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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

Commission file number: 0-04041

ALLIED MOTION TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code:(303) 799-8520(716) 242-8634

         Securities registered pursuant to Section 12(b) of the Act:Common Stock, no par value Nasdaq Global Market

         Securities registered pursuant to Section 12(g) of the Act:None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

         The aggregate market value of voting stock held by non-affiliates of the Registrant, computed by reference to the average bid and asked prices of such stock as of the last business day of the Registrant's most recently completed second fiscal quarter was approximately $39,839,000.$46,864,794.

         Number of shares of the only class of Common Stock outstanding: 8,847,1609,240,498 as of March 7, 201314, 2014

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Proxy Statement for the 20132014 Annual Meeting of Shareholders are incorporated into Part III.

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Item 1.    Business.

        Allied Motion Technologies Inc. (Allied Motion("Allied Motion" or the Company)"Company") was organized under the laws of Colorado in 1962 and operates in the United States, Europe and Asia. Allied Motion utilizes its underlying core "electro-magnetic, mechanical and electronic motion technology/know how" to provide compact, high performance products as solutions in a wide range of motion applications. The Company designs, manufactures and sells motors, electronic motion controls, gearing and optical encoders to a broad spectrum of customers throughout the world. The Company sells component and integrated motion control solutions to end customers and OEM'soriginal equipment manufacturers ("OEM's") through its own direct sales force and manufacturers' reps and distributors.

MARKETS and APPLICATIONS:

        Examples of the end productsmarkets and applications using Allied Motion's technology inMotion technologies and products includes the medicalfollowing:

        Medical and health care industries includeHealth Care:    surgical robots, prosthetics, electric powered surgical hand pieces, programmable pumps to meter and administer infusions associated with chemotherapy, pain control and antibiotics, nuclear imaging systems, automated pharmacy dispensing equipment, kidney dialysis equipment, respiratory ventilators, and heart pumps, patient handling equipment (e.g., wheel chairs, scooters, stair lifts, patient lifts, patient handlingtransport tables and beds. In electronics, our products are used in the handling, inspection,hospital beds), etc.

        Vehicle:    electronic power steering and testing of components and in the automation and verification of final products such as PC's, game equipment and cell phones. Our motors are used in the HVAC systems of trucks, buses, RV's, boats and off-road construction/farming equipment. These motors operatedrive-by-wire applications to electrically replace or provide power-assist to a variety of mechanical linkages, traction/ drive systems, pumps; various high performance vehicle applications, actuation systems (e.g., lifts, slide-outs, covers etc.), they provide improved fuelHVAC systems, improving energy efficiency while theof vehicles arewhile idling and are used in drive-by-wire applications to electrically replace or power-assist a variety of mechanical linkages. Our products are also utilized in high performance vehicles, vehicles using alternative fuel systems such as LPG, fuel cell and hybrid vehicles. Our geared motor products are utilized inVehicle types include off and on-road construction and agricultural equipment; trucks, buses, boats, utility, recreational, specialty automotive, automated material handling vehicles/robots, commercial grade floor cleaners, commercial building equipment such as welders, cable pullers and assembly tool. Several products are used in a variety of military/defense applications includingremotely guided vehicles, etc.

        Aerospace and Defense:    inertial guided missiles, mid-range munitions systems, weapons systems on armed personnel carriers, unmanned vehicles, and in security and access control, in camera systems, door access control, and in airport screening and scanning devices. Other enddevices, etc.

        Electronics:    products utilizing our technology includeare used in the handling, inspection, and testing of components and final products such as PC's, game equipment and cell phones, high definition printers; tunable lasers and spectrum analyzers for the fiber optic industry; test and processing equipment for the semiconductor industry, etc.

        Industrial and Commercial:    factory automation, specialty equipment, material handling equipment, commercial grade floor polishers and cleaners, commercial building equipment such as well as ticketwelders, cable pullers and cash dispensing machines (ATM's).assembly tools, etc.

SALES, SUPPORT and TECHNOLOGY UNITS:

        Allied Motion's "One Team" approach to the market includesSales Units, Solution Centers andTechnology Units all working together to provide innovative motion solutions and create value for its customers.

Allied Motion Sales Units:

        Allied Motion Sales Units provide field coverage in Asia, Europe, Canada, Israel and the Americas, through direct Regional Sales Managers and external authorized Sales Representatives, Agents and Distributor organizations. The Sales Unit is responsible for selling all products designed, developed and produced by Allied Motion globally.

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Allied Motion Solution Centers:

        Allied Motion has Solution Centers in China, Europe and North America to enable the sale and application of integrated motion control solutions that utilize all Allied Motion products, as solutions, for its customers. In addition to providing sales and applications support, the solution center function may include final assembly, integration and test, as required, to support customers within their geographic region.

        China Solution Center—Changzhou, China

        European Solution Center—Stockholm, Sweden

        North American Solution Center—Amherst, New York, USA

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Allied Motion Technology Units:

        Allied Motion has several Technology Units where products are designed and developed, and in some cases, also produced. The locations of the Technology Units, including a brief description and capabilities at each, are as follows:

Allied Motion Controls—Global Electronic Motion Control Design and Development Unit.

•

Locations include: Amherst, NY, USA; Oakville, Ontario, Canada; Dordrecht, Netherlands; Ferndown, England; and Stockholm, Sweden.



•

Designs, develops, and manufactures advanced motion control technology including integrated power electronics, digital controls and network communications for motor control and power conversion to support Allied Motion's broad range of motors.

Allied Motion Dordrecht

•

Designs and manufactures fractional horsepower brushless DC motors with or without integrated electronics and coreless DC motors.



•

The products are used in a wide variety of medical, industrial and commercial aviation applications, such as dialysis equipment, industrial ink jet printers, cash dispensers, bar code readers, laser scanning equipment, fuel injection systems, HVAC actuators, waste water treatment, dosing systems for the pharmaceutical industry, textile manufacturing and document handling equipment.

Allied Motion Owosso

•

Designs and manufactures highly engineered fractional horsepower permanent magnet DC and brushless DC motors serving a wide range of original equipment applications.



•

The motors are used in mobile HVAC systems, actuation systems, and specialty and general purpose pumps in a variety of markets including trucks, buses, boats, RV's, off-road vehicles, health, fitness, medical and industrial equipment.

Allied Motion Tulsa

•

Designs, manufactures and markets high performance brushless DC motors, including servo motors, frameless motors, torque motors, high speed (60,000 RPM+) slotless motors, and high resolution encoders and motor/encoder assemblies.



•

Markets served include medical equipment, semiconductor, industrial, and aerospace and defense.




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Allied Motion Watertown

•

Designs and manufactures gearing solutions in both stand-alone and integrated gearing/motor configurations for the commercial and industrial equipment, healthcare, medical and non-automotive transportation markets.



•

The component products are sold primarily to original equipment manufacturers (OEM'S) that use them in their end products.

Allied Motion Globe Motors

•

Locations include: Dayton, OH, USA; Dothan, AL, USA, Reynosa, Mexico and Porto, Portugal.



•

Design, manufacture, and markets precision, subfractional horsepower motors and motorized solutions including integrated dives, controls, gearing and feedback devices.

        All statements contained herein that are not statements of historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the word "believe," "anticipate," "expect,"




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"project, "project," "intend," "will continue," "will likely result," "should" or words or phrases of similar meaning. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results of the Company to differ materially from the forward-looking statements. The risks and uncertainties include those associated with the present economic circumstances in the United States and throughout Europe, general business and economic conditions in the Company's motion markets, introduction of new technologies, products and competitors, the ability to protect the Company's intellectual property, the ability of the Company to sustain, manage or forecast its growth and product acceptance, success of new corporate strategies and implementation of defined critical issues designed for growth and improvement in profits, the continued success of the Company's customers to allow the Company to realize revenues from its order backlog and to support the Company's expected delivery schedules, the continued viability of the Company's customers and their ability to adapt to changing technology and product demand, the loss of significant customers or enforceability of the Company's contracts in connection with a merger, acquisition, disposition, bankruptcy, or otherwise, the ability of the Company to meet the technical specifications of its customers, the continued availability of parts and components, increased competition and changes in competitor responses to the Company's products and services, changes in government regulations, availability of financing, the ability of the Company's lenders and financial institutions to provide additional funds if needed for operations or for making future acquisitions or the ability of the Company to obtain alternate financing if present sources of financing are terminated, the ability to attract and retain qualified personnel who can design new applications and products for the motion industry, the ability of the Company to identify and consummate favorable acquisitions to support external growth and new technology, the ability of the Company to successfully integrate an acquired business into the Company's business model without substantial costs, delays, or problems, the ability of the Company to establish low cost region manufacturing and component sourcing capabilities, and the ability of the Company to control costs, including relocation costs, for the purpose of improving profitability. The Company's ability to compete in this market depends upon its capacity to anticipate the need for new products, and to continue to design and market those products to meet customers' needs in a competitive world. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements as a prediction of actual results. The Company has no obligation or intent to release publicly any revisions to any forward looking statements, whether as a result of new information, future events, or otherwise.

        New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company's expectations, beliefs and projections are expressed in good faith




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and are believed to have a reasonable basis; however, the Company makes no assurance that expectations, beliefs or projections will be achieved.

Product Distribution

        The Company maintains a direct sales force. In addition to its own marketing and sales force, the Company has independent sales representatives, agents and distributors to sell its various product lines in certain markets.

Competition

        The Company faces competition in all of its markets, although the number of competitors varies depending upon the product. The Company believes there are numerous competitors in the motion control market.market, many of which are substantially larger and have greater resources. Competition involves primarily product performance and price, although service and warranty are also important.




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Availability of Raw Materials

        All parts and materials used by the Company are in adequate supply. No significant parts or materials are acquired from a single source or for which an alternate source is not also available.

Patents, Trademarks, Licenses, Franchises and Concessions

        The Company holds several patents and trademarks regarding components used by the various subsidiaries and has several patents pending on new products recently developed, which are considered to be of major significance.

Working Capital Items

        The Company currently maintains inventory levels adequate for its short-term needs based upon present levels of production. The Company considers the component parts of its different product lines to be readily available and current suppliers to be reliable and capable of satisfying anticipated needs.

Sales to Large Customers

        During years 20122013 and 2011,2012, no single customer accounted for more than 10% of total revenues.

Sales Backlog

        The Company'sBeginning in 2013, the Company no longer included the full value of blanket purchase orders when received from customers and only reported them as bookings when they were actually released to production. To ensure an accurate comparison, we presented bookings and backlog atthroughout 2013 using our new method as well as presenting them in the same manner as the prior year. Backlog as of December 31, 2012 consisted2013 was $75,599. Using the prior year method, backlog would have been $83,694 as of sales orders totaling approximately $32,915,000 while backlog at December 31, 2011 was $44,005,000.2013 compared to $32,915 as of December 31, 2012.

        Many of the Company's customers place blanket purchase orders covering periods that could be longer than one year. The timing of the placement of these blanket orders can skew the comparability of the Company's backlog. In our commercial motors markets, the Company continues to serve customers requesting shipments on a "pull system" whereby the Company agrees to maintain available inventory that the customer "pulls" or takes delivery as they need the products. At the time the customer pulls the product, the Company records the sale. There can be no assurance that the Company's backlog from these customers will be converted into revenue.




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Engineering and Development Activities

        The Company's expenditures on engineering and development for the years ended December 31, 2013 and 2012 were $7,931 and 2011 were $6,060,000 and $5,983,000,$6,060, respectively. Of these expenditures, no material amounts were charged directly to customers, although the Company does charge some customers non-recurring engineering (NRE) charges for custom engineering that is required to develop products that meet the customer's specification.

Environmental Issues

        No significant pollution or other types of hazardous emission result from the Company's operations and it is not anticipated that the Company's operations will be materially affected by Federal, State or local provisions concerning environmental controls. The Company's costs of complying with environmental, health and safety requirements have not been material.

        The Company does not believe that existing or pending climate change legislation, regulation, or international treaties or accords are reasonably likely to have a material effect in the foreseeable future on the Company's business or markets that it serves, nor on the Company's results of operations, capital expenditures or financial position. The Company will continue to monitor emerging developments in this area.




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Foreign Operations

        The information required by this item is set forth in Note 1012.Segment Information of the Notesnotes to Consolidated Financial Statementsconsolidated financial statements contained herein.

Employees

        At December 31, 20122013 the Company had approximately 418942 full-time employees.

Available Information

        The Company maintains a website at www.alliedmotion.com. The Company makes available, free of charge on or through its website, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after it electronically files or furnishes such materials to the SEC.

        The Company has adopted a Code of Ethics for its chief executive officer and president and senior financial officers regarding their obligations in the conduct of Company affairs. The Company has also adopted a Code of Ethics and Business Conduct that is applicable to all directors, officers and employees. The Codes are available on the Company's website. The Company intends to disclose on its website any amendment to, or waiver of, the Codes that would otherwise be required to be disclosed under the rules of the SEC and the Nasdaq Global Market. A copy of both Codes is also available in print to any stockholder upon written request addressed to Allied Motion Technologies Inc., 23 Inverness Way East,455 Commerce Drive, Suite 150, Englewood, CO 80112-5711,4, Amherst, NY 14228-2313, Attention: Secretary.




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Item 2.    Properties.


        As of December 31, 2012,2013, the Company occupies facilities as follows:

Description / Use		Location		Approximate Square Footage			Owned Or Or Leased
Corporate headquarters		Englewood, ColoradoAmherst, New York			3,000		Leased
Office and manufacturing facility		Tulsa, OklahomaAmherst, New York			4,000		Leased
Office and manufacturing facility		Changzhou, China			30,000		Leased
Office		Dayton, Ohio			29,000		Owned
Office and manufacturing facility		Dayton, Ohio			25,000		Leased
Office and manufacturing facility		Dordrecht, The Netherlands			36,000		Leased
Office and manufacturing facility		Stockholm, SwedenDothan, Alabama			20,00088,000		Owned
Office		Ferndown, Great Britain			1,000		Leased
Office and manufacturing facility		Oakville, Ontario, Canada			2,000		Leased
Office and manufacturing facility		Owosso, Michigan			85,000		Owned
Office and manufacturing facility		Watertown, New YorkPorto, Portugal			107,00052,000		Owned
Office and manufacturing facility		Changzhou, ChinaReynosa, Mexico			12,00050,000		Leased
Office and manufacturing facility		Amherst, New YorkStockholm, Sweden			4,00020,000		Leased
Office and manufacturing facility		Oakville, Ontario, CanadaTulsa, Oklahoma			2,00030,000		Leased
Office and manufacturing facility		Ferndown, Great BritainWatertown, New York			1,000107,000		LeasedOwned

        The Company's management believes the above-described facilities are adequate to meet the Company's current and foreseeable needs. Most of the manufacturing facilities described above are operating at less than full capacity.

Item 3.    Legal Proceedings.


        The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company's consolidated financial position or results of operations.

Item 4.    Mine Safety Disclosures.

        Not applicable.




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PART II


Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.


        Allied Motion's common stock is traded on the Nasdaq Global Market System and trades under the symbol AMOT. The number of holders of record as reported by the Company's transfer agent of the Company's common stock as of the close of business on March 11, 201314, 2014 was 532.561. The following table sets forth, for the periods indicated, the high and low prices of the Company's common stock as reported by Nasdaq, and the per share dividends paid by the Company during each quarter.

		Price Range
		High			Low			Dividends(1)
Year ended December 31, 2011
First Quarter		$	9.25		$	6.30			—
Second Quarter			7.75			4.58			—
Third Quarter			5.97			4.79			0.02
Fourth Quarter			6.40			4.65			0.02
Year ended December 31, 2012
First Quarter		$	7.90		$	5.35			0.025
Second Quarter			8.25			5.60			0.025
Third Quarter			6.79			5.70			0.025
Fourth Quarter			6.73			6.24			0.025

---

(1)

The Company began to pay a quarterly dividend in August 2011.

		Price Range
		High			Low			Dividends
Year ended December 31, 2012
First Quarter		$	7.90		$	5.35		$	0.025
Second Quarter			8.25			5.60			0.025
Third Quarter			6.79			5.70			0.025
Fourth Quarter			6.73			6.24			0.025
Year ended December 31, 2013
First Quarter		$	7.24		$	6.50		$	0.025
Second Quarter			7.16			6.46			0.025
Third Quarter			8.98			6.64			0.025
Fourth Quarter			12.85			7.99			0.025

Equity Compensation Plan Information

        The following table shows the equity compensation plan information of the Company at December 31, 2012:2013:

Plan category		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders			358,864852,493

Item 6.    Selected Financial Data.


        The following tables summarize data from the Company's financial statements for the fiscal years 20072009 through 2012;2013; the Company's complete annual financial statements and notes thereto for the current fiscal year appear in Item 8 herein.

		For the year ended December 31,																For the year ended December 31,
		2012			2011			2010			2009			2008				2013			2012			2011			2010			2009
		In thousands (except per share data)																In thousands (except per share data)
Statements of Operations Data:
Revenues		$	101,968		$	110,941		$	80,591		$	61,240		$	85,967			$	125,502		$	101,968		$	110,941		$	80,591		$	61,240
​																	​		​	​		​	​		​	​		​	​		​	​
​																	​		​	​		​	​		​	​		​	​		​	​
Net income (loss)		$	5,397		$	6,967		$	3,585		$	(12,449	)	$	2,909			$	3,953		$	5,397		$	6,967		$	3,585		$	(12,449	)
​																	​		​	​		​	​		​	​		​	​		​	​
​																	​		​	​		​	​		​	​		​	​		​	​
Diluted income (loss) per share		$	0.63		$	0.81		$	0.45		$	(1.65	)	$	.39			$	0.45		$	0.63		$	0.81		$	0.45		$	(1.65	)
​																	​		​	​		​	​		​	​		​	​		​	​
​																	​		​	​		​	​		​	​		​	​		​	​

 


																		December 31,
		December 31,																2013			2012			2011			2010			2009
		2012			2011			2010			2009			2008				In thousands
Balance Sheet Data:
Total assets		$	60,967		$	58,687		$	51,006		$	34,753		$	52,780			$	170,977		$	60,967		$	58,687		$	51,006		$	34,753
Total current and long-term debt		$	397		$	157		$	795		$	600		$	2,800			$	87,645		$	397		$	157		$	795		$	600




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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.


Amounts in thousands, except per share data

Overview of 20122013

        For the year 2012,2013, sales were down 8%up 23% compared to 2011. The 8% decrease in sales is2012 primarily due to the acquisition of Globe and were comprised of a 4% decrease25% increase in sales to US customers and a 13% decrease21% increase in sales to non-US customers. All ofWe experienced increases in the companies' majorvehicle, aerospace and defense, industrial and medical markets served noted declinesoffset by slight decreases in sales with the exception of the medical market.electronics and distribution markets.

        Orders for 2012 were $90 million, down from $117 million in 2011. Year-end Backlog for 2012 was approximately $33 million compared to $44 million at the end of 2011. As we've stated previously, many of our orders are received as blanket orders covering 12 to 18 months of demand, and the timing of such impacts reported incoming levels.        Beginning in 2013, in reporting bookings, we will no longer include the full value of the blanket purchase orders when received from customers and will only report them as bookings oncewhen they are actually released to production. To ensure an accurate comparison, we presented bookings and backlog throughout 2013 using our new method as well as presenting them in the same manner as the prior year. Orders for 2013 were $121,133. Using the prior year method, orders would have been $135,302 compared to 2012's orders of $90,370, a release date has50% increase. Backlog as of December 31, 2013 was $75,599. Using the prior year method, backlog would have been provided from the customer.$83,694 as of December 31, 2013 compared to $32,915 as of December 31, 2012, a 154% increase.

        Net income was $5,397,000$3,953 for 2012,2013, or $0.45 per diluted share, compared to $5,397, or $0.63 per diluted share for 2012. Including the results of Globe Motors from October 18, 2013 and excluding non-recurring items, we generated adjusted net income for the year ended December 31, 2013 of $5,413 or $.61 per diluted share, compared to $6,967,000,$5,369 or $0.81$.62 per diluted share for 2011. Adjusted net income, which factors out the earn-out gain related2012. Gross profit increased by $6,882 and Operating Expenses increased by $7,096 primarily due to the Östergrensaddition of Globe, acquisition of $1,101,000 in 2011, was $5,866,000. 2012 net income compared to 2011 adjusted net income was down $469,000, or 8%, which equates to $0.05 per diluted share. While Gross profit decreased by $3.9M, Operating Expenses were reduced by $2.5M with a major portioncosts and relocation of the reduction being in performance based compensation. Performance based compensation is a way of life at Allied Motion. When the company does well, our employees share in the rewards and if we don't, then we also share the burden of the downturn.corporate offices from Colorado to New York.

        Most of our operating units and served markets experienced decreasedhave increased levels of business in 20122013 which indicates that we were impacted by anare recovering from a period of overall economic decline. As a company, we are well diversified and not dependent on any one specific market which we believe provides us with some protection during aan economic decline.

        From a Cash Flow perspective, we improved our debt position increased by $86,504 during the last quarter of 2013 resulting from the acquisition of Globe. Net of cash paid for the acquisition (which totaled $90,000), cash net of debt position by $300,000.increased $5,013, from $10,513 to $15,526. We also continued a quarterly dividend program in 2012,2013, providing $0.10 per share in dividends to shareholders, or a dividend payout ratio of 16%22% when compared to the earnings per share of $0.63. The Company$0.45 in 2013. We also continued to invest in capital equipment to expand production capacity in itsour China facilities, as well as to facilitate the transition to the Company's new ERP system.

Our Strategy

        We have a long-term growth strategy at Allied Motion and we will remain focused on meeting the long term goals of the Company. We have set aggressive growth targets for our Company and we will align and focus our resources to meet those targets. First and foremost, we invest in our people as we believe that attracting and retaining the right people is the most important element in our strategy. The right people will lead us to the right markets, the right customers, the right technologies, the right solutions and the right products.

        Our strategy defines Allied Motion as being a "Technology/Know-How" driven company and to be successful, we continue to invest in our Areas of Excellence. While the year was a down year, weWe walked the talk and continued to invest in applied and design engineering resources.

        Strategic focus means that we will take action to address the "critical issues" that we believe are necessary to meet the stated long term goals and objectives of the Company. Given that we are focused on growth, the majority of the critical issues are focused on growth initiatives for the Company.




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        One of these growth initiatives includes Product Line Platform development to meet the emerging needs of our selected target markets. Our platform development emphasizes a combination of Allied Motion technologies to create increased value solutions for our customers. The make-up of our top new opportunities is evolving from individual component solutions to a majority of the new




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opportunities now utilizingmultiple Allied Motion technologies. We believe this approach will allow us to provide increased value to our customers and improved margins for our Company.

        Our strong financial condition, along with Allied Systematic Tools (AST) continuous improvement initiatives in Quality, Delivery, Cost and focus on "Motion Solutions That Change the Game" and create value for our customers allow us to have a positive outlook for the continued long term growth of our Company.

Outlook for 20132014

        Looking beyond 2012,In 2014, revenues are expected to more than double relative to Allied's 2013 pre-acquisition revenues and the Globe acquisition is expected to continue to be accretive to earnings. Limited one-time costs will be incurred in 2014, primarily in the legal, financial and tax areas, as we dowork to finalize and implement the benefits available to us as a result of the acquisition. While Globe is operating in substantially the same manner as it was prior to the acquisition, the integration process has started and will continue through the year, as we follow a structured approach that we believe will lead to success in the process. We expect our markets to stabilize and wethat the coming year will continue to executebe transformative for our Strategy forCompany and that, with the long term growth and developmentaddition of our CompanyGlobe Motors, we have put ourselves in a position to leverage the capabilities of both companies to create an increasing number of new opportunities by designing innovative "Motion Solutions That Change the Game" and meet the current and emerging needs of our customers in our served market segments. We expect market conditions to improve throughout the year and to gain strength during the second half of 2013.

        We have continued our investment in engineering resources and the same can be said about our Sales Team development. In support of our sales efforts, our Solution Centers are coming on line nicely and are providing the support required to sell and support multi-technology solutions. We anticipate that investment in these key resources will help drive our growth now and in the future. We plan to continue investing in these resources during 2013.2014.

        In China, we have signed a lease for a new expanded and modern facility and are moving forward with our capital investments to installinstalled production lines that will "Change the Game" and are capable of meeting the demands of our existing customers and new potential customers within China as well. We believe that the best opportunity for increasing sales in China will be best met by having a strong presence directly in the country.

        We expect that internal Cash Flow from our operations, as well as financing available through lenders will continue to fund our growth opportunities. We will continue our dividend program as we believe that our cash flows can support our growth initiatives and also reward our shareholders at the same time.

        We will emphasize Gross Margin improvement. Gross Margin improvement requires cost reduction, new products emphasizing more complete Motion Control systems and a support structure trained to sell, apply and service our products and customers. We made good progress in 20122013 and these initiatives will continue in 2013.2014.

        Further development and promotion of our parent brand, Allied Motion, will continue in 2013.2014. A global structure has been defined and we intend to use that to our advantage in the marketplace.

        And lastLast but not least, we are taking our commitment to AST to a new level as we have invested in additional resources as part of our Operational Excellence Team. As always, we will continuously utilize AST to improve efficiencies and eliminate waste throughout our Company. AST is critical to and helps create the path to success in all regions of the world.




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Operating Results

Amounts in thousands, except per share data

Year 20122013 compared to 20112012

		For the year ended December 31,						Increase (decrease)							For the year ended December 31,						Increase (decrease)
(in thousands)		2012			2011			$			%				2013			2012			$			%
Revenues		$	101,968		$	110,941		$	(8,973	)		(8	)%		$	125,502		$	101,968		$	23,534			23	%
Cost of products sold			72,328			77,410			(5,082	)		(6	)%			88,980			72,328			16,652			23	%
​														​		​	​		​	​		​	​		​	​
Gross margin			29,640			33,531			(3,891	)		(12	)%			36,522			29,640			6,882			23	%
Gross margin percentage			29	%		30	%		—			(1	)%			29	%		29	%
Operating costs and expenses:
Selling			5,093			5,626			(533	)		(9	)%			5,513			5,093			420			8	%
General and administrative			10,811			12,639			(1,828	)		(14	)%			13,048			10,643			2,405			23	%
Engineering and development			6,060			5,983			77			1	%			7,931			6,060			1,871			31	%
Adjustment to contingent consideration			—			(1,101	)		1,101			100	%
Business development																1,913			24			1,889
Relocation costs																234			—			234			100	%
Amortization of intangible assets			548			732			(184	)		(25	)%			825			548			277			51	%
​														​		​	​		​	​		​	​		​	​
Total operating costs and expenses			22,512			23,879			(1,367	)		(6	)%			29,464			22,368			7,096			32	%
​														​		​	​		​	​		​	​		​	​
Operating income			7,128			9,652			(2,524	)		(26	)%			7,058			7,272			(214	)		(3	)%
Interest expense			13			84			(71	)						1,445			13			1,432
Other expense (income)			(383	)		49			(432	)
Other income																(168	)		(239	)		71			(30	)%
​														​		​	​		​	​		​	​		​	​
Total other expense (income)			(370	)		133			(503	)						1,277			(226	)		1,503
Income before income taxes			7,498			9,519			(2,021	)		(21	)%			5,781			7,498			(1,717	)		(23	)%
Provision for income taxes			(2,101	)		(2,552	)		(451	)		(18	)%			(1,828	)		(2,101	)		273			(13	)%
​														​		​	​		​	​		​	​		​	​
Net Income		$	5,397		$	6,967		$	(1,570	)		(23	)%		$	3,953		$	5,397		$	(1,444	)		(27	)%
​														​		​	​		​	​		​	​		​	​
​														​		​	​		​	​		​	​		​	​

        NET INCOME:    The Company achieved netNet income for the year ended December 31,declined from 2012 of $5,397,000 or $.63 per diluted share compared to $6,967,000 or $0.81 per diluted share for 2011. The 2011 results include a $1.1 million adjustment2013 primarily due to the earnout that was part ofacquisition related costs from the Östergrens acquisitionGlobe acquisition. See information included in 2010. Excluding the earnout adjustment of $1.1 million, the Company's net income for 2011 was $0.68 per diluted share, and the Company's net income decreased 7%"Non-GAAP Measures", or $0.05 per diluted share."Adjusted Net Income Reconciliation" table.

        EBITDA and ADJUSTED EBITDA:    EBITDA was $9,309,000$10,139 and $11,774,000$9,309 for 20122013 and 2011,2012, respectively. Adjusted EBITDA was $9,918,000$13,213 for 20122013 compared to $11,376,000$9,879 for 2011.2012. EBITDA and Adjusted EBITDA are non-GAAP measurements. EBITDA consists of income before interest expense, provision for income taxes, depreciation and amortization. Adjusted EBITDA is before stock compensation expense, as well as other nonrecurring items, such as adjustments to the earnout related to the Östergrens acquisition.business development costs and relocation expenses. See information included in "Non-GAAP Measures" below for a reconciliation of net income to EBITDA and Adjusted EBITDA.

        REVENUES:    Revenues were $101,968,000 in 2012 compared to $110,941,000 in 2011. The 8% decrease23% increase in sales from last year wasin 2013 is primarily due to the resultacquisition of decreased salesGlobe and consists of significant increases in virtually all of our major industry sectors, partially offset by increased sales into the Company's medicalvehicle and aerospace and defense markets. The 8% decrease in sales23% increase is comprised of a 4% decrease25% increase in sales to US customers and a 13% decrease21% increase in sales to non-US customers. 56%57% of our sales for the year were to US customers with the balance of our sales to customers primarily in Europe, Canada and Asia. Of the 8% decrease23% increase in revenues, 6%22% was due to a decreasean increase in sales volume for the year and 2%1% was due to the dollar strengtheningweakening against the foreign currencies in which the Company doeswhere we do business, primarily the Euro and the Swedish Krona.

BACKLOG:    Orders for 2013 were $121,133. Using the prior year method, orders would have been $135,302 compared to 2012's orders of $90,370, a 50% increase. Backlog as of December 31, 2013




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BACKLOG:    The Company'swas $75,599. Using the prior year method, backlog atwould have been $83,694 as of December 31, 2013 compared to $32,915 as of December 31, 2012, consisted of sales orders totaling approximately $32,915,000 while backlog at December 31, 2011 was $44,005,000 reflecting a 25% decrease from the end of 2011.

        Backlog may fluctuate up or down throughout the year for various reasons, not limited to the following: customer order patterns, annual versus intermittent orders, and long-term blanket orders versus new product orders. Beginning in 2013, for booking reporting purposes, we will no longer include the full value of the blanket orders when received and will only report them as bookings once a release date is provided from the customer.155% increase.

        GROSS MARGIN:    Gross margin as a percentage of revenues was 29% for both 2013 and 30% for 2012, and 2011, respectively. This 1% decrease in gross margin for 2012, when compared to 2011, was due to the sales mix, lower fixed overhead absorption based on the lower sales, and a warranty charge that was recorded to cover the expected costs of replacing certain products in the field due to an incorrect electronic component in a printed circuit board supplied by one of the Company's sub-contract suppliers.

        SELLING EXPENSES:    Selling expenses were $5,093,000 and $5,626,000The 8% increase in 2012 and 2011, respectively. The 9% decrease in 20122013 is primarily due to a change in responsibility for certain employeesthe acquisition of the Company who were previously involved in sales, as well as lower sales incentive compensation when compared to 2011.Globe.

        GENERAL AND ADMINISTRATIVE EXPENSES:    General and administrative expenses were $10,811,000 in 2012 and $12,639,000 for 2011. The 14% decrease isincreased by 23% primarily as a result of lower compensation expense, which includes incentive bonuses.the addition of Globe and consulting and depreciation expenses related to our ERP implementation.

        AMORTIZATION OF INTANGIBLE ASSETS:    Amortization of intangible assets expense was $548,000 and $732,000 in 2012 and 2011, respectively. The 25% decrease51% increase is the result of certainamortization for Globe's intangible assets becoming fully amortized in 2012.assets.

        INCOME TAXES:    Provision for income taxes was $2,101,000 and $2,552,000 for 2012 and 2011, respectively.

    The effective income tax rate as a percentage of income before income taxes was 31.6% and 28.0% in 2013 and 26.8% in 2012, and 2011, respectively. The effective tax rate for 20122013 and 20112012 is lower than the statutory rate primarily due to differences in state and foreign tax rates. The effective rate for 20122013 is higherlower than 20112012 primarily due to permanentforeign tax rate differences mostlyand the resultimpact of the adjustment to contingent consideration in 2011.a one-time receipt of a dividend from a foreign subsidiary.

Non-GAAP Measures

        EBITDA and Adjusted EBITDA are provided for information purposes only and are not measures of financial performance under generally accepted accounting principles.

        The Company believesWe believe EBITDA is often a useful measure of a Company'scompany's operating performance and is a significant basis used by the Company'sour management to measure the operating performance of the Company'sour business because EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our debt financings, as well as our provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company'sour industry.

        The CompanyWe also believesbelieve that Adjusted EBITDA provides helpful information about the operating performance of itsa business. Adjusted EBITDA excludes stock compensation expense, as well as certain non-recurring items. Nonrecurring items are either income or expenses which do not occur regularly as part of the normal activities of the Company. The Company considersWe consider these items to be of




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significance in nature and/or size, and accordingly, hashave excluded these items from Adjusted EBITDA. Adjusted EBITDA in 2011 excludes the earnout adjustment related to the acquisition of Östergrens.

        EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles.




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        The Company's calculation of EBITDA and Adjusted EBITDA for 20122013 and 20112012 is as follows (in thousands):

		For the year ended December 31,							For the year ended December 31,
		2012			2011				2013			2012
Net income		$	5,397		$	6,967
Net income as reported									$	3,953		$	5,397
Interest expense			13			84				1,445			13
Provision for income tax			2,101			2,552				1,828			2,101
Depreciation and amortization			1,798			2,171				2,913			1,798
​								​		​	​		​	​
EBITDA			9,309			11,774				10,139			9,309
Stock compensation expense			609			703				927			609
Adjustment to contingent consideration			—			(1,101	)
Relocation costs										234			—
Business development costs										1,913			24
Concession payment from former landlord										—			(301	)
Non-recurring replacement costs										—			238
​								​		​	​		​	​
Adjusted EBITDA		$	9,918		$	11,376			$	13,213		$	9,879
​								​		​	​		​	​
​								​		​	​		​	​

        Allied Motion's management uses Adjusted net income to assess the Company's consolidated financial and operating performance. Adjusted net income is provided for informational purposes only and is not a measure of financial performance under generally accepted accounting principles. This measure helps management make decisions that are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. Adjusted net income provides management with a measure of financial performance of the Company based on operational factors, including the profitability of assets on an economic basis, net of operating expenses, and the capital costs of the business on a consistent basis as it removes the impact of certain non-routine items from the Company's operating results. Adjusted net income is a key metric used by senior management and the Company's board of directors to review the consolidated financial performance of the business. This measure adjusts net income determined in accordance with GAAP to reflect changes in financial results associated with the highlighted charges and income items.

        The Company's calculation of Adjusted net income and Adjusted diluted earnings per share for years ended December 31, 2013 and 2012 is as follows (in thousands):

		For the year ended December 31,
Adjusted Net Income Reconciliation (in thousands)		2013			2012
As reported net income		$	3,953		$	5,397
Non-GAAP adjustments, net of tax
Relocation costs			159			—
Business development costs			1,301			16
Concession payment from landlord			—			(222	)
Non-recurring replacement costs			—			178
​	​	​	​	​	​	​	​
Non-GAAP adjusted net income		$	5,413		$	5,369
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Per Share Amounts
Non-GAAP adjusted net income per share (diluted)		$	0.61		$	0.62
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Diluted weighted average common shares			8,840			8,616
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​




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Liquidity and Capital Resources (in thousands)

        The Company's liquidity position as measured by cash and cash equivalents increased $573,000$443 during 20122013 to a balance of $9,728,000$10,171 at December 31, 2012,2013, compared to an increase of 5,602,000$573 during 2011.2012.

        During 2012,2013, operations provided $4,604,000$10,779 in cash compared to $8,881,000$4,604 provided for 2011.2012. The decreaseincrease in cash provided from operations of $4,277,000 is primarily due to lower profits, higher incentive bonus payments madechanges in 2012 for bonuses earned in 2011 and higher tax payments.working capital.

        Net cash used in investing activities was $3,947,000$94,694 and $2,181,000$3,947 for 2013 and 2012, and 2011, respectively. The majority of the increase in 2013 is due to the $90,000 paid for the acquisition of Globe Motors in 2013. Purchases of property and equipment were $2,597,000$3,087 and $1,849,000$2,597 in 2013 and 2012, and 2011, respectively. Investing activities also included a payment of $1,350,000, which is the final portion of consideration for the Östergrens acquisition.

        Net cash used inprovided from financing activities was $244,000$84,409 in 20122013 compared to $838,000$(244) for 2011.2012. The decreaseincrease in cash usedprovided in 20122013 is primarily due to the Company paying offborrowings on the new Credit Agreement (discussed below) that were put in place to fund the Globe acquisition offset by the payment of debt in 2011.issuance costs and dividend payments to shareholders. The financing activity in 2012 consists of dividend payments to shareholders, primarily offset by morethe purchase of Company stock purchased by the Allied Motion Employee Stock Ownership Plan (ESOP), based on higher Company contributions to the plan for 2011..

        At December 31, 2012, the Company2013, we had $397,000$87,645 in debt obligations. The average outstanding borrowings for 2012 were $198,000.obligations, with substantially all incurred in the fourth quarter.

        The Company'sWe entered into a new Credit Agreement dated as amended, is used for borrowing needs that may occur in the United States and Europe.of October 18, 2013. The Credit Agreement provides for a $15,000 five-year revolving credit up to $4 millionfacility and €3 million.a $50,000 five-year term loan (collectively the "Senior Credit Facilities").

        Borrowings under the revolver incur interest of LIBOR plus 1.5%. Overnight borrowings incurSenior Credit Facilities are subject to terms defined in the Credit Agreement. Borrowings bear interest at PRIMEeither the Base Rate plus 0.50%a margin of 0.25% to 2.00% (currently 1.50%) or the Eurocurrency Rate plus a margin of 1.25% to 3.00%, in each case depending on the Company's ratio of total funded indebtedness to Consolidated EBITDA (the "Total Leverage Ratio"). The unused portionweighted average interest rate at December 31, 2013 was 3.08%.

        Principal installments are payable on the Term Loan in varying percentages quarterly through September 30, 2018 with a balloon payment at maturity. The Senior Credit Facilities are secured by substantially all of the revolver is charged a commitment fee of .375% per annum.Company's assets.

        The Credit Agreement contains certain financial covenants related to maximum leverage and minimum fixed charge coveragecoverage. We were in compliance with all covenants at December 31, 2013. The Credit Agreement also includes other covenants and minimum tangible net worthrestrictions, including limits on the amount of certain types of capital expenditures.

        Also in connection with funding the acquisition of Globe Motors, Inc., we entered into a Note Agreement, dated as of October 18, 2013 pursuant to which we sold $30,000 of 14.50% Senior Subordinated Notes due October 18, 2019 (the "Notes") to Prudential Capital Partners IV, L.P. and its affiliates in a private placement. The interest rate on the Notes is 14.50% with 13.00% payable in cash and 1.50% payable in-kind, quarterly in arrears and the outstanding principal amount of the Company. In October 2012, the Credit Agreement was extended for an additional year, now expiringNotes, together with any accrued and unpaid interest is due on October 26,18, 2019. We may prepay the Notes at any time after October 18, 2016, in whole or in part, at 100% of the principal amount. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company's subsidiaries.

        We also have a Credit Facility in China providing credit of approximately $1,600 (Chinese Renminbi ("RMB") 9,500). This facility is used for working capital and capital equipment needs at our China operations, and will mature in October 2014. The average borrowings for 2013 were $766 (RMB 4,700). At December 31, 2013, there was approximately $386 (RMB 2,400) available under the facility.




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        The Company also has a Credit Facility in China providing credit of approximately $700,000 (RMB 4,500,000) to provide financing availability for working capital needs for the Company's subsidiaries in China. There is approximately $317,000 (RMB 2,000,000) available under the facility at December 31, 2012.

As of December 31, 2012,2013, the amount available to borrow under the Company'sour various lines-of-credit was approximately $8,300,000.

        The Company also has bank overdraft facilities with foreign banks in Europe. The facilities had no outstanding balance as of December 31, 2012. The amount available under the overdraft facilities was approximately $700,000 (€ 300,000 and 2,100,000 SEK).$7,700.

        As part of the Company's quarterly cash dividend program, the Board of Directors declared a dividend of $0.025 per share payable on March 12, 201314, 2014 to shareholders of record on March 1, 2013. The Company's3, 2014. Our working capital, capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the Company'sour credit facilities.

Price Levels and the Impact of Inflation

        The effect of inflation on the Company's costs of production has been minimized through production efficiencies, lower costs of materials and surcharges passed on to customers. The Company anticipates that these factors will continue to minimize the effects of any foreseeable inflation and other price pressures from the industries in which it operates. As the Company's manufacturing activities mainly utilize semi-skilled labor, which is relatively plentiful in the areas surrounding the Company's production facilities, the Company does not anticipate substantial inflation-related increases in the wages of the majority of its employees.

Recent Accounting Pronouncements

Pronouncements Implemented

        In September 2011, the FASB issued ASU No. 2012-08, "Intangibles—Goodwill and Other (ASC 350): Testing Goodwill for Impairment," which specifies that an entity has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU No. 2012-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company's adoption of ASU No. 2011-08 had no impact on our consolidated financial condition and results of operations.

        In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (ASC 220): Presentation of Comprehensive Income," which specifies that an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This amendment also requires an entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income. In December 2011, the FASB issued ASU No. 2011-12 to defer the requirement to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income. ASU No. 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU No. 2011-05 and 2011-12 did not have an impact on our consolidated financial condition and results of operations.




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Pronouncements not yet implemented

        In February        During 2013, the FASB issued ASUCompany adopted the new provisions of Accounting Standards Update ("ASU") No. 2013-02 "ComprehensiveComprehensive Income (ASC(Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income". The standard requires that companies presentamendments in this ASU require the Company to provide information about reclassification adjustments from accumulated other comprehensive income in their interim and annual financial statements in a single note or on the face of the financial statements. The standard requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each componentout of accumulated other comprehensive income, basedby component. Other than requiring additional disclosures, the adoption of this amendment does not have a material impact on its source and the income statement line items affected byCompany's financial statements.

        The Company's management has reviewed recent accounting pronouncements issued through the reclassification. If a component is not required to be reclassified to net income in its entirety, companies would instead cross reference todate of the related footnote for additional information. ASU No. 2012-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company is currently evaluating the impact this guidanceissuance of financial statements. In management's opinion, none of these new pronouncements apply or will have a material effect on itsthe Company's financial statements.




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Item 8.    Financial Statements and Supplementary Data.


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Allied Motion Technologies Inc.
Denver, Colorado

        We have audited the accompanying consolidated balance sheets of Allied Motion Technologies Inc. and subsidiaries (the "Company") as of December 31, 20122013 and 2011,2012, and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for the years then ended. The Company's management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Allied Motion Technologies Inc. and subsidiaries as of December 31, 20122013 and 2011,2012, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ EKS&H LLLP

March 11, 201318, 2014
Denver, Colorado




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ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Assets
Current Assets:
Cash and cash equivalents		$	9,728		$	9,155			$	10,171		$	9,728
Trade receivables, net of allowance for doubtful accounts of $177 and $284 at December 31, 2012 and 2011, respectively			10,806			11,689
Trade receivables, net of allowance for doubtful accounts of $802 and $177 at December 31, 2013 and 2012, respectively										27,123			10,806
Inventories, net			14,701			14,429				24,430			14,701
Deferred income taxes			639			1,254				2,961			639
Prepaid expenses and other assets			2,155			1,193				2,602			2,155
​								​		​	​		​	​
Total Current Assets			38,029			37,720				67,287			38,029
Property, plant and equipment, net			8,631			7,352				40,111			8,631
Deferred income taxes			4,103			4,326				3,246			4,103
Intangible assets, net			2,431			2,936				35,222			2,431
Goodwill			5,782			5,665				20,233			5,782
Other long term assets			1,991			688				4,878			1,991
​								​		​	​		​	​
Total Assets		$	60,967		$	58,687			$	170,977		$	60,967
​								​		​	​		​	​
​								​		​	​		​	​
Liabilities and Stockholders' Equity
Current Liabilities:
Debt obligations			397			157				14,145			397
Accounts payable			5,748			6,598				15,478			5,748
Accrued liabilities			5,926			7,842				9,898			5,926
Contingent consideration			—			1,313
Income taxes payable			—			1,272				2,729			—
​								​		​	​		​	​
Total Current Liabilities			12,071			17,182				42,250			12,071
Long-term debt										73,500			—
Deferred income taxes			935			973				2,327			935
Deferred compensation arrangements			1,997			694				2,599			1,997
Pension and post-retirement obligations			3,812			3,516				2,298			3,812
​								​		​	​		​	​
Total Liabilities			18,815			22,365				122,974			18,815
Commitments and Contingencies
Stockholders' Equity:
Common stock, no par value, authorized 50,000 shares; 8,631 and 8,466 shares issued and outstanding at December 31, 2012 and 2011, respectively			22,547			21,568
Common stock, no par value, authorized 50,000 shares; 9,091 and 8,631 shares issued and outstanding at December 31, 2013 and 2012, respectively										23,771			22,547
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding			—			—				—			—
Retained earnings			20,528			15,970				23,608			20,528
Accumulated other comprehensive (loss) income			(923	)		(1,216	)
Accumulated other comprehensive income (loss)										624			(923	)
​								​		​	​		​	​
Total Stockholders' Equity			42,152			36,322				48,003			42,152
​								​		​	​		​	​
Total Liabilities and Stockholders' Equity		$	60,967		$	58,687			$	170,977		$	60,967
​								​		​	​		​	​
​								​		​	​		​	​

   

See accompanying notes to consolidated financial statements.




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)


		For the year ended December 31, 2013			For the year ended December 31, 2012
Revenues		$	125,502		$	101,968
Cost of goods sold			88,980			72,328
​	​	​	​	​	​	​	​
Gross margin			36,522			29,640
Operating costs and expenses:
Selling			5,513			5,093
General and administrative			13,048			10,643
Engineering and development			7,931			6,060
Business development			1,913			24
Relocation			234			—
Amortization of intangible assets			825			548
​	​	​	​	​	​	​	​
Total operating costs and expenses			29,464			22,368
Operating income			7,058			7,272
Other expense (income):
Interest expense			1,445			13
Other expense (income), net			(168	)		(239	)
​	​	​	​	​	​	​	​
Total other expense (income) , net			1,277			(226	)
​	​	​	​	​	​	​	​
Income before income taxes			5,781			7,498
Provision for income taxes			(1,828	)		(2,101	)
​	​	​	​	​	​	​	​
Net income		$	3,953		$	5,397
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Foreign currency translation adjustment			652			624
Change in accumulated income (loss) on derivatives			41			—
Pension adjustments(1)			854			(331	)
​	​	​	​	​	​	​	​
Comprehensive income		$	5,500		$	5,690
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Basic earnings per share:
Earnings per share		$	0.45		$	0.63
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Basic weighted average common shares			8,833			8,616
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Diluted earnings per share:
Earnings per share		$	0.45		$	0.63
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Diluted weighted average common shares			8,840			8,616
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​

---

		For the year ended December 31, 2012			For the year ended December 31, 2011
Revenues		$	101,968		$	110,941
Cost of products sold			72,328			77,410
Gross margin			29,640			33,531
Operating costs and expenses:
Selling			5,093			5,626
General and administrative			10,811			12,639
Engineering and development			6,060			5,983
Adjustment to contingent consideration			—			(1,101	)
Amortization of intangible assets			548			732
Total operating costs and expenses			22,512			23,879
Operating income			7,128			9,652
Other (income) expense:
Interest expense			13			84
Other (income) expense, net			(383	)		49
Total other (income) expense, net			(370	)		133
Income before income taxes			7,498			9,519
Provision for income taxes			(2,101	)		(2,552	)
Net income		$	5,397		$	6,967
Foreign currency translation adjustment			624			(559	)
Pension adjustments			(331	)		(786	)
Comprehensive income		$	5,690		$	5,622
Basic earnings per share:
Earnings per share		$	0.63		$	0.83
Basic weighted average common shares			8,616			8,437
Diluted earnings per share:
Earnings per share		$	0.63		$	0.81
Diluted weighted average common shares			8,616			8,575

(1)

Net of tax of $480 and $(185) for the periods ending December 31, 2013 and 2012, respectively.

   

See accompanying notes to consolidated financial statements.




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)


														Accumulated Other Comprehensive Income							Common Stock												Accumulated Other Comprehensive Income
		Common Stock
														Foreign Currency Translation Adjustments
		Shares			Amount			Unamortized Cost of Equity Awards			Retained Earnings						Pension Adjustments
Balances, December 31, 2010			8,110		$	20,953		$	(480	)	$	9,342		$	56		$	73
Stock transactions under employee benefit stock plans and option exercises			152			670
Issuance of restricted stock, net of forfeitures			87			635			(913	)
Stock compensation expense									703
Issuance of stock due to warrant exercises			117
Pension adjustments, net of tax																		(786	)
Foreign currency translation adjustment															(559	)
Net income												6,967
Dividends to Stockholders												(339	)
Comprehensive income
																					Shares			Amount			Unamortized Cost of Equity Awards			Retained Earnings			Foreign Currency Translation Adjustments			Accumulated income (loss) on derivatives			Pension Adjustments			Total Stockholder's Equity
Balances, December 31, 2011			8,466		$	22,258		$	(690	)	$	15,970		$	(503	)	$	(713	)			8,466		$	22,258		$	(690	)	$	15,970		$	(503	)	$	—		$	(713	)	$	36,322
Stock transactions under employee benefit stock plans and option exercises			68			494																68			494			—															494
Issuance of restricted stock, net of forfeitures			97			722			(846	)												97			722			(846	)														(124	)
Stock compensation expense									609																			609															609
Issuance of stock due to warrant exercises
Pension adjustments, net of tax																		(331	)
Foreign currency translation adjustment															624
Comprehensive income (loss)																																		624						(516	)		108
Tax effect																																								185			185
Net income												5,397																			5,397												5,397
Dividends to Stockholders												(839	)																		(839	)											(839	)
Comprehensive income
​																				​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Balances, December 31, 2012			8,631		$	23,474		$	(927	)	$	20,528		$	121		$	(1,044	)			8,631		$	23,474		$	(927	)	$	20,528		$	121		$	—		$	(1,044	)	$	42,152
​																				​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Stock transactions under employee benefit stock plans and option exercises																						61			420																		420
Issuance of restricted stock, net of forfeitures																						399			3,141			(3,264	)														(123	)
Stock compensation expense																												927															927
Comprehensive income (loss)																																		652			41			1,334			2,027
Tax effect																																								(480	)		(480	)
Net income																															3,953												3,953
Dividends to Stockholders																															(873	)											(873	)
​																				​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Balances, December 31, 2013																						9,091		$	27,035		$	(3,264	)	$	23,608		$	773		$	41		$	(190	)	$	48,003
​																				​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​																				​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

   

See accompanying notes to consolidated financial statements.




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ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


		For the year ended December 31, 2012			For the year ended December 31, 2011				For the year ended December 31, 2013			For the year ended December 31, 2012
Cash Flows From Operating Activities:
Net income		$	5,397		$	6,967			$	3,953		$	5,397
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			1,798			2,171				2,913			1,798
Deferred income taxes			782			278				90			782
Provision for excess and obsolete inventory			265			77				105			265
Restricted Stock Compensation			609			703				927			609
Adjustment to contingent consideration			—			(1,101	)
Other			773			12				(52	)		773
Changes in operating assets and liabilities:
(Increase) decrease in trade receivables			992			(96	)
Changes in operating assets and liabilities, excluding changes due to acquisition:
(Increase) decrease in trade receivables, net										196			992
(Increase) decrease in inventories			(400	)		(2,761	)			1,763			(400	)
(Increase) decrease in prepaid expenses and other			(1,999	)		(477	)			(561	)		(1,999	)
Increase (decrease) in accounts payable			(893	)		176				558			(893	)
Increase (decrease) in accrued liabilities and other			(692	)		2,165				(617	)		(692	)
Increase (decrease) in income taxes payable			(2,028	)		767				1,504			(2,028	)
​								​		​	​		​	​
Net cash provided by operating activities			4,604			8,881				10,779			4,604
Cash Flows From Investing Activities:
Consideration paid for acquisition			(1,350	)		(332	)
Consideration paid for acquisition, net of cash acquired										(91,607	)		(1,350	)
Purchase of property and equipment			(2,597	)		(1,849	)			(3,087	)		(2,597	)
​								​		​	​		​	​
Net cash used in investing activities			(3,947	)		(2,181	)			(94,694	)		(3,947	)
Cash Flows From Financing Activities:
Borrowings (repayments) on lines-of-credit, net			230			(667	)			8,475			230
Dividends paid			(839	)		(333	)
Proceeds from issuance of long-term debt										80,000			—
Principal payments of long-term debt										(1,250	)		—
Payment of debt issuance costs										(2,377	)		—
Dividends paid to stockholders										(873	)		(839	)
Stock transactions under employee benefit stock plans			365			162				434			365
Net cash used in financing activities			(244	)		(838	)
​								​		​	​		​	​
Net cash (used in) provided by financing activities										84,409			(244	)
Effect of foreign exchange rate changes on cash			160			(260	)			(51	)		160
​								​		​	​		​	​
Net increase in cash and cash equivalents			573			5,602				443			573
Cash and cash equivalents at beginning of period			9,155			3,553				9,728			9,155
​								​		​	​		​	​
Cash and cash equivalents at end of period		$	9,728		$	9,155				10,171			9,728
​								​		​	​		​	​
​								​		​	​		​	​
Supplemental disclosure of cash flow information:
Net cash paid during the period for:
Interest		$	18		$	20			$	1,326		$	18
Income taxes		$	3,223		$	918			$	1,099		$	3,223

   

See accompanying notes to consolidated financial statements.




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)


1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

        Allied Motion Technologies Inc. (Allied Motion or the Company) is engaged in the business of designing, manufacturing and selling motion control solutions, which include integrated system solutions as well as individual motion control products, to a broad spectrum of customers throughout the world primarily for the commercial motor, industrial motion, automotive control, medical, and aerospace and defense markets.

Principles of Consolidation

        The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.

        Acquisitions are accounted for under the acquisition method and, accordingly, the operating results for Globe Motors, Inc. (Note 2.) are included in the consolidated statements of income and comprehensive income from October 18, 2013, the date of acquisition.

Cash and Cash Equivalents

        Cash and cash equivalents include instruments which are readily convertible into cash (original maturities of three months or less) and which are not subject to significant risk of changes in interest rates. Cash flows from foreign currency transactions are translated using an average rate.

Accounts Receivable

        Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future.

        Activity in the allowance for doubtful accounts for 20122013 and 20112012 was as follows (in thousands):

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Beginning balance		$	284		$	226			$	177		$	284
Allowance for doubtful accounts acquired										460			—
Additional reserves			(25	)		74				164			(25	)
Write-offs			(82	)		(16	)
Writeoffs										1			(82	)
​								​		​	​		​	​
Ending balance		$	177		$	284			$	802		$	177
​								​		​	​		​	​
​								​		​	​		​	​




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventories

        Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market, as follows (in thousands):

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Parts and raw materials		$	13,174		$	11,268			$	20,649		$	13,174
Work-in-process			1,504			2,017				3,369			1,504
Finished goods			2,096			3,090				4,350			2,096
​								​		​	​		​	​
			16,774			16,375				28,368			16,774
Less reserves			(2,073	)		(1,946	)			(3,938	)		(2,073	)
​								​		​	​		​	​
Inventories, net		$	14,701		$	14,429			$	24,430		$	14,701
​								​		​	​		​	​
​								​		​	​		​	​

        The Company recorded provisions for excess and obsolete inventories of approximately $265,000$105 and $77,000,$265, for 20122013 and 2011,2012, respectively.

Property, Plant and Equipment

        Property, plant and equipment is classified as follows (in thousands):

		Useful lives		December 31, 2012			December 31, 2011				Useful lives		December 31, 2013			December 31, 2012
Land				$	290		$	290					$	3,020		$	290
Building and improvements		5 - 39 years			3,713			3,387			5 - 39 years			7,382			3,713
Machinery, equipment, tools and dies		3 - 15 years			13,483			12,633			3 - 15 years			40,237			13,483
Furniture, fixtures and other		3 - 10 years			3,996			3,037			3 - 10 years			4,544			3,996
​										​				​	​		​	​
					21,482			19,347						55,183			21,482
Less accumulated depreciation					(12,851	)		(11,995	)					(15,072	)		(12,851	)
​										​				​	​		​	​
Property, plant and equipment, net				$	8,631		$	7,352					$	40,111		$	8,631
​										​				​	​		​	​
​										​				​	​		​	​

        Depreciation expense is provided using the straight-line method over the estimated useful lives of the assets. Amortization of building improvements is provided using the straight-line method over the life of the lease term or the life of the assets, whichever is shorter. Maintenance and repair costs are charged to operations as incurred. Major additions and improvements are capitalized. The cost and related accumulated depreciation of retired or sold property are removed from the accounts and the resulting gain or loss, if any, is reflected in earnings.

        Depreciation expense was approximately $1,250,000$2,088 and $1,439,000$1,250 in 20122013 and 2011,2012, respectively.

        Computer software and software development costs incurred in connection with developing or obtaining computer software for internal use that has an extended useful life are capitalized. These costs are amortized over their estimated useful life of seven years. During 20122013 and 2011,2012, software costs of $1,072,000$488 and $457,000,$1,072, respectively, were capitalized or included in construction-in-process.capitalized. ERP software and implementation related costs are included within Furniture,furniture, fixtures and other in the Property,property, plant and equipment table.




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets

        Intangible assets, other than goodwill, are recorded at cost and are amortized over their estimated useful lives using the straight-line method.

Impairment of Long-Lived Assets

        The Company reviews the carrying values of its long-lived assets, including property, plant and equipment and intangible assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Long-lived assets are carried at historical cost if the projected cash flows from their use will recover their carrying amounts on an undiscounted basis and without considering interest. If projected cash flows are less than their carrying value, the long-lived assets must be reduced to their estimated fair value. Considerable judgment is required to project such cash flows and, if required, estimate the fair value of the impaired long-lived asset.

Goodwill

        Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination.

        The Company adopted FASB Accounting Standards Update ("ASU") No. 2011-08, "Intangibles—Goodwill and Other (ASC 350): Testing Goodwillis tested annually for Impairment"impairment or more frequently if events or changes in 2011, which specifiescircumstances indicate that an entity hasimpairment may have occurred. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amountamount. Otherwise, the impairment analysis for goodwill includes a comparison of our carrying value (including goodwill) to our estimated fair value. If the fair value does not exceed the carrying value, then an additional analysis would be performed to allocate the fair value to all of our assets and liabilities as if it had been acquired in a basis for determining whether itbusiness combination and the fair value was our purchase price. If the excess of the fair value of our identifiable assets and liabilities is necessary to perform the two-step goodwill impairment test. Under this new guidance, the Company assesses qualitative factors at least annually, or more frequently, if events or changes in circumstances indicate thatless than the carrying value of recorded goodwill, an impairment charge is recorded for the reporting unit is less than its carrying amount.difference.

        Based on the qualitative assessment, if the Company determines it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company will calculate the fair value of the reporting unit.        The Company estimatesdid not record any such impairment for the fair value of the goodwill based on a discounted cash flow model using business planstwelve months ended December 31, 2013 and projections as the basis for expected future cash flows. The fair value estimate is based upon level three inputs from ASC Topic "Fair Value Measurements and Disclosures", as unobservable inputs in which there is little or no market data, which required the Company to develop its own assumptions.2012.

Other Long-term Assets

        Other long-term assets are securities that the Company has purchased with the intent of funding the deferred compensation arrangements for certain executives of the Company. These securities are accounted for at fair value on a recurring basis. Any changes to the value of these securities held by the Company are included in Net Income in the Company's Consolidated Statementsconsolidated statements of Incomeincome and Comprehensive Income.comprehensive income.

Warranty

        The Company offers warranty coverage for its productsproducts. The length of the warranty period for periods ranging from 12 to 18 months after shipment, with the majority of its products for 12 months.varies significantly based on the product being sold. The Company estimates the costs of repairing products under warranty based on the historical average cost of the repairs. The assumptions used to estimate warranty accruals are reevaluated periodically in light of actual experience and, when




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

used to estimate warranty accruals are reevaluated periodically in light of actual experience and, when appropriate, the accruals are adjusted. Estimated warranty costs are recorded at the time of sale of the related product, and are considered a cost of sale. Accrued warranty costs were $551,000 and $372,000 as of December 31, 2012 and 2011, respectively.

        Changes in the Company's reserve for product warranty claims during 20122013 and 2011,2012 were as follows (in thousands):

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Warranty reserve at beginning of the year		$	372		$	341			$	551		$	372
Warranty reserves acquired										429			—
Provision			579			255				175			579
Warranty expenditures			(411	)		(215	)			(529	)		(411	)
Effect of foreign currency translation			11			(9	)			3			11
​								​		​	​		​	​
Warranty reserve at end of year		$	551		$	372			$	629		$	551
​								​		​	​		​	​
​								​		​	​		​	​

        In 2012, of the $579,000$579 of warranty provision, $342,000$342 was recorded to cover the expected costs of replacing certain products in the field due to an incorrect electronic component in a printed circuit board supplied by one of the Company's sub-contract suppliers. In 2013, $44 of additional provision was recorded, and $367 of warranty expenditures were incurred related to this issue. The remaining reserve balance is $30, net of the effect of foreign currency translation.

Accrued Liabilities

        Accrued liabilities consist of the following (in thousands):

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Compensation and fringe benefits		$	4,230		$	6,525			$	6,721		$	4,230
Warranty reserve			551			372				629			551
Other accrued expenses			1,145			945				2,548			1,145
​								​		​	​		​	​
		$	5,926		$	7,842			$	9,898		$	5,926
​								​		​	​		​	​
​								​		​	​		​	​

Foreign Currency Translation

        The assets and liabilities of the Company's foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries' functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in other comprehensive income, a component of stockholders' investmentequity in the accompanying consolidated statementstatements of stockholders' investment and comprehensive income.equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each Technology Unit ("TU") are included in the results of operations as incurred.




Table of Contents


ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Engineering and Development Costs

        The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company's existing technologies. Engineering and development costs are expensed as incurred.

Revenue Recognition

        The Company recognizes revenue when products are shipped or delivered (shipping terms may be either FOB shipping point or destination) and title has passed to the customer, persuasive evidence of an arrangement exists, the selling price is fixed or determinable, and collectability is reasonably assured.

Basic and Diluted Income per Share from Continuing Operations

        Basic income per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding. Diluted income per share is determined by dividing the net income by the sum of (1) the weighted average number of common shares outstanding and (2) if not anti-dilutive, the effect of stock awards determined utilizing the treasury stock method. The dilutive effect of outstanding awards was 7 and 0 and 138,000shares for the years 20122013 and 2011,2012, respectively. No stock awards were excluded from the calculation of diluted income per share for years 20122013 and 2011.2012.

Comprehensive Income

        Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by and distributions to stockholders.

Fair Value Accounting

        Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

        The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy:

Level 1:		Quoted prices for identical assets or liabilities in active markets.
Level 2:		Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.
Level 3:		Significant inputs to the valuation model that are unobservable.

        The Company's financial assets and liabilities other than the pension plan assets, include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

the consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments.

        The following table presents the Company's financial assets that are accounted for at fair value on a recurring basis as of December 31, 20122013 and December 31, 2011,2012, respectively, by level within the fair value hierarchy (in '000s)thousands):

		December 31, 2012										December 31, 2013
		Level 1			Level 2			Level 3				Level 1			Level 2			Level 3
Assets
Pension Plan Assets		$	4,086			0			0			$	4,847		$	—		$	—
Other long term assets			1,991			0			0				2,595			—			—
Interest rate swaps													—			41			—

 


		December 31, 2011										December 31, 2012
		Level 1			Level 2			Level 3				Level 1			Level 2			Level 3
Assets
Pension Plan Assets		$	3,418			0			0			$	4,086		$	—		$	—
Other long term assets			688			0			0				1,991			—			—

Derivative Financial Instruments

        As required by ASC Topic 815, "Derivatives and Hedging," the Company records all derivatives on the balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Income Taxes

        The Company accounts for income taxes in accordance with ASC Topic 740, "Income Taxes." Consistent with guidance in "Income Taxes",Taxes," the current provision for income taxes represents actual or estimated amounts payable or refundable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

in the period of enactment. A valuation allowance may be provided to the extent management deems it is more likely than not that deferred tax assets will not be realized. The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income, in the appropriate taxing jurisdictions, during the periods in which temporary differences, net operating losses and tax credits become realizable. Management believes that it is more likely than not that the Company will realize the benefits of these temporary differences and operating loss and tax credit carryforwards, net of valuation allowances.

        The guidance in "Income Taxes" requires that realization of an uncertain income tax position must have a "more likely than not" probability of being sustained based on technical merits before it can be recognized in the financial statements, assuming a review by tax authorities having all relevant information and applying current conventions. The Company does not have significant unrecognized tax benefits and does not anticipate a significant increase or decrease in unrecognized tax benefits within the next twelve months. Income tax related interest and penalties recognized in 20122013 and 20112012 are immaterial.

Pension and Postretirement Welfare Plans

        The Company reports gains or losses and prior service costs or credits that arise during the period, but not recognized as components of net periodic benefit cost, as a component of other comprehensive




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

income, net of tax, in accordance with ASC Topic 715, "Compensation—Retirement Benefits". Amounts recognized in accumulated other comprehensive income are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements.

Concentration of Credit Risk

        Trade receivables subject the Company to the potential for credit risk. To reduce this risk, the Company performs evaluations of its customers' financial condition and creditworthiness at the time of sale, and updates those evaluations when necessary. Three customers made up 42% of trade receivables as of December 31, 2013. No single customer makesmade up more than 10% of trade receivables.receivables as of December 31, 2012.

Use of Estimates

        The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. GOODWILL

        The change in the carrying amount of goodwill for 2012 and 2011 is as follows (in thousands):

		December 31, 2012			December 31, 2011
Balance at beginning of period		$	5,665		$	5,936
Other			—			(139	)
Effect of foreign currency translation			117			(132	)
Balance at end of period		$	5,782		$	5,665

3. INTANGIBLE ASSETS

        Intangible assets on the Company's consolidated balance sheets consist of the following (in thousands):

		December 31, 2012									December 31, 2011
		Gross Amount			Accumulated amortization			Net Book Value			Gross Amount			Accumulated amortization			Net Book Value			Estimated Life
Customer lists		$	4,364		$	(3,212	)	$	1,152		$	4,315		$	(2,960	)	$	1,355		8 - 10 years
Trade name			946			(889	)		57			946			(804	)		142		10 years
Design and technologies			2,626			(1,427	)		1,199			2,575			(1,160	)		1,415		8 - 10 years
Patents			24			(1	)		23			24			0			24
Total		$	7,960		$	(5,529	)	$	2,431		$	7,860		$	(4,924	)	$	2,936




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

2. ACQUISITIONS

        On August 22, 2013, Allied Motion Technologies Inc. ("Allied Motion") entered into a Stock Purchase Agreement (the "Purchase Agreement") to purchase all of the outstanding equity interests of Globe Motors, Inc., a Delaware corporation ("Globe Motors" or "Globe") from Safran USA, Inc. (the "Seller"), for approximately $90,000 in cash. The purchase price paid will be subject to adjustment to reflect, among other things, the working capital of Globe Motors at the time of closing. The acquisition closed on October 18, 2013.

        Globe Motors is headquartered in Dayton, Ohio, and has manufacturing facilities located in the U.S, Portugal, and Mexico. The purchase price of $90,000 was comprised of $4,300 cash paid at closing, as well as funds acquired from the new Credit Agreement and Senior Subordinated Notes.

        The Company incurred $1,913 of transaction costs related to the acquisition of Globe Motors. Transaction costs are included in Business development expenses on the consolidated statements of income and comprehensive income.

        The Company accounted for the acquisition pursuant to ASC 805, "Business Combinations." The purchase price was allocated to the underlying net assets based on fair value as of the acquisition date, as follows (in thousands):

		December 31, 2013
Trade receivables, net		$	16,567
Inventories, net			11,142
Prepaid expenses and other assets			2,860
Property, plant and equipment			30,304
Amortizable intangible assets			33,530
Goodwill			14,209
Accounts payable			(10,622	)
Accrued liabilities			(7,990	)
​	​	​	​	​
Net purchase price		$	90,000
​	​	​	​	​
​	​	​	​	​

        The purchase price of $90,000 excludes any cash on hand and any debt of Globe Motors. The purchase price allocation is subject to further adjustment upon finalization of the opening balance sheet.

        The intangible assets acquired consist of customer lists and a tradename, which are being amortized over 15 and 10 years, respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion's other Technology Units ("TUs") and Globe Motors that will occur as a result of the combined engineering knowledge, the ability of each of the TU's to integrate each other's products into more fully integrated system solutions and Allied Motion's ability to utilize Globe's management knowledge in providing complementary product offerings to the Company's customers.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

2. ACQUISITIONS (Continued)

Pro forma Condensed Combined Financial Information (Unaudited)

        The following presents the Company's unaudited pro forma financial information for the year ended December 31, 2013 giving effect to the acquisition of Globe Motors as if it had occurred at January 1, 2013. Included in the pro forma information is: the additional depreciation and amortization resulting from the valuation of amortizable tangible and intangible assets; interest on borrowings made by the Company; amortization of deferred finance costs incurred to issue the borrowings; removal of acquisition related transaction costs; removal of certain costs for which Allied Motion would be indemnified by the seller and stock compensation expense related to shares issued to certain executives of Allied Motion as a result of the acquisition.

		For the year ended December 31, 2013
Revenues		$	220,692
Net income		$	7,984
Diluted net income per share		$	0.88

        The pro forma adjustments do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition. The pro forma financial information is for informational purposes only and does not purport to present what the Company's results would actually have been had these transactions actually occurred on the dates presented or to project the combined company's results of operations or financial position for any future period.

3. GOODWILL

        The change in the carrying amount of goodwill for 2013 and 2012 is as follows (in thousands):

		December 31, 2013			December 31, 2012
Beginning balance		$	5,782		$	5,665
Goodwill acquired			14,209			—
Effect of foreign currency translation			242			117
​	​	​	​	​	​	​	​
Ending balance		$	20,233		$	5,782
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

4. INTANGIBLE ASSETS (Continued)

        Intangible assets on the Company's consolidated balance sheets consist of the following (in thousands):

				December 31, 2013									December 31, 2012
		Life		Gross Amount			Accumulated amortization			Net Book Value			Gross Amount			Accumulated amortization			Net Book Value
Customer lists		8 - 15 years		$	34,166		$	(3,821	)	$	30,345		$	4,364		$	(3,212	)	$	1,152
Trade name		10 years			4,775			(1,012	)		3,763			946			(889	)		57
Design and technologies		8 - 10 years			2,730			(1,637	)		1,093			2,626			(1,427	)		1,199
Patents					24			(3	)		21			24			(1	)		23
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total				$	41,695		$	(6,473	)	$	35,222		$	7,960		$	(5,529	)	$	2,431
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

        Intangible assets acquired from the Globe Motors acquisition were $33,530 (Note 2).

        Total amortization expense for intangible assets for the years 2013 and 2012 was $825 and 2011 was $548,000 and $732,000$548 respectively. Estimated amortization expense for intangible assets is $338,000 for the year ending December 31, 2013, $310,000 for 2014, $295,000 for 2015, $295,000 for 2016, $295,000 for 2017,as follows:

Year ending December 31,		Total
2014		$	2,685
2015			2,671
2016			2,671
2017			2,671
2018			2,671
Thereafter			21,853
​	​	​	​	​
		$	35,222
​	​	​	​	​
​	​	​	​	​




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and $898,000 for years thereafter.per share data)

4.5. DEBT OBLIGATIONS

        Debt obligations consisted of the following (in thousands):

		December 31, 2013			December 31, 2012
Current Borrowings
Revolving Credit Facility (2.7% at December 31, 2013)		$	7,725		$	—
China Credit Facility (6.2% at December 31, 2013)			1,170			397
Term Loan, current portion, (2.7% at December 31, 2013)(1)			5,250			—
​	​	​	​	​	​	​	​
Current borrowings		$	14,145		$	397
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Long-term Debt
Term Loan, noncurrent (2.7% at December 31, 2013)(1)		$	43,500		$	—
Subordinated Notes (14.5%, 13% Cash, 1.5% PIK)			30,000			—
​	​	​	​	​	​	​	​
Long-term debt		$	73,500		$	—
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​

---

		December 31, 2012			December 31, 2011
Current borrowings (at variable rates)
Credit Agreement, revolving line-of-credit		$	—		$	—
China Credit Facility, 5.9% and 6.4% at December 31, 2012 and 2011, respectively		$	397		$	157
Total Debt		$	397		$	157

(1)

The effective rate of the Term Loan including the impact of the related hedges is 3.14%.

        The Company's amendedCredit Agreement

        In connection with the funding of the acquisition of Globe, the Company entered into a new Credit Agreement which maturesdated as of October 26, 2014,18, 2013. The Credit Agreement provides for a $15,000 five-year revolving credit upfacility and a $50,000 five-year term loan (collectively the "Senior Credit Facilities").

        Borrowings under the Senior Credit Facilities are subject to $4 million and €3 million.terms defined in the Credit Agreement. Borrowings bear interest at either the Base Rate plus a margin of 0.25% to 2.00% (currently 1.50%) or the Eurocurrency Rate plus a margin of 1.25% to 3.00%, in each case depending on the Company's ratio of total funded indebtedness to Consolidated EBITDA (the "Total Leverage Ratio").

        Principal installments are payable on the Term Loan in varying percentages quarterly through September 30, 2018 with a balloon payment at maturity. The amendedSenior Credit Facilities are secured by substantially all of the Company's assets. The average outstanding borrowings for 2013 for the Senior Credit Facilities were $13,200. At December 31, 2013, there was approximately $7,300 available under the Senior Credit Facilities.

        The Credit Agreement contains certain financial covenants related to maximum leverage and minimum fixed charge coveragecoverage. The Credit Agreement also includes other covenants and minimum tangible net worthrestrictions, including limits on the amount of the Company.certain types of capital expenditures. The Company was in compliance with all covenants at December 31, 2012.2013.

        The Senior Credit Facilities replaced the Company's Prior Credit Agreement dated as of May 7, 2007, as amended, among the Company, JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto. The Prior Credit Agreement was scheduled to mature on October 26, 2014 and provided revolving credit up to $4,000 and €3,000. No principal payments are requiredamounts were outstanding under the Prior Credit Agreement at the time of termination.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

5. DEBT OBLIGATIONS (Continued)

Senior Subordinated Notes

        Also in connection with funding the acquisition of Globe Motors, Inc., the Company entered into a Note Agreement, dated as of October 18, 2013 pursuant to which the Company sold $30,000 of 14.50% Senior Subordinated Notes due October 18, 2019 (the "Notes") to Prudential Capital Partners IV, L.P. and its affiliates in a private placement. The interest rate on the revolving credit facility prior to maturity. The interest rates onNotes is 14.50% with 13.00% payable in cash and 1.50% payable in-kind, quarterly in arrears and the agreement are variable rates based on one or more interest rate indices, primarily LIBOR plus 1.5%. All borrowings are secured by substantially all the assetsoutstanding principal amount of the Company.Notes, together with any accrued and unpaid interest is due on October 18, 2019. The average outstanding borrowings for 2012 were $198,000.Company may prepay the Notes at any time after October 18, 2016, in whole or in part, at 100% of the principal amount. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company's subsidiaries.

        At December 31, 2012, approximately $8,000,000 ($4 million and € 3.0 million) was available under the amended Credit Agreement and $720,000 (€ 300,000 and 2,100,000 Swedish Krona ("SEK")) was available under bank overdraft facilities in Europe.Other

        The Company also has a Credit Line Facility in China providing credit of approximately $700,000$1,600 (Chinese Renminbi ("RMB") 4,500,000)9,500). This facility will beis used for working capital and capital equipment needs at the Company's China operations. In October 2012, the facility was extended one year,operations, and will mature in October 2013.2014. The average borrowings for 2013 were $766 (RMB 4,700). At December 31, 2012,2013, there was approximately $317,000$386 (RMB 2,000,000)2,400) available under the facility.

        Maturities of long-term debt are as follows:

Year ending December 31,		Total
2014		$	14,145
2015			6,375
2016			8,219
2017			10,374
2018			18,532
Thereafter			30,000
​	​	​	​	​
Total		$	87,645
​	​	​	​	​
​	​	​	​	​

Deferred Financing Fees

        In connection with the new Credit Agreement, the Company incurred $2,377 of deferred financing costs. The Company capitalized these costs pursuant to the guidance in ASC Topic 835, "Broad Transactions—Interest." These costs are included in other assets in the accompanying consolidated balance sheets. The costs are deferred and amortized over the terms of the components of the Credit Agreement ranging up to six years. Amortization of these costs is charged to interest expense in the accompanying consolidated statements of income and comprehensive income using the straight-line method. The straight-line method is allowable under the guidance if the result is not materially different from the result using the effective interest method.

        Deferred Financing costs net of accumulated amortization were $2,284 as of December 31, 2013.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

6. DERIVATIVE FINANCIAL INSTRUMENTS

        The Company did not use derivative contracts prior to the acquisition of Globe Motors, Inc. in October, 2013. As part of the acquisition, the Company entered into a new Credit Agreement discussed in Note 5.Debt Obligations. The Credit Agreement requires the Company to enter into derivative contracts for at least 50% of the balance of the Term Loan, as amortized. During October 2013, the Company entered into two Interest Rate Swaps with a combined notional amount of $25,000 that amortize quarterly to a notional amount of $6,673 at maturity.

        The Company's use of Interest Rate Swaps assists in stabilizing interest expense and managing exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

        The effective portion of changes in the fair value of the Interest Rate Swaps is recorded in Accumulated Other Comprehensive Income ("AOCI") and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2013, the swaps were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the twelve months ended December 31, 2013, the Company recorded $0 hedge ineffectiveness in earnings.

        Amounts reported in AOCI related to derivatives is reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During 2014, the Company estimates that an additional $212 will be reclassified as an increase to interest expense.

        The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2013 (in thousands):

Derivative Instrument		Balance Sheet Location		December 31, 2013 Fair Value
Interest Rate Swaps		Prepaid expenses and other assets		$	41
​	​	​	​	​	​	​
​	​	​	​	​	​	​

        The effect of the Company's derivative financial instruments on the consolidated statement of income and comprehensive income is as follows (in thousands):

For the year ended December 31, 2013					For the year ended December 31, 2013					For the year ended December 31, 2013
Derivative Instruments		Net deferral in OCI of derivatives (effective portion)			Statement of earnings classification		Net reclassification from AOCI into income (effective portion)			Statement of earnings classification		Amount recognized in income (ineffective portion and amount excluded from effectiveness testing)
Interest Rate Swaps		$	—		Interest expense		$	(41	)	Other (expense)		$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

        As of December 31, 2013, the fair value of derivatives in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $44. As of December 31, 2013, the Company has not posted any collateral related to these agreements.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

7. INCOME TAXES

        The provision for income taxes is based on income before income taxes as follows (in thousands):

		For the year ended December 31, 2012			For the year ended December 31, 2011				For the year ended December 31, 2013			For the year ended December 31, 2012
Domestic		$	3,725		$	2,821			$	1,406		$	3,725
Foreign			3,773			6,698				4,375			3,773
​								​		​	​		​	​
Income before income taxes		$	7,498		$	9,519			$	5,781		$	7,498
​								​		​	​		​	​
​								​		​	​		​	​




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. INCOME TAXES (Continued)

        Components of the total provision for income taxes are as follows (in thousands):

		For the year ended December 31, 2012			For the year ended December 31, 2011				For the year ended December 31, 2013			For the year ended December 31, 2012
Current provision:
Current provision
Domestic		$	115		$	302			$	1,179		$	115
Foreign			881			1,190				898			881
​								​		​	​		​	​
Total current provision			996			1,492				2,077			996
Deferred provision:
​								​		​	​		​	​
Deferred provision
Domestic			1,162			984				(197	)		1,162
Foreign			(57	)		76				(52	)		(57	)
​								​		​	​		​	​
Total deferred provision			1,105			1,060				(249	)		1,105
​								​		​	​		​	​
Provision for income taxes		$	2,101		$	2,552			$	1,828		$	2,101
​								​		​	​		​	​
​								​		​	​		​	​

        The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows (in thousands):

		For the year ended December 31, 2012			For the year ended December 31, 2011				For the year ended December 31, 2013			For the year ended December 31, 2012
Tax provision, computed at statutory rate			34.0	%		34.0	%			34.0	%		34.0	%
State tax, net of federal impact			3.3	%		1.7	%			3.7	%		3.3	%
Permanent item; adjustment to contingent consideration			—	%		(3.9	)%
Effect of foreign tax rate differences			(4.4	)%		(4.6	)%
Foreign tax adjustments			(1.6	)%		(2.1	)%
Effect of foreign tax rate differences and foreign tax adjustments										(9.7	)%		(6.0	)%
Dividend from foreign subsidiary, net of foreign tax credit										3.5	%		0.0	%
Adjustments to prior year accruals(1)			(1.9	)%		—	%			0.0	%		(1.9	)%
Other			(1.4	)%		1.7	%			0.1	%		(1.4	)%
​								​		​	​		​	​
Provision for income taxes			28.0	%		26.8	%			31.6	%		28.0	%
​								​		​	​		​	​
​								​		​	​		​	​

---

(1)

Adjustments relate to the resolution of certain prior year income tax related matters.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.(in thousands, except share and per share data)

7. INCOME TAXES (Continued)

        The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands):

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Current deferred tax assets:
Allowances and other		$	591		$	587			$	1,315		$	591
Tax credit carryforwards			—			—
Net operating loss carryforwards			98			749
Net operating loss and tax credit carryforwards										3,628			98
​								​		​	​		​	​
Total current deferred tax assets			689			1,336				4,943			689
Valuation allowance			(50	)		(82	)			(1,982	)		(50	)
​								​		​	​		​	​
Net current deferred tax assets		$	639		$	1,254			$	2,961		$	639
​								​		​	​		​	​
​								​		​	​		​	​
Noncurrent deferred tax assets:
Employee benefit plans		$	1,375		$	1,268			$	2,074		$	1,375
Net operating loss carryforwards			—			—
Goodwill and Intangibles			1,983			2,349				1,553			2,916
Property, plant & equipment			(188	)		50				(381	)		(188	)
Other			933			659
​								​		​	​		​	​
Total noncurrent deferred tax assets		$	4,103		$	4,326			$	3,246		$	4,103
​								​		​	​		​	​
​								​		​	​		​	​
Deferred tax liabilities:
Acquired property, plant and equipment and intangible assets		$	638		$	756			$	1,997		$	638
Other			297			217				330			297
​								​		​	​		​	​
Total deferred tax liabilities		$	935		$	973			$	2,327		$	935
​								​		​	​		​	​
​								​		​	​		​	​

        During 2010,        The Company has foreign net operating loss carryforwards of approximately $3,300 expiring in 2014 through 2017 and tax credit carryforwards of approximately $212 expiring in 2018. These carryforwards and related valuation allowance were recorded in relation to the acquisition of Globe Motors, Inc. and are included in the purchase price allocation discussed in Note 2.Acquisitions.

        Additionally, the Company acquiredhas foreign operating losses and tax credit carryforwards that relate to a foreign subsidiary acquired in relation to its acquisition of Agile Systems Inc. in Canada.2010. At the time of the acquisition, the Company could not conclude, on a more likely than not basis, that it would ultimately realize tax benefits from thethese losses and credits, and therefore valued the deferred benefit at zero. During 2012 and 2011, the Company utilized a portion of the foreign tax loss carryforward which reduced the consolidated tax provision for income taxes by $72,000 and $244,000, respectively. In addition, in 2012 the Company recorded a deferred tax asset of $66,000 for the forecasted utilization of the Company's foreign tax loss carryforward; however, the Company has not concluded that it will ultimately realize the remainder of the foreign tax carryforward on a more likely than not basis. The Company will continue to assess its ability to utilize any portion of the tax carryforward balance and whether it should adjust the amount of deferred tax asset related to this loss carryforward.

        Realization of the Company's recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of domestic net operating losses and tax credit carryforwards. The Company has recorded a valuation allowance due to the uncertainty related to the realization of certain deferred tax assets existing at December 31, 2012.2013. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. Management




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. INCOME TAXES (Continued)

believes that it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of valuation allowances as of December 31, 2012.2013.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

7. INCOME TAXES (Continued)

        The Company files income tax returns in various U.S. and foreign taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before 2008.2009. The Company is no longer subject to tax examinations in The Netherlands or Sweden for periods before 2007.2008. The Company is no longer subject to tax examinations in Portugal for periods before 2010.

        In relation to the acquisition of Globe Motors, Inc., the Company intends to file a unilateral election under Section 338(g) of the Internal Revenue Code to treat the acquisition as an asset purchase instead of a stock purchase. This election will allow the Company to take a stepped-up basis at the fair market value purchase price and the transaction will be deemed, for purposes of the section, as an asset sale. The deemed sale may result in a taxable gain for the Company. The effects of the election have been assumed for purposes of the purchase price allocation discussed in Note 2. The final date by which the Company must make the election is July 15, 2014. Should the company not make the election as intended; the purchase price allocation will be adjusted accordingly.

        In general, it is the practice and intention of the Company to reinvest the earnings of its non-domestic subsidiaries in activities outside the United States. Generally, such amounts would become subject to domestic taxation upon the remittance of dividends to the United States and under certain other circumstances. Exceptions may be made on a year-by-year basis to repatriate current year earnings of certain foreign subsidiaries based on cash needs in the United States. During 2013, the Company's foreign subsidiaries paid dividends of $3,400 to the Company's domestic parent in relation to completing the acquisition of Globe Motors, Inc. and U.S. tax consequences of the payments have been included in the Company's provision for income taxes. The Company does not intend to transfer or pay dividends of the remaining amounts and, therefore, has not recorded the domestic tax consequences of such payments. As of December 31, 2013, domestic income and foreign withholding taxes have not been provided for unremitted earnings of foreign subsidiaries. These earnings, which are considered to be indefinitely reinvested, would become subject to domestic income tax if they were remitted to the United States. The amount of unrecognized deferred income tax liability on the unremitted earnings has not been determined because the hypothetical calculation is not practicable.

6.8. STOCK-BASED COMPENSATION PLANS

Stock Incentive Plans

        The Company's Stock Incentive Plans provide for the granting of stock awards, including stock options, stock appreciation rights and restricted stock, to employees and non-employees, including directors of the Company.

        As of December 31, 2012,2013, the Company had 358,864852,493 shares of Common Stock available for grant under stock incentive plans.

Stock Options

        No option activity occurred during the year ended December 31, 2012. As of December 31, 2011, there were no outstanding options. Option activity during 2011 was as follows:

		Number of Shares			Weighted Average Exercise Price			Aggregate Intrinsic Value
Balance Outstanding, December 31, 2010			300,000		$	4.93		$	581,000
Granted			—
Forfeited			(91,206	)
Exercised			(208,794	)
Balance Outstanding, December 31, 2011			0					$	0

        Cash received from the exercise of stock options for the year ended December 31, 2011 was $334,000. Shares issued as a result of the 208,794 options exercised in 2011 were approximately 118,000.

Stock Warrants

        As of December 31, 2012 and 2011, the Company had 0 warrants outstanding to purchase common stock. The warrants were exercisable at an exercise price of $4.41. The warrants were exercised in cashless transactions in 2011, and the total shares issued as a result of the warrant exercises were 117,145.

Restricted Stock

        During 2013 and 2012, 423,518 and 2011, 140,150 and 130,466 shares of unvested restricted stock were awarded with a weighted average value of $7.10$7.73 and $7.08$7.10 per share, respectively. Of the restricted shares granted in 2013 and 2012, 58,909 and 2011, 30,000 and 40,000 shares have performance based vesting requirements. The value at the date of award is amortized to compensation expense over the related service period, which is




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.(in thousands, except share and per share data)

8. STOCK-BASED COMPENSATION PLANS (Continued)

the date of award is amortized to compensation expense over the related service period, which is generally three years (for time vested grants), or over the performance period. Shares of non-vested restricted stock are forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards.

        The following is a summary of restricted stock activity during years 20122013 and 2011:2012:

		Number of Nonvested Restricted Shares
Balance, December 31, 2010			379,079
Awarded			130,466
Forfeited			(2,768	)
Vested			(223,169	)
Balance, December 31, 2011			283,608
Awarded			140,150
Forfeited			(21,398	)
Vested			(159,236	)
​	​	​	​	​
Balance, December 31, 2012			243,124
Awarded			423,518
Forfeited			(3,181	)
Vested			(143,266	)
​	​	​	​	​
Balance, December 31, 2013			520,195
​	​	​	​	​
​	​	​	​	​

        In 2013, of the 58,909 performance shares granted in 2013, 18,775 achieved the related performance criteria, and are still outstanding, 5,190 did not achieve the performance criteria and are still outstanding, and 34,944 were forfeited as the performance criteria was not achieved. In 2012, 20,000 of the 30,000 performance based shares granted in 2012 were forfeited as the performance criteria was not achieved. 5,190 and 10,000 of the performance based shares granted in 2013 and 2012 respectively are still outstanding.outstanding as of December 31, 2013. The performance criteria forvesting and forfeitures discussed above did not occur until the 40,000 performance based shares granted in 2011 was achieved, and allBoard of Directors approved them during the related shares vested in the first quarter of 2012.February 2014 meeting.

Share-Based Compensation Expense

Restricted Stock

        During 20122013 and 2011,2012, compensation expense net of forfeitures of $609,000$927 and $703,000$609 was recorded, respectively. As of December 31, 2012,2013, there was $927,000$3,264 of total unrecognized compensation expense related to restricted stock awards, of which approximately $526,000$950 is expected to be recognized in 2013, with the remaining amount of $401,000 in 2013 and 2014.

Employee Stock Ownership Plan

        The Company sponsors an Employee Stock Ownership Plan (ESOP)("ESOP") that covers all non-union U.S. employees who work over 1,000 hours per year. The terms of the ESOP require the Company to make an annual contribution equal to the greater of i) the Board established percentage of pretax income before the contribution (5% in 20122013 and 2011)2012) or ii) the annual interest payable on any loan outstanding to the Company. Company contributions to the Plan accrued for 20122013 and 2011,2012, respectively, were $395,000$304 and $437,000.$395. These amounts are included in General and Administrative costs in the Consolidated Statementsconsolidated statements of Incomeincome and Comprehensive Income.

Dividends

        For the year ended December 31, 2012 and 2011, a total of $0.10 and $0.04 per share on all outstanding shares was paid. Based on the terms of the Company's Credit Agreement, as amended,comprehensive income.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.(in thousands, except share and per share data)

8. STOCK-BASED COMPENSATION PLANS (Continued)

Defined Contribution Plan

        The Company sponsors the Allied Motion 401(k) Tax Advantaged Investment Plan ("401(k)") which covers substantially all of its U.S. based employees. The plan provides for the deferral of employee compensation under Section 401(k) and a discretionary Company match. In 2013 and 2012, this match was 100% per dollar of the first 3% of participant deferral and 50% per dollar of the next 2% contribution, up to 4% of a total 5% participant deferral. Net costs related to this defined contribution plan were $506 in 2013 and $400 in 2012.

Dividends

        For the year ended December 31, 2013 and 2012, a total of $0.10 and $0.10 per share, respectively, on all outstanding shares was paid. Based on the terms of the Company's Credit Agreement, dividends paid to shareholders are acceptable, subject to the Company's compliance with the covenants under the Credit Agreement. The Board of Directors began the quarterly dividend program in the third quarter of 2011.

7.9. COMMITMENTS AND CONTINGENCIES

Operating Leases

        At December 31, 2012,2013, the Company maintains leases for certain facilities and equipment. The Company has entered into facility agreements, some of which contain provisions for future rent increases. The total amount of rental payments due over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to "Deferred rent obligation," which is included in "Accrued liabilities and other"liabilities" in the accompanying Balance Sheet.consolidated balance sheets.

        Minimum future rental commitments under all non-cancelable operating leases are as follows (in thousands):

Year ending December 31,		Total				Total
2013		$	843
2014			546			$	1,727
2015			503				1,349
2016			474				1,304
2017			118				993
2018							715
Thereafter			3				3,027
​					​		​	​
		$	2,487			$	9,115
​					​		​	​
​					​		​	​

        Rental expense was $1,144,000$1,248 and $1,270,000$1,144 in 20122013 and 2011,2012, respectively.

Severance Benefit Agreements

        The Company has entered into annually renewable severance benefit agreements with four key employees which, among other things, provide inducement to the employees to continue to work for the Company during and after any period of a potential change in control of the Company. The




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

9. COMMITMENTS AND CONTINGENCIES (Continued)

agreements provide the employees with specified benefits upon the subsequent severance of employment in the event of change in control of the Company and are effective for 24 months thereafter. The amount of severance payments that could be required to be paid under these contracts, if such events occur, totaled approximately $5,252,000$5,396 and $5,028,000,$5,028, respectively as of December 31, 20122013 and 2011.2012. In addition, severance benefits include, for some employees, a gross-up payment for excise taxes, if any.

Litigation

        The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company's consolidated financial position or results of operations.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.10. DEFERRED COMPENSATION ARRANGEMENTS

        The Company has deferred compensation arrangements with certain key members of management. These arrangements provide the Board with the ability to make contributions based on the Company's performance and discretionary contributions based on other factors as determined by the Board. It also allows for the participants to make certain deferrals into the plan. The amount of the liability is composed of liabilities from previous contributions as well as the performance contribution for the year ended December 31, 2012.2013. Amounts accrued relating to previous contributions to the plan are $1,997,000$2,599 and $694,000$1,997 as of December 31, 20122013 and December 31, 2011,2012, respectively, and are included in noncurrent liabilities in the Consolidated Balance Sheets.consolidated balance sheets. The amounts accrued as of December 31, 20122013 and December 31, 2011,2012, respectively, which relate to the performance contribution for 2013 and 2012 are $0, and 2011 are $308,000, and $1,042,000,$308, respectively, and are included in accrued liabilities on the Consolidated Balance Sheets.consolidated balance sheets.

        In addition, the Company would contribute certain amounts to a Supplemental Executive Retirement Plan in the event of death, disability, or termination without cause, for certain key executives. As of December 31, 20122013 this amount would be approximately $769,000.$615.

9.11. PENSION AND POSTRETIREMENT WELFARE PLANS

Pension Plan

        Motor Products (Allied Motion Owosso) has a defined benefit pension plan covering substantially all of its hourly union employees hired prior to April 10, 2002. The benefits are based on years of service, the employee's compensation during the last three years of employment, and accumulated employee contributions.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

11. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

        The following tables provide a reconciliation of the change in benefit obligation, the change in plan assets and the net amount recognized in the Consolidated Balance Sheetconsolidated balance sheets at December 31, 20122013 and December 31, 20112012 (in thousands):

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Change in projected benefit obligation:
Projected benefit obligation at beginning of period		$	5,556		$	4,629			$	6,277		$	5,556
Service cost			122			104				103			122
Employee contributions			9			11				10			9
Interest cost			259			264				241			259
Actuarial loss			580			789
Actuarial (gain) loss										(638	)		580
Benefits paid			(249	)		(241	)			(255	)		(249	)
​								​		​	​		​	​
Projected benefit obligation at end of period		$	6,277		$	5,556			$	5,738		$	6,277
​								​		​	​		​	​
​								​		​	​		​	​
Change in plan assets:
Fair value of plan assets at beginning of period		$	3,418		$	3,425			$	4,086		$	3,418
Actual (loss) return on plan assets			469			(48	)
Actual return on plan assets										691			469
Employee contributions			9			11				10			9
Employer contributions			439			271				315			439
Benefits and expenses paid			(249	)		(241	)			(255	)		(249	)
​								​		​	​		​	​
Fair value of plan assets at end of period		$	4,086		$	3,418			$	4,847		$	4,086
​								​		​	​		​	​
​								​		​	​		​	​




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

        The following table reconciles the accumulated other comprehensive income from the prior measurement date to the current measurement date:

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Excess of projected benefit obligation over fair value of plan assets		$	2,191		$	2,138			$	891		$	2,191
Unrecognized loss			(2,088	)		(1,881	)			(875	)		(2,088	)
​								​		​	​		​	​
Accrued pension cost prior to pension adjustments		$	103		$	257			$	16		$	103
Accumulated Other Comprehensive Income at Current Measurement Date			2,088			1,881				875			2,088
​								​		​	​		​	​
Accrued pension cost at end of period		$	2,191		$	2,138			$	891		$	2,191
​								​		​	​		​	​
​								​		​	​		​	​

        The accumulated benefit obligation for the pension plan was $6,032,000$5,548 at December 31, 20122013 and $5,323,000$6,032 at December 31, 2011.2012. The amount of accumulated other comprehensive income expected to be recognized as a plan expense in 20132014 is $182,000,$43, which all relates to the amortization of the actuarial loss.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

11. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

        Benefits expected to be paid from the Plan during each of the next five fiscal years, and in aggregate for the five fiscal years thereafter are:are (in thousands):

Year of payment		Amount of Benefit Payment				Amount of Benefit Payment
2013		$	286,000
2014			290,000			$	289
2015			320,000				308
2016			323,000				311
2017			338,000				326
2018 - 2022			1,826,000
2018							326
2019 - 2023							1,863

        Components of net periodic pension expense included in the consolidated statements of operationsincome and comprehensive income for years 20122013 and 20112012 are as follows (in thousands):

		For the year ended December 31, 2012			For the year ended December 31, 2011				For the year ended December 31, 2013			For the year ended December 31, 2012
Service cost		$	122		$	104			$	103		$	122
Interest cost on projected benefit obligation			259			264
Interest cost										241			259
Amortization of net loss			150			51				172			150
Expected return on assets			(245	)		(257	)			(288	)		(245	)
				��
​								​		​	​		​	​
Net periodic pension expense		$	286		$	162			$	228		$	286
​								​		​	​		​	​
​								​		​	​		​	​

        Items subject to deferred recognition are amortized on a straight-line basis over the average remaining service period of active employees expected to receive benefits from the plan. Cumulative gains and losses, including the impact of any actuarial assumption changes, are amortized to the extent that their value exceeds 10% of the greater of the Market Related Value of Assets and the Projected Benefit Obligation.

        The weighted average assumptions used to determine the projected benefit obligation were as follows:

		December 31, 2013			December 31, 2012
Discount rate			4.75	%		4.00	%
Rate of compensation increases			2.00	%		5.00	%

        The weighted average assumptions used to determine net periodic pension expense are as follows:

		December 31, 2013			December 31, 2012
Discount rate			4.00	%		4.75	%
Expected long-term rate of return on plan assets			7.00	%		7.00	%
Rate of compensation increases			5.00	%		5.00	%




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.(in thousands, except share and per share data)

11. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

that their value exceeds 10% of the greater of the Market Related Value of Assets and the Projected Benefit Obligation

        The weighted average assumptions used to determine the projected benefit obligation were as follows:

		December 31, 2012			December 31, 2011
Discount rate			4.00	%		4.75	%
Rate of compensation increases			5.00	%		5.00	%

        The weighted average assumptions used to determine net periodic pension expense are as follows:

		For the year ended December 31, 2012			For the year ended December 31, 2011
Discount rate			4.75	%		5.75	%
Expected long-term rate of return on plan assets			7.00	%		7.50	%
Rate of compensation increases			5.00	%		5.00	%

        The expected rate of return on plan assets assumption is based on the long-term expected returns for the investment mix of assets currently in the portfolio. Management uses historic return trends of the asset portfolio combined with anticipated future market conditions to estimate the rate of return. The performance of the financial markets and changes in interest rates impact the funding obligations under our pension plan. Significant changes in market interest rates and decreases in the fair value of plan assets may increase our funding obligations and adversely impact our results of operations and cash flows in future periods.

        The Company expects to contribute approximately $276,000$285 to the pension plan during 2013.2014.

        All plan assets are accounted for at fair value on a recurring basis. Fair values are determined using level one inputs,input, or quoted prices for identical assets in active markets on the measurement date, as discussed in Note 1.

        The pension plan assets allocation at December 31, 20122013 and 20112012 was as follows:

		December 31, 2012			December 31, 2011				December 31, 2013			December 31, 2012
Cash equivalents			4	%		4	%			5	%		4	%
Equity securities			65	%		64	%			64	%		65	%
Fixed income securities			31	%		32	%			31	%		31	%
​								​		​	​		​	​
Total			100	%		100	%			100	%		100	%
​								​		​	​		​	​
​								​		​	​		​	​

        The pension assets are managed by an outside investment manager. The Company's investment policy with respect to pension assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment diversification




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

to assist in minimizing the risk of large losses.

        The pension assets are subject to the following ranges for asset allocation percentages based on the Plan's Investment Policy Guidelines:

Equity Securitiessecurities			55 - 75	%75%
Fixed Income Securitiesincome securities			25 - 45	%45%
Cash			0 - 20	%20%
​	​	​
Total			100	%100%
​	​	​
​	​	​

Postretirement Welfare Plan

        Motor Products provides postretirement medical insurance and life insurance benefits to current and former employees hired before January 1, 1994 who retire from Motor Products. Employees who retire after January 1, 2005 must have twenty or more years of continuous service in order to be eligible for retiree medical benefits. Partial contributions from retirees are required for the medical insurance benefits. The Company's portion of the medical insurance premiums is funded from the




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

11. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

general assets of the Company. The Company recognizes the expected cost of providing such post-retirement benefits during employees' active service periods.

        The following tables provide a reconciliation of the change in the accumulated postretirement benefit obligation and the net amount recognized in the Consolidated Balance Sheetconsolidated balance sheets at December 31, 20122013 and December 31, 20112012 (in thousands):

		December 31, 2012			December 31, 2011
Change in postretirement benefit obligation:
Accumulated postretirement benefit obligation at beginning of period		$	1,378		$	1,249
Service cost			22			22
Interest cost			67			70
Actuarial loss			227			104
Benefits paid, net of participant contributions			(73	)		(67	)
Accumulated postretirement benefit obligation at end of period		$	1,621		$	1,378
Accrued postretirement benefit cost at the beginning of period		$	1,378		$	2,195
Net periodic postretirement cost			28			11
Employer contributions			(73	)		(67	)
Accrued postretirement benefit cost, prior to pension adjustments		$	1,333		$	2,139
Required incremental (liability) asset			288			(761	)
Accrued postretirement benefit cost at end of period		$	1,621		$	1,378

		December 31, 2013			December 31, 2012
Change in postretirement benefit obligation:
Accumulated post retirement benefit obligation at beginning of period		$	1,621		$	1,378
Service cost			16			22
Interest cost			60			67
Actuarial (gain) loss			(243	)		227
Benefits paid			(47	)		(73	)
​	​	​	​	​	​	​	​
Accumulated postretirement benefit obligation at end of period		$	1,407		$	1,621
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. PENSION AND POSTRETIREMENT WELFARE PLANS (Continued)

        Net periodic postretirement benefit costs included in the consolidated statements of operationsincome and comprehensive income for years 2013 and 2012 were $30 and 2011 are as follows (in thousands):$28, respectively.

		For the year ended December 31,
		2012			2011
Service cost		$	22		$	22
Interest cost			67			70
Amortization of prior service credit			(12	)		(12	)
Amortization of gain			(49	)		(69	)
Total benefit costs		$	28		$	11

        The amount of accumulated other comprehensive income expected to be recognized as income to the plan in 20132014 is $38,000,$66, of which $26,000$54 relates to the actuarial gain and $12,000$12 to the prior service credit.

        Postretirement medical liabilities can be extremely sensitive to changes in the assumed rate of future medical increases, and, therefore the healthcare cost trend rate assumption can have a significant effect on the amounts reported. However, the Company's current contractual obligation requires a per capita fixed Company contribution amount through December 2015.

        The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 4.00%4.75% and 4.75%4.00% as of December 31, 20122013 and 2011,2012, respectively. The weighted average discount rate used to determine the net periodic postretirement benefit cost was 4.00% for 2013 and 4.75% for 2012 and 5.75% for 2011.2012.

        Benefits expected to be paid from the Plan during each of the next five fiscal years, and in aggregate for the five fiscal years thereafter are:are (in thousands):

Year of payment		Amount of Benefit Payment				Amount of Benefit Payment
2013		$	57,000
2014			60,000			$	58
2015			67,000				62
2016			65,000				60
2017			72,000				68
2018 - 2022			404,000
2018							64
2019 - 2023							404




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

12. SEGMENT INFORMATION

        ASC Topic "Segment Reporting" requires disclosure of operating segments, which as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

        The Company operates in one segment for the manufacture and marketing of motion control products for original equipment manufacturers and end user applications. In accordance with the




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. SEGMENT INFORMATION (Continued)

"Segment "Segment Reporting" Topic of the ASC, the Company's chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under "Segment Reporting" due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by "Segment Reporting" can be found in the accompanying consolidated financial statements and within this note.

        The Company's wholly owned foreign subsidiaries, Premotec (Dordrecht, The Netherlands), Allied Motion Stockholm (formerly known as Östergrens, located in Stockholm, Sweden), Allied Motion Asia (Hong Kong and Changzhou, China), and Allied Motion Canada (Oakville, Ontario, Canada), Globe Motors Portugal (Porto, Portugal) and Globe Motors Mexico (Reynosa, Mexico) are included in the accompanying consolidated financial statements.

        Financial information related to the foreign subsidiaries is summarized below (in thousands):

		For the year ended and as of December 31,							For the year ended and as of December 31,
		2012			2011				2013			2012
Revenues derived from foreign subsidiaries		$	42,172		$	47,757			$	51,199		$	42,172
Identifiable assets			26,525			25,484				55,627			26,525

        Sales to customers outside of the United States by all Technology Units ("TUs") were $44,761,000$53,988 and $51,611,000$44,761 in years 20122013 and 2011,2012, respectively.

        During years 20122013 and 2011,2012, no single customer accounted for more than 10% of total revenues.

11. CONTINGENT CONSIDERATION

        The Company acquired Östergrens Elmotor AB (Östergrens), located in Stockholm, Sweden on December 30, 2010. In conjunction with the acquisition of Östergrens, the Company recorded contingent cash consideration based on the seller meeting certain performance criteria. The Company paid $1,350,000 and $332,000 of the contingent consideration in 2012 and 2011, respectively. The liability was denominated in Swedish Krona. The consideration paid was based on a multiple of the incremental profit achieved in 2011 over 2010 for certain customer projects.

12.13. RECLASSIFICATIONS

        Certain prior year balances were reclassified to conform to the current year presentation. Those reclassifications had no impact on the Consolidated Statementsconsolidated statements of Incomeincome and Comprehensive Income,comprehensive income, the Consolidated Statementsconsolidated statements of Stockholders' Equitystockholders' equity or the Consolidated Statementconsolidated statements of Cash Flowscash flows as previously reported.




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ALLIED MOTION TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.(in thousands, except share and per share data)

14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

        Selected quarterly financial data for each of the four quarters in years 20122013 and 20112012 is as follows (in thousands, except per share data):

Year 2012		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Year 2013															First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues		$	26,847		$	26,836		$	24,316		$	23,969			$	25,143		$	25,352		$	24,876		$	50,131
Gross margin			7,637			8,151			7,099			6,753				7,523			7,535			7,238			14,226
Net income			1,158			1,817			1,321			1,101				960			819			833			1,341
Basic income per share			.14			.21			.15			.13				0.11			0.09			0.09			0.15
Diluted income per share			.14			.21			.15			.13				0.11			0.09			0.09			0.15

 


Year 2011		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Year 2012															First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues		$	26,724		$	28,862		$	27,331		$	28,024			$	26,847		$	26,836		$	24,316		$	23,969
Gross margin			7,949			8,800			8,213			8,569				7,637			8,151			7,099			6,753
Net income			1,213			1,481			1,557			2,716				1,158			1,817			1,321			1,101
Basic income per share			.15			.17			.18			.32				0.14			0.21			0.15			0.13
Diluted income per share			.14			.17			.18			.32				0.14			0.21			0.15			0.13




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Item 9A.    Controls and Procedures.


Evaluation of Disclosure Controls and Procedures

        The Company's controls and procedures include those designed to ensure that material information is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure. Under the supervision and with the participation of management, the Company's chief executive officer and chief financial officer evaluated the effectiveness of the Company's disclosure controls and procedures designed to ensure that information is recorded, processed, summarized and reported in a timely manner as required by Exchange Act reports such as this Form 10-K. Based on this evaluation, the chief executive officerChief Executive Officer and chief financial officerChief Financial Officer concluded that they are effective as of December 31, 2012.2013.

Management's Report on Internal Control Over Financial Reporting

        Under Section 404 of the Sarbanes Oxley Act of 2002, management is responsible for establishing and maintaining adequate internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company's internal control over financial reporting is effective.

        Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company's financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.

        Management has conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation under this framework, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2012.2013.

        There has not been any change in the Company's internal controls over financial reporting during the quarter ended December 31, 20122013 that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting.

        In making our assessment of the Company's internal control over financial reporting as of December 31, 2013, we have excluded the operations of Globe. We are currently assessing the control environment of this acquired business. Our consolidated financial statements reflect Globe's results of operations from October 18, 2013. Globe's net sales constituted approximately 21% of our net sales for the year ended December 31, 2013, and Globe's assets constituted approximately 63% of the Company's total assets as of December 31, 2013.


PART III


Item 10.    Directors, Executive Officers and Corporate Governance.


        The Company's definitive proxy statement which will be filed with the SEC pursuant to Registration 14A within 120 days of the end of the Company's fiscal year is incorporated herein by reference.

Item 11.    Executive Compensation.


        The Company's definitive proxy statement which will be filed with the SEC pursuant to Registration 14A within 120 days of the end of the Company's fiscal year is incorporated herein by reference.




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Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.


        The Company's definitive proxy statement which will be filed with the SEC pursuant to Registration 14A within 120 days of the end of the Company's fiscal year is incorporated herein by reference. Also incorporated by reference is the information in the table under the heading "Equity Compensation Plan Information" included in Item 5 of the Form 10-K.




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Item 13.    Certain Relationships and Related Transactions, and Director Independence.


        The Company's definitive proxy statement which will be filed with the SEC pursuant to Registration 14A within 120 days of the end of the Company's fiscal year is incorporated herein by reference.

Item 14.    Principal Accountant Fees and Services.


        The Company's definitive proxy statement which will be filed with the SEC pursuant to Registration 14A within 120 days of the end of the Company's fiscal year is incorporated herein by reference.


PART IV


Item 15.    Exhibits and Financial Statement Schedules.


a)

The following documents are filed as part of this Report:



1.

Consolidated Financial Statements



a)

Consolidated Balance Sheets as of December 31, 20122013 and December 31, 2011.2012.



b)

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 20122013 and 2011.2012.



c)

Consolidated Statements of Stockholders' Equity for the years 20122013 and 2011.2012.



d)

Consolidated Statements of Cash Flows for the years 20122013 and 2011.2012.



e)

Notes to Consolidated Financial Statements.



f)

Report of Independent Registered Public Accounting Firm.




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3.

3.     Exhibits

Exhibit No.			Subject
	3.1		Amended and Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed June 16, 2010.)
	3.2
	3.2		Amended and restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed June 16, 2010.)
	10.1
	10.1	*	2007 Stock Incentive Plan.Plan as amended. (Incorporated by reference to Exhibit A10 to the Company's ProxyRegistration Statement datedon Form S-8 filed with the SEC on March 20, 2008.19, 2013.)
	10.2	*	Amendment No. 1 to the Year 2007 Stock Incentive Plan. (Incorporated by reference to Appendix B to the Company's Proxy Statement dated March 19, 2010.)
	10.310.2	*	Employment Agreement between Allied Motion Technologies Inc. and Richard D. Smith, as Amended and Restated, effective May 12, 2009. (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter ended March 31, 2009.)
	10.4	*	Change of Control Agreement between Allied Motion Technologies Inc. and Richard D. Smith, as Amended and Restated, effective December 22, 2008. (Incorporated by reference to Exhibit 10.5 to the Company's Form 10-K for the year ended December 31, 2008.)
	10.5	*	Consulting Agreement between Richard D. Smith and Allied Motion Technologies Inc. dated January 3, 2011. (Incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed January 6, 2011.)
	10.6
	10.3	*	Employment Agreement between Allied Motion Technologies Inc. and Richard S. Warzala, as Amended and Restated, effective May 12, 2009. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 2009.)
	10.7
	10.4	*	Amendment to Amended and Restated Employment Agreement for Richard S. Warzala dated and effective as of June 1, 2011 between Allied Motion Technologies, Inc. and Richard S. Warzala. (Incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q for the quarter ended June 30, 2011)
	10.8
	10.5	*	Change of Control Agreement between Allied Motion Technologies Inc. and Richard S. Warzala, as Amended and Restated, effective December 22, 2008. (Incorporated by reference to Exhibit 10.7 to the Company's Form 10-K for the year ended December 31, 2008.)
	10.9
	10.6	*	Deferred Compensation Plan, as Amended and Restated, effective May 31, 2011. (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter ended June 30, 2011.)
	10.10
	10.7	*	Change of Control Agreement between Allied Motion Technologies Inc. and Robert P. Maida, dated and effective as of October 1, 2012 (attached herein)(Incorporated by reference to Exhibit 10.10 to the Company's Form 10-K for the year ended December 31, 2012.)
	10.11
	10.8	*	Non-Employee Director Stock in Lieu of Cash Retainer Plan. (Incorporated by reference to Exhibit 99.3 to the Company's Registration Statement on Form S-8 filed November 12, 2010.)
	10.12
	10.9		Credit Agreement, dated as of May 7, 2007October 18, 2013, among Allied Motion Technologies Inc., as US Borrower, Precision Motor Technology and Allied Motions Technologies B.V., as EUR Borrower, JPMorgan Chaseborrowers, Bank of America, N.A., as Administrative Agent, J.P. Morgan Europe Limited,administrative agent, HSBC Bank USA, National Association, as EUR Agent,syndication agent and the Lenderslenders party thereto. (Incorporatedthereto (incorporated by reference to Exhibit 1010.1 to the Company's Form 8-K/A8-K filed October 24, 2013).
	10.10		Note Agreement, dated as of October 18, 2013, among Allied Motion Technologies Inc. and the purchasers of the notes party thereto (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed October 24, 2013).
	10.11		Stock Purchase Agreement by and between Allied Motion Technologies Inc. and Safran USA, Inc. dated August 8, 2007.)22, 2013 (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed August 28, 2013).




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Exhibit No.			Subject
	10.1314.1		Waiver and First Amendment to Credit Agreement dated as of August 3, 2009 among Allied Motion Technologies Inc., Precision Motor Technology B.V., JPMorgan Chase Bank, N.A. and J.P. Morgan Europe Limited. (Incorporated by reference to Exhibit 99.1 to the Company's Form 8-K filed August 7, 2009.)
	10.14		Third Amendment to Credit Agreement dated as of October 26, 2010 among Allied Motion Technologies Inc., Allied Motion Technologies B.V., JPMorgan Chase Bank, N.A. and J.P. Morgan Europe Limited. (Incorporated by reference to Exhibit 10 to the Company's Form 8-K filed November 1, 2010.)
	10.15		Fourth Amendment to Credit Agreement dated as of March 28, 2011, among Allied Motion Technologies Inc., Allied Motion Technologies B.V., JPMorgan Chase Bank, N.A. and J.P. Morgan Europe Limited. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 2011).
	10.16		Fifth Amendment to Credit Agreement dated as of August 3, 2011, among Allied Motion Technologies Inc., Allied Motion Technologies B.V., JPMorgan Chase Bank, N.A. and J.P. Morgan Europe Limited. (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended June 30, 2011).
	10.17		Sixth Amendment to Credit Agreement dated as of April 20, 2012, among Allied Motion Technologies Inc., Allied Motion Technologies B.V., JP Morgan Chase Bank, N.A. and JP Morgan Europe Limited (incorporated by reference to the Company's Form 10-Q for the quarter ended March 31, 2012.
	10.18		Seventh Amendment to Credit Agreement dated October 26, 2012, among Allied Motion Technologies Inc., Allied Motion Technologies B.V., J.P. Morgan Chase Bank N.A., and J.P. Morgan Europe Limited (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended September 30, 2012).
	14.1		Code of Ethics for chief executive officer, president and senior financial officers adopted October 23, 2003. (Incorporated by reference to Exhibit 14.1 to the Company's Form 10-K for the year ended December 31, 2003.)
	21
	21		List of Subsidiaries (attached herein).
	23
	23		Consent of EKS&H LLP (filed herewith).
	31.1
	31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2
	31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1
	32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2
	32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




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Exhibit No.			Subject
	101		The following materials from Allied Motion Technologies Inc.'s Annual Report on Form 10-K for the year ended December 31, 2012,2013, formatted in XBRL (eXtensible Business Reporting Language): (i)  consolidated balance sheets, (ii) consolidated statements of operations,income and comprehensive income, (iii) consolidated statements of stockholders' investment,equity, (iv) consolidated statements of cash flows and (iv) the notes to the consolidated financial statements, tagged as block of text.*statements**

---

*

Denotes management contract or compensatory plan or arrangement.



**

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.




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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			ALLIED MOTION TECHNOLOGIES INC.
			By:	By:		/s/ ROBERT P. MAIDA Robert P. Maida Chief Financial Officer
			Date: March 11, 201318, 2014

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signatures		Title		Date
/s/ RICHARD D. SMITHS. WARZALA Richard D. SmithS. Warzala		President, Chief Executive Officer and Chairman of the Board		March 11, 201318, 2014
/s/ ROBERT P. MAIDA Robert P. Maida		Chief Financial Officer		March 18, 2014
/s/ RICHARD S. WARZALAD. FEDERICO Richard S. Warzala		President, Chief Executive Officer and Director		March 11, 2013
/s/ DELWIN D. HOCK Delwin D. HockFederico		Lead Director of the Independent Directors		March 11, 2013
/s/ JOSEPH W. BAGAN Joseph W. Bagan		Director		March 11, 201318, 2014
/s/ S.R. ROLLIE HEATH, JR. S.R. Rollie Heath, Jr.		Director		March 11, 2013
/s/ RICHARD D. FEDERICO Richard D. Federico		Director		March 11, 201318, 2014
/s/ GERALD J. LABER Gerald J. Laber		Director		March 11, 201318, 2014
/s/ WILLIAM P. MONTAGUE William P. Montague		Director		March 11, 201318, 2014




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Signatures		Title		Date
/s/ MICHEL M. ROBERT Michel M. Robert		Director		March 11, 201318, 2014
/s/ RICHARD D. SMITH Richard D. Smith		Director		March 18, 2014