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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________________________________________________________
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2021
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from _____ to _____
Commission File No. 0-09115
____________________________________________________________
MATTHEWS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________________________________
| | | | | | | | |
Pennsylvania | | 25-0644320 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
Two Northshore Center, Pittsburgh, PA 15212-5851
(Address of principal executive offices) (Zip Code)
(412) 442-8200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
| | | | | | | | | | | | | | |
Securities registered pursuant to Section 12(b) of the Act: | | |
Title of each class | | Trading Symbol | | Name of each exchange on which registered |
Class A Common Stock, $1.00 par value | | MATW | | Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
Large accelerated filer | ý | | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ý
As of March 31, 2021, shares of common stock outstanding were: Class A Common Stock 31,656,210 shares.
PART I ‑ FINANCIAL INFORMATION
Item 1. Financial Statements
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2021 | | September 30, 2020 |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | | $ | 46,980 | | | | | $ | 41,334 | |
Accounts receivable, net | | | 292,703 | | | | | 295,185 | |
Inventories, net | | | 186,522 | | | | | 175,100 | |
Other current assets | | | 73,410 | | | | | 63,954 | |
| | | | | | | |
Total current assets | | | 599,615 | | | | | 575,573 | |
| | | | | | | |
Investments | | | 49,048 | | | | | 63,250 | |
| | | | | | | |
| | | | | | | |
Property, plant and equipment, net | | | 228,362 | | | | | 236,788 | |
Operating lease right-of-use assets | | | 78,944 | | | | | 72,011 | |
Deferred income taxes | | | 3,457 | | | | | 3,757 | |
Goodwill | | | 777,823 | | | | | 765,388 | |
Other intangible assets, net | | | 305,295 | | | | | 333,498 | |
Other assets | | | 21,216 | | | | | 22,368 | |
| | | | | | | |
Total assets | | | $ | 2,063,760 | | | | | $ | 2,072,633 | |
| | | | | | | |
LIABILITIES | | | | | | | |
Current liabilities: | | | | | | | |
Long-term debt, current maturities | | | $ | 4,274 | | | | | $ | 26,824 | |
Current portion of operating lease liabilities | | | 24,458 | | | | | 23,942 | |
Trade accounts payable | | | 89,321 | | | | | 82,921 | |
Accrued compensation | | | 57,547 | | | | | 58,058 | |
Accrued income taxes | | | 2,764 | | | | | 3,612 | |
Other current liabilities | | | 145,906 | | | | | 121,511 | |
| | | | | | | |
Total current liabilities | | | 324,270 | | | | | 316,868 | |
| | | | | | | |
Long-term debt | | | 778,209 | | | | | 807,710 | |
Operating lease liabilities | | | 55,984 | | | | | 49,297 | |
Accrued pension | | | 150,995 | | | | | 149,848 | |
Postretirement benefits | | | 18,629 | | | | | 18,600 | |
Deferred income taxes | | | 83,861 | | | | | 78,911 | |
Other liabilities | | | 32,213 | | | | | 39,966 | |
Total liabilities | | | 1,444,161 | | | | | 1,461,200 | |
| | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | |
Shareholders' equity-Matthews: | | | | | | | |
Common stock | $ | 36,334 | | | | | $ | 36,334 | | | |
Additional paid-in capital | 143,324 | | | | | 135,187 | | | |
Retained earnings | 848,254 | | | | | 859,002 | | | |
Accumulated other comprehensive loss | (224,493) | | | | | (240,719) | | | |
Treasury stock, at cost | (184,373) | | | | | (178,997) | | | |
Total shareholders' equity-Matthews | | | 619,046 | | | | | 610,807 | |
Noncontrolling interests | | | 553 | | | | | 626 | |
Total shareholders' equity | | | 619,599 | | | | | 611,433 | |
| | | | | | | |
Total liabilities and shareholders' equity | | | $ | 2,063,760 | | | | | $ | 2,072,633 | |
The accompanying notes are an integral part of these consolidated financial statements.
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollar amounts in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Six Months Ended March 31, |
| 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | |
Sales | $ | 417,154 | | | $ | 374,800 | | | $ | 803,811 | | | $ | 739,744 | |
Cost of sales | (276,143) | | | (250,036) | | | (537,302) | | | (499,253) | |
| | | | | | | |
Gross profit | 141,011 | | | 124,764 | | | 266,509 | | | 240,491 | |
| | | | | | | |
Selling expense | (32,360) | | | (33,182) | | | (63,155) | | | (65,445) | |
Administrative expense | (70,749) | | | (68,399) | | | (139,858) | | | (138,864) | |
Intangible amortization | (22,930) | | | (17,872) | | | (38,151) | | | (35,814) | |
Goodwill write-down | — | | | (90,408) | | | — | | | (90,408) | |
| | | | | | | |
Operating profit (loss) | 14,972 | | | (85,097) | | | 25,345 | | | (90,040) | |
| | | | | | | |
Investment income (loss) | 969 | | | (1,108) | | | 2,046 | | | 191 | |
Interest expense | (7,233) | | | (9,613) | | | (14,961) | | | (18,853) | |
Other income (deductions), net | (2,584) | | | (1,843) | | | (4,318) | | | (4,662) | |
| | | | | | | |
Income (loss) before income taxes | 6,124 | | | (97,661) | | | 8,112 | | | (113,364) | |
| | | | | | | |
Income tax (provision) benefit | (972) | | | 11,066 | | | (4,952) | | | 16,463 | |
| | | | | | | |
Net income (loss) | 5,152 | | | (86,595) | | | 3,160 | | | (96,901) | |
| | | | | | | |
Net (income) loss attributable to noncontrolling interests | (163) | | | 231 | | | 71 | | | 71 | |
| | | | | | | |
Net income (loss) attributable to Matthews shareholders | $ | 4,989 | | | $ | (86,364) | | | $ | 3,231 | | | $ | (96,830) | |
| | | | | | | |
Earnings (loss) per share attributable to Matthews shareholders: |
Basic | $ | 0.16 | | | $ | (2.77) | | | $ | 0.10 | | | $ | (3.11) | |
| | | | | | | |
Diluted | $ | 0.16 | | | $ | (2.77) | | | $ | 0.10 | | | $ | (3.11) | |
The accompanying notes are an integral part of these consolidated financial statements.
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Three Months Ended March 31, |
| Matthews | | Noncontrolling Interest | | Total |
| 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | | | | | |
Net income (loss): | $ | 4,989 | | | $ | (86,364) | | | $ | 163 | | | $ | (231) | | | $ | 5,152 | | | $ | (86,595) | |
Other comprehensive income (loss) ("OCI"), net of tax: | | | | | | | | | | | |
Foreign currency translation adjustment | (8,898) | | | (30,648) | | | 1 | | | 1 | | | (8,897) | | | (30,647) | |
Pension plans and other postretirement benefits | 2,255 | | | 1,827 | | | — | | | — | | | 2,255 | | | 1,827 | |
Unrecognized gain (loss) on derivatives: | | | | | | | | | | | |
Net change from periodic revaluation | 2,088 | | | (4,305) | | | — | | | — | | | 2,088 | | | (4,305) | |
Net amount reclassified to earnings | 567 | | | (137) | | | — | | | — | | | 567 | | | (137) | |
Net change in unrecognized gain (loss) on derivatives | 2,655 | | | (4,442) | | | — | | | — | | | 2,655 | | | (4,442) | |
OCI, net of tax | (3,988) | | | (33,263) | | | 1 | | | 1 | | | (3,987) | | | (33,262) | |
Comprehensive income (loss) | $ | 1,001 | | | $ | (119,627) | | | $ | 164 | | | $ | (230) | | | $ | 1,165 | | | $ | (119,857) | |
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| Six Months Ended March 31, |
| Matthews | | Noncontrolling Interest | | Total |
| 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
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Net income (loss): | $ | 3,231 | | | $ | (96,830) | | | $ | (71) | | | $ | (71) | | | $ | 3,160 | | | $ | (96,901) | |
OCI, net of tax: | | | | | | | | | | | |
Foreign currency translation adjustment | 8,157 | | | (19,537) | | | (2) | | | (4) | | | 8,155 | | | (19,541) | |
Pension plans and other postretirement benefits | 4,379 | | | 3,554 | | | — | | | — | | | 4,379 | | | 3,554 | |
Unrecognized gain (loss) on derivatives: | | | | | | | | | | | |
Net change from periodic revaluation | 2,441 | | | (3,739) | | | — | | | — | | | 2,441 | | | (3,739) | |
Net amount reclassified to earnings | 1,249 | | | (412) | | | — | | | — | | | 1,249 | | | (412) | |
Net change in unrecognized gain (loss) on derivatives | 3,690 | | | (4,151) | | | — | | | — | | | 3,690 | | | (4,151) | |
OCI, net of tax | 16,226 | | | (20,134) | | | (2) | | | (4) | | | 16,224 | | | (20,138) | |
Comprehensive income (loss) | $ | 19,457 | | | $ | (116,964) | | | $ | (73) | | | $ | (75) | | | $ | 19,384 | | | $ | (117,039) | |
The accompanying notes are an integral part of these consolidated financial statements.
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the three and six months ended March 31, 2021 and 2020 (Unaudited)
(Dollar amounts in thousands, except per share data)
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| Shareholders' Equity |
| Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive (Loss) Income | | Treasury Stock | | Non- controlling Interests | | Total |
Balance, September 30, 2020 | $ | 36,334 | | | $ | 135,187 | | | $ | 859,002 | | | $ | (240,719) | | | $ | (178,997) | | | $ | 626 | | | $ | 611,433 | |
Net loss | — | | | — | | | (1,758) | | | — | | | — | | | (234) | | | (1,992) | |
Minimum pension liability | — | | | — | | | — | | | 2,124 | | | — | | | — | | | 2,124 | |
Translation adjustment | — | | | — | | | — | | | 17,055 | | | — | | | (3) | | | 17,052 | |
Fair value of derivatives | — | | | — | | | — | | | 1,035 | | | — | | | — | | | 1,035 | |
Total comprehensive income | | | | | | | | | | | | | 18,219 | |
Stock-based compensation | — | | | 3,246 | | | — | | | — | | | — | | | — | | | 3,246 | |
Purchase of 162,291 shares of treasury stock | — | | | — | | | — | | | — | | | (4,237) | | | — | | | (4,237) | |
Issuance of 10,300 shares of treasury stock | — | | | (407) | | | — | | | — | | | 407 | | | — | | | — | |
Cancellations of 34,727 shares of treasury stock | — | | | 1,982 | | | — | | | — | | | (1,982) | | | — | | | — | |
Dividends, $0.215 per share | — | | | — | | | (6,808) | | | — | | | — | | | — | | | (6,808) | |
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Balance, December 31, 2020 | $ | 36,334 | | | $ | 140,008 | | | $ | 850,436 | | | $ | (220,505) | | | $ | (184,809) | | | $ | 389 | | | $ | 621,853 | |
Net income | — | | | — | | | 4,989 | | | — | | | — | | | 163 | | | 5,152 | |
Minimum pension liability | — | | | — | | | — | | | 2,255 | | | — | | | — | | | 2,255 | |
Translation adjustment | — | | | — | | | — | | | (8,898) | | | — | | | 1 | | | (8,897) | |
Fair value of derivatives | — | | | — | | | — | | | 2,655 | | | — | | | — | | | 2,655 | |
Total comprehensive income | | | | | | | | | | | | | 1,165 | |
Stock-based compensation | — | | | 4,001 | | | — | | | — | | | — | | | — | | | 4,001 | |
Purchase of 6,000 shares of treasury stock | — | | | — | | | — | | | — | | | (249) | | | — | | | (249) | |
Issuance of 17,357 shares of treasury stock | — | | | (685) | | | — | | | — | | | 685 | | | — | | | — | |
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Dividends, $0.215 per share | — | | | — | | | (7,171) | | | — | | | — | | | — | | | (7,171) | |
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Balance, March 31, 2021 | $ | 36,334 | | | $ | 143,324 | | | $ | 848,254 | | | $ | (224,493) | | | $ | (184,373) | | | $ | 553 | | | $ | 619,599 | |
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| Shareholders' Equity |
| Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive (Loss) Income | | Treasury Stock | | Non- controlling Interests | | Total |
Balance, September 30, 2019 | $ | 36,334 | | | $ | 137,774 | | | $ | 972,594 | | | $ | (228,361) | | | $ | (200,235) | | | $ | 1,130 | | | $ | 719,236 | |
Net (loss) income | — | | | — | | | (10,466) | | | — | | | — | | | 160 | | | (10,306) | |
Minimum pension liability | — | | | — | | | — | | | 1,727 | | | — | | | — | | | 1,727 | |
Translation adjustment | — | | | — | | | — | | | 11,111 | | | — | | | (5) | | | 11,106 | |
Fair value of derivatives | — | | | — | | | — | | | 291 | | | — | | | — | | | 291 | |
Total comprehensive income | | | | | | | | | | | | | 2,818 | |
Stock-based compensation | — | | | 2,031 | | | — | | | — | | | — | | | — | | | 2,031 | |
Purchase of 52,104 shares of treasury stock | — | | | — | | | — | | | — | | | (1,845) | | | — | | | (1,845) | |
Issuance of 11,225 shares of treasury stock | — | | | (450) | | | — | | | — | | | 450 | | | — | | | — | |
Cancellations of 17,509 shares of treasury stock | — | | | 1,171 | | | — | | | — | | | (1,171) | | | — | | | — | |
Dividends, $0.21 per share | — | | | — | | | (6,535) | | | — | | | — | | | — | | | (6,535) | |
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Balance, December 31, 2019 | $ | 36,334 | | | $ | 140,526 | | | $ | 955,593 | | | $ | (215,232) | | | $ | (202,801) | | | $ | 1,285 | | | $ | 715,705 | |
Net loss | — | | | — | | | (86,364) | | | — | | | — | | | (231) | | | (86,595) | |
Minimum pension liability | — | | | — | | | — | | | 1,827 | | | — | | | — | | | 1,827 | |
Translation adjustment | — | | | — | | | — | | | (30,648) | | | — | | | 1 | | | (30,647) | |
Fair value of derivatives | — | | | — | | | — | | | (4,442) | | | — | | | — | | | (4,442) | |
Total comprehensive loss | | | | | | | | | | | | | (119,857) | |
Stock-based compensation | — | | | 2,508 | | | — | | | — | | | — | | | — | | | 2,508 | |
Purchase of 20,750 shares of treasury stock | — | | | — | | | — | | | — | | | (506) | | | — | | | (506) | |
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Dividends, $0.21 per share | — | | | — | | | (6,648) | | | — | | | — | | | — | | | (6,648) | |
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Balance, March 31, 2020 | $ | 36,334 | | | $ | 143,034 | | | $ | 862,581 | | | $ | (248,495) | | | $ | (203,307) | | | $ | 1,055 | | | $ | 591,202 | |
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The accompanying notes are an integral part of these consolidated financial statements.
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands)
| | | | | | | | | | | |
| Six Months Ended March 31, |
| 2021 | | 2020 |
Cash flows from operating activities: | | | |
Net income (loss) | $ | 3,160 | | | $ | (96,901) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Depreciation and amortization | 62,530 | | | 58,250 | |
Stock-based compensation expense | 7,247 | | | 4,539 | |
Deferred tax provision (benefit) | 930 | | | (6,155) | |
(Gain) loss on sale of assets, net | (511) | | | 27 | |
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Unrealized (gain) loss on investments | (844) | | | 70 | |
Loss from equity-method investments | — | | | 1,345 | |
Goodwill write-down | — | | | 90,408 | |
Changes in working capital items | 2,730 | | | 19,384 | |
Decrease in other assets | 2,556 | | | 5,587 | |
Increase (decrease) in other liabilities | 12,962 | | | (1,107) | |
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Other operating activities, net | 1,422 | | | (9,452) | |
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Net cash provided by operating activities | 92,182 | | | 65,995 | |
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Cash flows from investing activities: | | | |
Capital expenditures | (15,819) | | | (19,082) | |
Acquisitions, net of cash acquired | (13,100) | | | — | |
Proceeds from sale of assets | 2,065 | | | 181 | |
Proceeds from sale of investments | 15,000 | | | — | |
Investments and advances | — | | | (9,637) | |
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Net cash used in investing activities | (11,854) | | | (28,538) | |
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Cash flows from financing activities: | | | |
Proceeds from long-term debt | 249,833 | | | 942,692 | |
Payments on long-term debt | (303,781) | | | (921,359) | |
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Purchases of treasury stock | (4,486) | | | (2,351) | |
Dividends | (13,979) | | | (13,183) | |
Acquisition holdback and contingent consideration payments | (1,556) | | | (1,739) | |
Other financing activities | (1,484) | | | (3,475) | |
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Net cash (used in) provided by financing activities | (75,453) | | | 585 | |
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Effect of exchange rate changes on cash | 771 | | | (1,006) | |
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Net change in cash and cash equivalents | 5,646 | | | 37,036 | |
Cash and cash equivalents at beginning of year | 41,334 | | | 35,302 | |
Cash and cash equivalents at end of period | $ | 46,980 | | | $ | 72,338 | |
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The accompanying notes are an integral part of these consolidated financial statements.
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2021
(Dollar amounts in thousands, except per share data)
Note 1. Nature of Operations
Matthews International Corporation ("Matthews" or the "Company"), founded in 1850 and incorporated in Pennsylvania in 1902, is a global provider of brand solutions, memorialization products and industrial technologies. Brand solutions consists of brand management, pre-media services, printing plates and cylinders, engineered products, imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries. Memorialization products consist primarily of bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries. Industrial technologies include marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.
The Company has facilities in North America, Europe, Asia, Australia, and Central and South America.
Note 2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2020. The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control. Investments in certain companies over which the Company exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
New Accounting Pronouncements:
Adopted
In August 2018, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The adoption of this ASU in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements and the Form 10-K disclosures for the year ended September 30, 2021 will reflect the adoption of this ASU.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each report date. Subsequently, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses and ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842), that provide certain amendments to the new guidance. The adoption of these ASUs in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 2. Basis of Presentation (continued)
The following table summarizes the activity for the accounts receivable allowance for doubtful accounts for the six months ended March 31, 2021:
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| | | Accounts Receivable Allowance for Doubtful Accounts |
| Balance at October 1, 2020 | | $ | 9,618 | |
| Current period expense / (deductions) | | (621) | |
| Translation and other adjustments (1) | | (216) | |
| Balance at March 31, 2021 | | $ | 8,781 | |
(1) Includes the impact of foreign currency fluctuations and amounts determined not to be collectible (including direct write-offs), net of recoveries.
Note 3. Revenue Recognition
The Company delivers a variety of products and services through its business segments. The SGK Brand Solutions segment delivers brand management, pre-media services, printing plates and cylinders, engineered products, and imaging services for consumer goods and retail customers, merchandising display systems, and marketing and design services primarily to the consumer goods and retail industries. The Memorialization segment produces and delivers bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment delivers marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products for the warehousing and industrial industries.
The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three and six months ended March 31, 2021 and 2020 were as follows:
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| | SGK Brand Solutions | | Memorialization | | Industrial Technologies | | Consolidated |
| | Three Months Ended March 31, | | Three Months Ended March 31, | | Three Months Ended March 31, | | Three Months Ended March 31, |
| | 2021 | 2020 | | 2021 | 2020 | | 2021 | 2020 | | 2021 | 2020 |
North America | | $ | 66,282 | | $ | 75,448 | | | $ | 190,253 | | $ | 152,253 | | | $ | 32,260 | | $ | 32,380 | | | $ | 288,795 | | $ | 260,081 | |
Central and South America | | 1,319 | | 1,360 | | | — | | — | | | — | | — | | | 1,319 | | 1,360 | |
Europe | | 89,190 | | 83,015 | | | 12,662 | | 7,637 | | | 7,013 | | 7,453 | | | 108,865 | | 98,105 | |
Australia | | 3,456 | | 2,937 | | | 2,542 | | 1,929 | | | — | | — | | | 5,998 | | 4,866 | |
Asia | | 10,777 | | 10,095 | | | — | | — | | | 1,400 | | 293 | | | 12,177 | | 10,388 | |
Total Sales | | $ | 171,024 | | $ | 172,855 | | | $ | 205,457 | | $ | 161,819 | | | $ | 40,673 | | $ | 40,126 | | | $ | 417,154 | | $ | 374,800 | |
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| | SGK Brand Solutions | | Memorialization | | Industrial Technologies | | Consolidated |
| | Six Months Ended March 31, | | Six Months Ended March 31, | | Six Months Ended March 31, | | Six Months Ended March 31, |
| | 2021 | 2020 | | 2021 | 2020 | | 2021 | 2020 | | 2021 | 2020 |
North America | | $ | 136,684 | | $ | 151,678 | | | $ | 360,577 | | $ | 296,298 | | | $ | 59,895 | | $ | 60,679 | | | $ | 557,156 | | $ | 508,655 | |
Central and South America | | 2,694 | | 3,196 | | | — | | — | | | — | | — | | | 2,694 | | 3,196 | |
Europe | | 170,999 | | 165,428 | | | 23,102 | | 15,466 | | | 13,004 | | 14,379 | | | 207,105 | | 195,273 | |
Australia | | 6,937 | | 5,939 | | | 5,052 | | 4,460 | | | — | | — | | | 11,989 | | 10,399 | |
Asia | | 21,850 | | 21,494 | | | — | | — | | | 3,017 | | 727 | | | 24,867 | | 22,221 | |
Total Sales | | $ | 339,164 | | $ | 347,735 | | | $ | 388,731 | | $ | 316,224 | | | $ | 75,916 | | $ | 75,785 | | | $ | 803,811 | | $ | 739,744 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued
(Dollar amounts in thousands, except per share data)
Note 4. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below:
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| Level 1: | Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. |
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
| Level 3: | |