Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Apr. 04, 2015 | Apr. 30, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Polypore International, Inc. | |
Entity Central Index Key | 1292556 | |
Document Type | 10-Q | |
Document Period End Date | 4-Apr-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -1 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 45,008,249 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
Condensed_consolidated_balance
Condensed consolidated balance sheets (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $43,180 | $44,458 |
Accounts receivable, net | 112,222 | 121,755 |
Inventories | 104,756 | 101,176 |
Prepaid and other | 17,395 | 16,673 |
Total current assets | 277,553 | 284,062 |
Property, plant and equipment, net | 544,763 | 558,235 |
Goodwill | 444,512 | 444,512 |
Intangibles and loan acquisition costs, net | 74,463 | 78,303 |
Other | 10,014 | 10,180 |
Total assets | 1,351,305 | 1,375,292 |
Current liabilities: | ||
Accounts payable | 24,595 | 24,358 |
Accrued liabilities | 48,100 | 52,697 |
Income taxes payable | 5,388 | 2,310 |
Current portion of debt | 25,000 | 25,000 |
Total current liabilities | 103,083 | 104,365 |
Debt, less current portion | 456,250 | 462,500 |
Pension obligations, less current portion | 110,308 | 121,038 |
Deferred income taxes | 37,193 | 40,319 |
Other | 32,475 | 29,736 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Preferred stock - 15,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value - 200,000,000 shares authorized, 47,507,177 issued and 45,006,582 outstanding at April 4, 2015 and 47,330,740 issued and 44,859,492 outstanding at January 3, 2015 | 475 | 473 |
Paid-in capital | 603,215 | 600,418 |
Retained earnings | 185,672 | 171,287 |
Accumulated other comprehensive loss | -82,470 | -61,308 |
Treasury stock, at cost - 2,500,595 shares at April 4, 2015 and 2,471,248 shares at January 3, 2015 | -102,728 | -100,998 |
Total Polypore International, Inc. shareholders’ equity | 604,164 | 609,872 |
Noncontrolling interest | 7,832 | 7,462 |
Total shareholders’ equity | 611,996 | 617,334 |
Total liabilities and shareholders’ equity | $1,351,305 | $1,375,292 |
Condensed_consolidated_balance1
Condensed consolidated balance sheets (Parenthetical) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | $0.01 | $0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 47,507,177 | 47,330,740 |
Common stock, shares outstanding | 45,006,582 | 44,859,492 |
Treasury stock, shares | 2,500,595 | 2,471,248 |
Condensed_consolidated_stateme
Condensed consolidated statements of income (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Income Statement [Abstract] | ||
Net sales | $137,908 | $161,002 |
Cost of goods sold | 88,652 | 102,486 |
Gross profit | 49,256 | 58,516 |
Selling, general and administrative expenses | 33,341 | 36,156 |
Operating income | 15,915 | 22,360 |
Other (income) expense: | ||
Interest expense, net | 3,171 | 9,620 |
Foreign currency and other | -10,440 | 598 |
Integrated sale transactions expenses | 2,954 | 0 |
Other (income) expense total | -4,315 | 10,218 |
Income before income taxes | 20,230 | 12,142 |
Income taxes | 5,530 | 3,400 |
Net income | 14,700 | 8,742 |
Net income attributable to noncontrolling interest | 315 | 345 |
Net income attributable to Polypore International, Inc. | $14,385 | $8,397 |
Net income attributable to Polypore International, Inc. per share: | ||
Basic (in usd per share) | $0.32 | $0.19 |
Diluted (in usd per share) | $0.32 | $0.18 |
Weighted average shares outstanding: | ||
Basic (in shares) | 44,719,614 | 44,884,728 |
Diluted (in shares) | 45,377,615 | 45,423,573 |
Condensed_consolidated_stateme1
Condensed consolidated statements of comprehensive income (loss) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Statement of Comprehensive Income [Abstract] | ||
Net income | $14,700 | $8,742 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | -18,864 | 660 |
Change in net actuarial loss and prior service credit | 567 | 22 |
Unrealized loss on interest rate swap | -4,134 | 0 |
Income taxes related to other comprehensive income (loss) | 1,324 | 172 |
Other comprehensive income (loss) | -21,107 | 854 |
Comprehensive income (loss) | -6,407 | 9,596 |
Comprehensive income attributable to noncontrolling interest | 370 | 277 |
Comprehensive income (loss) attributable to Polypore International, Inc. | ($6,777) | $9,319 |
Condensed_consolidated_stateme2
Condensed consolidated statements of cash flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Operating activities: | ||
Net income | $14,700 | $8,742 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 10,397 | 10,941 |
Amortization expense | 2,797 | 2,786 |
Amortization of loan acquisition costs | 349 | 618 |
Stock-based compensation | 2,799 | 5,377 |
Deferred income taxes | -1,867 | -1,728 |
Foreign currency (gain) loss | -7,109 | 896 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 5,850 | 364 |
Inventories | -7,295 | 399 |
Prepaid and other current assets | -784 | 1,868 |
Accounts payable and accrued liabilities | -3,134 | -7,741 |
Income taxes payable | 2,860 | 1,187 |
Other, net | 1,205 | 574 |
Net cash provided by operating activities | 20,768 | 24,283 |
Investing activities: | ||
Purchases of property, plant and equipment, net | -10,279 | -3,748 |
Net cash used in investing activities | -10,279 | -3,748 |
Financing activities: | ||
Principal payments on debt | -6,250 | -7,500 |
Proceeds from revolving credit facility | 30,000 | 0 |
Payments on revolving credit facility | -30,000 | 0 |
Repurchases of common stock | -1,730 | -282 |
Proceeds from stock option exercises | 0 | 619 |
Net cash used in financing activities | -7,980 | -7,163 |
Effect of exchange rate changes on cash and cash equivalents | -3,787 | 646 |
Net increase (decrease) in cash and cash equivalents | -1,278 | 14,018 |
Cash and cash equivalents at beginning of period | 44,458 | 163,423 |
Cash and cash equivalents at end of period | $43,180 | $177,441 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended |
Apr. 04, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation |
Description of Business | |
Polypore International, Inc. (the “Company”) is a leading global high-technology filtration company that develops, manufactures and markets specialized microporous membranes used in separation and filtration processes. The Company has a global presence in the major geographic markets of North America, South America, Europe and Asia. | |
Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries after elimination of intercompany accounts and transactions. The unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements and notes do not contain certain information included in the Company’s annual financial statements. In the opinion of management, all normal and recurring adjustments that are necessary for a fair presentation have been made. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2015. Operating results for the three months ended April 4, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2016. |
Integrated_Sale_Transactions
Integrated Sale Transactions | 3 Months Ended |
Apr. 04, 2015 | |
Integrated Sale Transaction Text Block [Abstract] | |
Integrated Sale Transactions | Integrated Sale Transactions |
On February 23, 2015, the Company entered into integrated transactions with 3M Company (“3M”), Asahi Kasei Corporation (“Asahi Kasei”) and ESM Holdings Corporation (“ESM”), an affiliate of Asahi Kasei, pursuant to which the Company will sell its separations media business to 3M and, immediately thereafter, will be merged with ESM. In connection with the integrated transactions, at the time of the merger, each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive $60.50 in cash without interest (the “Merger Consideration”), payable to the holder of such share. Each option to purchase shares of the Company’s common stock and each restricted share of the Company's common stock that is outstanding immediately prior to the effective time of the merger will immediately accelerate and vest and be cancelled and converted into the right to receive a payment in cash. The integrated transactions are subject to customary closing conditions, including regulatory and stockholder approval. There are no assurances that the proposed integrated transactions will be consummated on any given timetable, or at all. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Apr. 04, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. | |
In April 2015, the FASB issued ASU No. 2015-04, Compensation - Retirement Benefits, which provides a practical expedient for employers with fiscal year-ends that do not fall on a calendar month-end by permitting those employers to measure defined benefit plan assets and obligations as of the month-end that is closest to the entity's fiscal year-end. The new standard is effective for the Company on January 3, 2016; however, early adoption is permitted. Adoption of the standard is not expected to have an impact on the Company's consolidated financial statements. |
Inventories
Inventories | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventories | Inventories | ||||||||
Inventories are carried at the lower of cost or market using the first-in, first-out method of accounting and consist of: | |||||||||
(in thousands) | 4-Apr-15 | 3-Jan-15 | |||||||
Raw materials | $ | 33,344 | $ | 35,700 | |||||
Work-in-process | 13,280 | 11,846 | |||||||
Finished goods | 58,132 | 53,630 | |||||||
$ | 104,756 | $ | 101,176 | ||||||
Debt
Debt | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Debt | Debt | ||||||||
Debt consists of: | |||||||||
(in thousands) | 4-Apr-15 | 3-Jan-15 | |||||||
Senior credit agreement: | |||||||||
Revolving credit facility | $ | — | $ | — | |||||
Term loan facility | 481,250 | 487,500 | |||||||
481,250 | 487,500 | ||||||||
Less current portion | 25,000 | 25,000 | |||||||
Long-term debt | $ | 456,250 | $ | 462,500 | |||||
On April 8, 2014, the Company entered into a new senior secured credit agreement that provides for a $150,000,000 revolving credit facility and a $500,000,000 term loan facility. At that date, the Company used cash on hand, proceeds from the initial draw of $100,000,000 under the new term loan facility and borrowings of $33,000,000 under the new revolving credit facility to pay all outstanding principal and interest under the previous senior secured credit agreement and loan acquisition costs. The Company incurred loan acquisition costs of approximately $4,080,000, of which $3,944,000 was capitalized and will be amortized over the life of the new credit agreement. During the three months ended June 28, 2014, the Company wrote off unamortized loan acquisition costs of $1,012,000 associated with the previous credit agreement. | |||||||||
On May 8, 2014, the Company borrowed the remaining $400,000,000 available under the new term loan facility and used the proceeds to purchase and retire all of the previously outstanding 7.5% senior notes. The total purchase price for the notes was $385,542,000, consisting of principal of $365,000,000, redemption premiums of $20,531,000 and other expenses associated with the transaction. During the three months ended June 28, 2014, the Company incurred a $24,937,000 charge to income during the second quarter of 2014, comprised of the redemption premiums, write-off of unamortized loan acquisition costs of $4,395,000 and other expenses associated with the purchase. | |||||||||
The Company's domestic subsidiaries guarantee indebtedness under the credit agreement. Substantially all assets of the Company and its domestic subsidiaries and a first priority pledge of 65% of the voting capital stock of its foreign subsidiaries secure indebtedness under the credit agreement. Interest rates under the credit agreement are equal to, at the Company’s option, either an alternate base rate or the Eurodollar base rate, plus a specified margin. The Company’s ability to pay dividends on its common stock is limited under the terms of the credit agreement. The Company is also subject to certain financial covenants, including a maximum leverage ratio and a minimum interest coverage ratio, all of which the Company was in compliance with as of April 4, 2015. The revolving credit facility and term loan facility mature in April 2019. | |||||||||
At April 4, 2015, the Company had no amounts outstanding and $150,000,000 available for borrowing under the revolving credit facility. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended |
Apr. 04, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, long-term debt and an interest rate swap. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates the fair value due to the short-term maturities of these assets and liabilities. The carrying value of borrowings under the senior credit agreement approximates fair value because the interest rates adjust to market interest rates. See Note 7 for the fair value of the interest rate swap. |
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 3 Months Ended | ||||||||||
Apr. 04, 2015 | |||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities | ||||||||||
In August 2014, the Company entered into a forward-starting interest rate swap to pay a fixed interest rate of 1.9% and receive one-month LIBOR on a notional amount of $250,000,000 from its effective date of July 31, 2015 through its expiration on April 8, 2019. The Company’s principal objective is to reduce significant, unanticipated earnings fluctuations and cash flow variability that may arise from volatility in interest rates. The interest rate swap economically converts a portion of the Company’s LIBOR-based, variable rate debt into fixed rate debt. Under the contract, the Company agrees with a counterparty to exchange, at specified intervals, the difference between floating and fixed rate interest payments on the notional amount. The Company’s interest rate swap is governed by a standard International Swaps and Derivatives Association master agreement. | |||||||||||
The interest rate swap has been designated as a cash flow hedge and is recorded at fair value in the consolidated balance sheet with changes in fair value, net of income taxes, recorded to shareholders’ equity in “Accumulated other comprehensive loss.” The fair value of the interest rate swap is derived from a discounted cash flow analysis based on the terms of the contract and the observable market interest rate curve (level two inputs in the fair value hierarchy), taking into consideration the risk of nonperformance, including counterparty credit risk. The interest rate swap is recorded in the condensed consolidated balance sheets as follows: | |||||||||||
(in thousands) | Balance Sheet Location | 4-Apr-15 | 3-Jan-15 | ||||||||
Interest rate swap (current portion) | Accrued liabilities | $ | 2,489 | $ | 1,414 | ||||||
Interest rate swap (non-current portion) | Other liabilities | 3,910 | 851 | ||||||||
Total fair value of interest rate swap | $ | 6,399 | $ | 2,265 | |||||||
For the three months ended April 4, 2015, cash flow hedge activity, net of income taxes, was included in "Accumulated other comprehensive loss" as follows: | |||||||||||
(in thousands) | |||||||||||
Beginning balance | $ | (1,439 | ) | ||||||||
Hedging loss before reclassifications | (2,628 | ) | |||||||||
Amount reclassified into earnings | — | ||||||||||
Other comprehensive loss | (2,628 | ) | |||||||||
Ending balance | $ | (4,067 | ) | ||||||||
No derivative gains or losses, including those related to either ineffectiveness or to amounts excluded from effectiveness testing, were recognized in earnings during the periods presented. The estimated loss, net of income taxes, expected to be reclassified out of “Accumulated other comprehensive loss” into earnings during the next twelve months is approximately $1,582,000. |
Income_Taxes
Income Taxes | 3 Months Ended |
Apr. 04, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
The income tax provision for the interim periods presented is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country-by-country basis. Income taxes recorded in the financial statements differ from the federal statutory income tax rate due to a variety of factors, including state income taxes, the mix of income between U.S. and foreign jurisdictions taxed at varying rates and changes in estimates of permanent differences and valuation allowances. |
Pension_Plans
Pension Plans | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||
Pension Plans | Pension Plans | ||||||||
The Company and its subsidiaries sponsor multiple defined benefit pension plans based in subsidiaries located outside of the United States. The following table provides the components of net periodic benefit cost: | |||||||||
Three Months Ended | |||||||||
(in thousands) | 4-Apr-15 | 29-Mar-14 | |||||||
Service cost | $ | 620 | $ | 524 | |||||
Interest cost | 659 | 1,080 | |||||||
Expected return on plan assets | (82 | ) | (109 | ) | |||||
Amortization of prior service credit | (26 | ) | (32 | ) | |||||
Recognized net actuarial loss | 591 | 269 | |||||||
Net periodic benefit cost | $ | 1,762 | $ | 1,732 | |||||
Environmental_Matters
Environmental Matters | 3 Months Ended |
Apr. 04, 2015 | |
Environmental Matters | |
Environmental Matters | Environmental Matters |
Environmental obligations are accrued when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the progress of remedial investigations, current status of discussions with regulatory authorities regarding the method and extent of remediation, presently enacted laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental obligations are not discounted to their present value. The Company does not currently anticipate any material loss in excess of the amounts accrued. However, the Company’s future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations and the availability and application of technology. The Company does not expect the resolution of such uncertainties to have a material adverse effect on its consolidated financial position or liquidity. Recoveries of environmental costs from other parties are recognized as assets when receipt is deemed probable. | |
In connection with the acquisition of Membrana GmbH (“Membrana”) in 2002, the Company recorded a reserve for environmental obligations. The reserve provides for costs to remediate known environmental issues and operational upgrades which are required in order for the Company to remain in compliance with local regulations. The initial estimate and subsequent finalization of the reserve were included in the allocation of purchase price at the date of acquisition. The environmental reserve for the Membrana facility, which is denominated in euros, was $828,000 and $917,000 at April 4, 2015 and January 3, 2015, respectively. The Company anticipates the expenditures associated with the reserve will be made in the next twelve months. The reserve is included in “Accrued liabilities” in the accompanying condensed consolidated balance sheets. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Apr. 04, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
The Company’s German subsidiary has a 33% equity investment in a patent and trademark service provider and a 25% equity investment in a research company. The investments are accounted for under the equity method of accounting and were $669,000 and $593,000 at April 4, 2015 and January 3, 2015, respectively. Charges from the affiliates for work performed were $395,000 and $357,000 for the three months ended April 4, 2015 and March 29, 2014, respectively. Amounts due to the affiliates were $211,000 and $223,000 at April 4, 2015 and January 3, 2015, respectively. |
Noncontrolling_Interest
Noncontrolling Interest | 3 Months Ended |
Apr. 04, 2015 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling Interest |
In 2010, the Company formed a joint venture with Camel Group Co., Ltd. (“Camel”), a leading battery manufacturer in China, to produce lead-acid battery separators primarily for Camel’s use. The joint venture, Daramic Xiangyang Battery Separator Co., Ltd. (“Daramic Xiangyang”), is located at Camel’s facility and owned 65% by the Company and 35% by Camel. | |
Daramic Xiangyang has notes payable to Camel and the Company for the purchase of certain assets. The notes payable and related interest will be paid by Daramic Xiangyang using available free cash flow, as defined in the joint venture agreement. The note payable to Camel had a principal balance of $10,348,000 at April 4, 2015 and January 3, 2015 and is included in “Other” non-current liabilities in the accompanying condensed consolidated balance sheets. The note payable to the Company eliminates in consolidation. |
StockBased_Compensation_Plans
Stock-Based Compensation Plans | 3 Months Ended |
Apr. 04, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Plans | Stock-Based Compensation Plans |
The Company offers stock-based compensation plans to attract, retain, motivate and reward key officers, non-employee directors and employees. Stock-based compensation expense was $2,799,000 and $5,377,000 for the three months ended April 4, 2015 and March 29, 2014, respectively. The income tax benefit related to stock-based compensation expense was $1,000,000 and $1,920,000 for the three months ended April 4, 2015 and March 29, 2014, respectively. Stock-based compensation expense includes costs associated with stock options and restricted stock and is classified as “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income. | |
The 2007 Stock Incentive Plan (“2007 Plan”) allows for the grant of stock options, restricted stock and other instruments for up to a total of 6,251,963 shares of common stock. On March 10, 2015, the Company granted 176,437 shares of restricted stock under the 2007 Plan with an aggregate grant-date fair value of $10,447,000, to be recognized over a three-year vesting period. | |
The Company repurchased shares of common stock to satisfy certain employees' statutory withholding tax liabilities for $1,730,000 and $282,000 during the three months ended April 4, 2015 and March 29, 2014, respectively. |
Segment_Information
Segment Information | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
Segment Information | Segment Information | ||||||||
The Company’s operations are principally managed on a products basis and are comprised of three reportable segments for financial reporting purposes. The Company’s three reportable segments are presented in the context of its two primary businesses — energy storage and separations media. | |||||||||
The energy storage business produces and markets membranes that provide the critical function of separating the cathode and anode in a variety of battery markets and is comprised of the following reportable segments: | |||||||||
•Electronics and EDVs — produces and markets membranes for lithium batteries that are used in portable | |||||||||
electronic devices, cordless power tools, electric drive vehicles (“EDVs”) and energy storage systems | |||||||||
(“ESS”). | |||||||||
•Transportation and industrial — produces and markets membranes for lead-acid batteries that are used in | |||||||||
automobiles, other motor vehicles, forklifts and uninterruptible power supply systems. | |||||||||
The separations media business is a reportable segment and produces and markets membranes and membrane modules used as the high-technology filtration element in various medical and industrial applications. | |||||||||
The Company evaluates the performance of segments and allocates resources to segments based on operating income before depreciation and amortization. In addition, it evaluates business segment performance before stock-based compensation and certain non-recurring and other costs. | |||||||||
Financial information relating to the reportable segments is presented below: | |||||||||
Three Months Ended | |||||||||
(in thousands) | 4-Apr-15 | 29-Mar-14 | |||||||
Net sales to external customers (by major product group): | |||||||||
Electronics and EDVs | $ | 20,657 | $ | 30,072 | |||||
Transportation and industrial | 69,312 | 79,101 | |||||||
Energy storage | 89,969 | 109,173 | |||||||
Healthcare | 28,550 | 32,157 | |||||||
Filtration and specialty | 19,389 | 19,672 | |||||||
Separations media | 47,939 | 51,829 | |||||||
Net sales | $ | 137,908 | $ | 161,002 | |||||
Segment operating income: | |||||||||
Electronics and EDVs | $ | (1,938 | ) | $ | 3,061 | ||||
Transportation and industrial | 14,605 | 16,966 | |||||||
Energy storage | 12,667 | 20,027 | |||||||
Separations media | 16,479 | 17,757 | |||||||
Corporate and other | (8,989 | ) | (8,434 | ) | |||||
Segment operating income | 20,157 | 29,350 | |||||||
Stock-based compensation | 2,799 | 5,377 | |||||||
Non-recurring and other costs | 1,443 | 1,613 | |||||||
Total operating income | 15,915 | 22,360 | |||||||
Reconciling items: | |||||||||
Interest expense, net | 3,171 | 9,620 | |||||||
Foreign currency and other | (10,440 | ) | 598 | ||||||
Integrated sale transactions expenses | 2,954 | — | |||||||
Income before income taxes | $ | 20,230 | $ | 12,142 | |||||
Depreciation and amortization: | |||||||||
Electronics and EDVs | $ | 4,277 | $ | 4,324 | |||||
Transportation and industrial | 2,913 | 2,850 | |||||||
Energy storage | 7,190 | 7,174 | |||||||
Separations media | 3,166 | 3,716 | |||||||
Corporate and other | 2,838 | 2,837 | |||||||
$ | 13,194 | $ | 13,727 | ||||||
Recent_Accounting_Pronouncemen1
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Apr. 04, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. | |
In April 2015, the FASB issued ASU No. 2015-04, Compensation - Retirement Benefits, which provides a practical expedient for employers with fiscal year-ends that do not fall on a calendar month-end by permitting those employers to measure defined benefit plan assets and obligations as of the month-end that is closest to the entity's fiscal year-end. The new standard is effective for the Company on January 3, 2016; however, early adoption is permitted. Adoption of the standard is not expected to have an impact on the Company's consolidated financial statements. |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Schedule of inventories | Inventories are carried at the lower of cost or market using the first-in, first-out method of accounting and consist of: | ||||||||
(in thousands) | 4-Apr-15 | 3-Jan-15 | |||||||
Raw materials | $ | 33,344 | $ | 35,700 | |||||
Work-in-process | 13,280 | 11,846 | |||||||
Finished goods | 58,132 | 53,630 | |||||||
$ | 104,756 | $ | 101,176 | ||||||
Debt_Tables
Debt (Tables) | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Schedule of debt | Debt consists of: | ||||||||
(in thousands) | 4-Apr-15 | 3-Jan-15 | |||||||
Senior credit agreement: | |||||||||
Revolving credit facility | $ | — | $ | — | |||||
Term loan facility | 481,250 | 487,500 | |||||||
481,250 | 487,500 | ||||||||
Less current portion | 25,000 | 25,000 | |||||||
Long-term debt | $ | 456,250 | $ | 462,500 | |||||
Derivative_Instruments_and_Hed1
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended | ||||||||||
Apr. 04, 2015 | |||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||
Schedule of interest rate swap recorded in the condensed consolidated balance sheets | The interest rate swap is recorded in the condensed consolidated balance sheets as follows: | ||||||||||
(in thousands) | Balance Sheet Location | 4-Apr-15 | 3-Jan-15 | ||||||||
Interest rate swap (current portion) | Accrued liabilities | $ | 2,489 | $ | 1,414 | ||||||
Interest rate swap (non-current portion) | Other liabilities | 3,910 | 851 | ||||||||
Total fair value of interest rate swap | $ | 6,399 | $ | 2,265 | |||||||
Schedule of cash flow hedge activity, net of income taxes, within accumulated other comprehensive income (loss) included | For the three months ended April 4, 2015, cash flow hedge activity, net of income taxes, was included in "Accumulated other comprehensive loss" as follows: | ||||||||||
(in thousands) | |||||||||||
Beginning balance | $ | (1,439 | ) | ||||||||
Hedging loss before reclassifications | (2,628 | ) | |||||||||
Amount reclassified into earnings | — | ||||||||||
Other comprehensive loss | (2,628 | ) | |||||||||
Ending balance | $ | (4,067 | ) |
Pension_Plans_Tables
Pension Plans (Tables) | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||
Schedule of components of net periodic benefit cost | The following table provides the components of net periodic benefit cost: | ||||||||
Three Months Ended | |||||||||
(in thousands) | 4-Apr-15 | 29-Mar-14 | |||||||
Service cost | $ | 620 | $ | 524 | |||||
Interest cost | 659 | 1,080 | |||||||
Expected return on plan assets | (82 | ) | (109 | ) | |||||
Amortization of prior service credit | (26 | ) | (32 | ) | |||||
Recognized net actuarial loss | 591 | 269 | |||||||
Net periodic benefit cost | $ | 1,762 | $ | 1,732 | |||||
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | ||||||||
Apr. 04, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
Schedule of financial information relating to the reportable segments | Financial information relating to the reportable segments is presented below: | ||||||||
Three Months Ended | |||||||||
(in thousands) | 4-Apr-15 | 29-Mar-14 | |||||||
Net sales to external customers (by major product group): | |||||||||
Electronics and EDVs | $ | 20,657 | $ | 30,072 | |||||
Transportation and industrial | 69,312 | 79,101 | |||||||
Energy storage | 89,969 | 109,173 | |||||||
Healthcare | 28,550 | 32,157 | |||||||
Filtration and specialty | 19,389 | 19,672 | |||||||
Separations media | 47,939 | 51,829 | |||||||
Net sales | $ | 137,908 | $ | 161,002 | |||||
Segment operating income: | |||||||||
Electronics and EDVs | $ | (1,938 | ) | $ | 3,061 | ||||
Transportation and industrial | 14,605 | 16,966 | |||||||
Energy storage | 12,667 | 20,027 | |||||||
Separations media | 16,479 | 17,757 | |||||||
Corporate and other | (8,989 | ) | (8,434 | ) | |||||
Segment operating income | 20,157 | 29,350 | |||||||
Stock-based compensation | 2,799 | 5,377 | |||||||
Non-recurring and other costs | 1,443 | 1,613 | |||||||
Total operating income | 15,915 | 22,360 | |||||||
Reconciling items: | |||||||||
Interest expense, net | 3,171 | 9,620 | |||||||
Foreign currency and other | (10,440 | ) | 598 | ||||||
Integrated sale transactions expenses | 2,954 | — | |||||||
Income before income taxes | $ | 20,230 | $ | 12,142 | |||||
Depreciation and amortization: | |||||||||
Electronics and EDVs | $ | 4,277 | $ | 4,324 | |||||
Transportation and industrial | 2,913 | 2,850 | |||||||
Energy storage | 7,190 | 7,174 | |||||||
Separations media | 3,166 | 3,716 | |||||||
Corporate and other | 2,838 | 2,837 | |||||||
$ | 13,194 | $ | 13,727 | ||||||
Integrated_Sale_Transactions_D
Integrated Sale Transactions (Details) (USD $) | 0 Months Ended |
Feb. 23, 2015 | |
Integrated Sale Transaction Text Block [Abstract] | |
Price per Share Conversion to Cash In Event of Merger (in usd per share) | $60.50 |
Inventories_Details
Inventories (Details) (USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
In Thousands, unless otherwise specified | ||
Inventories | ||
Raw materials | $33,344 | $35,700 |
Work-in-process | 13,280 | 11,846 |
Finished goods | 58,132 | 53,630 |
Total inventories | $104,756 | $101,176 |
Debt_Details
Debt (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||
8-May-14 | Jun. 28, 2014 | Apr. 08, 2014 | Apr. 04, 2015 | Jan. 03, 2015 | |
Debt | |||||
Revolving credit facility | $0 | ||||
Long-term debt including current maturities | 481,250,000 | 487,500,000 | |||
Less current portion | 25,000,000 | 25,000,000 | |||
Long-term debt | 456,250,000 | 462,500,000 | |||
Revolving credit facility | |||||
Debt | |||||
Revolving credit facility | 0 | 0 | |||
Term loan facility | |||||
Debt | |||||
Long-term debt including current maturities | 481,250,000 | 487,500,000 | |||
7.5% senior notes | |||||
Debt | |||||
Unamortized loan acquisition costs written off | 4,395,000 | ||||
Debt instrument, interest rate (as a percent) | 7.50% | ||||
Redemption price of notes | 385,542,000 | ||||
Face value of redeemed notes | 365,000,000 | ||||
Premium on redemption of notes | 20,531,000 | ||||
Amount charged to income in connection with the purchase of notes | 24,937,000 | ||||
New senior credit agreement | |||||
Debt | |||||
Loan acquisition costs | 4,080,000 | ||||
Capitalized loan acquisition costs | 3,944,000 | ||||
Unamortized loan acquisition costs written off | 1,012,000 | ||||
Percentage of voting capital stock of foreign subsidiaries pledged as collateral for borrowing under senior credit agreement | 65.00% | ||||
New senior credit agreement | Revolving credit facility | |||||
Debt | |||||
Maximum borrowing capacity | 150,000,000 | 150,000,000 | |||
New senior credit agreement | Term loan facility | |||||
Debt | |||||
Debt instrument, face amount | 500,000,000 | ||||
Repayment of debt using proceeds from new term loan | 100,000,000 | ||||
Repayment of debt using proceeds from new revolving credit facility | 33,000,000 | ||||
Amount received under new credit agreement | $400,000,000 |
Derivative_Instruments_and_Hed2
Derivative Instruments and Hedging Activities (Details) (USD $) | 3 Months Ended | |||
Apr. 04, 2015 | Mar. 29, 2014 | Jan. 03, 2015 | Aug. 31, 2014 | |
Cash flow hedge activity, net of income taxes, within accumulated other comprehensive income (loss) | ||||
Beginning balance | ($61,308,000) | |||
Amount reclassified into earnings | 0 | |||
Other comprehensive income (loss) | -21,107,000 | 854,000 | ||
Ending balance | -82,470,000 | |||
Cash flow hedge | ||||
Cash flow hedge activity, net of income taxes, within accumulated other comprehensive income (loss) | ||||
Beginning balance | -1,439,000 | |||
Hedging loss before reclassifications | -2,628,000 | |||
Other comprehensive income (loss) | -2,628,000 | |||
Ending balance | -4,067,000 | |||
Gain (Loss) Recognized in earnings | 0 | |||
Estimated gain (loss), net of income taxes, expected to be reclassified out of accumulated other comprehensive income (loss) into earnings during the next twelve months | -1,582,000 | |||
Interest rate swaps | ||||
Derivatives and Hedging Transactions | ||||
Fixed interest rate (as a percent) | 1.90% | |||
Notional amount | 250,000,000 | |||
Total fair value of interest rate swap | 6,399,000 | 2,265,000 | ||
Interest rate swaps | Accrued liabilities | ||||
Derivatives and Hedging Transactions | ||||
Interest rate swap | 2,489,000 | 1,414,000 | ||
Interest rate swaps | Other liabilities | ||||
Derivatives and Hedging Transactions | ||||
Interest rate swap | $3,910,000 | $851,000 |
Pension_Plans_Details
Pension Plans (Details) (Pension Plans, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
Pension Plans | ||
Components of net periodic benefit cost: | ||
Service cost | $620 | $524 |
Interest cost | 659 | 1,080 |
Expected return on plan assets | -82 | -109 |
Amortization of prior service credit | -26 | -32 |
Recognized net actuarial loss | 591 | 269 |
Net periodic benefit cost | $1,762 | $1,732 |
Environmental_Matters_Details
Environmental Matters (Details) (Membrana GmbH, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Jan. 03, 2015 |
Membrana GmbH | ||
Environmental Matters | ||
Environmental reserve | $828 | $917 |
Period over which expenditures will be made | 12 months |
Related_Party_Transactions_Det
Related Party Transactions (Details) (German Subsidiary, USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 | Jan. 03, 2015 |
Patent and trademark service provider | |||
Related party transactions | |||
Ownership percentage in related party | 33.00% | ||
Research company | |||
Related party transactions | |||
Ownership percentage in related party | 25.00% | ||
All related parties | |||
Related party transactions | |||
Equity method investment | $669 | $593 | |
Charges from the affiliates for work performed | 395 | 357 | |
Amounts due to the affiliates | $211 | $223 |
Noncontrolling_Interest_Detail
Noncontrolling Interest (Details) (Daramic Xiangyang, USD $) | Apr. 04, 2015 | Jan. 03, 2015 |
Noncontrolling Interest | ||
Ownership percentage of joint venture | 65.00% | |
Principal balance of note payable | $10,348,000 | $10,348,000 |
Camel Group Co., Ltd, Co-Venturer | ||
Noncontrolling Interest | ||
Ownership percentage of joint venture | 35.00% |
StockBased_Compensation_Plans_
Stock-Based Compensation Plans (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 | Mar. 10, 2015 |
Stock Based Compensation Plans | |||
Stock-based compensation | $2,799 | $5,377 | |
Income tax benefit related to stock-based compensation expense | 1,000 | 1,920 | |
Payments Related to Tax Withholding for Share-based Compensation | 1,730 | 282 | |
2007 Stock Incentive Plan | |||
Stock Based Compensation Plans | |||
Number of shares authorized for grant under 2007 plan | 6,251,963 | ||
Aggregate grant-date fair value of awards granted | $10,447 | ||
2007 Stock Incentive Plan | Restricted Stock | |||
Stock Based Compensation Plans | |||
Restricted stock grants (in shares) | 176,437 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Apr. 04, 2015 | Mar. 29, 2014 |
business | ||
segment | ||
Segment Reporting [Abstract] | ||
Number of reportable segments | 3 | |
Number of primary businesses | 2 | |
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | $137,908 | $161,002 |
Segment operating income | 15,915 | 22,360 |
Stock-based compensation | 2,799 | 5,377 |
Interest expense, net | 3,171 | 9,620 |
Foreign currency and other | -10,440 | 598 |
Integrated sale transactions expenses | 2,954 | 0 |
Income before income taxes | 20,230 | 12,142 |
Depreciation and amortization | 13,194 | 13,727 |
Energy storage | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 89,969 | 109,173 |
Segment operating income | 12,667 | 20,027 |
Operating segments | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 137,908 | 161,002 |
Segment operating income | 20,157 | 29,350 |
Operating segments | Electronics and EDVs | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 20,657 | 30,072 |
Segment operating income | -1,938 | 3,061 |
Operating segments | Transportation and industrial | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 69,312 | 79,101 |
Segment operating income | 14,605 | 16,966 |
Operating segments | Separations Media | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 47,939 | 51,829 |
Segment operating income | 16,479 | 17,757 |
Operating segments | Separations Media | Healthcare | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 28,550 | 32,157 |
Operating segments | Separations Media | Filtration and specialty | ||
Financial information relating to the reportable segments | ||
Net sales to external customers (by major product group) | 19,389 | 19,672 |
Corporate and other | ||
Financial information relating to the reportable segments | ||
Segment operating income | -8,989 | -8,434 |
Material reconciling items | ||
Financial information relating to the reportable segments | ||
Stock-based compensation | 2,799 | 5,377 |
Non-recurring and other costs | 1,443 | 1,613 |
Continuing Operations | Energy storage | ||
Financial information relating to the reportable segments | ||
Depreciation and amortization | 7,190 | 7,174 |
Continuing Operations | Operating segments | Electronics and EDVs | ||
Financial information relating to the reportable segments | ||
Depreciation and amortization | 4,277 | 4,324 |
Continuing Operations | Operating segments | Transportation and industrial | ||
Financial information relating to the reportable segments | ||
Depreciation and amortization | 2,913 | 2,850 |
Continuing Operations | Operating segments | Separations Media | ||
Financial information relating to the reportable segments | ||
Depreciation and amortization | 3,166 | 3,716 |
Continuing Operations | Corporate and other | ||
Financial information relating to the reportable segments | ||
Depreciation and amortization | $2,838 | $2,837 |