KIMBALL ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
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Indiana
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35-2047713
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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1205 Kimball Boulevard, Jasper, Indiana
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47546
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(Address of principal executive offices)
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(Zip Code)
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(812) 634-4000
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Registrant’s telephone number, including area code
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each Class
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Name of each exchange on which registered
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Common Stock, no par value
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The NASDAQ Stock Market LLC
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Securities registered pursuant to Section 12(g) of the Act: None
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•
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Design services and support;
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•
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Supply chain services and support;
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•
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Rapid prototyping and new product introduction support;
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•
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Product design and process validation and qualification;
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•
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Industrialization and automation of manufacturing processes;
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•
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Reliability testing (testing of products under a series of extreme environmental conditions);
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•
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Production and testing of printed circuit board assemblies (PCBAs);
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•
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Assembly, production, and packaging of medical disposables and other non-electronic products;
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•
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Design engineering and production of precision plastics and metal fabrication; and
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•
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Complete product life cycle management.
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•
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Leveraging Our Global Footprint – continue our strategy of utilizing our presence in key global regions, including new potential country locations and/or facility expansion as our customer demands dictate;
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•
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Expanding Our Package of Value – enhance our core strengths and expand upon our package of value through diversified contract manufacturing services in areas such as complex system assembly, specialized processes, precision metals, and plastics; and
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•
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Expanding Our Markets - explore opportunities that will establish new markets, platforms, and technologies beyond the EMS market such as the automation, test, and measurement systems market.
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•
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Our core competency of producing durable electronics;
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•
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Our body of knowledge as it relates to the design and manufacture of products that require high levels of quality control, reliability, and durability;
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•
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Our highly integrated, global footprint;
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•
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Our capability to provide our customers diversified contract manufacturing services for non-electronic components, medical disposables, plastics, and metal fabrication;
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•
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Our CRM model and our customer scorecard process;
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•
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Our ability to provide our customers with valuable input regarding designs for improved manufacturability, reliability, and cost;
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•
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Our quality systems, industry certifications, and regulatory compliance;
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•
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Our integrated supply chain solutions and competitive bid process resulting in competitive raw material pricing; and
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•
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Complete product life cycle management.
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Year Ended June 30
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||||
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2018
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2017
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2016
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Automotive
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44%
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41%
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|
39%
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Medical
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29%
|
|
28%
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30%
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Industrial
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20%
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22%
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22%
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Public Safety
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6%
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7%
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7%
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Other
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1%
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2%
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2%
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Total
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100%
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100%
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100%
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Year Ended June 30
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||||
(Amounts in Millions)
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2018
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2017
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2016
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Research and Development Costs
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$11
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$10
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$9
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•
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instability of the global financial markets;
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•
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uncertainty of worldwide economic conditions;
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•
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volatile energy costs;
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•
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erosion of global consumer confidence;
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•
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general corporate profitability of our end markets;
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•
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credit availability to our customers and our customers’ end markets;
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•
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demand fluctuations in the industries we currently serve, including automotive, medical, industrial, and public safety;
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•
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demand for end-user products which include electronic assembly components produced by us;
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•
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excess capacity in the industries in which we compete; and
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•
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changes in customer order patterns, including changes in product quantities, delays in orders, or cancellation of orders.
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•
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compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act;
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•
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compliance with any new rules that may be adopted by the Public Company Accounting Oversight Board;
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•
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compliance with any new or revised financial accounting standards applicable to public companies without an extended transition period;
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•
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full disclosure regarding executive compensation required of larger public companies; and
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•
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compliance with the requirement of holding a nonbinding advisory vote on executive compensation and obtaining Share Owner approval of any golden parachute payments not previously approved.
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•
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difficulties in identifying suitable acquisition candidates and in negotiating and consummating acquisitions on terms attractive to us;
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•
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difficulties in the assimilation of the operations of the acquired company;
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•
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the diversion of resources, including diverting management’s attention from our current operations;
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•
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risks of entering new geographic or product markets in which we have limited or no direct prior experience;
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•
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the potential loss of key customers of the acquired company;
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•
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the potential loss of key employees of the acquired company;
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•
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the potential incurrence of indebtedness to fund the acquisition;
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•
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the potential issuance of common stock for some or all of the purchase price, which could dilute ownership interests of our current Share Owners;
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the acquired business not achieving anticipated revenues, earnings, cash flow, or market share;
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excess capacity;
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•
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the assumption of undisclosed liabilities;
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•
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potential adverse tax effects; and
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•
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dilution of earnings.
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•
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economic and political instability, including the uncertainties caused by the United Kingdom’s pending exit from the European Union;
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warfare, riots, terrorism, and other forms of violence or geopolitical disruption;
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•
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compliance with laws, such as the Foreign Corrupt Practices Act, applicable to U.S. companies doing business outside the United States;
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•
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changes in U.S. or foreign policies, regulatory requirements, and laws;
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tariffs and other trade barriers, including tariffs recently imposed by the United States as well as responsive tariffs imposed by China and the European Union;
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potentially adverse tax consequences, including changes in tax rates and the manner in which multinational companies are taxed in the United States and other countries; and
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•
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foreign labor practices.
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•
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International Traffic in Arms Regulations (ITAR) must be followed when producing defense related products for the U.S. government. A breach of these regulations could have an adverse impact on our financial condition, results of operations, or cash flows.
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•
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Foreign regulations are increasing in many areas such as data privacy, hazardous waste disposal, labor relations, and employment practices.
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•
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Changes in policies by the U.S. or other governments could negatively affect our operating results due to changes in duties, tariffs or taxes, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries. For example, our facility in Mexico operates under the Mexican Maquiladora (“IMMEX”) program. This program provides for reduced tariffs and eased import regulations. We could be adversely affected by changes in the IMMEX program or our failure to comply with its requirements. As another example, the U.S. government has recently imposed tariffs on certain products imported from China as well as steel and aluminum imported from the European Union, Mexico, and Canada. China and the European Union have imposed tariffs on U.S. products in retaliation. These tariffs could force our customers or us to consider various strategic options including, but not limited to, looking for different suppliers, shifting production to facilities in different geographic regions, absorbing the additional costs, or passing the cost on to customers. Ultimately, these tariffs could adversely affect the competitiveness of our domestic operations, which could lead to the reduction or exit of certain U.S. manufacturing capacity. The U.S. government has also indicated its intent to renegotiate certain existing trade agreements and impose additional tariffs on automotive imports. Depending on the types of changes made, demand for our foreign manufacturing facilities could be reduced, or operating costs in our U.S. manufacturing facilities could be increased, which could negatively impact our financial performance. Moreover, any retaliatory actions by other countries where we operate could also negatively impact our financial performance.
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•
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actual or anticipated fluctuations in our operating results due to factors related to our business;
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•
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wins and losses on contract competitions and new business pursuits;
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•
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success or failure of our business strategy;
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•
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our quarterly or annual earnings, or those of other companies in our industry;
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our ability to obtain financing as needed;
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announcements by us or our competitors of significant acquisitions or dispositions;
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changes in accounting standards, policies, guidance, interpretations or principles;
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the failure of securities analysts to cover our common stock;
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•
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changes in earnings estimates by securities analysts or our ability to meet those estimates;
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the operating and stock price performance of other comparable companies;
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the changes in customer requirements for our products and services;
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•
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natural or environmental disasters that investors believe may affect us;
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overall market fluctuations;
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•
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results from any material litigation or government investigation;
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•
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changes in laws and regulations affecting our business; and
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•
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general economic conditions and other external factors.
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Name
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Age
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Office and Area of Responsibility
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Donald D. Charron
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54
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Chairman of the Board and Chief Executive Officer
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Michael K. Sergesketter
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58
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Vice President, Chief Financial Officer
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John H. Kahle
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61
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Vice President, General Counsel, Chief Compliance Officer, and Secretary
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Christopher J. Thyen
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55
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Vice President, New Platforms
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Jessica L. DeLorenzo
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33
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Vice President, Human Resources
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Sandy A. Smith
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55
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Vice President, Information Technology
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Janusz F. Kasprzyk
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58
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Vice President, European Operations
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Steven T. Korn
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54
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|
Vice President, North American Operations
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Roger Chang (Chang Shang Yu)
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61
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|
Vice President, Asian Operations
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Desiree L. Castillejos
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|
47
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Vice President, Corporate Development and M&A, and Chief Strategy Officer
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Kathy R. Thomson
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49
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|
Vice President, Global Business Development and Design Services
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|
2018
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|
2017
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||||||||||||
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High
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Low
|
|
High
|
|
Low
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||||||||
First Quarter
|
$
|
22.05
|
|
|
$
|
17.46
|
|
|
$
|
14.28
|
|
|
$
|
11.54
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|
Second Quarter
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$
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22.45
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|
|
$
|
18.14
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|
|
$
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19.00
|
|
|
$
|
13.38
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|
Third Quarter
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$
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19.70
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|
$
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15.75
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|
|
$
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18.45
|
|
|
$
|
15.05
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|
Fourth Quarter
|
$
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19.70
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|
|
$
|
15.80
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|
|
$
|
18.90
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|
|
$
|
15.90
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|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plan
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan
|
||||
April 1, 2018 - April 30, 2018
|
—
|
$
|
—
|
|
—
|
$
|
18,608,701
|
|
May 1, 2018 - May 31, 2018
|
52,177
|
$
|
18.61
|
|
52,177
|
$
|
17,637,743
|
|
June 1, 2018 - June 30, 2018
|
110,794
|
$
|
19.15
|
|
110,794
|
$
|
15,516,025
|
|
Total
|
162,971
|
$
|
18.98
|
|
162,971
|
|
|
11/03/2014
|
06/30/2015
|
06/30/2016
|
06/30/2017
|
06/30/2018
|
||||||||||
Kimball Electronics, Inc.
|
$
|
100.00
|
|
$
|
202.08
|
|
$
|
172.44
|
|
$
|
250.00
|
|
$
|
253.46
|
|
NASDAQ Stock Market (U.S.)
|
$
|
100.00
|
|
$
|
108.38
|
|
$
|
106.56
|
|
$
|
136.71
|
|
$
|
168.97
|
|
Peer Group Index
|
$
|
100.00
|
|
$
|
99.49
|
|
$
|
101.36
|
|
$
|
145.47
|
|
$
|
131.37
|
|
•
|
Due to the contract and project nature of the EMS industry, fluctuation in the demand for our products and variation in the gross margin on those projects is inherent to our business. Effective management of manufacturing capacity is, and will continue to be, critical to our success.
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•
|
The nature of the EMS industry is such that the start-up of new customers and new programs to replace expiring programs occurs frequently. While our agreements with customers generally do not have a definitive term and thus could be canceled at any time with little or no notice, we generally realize relatively few cancellations prior to the end of the product’s life cycle. We attribute this to our focus on long-term customer relationships, meeting customer expectations, required capital investment, and product qualification cycle times. As such, our ability to continue contractual relationships with our customers, including our principal customers, is not certain. New customers and program start-ups generally cause losses early in the life of a program, which are generally recovered as the program becomes established and matures. Risk factors within our business include, but are not limited to, general economic and market conditions, customer order delays, globalization, impact related to tariffs and other trade barriers, foreign currency exchange rate fluctuations, rapid technological changes, component availability, supplier and customer financial stability, the contract nature of this industry, the concentration of sales to large customers, and the potential for customers to choose a dual sourcing strategy or to in-source a greater portion of their electronics manufacturing. The continuing success of our business is dependent upon our ability to replace expiring customers/programs with new customers/programs. We monitor our success in this area by tracking the number of customers and the percentage of our net sales generated from them by years of service as depicted in the table below. While variation in the size of program award makes it difficult to directly correlate this data to our sales trends, we believe it does provide useful information regarding our customer loyalty and new business growth. Additional risk factors that could have an effect on our performance are located within
Item 1A - Risk Factors
.
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|
|
Year End
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|||||||
Customer Service Years
|
|
2018
|
|
2017
|
|
2016
|
|||
More than 10 Years
|
|
|
|
|
|
|
|||
% of Net Sales
|
|
61
|
%
|
|
56
|
%
|
|
56
|
%
|
# of Customers
|
|
28
|
|
|
28
|
|
|
25
|
|
5 to 10 Years
|
|
|
|
|
|
|
|||
% of Net Sales
|
|
28
|
%
|
|
36
|
%
|
|
38
|
%
|
# of Customers
|
|
18
|
|
|
22
|
|
|
29
|
|
Less than 5 Years
|
|
|
|
|
|
|
|||
% of Net Sales
|
|
11
|
%
|
|
8
|
%
|
|
6
|
%
|
# of Customers
|
|
30
|
|
|
32
|
|
|
32
|
|
Total
|
|
|
|
|
|
|
|||
% of Net Sales
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
# of Customers
|
|
76
|
|
|
82
|
|
|
86
|
|
•
|
Globalization continues to be a factor not only in the industries in which we operate but also for our key customers, suppliers, and competitors.
|
•
|
Employees throughout our business operations are an integral part of our ability to compete successfully, and the stability of the management team is critical to long-term Share Owner value. Our talent management and succession planning processes help to maintain stability in management.
|
|
At or For the Year Ended
|
|
|
|||||||||||||
|
June 30
|
|
|
|||||||||||||
(Amounts in Millions, Except for Per Share Data)
|
2018
|
|
as a % of Net Sales
|
|
2017
|
|
as a % of Net Sales
|
|
% Change
|
|||||||
Net Sales
|
$
|
1,072.1
|
|
|
|
|
$
|
930.9
|
|
|
|
|
15
|
%
|
||
Gross Profit
|
$
|
86.2
|
|
|
8.0
|
%
|
|
$
|
75.6
|
|
|
8.1
|
%
|
|
14
|
%
|
Selling and Administrative Expenses
|
$
|
43.9
|
|
|
4.0
|
%
|
|
$
|
36.5
|
|
|
3.9
|
%
|
|
20
|
%
|
Other General Income
|
$
|
—
|
|
|
|
|
$
|
4.0
|
|
|
|
|
|
|||
Operating Income
|
$
|
42.3
|
|
|
4.0
|
%
|
|
$
|
43.1
|
|
|
4.6
|
%
|
|
(2
|
)%
|
Provision for Income Taxes
|
$
|
28.0
|
|
|
|
|
$
|
10.1
|
|
|
|
|
178
|
%
|
||
Net Income
|
$
|
16.8
|
|
|
|
|
$
|
34.2
|
|
|
|
|
(51
|
)%
|
||
Diluted Earnings per Share
|
$
|
0.62
|
|
|
|
|
$
|
1.24
|
|
|
|
|
|
|||
Open Orders
|
$
|
293.1
|
|
|
|
|
$
|
214.3
|
|
|
|
|
37
|
%
|
Other Income (Expense)
|
Year Ended
|
||||||
|
June 30
|
||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
Interest Income
|
$
|
73
|
|
|
$
|
64
|
|
Interest Expense
|
(527
|
)
|
|
(271
|
)
|
||
Foreign Currency/Derivative Gain (Loss)
|
2,358
|
|
|
(453
|
)
|
||
Gain on Supplemental Employee Retirement Plan Investment
|
712
|
|
|
1,006
|
|
||
Bargain Purchase Gain on Acquisition
|
—
|
|
|
925
|
|
||
Other
|
(189
|
)
|
|
(73
|
)
|
||
Other Income (Expense), net
|
$
|
2,427
|
|
|
$
|
1,198
|
|
|
Year Ended June 30, 2018
|
|
Year Ended June 30, 2017
|
||||||||||
(Amounts in Thousands)
|
Income Before Taxes
|
|
Effective Tax Rate
|
|
Income Before Taxes
|
|
Effective Tax Rate
|
||||||
United States
|
$
|
5,609
|
|
|
329.2
|
%
|
|
$
|
10,051
|
|
|
25.6
|
%
|
Foreign
|
$
|
39,166
|
|
|
24.4
|
%
|
|
$
|
34,204
|
|
|
21.9
|
%
|
Total
|
$
|
44,775
|
|
|
62.6
|
%
|
|
$
|
44,255
|
|
|
22.8
|
%
|
|
At or For the Year Ended
|
|
|
|||||||||||||
|
June 30
|
|
|
|||||||||||||
(Amounts in Millions, Except for Per Share Data)
|
2017
|
|
as a % of Net Sales
|
|
2016
|
|
as a % of Net Sales
|
|
% Change
|
|||||||
Net Sales
|
$
|
930.9
|
|
|
|
|
$
|
842.1
|
|
|
|
|
11
|
%
|
||
Gross Profit
|
$
|
75.6
|
|
|
8.1
|
%
|
|
$
|
64.5
|
|
|
7.7
|
%
|
|
17
|
%
|
Selling and Administrative Expenses
|
$
|
36.5
|
|
|
3.9
|
%
|
|
$
|
34.8
|
|
|
4.2
|
%
|
|
5
|
%
|
Other General Income
|
$
|
4.0
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|||
Operating Income
|
$
|
43.1
|
|
|
4.6
|
%
|
|
$
|
29.7
|
|
|
3.5
|
%
|
|
45
|
%
|
Net Income
|
$
|
34.2
|
|
|
|
|
$
|
22.3
|
|
|
|
|
53
|
%
|
||
Diluted Earnings per Share
|
$
|
1.24
|
|
|
|
|
$
|
0.76
|
|
|
|
|
|
|||
Open Orders
|
$
|
214.3
|
|
|
|
|
$
|
171.0
|
|
|
|
|
25
|
%
|
Net Sales by Vertical Market
|
For the Year Ended
|
|
|
|||||||
|
June 30
|
|
|
|||||||
(Amounts in Millions)
|
2017
|
|
2016
|
|
% Change
|
|||||
Automotive
|
$
|
378.7
|
|
|
$
|
326.7
|
|
|
16
|
%
|
Medical
|
256.5
|
|
|
249.2
|
|
|
3
|
%
|
||
Industrial
|
205.6
|
|
|
186.6
|
|
|
10
|
%
|
||
Public Safety
|
70.1
|
|
|
61.1
|
|
|
15
|
%
|
||
Other
|
20.0
|
|
|
18.5
|
|
|
8
|
%
|
||
Total Net Sales
|
$
|
930.9
|
|
|
$
|
842.1
|
|
|
11
|
%
|
Other Income (Expense)
|
Year Ended
|
||||||
|
June 30
|
||||||
(Amounts in Thousands)
|
2017
|
|
2016
|
||||
Interest Income
|
$
|
64
|
|
|
$
|
79
|
|
Interest Expense
|
(271
|
)
|
|
(80
|
)
|
||
Foreign Currency/Derivative Loss
|
(453
|
)
|
|
(1,292
|
)
|
||
Gain (Loss) on Supplemental Employee Retirement Plan Investment
|
1,006
|
|
|
(67
|
)
|
||
Bargain Purchase Gain on Acquisition
|
925
|
|
|
—
|
|
||
Other
|
(73
|
)
|
|
(386
|
)
|
||
Other Income (Expense), net
|
$
|
1,198
|
|
|
$
|
(1,746
|
)
|
|
Year Ended June 30, 2017
|
|
Year Ended June 30, 2016
|
||||||||||
(Amounts in Thousands)
|
Income Before Taxes
|
|
Effective Tax Rate
|
|
Income Before Taxes
|
|
Effective Tax Rate
|
||||||
United States
|
$
|
10,051
|
|
|
25.6
|
%
|
|
$
|
1,919
|
|
|
17.8
|
%
|
Foreign
|
$
|
34,204
|
|
|
21.9
|
%
|
|
$
|
26,057
|
|
|
20.5
|
%
|
Total
|
$
|
44,255
|
|
|
22.8
|
%
|
|
$
|
27,976
|
|
|
20.3
|
%
|
|
|
Three Months Ended
|
||||||||
|
|
June 30, 2018
|
|
March 31, 2018
|
|
December 31, 2017
|
|
September 30, 2017
|
|
June 30, 2017
|
DSO
|
|
57
|
|
58
|
|
62
|
|
60
|
|
62
|
PDSOH
|
|
72
|
|
66
|
|
66
|
|
61
|
|
59
|
APD
|
|
66
|
|
62
|
|
68
|
|
62
|
|
61
|
CCD
|
|
63
|
|
62
|
|
60
|
|
59
|
|
60
|
|
|
Year Ended June 30
|
||||||||||
(Amounts in Millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash provided by operating activities
|
|
$
|
40.2
|
|
|
$
|
46.8
|
|
|
$
|
36.8
|
|
Net cash used for investing activities
|
|
$
|
(26.2
|
)
|
|
$
|
(35.7
|
)
|
|
$
|
(42.6
|
)
|
Net cash used for financing activities
|
|
$
|
(12.6
|
)
|
|
$
|
(22.0
|
)
|
|
$
|
(4.3
|
)
|
•
|
a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, and
|
•
|
a fixed charge coverage ratio, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be less than 1.10 to 1.00.
|
|
Payments Due During Fiscal Years Ending June 30
|
|||||||||||||||||||||
(Amounts in Millions)
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
|||||||||||||
Recorded Contractual Obligations:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-Term Debt Obligations
(b)
|
$
|
8.4
|
|
|
$
|
8.4
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Long-Term Income Taxes Payable
(c)
|
13.4
|
|
|
1.0
|
|
|
|
2.1
|
|
|
|
2.1
|
|
|
|
8.2
|
|
|||||
Other Long-Term Liabilities Reflected on the Balance
Sheet
(d) (e) (f)
|
13.0
|
|
|
0.9
|
|
|
|
2.8
|
|
|
|
1.2
|
|
|
|
8.1
|
|
|||||
Unrecorded Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Leases
(f)
|
1.5
|
|
|
0.3
|
|
|
|
0.4
|
|
|
|
0.2
|
|
|
|
0.6
|
|
|||||
Purchase Obligations
(g)
|
521.1
|
|
|
495.1
|
|
|
|
24.3
|
|
|
|
1.7
|
|
|
|
—
|
|
|||||
Total
|
$
|
557.4
|
|
|
$
|
505.7
|
|
|
|
$
|
29.6
|
|
|
|
$
|
5.2
|
|
|
|
$
|
16.9
|
|
(a)
|
As of
June 30, 2018
, we had no Capital Lease Obligations.
|
(b)
|
Amounts outstanding on our credit facilities and the accrued interest for these amounts are included on the Long-Term Debt Obligations line. Refer to
Note 6 - Credit Facilities
of Notes to Consolidated Financial Statements for more information regarding our credit facilities. The fiscal year
2019
amount was recorded as a current liability.
|
(c)
|
U.S. federal income taxes payable for the one-time deemed repatriation tax on certain unremitted earnings of foreign subsidiaries. The fiscal year
2019
amount includes
$1.0 million
for short-term income taxes payable on the deemed repatriation tax recorded as a current liability. Refer to
Note 9 - Income Taxes
of Notes to Consolidated Financial Statements for more information regarding the deemed repatriation tax.
|
(d)
|
The timing of payments of certain items included on the Other Long-Term Liabilities Reflected on the Balance Sheet line above is estimated based on the following assumptions:
|
•
|
The timing of SERP payments is estimated based on an assumed retirement age of 62 with payout based on the prior distribution elections of participants. The fiscal year
2019
amount includes
$0.3 million
for SERP payments recorded as current liabilities.
|
•
|
The timing of severance plan payments is estimated based on the average remaining service life of employees. The fiscal year
2019
amount includes
$0.4 million
for severance payments recorded as a current liability.
|
•
|
The timing of warranty payments is estimated based on historical data. The fiscal year
2019
amount includes
$0.2 million
for short-term warranty payments recorded as a current liability.
|
(e)
|
Excludes
$0.2 million
of deferred tax liabilities and long-term unrecognized tax benefits which are not tied to a contractual obligation and for which we cannot make a reasonably reliable estimate of the period of future payments.
|
(f)
|
Refer to
Note 5 - Commitments and Contingent Liabilities
of Notes to Consolidated Financial Statements for more information regarding Operating Leases and certain Other Long-Term Liabilities.
|
(g)
|
Purchase Obligations are defined as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms. The amounts listed above for purchase obligations include contractual commitments for items such as raw materials, supplies, capital expenditures, services, and software acquisitions/license commitments. Cancellable purchase obligations that we intend to fulfill are also included in the purchase obligations amount listed. In certain instances, such as when lead times dictate, we enter into contractual agreements for material in excess of the levels required to fulfill customer orders. Purchase obligations as of June 30, 2018 include the placement of orders to help mitigate the potential impact related to component shortages, which requires longer lead times. In turn, material authorization agreements with customers cover a portion of the exposure for material which is purchased prior to having a firm order.
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
Page No.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ DONALD D. CHARRON
|
|
Donald D. Charron
|
|
Chairman of the Board,
|
|
Chief Executive Officer
|
|
August 28, 2018
|
|
|
|
/s/ MICHAEL K. SERGESKETTER
|
|
Michael K. Sergesketter
|
|
Vice President,
|
|
Chief Financial Officer
|
|
August 28, 2018
|
/s/ Deloitte & Touche LLP
|
DELOITTE & TOUCHE LLP
|
Indianapolis, Indiana
|
August 28, 2018
|
|
June 30,
2018 |
|
June 30,
2017 |
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
46,428
|
|
|
$
|
44,555
|
|
Receivables, net of allowances of $482 and $284, respectively
|
173,559
|
|
|
169,785
|
|
||
Inventories
|
201,596
|
|
|
144,606
|
|
||
Prepaid expenses and other current assets
|
15,405
|
|
|
29,219
|
|
||
Total current assets
|
436,988
|
|
|
388,165
|
|
||
Property and Equipment, net of accumulated depreciation of $198,672 and $180,028, respectively
|
137,210
|
|
|
137,549
|
|
||
Goodwill
|
6,191
|
|
|
6,191
|
|
||
Other Intangible Assets, net of accumulated amortization of $27,276 and $26,392, respectively
|
4,375
|
|
|
4,581
|
|
||
Other Assets
|
23,994
|
|
|
18,458
|
|
||
Total Assets
|
$
|
608,758
|
|
|
$
|
554,944
|
|
|
|
|
|
||||
LIABILITIES AND SHARE OWNERS’ EQUITY
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Borrowings under credit facilities
|
$
|
8,337
|
|
|
$
|
10,000
|
|
Accounts payable
|
187,788
|
|
|
154,619
|
|
||
Accrued expenses
|
32,446
|
|
|
34,630
|
|
||
Total current liabilities
|
228,571
|
|
|
199,249
|
|
||
Other Liabilities:
|
|
|
|
|
|
||
Long-term income taxes payable
|
12,361
|
|
|
—
|
|
||
Other long-term liabilities
|
12,299
|
|
|
13,423
|
|
||
Total other liabilities
|
24,660
|
|
|
13,423
|
|
||
Share Owners’ Equity:
|
|
|
|
|
|
||
Preferred stock-no par value
|
|
|
|
|
|
||
Shares authorized: 15,000,000
Shares issued: none
|
—
|
|
|
—
|
|
||
Common stock-no par value
|
|
|
|
||||
Shares authorized: 150,000,000
Shares issued: 29,430,000
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
304,215
|
|
|
302,483
|
|
||
Retained earnings
|
99,374
|
|
|
82,671
|
|
||
Accumulated other comprehensive loss
|
(6,899
|
)
|
|
(9,084
|
)
|
||
Treasury stock, at cost:
|
|
|
|
||||
Shares: 2,898,000 and 2,592,000, respectively
|
(41,163
|
)
|
|
(33,798
|
)
|
||
Total Share Owners’ Equity
|
355,527
|
|
|
342,272
|
|
||
Total Liabilities and Share Owners’ Equity
|
$
|
608,758
|
|
|
$
|
554,944
|
|
|
Year Ended June 30
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales
|
$
|
1,072,061
|
|
|
$
|
930,914
|
|
|
$
|
842,060
|
|
Cost of Sales
|
985,859
|
|
|
855,319
|
|
|
777,522
|
|
|||
Gross Profit
|
86,202
|
|
|
75,595
|
|
|
64,538
|
|
|||
Selling and Administrative Expenses
|
43,854
|
|
|
36,543
|
|
|
34,816
|
|
|||
Other General Income
|
—
|
|
|
(4,005
|
)
|
|
—
|
|
|||
Operating Income
|
42,348
|
|
|
43,057
|
|
|
29,722
|
|
|||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|||
Interest income
|
73
|
|
|
64
|
|
|
79
|
|
|||
Interest expense
|
(527
|
)
|
|
(271
|
)
|
|
(80
|
)
|
|||
Non-operating income
|
3,337
|
|
|
2,319
|
|
|
166
|
|
|||
Non-operating expense
|
(456
|
)
|
|
(914
|
)
|
|
(1,911
|
)
|
|||
Other income (expense), net
|
2,427
|
|
|
1,198
|
|
|
(1,746
|
)
|
|||
Income Before Taxes on Income
|
44,775
|
|
|
44,255
|
|
|
27,976
|
|
|||
Provision for Income Taxes
|
28,023
|
|
|
10,076
|
|
|
5,689
|
|
|||
Net Income
|
$
|
16,752
|
|
|
$
|
34,179
|
|
|
$
|
22,287
|
|
|
|
|
|
|
|
||||||
Earnings Per Share of Common Stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.63
|
|
|
$
|
1.25
|
|
|
$
|
0.77
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
1.24
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
||||||
Average Number of Shares Outstanding:
|
|
|
|
|
|
||||||
Basic
|
26,745
|
|
|
27,413
|
|
|
28,916
|
|
|||
Diluted
|
27,007
|
|
|
27,530
|
|
|
29,176
|
|
|
Year Ended June 30, 2018
|
|
Year Ended June 30, 2017
|
|
Year Ended June 30, 2016
|
||||||||||||||||||||||||||||||
|
Pre-tax
|
|
Tax
|
|
Net of Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of Tax
|
||||||||||||||||||
Net Income
|
|
|
|
|
$
|
16,752
|
|
|
|
|
|
|
$
|
34,179
|
|
|
|
|
|
|
$
|
22,287
|
|
||||||||||||
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Foreign currency translation adjustments
|
$
|
2,519
|
|
|
$
|
—
|
|
|
$
|
2,519
|
|
|
$
|
2,777
|
|
|
$
|
—
|
|
|
$
|
2,777
|
|
|
$
|
(540
|
)
|
|
$
|
—
|
|
|
$
|
(540
|
)
|
Postemployment severance actuarial change
|
533
|
|
|
(188
|
)
|
|
345
|
|
|
285
|
|
|
(107
|
)
|
|
178
|
|
|
507
|
|
|
(195
|
)
|
|
312
|
|
|||||||||
Derivative gain (loss)
|
(2,669
|
)
|
|
704
|
|
|
(1,965
|
)
|
|
779
|
|
|
(256
|
)
|
|
523
|
|
|
(2,869
|
)
|
|
937
|
|
|
(1,932
|
)
|
|||||||||
Reclassification to (earnings) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Derivatives
|
1,668
|
|
|
(213
|
)
|
|
1,455
|
|
|
(13
|
)
|
|
(161
|
)
|
|
(174
|
)
|
|
3,537
|
|
|
(1,185
|
)
|
|
2,352
|
|
|||||||||
Amortization of prior service costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
(10
|
)
|
|
18
|
|
|||||||||
Amortization of actuarial change
|
(358
|
)
|
|
140
|
|
|
(218
|
)
|
|
(317
|
)
|
|
119
|
|
|
(198
|
)
|
|
(254
|
)
|
|
101
|
|
|
(153
|
)
|
|||||||||
Other Comprehensive Income (Loss)
|
$
|
1,693
|
|
|
$
|
443
|
|
|
$
|
2,136
|
|
|
$
|
3,511
|
|
|
$
|
(405
|
)
|
|
$
|
3,106
|
|
|
$
|
409
|
|
|
$
|
(352
|
)
|
|
$
|
57
|
|
Total Comprehensive Income
|
|
|
|
|
|
|
$
|
18,888
|
|
|
|
|
|
|
|
|
$
|
37,285
|
|
|
|
|
|
|
|
|
$
|
22,344
|
|
|
Year Ended June 30
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
16,752
|
|
|
$
|
34,179
|
|
|
$
|
22,287
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
26,376
|
|
|
23,904
|
|
|
19,869
|
|
|||
Gain on sales of assets
|
(7
|
)
|
|
(33
|
)
|
|
(145
|
)
|
|||
Deferred income tax and other deferred charges
|
1,213
|
|
|
(115
|
)
|
|
1,449
|
|
|||
Deferred tax valuation allowance
|
(638
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
5,299
|
|
|
3,484
|
|
|
3,406
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
(203
|
)
|
|||
Bargain purchase gain
|
—
|
|
|
(925
|
)
|
|
—
|
|
|||
Other, net
|
487
|
|
|
359
|
|
|
137
|
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(2,876
|
)
|
|
(19,267
|
)
|
|
(9,192
|
)
|
|||
Inventories
|
(55,769
|
)
|
|
(8,549
|
)
|
|
(3,513
|
)
|
|||
Prepaid expenses and other current assets
|
5,092
|
|
|
(3,976
|
)
|
|
(3,713
|
)
|
|||
Accounts payable
|
33,272
|
|
|
9,486
|
|
|
8,270
|
|
|||
Accrued expenses and taxes payable
|
10,999
|
|
|
8,207
|
|
|
(1,820
|
)
|
|||
Net cash provided by operating activities
|
40,200
|
|
|
46,754
|
|
|
36,832
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
(25,876
|
)
|
|
(33,254
|
)
|
|
(33,664
|
)
|
|||
Proceeds from sales of assets
|
261
|
|
|
490
|
|
|
209
|
|
|||
Payments for acquisitions, net of cash acquired
|
—
|
|
|
(2,138
|
)
|
|
(8,267
|
)
|
|||
Purchases of capitalized software
|
(643
|
)
|
|
(1,018
|
)
|
|
(968
|
)
|
|||
Other, net
|
44
|
|
|
211
|
|
|
100
|
|
|||
Net cash used for investing activities
|
(26,214
|
)
|
|
(35,709
|
)
|
|
(42,590
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from credit facilities
|
—
|
|
|
4,000
|
|
|
12,000
|
|
|||
Payments on credit facilities
|
—
|
|
|
(13,000
|
)
|
|
(3,000
|
)
|
|||
Net change in revolving credit facilities
|
(1,542
|
)
|
|
10,000
|
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
203
|
|
|||
Repurchases of common stock
|
(9,553
|
)
|
|
(22,325
|
)
|
|
(12,606
|
)
|
|||
Payments related to tax withholding for stock-based compensation
|
(1,508
|
)
|
|
(709
|
)
|
|
(897
|
)
|
|||
Net cash used for financing activities
|
(12,603
|
)
|
|
(22,034
|
)
|
|
(4,300
|
)
|
|||
Effect of Exchange Rate Change on Cash and Cash Equivalents
|
490
|
|
|
806
|
|
|
(384
|
)
|
|||
Net Increase (Decrease) in Cash and Cash Equivalents
|
1,873
|
|
|
(10,183
|
)
|
|
(10,442
|
)
|
|||
Cash and Cash Equivalents at Beginning of Year
|
44,555
|
|
|
54,738
|
|
|
65,180
|
|
|||
Cash and Cash Equivalents at End of Year
|
$
|
46,428
|
|
|
$
|
44,555
|
|
|
$
|
54,738
|
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Total Share Owners’ Equity
|
||||||||||
|
|||||||||||||||||||
Amounts at June 30, 2015
|
$
|
298,491
|
|
|
$
|
26,205
|
|
|
$
|
(12,247
|
)
|
|
$
|
—
|
|
|
$
|
312,449
|
|
Net income
|
|
|
22,287
|
|
|
|
|
|
|
22,287
|
|
||||||||
Other comprehensive income
|
|
|
|
|
57
|
|
|
|
|
57
|
|
||||||||
Issuance of non-restricted stock
(47,000 shares)
|
(28
|
)
|
|
|
|
|
|
545
|
|
|
517
|
|
|||||||
Compensation expense related to stock compensation plans
|
2,915
|
|
|
|
|
|
|
|
|
2,915
|
|
||||||||
Performance share issuance (258,000 shares)
|
203
|
|
|
|
|
|
|
|
|
203
|
|
||||||||
Repurchase of employee shares for tax withholding (78,000 shares)
|
|
|
|
|
|
|
(897
|
)
|
|
(897
|
)
|
||||||||
Repurchase of Common Stock
(1,179,000 shares)
|
|
|
|
|
|
|
(13,162
|
)
|
|
(13,162
|
)
|
||||||||
Amounts at June 30, 2016
|
$
|
301,581
|
|
|
$
|
48,492
|
|
|
$
|
(12,190
|
)
|
|
$
|
(13,514
|
)
|
|
$
|
324,369
|
|
Net income
|
|
|
34,179
|
|
|
|
|
|
|
34,179
|
|
||||||||
Other comprehensive income
|
|
|
|
|
3,106
|
|
|
|
|
3,106
|
|
||||||||
Issuance of non-restricted stock
(10,000 shares)
|
46
|
|
|
|
|
|
|
119
|
|
|
165
|
|
|||||||
Compensation expense related to stock compensation plans
|
3,246
|
|
|
|
|
|
|
|
|
3,246
|
|
||||||||
Performance share issuance (136,000 shares)
|
(2,390
|
)
|
|
|
|
|
|
1,502
|
|
|
(888
|
)
|
|||||||
Repurchase of Common Stock
(1,528,000 shares)
|
|
|
|
|
|
|
(21,905
|
)
|
|
(21,905
|
)
|
||||||||
Amounts at June 30, 2017
|
$
|
302,483
|
|
|
$
|
82,671
|
|
|
$
|
(9,084
|
)
|
|
$
|
(33,798
|
)
|
|
$
|
342,272
|
|
Net income
|
|
|
16,752
|
|
|
|
|
|
|
16,752
|
|
||||||||
Other comprehensive income
|
|
|
|
|
2,136
|
|
|
|
|
2,136
|
|
||||||||
Tax Reform impact
|
|
|
(49
|
)
|
|
49
|
|
|
|
|
—
|
|
|||||||
Issuance of non-restricted stock
(8,000 shares)
|
65
|
|
|
|
|
|
|
90
|
|
|
155
|
|
|||||||
Compensation expense related to stock compensation plans
|
5,138
|
|
|
|
|
|
|
|
|
5,138
|
|
||||||||
Performance share issuance (174,000 shares)
|
(3,471
|
)
|
|
|
|
|
|
1,963
|
|
|
(1,508
|
)
|
|||||||
Repurchase of Common Stock
(488,000 shares)
|
|
|
|
|
|
|
(9,418
|
)
|
|
(9,418
|
)
|
||||||||
Amounts at June 30, 2018
|
$
|
304,215
|
|
|
$
|
99,374
|
|
|
$
|
(6,899
|
)
|
|
$
|
(41,163
|
)
|
|
$
|
355,527
|
|
|
|
June 30, 2018
|
|
June 30, 2017
|
||||||||||||||||||||
(Amounts in Thousands)
|
Cost
|
|
Accumulated
Amortization
|
|
Net Value
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Value
|
||||||||||||
Capitalized Software
|
$
|
30,484
|
|
|
$
|
26,154
|
|
|
$
|
4,330
|
|
|
$
|
29,806
|
|
|
$
|
25,294
|
|
|
$
|
4,512
|
|
Customer Relationships
|
1,167
|
|
|
1,122
|
|
|
45
|
|
|
1,167
|
|
|
1,098
|
|
|
69
|
|
||||||
Other Intangible Assets
|
$
|
31,651
|
|
|
$
|
27,276
|
|
|
$
|
4,375
|
|
|
$
|
30,973
|
|
|
$
|
26,392
|
|
|
$
|
4,581
|
|
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
Finished products
|
$
|
25,552
|
|
|
$
|
18,916
|
|
Work-in-process
|
17,254
|
|
|
15,480
|
|
||
Raw materials
|
158,790
|
|
|
110,210
|
|
||
Total inventory
|
$
|
201,596
|
|
|
$
|
144,606
|
|
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
Land
|
$
|
10,321
|
|
|
$
|
9,331
|
|
Buildings and improvements
|
71,385
|
|
|
63,996
|
|
||
Machinery and equipment
|
246,758
|
|
|
230,142
|
|
||
Construction-in-progress
|
7,418
|
|
|
14,108
|
|
||
Total
|
$
|
335,882
|
|
|
$
|
317,577
|
|
Less: Accumulated depreciation
|
(198,672
|
)
|
|
(180,028
|
)
|
||
Property and equipment, net
|
$
|
137,210
|
|
|
$
|
137,549
|
|
|
Years
|
Buildings and improvements
|
3 to 40
|
Machinery and equipment
|
3 to 11
|
Leasehold improvements
|
Lesser of Useful Life or Term of Lease
|
(Amounts in Thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Product Warranty Liability at the beginning of the year
|
$
|
593
|
|
|
$
|
605
|
|
|
$
|
621
|
|
Additions to warranty accrual (including changes in estimates)
|
346
|
|
|
415
|
|
|
160
|
|
|||
Settlements made (in cash or in kind)
|
(283
|
)
|
|
(427
|
)
|
|
(176
|
)
|
|||
Product Warranty Liability at the end of the year
|
$
|
656
|
|
|
$
|
593
|
|
|
$
|
605
|
|
|
Availability to Borrow at
|
|
Borrowings Outstanding at
|
|
Borrowings Outstanding at
|
||||||
(Amounts in Millions, in U.S Dollar Equivalents)
|
June 30, 2018
|
|
June 30, 2018
|
|
June 30, 2017
|
||||||
Primary credit facility
(1)
|
$
|
43.6
|
|
|
$
|
6.0
|
|
|
$
|
10.0
|
|
Thailand overdraft credit facility
(2)
|
2.7
|
|
|
—
|
|
|
—
|
|
|||
China revolving credit facility
(3)
|
7.5
|
|
|
—
|
|
|
—
|
|
|||
Netherlands revolving credit facility
(4)
|
8.5
|
|
|
2.3
|
|
|
—
|
|
|||
Total
|
$
|
62.3
|
|
|
$
|
8.3
|
|
|
$
|
10.0
|
|
(1)
|
At
June 30, 2018
, the Company maintained a U.S. primary credit facility (the “primary facility”) dated as of October 31, 2014 and scheduled to mature in
October 2019
. The primary facility provided for
$50 million
in borrowings, with an option to increase the amount available for borrowing to
$75 million
upon request, subject to participating banks’ consent. This facility was maintained for acquisitions and general corporate purposes. A commitment fee was payable on the unused portion of the credit facility which was immaterial to our operating results in fiscal years
2018
,
2017
, and
2016
. The commitment fee on the unused portion of principal amount of the credit facility was payable at a rate that ranges from
20.0
to
25.0
basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary facility. Types of borrowings available on the primary facility included revolving loans, multi-currency term loans, and swingline loans. The interest rate on borrowings was dependent on the type of borrowings.
|
•
|
a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of
$15 million
to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than
3.0
to 1.0, and
|
•
|
a fixed charge coverage ratio, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be less than
1.10
to 1.00.
|
|
The Company had
$0.4 million
in letters of credit contingently committed against the credit facility at
June 30, 2018
.
|
(2)
|
The Company also maintains a foreign credit facility for its operation in Thailand which allows for borrowings of up to
90.0 million
Thai Baht (approximately
$2.7 million
at
June 30, 2018
exchange rates). This credit facility can be terminated at any time by either the Company or the bank by giving prior written notice of at least 15 days to the other party. Interest on borrowing under this facility is charged at a rate of interest determined by the bank in accordance with relevant laws and regulations for charging interest on an overdraft facility.
|
(3)
|
The Company also maintains a foreign revolving credit facility for its China operation. The China credit facility allows for borrowings of up to
$7.5 million
, which borrowings can be made in either Chinese Renminbi (RMB) or U.S. dollars. The availability of this uncommitted facility is at the sole discretion of the bank and is subject to the availability of funds and other relevant conditions. The bank may, at its sole discretion, agree to provide the facility on such terms and conditions as the bank deems appropriate. Further, the availability of the facility is also subject to the determination by the bank of the borrower’s actual need for such facility. Proceeds from the facility are to be used for general working capital purposes. Interest on borrowing under this facility is charged at a rate of interest determined by the bank and is dependent on the denomination of the currency borrowed. The facility matures on
May 31, 2019
.
|
|
June 30
|
||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
Changes and Components of Benefit Obligation:
|
|
|
|
|
|
||
Benefit obligation at beginning of year
|
$
|
1,808
|
|
|
$
|
1,805
|
|
Service cost
|
364
|
|
|
302
|
|
||
Interest cost
|
49
|
|
|
39
|
|
||
Actuarial gain for the period
|
(533
|
)
|
|
(285
|
)
|
||
Benefits paid
|
(30
|
)
|
|
(53
|
)
|
||
Benefit obligation at end of year
|
$
|
1,658
|
|
|
$
|
1,808
|
|
Balance in current liabilities
|
$
|
353
|
|
|
$
|
385
|
|
Balance in noncurrent liabilities
|
1,305
|
|
|
1,423
|
|
||
Total benefit obligation recognized in the Consolidated Balance Sheets
|
$
|
1,658
|
|
|
$
|
1,808
|
|
(Amounts in Thousands)
|
Year Ended June 30
|
||||||||||
Components of Net Periodic Benefit Cost (before tax):
|
2018
|
|
2017
|
|
2016
|
||||||
Service cost
|
$
|
364
|
|
|
$
|
302
|
|
|
$
|
328
|
|
Interest cost
|
49
|
|
|
39
|
|
|
50
|
|
|||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
28
|
|
|||
Amortization of actuarial (gain) loss
|
(358
|
)
|
|
(317
|
)
|
|
(254
|
)
|
|||
Net periodic benefit cost recognized in the Consolidated Statements of Income
|
$
|
55
|
|
|
$
|
24
|
|
|
$
|
152
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Performance shares outstanding at
July 1, 2017
|
603,114
|
|
|
$
|
11.46
|
|
Granted
|
209,821
|
|
|
$
|
18.30
|
|
Vested
|
(255,757
|
)
|
|
$
|
11.30
|
|
Forfeited
|
(750
|
)
|
|
$
|
12.07
|
|
Performance shares outstanding at
June 30, 2018
|
556,428
|
|
|
$
|
14.11
|
|
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
Deferred Tax Assets:
|
|
|
|
|
|
||
Receivables
|
$
|
158
|
|
|
$
|
112
|
|
Inventory
|
1,153
|
|
|
1,792
|
|
||
Employee benefits
|
194
|
|
|
190
|
|
||
Deferred compensation
|
6,496
|
|
|
8,226
|
|
||
Other current liabilities
|
830
|
|
|
727
|
|
||
Tax credit carryforwards
|
1,251
|
|
|
749
|
|
||
Goodwill
|
655
|
|
|
1,421
|
|
||
Net operating loss carryforward
|
2,376
|
|
|
1,597
|
|
||
Net foreign currency losses
|
—
|
|
|
75
|
|
||
Property and equipment
|
—
|
|
|
1,774
|
|
||
Miscellaneous
|
2,394
|
|
|
1,387
|
|
||
Valuation Allowance
|
(638
|
)
|
|
—
|
|
||
Total asset
|
$
|
14,869
|
|
|
$
|
18,050
|
|
Deferred Tax Liabilities:
|
|
|
|
||||
Property and equipment
|
$
|
565
|
|
|
$
|
—
|
|
Net foreign currency gains
|
$
|
12
|
|
|
$
|
—
|
|
Miscellaneous
|
300
|
|
|
1,962
|
|
||
Total liability
|
$
|
877
|
|
|
$
|
1,962
|
|
Net Deferred Income Taxes
|
$
|
13,992
|
|
|
$
|
16,088
|
|
|
Year Ended June 30
|
||||||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
$
|
5,609
|
|
|
$
|
10,051
|
|
|
$
|
1,919
|
|
Foreign
|
39,166
|
|
|
34,204
|
|
|
26,057
|
|
|||
Total income before taxes on income
|
$
|
44,775
|
|
|
$
|
44,255
|
|
|
$
|
27,976
|
|
|
Year Ended June 30
|
||||||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Current Taxes:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
13,132
|
|
|
$
|
2,696
|
|
|
$
|
280
|
|
Foreign
|
11,982
|
|
|
8,130
|
|
|
5,848
|
|
|||
State
|
459
|
|
|
134
|
|
|
50
|
|
|||
Total payable
|
$
|
25,573
|
|
|
$
|
10,960
|
|
|
$
|
6,178
|
|
Deferred Taxes:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
5,015
|
|
|
$
|
6
|
|
|
$
|
153
|
|
Foreign
|
(2,427
|
)
|
|
(631
|
)
|
|
(501
|
)
|
|||
State
|
(776
|
)
|
|
(259
|
)
|
|
(141
|
)
|
|||
Valuation allowance
|
638
|
|
|
—
|
|
|
—
|
|
|||
Total deferred
|
$
|
2,450
|
|
|
$
|
(884
|
)
|
|
$
|
(489
|
)
|
Total provision for income taxes
|
$
|
28,023
|
|
|
$
|
10,076
|
|
|
$
|
5,689
|
|
|
Year Ended June 30
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
(Amounts in Thousands)
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Tax computed at U.S. federal statutory rate
|
$
|
12,582
|
|
|
28.1
|
%
|
|
$
|
15,489
|
|
|
35.0
|
%
|
|
$
|
9,791
|
|
|
35.0
|
%
|
State income taxes, net of federal income tax benefit
|
(408
|
)
|
|
(0.9
|
)
|
|
(81
|
)
|
|
(0.2
|
)
|
|
(59
|
)
|
|
(0.2
|
)
|
|||
Foreign tax rate differential
|
(1,615
|
)
|
|
(3.6
|
)
|
|
(3,832
|
)
|
|
(8.7
|
)
|
|
(2,998
|
)
|
|
(10.7
|
)
|
|||
Impact of foreign exchange rates on foreign income taxes
|
180
|
|
|
0.4
|
|
|
(613
|
)
|
|
(1.4
|
)
|
|
1,026
|
|
|
3.7
|
|
|||
Foreign subsidiary capitalization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,801
|
)
|
|
(6.4
|
)
|
|||
Valuation allowance
|
638
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Research credit
|
(378
|
)
|
|
(0.8
|
)
|
|
(348
|
)
|
|
(0.8
|
)
|
|
(320
|
)
|
|
(1.2
|
)
|
|||
Deemed repatriation
|
13,436
|
|
|
30.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Revaluation of net deferred tax assets
|
4,357
|
|
|
9.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other - net
|
(769
|
)
|
|
(1.7
|
)
|
|
(539
|
)
|
|
(1.1
|
)
|
|
50
|
|
|
0.1
|
|
|||
Total provision for income taxes
|
$
|
28,023
|
|
|
62.6
|
%
|
|
$
|
10,076
|
|
|
22.8
|
%
|
|
$
|
5,689
|
|
|
20.3
|
%
|
(Amounts in Thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Beginning balance - July 1
|
$
|
102
|
|
|
$
|
46
|
|
|
$
|
—
|
|
Tax positions related to prior fiscal years:
|
|
|
|
|
|
|
|
|
|||
Additions
|
78
|
|
|
56
|
|
|
46
|
|
|||
Reductions
|
(20
|
)
|
|
—
|
|
|
—
|
|
|||
Tax positions related to current fiscal year:
|
|
|
|
|
|
|
|
|
|||
Additions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reductions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Lapses in statute of limitations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Ending balance - June 30
|
$
|
160
|
|
|
$
|
102
|
|
|
$
|
46
|
|
Portion that, if recognized, would reduce tax expense and effective tax rate
|
$
|
137
|
|
|
$
|
85
|
|
|
$
|
37
|
|
•
|
Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
|
•
|
Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
|
•
|
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
|
Financial Instrument
|
|
Level
|
|
Valuation Technique/Inputs Used
|
Cash Equivalents
|
|
1
|
|
Market - Quoted market prices
|
Derivative Assets: Foreign exchange contracts
|
|
2
|
|
Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk
|
Trading securities: Mutual funds held in SERP
|
|
1
|
|
Market - Quoted market prices
|
Derivative Liabilities: Foreign exchange contracts
|
|
2
|
|
Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk
|
|
June 30, 2018
|
||||||||||
(Amounts in Thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
||||||
Cash equivalents
|
$
|
1,099
|
|
|
$
|
—
|
|
|
$
|
1,099
|
|
Derivatives: foreign exchange contracts
|
—
|
|
|
1,713
|
|
|
1,713
|
|
|||
Trading securities: mutual funds held in nonqualified SERP
|
8,769
|
|
|
—
|
|
|
8,769
|
|
|||
Total assets at fair value
|
$
|
9,868
|
|
|
$
|
1,713
|
|
|
$
|
11,581
|
|
Liabilities
|
|
|
|
|
|
||||||
Derivatives: foreign exchange contracts
|
$
|
—
|
|
|
$
|
1,867
|
|
|
$
|
1,867
|
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
1,867
|
|
|
$
|
1,867
|
|
|
June 30, 2017
|
||||||||||
(Amounts in Thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Assets
|
|
|
|
|
|
||||||
Cash equivalents
|
$
|
1,087
|
|
|
$
|
—
|
|
|
$
|
1,087
|
|
Derivatives: foreign exchange contracts
|
—
|
|
|
1,810
|
|
|
1,810
|
|
|||
Trading securities: mutual funds held in nonqualified SERP
|
7,607
|
|
|
—
|
|
|
7,607
|
|
|||
Total assets at fair value
|
$
|
8,694
|
|
|
$
|
1,810
|
|
|
$
|
10,504
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|||
Derivatives: foreign exchange contracts
|
$
|
—
|
|
|
$
|
2,928
|
|
|
$
|
2,928
|
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
2,928
|
|
|
$
|
2,928
|
|
Financial Instrument
|
|
Level
|
|
Valuation Technique/Inputs Used
|
Notes receivable
|
|
2
|
|
Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account non-performance risk
|
Borrowings under credit facilities
|
|
2
|
|
Market - Based on observable market rates, taking into account Kimball Electronics’ non-performance risk
|
The Effect of Derivative Instruments on Other Comprehensive Income (Loss)
|
||||||||||||||
|
|
|
|
June 30
|
||||||||||
(Amounts in Thousands)
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Amount of Pre-Tax Gain or (Loss) Recognized in Other Comprehensive Income (Loss) (OCI) on Derivatives (Effective Portion):
|
|
|
||||||||||||
Foreign exchange contracts
|
|
$
|
(2,669
|
)
|
|
$
|
779
|
|
|
$
|
(2,869
|
)
|
|
June 30
|
||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
SERP investments - current asset
|
$
|
294
|
|
|
$
|
258
|
|
SERP investments - other long-term asset
|
8,475
|
|
|
7,349
|
|
||
Total SERP investments
|
$
|
8,769
|
|
|
$
|
7,607
|
|
SERP obligation - current liability
|
$
|
294
|
|
|
$
|
258
|
|
SERP obligation - other long-term liability
|
8,475
|
|
|
7,349
|
|
||
Total SERP obligation
|
$
|
8,769
|
|
|
$
|
7,607
|
|
|
June 30
|
||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
||||
Taxes
|
$
|
2,803
|
|
|
$
|
6,412
|
|
Compensation
|
18,008
|
|
|
16,670
|
|
||
Derivatives
|
1,867
|
|
|
2,928
|
|
||
Retirement plan
|
1,791
|
|
|
1,506
|
|
||
Insurance
|
1,375
|
|
|
1,426
|
|
||
Other expenses
|
6,602
|
|
|
5,688
|
|
||
Total accrued expenses
|
$
|
32,446
|
|
|
$
|
34,630
|
|
|
At or For the Year Ended June 30
|
||||||||||
(Amounts in Thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales:
|
|
|
|
|
|
||||||
United States
|
$
|
448,785
|
|
|
$
|
403,830
|
|
|
$
|
383,678
|
|
China
|
160,175
|
|
|
152,817
|
|
|
150,080
|
|
|||
Mexico
|
117,327
|
|
|
94,726
|
|
|
76,499
|
|
|||
Other Foreign
|
345,774
|
|
|
279,541
|
|
|
231,803
|
|
|||
Total net sales
|
$
|
1,072,061
|
|
|
$
|
930,914
|
|
|
$
|
842,060
|
|
Long-Lived Assets:
|
|
|
|
|
|
||||||
United States
|
$
|
66,660
|
|
|
$
|
67,817
|
|
|
$
|
53,596
|
|
Poland
|
33,629
|
|
|
32,315
|
|
|
34,588
|
|
|||
China
|
14,546
|
|
|
17,106
|
|
|
15,922
|
|
|||
Romania
|
19,394
|
|
|
16,468
|
|
|
12,249
|
|
|||
Other Foreign
|
7,311
|
|
|
8,355
|
|
|
8,839
|
|
|||
Total long-lived assets
|
$
|
141,540
|
|
|
$
|
142,061
|
|
|
$
|
125,194
|
|
(Amounts in thousands, except per share data)
|
Year Ended June 30
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Basic and Diluted Earnings Per Share:
|
|
|
|
|
|
||||||
Net Income
|
$
|
16,752
|
|
|
$
|
34,179
|
|
|
$
|
22,287
|
|
Less: Net Income allocated to participating securities
|
9
|
|
|
15
|
|
|
—
|
|
|||
Net Income allocated to common Share Owners
|
$
|
16,743
|
|
|
$
|
34,164
|
|
|
$
|
22,287
|
|
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
26,745
|
|
|
27,413
|
|
|
28,916
|
|
|||
Dilutive effect of average outstanding performance shares
|
255
|
|
|
110
|
|
|
260
|
|
|||
Dilutive effect of average outstanding deferred stock units
|
7
|
|
|
7
|
|
|
—
|
|
|||
Dilutive weighted average shares outstanding
|
27,007
|
|
|
27,530
|
|
|
29,176
|
|
|||
|
|
|
|
|
|
||||||
Earnings Per Share of Common Stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.63
|
|
|
$
|
1.25
|
|
|
$
|
0.77
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
1.24
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
(Amounts in Thousands)
|
Foreign Currency Translation Adjustments
|
|
Derivative Gain (Loss)
|
|
Postemployment Benefits
Net Actuarial Gain (Loss)
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance at June 30, 2016
|
$
|
(9,653
|
)
|
|
$
|
(3,137
|
)
|
|
$
|
600
|
|
|
$
|
(12,190
|
)
|
Other comprehensive income (loss) before reclassifications
|
2,777
|
|
|
523
|
|
|
178
|
|
|
3,478
|
|
||||
Reclassification to (earnings) loss
|
—
|
|
|
(174
|
)
|
|
(198
|
)
|
|
(372
|
)
|
||||
Net current-period other comprehensive income (loss)
|
$
|
2,777
|
|
|
$
|
349
|
|
|
$
|
(20
|
)
|
|
$
|
3,106
|
|
Balance at June 30, 2017
|
$
|
(6,876
|
)
|
|
$
|
(2,788
|
)
|
|
$
|
580
|
|
|
$
|
(9,084
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) before reclassifications
|
2,519
|
|
|
(1,965
|
)
|
|
345
|
|
|
899
|
|
||||
Reclassification to (earnings) loss
|
—
|
|
|
1,455
|
|
|
(218
|
)
|
|
1,237
|
|
||||
Net current-period other comprehensive income (loss)
|
2,519
|
|
|
(510
|
)
|
|
127
|
|
|
2,136
|
|
||||
Tax Reform impact
(1)
|
—
|
|
|
(81
|
)
|
|
130
|
|
|
49
|
|
||||
Balance at June 30, 2018
|
$
|
(4,357
|
)
|
|
$
|
(3,379
|
)
|
|
$
|
837
|
|
|
$
|
(6,899
|
)
|
Reclassifications from Accumulated Other Comprehensive Income (Loss)
|
|
|
|
Affected Line Item in the
Consolidated Statements of Income
|
||||||
|
Year Ended June 30
|
|
||||||||
(Amounts in Thousands)
|
|
2018
|
|
2017
|
|
|||||
Derivative Gain (Loss)
(1)
|
|
$
|
(1,648
|
)
|
|
$
|
18
|
|
|
Cost of Sales
|
|
|
(20
|
)
|
|
(5
|
)
|
|
Non-operating income (expense), net
|
||
|
|
213
|
|
|
161
|
|
|
Benefit (Provision) for Income Taxes
|
||
|
|
$
|
(1,455
|
)
|
|
$
|
174
|
|
|
Net of Tax
|
Postemployment Benefits:
|
|
|
|
|
|
|
||||
Amortization of Actuarial Gain (Loss)
(2)
|
|
$
|
200
|
|
|
$
|
181
|
|
|
Cost of Sales
|
|
|
158
|
|
|
136
|
|
|
Selling and Administrative Expenses
|
||
|
|
(140
|
)
|
|
(119
|
)
|
|
Benefit (Provision) for Income Taxes
|
||
|
|
$
|
218
|
|
|
$
|
198
|
|
|
Net of Tax
|
|
|
|
|
|
|
|
||||
Total Reclassifications for the Period
|
|
$
|
(1,237
|
)
|
|
$
|
372
|
|
|
Net of Tax
|
|
Three Months Ended
|
||||||||||||||
(Amounts in Thousands, Except for Per Share Data)
|
September 30
|
|
December 31
|
|
March 31
|
|
June 30
|
||||||||
Fiscal Year 2018:
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
253,204
|
|
|
$
|
258,151
|
|
|
$
|
283,938
|
|
|
$
|
276,768
|
|
Gross Profit
|
19,490
|
|
|
20,962
|
|
|
22,927
|
|
|
22,823
|
|
||||
Net Income
(1)
|
8,480
|
|
|
(8,347
|
)
|
|
10,835
|
|
|
5,784
|
|
||||
Basic Earnings Per Share
|
$
|
0.32
|
|
|
$
|
(0.31
|
)
|
|
$
|
0.41
|
|
|
$
|
0.22
|
|
Diluted Earnings Per Share
|
$
|
0.31
|
|
|
$
|
(0.31
|
)
|
|
$
|
0.40
|
|
|
$
|
0.22
|
|
Fiscal Year 2017:
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
226,451
|
|
|
$
|
230,265
|
|
|
$
|
232,930
|
|
|
$
|
241,268
|
|
Gross Profit
|
18,322
|
|
|
20,553
|
|
|
18,718
|
|
|
18,002
|
|
||||
Other General Income
(2)
|
(4,005
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net Income
|
10,122
|
|
|
7,812
|
|
|
8,117
|
|
|
8,128
|
|
||||
Basic Earnings Per Share
|
$
|
0.36
|
|
|
$
|
0.29
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
Diluted Earnings Per Share
|
$
|
0.36
|
|
|
$
|
0.28
|
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
(a)
|
The following documents are filed as part of this report:
|
|
|
||
|
|
|
|
|
|
Schedules other than those listed above are omitted because they are either not required or not applicable, or the required information is presented in the Consolidated Financial Statements.
|
Exhibit No.
|
|
Description
|
2.1
|
|
|
2.2
(b)(d)(e)
|
|
|
3.1
|
|
|
3.2
|
|
|
10.1
(a)(b)
|
|
|
10.2
(a)
|
|
|
10.3
(a)
|
|
|
10.4
(a)
|
|
|
10.5
(a)
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
(a)
|
|
|
10.11
(a)
|
|
|
10.12
(a)
|
|
|
10.13
(a)
|
|
|
10.14
|
|
|
10.15
(a)
|
|
10.16
(a)
|
|
|
10.17
|
|
|
21
(b)
|
|
|
23
(b)
|
|
|
24
(b)
|
|
|
31.1
(b)
|
|
|
31.2
(b)
|
|
|
32.1
(b)(c)
|
|
|
32.2
(b)(c)
|
|
|
101.INS
(b)
|
|
XBRL Instance Document
|
101.SCH
(b)
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
(b)
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
(b)
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
(b)
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
(b)
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(a)
|
Constitutes management contract or compensatory arrangement
|
(b)
|
Filed herewith
|
(c)
|
In accordance with Item 601(b)(32)(ii) of Regulation S-K, the certifications furnished in Exhibit 32.1 and 32.2 will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
|
(d)
|
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will supplementally furnish any of the omitted schedules or exhibits to the Securities and Exchange Commission upon request.
|
(e)
|
Confidential treatment has been requested as to certain portions of this Exhibit.
|
|
|
KIMBALL ELECTRONICS, INC.
|
|
|
|
|
By:
|
/s/ MICHAEL K. SERGESKETTER
|
|
|
Michael K. Sergesketter
|
|
|
Vice President,
|
|
|
Chief Financial Officer
|
|
|
August 28, 2018
|
|
|
/s/ DONALD D. CHARRON
|
|
|
Donald D. Charron
|
|
|
Chairman of the Board,
|
|
|
Chief Executive Officer
|
|
|
August 28, 2018
|
|
|
|
|
|
/s/ MICHAEL K. SERGESKETTER
|
|
|
Michael K. Sergesketter
|
|
|
Vice President,
|
|
|
Chief Financial Officer
|
|
|
August 28, 2018
|
|
|
|
|
|
/s/ MARK D. HODELL
|
|
|
Mark D. Hodell
|
|
|
Corporate Controller,
|
|
|
(functioning as Principal Accounting Officer)
|
|
|
August 28, 2018
|
Signature
|
|
Signature
|
|
|
|
GREGORY J. LAMPERT *
|
|
COLLEEN C. REPPLIER *
|
Gregory J. Lampert
|
|
Colleen C. Repplier
|
Director
|
|
Director
|
|
|
|
GEOFFREY L. STRINGER *
|
|
GREGORY A. THAXTON *
|
Geoffrey L. Stringer
|
|
Gregory A. Thaxton
|
Director
|
|
Director
|
|
|
|
THOMAS J. TISCHHAUSER *
|
|
CHRISTINE M. VUJOVICH *
|
Thomas J. Tischhauser
|
|
Christine M. Vujovich
|
Director
|
|
Director
|
|
|
|
*
|
The undersigned does hereby sign this document on my behalf pursuant to powers of attorney duly executed and filed with the Securities and Exchange Commission, all in the capacities as indicated:
|
Date
|
|
|
August 28, 2018
|
|
/s/ DONALD D. CHARRON
|
|
|
Donald D. Charron
|
|
|
As Attorney-In-Fact
|
|
|
|
|
Description
|
Balance at
Beginning
of Year
|
|
Additions (Reductions)
to Expense
|
|
Adjustments to Other
Accounts
|
|
Write-offs and
Recoveries
|
|
Balance at
End of
Year
|
|||||||||||||||
(Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation Allowances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-Term Receivables
|
|
$
|
284
|
|
|
|
$
|
259
|
|
|
|
$
|
(51
|
)
|
|
|
$
|
(10
|
)
|
|
|
$
|
482
|
|
Deferred Tax Asset
|
|
$
|
—
|
|
|
|
$
|
638
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
638
|
|
Year Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation Allowances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-Term Receivables
|
|
$
|
192
|
|
|
|
$
|
129
|
|
|
|
$
|
(37
|
)
|
|
|
$
|
—
|
|
|
|
$
|
284
|
|
Year Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation Allowances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-Term Receivables
|
|
$
|
236
|
|
|
|
$
|
67
|
|
|
|
$
|
(96
|
)
|
|
|
$
|
(15
|
)
|
|
|
$
|
192
|
|
|
|
TABLE OF CONTENTS
|
Page
|
|
1.
|
DEFINITIONS AND USAGE
|
1
|
|
|
|
1.1
|
Definitions
|
1
|
|
|
1.2
|
Additional Definitions
|
10
|
|
|
1.3
|
Usage
|
13
|
|
2.
|
SALE AND TRANSFER OF ASSETS; CLOSING
|
13
|
|
|
|
2.1
|
Assets to be Sold
|
13
|
|
|
2.2
|
Excluded Assets
|
14
|
|
|
2.3
|
Consideration
|
15
|
|
|
2.4
|
Liabilities
|
16
|
|
|
2.5
|
Allocation
|
18
|
|
|
2.6
|
Closing
|
20
|
|
|
2.7
|
Closing Deliveries
|
21
|
|
|
2.8
|
Adjustment Procedure
|
23
|
|
|
2.9
|
Escrow of Escrow Amount
|
25
|
|
|
2.10
|
Third Party Consents
|
25
|
|
3.
|
REPRESENTATIONS AND WARRANTIES OF SELLERS
|
25
|
|
|
|
3.1
|
Organization and Good Standing
|
25
|
|
|
3.2
|
Enforceability; Authority; No Conflict
|
26
|
|
|
3.3
|
Ownership of Sellers
|
26
|
|
|
3.4
|
Financial Statements
|
27
|
|
|
3.5
|
Books and Records
|
27
|
|
|
3.6
|
Sufficiency of Assets
|
27
|
|
|
3.7
|
Owned Real Property
|
27
|
|
|
3.8
|
Leased Real Property
|
28
|
|
|
3.9
|
Title to Assets; Encumbrances
|
28
|
|
|
3.10
|
Condition of Facilities
|
29
|
|
|
3.11
|
Accounts Receivable
|
29
|
|
|
3.12
|
Inventories
|
29
|
|
|
3.13
|
No Undisclosed Liabilities
|
29
|
|
|
3.14
|
Taxes
|
30
|
|
|
|
|
|
|
-
i
-
|
|
|
|
TABLE OF CONTENTS
(Continued)
|
Page
|
|
|
3.15
|
No Material Adverse Effect
|
31
|
|
|
3.16
|
Employee Benefits
|
31
|
|
|
3.17
|
Compliance With Laws
|
32
|
|
|
3.18
|
Legal Proceedings
|
33
|
|
|
3.19
|
Absence of Certain Changes and Events
|
33
|
|
|
3.20
|
Contracts; No Defaults
|
34
|
|
|
3.21
|
Insurance
|
36
|
|
|
3.22
|
Environmental Matters
|
36
|
|
|
3.23
|
Employees
|
37
|
|
|
3.24
|
Labor Disputes; Compliance
|
38
|
|
|
3.25
|
Intellectual Property Assets
|
38
|
|
|
3.26
|
No Options
|
39
|
|
|
3.27
|
Certain Payments
|
39
|
|
|
3.28
|
Customers and Suppliers
|
39
|
|
|
3.29
|
Relationships with Related Persons
|
40
|
|
|
3.30
|
Brokers or Finders
|
40
|
|
4.
|
REPRESENTATIONS AND WARRANTIES OF BUYER
|
40
|
|
|
|
4.1
|
Organization and Good Standing
|
40
|
|
|
4.2
|
Authority; No Conflict
|
40
|
|
|
4.3
|
Certain Proceedings
|
41
|
|
|
4.4
|
Brokers or Finders
|
41
|
|
5.
|
PRE-CLOSING COVENANTS
|
41
|
|
|
|
5.1
|
Pre-Closing Covenants of Sellers
|
41
|
|
|
5.2
|
Pre-Closing Covenants of Buyer
|
43
|
|
6.
|
CONDITIONS TO CLOSE
|
43
|
|
|
|
6.1
|
Conditions Precedent to the Obligations of the Sellers
|
43
|
|
|
6.2
|
Conditions Precedent to the Obligations of Buyer
|
44
|
|
|
6.3
|
Conditions Precedent to the Obligations of Buyer and Sellers
|
44
|
|
7.
|
ADDITIONAL COVENANTS
|
44
|
|
|
|
7.1
|
Employees
|
44
|
|
|
-
ii
-
|
|
|
|
TABLE OF CONTENTS
(Continued)
|
Page
|
|
|
7.2
|
Taxes
|
46
|
|
|
7.3
|
Payment of Other Retained Liabilities
|
49
|
|
|
7.4
|
Restrictions on Sellers’ Dissolution and Distributions
|
49
|
|
|
7.5
|
Removing Excluded Assets
|
49
|
|
|
7.6
|
Assistance in Proceedings
|
50
|
|
|
7.7
|
Non-competition, Nonsolicitation, Non-disparagement and Confidentiality
|
50
|
|
|
7.8
|
Customer and Other Business Relationships
|
51
|
|
|
7.9
|
Change of Name
|
51
|
|
|
7.10
|
Bulk Sales
|
51
|
|
|
7.11
|
Collection of Accounts Receivable
|
51
|
|
|
7.12
|
Further Assurances
|
52
|
|
|
7.13
|
Transfer of Environmental Permits
|
52
|
|
|
7.14
|
Local County Purchase Agreements; Transition Services Agreement
|
52
|
|
8.
|
INDEMNIFICATION; REMEDIES
|
53
|
|
|
|
8.1
|
Survival
|
53
|
|
|
8.2
|
Indemnification and Reimbursement by Sellers
|
53
|
|
|
8.3
|
Indemnification and Reimbursement by Buyer
|
54
|
|
|
8.4
|
Limitations on Amount – Sellers
|
54
|
|
|
8.5
|
Limitations on Amount – Buyer
|
54
|
|
|
8.6
|
Time Limitations
|
54
|
|
|
8.7
|
Third-Party Claims
|
55
|
|
|
8.8
|
Procedures for Direct Claims
|
56
|
|
|
8.9
|
Calculation of Damages; Treatment of Indemnity Payments
|
56
|
|
|
8.10
|
No Double Recovery
|
57
|
|
|
8.11
|
Exclusion of Other Remedies
|
57
|
|
9.
|
TERMINATION
|
58
|
|
|
|
9.1
|
Termination Events
|
58
|
|
|
9.2
|
Effect of Termination
|
58
|
|
10.
|
GENERAL PROVISIONS
|
59
|
|
|
|
10.1
|
Expenses
|
59
|
|
|
-
iii
-
|
|
|
|
TABLE OF CONTENTS
(Continued)
|
Page
|
|
|
10.2
|
Public Announcements
|
59
|
|
|
10.3
|
Notices
|
59
|
|
|
10.4
|
Enforcement of Agreement
|
60
|
|
|
10.5
|
Waiver; Remedies Cumulative
|
60
|
|
|
10.6
|
Entire Agreement
|
61
|
|
|
10.7
|
Assignments, Successors and No Third-Party Rights
|
61
|
|
|
10.8
|
Severability
|
61
|
|
|
10.9
|
Construction
|
61
|
|
|
10.10
|
Time of Essence
|
61
|
|
|
10.11
|
Governing Law
|
61
|
|
|
10.12
|
Alternative Dispute Resolution
|
61
|
|
|
10.13
|
Exhibits and Schedules
|
64
|
|
|
10.14
|
Amendments and Waivers
|
65
|
|
|
10.15
|
Time Periods
|
65
|
|
|
10.16
|
Execution of Agreement
|
65
|
|
|
10.17
|
Appointment of Sellers’ Representative
|
65
|
|
11.
|
CONFIDENTIALITY
|
65
|
|
|
|
11.1
|
Definition of Confidential Information
|
65
|
|
|
11.2
|
Restricted Use of Confidential Information
|
66
|
|
|
11.3
|
Exceptions
|
66
|
|
|
11.4
|
Legal Proceedings
|
67
|
|
|
11.5
|
Return or Destruction of Confidential Information
|
67
|
|
|
11.6
|
Attorney-Client Privilege
|
67
|
|
|
-
iv
-
|
|
|
-v-
|
|
|
-
2
-
|
|
|
-
3
-
|
|
|
-
4
-
|
|
|
-
5
-
|
|
|
-
6
-
|
|
|
-
7
-
|
|
|
-
8
-
|
|
|
-
9
-
|
|
Term
|
Section
|
“Acquired Assets”
|
2.1
|
“Agreement”
|
Introductory Paragraph
|
“Allocation”
|
2.5(a)
|
|
-
10
-
|
|
Term
|
Section
|
“Assumed Liabilities”
|
2.4(a)
|
“Balance Sheet”
|
3.4
|
“Base Purchase Price”
|
2.3
|
“Bill of Sale and Assignment and Assumption Agreement”
|
2.7(a)(i)
|
“Business”
|
Recitals
|
“Buyer Contact”
|
11.2(a)
|
“Buyer Closing Documents”
|
4.2(a)
|
“Buyer Group”
|
5.1(a)
|
“Buyer Indemnified Persons”
|
8.2(a)
|
“Buyer’s Tax Contest”
|
7.2(c)
|
“Buyer”
|
Introductory Paragraph
|
“Buyer Plan”
|
7.1(e)
|
“Cap”
|
8.4
|
“Closing”
|
2.6
|
“Closing Adjustment Amount”
|
2.8(b)
|
“Closing Date”
|
2.6
|
“Closing Financial Statements”
|
2.8(b)
|
“Closing Working Capital”
|
2.8(b)
|
“Confidential Information”
|
11.1(a)
|
“Control Notice”
|
8.7(b)
|
“Current Employees”
|
3.23(a)
|
“Damages”
|
8.2(a)
|
“Deductible”
|
8.4
|
“Disclosing Party”
|
11.1(a)
|
“Dispute”
|
10.12(a)
|
“Earliest Initiation Date”
|
2.7(a)(viii)
|
“Employment Agreements”
|
2.7(a)(v)
|
“Escrow Agreement”
|
2.7(a)(vii)
|
“Estimated Closing Adjustment Amount”
|
2.8(a)
|
“Estimated Closing Financial Statements”
|
2.8(a)
|
“Estimated Closing Working Capital”
“Excess Vietcom Bank Indebtedness”
|
2.8(a)
2.4(a)(vi)
|
“Excluded Assets”
|
2.2
|
“FIRPTA Certificate”
“GES Purchase Price”
|
2.7(a)(vii)
2.5(a)
|
“GES Holdings Purchase Price”
|
2.5(a)
|
“GES Infotek Purchase Price”
|
2.5(a)
|
“GES Japan Purchase Price”
|
2.5(a)
|
“GES Suzhou Purchase Price”
|
2.5(a)
|
“GES Vietnam Purchase Price”
|
2.5(a)
|
|
-
11
-
|
|
Term
|
Section
|
“First Meeting”
|
2.7(a)(viii)
|
“Fundamental Representations”
|
8.5
|
“Indemnified Person”
|
8.7(a)
|
“Indemnifying Person”
|
8.7(a)
|
“Independent Accountants”
|
2.5(b)
|
“Interim Balance Sheet”
|
3.4
|
“Independent Accounts”
|
3.4
|
“JAMS Rules”
|
2.7(a)(viii)
|
“Leased Real Property”
|
3.8
|
“Loan Payoff Amount”
|
2.7(a)(vi)
|
“Non-Competition and Non-Solicitation Agreements”
|
2.7(a)(viii)
|
“Notice”
|
10.12(a)
|
“Parties”
|
Introductory Paragraph
|
“Proprietary Information”
“Pre-Closing Tax Return”
|
7.7(d)
7.2(b)
|
“Purchase Price”
|
2.3
|
“Real Property Lease”
|
3.8
|
“Receiving Party”
|
2.7(a)(viii)
|
“Restricted Period”
|
7.7(a)
|
“Retained Liabilities”
|
2.4(b)
|
“Securities Act”
|
3.3
|
“Seller Contact”
|
2.7(a)(viii)
|
“Sellers”
|
Introductory Paragraph
|
“Sellers Closing Documents”
|
3.2(a)
|
“Sellers Fundamental Representations”
|
8.4
|
“Sellers Indemnified Persons”
|
8.3
|
“Sellers’ Representative”
|
Introductory Paragraph
|
“Sellers’ Tax Contest”
|
7.2(c)
|
“Shared Tax Return”
|
7.2(b)
|
“Survival Period”
|
8.6(a)
|
“Tax Proceeding”
|
7.2(c)
|
“Tax Grant”
|
3.14(o)
|
“Tax Purchase Price”
|
2.5(a)
|
“Third-Party Claim”
|
8.7(a)
|
“Transfer Taxes”
|
7.2(f)
|
“Transferred Employees”
|
7.1(a)
|
“Transition Services Agreement”
|
7.14
|
“Union”
|
3.24(b)
|
“U.S. Allocation”
|
2.5(b)
|
“WARN Act”
|
7.1(d)
|
|
-
12
-
|
|
|
-
13
-
|
|
|
-
14
-
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|
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-
15
-
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-
16
-
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-
17
-
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18
-
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19
-
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-
20
-
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-
21
-
|
|
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-
22
-
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|
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-
23
-
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-
24
-
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|
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-
25
-
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-
26
-
|
|
|
-
27
-
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|
|
-
28
-
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-
29
-
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|
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-
30
-
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|
|
-
31
-
|
|
|
-
32
-
|
|
|
-
33
-
|
|
|
-
34
-
|
|
|
-
35
-
|
|
|
-
36
-
|
|
|
-
37
-
|
|
|
-
38
-
|
|
|
-
39
-
|
|
|
-
40
-
|
|
|
-
41
-
|
|
|
-
42
-
|
|
|
-
43
-
|
|
|
-
44
-
|
|
|
-
45
-
|
|
|
-
46
-
|
|
|
-
47
-
|
|
|
-
48
-
|
|
|
-
49
-
|
|
|
-
50
-
|
|
|
-
51
-
|
|
|
-
52
-
|
|
|
-
53
-
|
|
|
-
54
-
|
|
|
-
55
-
|
|
|
-
56
-
|
|
|
-
57
-
|
|
|
-
58
-
|
|
If to Buyer:
|
Kimball Electronics Indiana, Inc.
1205 Kimball Boulevard
Jasper, Indiana 47546
Attention: John Kahle
Telephone No.: (812) 634-4748
Facsimile No.: (812) 482-8060
E-mail: john.kahle@kimballelectronics.com
|
|
-
59
-
|
|
with a copy to:
|
Squire Patton Boggs (US) LLP
221 E. Fourth Street, Suite 2900 Cincinnati, Ohio 45202 Attention: Stephen C. Mahon and Toby D. Merchant
Telephone No.: (513) 361-1200
Facsimile No.: (513) 361-1201
E-mail: stephen.mahon@squirepb.com
toby.merchant@squirepb.com |
If to Sellers’ Representative:
|
GES Holdings, Inc.
5215 Hellyer Avenue, Suite #130
San Jose, CA 95138
Attention: James McCormick
Telephone No.: (669) 234-1111
Facsimile No.: (669) 234-1099
E-mail: james@geservs.com
|
with a copy to:
|
Pillsbury Winthrop Shaw Pittman LLP
2550 Hanover Street
Palo Alto, CA 94304-1115
Attention: Riaz Karamali
Telephone No.: 650.233.4052
Facsimile No.: 650.233.4545
|
|
E-mail.: riaz.karamali@pillsburylaw.com
|
|
-
60
-
|
|
|
-
61
-
|
|
(i)
|
all information that is a trade secret under applicable trade secret or other law;
|
(ii)
|
all information concerning product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer hardware, Software and computer software and database technologies, systems, structures and architectures;
|
(iii)
|
all information concerning the business and affairs of the Disclosing Party (which includes historical and current financial statements, financial projections and budgets, tax returns and accountants’ materials, historical, current and projected sales, capital spending budgets and plans, business plans, strategic
|
|
-
65
-
|
|
(iv)
|
all notes, analyses, compilations, studies, summaries and other material prepared by the Receiving Party to the extent containing or based, in whole or in part, upon any information included in the foregoing.
|
|
-
66
-
|
|
|
-
67
-
|
|
SELLERS:
|
|
|
|
|
GES Holdings, Inc.,
a California corporation |
|
Global Equipment Services and Manufacturing (Suzhou) Co., Ltd.,
a limited liability company registered under the laws of China |
||
|
|
|
|
|
By:
|
/s/ Don Tran
|
|
By:
|
/s/ Seo Ping Ng
|
Name:
Title:
|
Don Tran
CEO
|
|
Name:
Title:
|
Seo Ping Ng
CEO/President Asia Pacific
|
|
|
|
|
|
Global Equipment Services and Manufacturing, Inc.,
a California Corporation |
|
Suzhou Global Equipment Services and Trading Co., Ltd.,
a limited liability company registered under the laws of China |
||
|
|
|
|
|
By:
|
/s/ Don Tran
|
|
By:
|
/s/ Seo Ping Ng
|
Name:
Title:
|
Don Tran
CEO
|
|
Name:
Title:
|
Seo Ping Ng
CEO/President Asia Pacific
|
|
|
|
|
|
|
|
|
|
|
GES Japan KK,
a kabushiki kaisha registered under the laws of Japan |
|
GES Infotek Pvt. Ltd.,
a private limited company registered under the laws of India |
||
|
|
|
|
|
By:
|
/s/ Gautam Shankar
|
|
By:
|
/s/ Gautam Shankar
|
Name:
Title:
|
Gautam Shankar
CEO
|
|
Name:
Title:
|
Gautam Shankar
CEO
|
|
|
|
|
|
|
|
|
|
|
SELLERS’ REPRESENTATIVE:
|
|
|
|
|
GES Holdings, Inc.,
a California corporation |
|
|
|
|
|
|
|
|
|
By:
|
/s/ Don Tran
|
|
|
|
Name:
Title:
|
Don Tran
CEO
|
|
|
|
BUYER:
|
|
|
|
Kimball Electronics Indiana, Inc.,
an Indiana corporation
|
|
|
|
By:
|
/s/ Donald D. Charron
|
Name:
Title:
|
Donald D. Charron
Chairman of the Board,
Chief Executive Officer
|
Donald D. Charron, Chairman of the Board, Chief Executive Officer
|
$
|
692,441
|
|
John H. Kahle, Vice President, General Counsel, Chief Compliance Officer, Secretary
|
$
|
397,800
|
|
Steven T. Korn, Vice President, North American Operations
|
$
|
315,297
|
|
Michael K. Sergesketter, Vice President, Chief Financial Officer
|
$
|
312,878
|
|
Christopher J. Thyen, Vice President, New Platforms
|
$
|
294,899
|
|
Donald D. Charron, Chairman of the Board, Chief Executive Officer
|
$
|
461,584
|
|
John H. Kahle, Vice President, General Counsel, Chief Compliance Officer, Secretary
|
$
|
270,504
|
|
Steven T. Korn, Vice President, North American Operations
|
$
|
210,279
|
|
Michael K. Sergesketter, Vice President, Chief Financial Officer
|
$
|
207,871
|
|
Christopher J. Thyen, Vice President, New Platforms
|
$
|
196,675
|
|
|
|
LTPS Grant
(Shares Issued)
(1)
|
|
Donald D. Charron, Chairman of the Board, Chief Executive Officer
|
|
74,351
|
|
John H. Kahle, Vice President, General Counsel, Chief Compliance Officer, Secretary
|
|
26,802
|
|
Steven T. Korn, Vice President, North American Operations
|
|
15,493
|
|
Michael K. Sergesketter, Vice President, Chief Financial Officer
|
|
14,948
|
|
Christopher J. Thyen, Vice President, New Platforms
|
|
14,590
|
|
|
|
|
|
(1) Shares have not been reduced by the number of shares withheld to satisfy tax withholding obligations.
|
|
|
LTPS Award
(number of shares)
|
|
Donald D. Charron, Chairman of the Board, Chief Executive Officer
|
|
65,692
|
|
John H. Kahle, Vice President, General Counsel, Chief Compliance Officer, Secretary
|
|
16,746
|
|
Steven T. Korn, Vice President, North American Operations
|
|
13,181
|
|
Michael K. Sergesketter, Vice President, Chief Financial Officer
|
|
12,934
|
|
Christopher J. Thyen, Vice President, New Platforms
|
|
12,351
|
|
|
Jurisdiction of Incorporation
|
|
Percent of Voting Stock Owned By the Registrant
|
Kimball Electronics Group, LLC
|
Indiana
|
|
100%
|
Kimball Electronics (Thailand) Ltd.
|
Thailand
|
|
100%
|
Kimball Electronics Poland Sp. z o.o.
|
Poland
|
|
100%
|
Kimball Electronics (Nanjing) Co. Ltd. (LLC)
|
China
|
|
100%
|
Kimball Electronics Tampa, Inc.
|
Florida
|
|
100%
|
Kimball Electronics Mexico, Inc.
|
Texas
|
|
100%
|
Kimball Electronics - Mexico S.A. de C.V.
|
Mexico
|
|
100%
|
Kimball Electronics Netherlands B.V.
|
Netherlands
|
|
100%
|
Kimball Electronics Romania S.R.L.
|
Romania
|
|
100%
|
Kimball Electronics Indianapolis, Inc.
|
Indiana
|
|
100%
|
/s/ Deloitte & Touche LLP
|
DELOITTE & TOUCHE LLP
|
Indianapolis, Indiana
|
August 28, 2018
|
/s/ Gregory J. Lampert
|
/s/ Colleen C. Repplier
|
Gregory J. Lampert
|
Colleen C. Repplier
|
|
|
/s/ Geoffrey L. Stringer
|
/s/ Gregory A. Thaxton
|
Geoffrey L. Stringer
|
Gregory A. Thaxton
|
|
|
/s/ Thomas J. Tischhauser
|
/s/ Christine M. Vujovich
|
Thomas J. Tischhauser
|
Christine M. Vujovich
|
|
|
1.
|
I have reviewed this
Annual Report on Form 10-K
of Kimball Electronics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 28, 2018
|
|
|
|
/s/ DONALD D. CHARRON
|
|
|
DONALD D. CHARRON
Chairman of the Board,
Chief Executive Officer
|
1.
|
I have reviewed this
Annual Report on Form 10-K
of Kimball Electronics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 28, 2018
|
|
|
|
/s/ MICHAEL K. SERGESKETTER
|
|
|
MICHAEL K. SERGESKETTER
Vice President,
Chief Financial Officer
|
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 28, 2018
|
|
|
|
/s/ DONALD D. CHARRON
|
|
|
DONALD D. CHARRON
Chairman of the Board,
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 28, 2018
|
|
|
|
/s/ MICHAEL K. SERGESKETTER
|
|
|
MICHAEL K. SERGESKETTER
Vice President,
Chief Financial Officer
|