)

Revenue From Contracts With Customers

Effective

July 1, 2018,

the Company adopted the new accounting standard ASU

No.

2014

09,

“Revenue from Contracts with Customers" (ASC

606

) using the modified retrospective method to contracts that were

not

completed as of

June 30, 2018.

We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings, whereby the cumulative impact of all prior periods is recorded in retained earnings or other impacted balance sheet line items upon adoption. The comparative information has

not

been adjusted and continues to be reported under ASC

605.

The impact on the Company’s consolidated income statements, balance sheets, equity or cash flows as of the adoption date as a result of applying ASC

606

have been reflected within those respective financial statements.

Under the Company’s historical accounting policies, non-developmental long-term contracts were recognized when the goods were transferred to the customer. Upon adoption, contracts for highly customized customer products that have

alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin met the requirements for recognition over time under ASC

606.

Additionally, under the Company’s historical accounting policies, the Food Service Equipment segment estimated the rebate accrual based on a volume-related method for rebates. Under ASC

606,

the Company now calculates the rebate accrual on anticipated sales for the rebate period, rather than measurement of actual achievement of specific tiers.

Upon adoption, we recognized a reduction to retained earnings of

$1.0

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

$0.7

million in revenues offset by cost of sales increase of

$0.6

million; and (ii) a

$1.5

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

June 30, 2018

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

June 30, 2018,

as if ASC

606

had been adopted in our

2018

fiscal year are as follows:

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

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

Note that above amounts as of

June 30

are before any restatement of balances to discontinued operations.

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

three

and

six

months ended

December 31, 2018

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

	Three Months Ended December 31, 2018
	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
Net sales	$	195,522	$	(2,812	)	$	192,710
Cost of sales		128,586		(2,786	)		125,800
Gross profit		66,936		(26	)		66,910
Provision for income taxes		3,860		(8	)		3,852
Income from continuing operations		12,474		(18	)		12,456
Income (loss) from discontinued operations, net of income taxes		924		171			1,095
Net income (loss)	$	13,398	$	153		$	13,551

	Six Months Ended December 31, 2018
	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
Net sales	$	388,609	$	(5,855	)	$	382,754
Cost of sales		252,421		(5,282	)		247,139
Gross profit		136,188		(573	)		135,615
Provision for income taxes		9,702		(166	)		9,536
Income from continuing operations		26,767		(407	)		26,360
Income (loss) from discontinued operations, net of income taxes		2,488		195			2,683
Net income (loss)	$	29,255	$	(212	)	$	29,043

	December 31, 2018
	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
ASSETS
Prepaid Expenses	$	21,425	$	(7,083	)	$	14,342
Inventories		109,423		5,282			114,705

LIABILITIES
Accrued liabilities	$	61,262	$	(1,228	)	$	60,034
Income taxes payable		7,672		(166	)		7,506
Current liabilities- Discontinued Operations		18,906		(195	)		18,711
Retained earnings		784,687		(212	)		784,475

Disaggregation of Revenue from Contracts with Customers

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

	Three Months Ended
Revenue by Product Line	December 31, 2018		December 31, 2017
Refrigeration	$	52,217	$	56,434
Merchandising & Display		9,065		8,235
Pumps		7,371		8,496
Total Food Service Equipment		68,653		73,165

Engraving Services		35,796		30,131
Engraving Products		2,689		3,748
Total Engraving		38,485		33,879

Engineering Technologies Components		23,568		21,928

Electronics		52,700		46,035

Hydraulics Cylinders and System		12,116		10,687

Total Revenue by Product Line	$	195,522	$	185,694

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

	Six Months Ended
Revenue by Product Line	December 31, 2018		December 31, 2017
Refrigeration	$	106,664		116,105
Merchandising & Display		18,229		17,048
Pumps		16,098		17,839
Total Food Service Equipment		140,991		150,992

Engraving Services		69,653		60,124
Engraving Products		4,813		6,584
Total Engraving		74,466		66,708

Engineering Technologies Components		44,351		42,195

Electronics		104,150		92,851

Hydraulics Cylinders and System		24,651		22,090

Total Revenue by Product Line	$	388,609		374,836

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

Net sales	Three Months Ended December 31, 2018		Six Months Ended December 31, 2018
United States	$	129,969		254,705
Asia Pacific		28,163		56,041
EMEA (1)		32,978		68,504
Other Americas		4,412		9,359
Total	$	195,522		388,609

(

)

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

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

	Three Months Ended
Timing of Revenue Recognition	December 31, 2018		December 31, 2017
Products and services transferred at a point in time	$	188,093	$	182,441
Products transferred over time		7,429		3,253
Net Sales	$	195,522	$	185,694

	Six Months Ended
Timing of Revenue Recognition	December 31, 2018		December 31, 2017
Products and services transferred at a point in time	$	375,998	$	367,954
Products transferred over time		12,611		6,882
Net Sales	$	388,609	$	374,836

Contract Balances

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

not

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

Contract liabilities are customer deposits for which revenue has

not

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

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

December 31, 2018

and

September 30, 2018 (

in thousands):

	Balance at Beginning of Period		Additions		Deductions		Balance at End of Period
Fiscal quarter ended December 31, 2018
Contract assets:
Accounts receivable	$	1,552	$	10,735	$	9,584	$	2,703
Unbilled services		7,183		2,465		1,035		8,613
Contract liabilities:
Customer deposits		2,049		3,383		-		5,432

Fiscal quarter ended September 30, 2018
Contract assets:
Accounts receivable	$	5,655	$	5,422	$	9,525	$	1,552
Unbilled services		5,904		2,960		1,681		7,183
Contract liabilities:
Customer deposits		2,552		-		503		2,049

During the quarters ended

December 31, 2018

and

September 30, 2018,

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

Revenue recognized in the period from:		December 31, 2018				September 30, 2018
Amounts included in the contract liability balance at the beginning of the period		$	-			$	503

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

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