ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ohio | 38-1054690 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
425 N. Martingale Road, Suite 1000, Schaumburg, Illinois | 60173-2213 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer | ¨ | Accelerated filer | ý |
Non-accelerated filer | ¨ | Smaller reporting company | ý |
Emerging growth company | o |
PART I | ||
ITEM 1. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
PART II | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 6. | ||
CERTIFICATIONS |
December 30, 2018 | July 1, 2018 | ||||||
Assets | (UNAUDITED) | ||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 1,385 | $ | 1,160 | |||
Accounts receivable, net of allowance for doubtful accounts of $146 and $169, respectively | 47,280 | 60,454 | |||||
Inventories and cost of contracts in progress, net | 86,295 | 72,406 | |||||
Legal settlements - insurance receivable | — | 4,500 | |||||
Prepaid expenses and other current assets | 8,131 | 3,944 | |||||
Total current assets | 143,091 | 142,464 | |||||
Property, plant and equipment, net | 31,969 | 32,790 | |||||
Goodwill | 12,663 | 12,663 | |||||
Other intangible assets, net | 17,797 | 21,108 | |||||
Deferred income taxes | 14,786 | 17,646 | |||||
Other non-current assets | 4,416 | 5,331 | |||||
Total assets | $ | 224,722 | $ | 232,002 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 45,682 | $ | 28,636 | |||
Accrued salaries | 10,538 | 11,341 | |||||
Accrued health benefits | 1,246 | 947 | |||||
Accrued legal settlements | — | 5,500 | |||||
Performance based payments on customer contracts | 8,827 | 3,868 | |||||
Advances from customers | 5,775 | 5,949 | |||||
Current portion of capital lease obligations | 32 | 163 | |||||
Other accrued expenses | 7,805 | 10,718 | |||||
Credit facility | 64,100 | — | |||||
Total current liabilities | 144,005 | 67,122 | |||||
Credit facility | — | 84,500 | |||||
Environmental remediation | 4,598 | 4,866 | |||||
Pension liability | 633 | 690 | |||||
Other non-current liabilities | — | 1,220 | |||||
Total liabilities | 149,236 | 158,398 | |||||
Commitments and contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred stock, no par value; 200,000 shares authorized, none issued | — | — | |||||
Common stock, $1.25 par value; 15,000,000 shares authorized, 9,834,723 and 9,834,723 shares issued and outstanding, respectively | 12,293 | 12,293 | |||||
Capital in excess of par value | 17,646 | 17,599 | |||||
Retained earnings | 46,497 | 44,713 | |||||
Accumulated other comprehensive loss | (950 | ) | (1,001 | ) | |||
Total shareholders’ equity | 75,486 | 73,604 | |||||
Total liabilities and shareholders’ equity | $ | 224,722 | $ | 232,002 |
For the Second Quarter of Fiscal Years | For the First Two Quarters of Fiscal Years | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 105,248 | $ | 97,819 | $ | 194,710 | $ | 180,582 | |||||||
Cost of goods sold | 82,176 | 76,070 | 153,999 | 142,909 | |||||||||||
Gross profit | 23,072 | 21,749 | 40,711 | 37,673 | |||||||||||
Operating expense | |||||||||||||||
Selling and administrative expenses | 14,734 | 14,074 | 27,104 | 29,279 | |||||||||||
Internal research and development expenses | 1,442 | 669 | 2,791 | 1,241 | |||||||||||
Amortization of intangible assets | 1,641 | 1,893 | 3,311 | 3,816 | |||||||||||
Total operating expense | 17,817 | 16,636 | 33,206 | 34,336 | |||||||||||
Operating income | 5,255 | 5,113 | 7,505 | 3,337 | |||||||||||
Other expense | |||||||||||||||
Interest expense, net | (1,790 | ) | (1,507 | ) | (3,739 | ) | (2,773 | ) | |||||||
Other, net | (57 | ) | 13 | (71 | ) | 3 | |||||||||
Total other expense, net | (1,847 | ) | (1,494 | ) | (3,810 | ) | (2,770 | ) | |||||||
Income before income taxes | 3,408 | 3,619 | 3,695 | 567 | |||||||||||
Income taxes | 1,491 | 11,703 | 1,566 | 10,635 | |||||||||||
Net income (loss) | $ | 1,917 | $ | (8,084 | ) | $ | 2,129 | $ | (10,068 | ) | |||||
Income (loss) per share of common stock: | |||||||||||||||
Basic | $ | 0.19 | $ | (0.82 | ) | $ | 0.22 | $ | (1.02 | ) | |||||
Diluted | 0.19 | (0.82 | ) | $ | 0.22 | $ | (1.02 | ) | |||||||
Weighted average shares of common stock outstanding: | |||||||||||||||
Basic | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 | |||||||||||
Diluted | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 |
For the Second Quarter of Fiscal Years | For the First Two Quarters of Fiscal Years | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | 1,917 | $ | (8,084 | ) | $ | 2,129 | $ | (10,068 | ) | |||||
Other comprehensive income, net: | |||||||||||||||
Pension amortization of unrecognized net actuarial loss, net of tax | 20 | 22 | 51 | 57 | |||||||||||
Other comprehensive income, net | 20 | 22 | 51 | 57 | |||||||||||
Comprehensive income (loss) | $ | 1,937 | $ | (8,062 | ) | $ | 2,180 | $ | (10,011 | ) |
For the First Two Quarters of Fiscal 2019 | ||||||||||||||||||||||
Common Stock | Capital In Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders' Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance at July 1, 2018 | 9,834,723 | $ | 12,293 | $ | 17,599 | $ | 44,713 | $ | (1,001 | ) | $ | 73,604 | ||||||||||
Stock-based compensation | — | — | 47 | — | — | 47 | ||||||||||||||||
Adjustment upon adoption of ASC 606 on July 2, 2018 | — | — | — | (345 | ) | — | (345 | ) | ||||||||||||||
Net income | — | — | — | 2,129 | — | 2,129 | ||||||||||||||||
Comprehensive income, net | — | — | — | — | 51 | 51 | ||||||||||||||||
Balance at December 30, 2018 | 9,834,723 | $ | 12,293 | $ | 17,646 | $ | 46,497 | $ | (950 | ) | $ | 75,486 |
For the First Two Quarters of Fiscal 2018 | ||||||||||||||||||||||
Common Stock | Capital In Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders' Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance at July 2, 2017 | 9,860,635 | $ | 12,326 | $ | 17,851 | $ | 52,967 | $ | (1,276 | ) | $ | 81,868 | ||||||||||
Forfeiture of restricted stock | (25,912 | ) | (33 | ) | 33 | — | — | — | ||||||||||||||
Stock-based compensation | — | — | 222 | — | — | 222 | ||||||||||||||||
Net loss | — | — | — | (10,068 | ) | — | (10,068 | ) | ||||||||||||||
Comprehensive income, net | — | — | — | — | 57 | 57 | ||||||||||||||||
Balance at December 31, 2017 | 9,834,723 | $ | 12,293 | $ | 18,106 | $ | 42,899 | $ | (1,219 | ) | $ | 72,079 |
For the First Two Quarters of Fiscal Years | |||||||
2019 | 2018 | ||||||
Cash Flows from Operating Activities: | |||||||
Net income (loss) | $ | 2,129 | $ | (10,068 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation | 2,774 | 2,990 | |||||
Amortization of intangible assets | 3,311 | 3,816 | |||||
Deferred income taxes | 2,980 | 10,122 | |||||
Stock-based compensation expense | 47 | 221 | |||||
Amortization of deferred financing costs | 748 | 597 | |||||
Loss on sale of property, plant and equipment, net | — | 31 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 5,397 | (9,119 | ) | ||||
Inventories and cost of contracts in progress | (4,088 | ) | (5,175 | ) | |||
Prepaid expenses and other assets | 3,370 | 341 | |||||
Advance billings on customer contracts | (174 | ) | — | ||||
Performance based payments on customer contracts | (4,934 | ) | (1,749 | ) | |||
Accounts payable and accrued expenses | 11,153 | 7,119 | |||||
Net cash provided by (used in) operating activities | 22,713 | (874 | ) | ||||
Cash Flows from Investing Activities: | |||||||
Purchases of property, plant and equipment | (1,953 | ) | (3,099 | ) | |||
Proceeds from sale of property, plant and equipment | — | 14 | |||||
Net cash used in investing activity | (1,953 | ) | (3,085 | ) | |||
Cash Flows from Financing Activities: | |||||||
Borrowings under credit facility | 83,400 | 104,800 | |||||
Repayments under credit facility | (103,800 | ) | (100,400 | ) | |||
Payments under capital lease agreements | (135 | ) | (136 | ) | |||
Payment of debt financing costs | — | (189 | ) | ||||
Net cash provided by (used in) financing activities | (20,535 | ) | 4,075 | ||||
Net increase in cash and cash equivalents | 225 | 116 | |||||
Cash and cash equivalents at beginning of period | 1,160 | 988 | |||||
Cash and cash equivalents at end of period | $ | 1,385 | $ | 1,104 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 2,958 | $ | 1,880 | |||
Cash paid for income taxes | 1,783 | 603 |
Before Adoption of ASC 606 | Effect of adoption | After adoption of ASC 606 | |||||||||
Assets: | |||||||||||
Accounts receivable, net of allowance for doubtful accounts | $ | 60,454 | $ | (7,777 | ) | $ | 52,677 | ||||
Inventories and cost of contracts in progress, net | 72,406 | 9,801 | 82,207 | ||||||||
Prepaid expenses and other current assets | 3,944 | 7,390 | 11,334 | ||||||||
Deferred income taxes | 17,646 | 134 | 17,780 | ||||||||
Liabilities: | |||||||||||
Performance based payments on customer contracts | 3,868 | 9,893 | 13,761 | ||||||||
Shareholders' equity: | |||||||||||
Retained earnings | 44,713 | (345 | ) | 44,368 |
As of | |||||||
December 30, 2018 | July 2, 2018 | ||||||
Contract assets: | |||||||
Prepaid expenses and current assets | $ | 3,149 | $ | 6,891 | |||
Contract liabilities: | |||||||
Performance based payments on customer contracts | 8,827 | 13,761 | |||||
Advances from customers | 5,764 | 5,899 |
Condensed Consolidated Balance Sheet | December 30, 2018 | ||||||||||
As reported | Net effect of adoption of ASC 606 | Balances without adoption of ASC 606 | |||||||||
Assets: | |||||||||||
Inventories and cost of contracts in progress, net | $ | 86,295 | $ | (837 | ) | $ | 85,458 | ||||
Prepaid expenses and other current assets | 8,131 | 452 | 8,583 | ||||||||
Total current assets | 143,091 | (385 | ) | 142,706 | |||||||
Deferred income taxes | 14,786 | (134 | ) | 14,652 | |||||||
Total assets | 224,722 | (519 | ) | 224,203 | |||||||
Liabilities and Shareholders’ Equity: | |||||||||||
Performance based payments on customer contracts | 8,827 | (1,316 | ) | 7,511 | |||||||
Other accrued expenses | 7,805 | 95 | 7,900 | ||||||||
Total current liabilities | 144,005 | (1,221 | ) | 142,784 | |||||||
Total liabilities | 149,236 | (1,221 | ) | 148,015 | |||||||
Retained earnings | 46,497 | 702 | 47,199 | ||||||||
Total shareholders’ equity | 75,486 | 702 | 76,188 | ||||||||
Total liabilities and shareholders’ equity | 224,722 | (519 | ) | 224,203 |
Condensed Consolidated Statements of Operations | For the Second Quarter of Fiscal Year 2019 | ||||||||||
As reported | Net effect of adoption of ASC 606 | Excluding the effect of adoption of ASC 606 | |||||||||
Net sales | $ | 105,248 | $ | (1,381 | ) | $ | 103,867 | ||||
Cost of goods sold | 82,176 | (754 | ) | 81,422 | |||||||
Gross profit | 23,072 | (627 | ) | 22,445 | |||||||
Operating income | 5,255 | (627 | ) | 4,628 | |||||||
Income before income taxes | 3,408 | (627 | ) | 2,781 | |||||||
Income taxes | 1,491 | (132 | ) | 1,359 | |||||||
Net income | $ | 1,917 | $ | (495 | ) | $ | 1,422 | ||||
For the First Two Quarters of Fiscal Year 2019 | |||||||||||
As reported | Net effect of adoption of ASC 606 | Excluding the effect of adoption of ASC 606 | |||||||||
Net sales | $ | 194,710 | $ | 92 | $ | 194,802 | |||||
Cost of goods sold | 153,999 | (360 | ) | 153,639 | |||||||
Gross profit | 40,711 | 452 | 41,163 | ||||||||
Operating income | 7,505 | 452 | 7,957 | ||||||||
Income before income taxes | 3,695 | 452 | 4,147 | ||||||||
Income taxes | 1,566 | 95 | 1,661 | ||||||||
Net income | $ | 2,129 | $ | 357 | $ | 2,486 |
For the Second Quarter of Fiscal Years | For the First Two Quarters of Fiscal Years | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
ECP Segment | |||||||||||||||
U.S. sonobuoy | $ | 26,178 | $ | 29,026 | $ | 47,021 | $ | 45,993 | |||||||
Foreign sonobuoy | 7,626 | 4,064 | 10,750 | 9,672 | |||||||||||
Engineering services | 1,719 | 1,057 | 3,907 | 1,606 | |||||||||||
Rugged electronics | 7,460 | 8,289 | 14,617 | 15,557 | |||||||||||
Total ECP Segment | 42,983 | 42,436 | 76,295 | 72,828 | |||||||||||
MDS Segment | |||||||||||||||
Manufacturing | 58,177 | 51,269 | 110,084 | 98,961 | |||||||||||
Engineering services | 3,452 | 3,271 | 7,057 | 7,540 | |||||||||||
Other | 636 | 843 | 1,274 | 1,253 | |||||||||||
Total MDS Segment | 62,265 | 55,383 | 118,415 | 107,754 | |||||||||||
Total net sales | $ | 105,248 | $ | 97,819 | $ | 194,710 | $ | 180,582 |
December 30, 2018 | July 1, 2018 | ||||||
Raw materials | $ | 62,563 | $ | 56,088 | |||
Work in process | 15,307 | 16,138 | |||||
Finished goods | 8,425 | 8,784 | |||||
Total inventory and cost of contracts in progress, gross | 86,295 | 81,010 | |||||
Inventory to which the U.S. government has title due to interim billings | — | (8,604 | ) | ||||
Total inventory and cost of contracts in progress, net | $ | 86,295 | $ | 72,406 |
December 30, 2018 | July 1, 2018 | ||||||
Land and land improvements | $ | 1,461 | $ | 1,439 | |||
Buildings and building improvements | 28,215 | 28,160 | |||||
Machinery and equipment | 54,433 | 53,250 | |||||
Construction in progress | 2,084 | 1,391 | |||||
Total property, plant and equipment | 86,193 | 84,240 | |||||
Less accumulated depreciation | (54,224 | ) | (51,450 | ) | |||
Property, plant and equipment, net | $ | 31,969 | $ | 32,790 |
Net Carrying Value at July 1, 2018 | Amortization | Net Carrying Value at December 30, 2018 | |||||||||
Non-compete agreements | $ | 680 | $ | (321 | ) | $ | 359 | ||||
Customer relationships | 19,061 | (2,831 | ) | 16,230 | |||||||
Trademarks/Tradenames | 1,059 | (81 | ) | 978 | |||||||
Unpatented technology and patents | 308 | (78 | ) | 230 | |||||||
Other intangible assets, net | $ | 21,108 | $ | (3,311 | ) | $ | 17,797 |
For the Second Quarter of Fiscal Years | For the First Two Quarters of Fiscal Years | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Fair value expense of stock option awards | $ | 5 | $ | 4 | $ | 6 | $ | 43 | |||||||
Restricted stock units | 55 | 7 | 41 | 178 | |||||||||||
Restricted and unrestricted stock | — | — | — | — | |||||||||||
Total stock-based compensation expense | $ | 60 | $ | 11 | $ | 47 | $ | 221 |
Stock Options | Restricted stock units | Restricted shares | ||||||
Outstanding at July 1, 2018 | 78,249 | 95,686 | — | |||||
Granted | — | — | — | |||||
Forfeited | (9,780 | ) | (21,093 | ) | — | |||
Outstanding at December 30, 2018 | 68,469 | 74,593 | — |
For the Second Quarter of Fiscal Years | For the First Two Quarters of Fiscal Years | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Numerator: | |||||||||||||||
Net income (loss) | $ | 1,917 | $ | (8,084 | ) | $ | 2,129 | $ | (10,068 | ) | |||||
Less net income allocated to contingently issuable participating securities | — | — | — | — | |||||||||||
Net income (loss) available to common shareholders | $ | 1,917 | $ | (8,084 | ) | $ | 2,129 | $ | (10,068 | ) | |||||
Weighted average shares outstanding – Basic | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 | |||||||||||
Dilutive effect of stock options | — | — | — | — | |||||||||||
Weighted average shares outstanding – Diluted | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 | |||||||||||
Net income (loss) available to common shareholders per share: | |||||||||||||||
Basic | $ | 0.19 | $ | (0.82 | ) | $ | 0.22 | $ | (1.02 | ) | |||||
Diluted | 0.19 | (0.82 | ) | $ | 0.22 | $ | (1.02 | ) |
For the Second Quarter of Fiscal Year 2019 | |||||||||||||||||||
MDS | ECP | Unallocated | Eliminations | Total | |||||||||||||||
Gross sales | $ | 65,402 | $ | 42,983 | $ | — | $ | (3,137 | ) | $ | 105,248 | ||||||||
Gross profit | 8,855 | 14,217 | — | — | 23,072 | ||||||||||||||
Selling and administrative expenses (incl. depreciation) | 5,758 | 3,497 | 5,479 | — | 14,734 | ||||||||||||||
Internal research and development expenses | — | 1,442 | — | — | 1,442 | ||||||||||||||
Depreciation and amortization | 1,916 | 485 | 604 | — | 3,005 | ||||||||||||||
Operating income | 1,746 | 8,988 | (5,479 | ) | — | 5,255 | |||||||||||||
Capital expenditures | 580 | 547 | 175 | — | 1,302 | ||||||||||||||
Total assets at December 30, 2018 | 154,097 | 73,521 | (2,896 | ) | — | 224,722 | |||||||||||||
For the Second Quarter of Fiscal Year 2018 | |||||||||||||||||||
MDS | ECP | Unallocated | Eliminations | Total | |||||||||||||||
Gross sales | $ | 58,353 | $ | 42,468 | $ | — | $ | (3,002 | ) | $ | 97,819 | ||||||||
Gross profit | 6,960 | 14,789 | — | — | 21,749 | ||||||||||||||
Selling and administrative expenses (incl. depreciation) | 5,614 | 3,570 | 4,890 | — | 14,074 | ||||||||||||||
Internal research and development expenses | — | 669 | — | — | 669 | ||||||||||||||
Depreciation and amortization | 2,247 | 535 | 567 | — | 3,349 | ||||||||||||||
Operating income (loss) | (208 | ) | 10,211 | (4,890 | ) | — | 5,113 | ||||||||||||
Capital expenditures | 2,210 | 208 | 226 | — | 2,644 | ||||||||||||||
Total assets at July 1, 2018 | 147,860 | 71,558 | 12,584 | — | 232,002 | ||||||||||||||
For the First Two Quarters of Fiscal Year 2019 | |||||||||||||||||||
MDS | ECP | Unallocated | Eliminations | Total | |||||||||||||||
Gross sales | $ | 124,696 | $ | 76,295 | $ | — | $ | (6,281 | ) | $ | 194,710 | ||||||||
Gross profit | 16,064 | 24,647 | — | — | 40,711 | ||||||||||||||
Selling and administrative expenses (incl. depreciation) | 11,302 | 7,180 | 8,622 | — | 27,104 | ||||||||||||||
Internal research and development expenses | — | 2,791 | — | — | 2,791 | ||||||||||||||
Depreciation and amortization | 3,929 | 963 | 1,193 | — | 6,085 | ||||||||||||||
Operating income (loss) | 2,036 | 14,091 | (8,622 | ) | — | 7,505 | |||||||||||||
Capital expenditures | 672 | 831 | 450 | — | 1,953 | ||||||||||||||
For the First Two Quarters of Fiscal Year 2018 | |||||||||||||||||||
MDS | ECP | Unallocated | Eliminations | Total | |||||||||||||||
Gross sales | $ | 113,661 | $ | 72,867 | $ | — | $ | (5,946 | ) | $ | 180,582 | ||||||||
Gross profit | 12,953 | 24,720 | — | — | 37,673 | ||||||||||||||
Selling and administrative expenses (incl. depreciation) | 11,514 | 7,150 | 10,615 | — | 29,279 | ||||||||||||||
Internal research and development expenses | — | 1,241 | — | — | 1,241 | ||||||||||||||
Depreciation and amortization | 4,575 | 1,096 | 1,135 | — | 6,806 | ||||||||||||||
Operating income (loss) | (1,693 | ) | 15,645 | (10,615 | ) | — | 3,337 | ||||||||||||
Capital expenditures | 2,315 | 395 | 389 | — | 3,099 |
For the Second Quarter of Fiscal Years | |||||||||||||
2019 | % of Sales | 2018 | % of Sales | ||||||||||
Net sales | $ | 105,248 | 100.0 | % | $ | 97,819 | 100.0 | % | |||||
Cost of goods sold | 82,176 | 78.1 | 76,070 | 77.8 | |||||||||
Gross profit | 23,072 | 21.9 | 21,749 | 22.2 | |||||||||
Selling and administrative expenses | 14,734 | 14.0 | 14,074 | 14.4 | |||||||||
Internal research and development expenses | 1,442 | 1.4 | 669 | 0.7 | |||||||||
Amortization of intangible assets | 1,641 | 1.5 | 1,893 | 1.9 | |||||||||
Operating income | 5,255 | 5.0 | 5,113 | 5.2 | |||||||||
Other expense, net | (1,847 | ) | (1.8 | ) | (1,494 | ) | (1.5 | ) | |||||
Income before income taxes | 3,408 | 3.2 | 3,619 | 3.7 | |||||||||
Income taxes | 1,491 | 1.4 | 11,703 | 12.0 | |||||||||
Net income (loss) | $ | 1,917 | 1.8 | % | $ | (8,084 | ) | (8.3 | )% |
For the Second Quarter of Fiscal Years | |||||||||||||||||
2019 | % of Sales | 2018 | % of Sales | $ Chg | |||||||||||||
Gross sales | $ | 65,402 | 100.0 | % | $ | 58,353 | 100.0 | % | $ | 7,049 | |||||||
Intercompany sales | (3,137 | ) | (4.8 | ) | (2,970 | ) | (5.1 | ) | (167 | ) | |||||||
Net sales | 62,265 | 95.2 | 55,383 | 94.9 | 6,882 | ||||||||||||
Gross profit | 8,855 | 13.5 | 6,960 | 11.9 | 1,895 | ||||||||||||
Selling and administrative expenses | 5,758 | 8.8 | 5,614 | 9.6 | 144 | ||||||||||||
Amortization of intangible assets | 1,351 | 2.0 | 1,554 | 2.7 | (203 | ) | |||||||||||
Operating income (loss) | $ | 1,746 | 2.7 | % | $ | (208 | ) | (0.4 | )% | $ | 1,954 |
For the Second Quarter of Fiscal Years | |||||||||||||||||
2019 | % of Sales | 2018 | % of Sales | $ Chg | |||||||||||||
Gross sales | $ | 42,983 | 100.0 | % | $ | 42,468 | 100.0 | % | $ | 515 | |||||||
Intercompany sales | — | — | (32 | ) | (0.1 | ) | 32 | ||||||||||
Net sales | 42,983 | 100.0 | 42,436 | 99.9 | 547 | ||||||||||||
Gross profit | 14,217 | 33.1 | 14,789 | 34.8 | (572 | ) | |||||||||||
Selling and administrative expenses | 3,497 | 8.1 | 3,570 | 8.4 | (73 | ) | |||||||||||
Internal research and development expenses | 1,442 | 3.4 | 669 | 1.6 | 773 | ||||||||||||
Amortization of intangible assets | 290 | 0.7 | 339 | 0.8 | (49 | ) | |||||||||||
Operating income | $ | 8,988 | 20.9 | % | $ | 10,211 | 24.0 | % | $ | (1,223 | ) |
For the Second Quarter of Fiscal Years | |||||||||||
2019 | 2018 | $ Chg | |||||||||
Intercompany sales elimination | $ | (3,137 | ) | $ | (3,002 | ) | $ | (135 | ) | ||
Selling and administrative expenses unallocated | 5,479 | 4,890 | 589 |
For the First Two Quarters of Fiscal Years | |||||||||||||
2019 | % of Sales | 2018 | % of Sales | ||||||||||
Net sales | $ | 194,710 | 100.0 | % | $ | 180,582 | 100.0 | % | |||||
Cost of goods sold | 153,999 | 79.1 | 142,909 | 79.1 | |||||||||
Gross profit | 40,711 | 20.9 | 37,673 | 20.9 | |||||||||
Selling and administrative expenses | 27,104 | 13.9 | 29,279 | 16.2 | |||||||||
Internal research and development expenses | 2,791 | 1.4 | 1,241 | 0.7 | |||||||||
Amortization of intangible assets | 3,311 | 1.7 | 3,816 | 2.2 | |||||||||
Operating income | 7,505 | 3.9 | 3,337 | 1.8 | |||||||||
Other expense, net | (3,810 | ) | (2.0 | ) | (2,770 | ) | (1.5 | ) | |||||
Income before income taxes | 3,695 | 1.9 | 567 | 0.3 | |||||||||
Income taxes | 1,566 | 0.8 | 10,635 | 5.9 | |||||||||
Net income (loss) | $ | 2,129 | 1.1 | % | $ | (10,068 | ) | (5.6 | )% |
For the First Two Quarters of Fiscal Years | |||||||||||||||||
2019 | % of Sales | 2018 | % of Sales | $ Chg | |||||||||||||
Gross sales | $ | 124,696 | 100.0 | % | $ | 113,661 | 100.0 | % | $ | 11,035 | |||||||
Intercompany sales | (6,281 | ) | (5.0 | ) | (5,907 | ) | (5.2 | ) | (374 | ) | |||||||
Net sales | 118,415 | 95.0 | 107,754 | 94.8 | 10,661 | ||||||||||||
Gross profit | 16,064 | 12.9 | 12,953 | 11.4 | 3,111 | ||||||||||||
Selling and administrative expenses | 11,302 | 9.1 | 11,514 | 10.1 | (212 | ) | |||||||||||
Amortization of intangible assets | 2,726 | 2.2 | 3,132 | 2.8 | (406 | ) | |||||||||||
Operating income (loss) | $ | 2,036 | 1.6 | % | $ | (1,693 | ) | (1.5 | )% | $ | 3,729 |
For the First Two Quarters of Fiscal Years | |||||||||||||||||
2019 | % of Sales | 2018 | % of Sales | $ Chg | |||||||||||||
Gross sales | $ | 76,295 | 100.0 | % | $ | 72,867 | 100.0 | % | $ | 3,428 | |||||||
Intercompany sales | — | — | (39 | ) | (0.1 | ) | 39 | ||||||||||
Net sales | 76,295 | 100.0 | 72,828 | 99.9 | 3,467 | ||||||||||||
Gross profit | 24,647 | 32.3 | 24,720 | 33.9 | (73 | ) | |||||||||||
Selling and administrative expenses | 7,180 | 9.4 | 7,150 | 9.8 | 30 | ||||||||||||
Internal research and development expenses | 2,791 | 3.7 | 1,241 | 1.7 | 1,550 | ||||||||||||
Amortization of intangible assets | 585 | 0.8 | 684 | 0.9 | (99 | ) | |||||||||||
Operating income | $ | 14,091 | 18.4 | % | $ | 15,645 | 21.5 | % | $ | (1,554 | ) |
For the First Two Quarters of Fiscal Years | |||||||||||
2019 | 2018 | $ Chg | |||||||||
Intercompany sales elimination | $ | (6,281 | ) | $ | (5,946 | ) | $ | (335 | ) | ||
Selling and administrative expenses unallocated | 8,622 | 10,615 | (1,993 | ) |
For the First Two Quarters of Fiscal Years | |||||||
CASH FLOWS | 2019 | 2018 | |||||
Operating activities, excluding net changes in working capital | $ | 11,989 | $ | 7,709 | |||
Net changes in working capital | 10,724 | (8,583 | ) | ||||
Operating activities | 22,713 | (874 | ) | ||||
Investing activities | (1,953 | ) | (3,085 | ) | |||
Financing activities | (20,535 | ) | 4,075 |
• | the requirement in the Merger Agreement that, under certain circumstances, we reimburse Parent for certain expenses up to $4.75 million; |
• | the requirement in the Merger Agreement that, under certain circumstances, we pay Parent a termination fee of $7.5 million; |
• | incurring costs related to the Merger, such as legal, accounting, financial advisory and other costs that have already been incurred or will continue to be incurred until the consummation of the Merger; |
• | potential reputational harm due to any failure to successfully consummate the Merger; |
• | potential disruption to our business, such as distraction of our employees to pursue other opportunities that could be beneficial to the Company, without the Merger actually being consummated; |
• | uncertainties and disruption caused by potential plant closures and possible restructuring; |
• | need to renegotiate our credit facility to provide for additional liquidity to meet working capital needs; and |
• | potential disruption to our business due to possible loss of customers and possible changes in vendor terms as a result of uncertainties. |
• | the announcement or pendency of the Merger may impeded or otherwise interfere with the Company's ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or the operation of its business generally; |
• | the attention of our employees and management may be diverted due to activities related to the Merger, which may affect our business operations; |
• | matters relating to the Merger (including integration planning) may require substantial commitments of time and resources by Sparton management, which could harm our relationships with our employees, customers, distributors, suppliers or other business partners, and may result in a loss of or a substantial decrease in purchases by our customers; |
• | the Merger Agreement restricts us from engaging in certain actions without the approval of Parent, which could prevent us from pursuing certain business opportunities outside the ordinary course of business that arise prior to the consummation of the Merger; and |
• | shareholder litigation in connection with the transaction contemplated by the Merger Agreement may arise and result in significant costs of defense, indemnification and liability. |
Exhibit Number | Description | ||
Agreement and Plan of Merger by and among the Registrant, Striker Parent 2018, LLC (an affiliate of Cerberus Capital Management, L.P.) and Striker Merger Sub 2018, Inc., incorporated herein by reference from Exhibit 2.1 to the Registrant's Form 8-K filed with the SEC on December 14, 2018. | |||
Second Amended Articles of Incorporation of the Registrant, incorporated herein by reference from the Registrant’s Proxy Statement on Form DEF 14A filed with the SEC on September 21, 2010. | |||
Amended and Restated Code of Regulations of the Registrant, incorporated herein by reference from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 5, 2015. | |||
Amendment to Amended and Restated Code of Regulations of the Registrant, incorporated by reference from Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 15, 2017. | |||
Merger Termination Agreement dated as of March 4, 2018 by and among Sparton Corporation, Ultra Electronics Holdings plc, and Ultra Electronics Aneira Inc., incorporated herein by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 5, 2018. | |||
31.1* | Interim Chief Executive Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2* | Chief Financial Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1* | Interim Chief Executive Officer and Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS* | XBRL Instance Document | ||
101.SCH* | XBRL Taxonomy Extension Schema Document | ||
101.CAL* | XBRL Taxonomy Calculation Linkbase Document | ||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
Sparton Corporation | |||
Date: February 6, 2019 | By: | /s/ JOSEPH J. HARTNETT | |
Joseph J. Hartnett | |||
Interim President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: February 6, 2019 | By: | /s/ JOSEPH G. MCCORMACK | |
Joseph G. McCormack | |||
Senior Vice President and Chief Financial Officer | |||
(Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Sparton Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ JOSEPH J. HARTNETT |
Joseph J. Hartnett, Interim President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Sparton Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ JOSEPH G. MCCORMACK |
Joseph G. McCormack, Senior Vice President and Chief Financial Officer |
1 | The Periodic 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 Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 6, 2019 | /s/ JOSEPH J. HARTNETT | |
Joseph J. Hartnett, Interim President and Chief Executive Officer | ||
Date: February 6, 2019 | /s/ JOSEPH G. MCCORMACK | |
Joseph G. McCormack, Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Dec. 30, 2018 |
Feb. 04, 2019 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Sparton Corp. | |
Entity Central Index Key | 0000092679 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 30, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 9,834,723 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 30, 2018 |
Jul. 01, 2018 |
---|---|---|
Current Assets: | ||
Accounts receivable, allowance for doubtful accounts | $ 146 | $ 169 |
Shareholders’ Equity: | ||
Preferred stock authorized (in shares) | 200,000 | 200,000 |
Preferred stock issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1.25 | $ 1.25 |
Common stock authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock issued (in shares) | 9,834,723 | 9,834,723 |
Common stock outstanding (in shares) | 9,834,723 | 9,834,723 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Income Statement [Abstract] | ||||
Net sales | $ 105,248 | $ 97,819 | $ 194,710 | $ 180,582 |
Cost of goods sold | 82,176 | 76,070 | 153,999 | 142,909 |
Gross profit | 23,072 | 21,749 | 40,711 | 37,673 |
Operating expense | ||||
Selling and administrative expenses | 14,734 | 14,074 | 27,104 | 29,279 |
Internal research and development expenses | 1,442 | 669 | 2,791 | 1,241 |
Amortization of intangible assets | 1,641 | 1,893 | 3,311 | 3,816 |
Total operating expense | 17,817 | 16,636 | 33,206 | 34,336 |
Operating income | 5,255 | 5,113 | 7,505 | 3,337 |
Other expense | ||||
Interest expense, net | (1,790) | (1,507) | (3,739) | (2,773) |
Other, net | (57) | 13 | (71) | 3 |
Total other expense, net | (1,847) | (1,494) | (3,810) | (2,770) |
Income before income taxes | 3,408 | 3,619 | 3,695 | 567 |
Income taxes | 1,491 | 11,703 | 1,566 | 10,635 |
Net income (loss) | $ 1,917 | $ (8,084) | $ 2,129 | $ (10,068) |
Income (loss) per share of common stock: | ||||
Basic (in dollars per share) | $ 0.19 | $ (0.82) | $ 0.22 | $ (1.02) |
Diluted (in dollars per share) | $ 0.19 | $ (0.82) | $ 0.22 | $ (1.02) |
Weighted average shares of common stock outstanding: | ||||
Basic (in shares) | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 |
Diluted (in shares) | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,917 | $ (8,084) | $ 2,129 | $ (10,068) |
Other comprehensive income, net: | ||||
Pension amortization of unrecognized net actuarial loss, net of tax | 20 | 22 | 51 | 57 |
Other comprehensive income, net | 20 | 22 | 51 | 57 |
Comprehensive income (loss) | $ 1,937 | $ (8,062) | $ 2,180 | $ (10,011) |
Business and Basis of Presentation |
6 Months Ended |
---|---|
Dec. 30, 2018 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain reclassifications of prior year amounts have been made to conform to the current year presentation. Subsequent events have been evaluated through the date these financial statements were issued. Additionally, the consolidated financial statements should be read in conjunction with Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this Quarterly Report on Form 10-Q. Operating results for the quarter and the first two quarters ended December 30, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2019. The consolidated balance sheet at July 1, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States ("GAAP") for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2018. The Company reports fiscal years on a 52-53 week year (5-4-4 basis) ending on the Sunday closest to June 30. Pending Acquisition of the Company On December 11, 2018, Sparton Corporation (the "Company" or "Sparton") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Striker Parent 2018, LLC ("Parent"), a Delaware limited liability company and affiliate of Cerberus Capital Management, L.P. ("Cerberus"), and Striker Merger Sub 2018, Inc. ("Merger Sub"), an Ohio corporation and a wholly owned subsidiary of Parent. Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger") with the Company surviving the Merger as a wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each issued and outstanding share of common stock, par value $1.25 per share, of the Company (each, a "Share") (other than (i) Shares that immediately prior to the Effective Time are owned by Parent, Merger Sub or any other wholly owned subsidiary of Parent or owned by the Company or any wholly owned subsidiary of the Company (including as treasury stock) and (ii) Shares that are held by any record holder who is entitled to demand and properly demands payment of the fair cash value of such Shares as a dissenting shareholder pursuant to, and who complies in all respects with, the provisions of Section 1701.85 of the Ohio General Corporation Law) will be canceled and converted into the right to receive $18.50 per Share in cash, without interest. Consummation of the Merger is subject to the satisfaction or (to the extent permitted by law) waiver of specified closing conditions, including (i) the adoption of the Merger Agreement by the affirmative vote of the holders of at least two-thirds of all the outstanding Shares entitled to vote thereon at a special meeting of the Company's shareholders (the "Shareholders Meeting") to be held on March 1, 2019, as more fully described in the proxy statement of the Company, filed with the SEC on January 23, 2019 (the "Proxy Statement"), (ii) the absence of any law, executive order, ruling, injunction or other order ("Orders") that restrains, enjoins or otherwise prohibits the consummation of the Merger (the "No Order Condition"), (iii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") which expired on January 22, 2019, (such condition, the "HSR Act Condition"), (iv) any agreement with a governmental authority not to consummate the Merger, which agreement shall have been entered into with the prior written consent of both the Company and Parent, shall have expired or been terminated (the "Governmental Authority Agreement Condition") and (v) other customary closing conditions, including the accuracy of each party's representations and warranties and each party's compliance with its covenants and agreements contained in the Merger Agreement (subject in the case of this clause (v) to certain qualifications as to materiality). Consummation of the Merger is not subject to Parent obtaining any financing for or related to the transactions contemplated by the Merger Agreement. The Company and Parent have agreed to cooperate with each other and use their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary and proper on their part under the Merger and applicable law to consummate and make effective the Merger and the other transactions contemplated by the Merger Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any governmental authority in order to consummate the Merger or any of the other transactions contemplated by the Merger Agreement. Parent is not required as part of its reasonable best efforts obligation to divest any assets or businesses or engage in any other form of remediation or mitigation action (including holding assets or businesses separate or altering or restricting its business practices in any way), except for, if requested by a governmental authority, any non-sonobuoy-related assets, that individually or in the aggregate, are not material in any respect to the Company and its subsidiaries. The Merger Agreement includes customary representations and warranties of the Company, Parent and Merger Sub. Many of the representations made by the Company are subject to and qualified by a Material Adverse Effect standard (as defined in the Merger Agreement). The Company, Parent, and Merger Sub have also made certain covenants in the Merger Agreement, including (i) covenants by the Company regarding the operation of its business and that of its subsidiaries prior to the Effective Time, (ii) a customary non-solicitation covenant prohibiting the Company from soliciting, providing non-public information in response to, or entering into discussions or negotiations with respect to, proposals relating to alternative business combination transactions, except as permitted under the Merger Agreement, (iii) a financing covenant by Parent and Merger Sub to take all actions necessary, proper and advisable to obtain Parent's equity financing pursuant to an equity commitment letter between Parent and an affiliate of Cerberus under which such affiliate has committed to acquire securities of Parent in connection with funding Parent's obligations contemplated by the Merger Agreement, and (iv) a customary covenant in which the Company has agreed to use, and to cause its subsidiaries to use, commercially reasonable efforts to provide the cooperation reasonably requested by Parent or Merger Sub to assist Parent and Merger Sub in obtaining debt financing in connection with the Merger. The Merger Agreement may be terminated by each of the Company and Parent under certain circumstances, including (i) by either the Company or Parent if the Merger is not consummated by May 11, 2019 (subject to an extension to June 11, 2019 at the election of either Parent or the Company if (A) any of the No Order Condition (solely with respect to Orders entered pursuant to the HSR Act or any other applicable antitrust or competition law), the HSR Condition or the Governmental Authority Agreement Condition have not been satisfied by May 11, 2019 or (B) the Shareholders Meeting has not been called and held prior to May 11, 2019) (such date, as may be extended, the "Termination Date") or (ii) by Parent if, following the date of the Merger Agreement, the Company, any of its subsidiaries or ERAPSCO, a joint venture between subsidiaries of Ultra Electronics Holdings plc ("Ultra") and the Company ("ERAPSCO"), are suspended, debarred, excluded or proposed for debarment from doing business with any governmental entity or are declared non-responsible or ineligible for contracting with any governmental entity, subject to a cure period ending on the earlier of (A) sixty (60) days after Parent notifies the Company of its intent to so terminate and (B) the Termination Date. The Merger Agreement provides for certain other termination rights for both the Company and Parent, and further provides that, upon termination of the Merger Agreement under certain specified circumstances, (i) the Company will be required to (A) reimburse certain of Parent's expenses up to a maximum of $4,750 (the "Expenses") or (B) pay Parent a termination fee of $7,500 (net of any Expenses previously paid by the Company) or (ii) Parent will be required to pay the Company a termination fee of $9,250 (the "Parent Termination Fee"). Under the terms of a limited guarantee entered into by the Company and an affiliate of Cerberus (the "Limited Guarantee"), such affiliate of Cerberus has, subject to the terms of the Limited Guarantee, guaranteed Parent's obligation to, among other things, pay the Parent Termination Fee. The Company has called a special meeting on March 1, 2019, of holders of shares of common stock of the Company, at which time it is expected that the shareholders of record as of January 18, 2019, the record date for the special meeting, will vote on adoption of the Merger Agreement and the other related matters as described in the Proxy Statement. Q-125A Sonobuoy Bid Process On July 9, 2018, the Company announced the filing of a bid protest by ERAPSCO with the United States Government Accountability Office ("GAO") challenging the competitive range exclusion of ERAPSCO under the United States Navy Solicitation No. N00019-19-R-0002 for the GFY 19-23 AN/SSQ-125A (the “Q-125A”) production sonobuoy. The protest challenged, on a number of bases, the United States Navy's (the "Navy") decision to exclude ERAPSCO from the solicitation process and requested that GAO restore ERAPSCO's ability to participate in the process. On August 30, 2018, the Navy issued a notice that it had taken corrective action to reopen the competitive range regarding the Q-125A production sonobuoy and include ERAPSCO in that competitive range. This corrective action allows ERAPSCO to again participate in the bid process. As a result of the Navy’s decision to restore ERAPSCO’s ability to participate in the bid process, the GAO dismissed the protest on September 4, 2018. |
Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Effective July 2, 2018, the Company adopted Accounting Standards Codification 606, “Revenue from Contracts with Customers” (“ASC 606”) using the modified retrospective method. As a result, the cumulative effect of adopting ASC 606 on contracts that were open on the date of adoption was recognized as an adjustment to the opening balance sheet at July 2, 2018. The Company did not restate prior period information in its Consolidated Balance Sheet, Consolidated Statement of Operations or Consolidated Statement of Cash Flows. Sparton's customers typically engage the Company to provide distinct products and services within the Company's two reportable segments. In its Manufacturing and Design Services ("MDS") segment, the Company performs services that include contract design, manufacturing, and aftermarket repair. In its Engineered Components & Products ("ECP") segment, the Company provides products and services including design, development and production of proprietary products for domestic and foreign defense markets as well as for commercial needs. The Company considers contracts to exist once (i) the parties have approved the contract and have committed to perform their respective rights and obligations under the contract, (ii) the commitment of goods or services to be transferred has been established, (iii) the payment terms have been established, (iv) the Company has determined the contract has commercial substance, and (v) the Company has determined collectability of substantially all due consideration. Sparton treats contracts with similar characteristics as a portfolio when the results are not materially different from treating contracts individually. The contract price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Performance Obligations Performance obligations are typically satisfied when or as products are shipped to customers. In certain contracts, transfer of control is recognized prior to shipment if the contract meets the requirements of a bill-and-hold arrangement or if the contract restricts Sparton’s use of the products, thereby eliminating the ability to obtain a benefit from the products outside the customer contract. Service based performance obligations are considered satisfied as services are rendered based on costs incurred. The amount of consideration the Company expects to receive is allocated on the basis of each performance obligation’s selling price, including the effect of variable consideration to the extent that revenue would likely not be reversed. The primary method used to estimate the standalone selling price is the contracted or list price. Typical payment terms are 30 days from invoicing and, in certain agreements, the Company receives progress based payments and deposits in advance of its satisfaction of performance obligations. The Company's warranties are assurance type which are not considered performance obligations and refund or return obligations are not material. The amount of the transaction price allocated to wholly unsatisfied (or partially unsatisfied) performance obligations is represented by the Company's backlog. Of the $298,000 of backlog at December 30, 2018, $43,000 is expected to be recognized as revenue beyond the next 12 months. In its application of practical expedients, under ASC 606, the Company (i) treats contracts with similar characteristics as a portfolio, (ii) excludes implied financing costs from variable consideration, (iii) records service revenue based on its right to invoice, (iv) expenses the incremental cost of obtaining a contract for contracts less than twelve months, (v) excludes taxes collected on behalf of a government authority related to its revenue generating transactions from its calculation of transaction price, and (vi) accrues for expected shipping and handling expenses that are expected to be incurred after control is transferred to customers. The net impact of adoption of ASC 606 on the Company's opening balance sheet as of July 2, 2018 was as follows:
Progress payments from customers related to inventory purchases now are reflected as a liability rather than as a reduction of inventory and unbilled accounts receivable now are classified within prepaid expenses and other current assets rather than within accounts receivable. The net impact to retained earnings as a result of the adoption of ASC 606 was a decrease of $345. Contract Assets and Contract Liabilities Contract assets consist of the Company's right to consideration for work performed or performance obligations completed which have not yet billed. Contract assets are invoiced and considered accounts receivable when the right to consideration no longer has any further contractual conditions. Contract liabilities consist of customer advances or progress payments for which the Company has not transferred goods or services to its customers. The Company expects to transfer all underlying goods and services to the customer within 12 months of establishing a contract liability. Contract assets and contract liabilities from revenue contracts with customers consist of the following amounts within the Company's respective consolidated balance sheet captions as of December 30, 2018 and the opening balance sheet date of July 2, 2018:
Revenue of $15,536 that was included in the contract liabilities at July 2, 2018 was recognized in the first two fiscal quarters ended December 30, 2018. Changes in the contract assets and contract liabilities account balances were attributed to regular business activity. The following tables summarize the impact of adopting ASC 606 on the Company's unaudited condensed consolidated financial statements at December 30, 2018 and for the second quarter ended and the first two fiscal quarters ended December 30, 2018:
Revenue by Category The following table reflects the Company's revenue disaggregated by major end-use market for the periods ended:
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Inventories and Cost of Contracts in Progress, net |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories and Cost of Contracts in Progress, net | Inventories and Cost of Contracts in Progress, net The following are the major classifications of inventory, net of interim billings:
In accordance with the application of ASC 606, progress payments from customers related to inventory purchases are reflected as liabilities rather than as a reduction of net inventories as presented on July 1, 2018. |
Property, Plant and Equipment, net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant and equipment, net consists of the following:
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Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets | Other Intangible Assets The components of other intangible assets, net consist of the following:
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Debt |
6 Months Ended |
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Dec. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt On September 11, 2014, the Company entered into a revolving line-of-credit facility with a group of banks (the “Credit Facility”) which expires on September 11, 2019. On May 3, 2018, the Company entered into Amendment No.5 ("Amendment 5") to the Credit Facility. Under the terms of Amendment 5, (i) the revolving credit facility was reduced from $125,000 to $120,000, (ii) the Company's permitted Total Funded Debt to EBITDA Ratio, as defined, was increased to 4.5x for the fiscal quarters ended April 1, 2018 and July 1, 2018, and beginning with the fiscal quarters ended September 30, 2018 and thereafter the Company's permitted Total Funded Debt to EBITDA Ratio was decreased to 3.0x, and (iii) the interest rates on the revolving line of credit were increased, at the Company's option, to either LIBOR, plus 3.50% to 4.50%, or the bank’s base rate, as defined, plus 2.50% to 3.50%. In addition, Amendment 5 also fixed the commitment fees on the unused portion of the Credit Facility at 0.50%. The Credit Facility is secured by substantially all assets of the Company and its subsidiaries. As of December 30, 2018, the Company had $49,821 available under the Credit Facility, with current borrowings under the facility of $64,100, outstanding letters of credit of $6,047 and capital leases of $32. As of December 30, 2018, outstanding borrowings under the Credit Facility will bear interest, at the Company’s option, at either LIBOR, fixed for interest periods of one, two, three or six month periods, plus 3.50% to 4.50%, or at the bank’s base rate, as defined, plus 2.50% to 3.50%, based upon the Company’s Total Funded Debt/EBITDA Ratio, as defined. The effective interest rate on outstanding borrowings under the Credit Facility was 6.08% at December 30, 2018. The Credit Facility includes representations, covenants and events of default that are customary for financing transactions of this nature. The Company was compliant with all such covenants at December 30, 2018. As a result of the pending acquisition of the Company and the full repayment of the Credit Facility upon the effective date of the Merger, the Credit Facility has been classified as a current liability on the Company's consolidated balance sheet as of December 30, 2018. |
Income Taxes |
6 Months Ended |
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Dec. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law. The Tax Act made significant changes to U.S. tax laws including, but not limited to, lowering the federal income tax rate for U.S. corporations from a maximum of 35% to a fixed 21%, revising certain corporate income tax deductions, implementing a territorial tax system and imposing a repatriation tax on unrepatriated earnings of foreign subsidiaries. The new federal tax rate was effective January 1, 2018. For corporations that report on a fiscal year basis, the Tax Act required the use of a full-year blended income tax rate based on the new and old rates. The Company's effective income tax rate for interim periods was determined based on the Company's estimated annual effective tax rate for the applicable year using the federal statutory income tax rate, permanent tax differences, foreign income and state income tax rates, as well as the impact of federal, foreign and state tax deductions and credits. The Company's estimated annual effective income tax rate for the fiscal year 2019 was determined to be 21%. Income tax expense for the second quarter of fiscal 2019 included a $1,675 discrete tax expense item related the write off of a deferred tax asset on certain transaction costs associated with the Company's pending Merger and an $887 discrete tax credit item related to the completion of the Company's income tax returns for fiscal year 2018. For the first quarter of fiscal year 2018, the Company used an effective income tax rate of 35% as the Tax Act had not yet been enacted. Subsequent to the Tax Act, the Company used an annual effective income tax rate of 28% for fiscal year 2018, exclusive of any discrete tax events. During the second quarter of fiscal year 2018, as a result of the Tax Act, the Company recorded income tax expense of $10,100 for a provisional reduction in its net deferred tax assets, $400 for a provisional liability related to unrepatriated earnings and profits of foreign subsidiaries and $307 to adjust the tax benefit recorded in the first quarter of fiscal year 2018. In addition to the discrete income tax events of the Tax Acts in the second quarter of fiscal year 2018, the Company recognized a discrete income tax benefit of $118 during the second quarter of fiscal year 2018 as a result of a return to provision true-up when filing its fiscal year 2017 tax return as well as amending certain tax returns from earlier tax years. In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain tax effects of the Tax Act and provides for a one-year measurement period. The ultimate impact of the Tax Act may differ from the provisional amounts the Company has recorded due to additional analysis, changes in interpretations and assumptions the Company has made and additional regulatory guidance that may be issued. The accounting was completed before the end of the measurement period on December 22, 2018. |
Defined Benefit Pension Plan |
6 Months Ended |
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Dec. 30, 2018 | |
Retirement Benefits [Abstract] | |
Defined Benefit Pension Plan | Defined Benefit Pension Plan The Company has a frozen defined benefit pension plan. The Company recorded net periodic pension expense of $5 and net periodic pension income of $6 for the second quarter of fiscal years 2019 and 2018, respectively. Net periodic pension expense was $7 and $13 for the first two quarters of fiscal years 2019 and 2018, respectively. No contributions were made to the pension plan during either of the first two quarters of fiscal years 2019 and 2018. |
Commitments and Contingencies |
6 Months Ended |
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Dec. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is a party to an environmental remediation matter in Albuquerque, New Mexico ("Coors Road"). As of December 30, 2018 and July 1, 2018, Sparton had accrued $5,240 and $5,508 respectively, as its estimate of the remaining minimum future discounted financial liability regarding this matter, of which $642 and $642, respectively, was classified as a current liability and included on its consolidated balance sheets in other accrued expenses. As of December 30, 2018 and July 1, 2018, the Company had accrued $1,606, in relation to expected reimbursements from the Department of Energy, which are included in other non-current assets on the consolidated balance sheets and are considered collectible. At the end of each fiscal year, the Company is required to certify compliance with the United States Environmental Protection Agency's (“EPA”) financial assurance requirements. If the Company is not in compliance, funds for environmental remediation costs must be set aside. As a result of the $9,197 of income tax expense related to the tax law changes from the Tax Act that the Company recorded in fiscal year 2018, the Company was not in compliance with such financial assurance requirements at the end of fiscal year 2018. In October 2018, the Company established the Sparton Corporation Standby Financial Assurance Trust and issued a standby letter of credit in the amount of $2,512 related to the Coors Road environmental remediation matter. The trust was established to alternately meet the EPA’s financial assurance requirements. See the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2018 for further information regarding the Company's environmental matters. In addition to the foregoing, from time to time, the Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. The Company and the members of its board of directors were named as defendants in four federal securities class actions purportedly brought on behalf of all holders of the Company’s common stock challenging the merger (the "Sparton/Ultra Merger") contemplated by the now terminated Agreement and Plan of Merger, dated as of July 7, 2017 (the "Sparton/Ultra Merger Agreement"), by and among the Company, Ultra and Ultra Electronics Aneira, Inc. The lawsuits generally sought, among other things, to enjoin the defendants from proceeding with the shareholder vote on the Sparton/Ultra Merger Agreement at the special meeting or consummating the Sparton/Ultra Merger unless and until the Company disclosed the allegedly omitted information. The complaints also sought damages allegedly suffered by the plaintiffs as a result of the asserted omissions, as well as related attorneys’ fees and expenses. After discussions with counsel for the plaintiffs, the Company included certain additional disclosures in the proxy statement soliciting shareholder approval of the Sparton/Ultra Merger Agreement. The Company believed the demands and complaints were without merit, there were substantial legal and factual defenses to the claims asserted, and the proxy statement disclosed all material information prior to the inclusion of the additional disclosures. The Company made the additional disclosures to avoid the expense and burden of litigation. On September 1, 2017, the court dismissed the lawsuits with prejudice with respect to the lead plaintiffs in the lawsuits and without prejudice as to all other shareholders. During the second quarter of fiscal year 2018, the Company and the plaintiffs agreed to settle the claim for $200. The members of the Company's board of directors were named as defendants in another class action suit filed in the United States District Court for the Northern District of Ohio on October 24, 2017, purportedly brought on behalf of all holders of the Company's common stock. This lawsuit sought damages allegedly suffered by plaintiffs as a result of violations by the members of the board of directors of their fiduciary duties. As a result of the termination of the Sparton/Ultra Merger Agreement, on March 16, 2018, the parties to the lawsuit stipulated to a dismissal of the lawsuit without prejudice. The Company was party to a dispute regarding a health claim by a former employee and her children (collectively the "plaintiffs") of one of the Company’s former businesses. The plaintiffs sought monetary damages related to their medical care and treatment, pain and suffering, and lost earnings. In fiscal year 2018, the Company accrued $635 for potential insurance deductibles and legal fees associated with this claim. In August 2018, a $5,500 settlement was reached between the plaintiffs, the Company, and the Company’s insurer, where the Company would pay $500 in settlement costs in excess of its $5,000 insurance coverage and $500 in insurance deductibles. The Company recorded this settlement in fiscal year 2018, and also recorded $594 of legal fees related to this dispute. The settlement was paid in full in the second quarter of fiscal 2019. The Company was the plaintiff in a lawsuit against the previous owner and other shareholders of Hunter Technology Corporation (“Hunter”), a business acquired by the Company, for breaches of the acquisition agreement and fraud. In June 2018, the Court ruled against the Company, and the Company was required to reimburse the defendant’s legal fees of $484. The Company also incurred $115 of legal fees related to this matter. The Company recorded the liability in the fourth quarter of fiscal year 2018, and expensed its related legal fees during fiscal year 2018. The Company is also involved in a dispute between a predecessor company of Hunter and the California State Board of Equalization (“SBOE”) regarding unpaid taxes for which the Company is liable. In the fourth quarter of fiscal year 2018, the Company accrued $500 as an estimated settlement of this liability. This dispute remains in negotiations with the SBOE and the Company. The Company is involved in a matter with Goodrich Corporation (“Goodrich”) in which Goodrich has alleged that the Company owes indemnification to Goodrich under an agreement as a result of damages suffered by Goodrich in a lawsuit that Goodrich settled. The Company has disputed the indemnification claim and Goodrich has requested the parties mediate the dispute or move to trial. This dispute is covered by insurance, subject to normal reservation of rights by the insurance company, and the Company believes that a settlement, if any, would likely be within the Company’s coverage. No amounts have been accrued as it is not probable that a loss has been incurred. The Company is not currently a party to any other legal proceedings, the adverse outcome of which, individually or in the aggregate, is expected to have a material adverse effect on the Company's business, financial condition or results of operations. The Company is subject to audits by certain federal government agencies, including the Defense Contract Audit Agency and the Defense Contract Management Agency. The agencies audit and evaluate government contracts and government contractors’ administrative processes and systems. These agencies review the Company’s performance on contracts, pricing practices, cost structure, financial capability and compliance with applicable laws, regulations and standards. They also review the adequacy of the Company’s internal control systems and policies, including the Company’s purchasing, accounting, estimating, compensation and management information processes and systems. The Company works closely with these agencies to ensure compliance. From time to time, the Company is notified of claims related to noncompliance arising from the audits performed by these agencies. Such claims have historically been subject to actions of remediation and/or financial claims that are typically subject to negotiated settlements. The Company believes that it has appropriate reserves established for outstanding issues and is not aware of any issues of noncompliance that would have a material adverse effect on the Company’s financial position or results of operations. |
Stock-Based Compensation |
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Stock-Based Compensation | Stock-Based Compensation The Company has a long-term incentive plan to offer incentive and non-qualified stock options, stock appreciation rights, restricted stock or restricted stock units, performance awards and other stock-based awards, including grants of shares under the Sparton Corporation 2010 Long-Term Incentive Plan (the “2010 Plan”). The following table shows stock-based compensation expense by type of share-based award included in the consolidated statements of operations:
The following is a summary of activity for the first two quarters of fiscal year 2019 related to the 2010 Plan:
As of December 30, 2018, 56,630 stock options were exercisable, of which 17,120 vested in the first two quarters of fiscal year 2019. |
Earnings Per Share Data |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Data | Earnings Per Share Data The following table sets forth the computation of basic and diluted net income/(loss) per share:
There were no unvested restricted shares outstanding during the second quarter of fiscal year 2019, the first two quarters of fiscal year 2019, and the second quarter of fiscal year 2018. Net income available to common shareholders was not reduced by allocated earnings associated with unvested restricted shares of 10,963 for the first two quarters of fiscal year 2018, as the unvested restricted shares did not participate in the net loss for the first two quarters of fiscal year 2018. The computation of diluted net income per share for the second quarter of fiscal year 2019 and the first two quarters of fiscal 2019 excluded any potential shares of commons stock issuable upon the exercise of stock options as the option price exercises were in excess of the average share price for the respective periods. The computation of diluted net loss per share for the second quarter of fiscal year 2018 and the first two quarters of fiscal year 2018 excluded potential shares of common stock issuable upon exercise of stock options totaling 580 and 581, respectively, as their inclusion would have had an anti-dilutive effect due to the net losses for these periods. |
Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments As previously described, the Company has identified two reportable segments, MDS and ECP. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company's resources on a segment basis. The Company’s Chief Operating Decision Maker assesses segment performance and allocates resources to each segment individually. Operating results and certain other financial information about the Company’s two reportable segments for the second quarter and first two quarters of fiscal years 2019 and 2018 were as follows:
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New Accounting Standards |
6 Months Ended |
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Dec. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842). ASU 2016-02 establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for capital leases and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 ("ASU 2016-13"), Financial Instruments—Credit Losses (Topic 326). ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity may still perform the optional qualitative assessment for a reporting unit to determine if it is more likely than not that goodwill is impaired. ASU 2017-04 will be effective for fiscal years and interim periods beginning after December 15, 2019. ASU 2017-04 is required to be applied prospectively and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 permits the reclassification of certain “stranded tax effects” resulting from the recent U.S. tax reform from accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within those years. Entities have the option to record the reclassification either retrospectively to each period in which the income tax effects of tax reform are recognized, or at the beginning of the annual or interim period in which the amendments are adopted. Early adoption is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. |
Business and Basis of Presentation (Policies) |
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Dec. 30, 2018 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain reclassifications of prior year amounts have been made to conform to the current year presentation. Subsequent events have been evaluated through the date these financial statements were issued. Additionally, the consolidated financial statements should be read in conjunction with Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this Quarterly Report on Form 10-Q. Operating results for the quarter and the first two quarters ended December 30, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2019. The consolidated balance sheet at July 1, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States ("GAAP") for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2018. |
Fiscal Period | The Company reports fiscal years on a 52-53 week year (5-4-4 basis) ending on the Sunday closest to June 30. |
Revenue Recognition | Contract assets consist of the Company's right to consideration for work performed or performance obligations completed which have not yet billed. Contract assets are invoiced and considered accounts receivable when the right to consideration no longer has any further contractual conditions. Contract liabilities consist of customer advances or progress payments for which the Company has not transferred goods or services to its customers. The Company expects to transfer all underlying goods and services to the customer within 12 months of establishing a contract liability. Effective July 2, 2018, the Company adopted Accounting Standards Codification 606, “Revenue from Contracts with Customers” (“ASC 606”) using the modified retrospective method. As a result, the cumulative effect of adopting ASC 606 on contracts that were open on the date of adoption was recognized as an adjustment to the opening balance sheet at July 2, 2018. The Company did not restate prior period information in its Consolidated Balance Sheet, Consolidated Statement of Operations or Consolidated Statement of Cash Flows. Sparton's customers typically engage the Company to provide distinct products and services within the Company's two reportable segments. In its Manufacturing and Design Services ("MDS") segment, the Company performs services that include contract design, manufacturing, and aftermarket repair. In its Engineered Components & Products ("ECP") segment, the Company provides products and services including design, development and production of proprietary products for domestic and foreign defense markets as well as for commercial needs. The Company considers contracts to exist once (i) the parties have approved the contract and have committed to perform their respective rights and obligations under the contract, (ii) the commitment of goods or services to be transferred has been established, (iii) the payment terms have been established, (iv) the Company has determined the contract has commercial substance, and (v) the Company has determined collectability of substantially all due consideration. Sparton treats contracts with similar characteristics as a portfolio when the results are not materially different from treating contracts individually. The contract price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Performance Obligations Performance obligations are typically satisfied when or as products are shipped to customers. In certain contracts, transfer of control is recognized prior to shipment if the contract meets the requirements of a bill-and-hold arrangement or if the contract restricts Sparton’s use of the products, thereby eliminating the ability to obtain a benefit from the products outside the customer contract. Service based performance obligations are considered satisfied as services are rendered based on costs incurred. The amount of consideration the Company expects to receive is allocated on the basis of each performance obligation’s selling price, including the effect of variable consideration to the extent that revenue would likely not be reversed. The primary method used to estimate the standalone selling price is the contracted or list price. Typical payment terms are 30 days from invoicing and, in certain agreements, the Company receives progress based payments and deposits in advance of its satisfaction of performance obligations. The Company's warranties are assurance type which are not considered performance obligations and refund or return obligations are not material. The amount of the transaction price allocated to wholly unsatisfied (or partially unsatisfied) performance obligations is represented by the Company's backlog. Of the $298,000 of backlog at December 30, 2018, $43,000 is expected to be recognized as revenue beyond the next 12 months. In its application of practical expedients, under ASC 606, the Company (i) treats contracts with similar characteristics as a portfolio, (ii) excludes implied financing costs from variable consideration, (iii) records service revenue based on its right to invoice, (iv) expenses the incremental cost of obtaining a contract for contracts less than twelve months, (v) excludes taxes collected on behalf of a government authority related to its revenue generating transactions from its calculation of transaction price, and (vi) accrues for expected shipping and handling expenses that are expected to be incurred after control is transferred to customers. |
New Accounting Standards | In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842). ASU 2016-02 establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for capital leases and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 ("ASU 2016-13"), Financial Instruments—Credit Losses (Topic 326). ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity may still perform the optional qualitative assessment for a reporting unit to determine if it is more likely than not that goodwill is impaired. ASU 2017-04 will be effective for fiscal years and interim periods beginning after December 15, 2019. ASU 2017-04 is required to be applied prospectively and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 permits the reclassification of certain “stranded tax effects” resulting from the recent U.S. tax reform from accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within those years. Entities have the option to record the reclassification either retrospectively to each period in which the income tax effects of tax reform are recognized, or at the beginning of the annual or interim period in which the amendments are adopted. Early adoption is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements. |
Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of Adoption of ASC 606 | The net impact of adoption of ASC 606 on the Company's opening balance sheet as of July 2, 2018 was as follows:
The following tables summarize the impact of adopting ASC 606 on the Company's unaudited condensed consolidated financial statements at December 30, 2018 and for the second quarter ended and the first two fiscal quarters ended December 30, 2018:
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Schedule of Contract Assets and Contract Liabilities | Contract assets and contract liabilities from revenue contracts with customers consist of the following amounts within the Company's respective consolidated balance sheet captions as of December 30, 2018 and the opening balance sheet date of July 2, 2018:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Category | The following table reflects the Company's revenue disaggregated by major end-use market for the periods ended:
|
Inventories and Cost of Contracts in Progress, net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Classifications of Inventory, Net of Interim Billings | The following are the major classifications of inventory, net of interim billings:
|
Property, Plant and Equipment, net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, net | Property, plant and equipment, net consists of the following:
|
Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets, Net | The components of other intangible assets, net consist of the following:
|
Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Stock-Based Compensation Expense | The following table shows stock-based compensation expense by type of share-based award included in the consolidated statements of operations:
|
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Summary of Activity | The following is a summary of activity for the first two quarters of fiscal year 2019 related to the 2010 Plan:
|
Earnings Per Share Data (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following table sets forth the computation of basic and diluted net income/(loss) per share:
|
Business Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Results and Other Financial Information by Segment | Operating results and certain other financial information about the Company’s two reportable segments for the second quarter and first two quarters of fiscal years 2019 and 2018 were as follows:
|
Business and Basis of Presentation (Details) - USD ($) |
Dec. 11, 2018 |
Dec. 30, 2018 |
Jul. 01, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Common stock, par value (in dollars per share) | $ 1.25 | $ 1.25 | $ 1.25 |
Merger Agreement | |||
Business Acquisition [Line Items] | |||
Cash consideration per share paid in event of agreement cancellation (in dollars per share) | $ 18.50 | ||
Termination notice, cure period | 60 days | ||
Reimbursement of merger costs | $ 4,750,000 | ||
Agreement termination fee | 7,500,000 | ||
Merger Agreement | Striker Parent 2018, LLC | |||
Business Acquisition [Line Items] | |||
Agreement termination fee | $ 9,250,000 |
Revenue Recognition - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 30, 2018
USD ($)
segment
|
Dec. 31, 2017
segment
|
Dec. 30, 2018
USD ($)
segment
|
Dec. 31, 2017
segment
|
Jul. 02, 2018
USD ($)
|
Jul. 01, 2018
USD ($)
|
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Number of segments | segment | 2 | 2 | 2 | 2 | ||
Payment terms | 30 days | |||||
Impact on retained earnings | $ (46,497) | $ (46,497) | $ (44,368) | $ (44,713) | ||
Recognized revenue | 15,536 | |||||
Remaining performance obligation, amount | 298,000 | 298,000 | ||||
Net effect of adoption of ASC 606 | Accounting Standards Update 2014-09 | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Impact on retained earnings | $ (702) | $ (702) | $ 345 |
Revenue Recognition - Performance Obligation (Details) $ in Millions |
Dec. 30, 2018
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, amount | $ 298 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-12-31 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, amount | $ 43 |
Expected timing of satisfaction period |
Revenue Recognition - Schedule of Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Dec. 30, 2018 |
Jul. 01, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||
Description of timing | P12M | |
Contract assets: | ||
Prepaid expenses and current assets | $ 3,149 | $ 6,891 |
Contract liabilities: | ||
Performance based payments on customer contracts | 8,827 | 13,761 |
Advance from customers | $ 5,764 | $ 5,899 |
Inventories and Cost of Contracts in Progress, net (Details) - USD ($) $ in Thousands |
Dec. 30, 2018 |
Jul. 02, 2018 |
Jul. 01, 2018 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Raw materials | $ 62,563 | $ 56,088 | |
Work in process | 15,307 | 16,138 | |
Finished goods | 8,425 | 8,784 | |
Total inventory and cost of contracts in progress, gross | 86,295 | 81,010 | |
Inventory to which the U.S. government has title due to interim billings | 0 | (8,604) | |
Total inventory and cost of contracts in progress, net | $ 86,295 | $ 82,207 | $ 72,406 |
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands |
Dec. 30, 2018 |
Jul. 01, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 86,193 | $ 84,240 |
Less accumulated depreciation | (54,224) | (51,450) |
Property, plant and equipment, net | 31,969 | 32,790 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | 1,461 | 1,439 |
Buildings and building improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | 28,215 | 28,160 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | 54,433 | 53,250 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 2,084 | $ 1,391 |
Debt (Details) |
6 Months Ended | |||
---|---|---|---|---|
May 03, 2018
USD ($)
|
Dec. 30, 2018
USD ($)
|
Jul. 01, 2018 |
Sep. 11, 2014
USD ($)
|
|
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity (up to) | $ 120,000,000 | $ 125,000,000 | ||
EBITDA ratio | 3.0 | 4.5 | ||
Available borrowings | $ 49,821,000 | |||
Letters of credit | 64,100,000 | |||
Capital leases | $ 32,000 | |||
Effective interest rate percent | 6.08% | |||
Revolving Credit Facility | Minimum | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 3.50% | 3.50% | ||
Revolving Credit Facility | Minimum | Bank Base Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 2.50% | 2.50% | ||
Revolving Credit Facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
Unused commitment fees | 0.50% | |||
Revolving Credit Facility | Maximum | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 4.50% | 4.50% | ||
Revolving Credit Facility | Maximum | Bank Base Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 3.50% | 3.50% | ||
Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Letters of credit | $ 6,047,000 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
Oct. 01, 2017 |
Dec. 30, 2018 |
Jul. 01, 2018 |
|
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 35.00% | 21.00% | 28.00% | ||
Tax expense related to valuation reserve | $ 1,675 | ||||
Tax credit | $ 887 | ||||
Decrease in deferred tax asset | $ (10,100) | ||||
Provisional liability | 400 | ||||
Tax adjustment | $ 307 | ||||
Income tax benefit for prior year filing and amendments | $ 118 |
Defined Benefit Pension Plan (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Retirement Benefits [Abstract] | ||||
Periodic pension (expense) income | $ 5,000 | $ (6,000) | $ 7,000 | $ 13,000 |
Pension plan contributions | $ 0 | $ 0 |
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 60 | $ 11 | $ 47 | $ 221 |
Fair value expense of stock option awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 5 | 4 | 6 | 43 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 55 | 7 | 41 | 178 |
Restricted and unrestricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 0 | $ 0 | $ 0 | $ 0 |
Stock-Based Compensation - Summary of Activity (Details) |
6 Months Ended |
---|---|
Dec. 30, 2018
shares
| |
Stock Options | |
Outstanding, beginning balance (in shares) | 78,249 |
Granted (in shares) | 0 |
Forfeited (in shares) | (9,780) |
Outstanding, ending balance (in shares) | 68,469 |
Restricted stock units | |
Restricted Stock Units/Shares | |
Outstanding, beginning balance (in shares) | 95,686 |
Granted (in shares) | 0 |
Forfeited (in shares) | (21,093) |
Outstanding, ending balance (in shares) | 74,593 |
Restricted shares | |
Restricted Stock Units/Shares | |
Outstanding, beginning balance (in shares) | 0 |
Granted (in shares) | 0 |
Forfeited (in shares) | 0 |
Outstanding, ending balance (in shares) | 0 |
Stock-Based Compensation - Narrative (Details) |
6 Months Ended |
---|---|
Dec. 30, 2018
shares
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock options exercisable (in shares) | 56,630 |
Number of shares vested (in shares) | 17,120 |
Earnings Per Share Data - Summary of Computation of Basic and Diluted Net Loss (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Numerator: | ||||
Net income (loss) | $ 1,917 | $ (8,084) | $ 2,129 | $ (10,068) |
Less net income allocated to contingently issuable participating securities | 0 | 0 | 0 | 0 |
Net income (loss) available to common shareholders | $ 1,917 | $ (8,084) | $ 2,129 | $ (10,068) |
Weighted average shares outstanding – Basic (in shares) | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 |
Dilutive effect of stock options (in shares) | 0 | 0 | 0 | 0 |
Weighted average shares outstanding – Diluted (in shares) | 9,834,723 | 9,834,723 | 9,834,723 | 9,845,686 |
Net income (loss) available to common shareholders per share: | ||||
Basic (in dollars per share) | $ 0.19 | $ (0.82) | $ 0.22 | $ (1.02) |
Diluted (in dollars per share) | $ 0.19 | $ (0.82) | $ 0.22 | $ (1.02) |
Earnings Per Share Data - Narrative (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2017 |
Jul. 01, 2018 |
|
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Nonvested shares outstanding (in shares) | 0 | 0 | 0 | 0 |
Unvested restricted shares (in shares) | 10,963 | |||
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares excluded from computation (in shares) | 580 | 581 |
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