid expenses and other current assets | 1,900 | 1,644 | ||||||
Assets held for sale | 35 | 2,524 | ||||||
Total current assets | 49,583 | 52,134 | ||||||
Property, plant and equipment, net | 35,390 | 39,508 | ||||||
Intangible assets, net | 5,076 | 6,814 | ||||||
Goodwill | 12,020 | 12,170 | ||||||
Other assets | 168 | 261 | ||||||
Total assets | $ | 102,237 | $ | 110,887 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 5,944 | $ | 7,560 | ||||
Revolver | 21,253 | 18,557 | ||||||
Accounts payable | 15,513 | 12,817 | ||||||
Accrued liabilities | 5,107 | 6,791 | ||||||
Total current liabilities | 47,817 | 45,725 | ||||||
Long-term debt, net of current maturities | 2,332 | 5,151 | ||||||
Deferred income taxes | 2,413 | 3,266 | ||||||
Pension liability | 5,339 | 6,184 | ||||||
Other long-term liabilities | 147 | 430 | ||||||
Shareholders’ equity: | ||||||||
Serial preferred shares, no par value, authorized 1,000 shares | — | — | ||||||
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares – 5,690 at September 30, 2018 and 5,596 at September 30, 2017 | 5,690 | 5,596 | ||||||
Additional paid-in capital | 10,031 | 9,519 | ||||||
Retained earnings | 37,097 | 44,267 | ||||||
Accumulated other comprehensive loss | (8,629 | ) | (9,251 | ) | ||||
Total shareholders’ equity | 44,189 | 50,131 | ||||||
Total liabilities and shareholders’ equity | $ | 102,237 | $ | 110,887 |
(Amounts in thousands) | Years Ended September 30, | |||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (7,170 | ) | $ | (14,209 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 8,459 | 9,988 | ||||||
Amortization and write-off of debt issuance costs | 205 | 519 | ||||||
(Gain) loss on disposal of operating assets or impairment of operating assets | (905 | ) | 4,957 | |||||
Loss on extinguishment of debt | 496 | — | ||||||
LIFO expense | 560 | 293 | ||||||
Share transactions under employee stock plan | 608 | 371 | ||||||
Deferred income taxes | (823 | ) | 228 | |||||
Other long-term liabilities | (151 | ) | 408 | |||||
Changes in operating assets and liabilities, net of acquisition: | ||||||||
Receivables | (2,163 | ) | (294 | ) | ||||
Inventories | 1,479 | 8,093 | ||||||
Refundable income taxes | 167 | 1,482 | ||||||
Prepaid expenses and other current assets | (607 | ) | 1,493 | |||||
Other assets | 109 | (433 | ) | |||||
Accounts payable | 2,706 | (2,315 | ) | |||||
Accrued liabilities | (824 | ) | 1,414 | |||||
Accrued income tax and other | (851 | ) | — | |||||
Net cash provided by operating activities | 1,295 | 11,995 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from disposal of property, plant and equipment | 3,519 | 70 | ||||||
Capital expenditures | (2,831 | ) | (2,339 | ) | ||||
Net cash provided by (used for) investing activities | 688 | (2,269 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from term note | 1,218 | — | ||||||
Repayments of term note | (5,505 | ) | (14,332 | ) | ||||
Proceeds from revolving credit agreement | 87,102 | 85,934 | ||||||
Repayments of revolving credit agreement | (84,522 | ) | (80,128 | ) | ||||
Proceeds from short-term debt borrowings | 6,535 | 3,429 | ||||||
Repayments of short-term debt borrowings | (6,620 | ) | (3,143 | ) | ||||
Payments for debt financing | (312 | ) | (562 | ) | ||||
Net cash used for financing activities | (2,104 | ) | (8,802 | ) | ||||
Increase (decrease) in cash and cash equivalents | (121 | ) | 924 | |||||
Cash and cash equivalents at beginning of year | 1,399 | 471 | ||||||
Effects of exchange rate changes on cash and cash equivalents | (26 | ) | 4 | |||||
Cash and cash equivalents at end of year | $ | 1,252 | $ | 1,399 |
(Amounts in thousands) | Years Ended September 30, | |||||||
2018 | 2017 | |||||||
Cash (paid) received during the year: | ||||||||
Cash paid for interest | $ | (1,424 | ) | $ | (1,564 | ) | ||
Cash (paid for) refunds received for income tax, net | $ | (99 | ) | $ | 1,343 | |||
Non-cash investing and financing activities: | ||||||||
Capital expenditures funded by capital lease borrowings | $ | 92 | $ | 288 | ||||
Additions to property, plant & equipment - incurred but not yet paid | $ | 190 | $ | 667 |
Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||
Balance - September 30, 2016 | $ | 5,525 | $ | 9,219 | $ | 58,476 | $ | (12,850 | ) | $ | 60,370 | |||||||||
Comprehensive loss | — | — | (14,209 | ) | 3,599 | (10,610 | ) | |||||||||||||
Performance and restricted share expense | — | 404 | — | — | 404 | |||||||||||||||
Share transactions under employee stock plans | 71 | (104 | ) | — | — | (33 | ) | |||||||||||||
Balance - September 30, 2017 | 5,596 | 9,519 | 44,267 | (9,251 | ) | 50,131 | ||||||||||||||
Comprehensive loss | — | — | (7,170 | ) | 622 | (6,548 | ) | |||||||||||||
Performance and restricted share expense | — | 620 | — | — | 620 | |||||||||||||||
Share transactions under employee stock plans | 94 | (108 | ) | — | — | (14 | ) | |||||||||||||
Balance - September 30, 2018 | $ | 5,690 | $ | 10,031 | $ | 37,097 | $ | (8,629 | ) | $ | 44,189 |
2018 | 2017 | |||||||
Property, plant and equipment: | ||||||||
Land | $ | 995 | $ | 1,005 | ||||
Buildings | 15,365 | 15,084 | ||||||
Machinery and equipment | 76,465 | 75,080 | ||||||
Total property, plant and equipment | 92,825 | 91,169 | ||||||
Less: Accumulated depreciation | 57,435 | 51,661 | ||||||
Property, plant and equipment, net | $ | 35,390 | $ | 39,508 |
September 30, | ||||||||
2018 | 2017 | |||||||
Net loss | $ | (7,170 | ) | $ | (14,209 | ) | ||
Weighted-average common shares outstanding (basic and diluted) | 5,523 | 5,487 | ||||||
Net loss per share – basic and diluted: | ||||||||
Net loss per share | $ | (1.30 | ) | $ | (2.59 | ) | ||
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share | 144 | 93 |
• | applying the new guidance only to contracts that are not completed as of October 1, 2018; and |
• | expensing the incremental costs to obtain a contract as incurred when the expected amortization period is one year or less. |
2018 | 2017 | ||||||
Foreign currency translation adjustment, net of income tax benefit of $0 and $0, respectively | $ | (4,955 | ) | $ | (4,607 | ) | |
Net retirement plan liability adjustment, net of income tax benefit of ($3,758) and ($3,758), respectively | (3,674 | ) | (4,648 | ) | |||
Interest rate swap agreement, net of income tax benefit of $0 and $0, respectively | — | 4 | |||||
Total accumulated other comprehensive loss | $ | (8,629 | ) | $ | (9,251 | ) |
Foreign Currency Translation Adjustment | Retirement Plan Liability Adjustment | Interest Rates Swap Adjustment | Accumulated Other Comprehensive Loss | ||||||||||||
Balance at September 30, 2016 | $ | (5,623 | ) | $ | (7,197 | ) | $ | (30 | ) | $ | (12,850 | ) | |||
Other comprehensive income before reclassifications | 1,016 | 1,655 | 28 | 2,699 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 894 | 6 | 900 | |||||||||||
Net current-period other comprehensive loss | 1,016 | 2,549 | 34 | 3,599 | |||||||||||
Balance at September 30, 2017 | (4,607 | ) | (4,648 | ) | 4 | (9,251 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (348 | ) | 333 | 19 | 4 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss (income) | — | 641 | (23 | ) | 618 | ||||||||||
Net current-period other comprehensive loss | (348 | ) | 974 | (4 | ) | 622 | |||||||||
Balance at September 30, 2018 | $ | (4,955 | ) | $ | (3,674 | ) | $ | — | $ | (8,629 | ) |
Amount reclassified from accumulated other comprehensive loss | ||||||||||
Details about accumulated other comprehensive loss components | 2018 | 2017 | Affected line item in the Consolidated Statement of Operations | |||||||
Amortization of Retirement plan liability: | ||||||||||
Prior service costs | $ | — | $ | 15 | (1) | |||||
Net actuarial loss | 974 | 927 | (1) | |||||||
Settlements/curtailments | — | (48 | ) | (1) | ||||||
974 | 894 | Total before taxes | ||||||||
— | — | Income tax expense | ||||||||
$ | 974 | $ | 894 | Net of taxes | ||||||
2018 | 2017 | ||||||
Raw materials and supplies | $ | 6,202 | $ | 6,108 | |||
Work-in-process | 6,626 | 7,650 | |||||
Finished goods | 5,441 | 6,623 | |||||
Total inventories | $ | 18,269 | $ | 20,381 |
September 30, 2018 | Weighted Average Life at September 30, | Original Cost | Accumulated Amortization | Impairment | Currency Translation | Net Book Value | |||||||||||||||
Intangible assets: | |||||||||||||||||||||
Trade name | 8 years | $ | 2,466 | $ | 1,821 | $ | — | $ | (4 | ) | $ | 641 | |||||||||
Non-compete agreement | 5 years | 1,600 | 1,600 | — | — | — | |||||||||||||||
Technology asset | 5 years | 1,869 | 1,128 | — | (10 | ) | 731 | ||||||||||||||
Customer relationships | 10 years | 13,589 | 9,866 | — | (19 | ) | 3,704 | ||||||||||||||
Total intangible assets | $ | 19,524 | $ | 14,415 | $ | — | $ | (33 | ) | $ | 5,076 | ||||||||||
September 30, 2017 | |||||||||||||||||||||
Intangible assets: | |||||||||||||||||||||
Trade name | 8 years | $ | 2,776 | $ | 1,564 | $ | 310 | $ | 19 | $ | 921 | ||||||||||
Non-compete agreement | 5 years | 1,600 | 1,584 | — | — | 16 | |||||||||||||||
Technology asset | 5 years | 1,869 | 749 | — | 50 | 1,170 | |||||||||||||||
Customer relationships | 10 years | 15,568 | 8,946 | 1,979 | 64 | 4,707 | |||||||||||||||
Total intangible assets | $ | 21,813 | $ | 12,843 | $ | 2,289 | $ | 133 | $ | 6,814 |
Amortization Expense | |||
Fiscal year 2019 | $ | 1,668 | |
Fiscal year 2020 | 1,523 | ||
Fiscal year 2021 | 1,009 | ||
Fiscal year 2022 | 324 | ||
Fiscal year 2023 | 247 |
Balance at September 30, 2016 | $ | 11,748 | |
Currency translation | 422 | ||
Balance at September 30, 2017 | $ | 12,170 | |
Currency translation | (150 | ) | |
Balance at September 30, 2018 | $ | 12,020 |
2018 | 2017 | ||||||
Accrued employee compensation and benefits | $ | 3,864 | $ | 4,309 | |||
Accrued income taxes | 72 | 901 | |||||
Other accrued liabilities | 1,171 | 1,581 | |||||
Total accrued liabilities | $ | 5,107 | $ | 6,791 |
2018 | 2017 | ||||||
Revolving credit agreement | $ | 21,253 | $ | 18,557 | |||
Foreign subsidiary borrowings | 7,949 | 8,346 | |||||
Capital lease obligations | 327 | 352 | |||||
Term loan | — | 4,060 | |||||
Less: unamortized debt issuance cost | — | (47 | ) | ||||
Term loan less unamortized debt issuance cost | — | 4,013 | |||||
Total debt | 29,529 | 31,268 | |||||
Less – current maturities | (27,197 | ) | (26,117 | ) | |||
Total long-term debt | $ | 2,332 | $ | 5,151 |
2018 | 2017 | ||||||
Term loan | $ | 3,548 | $ | 3,881 | |||
Short-term borrowings | 3,472 | 2,618 | |||||
Factor | 929 | 1,847 | |||||
Total debt | $ | 7,949 | $ | 8,346 | |||
Less – current maturities | (5,822 | ) | (5,805 | ) | |||
Total long-term debt | $ | 2,127 | $ | 2,541 | |||
Receivables pledged as collateral | $ | 2,007 | $ | 3,548 |
Minimum long-term debt payments | ||||
2019 | $ | 1,421 | ||
2020 | 1,251 | |||
2021 | 493 | |||
2022 | 239 | |||
2023 | 144 | |||
Total Minimum long-term debt payments | $ | 3,548 |
Years Ended September 30, | |||||||
2018 | 2017 | ||||||
U.S. | $ | (7,582 | ) | $ | (15,574 | ) | |
Non-U.S. | 51 | 2,434 | |||||
Loss before income tax provision (benefit) | $ | (7,531 | ) | $ | (13,140 | ) |
Years Ended September 30, | |||||||
2018 | 2017 | ||||||
Current income tax provision (benefit): | |||||||
U.S. federal | $ | (19 | ) | $ | (64 | ) | |
U.S. state and local | 5 | (11 | ) | ||||
Non-U.S. | 472 | 951 | |||||
Total current tax provision (benefit) | 458 | 876 | |||||
Deferred income tax provision (benefit): | |||||||
U.S. federal | (462 | ) | 147 | ||||
U.S. state and local | (30 | ) | 5 | ||||
Non-U.S. | (327 | ) | 41 | ||||
Total deferred tax provision | (819 | ) | 193 | ||||
Income tax provision (benefit) | $ | (361 | ) | $ | 1,069 |
Years Ended September 30, | |||||||
2018 | 2017 | ||||||
Loss before income tax benefit | $ | (7,531 | ) | $ | (13,140 | ) | |
Income tax benefit at U.S. federal statutory rates | $ | (1,582 | ) | $ | (4,599 | ) | |
Tax effect of: | |||||||
Foreign rate differential | 694 | 120 | |||||
State and local income taxes | (25 | ) | (6 | ) | |||
Impact of tax law changes | 820 | (103 | ) | ||||
Federal tax credits | (1,573 | ) | (252 | ) | |||
Valuation allowance | 1,243 | 5,720 | |||||
Prior year tax adjustments | (211 | ) | 34 | ||||
Other | 273 | 155 | |||||
Income tax provision (benefit) | $ | (361 | ) | $ | 1,069 |
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Net U.S. operating loss carryforwards | $ | 3,200 | $ | 5,188 | |||
Net non-U.S. operating loss carryforwards | 592 | 596 | |||||
Employee benefits | 1,656 | 2,461 | |||||
Inventory reserves | 1,029 | 1,240 | |||||
Allowance for doubtful accounts | 126 | 135 | |||||
Intangibles | 2,826 | 4,873 | |||||
Foreign tax credits | 1,956 | 602 | |||||
Other tax credits | 1,164 | 994 | |||||
Other | 1,015 | 1,126 | |||||
Total deferred tax assets | 13,564 | 17,215 | |||||
Deferred tax liabilities: | |||||||
Depreciation | (5,449 | ) | (8,854 | ) | |||
Unremitted foreign earnings | — | (65 | ) | ||||
Prepaid expenses | (296 | ) | (247 | ) | |||
Other | (1,832 | ) | (1,718 | ) | |||
Total deferred tax liabilities | (7,577 | ) | (10,884 | ) | |||
Net deferred tax assets | 5,987 | 6,331 | |||||
Valuation allowance | (8,400 | ) | (9,597 | ) | |||
Net deferred tax liabilities | $ | (2,413 | ) | $ | (3,266 | ) |
2018 | 2017 | ||||||
Balance at beginning of year | $ | 69 | $ | 69 | |||
Decrease due to lapse of statute of limitations | (16 | ) | — | ||||
Balance at end of year | $ | 53 | $ | 69 |
Years Ended September 30, | |||||||
2018 | 2017 | ||||||
Service cost | $ | 262 | $ | 324 | |||
Interest cost | 963 | 883 | |||||
Expected return on plan assets | (1,608 | ) | (1,615 | ) | |||
Amortization of net loss | 641 | 861 | |||||
Net pension expense for defined benefit plan | $ | 258 | $ | 453 |
2018 | 2017 | ||||||
Benefit obligations: | |||||||
Benefit obligations at beginning of year | $ | 27,921 | $ | 29,731 | |||
Service cost | 262 | 324 | |||||
Interest cost | 963 | 883 | |||||
Actuarial (loss) gain | 178 | (1,292 | ) | ||||
Benefits paid | (1,880 | ) | (1,740 | ) | |||
Currency translation | (7 | ) | 15 | ||||
Benefit obligations at end of year | $ | 27,437 | $ | 27,921 | |||
Plan assets: | |||||||
Plan assets at beginning of year | $ | 21,691 | $ | 21,344 | |||
Actual return on plan assets | 2,118 | 1,978 | |||||
Employer contributions | 123 | 109 | |||||
Benefits paid | (1,880 | ) | (1,740 | ) | |||
Plan assets at end of year | $ | 22,052 | $ | 21,691 |
Plans in which Benefit Obligations Exceed Assets at September 30, | |||||||
2018 | 2017 | ||||||
Reconciliation of funded status: | |||||||
Plan assets less than projected benefit obligations | $ | (5,385 | ) | $ | (6,230 | ) | |
Amounts recognized in accumulated other comprehensive loss: | |||||||
Net loss | 7,432 | 8,406 | |||||
Net amount recognized in the consolidated balance sheets | $ | 2,047 | $ | 2,176 | |||
Amounts recognized in the consolidated balance sheets are: | |||||||
Accrued liabilities | (46 | ) | (46 | ) | |||
Pension liability | (5,339 | ) | (6,184 | ) | |||
Accumulated other comprehensive loss – pretax | 7,432 | 8,406 | |||||
Net amount recognized in the consolidated balance sheets | $ | 2,047 | $ | 2,176 |
Plans in which Assets Exceed Benefit Obligations | Plans in which Benefit Obligations Exceed Assets | ||||||
Net loss | $ | — | $ | 426 |
Years Ended September 30, | |||||
2018 | 2017 | ||||
Discount rate for liabilities | 4.1 | % | 3.6 | % | |
Discount rate for expenses | 3.6 | % | 3.1 | % | |
Expected return on assets | 7.7 | % | 7.9 | % |
• | U.S. equity securities are comprised of domestic equities that are priced using the closing price of the applicable nationally recognized stock exchange, as provided by industry standard vendors such as Interactive Data Corporation. |
• | Non-U.S. equity securities are comprised of international equities. These securities are priced using the closing price from the applicable foreign stock exchange. |
• | U.S. bond funds are comprised of domestic fixed income securities. Securities are priced by industry standards vendors, such as Interactive Data Corporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, or issuer spreads. |
◦ | Included as part of the U.S. bond funds, are private placement funds, for which fair market value is not always commercially available, the fair value of these investments is primarily determined using a discounted cash flow model, which utilizes a discount rate based upon the average of spread surveys collected from private-market intermediaries who are active in both primary and secondary transactions, and takes into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. |
• | Non-U.S. bond funds are comprised of international fixed income securities. Securities are priced by Interactive Data Corporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, or issuer spreads. |
• | Stable value fund is comprised of short-term securities and cash equivalent securities, which seek to provide high current income consistent with the preservation of principal and liquidity. As permitted under relevant securities laws, securities in this type of fund are valued initially at cost and thereafter adjusted for amortization of any discount or premium. |
September 30, 2018 | Asset Amount | Level 2 | Level 3 | ||||||||
U.S. equity securities: | |||||||||||
Large value | $ | 446 | $ | 446 | $ | — | |||||
Large blend | 9,910 | 9,910 | — | ||||||||
Large growth | 825 | 825 | — | ||||||||
Mid blend | 228 | 228 | — | ||||||||
Small blend | 229 | 229 | — | ||||||||
Non-U.S. equity securities: | |||||||||||
Foreign large blend | 1,714 | 1,714 | — | ||||||||
Diversified emerging markets | 18 | 18 | — | ||||||||
U.S. debt securities: | |||||||||||
Inflation protected bond | 1,184 | 1,184 | — | ||||||||
Intermediate term bond | 6,811 | 4,996 | 1,815 | ||||||||
High inflation bond | 182 | 182 | — | ||||||||
Non-U.S. debt securities: | |||||||||||
Emerging markets bonds | 38 | 38 | — | ||||||||
Stable value: | |||||||||||
Short-term bonds | 467 | 467 | — | ||||||||
Total plan assets at fair value | $ | 22,052 | $ | 20,237 | $ | 1,815 |
September 30, 2017 | Asset Amount | Level 2 | Level 3 | ||||||||
U.S. equity securities: | |||||||||||
Large value | $ | 681 | $ | 681 | $ | — | |||||
Large blend | 9,788 | 9,788 | — | ||||||||
Large growth | 470 | 470 | — | ||||||||
Mid blend | 79 | 79 | — | ||||||||
Small blend | 111 | 111 | — | ||||||||
Non-U.S. equity securities: | |||||||||||
Foreign large blend | 1,731 | 1,731 | — | ||||||||
Diversified emerging markets | 19 | 19 | — | ||||||||
U.S. debt securities: | |||||||||||
Inflation protected bond | 1,089 | 1,089 | — | ||||||||
Intermediate term bond | 7,240 | 5,065 | 2,175 | ||||||||
High inflation bond | 187 | 187 | — | ||||||||
Non-U.S. debt securities: | |||||||||||
Emerging markets bonds | 77 | 77 | — | ||||||||
Stable value: | |||||||||||
Short-term bonds | 219 | 219 | — | ||||||||
Total plan assets at fair value | $ | 21,691 | $ | 19,516 | $ | 2,175 |
2018 | 2017 | ||||||
Balance at beginning of year | $ | 2,175 | $ | 2,185 | |||
Actual return on plan assets | 1 | 26 | |||||
Purchases and sales of plan assets, net | (361 | ) | (36 | ) | |||
Balance at end of year | $ | 1,815 | $ | 2,175 |
Percent of Plan Assets at September 30, | Asset Allocation Range | ||||||
2018 | 2017 | ||||||
U.S. equities | 53 | % | 51 | % | 30% to 70% | ||
Non-U.S. equities | 8 | % | 8 | % | 0% to 20% | ||
U.S. debt securities | 37 | % | 39 | % | 20% to 70% | ||
Non-U.S. debt securities | — | % | 1 | % | 0% to 10% | ||
Other securities | 2 | % | 1 | % | 0% to 60% | ||
Total | 100 | % | 100 | % |
Years Ending September 30, | Projected Benefit Payments | ||
2019 | $ | 1,986 | |
2020 | 1,969 | ||
2021 | 1,968 | ||
2022 | 1,827 | ||
2023 | 1,911 | ||
2024-2028 | 9,199 |
Pension Fund | Pension Protection Act Zone Status | FIP/RP Status Pending/ Implemented | Contributions by the Company | Surcharge Imposed | Expiration of Collective Bargaining Agreement | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Fund ¹ | Green | Green | No | $ | 60 | $ | 58 | No | 5/31/2020 |
2018 | 2017 | ||||||||||||
Number of Shares | Weighted Average Fair Value at Date of Grant | Number of Shares | Weighted Average Fair Value at Date of Grant | ||||||||||
Outstanding at beginning of year | 194 | $ | 8.57 | 146 | $ | 13.07 | |||||||
Restricted shares awarded | 98 | 6.63 | 71 | 7.73 | |||||||||
Restricted shares earned | (33 | ) | 8.05 | (29 | ) | 9.45 | |||||||
Performance shares awarded | 68 | 6.70 | 69 | 7.45 | |||||||||
Performance shares earned | — | — | (10 | ) | 9.50 | ||||||||
Awards forfeited | (56 | ) | 9.85 | (53 | ) | 17.75 | |||||||
Outstanding at end of year | 271 | $ | 7.20 | 194 | $ | 8.57 |
Year ending September 30, | Capital Leases | Operating Leases | |||||
2019 | $ | 134 | $ | 2,241 | |||
2020 | 87 | 2,053 | |||||
2021 | 86 | 1,758 | |||||
2022 | 35 | 1,468 | |||||
2023 | 12 | 1,333 | |||||
Thereafter | — | 16,675 | |||||
Total minimum lease payments | $ | 354 | $ | 25,528 | |||
Plus: Amount representing interest | (27 | ) | |||||
Present value of minimum lease payments | $ | 327 |
2018 | 2017 | ||||||
Machinery and equipment | $ | 638 | $ | 550 | |||
Accumulated depreciation | (278 | ) | (162 | ) |
2018 | 2017 | ||||||
Long-Lived Assets | |||||||
United States | $ | 29,595 | 33,114 | ||||
Europe | 23,059 | 25,639 | |||||
$ | 52,654 | 58,753 |
Plant locations | Expiration date | |
Cleveland, Ohio | May 31, 2020 | |
Maniago, Italy | December 31, 2019 |
Balance at Beginning of Period | Additions (Reductions) Charged to Expense | Additions (Reductions) Charged to Other Accounts | Deductions | Balance at End of Period | ||||||||||||||||
Year Ended September 30, 2018 | ||||||||||||||||||||
Deducted from asset accounts | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 330 | 415 | (39 | ) | (186 | ) | (a) | $ | 520 | ||||||||||
Inventory obsolescence reserve | 3,859 | 177 | (30 | ) | (127 | ) | (b) | $ | 3,879 | |||||||||||
Inventory LIFO reserve | 8,319 | 560 | — | — | $ | 8,879 | ||||||||||||||
Deferred tax valuation allowance | 9,597 | (968 | ) | (229 | ) | — | $ | 8,400 | ||||||||||||
Accrual for estimated liability | ||||||||||||||||||||
Workers’ compensation reserve | 237 | (132 | ) | — | 31 | (c) | $ | 136 | ||||||||||||
Year Ended September 30, 2017 | ||||||||||||||||||||
Deducted from asset accounts | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 706 | $ | 77 | $ | 8 | $ | (461 | ) | (a) | $ | 330 | ||||||||
Inventory obsolescence reserve | 3,308 | 657 | 91 | (197 | ) | (b) | 3,859 | |||||||||||||
Inventory LIFO reserve | 8,026 | 293 | — | — | 8,319 | |||||||||||||||
Deferred tax valuation allowance | 4,399 | 6,117 | (919 | ) | — | 9,597 | ||||||||||||||
Accrual for estimated liability | ||||||||||||||||||||
Workers’ compensation reserve | 324 | 234 | 1 | (322 | ) | (c) | 237 | |||||||||||||
(a) | Accounts determined to be uncollectible, net of recoveries |
(b) | Inventory sold or otherwise disposed |
(c) | Payment of workers’ compensation claims |
• | Key controls around segregation of duties and periodic access reviews within IT general and application controls for domestic operations were not designed nor operating effectively. |
• | Key controls within IT processes were not designed and operating effectively at Maniago. |
• | Implement a robust security and access reviews at a level of precision necessary to ensure they are timely and appropriate, including monitoring activities for users with privileged access. The Company is making progress and will seek external assistance as needed. Using a risk-based approach, management will implement detective and monitoring business process controls to further mitigate IT risks over financial reporting. |
• | Management was unable to remediate the Company's Maniago IT general controls for fiscal 2018. In fiscal 2019, management will review the control design of the IT general controls and use a risk-based approach to test the effectiveness over Maniago’s IT general controls and continue to leverage its business process controls and monitoring controls over financial reporting. Management was successfully able to remediate its material weakness around business process controls for Maniago in fiscal 2018. |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | ||||
Equity compensation plans approved by security holders: | |||||||
2016 Long-term Incentive Plan (1) | 271,250 | N/A | 302,254 |
(1) | Under the 2016 Long-Term Incentive Plan, the aggregate number of common shares that are available to be granted is 646,401 shares, with a further limit of no more than 50,000 shares to any one person in any twelve-month period. For additional information concerning the Company’s equity compensation plans, refer to the discussion in Note 8, Stock Compensation, of the consolidated financial statements. These securities are issued upon meeting performance objectives. |
Exhibit No. | Description | |
2.1 | ||
2.2 | ||
3.1 | ||
3.2 | ||
9.1 | ||
9.2 | ||
9.3 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
14.1 | ||
*21.1 | ||
*23.1 |
*31.1 | ||
*31.2 | ||
*32.1 | ||
*32.2 | ||
*101 | The following financial information from SIFCO Industries, Inc. Report on Form 10-K for the year ended September 30, 2018 filed with the SEC on December 6, 2018, formatted in XBRL includes: (i) Consolidated Statements of Operations for the years ended September 30, 2018 and 2017, (ii) Consolidated Statements of Comprehensive Income for the years ended September 30, 2018 and 2017, (iii) Consolidated Balance Sheets at September 30, 2018 and 2017, (iv) Consolidated Statements of Cash Flow for the years ended September 30, 2018 and 2017, (vi) Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2018 and 2017 and (v) the Notes to the Consolidated Financial Statements. | |
SIFCO Industries, Inc. | ||
By: /s/ Thomas R. Kubera | ||
Thomas R. Kubera | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
Date: December 6, 2018 | ||
/s/ Norman E. Wells, Jr. | /s/ Peter W. Knapper | ||
Norman E. Wells, Jr. | Peter W. Knapper | ||
Chairman of the Board | President and Chief Executive Officer | ||
(Principal Executive Officer) | |||
/s/ Jeffrey P. Gotschall | /s/ Donald C. Molten, Jr. | ||
Jeffrey P. Gotschall | Donald C. Molten, Jr. | ||
Director | Director | ||
/s/ Alayne L. Reitman | /s/ Mark J. Silk | ||
Alayne L. Reitman | Mark J. Silk | ||
Director | Director | ||
/s/ Hudson D. Smith | /s/ Thomas R. Kubera | ||
Hudson D. Smith | Thomas R. Kubera | ||
Director | Chief Financial Officer | ||
(Principal Financial Officer) | |||
Subsidiary | State of Jurisdiction of Incorporation | |
SIFCO Custom Machining Company | Minnesota | |
T&W Forge, LLC | Ohio | |
SIFCO Turbine Component Services LLC | Ohio | |
SIFCO Irish Holdings, Limited | Ireland | |
SIFCO Turbine Components Limited | Ireland | |
Quality Aluminum Forge, LLC | Ohio | |
General Aluminum Forgings, LLC | Ohio | |
C Blade S.p.A. Manufacturing & Forging | Italy | |
1. | I have reviewed this Annual Report on Form 10-K of SIFCO Industries, 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(s) 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; |
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(s) 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: December 6, 2018 | /s/ Peter W. Knapper | |
Peter W. Knapper | ||
President and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of SIFCO Industries, 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(s) 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; |
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(s) 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: December 6, 2018 | /s/ Thomas R. Kubera | |
Thomas R. Kubera | ||
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 results of operations of the Company. |
Dated: December 6, 2018 | ||
/s/ Peter W. Knapper | ||
Peter W. Knapper | ||
President and Chief Executive 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 results of operations of the Company. |
Dated: December 6, 2018 | ||
/s/ Thomas R. Kubera | ||
Thomas R. Kubera | ||
Interim Chief Financial Officer | ||
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
Mar. 31, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SIFCO INDUSTRIES INC | ||
Entity Central Index Key | 0000090168 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 15,601,104 | ||
Entity Common Stock, Shares Outstanding | 5,689,939 |
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (7,170) | $ (14,209) |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustment, net of tax $0 and $0, respectively | (348) | 1,016 |
Retirement plan liability adjustment, net of tax $0 and $0, respectively | 974 | 2,549 |
Interest rate swap agreement adjustment, net of tax $0 and $0, respectively | (4) | 34 |
Comprehensive loss | $ (6,548) | $ (10,610) |
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustment tax | $ 0 | $ 0 |
Retirement plan liability adjustment tax | 0 | 0 |
Interest rate swap agreement adjustment tax | $ 0 | $ 0 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Doubtful Accounts | $ 520 | $ 330 |
Serial preferred shares, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common shares, par value (in dollars per share) | $ 1 | $ 1 |
Common shares, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common shares, shares issued (in shares) | 5,690,000 | 5,596,000 |
Common shares, shares outstanding (in shares) | 5,690,000 | 5,596,000 |
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands |
Total |
Common Shares |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|
Beginning Balance at Sep. 30, 2016 | $ 60,370 | $ 5,525 | $ 9,219 | $ 58,476 | $ (12,850) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive loss | (10,610) | (14,209) | 3,599 | ||
Performance and restricted share expense | 404 | 404 | |||
Share transactions under employee stock plans | (33) | 71 | (104) | ||
Ending Balance at Sep. 30, 2017 | 50,131 | 5,596 | 9,519 | 44,267 | (9,251) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive loss | (6,548) | (7,170) | 622 | ||
Performance and restricted share expense | 620 | 620 | |||
Share transactions under employee stock plans | (14) | 94 | (108) | ||
Ending Balance at Sep. 30, 2018 | $ 44,189 | $ 5,690 | $ 10,031 | $ 37,097 | $ (8,629) |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies A. DESCRIPTION OF BUSINESS SIFCO Industries, Inc. and its subsidiaries are engaged in the production of forgings and machined components primarily in the Aerospace and Energy ("A&E") market. The Company’s operations are conducted in a single business segment, "SIFCO" or the "Company." B. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The U.S. dollar is the functional currency for all the Company’s U.S. operations and its Irish subsidiary. For these operations, all gains and losses from completed currency transactions are included in income currently. The functional currency for the Company's other non-U.S. subsidiaries is the Euro. Assets and liabilities are translated into U.S. dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange. Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity. C. CASH EQUIVALENTS The Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. A substantial majority of the Company’s cash and cash equivalent bank balances exceed federally insured limits as of September 30, 2018 and 2017, respectively. D. CONCENTRATIONS OF CREDIT RISK Receivables are presented net of allowance for doubtful accounts of $520 and $330 at September 30, 2018 and 2017, respectively. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company writes off accounts receivable when they become uncollectible. During fiscal 2018 and 2017, $186 and $461, respectively, of accounts receivable were written off against the allowance for doubtful accounts. Bad debt expense totaled $415 and $77 in fiscal 2018 and fiscal 2017, respectively. Most of the Company’s receivables represent trade receivables due from manufacturers of turbine engines and aircraft components as well as turbine engine overhaul companies located throughout the world, including a significant concentration of U.S. based companies. In fiscal 2018, 31% of the Company’s consolidated net sales were from two of its largest customers; and 38% of the Company's consolidated net sales were from the three largest customers and their direct subcontractors, which individually accounted for 14%, 12% and 12%, of consolidated net sales, respectively. In fiscal 2017, 22% of the Company’s consolidated net sales were from two of its largest customers; and 35% of the Company's consolidated net sales were from three of the largest customers and their direct subcontractors which individually accounted for 13%, 11% and 11%, of consolidated net sales, respectively. No other single customer or group represented greater than 10% of total net sales in fiscal 2018 and 2017. At September 30, 2018, three of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% of the total net accounts receivable; and five of the largest customers and direct subcontractors had outstanding net accounts receivable which accounted for 16%, 14%, 12%, 11% and 11% of total net accounts receivable, respectively. At September 30, 2017, one of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% of total net accounts receivable; and three of the largest customers and direct subcontractors had outstanding net accounts receivable which accounted for 13%, 10% and 10% of total net accounts receivable, respectively. The Company performs ongoing credit evaluations of its customers’ financial conditions. The Company believes its allowance for doubtful accounts is sufficient based on the credit exposures outstanding at September 30, 2018. E. INVENTORY VALUATION Inventories are stated at the lower of cost or market. For a portion of the Company's inventory, cost is determined using the last-in, first-out (“LIFO”) method. For approximately 54% and 38% of the Company’s inventories at September 30, 2018 and 2017, respectively, the LIFO method is used to value the Company’s inventories. The first-in, first-out (“FIFO”) method is used to value the remainder of the Company’s inventories. The Company maintains allowances for obsolete and excess inventory. The Company evaluates its allowances for obsolete and excess inventory each quarter and requires at a minimum that reserves be established based on an analysis of the age of the inventory. In addition, if the Company identifies specific obsolescence, other than that identified by the aging criteria, an additional reserve will be recognized. Specific obsolescence and excess reserve requirements may arise due to technological or market changes or based on cancellation of an order. The Company’s reserves for obsolete and excess inventory were $3,979 and $3,859 at September 30, 2018 and 2017, respectively. F. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is generally computed using the straight-line method. Depreciation is provided in amounts sufficient to amortize the cost of the assets over their estimated useful lives. Depreciation provisions are based on estimated useful lives: (i) buildings, including building improvements - 5 to 40 years; (ii) machinery and equipment, including office and computer equipment - 3 to 20 years; (iii) software - 3 to 7 years (included in machinery and equipment); and (iv) leasehold improvements - remaining life or length of the lease (included in buildings). The Company's property, plant and equipment assets by major asset class at September 30 consist of:
The (gain) loss on disposal of operating assets is included as a separate line item in the accompanying consolidated statements of operations. Depreciation expense was $6,754 and $7,820 in fiscal 2018 and 2017, respectively. G. ASSET IMPAIRMENT The Company reviews the carrying value of its long-lived assets, including property, plant and equipment, when events and circumstances indicate a triggering event has occurred. This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets. If the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. The Company announced the decision to close the Alliance, Ohio ("Alliance") plant in the third quarter of fiscal 2017 and transfer future orders to the Cleveland, Ohio ("Cleveland") plant, resulting in a triggering event, requiring an impairment analysis to be performed by the Company in accordance with Accounting Standard Codification ("ASC") 360 Property, Plant and Equipment in fiscal 2017 and further assessment for certain assets held for sale as discussed in Note 1, Summary of Significant Accounting Policies - Assets Held for Sale, of the consolidated financial statements in fiscal 2018. As required by ASC 360, an impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The Company used May 31, 2017 as the triggering date to evaluate the carrying values and test for recoverability of the Alliance machinery and equipment, customer list and trade name as this was the date of when the decision to close Alliance was approved. The fair value of the assets was estimated using Level 2 and Level 3 inputs based on the orderly liquidation value as determined by a third-party appraisal and undiscounted cash flows. As a result, in fiscal 2017, the Company recorded asset impairment charges of $4,786, which is included in the consolidated statements of operations within (gain) loss on disposal or impairment of operating assets; $2,497 of the total impairment charge related to machinery and equipment and the remaining $2,289 related to intangible assets. In addition, the Company also impaired assets totaling $174 in fiscal 2017 related to development of an ERP solution for one of its operating plants. H. ASSETS HELD FOR SALE The assets held for sale at September 30, 2018 and 2017, were $35 and $2,524, respectively. A portion of the September 30, 2017 assets held for sale related to the Alliance machinery and equipment which were auctioned in July 2018, and the Company recorded a net loss on disposal and impairment of assets to the consolidated statements of operations of $500 after considering $515 in cash proceeds, net of costs to sell. The balance remaining at September 30, 2018 relates to the Alliance building and certain machinery and equipment, which the Company expects to sell within the next 12 months. See Note 12, Subsequent Events to the consolidated statements for discussion on sale of the Alliance building. Included in asset held for sale balance at September 30, 2017 was the asset related to the Company’s Cork, Ireland building ("Irish Building") with a net carrying amount of $1,447. Prior to the sale of the Irish Building, it was subject to a lease arrangement with the acquirer of the business that expires in June 2027. Rental income was previously earned in quarterly installments of $103. Rental income was $78 and $413 in each of fiscal years 2018 and 2017, respectively, and is recorded in other income, net on the consolidated statements of operations. In the first quarter of fiscal 2018, the Company executed the sale of the Irish Building. The sale transaction was finalized on December 15, 2017 for cash proceeds of approximately $3,078, resulting in a net gain of $1,545 included within the consolidated statement of operations within (gain) loss of disposal and impairment of assets. No loss was incurred as of September 30, 2017 as the carrying amount of the Irish Building was less than the fair value less expected costs to sell. The net cash proceeds after paying third party costs and related taxes were received in January 2018. A portion of the proceeds received in the amount of $2,447 was used to pay down the Term Facility and revolving credit facility as discussed further in Note 5, Debt, of the consolidated financial statements. I. GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is subject to impairment testing if triggered in the interim, and if not, on an annual basis. The Company has selected July 31 as the annual impairment testing date. Since the adoption of Accounting Standard Update ("ASU") 2017-04, Step 2 has been eliminated from the goodwill impairment test. The first step of the goodwill impairment test compares the fair value of a reporting unit (as defined) with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired. However, if the carrying amount exceeds the fair value, the Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. See Note 3, Goodwill and Intangibles, of the consolidated financial statements for further discussion of the July 31, 2018 and 2017 annual impairment test results and its interim goodwill test performed as of May 31, 2017 for one of its reporting units. Intangible assets consist of identifiable intangibles acquired or recognized in the accounting for the acquisition of a business and include such items as a trade name, a non-compete agreement, below market lease, customer relationships and order backlog. Intangible assets are amortized over their useful lives ranging from one year to ten years. Identifiable intangible assets assessment for impairment is evaluated when events and circumstances warrant such a review, as noted within Note 1, Summary of Significant Accounting Policies - Asset Impairment, of the consolidated financial statements. J. NET LOSS PER SHARE The Company’s net loss per basic share has been computed based on the weighted-average number of common shares outstanding. Due to the net loss for each reporting period, zero restricted shares are included in the calculation of basic or diluted earnings per share because the effect would be anti-dilutive. The dilutive effect is as follows:
K. REVENUE RECOGNITION Revenue is generally recognized from the sale of products shipped when the title and risk of loss passes to the customer, which is generally at the time of shipment. Substantially all product sales are made pursuant to a firm, fixed-price purchase orders or supply agreement demand forecasts received from customers. Provisions for estimated returns and uncollectible accounts provisions are provided for in the same period as the related revenues are recorded and are principally based on historical results modified, as appropriate, by the most current information available. Due to uncertainties in the estimation process, it is possible that actual results may vary from the estimates. L. CAPITAL LEASE OBLIGATIONS Capital leases are accounted for as the acquisition of an asset and the commitment of an obligation by the lessee and as a sale or financing by the lessor. All other leases are accounted for as operating leases. M. IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS In 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. ASU 2016-09 was adopted by the Company effective October 1, 2017. This guidance requires all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the consolidated statements of operations and also requires a policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company changed its policy to recognize the impact of forfeitures when they actually occur. There was no impact to the consolidated condensed financial statements as of October 1, 2017. Also, this guidance requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified in the consolidated statements of cash flows as a financing activity, which differs from the Company's previous method of classification of such cash payments as an operating activity. The Company applied this provision retrospectively, and for the first quarter of fiscal 2017, the impact between operating activities to financing activities was nominal. This guidance also requires the tax effects of exercised or vested awards to be treated as discrete items in the reporting period in which they occur, which was applied prospectively, beginning October 1, 2017. Due to the Company having recorded a domestic valuation allowance, the tax impact upon adoption of this ASU was not material to the consolidated financial statements. Lastly, the guidance requires that excess tax benefits should be classified along with other income tax cash flows as an operating activity on the consolidated statements of cash flows, which differs from the Company’s historical classification of excess tax benefits as cash inflows from financing activities. The Company elected to apply this provision using the prospective transition method. In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory," which provides new guidance to simplify the measurement of inventory valuation at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this ASU in the first quarter ended December 31, 2017 had no impact on the Company's consolidated financial statements. N. IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)." The ASU amends certain disclosures by removing disclosure requirements that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant. This ASU will be effective for fiscal years ending after December 15, 2020. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, "Improvements to Non-employee Share-Based Payment Accounting." The ASU simplifies the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The standard will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This ASU allows an optional reclassification from accumulated other comprehensive income to retained earnings for standard tax effects resulting from the Act. ASU 2018-02 must be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. This ASU is effective for fiscal years, including interim periods within, beginning after December 15, 2018 with early adoption permitted in any interim period. Due to the valuation allowance in the U.S., the Company has elected not to adopt this optional reclassification. In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which relates to pension related costs that require an entity to report the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs. The other components of the net periodic benefit cost are required to be presented in the income statement separately from the service cost component and outside of any subtotal of operating income. Additionally, only the service cost component will be eligible for capitalization in assets. The ASU is effective October 1, 2018, and the ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost in the income statement and prospectively for the capitalization of the service cost component. The amendment allows for a practical expedient that permits an employer to use the amounts disclosed in its pension and other post-retirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company would need to disclose if the practical expedient was used. The Company does not expect the adoption of this standard to have a material impact to its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," requiring that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amendment is effective October 1, 2018. The Company does not expect that this ASU would have a material impact to the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory," which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This ASU will be effective for the Company on October 1, 2018. The Company does not expect that this ASU would have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which amends certain cash flow issues which apply to all entities required to present a statement of cash flow. The amendment is effective October 1, 2018. The Company is currently evaluating the impact it may have on its consolidated financial statements together with evaluating the adoption date. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. The standard requires a modified retrospective transition for capital and operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial adoption. Subsequent to this ASU, the FASB has released additional ASUs, such as, ASU 2018-10 and ASU 2018-11 to provide technical improvements and clarify transitional methods. The ASU, along with subsequent updates, is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company will adopt the new guidance on October 1, 2019 and is currently evaluating the requirements of ASU 2016-02 and anticipates that the adoption will impact the consolidated condensed balance sheets due to the recognition of the right-to-use asset and lease liability related to its current operating leases. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for generally accepted accounting principles ("GAAP") and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” This ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. These ASUs, along with subsequent updates, apply to all companies that enter into contracts with customers to transfer goods or services, and are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The standard permits two methods of adoption: retrospectively to each prior reporting period presented (the “full retrospective method”), or retrospectively with the cumulative effect of initially applying Topic 606 recognized at the date of initial application (the “modified retrospective method”) effective October 1, 2018. The Company is substantially complete in performing the five-step contract review for all existing contracts with customers, across all locations, and opening retained earnings adjustment as it plans to adopt the standard using the modified retrospective method transition method on October 1, 2018 and will use practical expedients permitted by the standard when applicable. These practical expedients include:
The Company executed a bottom up approach to analyze the standard's impact on its revenues by looking at historical policies and practices and identifying the differences from applying the new standard to its revenue streams. The Company has determined that many of its long-term agreements contain variable consideration clauses and believes the impact is determined to be insignificant to its consolidated financial statements. While the Company continues to assess all potential impacts of the standard, the Company currently believes that the most significant impact relates to the accounting for agreements which include production of military forgings and certain agreements for commercial forgings which include terms and conditions that require the Company to recognize revenue over time. These terms and conditions relate to assets with no alternative use that have an enforceable right to payment upon termination for convenience. The remainder of the Company's current revenues, including all commercial parts that do not have a long-term agreement clause requiring over time recognition will continue to be recognized at a point-in-time. The Company anticipates the adoption of the standard will result in an increase of between approximately $2,300 and $3,100 to retained earnings (net of tax) and corresponding contract asset due to revenue being accelerated from the shift of some customers and product revenue being recognized over a period of time. Adoption of the standard is not anticipated to impact cash from or used in operating, financing, or investing activities in our consolidated statements of cash flows. The Company future disclosures will be expanded to comply with the standard. Additionally, the Company is in process of updating its processes and internal control framework as it relates to the new standard. The Company is in the process of implementing a system to automate the calculation of overtime revenue recognition. O. USE OF ESTIMATES Accounting principles generally accepted in the U.S. require management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the period in preparing these financial statements. Actual results could differ from those estimates. P. DERIVATIVE FINANCIAL INSTRUMENTS As part of the 2016 Credit Agreement (described further in Note 5, Debt, of the consolidated financial statements), the Company entered into an interest rate swap agreement on November 30, 2016 to reduce risk related to the variable rate debt over the life of the term loan. The cash flows related to the interest rate swap agreement were included in interest expense. The Company’s interest rate swap agreement and its variable rate term debt were based upon LIBOR. The interest rate swap qualified as a fully-effective cash flow hedge against the Company’s variable rate term note through the second quarter of fiscal 2018. In the second quarter of fiscal 2018, the interest rate swap was de-designated as a cash flow hedge. As a result of the de-designation of the interest rate swap, changes in fair value were recorded in the current period's earnings, which are included in interest expense. The interest rate swap was terminated in the fourth quarter of fiscal 2018, resulting in a realized gain of $43, which was recognized within interest expense. As of September 30, 2017, the Company had an interest rate swap with a notional amount of $4,059, which qualified as a fully effective cash flow hedge at the time. The mark-to-market valuation was a $4 asset at September 30, 2017. Q. RESEARCH AND DEVELOPMENT Research and development costs are expensed as they are incurred. Research and development expense was nominal in fiscal 2018 and 2017. R. DEFERRED FINANCING COSTS Debt issuance costs are capitalized and amortized over the life of the related debt. Amortization of deferred financing costs is included in interest expense in the consolidated statements of operations. S. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss as shown on the consolidated balance sheets at September 30 are as follows:
The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive loss, net of tax:
The following table reflects the changes in accumulated other comprehensive loss related to the Company for September 30, 2018 and 2017:
(1) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost. See Note 7, Retirement Benefit Plans, of the consolidated financial statements for further information. T. INCOME TAXES The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s Irish and Italian subsidiaries also file tax returns in the respective jurisdictions. The Company provides deferred income taxes for the temporary difference between the financial reporting basis and tax basis of the Company’s assets and liabilities. Such taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Deductible temporary differences result principally from recording certain expenses in the financial statements in excess of amounts currently deductible for tax purposes. Taxable temporary differences result principally from tax depreciation in excess of book depreciation. The Company evaluates for uncertain tax positions taken at each balance sheet date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company's policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in tax expenses. The Company maintains a valuation allowance against its deferred tax assets when management believes it is more likely than not that all or a portion of a deferred tax asset may not be realized. Changes in valuation allowances are recorded in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. U. 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. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Quoted market prices in active markets for identical assets or liabilities Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 - Unobservable inputs that are not corroborated by market data A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The book value of cash equivalents, accounts receivable, accounts payable, and revolving credit facilities are considered to be representative of their fair values because of their short maturities. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in goodwill, other intangible assets and long-lived assets impairment analysis, the valuation of acquired intangibles and in the valuation of assets held for sale. Goodwill and intangible assets are valued using Level 3 inputs. V. SHARE-BASED COMPENSATION Share-based compensation is measured at the grant date, based on the calculated fair value of the award and the probability of meeting its performance condition, and is recognized as expense when it is probable that the performance conditions will be met over the requisite service period (generally the vesting period). Share-based expense includes expense related to restricted shares and performance shares issued under the Company's 2007 Long-Term Incentive Plan ("2007 Plan") and the 2016 Long-Term Incentive Plan ("2016 Plan"). The Company recognizes share-based expense within selling, general, and administrative expense. W. SHIPPING AND HANDLING COSTS The Company classifies all amounts billed to customers for shipping and handling as revenue and reflects shipping and handling costs in cost of sales. X. RESTRUCTURING CHARGES The Company’s policy is to recognize restructuring costs in accordance with the accounting rules related to exit or disposal activities and compensation and non-retirement post-employment benefits. Detailed documentation is maintained and updated to ensure that accruals are properly supported. If management determines that there is a change in estimate, the accruals are adjusted to reflect this change. |
Inventories |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories at September 30 consist of:
If the FIFO method had been used for the entire Company, inventories would have been $8,879 and $8,319 higher than reported at September 30, 2018 and 2017, respectively. LIFO expense was $560 and $293 in fiscal 2018 and 2017, respectively. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s intangible assets by major asset class subject to amortization as of:
The amortization expense on identifiable intangible assets for fiscal 2018 and 2017 was $1,705 and $2,168, respectively. Amortization expense associated with the identified intangible assets is expected to be as follows:
Goodwill is not amortized, but is subject to an annual impairment test. The Company tests its goodwill for impairment in the fourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired. The Company completed its annual impairment test of goodwill as of July 31, 2018 and 2017 for the Cleveland and Maniago, Italy ("Maniago") reporting units. The Company's fair value measurement approach combines the income (discounted cash flow method) and market valuation (market comparable method) techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparables, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions (Level 3 inputs). Upon completion of the annual impairment testing for the Maniago reporting unit and the Cleveland reporting unit, it was determined that the fair value of goodwill for the reporting units exceeded the carrying value. As such, no impairment of goodwill existed as of September 30, 2018 and 2017, respectively. Prior year included a triggering event within the third quarter of fiscal 2017, which resulted in the Company performing an interim impairment test. Certain qualitative factors, primarily the under-performance relative to projected future operating results for the Alliance reporting unit caused the triggering event. The Company used May 31, 2017, the announcement date of the decision to close Alliance and move its business to its Cleveland reporting unit, as the triggering date to evaluate the carrying values and test for recoverability at the lowest level starting with Alliance's long-lived assets, primarily its machinery and equipment and its identifiable intangible assets. See Note 1, Summary of Significant Accounting Policies - Asset Impairment, of the consolidated financial statements for further discussion on the long-lived assets impairment test. At the time the announcement was made, it was determined that orders after September 30, 2017 were to be transferred to Cleveland which resulted in the reallocation of $3,493 of goodwill to the Cleveland reporting unit. The Company used the carrying value of the reporting unit, inclusive of the assigned goodwill to compare to its fair value using the market and income approach to estimate the fair value of this reporting unit. Significant assumptions inherent in the valuation methodologies for goodwill were employed and include, but are not limited to, prospective financial information, growth rates, terminal value and discount rates and required the Company to make certain assumptions and estimates regarding industry economic factors and future profitability of its business. When performing the income and market approach for the reporting unit, SIFCO incorporated the use of projected financial information and a discount rate that was developed using market participant based assumptions. The cash flow projections are based on five-year financial forecasts developed by management that include revenue projections, capital spending trends, and investment in working capital to support anticipated revenue growth. The selected discount rate considers the risk and nature of the reporting unit's cash flows and ratios of return that market participants would require to invest their capital in our plant. Although the Company believes its assumptions are reasonable, actual results may vary significantly and may expose the Company to material impairment charges in the future. The methodology for determining fair values was consistent for the periods presented. Based on this quantitative test performed during the interim test date, it was determined that the fair value (using Level 3 inputs) of this reporting unit exceeded the carrying value. As such, there was no goodwill impairment of the Cleveland reporting unit at May 31, 2017. All of the goodwill is expected to be deductible for tax purposes. Changes in the net carrying amount of goodwill were as follows:
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Accrued Liabilities |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued Liabilities Accrued liabilities at September 30 consist of:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt at September 30 consists of:
Credit Agreement and Security Agreement of 2018 On August 8, 2018, the Company entered into a new asset-based Credit Agreement ("Credit Agreement") and a Security Agreement (“Security Agreement”) with a new lender. The new Credit Agreement matures on August 6, 2021 and is comprised of a senior secured revolving credit facility of a maximum borrowing of $30,000. The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $10,000 upon consent of the existing lender or upon additional lenders joining the Credit Agreement. The terms of the Credit Agreement contain both a lock box arrangement and subjective acceleration clause. As a result, the amount outstanding on the revolving credit facility is classified as a short-term liability and the availability at September 30, 2018 was $8,437. The proceeds from the Credit Agreement were used to repay the indebtedness and extinguishment of the Company's November 9, 2016 Amended and Restated Credit and Security Agreement ("2016 Credit Agreement"), for working capital purposes, for general corporate purposes and to pay fees and expenses incurred in connections with entering into the Credit Agreement. After entering the new Credit Agreement, the Company terminated its interest rate swap with its prior lender, as referenced in Note 1, Summary of Significant Accounting Policies -Derivative Financial Instruments, of the consolidated financial statements. The Credit Agreement contains affirmative and negative covenants and events of defaults. As set forth in the Credit Agreement, the Company is required to maintain a fixed charge coverage ratio ("FCCR") of 1.1:1.0 any time the availability is equal to or less than 12.5% of the revolving commitment. In the event of a default, the Company may not be able to access the revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities. SIFCO must initially meet the FCCR requirements at August 31, 2018 and September 30, 2018. If compliant, the Company is only required to maintain availability as stated above to avoid the FCCR covenant. As discussed in Note 12, Subsequent Events, of the consolidated financial statements a First Amendment (the "First Amendment") to the Credit Agreement and Security Agreement was entered into, which clarifies certain definitions, one being this FCCR requirement. As a result of the clarification of the First Amendment, the Company obtained a waiver from its lender which removes the August 31, 2018 FCCR covenant requirement. The Company is in compliance with its loan covenant at September 30, 2018. Amounts borrowed under the Credit Agreement are secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 66.67%of the stock of its first-tier non-U.S. subsidiaries. Borrowings will bear interest at the lender's established domestic rate or LIBOR, plus the applicable margin as set forth in the Credit Agreement. The revolver has a rate based on LIBOR plus 1.75% spread, which was 3.85% at September 30, 2018. The Company also has a commitment fee of 0.25% under the Credit Agreement to be incurred on the unused balance of the revolver. The Company incurred a $496 loss on extinguishment of debt that is included within the interest expense line in the consolidated statement of operations as a result of the refinancing. The loss primarily consisted of unamortized financing costs and costs incurred from the previous lender during the refinancing. Amended and Restated Credit and Security Agreement of 2016 and 2015 Credit Agreement Prior to entering into the Credit Agreement, the Company previously had been a party to the 2016 Credit Agreement. The 2016 Credit Agreement was expected to mature on June 25, 2020 and consisted of secured loans in an aggregate principal amount of $39,871. The 2016 Credit Agreement was comprised of (i) a senior secured revolving credit facility with a maximum borrowing amount of $35,000, including swing line loans and letters of credit provided by the Lender and (ii) a secured term loan facility in the amount of $4,871 (the "Term Facility"). Amounts borrowed under the 2016 Credit Agreement were secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 65% of the stock of its non-U.S. subsidiaries. The Term Facility was repayable in monthly installments of $81, which commenced December 1, 2016. The terms of the 2016 Credit Agreement included both a lock-box arrangement and a subjective acceleration clause. The amounts borrowed under the 2016 Credit Agreement were used to repay the amounts outstanding under the Company's prior Credit and Security Agreement (the "2015 Credit Agreement"), for working capital, for general corporate purposes and to pay fees and expenses incurred with entering into the 2016 Credit Agreement. The Company entered into its First Amendment Agreement (the "First Amendment to the 2016 Credit Agreement") to the 2016 Credit Agreement on February 16, 2017. The First Amendment to the 2016 Credit Agreement assigned its Lender as Administrative Agent and assigned a portion of its 2016 Credit Agreement to a participating Lender. On August 4, 2017, the Company entered into its Second Amendment Agreement to the 2016 Credit Agreement with its lender to (i) amend certain definitions within its 2016 Credit Agreement to, among other things, effect the changes described herein and to reset the Fixed Charge Coverage Ratio (as defined in the 2016 Credit Agreement) to build to a trailing four quarters in each of the fiscal 2018 quarters, commencing with the quarter ended December 31, 2017; (ii) replace certain of its financial covenants outlined in the description of the 2016 Credit Agreement and amend its financial covenants with a revised minimum EBITDA for the four fiscal quarters ending September 30, 2017 and to maintain a fixed charge coverage ratio commencing on December 31, 2017; (iii) reduce its maximum revolving amount of $35,000 to $30,000; and (iv) require the Company to use the cash proceeds from the sale of the Irish building discussed in Note 1, Summary of Significant Accounting Policies - Asset Held for Sale, of the consolidated financial statements to reduce the Term Facility by $700 and use the remaining proceeds to reduce the revolver. On November 28, 2017, the Company obtained a consent letter from its Lender which extended to December 31, 2017 the date to consummate such sale of the Irish property. On February 8, 2018, the Company entered into the Third Amendment Agreement to its 2016 Credit Agreement with the Agent and Lenders under 2016 the Credit Agreement, in which the Company and the Agent and the Lenders agreed to, among other things, (i) amend the interest rate pricing spreads, (ii) add an owned real property location as part of the collateral and sell certain identified assets at our closed location in Alliance, and (iii) adjust the calculation of EBITDA and certain financial covenants, by adding a new minimum EBITDA test for a specific location and changing the timing of the tests and some of the covenant levels. Under the Company's 2016 Credit Agreement, the Company was subject to certain customary loan covenants. They included, without limitation, covenants that required maintenance of certain specified financial ratios, including that the Company meet a minimum EBITDA and the maintain a minimum fixed charge coverage ratio that commenced on September 30, 2017. The Company's previous borrowings under the Credit Facility used LIBOR rate, prime rate or the eurocurrency reference rate on the type of loan requested by the Company, in each case, plus the applicable margin set forth in the Credit Facility. The revolver under the Credit Facility had a rate based on LIBOR plus a 3.75% spread and a prime rate which resulted in a weighted average rate of 4.8% at September 30, 2017 and Term Facility had a rate of 5.5% at September 30, 2017, which was based on LIBOR plus a 4.25% spread. This rate became an effective fixed rate of 5.8% after giving effect to the interest rate swap agreement at September 30, 2017. There was a commitment fee that previously ranged from 0.15% to 0.375% under the 2016 Credit Agreement, that was incurred on the unused balance. The Company had the 2015 Credit Agreement in place with its Lender until it entered in the above 2016 Credit Agreement. The 2015 Credit Agreement was comprised of (i) a five-year revolving credit facility with a maximum borrowing amount of up to $25,000, which reduced to $20,000 on January 1, 2016, and (ii) a five-year term loan of $20,000. Amounts borrowed under the 2015 Credit Agreement were secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 65% of the stock of its non-U.S. subsidiaries. The term loan was repayable in quarterly installments of $714 starting September 30, 2015. The amounts borrowed under the 2015 Credit Agreement were used to repay the Company's previous revolver and term note, to fund the acquisition of Maniago and for working capital and general corporate purposes. Foreign subsidiary borrowings Foreign debt at September 30 consists of:
Interest rates are based on Euribor rates plus spread which range from 1.0% to 4.0%. The factoring programs are uncommitted, whereby the Company offers receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution. Following the sale and transfer of the receivables to the unaffiliated financial institution, the receivables are not isolated from the Company, and effective control of the receivables is not passed to the unaffiliated financial institution, which does not have the right to pledge or sell the receivables. The Company accounts for the pledge of receivables under this agreement as short-term debt and continues to carry the receivables on its consolidated balance sheets. Payments on long-term debt under the foreign term debt (excluding capital lease obligations, see Note 9, Commitments and Contingencies, of the consolidated financial statements) over the next 5 years are as follows:
Debt issuance costs The Company incurred debt issuance costs related to the prior credit agreements, however, since the debt was extinguished in August 2018, all previous financing costs of $490 were written off and included as part of the extinguishment loss discussed above. The Company incurred debt issuance costs as it pertains to the new Credit Agreement in the amount of $212, of which is included in the consolidated balance sheet as a deferred charge in other current assets, net of amortization of $12 at September 30, 2018, compared to the September 30, 2017 amount which included total debt issuance costs that pertained to the 2016 Credit Agreement in the amount of $768. Deferred issuance costs were previously split between the Term Facility of the Credit Facility and the revolving credit facility at September 30, 2017. The portion related to fiscal 2017 noted above within the debt table related to the Term Facility of the 2016 Credit Agreement in the amount of $61, net of amortization of $14 at September 30, 2017. The remaining $707 of debt issuance cost relates to the revolving credit facility under the 2016 Credit Agreement. This portion is shown in the consolidated balance sheet as a deferred charge in other current assets, net of amortization of $282 at September 30, 2017. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of loss from operations before income tax provision (benefit) are as follows:
Income taxes from operations before income tax provision (benefit) consist of the following:
The income tax provision (benefit) from operations in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows:
On December 22, 2017, the Tax Cut and Jobs Act (the "Act") was enacted which, among other items, reduced the U.S. corporate tax rate effective January 1, 2018 from 35% to 21%, imposed a one-time transition tax on accumulated foreign earnings not previously subject to U.S. taxation, provides a U.S. federal tax exemption on future distributions of foreign earnings, and beginning in fiscal 2019, creates a new minimum tax on certain foreign-sourced earnings. The U.S. corporate tax rate reduction resulted in a blended tax rate of 24.5% for fiscal 2018 (based on 35% corporate rate through December 31, 2017 and 21% from that date through the end of fiscal 2018). In response to the Act, the Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin 118 ("SAB 118"). SAB 118 expresses views of the SEC regarding ASC Topic 740, Income Taxes ("Topic 740") in the reporting period that includes the enactment date of the Act. The SEC staff, in issuing SAB 118 recognized that a company’s review of certain income tax effects of the Act may be incomplete at the time the financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year from the day of enactment. As a result of the U.S. corporate tax rate reduction, the Company revalued its gross U.S. deferred taxes and the related valuation allowance. The revaluation, which is considered complete as of the first quarter of fiscal 2018, resulted in a tax benefit of $207 during fiscal 2018. Additionally, the Company released $267 of valuation allowance on a portion of its U.S. deferred tax assets as a result of deferred tax liabilities for indefinite lived intangible assets now considered available as a source of income as a result of the Act. At September 30, 2018, the Company's estimate with respect to the one-time transition tax of $240, net of applicable foreign tax credits generated, remains provisional as the Company continues to analyze undistributed foreign earnings and profits for purposes of filing the U.S. federal income tax return for fiscal 2018. In addition, the Company continues to interpret the law and guidance related to the Act issued as of the date of these financial statements. On August 1, 2018, the U.S. Treasury released proposed regulations relating to the one-time transition tax. The proposed regulations are subject to a 60-day comment period. Final regulations are expected to be issued after consideration of the comments. As a result of the valuation allowance in the U.S. on tax attribute carryforwards, no charge to tax expense was recorded related to the one-time transition tax. The Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein minimum taxes are imposed on foreign income in excess of a deemed return on the tangible assets of foreign corporations. This income will effectively be taxed at a 10.5% tax rate. GILTI is effective for the Company starting in fiscal 2019. Because of the complexity of the new provisions, the Company is continuing to evaluate how the provisions will be accounted for under the U.S. generally accepted accounting principles wherein companies are allowed to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and will only do so after its completion of the analysis of the GILTI provisions. Deferred tax assets and liabilities at September 30 consist of the following:
At September 30, 2018, the Company has a non-U.S. tax loss carryforward of approximately $5,458 related to the Company’s Irish and Italian subsidiaries. The Company's Irish subsidiary ceased operations in 2007 and therefore, a valuation allowance has been recorded against the deferred tax asset related to the Irish tax loss carryforward because it is unlikely that such operating loss can be utilized unless the Irish subsidiary resumes operations. The Irish tax loss carryforward does not expire. The Company has $1,956 of foreign tax credit carryforwards that are subject to expiration in fiscal 2023-2028, $999 of U.S. general business tax credits that are subject to expiration in 2035-2038, and $11,727 of U.S. Federal tax loss carryforwards subject to expiration in fiscal 2036-2037. A valuation allowance has been recorded against the deferred tax assets related to the foreign tax credit carryforwards, U.S. general business credits, and U.S. Federal tax loss carryforwards. In addition, the Company has $165 of U.S. state tax credit carryforwards subject to expiration in fiscal 2022-2024 and $27,125 of U.S. state and local tax loss carryforwards subject to expiration in fiscal 2020-2038. The U.S. state tax credit carryforwards and U.S. state and local tax loss carryforwards have been fully offset by a valuation allowance. The Company reported liabilities for uncertain tax positions, excluding any related interest and penalties, of $53 and $69 in fiscal 2018 and 2017. If recognized, $53 of the fiscal 2018 uncertain tax positions would impact the effective tax rate. As of September 30, 2018, the Company had accrued interest of $21 and recognized $2 for interest and penalties in operations. The Company classifies interest and penalties on uncertain tax positions as income tax expense. A summary of activity related to the Company’s uncertain tax position is as follows:
The Company is subject to income taxes in the U.S. federal jurisdiction, Ireland, Italy and various states and local jurisdictions. The Company believes it has appropriate support for its federal income tax returns. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2015, state and local income tax examinations for fiscal years prior to 2013, or non-U.S. income tax examinations by tax authorities for fiscal years prior to 2007. As of September 30, 2018, the Company has $11,363 of undistributed earnings of non-U.S. subsidiaries for which no deferred taxes for foreign withholding tax is required as the Company intends to indefinitely reinvest these earnings outside the U.S. A nominal withholding tax charge is required if these earnings are distributed. |
Retirement Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Plans | Retirement Benefit Plans Defined Benefit Plans The Company and certain of its subsidiaries sponsor defined benefit pension plans covering most of its employees. The Company’s funding policy for its defined benefit pension plans is based on an actuarially determined cost method allowable under Internal Revenue Service regulations. One of the defined benefit pension plans covers substantially all non-union employees of the Company’s U.S. operations who were hired prior to March 1, 2003, and this plan was frozen in 2003, while another plan that covered union employees no longer has active participants due to the business closure. Consequently, although both plans continue, the non-union plan ceased the accrual of additional pension benefits for service subsequent to March 1, 2003, and the related union plan has had no participants accrue additional benefits subsequent to December 31, 2013. The Company sponsors a defined benefit plan for certain of its employees. The plan is a severance entitlement payable to the Italian employees who qualified prior to December 27, 2006. The plan is considered an unfunded defined benefit plan and is measured as the actuarial present value of the vested benefits to which the employees would be entitled if they separated at the consolidated balance sheet date. The Company uses a September 30 measurement date for its U.S. defined benefit pension plans. Net pension expense, benefit obligations and plan assets for the Company-sponsored defined benefit pension plans consists of the following:
The status of all defined benefit pension plans at September 30 is as follows:
The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit costs during fiscal 2019 are as follows:
Where applicable, the following weighted-average assumptions were used in developing the benefit obligation and the net pension expense for defined benefit pension plans:
The Company holds investments in pooled separate accounts and common/collective trusts, in which the fair value of assets of the underlying funds are determined in the following ways:
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. However, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement result. The following tables set forth the asset allocation of the Company’s defined benefit pension plan assets and summarize the fair values and levels within the fair value hierarchy for such plan assets as of September 30, 2018 and 2017:
Changes in the fair value of the Company’s Level 3 investments during the years ending September 30, 2018 and 2017 were as follows:
Investment objectives relative to the assets of the Company’s defined benefit pension plans are to (i) optimize the long-term return on the plans’ assets while assuming an acceptable level of investment risk; (ii) maintain an appropriate diversification across asset categories and among investment managers; and (iii) maintain a careful monitoring of the risk level within each asset category. Asset allocation objectives are established to promote optimal expected returns and volatility characteristics given the long-term time horizon for fulfilling the obligations of the Company’s defined benefit pension plans. Selection of the appropriate asset allocation for the plans’ assets was based upon a review of the expected return and risk characteristics of each asset category in relation to the anticipated timing of future plan benefit payment obligations. The Company has a long-term objective for the allocation of plan assets. However, the Company realizes that actual allocations at any point in time will likely vary from this objective due principally to (i) the impact of market conditions on plan asset values and (ii) required cash contributions to and distribution from the plans. The “Asset Allocation Range” listed below anticipates these potential scenarios and provides flexibility for the Plan’s investments to vary around the objective without triggering a reallocation of the assets, as noted by the following:
External consultants assist the Company with monitoring the appropriateness of the above investment strategy and the related asset mix and performance. To develop the expected long-term rate of return assumptions on plan assets, generally the Company uses long-term historical information for the target asset mix selected. Adjustments are made to the expected long-term rate of return assumptions when deemed necessary based upon revised expectations of future investment performance of the overall investments markets. The Company anticipates making approximately $196 in contributions to its defined benefit pension plans during fiscal 2019. The Company has carryover balances from previous periods that may be available for use as a credit to reduce the amount of contributions that the Company is required to make to certain of its defined benefit pension plans in fiscal 2019. The Company’s ability to elect to use such carryover balances will be determined based on the actual funded status of each defined benefit pension plan relative to the plan’s minimum regulatory funding requirements. The following defined benefit payment amounts are expected to be made in the future:
Multi-Employer Plans The Company contributes to one (1) U.S. multi-employer retirement plan for certain union employees, as follow:
¹ The fund is the IAM National Pension Fund – EIN 51-6031295 / Plan number 2. The IAM National Pension Fund utilized the special 30-year amortization provided by Public law 111-192, section 211 to amortize its losses from 2008. The plan's year-end to which the zone status relates is December 31, 2017 and 2016. The risks of participating in the multi-employer retirement plan are different from a single-employer plan in that (i) assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if the Company chooses to stop participating in the multi-employer retirement plan, the Company may be required to pay the plan an amount based on the unfunded status of the plan, referred to as a withdrawal liability. Defined Contribution Plans Substantially all non-union U.S. employees of the Company and its U.S. subsidiaries are eligible to participate in the Company’s U.S. defined contribution plan. The Company makes non-discretionary, regular matching contributions to this plan equal to an amount that represents one hundred percent (100%) of a participant’s deferral contribution up to one percent (1%) of eligible compensation plus eighty percent (80%) of a participant’s deferral contribution between one percent (1%) and six percent (6%) of eligible compensation. The Company’s regular matching contribution expense for its U.S. defined contribution plan in fiscal 2018 and 2017 was $475 and $574, respectively. This defined contribution plan provides that the Company may also make an additional discretionary matching contribution during those periods in which the Company achieves certain performance levels. The Company did not provide additional discretionary matching contributions in either fiscal 2018 and 2017. The Company sponsored a separate defined contribution plan for certain of its U.S. union employees related to the Alliance plant. The Company's contribution to this plan was based on a specified amount per hour based on the provisions of the applicable collective bargaining agreement. Due to the closure of the Alliance facility, as described previously, the related defined contribution plan for its union employees terminated in October 2017. The Company sponsors a defined contribution plan for certain of its employees Maniago union employees. The plan is a severance entitlement payable plan to Italian employees based on local government laws, which qualifies as a defined contribution plan. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Company has awarded performance and restricted shares under its shareholder-approved amended and restated its 2007 Long-Term Incentive Plan (“2007 Plan”), which was further amended and restated under the 2016 Long-Term Incentive Plan ("2016 Plan"). The aggregate number of shares that may be awarded by the Company was increased by 646 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares, pursuant to the 2016 Plan. In addition, shares that may be awarded are subject to individual recipient award limitations. The shares awarded under the 2016 Plan may be made in multiple forms including stock options, stock appreciation rights, restricted or unrestricted stock, and performance related shares. Any such awards are exercisable no later than ten years from the date of grant. The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the granting of such award. The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200% of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives. With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target. During each future reporting period, such expense is evaluated and may be subject to adjustment based upon the Company’s financial performance, which impacts the number of common shares that it expects to issue upon the completion of the performance period. The performance shares were valued at the closing market price of the Company’s common shares on the date of grant. The vesting of such shares is determined at the end of the performance period. The Company has awarded restricted shares to certain of its directors, officers and other employees of the Company. The restricted shares were valued at the closing market price of the Company’s common shares on the date of grant, and such value was recorded as unearned compensation. The unearned compensation is being amortized ratably over the restricted stock vesting period of one (1) year or three (3) years. If all outstanding share awards are ultimately earned and issued at the target number of shares, then at September 30, 2018 there are approximately 302 shares that remain available for award. If any of the outstanding share awards are ultimately earned and issued at greater than the target number of shares, up to a maximum of 200% of such target, then a fewer number of shares would be available for award. Stock-based compensation under the 2016 Plan was expense of $608 and $404 for fiscal 2018 and 2017, respectively. The Company did not record income tax benefits in Additional Paid-in Capital related to shares that were earned under the 2016 Plan in fiscal 2017, prior to the adoption of ASU 2016-09. As of September 30, 2018, there was $745 of total unrecognized compensation cost related to the performance and restricted shares awarded under the 2016 Plan. The Company expects to recognize this cost over the next 1.3 years. The following is a summary of activity related to performance and restricted shares:
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company may be involved in ordinary, routine legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters; however, it does not believe any such matters are material to its financial condition or results of operations. The Company maintains various liability insurance coverages to protect its assets from losses arising out of or involving activities associated with ongoing and normal business operations; however, it is possible that the Company’s future operating results could be affected by future costs of litigation. A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), is currently a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the United States District Court for the District of Rhode Island, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco. No specific amount of damages was claimed by Avco and no discovery has occurred at this time and Orange disagrees with the allegations made by Avco. Although the Company records reserves for legal disputes and other matters in accordance with GAAP, the ultimate outcomes of these types of matters are inherently uncertain. Actual results may differ significantly from current estimates. Given the current status of this matter, the Company has not recorded a reserve as it isn't estimable. The Company was a defendant in a class action lawsuit filed in the Superior Court of California, County of Orange, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations; and unfair competition. As mentioned previously, the Company records reserves for legal disputes and other matters in accordance with GAAP, the ultimate outcomes of these types of matters are inherently uncertain. Actual results may differ significantly from current estimates. In fiscal 2017, the Company recorded an estimated loss of $385 of which $5 was paid as of September 30, 2017. An additional amount of $11 was incurred in fiscal 2018 and $391 was paid during the second quarter of fiscal 2018. On September 1, 2016 the Company's Cleveland, Ohio location had an Occupational Safety and Health Administration ("OSHA") inspection at the facility. This inspection resulted in OSHA issuing citations to the location. Since the inspection, SIFCO has abated all issues identified. These findings resulted in penalties having been assessed in the amount of $127 during fiscal 2017, of which $95 was paid during fiscal 2018 and the remaining $32 is expected to be paid in fiscal 2019. The Company leases certain facilities, machinery and equipment, and office buildings under long-term leases. The leases generally provide renewal options and require the Company to pay for utilities, insurance, taxes and maintenance. The Company recorded rent expense of $2,522 and $1,925 in fiscal 2018 and 2017, respectively. Included are lease payments on the Company's Orange newly built facility for which the lease payments commenced in December 2016 and expire in 2036. At September 30, 2018, minimum rental commitments under non-cancelable leases are as follows:
Amortization of the cost of equipment under capital leases is included in depreciation expense. At September 30, assets recorded under capital leases consist of the following:
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Business Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Information | Business Information The Company identifies itself as one reportable segment, SIFCO, which is a manufacturer of forgings and machined components for the A&E markets. Geographic net sales are based on location of customer. The United States of America is the single largest country for unaffiliated customer sales, accounting for 69% and 63% of consolidated net sales in fiscal 2018 and 2017, respectively. No other single country represents greater than 10% of consolidated net sales in fiscal 2018 and 2017. Net sales to unaffiliated customers located in various European countries accounted for 19% and 27% of consolidated net sales in fiscal 2018 and 2017, respectively. Net sales to unaffiliated customers located in various Asian countries accounted for 7% and 2% of consolidated net sales in fiscal 2018 and 2017, respectively. Substantially all of the Company's operations and identifiable assets are located within the United States with the exception of its non-U.S. subsidiaries located in Maniago, Italy and Cork, Ireland. The identifiable assets for the Company's foreign subsidiaries as of September 30, 2018 was $33,507 compared with $37,607 as of September 30, 2017.
At September 30, 2018, approximately 196 of the hourly plant personnel are represented by two separate and active collective bargaining agreements. The table below shows the expiration dates of the collective bargaining agreements.
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Restructuring Costs |
12 Months Ended |
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Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs The Company completed the closure of the Alliance plant in October 2017. Orders after September 30, 2017 were and continue to be processed and manufactured by the Cleveland plant. As a result of the closure, Alliance incurred approximately $5,048 of non-cash costs, of which $4,786 relates to asset impairment discussed in Note 1, Summary of Significant Accounting Policies - Asset Impairment, of the consolidated financial statements and $262 relates to accelerated depreciation of assets due to useful lives shortening as of September 30, 2017. The remaining estimated exit costs were expensed as incurred, which included workforce reduction costs. Workforce reduction costs incurred at September 30, 2017 were approximately $215, of which a $15 was paid by September 30, 2017 and the remainder was paid in the first quarter of fiscal 2018. |
Subsequent events |
12 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events The Company has evaluated subsequent events through the date the consolidated financial statements are issued. On November 1, 2018 the Company executed a purchase agreement and finalized the sale transaction with a buyer for the Alliance building and land. The Company received cash proceeds, less cost to sell of approximately $287, which will be the gain to be recorded on fiscal 2019. On November 5, 2018, the Company entered into the First Amendment to its Credit Agreement and to its Security Agreement with its lender. The First Amendment, retroactively amended certain definitions and provisions effective as of the original closing date to clarify the parties original understandings regarding, among other things: (i) the permitted liens securing certain indebtedness of the Company to the City of Cleveland (described below), (ii) the time frames for which certain post-closing requirements would be satisfied, and (iii) the conditions under which the Company will be required to meet the minimum fixed charge coverage ratio, which is as follows: The Borrowers will not permit the Fixed Charge Coverage Ratio to be less than: (a) 1.1 to 1.0 as of August 31, 2018 or as of September 30, 2018; or (b) 1.1 to 1.0 at any month end on or after October 31, 2018; provided that the Fixed Charge Coverage Ratio will not be tested under this clause (b) unless (i) a Default has occurred and is continuing or (ii) Availability was less than or equal to 12.5% of the Revolving Commitment for three or more business days in any consecutive 30 day period (with the FCCR calculated as of the end of the month for which the lender has most recently received financial statements). On November 8, 2018, the Company entered into an Economic Development Administration Title IX Loan Agreement (the “Cleveland Loan Agreement”) with the City of Cleveland. Under the Cleveland Loan Agreement, the City of Cleveland has agreed to loan the Company $305 (the “Cleveland Loan”) in connection with the Company’s acquisition of a forging press machine to add additional capacity to its operations in Cleveland. The term of the Cleveland Loan is 60 months, beginning on the first day of the calendar month following initial disbursement of loan funds, but in no event later than January 1, 2019, and its maturity date shall be 60 months from the first day of the calendar month following initial disbursement of loan funds, but in no event later than December 1, 2023. The interest rate on the Cleveland Loan is fixed at 3.56%. The Company is not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements. |
Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and Qualifying Accounts | Schedule II SIFCO Industries, Inc. and Subsidiaries Valuation and Qualifying Accounts Years Ended September 30, 2018 and 2017 (Amounts in thousands)
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Summary of Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||
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Sep. 30, 2018 | |||||||||
Accounting Policies [Abstract] | |||||||||
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS SIFCO Industries, Inc. and its subsidiaries are engaged in the production of forgings and machined components primarily in the Aerospace and Energy ("A&E") market. The Company’s operations are conducted in a single business segment, "SIFCO" or the "Company." |
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PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The U.S. dollar is the functional currency for all the Company’s U.S. operations and its Irish subsidiary. For these operations, all gains and losses from completed currency transactions are included in income currently. The functional currency for the Company's other non-U.S. subsidiaries is the Euro. Assets and liabilities are translated into U.S. dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange. Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity. |
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CASH EQUIVALENTS | CASH EQUIVALENTS The Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. |
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CONCENTRATIONS OF CREDIT RISK | CONCENTRATIONS OF CREDIT RISK Receivables are presented net of allowance for doubtful accounts of $520 and $330 at September 30, 2018 and 2017, respectively. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company writes off accounts receivable when they become uncollectible. During fiscal 2018 and 2017, $186 and $461, respectively, of accounts receivable were written off against the allowance for doubtful accounts. Bad debt expense totaled $415 and $77 in fiscal 2018 and fiscal 2017, respectively. Most of the Company’s receivables represent trade receivables due from manufacturers of turbine engines and aircraft components as well as turbine engine overhaul companies located throughout the world, including a significant concentration of U.S. based companies. In fiscal 2018, 31% of the Company’s consolidated net sales were from two of its largest customers; and 38% of the Company's consolidated net sales were from the three largest customers and their direct subcontractors, which individually accounted for 14%, 12% and 12%, of consolidated net sales, respectively. In fiscal 2017, 22% of the Company’s consolidated net sales were from two of its largest customers; and 35% of the Company's consolidated net sales were from three of the largest customers and their direct subcontractors which individually accounted for 13%, 11% and 11%, of consolidated net sales, respectively. No other single customer or group represented greater than 10% of total net sales in fiscal 2018 and 2017. At September 30, 2018, three of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% of the total net accounts receivable; and five of the largest customers and direct subcontractors had outstanding net accounts receivable which accounted for 16%, 14%, 12%, 11% and 11% of total net accounts receivable, respectively. At September 30, 2017, one of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% of total net accounts receivable; and three of the largest customers and direct subcontractors had outstanding net accounts receivable which accounted for 13%, 10% and 10% of total net accounts receivable, respectively. The Company performs ongoing credit evaluations of its customers’ financial conditions. The Company believes its allowance for doubtful accounts is sufficient based on the credit exposures outstanding at September 30, 2018. |
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INVENTORY VALUATION | INVENTORY VALUATION Inventories are stated at the lower of cost or market. For a portion of the Company's inventory, cost is determined using the last-in, first-out (“LIFO”) method. For approximately 54% and 38% of the Company’s inventories at September 30, 2018 and 2017, respectively, the LIFO method is used to value the Company’s inventories. The first-in, first-out (“FIFO”) method is used to value the remainder of the Company’s inventories. The Company maintains allowances for obsolete and excess inventory. The Company evaluates its allowances for obsolete and excess inventory each quarter and requires at a minimum that reserves be established based on an analysis of the age of the inventory. In addition, if the Company identifies specific obsolescence, other than that identified by the aging criteria, an additional reserve will be recognized. Specific obsolescence and excess reserve requirements may arise due to technological or market changes or based on cancellation of an order. |
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PROPERTY, PLANT AND EQUIPMENT | The (gain) loss on disposal of operating assets is included as a separate line item in the accompanying consolidated statements of operations. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is generally computed using the straight-line method. Depreciation is provided in amounts sufficient to amortize the cost of the assets over their estimated useful lives. Depreciation provisions are based on estimated useful lives: (i) buildings, including building improvements - 5 to 40 years; (ii) machinery and equipment, including office and computer equipment - 3 to 20 years; (iii) software - 3 to 7 years (included in machinery and equipment); and (iv) leasehold improvements - remaining life or length of the lease (included in buildings). |
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ASSET IMPAIRMENT | ASSET IMPAIRMENT The Company reviews the carrying value of its long-lived assets, including property, plant and equipment, when events and circumstances indicate a triggering event has occurred. This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets. If the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. |
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GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is subject to impairment testing if triggered in the interim, and if not, on an annual basis. The Company has selected July 31 as the annual impairment testing date. Since the adoption of Accounting Standard Update ("ASU") 2017-04, Step 2 has been eliminated from the goodwill impairment test. The first step of the goodwill impairment test compares the fair value of a reporting unit (as defined) with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired. However, if the carrying amount exceeds the fair value, the Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. See Note 3, Goodwill and Intangibles, of the consolidated financial statements for further discussion of the July 31, 2018 and 2017 annual impairment test results and its interim goodwill test performed as of May 31, 2017 for one of its reporting units. Intangible assets consist of identifiable intangibles acquired or recognized in the accounting for the acquisition of a business and include such items as a trade name, a non-compete agreement, below market lease, customer relationships and order backlog. Intangible assets are amortized over their useful lives ranging from one year to ten years. |
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NET LOSS PER SHARE | NET LOSS PER SHARE The Company’s net loss per basic share has been computed based on the weighted-average number of common shares outstanding. |
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REVENUE RECOGNITION | REVENUE RECOGNITION Revenue is generally recognized from the sale of products shipped when the title and risk of loss passes to the customer, which is generally at the time of shipment. Substantially all product sales are made pursuant to a firm, fixed-price purchase orders or supply agreement demand forecasts received from customers. Provisions for estimated returns and uncollectible accounts provisions are provided for in the same period as the related revenues are recorded and are principally based on historical results modified, as appropriate, by the most current information available. Due to uncertainties in the estimation process, it is possible that actual results may vary from the estimates. |
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CAPITAL LEASE OBLIGATIONS | CAPITAL LEASE OBLIGATIONS Capital leases are accounted for as the acquisition of an asset and the commitment of an obligation by the lessee and as a sale or financing by the lessor. All other leases are accounted for as operating leases. |
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IMPACT OF RECENTLY ADOPTED AND NEWLY ISSUED ACCOUNTING STANDARDS | IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS In 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. ASU 2016-09 was adopted by the Company effective October 1, 2017. This guidance requires all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the consolidated statements of operations and also requires a policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company changed its policy to recognize the impact of forfeitures when they actually occur. There was no impact to the consolidated condensed financial statements as of October 1, 2017. Also, this guidance requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified in the consolidated statements of cash flows as a financing activity, which differs from the Company's previous method of classification of such cash payments as an operating activity. The Company applied this provision retrospectively, and for the first quarter of fiscal 2017, the impact between operating activities to financing activities was nominal. This guidance also requires the tax effects of exercised or vested awards to be treated as discrete items in the reporting period in which they occur, which was applied prospectively, beginning October 1, 2017. Due to the Company having recorded a domestic valuation allowance, the tax impact upon adoption of this ASU was not material to the consolidated financial statements. Lastly, the guidance requires that excess tax benefits should be classified along with other income tax cash flows as an operating activity on the consolidated statements of cash flows, which differs from the Company’s historical classification of excess tax benefits as cash inflows from financing activities. The Company elected to apply this provision using the prospective transition method. In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory," which provides new guidance to simplify the measurement of inventory valuation at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this ASU in the first quarter ended December 31, 2017 had no impact on the Company's consolidated financial statements. N. IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)." The ASU amends certain disclosures by removing disclosure requirements that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant. This ASU will be effective for fiscal years ending after December 15, 2020. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, "Improvements to Non-employee Share-Based Payment Accounting." The ASU simplifies the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The standard will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This ASU allows an optional reclassification from accumulated other comprehensive income to retained earnings for standard tax effects resulting from the Act. ASU 2018-02 must be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. This ASU is effective for fiscal years, including interim periods within, beginning after December 15, 2018 with early adoption permitted in any interim period. Due to the valuation allowance in the U.S., the Company has elected not to adopt this optional reclassification. In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which relates to pension related costs that require an entity to report the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs. The other components of the net periodic benefit cost are required to be presented in the income statement separately from the service cost component and outside of any subtotal of operating income. Additionally, only the service cost component will be eligible for capitalization in assets. The ASU is effective October 1, 2018, and the ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost in the income statement and prospectively for the capitalization of the service cost component. The amendment allows for a practical expedient that permits an employer to use the amounts disclosed in its pension and other post-retirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company would need to disclose if the practical expedient was used. The Company does not expect the adoption of this standard to have a material impact to its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," requiring that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amendment is effective October 1, 2018. The Company does not expect that this ASU would have a material impact to the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory," which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This ASU will be effective for the Company on October 1, 2018. The Company does not expect that this ASU would have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which amends certain cash flow issues which apply to all entities required to present a statement of cash flow. The amendment is effective October 1, 2018. The Company is currently evaluating the impact it may have on its consolidated financial statements together with evaluating the adoption date. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. The standard requires a modified retrospective transition for capital and operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial adoption. Subsequent to this ASU, the FASB has released additional ASUs, such as, ASU 2018-10 and ASU 2018-11 to provide technical improvements and clarify transitional methods. The ASU, along with subsequent updates, is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company will adopt the new guidance on October 1, 2019 and is currently evaluating the requirements of ASU 2016-02 and anticipates that the adoption will impact the consolidated condensed balance sheets due to the recognition of the right-to-use asset and lease liability related to its current operating leases. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board to improve financial reporting by creating common revenue recognition guidance for generally accepted accounting principles ("GAAP") and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” This ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. These ASUs, along with subsequent updates, apply to all companies that enter into contracts with customers to transfer goods or services, and are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The standard permits two methods of adoption: retrospectively to each prior reporting period presented (the “full retrospective method”), or retrospectively with the cumulative effect of initially applying Topic 606 recognized at the date of initial application (the “modified retrospective method”) effective October 1, 2018. The Company is substantially complete in performing the five-step contract review for all existing contracts with customers, across all locations, and opening retained earnings adjustment as it plans to adopt the standard using the modified retrospective method transition method on October 1, 2018 and will use practical expedients permitted by the standard when applicable. These practical expedients include:
The Company executed a bottom up approach to analyze the standard's impact on its revenues by looking at historical policies and practices and identifying the differences from applying the new standard to its revenue streams. The Company has determined that many of its long-term agreements contain variable consideration clauses and believes the impact is determined to be insignificant to its consolidated financial statements. While the Company continues to assess all potential impacts of the standard, the Company currently believes that the most significant impact relates to the accounting for agreements which include production of military forgings and certain agreements for commercial forgings which include terms and conditions that require the Company to recognize revenue over time. These terms and conditions relate to assets with no alternative use that have an enforceable right to payment upon termination for convenience. The remainder of the Company's current revenues, including all commercial parts that do not have a long-term agreement clause requiring over time recognition will continue to be recognized at a point-in-time. The Company anticipates the adoption of the standard will result in an increase of between approximately $2,300 and $3,100 to retained earnings (net of tax) and corresponding contract asset due to revenue being accelerated from the shift of some customers and product revenue being recognized over a period of time. Adoption of the standard is not anticipated to impact cash from or used in operating, financing, or investing activities in our consolidated statements of cash flows. The Company future disclosures will be expanded to comply with the standard. Additionally, the Company is in process of updating its processes and internal control framework as it relates to the new standard. The Company is in the process of implementing a system to automate the calculation of overtime revenue recognition. |
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USE OF ESTIMATES | USE OF ESTIMATES Accounting principles generally accepted in the U.S. require management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the period in preparing these financial statements. Actual results could differ from those estimates. |
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RESEARCH AND DEVELOPMENT | RESEARCH AND DEVELOPMENT Research and development costs are expensed as they are incurred. |
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DEFERRED FINANCING COSTS | DEFERRED FINANCING COSTS Debt issuance costs are capitalized and amortized over the life of the related debt. Amortization of deferred financing costs is included in interest expense in the consolidated statements of operations. |
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INCOME TAXES | INCOME TAXES The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s Irish and Italian subsidiaries also file tax returns in the respective jurisdictions. The Company provides deferred income taxes for the temporary difference between the financial reporting basis and tax basis of the Company’s assets and liabilities. Such taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Deductible temporary differences result principally from recording certain expenses in the financial statements in excess of amounts currently deductible for tax purposes. Taxable temporary differences result principally from tax depreciation in excess of book depreciation. The Company evaluates for uncertain tax positions taken at each balance sheet date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company's policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in tax expenses. The Company maintains a valuation allowance against its deferred tax assets when management believes it is more likely than not that all or a portion of a deferred tax asset may not be realized. Changes in valuation allowances are recorded in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. |
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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. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Quoted market prices in active markets for identical assets or liabilities Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 - Unobservable inputs that are not corroborated by market data A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The book value of cash equivalents, accounts receivable, accounts payable, and revolving credit facilities are considered to be representative of their fair values because of their short maturities. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in goodwill, other intangible assets and long-lived assets impairment analysis, the valuation of acquired intangibles and in the valuation of assets held for sale. Goodwill and intangible assets are valued using Level 3 inputs. |
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SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Share-based compensation is measured at the grant date, based on the calculated fair value of the award and the probability of meeting its performance condition, and is recognized as expense when it is probable that the performance conditions will be met over the requisite service period (generally the vesting period). Share-based expense includes expense related to restricted shares and performance shares issued under the Company's 2007 Long-Term Incentive Plan ("2007 Plan") and the 2016 Long-Term Incentive Plan ("2016 Plan"). The Company recognizes share-based expense within selling, general, and administrative expense. |
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SHIPPING AND HANDLING COSTS | SHIPPING AND HANDLING COSTS The Company classifies all amounts billed to customers for shipping and handling as revenue and reflects shipping and handling costs in cost of sales. |
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RESTRUCTURING CHARGES | RESTRUCTURING CHARGES The Company’s policy is to recognize restructuring costs in accordance with the accounting rules related to exit or disposal activities and compensation and non-retirement post-employment benefits. Detailed documentation is maintained and updated to ensure that accruals are properly supported. If management determines that there is a change in estimate, the accruals are adjusted to reflect this change. |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment by Major Asset Class | The Company's property, plant and equipment assets by major asset class at September 30 consist of:
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Dilutive Effect of The Company's Restricted Shares, and Performance Shares | The dilutive effect is as follows:
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Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss as shown on the consolidated balance sheets at September 30 are as follows:
The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive loss, net of tax:
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Reclassification Out of Accumulated Other Comprehensive Loss | The following table reflects the changes in accumulated other comprehensive loss related to the Company for September 30, 2018 and 2017:
(1) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost. See Note 7, Retirement Benefit Plans, of the consolidated financial statements for further information. |
Inventories (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories at September 30 consist of:
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Goodwill and Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets by Major Class Subject to Amortization | The Company’s intangible assets by major asset class subject to amortization as of:
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Expected Future Amortization Expense | Amortization expense associated with the identified intangible assets is expected to be as follows:
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Changes in Net Carrying Amount of Goodwill | Changes in the net carrying amount of goodwill were as follows:
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Accrued Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued liabilities at September 30 consist of:
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Debt at September 30 consists of:
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Schedule of Foreign Debt | Foreign debt at September 30 consists of:
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Schedule of Maturities of Long-Term Debt | Payments on long-term debt under the foreign term debt (excluding capital lease obligations, see Note 9, Commitments and Contingencies, of the consolidated financial statements) over the next 5 years are as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Loss from Continuing Operations Before Income Tax Benefit | The components of loss from operations before income tax provision (benefit) are as follows:
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Schedule of Income Taxes from Continuing Operations Before Income Tax Benefit | Income taxes from operations before income tax provision (benefit) consist of the following:
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Income Tax Benefit from Continuing Operations | The income tax provision (benefit) from operations in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows:
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Summary of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities at September 30 consist of the following:
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Summary of Activity Related to Uncertain Tax Position | A summary of activity related to the Company’s uncertain tax position is as follows:
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Retirement Benefit Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Pension Expense for Defined Benefit Plans | Net pension expense, benefit obligations and plan assets for the Company-sponsored defined benefit pension plans consists of the following:
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Roll Forward of Defined Benefit Pension Plan Obligations and Assets | The status of all defined benefit pension plans at September 30 is as follows:
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Net Plan Assets Recognized in the Consolidated Balance Sheets |
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Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized as Components of Net Periodic Benefit Costs | The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit costs during fiscal 2019 are as follows:
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Weighted-Average Assumptions Used in Developing Benefit Obligation and Net Pension Expense | Where applicable, the following weighted-average assumptions were used in developing the benefit obligation and the net pension expense for defined benefit pension plans:
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Fair Values and Asset Allocation Ranges of Defined Benefit Plan Investments | The following tables set forth the asset allocation of the Company’s defined benefit pension plan assets and summarize the fair values and levels within the fair value hierarchy for such plan assets as of September 30, 2018 and 2017:
The “Asset Allocation Range” listed below anticipates these potential scenarios and provides flexibility for the Plan’s investments to vary around the objective without triggering a reallocation of the assets, as noted by the following:
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Changes in the Fair Value of Level 3 Defined Benefit Plan Investments | Changes in the fair value of the Company’s Level 3 investments during the years ending September 30, 2018 and 2017 were as follows:
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Schedule of Projected Future Defined Benefit Plan Payments | The following defined benefit payment amounts are expected to be made in the future:
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Schedule of Contributions in U.S. Multi-Employer Retirement Plan for Certain Union Employees | The Company contributes to one (1) U.S. multi-employer retirement plan for certain union employees, as follow:
¹ The fund is the IAM National Pension Fund – EIN 51-6031295 / Plan number 2. The IAM National Pension Fund utilized the special 30-year amortization provided by Public law 111-192, section 211 to amortize its losses from 2008. |
Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Related to Performance Shares | The following is a summary of activity related to performance and restricted shares:
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Minimum Rental Commitments Under Non-Cancelable Leases | At September 30, 2018, minimum rental commitments under non-cancelable leases are as follows:
|
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Schedule of Capital Leased Assets | At September 30, assets recorded under capital leases consist of the following:
|
Business Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Assets by Geographic Areas |
|
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Schedule of Maturities of Bargaining Agreements | The table below shows the expiration dates of the collective bargaining agreements.
|
Summary of Significant Accounting Policies - Schedule of Property, Plant and Equipment by Major Asset Class (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 92,825 | $ 91,169 |
Less: Accumulated depreciation | 57,435 | 51,661 |
Property, plant and equipment, net | 35,390 | 39,508 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | 995 | 1,005 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | 15,365 | 15,084 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 76,465 | $ 75,080 |
Summary of Significant Accounting Policies - Dilutive Effect of The Company's Stock Options, Restricted Shares, and Performance Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Accounting Policies [Abstract] | ||
Net loss | $ (7,170) | $ (14,209) |
Weighted-average common shares outstanding (basic and diluted) (in shares) | 5,523 | 5,487 |
Net loss per share – basic and diluted: | ||
Net Loss per share (basic and diluted) (in dollars per share) | $ (1.30) | $ (2.59) |
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share (in shares) | 144 | 93 |
Inventories (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Components of inventories | ||
Raw materials and supplies | $ 6,202 | $ 6,108 |
Work-in-process | 6,626 | 7,650 |
Finished goods | 5,441 | 6,623 |
Total inventories | 18,269 | 20,381 |
Additional amount that would have been reported in inventory if FIFO method had been used | 8,879 | 8,319 |
LIFO expense | $ 560 | $ 293 |
Goodwill and Intangible Assets - Narrative (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
May 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 1,705,000 | $ 2,168,000 | ||
Goodwill [Line Items] | ||||
Goodwill impairment | 0 | 0 | ||
Goodwill | $ 12,020,000 | 12,170,000 | $ 11,748,000 | |
Cleveland | ||||
Goodwill [Line Items] | ||||
Goodwill impairment | $ 0 | |||
Goodwill | $ 3,493,000 |
Goodwill and Intangible Assets - Expected Future Amortization Expense (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Amortization Expense | |
Fiscal year 2019 | $ 1,668 |
Fiscal year 2020 | 1,523 |
Fiscal year 2021 | 1,009 |
Fiscal year 2022 | 324 |
Fiscal year 2023 | $ 247 |
Goodwill and Intangible Assets - Changes in Net Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill [Roll Forward] | ||
Balance at beginning of period | $ 12,170 | $ 11,748 |
Currency translation | (150) | 422 |
Balance at end of period | $ 12,020 | $ 12,170 |
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Components of Accrued liabilities | ||
Accrued employee compensation and benefits | $ 3,864 | $ 4,309 |
Accrued income taxes | 72 | 901 |
Other accrued liabilities | 1,171 | 1,581 |
Total accrued liabilities | $ 5,107 | $ 6,791 |
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Components of long-term debt | ||
Total debt | $ 29,529 | $ 31,268 |
Less – current maturities | (27,197) | (26,117) |
Total long-term debt | 2,332 | 5,151 |
Capital lease obligations | ||
Components of long-term debt | ||
Total debt | 327 | 352 |
Term loan | ||
Components of long-term debt | ||
Term loan | 0 | 4,060 |
Less: unamortized debt issuance cost | 0 | (47) |
Total debt | 0 | 4,013 |
Revolving credit agreement | Line of Credit | ||
Components of long-term debt | ||
Total debt | 21,253 | 18,557 |
Foreign subsidiary borrowings | ||
Components of long-term debt | ||
Total debt | 7,949 | 8,346 |
Total long-term debt | $ 2,127 | $ 2,541 |
Debt - Foreign Subsidiary Borrowings (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Total debt | $ 3,548 | |
Less – current maturities | (5,944) | $ (7,560) |
Total long-term debt | 2,332 | 5,151 |
Foreign subsidiary borrowings | ||
Line of Credit Facility [Line Items] | ||
Total debt | 7,949 | 8,346 |
Less – current maturities | (5,822) | (5,805) |
Total long-term debt | 2,127 | 2,541 |
Receivables pledged as collateral | 2,007 | 3,548 |
Foreign subsidiary borrowings | Term loan | ||
Line of Credit Facility [Line Items] | ||
Total debt | 3,548 | 3,881 |
Foreign subsidiary borrowings | Short Term Borrowings | ||
Line of Credit Facility [Line Items] | ||
Total debt | 3,472 | 2,618 |
Foreign subsidiary borrowings | Factor | ||
Line of Credit Facility [Line Items] | ||
Total debt | $ 929 | $ 1,847 |
Debt - Schedule of Minimum Long-term Debt Payments (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2019 | $ 1,421 |
2020 | 1,251 |
2021 | 493 |
2022 | 239 |
2023 | 144 |
Total debt | $ 3,548 |
Income Taxes - Schedule of Components of Loss from Continuing Operations Before Income Tax Benefit (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Components of income Before Income tax provision | ||
U.S. | $ (7,582) | $ (15,574) |
Non-U.S. | 51 | 2,434 |
Loss from operations before income tax expense (benefit) | $ (7,531) | $ (13,140) |
Income Taxes - Schedule of Income Taxes from Continuing Operations Before Income Tax Benefit (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Current income tax provision (benefit): | ||
U.S. federal | $ (19) | $ (64) |
U.S. state and local | 5 | (11) |
Non-U.S. | 472 | 951 |
Total current tax provision (benefit) | 458 | 876 |
Deferred income tax provision (benefit): | ||
U.S. federal | (462) | 147 |
U.S. state and local | (30) | 5 |
Non-U.S. | (327) | 41 |
Total deferred tax provision | (819) | 193 |
Income tax provision (benefit) | $ (361) | $ 1,069 |
Income Taxes - Income Tax Benefit from Continuing Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Provision Accompanying Consolidated Statements of Operation | ||
Loss before income tax benefit | $ (7,531) | $ (13,140) |
Income tax benefit at U.S. federal statutory rates | (1,582) | (4,599) |
Tax effect of: | ||
Foreign rate differential | 694 | 120 |
State and local income taxes | (25) | (6) |
Impact of tax law changes | 820 | (103) |
Federal tax credits | (1,573) | (252) |
Valuation allowance | 1,243 | 5,720 |
Prior year tax adjustments | (211) | 34 |
Other | 273 | 155 |
Income tax provision (benefit) | $ (361) | $ 1,069 |
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Deferred tax assets: | ||
Net U.S. operating loss carryforwards | $ 3,200 | $ 5,188 |
Net non-U.S. operating loss carryforwards | 592 | 596 |
Employee benefits | 1,656 | 2,461 |
Inventory reserves | 1,029 | 1,240 |
Allowance for doubtful accounts | 126 | 135 |
Intangibles | 2,826 | 4,873 |
Foreign tax credits | 1,956 | 602 |
Other tax credits | 1,164 | 994 |
Other | 1,015 | 1,126 |
Total deferred tax assets | 13,564 | 17,215 |
Deferred tax liabilities: | ||
Depreciation | (5,449) | (8,854) |
Unremitted foreign earnings | 0 | (65) |
Prepaid expenses | (296) | (247) |
Other | (1,832) | (1,718) |
Total deferred tax liabilities | (7,577) | (10,884) |
Net deferred tax assets | 5,987 | 6,331 |
Valuation allowance | (8,400) | (9,597) |
Net deferred tax liabilities | $ (2,413) | $ (3,266) |
Income Taxes - Summary of Activity Related to Uncertain Tax Position (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Summary of activity related to uncertain tax positions | ||
Balance at beginning of year | $ 69 | $ 69 |
Decrease due to lapse of statute of limitations | (16) | 0 |
Balance at end of year | $ 53 | $ 69 |
Retirement Benefit Plans - Net Pension Expense for Defined Benefit Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Components of net periodic benefit cost | ||
Service cost | $ 262 | $ 324 |
Interest cost | 963 | 883 |
Pension Plan | United States | ||
Components of net periodic benefit cost | ||
Service cost | 262 | 324 |
Interest cost | 963 | 883 |
Expected return on plan assets | (1,608) | (1,615) |
Amortization of net loss | 641 | 861 |
Net pension expense for defined benefit plan | $ 258 | $ 453 |
Retirement Benefit Plans - Roll Forward of Defined Benefit Pension Plan Obligations and Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Benefit obligations: | ||
Benefit obligations at beginning of year | $ 27,921 | $ 29,731 |
Service cost | 262 | 324 |
Interest cost | 963 | 883 |
Actuarial (loss) gain | 178 | (1,292) |
Benefits paid | (1,880) | (1,740) |
Currency translation | (7) | 15 |
Benefit obligations at end of year | 27,437 | 27,921 |
Plan assets: | ||
Plan assets at beginning of year | 21,691 | 21,344 |
Actual return on plan assets | 2,118 | 1,978 |
Employer contributions | 123 | 109 |
Benefits paid | (1,880) | (1,740) |
Plan assets at end of year | $ 22,052 | $ 21,691 |
Retirement Benefit Plans - Net Plan Assets Recognized in the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Reconciliation of funded status: | ||
Plan assets less than projected benefit obligations | $ (5,385) | $ (6,230) |
Amounts recognized in accumulated other comprehensive loss: | ||
Net loss, plans in which benefit obligations exceed assets | 7,432 | 8,406 |
Net amount recognized in the consolidated balance sheets, Plans in which Benefit Obligations Exceed Assets | 2,047 | 2,176 |
Amounts recognized in the consolidated balance sheets are: | ||
Accumulated other comprehensive loss pretax, Plans in which Benefit Obligations Exceed Assets | 7,432 | 8,406 |
Accrued liabilities | ||
Amounts recognized in the consolidated balance sheets are: | ||
Liabilities | 46 | 46 |
Pension liability | ||
Amounts recognized in the consolidated balance sheets are: | ||
Liabilities | $ 5,339 | $ 6,184 |
Retirement Benefit Plans - Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized as Components of Net Periodic Benefit Costs (Details) $ in Thousands |
12 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Defined Benefit Plan, Expected Amortization, Next Fiscal Year [Abstract] | |
Net loss, plans in which assets exceed benefit obligations | $ 0 |
Net loss, plans in which benefit obligations exceed assets | $ 426 |
Retirement Benefit Plans - Weighted-Average Assumptions Used in Developing Benefit Obligation and Net Pension Expense (Details) |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Developing the benefit obligation and the net pension expense for defined benefit pension plans | ||
Discount rate for liabilities | 4.10% | 3.60% |
Discount rate for expenses | 3.60% | 3.10% |
Expected return on assets | 7.70% | 7.90% |
Retirement Benefit Plans - Changes in the Fair Value of Level 3 Defined Benefit Plan Investments (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Changes in the fair value of the Company's Level 3 investments | ||
Plan assets at beginning of year | $ 21,691 | $ 21,344 |
Actual return on plan assets | 2,118 | 1,978 |
Plan assets at end of year | 22,052 | 21,691 |
Level 3 | ||
Changes in the fair value of the Company's Level 3 investments | ||
Plan assets at beginning of year | 2,175 | 2,185 |
Actual return on plan assets | 1 | 26 |
Purchases and sales of plan assets, net | (361) | (36) |
Plan assets at end of year | $ 1,815 | $ 2,175 |
Retirement Benefit Plans - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Percentage of non-discretionary regular matching contribution of company | 100.00% | |
Percentage of eligible compensation of deferral contribution, minimum | 1.00% | |
Percentage of eligible compensation | 80.00% | |
Percentage of eligible compensation of deferral contribution, maximum | 6.00% | |
Matching contribution expense for defined contribution plan | $ 475 | $ 574 |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Employer contributions | $ 196 |
Retirement Benefit Plans - Schedule of Projected Future Defined Benefit Plan Payments (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Projected Benefit Payments | |
2019 | $ 1,986 |
2020 | 1,969 |
2021 | 1,968 |
2022 | 1,827 |
2023 | 1,911 |
2024-2028 | $ 9,199 |
Retirement Benefit Plans - Schedule of Contributions in U.S. Multi-Employer Retirement Plan for Certain Union Employees (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
plan
|
Sep. 30, 2017
USD ($)
|
|
Multiemployer Plans [Line Items] | ||
Number of multiemployer plans | plan | 1 | |
Amortization Period of Losses Utilized under Pension Fund | 30 years | |
Fund | ||
Multiemployer Plans [Line Items] | ||
Pension Protection Act Zone Status | Green | Green |
FIP/RP Status Pending/ Implemented | No | |
Contributions by the Company | $ | $ 60 | $ 58 |
Surcharge Imposed | No | |
Expiration of Collective Bargaining Agreement | May 31, 2020 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Loss Contingencies [Line Items] | ||||
Assessed penalty | $ 127 | |||
Rent expense | $ 2,522 | 1,925 | ||
Class Action Suit in Superior Court of California, Orange County - Wage-and-hour law violations | ||||
Loss Contingencies [Line Items] | ||||
Estimated loss on class action lawsuit | 11 | 385 | ||
Loss contingency, paid | $ 391 | $ 95 | $ 5 | |
Scenario, Forecast [Member] | Class Action Suit in Superior Court of California, Orange County - Wage-and-hour law violations | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, paid | $ 32 |
Commitments and Contingencies - Schedule of Minimum Rental Commitments Under Non-Cancelable Leases (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Capital Leases | |
2019 | $ 134 |
2020 | 87 |
2021 | 86 |
2022 | 35 |
2023 | 12 |
Thereafter | 0 |
Total minimum lease payments | 354 |
Plus: Amount representing interest | (27) |
Present value of minimum lease payments | 327 |
Operating Leases | |
2019 | 2,241 |
2020 | 2,053 |
2021 | 1,758 |
2022 | 1,468 |
2023 | 1,333 |
Thereafter | 16,675 |
Total minimum lease payments | $ 25,528 |
Commitments and Contingencies - Schedule of Capital Leased Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Machinery and equipment | $ 638 | $ 550 |
Accumulated depreciation | $ (278) | $ (162) |
Business Information - Long-lived Assets by Geographic Areas (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 52,654 | $ 58,753 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | 29,595 | 33,114 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 23,059 | $ 25,639 |
Restructuring Costs (Details) $ in Thousands |
12 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Restructuring and Related Activities [Abstract] | |
Non-cash restructuring costs | $ 5,048 |
Asset impairment costs | 4,786 |
Accelerated depreciation costs | 262 |
Workforce reduction costs incurred | 215 |
Workforce reduction costs paid | $ 15 |
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