Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 28, 2019 | Feb. 04, 2020 | |
Document Documentand Entity Information [Abstract] | ||
Entity Incorporation, State or Country Code | WA | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 28, 2019 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | KTCC | |
Entity Registrant Name | KEY TRONIC CORP | |
Entity Central Index Key | 0000719733 | |
Current Fiscal Year End Date | --06-29 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 10,759,680 | |
Entity Tax Identification Number | 91-0849125 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-11559 | |
Entity Address, Address Line One | N. 4424 Sullivan Road | |
Entity Address, City or Town | Spokane Valley | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 99216 | |
City Area Code | 509 | |
Local Phone Number | 928-8000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, no par value | |
Entity Shell Company | false | |
Security Exchange Name | NASDAQ |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 28, 2019 | Jun. 29, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 499 | $ 601 |
Trade receivables, net of allowance for doubtful accounts of $58 and $58 | 70,225 | 58,429 |
Contract assets | 17,071 | 22,161 |
Inventories, net | 110,144 | 100,431 |
Other | 20,254 | 16,477 |
Total current assets | 218,193 | 198,099 |
Property, plant and equipment, net | 30,825 | 29,413 |
Operating lease right-of-use assets, net | 14,876 | 0 |
Other assets: | ||
Deferred income tax asset | 8,207 | 7,840 |
Other intangible assets, net | 0 | 657 |
Other | 1,869 | 2,301 |
Total other assets | 10,076 | 10,798 |
Total assets | 273,970 | 238,310 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Accounts payable | 80,448 | 73,571 |
Accrued compensation and vacation | 6,954 | 6,759 |
Current portion of debt, net | 7,508 | 5,841 |
Other | 13,350 | 7,233 |
Total current liabilities | 108,260 | 93,404 |
Long-term liabilities: | ||
Term loans | 7,087 | 7,091 |
Revolving loan | 32,018 | 23,356 |
Operating lease liabilities | 9,780 | 0 |
Other long-term obligations | 18 | 0 |
Total long-term liabilities | 48,903 | 30,447 |
Total liabilities | 157,163 | 123,851 |
Commitments and contingencies (Note 9) | ||
Shareholders’ equity: | ||
Common stock, no par value—shares authorized 25,000; issued and outstanding 10,760 and 10,760 shares, respectively | 46,821 | 46,680 |
Retained earnings | 67,729 | 65,353 |
Accumulated other comprehensive gain | 2,257 | 2,426 |
Total shareholders’ equity | 116,807 | 114,459 |
Total liabilities and shareholders’ equity | $ 273,970 | $ 238,310 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 28, 2019 | Jun. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for doubtful accounts | $ 58 | $ 58 |
Common stock - par value | $ 0 | $ 0 |
Common stock - shares authorized | 25,000 | 25,000 |
Common stock - shares issued | 10,760 | 10,760 |
Common stock - shares outstanding | 10,760 | 10,760 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 116,722 | $ 123,037 | $ 222,007 | $ 250,509 |
Cost of sales | 108,600 | 113,157 | 204,612 | 231,096 |
Gross profit | 8,122 | 9,880 | 17,395 | 19,413 |
Operating expenses | ||||
Research, development and engineering expenses | 1,720 | 1,857 | 3,380 | 3,557 |
Selling, general and administrative expenses | 4,904 | 5,399 | 9,978 | 10,687 |
Total operating expenses | 6,624 | 7,256 | 13,358 | 14,244 |
Operating income | 1,498 | 2,624 | 4,037 | 5,169 |
Interest expense, net | 524 | 708 | 1,234 | 1,385 |
Income before income taxes | 974 | 1,916 | 2,803 | 3,784 |
Income tax provision | 150 | 327 | 427 | 602 |
Net income | $ 824 | $ 1,589 | $ 2,376 | $ 3,182 |
Earnings per share: | ||||
Net income per share — Basic | $ 0.08 | $ 0.15 | $ 0.22 | $ 0.30 |
Weighted average shares outstanding — Basic | 10,760 | 10,760 | 10,760 | 10,760 |
Net income per share — Diluted | $ 0.08 | $ 0.15 | $ 0.22 | $ 0.29 |
Weighted average shares outstanding — Diluted | 10,877 | 10,881 | 10,811 | 10,986 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Comprehensive income: | ||||
Net income | $ 824 | $ 1,589 | $ 2,376 | $ 3,182 |
Other comprehensive income: | ||||
Unrealized gain (loss) on hedging instruments, net of tax | 778 | (889) | (169) | 2,160 |
Comprehensive income | $ 1,602 | $ 700 | $ 2,207 | $ 5,342 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Unrealized gain (loss) on foreign exchange contracts, tax | $ 0.2 | $ (0.2) | $ 0.1 | $ 0.6 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Operating activities: | ||
Net income | $ 2,376 | $ 3,182 |
Adjustments to reconcile net income to cash used in operating activities: | ||
Depreciation and amortization | 3,143 | 3,767 |
Amortization of deferred loan costs | 15 | 15 |
Provision for obsolete inventory | 41 | 58 |
Provision for warranty | 89 | 16 |
Loss on disposal of assets | 206 | 0 |
Share-based compensation expense | 141 | 274 |
Deferred income taxes | (318) | (131) |
Changes in operating assets and liabilities: | ||
Trade receivables | (13,514) | (10,787) |
Contract assets | 5,090 | (7,212) |
Cash received from arbitration settlement | 0 | 6,684 |
Inventories | (9,754) | 7,432 |
Other assets | (3,689) | (4,963) |
Accounts payable | 6,877 | (3,104) |
Accrued compensation and vacation | 195 | (350) |
Other liabilities | 664 | 23 |
Cash used in operating activities | (8,438) | (5,096) |
Investing activities: | ||
Purchase of property and equipment | (5,360) | (3,586) |
Proceeds from sale of fixed assets | 696 | 17 |
Cash receipts from deferred purchase price of factored receivables | 2,695 | 3,302 |
Cash used in investing activities | (1,969) | (267) |
Financing activities: | ||
Payment of financing costs | (5) | (8) |
Proceeds from issuance of long term debt | 5,000 | 0 |
Repayments of long term debt | (3,352) | (2,936) |
Borrowings under revolving credit agreement | 91,216 | 94,468 |
Repayments of revolving credit agreement | (82,554) | (86,312) |
Cash provided by financing activities | 10,305 | 5,212 |
Net decrease in cash and cash equivalents | (102) | (151) |
Cash and cash equivalents, beginning of period | 601 | 343 |
Cash and cash equivalents, end of period | 499 | 192 |
Noncash investing and financing items: | ||
Beneficial interest in transferred receivables | (1,718) | (2,117) |
Supplemental cash flow information: | ||
Interest payments | 1,235 | 1,332 |
Income tax payments (refunds), net of refunds | $ 426 | $ (50) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Retained Earnings | Accumulated Other Comprehensive (Loss) Income |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balances (Shares) | 10,760 | |||
Balances, Period Start at Jun. 30, 2018 | $ 118,081 | $ 46,244 | $ 72,806 | $ (969) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise of stock appreciation rights (Shares) | 0 | |||
Share-based compensation expense | 274 | $ 274 | ||
Net income | 3,182 | 3,182 | ||
ASC 606 opening balance sheet adjustment at Jun. 30, 2018 | 529 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Unrealized gain (loss) on hedging instruments, net | 2,160 | 2,160 | ||
Balances, Period End at Dec. 29, 2018 | 124,226 | $ 46,518 | 76,517 | 1,191 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balances (Shares) | 10,760 | |||
Balances, Period Start at Sep. 29, 2018 | 123,421 | $ 46,412 | 74,928 | 2,080 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise of stock appreciation rights (Shares) | 0 | |||
Share-based compensation expense | $ 106 | |||
Net income | 1,589 | 1,589 | ||
Unrealized gain (loss) on hedging instruments, net | (889) | (889) | ||
Balances, Period End at Dec. 29, 2018 | 124,226 | $ 46,518 | 76,517 | 1,191 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balances (Shares) | 10,760 | |||
Balances, Period Start at Jun. 29, 2019 | 114,459 | $ 46,680 | 65,353 | 2,426 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise of stock appreciation rights (Shares) | 0 | |||
Share-based compensation expense | 141 | $ 141 | ||
Net income | 2,376 | 2,376 | ||
ASC 606 opening balance sheet adjustment at Jun. 29, 2019 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Unrealized gain (loss) on hedging instruments, net | (169) | (169) | ||
Balances, Period End at Dec. 28, 2019 | 116,807 | $ 46,821 | 67,729 | 2,257 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balances (Shares) | 10,760 | |||
Balances, Period Start at Sep. 28, 2019 | 115,139 | $ 46,754 | 66,905 | 1,479 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Exercise of stock appreciation rights (Shares) | 0 | |||
Share-based compensation expense | $ 67 | |||
Net income | 824 | 824 | ||
ASC 606 opening balance sheet adjustment at Sep. 28, 2019 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Unrealized gain (loss) on hedging instruments, net | 778 | 778 | ||
Balances, Period End at Dec. 28, 2019 | $ 116,807 | $ 46,821 | $ 67,729 | $ 2,257 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balances (Shares) | 10,760 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Dec. 28, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | Basis of Presentation The consolidated financial statements included herein have been prepared by Key Tronic Corporation and subsidiaries (the Company) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. The year-end condensed consolidated balance sheet information was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The financial statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019 . |
FISCAL YEAR | The Company’s reporting period is a 52/53 week fiscal year ending on the Saturday closest to June 30. The three and six month periods ended December 28, 2019 and December 29, 2018 , were 13 and 26 week periods, respectively. Fiscal year 2020 will end on June 27, 2020 , which is a 52 week year. Fiscal year 2019 which ended on June 29, 2019 , was also a 52 week year. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Dec. 28, 2019 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Significant Accounting Policies Earnings Per Common Share Basic earnings per common share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) by the combination of other potentially dilutive weighted average common shares and the weighted average number of common shares outstanding during the period using the treasury stock method. The computation assumes the proceeds from the exercise of equity awards were used to repurchase common shares at the average market price during the period. The computation of diluted EPS does not assume conversion, exercise, or contingent issuance of common stock equivalent shares that would have an anti-dilutive effect on EPS. Derivative Instruments and Hedging Activities The Company has entered into foreign currency forward contracts, foreign currency swaps and an interest rate swap which are accounted for as cash flow hedges in accordance with ASC 815, “ Derivatives and Hedging”. The effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (AOCI) and is reclassified into earnings in the same period in which the underlying hedged transaction affects earnings. The derivative’s effectiveness represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. The Company uses derivatives to manage the variability of foreign currency fluctuations of expenses in our Mexico facilities and interest rate risk associated with certain borrowings under the Company’s term loan arrangement. The foreign currency forward contracts, foreign currency swaps and interest rate swap have terms that are matched to the underlying transactions being hedged. As a result, these transactions fully offset the hedged risk and no ineffectiveness has been recorded. The Company’s foreign currency forward contracts, and interest rate swap potentially expose the Company to credit risk to the extent the counterparty may be unable to meet the terms of the agreement. The Company minimizes such risk by utilizing a counterparty with a strong credit rating. The Company’s counterparty to the foreign currency forward contracts, foreign currency swaps and interest rate swap is a major banking institution. This institution does not require collateral for the contracts, and the Company believes that the risk of the counterparty failing to meet their contractual obligations is remote. The Company does not enter into derivative instruments for trading or speculative purposes. Income Taxes We compute our interim income tax provision through the use of an estimated annual effective tax rate (ETR) applied to year-to-date operating results and specific events that are discretely recognized as they occur. In determining the estimated annual ETR, we analyze various factors, including projections of our annual earnings, taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, our ability to use tax credits and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates, and certain circumstances with respect to valuation allowances or other unusual or non-recurring tax adjustments, are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than included in the estimated annual ETR. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities for a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. We utilize a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments based on new assessments and changes in estimates and which may not accurately forecast actual outcomes. Our policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. The tax years 1998 through the present remain open to examination by the major U.S. taxing jurisdictions to which we are subject. Refer to Note 6 for further discussions. Impairment of Goodwill and Other Intangible Assets The Company records intangible assets that are acquired individually or with a group of other assets in the financial statements at acquisition. In accordance with ASC 350, Goodwill and Other Intangible Assets , goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but are required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company’s acquired intangible assets are subject to amortization over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. Refer to footnote 12 for recognition of intangible asset in accordance with ASC 842. Recently Issued Accounting Standards In February 2016, the FASB issued Accounting Standards Update ASC 2016-02, Leases which supersedes ASC 840 Leases and creates a new topic, ASC 842 Leases. This update requires lessees to recognize a lease asset and a lease liability for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. In July 2018, the FASB issued Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases. The update is intended to clarify certain aspects of the new lease standard, Topic 842. The amendments affect narrow aspects of the guidance issued in update 2016-02 discussed above. The amendments address residual value guarantees, the rate implicit in the lease, certain lessee and lessor reassessments, variable lease payments that depend on an index or rate, investment tax credits, lease term and purchase option, transition guidance and certain adjustments, impairment of the net investment in the lease, residual assets that are not guaranteed, as well as other areas of improvement and clarification. The amendments have the same effective date and transition requirements as the new lease standard. The Company adopted ASC 842 on June 30, 2019 using the modified retrospective method for leases existing at, or entered into after, June 30, 2019. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before our adoption date. Management elected the package of practical expedients which, among other things, allows the Company to carry forward historical lease classification in place prior to June 30, 2019. ASC 842 also provides practical expedients for an entity’s accounting after transition. Management has elected the short-term lease recognition exemption for all leases that qualify, as well as the practical expedient to not separate lease and non-lease components. Both of these expedients were elected for all classes of underlying leased assets. As the Company cannot determine the interest rate implicit in the lease for its leases, the Company uses its estimate of the incremental borrowing rate as of the commencement date in determining the present value of lease payments. The Company’s estimated incremental borrowing rate is the rate of interest it would have to pay on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise. The adoption of ASC 842 had a material impact to the Company’s consolidated balance sheet, but did not materially impact the consolidated statement of income or consolidated statement of cash flows. The most significant changes to the consolidated balance sheet relate to the recognition of new right-of-use (ROU) assets and lease liabilities for operating leases. As a result of adopting ASC 842 as of June 30, 2019, the Company recognized an ROU asset of $17.2 million , a corresponding lease liability of $16.2 million , a reduction in prepaid rent of $0.4 million , a reduction of favorable lease agreement intangible of $0.7 million , and no adjustment to retained earnings or future P&L impact. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance is effective for the Company beginning in the first quarter of fiscal year 2024 with early adoption permitted. The Company is currently assessing and expects the new guidance to have an immaterial impact on its consolidated financial statements, and it intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2024. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Dec. 28, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | Inventories The components of inventories consist of the following (in thousands): December 28, 2019 June 29, 2019 Finished goods $ 14,320 $ 11,969 Work-in-process 20,638 11,705 Raw materials and supplies 75,186 76,757 $ 110,144 $ 100,431 Total inventory as of December 28, 2019 is net of $11.9 million of reserves, customer payments, and customer deposits compared to $10.0 million |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Dec. 28, 2019 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | Long-Term Debt On September 10, 2019, the Company entered into a Fifth amendment to the amended and restated credit agreement to increase the outstanding balance on the term loan in the amount of $5.0 million and to extend the maturity date to September 30, 2022 on the original term loan in the amount of $35.0 million that was used to acquire all of the outstanding shares of CDR Manufacturing, Inc. (dba Ayrshire Electronics). The term loan requires quarterly payments of $1.67 million commencing December 31, 2019 through September 30, 2021, and quarterly payments of $0.4 million commencing December 31, 2021 through September 30, 2022, with a final payment of the remaining outstanding balance on September 30, 2022. The Company had an outstanding balance of $13.3 million and $11.3 million under the term loan as of December 28, 2019 and June 29, 2019 , respectively. On November 20, 2019, the Company entered into a Sixth amendment to the amended and restated credit agreement extending the limit on our line of credit facility to $55.0 million as evidenced by the Second Replacement Revolving Note. The agreement specifies that the proceeds of the revolving line of credit be used primarily for working capital and general corporate purposes. The line of credit is secured by substantially all of the assets of the Company. On September 30, 2018, the Company entered into a Fourth amendment to the amended and restated credit agreement to extend the maturity date to November 1, 2023, at which time all outstanding balances are payable. As of December 28, 2019 , the Company had an outstanding balance under the credit facility of $32.0 million , $0.4 million in outstanding letters of credit and $22.6 million available for future borrowings. As of June 29, 2019 , the Company had an outstanding balance under the credit facility of $23.4 million , $0.4 million in outstanding letters of credit and $21.3 million available for future borrowings. On December 28, 2016, the Company entered into an equipment term loan agreement in the amount of $3.9 million in order to further invest in production equipment. The equipment term loan is collateralized by production equipment. Under this loan agreement, equal quarterly payments of approximately $0.2 million commenced on March 31, 2017 and will continue through the maturity of the equipment term loan on June 30, 2021. Amortization of the debt issuance costs is reported as interest expense on the consolidated income statement. As of December 28, 2019 , the Company had an outstanding balance of $1.3 million . As of June 29, 2019 , the Company had an outstanding balance of $1.7 million . The Fifth amendment to the amended and restated credit agreement noted above to increase the outstanding balance on the term loan in the amount of $5.0 million fixes borrowings under the revolving line of credit, term loan and equipment term loan to bear interest at LIBOR plus 2.0% , as opposed to previous borrowings at either a “Base Rate” or a “Fixed Rate,” as elected by the Company. The base rate is the higher of the Wells Fargo Bank prime rate, daily one month London Interbank Offered Rate (LIBOR) plus 1.5% , or the Federal Funds rate plus 1.5% . The fixed rate is LIBOR plus 1.75% , LIBOR plus 2.00% , or LIBOR plus 2.25% depending on the level of the Company’s trailing four quarters Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). The interest rates on outstanding debt as of December 28, 2019 range from 3.71% - 3.80% compared to 4.40% - 5.50% as of June 29, 2019 . Debt maturities as of December 28, 2019 for the next five years and thereafter are as follows (in thousands): Fiscal Years Ending Amount 2020 (1) $ 3,769 2021 7,537 2022 2,917 2023 417 2024 32,018 Total debt $ 46,658 Unamortized debt issuance costs (45 ) Long-term debt, net of debt issuance costs $ 46,613 (1) Represents scheduled payments for the remaining six-month period ending June 27, 2020. The Company must comply with certain financial covenants, including a cash flow leverage ratio, an asset coverage ratio, and a fixed charge coverage ratio. The credit agreement requires the Company to maintain a minimum profit threshold, limits the maximum capital lease expenditures and restricts the Company from declaring or paying dividends in cash or stock without prior bank approval. The Company was in compliance with all financial covenants as of December 28, 2019 . |
TRADE ACCOUNTS RECEIVABLE PURCH
TRADE ACCOUNTS RECEIVABLE PURCHASE PROGRAMS | 6 Months Ended |
Dec. 28, 2019 | |
Receivables [Abstract] | |
TRADE ACCOUNTS RECEIVABLE PURCHASE PROGRAMS | Trade Accounts Receivable Purchase Programs Sale Programs The Company utilizes an Account Purchase Agreement with Wells Fargo Bank, N.A. (“WFB”) which allows the Company to sell and assign to WFB and WFB may purchase from the Company the accounts receivable of certain Company customers in a maximum aggregate amount outstanding of $25.0 million . This agreement may be cancelled at any time by either party. The Company also has an Account Purchase Agreement with Orbian Financial Services (“Orbian”). This agreement allows the Company to sell accounts receivable of certain customers to Orbian and the agreement may be cancelled at any time by either party. Total accounts receivables sold during the six months ended December 28, 2019 and December 29, 2018 was approximately $35.0 million and $41.1 million , respectively. Accounts receivables sold and not yet collected were $1.7 million and $1.7 million as of December 28, 2019 and June 29, 2019 , respectively. The receivables that were sold were removed from the condensed consolidated balance sheets and the cash received is reflected as cash provided by operating activities in the condensed consolidated statements of cash flows. Cash receipts related to the deferred purchase price from receivables factored by the Company is reflected as cash provided by investing activities. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Dec. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. The Tax Act reduced Federal corporate tax rates effective January 1, 2018 and changed certain other provisions, many of which were not effective until fiscal year 2019. As a result of the change of the U.S. tax system under the Tax Act from a global to a territorial model, a deemed one-time repatriation of all accumulated earnings and profits (AE&P) in Mexico and China occurred on December 31, 2017 (the “Transition Tax”). On December 22, 2017, the staff of the SEC issued Staff Accounting Bulletin No. 118 (“SAB No. 118”). SAB No. 118 provides guidance on accounting for the tax effects of the 2017 Tax Act and allows registrants to record provisional amounts for a period of up to one year from the date of enactment of the 2017 Tax Act. In fiscal year 2019 we finalized the effects of the Tax Act, resulting in a net Transition Tax amount of $0.8 million , a decrease of $0.4 million compared to the amount provisioned in fiscal year 2018. In future years, because of the Transition Tax on AE&P described above, repatriations of cash will generally be tax-free in the U.S. However, withholding taxes in China may still apply to any such future repatriations. Management has not changed its indefinite investment assertions with regard to the portion of AE&P in China that may be repatriated in the future. Accordingly, management estimates that future repatriations of cash from China may result in approximately $0.8 million of withholding tax. There would be no offsetting foreign tax credits in the U.S. and as such, this potential liability is a direct cost associated with actual repatriations. Withholding taxes will not apply to future repatriations from Mexico or Vietnam. The Company expects to repatriate a portion of its foreign earnings based on increased net sales growth driving additional capital requirements domestically, cash requirements for potential acquisitions and to implement certain tax strategies. The Company currently expects to repatriate approximately $7.8 million of foreign earnings in the future. All other unremitted foreign earnings are expected to remain permanently reinvested for planned fixed assets purchases and improvements in foreign locations. The Company has available approximately $9.4 million of gross federal research and development tax credits as of December 28, 2019 . ASC 740 requires the Company to recognize in its financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities. Accordingly, as of December 28, 2019 , the Company has recorded $4.1 million of unrecognized tax benefits associated with these federal tax credits, resulting in a net deferred tax benefit of approximately $5.3 million |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Dec. 28, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Earnings Per Share The following tables present a reconciliation of the denominator in the basic and diluted EPS calculation and the number of antidilutive common share awards that were not included in the diluted earnings per share calculation. These antidilutive securities occur when equity awards outstanding have an option price greater than the average market price for the period. Three Months Ended (in thousands, except share and per share information) December 28, 2019 December 29, 2018 Net income $ 824 $ 1,589 Weighted average shares outstanding—basic 10,760 10,760 Effect of dilutive common stock awards 117 121 Weighted average shares outstanding—diluted 10,877 10,881 Net income per share—basic $ 0.08 $ 0.15 Net income per share—diluted $ 0.08 $ 0.15 Antidilutive SARs not included in diluted earnings per share 725 1,035 Six Months Ended (in thousands, except share and per share information) December 28, 2019 December 29, 2018 Net income $ 2,376 $ 3,182 Weighted average shares outstanding—basic 10,760 10,760 Effect of dilutive common stock awards 51 226 Weighted average shares outstanding—diluted 10,811 10,986 Net income per share—basic $ 0.22 $ 0.30 Net income per share—diluted $ 0.22 $ 0.29 Antidilutive SARs not included in diluted earnings per share 725 793 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Dec. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
SHARE BASED COMPENSATION | Share-based Compensation The Company’s incentive plan provides for equity and liability awards to employees and non-employee directors in the form of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, stock awards, stock units, performance shares, performance units, and other stock-based or cash-based awards. Compensation cost is recognized on a straight-line basis over the requisite employee service period, which is generally the vesting period, and is recorded as employee compensation expense in cost of goods sold, research, development and engineering, and selling, general and administrative expenses. Share-based compensation is recognized only for those awards that are expected to vest, with forfeitures estimated at the date of grant based on historical experience and future expectations. In addition to service conditions, SARs contain a performance condition. The additional performance condition is based upon the achievement of Return on Invested Capital (ROIC) goals relative to a peer group. All awards with performance conditions are evaluated quarterly to determine the likelihood that performance metrics will be achieved during the performance period. These awards are charged to compensation expense over the requisite service period based on the number of shares expected to vest. The SARs cliff vest after a three-year period from date of grant and expire five years from date of grant. The grant date fair value for the awards granted below were estimated using the Black Scholes option valuation method: July 26, 2019 July 27, 2018 SARs Granted 170,000 161,250 Strike Price $ 4.93 $ 8.17 Fair Value $ 1.23 $ 2.27 Total share-based compensation expense recognized during the three months ended December 28, 2019 and December 29, 2018 was approximately $67,000 and $106,000 , respectively. Total share-based compensation expense recognized during the six months ended December 28, 2019 and December 29, 2018 was approximately $141,000 and $274,000 , respectively. As of December 28, 2019 , total unrecognized compensation expense related to unvested share-based compensation arrangements was approximately $0.3 million . This expense is expected to be recognized over a weighted average period of 1.80 years. No SARs were exercised during the three or six months ended December 28, 2019 or December 29, 2018 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Dec. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Commitments and Contingencies Litigation and Other Matters The Company is party to certain lawsuits or claims in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the financial position, results of operations or cash flow of the Company. Warranties The Company provides warranties on certain product sales. Allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty. If actual return rates and/or repair and replacement costs differ significantly from management’s estimates, adjustments to recognize additional cost of sales may be required in future periods. The Company’s warranty reserve was approximately $11,000 as of December 28, 2019 and $22,000 as of June 29, 2019 , respectively. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Dec. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | Derivative Financial Instruments As of December 28, 2019 , the Company had outstanding foreign currency forward contracts with a total notional amount of $25.8 million . The maturity dates for these contracts extend through December 2020. For the three months ended December 28, 2019 , the Company did not enter into any foreign currency forward contracts and settled $7.2 million of such contracts. During the same period of the previous year, the Company entered into foreign currency forward contracts of $6.3 million and settled $6.7 million of such contracts. For the six months ended December 28, 2019 , the Company did not enter into any foreign currency forward contracts and settled $13.9 million of such contracts. During the same period of the previous year, the Company entered into foreign currency forward contracts of $6.3 million and settled $12.0 million of such contracts. As of December 28, 2019 , the aggregate notional amount of the Company’s outstanding foreign currency contracts along with their unrealized gains are expected to mature as summarized below (in thousands): Quarter Ending Notional Contracts in MXN Notional Contracts in USD Estimated Fair Value March 28, 2020 $ 146,613 $ 6,553 $ 1,177 June 27, 2020 $ 138,213 $ 6,257 $ 929 September 26, 2020 $ 141,173 $ 6,729 $ 516 December 26, 2020 $ 132,773 $ 6,241 $ 488 On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of September 30, 2022, related to the borrowings outstanding under the term loan. This interest rate swap pays the Company variable interest at the one month LIBOR rate, and the Company pays the counter party a fixed interest rate. The fixed interest rate for the contract is 1.70% that replaces the one month LIBOR rate component of our contractual interest to be paid to WFB as part of our term loan. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the term loan, the interest rate contract was determined to be effective, and thus qualified as a cash flow hedge. On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of November 1, 2023, related to the borrowings outstanding under the line of credit. This interest rate swap pays the Company variable interest at the one month LIBOR rate, and the Company pays the counter party a fixed interest rate. The fixed interest rate for the contract is 1.67% that replaces the one month LIBOR rate component of our contractual interest to be paid to WFB as part of our line of credit. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the line of credit, the interest rate contract was determined to be effective, and thus qualified as a cash flow hedge. The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheet as of December 28, 2019 and June 29, 2019 (in thousands): December 28, 2019 June 29, 2019 Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value Fair Value Foreign currency forward contracts & swaps Other current assets $ 3,110 $ 2,912 Foreign currency forward contracts & swaps Other long-term assets $ — $ 320 Interest rate swap Other current assets $ 6 $ 2 Interest rate swap Other current liabilities $ (83 ) $ — Interest rate swap Other long-term liabilities $ (17 ) $ — The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended December 28, 2019 and December 29, 2018 , respectively (in thousands): Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance Effective Portion Recorded In AOCI Effective Portion Reclassified From AOCI Into Income AOCI Balance Forward contracts & swaps Cost of sales $ 1,479 $ 1,533 $ (683 ) $ 2,329 Interest rate swap Interest expense — (71 ) (1 ) (72 ) Total $ 1,479 $ 1,462 $ (684 ) $ 2,257 Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance Effective Portion Recorded In AOCI Effective Portion Reclassified From AOCI Into Income AOCI Balance Forward contracts & swaps Cost of sales $ 2,061 $ (1,266 ) $ 383 $ 1,178 Interest rate swap Interest expense 19 (1 ) (5 ) 13 Total $ 2,080 $ (1,267 ) $ 378 $ 1,191 The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the six months ended December 28, 2019 and December 29, 2018 , respectively (in thousands): Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance Effective Portion Recorded In AOCI Effective Portion Reclassified From AOCI Into Income AOCI Balance Forward contracts & swaps Cost of sales $ 2,424 $ 1,492 $ (1,587 ) $ 2,329 Interest rate swap Interest expense 2 (71 ) (3 ) (72 ) Total $ 2,426 $ 1,421 $ (1,590 ) $ 2,257 Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance Effective Portion Recorded In AOCI Effective Portion Reclassified From AOCI Into Income AOCI Balance Forward contracts & swaps Cost of sales $ (988 ) $ 1,249 $ 917 $ 1,178 Interest rate swap Interest expense 19 1 (7 ) 13 Total $ (969 ) $ 1,250 $ 910 $ 1,191 As of December 28, 2019 , the net amount of unrealized gain expected to be reclassified into earnings within the next 12 months is approximately $2.3 million . As of December 28, 2019 , the Company does not have any foreign exchange contracts with credit-risk-related contingent features. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Dec. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | Fair Value Measurements The Company has adopted ASC 820, Fair Value Measurements , which defines fair value, establishes a framework for assets and liabilities being measured and reported at fair value and expands disclosures about fair value measurements. There are three levels of fair value hierarchy inputs used to value assets and liabilities which include: Level 1 – inputs are quoted market prices for identical assets or liabilities; Level 2 – inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 – inputs are unobservable inputs for the asset or liability. The following table summarizes the fair value of assets (liabilities) of the Company’s derivatives that are required to be measured on a recurring basis as of December 28, 2019 and June 29, 2019 (in thousands): December 28, 2019 Level 1 Level 2 Level 3 Total Fair Value Financial Assets: Interest rate swaps $ — $ 6 $ — $ 6 Foreign currency forward contracts $ — $ 3,110 $ — $ 3,110 Financial Liabilities: Interest rate swap $ — $ (100 ) $ — $ (100 ) June 29, 2019 Level 1 Level 2 Level 3 Total Fair Value Financial Assets: Interest rate swaps $ — $ 2 $ — $ 2 Foreign currency forward contracts & swaps $ — $ 3,232 $ — $ 3,232 The Company currently has forward contracts to hedge known future cash outflows for expenses denominated in the Mexican peso and an interest rate swap to mitigate risk associated with certain borrowings under the Company’s debt arrangement. These contracts are measured on a recurring basis based on the foreign currency spot rates and forward rates quoted by banks or foreign currency dealers. These contracts are marked to market using level 2 input criteria every period with the unrealized gain or loss, net of tax, reported as a component of shareholders’ equity in accumulated other comprehensive loss, as they qualify for hedge accounting. The carrying values of cash and cash equivalents, accounts receivable and current liabilities reflected on the balance sheets at December 28, 2019 and June 29, 2019 , reasonably approximate their fair value. The Company’s long-term debt, which is measured at amortized cost, primarily consists of a revolving line of credit, a term loan and an equipment term loan. These borrowings bear interest at LIBOR plus 2.0% per the Fifth amendment to the amended and restated credit agreement, as opposed to the previous interest at either a “Base Rate” or a “Fixed Rate,” as elected by the Company. Each of these rates is a variable floating rate dependent upon current market conditions and the Company’s current credit risk as discussed in footnote 4. As a result of the determinable market rates for our revolving line of credit, term loan and equipment term loan, they are classified within Level 2 of the fair value hierarchy. Further, the carrying value of each of these instruments reasonably approximates their fair value as of December 28, 2019 and June 29, 2019 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Dec. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | Goodwill and Other Intangible Assets The Company recorded intangible assets in connection with the Ayrshire and Sabre acquisitions resulting primarily favorable lease agreements. In accordance with accounting guidance on goodwill and other intangible assets, the Company evaluates intangible assets for impairment at the reporting unit level annually, and whenever circumstances occur indicating that intangibles might be impaired. During the third quarter for fiscal year 2019, the Company assessed other finite-lived intangible assets including the Company’s customer relationships and favorable lease agreements due to an indicator of possible impairment being present. As a result of the analysis performed, the Company determined that the carrying value of the customer relationships intangible asset was not recoverable and recorded an impairment for the entire carrying amount during the third quarter of fiscal year 2019. This resulted in an impairment charge related to other intangible assets of $2.5 million recognized in the third quarter of fiscal year 2019. The Company’s analysis did not indicate that any of its other long-lived assets were impaired. During the first quarter of fiscal year 2020, the Company adopted the Accounting Standards Update 2016-02, Leases which supersedes ASC 840 Leases and creates a new topic, ASC 842 Leases. Under ASC 842, any assets or liabilities recognized in accordance with ASC 805 that are related to favorable or unfavorable terms of an operating lease for which an entity is a lessee, the entity should derecognize the asset or liability and commensurately adjust the ROU asset. As such, the Company derecognized the intangible asset and added the offsetting amount to the ROU asset. Resulting in a reduction of favorable lease agreement intangible of $0.7 million , and no adjustment to retained earnings or future P&L impact. The components of acquired intangible assets are as follows (in thousands): December 28, 2019 Amortization Period in Years Gross Carrying Amount Accumulated Amortization Impairment Recognized Derecognition Favorable Lease per ASC 842 Net Carrying Amount Intangible assets: Favorable Lease Agreements 4 - 7 2,941 (2,284 ) — (657 ) — Total $ 2,941 $ (2,284 ) $ — $ (657 ) $ — June 29, 2019 Amortization Period in Years Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount Intangible assets: Non-Compete Agreements 3 - 5 $ 568 $ (568 ) $ — $ — Customer Relationships 10 4,803 (2,311 ) (2,492 ) — Favorable Lease Agreements 4 - 7 2,941 (2,284 ) — 657 Total $ 8,312 $ (5,163 ) $ (2,492 ) $ 657 Amortization expense was approximately $0 and $196,000 for the three months ended December 28, 2019 and December 29, 2018 , respectively. Amortization expense was approximately $0 and $426,000 for the six months ended December 28, 2019 and December 29, 2018 , respectively. |
REVENUE
REVENUE | 6 Months Ended |
Dec. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACT WITH CUSTOMER | Revenue Revenue Recognition The Company specializes in services ranging from product manufacturing to engineering and tooling services. The first step in its process for revenue recognition is to identify the contract with a customer. A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations. A contract can be written, oral, or implied. The Company generally enters into manufacturing service agreements (“MSA”) with its customers that outlines the terms of the business relationship between the customer and the Company. This includes matters such as warranty, indemnification, transfer of title and risk of loss, liability for excess and obsolete inventory, pricing, payment terms, etc. The Company will also bid on a program-by-program basis for customers in which an executed MSA may not be in place. In these instances, as well as when we have an MSA in place, we receive customer purchase orders for specific quantities and timing of products. As a result, the Company considers its contract with a customer to be the combination of the MSA and the purchase order. The transaction price is fixed and set forth in each purchase order. In the Company's normal course of business, there are no variable pricing components, or material amounts refunded to customers in the form of refunds or rebates. The Company assesses whether control of the product or services promised under the contract is transferred to the customer at a point in time (shipment) or over time (as we manufacture the product). The Company is first required to evaluate whether its contracts meet the criteria for 'over-time' or 'point-in-time' recognition. The Company has determined that for the majority of its contracts the Company is manufacturing products for which there is no alternative use due to the unique nature of the customer-specific product, IP and other contract restrictions. The Company has an enforceable right to payment including a reasonable profit for performance completed to date with respect to these contracts. As a result, revenue is recognized under these contracts 'over-time' based on the input cost-to-cost method as it better depicts the transfer of control. This input method is based on the ratio of costs incurred to date as compared to the total estimated costs at completion of the performance obligation. For all other contracts that do not meet these criteria, such as manufacturing contracts for which the terms do not provide an enforceable right to payment for performance completed to date, the Company recognizes revenue when it has transferred control of the related manufactured products which generally occurs upon shipment to the customer. Revenue from engineering services is recognized over time as the services are performed. The Company’s typical payment terms are 30 to 45 days and its sales arrangements do not contain any significant financing component for its customers. The Company generally provides a warranty for workmanship on its manufacturing contracts. Historically, the amount of returns for workmanship issues has been de minimis under the Company’s warranties. The Company elected to not disclose information about remaining performance obligations as they are part of contracts that that have expected durations of one year or less. During fiscal 2020, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods. Contract Balances A contract asset is recognized when the Company has recognized revenue, but has not issued an invoice for payment. Contract assets are classified separately on the condensed consolidated balance sheet and transferred to receivables when the right to payment becomes unconditional. The following table summarizes the activity in the Company’s contract assets during the six months ended December 28, 2019 (in thousands): Contract Assets Beginning balance, June 29, 2019 $ 22,161 Revenue recognized 219,144 Amounts collected or invoiced (224,234 ) Ending balance, September 28, 2019 $ 17,071 Disaggregation of Revenue The following table presents the Company’s revenue disaggregated for the three and six months ended December 28, 2019 (in thousands): EMS Revenue Recognition Three Months Ended Six Months Ended December 28, 2019 December 29, 2018 December 28, 2019 December 29, 2018 Over-Time $ 115,118 $ 122,137 $ 219,144 $ 248,518 Point-in-Time 1,604 900 2,863 1,991 Total $ 116,722 $ 123,037 $ 222,007 $ 250,509 |
LEASES LEASES
LEASES LEASES | 6 Months Ended |
Dec. 28, 2019 | |
Leases [Abstract] | |
LESSEE, OPERATING LEASES | Leases The Company has several commitments under operating leases for warehouses, manufacturing facilities, office buildings, and equipment with initial terms that expire at various dates during the next 1 year to 12 years . The components of lease cost for the three and six months ended December 28, 2019 were (in thousands): Lease cost Classification Three-Month Period Ended Six-Month Period Ended Operating lease cost Cost of sales $ 1,161 $ 2,319 Operating lease cost Selling, general and administrative expenses 331 598 Total lease cost $ 1,492 $ 2,917 Amounts reported in the Consolidated Balance Sheet as of December 28, 2019 were (in thousands, except weighted average lease term and discount rate): December 28, 2019 Operating Leases: Operating lease right of use assets $ 14,876 Operating lease liabilities (1) 14,329 Weighted-average remaining lease term (in years) Operating leases 6.29 Weighted-average discount rate Operating leases 4.1 % (1) The current portion of the total operating lease liabilities of $4.5 million is classified under Other Current Liabilities , resulting in $9.8 million classified under Operating Lease Liabilities in the Long-term Liabilities section of the condensed consolidated balance sheet. Other information related to leases was as follows (in thousands): Three-Month Period Ended Six-Month Period Ended December 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,180 $ 2,301 Future lease payments under non-cancellable leases as of December 28, 2019 are as follows (in thousands): Fiscal Years Ending Operating Leases 2020 (1) $ 2,241 2021 3,970 2022 3,371 2023 2,597 2024 1,595 Thereafter 6,337 Total undiscounted lease payments 20,111 Less: present value discount 5,782 Total lease liabilities $ 14,329 (1) Represents estimated lease payments for the remaining six-month period ending June 27, 2020 . As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 29, 2019 and under the previous lease accounting standard ASC 840, the aggregate future minimum payments under non-cancellable operating leases, as of June 29, 2019, are as follows (in thousands): Fiscal Years Ending Operating Leases 2020 $ 4,777 2021 3,563 2022 2,641 2023 1,866 2024 1,271 Thereafter 4,121 Total minimum lease payments $ 18,239 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 28, 2019 | |
Accounting Policies [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) by the combination of other potentially dilutive weighted average common shares and the weighted average number of common shares outstanding during the period using the treasury stock method. The computation assumes the proceeds from the exercise of equity awards were used to repurchase common shares at the average market price during the period. The computation of diluted EPS does not assume conversion, exercise, or contingent issuance of common stock equivalent shares that would have an anti-dilutive effect on EPS. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company has entered into foreign currency forward contracts, foreign currency swaps and an interest rate swap which are accounted for as cash flow hedges in accordance with ASC 815, “ Derivatives and Hedging”. The effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (AOCI) and is reclassified into earnings in the same period in which the underlying hedged transaction affects earnings. The derivative’s effectiveness represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. The Company uses derivatives to manage the variability of foreign currency fluctuations of expenses in our Mexico facilities and interest rate risk associated with certain borrowings under the Company’s term loan arrangement. The foreign currency forward contracts, foreign currency swaps and interest rate swap have terms that are matched to the underlying transactions being hedged. As a result, these transactions fully offset the hedged risk and no ineffectiveness has been recorded. The Company’s foreign currency forward contracts, and interest rate swap potentially expose the Company to credit risk to the extent the counterparty may be unable to meet the terms of the agreement. The Company minimizes such risk by utilizing a counterparty with a strong credit rating. The Company’s counterparty to the foreign currency forward contracts, foreign currency swaps and interest rate swap is a major banking institution. This institution does not require collateral for the contracts, and the Company believes that the risk of the counterparty failing to meet their contractual obligations is remote. The Company does not enter into derivative instruments for trading or speculative purposes. |
Income Taxes | Income Taxes We compute our interim income tax provision through the use of an estimated annual effective tax rate (ETR) applied to year-to-date operating results and specific events that are discretely recognized as they occur. In determining the estimated annual ETR, we analyze various factors, including projections of our annual earnings, taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, our ability to use tax credits and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates, and certain circumstances with respect to valuation allowances or other unusual or non-recurring tax adjustments, are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than included in the estimated annual ETR. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities for a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. We utilize a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments based on new assessments and changes in estimates and which may not accurately forecast actual outcomes. Our policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. The tax years 1998 through the present remain open to examination by the major U.S. taxing jurisdictions to which we are subject. Refer to Note 6 for further discussions. |
Impairment of Goodwill | Impairment of Goodwill and Other Intangible Assets The Company records intangible assets that are acquired individually or with a group of other assets in the financial statements at acquisition. In accordance with ASC 350, Goodwill and Other Intangible Assets , goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but are required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company’s acquired intangible assets are subject to amortization over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. Refer to footnote 12 for recognition of intangible asset in accordance with ASC 842. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2016, the FASB issued Accounting Standards Update ASC 2016-02, Leases which supersedes ASC 840 Leases and creates a new topic, ASC 842 Leases. This update requires lessees to recognize a lease asset and a lease liability for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. In July 2018, the FASB issued Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases. The update is intended to clarify certain aspects of the new lease standard, Topic 842. The amendments affect narrow aspects of the guidance issued in update 2016-02 discussed above. The amendments address residual value guarantees, the rate implicit in the lease, certain lessee and lessor reassessments, variable lease payments that depend on an index or rate, investment tax credits, lease term and purchase option, transition guidance and certain adjustments, impairment of the net investment in the lease, residual assets that are not guaranteed, as well as other areas of improvement and clarification. The amendments have the same effective date and transition requirements as the new lease standard. The Company adopted ASC 842 on June 30, 2019 using the modified retrospective method for leases existing at, or entered into after, June 30, 2019. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before our adoption date. Management elected the package of practical expedients which, among other things, allows the Company to carry forward historical lease classification in place prior to June 30, 2019. ASC 842 also provides practical expedients for an entity’s accounting after transition. Management has elected the short-term lease recognition exemption for all leases that qualify, as well as the practical expedient to not separate lease and non-lease components. Both of these expedients were elected for all classes of underlying leased assets. As the Company cannot determine the interest rate implicit in the lease for its leases, the Company uses its estimate of the incremental borrowing rate as of the commencement date in determining the present value of lease payments. The Company’s estimated incremental borrowing rate is the rate of interest it would have to pay on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise. The adoption of ASC 842 had a material impact to the Company’s consolidated balance sheet, but did not materially impact the consolidated statement of income or consolidated statement of cash flows. The most significant changes to the consolidated balance sheet relate to the recognition of new right-of-use (ROU) assets and lease liabilities for operating leases. As a result of adopting ASC 842 as of June 30, 2019, the Company recognized an ROU asset of $17.2 million , a corresponding lease liability of $16.2 million , a reduction in prepaid rent of $0.4 million , a reduction of favorable lease agreement intangible of $0.7 million , and no adjustment to retained earnings or future P&L impact. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance is effective for the Company beginning in the first quarter of fiscal year 2024 with early adoption permitted. The Company is currently assessing and expects the new guidance to have an immaterial impact on its consolidated financial statements, and it intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2024. |
Maximum Amount Of Income Tax Benefits Percentage Realized Upon Ultimate Settlement | 50.00% |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | The components of inventories consist of the following (in thousands): December 28, 2019 June 29, 2019 Finished goods $ 14,320 $ 11,969 Work-in-process 20,638 11,705 Raw materials and supplies 75,186 76,757 $ 110,144 $ 100,431 Total inventory as of December 28, 2019 is net of $11.9 million of reserves, customer payments, and customer deposits compared to $10.0 million |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | Debt maturities as of December 28, 2019 for the next five years and thereafter are as follows (in thousands): Fiscal Years Ending Amount 2020 (1) $ 3,769 2021 7,537 2022 2,917 2023 417 2024 32,018 Total debt $ 46,658 Unamortized debt issuance costs (45 ) Long-term debt, net of debt issuance costs $ 46,613 (1) Represents scheduled payments for the remaining six-month period ending June 27, 2020. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Earnings Per Share [Abstract] | |
Reconciliation of Denominator and Number of Antidilutive Common Share Awards not Included in Diluted Earnings Per Share Calculation | These antidilutive securities occur when equity awards outstanding have an option price greater than the average market price for the period. Three Months Ended (in thousands, except share and per share information) December 28, 2019 December 29, 2018 Net income $ 824 $ 1,589 Weighted average shares outstanding—basic 10,760 10,760 Effect of dilutive common stock awards 117 121 Weighted average shares outstanding—diluted 10,877 10,881 Net income per share—basic $ 0.08 $ 0.15 Net income per share—diluted $ 0.08 $ 0.15 Antidilutive SARs not included in diluted earnings per share 725 1,035 Six Months Ended (in thousands, except share and per share information) December 28, 2019 December 29, 2018 Net income $ 2,376 $ 3,182 Weighted average shares outstanding—basic 10,760 10,760 Effect of dilutive common stock awards 51 226 Weighted average shares outstanding—diluted 10,811 10,986 Net income per share—basic $ 0.22 $ 0.30 Net income per share—diluted $ 0.22 $ 0.29 Antidilutive SARs not included in diluted earnings per share 725 793 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The grant date fair value for the awards granted below were estimated using the Black Scholes option valuation method: July 26, 2019 July 27, 2018 SARs Granted 170,000 161,250 Strike Price $ 4.93 $ 8.17 Fair Value $ 1.23 $ 2.27 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | As of December 28, 2019 , the aggregate notional amount of the Company’s outstanding foreign currency contracts along with their unrealized gains are expected to mature as summarized below (in thousands): Quarter Ending Notional Contracts in MXN Notional Contracts in USD Estimated Fair Value March 28, 2020 $ 146,613 $ 6,553 $ 1,177 June 27, 2020 $ 138,213 $ 6,257 $ 929 September 26, 2020 $ 141,173 $ 6,729 $ 516 December 26, 2020 $ 132,773 $ 6,241 $ 488 |
Summerized Fair Value of Derivative Instruments in Consolidated Balance Sheets | The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheet as of December 28, 2019 and June 29, 2019 (in thousands): December 28, 2019 June 29, 2019 Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value Fair Value Foreign currency forward contracts & swaps Other current assets $ 3,110 $ 2,912 Foreign currency forward contracts & swaps Other long-term assets $ — $ 320 Interest rate swap Other current assets $ 6 $ 2 Interest rate swap Other current liabilities $ (83 ) $ — Interest rate swap Other long-term liabilities $ (17 ) $ — |
Gain (Loss) of Derivative Instruments in Statement of Operations | The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended December 28, 2019 and December 29, 2018 , respectively (in thousands): Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance Effective Portion Recorded In AOCI Effective Portion Reclassified From AOCI Into Income AOCI Balance Forward contracts & swaps Cost of sales $ 1,479 $ 1,533 $ (683 ) $ 2,329 Interest rate swap Interest expense — (71 ) (1 ) (72 ) Total $ 1,479 $ 1,462 $ (684 ) $ 2,257 Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance Effective Portion Recorded In AOCI Effective Portion Reclassified From AOCI Into Income AOCI Balance Forward contracts & swaps Cost of sales $ 2,061 $ (1,266 ) $ 383 $ 1,178 Interest rate swap Interest expense 19 (1 ) (5 ) 13 Total $ 2,080 $ (1,267 ) $ 378 $ 1,191 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the fair value of assets (liabilities) of the Company’s derivatives that are required to be measured on a recurring basis as of December 28, 2019 and June 29, 2019 (in thousands): December 28, 2019 Level 1 Level 2 Level 3 Total Fair Value Financial Assets: Interest rate swaps $ — $ 6 $ — $ 6 Foreign currency forward contracts $ — $ 3,110 $ — $ 3,110 Financial Liabilities: Interest rate swap $ — $ (100 ) $ — $ (100 ) June 29, 2019 Level 1 Level 2 Level 3 Total Fair Value Financial Assets: Interest rate swaps $ — $ 2 $ — $ 2 Foreign currency forward contracts & swaps $ — $ 3,232 $ — $ 3,232 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The components of acquired intangible assets are as follows (in thousands): December 28, 2019 Amortization Period in Years Gross Carrying Amount Accumulated Amortization Impairment Recognized Derecognition Favorable Lease per ASC 842 Net Carrying Amount Intangible assets: Favorable Lease Agreements 4 - 7 2,941 (2,284 ) — (657 ) — Total $ 2,941 $ (2,284 ) $ — $ (657 ) $ — June 29, 2019 Amortization Period in Years Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount Intangible assets: Non-Compete Agreements 3 - 5 $ 568 $ (568 ) $ — $ — Customer Relationships 10 4,803 (2,311 ) (2,492 ) — Favorable Lease Agreements 4 - 7 2,941 (2,284 ) — 657 Total $ 8,312 $ (5,163 ) $ (2,492 ) $ 657 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Asset and Liability | Contract Balances A contract asset is recognized when the Company has recognized revenue, but has not issued an invoice for payment. Contract assets are classified separately on the condensed consolidated balance sheet and transferred to receivables when the right to payment becomes unconditional. The following table summarizes the activity in the Company’s contract assets during the six months ended December 28, 2019 (in thousands): Contract Assets Beginning balance, June 29, 2019 $ 22,161 Revenue recognized 219,144 Amounts collected or invoiced (224,234 ) Ending balance, September 28, 2019 $ 17,071 |
Disaggregation of Revenue | Disaggregation of Revenue The following table presents the Company’s revenue disaggregated for the three and six months ended December 28, 2019 (in thousands): EMS Revenue Recognition Three Months Ended Six Months Ended December 28, 2019 December 29, 2018 December 28, 2019 December 29, 2018 Over-Time $ 115,118 $ 122,137 $ 219,144 $ 248,518 Point-in-Time 1,604 900 2,863 1,991 Total $ 116,722 $ 123,037 $ 222,007 $ 250,509 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Dec. 28, 2019 | |
Leases [Abstract] | |
Lease, Cost | The components of lease cost for the three and six months ended December 28, 2019 were (in thousands): Lease cost Classification Three-Month Period Ended Six-Month Period Ended Operating lease cost Cost of sales $ 1,161 $ 2,319 Operating lease cost Selling, general and administrative expenses 331 598 Total lease cost $ 1,492 $ 2,917 |
Assets and Liabilities, Lessee | Amounts reported in the Consolidated Balance Sheet as of December 28, 2019 were (in thousands, except weighted average lease term and discount rate): December 28, 2019 Operating Leases: Operating lease right of use assets $ 14,876 Operating lease liabilities (1) 14,329 Weighted-average remaining lease term (in years) Operating leases 6.29 Weighted-average discount rate Operating leases 4.1 % (1) The current portion of the total operating lease liabilities of $4.5 million is classified under Other Current Liabilities , resulting in $9.8 million classified under Operating Lease Liabilities in the Long-term Liabilities section of the condensed consolidated balance sheet. Other information related to leases was as follows (in thousands): Three-Month Period Ended Six-Month Period Ended December 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,180 $ 2,301 |
Lessee, Operating Lease, Liability, Maturity | Future lease payments under non-cancellable leases as of December 28, 2019 are as follows (in thousands): Fiscal Years Ending Operating Leases 2020 (1) $ 2,241 2021 3,970 2022 3,371 2023 2,597 2024 1,595 Thereafter 6,337 Total undiscounted lease payments 20,111 Less: present value discount 5,782 Total lease liabilities $ 14,329 (1) Represents estimated lease payments for the remaining six-month period ending June 27, 2020 . |
Schedule of Future Minimum Rental Payments for Operating Leases | As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 29, 2019 and under the previous lease accounting standard ASC 840, the aggregate future minimum payments under non-cancellable operating leases, as of June 29, 2019, are as follows (in thousands): Fiscal Years Ending Operating Leases 2020 $ 4,777 2021 3,563 2022 2,641 2023 1,866 2024 1,271 Thereafter 4,121 Total minimum lease payments $ 18,239 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Detail) - USD ($) $ in Thousands | 6 Months Ended | ||
Dec. 28, 2019 | Jun. 30, 2019 | Jun. 29, 2019 | |
Operating lease right-of-use assets, net | $ 14,876 | $ 17,200 | $ 0 |
Total lease liabilities | 14,329 | 16,200 | |
Prepaid Rent | $ 400 | ||
Derecognition Favorable Lease per ASC 842 | 700 | ||
Favorable Lease Agreements | |||
Derecognition Favorable Lease per ASC 842 | $ 657 |
Inventories (Components Of Inve
Inventories (Components Of Inventories) (Detail) - USD ($) $ in Thousands | Dec. 28, 2019 | Jun. 29, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 14,320 | $ 11,969 |
Work-in-process | 20,638 | 11,705 |
Raw materials and supplies | 75,186 | 76,757 |
Inventories | 110,144 | 100,431 |
Inventory Valuation Reserves | $ 11,900 | $ 10,000 |
Long-Term Debt (Detail)
Long-Term Debt (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Apr. 02, 2022 | Dec. 28, 2019 | Sep. 05, 2019 | Jun. 29, 2019 | Sep. 30, 2018 | Dec. 28, 2016 | Aug. 06, 2015 | |
Debt Disclosure [Line Items] | |||||||
Debt Instrument, Periodic Payment, Principal | $ 1,670,000 | ||||||
Line of Credit Facility, Amount Outstanding | 32,000,000 | $ 23,400,000 | |||||
Letters of Credit Outstanding, Amount | 400,000 | 400,000 | |||||
Additional availability of line of credit | 22,600,000 | 21,300,000 | |||||
2020 (1) | 3,769,000 | ||||||
2021 | 7,537,000 | ||||||
2022 | 2,917,000 | ||||||
2023 | 417,000 | ||||||
2024 | 32,018,000 | ||||||
Total debt | 46,658,000 | ||||||
Unamortized debt issuance costs | (45,000) | ||||||
Long-term debt, net of debt issuance costs | $ 46,613,000 | $ 5,000,000 | 11,300,000 | $ 35,000,000 | |||
Line of Credit | One-Month London Interbank Offered Rate | |||||||
Debt Disclosure [Line Items] | |||||||
Variable rate on line of credit facility (percent) | 1.50% | ||||||
Line of Credit | Federal Funds Rate | |||||||
Debt Disclosure [Line Items] | |||||||
Variable rate on line of credit facility (percent) | 1.50% | ||||||
Term Loan | |||||||
Debt Disclosure [Line Items] | |||||||
Long-term debt, net of debt issuance costs | $ 13,300,000 | ||||||
Equipment Term Loan | |||||||
Debt Disclosure [Line Items] | |||||||
Debt Instrument, Periodic Payment, Principal | 200,000 | ||||||
Long-term debt, net of debt issuance costs | $ 1,300,000 | $ 1,700,000 | $ 3,900,000 | ||||
Wells Fargo Bank | |||||||
Debt Disclosure [Line Items] | |||||||
Increase in revolving line of credit | $ 55,000,000 | ||||||
Debt Instrument, Basis Spread on Variable Rate, 1.75% | Line of Credit | Fixed Rate | |||||||
Debt Disclosure [Line Items] | |||||||
Variable rate on line of credit facility (percent) | 1.75% | ||||||
Debt Instrument, Basis Spread on Variable Rate, 2.00% | Line of Credit | Fixed Rate | |||||||
Debt Disclosure [Line Items] | |||||||
Variable rate on line of credit facility (percent) | 2.00% | ||||||
Debt Instrument, Basis Spread on Variable Rate, 2.25% | Line of Credit | Fixed Rate | |||||||
Debt Disclosure [Line Items] | |||||||
Variable rate on line of credit facility (percent) | 2.25% | ||||||
Minimum | |||||||
Debt Disclosure [Line Items] | |||||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 3.71% | 4.40% | |||||
Maximum | |||||||
Debt Disclosure [Line Items] | |||||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 3.80% | 5.50% | |||||
Subsequent Event [Member] | |||||||
Debt Disclosure [Line Items] | |||||||
Debt Instrument, Periodic Payment, Principal | $ 400,000 |
Trade Accounts Receivable Pur_2
Trade Accounts Receivable Purchase Programs (Detail) - USD ($) $ in Millions | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Jun. 29, 2019 | |
Receivables [Abstract] | |||
Account Purchase Agreement Maximum Aggregate Amount | $ 25 | ||
Trade Accounts Receivable Sold To Third Party | 35 | $ 41.1 | |
Accounts Receivable Factored To Banking Institutions | $ 1.7 | $ 1.7 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Sep. 30, 2017 | Dec. 28, 2019 | Jun. 29, 2019 | |
Income Tax Disclosure [Abstract] | |||
Toll Tax Liability | $ 0.4 | $ 0.8 | |
Estimated Federal And State Income Taxes And Potential Withholding Taxes | $ 0.8 | ||
Foreign tax credits related to future repatriations of earnings | 7.8 | ||
Gross potential research and development (R&D) tax credit | 9.4 | ||
Unrecognized tax benefits associated with federal tax credits | 4.1 | ||
Deferred Tax Assets, Tax Credit Carryforwards | $ 5.3 |
Earnings Per Share (Reconciliat
Earnings Per Share (Reconciliation Of Denominator And Number Of Antidilutive Common Share Awards Not Included In Diluted Earnings Per Share Calculation) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 824 | $ 1,589 | $ 2,376 | $ 3,182 |
Weighted average shares outstanding - basic | 10,760 | 10,760 | 10,760 | 10,760 |
Effect of dilutive common stock options (Shares) | 117 | 121 | 51 | 226 |
Weighted average shares outstanding - Diluted | 10,877 | 10,881 | 10,811 | 10,986 |
Net income per share—diluted | $ 0.08 | $ 0.15 | $ 0.22 | $ 0.30 |
Net income per share—diluted | $ 0.08 | $ 0.15 | $ 0.22 | $ 0.29 |
Antidilutive options not included in diluted earnings per share (Shares) | 725 | 1,035 | 725 | 793 |
Share-Based Compensation (Detai
Share-Based Compensation (Detail) - USD ($) | Jul. 25, 2019 | Jul. 27, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized Share-based Compensation Expense | $ 300,000 | $ 300,000 | ||||
Unrecognized Share-based Compensation, Period for Recognition | 1 year 9 months 18 days | |||||
Stock Appreciation Rights (SARs) [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
SARs Granted | 170,000 | 161,250 | ||||
Strike Price | $ 4.93 | $ 8.17 | ||||
Fair Value | $ 1.23 | $ 2.27 | ||||
Share-based Compensation Expense | $ 67,000 | $ 106,000 | $ 141,000 | $ 274,000 |
Commitments And Contingencies (
Commitments And Contingencies (Detail) - USD ($) | Dec. 28, 2019 | Jun. 29, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Warranty reserve | $ 11,000 | $ 22,000 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | Nov. 06, 2019 | |
Derivative [Line Items] | |||||
Derivative, Notional Amount | $ 25.8 | $ 25.8 | |||
Foreign currency forward contracts entered | 6.3 | $ 6.3 | |||
Foreign currency forward contracts settled | 7.2 | $ 6.7 | 13.9 | $ 12 | |
Derivative, Fixed Interest Rate | 1.70% | ||||
Net amount of existing losses expected to be reclassified into earnings within the next 12 months | $ 2.3 | $ 2.3 | |||
Line of Credit | |||||
Derivative [Line Items] | |||||
Derivative, Fixed Interest Rate | 1.67% |
Schedule of Derivative Instrume
Schedule of Derivative Instruments (Detail) - USD ($) $ in Thousands | Dec. 26, 2020 | Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Dec. 28, 2019 |
Derivative [Line Items] | |||||
Derivative, Notional Amount | $ 25,800 | ||||
Subsequent Event [Member] | |||||
Derivative [Line Items] | |||||
Derivative, Fair Value, Net | $ 488 | $ 516 | $ 929 | $ 1,177 | |
Subsequent Event [Member] | Mexico, Pesos | |||||
Derivative [Line Items] | |||||
Derivative, Notional Amount | 132,773 | 141,173 | 138,213 | 146,613 | |
Subsequent Event [Member] | United States of America, Dollars | |||||
Derivative [Line Items] | |||||
Derivative, Notional Amount | $ 6,241 | $ 6,729 | $ 6,257 | $ 6,553 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Summarized Fair Value Of Derivative Instruments In Consolidated Balance Sheets) (Detail) - USD ($) $ in Thousands | Dec. 28, 2019 | Jun. 29, 2019 |
Forward Contracts and swaps | Other Current Assets | ||
Derivative Instruments [Line Items] | ||
Foreign currency forward contracts, Asset Fair Value | $ 3,110 | $ 2,912 |
Forward Contracts and swaps | Other Long Term Assets | ||
Derivative Instruments [Line Items] | ||
Foreign currency forward contracts, Asset Fair Value | 0 | 320 |
Interest Rate Swap [Member] | Other Current Assets | ||
Derivative Instruments [Line Items] | ||
Foreign currency forward contracts, Asset Fair Value | 6 | 2 |
Interest Rate Swap [Member] | Other Current Liabilities | ||
Derivative Instruments [Line Items] | ||
Foreign currency forward contracts, Liability Fair Value | (83) | 0 |
Interest Rate Swap [Member] | Other Long Term Liabilities | ||
Derivative Instruments [Line Items] | ||
Foreign currency forward contracts, Liability Fair Value | $ (17) | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Gain (Loss) Of Derivative Instruments In Statement Of Operations) (Detail) - Designated As Hedging Instrument - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Derivatives used in Net Investment Hedge, Net of Tax [Roll Forward] | ||||
AOCI Balance, Period Start | $ 1,479 | $ 2,080 | $ 2,426 | $ (969) |
Effective Portion Recorded In AOCI | 1,462 | (1,267) | 1,421 | 1,250 |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (684) | 378 | (1,590) | 910 |
AOCI Balance, Period End | 2,257 | 1,191 | 2,257 | 1,191 |
Forward Contracts and swaps | ||||
Derivatives used in Net Investment Hedge, Net of Tax [Roll Forward] | ||||
AOCI Balance, Period Start | 1,479 | 2,061 | 2,424 | (988) |
Effective Portion Recorded In AOCI | 1,533 | (1,266) | 1,492 | 1,249 |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (683) | 383 | (1,587) | 917 |
AOCI Balance, Period End | 2,329 | 1,178 | 2,329 | 1,178 |
Interest Rate Swap [Member] | ||||
Derivatives used in Net Investment Hedge, Net of Tax [Roll Forward] | ||||
AOCI Balance, Period Start | 0 | 19 | 2 | 19 |
Effective Portion Recorded In AOCI | (71) | (1) | (71) | 1 |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (1) | (5) | (3) | (7) |
AOCI Balance, Period End | $ (72) | $ 13 | $ (72) | $ 13 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets And Liabilities Measured At Fair Value On Recurring Basis) (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 28, 2019 | Jun. 29, 2019 | |
Forward Contracts and swaps | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | $ 3,110 | $ 3,232 |
Forward Contracts and swaps | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 0 | 0 |
Forward Contracts and swaps | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 3,110 | 3,232 |
Forward Contracts and swaps | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 0 | 0 |
Interest Rate Swap [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 6 | 2 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 100 | |
Interest Rate Swap [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 0 | 0 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 0 | |
Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 6 | 2 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 100 | |
Interest Rate Swap [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets, Fair Value Disclosure | 0 | $ 0 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | $ 0 | |
Debt Instrument, Basis Spread on Variable Rate, 2.00% | Fixed Rate | Line of Credit | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Variable rate on line of credit facility (percent) | 2.00% |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Dec. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||
Amortization of Intangible Assets | $ 0 | $ 196,000 | $ 0 | $ 426,000 | ||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Gross Carrying Amount | 2,941,000 | $ 8,312,000 | 2,941,000 | |||
Accumulated Amortization | (2,284,000) | (5,163,000) | (2,284,000) | |||
Impairment of Intangible Assets, Finite-lived | (2,492,000) | $ (2,500,000) | 0 | |||
Derecognition Favorable Lease per ASC 842 | (700,000) | |||||
Net Carrying Amount | 0 | 657,000 | $ 0 | |||
Non-Compete Agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Gross Carrying Amount | 568,000 | |||||
Accumulated Amortization | (568,000) | |||||
Impairment of Intangible Assets, Finite-lived | 0 | |||||
Net Carrying Amount | 0 | |||||
Customer Relationships | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Amortization Period in Years | 10 years | |||||
Gross Carrying Amount | 4,803,000 | |||||
Accumulated Amortization | (2,311,000) | |||||
Impairment of Intangible Assets, Finite-lived | (2,492,000) | |||||
Net Carrying Amount | 0 | |||||
Favorable Lease Agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Gross Carrying Amount | 2,941,000 | 2,941,000 | $ 2,941,000 | |||
Accumulated Amortization | (2,284,000) | (2,284,000) | (2,284,000) | |||
Impairment of Intangible Assets, Finite-lived | 0 | 0 | ||||
Derecognition Favorable Lease per ASC 842 | (657,000) | |||||
Net Carrying Amount | $ 0 | $ 657,000 | $ 0 | |||
Minimum | Non-Compete Agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Amortization Period in Years | 3 years | |||||
Minimum | Favorable Lease Agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Amortization Period in Years | 4 years | |||||
Maximum | Non-Compete Agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Amortization Period in Years | 5 years | |||||
Maximum | Favorable Lease Agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Amortization Period in Years | 7 years |
Revenue Contract with Customer,
Revenue Contract with Customer, Asset and Liability (Detail) $ in Thousands | 6 Months Ended |
Dec. 28, 2019USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Beginning balance, June 30, 2019 | $ 22,161 |
Revenue recognized | 219,144 |
Amounts collected or invoiced | (224,234) |
Ending balance, September 28, 2019 | $ 17,071 |
Revenue Disaggregation of Reven
Revenue Disaggregation of Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 116,722 | $ 123,037 | $ 222,007 | $ 250,509 |
Over-Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 115,118 | 122,137 | 219,144 | 248,518 |
Point-in-Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 1,604 | $ 900 | $ 2,863 | $ 1,991 |
Leases (Detail)
Leases (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended |
Dec. 28, 2019USD ($) | Dec. 28, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Lease, Cost | $ 1,492 | $ 2,917 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Operating Lease, Term of Contract | 1 year | 1 year |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Operating Lease, Term of Contract | 12 years | 12 years |
Cost of Sales | ||
Lessee, Lease, Description [Line Items] | ||
Operating Lease, Cost | $ 1,161 | $ 2,319 |
Selling, General and Administrative Expenses | ||
Lessee, Lease, Description [Line Items] | ||
Operating Lease, Cost | $ 331 | $ 598 |
Assets and Liabilities, Lessee
Assets and Liabilities, Lessee (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2019 | Dec. 28, 2019 | Jun. 30, 2019 | Jun. 29, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease right-of-use assets, net | $ 14,876 | $ 14,876 | $ 17,200 | $ 0 |
Total lease liabilities | $ 14,329 | $ 14,329 | $ 16,200 | |
Operating Lease, Weighted Average Remaining Lease Term | 6 years 3 months 14 days | 6 years 3 months 14 days | ||
Operating Lease, Weighted Average Discount Rate, Percent | 4.10% | 4.10% | ||
Operating Lease, Payments | $ 1,180 | $ 2,301 | ||
Other Current Liabilities | ||||
Lessee, Lease, Description [Line Items] | ||||
Total lease liabilities | 4,500 | 4,500 | ||
Other Long Term Liabilities | ||||
Lessee, Lease, Description [Line Items] | ||||
Total lease liabilities | $ 9,800 | $ 9,800 |
Lessee, Operating Lease, Liabil
Lessee, Operating Lease, Liability, Maturity (Detail) - USD ($) $ in Thousands | Dec. 28, 2019 | Jun. 30, 2019 |
Lessee, Operating Lease, Liability, Maturity [Abstract] | ||
2020 (1) | $ 2,241 | |
2021 | 3,970 | |
2022 | 3,371 | |
2023 | 2,597 | |
2024 | 1,595 | |
Thereafter | 6,337 | |
Total undiscounted lease payments | 20,111 | |
Less: present value discount | 5,782 | |
Total lease liabilities | $ 14,329 | $ 16,200 |
Schedule of Future Minimum Rent
Schedule of Future Minimum Rental Payments for Operating Leases (Detail) $ in Thousands | Jun. 29, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 4,777 |
2021 | 3,563 |
2022 | 2,641 |
2023 | 1,866 |
2024 | 1,271 |
Thereafter | 4,121 |
Total minimum lease payments | $ 18,239 |