Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 01, 2016 | Oct. 24, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 1, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ENTG | |
Entity Registrant Name | ENTEGRIS INC | |
Entity Central Index Key | 1,101,302 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 141,341,822 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 411,777 | $ 349,825 |
Short-term investments | 0 | 2,181 |
Trade accounts and notes receivable, net of allowance for doubtful accounts of $2,616 and $1,318 | 167,559 | 141,409 |
Inventories | 186,021 | 173,176 |
Deferred tax charges and refundable income taxes | 18,000 | 18,943 |
Other current assets | 17,675 | 23,253 |
Total current assets | 801,032 | 708,787 |
Property, plant and equipment, net of accumulated depreciation of $380,340 and $341,840 | 315,512 | 321,301 |
Other assets: | ||
Goodwill | 349,980 | 342,111 |
Intangible assets, net of accumulated amortization of $227,044 and $193,884 | 230,987 | 258,942 |
Deferred tax assets and other noncurrent tax assets | 8,690 | 7,771 |
Other | 7,391 | 7,785 |
Total assets | 1,713,592 | 1,646,697 |
Current liabilities: | ||
Long-term debt, current maturities | 100,000 | 50,000 |
Accounts payable | 54,001 | 36,916 |
Accrued payroll and related benefits | 43,923 | 41,891 |
Other accrued liabilities | 39,040 | 33,968 |
Income taxes payable | 713 | 12,775 |
Total current liabilities | 237,677 | 175,550 |
Long-term debt, excluding current maturities, net of unamortized discount and debt issuance costs of $10,074 and $12,807 | 508,775 | 606,044 |
Pension benefit obligations and other liabilities | 27,848 | 24,608 |
Deferred tax liabilities and other noncurrent tax liabilities | 42,089 | 37,612 |
Commitments and contingent liabilities | 0 | 0 |
Equity: | ||
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued and outstanding as of October 1, 2016 and December 31, 2015 | 0 | 0 |
Common stock, par value $.01; 400,000,000 shares authorized; issued and outstanding shares as of October 1, 2016 and December 31, 2015: 141,322,874 and 140,716,420 | 1,413 | 1,407 |
Additional paid-in capital | 857,023 | 848,667 |
Retained earnings (accumulated loss) | 68,830 | (416) |
Accumulated other comprehensive loss | (30,063) | (46,775) |
Total equity | 897,203 | 802,883 |
Total liabilities and equity | $ 1,713,592 | $ 1,646,697 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Oct. 01, 2016 | Dec. 31, 2015 |
Trade accounts and notes receivable, allowance for doubtful accounts | $ 2,616,000 | $ 1,318,000 |
Property, plant and equipment, accumulated depreciation | 380,340,000 | 341,840,000 |
Intangible assets, Accumulated amortization | 227,044,000 | 193,884,000 |
Unamortized discount and debt issuance costs | $ 10,074,000 | $ 12,807,000 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 141,322,874 | 140,716,420 |
Common stock, shares outstanding | 141,322,874 | 140,716,420 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Net sales | $ 296,692 | $ 270,253 | $ 866,768 | $ 814,335 |
Cost of sales | 173,712 | 153,943 | 489,877 | 453,402 |
Gross profit | 122,980 | 116,310 | 376,891 | 360,933 |
Selling, general and administrative expenses | 51,614 | 46,730 | 153,167 | 147,890 |
Engineering, research and development expenses | 25,720 | 26,841 | 79,768 | 79,183 |
Amortization of intangible assets | 10,974 | 11,673 | 33,325 | 35,908 |
Operating income | 34,672 | 31,066 | 110,631 | 97,952 |
Interest expense | 9,468 | 9,291 | 27,778 | 28,884 |
Interest income | (123) | (90) | (233) | (340) |
Other income, net | (565) | (5,624) | (2,294) | (8,466) |
Income before income tax expense and equity in net loss of affiliates | 25,892 | 27,489 | 85,380 | 77,874 |
Income tax expense | 3,945 | 4,018 | 14,331 | 14,933 |
Equity in net loss of affiliates | 0 | 68 | 0 | 218 |
Net income | $ 21,947 | $ 23,403 | $ 71,049 | $ 62,723 |
Basic net income per common share | $ 0.16 | $ 0.17 | $ 0.50 | $ 0.45 |
Diluted net income per common share | $ 0.15 | $ 0.17 | $ 0.50 | $ 0.44 |
Weighted shares outstanding: | ||||
Basic | 141,324 | 140,555 | 141,019 | 140,282 |
Diluted | 142,473 | 141,317 | 141,856 | 141,016 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Net income | $ 21,947 | $ 23,403 | $ 71,049 | $ 62,723 |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | 10,512 | (35,343) | 17,276 | (50,297) |
Available for sale securities, unrealized (loss) gain | 0 | (430) | (611) | 254 |
Pension liability adjustments | 16 | 63 | 47 | 80 |
Other comprehensive income (loss) | 10,528 | (35,710) | 16,712 | (49,963) |
Comprehensive income (loss) | $ 32,475 | $ (12,307) | $ 87,761 | $ 12,760 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Sep. 26, 2015 | |
Operating activities: | ||
Net income | $ 71,049 | $ 62,723 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 41,320 | 40,080 |
Amortization | 33,325 | 35,908 |
Share-based compensation expense | 10,063 | 8,120 |
Provision for deferred income taxes | (334) | 2,594 |
Other | 19,667 | (12,102) |
Changes in operating assets and liabilities: | ||
Trade accounts and notes receivable | (22,252) | (38,020) |
Inventories | (17,296) | (39,550) |
Accounts payable and accrued liabilities | 26,517 | 12,576 |
Other current assets | 7,387 | 4,845 |
Income taxes payable and refundable income taxes | (11,364) | (3,647) |
Other | (7,606) | (4,827) |
Net cash provided by operating activities | 150,476 | 68,700 |
Investing activities: | ||
Acquisition of property, plant and equipment | (45,268) | (55,696) |
Proceeds from sale and maturities of short-term investments | 1,726 | 2,111 |
Other | (3,246) | 347 |
Net cash used in investing activities | (46,788) | (53,238) |
Financing activities: | ||
Payments of long-term debt | (50,000) | (100,000) |
Issuance of common stock | 2,892 | 2,608 |
Repurchase and retirement of common stock | (3,573) | 0 |
Taxes paid related to net share settlement of equity awards | (3,316) | (2,458) |
Other | 493 | 665 |
Net cash used in financing activities | (53,504) | (99,185) |
Effect of exchange rate changes on cash and cash equivalents | 11,768 | (4,915) |
Increase (decrease) in cash and cash equivalents | 61,952 | (88,638) |
Cash and cash equivalents at beginning of period | 349,825 | 389,699 |
Cash and cash equivalents at end of period | $ 411,777 | $ 301,061 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Entegris, Inc. (Entegris or the Company) is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry and other high-technology industries. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, goodwill, intangibles, accrued expenses, and income taxes and related accounts, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and contain all adjustments considered necessary, and are of a normal recurring nature, to present fairly the financial position as of October 1, 2016 and December 31, 2015 , the results of operations and comprehensive income for the three and nine months ended October 1, 2016 and September 26, 2015 , and cash flows for the nine months ended October 1, 2016 and September 26, 2015 . The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015 . The results of operations for the three and nine months ended October 1, 2016 are not necessarily indicative of the results to be expected for the full year. Fair Value of Financial Instruments The carrying value of cash equivalents, accounts receivable, accounts payable, accrued payroll and related benefits, and other accrued liabilities approximates fair value due to the short maturity of those items. The fair value of long-term debt, including current maturities, was $624.9 million at October 1, 2016 compared to the carrying amount of long-term debt, including current maturities, of $608.8 million . Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. ASU No. 2014-09 also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers. ASU No. 2014-09 is effective beginning January 1, 2018. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and disclosures. To assist in this assessment, and to oversee the eventual adoption of ASU No. 2014-09, the Company has established a cross-functional steering committee. The initial analysis of identifying revenue streams and potential impacts of the new guidance is substantially complete, and the Company is now analyzing the potential magnitude to the consolidated financial statements and related disclosures. The Company has not yet selected a transition approach. On April 7, 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs which requires an entity to present debt issuance costs as a direct deduction from the carrying amount of the related debt liability on the balance sheet. The update represents a change in accounting principle and required retrospective application. The update became effective January 1, 2016. Based on the balances as of December 31, 2015, in accordance with ASU No. 2015-03, the Company reclassified $11.2 million of unamortized debt issuance costs from other current assets and other noncurrent assets to long-term debt. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU No. 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve-month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU No. 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases, and amortization and interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU No. 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU No. 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements and disclosures, and the timing of adoption. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU No. 2016-09 is effective beginning January 1, 2017. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and disclosures. |
Inventories
Inventories | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Inventories consist of the following: (In thousands) October 1, 2016 December 31, 2015 Raw materials $ 51,116 $ 51,063 Work-in process 17,078 11,644 Finished goods 117,827 110,469 Total inventories $ 186,021 $ 173,176 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Oct. 01, 2016 | |
Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill activity for each period was as follows: (In thousands) Critical Materials Handling Electronic Materials Total December 31, 2015 $ 47,411 $ 294,700 $ 342,111 Addition due to purchase accounting adjustment — 4,434 4,434 Foreign currency translation — 3,435 3,435 October 1, 2016 $ 47,411 $ 302,569 $ 349,980 Identifiable intangible assets at October 1, 2016 and December 31, 2015 consist of the following: October 1, 2016 (In thousands) Gross carrying Amount Accumulated amortization Net carrying value Developed technology $ 202,692 $ 120,250 $ 82,442 Trademarks and trade names 16,729 12,133 4,596 Customer relationships 220,024 86,732 133,292 Other 18,586 7,929 10,657 $ 458,031 $ 227,044 $ 230,987 December 31, 2015 (In thousands) Gross carrying amount Accumulated amortization Net carrying value Developed technology $ 200,692 $ 102,883 $ 97,809 Trademarks and trade names 17,085 10,905 6,180 Customer relationships 218,283 72,948 145,335 Other 16,766 7,148 9,618 $ 452,826 $ 193,884 $ 258,942 Future amortization expense for each of the five succeeding years and thereafter relating to intangible assets currently recorded in the Company's consolidated balance sheets is estimated at October 1, 2016 to be the following: Fiscal year ending December 31 (In thousands) 2016 $ 10,945 2017 42,860 2018 40,563 2019 38,241 2020 26,550 Thereafter 71,828 $ 230,987 |
Earnings Per Common Share
Earnings Per Common Share | 9 Months Ended |
Oct. 01, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | EARNINGS PER COMMON SHARE The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per common share (EPS): Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Basic—weighted common shares outstanding 141,324 140,555 141,019 140,282 Weighted common shares assumed upon exercise of stock options and vesting of restricted common stock 1,149 762 837 734 Diluted—weighted common shares and common shares equivalent outstanding 142,473 141,317 141,856 141,016 The Company excluded the following shares underlying stock-based awards from the calculations of diluted EPS because their inclusion would have been anti-dilutive for the three and nine months ended October 1, 2016 and September 26, 2015 : Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Shares excluded from calculations of diluted EPS 23 1,002 831 980 |
Fair Value
Fair Value | 9 Months Ended |
Oct. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value | FAIR VALUE Financial Assets Measured at Fair Value on a Recurring Basis The following table presents the Company’s financial assets that are measured at fair value on a recurring basis at October 1, 2016 and December 31, 2015 . Level 1 inputs are based on quoted prices in active markets accessible at the reporting date for identical assets and liabilities. Level 2 inputs are based on quoted prices for similar instruments in active markets and quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques for which all significant assumptions are observable in a market. Level 3 inputs are based on prices or valuations that require inputs that are significant to the valuation and are unobservable. October 1, 2016 December 31, 2015 (In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments Common stock $ — $ — $ — $ — $ 2,181 $ — $ — $ 2,181 Other current assets Foreign currency contracts (a) $ — $ — $ — $ — $ — $ 2,463 $ — $ 2,463 Total assets measured and recorded at fair value $ — $ — $ — $ — $ 2,181 $ 2,463 $ — $ 4,644 Liabilities: Other accrued liabilities Foreign currency contracts (a) $ — $ 267 $ — $ 267 $ — $ — $ — $ — Total liabilities measured and recorded at fair value $ — $ 267 $ — $ 267 $ — $ — $ — $ — (a) Based on observable market transactions of spot currency rates and forward currency rates on equivalently-termed instruments. A reconciliation of the net fair value of foreign currency contract assets and liabilities subject to master netting arrangements that are recorded in the October 1, 2016 and December 31, 2015 condensed consolidated balance sheets to the net fair value that could have been reported in the respective condensed consolidated balance sheets is as follows: October 1, 2016 December 31, 2015 (In thousands) Gross Gross Net amount of Gross amounts of recognized assets Gross amounts offset in the condensed consolidated balance sheet Net amount of assets in the condensed consolidated balance sheet Foreign currency contracts $ 267 $ — $ 267 $ 2,958 $ 495 $ 2,463 Losses associated with derivatives are recorded in other income, net, in the condensed consolidated statements of operations. Losses associated with derivative instruments not designated as hedging instruments were as follows: Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Losses on foreign currency contracts $ (267 ) $ (10,927 ) $ (6,432 ) $ (13,249 ) In the first quarter of 2015, the Company recorded an other-than-temporary impairment loss of $0.5 million related to an available-for-sale common stock investment classified in short-term investments in its condensed consolidated balance sheet. The Company determined that it was an other-than-temporary impairment due to the significant decline in the fair value compared to the investment's carrying value for an extended period of time and the financial condition of the issuer. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Oct. 01, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | SEGMENT REPORTING The Company reports its financial performance based on two reportable segments: Critical Materials Handling (CMH) and Electronic Materials (EM). The manager of CMH and EM is accountable for results at the segment profit level and reports directly to the Company’s Chief Executive Officer, who is responsible for evaluating companywide performance and resource allocation decisions between the product groups. The Company's two reportable segments are business divisions that provide unique products and services. • CMH provides a broad range of products that filter, handle, dispense, and protect critical materials used in the semiconductor manufacturing process and in other high-technology manufacturing. CMH’s products and subsystems include high-purity materials packaging, fluid handling and dispensing systems and liquid filters as well as microenvironment products that protect critical substrates such as wafers during shipping and manufacturing. CMH also provides specialized graphite components and specialty coatings for high-temperature applications. • EM provides high-performance materials, materials packaging and materials delivery systems that enable high-yield, cost-effective semiconductor manufacturing. EM’s products consist of specialized chemistries and performance materials, gas microcontamination control systems and components, and sub-atmospheric pressure gas delivery systems for the safe and efficient handling of hazardous gases to semiconductor process equipment. Intersegment sales are not significant. Segment profit is defined as net sales less direct segment operating expenses, excluding certain unallocated expenses, consisting mainly of general and administrative costs for the Company’s human resources, finance and information technology functions as well as interest expense, and amortization of intangible assets. Summarized financial information for the Company’s reportable segments is shown in the following tables. Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Net sales CMH $ 192,744 $ 166,043 $ 553,853 $ 507,764 EM 103,948 104,210 312,915 306,571 Total net sales $ 296,692 $ 270,253 $ 866,768 $ 814,335 Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Segment profit CMH $ 45,352 $ 37,109 $ 135,768 $ 122,182 EM 20,454 23,919 69,504 72,700 Total segment profit $ 65,806 $ 61,028 $ 205,272 $ 194,882 The following table reconciles total segment profit to income before income taxes and equity in net loss of affiliates: Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Total segment profit $ 65,806 $ 61,028 $ 205,272 $ 194,882 Less: Amortization of intangible assets 10,974 11,673 33,325 35,908 Unallocated general and administrative expenses 20,160 18,289 61,316 61,022 Operating income 34,672 31,066 110,631 97,952 Interest expense 9,468 9,291 27,778 28,884 Interest income (123 ) (90 ) (233 ) (340 ) Other income, net (565 ) (5,624 ) (2,294 ) (8,466 ) Income before income tax expense and equity in net loss of affiliates $ 25,892 $ 27,489 $ 85,380 $ 77,874 |
Summary of Significant Accoun13
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2016 | |
Nature of Operations | Nature of Operations Entegris, Inc. (Entegris or the Company) is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry and other high-technology industries. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, goodwill, intangibles, accrued expenses, and income taxes and related accounts, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and contain all adjustments considered necessary, and are of a normal recurring nature, to present fairly the financial position as of October 1, 2016 and December 31, 2015 , the results of operations and comprehensive income for the three and nine months ended October 1, 2016 and September 26, 2015 , and cash flows for the nine months ended October 1, 2016 and September 26, 2015 . The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015 . The results of operations for the three and nine months ended October 1, 2016 are not necessarily indicative of the results to be expected for the full year. |
Fair Value Measurement, Policy | The carrying value of cash equivalents, accounts receivable, accounts payable, accrued payroll and related benefits, and other accrued liabilities approximates fair value due to the short maturity of those items. The fair value of long-term debt, including current maturities, was $624.9 million at October 1, 2016 compared to the carrying amount of long-term debt, including current maturities, of $608.8 million . |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. ASU No. 2014-09 also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers. ASU No. 2014-09 is effective beginning January 1, 2018. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and disclosures. To assist in this assessment, and to oversee the eventual adoption of ASU No. 2014-09, the Company has established a cross-functional steering committee. The initial analysis of identifying revenue streams and potential impacts of the new guidance is substantially complete, and the Company is now analyzing the potential magnitude to the consolidated financial statements and related disclosures. The Company has not yet selected a transition approach. On April 7, 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs which requires an entity to present debt issuance costs as a direct deduction from the carrying amount of the related debt liability on the balance sheet. The update represents a change in accounting principle and required retrospective application. The update became effective January 1, 2016. Based on the balances as of December 31, 2015, in accordance with ASU No. 2015-03, the Company reclassified $11.2 million of unamortized debt issuance costs from other current assets and other noncurrent assets to long-term debt. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU No. 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve-month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU No. 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases, and amortization and interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU No. 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU No. 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements and disclosures, and the timing of adoption. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU No. 2016-09 is effective beginning January 1, 2017. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and disclosures. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following: (In thousands) October 1, 2016 December 31, 2015 Raw materials $ 51,116 $ 51,063 Work-in process 17,078 11,644 Finished goods 117,827 110,469 Total inventories $ 186,021 $ 173,176 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Schedule of Goodwill | Goodwill activity for each period was as follows: (In thousands) Critical Materials Handling Electronic Materials Total December 31, 2015 $ 47,411 $ 294,700 $ 342,111 Addition due to purchase accounting adjustment — 4,434 4,434 Foreign currency translation — 3,435 3,435 October 1, 2016 $ 47,411 $ 302,569 $ 349,980 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | Identifiable intangible assets at October 1, 2016 and December 31, 2015 consist of the following: October 1, 2016 (In thousands) Gross carrying Amount Accumulated amortization Net carrying value Developed technology $ 202,692 $ 120,250 $ 82,442 Trademarks and trade names 16,729 12,133 4,596 Customer relationships 220,024 86,732 133,292 Other 18,586 7,929 10,657 $ 458,031 $ 227,044 $ 230,987 December 31, 2015 (In thousands) Gross carrying amount Accumulated amortization Net carrying value Developed technology $ 200,692 $ 102,883 $ 97,809 Trademarks and trade names 17,085 10,905 6,180 Customer relationships 218,283 72,948 145,335 Other 16,766 7,148 9,618 $ 452,826 $ 193,884 $ 258,942 |
Estimated Future Amortization Expense | Future amortization expense for each of the five succeeding years and thereafter relating to intangible assets currently recorded in the Company's consolidated balance sheets is estimated at October 1, 2016 to be the following: Fiscal year ending December 31 (In thousands) 2016 $ 10,945 2017 42,860 2018 40,563 2019 38,241 2020 26,550 Thereafter 71,828 $ 230,987 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Reconcilation of Share Amount Used in Computaion of Basic and Diluted Earnings Per Share (EPS) | The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per common share (EPS): Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Basic—weighted common shares outstanding 141,324 140,555 141,019 140,282 Weighted common shares assumed upon exercise of stock options and vesting of restricted common stock 1,149 762 837 734 Diluted—weighted common shares and common shares equivalent outstanding 142,473 141,317 141,856 141,016 |
Shares Excluded Underlying Stock Based Awards from Calculations of Diluted EPS | The Company excluded the following shares underlying stock-based awards from the calculations of diluted EPS because their inclusion would have been anti-dilutive for the three and nine months ended October 1, 2016 and September 26, 2015 : Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Shares excluded from calculations of diluted EPS 23 1,002 831 980 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Financial Assets Measured At Fair Value On Recurring Basis | The following table presents the Company’s financial assets that are measured at fair value on a recurring basis at October 1, 2016 and December 31, 2015 . Level 1 inputs are based on quoted prices in active markets accessible at the reporting date for identical assets and liabilities. Level 2 inputs are based on quoted prices for similar instruments in active markets and quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques for which all significant assumptions are observable in a market. Level 3 inputs are based on prices or valuations that require inputs that are significant to the valuation and are unobservable. October 1, 2016 December 31, 2015 (In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments Common stock $ — $ — $ — $ — $ 2,181 $ — $ — $ 2,181 Other current assets Foreign currency contracts (a) $ — $ — $ — $ — $ — $ 2,463 $ — $ 2,463 Total assets measured and recorded at fair value $ — $ — $ — $ — $ 2,181 $ 2,463 $ — $ 4,644 Liabilities: Other accrued liabilities Foreign currency contracts (a) $ — $ 267 $ — $ 267 $ — $ — $ — $ — Total liabilities measured and recorded at fair value $ — $ 267 $ — $ 267 $ — $ — $ — $ — (a) Based on observable market transactions of spot currency rates and forward currency rates on equivalently-termed instruments. |
Information about Derivative Positions | A reconciliation of the net fair value of foreign currency contract assets and liabilities subject to master netting arrangements that are recorded in the October 1, 2016 and December 31, 2015 condensed consolidated balance sheets to the net fair value that could have been reported in the respective condensed consolidated balance sheets is as follows: October 1, 2016 December 31, 2015 (In thousands) Gross Gross Net amount of Gross amounts of recognized assets Gross amounts offset in the condensed consolidated balance sheet Net amount of assets in the condensed consolidated balance sheet Foreign currency contracts $ 267 $ — $ 267 $ 2,958 $ 495 $ 2,463 |
Gains and (losses) associated with derivatives | Losses associated with derivatives are recorded in other income, net, in the condensed consolidated statements of operations. Losses associated with derivative instruments not designated as hedging instruments were as follows: Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Losses on foreign currency contracts $ (267 ) $ (10,927 ) $ (6,432 ) $ (13,249 ) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Summary of Financial Information for Reportable Segments | Summarized financial information for the Company’s reportable segments is shown in the following tables. Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Net sales CMH $ 192,744 $ 166,043 $ 553,853 $ 507,764 EM 103,948 104,210 312,915 306,571 Total net sales $ 296,692 $ 270,253 $ 866,768 $ 814,335 Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Segment profit CMH $ 45,352 $ 37,109 $ 135,768 $ 122,182 EM 20,454 23,919 69,504 72,700 Total segment profit $ 65,806 $ 61,028 $ 205,272 $ 194,882 |
Reconciliation of Total Segment Profit to Operating Income | The following table reconciles total segment profit to income before income taxes and equity in net loss of affiliates: Three months ended Nine months ended (In thousands) October 1, 2016 September 26, 2015 October 1, 2016 September 26, 2015 Total segment profit $ 65,806 $ 61,028 $ 205,272 $ 194,882 Less: Amortization of intangible assets 10,974 11,673 33,325 35,908 Unallocated general and administrative expenses 20,160 18,289 61,316 61,022 Operating income 34,672 31,066 110,631 97,952 Interest expense 9,468 9,291 27,778 28,884 Interest income (123 ) (90 ) (233 ) (340 ) Other income, net (565 ) (5,624 ) (2,294 ) (8,466 ) Income before income tax expense and equity in net loss of affiliates $ 25,892 $ 27,489 $ 85,380 $ 77,874 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies Additional details (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Long-term Debt, Fair Value | $ 624,861 | |
Long-term Debt | $ 608,775 | |
Unamortized Debt Issuance Costs | $ 11,243 |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 51,116 | $ 51,063 |
Work-in process | 17,078 | 11,644 |
Finished goods | 117,827 | 110,469 |
Total inventories | $ 186,021 | $ 173,176 |
Goodwill Rollforward (Details)
Goodwill Rollforward (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill | $ 349,980 | $ 342,111 |
Addition due to purchase accounting adjustment | 4,434 | |
Foreign currency translation | 3,435 | |
CMH | ||
Goodwill [Line Items] | ||
Goodwill | 47,411 | 47,411 |
Addition due to purchase accounting adjustment | 0 | |
Foreign currency translation | 0 | |
EM | ||
Goodwill [Line Items] | ||
Goodwill | 302,569 | $ 294,700 |
Addition due to purchase accounting adjustment | 4,434 | |
Foreign currency translation | $ 3,435 |
Intangible Assets (Detail)
Intangible Assets (Detail) - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets | ||
Gross carrying Amount | $ 458,031 | $ 452,826 |
Accumulated amortization | 227,044 | 193,884 |
Net carrying value | 230,987 | 258,942 |
Developed Technology | ||
Finite-Lived Intangible Assets | ||
Gross carrying Amount | 202,692 | 200,692 |
Accumulated amortization | 120,250 | 102,883 |
Net carrying value | 82,442 | 97,809 |
Trademarks and Trade names | ||
Finite-Lived Intangible Assets | ||
Gross carrying Amount | 16,729 | 17,085 |
Accumulated amortization | 12,133 | 10,905 |
Net carrying value | 4,596 | 6,180 |
Customer Relationships | ||
Finite-Lived Intangible Assets | ||
Gross carrying Amount | 220,024 | 218,283 |
Accumulated amortization | 86,732 | 72,948 |
Net carrying value | 133,292 | 145,335 |
Other | ||
Finite-Lived Intangible Assets | ||
Gross carrying Amount | 18,586 | 16,766 |
Accumulated amortization | 7,929 | 7,148 |
Net carrying value | $ 10,657 | $ 9,618 |
Goodwill and Intangible Asset23
Goodwill and Intangible Assets Estimated Future Amortization Expense (Detail) - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets | ||
2,016 | $ 10,945 | |
2,017 | 42,860 | |
2,018 | 40,563 | |
2,019 | 38,241 | |
2,020 | 26,550 | |
Thereafter | 71,828 | |
Intangible assets, net | $ 230,987 | $ 258,942 |
Reconciliation of Share Amount
Reconciliation of Share Amount Used in Computation of Basic and Diluted Earnings Per Share (EPS) (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Weighted shares outstanding: | ||||
Basic-weighted common shares outstanding | 141,324 | 140,555 | 141,019 | 140,282 |
Weighted common shares assumed upon exercise of stock options and vesting of restricted common stock | 1,149 | 762 | 837 | 734 |
Diluted-weighted common shares and common shares equivalent outstanding | 142,473 | 141,317 | 141,856 | 141,016 |
Shares Excluded Underlying Stoc
Shares Excluded Underlying Stock Based Award from Calucations of Diluted EPS (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from calculations of diluted EPS | 23 | 1,002 | 831 | 980 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, asset | $ 2,463 | |
Total assets measured and recorded at fair value | $ 0 | 4,644 |
Foreign currency contracts, liabilities | 267 | |
Total liabilities measured and recorded at fair value | 267 | 0 |
Short-term Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Common stock | 0 | 2,181 |
Other Current Assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, asset | 0 | 2,463 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured and recorded at fair value | 0 | 2,181 |
Total liabilities measured and recorded at fair value | 0 | 0 |
Fair Value, Inputs, Level 1 | Short-term Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Common stock | 0 | 2,181 |
Fair Value, Inputs, Level 1 | Other Current Assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, asset | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured and recorded at fair value | 0 | 2,463 |
Total liabilities measured and recorded at fair value | 267 | 0 |
Fair Value, Inputs, Level 2 | Short-term Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Common stock | 0 | 0 |
Fair Value, Inputs, Level 2 | Other Current Assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, asset | 0 | 2,463 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured and recorded at fair value | 0 | 0 |
Total liabilities measured and recorded at fair value | 0 | 0 |
Fair Value, Inputs, Level 3 | Short-term Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Common stock | 0 | 0 |
Fair Value, Inputs, Level 3 | Other Current Assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, asset | 0 | 0 |
Other Accrued Liabilities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, liabilities | 267 | 0 |
Other Accrued Liabilities [Member] | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, liabilities | 0 | 0 |
Other Accrued Liabilities [Member] | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, liabilities | 267 | 0 |
Other Accrued Liabilities [Member] | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contracts, liabilities | $ 0 | $ 0 |
Information about Derivative Po
Information about Derivative Positions (Detail) - USD ($) $ in Thousands | Oct. 01, 2016 | Dec. 31, 2015 |
Derivative [Line Items] | ||
Gross amounts of recognized liabilities | $ 267 | $ 495 |
Gross amounts of recognized assets | 0 | 2,958 |
Net amount of liabilities | $ 267 | |
Net amount of assets | $ 2,463 |
Fair Value Losses associated wi
Fair Value Losses associated with derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Fair Value Disclosures [Abstract] | ||||
Losses on forward currency contracts | $ (267) | $ (10,927) | $ (6,432) | $ (13,249) |
Fair Value Additional Detail (D
Fair Value Additional Detail (Details) $ in Millions | 9 Months Ended |
Sep. 26, 2015USD ($) | |
Fair Value Disclosures [Abstract] | |
Other than Temporary Impairment Losses, Investments | $ 0.5 |
Summary of Financial Informatio
Summary of Financial Information for Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Segment Reporting Information [Line Items] | ||||
Total net sales | $ 296,692 | $ 270,253 | $ 866,768 | $ 814,335 |
Total Segment Profit | 65,806 | 61,028 | 205,272 | 194,882 |
CMH | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 192,744 | 166,043 | 553,853 | 507,764 |
Total Segment Profit | 45,352 | 37,109 | 135,768 | 122,182 |
EM | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 103,948 | 104,210 | 312,915 | 306,571 |
Total Segment Profit | $ 20,454 | $ 23,919 | $ 69,504 | $ 72,700 |
Reconciliation of Total Segment
Reconciliation of Total Segment Profit to Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Sep. 26, 2015 | Oct. 01, 2016 | Sep. 26, 2015 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total Segment Profit | $ 65,806 | $ 61,028 | $ 205,272 | $ 194,882 |
Amortization | 10,974 | 11,673 | 33,325 | 35,908 |
Unallocated General And Administrative Expenses | 20,160 | 18,289 | 61,316 | 61,022 |
Operating income | 34,672 | 31,066 | 110,631 | 97,952 |
Interest expense | 9,468 | 9,291 | 27,778 | 28,884 |
Interest income | (123) | (90) | (233) | (340) |
Other income, net | (565) | (5,624) | (2,294) | (8,466) |
Income before income tax expense and equity in net loss of affiliates | $ 25,892 | $ 27,489 | $ 85,380 | $ 77,874 |