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:

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

	Reported		ASC 606			As Adjusted
Effective Date	June 30, 2018		Adjustments			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 fiscal year ended

June

30,

2019

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

	Year Ended June 30, 2019
	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
Net sales	$	791,579	$	(8,624	)	$	782,955
Cost of sales		523,519		(5,979	)	$	517,540
Gross profit		268,060		(2,645	)	$	265,415
Provision for income taxes		18,424		(650	)	$	17,774
Income from continuing operations		47,189		(1,995	)	$	45,194
Income (loss) from discontinued operations, net of income taxes		20,725		195		$	20,920
Net income (loss)	$	67,914	$	(1,800	)	$	66,114

As of June 30, 2019	As Presented		Impact of ASC 606			Balances Without adoption of ASC 606
ASSETS
Prepaid Expenses	$	30,872	$	(8,624	)	$	22,248
Inventories		88,645		5,979			94,624

LIABILITIES
Income taxes payable		5,744		(650	)		5,094
Retained earnings		818,282		(1,800	)		816,482

Disaggregation of Revenue from Contracts with Customers

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

	Year Ended
Revenue by Product Line	June 30, 2019		June 30, 2018
Refrigeration	$	210,407	$	227,367
Merchandising & Display		34,532		34,932
Pumps		33,661		36,637
Total Food Service Equipment		278,600		298,936

Engraving Services		139,769		123,822
Engraving Products		9,924		12,453
Total Engraving		149,693		136,275

Engineering Technologies Components		105,270		90,781

Electronics		204,073		196,291

Hydraulics Cylinders and System		53,943		48,169

Total Revenue by Product Line	$	791,579	$	770,452

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

	Year Ended
Net sales	June 30, 2019
United States	$	520,908
Asia Pacific		108,667
EMEA (1)		144,636
Other Americas		17,368
Total	$	791,579

(

)

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):

	Year Ended
Timing of Revenue Recognition	June 30, 2019		June 30, 2018
Products and services transferred at a point in time	$	759,628	$	755,067
Products transferred over time		31,951		15,385
Net Sales	$	791,579	$	770,452

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

June 30, 2019 (

in thousands):

	Balance at Beginning of Period		Additions		Deductions		Balance at End of Period
Year ended June 30, 2019
Contract assets:
Prepaid and other current assets		5,904		24,380		21,866		8,418
Contract liabilities:
Customer deposits		2,552		6,336		7,530		1,358

During the year ended

June 30, 2019,

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

	Year ended
Revenue recognized in the period from:	June 30, 2019
Amounts included in the contract liability balance at the beginning of the period	$	2,552

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.