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| Network | 130 - Disclosure - Summary of Significant Accounting Policies (Policies) (http://www.aceto.com/taxonomy/role/NotesToFinancialStatementsSignificantAccountingPoliciesTextBlockPolicies) |
| Table | Statement [Table] |
| Reporting Entity [Axis] | 0000002034 (http://www.sec.gov/CIK) |
| Legal Entity [Axis] | Entity [Domain] |
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2011-07-01 - 2012-06-30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation |
Principles of Consolidation
The
consolidated financial statements include the financial statements
of the Company and its wholly-owned subsidiaries. All significant
inter-company balances and transactions are eliminated in
consolidation.
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Use of Estimates |
Use of Estimates
The
preparation of financial statements in conformity with U.S.
generally accepted accounting principles (GAAP) requires management
to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses reported in those
financial statements and the disclosure of contingent assets and
liabilities at the date of the financial statements. These
judgments can be subjective and complex, and consequently actual
results could differ from those estimates and
assumptions. The Company’s most critical
accounting policies relate to revenue recognition; allowance for
doubtful accounts; inventory; goodwill and other indefinite-life
intangible assets; long-lived assets; environmental matters and
other contingencies; income taxes; and stock-based
compensation.
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Cash Equivalents |
Cash Equivalents
The
Company considers all highly liquid debt instruments with original
maturities at the time of purchase of three months or less to be
cash equivalents. Included in cash equivalents as of June 30, 2012
is $91 of restricted cash.
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Investments |
Investments
The
Company classifies investments in marketable securities as trading,
available-for-sale or held-to-maturity at the time of purchase and
periodically re-evaluates such classifications. Trading
securities are carried at fair value, with unrealized holding gains
and losses included in earnings. Held-to-maturity
securities are recorded at cost and are adjusted for the
amortization or accretion of premiums or discounts over the life of
the related security. Unrealized holding gains and losses on
available-for-sale securities are excluded from earnings and are
reported as a separate component of accumulated other comprehensive
income (loss) until realized. In determining realized
gains and losses, the cost of securities sold is based on the
specific identification method. Interest and dividends on the
investments are accrued at the balance sheet date.
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Inventories |
Inventories
Inventories,
which consist principally of finished goods, are stated at the
lower of cost (first-in first-out method) or market. The
Company writes down its inventories for estimated excess and
obsolete goods by an amount equal to the difference between the
carrying cost of the inventory and the estimated market value based
upon assumptions about future demand and market
conditions.
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Environmental and Other Contingencies |
Environmental and Other Contingencies
The
Company establishes accrued liabilities for environmental matters
and other contingencies when it is probable that a liability has
been incurred and the amount of the liability is reasonably
estimable. If the contingency is resolved for an amount
greater or less than the accrual, or the Company’s share of
the contingency increases or decreases, or other assumptions
relevant to the development of the estimate were to change, the
Company would recognize an additional expense or benefit in the
consolidated statements of income in the period such determination
was made.
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Pension Benefits |
Pension Benefits
In
connection with certain historical acquisitions in Germany, the
Company assumed defined benefit pension plans covering certain
employees who meet certain eligibility requirements. The
net pension benefit obligations recorded and the related periodic
costs are based on, among other things, assumptions of the discount
rate, estimated return on plan assets, salary increases and the
mortality of participants. The obligation for these
claims and the related periodic costs are measured using actuarial
techniques and assumptions. Actuarial gains and losses
are deferred and amortized over future periods. The
Company’s plans are funded in conformity with the funding
requirements of applicable government regulations.
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Accumulated Other Comprehensive Income |
Accumulated Other Comprehensive Income
The
components of accumulated other comprehensive income as of June 30,
2012 and 2011 are as follows:
The
foreign currency translation adjustments for the year ended June
30, 2012 primarily relates to the fluctuation of the conversion
rate of the Euro. The currency translation adjustments are not
adjusted for income taxes as they relate to indefinite investments
in non-US subsidiaries.
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Common Stock |
Common Stock
On
September 8, 2011, the Board of Directors of the Company authorized
the continuation of the Company’s stock repurchase program,
expiring in May 2014. Under the stock repurchase
program, the Company is authorized to purchase up to an additional
4,051 shares of common stock in open market or private
transactions, at prices not to exceed the market value of the
common stock at the time of such purchase.
On
September 6, 2012, the Company's board of directors declared a
regular quarterly dividend of $0.055 per share to be distributed on
September 28, 2012 to shareholders of record as of September 17,
2012.
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Stock Options |
Stock Options
GAAP
requires that all stock-based compensation be recognized as an
expense in the financial statements and that such costs be measured
at the fair value of the award. GAAP also requires that
excess tax benefits related to stock option exercises be reflected
as financing cash inflows.
In
order to determine the fair value of stock options on the date of
grant, the Company uses the Black-Scholes option-pricing model,
including an estimate of forfeiture rates. Inherent in this
model are assumptions related to expected stock-price volatility,
risk-free interest rate, expected life and dividend yield.
The Company uses an expected stock-price volatility assumption that
is a combination of both historical volatility, calculated based on
the daily closing prices of its common stock over a period equal to
the expected life of the option and implied volatility, utilizing
market data of actively traded options on Aceto’s common
stock, which are obtained from public data sources. The Company
believes that the historical volatility of the price of its common
stock over the expected life of the option is a reasonable
indicator of the expected future volatility and that implied
volatility takes into consideration market expectations of how
future volatility might differ from historical volatility.
Accordingly, the Company believes a combination of both historical
and implied volatility provides the best estimate of the future
volatility of the market price of its common stock. The risk-free
interest rate is based on U.S. Treasury issues with a term equal to
the expected life of the option. The Company uses historical data
to estimate expected dividend yield, expected life and forfeiture
rates.
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Revenue Recognition |
Revenue Recognition
The
Company recognizes revenue from product sales at the time of
shipment and passage of title and risk of loss to the
customer. The Company has no acceptance or other
post-shipment obligations and does not offer product warranties or
services to its customers.
Sales
are recorded net of returns of damaged goods from customers, which
historically have been immaterial, and sales incentives offered to
customers. Sales incentives include volume incentive
rebates. The Company records volume incentive rebates
based on the underlying revenue transactions that result in
progress by the customer in earning the rebate. In addition, upon
each sale, estimates of rebates, chargebacks, returns, government
reimbursed rebates, and other adjustments are made. These estimates
are recorded as reductions to gross revenues, with corresponding
adjustments to either accounts receivable reserves or reserve for
price concessions. Management has the experience and access to
relevant information that they believe are necessary to reasonably
estimate the amounts of such deductions from gross revenues. The
Company regularly reviews the information related to these
estimates and adjust its reserves accordingly, if and when actual
experience differs from previous estimates.
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Shipping and Handling Fees and Costs |
Shipping and Handling Fees and Costs
All
amounts billed to a customer in a sales transaction related to
shipping and handling represent revenues earned and are included in
net sales. The costs incurred by the Company for
shipping and handling are reported as a component of cost of
sales. Cost of sales also includes inbound freight,
receiving, inspection, warehousing, distribution network, and
customs and duty costs.
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Net Income Per Common Share |
Net Income Per Common Share
Basic
income per common share is based on the weighted average number of
common shares outstanding during the period. Diluted
income per common share includes the dilutive effect of potential
common shares outstanding. The following table sets
forth the reconciliation of weighted average shares outstanding and
diluted weighted average shares outstanding for the fiscal years
ended June 30, 2012, 2011 and 2010:
There
were 1,340, 1,475 and 1,702 common equivalent shares outstanding as
of June 30, 2012, 2011 and 2010, respectively that were not
included in the calculation of diluted income per common share
because their effect would have been anti-dilutive.
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Income Taxes |
Income Taxes
Income
taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those differences are expected to be recovered or
settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
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Property and Equipment |
Property and Equipment
Property
and equipment are stated at cost and are depreciated using the
straight line method over the estimated useful lives of the related
asset. The Company allocates depreciation and amortization to cost
of sales. Expenditures for improvements that extend the
useful life of an asset are capitalized. Ordinary
repairs and maintenance are expensed as incurred. When
assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and any
related gains or losses are included in income.
The
components of property and equipment were as follows:
Property
held for sale represents land and land improvements of $3,752 at
June 30, 2012 and 2011. See Note 8, “Environmental
Remediation” for further discussion on property held for
sale
Depreciation
and amortization of property and equipment amounted to $1,317,
$1,034 and $798 for the years ended June 30, 2012, 2011, and 2010
respectively.
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Goodwill and Other Intangibles |
Goodwill and Other Intangibles
Goodwill
is calculated as the excess of the cost of purchased businesses
over the fair value of their underlying net
assets. Other intangible assets principally consist of
customer relationships, license agreements, technology-based
intangibles, EPA registrations and related data, trademarks and
product rights and related intangibles. Goodwill and
other intangible assets that have an indefinite life are not
amortized.
In
accordance with GAAP, the Company tests goodwill and other
intangible assets for impairment on at least an annual
basis. Goodwill impairment exists if the net book value
of a reporting unit exceeds its estimated fair
value. The impairment testing is performed in two steps:
(i) the Company determines impairment by comparing the fair value
of a reporting unit with its carrying value, and (ii) if there is
an impairment, the Company measures the amount of impairment loss
by comparing the implied fair value of goodwill with the carrying
amount of that goodwill. To determine the fair value of
these intangible assets, the Company uses many assumptions and
estimates using a market participant approach that directly impact
the results of the testing. In making these assumptions
and estimates, the Company uses industry accepted valuation models
and set criteria that are reviewed and approved by various levels
of management.
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Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of |
Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of
Long-lived
assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future
undiscounted net cash flows expected to be generated by the asset.
Recoverability of assets held for sale is measured by comparing the
carrying amount of the assets to their estimated fair
value. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the
assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to
sell.
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Accounting for Derivatives and Hedging Activities |
Accounting for Derivatives and Hedging Activities
The
Company accounts for derivatives and hedging activities under the
provisions of GAAP which establishes accounting and reporting
guidelines for derivative instruments and hedging
activities. GAAP requires the recognition of all
derivative financial instruments as either assets or liabilities in
the statement of financial condition and measurement of those
instruments at fair value. Changes in the fair values of
those derivatives are reported in earnings or other comprehensive
income depending on the designation of the derivative and whether
it qualifies for hedge accounting. The accounting for
gains and losses associated with changes in the fair value of a
derivative and the effect on the consolidated financial statements
depends on its hedge designation and whether the hedge is highly
effective in achieving offsetting changes in the fair value or cash
flows of the asset or liability hedged. The method that
is used for assessing the effectiveness of a hedging derivative, as
well as the measurement approach for determining the ineffective
aspects of the hedge, is established at the inception of the hedged
instrument.
The
Company operates internationally, therefore its earnings, cash
flows and financial positions are exposed to foreign currency risk
from foreign-currency-denominated receivables and payables, which,
in the U.S., have been denominated in various foreign currencies,
including, among others, Euros, British Pounds, Japanese
Yen, Singapore Dollars and Chinese Renminbi and at certain foreign
subsidiaries in U.S. dollars and other non-local
currencies.
Management
believes it is prudent to minimize the risk caused by foreign
currency fluctuation. Management minimizes the currency
risk on its foreign currency receivables and payables by purchasing
future foreign currency contracts (futures) with one of its
financial institutions. Futures are traded on regulated
U.S. and international exchanges and represent commitments to
purchase or sell a particular foreign currency at a future date and
at a specific price. Since futures are purchased
for the amount of the foreign currency receivable or for the amount
of foreign currency needed to pay for specific purchase orders, and
the futures mature on the due date of the related foreign currency
vendor invoices or customer receivables, the Company believes that
it eliminates risks relating to foreign currency
fluctuation. The Company takes delivery of all futures
to pay suppliers in the appropriate currency. The gains
or losses for the changes in the fair value of the foreign currency
contracts are recorded in cost of sales (sales) and offset the
gains or losses associated with the impact of changes in foreign
exchange rates on trade payables (receivables) denominated in
foreign currencies. Senior management and members of the
financial department continually monitor foreign currency risks and
the use of this derivative instrument.
Pursuant
to the requirements of the Credit Agreement, the Company is
required to deliver Hedging Agreements (as defined in the Credit
Agreement) fixing the interest rate on not less than $20,000 of the
Term Loan. Accordingly, in March 2011, the Company
entered into an interest rate swap for a notional amount of
$20,000, which has been designated as a cash flow
hedge. The expiration date of this interest rate swap is
December 31, 2015.
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Foreign Currency |
Foreign Currency
The
financial statements of the Company’s foreign subsidiaries
are translated into U.S. dollars in accordance with GAAP. Where the
functional currency of a foreign subsidiary is its local currency,
balance sheet accounts are translated at the current exchange rate
and income statement items are translated at the average exchange
rate for the period. Exchange gains or losses
resulting from the translation of financial statements of foreign
operations are accumulated in other comprehensive
income. Where the local currency of a foreign subsidiary
is not its functional currency, financial statements are translated
at either current or historical exchange rates, as
appropriate.
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