Note K - Business Segments and Foreign Operations

12 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

K

. BUSINESS SEGMENTS AND FOREIGN OPERATIONS

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment. Principal products include marine transmissions, azimuth drives, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and controls systems. The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, energy and natural resources, government, and industrial markets.

Net sales by product group is summarized as follows:

	2020		2019
Industrial	$	26,343	$	34,042
Land-based transmissions		62,697		112,793
Marine and propulsion systems		152,501		150,237
Other		5,297		5,591
Total	$	246,838	$	302,663

Industrial products include clutches, power take-offs and pump drives sold to the agriculture, recycling, construction and oil and gas markets. The land based transmission products include applications for oilfield and natural gas, military and airport rescue and fire fighting. The marine and propulsion systems include marine transmission, azimuth drives, controls, surface drives, propellers and boat management systems for the global commercial marine, pleasure craft and patrol boat markets. Other includes non-Twin Disc manufactured product sold through Company-owned distribution entities.

The Company has

two

reportable segments: manufacturing and distribution.  Its segment structure reflects the way management makes operating decisions and manages the growth and profitability of the business. It also corresponds with management's approach of allocating resources and assessing the performance of its segments. The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices.  Management evaluates the performance of its segments based on net earnings.

Information about the Company's segments, before intercompany eliminations, is summarized as follows:

2020	Manufacturing			Distribution		Total
Net Sales	$	227,565		$	95,824	$	323,389
Intra-segment sales		14,230			12,889		27,119
Inter-segment sales		43,854			5,578		49,432
Interest income		346			22		368
Interest expense		2,128			-		2,128
Income taxes		(2,027	)		268		(1,759	)
Depreciation and amortization		11,151			379		11,530
Net (loss) income attributable to Twin Disc		(31,603	)		553		(31,050	)
Assets		365,417			43,118		408,535
Expenditures for segment assets		9,615			734		10,349

2019	Manufacturing		Distribution			Total
Net Sales	$	280,428	$	106,481		$	386,909
Intra-segment sales		20,384		14,026			34,410
Inter-segment sales		46,078		3,758			49,836
Interest income		1,154		26			1,180
Interest expense		3,086		(37	)		3,049
Income taxes		7,939		353			8,292
Depreciation and amortization		12,893		402			13,295
Net income attributable to Twin Disc		25,062		248			25,310
Assets		384,612		46,076			430,688
Expenditures for segment assets		10,725		663			11,388

The following is a reconciliation of reportable segment net sales and net (loss) income to the Company's consolidated totals:

	2020			2019
Net sales:
Total net sales from reportable segments	$	323,389		$	386,909
Elimination of inter-company sales		(76,551	)		(84,246	)
Total consolidated net sales	$	246,838		$	302,663
Net (loss) income attributable to Twin Disc:
Total net (loss) income from reportable segments	$	(31,050	)	$	25,310
Other adjustments and corporate expenses		(8,767	)		(14,637	)
Total consolidated net (loss) income attributable to Twin Disc	$	(39,817	)	$	10,673

Corporate expenses pertain to certain costs that are

not

allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and global functional expenses.

Other significant items:

	Segment						Consolidated
	Totals			Adjustments			Totals
2020
Interest income	$	368		$	(290	)	$	78
Interest expense		2,128			(268	)		1,860
Income taxes		(1,759	)		(2,410	)		(4,169	)
Depreciation and amortization		11,530			395			11,925
Assets		408,535			(114,408	)		294,127
Expenditures for segment assets		10,349			350			10,699
2019
Interest income	$	1,180		$	(1,137	)	$	43
Interest expense		3,049			(1,122	)		1,927
Income taxes		8,292			(4,581	)		3,711
Depreciation and amortization		13,295			317			13,612
Assets		430,688			(83,818	)		346,870
Expenditures for segment assets		11,388			591			11,979

All adjustments represent inter-company eliminations and corporate amounts.

Geographic information about the Company is summarized as follows:

	2020		2019
Net sales
United States	$	83,771	$	132,467
Netherlands		39,501		31,521
China		26,354		28,772
Austria		12,552		10,464
Australia		12,438		12,463
Italy		11,802		12,755
Canada		5,664		10,875
Other countries		54,756		63,346
Total	$	246,838	$	302,663

Net sales by geographic region are based on product shipment destination.

Long-lived assets primarily pertain to property, plant and equipment and exclude goodwill, other intangibles, and deferred income taxes. They are summarized as follows:

	2020		2019
Long-lived assets
United States	$	41,996	$	41,233
Netherlands		12,659		13,186
Belgium		8,363		8,595
Switzerland		6,804		6,810
Italy		1,697		1,894
Other countries		5,205		3,298
Total	$	76,724	$	75,016

The Company has

one

distributor customer, primarily of its manufacturing segment, that accounted for

10%

of total Company sales for fiscal

2020.

There were

no

customers that accounted for

10%

of consolidated net sales in fiscal

2019.

Disaggregated revenue:

The following tables present details deemed most relevant to the users of the financial statements for the years ended

June 30, 2020

and

June 30, 2019.

Net sales by product group for the year ended

June 30, 2020

is summarized as follows:

	Manufacturing		Distribution		Elimination of Intercompany Sales			Total
Industrial	$	24,143	$	5,634	$	(3,434	)	$	26,343
Land-based transmissions		63,523		25,699		(26,525	)		62,697
Marine and propulsion systems		139,833		59,212		(46,544	)		152,501
Other		66		5,279		(48	)		5,297
Total	$	227,565	$	95,824	$	(76,551	)	$	246,838

Net sales by product group for the year ended

June 30, 2019

is summarized as follows:

	Manufacturing		Distribution		Elimination of Intercompany Sales			Total
Industrial	$	30,393	$	8,079	$	(4,430	)	$	34,042
Land-based transmissions		111,260		30,483		(28,950	)		112,793
Marine and propulsion systems		138,704		62,329		(50,796	)		150,237
Other		71		5,590		(70	)		5,591
Total	$	280,428	$	106,481	$	(84,246	)	$	302,663