XML 18 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Note 1 - Management Statement
 3 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Business Description and Basis of Presentation [Text Block]
1
)     
Management Statement
 
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the results of operations for the
three
months ended
September 30, 2018
and
2017,
the cash flows for the
three
months ended
September 30, 2018
and
2017
and the financial position of Standex International Corporation (“Standex”, the “Company”, “we”, “us”, or “our”), at
September 30, 2018.
The interim results are
not
necessarily indicative of results for a full year. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information
not
misleading. The unaudited condensed consolidated financial statements and notes do
not
contain information which would substantially duplicate the disclosures contained in the audited annual consolidated financial statements and notes for the year ended
June 30, 2018.
The condensed consolidated balance sheet at
June 30, 2018
presented herein 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 contained herein should be read in conjunction with the Annual Report on Form
10
-K and in particular the audited consolidated financial statements for the year ended
June 30, 2018.
Certain prior period amounts have been reclassified to conform to the current period presentation. Unless otherwise noted, references to years are to the Company’s fiscal years.
 
The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. We evaluated subsequent events through the date and time our unaudited condensed consolidated financial statements were issued.
 
In
March 2017,
the FASB issued ASU
2017
-
07,
Compensation-Retirement Benefits (Topic
715
): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line items as other employee compensation costs arising from services rendered during the period. Other components of the net periodic benefit cost are to be stated separately from service cost and outside of operating income. This guidance was effective for fiscal years beginning after
December 15, 2017 (
fiscal
2019
for the Company) and interim periods within those annual periods. The amendment was applied retrospectively. As required for this retrospective adoption, the Company reclassified net benefit costs of
$0.2
million from cost of sales and
$0.4
million from the selling, general, and administrative expenses to other expense non-operating in the Consolidated Statement of Operations for the quarter ended
September 30, 2017.
 
Effective
July 1, 2018,
the Company adopted the new accounting standard ASU
No.
2014
-
09,
“Revenue from Contracts with Customers" (ASC
606
) using the modified retrospective method to contracts that were
not
completed as of
June 30, 2018.
We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings, whereby the cumulative impact of all prior periods is recorded in retained earnings or other impacted balance sheet line items upon adoption. The comparative information has
not
been adjusted and continues to be reported under ASC
605.
The impact on the Company’s consolidated income statements, balance sheets, equity or cash flows as of the adoption date for the fiscal quarter ended
September 30, 2018
as a result of applying ASC
606
have been reflected within those respective financial statements. The Company’s accounting policy has been updated to align with ASC
606.
 
Under the Company’s historical accounting policies, non-developmental long-term contracts were recognized when the goods were transferred to the customer. Upon adoption, contracts for highly customized customer products that have
no
alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin met the requirements for recognition over time under ASC
606.
Additionally, under the Company’s historical accounting policies, the Food Service Equipment segment estimated the rebate accrual based on a volume-related method for rebates. Under ASC
606,
the Company will calculate the rebate accrual on anticipated sales for the rebate period, rather than measurement of actual achievement of specific tiers.
 
Upon adoption, we recognized a reduction to retained earnings of
$1.0
million. The net change for Engineering Technologies will be approximately
$0.1
million after cost of sales of
$0.6
million and the Food Service Equipment group recorded a
$1.5
million adjustment for accrued rebates.
 
In pursuing our business strategy, we have divested certain businesses and recorded activities of these businesses as discontinued operations.  During the
first
quarter of
2019,
we decided to divest our Cooking Solutions Group which consists of
three
operating segments in order to focus its financial assets and managerial resources on its remaining portfolio of businesses.  The Company has concluded that all criteria of ASC
205
-
20
-
45
have been met as of
September 30
to classify the
three
operating segments as discontinued operations. 
 
Results of the Cooking Solutions Group in current and prior periods have been classified as discontinued in the Condensed Consolidated Financial Statements to exclude the results from continuing operations.
 
Recently Issued Accounting Pronouncements
 
In
November 2015,
the FASB issued ASC Update
2015
-
17,
Income Taxes (Topic
740
): Balance Sheet Classification of Deferred Taxes
, as part of its simplification initiatives. This update requires deferred tax liabilities and assets to be classified as non-current on the consolidated condensed balance sheet for fiscal years beginning after
December 
15,
 
2016,
and interim periods within those annual periods. Early application is permitted.  An entity can elect adoption prospectively or retrospectively to all periods presented.  We have adopted ASU
2015
-
17
prospectively.  As a result, we have presented all deferred tax assets and liabilities as noncurrent on our consolidated balance sheet as of
September 30, 2018.
There was
no
impact on our results of operations as a result of the adoption of ASU
2015
-
17.
 
In
February 2016,
the FASB issued ASU
2016
-
02,
Leases (Topic
842
)
. ASU
2016
-
02
increases transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. For leases with a term or
twelve
months or less, a lessee is permitted to make an accounting policy election by class of underlying asset
not
to recognize lease assets and liabilities. ASU
2016
-
02
is effective for fiscal years beginning after
December 15, 2018.
Due to the materiality of the underlying leases subject to the new guidance, we anticipate the adoption will have a material impact on the Company’s consolidated financial statements, however are unable to quantify that effect until our analysis is complete.
 
In
January 2017,
the FASB issued ASU
2017
-
04,
Simplifying the Test for Goodwill Impairment
, which simplifies the accounting for goodwill impairments by eliminating step
two
from the goodwill impairment test.  Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.  ASU
2017
-
04
also clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity's testing of reporting units for goodwill impairment. It further clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.  ASU
2017
-
04
is effective for annual or any interim goodwill impairment tests in fiscal years beginning after
December 15, 2019. 
The Company is currently assessing the potential impact of the adoption of ASU
2017
-
04
on our consolidated financial statements.
 
In
August 2017,
the FASB issued ASU
2017
-
12,
Derivatives and Hedging (Topic
815
); Targeting Improvements to Accounting for Hedging Activities
, which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance.  The new guidance requires additional disclosures including cumulative basis adjustments for fair value hedges and the effect of hedging on individual income statement line items.  This guidance is effective for fiscal years beginning after
December 15, 2018 (
fiscal
2020
for the Company), and interim periods within those fiscal years.  The amendment is to be applied prospectively.  The Company is in the preliminary stages of assessing the potential impact of the adoption of ASU
2017
-
12
on our consolidated financial statements. 
 
As of
July 1, 2018,
the Company adopted ASU
No.
2017
-
07,
Compensation-Retirement Benefits (Topic
715
): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
. This new guidance required the service cost component of net periodic benefit cost to be presented in the same income statement line items as other employee compensation costs arising from services rendered during the period. Other components of the net periodic benefit cost are to be stated separately from service cost and outside of operating income. The retrospective adoption this ASU resulted in the reclassification of net benefit costs of
$0.2
million from cost of sales and
$0.4
million from the selling, general, and administrative expenses to other expense non-operating in the Consolidated Statement of Operations for the quarter ended
September 30, 2017.