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Summary of Significant Accounting Policies | 12 Months Ended
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Sep. 30, 2019
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies A. DESCRIPTION OF BUSINESS SIFCO Industries, Inc. and its subsidiaries are engaged in the production of forgings and machined components primarily in the Aerospace and Energy ("A&E") market. The Company’s operations are conducted in a single business segment, "SIFCO" or the "Company." B. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The U.S. dollar is the functional currency for all the Company’s U.S. operations and its Irish subsidiary. For these operations, all gains and losses from completed currency transactions are included in income. The functional currency for the Company's other non-U.S. subsidiaries is the Euro. Assets and liabilities are translated into U.S. dollars at the rates of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange. Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity. C. CASH EQUIVALENTS The Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. A substantial majority of the Company’s cash and cash equivalent bank balances exceed federally insured limits as of September 30, 2018. D. CONCENTRATIONS OF CREDIT RISK Receivables are presented net of allowance for doubtful accounts of $592 and $520 at September 30, 2019 and 2018, respectively. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company writes off accounts receivable when they become uncollectible. During fiscal 2019 and 2018, $33 and $186, respectively, of accounts receivable were written off against the allowance for doubtful accounts. Bad debt expense totaled $39 and $415 in fiscal 2019 and fiscal 2018, respectively. Most of the Company’s receivables represent trade receivables due from manufacturers of turbine engines and aircraft components as well as turbine engine overhaul companies located throughout the world, including a significant concentration of U.S. based companies. In fiscal 2019, 44% of the Company’s consolidated net sales were from three of its largest customers; and 50% of the Company's consolidated net sales were from the four largest customers and their direct subcontractors, which individually accounted for 14%, 13%, 12% and 11%, of consolidated net sales, respectively. In fiscal 2018, 31% of the Company’s consolidated net sales were from two of its largest customers; and 38% of the Company's consolidated net sales were from three of the largest customers and their direct subcontractors which individually accounted for 14%, 12% and 12%, of consolidated net sales, respectively. Other than what has been disclosed, no other single customer or group represented greater than 10% of total net sales in fiscal 2019 and 2018. At September 30, 2019, two of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% of the total net accounts receivable; and three of the largest customers and direct subcontractors had outstanding net accounts receivable which accounted for 15%, 14%, and 12% of total net accounts receivable, respectively. At September 30, 2018, three of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10% of total net accounts receivable; and five of the largest customers and direct subcontractors had outstanding net accounts receivable which accounted for 16%, 14% , 12% , 11%, and 11% of total net accounts receivable, respectively. The Company performs ongoing credit evaluations of its customers’ financial conditions. The Company believes its allowance for doubtful accounts is sufficient based on the credit exposures outstanding at September 30, 2019. E. INVENTORY VALUATION For a portion of the Company's inventory, cost is determined using the last-in, first-out (“LIFO”) method. For approximately 27% and 54% of the Company’s inventories at September 30, 2019 and 2018, respectively, the LIFO method is used to value the Company’s inventories. The first-in, first-out (“FIFO”) method is used to value the remainder of the Company’s inventories, which are stated at the lower cost or net realizable value. The Company maintains allowances for obsolete and excess inventory. The Company evaluates its allowances for obsolete and excess inventory each quarter and requires at a minimum that reserves be established based on an analysis of the age of the inventory. In addition, if the Company identifies specific obsolescence, other than that identified by the aging criteria, an additional reserve will be recognized. Specific obsolescence and excess reserve requirements may arise due to technological or market changes or based on cancellation of an order. The Company’s reserves for obsolete and excess inventory were $3,335 and $3,979 at September 30, 2019 and 2018, respectively. F. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is generally computed using the straight-line method. Depreciation is provided in amounts sufficient to amortize the cost of the assets over their estimated useful lives. Depreciation provisions are based on estimated useful lives: (i) buildings, including building improvements - 5 to 40 years; (ii) machinery and equipment, including office and computer equipment - 3 to 20 years; (iii) software - 3 to 7 years (included in machinery and equipment); and (iv) leasehold improvements - remaining life or length of the lease, whichever is less (included in buildings). The Company's property, plant and equipment assets by major asset class at September 30 consist of:
|  | 2019 |  | 2018
Property, plant and equipment: |  |  |  |
Land |  | $ | 964 |  |  | $ | 995 |
Buildings |  | 15,805 |  |  | 15,365 |
Machinery and equipment |  | 82,379 |  |  | 76,465 |
Total property, plant and equipment |  | 99,148 |  |  | 92,825 |
Less: Accumulated depreciation |  | 59,538 |  |  | 57,435 |
Property, plant and equipment, net |  | $ | 39,610 |  |  | $ | 35,390 |
The (gain) loss on disposal of operating assets is included as a separate line item in the accompanying consolidated statements of operations. Depreciation expense was $5,877 and $6,754 in fiscal 2019 and 2018, respectively. G. ASSET IMPAIRMENT The Company reviews the carrying value of its long-lived assets ("asset groups"), including property, plant and equipment, when events and circumstances indicate a triggering event has occurred. This review is performed using estimates of future undiscounted cash flows, which include proceeds from disposal of assets. Under the Accounting Standard Codification ("ASC") 360 ("Topic 360"), if the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. The Company experienced three triggering events in fiscal 2019 requiring the review of two asset groups to determine if the carrying value of each asset group is recoverable. Certain qualitative factors were triggered at its Orange, California ("Orange") location. See Note 10, Commitments and Contingencies, of the consolidated financial statements, for further discussion on the evaluation of its long-lived assets as it relates to the Orange asset group. The Maniago, Italy ("Maniago") location triggered certain qualitative factors, which led to an assessment of its long-lived assets as of May 31, 2019 and September 30, 2019, respectively, due to the continued challenges on operating income trends for the respective asset group. The results of management's analysis on the asset group's recoverability at interim and at year-end, respectively, indicated that the long-lived assets and definite lived intangible assets were recoverable and did not require further review for impairment. H. ASSETS HELD FOR SALE The assets held for sale at September 30, 2019 and 2018, were $0 and $35, respectively. The balance remaining at September 30, 2018 relates to the Alliance building and certain machinery and equipment, which the Company sold in the first quarter of fiscal 2019 for a gain on sale of asset within the consolidated statements of operations of $282. In October 2018, the Company executed a purchase agreement and finalized the sale transaction with a buyer for the Alliance building and land. The Company received cash proceeds for both the building and machinery and equipment, less cost to sell, of approximately $317, which is recorded as part of a gain on disposal and impairment of asset within the consolidated statements of operations. I. GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is subject to impairment testing if triggered in the interim, and if not, on an annual basis. The Company has selected July 31 as the annual impairment testing date. With the adoption of Accounting Standard Update ("ASU") 2017-04, Step 2 has been eliminated from the goodwill impairment test. The first step of the goodwill impairment test compares the fair value of a reporting unit (as defined) with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired. However, if the carrying amount exceeds the fair value, the Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. See Note 3, Goodwill and Intangibles, of the consolidated financial statements for further discussion of the July 31, 2019 and 2018 annual impairment test results and its interim goodwill test performed as of May 31, 2019 for one of its reporting units. Intangible assets consist of identifiable intangibles acquired or recognized in the accounting for the acquisition of a business and include such items as a trade name, a non-compete agreement, below market lease, customer relationships and order backlog. Intangible assets are amortized over their useful lives ranging from one year to ten years. Identifiable intangible assets assessment for impairment is evaluated when events and circumstances warrant such a review, as noted within Note 1, Summary of Significant Accounting Policies - Asset Impairment, of the consolidated financial statements. J. NET LOSS PER SHARE The Company’s net loss per basic share has been computed based on the weighted-average number of common shares outstanding. Due to the net loss for each reporting period, zero restricted shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive. The dilutive effect is as follows:
|  | September 30,
|  | 2019 |  | 2018
Net loss |  | $ | (7,506 | ) |  | $ | (7,170 | )
Weighted-average common shares outstanding (basic and diluted) |  | 5,566 |  |  | 5,523 |
Net loss per share – basic and diluted: |  |  |  |
Net loss per share |  | $ | (1.35 | ) |  | $ | (1.30 | )
Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share |  | 196 |  |  | 144 |
K. REVENUE RECOGNITION SIFCO adopted Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers ("Topic 606" and the "revenue standard") using the modified retrospective method and applied those provisions to all open contracts on October 1, 2018. The Company recognizes revenue in the following manner using the five-step revenue recognition model. A contract exists when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when performance obligations under the terms of the contract with a customer of the Company are satisfied. A portion of the Company's contracts are from purchase orders ("PO's"), which continue to be recognized as of a point in time when products are shipped from the Company's manufacturing facilities or at a later time when control of the products transfers to the customer. Revenue was previously recognized for certain long-term agreements ("LTA's"), firm fixed pricing agreements, and PO's at the point in time when the shipping terms were satisfied. Under the revenue standard, the Company now recognizes certain revenue over time as it satisfies the performance obligations because the conditions of transfer of control to the applicable customer are as follows:
• | Certain military contracts, which support providing specialized or unique goods to the U.S. government with no alternative use, include provisions within the contract that are subject to the Federal Acquisition Regulation ("FAR"). The FAR provision allows the customer to unilaterally terminate the contract for convenience and requires the customer to pay the Company for costs incurred plus reasonable profit margin and take control of any work in process.
• | For certain commercial contracts involving customer-specific products with no alternative use, the contract may fall under the FAR clause provisions noted above for military contracts or may include certain provisions within their contract that the customer controls the work in process based on contractual termination clauses or restrictions of the Company's use of the product and the Company possesses a right to payment for work performed to date plus reasonable profit margin.
As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company elected to use the cost to cost input method of progress based on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts. Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring goods. An accounting policy election to exclude from transaction price was made for sales, value add, and other taxes the Company collects concurrent with revenue-producing activities when applicable. The Company has elected to recognize incremental costs incurred to obtain contracts, which primarily represent commissions paid to third party sales agents where the amortization period would be less than one year, as selling, general and administrative expenses in the consolidated condensed statements of operations as incurred. The Company elected a practical expedient under Topic 606 to not adjust the promised amount of consideration for the effects of any significant financing component where the Company expects, at contract inception, that the period between when the Company transfers a promised good to a customer and when the customer pays for that good will be one year or less. Finally, the Company's policy is to exclude performance obligations resulting from contracts with a duration of one year or less from its disclosures related to remaining performance obligations. The amount of consideration to which the Company expects to be entitled in exchange for the goods is not generally subject to significant variations. The Company has elected to recognize the cost of freight and shipping when control of the products has transferred to the customer as an expense in cost of goods sold on the consolidated statements of operations, because those are costs incurred to fulfill the promise recognized, not a separate performance obligation. To the extent certain freight and shipping fees are charged to customers, the Company recognizes the amounts charged to customers as revenues and the related costs as an expense in cost of goods sold when control of the related products has transferred to the customer. Contracts are occasionally modified to account for changes in contract specifications, requirements, and pricing. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Substantially all of the Company's contract modifications are for goods that are distinct from the existing contract. Therefore, the effect of a contract modification on the transaction price and the Company's measure of progress for the performance obligation to which it relates is generally recognized on a prospective basis. Contract Balances Contract assets on the consolidated balance sheets are recognized when a good is transferred to the customer and the Company does not have the contractual right to bill for the related performance obligations. In these instances, revenue recognized exceeds the amount billed to the customer and the right to payment is not solely subject to the passage of time. Amounts do not exceed their net realizable value. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payment from customers are received based on the terms established in the contract with the customer. L. CAPITAL LEASE OBLIGATIONS Capital leases are accounted for as the acquisition of an asset and the commitment of an obligation by the lessee and as a sale or financing by the lessor. All other leases are accounted for as operating leases. M. IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS On October 1, 2018, the Company adopted the revenue standard. The revenue standard introduces a five-step revenue recognition model in which a company should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. The revenue standard also requires disclosure sufficient to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments and assets recognized from the cost to obtain or fulfill a contract. For further discussion, see Note 6, Revenue, of the consolidated financial statements. With the adoption by the Company of the revenue standard and all related amendments using the modified retrospective method and applied those provisions to all open contracts. The Company recognized the cumulative effect by initially applying the revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of changes made to the balance sheet as of October 1, 2018 for the adoption of the revenue standard was as follows:
|  | Balance at September 30, 2018 |  | Effect of Accounting Change |  | Balance at October 1, 2018
Assets |  |  |  |  |  |
Contract asset |  | $ | — |  |  | $ | 10,140 |  |  | $ | 10,140 |
Inventory, net |  | 18,269 |  |  | (6,542) |  | 11,727 |
Liabilities & Shareholders' Equity |  |  |  |  |  |
Retained earnings |  | 37,097 |  |  | 3,598 |  |  | 40,695 |
As part of the cumulative effect of the accounting change made as it pertains to the inventory, net line, the impact includes a reduction to the Company's LIFO reserve in the amount of $508 and excess and obsolete reserve of $366. As noted in Note 2, Inventories, of the consolidated financial statements, a portion of the Company's inventory is on LIFO. The following tables reflect the changes to the financial statements line items as a result to the revenue standard. The adoption of the revenue standard did not have an impact on "net cash provided by operating activities" on the consolidated statement of cash flows as of September 30, 2019. Consolidated statement of operations for the year end September 30, 2019:
|  | Previous Accounting Method |  | Effect of Accounting Change |  | As Reported
Net Sales |  | $ | 112,090 |  |  | $ | 364 |  |  | $ | 112,454 |
Cost of Goods Sold |  | 102,276 |  |  | (459 | ) |  | 101,817 |
Net loss |  | (8,329 | ) |  | 823 |  |  | (7,506 | )
Basic and diluted net loss per share |  | $ | (1.50 | ) |  | $ | 0.15 |  |  | $ | (1.35 | )
Consolidated balance sheet as of September 30, 2019:
|  | Previous Accounting Method |  | Effect of Accounting Change |  | As Reported
Assets |  |  |  |  |  |
Contract asset |  | $ | — |  |  | $ | 10,349 |  |  | $ | 10,349 |
Inventory, net |  | 16,592 |  |  | (6,083 | ) |  | 10,509 |
Liabilities & Shareholders' Equity |  |  |  |  |  |
Contract liabilities (included within accrued liabilities) |  | 537 |  |  | (155 | ) |  | 382 |
Deferred income taxes |  | 1,718 |  |  | — |  |  | 1,718 |
Retained earnings |  | 28,727 |  |  | 4,421 |  |  | 33,148 |
In March 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of the Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost," which was adopted by the Company on October 1, 2018. With the adoption of ASU 2017-07 on October 1, 2018, service cost is included in other employee compensation costs within operating income and is the only component that may be capitalized when applicable. The other components of net periodic benefit cost are presented separately outside of operating income. The Company retrospectively adopted ASU 2017-07 and reclassified prior-year amounts using a practical expedient that permits the usage of amounts disclosed in Note 8, Retirement Benefit Plans, of the consolidated financial statements. Results showed expense for fiscal 2019 and 2018 were reclassified from cost of sales and selling, general and administrative expenses, respectively, to other (income) expense, net and were not material to the consolidated statement of operations. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which amends certain cash flow issues which apply to all entities required to present a statement of cash flows. On October 1, 2018, the Company implemented provisions of ASU 2016-15 on a retrospective basis, which did not impact the consolidated statements of cash flows for the periods presented. N. IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842) Targeted Improvements," (collectively with ASU 2016-02, "Topic 842"), which amends ASU 2016-02 and provides new and (optional) transition method permitting the recognition of a cumulative effect adjustment to retained earnings on the date of adoption, rather than requiring retrospective restatement of prior periods. Topic 842's objective is to increase transparency and comparability among entities by recognizing lease right-of-use assets ("ROU") and lease liabilities except for short-term leases on the consolidated balance sheet and provide additional disclosure information about leasing arrangements. Topic 842 modifies the definition of a lease to clarify that an arrangement contains a lease when such arrangement conveys the right to control the use of an identified asset. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within the year of adoption. The Company adopted this new guidance on October 1, 2019 and has elected to apply a modified retrospective transition approach as permitted, which includes a number of optional practical expedients that can be applied. This approach applies to all leases that exist at or commence after the date of our initial application. The Company will not adjust comparative periods or make the new required lease disclosure prior to the effective date. SIFCO will elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, permits companies not to reassess prior conclusions about lease identification, lease classification and initial direct costs. SIFCO did not elect the hindsight practical expedient. The Company is in process of finalizing the design and implementation of internal controls, policies and processes to comply w ith the new standard. The adoption of Topic 842 will result in the recognition of ROU assets and lease liabilities of approximately $16,106 to $20,218 based on the lease portfolio as of October 1, 2019. The lease liability and the corresponding ROU asset primarily relate to one of its leased manufacturing buildings at its Orange location. The prospective impact on the consolidated statements of comprehensive loss under the new standard is substantially the same compared to the current lease accounting model and the impact to retained earnings will be minimal. The accounting for capital leases related to equipment, which are referred to as financing leases under the new standard, is substantially unchanged under the new standard and is not expected to have a material impact on our liquidity or consolidated statements of cash flows. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent updates. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance will replace the current incurred loss approach with an expected loss model. The new expected credit loss impairment model will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt instruments, net investments in leases, loan commitments and standby letters of credit. Upon initial recognition of the exposure, the expected credit loss model requires entities to estimate the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider historical information, current information and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating expected credit losses. ASU 2016-13 does not prescribe a specific method to make the estimate, so its application will require significant judgment. ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Subsequent to September 30, 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)," which defers the effective date for public filers that are considered small reporting companies ("SRC") as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since SIFCO is a SRC, the Company does not need to implement until October 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company's results within the consolidated statements of operations and financial condition. O. USE OF ESTIMATES Accounting principles generally accepted in the U.S. require management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the period in preparing these financial statements. Actual results could differ from those estimates. P. RESEARCH AND DEVELOPMENT Research and development costs are expensed as they are incurred. Research and development expenses were nominal in fiscal 2019 and 2018. Q. DEBT ISSUANCE COSTS Debt issuance costs are capitalized and amortized over the life of the related debt. Amortization of debt issuance costs is included in interest expense in the consolidated statements of operations. R. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss as shown on the consolidated balance sheets at September 30 are as follows:
| 2019 |  | 2018
Foreign currency translation adjustment, net of income tax benefit of $0 and $0, respectively | $ | (5,667 | ) |  | $ | (4,955 | )
Net retirement plan liability adjustment, net of income tax benefit of ($3,758) and ($3,758), respectively | (7,642 | ) |  | (3,674 | )
Total accumulated other comprehensive loss | $ | (13,309 | ) |  | $ | (8,629 | )
The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive loss, net of tax:
| Foreign Currency Translation Adjustment |  | Retirement Plan Liability Adjustment |  | Interest Rates Swap Adjustment |  | Accumulated Other Comprehensive Loss
Balance at September 30, 2017 | $ | (4,607 | ) |  | $ | (4,648 | ) |  | $ | 4 |  |  | $ | (9,251 | )
Other comprehensive income (loss) before reclassifications | (348 | ) |  | 333 |  |  | 19 |  |  | 4 |
Amounts reclassified from accumulated other comprehensive income (loss) | — |  |  | 641 |  |  | (23 | ) |  | 618 |
Net current-period other comprehensive loss | (348 | ) |  | 974 |  |  | (4 | ) |  | 622 |
Balance at September 30, 2018 | (4,955 | ) |  | (3,674 | ) |  | — |  |  | (8,629 | )
Other comprehensive loss before reclassifications | (712 | ) |  | (4,643 | ) |  | — |  |  | (5,355 | )
Amounts reclassified from accumulated other comprehensive income | — |  |  | 675 |  |  | — |  |  | 675 |
Net current-period other comprehensive loss | (712 | ) |  | (3,968 | ) |  | — |  |  | (4,680 | )
Balance at September 30, 2019 | $ | (5,667 | ) |  | $ | (7,642 | ) |  | $ | — |  |  | $ | (13,309 | )
The following table reflects the changes in accumulated other comprehensive loss related to the Company for September 30, 2019 and 2018:
|  | Amount reclassified from accumulated other comprehensive loss |  |
Details about accumulated other comprehensive loss components |  | 2019 |  | 2018 |  | Affected line item in the Consolidated Statement of Operations
Amortization of Retirement plan liability: |  |  |  |  |  |
Prior service costs |  | $ | — |  |  | $ | — |  |  | (1)
Net actuarial gain (loss) |  | (4,214 | ) |  | 974 |  |  | (1)
Settlements/curtailments |  | 246 |  |  | — |  |  | (1)
|  | (3,968 | ) |  | 974 |  |  | Total before taxes
|  | — |  |  | — |  |  | Income tax expense
|  | $ | (3,968 | ) |  | $ | 974 |  |  | Net of taxes
(1) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost. See Note 8, Retirement Benefit Plans, of the consolidated financial statements for further information. S. INCOME TAXES The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s Irish and Italian subsidiaries also file tax returns in the respective jurisdictions. The Company provides deferred income taxes for the temporary difference between the financial reporting basis and tax basis of the Company’s assets and liabilities. Such taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Deductible temporary differences result principally from recording certain expenses in the financial statements in excess of amounts currently deductible for tax purposes. Taxable temporary differences result principally from tax depreciation in excess of book depreciation. The Company evaluates for uncertain tax positions taken at each balance sheet date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company's policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in tax expenses. The Company maintains a valuation allowance against its deferred tax assets when management believes it is more likely than not that all or a portion of a deferred tax asset may not be realized. Changes in valuation allowances are recorded in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. T. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Quoted market prices in active markets for identical assets or liabilities Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data Level 3 - Unobservable inputs that are not corroborated by market data A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The book value of cash equivalents, accounts receivable, and accounts payable are considered to be representative of their fair values because of their short maturities. The carrying value of debt is considered to approximate the fair value based on the borrowing rates currently available to us for loans with similar terms and maturities. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in goodwill, other intangible assets and long-lived assets impairment analysis, the valuation of acquired intangibles and in the valuation of assets held for sale. Goodwill and intangible assets are valued using Level 3 inputs. U. SHARE-BASED COMPENSATION Share-based compensation is measured at the grant date, based on the calculated fair value of the award and the probability of meeting its performance condition, and is recognized as expense when it is probable that the performance conditions will be met over the requisite service period (generally the vesting period). Share-based expense includes expense related to restricted shares and performance shares issued under the Company's 2007 Long-Term Incentive Plan ("2007 Plan") and the Company's 2007 Plan Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) ("2016 Plan"). The Company recognizes share-based expense within selling, general, and administrative expense.

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