) Revenue From Contracts With Customers

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 as a result of applying ASC

606

have been reflected within those respective financial statements.

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

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 now calculates 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 which is comprised of (i) a net change for Engineering Technologies of

$0.7

million in revenues offset by cost of sales increase of

$0.6

million; and (ii) a

$1.5

million adjustment for accrued rebates in the Food Service Equipment segment. The details of the adjustments to retained earnings upon adoption on

June 30, 2018

as well as the effects on the consolidated balance sheet as of

June 30, 2018,

as if ASC

606

had been adopted in our

2018

fiscal year are as follows:

	Cumulative
(in thousands)	Effect
Net sales	$	(799	)
Cost of Sales		(574	)
Income tax expense		340
Net Loss		(1,033	)

Effective Date	Reported June 30, 2018		ASC 606 Adjustments			As Adjusted July 1, 2018
Inventories	$	127,223	$	(574	)	$	126,649
Accounts receivable		134,228		703			134,931
Accrued liabilities		65,575		1,502			67,077
Deferred income taxes		26,816		(340	)		26,476
Retained earnings		761,430		(1,033	)		760,397

Note that above amounts as of

June 30

are before any restatement of balances to discontinued operations.

The following tables reconcile the balances as presented as of and for the

three

and

nine

months ended

March

31,

2019

exclusive of the cumulative effect adjustment presented above to the balances prior to the adjustments made to implement the new revenue recognition standard for the same period (in thousands):

	Three Months Ended March 31, 2019
	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
Net sales	$	193,771	$	(3,324	)	$	190,447
Cost of sales		131,981		(2,460	)		129,521
Gross profit		61,790		(864	)		60,926
Provision for income taxes		3,833		(250	)		3,583
Income from continuing operations		7,304		(614	)		6,690
Income (loss) from discontinued operations, net of income taxes		18,965		-			18,965
Net income (loss)	$	26,269	$	(614	)	$	25,655

	Nine Months Ended March 31, 2019
	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
Net sales	$	582,380	$	(9,179	)	$	573,201
Cost of sales		384,402		(7,742	)		376,660
Gross profit		197,978		(1,437	)		196,541
Provision for income taxes		13,535		(416	)		13,119
Income from continuing operations		34,071		(1,021	)		33,050
Income (loss) from discontinued operations, net of income taxes		21,450		195			21,645
Net income (loss)	$	55,521	$	(826	)	$	54,695

As of March 31, 2019	As Presented		Impact o f ASC 606			Balances Without adoption of ASC 606
ASSETS
Prepaid Expenses	$	27,115	$	(10,407	)	$	16,708
Inventories		103,383		7,742			111,125

LIABILITIES
Income taxes payable		4,762		84			4,846
Retained earnings		808,417		402			808,819

Disaggregation of Revenue from Contracts with Customers

The following table presents revenue disaggregated by product line and segment (in thousands):

	Three Months Ended
Revenue by Product Line	March 31, 2019		March 31, 2018
Refrigeration	$	46,883	$	52,245
Merchandising & Display		7,662		8,814
Pumps		9,321		9,822
Total Food Service Equipment		63,866		70,881

Engraving Services		34,505		30,375
Engraving Products		2,630		3,374
Total Engraving		37,135		33,749

Engineering Technologies Components		27,467		23,426

Electronics		50,197		51,213

Hydraulics Cylinders and System		15,106		12,878

Total Revenue by Product Line	$	193,771	$	192,147

The following table presents revenue disaggregated by product line and segment (in thousands):

	Nine Months Ended
Revenue by Product Line	March 31, 2019		March 31, 2018
Refrigeration	$	153,955		168,562
Merchandising & Display		25,638		25,720
Pumps		25,262		27,571
Total Food Service Equipment		204,855		221,853

Engraving Services		104,159		90,499
Engraving Products		7,443		9,958
Total Engraving		111,602		100,457

Engineering Technologies Components		71,818		65,621

Electronics		154,347		144,082

Hydraulics Cylinders and System		39,758		34,969

Total Revenue by Product Line	$	582,380		566,982

The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):

	Three Months Ended		Nine Months Ended
Net sales	March 31, 2019		March 31, 2019
United States	$	126,910		381,615
Asia Pacific		25,608		81,649
EMEA (1)		37,271		105,775
Other Americas		3,982		13,341
Total	$	193,771		582,380

(

)

EMEA consists primarily of Europe, Middle East and S. Africa.

The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands):

	Three Months Ended
Timing of Revenue Recognition	March 31, 2019		March 31, 2018
Products and services transferred at a point in time	$	184,950	$	187,970
Products transferred over time		8,821		4,177
Net Sales	$	193,771	$	192,147

	Nine Months Ended
Timing of Revenue Recognition	March 31, 2019		March 31, 2018
Products and services transferred at a point in time	$	360,948	$	555,923
Products transferred over time		21,432		11,059
Net Sales	$	582,380	$	566,982

Contract Balances

Contract assets represent sales recognized in excess of billings related to work completed but

not

yet shipped for which revenue is recognized over time. Contract assets are recorded as accounts receivable.

Contract liabilities are customer deposits for which revenue has

not

been recognized. Current contract liabilities are recorded as accrued expenses.

The following table provides information about contract assets and liability balances as of

March 31, 2019 (

in thousands):

	Balance at Beginning of Period		Additions		Deductions		Balance at End of Period
Nine months ended March 31, 2019
Contract assets:
Accounts receivable	$	5,655	$	23,500	$	24,844	$	4,311
Unbilled services		5,904		13,708		8,938		10,674
Contract liabilities:
Customer deposits		2,552		4,612		1,881		5,283

During the

three

and

nine

months ended

March 31, 2019,

we recognized the following revenue as a result of changes in the contract liability balances (in thousands):

	March 31, 2019
Revenue recognized in the period from:	Three months ended		Nine months ended
Amounts included in the contract liability balance at the beginning of the period	$	1,378	$	1,881

The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets.

When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognition criteria have been met.