Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 28, 2014 | Nov. 25, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Colt Defense LLC | ' |
Entity Central Index Key | '0001508677 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 28-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 0 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 28, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $3,963 | $12,594 |
Restricted cash | 771 | 771 |
Accounts receivable, net | 14,670 | 22,482 |
Inventories | 76,553 | 66,674 |
Deferred tax assets | 166 | 954 |
Other current assets | 3,013 | 5,962 |
Total current assets | 99,136 | 109,437 |
Property and equipment, net | 27,754 | 30,733 |
Goodwill | 50,749 | 51,225 |
Trademarks | 50,100 | 50,100 |
Intangible assets with finite lives, net | 10,798 | 13,415 |
Deferred financing costs | 5,954 | 7,742 |
Long-term restricted cash | 572 | 572 |
Other assets | 1,464 | 1,510 |
Total assets | 246,527 | 264,734 |
Current liabilities: | ' | ' |
Line of credit | 13,000 | 7,083 |
Accounts payable | 18,018 | 14,038 |
Accrued expenses (Note 11) | 26,078 | 22,158 |
Pension and retirement liabilities - current portion | 1,085 | 1,085 |
Customer advances and deferred income | 13,968 | 19,467 |
Long-term debt - current portion (Note 1 and 10) | 294,458 | 5,000 |
Accrued distributions to members | ' | 670 |
Total current liabilities | 366,607 | 69,501 |
Long-term debt | ' | 289,817 |
Pension and retirement liabilities - current portion | 22,881 | 21,670 |
Long-term deferred tax liability | 19,105 | 18,715 |
Long-term distribution payable to members | 2,277 | 2,277 |
Other long-term liabilities | 5,949 | 2,230 |
Total long-term liabilities | 50,212 | 334,709 |
Total liabilities | 416,819 | 404,210 |
Commitments and Contingencies (Note 17) | ' | ' |
Deficit: | ' | ' |
Accumulated deficit | -158,412 | -130,136 |
Accumulated other comprehensive loss | -11,880 | -9,340 |
Total deficit | -170,292 | -139,476 |
Total liabilities and deficit | $246,527 | $264,734 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Consolidated Statements of Operations | ' | ' | ' | ' | ' |
Net sales | $51,114 | $73,030 | ' | $150,827 | $201,165 |
Cost of sales | 40,517 | 58,487 | ' | 125,543 | 149,642 |
Gross profit | 10,597 | 14,543 | ' | 25,284 | 51,523 |
Operating expenses: | ' | ' | ' | ' | ' |
Selling and commissions | 3,746 | 4,064 | ' | 12,827 | 10,398 |
Research and development | 1,250 | 1,714 | ' | 3,885 | 4,015 |
General and administrative | 4,088 | 3,896 | ' | 11,798 | 10,641 |
Total selling and commissions, research and development, general and administrative | 9,084 | 9,674 | ' | 28,510 | 25,054 |
Business development | ' | 463 | ' | 509 | 707 |
Certain transaction cost (benefit) | -12 | 461 | ' | -12 | 877 |
Gain on effective settlement of contract | ' | -15,264 | ' | ' | -15,264 |
Restructuring cost (benefit) | ' | 631 | 782 | -76 | 631 |
Total operating expenses | 9,072 | -4,035 | ' | 28,931 | 12,005 |
Operating income | 1,525 | 18,578 | ' | -3,647 | 39,518 |
Other expense (income): | ' | ' | ' | ' | ' |
Interest expense | 7,904 | 7,623 | ' | 23,447 | 19,686 |
Other (income)/expense, net | -55 | 306 | ' | -168 | -1,092 |
Total other expense, net | 7,849 | 7,929 | ' | 23,279 | 18,594 |
Income (loss) before provision for income taxes | -6,324 | 10,649 | ' | -26,926 | 20,924 |
Income tax expense (benefit) | 1,510 | -208 | ' | 1,443 | 551 |
Net (loss) income | ($7,834) | $10,857 | ' | ($28,369) | $20,373 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Consolidated Statements of Comprehensive Income (Loss) | ' | ' | ' | ' |
Net (loss) income | ($7,834) | $10,857 | ($28,369) | $20,373 |
Foreign currency translation adjustment | ' | ' | ' | ' |
Foreign currency translation losses | -975 | 457 | -1,115 | -1,140 |
Pension and postretirement benefit liabilities: | ' | ' | ' | ' |
Other comprehensive income arising during the period | -1 | ' | -1,551 | ' |
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | 43 | 126 | 126 | 376 |
Total | 42 | 126 | -1,425 | 376 |
Comprehensive (loss) income | ($8,767) | $11,440 | ($30,909) | $19,609 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 |
Operating Activities | ' | ' |
Net income (loss) | ($28,369) | $20,373 |
Adjustments to reconcile net income (loss) to net cash (used in)/provided by operating activities: | ' | ' |
Depreciation and amortization | 7,086 | 4,294 |
Amortization of financing fees | 1,788 | 1,403 |
Amortization of debt discount | 947 | 486 |
Postretirement health plan curtailment | -98 | ' |
Deferred income taxes | 1,239 | -196 |
Gain on sale/disposals of fixed assets | ' | -15,264 |
Other non-cash items | ' | 110 |
Changes in operating assets and liabilities, net of acquisition: | ' | ' |
Accounts receivable | 7,464 | 2,954 |
Inventories | -10,034 | -17,514 |
Prepaid expenses and other current assets | 2,904 | -243 |
Accounts payable and accrued expenses | 7,812 | 16,014 |
Accrued pension and retirement liabilities | -214 | -877 |
Customer advances and deferred income | -3,732 | -726 |
Other | 2,462 | 531 |
Net cash (used in)/provided by operating activities | -10,745 | 11,345 |
Investing Activities | ' | ' |
Purchases of property and equipment | -1,710 | -6,615 |
Business acquisition, net of cash acquired and reinvested Merger consideration | ' | -59,488 |
Change in restricted cash | ' | -355 |
Net cash used in investing activities | -1,710 | -66,458 |
Financing Activities | ' | ' |
Debt issuance costs | -56 | -1,961 |
Repayments of long-term debt | -1,250 | ' |
Term Loan Borrowings | ' | 47,742 |
Line of credit advances | 13,500 | -6 |
Line of credit repayments | -7,583 | ' |
Capital lease obligation repayment | ' | -393 |
Proceeds from issuance of common units, net of reinvested consideration proceeds | ' | 5,000 |
Purchase of common units | ' | -14,000 |
Distributions paid to members | -683 | -2,557 |
Net cash provided by financing activities | 3,928 | 33,825 |
Effect of exchange rates on cash and cash equivalents | -104 | -478 |
Change in cash and cash equivalents | -8,631 | -21,766 |
Cash and cash equivalents, beginning of period | 12,594 | 42,373 |
Cash and cash equivalents, end of period | 3,963 | 20,607 |
Supplemental Disclosure of Cash Flow Information | ' | ' |
Cash paid for interest | 14,031 | 11,503 |
Cash paid for income taxes | 726 | 1,354 |
Non-cash consideration for sale of equipment | ' | 7 |
Accrued purchases of fixed assets | 156 | 9 |
Accrued distribution to members | ' | $4,948 |
Nature_of_Business
Nature of Business | 9 Months Ended |
Sep. 28, 2014 | |
Nature of Business | ' |
Nature of Business | ' |
Note 1 Nature of Business | |
Colt Defense LLC (“Colt Defense” or the “Company”) is one of the world’s oldest and most renowned designers, developers and manufacturers of firearms for military, personal defense and recreational purposes. The Company’s founder, Samuel Colt, patented the first commercially successful revolving cylinder firearm in 1836 and, in 1847, began supplying U.S. and international military customers with firearms that have set the standards of their era. Today, the Company’s end customers encompass every segment of the worldwide firearms market, including U.S., Canadian and foreign military forces, global law enforcement and security agencies, consumers seeking personal protection, the hunting and sporting community and collectors. | |
Going Concern | |
During the third quarter of 2014, the Company faced increasing liquidity challenges as a result of several recent business trends impacting the Company’s current and forecasted revenues and cash flows. These trends included the continued decline in market demand for the Company’s commercial modern sporting rifle (“MSR”), recent declines in demand for the Company’s commercial handguns and delays in anticipated timing of U.S. Government and certain international sales. As a result, the Company expects to report lower revenues and Adjusted EBITDA (see Note 18 “Segment Information”) for the year-ended December 31, 2014 than it had previously forecasted. These trends are expected to continue to put pressure on the Company’s liquidity for the foreseeable future. | |
Management’s plan to mitigate the business risk associated with the Company’s increased liquidity challenges include: (i) seeking revenue growth across all sales channels, (ii) executing initiatives designed to optimize the Company’s performance and reduce costs, (iii) managing inventory levels for positive cash flow by focusing the production schedule on the Company’s backlog of firm commitments, (iv) working closely with U.S. Government regulators to obtain timely approval of international sales and (v) seeking ways to restructure the Company’s unsecured debt to reduce overall debt service costs. | |
As announced in the Company’s Form 12b-25 filed on November 12, 2014, there was uncertainty about whether the Company would have the cash necessary to pay its November 17, 2014 senior notes interest payment under the Company’s senior notes issued on November 10, 2009 by Colt Defense LLC and Colt Finance Corp. (“Senior Notes”). On November 17, 2014, the Company entered into a $70,000 senior secured term loan facility with Wilmington Savings Fund Society, FSB, as agent and Morgan Stanley Senior Funding Inc., as lender, (the “MS Term Loan”) (see Note 22 “Subsequent Events”) which replaced the Company’s existing Term Loan agreement (see Note 10 “Notes Payable and Long-Term Debt – Term Loan”) and provided the Company a net amount of $4,101 of additional liquidity. The MS Term Loan also enabled the Company to make its November 17, 2014 Senior Notes interest payment of $10,938. In addition, the lenders, under the Company’s existing Credit Agreement (see Note 10 “Notes Payable and Long-Term Debt – Credit Agreement”), also agreed to amendments to the Credit Agreement which allowed the Company to enter into the MS Term Loan and provided for additional liquidity through a modification of excess availability thresholds. | |
After giving effect to the aforementioned market and business challenges as well as the sales opportunities that the Company believes exist, the Company has forecasted revenue and Adjusted EBITDA growth in 2015. There can be no assurance that the actual demand for the Company’s commercial MSRs or commercial handguns will meet the Company’s internal forecast. In addition, there can be no assurance that U.S. Government or international sales will occur as the Company has forecasted primarily due to a U.S. Government regulatory approval process which is difficult to predict. As a result of these factors, and notwithstanding the additional cash the Company obtained from the MS Term Loan, risk exists with respect to the Company achieving its internally forecasted results and projected cash flows for the remainder of 2014 and 2015. Absent the Company achieving its internal forecast for the remainder of 2014 and 2015 and the successful execution of Management’s strategy, including addressing other long-term debt such as the Senior Notes, it is probable that the Company may not have sufficient cash and cash equivalents on-hand along with availability under its Credit Agreement, as amended, to be able to meet its obligations as they come due over the next 12 months, including the Company’s May 15, 2015 Senior Notes interest payment of $10,938. | |
As it is probable that the Company may not have sufficient liquidity to be able to make its May 15, 2015 Senior Notes interest payment without meeting the Company’s internal projections (including addressing the Company’s Senior Notes), the Company’s long-term debt has been classified as current on the consolidated balance sheet. Currently the Company does not have sufficient funds to repay the Senior Notes upon an actual acceleration of maturity. In the event of an accelerated maturity, the Company’s lenders may take actions to secure their position as creditors and mitigate their potential risks. These events would adversely impact the Company’s liquidity (see Note 9 “Liquidity”). These factors raise substantial doubt about the Company’s ability to continue as a going concern. | |
As of January 1, 2014, Colt Defense effected a legal entity restructuring whereby Colt Defense and New Colt Holding Corp. (“New Colt”) (See Note 3, “Acquisition” and Note 12, “Income Taxes”) contributed their assets and operations to Colt’s Manufacturing Company LLC (“Colt’s Manufacturing”), a limited liability corporation. The contribution created a combined operating entity for the Company’s U.S. based operations. | |
As of December 31, 2013, Colt Defense owned 100% of Colt Finance Corp. (“Colt Finance”), New Colt and Colt Defense Technical Services LLC (“CDTS”), New Colt owned 100% of Colt’s Manufacturing and Colt Defense and CDTS collectively owned 100% of Colt International which owned 100% of Colt Canada Corporation (“Colt Canada”). Effective January 1, 2014, Colt Defense, a limited liability corporation, owned 100% of Colt Finance, New Colt, a C corporation, and CDTS, a limited liability corporation. Colt Defense and New Colt collectively own 100% of Colt’s Manufacturing as a result of the legal entity restructuring and Colt Defense and CDTS collectively own 100% of Colt International Coöperatief U.A. (“Colt International”), a Dutch coöperatief, which owns 100% of Colt Canada a Canadian C corporation. | |
The company operates on a monthly 4-4-5 week calendar with the end of each month on a Sunday, except for the month of December which ends on the 31st. The first two months of each quarter, with the exception of January, have four weeks and the third month of each quarter, with the exception of December, has five weeks. The 4-4-5 calendar ensures that the end date of the period is always the same day of the week, which is utilized by the Company for shift and manufacturing planning, and it also ensures that every period is the same length. | |
On March 31, 2014, Colt Defense through its domestic operating subsidiary Colt’s Manufacturing reached an agreement with UAW Local 376 for a new five year contract covering approximately 529 employees. The new contract will be in effect from April 1, 2014 through March 31, 2019. | |
The following items, which are discussed in further detail in the notes to the consolidated financial statements for the third quarter of 2014 had an impact on the Company’s results as included in the Form 10-Q: | |
The Company restated its Annual Report on Form 10-K/A for the year ended December 31, 2013 and revised the unaudited interim financial statements for the first three quarters in the fiscal year ended December 31, 2013 (see Note 2, “Summary of Significant Accounting Policies — Restatement of Previously Issued Consolidated Financial Statements”). | |
On August 6, 2014, the Company entered into Amendment No. 1 to the Term Loan (the “Term Loan Amendment”). Absent an amendment to the Term Loan, the Company would have been in violation of certain of its financial covenants as of June 29, 2014 and September 28, 2014. The Term Loan Amendment eliminated and modified certain covenants and provided for an extension of the time period for delivery of certain financial information to its lenders. Also, on August 6, 2014, the Company obtained an amendment to its credit agreement (“Credit Agreement”) that provided an extension of the time period for delivery of certain financial information to its lenders, (See Note 10, “Notes Payable and Long-Term Debt”). | |
In response to, among other factors, the decrease in demand for commercial rifles, the Company initiated actions which resulted in a workforce reduction of 33 salaried and 64 hourly employees in the second and third quarters of 2014 (see Note 17, “Commitments and Contingencies”). In conjunction with the workforce reduction, the Company recognized a curtailment of its postretirement health plan during the second quarter of 2014 (see Note 13, “Pension and Postretirement Benefits”). | |
During the third quarter of 2014, based upon new, additional information, the Company reassessed the M240 machine gun program (the “M240 Program”) accruals and determined an incremental contract obligation expense of $1,722 was required. The incremental contract obligation expense related to additional inventory reserves for defective parts. In addition, during the third quarter of 2014 the Company recorded a $200 increase in sales and a corresponding increase in cost of sales related to a contract modification signed in the fourth quarter of this year with the U.S. Government. The Company continues to evaluate its M240 Program and believes sales of M240 machine guns will commence in the first quarter of 2015. (See Note 17, “Commitments and Contingencies”) | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | |||||||||||||||||||
Sep. 28, 2014 | ||||||||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||||||
Note 2 Summary of Significant Accounting Policies | ||||||||||||||||||||
Restatement of Previously Issued Consolidated Financial Statements | ||||||||||||||||||||
In the Company’s 2013 Annual Report on Form 10-K/A, it restated its previously issued consolidated financial statements and the related disclosures for the year ended December 31, 2013 (the “Restated Period”). The Company also revised the unaudited interim financial statements for the first three quarters in the fiscal year ended December 31, 2013 and the fourth quarter in the fiscal year ended December 31, 2012 (the “Revised Periods”). | ||||||||||||||||||||
The restatement is the result of the Company’s correction of a financial statement error attributable to the lack of recognition of the impact of a contract modification related to the M240 Program for the U.S. Government in the Company’s fourth quarter 2013 results. There was no impact to the Company’s net sales or cost of sales in the three and nine month periods ended September 29, 2013 related to the M240 Program error. In conjunction with the correction of the M240 Program error, other previously recorded, immaterial out-of-period adjustments were also adjusted to be reflected in the proper period, along with the reclassification of business development expenses from other expense (income) to operating income. Correction of these previously recorded, immaterial out-of-period adjustments had the combined effect on the consolidated statements of operations for the three and nine month periods ended September 29, 2013 of decreasing net income by $288 and $0, respectively. | ||||||||||||||||||||
The impacts of correcting the previously recorded, immaterial out-of-period adjustments and the reclassification of business development expenses for the three and nine month periods ended September 29, 2013 were as follows: | ||||||||||||||||||||
Adjustments to | ||||||||||||||||||||
Previously Reported Income | ||||||||||||||||||||
Statement - Income / (Expense) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
For the years ended | September 29, 2013 | September 29, 2013 | ||||||||||||||||||
Net sales | $ | (208 | ) | (231 | ) | |||||||||||||||
Cost of sales | (168 | ) | (89 | ) | ||||||||||||||||
Gross profit | (40 | ) | (142 | ) | ||||||||||||||||
Selling and commissions (A) | 221 | 12 | ||||||||||||||||||
Research and development | 4 | 6 | ||||||||||||||||||
General and administrative (B) | 10 | (207 | ) | |||||||||||||||||
Business development (C) | 463 | 707 | ||||||||||||||||||
Operating income | (738 | ) | (660 | ) | ||||||||||||||||
Other (income) / expense (C) | (440 | ) | (707 | ) | ||||||||||||||||
Income tax expense | (10 | ) | 47 | |||||||||||||||||
Net income (loss) (B) | (288 | ) | — | |||||||||||||||||
(A) | Primarily relates to the reclassification of $214 of armorers training expenses from selling and commissions to cost of sales. | |||||||||||||||||||
(B) | Primarily relates to the timing of recognition of certain professional fees. | |||||||||||||||||||
(C) | Primarily relates to the reclassification of transaction costs incurred in connection with contemplated merger and acquisition activities from other expense/(income) to business development. | |||||||||||||||||||
This Quarterly Report on Form 10-Q for the quarter ended September 28, 2014 includes the impact of adjustments to the Restated Period and Revised Periods on the applicable unaudited quarterly financial information for the quarter ended September 29, 2013. In addition, the Company’s future Quarterly Reports on Form 10-Q for subsequent quarterly periods during 2014 will also include the impact of adjustments to the Restated Period and Revised Periods on applicable 2013 comparable prior quarter and year to date periods. The effect of the revision on previously issued quarterly information as of and for the three and nine months ended September 29, 2013, is set forth in this footnote. | ||||||||||||||||||||
Comparison of revised financial statements to financial statements as previously reported | ||||||||||||||||||||
The following tables compare the Company’s previously reported Consolidated Statements of Operations, Comprehensive Income (Loss) and Changes in Cash Flows for the quarter ended September 29, 2013 to the corresponding financial statements for the quarterly period as revised. | ||||||||||||||||||||
Colt Defense LLC and Subsidiaries | ||||||||||||||||||||
Consolidated Statement of Operations | ||||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three months ended September 29, 2013 | Nine months ended September 29, 2013 | |||||||||||||||||||
As Revised | As Revised | |||||||||||||||||||
As | in this Quarterly | As | in this Quarterly | |||||||||||||||||
Previously | Report on | Previously | Report on | |||||||||||||||||
Reported | Adjustments | Form 10-Q | Reported | Adjustments | Form 10-Q | |||||||||||||||
Net sales | $ | 73,238 | $ | (208 | ) | $ | 73,030 | $ | 201,396 | $ | (231 | ) | $ | 201,165 | ||||||
Cost of sales | 58,655 | (168 | ) | 58,487 | 149,731 | (89 | ) | 149,642 | ||||||||||||
Gross Profit | 14,583 | (40 | ) | 14,543 | 51,665 | (142 | ) | 51,523 | ||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling and commissions | 3,843 | 221 | 4,064 | 10,386 | 12 | 10,398 | ||||||||||||||
Research and development | 1,710 | 4 | 1,714 | 4,009 | 6 | 4,015 | ||||||||||||||
General and administrative | 3,886 | 10 | 3,896 | 10,848 | (207 | ) | 10,641 | |||||||||||||
9,439 | 235 | 9,674 | 25,243 | (189 | ) | 25,054 | ||||||||||||||
Business development | — | 463 | 463 | — | 707 | 707 | ||||||||||||||
Certain transaction costs | 461 | — | 461 | 877 | — | 877 | ||||||||||||||
Gain on effective settlement of contract (Note 3) | (15,264 | ) | — | (15,264 | ) | (15,264 | ) | — | (15,264 | ) | ||||||||||
Restructuring costs (Note 4) | 631 | — | 631 | 631 | — | 631 | ||||||||||||||
Total operating expenses | (4,733 | ) | 698 | (4,035 | ) | 11,487 | 518 | 12,005 | ||||||||||||
Operating income | 19,316 | (738 | ) | 18,578 | 40,178 | (660 | ) | 39,518 | ||||||||||||
Other expense/(income): | ||||||||||||||||||||
Interest expense | 7,623 | — | 7,623 | 19,686 | — | 19,686 | ||||||||||||||
Other (income)/expense, net | 746 | (440 | ) | 306 | (385 | ) | (707 | ) | (1,092 | ) | ||||||||||
Total other expenses, net | 8,369 | (440 | ) | 7,929 | 19,301 | (707 | ) | 18,594 | ||||||||||||
Income (loss) before provision for income taxes | 10,947 | (298 | ) | 10,649 | 20,877 | 47 | 20,924 | |||||||||||||
Income tax expense | (198 | ) | (10 | ) | (208 | ) | 504 | 47 | 551 | |||||||||||
Net income (loss) | $ | 11,145 | $ | (288 | ) | $ | 10,857 | $ | 20,373 | $ | — | $ | 20,373 | |||||||
Colt Defense LLC and Subsidiaries | ||||||||||||||||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Three Months Ended September 29, 2013 | ||||||||||||||||||||
As Revised | ||||||||||||||||||||
As | in this Quarterly | |||||||||||||||||||
Previously | Report on | |||||||||||||||||||
Reported | Adjustments | Form 10-Q | ||||||||||||||||||
Net income (loss) | $ | 11,145 | $ | (288 | ) | $ | 10,857 | |||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustment: | ||||||||||||||||||||
Foreign currency translation gains (losses) | 465 | (8 | ) | 457 | ||||||||||||||||
Pension and postretirement benefit liabilities: | ||||||||||||||||||||
Other comprehensive income (loss) arising during the period | — | — | — | |||||||||||||||||
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | 126 | — | 126 | |||||||||||||||||
126 | — | 126 | ||||||||||||||||||
Comprehensive income (loss) | $ | 11,736 | $ | (296 | ) | $ | 11,440 | |||||||||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Nine Months Ended September 29, 2013 | ||||||||||||||||||||
As Revised | ||||||||||||||||||||
As | in this Quarterly | |||||||||||||||||||
Previously | Report on | |||||||||||||||||||
Reported | Adjustments | Form 10-Q | ||||||||||||||||||
Net income (loss) | $ | 20,373 | $ | — | $ | 20,373 | ||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustment: | ||||||||||||||||||||
Foreign currency translation gains (losses) | (1,132 | ) | (8 | ) | (1,140 | ) | ||||||||||||||
Pension and postretirement benefit liabilities: | ||||||||||||||||||||
Other comprehensive income (loss) arising during the period | — | — | — | |||||||||||||||||
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | 376 | — | 376 | |||||||||||||||||
376 | — | 376 | ||||||||||||||||||
Comprehensive income (loss) | $ | 19,617 | $ | (8 | ) | $ | 19,609 | |||||||||||||
Colt Defense LLC and Subsidiaries | ||||||||||||||||||||
Consolidated Statement of Changes in Cash Flows | ||||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Nine Months Ended September 29, 2013 | ||||||||||||||||||||
As Revised | ||||||||||||||||||||
As | in this Quarterly | |||||||||||||||||||
Previously | Report on | |||||||||||||||||||
Reported | Adjustments | Form 10-Q | ||||||||||||||||||
Operating Activities | ||||||||||||||||||||
Net income | $ | 20,373 | $ | — | $ | 20,373 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 4,294 | — | 4,294 | |||||||||||||||||
Amortization of financing fees | 1,403 | — | 1,403 | |||||||||||||||||
Amortization of debt discount | 486 | — | 486 | |||||||||||||||||
Deferred income taxes | (195 | ) | (1 | ) | (196 | ) | ||||||||||||||
Gain on sale/disposals of fixed assets | (15,264 | ) | — | (15,264 | ) | |||||||||||||||
Other non-cash items | 110 | — | 110 | |||||||||||||||||
Changes in operating assets and liabilites, net of acquisition: | ||||||||||||||||||||
Accounts receivable | 2,713 | 241 | 2,954 | |||||||||||||||||
Inventories | (17,644 | ) | 130 | (17,514 | ) | |||||||||||||||
Prepaid expense and other current assets | 46 | (289 | ) | (243 | ) | |||||||||||||||
Accounts payable and accrued expense | 16,299 | (285 | ) | 16,014 | ||||||||||||||||
Accrued pension and retirement liabilities | (1,089 | ) | 212 | (877 | ) | |||||||||||||||
Customer advances and deferred income | (726 | ) | — | (726 | ) | |||||||||||||||
Other | 531 | — | 531 | |||||||||||||||||
Net cash provided by operating activities | 11,337 | 8 | 11,345 | |||||||||||||||||
Investing Activities | ||||||||||||||||||||
Purchase of property and equipment | (6,615 | ) | — | (6,615 | ) | |||||||||||||||
Business acquisition, net of cash acquired and reinvested Merger consideration | (63,488 | ) | 4,000 | (59,488 | ) | |||||||||||||||
Change in restricted cash | (355 | ) | — | (355 | ) | |||||||||||||||
Net cash used in investing activities | (70,458 | ) | 4,000 | (66,458 | ) | |||||||||||||||
Financing Activities | ||||||||||||||||||||
Debt issuance costs | (1,961 | ) | — | (1,961 | ) | |||||||||||||||
Term Loan Borrowings | 47,742 | — | 47,742 | |||||||||||||||||
Line of credit advances | (6 | ) | — | (6 | ) | |||||||||||||||
Capital lease obligation repayment | (393 | ) | — | (393 | ) | |||||||||||||||
Proceeds from issuance of common units, net of reinvested consideration proceeds | 9,000 | (4,000 | ) | 5,000 | ||||||||||||||||
Purchase of common units | (14,000 | ) | — | (14,000 | ) | |||||||||||||||
Distributions paid to members | (2,557 | ) | — | (2,557 | ) | |||||||||||||||
Net cash provided by financing activities | 37,825 | (4,000 | ) | 33,825 | ||||||||||||||||
Effect of exchange rates on cash and cash equivalents | (470 | ) | (8 | ) | (478 | ) | ||||||||||||||
Change in cash and cash equivalents | (21,766 | ) | — | (21,766 | ) | |||||||||||||||
Cash and cash equivalents, beginning of period | 42,373 | — | 42,373 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 20,607 | $ | — | $ | 20,607 | ||||||||||||||
Basis of Accounting and Consolidation | ||||||||||||||||||||
The accompanying unaudited consolidated financial statements of Colt Defense and Colt Finance (collectively, the “Company”, or “Colt”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all significant adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of the financial position, results of operations and cash flows for the three and nine months ended September 28, 2014 and September 29, 2013, as revised, have been included. The financial information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2013, as restated. The consolidated balance sheet dated December 31, 2013, as restated, included in this quarterly report on Form 10-Q has been derived from the audited consolidated financial statements at that time, but does not include all disclosures required by GAAP. Operating results for the three and nine months ended September 28, 2014 are not necessarily indicative of the results to be expected for any subsequent interim period or for the year ending December 31, 2014. | ||||||||||||||||||||
During the third quarter of 2014, the Company faced increasing liquidity challenges as a result of several recent business trends impacting the Company’s current and forecasted revenues and cash flows. These trends included the continued decline in market demand for the Company’s commercial MSR, recent declines in demand for the Company’s commercial handguns, and delays in anticipated timing of U.S. Government and certain international sales. As a result, the Company expects to report significantly lower revenues and Adjusted EBITDA (see Note 18 “Segment Information”) for the year-ended December 31, 2014 than it had previously forecasted. These trends are expected to continue to put significant pressure on the Company’s liquidity for the foreseeable future. | ||||||||||||||||||||
Absent the Company achieving its internal forecast for the remainder of 2014 and 2015 and the successful execution of Management’s plans, including restructuring of the unsecured debt, it is probable that the Company may not have sufficient cash and cash equivalents on-hand along with availability under its Credit Agreement, as amended, to be able to meet its obligations as they come due over the next 12 months, including the Company’s May 15, 2015 Senior Notes interest payment of $10,938. As it is probable that the Company may not have sufficient liquidity to be able to make its May 15, 2015 Senior Notes interest payment, the Company’s long-term debt has been classified as current in the consolidated balance sheet. Currently the Company does not have sufficient funds to repay the debt upon an actual acceleration of maturity. In the event of an accelerated maturity, the Company’s lenders may take actions to secure their position as creditors and mitigate their potential risks. These events would adversely impact the Company’s liquidity (see Note 9 “Liquidity”). These factors raise substantial doubt about the Company’s ability to continue as a going concern. | ||||||||||||||||||||
The Company’s financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or classification of liabilities should the Company be unable to continue as a going concern. | ||||||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. | ||||||||||||||||||||
On July 12, 2013 (the “Merger Date”), the Company acquired 100% ownership (the “Merger”) of New Colt. The results of New Colt have been included in the unaudited consolidated financial statements from the Merger Date. | ||||||||||||||||||||
Use of Estimates | ||||||||||||||||||||
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include estimates used to determine the fair value of assets acquired and liabilities assumed related to the acquisition of New Colt (see Note 3, “Acquisition”) and accruals for the Company’s M240 Program (see Note 17, “Commitments and Contingencies”), excess and obsolete inventory, income tax expense, deferred tax asset valuation, medical claims payable, and worker’s compensation expense. Actual results could differ materially from those estimates. | ||||||||||||||||||||
Self-Funded Medical Plan | ||||||||||||||||||||
As of September 28, 2014, the Company maintained two employee group medical plans, one of which covers the Company’s Canadian subsidiary and one of which cover the Company’s domestic operations and is self-funded. The Company’s domestic medical plan liabilities are limited by individual and aggregate stop loss insurance coverage. Included in accrued expense in the accompanying consolidated balance sheets is a liability for reported claims outstanding, as well as an estimate of incurred but unreported claims, based on the Company’s best estimate of the ultimate cost not covered by stop loss insurance. The individual stop loss limit for the Company’s domestic self-funded medical plan is $175 as of September 28, 2014. The aggregate stop loss limit for the Company’s self-funded medical plan is $14,547 as of September 28, 2014. The actual amount of the claims could differ from the total consolidated estimated liability recorded of $416 and $823 at September 28, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||
Self-Funded Worker’s Compensation | ||||||||||||||||||||
As of December 31, 2013, the Company insured its domestic worker’s compensation with a $250 per event deductible program, that incorporates individual, accident and aggregate stop loss limits of $2,000. The Company’s liability for estimated premiums and incurred losses under the Company’s deductible policies that have been actuarially determined and accrued for as of September 28, 2014 and December 31, 2013 were $958 and $214, respectively. The Company revised its disclosure with respect to the Company’s liability for estimated premiums and incurred losses under the Company’s deductible policies as of December 31, 2013. The Company does not consider the revision of this disclosure material. | ||||||||||||||||||||
Cash and Cash Equivalents | ||||||||||||||||||||
Cash and cash equivalents consists of cash and short-term, highly liquid investments with original maturities of three months or less at the date of purchase. | ||||||||||||||||||||
Restricted Cash | ||||||||||||||||||||
Restricted cash at September 28, 2014 and December 31, 2013, consists of funds deposited to secure standby letters of credit primarily for performance guarantees related to the Company’s international business. | ||||||||||||||||||||
Revenue | ||||||||||||||||||||
The Company recognizes revenue when evidence of an arrangement exists, delivery of the product or service has occurred and title and risk of loss have passed to the customer, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. | ||||||||||||||||||||
The Company accounts for revenues and earnings under two long-term government contracts/programs with interrelated multiple elements (procurement of parts, manufacturing and refurbishment services) using concepts of proportionate performance. These contracts effect reported results for all periods presented. The Company estimates the total profit on each contract as the difference between the total estimated revenue and total estimated cost of the contract and recognizes that profit over the remaining life of the contract using an output measure (the ratio of units completed to the total number of units to be refurbished under the contract). The Company computes an earnings rate for each contract, including general and administrative expense, to determine operating earnings. The Company reviews the earnings rate quarterly to assess revisions in contract values and estimated costs at completion. Any changes in earnings rates and recognized contract to date earnings resulting from these assessments are made in the period the revisions are identified. Contract costs include production costs, related overhead and allocated general and administrative costs. Amounts billed and collected on these contracts in excess of revenue recorded are reflected as customer advances and deferred revenue in the Company’s consolidated balance sheets. | ||||||||||||||||||||
Anticipated contract losses are charged to operations as soon as they are identified. Anticipated losses cover all costs allocable to the contracts, including certain general and administrative expenses. If a contract is cancelled by the government for its convenience, the Company can make a claim against the customer for fair compensation for worked performed plus costs of settling and paying claims by terminated subcontractors, other settlement expenses and a reasonable profit on costs incurred. When the Company has a customer claim, revenue arising from the claims process is either recognized as revenue or as an offset against a potential loss only when the amount of the claim can be estimated reliably and its realization is probable. The Company had no claims recorded at any period-end presented. | ||||||||||||||||||||
Prior to the Merger, Colt Defense generated an immaterial amount of royalty income, which it included in other income in its consolidated statements of operations. As a result of the Merger, the Company now generates a higher amount of royalty income on a quarterly basis and has therefore determined that royalty income should now be recorded as net sales in the Consolidated Statements of Operations. | ||||||||||||||||||||
The Company recognizes trademark licensing revenue for individual licensees based on historical experience and expected cash receipts from licensees. Licensing revenue consists of minimum royalties and/or a percentage of a licensee’s sales on licensed products. Under most of the Company’s current licensing agreements, royalties are payable in arrears on a calendar quarter basis. | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company provides a valuation allowance when it is more likely than not that deferred tax assets will not be realized. The Company recognizes the benefit of an uncertain tax position that has been taken or it expects to take on income tax returns if such tax position is more likely than not to be sustained. | ||||||||||||||||||||
The Company follows the authoritative guidance regarding accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These unrecognized tax benefits relate primarily to issues common among multinational corporations in its industry. The Company applies a variety of methodologies in making these estimates, which include studies performed by independent economists, advice from industry and subject experts, evaluation of public actions taken by the Internal Revenue Service and other taxing authorities, as well as its own industry experience. The Company provides estimates for unrecognized tax benefits which may be subject to material adjustments until matters are resolved with taxing authorities or statutes expire. If its estimates are not representative of actual outcomes, its results of operations could be materially impacted. | ||||||||||||||||||||
The Company continues to maintain a valuation allowance against certain deferred tax assets where realization is not certain. The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of these deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income, carryforward periods available to it for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and, to the extent future expectations change; the Company would assess the recoverability of its deferred tax assets at that time. If the Company determines that the deferred tax assets are not realizable in a future period, the Company would record material adjustments to income tax expense in that period. | ||||||||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||||||||
Revenue from Contracts with Customers - In May 2014, the FASB issued ASU No. 2014-09, that 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 ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||||||||||||||||||
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists - In July 2013, the FASB issued ASU 2013-11 to provide guidance on the presentation of unrecognized tax benefits. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective for interim and annual periods beginning after December 15, 2013 with earlier adoption permitted. ASU 2013-11 should be applied prospectively with retroactive application permitted. The Company has adopted ASU 2013-11 in the first quarter of 2014. | ||||||||||||||||||||
Acquisition
Acquisition | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Acquisition | ' | |||||||
Acquisition | ' | |||||||
Note 3 Acquisition | ||||||||
On the Merger Date, the Company consummated the Merger with New Colt, a privately-held company, which is a world leader in the design, development and manufacture of pistols and revolvers. As a result of the Merger, the two manufacturers of Colt-branded firearms were consolidated into a single enterprise providing Colt Defense direct access to the commercial market for Colt Defense’s rifles and carbines, ownership of the Colt brand name and other related trademarks, and the technology and production facilities for the full line of Colt handguns. | ||||||||
Prior to determining the purchase price allocation of the Merger consideration, Colt Defense recorded the effective settlement of a pre-existing relationship with New Colt related to Colt Defense’s license agreement (the “License”) with New Colt for the use of certain Colt trademarks. As a result of the effective settlement of the pre-existing relationship, Colt Defense recorded a gain in the third quarter of 2013 of $15,264 (“Settlement Gain”), which equals the calculated gain of $16,320 reduced by the write-off of Colt Defense’s prepaid license balance of $1,056. A third-party valuation firm assisted management’s calculation of the gain by comparing the value of the royalty rate in the License to the current market rate for such a license. | ||||||||
The Company acquired New Colt for an aggregate purchase price of $82,543, which included the Settlement Gain of $15,264. The cash portion of the purchase price was funded by the proceeds from a new $50,000 senior secured term loan (“Term Loan”), cash on hand and $9,000 of consideration from the issuance and sale of the Company’s common units, of which $5,000 was paid in cash and $4,000 was related to Merger consideration reinvested by certain New Colt investors into Colt Defense. | ||||||||
The following table summarizes the fair values of the assets acquired and the liabilities assumed at the Merger Date: | ||||||||
Cash and cash equivalents | $ | 3,791 | ||||||
Accounts receivable | 3,318 | |||||||
Inventories | 7,585 | |||||||
Property and equipment | 5,182 | |||||||
Other assets | 3,090 | |||||||
Intangible assets with finite lives | 9,340 | |||||||
Trademarks | 50,100 | |||||||
Goodwill | 36,974 | |||||||
Total assets acquired | 119,380 | |||||||
Accounts payable and accrued expenses | 8,808 | |||||||
Customer advances and deferred revenue | 1,832 | |||||||
Capital lease obligations | 393 | |||||||
Pension and retirement liabilities | 9,357 | |||||||
Deferred tax liabilities | 16,447 | |||||||
Total liabilities assumed | 36,837 | |||||||
Net assets acquired | $ | 82,543 | ||||||
The Company, with the assistance of a third party valuation firm, valued the Colt brand and related trademarks by comparing the value of the royalty rate inherent in the prepaid license fee to the current market rate for such a license based upon both the value of the Colt brand and related trademarks in both the defense and commercial marketplace utilizing a relief from royalty methodology. | ||||||||
The Company, with the assistance of a third party valuation firm, determined the fair value of the finite-lived intangible assets which includes $5,240 of existing license agreements, valued based on a discounted cash flow approach, which represents the estimated fair value of New Colt license agreements for licensing the Colt trade marks to various third parties, $2,970 of developed technology, valued based on a relief from royalty method, which represents the estimated fair value of designs, trade secrets, materials, specifications and other proprietary intellectual property included in the technical data packages and related manufacturing processes and know-how and $1,130 of backlog, valued based on an excess earnings method, which represents the estimated fair value of unfilled contractual orders from customers. The weighted average useful lives of the acquired existing license agreements, developed technology and backlog were 6 years, 20 years, and 3 years respectively. In addition, the Company, with the assistance of a third party valuation firm, valued the Colt brand and related trade marks by comparing the value of the royalty rate inherent in the license (see Note 8,“Goodwill, Trademarks and Other Intangible Assets”) to the current market rate for such a license based upon both the value of the Colt brand and related trade marks in both the defense and the commercial marketplace utilizing a relief from royalty methodology. | ||||||||
Deferred income taxes arise from temporary differences between tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover the deferred tax assets acquired through the acquisition of New Colt, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax-planning strategies and results of recent operations. In projecting future taxable income for New Colt, the Company began with historical results adjusted to include the $50,000 Term Loan (see Note 10, “Notes Payable and Long-Term Debt”) and related interest expense, incorporated assumptions including the amount of future state and federal pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying business. Based on the analysis performed, the Company believes, as of the acquisition date, that it is more likely than not that the benefit from New Colt’s deferred tax assets will not be realized. In recognition of this risk, the Company provided a valuation allowance against New Colt’s deferred tax assets as part of the Company’s purchase accounting adjustments. | ||||||||
Goodwill is the excess of the purchase price of an acquired business over the fair value of net assets acquired. Goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if indicators of impairment arise. The $36,974 of goodwill is not deductible for federal income tax purposes. | ||||||||
The following table reflects the unaudited pro forma operating results of the Company for three and nine months ended September 29, 2013, which gives effect to the Merger with New Colt as if it had occurred on January 1, 2012. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of the operating results that would have occurred had the Merger been effective January 1, 2012, nor are they intended to be indicative of results that may occur in the future. The underlying pro forma information includes historical financial results of the Company and New Colt adjusted for certain items including depreciation and amortization expense associated with the assets acquired, the Company’s expense related to financing arrangements and the elimination of intercompany transactions. The pro forma information does not include the effects of any synergies or cost reduction initiatives related to the Merger. | ||||||||
Unaudited Pro Forma | Unaudited Pro Forma | |||||||
Three Months Ended | Nine Months Ended | |||||||
September 29, 2013 | September 29, 2013 | |||||||
(As Revised) | (As Revised) | |||||||
Net sales | $ | 73,246 | $ | 240,171 | ||||
Net income (loss) | 8,647 | 19,189 | ||||||
Pro forma net income for the three and nine months ended September 29, 2013 were adjusted to include $194 and $3,402 respectively, of additional interest expense related to the Company’s $50,000 Term Loan and to include $80 and $1,408, respectively, of additional expense related to the amortization of finite-lived intangible assets. | ||||||||
Restructuring_Costs
Restructuring Costs | 9 Months Ended | ||||
Sep. 28, 2014 | |||||
Restructuring Costs | ' | ||||
Restructuring Costs | ' | ||||
Note 4 Restructuring Costs | |||||
During the third and fourth quarters of the year ended December 31, 2013, as restated, the Company recorded restructuring costs of $1,118 for restructuring actions that were initiated as a result of the Merger with New Colt. Of these costs, $336 is being reimbursed from an escrow established at the time of the Merger and $782 was recorded as operating expenses. The costs consist of severance, continuation of benefits and other compensation-related expenses. These actions, which have been completed, resulted in a workforce reduction of 10 salaried employees. Restructuring accruals are included in accounts payable, accrued expenses and other long-term liabilities on the Consolidated Balance Sheets. | |||||
The following table summarizes the Company’s restructuring activity for the nine months ended September 28, 2014: | |||||
Restructuring accruals at December 31, 2013 | $ | 706 | |||
Accrual reversal | (76 | ) | |||
Utilization | (491 | ) | |||
Balance at September 28, 2014 | $ | 139 | |||
During the third quarter of 2014, the Company received the remaining $268 for the reimbursement of restructuring costs from an escrow established at the time of the Merger. | |||||
Accounts_Receivable
Accounts Receivable | 9 Months Ended |
Sep. 28, 2014 | |
Accounts Receivable | ' |
Accounts Receivable | ' |
Note 5 Accounts Receivable | |
Accounts receivable are net of an allowance for doubtful accounts of $68 and $78 at September 28, 2014 and December 31, 2013, respectively. | |
Inventories
Inventories | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Inventories | ' | |||||||
Inventories | ' | |||||||
Note 6Inventories | ||||||||
The following table sets forth a summary of inventories, net of reserves at the lower of cost or market: | ||||||||
September 28, 2014 | December 31, 2013 | |||||||
Raw materials | $ | 43,251 | $ | 43,469 | ||||
Work in process | 20,627 | 9,476 | ||||||
Finished products | 12,675 | 13,729 | ||||||
$ | 76,553 | $ | 66,674 | |||||
Property_and_Equipment
Property and Equipment | 9 Months Ended | |||||||||
Sep. 28, 2014 | ||||||||||
Property and Equipment | ' | |||||||||
Property and Equipment | ' | |||||||||
Note 7Property and Equipment | ||||||||||
Property and equipment are recorded at cost. Depreciation of building and equipment (including assets recorded under capital leases) and amortization of leasehold improvements are computed using the straight-line method over the estimated useful life of the assets, or for leasehold improvements, over the remaining life of the lease term if shorter. | ||||||||||
Expenditures that improve or extend the lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. | ||||||||||
The fair value of the property and equipment acquired as a result of the Merger are allocated to machinery and equipment, furniture, fixtures and leasehold improvements and construction in process was $4,420, $30 and $732, respectively. | ||||||||||
Property and equipment consist of the following as of: | ||||||||||
Estimated | ||||||||||
September 28, 2014 | December 31, 2013 | Useful Life | ||||||||
Land | $ | 322 | $ | 338 | - | |||||
Building | 2,528 | 2,653 | 33 | |||||||
Machinery and equipment | 51,812 | 47,476 | 10-Jul | |||||||
Furniture, fixtures and leasehold improvements | 7,545 | 7,081 | 5-Mar | |||||||
62,207 | 57,548 | |||||||||
Less accumulated depreciation and amortization | (36,387 | ) | (32,152 | ) | ||||||
25,820 | 25,396 | |||||||||
Construction in process | 1,934 | 5,337 | ||||||||
Property and equipment, net | $ | 27,754 | $ | 30,733 | ||||||
Goodwill_Trademarks_and_Other_
Goodwill, Trademarks and Other Intangible Assets | 9 Months Ended | ||||||||||||
Sep. 28, 2014 | |||||||||||||
Goodwill, Trademarks and Other Intangible Assets | ' | ||||||||||||
Goodwill, Trademarks and Other Intangible Assets | ' | ||||||||||||
Note 8Goodwill, Trademarks and Other Intangible Assets | |||||||||||||
Goodwill | |||||||||||||
Goodwill is tested for impairment annually as of the beginning of the Company’s fourth fiscal quarter, or when events or circumstances indicate that its value may have declined. Impairment exists when the carrying amount of goodwill exceeds its fair market value. Management estimates the fair value of each reporting unit primarily using the income approach. Specifically the discounted cash flow (“DCF”) model was utilized for the valuation of each reporting unit. Management develops cash flow forecasts based on existing firm orders, expected future orders, contracts with suppliers, labor agreements and general market conditions. The Company discounts the cash flow forecasts using the weighted average cost of capital method at the date of evaluation. The Company also calculates the fair value of its reporting units using the market approach in order to corroborate its DCF model results. These methodologies used in the current year are consistent with those used in the prior year. | |||||||||||||
The following table sets forth the changes in the carrying amount of goodwill for the Company as of and for the nine months ended September 28, 2014: | |||||||||||||
Total | |||||||||||||
Balance at December 31, 2013 | $ | 51,225 | |||||||||||
Effect of foreign currency translation | (476 | ) | |||||||||||
Balance at September 28, 2014 | $ | 50,749 | |||||||||||
As of September 28, 2014, the Company had $41.1 million and $9.6 million of goodwill assigned to its West Hartford and Colt Canada reporting units, respectively. | |||||||||||||
Trademarks | |||||||||||||
In connection with the Merger, the Company recorded an indefinite-lived intangible asset of $50,100 for the Colt brand and related trademarks. The Company, with the assistance of a third party valuation firm, valued the Colt brand and related trademarks by comparing the value of the royalty rate inherent in the prepaid license fee to the current market rate for such a license based upon both the value of the Colt brand and related trademarks in both the defense and the commercial marketplace utilizing a relief from royalty methodology. | |||||||||||||
Impairment Evaluation | |||||||||||||
During the first half of 2014, the Company has experienced a continued decrease in the demand for commercial rifles. The Company concluded that a triggering event had occurred and an interim impairment test for indefinite lived intangible assets, Goodwill and Trademarks, was required as of June 29, 2014. Management developed cash flow forecasts based on existing firm orders, expected future orders, contracts with suppliers, labor agreements and general market conditions. The Company, with the assistance of a third party valuation firm, discounted the cash flow forecasts using the weighted average cost of capital method as of June 29, 2014. The Company also calculated the fair value of its reporting units using the market approach in order to corroborate its DCF model results. Based on completion of Step 1 of the impairment analysis for indefinite lived intangible assets the fair value of the Company’s indefinite lived intangible assets, both goodwill and trademarks, exceeds the book value and therefore the Company concluded no impairment existed as of June 29, 2014. | |||||||||||||
Subsequent to the filing of the Company’s quarterly results for the three and six months ended June 29, 2014, the Company has seen a continued decrease in demand for MSR’s, a decline in demand for the Company’s commercial handguns, and delays in the anticipated timing of U.S. Government and certain international sales. The Company considered these adverse changes in the Company’s business climate to be a triggering event as of September 28, 2014. Therefore, in addition to the impairment analysis performed as of June 29, 2014 the Company performed an impairment analysis as of September 28, 2014 to determine the impact that a material decrease in the Company’s sales, resulting from the aforementioned factors would have on the Company’s valuation. The Company, with assistance of a third party valuation firm, discounted the cash flow forecasts using the weighted average cost of capital method as of September 28, 2014. The Company also calculated the fair value of its reporting units using the market approach to corroborate its discounted cash flows model results. Based on completion of step one of the impairment analysis for indefinite lived intangible assets, the Company determined that the fair value of the Company’s indefinite lived intangible assets, including goodwill and trademarks, exceeds the book value, and therefore, the Company has concluded no impairment existed as of September 28, 2014. The Company has two reporting units as of September 28, 2014, West Hartford, including all of the Company’s domestic operations and Colt Canada. The estimated fair value as a percentage of the carrying value of the Company’s West Hartford and Colt Canada reporting units approximated 110% and 133%, respectively, and as such the fair value of the Company’s West Hartford reporting unit didn’t significantly exceed its carrying value. | |||||||||||||
Net sales and operating income growth assumptions and the risk-adjusted discount rate, which represents the weighted average cost of capital, have the most significant influence on the estimation of the fair value of the Company’s reportable segment. Under the income approach, specifically the discounted cash flow method, net sales and operating income growth rate assumptions were used to estimate cash flows in future periods. Growth rates were based on current levels of backlog, the retention of existing customers and the Company’s ability to introduce new products. If gross margin assumptions for the Company’s West Hartford reporting unit were to decline by approximately 1% per annum, the West Hartford reporting unit may not pass step one and step two could result in a non-cash goodwill impairment charge. The factors that affect the level of estimated cash flows within the West Hartford reporting unit include, but are not limited to: (1) declines in consumer demand for commercial rifles and handguns, (2) delays in anticipated timing of U.S. Government orders, (3) delays in the timing of international sales which require certain regulatory approvals and (4) the Company’s ability to successfully launch new products. Management utilized a discount rate of 18% to estimate the present value of future cash flows. The discount rate was based upon a build-up of market data from similar companies and reflected uncertainty related to the Company’s ability to achieve its forecasted results. Holding all other assumptions constant, an increase in the rate used to discount the expected future cash flows of approximately 175 basis points would reduce the fair value of the West Hartford reporting unit such that the reporting unit would not pass step one and step two cold result in a non-cash impairment charge. | |||||||||||||
Management’s judgment and assumptions are required in performing the impairment tests for all reporting units with goodwill. While management expects future operating improvements to result from improving commercial rifle and handgun demand, the resumption of fulfilling certain U.S. Government orders and the introduction of new products there can be no assurance that such expectations will be met or that the fair value of the reporting units will continue to exceed their carrying value. If the fair value of either of the reporting units were to fall below its carrying value, a non-cash impairment charge to income from operations could result. | |||||||||||||
Intangible Assets | |||||||||||||
The Company reviews long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Impairment losses, where identified, are determined as the excess of the carrying value over the estimated fair value of the long-lived asset. The Company assesses the recoverability of the carrying value of assets held for use based on a review of projected, undiscounted cash flows. When long-lived assets are reclassified to “held for sale”, the Company compares the asset’s carrying amount to its estimated fair value less cost to sell to evaluate impairment. No long-lived assets have been reclassified to held for sale for any period presented. | |||||||||||||
In connection with the Merger, the Company recorded finite-lived intangible assets of $9,340 which includes $5,240 of existing license agreements which represents the estimated fair value of New Colt license agreements for licensing the Colt trademarks to various third parties, $2,970 of developed technology which represents the estimated fair value of designs, trade secrets, materials, specifications and other proprietary intellectual property included in the technical data packages and related manufacturing processes and know-how and $1,130 of backlog which represents the estimated fair value of unfilled contractual orders from customers. The weighted average useful lives of the acquired existing license agreements, developed technology and backlog were 6 years, 20 years and 3 years, respectively. | |||||||||||||
The net carrying value of the Company’s intangible assets with finite lives follows: | |||||||||||||
As of September 28, 2014 | |||||||||||||
Gross | Estimated | ||||||||||||
Carrying | Accumulated | Useful | |||||||||||
Amount | Amortization | Net | Life | ||||||||||
Customer relationship Canadian Government | $ | 2,257 | $ | (702 | ) | $ | 1,555 | 30 | |||||
Customer relationships other | 5,869 | (4,124 | ) | 1,745 | 20 | ||||||||
License agreements | 5,240 | (2,019 | ) | 3,221 | 6 | ||||||||
Backlog | 1,694 | (1,047 | ) | 647 | 3 | ||||||||
Technology-based intangibles | 6,580 | (2,950 | ) | 3,630 | 15-20 | ||||||||
$ | 21,640 | $ | (10,842 | ) | $ | 10,798 | |||||||
As of December 31, 2013 | |||||||||||||
Gross | Estimated | ||||||||||||
Carrying | Accumulated | Useful | |||||||||||
Amount | Amortization | Net | Life | ||||||||||
Customer relationship Canadian Government | $ | 2,369 | $ | (678 | ) | $ | 1,691 | 30 | |||||
Customer relationships other | 6,160 | (4,077 | ) | 2,083 | 20 | ||||||||
License agreements | 5,240 | (805 | ) | 4,435 | 6 | ||||||||
Backlog | 1,722 | (604 | ) | 1,118 | 3 | ||||||||
Technology-based intangibles | 6,580 | (2,492 | ) | 4,088 | 15 - 20 | ||||||||
$ | 22,071 | $ | (8,656 | ) | $ | 13,415 | |||||||
The Company expects to record annual amortization expense of $3,251, $2,766, $1,910, $1,171, and $859 for 2014, 2015, 2016, 2017 and 2018, respectively. | |||||||||||||
Liquidity
Liquidity | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Liquidity | ' | |||||||
Liquidity | ' | |||||||
Note 9 Liquidity | ||||||||
During the third quarter of 2014, the Company faced increasing liquidity challenges as a result of several recent business trends impacting the Company’s current and forecasted revenues and cash flows. These trends included the continued decline in market demand for the Company’s commercial MSR, recent declines in demand for the Company’s commercial handguns, and delays in anticipated timing of U.S. Government and certain international sales. As a result, the Company expects to report lower revenues and Adjusted EBITDA for the year-ended December 31, 2014 than it had previously forecasted. These trends are expected to continue to put pressure on the Company’s liquidity for the foreseeable future. | ||||||||
Management’s plan to mitigate the business risk associated with the Company’s increased liquidity challenges include: (i) seeking revenue growth across all sales channels, (ii) executing initiatives designed to optimize the Company’s performance and reduce costs, (iii) managing inventory levels for positive cash flow by focusing the production schedule on the Company’s backlog of firm commitments, (iv) working closely with U.S. Government regulators to obtain timely approval of international sales, and (v) seeking ways to restructure the Company’s unsecured debt to reduce overall debt service costs. | ||||||||
As announced in the Company’s Form 12b-25 filed on November 12, 2014, there was uncertainty about whether the Company would have the cash necessary to pay its November 17, 2014 Senior Notes interest payment. On November 17, 2014 the Company entered into the MS Term Loan, a $70,000 senior secured term loan facility with Wilmington Savings Fund Society, FSB, as agent and Morgan Stanley Senior Funding Inc., as lender, which replaced the Company’s existing Term Loan agreement and provided the Company $4,101 of additional liquidity. The MS Term Loan also enabled the Company to make its November 17, 2014 Senior Notes interest payment of $10,938. In addition, the lenders, under the Company’s existing Credit Agreement (see Note 10 “Notes Payable and Long-Term Debt — Credit Agreement”), also agreed to amendments to the Credit Agreement which allowed the Company to enter into the MS Term Loan and provided for additional liquidity through a modification of excess availability thresholds. | ||||||||
After giving effect to the aforementioned market and business challenges as well as the sales opportunities that the Company believes exist, the Company has forecasted revenue and Adjusted EBITDA growth in 2015. There can be no assurance that the actual demand for the Company’s commercial MSRs or commercial handguns will meet the Company’s internal forecast. In addition, there can be no assurance that U.S. Government or international sales will take place as the Company has forecasted primarily due to a U.S. Government regulatory approval process which is difficult to predict. As a result of these factors, and notwithstanding the additional cash the Company obtained from the MS Term Loan, risk exists with respect to the Company achieving its internally forecasted results and projected cash flows for the remainder of 2014 and 2015. Absent the Company achieving its internal forecast for the remainder of 2014 and 2015 and the successful execution of Management’s strategy, addressing other long-term debt such as the Senior Notes, it is probable that the Company may not have sufficient cash and cash equivalents on-hand along with availability under its Credit Agreement, as amended, to be able to meet its obligations as they come due over the next 12 months, including the Company’s May 15, 2015 Senior Notes interest payment of $10,938. | ||||||||
As it is probable that the Company may not have sufficient liquidity to be able to make its May 15, 2015 Senior Notes interest payment without meeting the Company’s internal projections (including addressing the Company’s Senior Notes), the Company’s long-term debt has been classified as current in the consolidated balance sheet. Currently the Company does not have sufficient funds to repay the debt upon an actual acceleration of maturity. In the event of an accelerated maturity, the Company’s lenders may take actions to secure their position as creditors and mitigate their potential risks. These events would adversely impact the Company’s liquidity. These factors raise substantial doubt about the Company’s ability to continue as a going concern. | ||||||||
The MS Term Loan and Credit Agreement contain a covenant requiring the Company to deliver audited financial statements within 90 days following each fiscal year, together with an audit opinion that does not contain a “going concern” explanatory paragraph. The Company will be re-filing under current date its 2013 Form 10-K/A sometime before December 31, 2014 in response to United States Security and Exchange Commission (“SEC”) comments on the 2013 10-K. The SEC comments primarily relate to the inclusion of certain certifications under Section 906 of Sarbanes-Oxley and do not require any changes to the financial statements for the year-ended December 31, 2013, as restated. In connection with the Company’s response to these comments and the re-filing of the 2013 Form 10-K/A, management expects its independent registered public accounting firm will issue an audit report that contains a “going concern” explanatory paragraph. The Company is in discussions with, and expects to receive a waiver from, each of our lenders in connection with the re-filing of the 2013 Form 10-K/A. | ||||||||
As of September 28, 2014, the Company had $3,963 of cash and cash equivalents and $2,113 of availability under its Credit Agreement. As of November 20, 2014, the Company has $8,233 of cash and cash equivalents and $2,473 of availability under its Credit Agreement (see Note 10 “Notes Payable and Long-Term Debt”). | ||||||||
The Company’s foreign and domestic cash and cash equivalents as of September 28, 2014 and December 31, 2013, respectively, are as follows: | ||||||||
September 28, 2014 | December 31, 2013 | |||||||
United States (1) | $ | 2,029 | $ | 8,363 | ||||
Canada (2) | 1,911 | 4,213 | ||||||
Netherlands (3) | 23 | 18 | ||||||
Total cash and cash equivalents | $ | 3,963 | $ | 12,594 | ||||
-1 | United States includes the following legal entities: Colt Defense LLC, New Colt Holding Corp., Colt’s Manufacturing Company LLC and Colt Defense Technical Services LLC | |||||||
-2 | Canada includes the following legal entity: Colt Canada Corporation | |||||||
-3 | Netherlands includes the following legal entity: Colt International Coöperatief U.A. | |||||||
Due to the Company’s current liquidity situation, during the three months ended September 28, 2014 Colt International recorded a deferred tax liability of $1,369 on the undistributed earnings from Colt Canada because the Company no longer considers Colt Canada’s earnings permanently reinvested (see Note 12 “Income Taxes”). | ||||||||
If the Company repatriated cash and cash equivalents, based on the Company’s current legal entity structure as described in Note 1 Nature of Business, the Company would not be required to accrue and pay U.S. income taxes to repatriate these funds. The Company’s cost of repatriation would be in the form of a 5% withholding tax which Colt Canada is required to withhold on dividends when declared and paid to Colt International under the terms of the treaty between Canada and the Netherlands. There is no further income or withholding tax on dividends when declared and paid to Colt Defense. | ||||||||
Notes_Payable_and_LongTerm_Deb
Notes Payable and Long-Term Debt | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Notes Payable and Long-Term Debt | ' | |||||||||||||
Notes Payable and Long-Term Debt | ' | |||||||||||||
Note 10Notes Payable and Long-Term Debt | ||||||||||||||
Term Loan | ||||||||||||||
On July 12, 2013, in connection with the Merger, the Company entered into the Term Loan agreement, which matures on November 15, 2016. The Term Loan bears interest at a variable rate of 9.75% plus the greater of the three month LIBOR rate or 1%. Interest is payable quarterly in arrears on the first day of the subsequent calendar quarter. Under the Term Loan, the Company’s obligations are secured by a first priority security interest in the Company’s intellectual property and a second priority security interest in substantially all other assets. The Term Loan was issued at a discount of $2,293, which represents the lenders fees and legal expenses. The Company also incurred $2,120 in financing fees. The discount and the financing fees are being amortized as additional interest expense over the life of the indebtedness. | ||||||||||||||
On August 6, 2014, the Company entered into Amendment No. 1 to the Term Loan (the “Term Loan Amendment”). Absent an amendment to the Term Loan, the Company would have been in violation of certain of its financial covenants as of September 28, 2014. The Term Loan Amendment is discussed in more detail in the following paragraph. | ||||||||||||||
The Term Loan Amendment provided that (i) the financial covenants were eliminated for the rolling four quarter periods ended June 29, 2014 and September 28, 2014 and modified for the rolling four quarter period ended December 31, 2014, (ii) the Company was granted the option to not pay principal installment payments of $1,875 due on September 30, 2014, December 31, 2014 and March 31, 2015, (iii) the applicable prepayment premium was increased from 2% to 6% of the outstanding principal balance of the Term Loan, (iv) the date of the applicable prepayment determination was extended to July 31, 2016 and (v) the Company was been granted a 30 day extension to deliver financial information to the Term Loan lenders to allow for completion of the restatement of the Company’s 2013 10-K (see Note 2, Summary of Significant Accounting Policies). Additionally, the Company agreed to pay an amendment fee of $475 that will be capitalized and paid-in-kind by being added to the outstanding principal balance of the Term Loan. | ||||||||||||||
The Term Loan Amendment fee of $475, along with Term Loan lenders legal fees to be paid by the Company in conjunction with the Term Loan Amendment, were recorded as additional debt discount in the third quarter of 2014 and amortized as interest expense over the remaining term of the Term Loan. The Company expensed costs incurred by the Company in conjunction with the Term Loan Amendment in the third quarter of 2014. The Company exercised its option not to pay the principal installment payment due on September 30, 2014. | ||||||||||||||
As of September 28, 2014 and December 31, 2013, the Company was subject to four financial covenants as defined in the Term Loan agreement: (i) minimum EBITDA (“Minimum EBITDA”), (ii) fixed charge coverage ratio (“FCCR”), (iii) secured coverage ratio (“Secured Coverage Ratio”) and (iv) maximum allowed capital expenditures (“Capital Expenditures”). Prior to Amendment No. 1, the required Minimum EBITDA for the four quarters ended September 28, 2014 and December 31, 2013 was $40,000. Actual Minimum EBITDA for the four quarters ended September 28, 2014 and December 31, 2013 was $31,833 and $63,293, respectively. Amendment No. 1 eliminated the Minimum EBITDA covenant for the four quarters ended September 28, 2014. Prior to Amendment No. 1, the required FCCR for the four quarters ended September 28, 2014 and December 31, 2013 was a minimum of 0.90:1.00. The actual FCCR for the four quarters ended September 28, 2014 and December 31, 2013 was 0.75:1.00 and 1.21:1.00, respectively. Amendment No. 1 eliminated the FCCR covenant for the four quarters ended September 28, 2014. Prior to Amendment No. 1, the required Secured Coverage Ratio for the four quarters ended September 28, 2014 and December 31, 2013 was a ratio not greater than 1.20:1.00. The actual Secured Coverage Ratio for the four quarters ended September 28, 2014 and December 31, 2013 was 2.02:1.00 and 0.89:1.00, respectively. Amendment No. 1 eliminated the Secured Leverage Ratio covenant for the four quarters ended September 28, 2014. The maximum allowed Capital Expenditures for the four quarters ended September 28, 2014 and December 31, 2013 is $12,000. The actual Capital Expenditures for the four quarters ended September 28, 2014 and December 31, 2013 were $3,693 and $8,598, respectively. Amendment No. 1 did not modify the Capital Expenditure covenant. | ||||||||||||||
The Term Loan agreement also contained non-financial covenants and other restrictions which limit the Company’s ability to incur additional indebtedness, make investments or certain payments, pay dividends (other than member distributions to support the Company’s member related taxes) enter into a merger and acquire or sell assets. | ||||||||||||||
The Company was in compliance with its Term Loan covenants, as amended, as of September 28, 2014 (pursuant to the Term Loan Amendment the Company was not required to satisfy any particular financial covenant levels for the quarter ending September 28, 2014 other than with respect to the maximum allowed capital expenditures) and December 31, 2013. | ||||||||||||||
On September 30, 2014, the Company made a Term Loan interest payment of $1,318. | ||||||||||||||
On November 12, 2014, the Company entered into Amendment No. 2 to the Term Loan, whereby, the Term Loan lenders consented to extending the delivery date to November 21, 2014, for the Company to deliver financial statements for the month and fiscal quarter ended September 28, 2014. | ||||||||||||||
On November 17, 2014, the Company entered into a $70,000 senior secured term loan facility with Wilmington Savings Fund Society, FSB, as agent and Morgan Stanley Senior Funding Inc., as lender (see Note 22, “Subsequent Events”) which replaced the Company’s Term Loan. The existing Term Loan agreement did not permit pre-payment at such time and thus, the Company agreed with the existing Term Loan lenders to pay a premium of $4,318 in addition to the outstanding principal and accrued interest balance. As a result of the Company entering into the MS Term Loan which replaced the Company’s existing Term Loan, the Term Loan has been reflected as a current liability as of September 28, 2014 in the consolidated balance sheet. The MS Term Loan (i) does not contain financial covenants or amortization provisions similar to those provisions in the Company’s existing Term Loan agreement; (ii) provides for the accrual of interest on an 8% cash and 2% payment-in-kind basis; and (iii) will mature no later than August 15, 2018 subject to the satisfaction of certain conditions. | ||||||||||||||
Credit Agreement | ||||||||||||||
On September 29, 2011, the Company entered into a Credit Agreement with Wells Fargo Capital Finance, LLC (“WFCF”). Under the terms of the Credit Agreement, senior secured revolving loans are available up to $50,000, inclusive of $20,000 available for letters of credit. Revolving loans are subject to, among other things, the borrowing base, which is calculated monthly based on specified percentages of eligible accounts receivable and inventory and specified values of fixed assets. Under the Credit Agreement, the Company’s obligations are secured by a first-priority security interest in substantially all of its assets (other than intellectual property), including accounts receivable, inventory and certain other collateral, and a second-priority security interest in its intellectual property. The Credit Agreement matures on September 28, 2016. | ||||||||||||||
Borrowings under the Credit Agreement bear interest at a variable rate based on the London Inter-Bank Offered Rate (“LIBOR”), the Canadian Banker’s Acceptance Rate or the lender’s prime rate, as defined in the Credit Agreement, plus a spread. The interest rate spread on borrowing varies based on both the rate option selected and Colt’s quarterly average excess availability under the Credit Agreement. There is an unused line fee of .50% per annum, payable quarterly on the unused portion under the facility and a $40 annual servicing fee. | ||||||||||||||
The Credit Agreement limits the Company’s ability to incur additional indebtedness, make investments or certain payments, pay dividends (other than for member distributions to support member LLC-related taxes) and merge, acquire or sell assets. In addition, certain covenants would be triggered if excess availability were to fall below a specified level. Excess availability is determined as the lesser of the Company’s borrowing base or $50,000, reduced by outstanding obligations under the Credit Agreement and trade payables that are more than 60 days past due. The Credit Agreement has an excess availability threshold of $11,000. If excess availability is below $11,000, the Company would be required to be in compliance with a fixed charge coverage ratio, as defined in the Credit Agreement (“WFCF FCCR”). If the Company is not in compliance with the WFCF FCCR and below $11,000 in excess availability, the Company would not be able to borrow additional amounts under the Credit Agreement and would be in default of the Credit Agreement. In addition, if excess availability falls below $11,000 or an event of default occurs, the Company would be required to provide WFCF with more frequent compliance reporting and WFCF may also assume certain other contractual privileges. The Company’s available borrowing capacity as of September 28, 2014 was $2,113 which is the amount above the excess availability requirement. The Credit Agreement also contains customary events of default including, but not limited to, no material litigation or defaults under material contracts and no material adverse change. In connection with any borrowing requests, management must certify, among other things, to no defaults or event of default.. | ||||||||||||||
As of September 28, 2014, there were advances of $13,000 and $3,847 of letters of credit outstanding under the Credit Agreement. As of December 31, 2013, there was a $7,083 line advance and $3,486 of letters of credit outstanding under the Credit Agreement. As of November 20, 2014, there were advances of $16,000 and $3,815 of letters of credit outstanding under the Credit Agreement. | ||||||||||||||
As of September 28, 2014 and December 31, 2013, the Company was in compliance with all of the Credit Agreement covenants and restrictions, as amended, and the Company monitors its future compliance based on current and anticipated financial results. The WFCF FCCR for four consecutive quarters may not be less than 1.00:1.00. As of September 28, 2014 and December 31, 2013 the Company’s availability was in excess of $11,000 and therefore the WFCF FCCR was not in effect. If it had been in effect, the calculated WFCF FCCR for the four quarters ended September 28, 2014 and December 31, 2013 would have been 0.77:1.00 and 1.54:1.00, respectively. | ||||||||||||||
On March 22, 2013, the Company entered into Amendment No. 2 to the Credit Agreement, whereby, among other things, WFCF consented to the transaction pursuant to the Unit Repurchase Agreement. For additional information about this transaction, see Note 13, “Accumulated Deficit” in this Form 10-Q. | ||||||||||||||
On June 19, 2013, the Company entered into Amendment No. 3 to the Credit Agreement, whereby WFCF consented to the contribution of all the issued and outstanding equity interests issued by Colt Canada to Colt International so that Colt Canada would become a wholly-owned subsidiary of Colt International, and providing for Colt International to become a guarantor under the Credit Agreement. | ||||||||||||||
On July 12, 2013, the Company entered into Amendment No. 4 to the Credit Agreement, which provided for New Colt to become a guarantor and Colt’s Manufacturing Company LLC (“Colt’s Manufacturing”) to become a borrower under the Credit Agreement in connection with the Merger. | ||||||||||||||
On August 6, 2014, the Company entered into Amendment No. 5 to the Credit Agreement, whereby WFCF consented to, among other things, extending the delivery date to September 15, 2014 for the Company to deliver financial statements for the month and fiscal quarter ended June 29, 2014. | ||||||||||||||
On November 12, 2014 the Company entered into Amendment No. 6 to the Credit Agreement, whereby WFCF consented to extending the delivery date to November 21, 2014, for the Company to deliver financial statements for the month and fiscal quarter ended September 28, 2014. | ||||||||||||||
On November 17, 2014, the Company entered into amendment No. 7 to the Credit Agreement, whereby WFCF consented to amendments to the Credit Agreement necessary for the Company to enter into the MS Term Loan. These amendments include, among other things, (i) reducing the Senior Secured revolving loan availability from $50,000 to $33,000 and (ii) incorporating a minimum $7,500 excess availability threshold for borrowings. | ||||||||||||||
On November 21, 2014, the Company entered into Amendment No. 8 to the Credit Agreement, whereby WFCF consented to extending the delivery date to November 26, 2014, for the Company to deliver financial statements for the month and fiscal quarter ended September 28, 2014. | ||||||||||||||
Senior Notes | ||||||||||||||
On November 10, 2009, Colt Defense LLC and Colt Finance Corp., the Company’s 100%-owned subsidiary, jointly and severally co-issued $250,000 of unsecured Senior Notes under an indenture (“Indenture”). The Senior Notes bear interest at 8.75% and mature on November 15, 2017. Interest is payable semi-annually in arrears on May 15 and November 15. The Company issued the Senior Notes at a discount of $3,522 from par value. This discount is being amortized as additional interest expense over the life of the indebtedness. No principal repayments are required until maturity. | ||||||||||||||
The Senior Notes do not contain financial covenants that require the Company to maintain compliance with any financial ratios or measurements on a periodic basis. The Senior Notes do contain non-financial covenants that, among other things, limit the Company’s ability to incur additional indebtedness, enter into certain mergers or consolidations, incur certain liens and engage in certain transactions with its affiliates. In addition, the Indenture restricts the Company’s ability to pay dividends or make other Restricted Payments (as defined in the Indenture) to its members, subject to certain exceptions. Such restrictions are not expected to affect the Company’s ability to meet its cash obligations for the next twelve months. Additionally, the Senior Notes contain certain cross-default provisions with other indebtedness if such indebtedness in default aggregates to $20,000 or more. | ||||||||||||||
On June 19, 2013, the Company entered into a supplement to the Indenture by which Colt International, Colt Canada and CDTS became new subsidiary guarantors to the Senior Notes. As such, each agreed to jointly and severally guarantee the obligations under the Indenture. | ||||||||||||||
On July 12, 2013, the Company entered into a supplement to the Indenture, by which New Colt and Colt’s Manufacturing became parties to the Indenture and each agreed to jointly and severally guarantee the obligations under the Indenture. | ||||||||||||||
Each of the debt agreements certain cross-default provisions, whereby a default under one agreement represents a default under the others. | ||||||||||||||
The outstanding loan balances at September 28, 2014 and December 31, 2013 were as follows: | ||||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
Senior Notes | $ | 248,319 | $ | 247,984 | ||||||||||
Term Loan | 46,139 | 46,833 | ||||||||||||
Credit Agreement | 13,000 | 7,083 | ||||||||||||
Total debt | 307,458 | 301,900 | ||||||||||||
Less: current portion | (307,458 | ) | (12,083 | ) | ||||||||||
Long-term debt | $ | — | $ | 289,817 | ||||||||||
As a result of the liquidity concerns (see, Note 1, “Nature of Business — Going Concern” and Note 9, “Liquidity”), the Company’s outstanding debt has been reflected as a current liability as of September 28, 2014 in the consolidated balance sheet. | ||||||||||||||
The Company’s debt was recorded net of unamortized original issue and debt discounts of $3,517 at September 28, 2014 and $3,932 at December 31, 2013. | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
Amortization of discount | $ | 334 | $ | 280 | $ | 947 | $ | 486 | ||||||
Amortization of deferred financing costs | 577 | 575 | 1,788 | 1,403 | ||||||||||
In accordance with Rule 3-10(f) of SEC Regulation S-X, the Company and Colt Finance Corp., co-issuers of the Senior Notes, are not presenting condensed consolidating guarantor financial statements as Colt Defense LLC and Colt Finance Corp. have no independent assets or operations. All of the Company’s subsidiaries are 100% owned and have guaranteed the Company’s Senior Notes; and all of the guarantees are full, unconditional, joint and several. | ||||||||||||||
Accrued_Expenses
Accrued Expenses | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Accrued Expenses | ' | |||||||
Accrued Expenses | ' | |||||||
Note 11 Accrued Expenses | ||||||||
Accrued expenses consisted of: | ||||||||
September 28, 2014 | December 31, 2013 | |||||||
(As Restated) | ||||||||
Accrued compensation and benefits | $ | 4,243 | 7,154 | |||||
Accrued contract obligation expense | 2,365 | 1,194 | ||||||
Accrued federal, excise and other taxes | 2,643 | 4,902 | ||||||
Accrued interest | 9,508 | 2,879 | ||||||
Accrued commissions | 1,932 | 929 | ||||||
Other accrued expenses | 5,387 | 5,100 | ||||||
$ | 26,078 | $ | 22,158 | |||||
Income_Taxes
Income Taxes | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Income Taxes | ' | |||||||||||||
Income Taxes | ' | |||||||||||||
Note 12 Income Taxes | ||||||||||||||
Colt Defense is a limited liability company organized under the laws of Delaware. Colt Defense is treated as a partnership for federal and state income tax purposes and is not subject to U.S. federal or state income taxes. Consequently, all taxable income (loss) of Colt Defense is reported to its members for inclusion in their respective income tax returns. The limited liability company agreement of Colt Defense requires distributions to the members in any year in which there is U.S. taxable income. The member’s distribution is equal to the product of the highest combined marginal federal, state, or local income tax rate applicable to any member and the highest taxable income allocated to any one unit, to the extent that the Governing Board determines that sufficient funds are available. | ||||||||||||||
As a result of the Merger with New Colt effective July 12, 2013, Colt Defense owns 100% of New Colt, a C corporation organized under the laws of Delaware. New Colt is taxed as a corporation for U.S. federal and state income tax purposes. Through December 31, 2013, New Colt owned 100% of Colt’s Manufacturing, New Colt’s operating entity. | ||||||||||||||
Effective January 1, 2014 (see Note 1, “Nature of Business”), Colt Defense and New Colt each contributed their assets and operations to Colt’s Manufacturing. As a result, Colt Defense and New Colt collectively own 100% of Colt’s Manufacturing, the combined domestic operating entity of the Company. The Company estimated the fair value of the Colt Defense and New Colt contributions to determine the respective ownership percentages of Colt Defense and New Colt. The allocation of the fair value of the contributions to the individual assets and liabilities contributed is preliminary and subject to change. | ||||||||||||||
The combined operations of Colt’s Manufacturing are treated as a partnership for federal income tax purposes. Consequently, taxable income is computed at the partnership level to determine New Colt’s income tax expense and Colt Defense’s member distribution payable. In conjunction with the transaction, New Colt acquired a preferred investment in Colt’s Manufacturing and a common equity interest in exchange for its contribution. Colt Defense acquired the remaining common equity interest in exchange for its contribution. Since each member contributed assets, the Company is allocating the built in gain (the difference between fair market value and tax basis) back to the contributing member in accordance with a permitted method under Section 704(c) of the Internal Revenue Code. | ||||||||||||||
Colt Defense and CDTS, a wholly owned subsidiary, collectively own 100% of Colt International, a Dutch coöperatief. Colt International owns 100% of Colt Canada, a Canadian C corporation. The income (loss) of Colt Canada is subject to entity level Canadian federal and provincial taxes. On April 16, 2014, Colt Canada declared and paid a $2,000 dividend to Colt International. Under the terms of the treaty between Canada and The Netherlands, Colt Canada is required to withhold taxes on the dividends at a rate of 5%. | ||||||||||||||
During the three months ended September 28, 2014 Colt International recorded a deferred tax liability of $1,369 on the undistributed earnings of Colt Canada due to the fact that the Company no longer considers Colt Canada’s earnings permanently reinvested due to the Company’s liquidity position (see Note 9 “Liquidity”). | ||||||||||||||
The provision (benefit) for foreign income taxes is as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
Current | $ | 152 | $ | 12 | $ | 204 | $ | 747 | ||||||
Deferred | 1,358 | (220 | ) | 1,239 | (196 | ) | ||||||||
Total | $ | 1,510 | $ | (208 | ) | $ | 1,443 | $ | 551 | |||||
New Colt has a partnership interest in Colt’s Manufacturing in which the book basis of New Colt’s assets and liabilities contributed exceeds the tax basis of those assets and liabilities. Therefore, New Colt recorded a deferred tax liability with respect to their partnership interest at January 1, 2014. The requirement that the partnership use carryover basis with respect to the contributed assets resulted in the partnership’s basis in the assets being equal to New Colt’s investment in the partnership. | ||||||||||||||
A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. A significant portion of the value of New Colt’s asset contribution was attributed to indefinite lived intangible assets. Consequently, the exclusion of the portion of the contribution related the indefinite lived intangible asset from the deferred tax liability associated with the partnership interest would put New Colt in a net deferred tax asset position. The Company has established that it is more likely than not that the full amount of New Colt’s deferred tax assets will not be recognized in future years. Consequently, New Colt continues to maintain a valuation allowance on its net deferred tax assets. | ||||||||||||||
Pension_and_Postretirement_Ben
Pension and Postretirement Benefits | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Pension and Postretirement Benefits | ' | |||||||||||||
Pension and Postretirement Benefits | ' | |||||||||||||
Note 13 Pension and Postretirement Benefits | ||||||||||||||
As a result of the Merger in 2013, the Company had four noncontributory, domestic defined benefit pension plans (“Plans”) that covered substantially all eligible salaried and hourly U.S. employees. The bargaining unit Plans were combined on January 1, 2014 and the salaried Plans were combined on January 1, 2014. | ||||||||||||||
Effective December 31, 2012, the pension benefits under the two hourly defined benefit plans were frozen. The benefits under the two salaried defined benefit plans have been frozen since December 31, 2008. Accordingly, participants retain the pension benefits that have already accrued. However, no additional benefits have accrued since the effective date of the freeze. | ||||||||||||||
Pension expense for the New Colt plans is included in the amounts below from the Merger Date. | ||||||||||||||
The components of income recognized in the Company’s Consolidated Statements of Operations for pension plans are as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
Interest cost | $ | 396 | $ | 368 | $ | 1,187 | $ | 918 | ||||||
Expected return on assets | (478 | ) | (419 | ) | (1,433 | ) | (986 | ) | ||||||
Amortization of unrecognized loss | 47 | 107 | 140 | 321 | ||||||||||
Net periodic cost (income) | $ | (35 | ) | $ | 56 | $ | (106 | ) | $ | 253 | ||||
The Company also provides certain postretirement health care coverage to retired U.S. employees who were subject to a collective bargaining agreement when they were employees. The cost of these postretirement benefits is determined actuarially and is recognized in the Company’s consolidated financial statements during the employees’ active working career. In connection with the Company’s collective bargaining agreement, it has capped certain retirees to approximately $250 (not in thousands) per employee per month. | ||||||||||||||
As a result of the Merger in 2013, the Company had two postretirement health care plans that applied to employees covered by the collective bargaining agreement. The postretirement health care plans were combined on April 1, 2014. Expense for the New Colt plan is included in the amounts below from the Merger Date. | ||||||||||||||
As a result of the workforce reduction in the second quarter of 2014 the Company recognized a $98 curtailment gain with respect to the Company’s postretirement health care plans. | ||||||||||||||
The components of cost recognized in the Company’s Consolidated Statements of Operations for postretirement health care coverage are as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
Service cost | $ | 173 | $ | 159 | $ | 519 | $ | 384 | ||||||
Interest cost | 233 | 201 | 700 | 446 | ||||||||||
Curtailment of postretirement health plan | — | — | (98 | ) | — | |||||||||
Amortization of unrecognized prior service costs | (38 | ) | (43 | ) | (113 | ) | (129 | ) | ||||||
Amortization of unrecognized loss | 33 | 61 | 99 | 184 | ||||||||||
Net periodic cost | $ | 401 | $ | 378 | $ | 1,107 | $ | 885 | ||||||
Accumulated_Deficit
Accumulated Deficit | 9 Months Ended |
Sep. 28, 2014 | |
Accumulated Deficit | ' |
Accumulated Deficit | ' |
Note 14 Accumulated Deficit | |
Colt Defense’s authorized capitalization consists of 1,000,000 common units, which include 18,878 nonvoting Class B common units, and 250,000 preferred units. Common units issued and outstanding as of both September 28, 2014 and December 31, 2013 were 132,174. No Class B common units or preferred units have been issued. | |
On March 22, 2013, Colt Defense purchased 31,165.589 common units (“Unit Repurchase”) from Blackstone Mezzanine Partners II-A L.P. and Blackstone Mezzanine Holdings II USS L.P. (collectively, “Blackstone Funds”) (representing 100% of the Colt Defense common membership units held by the Blackstone Funds) for an aggregate purchase price of $14,000 pursuant to an equity purchase agreement, dated as of March 22, 2013 (“Unit Repurchase Agreement”), by and among Colt Defense and the Blackstone Funds. In accordance with the Unit Repurchase Agreement, upon consummation of the Unit Repurchase, the Blackstone Funds delivered the certificates representing the common units held by the Blackstone Funds to Colt Defense for cancellation, and the rights of the Blackstone Funds under the Amended and Restated LLC Agreement, including appointment rights with respect to Colt Defense’s Governing Board, were terminated. The Unit Repurchase Agreement provided customary releases and indemnities for Colt Defense and the Blackstone Funds. | |
On July 12, 2013, the Company issued and sold 31,165.589 of Colt Defense common units to certain new and existing holders for $9,000 of consideration, of which $5,000 was paid in cash and $4,000 was related to Merger consideration reinvested by certain New Colt investors into Colt Defense. The Company used the $9,000 of consideration, together with the proceeds from the Term Loan and cash on hand, to fund the Merger and pay related fees and expenses. | |
In the first quarter of 2014 and 2013, respectively, there were no tax distribution payments to members. During the second quarter of 2014, the Company made tax distribution payments to members of $683 along with State of Connecticut members’ withholding payments of $530, both of which were accrued for in 2013 based on the Company’s 2013 taxable income. During the second quarter of 2013, the Company made tax distributions to members of $1,357 and no distributions to the State of Connecticut. During the third quarter of 2014 and 2013 the Company made tax distributions to members of $0 and $1,200, respectively. | |
Due to limitations on distributions to the Company’s members associated with the Company’s Term Loan, there was a $2,277 long term liability payable to members at September 28, 2014 and December 31, 2013, respectively. | |
Common_Unit_Compensation
Common Unit Compensation | 9 Months Ended |
Sep. 28, 2014 | |
Common Unit Compensation | ' |
Common Unit Compensation | ' |
Note 15 Common Unit Compensation | |
On March 1, 2012, the Governing Board approved the Colt Defense Long Term Incentive Plan (the “Plan”). The purpose of the Plan is to advance the interests of Colt Defense and its equity holders by providing a means to attract, retain and motivate key employees, advisors and members of the Governing Board. Awards under the Plan may consist of options, restricted units, restricted phantom units, performance units or other unit-based awards. A total of 18,878 nonvoting Class B common units have been reserved for issuance in connection with awards under the Plan. | |
Under the Plan, the exercise price of option awards is set at the grant date and may not be less than the fair market value per unit on that date. The term of each option is ten years from the grant date. The vesting periods, which vary by grant, may be time based, performance based or a combination thereof. Compensation expense equal to the grant date fair value of the option is generally recognized over the period during which the employee is required to provide service in exchange for the award or as the performance obligation is met. Fair value of the option was estimated on the date of grant using the Black-Scholes valuation method. | |
In 2013, options were granted for 5,300 common units at a weighted average exercise price of $288.78 (not in thousands). In the third quarter of 2014, options were granted for 3,000 common units at a weighted average exercise price of $288.78 (not in thousands). The Company’s common unit compensation expense, which is included in general and administrative expense in the consolidated statements of operations, was $13 and $0 for the three months ended September 28, 2014 and September 29, 2013, respectively. Common unit compensation expense was $95 and $0 for the nine month periods ended September 28, 2014 and September 29, 2013, respectively. | |
Transactions_with_Related_Part
Transactions with Related Parties | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Transactions with Related Parties | ' | |||||||
Transactions with Related Parties | ' | |||||||
Note 16 Transactions with Related Parties | ||||||||
In July 2007, Colt Defense entered into a financial advisory agreement with Sciens Management LLC (“Sciens Management”), which through its affiliates, may be deemed to beneficially own a substantial portion of Colt Defense’s limited liability interests and whose managing member is also a member of Colt Defense’s Governing Board. Under the terms of the agreement, the Company paid Sciens Management an aggregate annual retainer of $350. In July 2013, Colt Defense entered into a consulting services agreement (“Consulting Agreement”) with Sciens Institutional Services LLC (“Sciens Institutional”), an affiliate of Sciens Management. Affiliates of Sciens Institutional beneficially own a substantial portion of Colt Defense’s limited liability interests and Sciens Institutional’s managing member is a member of Colt Defense’s Governing Board. Under the terms of the Consulting Agreement, Sciens Institutional provides consulting services to Colt Defense for an aggregate annual fee of $650, payable quarterly in advance. | ||||||||
The costs for the services provided and the related expenses under the agreements with Sciens Institutional and Sciens Management were recorded within general and administrative expenses in the consolidated statements of operations and were $250 and $220 for the three months ended September 28, 2014 and September 29, 2013, respectively. The Company’s cost for these services were $750 and $436 for the nine months ended September 28, 2014 and September 29, 2013, respectively. | ||||||||
In July 2013, the Company entered into a services agreement (“Archives Agreement”) with Colt Archive Properties LLC (“Archives Properties”), one of the owners of which is a member of Colt Defense’s Governing Board and affiliates of which beneficially own a substantial portion of Colt Defense’s limited liability interests. Under the Archives Agreement, Colt agrees to provide designated employees to perform services for Archive Properties for an initial annual fee of $241, payable quarterly in arrears. The Company records revenue related to archive services as net sales and costs associated with providing archive services in cost of sales. | ||||||||
The Company leases its West Hartford facility from NPA Hartford LLC, which is beneficially owned by Sciens Management, for its corporate headquarters and primary manufacturing facility. The lease expires on October 25, 2015. For the three months ended September 28, 2014, and September 29, 2013, the rent expense under this lease was $210 and $210, respectively. Rent expense for the nine months ended September 28, 2014 and September 29, 2013 was $631 and $631 respectively. | ||||||||
In addition, Colt Defense LLC Profit Sharing Plan, a Colt Defense LLC unit holder, owns 100% of Colt Defense Employee Plan Holding Corp. which has a wholly owned subsidiary Colt Security LLC, which provides security guards for the Company. | ||||||||
Prior to the Merger, transactions with New Colt were as follows: | ||||||||
Nine Months | ||||||||
Three Months Ended | Ended | |||||||
September 29, 2013 | September 29, 2013 | |||||||
Net sales to New Colt | $ | 23,321 | $ | 67,156 | ||||
Purchases from New Colt | 8 | 1,894 | ||||||
Administration and services fees charged to New Colt | 442 | 1,325 | ||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Commitments and Contingencies | ' | |||||||||||||
Commitments and Contingencies | ' | |||||||||||||
Note 17 Commitments and Contingencies | ||||||||||||||
Standby Letters of Credit | ||||||||||||||
A summary of standby letters of credit issued principally in connection with performance and warranty bonds established for the benefit of certain international customers is as follows: | ||||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
Standby letters of credit secured by restricted cash | $ | 1,172 | $ | 1,185 | ||||||||||
Standby letters of credit under Credit Agreement | 3,854 | 3,486 | ||||||||||||
Guarantees of standby letters of credit established by a sales agent on behalf of Colt | 74 | 74 | ||||||||||||
Industrial Cooperation Agreements | ||||||||||||||
The Company also had certain industrial cooperation agreements, which stipulate its commitments to provide offsetting business to certain countries that have purchased Colt’s products. Colt generally settles its offset purchase commitments under industrial cooperation agreements through offsetting business and/or cooperating with other contractors on their spending during the related period. Additionally, the Company identifies future purchases and other satisfaction plans for the remainder of the offset purchase commitment period. Should there be a projected net purchase commitment after such consideration; Colt accrues the estimated cost to settle the offset purchase commitment. | ||||||||||||||
The Company’s remaining gross offset purchase commitment is the total amount of offset purchase commitments reduced for claims submitted and approved by the governing agencies. At September 28, 2014 and December 31, 2013, remaining gross offset purchase commitments totaled $65,325 and $64,131, respectively. The Company has evaluated the settlement of its remaining gross offset purchase commitments through planned spending and other satisfaction plans to determine the net offset purchase commitment. The Company has accrued $1,998 and $1,639 as of September 28, 2014 and December 31, 2013, respectively, based on the estimated cost of settling the remaining net offset purchase commitment. | ||||||||||||||
U.S. Government M240 and M249Programs | ||||||||||||||
During the year ended December 31, 2013, as restated, the Company recorded a contract obligation expense of $3,381 and a M240 Program contract modification, reduction of net sales of $6,820, respectively, for an aggregate reduction in gross profit of $10,201 related to the Company’s M240 Program with the U.S. Government. The M240 Program contract obligation expense and the M240 Program contract modification, relate to estimated costs (contract obligation expense) to retrofit products previously sold to the U.S. Government as well as the incorporation of changes into the Company’s M240 Program product design and production processes and the reduced funding of (contract modification) the M240 Program. | ||||||||||||||
During 2014, the Company, based on additional available information, continually assessed the M240 Program accruals and determined that an incremental $311, $4,779 and $1,722 of M240 Program contract obligation expense was required for the three months ended March 30, 2014, June 29, 2014 and September 28, 2014, respectively. The incremental M240 Program contract obligation expense related to the following: | ||||||||||||||
For the Nine Months | ||||||||||||||
For the Three Months Ended | Ended | |||||||||||||
March 30, 2014 | June 29, 2014 | September 28, 2014 | September 28, 2014 | |||||||||||
Inventory Reserves | $ | 311 | $ | 1,997 | $ | 810 | $ | 3,118 | ||||||
Contract Obligation | — | 2,782 | 912 | 3,694 | ||||||||||
Incremental Costs | $ | 311 | $ | 4,779 | $ | 1,722 | $ | 6,812 | ||||||
The incremental contract obligation expense recorded was based on the Company’s best estimate of the costs to satisfy the M240 Program obligations given a range of possible outcomes. The Company believes the actual costs to satisfy the obligation may vary from the revised estimate. | ||||||||||||||
As of September 28, 2014 and December 31, 2013, as restated, the Company had the following amounts included in the consolidated balance sheets related to the M240 Program: | ||||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
(as Restated) | ||||||||||||||
Inventory Reserves | $ | 2,560 | $ | 639 | ||||||||||
Current Accrued Contract Obligation | $ | 2,365 | $ | 1,194 | ||||||||||
Current Customer Advances and Deferred Income | $ | 5,244 | $ | 6,820 | ||||||||||
Other Long -Term Liabilities | $ | 3,466 | $ | — | ||||||||||
The Company revised its disclosure with respect to the Company’s inventory reserves related to the M240 Program as of December 31, 2013. The Company does not consider the revision of this disclosure material. | ||||||||||||||
The Company currently does not expect to deliver all of the new M240 units to the U.S. Government related to the contract modification and complete the retrofit of previously delivered units within the next twelve months, and accordingly, $1,376 of deferred revenue related to the delivery of new M240 units and $2,090 of accrued contract obligation related to the retrofit of previously delivered units is included in other long-term liabilities as of September 28, 2014. | ||||||||||||||
During the second quarter of 2014, the Company agreed to a No-Cost Cancellation of the M249 contract with the U.S. Government. In connection with the cancellation, the Company recorded an expense of $480 which is included in cost of sales in the consolidated statements of operations. The $480 is comprised of a write-off of $344 of inventory and $136 of other expenses associated with the program. | ||||||||||||||
Other Commitments and Contingencies | ||||||||||||||
At September 28, 2014 and December 31, 2013, the Company had unconditional purchase obligations related to capital expenditures for machinery and equipment of $629 and $892, respectively. | ||||||||||||||
During the second and third quarters of 2014, the Company initiated actions which resulted in a workforce reduction of 33 salaried employees and 64 hourly employees. The severance expenses for the employees affected by the workforce reduction along with severance associated with other departures was included in operating income during the three and nine months ended September 28, 2014 and amounted to $656 and $1,183, respectively. | ||||||||||||||
The Company is involved in various legal claims and disputes in the ordinary course of business. The Company accrues for such liabilities when it is both (i) probable that a loss has occurred and (ii) the amount of the loss can be reasonably estimated in accordance with ASC 450, Contingencies. The Company evaluates, on a quarterly basis, developments affecting legal claims and disputes that could cause an increase or decrease in the amount of the liability that has been previously accrued. At this time, management does not anticipate any such loss would have a material adverse impact on the Company’s consolidated financial position, results of operations or cash flows. | ||||||||||||||
During the three and nine month periods ended September 28, 2014 and September 28, 2013, respectively, there were no material tax examinations. | ||||||||||||||
In 2011, New Colt entered into a twelve year agreement with Osceola County in Florida to lease a 16 square foot facility in Kissimmee, Florida. This facility was renovated by the County at its cost and the building was made available for occupancy during 2012. There are no lease payments due during the initial five years of the lease and the annual cost of the lease will be $108 per year with the lease expiring on January 15, 2023. The lease expense is being accounted for on a straight-line basis, with an annual charge of $78 being incurred over the term of the lease. At September 28, 2014 and December 31, 2013, deferred lease expense was $95 and $36, respectively. In connection with the lease, the Company was required to hire a minimum number of employees commencing in 2013. As of September 28, 2014, the Company had not occupied the Florida facility and had not hired any employees. The Company has accrued a contractual penalty of $37 and $50 at September 28, 2014 and December 31, 2013, respectively, for not meeting the minimum hiring requirement. In addition, the State of Florida contributed $250 of funds to the Osceola County to assist with the cost of the renovations. As of September 28, 2014 the Company has repaid $50 of this contribution back to the State of Florida for not meeting the terms of the contract. In conjunction with the Florida lease, the Company entered into a quick action closing fund agreement, as amended, with the state of Florida which requires the Company to make a minimum capital investment of $2,500 by December 31, 2015, of which $181 had been made through both September 28, 2014 and December 31, 2013, respectively. | ||||||||||||||
Segment_Information
Segment Information | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Segment Information | ' | |||||||||||||
Segment Information | ' | |||||||||||||
Note 18 Segment Information | ||||||||||||||
As a result of the Merger (see Note 3, “Acquisition”), the two manufacturers of Colt firearms were consolidated into a single enterprise providing the Company with direct access to the commercial market for Colt rifles and carbines, ownership of the Colt brand name and other related trademarks and the technology and production facilities for the full line of Colt handguns. As of September 28, 2014 and December 31, 2013, the Company’s operations are conducted through two segments, firearms and spares/other. These operating segments have similar characteristics and have been aggregated into the Company’s only reportable segment. The firearms segment designs, develops, and manufactures firearms for domestic and international military and law enforcement markets as well as the domestic and international commercial markets. The spares and other segment primarily provides spare parts and kits and accessories for domestic and international military and law enforcement markets as well as domestic and international commercial markets. Other activities are de minimus and consist of product service, archive service, training and royalties from the license of the Colt brand and related trademarks. | ||||||||||||||
Adjusted EBITDA consists of income (loss) before interest, income taxes, depreciation and amortization and other expenses as noted below. Management uses Adjusted EBITDA to evaluate the financial performance of the business and to make operating decisions. See the footnotes that follow the reconciliation tables below for additional information regarding the adjustments made to arrive at Adjusted EBITDA. | ||||||||||||||
The following table represents a reconciliation of net income (loss) to Adjusted EBITDA: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
Statement of Operations Data: | September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||
(As Revised) | (As Revised) | |||||||||||||
Net income (loss) | $ | (7,834 | ) | $ | 10,857 | $ | (28,369 | ) | $ | 20,373 | ||||
Income tax (benefit) expense | 1,510 | (208 | ) | 1,443 | 551 | |||||||||
Depreciation and amortization (i) | 2,427 | 1,926 | 7,086 | 4,294 | ||||||||||
Interest expense, net | 7,904 | 7,623 | 23,447 | 19,686 | ||||||||||
Sciens fees and expenses (ii) | 250 | 220 | 750 | 436 | ||||||||||
Transaction costs (iii) | (12 | ) | 461 | (12 | ) | 877 | ||||||||
Restructuring costs (iv) | — | 631 | (76 | ) | 631 | |||||||||
Gain on effective settlement of contract (v) | — | (15,264 | ) | — | (15,264 | ) | ||||||||
Lease buyout expense (vi) | — | 287 | — | 287 | ||||||||||
M240 Program contract obligation expense (vii) | 1,722 | 7,199 | 6,812 | 7,199 | ||||||||||
Business development costs (viii) | — | 463 | 509 | 707 | ||||||||||
Severance costs (ix) | 656 | — | 1,183 | — | ||||||||||
Other income, net (x) | (55 | ) | 215 | (168 | ) | (516 | ) | |||||||
Adjusted EBITDA | $ | 6,568 | $ | 14,410 | $ | 12,605 | $ | 39,261 | ||||||
(i) | Includes depreciation and amortization of intangible assets. | |||||||||||||
(ii) | Includes fees and expenses pursuant to the Company’s agreements with Sciens Management and Sciens Institutional. | |||||||||||||
(iii) | Non-recurring costs associated with the July 12, 2013 acquisition of New Colt. | |||||||||||||
(iv) | Includes costs related to the Merger, including severance, continuation of benefits, and other. See Note 4 “Restructuring Costs.” | |||||||||||||
(v) | Gain from the settlement of the pre-existing License agreement between Colt Defense and New Colt. | |||||||||||||
(vi) | Non-recurring costs associated with the pay-off of leases acquired as part of the Merger. | |||||||||||||
(vii) | Expenses related to Company’s M240 Program. See Note 17 “Commitments and Contingencies.” | |||||||||||||
(viii) | Includes transaction costs incurred in connection with contemplated acquisition activities. | |||||||||||||
(ix) | Includes non-recurring severance costs. | |||||||||||||
(x) | Includes income and/or expenses such as foreign currency exchange gains or losses and other less significant charges not related to on-going operations. | |||||||||||||
Product Information | ||||||||||||||
The following table shows net sales for the three and nine months ended September 28, 2014 and September 29, 2013, as revised, by product category. The table includes the results of New Colt from the Merger Date. After intercompany sales eliminations, the New Colt acquisition provided $16.7 and $53.1 million of incremental sales for the three months and nine months ended September 28, 2014, respectively. | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
Long guns | $ | 23,490 | $ | 48,749 | $ | 63,797 | $ | 154,626 | ||||||
Handguns | 15,651 | 12,486 | 49,541 | 15,007 | ||||||||||
Spares and other | 11,973 | 11,795 | 37,489 | 31,532 | ||||||||||
Total | $ | 51,114 | $ | 73,030 | $ | 150,827 | $ | 201,165 | ||||||
Geographical Information | ||||||||||||||
Geographic external revenues are attributed to the geographic regions based on the customer’s location of origin. Colt’s net sales in the United States include revenues that arise from sales to the U.S. Government under its Foreign Military Sales (“FMS”) program, which involves product that is resold by the U.S. Government to foreign governments and generally shipped directly to the foreign government by the Company. | ||||||||||||||
The table below presents net sales for the three and nine months ended September 28, 2014 and September 29, 2013, as revised, for specific geographic regions: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
United States | $ | 30,419 | $ | 46,075 | $ | 103,639 | $ | 120,842 | ||||||
Canada | 2,745 | 5,253 | 11,062 | 20,206 | ||||||||||
Latin America/Caribbean | 3,000 | 4,626 | 5,970 | 5,670 | ||||||||||
Middle East/Africa | 9,393 | 48 | 12,726 | 618 | ||||||||||
Europe | 5,199 | 1,521 | 10,932 | 6,124 | ||||||||||
Asia/Pacific | 358 | 15,507 | 6,498 | 47,705 | ||||||||||
$ | 51,114 | $ | 73,030 | $ | 150,827 | $ | 201,165 | |||||||
Long-lived assets are net fixed assets attributed to specific geographic regions: | ||||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
United States | $ | 23,269 | $ | 25,745 | ||||||||||
Canada | 4,485 | 4,988 | ||||||||||||
$ | 27,754 | $ | 30,733 | |||||||||||
Major Customer Information | ||||||||||||||
For the three months ended September 28, 2014, one foreign customer and one domestic distributor accounted for 16% and 11%, respectively, of net sales. For the nine months ended September 28, 2014, no foreign customers or domestic customers accounted for more than 10% of net sales. For the three months ended September 29, 2013, one domestic distributor accounted for 24% of net sales, as revised, and one foreign direct customer accounted for 21% of net sales, as revised. For the nine months ended September 29, 2013, two foreign direct customers each accounted for 11% of net sales, as revised. | ||||||||||||||
For the three and nine months ended September 29, 2013, sales to Colt’s Manufacturing, represented 0% and 22% of net sales, as revised, respectively. | ||||||||||||||
For the three months and nine months ended September 28, 2014, sales to the U.S. Government accounted for 5% and 6% of net sales respectively. For the three and nine months ended September 29, 2013, sales to the U.S. Government accounted for 7.1% and 11% of net sales, as revised, respectively. | ||||||||||||||
Concentration_of_risk
Concentration of risk | 9 Months Ended |
Sep. 28, 2014 | |
Concentration of risk | ' |
Concentration of risk | ' |
Note 19 Concentration of risk | |
Accounts Receivable | |
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of accounts receivable. At September 28, 2014, the three largest individual trade receivable balances accounted for 19%, 12% and 10% of total accounts receivable, respectively. At December 31, 2013, as restated, the two largest individual trade receivable balances accounted for 28% and 16% of total accounts receivable, respectively. | |
Labor | |
The United Automobile, Aerospace & Agricultural Implements Workers of America (the “Union”) represents the Company’s West Hartford work force pursuant to a collective bargaining agreement will expire on March 31, 2019. At September 28, 2014, the Union represented approximately 74% of Colt’s U.S. workforce. On March 30, 2014, Colt Defense through its domestic operating subsidiary Colt’s Manufacturing, reached tentative agreement with the Union for a new five year contract covering approximately 515 employees, which was ratified by the union membership on March 31, 2014. The new contract is in effect from April 1, 2014 through March 31, 2019. | |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 28, 2014 | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | ' |
Note 20 Fair Value of Financial Instruments | |
The fair value of an asset or liability is the amount at which the instrument could be exchanged or settled in a current transaction between willing parties where neither is compelled to buy or sell. The carrying values for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current assets and liabilities approximate their fair value due to their short maturities. The carrying value of the Company’s long-term debt of $294,458 and $294,817 at September 28, 2014 and December 31, 2013, respectively, was recorded at amortized cost. The estimated fair value of long-term debt was approximately $195,885 and $262,775 at September 28, 2014 and December 31, 2013, respectively. The fair value of the Senior Notes was based on quoted market prices, which are Level 1 inputs and the fair value of the Term Loan was based on Level 3 inputs. | |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value fall into the following hierarchy: | |
Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities. | |
Level 2:Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. | |
Level 3: Unobservable inputs for the asset or liability. | |
As of September 28, 2014 and December 31, 2013, the Company did not have any financial assets and liabilities reported at fair value and measured on a recurring basis or any significant nonfinancial assets or nonfinancial liabilities. Therefore, Colt did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the nine months ended September 28, 2014. | |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Accumulated Other Comprehensive Loss | ' | |||||||||||||
Accumulated Other Comprehensive Loss | ' | |||||||||||||
Note 21 Accumulated Other Comprehensive Loss | ||||||||||||||
The components of accumulated other comprehensive loss were as follows: | ||||||||||||||
Unrecognized | Foreign | |||||||||||||
Prior Service | Unrecognized | Currency | ||||||||||||
Cost | Loss | Translation | Total | |||||||||||
Balance, December 31, 2012 | $ | 825 | $ | (17,399 | ) | $ | 2,733 | $ | (13,841 | ) | ||||
Other comprehensive income before reclassifications | — | — | — | — | ||||||||||
Amounts reclassified from accumulated other comprehensive income | (129 | ) | 505 | — | 376 | |||||||||
Currency translation | — | — | (1,140 | ) | (1,140 | ) | ||||||||
Net current period other comprehensive income | (129 | ) | 505 | (1,140 | ) | (764 | ) | |||||||
Balance, September 29, 2013 (As Revised) | $ | 696 | $ | (16,894 | ) | $ | 1,593 | $ | (14,605 | ) | ||||
Balance, December 31, 2013 (As Restated) | $ | 653 | $ | (10,836 | ) | $ | 843 | (9,340 | ) | |||||
Other comprehensive income before reclassifications | (98 | ) | (1,453 | ) | — | (1,551 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | (113 | ) | 239 | — | 126 | |||||||||
Currency translation | — | — | (1,115 | ) | (1,115 | ) | ||||||||
Net current period other comprehensive income | (211 | ) | (1,214 | ) | (1,115 | ) | (2,540 | ) | ||||||
Balance, September 28, 2014 | $ | 442 | $ | (12,050 | ) | $ | (272 | ) | $ | (11,880 | ) | |||
Amounts are on a before-tax basis. | ||||||||||||||
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 28, 2014 | |
Subsequent Event | ' |
Subsequent Events | ' |
Note 22 Subsequent Events | |
Senior Secured Debt | |
On November 17, 2014 the Company entered into a $70,000 senior secured term loan facility with Wilmington Savings Fund Society, FSB, as agent and Morgan Stanley Senior Funding Inc., as lender. Proceeds from the MS Term Loan were used to repay all amounts outstanding under the Company’s existing Term Loan agreement, allow for the Company to make the its $10,938 interest payment on November 17, 2014 under the existing Senior Notes and to provide additional liquidity for the Company. The MS Term Loan (i) does not contain financial covenants or amortization provisions similar to those provisions in the Company’s existing Term Loan agreement; (ii) provides for the accrual of interest on an 8% cash and 2% payment-in-kind basis; and (iii) will mature no later than August 15, 2018 subject to the satisfaction of certain conditions. The existing Term Loan agreement did not permit pre-payment at such time and thus, the Company agreed with the existing term Loan lenders to pay a premium of $4,318 in addition to the outstanding principal and accrued interest balances. | |
The lenders under the Company’s existing Credit Agreement (see Note 10 “Notes Payable and Long-Term Debt”) have also agreed to amendments to the Credit Agreement necessary for the Company to enter into the MS Term Loan. These amendments include, among other things, (i) reducing the senior secured revolving loans available from $50,000 to $33,000, and (ii) incorporating a minimum $7,500 excess availability threshold for borrowings. | |
The $70,000 of proceeds from the MS Term Loan were disbursed as follows: $52,966 for the repayment of the existing Term Loan principal, interest and premium, $10,938 for the Company’s Senior Notes interest payment paid on November 17, 2014, $1,995 for fees and expenses associated with the MS Term Loan and $4,101 of net proceeds remitted to Colt for additional liquidity. | |
As of November 20, 2014, the Company had cash and cash equivalents on-hand of $8,233 and availability under the Credit Agreement, above the $7,500 minimum excess availability threshold, of $2,473. | |
Employment Actions | |
Subsequent to September 28, 2014, the Company’s Chief Operating Officer and two employees discontinued their employment with the Company. Combined severance expense was $696 and will be included in operating income in the fourth quarter of 2014. In addition, the Company hired a new Chief Operating Officer effective on or about November 10, 2014. | |
Governing Board | |
On November 15, 2014, the members of Colt Defense LLC (“Colt”) elected Alan B. Miller, to the Governing Board. Mr. Miller joins the Governing Board of Colt Defense LLC with over 50 years experience as an attorney specializing in business finance and corporate restructuring including time spent as special counsel and litigation trustee with Collins & Aikman Corporation and senior counsel, senior partner and partner with Weil, Gotshal and Manges LLP. Mr. Miller currently is a board member of Ceva Holdings LLC and Ceva Group PLC and Spanish Broadcasting System Inc. Mr. Miller attended Trinity College, where he earned a B.A. in 1959 and Boston College Law School, where he earned a J.D. in 1962. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 28, 2014 | |
Summary of Significant Accounting Policies | ' |
Basis of Accounting and Consolidation | ' |
Basis of Accounting and Consolidation | |
The accompanying unaudited consolidated financial statements of Colt Defense and Colt Finance (collectively, the “Company”, or “Colt”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all significant adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of the financial position, results of operations and cash flows for the three and nine months ended September 28, 2014 and September 29, 2013, as revised, have been included. The financial information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2013, as restated. The consolidated balance sheet dated December 31, 2013, as restated, included in this quarterly report on Form 10-Q has been derived from the audited consolidated financial statements at that time, but does not include all disclosures required by GAAP. Operating results for the three and nine months ended September 28, 2014 are not necessarily indicative of the results to be expected for any subsequent interim period or for the year ending December 31, 2014. | |
During the third quarter of 2014, the Company faced increasing liquidity challenges as a result of several recent business trends impacting the Company’s current and forecasted revenues and cash flows. These trends included the continued decline in market demand for the Company’s commercial MSR, recent declines in demand for the Company’s commercial handguns, and delays in anticipated timing of U.S. Government and certain international sales. As a result, the Company expects to report significantly lower revenues and Adjusted EBITDA (see Note 18 “Segment Information”) for the year-ended December 31, 2014 than it had previously forecasted. These trends are expected to continue to put significant pressure on the Company’s liquidity for the foreseeable future. | |
Absent the Company achieving its internal forecast for the remainder of 2014 and 2015 and the successful execution of Management’s plans, including restructuring of the unsecured debt, it is probable that the Company may not have sufficient cash and cash equivalents on-hand along with availability under its Credit Agreement, as amended, to be able to meet its obligations as they come due over the next 12 months, including the Company’s May 15, 2015 Senior Notes interest payment of $10,938. As it is probable that the Company may not have sufficient liquidity to be able to make its May 15, 2015 Senior Notes interest payment, the Company’s long-term debt has been classified as current in the consolidated balance sheet. Currently the Company does not have sufficient funds to repay the debt upon an actual acceleration of maturity. In the event of an accelerated maturity, the Company’s lenders may take actions to secure their position as creditors and mitigate their potential risks. These events would adversely impact the Company’s liquidity (see Note 9 “Liquidity”). These factors raise substantial doubt about the Company’s ability to continue as a going concern. | |
The Company’s financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or classification of liabilities should the Company be unable to continue as a going concern. | |
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. | |
On July 12, 2013 (the “Merger Date”), the Company acquired 100% ownership (the “Merger”) of New Colt. The results of New Colt have been included in the unaudited consolidated financial statements from the Merger Date. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include estimates used to determine the fair value of assets acquired and liabilities assumed related to the acquisition of New Colt (see Note 3, “Acquisition”) and accruals for the Company’s M240 Program (see Note 17, “Commitments and Contingencies”), excess and obsolete inventory, income tax expense, deferred tax asset valuation, medical claims payable, and worker’s compensation expense. Actual results could differ materially from those estimates. | |
Self-Funded Medical Plan | |
As of September 28, 2014, the Company maintained two employee group medical plans, one of which covers the Company’s Canadian subsidiary and one of which cover the Company’s domestic operations and is self-funded. The Company’s domestic medical plan liabilities are limited by individual and aggregate stop loss insurance coverage. Included in accrued expense in the accompanying consolidated balance sheets is a liability for reported claims outstanding, as well as an estimate of incurred but unreported claims, based on the Company’s best estimate of the ultimate cost not covered by stop loss insurance. The individual stop loss limit for the Company’s domestic self-funded medical plan is $175 as of September 28, 2014. The aggregate stop loss limit for the Company’s self-funded medical plan is $14,547 as of September 28, 2014. The actual amount of the claims could differ from the total consolidated estimated liability recorded of $416 and $823 at September 28, 2014 and December 31, 2013, respectively. | |
Self-Funded Worker’s Compensation | |
As of December 31, 2013, the Company insured its domestic worker’s compensation with a $250 per event deductible program, that incorporates individual, accident and aggregate stop loss limits of $2,000. The Company’s liability for estimated premiums and incurred losses under the Company’s deductible policies that have been actuarially determined and accrued for as of September 28, 2014 and December 31, 2013 were $958 and $214, respectively. The Company revised its disclosure with respect to the Company’s liability for estimated premiums and incurred losses under the Company’s deductible policies as of December 31, 2013. The Company does not consider the revision of this disclosure material. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
Cash and cash equivalents consists of cash and short-term, highly liquid investments with original maturities of three months or less at the date of purchase. | |
Restricted Cash | ' |
Restricted Cash | |
Restricted cash at September 28, 2014 and December 31, 2013, consists of funds deposited to secure standby letters of credit primarily for performance guarantees related to the Company’s international business. | |
Revenue | ' |
Revenue | |
The Company recognizes revenue when evidence of an arrangement exists, delivery of the product or service has occurred and title and risk of loss have passed to the customer, the sales price is fixed or determinable, and collectability of the resulting receivable is reasonably assured. | |
The Company accounts for revenues and earnings under two long-term government contracts/programs with interrelated multiple elements (procurement of parts, manufacturing and refurbishment services) using concepts of proportionate performance. These contracts effect reported results for all periods presented. The Company estimates the total profit on each contract as the difference between the total estimated revenue and total estimated cost of the contract and recognizes that profit over the remaining life of the contract using an output measure (the ratio of units completed to the total number of units to be refurbished under the contract). The Company computes an earnings rate for each contract, including general and administrative expense, to determine operating earnings. The Company reviews the earnings rate quarterly to assess revisions in contract values and estimated costs at completion. Any changes in earnings rates and recognized contract to date earnings resulting from these assessments are made in the period the revisions are identified. Contract costs include production costs, related overhead and allocated general and administrative costs. Amounts billed and collected on these contracts in excess of revenue recorded are reflected as customer advances and deferred revenue in the Company’s consolidated balance sheets. | |
Anticipated contract losses are charged to operations as soon as they are identified. Anticipated losses cover all costs allocable to the contracts, including certain general and administrative expenses. If a contract is cancelled by the government for its convenience, the Company can make a claim against the customer for fair compensation for worked performed plus costs of settling and paying claims by terminated subcontractors, other settlement expenses and a reasonable profit on costs incurred. When the Company has a customer claim, revenue arising from the claims process is either recognized as revenue or as an offset against a potential loss only when the amount of the claim can be estimated reliably and its realization is probable. The Company had no claims recorded at any period-end presented. | |
Prior to the Merger, Colt Defense generated an immaterial amount of royalty income, which it included in other income in its consolidated statements of operations. As a result of the Merger, the Company now generates a higher amount of royalty income on a quarterly basis and has therefore determined that royalty income should now be recorded as net sales in the Consolidated Statements of Operations. | |
The Company recognizes trademark licensing revenue for individual licensees based on historical experience and expected cash receipts from licensees. Licensing revenue consists of minimum royalties and/or a percentage of a licensee’s sales on licensed products. Under most of the Company’s current licensing agreements, royalties are payable in arrears on a calendar quarter basis. | |
Income Taxes | ' |
Income Taxes | |
The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company provides a valuation allowance when it is more likely than not that deferred tax assets will not be realized. The Company recognizes the benefit of an uncertain tax position that has been taken or it expects to take on income tax returns if such tax position is more likely than not to be sustained. | |
The Company follows the authoritative guidance regarding accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These unrecognized tax benefits relate primarily to issues common among multinational corporations in its industry. The Company applies a variety of methodologies in making these estimates, which include studies performed by independent economists, advice from industry and subject experts, evaluation of public actions taken by the Internal Revenue Service and other taxing authorities, as well as its own industry experience. The Company provides estimates for unrecognized tax benefits which may be subject to material adjustments until matters are resolved with taxing authorities or statutes expire. If its estimates are not representative of actual outcomes, its results of operations could be materially impacted. | |
The Company continues to maintain a valuation allowance against certain deferred tax assets where realization is not certain. The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of these deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income, carryforward periods available to it for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and, to the extent future expectations change; the Company would assess the recoverability of its deferred tax assets at that time. If the Company determines that the deferred tax assets are not realizable in a future period, the Company would record material adjustments to income tax expense in that period. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
Revenue from Contracts with Customers - In May 2014, the FASB issued ASU No. 2014-09, that 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 ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | |
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists - In July 2013, the FASB issued ASU 2013-11 to provide guidance on the presentation of unrecognized tax benefits. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective for interim and annual periods beginning after December 15, 2013 with earlier adoption permitted. ASU 2013-11 should be applied prospectively with retroactive application permitted. The Company has adopted ASU 2013-11 in the first quarter of 2014. | |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 28, 2014 | ||||||||||||||||||||
Impacts of correcting the previously recorded immaterial out-of-period adjustments and the reclassification of business development expenses | ' | |||||||||||||||||||
Schedule of adjustments to previously reported income statement - Income/ (Expense) | ' | |||||||||||||||||||
The impacts of correcting the previously recorded, immaterial out-of-period adjustments and the reclassification of business development expenses for the three and nine month periods ended September 29, 2013 were as follows: | ||||||||||||||||||||
Adjustments to | ||||||||||||||||||||
Previously Reported Income | ||||||||||||||||||||
Statement - Income / (Expense) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
For the years ended | September 29, 2013 | September 29, 2013 | ||||||||||||||||||
Net sales | $ | (208 | ) | (231 | ) | |||||||||||||||
Cost of sales | (168 | ) | (89 | ) | ||||||||||||||||
Gross profit | (40 | ) | (142 | ) | ||||||||||||||||
Selling and commissions (A) | 221 | 12 | ||||||||||||||||||
Research and development | 4 | 6 | ||||||||||||||||||
General and administrative (B) | 10 | (207 | ) | |||||||||||||||||
Business development (C) | 463 | 707 | ||||||||||||||||||
Operating income | (738 | ) | (660 | ) | ||||||||||||||||
Other (income) / expense (C) | (440 | ) | (707 | ) | ||||||||||||||||
Income tax expense | (10 | ) | 47 | |||||||||||||||||
Net income (loss) (B) | (288 | ) | — | |||||||||||||||||
(A) | Primarily relates to the reclassification of $214 of armorers training expenses from selling and commissions to cost of sales. | |||||||||||||||||||
(B) | Primarily relates to the timing of recognition of certain professional fees. | |||||||||||||||||||
(C) | Primarily relates to the reclassification of transaction costs incurred in connection with contemplated merger and acquisition activities from other expense/(income) to business development. | |||||||||||||||||||
Consolidated Statements of Operations | ' | |||||||||||||||||||
Restatement of Previously Issued Consolidated Financial Statements | ' | |||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three months ended September 29, 2013 | Nine months ended September 29, 2013 | |||||||||||||||||||
As Revised | As Revised | |||||||||||||||||||
As | in this Quarterly | As | in this Quarterly | |||||||||||||||||
Previously | Report on | Previously | Report on | |||||||||||||||||
Reported | Adjustments | Form 10-Q | Reported | Adjustments | Form 10-Q | |||||||||||||||
Net sales | $ | 73,238 | $ | (208 | ) | $ | 73,030 | $ | 201,396 | $ | (231 | ) | $ | 201,165 | ||||||
Cost of sales | 58,655 | (168 | ) | 58,487 | 149,731 | (89 | ) | 149,642 | ||||||||||||
Gross Profit | 14,583 | (40 | ) | 14,543 | 51,665 | (142 | ) | 51,523 | ||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling and commissions | 3,843 | 221 | 4,064 | 10,386 | 12 | 10,398 | ||||||||||||||
Research and development | 1,710 | 4 | 1,714 | 4,009 | 6 | 4,015 | ||||||||||||||
General and administrative | 3,886 | 10 | 3,896 | 10,848 | (207 | ) | 10,641 | |||||||||||||
9,439 | 235 | 9,674 | 25,243 | (189 | ) | 25,054 | ||||||||||||||
Business development | — | 463 | 463 | — | 707 | 707 | ||||||||||||||
Certain transaction costs | 461 | — | 461 | 877 | — | 877 | ||||||||||||||
Gain on effective settlement of contract (Note 3) | (15,264 | ) | — | (15,264 | ) | (15,264 | ) | — | (15,264 | ) | ||||||||||
Restructuring costs (Note 4) | 631 | — | 631 | 631 | — | 631 | ||||||||||||||
Total operating expenses | (4,733 | ) | 698 | (4,035 | ) | 11,487 | 518 | 12,005 | ||||||||||||
Operating income | 19,316 | (738 | ) | 18,578 | 40,178 | (660 | ) | 39,518 | ||||||||||||
Other expense/(income): | ||||||||||||||||||||
Interest expense | 7,623 | — | 7,623 | 19,686 | — | 19,686 | ||||||||||||||
Other (income)/expense, net | 746 | (440 | ) | 306 | (385 | ) | (707 | ) | (1,092 | ) | ||||||||||
Total other expenses, net | 8,369 | (440 | ) | 7,929 | 19,301 | (707 | ) | 18,594 | ||||||||||||
Income (loss) before provision for income taxes | 10,947 | (298 | ) | 10,649 | 20,877 | 47 | 20,924 | |||||||||||||
Income tax expense | (198 | ) | (10 | ) | (208 | ) | 504 | 47 | 551 | |||||||||||
Net income (loss) | $ | 11,145 | $ | (288 | ) | $ | 10,857 | $ | 20,373 | $ | — | $ | 20,373 | |||||||
Consolidated Statements of Comprehensive Income (Loss) | ' | |||||||||||||||||||
Restatement of Previously Issued Consolidated Financial Statements | ' | |||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Three Months Ended September 29, 2013 | ||||||||||||||||||||
As Revised | ||||||||||||||||||||
As | in this Quarterly | |||||||||||||||||||
Previously | Report on | |||||||||||||||||||
Reported | Adjustments | Form 10-Q | ||||||||||||||||||
Net income (loss) | $ | 11,145 | $ | (288 | ) | $ | 10,857 | |||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustment: | ||||||||||||||||||||
Foreign currency translation gains (losses) | 465 | (8 | ) | 457 | ||||||||||||||||
Pension and postretirement benefit liabilities: | ||||||||||||||||||||
Other comprehensive income (loss) arising during the period | — | — | — | |||||||||||||||||
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | 126 | — | 126 | |||||||||||||||||
126 | — | 126 | ||||||||||||||||||
Comprehensive income (loss) | $ | 11,736 | $ | (296 | ) | $ | 11,440 | |||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Nine Months Ended September 29, 2013 | ||||||||||||||||||||
As Revised | ||||||||||||||||||||
As | in this Quarterly | |||||||||||||||||||
Previously | Report on | |||||||||||||||||||
Reported | Adjustments | Form 10-Q | ||||||||||||||||||
Net income (loss) | $ | 20,373 | $ | — | $ | 20,373 | ||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Foreign currency translation adjustment: | ||||||||||||||||||||
Foreign currency translation gains (losses) | (1,132 | ) | (8 | ) | (1,140 | ) | ||||||||||||||
Pension and postretirement benefit liabilities: | ||||||||||||||||||||
Other comprehensive income (loss) arising during the period | — | — | — | |||||||||||||||||
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | 376 | — | 376 | |||||||||||||||||
376 | — | 376 | ||||||||||||||||||
Comprehensive income (loss) | $ | 19,617 | $ | (8 | ) | $ | 19,609 | |||||||||||||
Consolidated Statements of Changes in Cash Flows | ' | |||||||||||||||||||
Restatement of Previously Issued Consolidated Financial Statements | ' | |||||||||||||||||||
(In thousands of dollars) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
For the Nine Months Ended September 29, 2013 | ||||||||||||||||||||
As Revised | ||||||||||||||||||||
As | in this Quarterly | |||||||||||||||||||
Previously | Report on | |||||||||||||||||||
Reported | Adjustments | Form 10-Q | ||||||||||||||||||
Operating Activities | ||||||||||||||||||||
Net income | $ | 20,373 | $ | — | $ | 20,373 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 4,294 | — | 4,294 | |||||||||||||||||
Amortization of financing fees | 1,403 | — | 1,403 | |||||||||||||||||
Amortization of debt discount | 486 | — | 486 | |||||||||||||||||
Deferred income taxes | (195 | ) | (1 | ) | (196 | ) | ||||||||||||||
Gain on sale/disposals of fixed assets | (15,264 | ) | — | (15,264 | ) | |||||||||||||||
Other non-cash items | 110 | — | 110 | |||||||||||||||||
Changes in operating assets and liabilites, net of acquisition: | ||||||||||||||||||||
Accounts receivable | 2,713 | 241 | 2,954 | |||||||||||||||||
Inventories | (17,644 | ) | 130 | (17,514 | ) | |||||||||||||||
Prepaid expense and other current assets | 46 | (289 | ) | (243 | ) | |||||||||||||||
Accounts payable and accrued expense | 16,299 | (285 | ) | 16,014 | ||||||||||||||||
Accrued pension and retirement liabilities | (1,089 | ) | 212 | (877 | ) | |||||||||||||||
Customer advances and deferred income | (726 | ) | — | (726 | ) | |||||||||||||||
Other | 531 | — | 531 | |||||||||||||||||
Net cash provided by operating activities | 11,337 | 8 | 11,345 | |||||||||||||||||
Investing Activities | ||||||||||||||||||||
Purchase of property and equipment | (6,615 | ) | — | (6,615 | ) | |||||||||||||||
Business acquisition, net of cash acquired and reinvested Merger consideration | (63,488 | ) | 4,000 | (59,488 | ) | |||||||||||||||
Change in restricted cash | (355 | ) | — | (355 | ) | |||||||||||||||
Net cash used in investing activities | (70,458 | ) | 4,000 | (66,458 | ) | |||||||||||||||
Financing Activities | ||||||||||||||||||||
Debt issuance costs | (1,961 | ) | — | (1,961 | ) | |||||||||||||||
Term Loan Borrowings | 47,742 | — | 47,742 | |||||||||||||||||
Line of credit advances | (6 | ) | — | (6 | ) | |||||||||||||||
Capital lease obligation repayment | (393 | ) | — | (393 | ) | |||||||||||||||
Proceeds from issuance of common units, net of reinvested consideration proceeds | 9,000 | (4,000 | ) | 5,000 | ||||||||||||||||
Purchase of common units | (14,000 | ) | — | (14,000 | ) | |||||||||||||||
Distributions paid to members | (2,557 | ) | — | (2,557 | ) | |||||||||||||||
Net cash provided by financing activities | 37,825 | (4,000 | ) | 33,825 | ||||||||||||||||
Effect of exchange rates on cash and cash equivalents | (470 | ) | (8 | ) | (478 | ) | ||||||||||||||
Change in cash and cash equivalents | (21,766 | ) | — | (21,766 | ) | |||||||||||||||
Cash and cash equivalents, beginning of period | 42,373 | — | 42,373 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 20,607 | $ | — | $ | 20,607 | ||||||||||||||
Acquisition_Tables
Acquisition (Tables) | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Acquisition | ' | |||||||
Summary of the fair values of the assets acquired and the liabilities assumed at the Merger Date | ' | |||||||
Cash and cash equivalents | $ | 3,791 | ||||||
Accounts receivable | 3,318 | |||||||
Inventories | 7,585 | |||||||
Property and equipment | 5,182 | |||||||
Other assets | 3,090 | |||||||
Intangible assets with finite lives | 9,340 | |||||||
Trademarks | 50,100 | |||||||
Goodwill | 36,974 | |||||||
Total assets acquired | 119,380 | |||||||
Accounts payable and accrued expenses | 8,808 | |||||||
Customer advances and deferred revenue | 1,832 | |||||||
Capital lease obligations | 393 | |||||||
Pension and retirement liabilities | 9,357 | |||||||
Deferred tax liabilities | 16,447 | |||||||
Total liabilities assumed | 36,837 | |||||||
Net assets acquired | $ | 82,543 | ||||||
Schedule of unaudited pro forma operating results | ' | |||||||
Unaudited Pro Forma | Unaudited Pro Forma | |||||||
Three Months Ended | Nine Months Ended | |||||||
September 29, 2013 | September 29, 2013 | |||||||
(As Revised) | (As Revised) | |||||||
Net sales | $ | 73,246 | $ | 240,171 | ||||
Net income (loss) | 8,647 | 19,189 | ||||||
Restructuring_Costs_Tables
Restructuring Costs (Tables) | 9 Months Ended | ||||
Sep. 28, 2014 | |||||
Restructuring Costs | ' | ||||
Summary of Company's restructuring activity | ' | ||||
Restructuring accruals at December 31, 2013 | $ | 706 | |||
Accrual reversal | (76 | ) | |||
Utilization | (491 | ) | |||
Balance at September 28, 2014 | $ | 139 | |||
Inventories_Tables
Inventories (Tables) | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Inventories | ' | |||||||
Summary of inventories, net of reserves at the lower of cost or market | ' | |||||||
September 28, 2014 | December 31, 2013 | |||||||
Raw materials | $ | 43,251 | $ | 43,469 | ||||
Work in process | 20,627 | 9,476 | ||||||
Finished products | 12,675 | 13,729 | ||||||
$ | 76,553 | $ | 66,674 | |||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | |||||||||
Sep. 28, 2014 | ||||||||||
Property and Equipment | ' | |||||||||
Schedule of property and equipment | ' | |||||||||
Estimated | ||||||||||
September 28, 2014 | December 31, 2013 | Useful Life | ||||||||
Land | $ | 322 | $ | 338 | - | |||||
Building | 2,528 | 2,653 | 33 | |||||||
Machinery and equipment | 51,812 | 47,476 | 10-Jul | |||||||
Furniture, fixtures and leasehold improvements | 7,545 | 7,081 | 5-Mar | |||||||
62,207 | 57,548 | |||||||||
Less accumulated depreciation and amortization | (36,387 | ) | (32,152 | ) | ||||||
25,820 | 25,396 | |||||||||
Construction in process | 1,934 | 5,337 | ||||||||
Property and equipment, net | $ | 27,754 | $ | 30,733 | ||||||
Goodwill_Trademarks_and_Other_1
Goodwill, Trademarks and Other Intangible Assets (Tables) | 9 Months Ended | ||||||||||||
Sep. 28, 2014 | |||||||||||||
Goodwill, Trademarks and Other Intangible Assets | ' | ||||||||||||
Schedule of changes in the carrying amount of goodwill | ' | ||||||||||||
Total | |||||||||||||
Balance at December 31, 2013 | $ | 51,225 | |||||||||||
Effect of foreign currency translation | (476 | ) | |||||||||||
Balance at September 28, 2014 | $ | 50,749 | |||||||||||
Schedule of net carrying value of the intangible assets with finite lives | ' | ||||||||||||
As of September 28, 2014 | |||||||||||||
Gross | Estimated | ||||||||||||
Carrying | Accumulated | Useful | |||||||||||
Amount | Amortization | Net | Life | ||||||||||
Customer relationship Canadian Government | $ | 2,257 | $ | (702 | ) | $ | 1,555 | 30 | |||||
Customer relationships other | 5,869 | (4,124 | ) | 1,745 | 20 | ||||||||
License agreements | 5,240 | (2,019 | ) | 3,221 | 6 | ||||||||
Backlog | 1,694 | (1,047 | ) | 647 | 3 | ||||||||
Technology-based intangibles | 6,580 | (2,950 | ) | 3,630 | 15-20 | ||||||||
$ | 21,640 | $ | (10,842 | ) | $ | 10,798 | |||||||
As of December 31, 2013 | |||||||||||||
Gross | Estimated | ||||||||||||
Carrying | Accumulated | Useful | |||||||||||
Amount | Amortization | Net | Life | ||||||||||
Customer relationship Canadian Government | $ | 2,369 | $ | (678 | ) | $ | 1,691 | 30 | |||||
Customer relationships other | 6,160 | (4,077 | ) | 2,083 | 20 | ||||||||
License agreements | 5,240 | (805 | ) | 4,435 | 6 | ||||||||
Backlog | 1,722 | (604 | ) | 1,118 | 3 | ||||||||
Technology-based intangibles | 6,580 | (2,492 | ) | 4,088 | 15 - 20 | ||||||||
$ | 22,071 | $ | (8,656 | ) | $ | 13,415 | |||||||
Liquidity_Tables
Liquidity (Tables) | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Liquidity | ' | |||||||
Schedule of Company's foreign and domestic cash and cash equivalents | ' | |||||||
September 28, 2014 | December 31, 2013 | |||||||
United States (1) | $ | 2,029 | $ | 8,363 | ||||
Canada (2) | 1,911 | 4,213 | ||||||
Netherlands (3) | 23 | 18 | ||||||
Total cash and cash equivalents | $ | 3,963 | $ | 12,594 | ||||
-1 | United States includes the following legal entities: Colt Defense LLC, New Colt Holding Corp., Colt’s Manufacturing Company LLC and Colt Defense Technical Services LLC | |||||||
-2 | Canada includes the following legal entity: Colt Canada Corporation | |||||||
-3 | Netherlands includes the following legal entity: Colt International Coöperatief U.A. | |||||||
Notes_Payable_and_LongTerm_Deb1
Notes Payable and Long-Term Debt (Tables) | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Notes Payable and Long-Term Debt | ' | |||||||||||||
Schedule of outstanding loan balances | ' | |||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
Senior Notes | $ | 248,319 | $ | 247,984 | ||||||||||
Term Loan | 46,139 | 46,833 | ||||||||||||
Credit Agreement | 13,000 | 7,083 | ||||||||||||
Total debt | 307,458 | 301,900 | ||||||||||||
Less: current portion | (307,458 | ) | (12,083 | ) | ||||||||||
Long-term debt | $ | — | $ | 289,817 | ||||||||||
Schedule of amortization | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
Amortization of discount | $ | 334 | $ | 280 | $ | 947 | $ | 486 | ||||||
Amortization of deferred financing costs | 577 | 575 | 1,788 | 1,403 | ||||||||||
Accrued_Expenses_Tables
Accrued Expenses (Tables) | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Accrued Expenses | ' | |||||||
Schedule of accrued expenses | ' | |||||||
September 28, 2014 | December 31, 2013 | |||||||
(As Restated) | ||||||||
Accrued compensation and benefits | $ | 4,243 | 7,154 | |||||
Accrued contract obligation expense | 2,365 | 1,194 | ||||||
Accrued federal, excise and other taxes | 2,643 | 4,902 | ||||||
Accrued interest | 9,508 | 2,879 | ||||||
Accrued commissions | 1,932 | 929 | ||||||
Other accrued expenses | 5,387 | 5,100 | ||||||
$ | 26,078 | $ | 22,158 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Income Taxes | ' | |||||||||||||
Schedule of components of income (loss) before provision for income taxes | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
Current | $ | 152 | $ | 12 | $ | 204 | $ | 747 | ||||||
Deferred | 1,358 | (220 | ) | 1,239 | (196 | ) | ||||||||
Total | $ | 1,510 | $ | (208 | ) | $ | 1,443 | $ | 551 | |||||
Pension_and_Postretirement_Ben1
Pension and Postretirement Benefits (Tables) | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Pension plans | ' | |||||||||||||
Pension and postretirement benefits | ' | |||||||||||||
Schedule of the components of income and cost recognized in Consolidated Statements of Operations | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
Interest cost | $ | 396 | $ | 368 | $ | 1,187 | $ | 918 | ||||||
Expected return on assets | (478 | ) | (419 | ) | (1,433 | ) | (986 | ) | ||||||
Amortization of unrecognized loss | 47 | 107 | 140 | 321 | ||||||||||
Net periodic cost (income) | $ | (35 | ) | $ | 56 | $ | (106 | ) | $ | 253 | ||||
Postretirement health cost coverage | ' | |||||||||||||
Pension and postretirement benefits | ' | |||||||||||||
Schedule of the components of income and cost recognized in Consolidated Statements of Operations | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
Service cost | $ | 173 | $ | 159 | $ | 519 | $ | 384 | ||||||
Interest cost | 233 | 201 | 700 | 446 | ||||||||||
Curtailment of postretirement health plan | — | — | (98 | ) | — | |||||||||
Amortization of unrecognized prior service costs | (38 | ) | (43 | ) | (113 | ) | (129 | ) | ||||||
Amortization of unrecognized loss | 33 | 61 | 99 | 184 | ||||||||||
Net periodic cost | $ | 401 | $ | 378 | $ | 1,107 | $ | 885 | ||||||
Transactions_with_Related_Part1
Transactions with Related Parties (Tables) | 9 Months Ended | |||||||
Sep. 28, 2014 | ||||||||
Transactions with Related Parties | ' | |||||||
Schedule of transactions with New Colt | ' | |||||||
Nine Months | ||||||||
Three Months Ended | Ended | |||||||
September 29, 2013 | September 29, 2013 | |||||||
Net sales to New Colt | $ | 23,321 | $ | 67,156 | ||||
Purchases from New Colt | 8 | 1,894 | ||||||
Administration and services fees charged to New Colt | 442 | 1,325 | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Commitments and Contingencies | ' | |||||||||||||
Summary of standby letters of credit issued principally in connection with performance and warranty bonds established for the benefit of certain international customers | ' | |||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
Standby letters of credit secured by restricted cash | $ | 1,172 | $ | 1,185 | ||||||||||
Standby letters of credit under Credit Agreement | 3,854 | 3,486 | ||||||||||||
Guarantees of standby letters of credit established by a sales agent on behalf of Colt | 74 | 74 | ||||||||||||
Schedule of incremental program contract obligation expense | ' | |||||||||||||
For the Nine Months | ||||||||||||||
For the Three Months Ended | Ended | |||||||||||||
March 30, 2014 | June 29, 2014 | September 28, 2014 | September 28, 2014 | |||||||||||
Inventory Reserves | $ | 311 | $ | 1,997 | $ | 810 | $ | 3,118 | ||||||
Contract Obligation | — | 2,782 | 912 | 3,694 | ||||||||||
Incremental Costs | $ | 311 | $ | 4,779 | $ | 1,722 | $ | 6,812 | ||||||
Schedule of amounts included in the consolidated balance sheets. | ' | |||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
(as Restated) | ||||||||||||||
Inventory Reserves | $ | 2,560 | $ | 639 | ||||||||||
Current Accrued Contract Obligation | $ | 2,365 | $ | 1,194 | ||||||||||
Current Customer Advances and Deferred Income | $ | 5,244 | $ | 6,820 | ||||||||||
Other Long -Term Liabilities | $ | 3,466 | $ | — | ||||||||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Segment Information | ' | |||||||||||||
Schedule of reconciliation of net income (loss) to Adjusted EBITDA | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
Statement of Operations Data: | September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||
(As Revised) | (As Revised) | |||||||||||||
Net income (loss) | $ | (7,834 | ) | $ | 10,857 | $ | (28,369 | ) | $ | 20,373 | ||||
Income tax (benefit) expense | 1,510 | (208 | ) | 1,443 | 551 | |||||||||
Depreciation and amortization (i) | 2,427 | 1,926 | 7,086 | 4,294 | ||||||||||
Interest expense, net | 7,904 | 7,623 | 23,447 | 19,686 | ||||||||||
Sciens fees and expenses (ii) | 250 | 220 | 750 | 436 | ||||||||||
Transaction costs (iii) | (12 | ) | 461 | (12 | ) | 877 | ||||||||
Restructuring costs (iv) | — | 631 | (76 | ) | 631 | |||||||||
Gain on effective settlement of contract (v) | — | (15,264 | ) | — | (15,264 | ) | ||||||||
Lease buyout expense (vi) | — | 287 | — | 287 | ||||||||||
M240 Program contract obligation expense (vii) | 1,722 | 7,199 | 6,812 | 7,199 | ||||||||||
Business development costs (viii) | — | 463 | 509 | 707 | ||||||||||
Severance costs (ix) | 656 | — | 1,183 | — | ||||||||||
Other income, net (x) | (55 | ) | 215 | (168 | ) | (516 | ) | |||||||
Adjusted EBITDA | $ | 6,568 | $ | 14,410 | $ | 12,605 | $ | 39,261 | ||||||
(i) | Includes depreciation and amortization of intangible assets. | |||||||||||||
(ii) | Includes fees and expenses pursuant to the Company’s agreements with Sciens Management and Sciens Institutional. | |||||||||||||
(iii) | Non-recurring costs associated with the July 12, 2013 acquisition of New Colt. | |||||||||||||
(iv) | Includes costs related to the Merger, including severance, continuation of benefits, and other. See Note 4 “Restructuring Costs.” | |||||||||||||
(v) | Gain from the settlement of the pre-existing License agreement between Colt Defense and New Colt. | |||||||||||||
(vi) | Non-recurring costs associated with the pay-off of leases acquired as part of the Merger. | |||||||||||||
(vii) | Expenses related to Company’s M240 Program. See Note 17 “Commitments and Contingencies.” | |||||||||||||
(viii) | Includes transaction costs incurred in connection with contemplated acquisition activities. | |||||||||||||
(ix) | Includes non-recurring severance costs. | |||||||||||||
(x) | Includes income and/or expenses such as foreign currency exchange gains or losses and other less significant charges not related to on-going operations. | |||||||||||||
Schedule of net sales by product category | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
Long guns | $ | 23,490 | $ | 48,749 | $ | 63,797 | $ | 154,626 | ||||||
Handguns | 15,651 | 12,486 | 49,541 | 15,007 | ||||||||||
Spares and other | 11,973 | 11,795 | 37,489 | 31,532 | ||||||||||
Total | $ | 51,114 | $ | 73,030 | $ | 150,827 | $ | 201,165 | ||||||
Schedule of net sales for specific geographic regions | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||
(As Revised) | (As Revised) | |||||||||||||
United States | $ | 30,419 | $ | 46,075 | $ | 103,639 | $ | 120,842 | ||||||
Canada | 2,745 | 5,253 | 11,062 | 20,206 | ||||||||||
Latin America/Caribbean | 3,000 | 4,626 | 5,970 | 5,670 | ||||||||||
Middle East/Africa | 9,393 | 48 | 12,726 | 618 | ||||||||||
Europe | 5,199 | 1,521 | 10,932 | 6,124 | ||||||||||
Asia/Pacific | 358 | 15,507 | 6,498 | 47,705 | ||||||||||
$ | 51,114 | $ | 73,030 | $ | 150,827 | $ | 201,165 | |||||||
Schedule of long-lived assets, which are net fixed assets attributed to specific geographic regions: | ' | |||||||||||||
September 28, 2014 | December 31, 2013 | |||||||||||||
United States | $ | 23,269 | $ | 25,745 | ||||||||||
Canada | 4,485 | 4,988 | ||||||||||||
$ | 27,754 | $ | 30,733 | |||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | |||||||||||||
Sep. 28, 2014 | ||||||||||||||
Accumulated Other Comprehensive Loss | ' | |||||||||||||
Schedule of the components of accumulated other comprehensive loss | ' | |||||||||||||
Unrecognized | Foreign | |||||||||||||
Prior Service | Unrecognized | Currency | ||||||||||||
Cost | Loss | Translation | Total | |||||||||||
Balance, December 31, 2012 | $ | 825 | $ | (17,399 | ) | $ | 2,733 | $ | (13,841 | ) | ||||
Other comprehensive income before reclassifications | — | — | — | — | ||||||||||
Amounts reclassified from accumulated other comprehensive income | (129 | ) | 505 | — | 376 | |||||||||
Currency translation | — | — | (1,140 | ) | (1,140 | ) | ||||||||
Net current period other comprehensive income | (129 | ) | 505 | (1,140 | ) | (764 | ) | |||||||
Balance, September 29, 2013 (As Revised) | $ | 696 | $ | (16,894 | ) | $ | 1,593 | $ | (14,605 | ) | ||||
Balance, December 31, 2013 (As Restated) | $ | 653 | $ | (10,836 | ) | $ | 843 | (9,340 | ) | |||||
Other comprehensive income before reclassifications | (98 | ) | (1,453 | ) | — | (1,551 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income | (113 | ) | 239 | — | 126 | |||||||||
Currency translation | — | — | (1,115 | ) | (1,115 | ) | ||||||||
Net current period other comprehensive income | (211 | ) | (1,214 | ) | (1,115 | ) | (2,540 | ) | ||||||
Balance, September 28, 2014 | $ | 442 | $ | (12,050 | ) | $ | (272 | ) | $ | (11,880 | ) | |||
Nature_of_Business_Details
Nature of Business (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||||||||||||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Jun. 29, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 30, 2014 | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Sep. 28, 2014 | Jun. 29, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Dec. 31, 2013 | Nov. 10, 2009 | Sep. 28, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 |
item | item | item | Senior Notes | Term Loan | M240 Program | M240 Program | M240 Program | M240 Program | M249 contract | Subsequent events | Subsequent events | Subsequent events | Colt Finance Corp | Colt Finance Corp | New Colt | New Colt | CDTS | Colt Defense LLC and CDTS | Colt Defense LLC and CDTS | New Colt | Colt International | Colt International | Colt's Manufacturing | Agreement with UAW Local 376 | ||||
Senior Notes | MS Term Loan | MS Term Loan | Colt International | Colt International | Colt's Manufacturing | Colt Canada | Colt Canada | item | Colt's Manufacturing | |||||||||||||||||||
Nature of Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Face amount of term loan facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $70,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional liquidity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,101 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest payments | ' | ' | ' | 14,031 | 11,503 | ' | ' | 1,318 | ' | ' | ' | ' | ' | 10,938 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest payment due in next 12 months | 9,508 | ' | ' | 9,508 | ' | 2,879 | 10,938 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership percentage | 100.00% | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | ' | ' |
Number of weeks in first two months of each quarter except January | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of weeks in third month of each quarter except December | ' | ' | ' | 5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of contract | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years |
Number of employee covered | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 529 | ' |
Reduction of salaried employees | 33 | 33 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of hourly employees | 64 | 64 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental contract obligation expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,722 | 4,779 | 311 | 6,812 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
No-Cost Cancellation expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 480 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental sales | 51,114 | ' | 73,030 | 150,827 | 201,165 | ' | ' | ' | 200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in cost of sales | $40,517 | ' | $58,487 | $125,543 | $149,642 | ' | ' | ' | $200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Net sales | $51,114 | $73,030 | $150,827 | $201,165 |
Cost of sales | 40,517 | 58,487 | 125,543 | 149,642 |
Gross profit | 10,597 | 14,543 | 25,284 | 51,523 |
Selling and commissions (A) | 3,746 | 4,064 | 12,827 | 10,398 |
Research and development | 1,250 | 1,714 | 3,885 | 4,015 |
General and administrative (B) | 4,088 | 3,896 | 11,798 | 10,641 |
Business development | ' | 463 | 509 | 707 |
Operating income | 1,525 | 18,578 | -3,647 | 39,518 |
Other (income) / expense | -7,849 | -7,929 | -23,279 | -18,594 |
Income tax expense | 1,510 | -208 | 1,443 | 551 |
Net income (loss) | -7,834 | 10,857 | -28,369 | 20,373 |
Adjustments | ' | ' | ' | ' |
Net sales | ' | -208 | ' | -231 |
Cost of sales | ' | -168 | ' | -89 |
Gross profit | ' | -40 | ' | -142 |
Selling and commissions (A) | ' | 221 | ' | 12 |
Research and development | ' | 4 | ' | 6 |
General and administrative (B) | ' | 10 | ' | -207 |
Business development | ' | 463 | ' | 707 |
Operating income | ' | -738 | ' | -660 |
Other (income) / expense | ' | 440 | ' | 707 |
Income tax expense | ' | -10 | ' | 47 |
Net income (loss) | ' | -288 | ' | ' |
Impact of a contract modification related to the M240 Program | ' | ' | ' | ' |
Net sales | ' | 0 | ' | 0 |
Cost of sales | ' | 0 | ' | 0 |
Impacts of correcting the previously recorded immaterial out-of-period adjustments and the reclassification of business development expenses | Adjustments | ' | ' | ' | ' |
Net sales | ' | -208 | ' | -231 |
Cost of sales | ' | -168 | ' | -89 |
Gross profit | ' | -40 | ' | -142 |
Selling and commissions (A) | ' | 221 | ' | 12 |
Research and development | ' | 4 | ' | 6 |
General and administrative (B) | ' | 10 | ' | -207 |
Business development | ' | 463 | ' | 707 |
Operating income | ' | -738 | ' | -660 |
Other (income) / expense | ' | -440 | ' | -707 |
Income tax expense | ' | -10 | ' | 47 |
Net income (loss) | ' | -288 | ' | ' |
Reclassification of armorers training expenses from selling and commissions to cost of sales | ' | $214 | ' | $214 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Net sales | $51,114 | $73,030 | ' | $150,827 | $201,165 |
Cost of sales | 40,517 | 58,487 | ' | 125,543 | 149,642 |
Gross profit | 10,597 | 14,543 | ' | 25,284 | 51,523 |
Operating expenses: | ' | ' | ' | ' | ' |
Selling and commissions | 3,746 | 4,064 | ' | 12,827 | 10,398 |
Research and development | 1,250 | 1,714 | ' | 3,885 | 4,015 |
General and administrative | 4,088 | 3,896 | ' | 11,798 | 10,641 |
Total selling and commissions, research and development, general and administrative | 9,084 | 9,674 | ' | 28,510 | 25,054 |
Business development | ' | 463 | ' | 509 | 707 |
Certain transaction costs (Note 3) | -12 | 461 | ' | -12 | 877 |
Gain on effective settlement of contract | ' | -15,264 | ' | ' | -15,264 |
Restructuring cost (benefit) | ' | 631 | 782 | -76 | 631 |
Total operating expenses | 9,072 | -4,035 | ' | 28,931 | 12,005 |
Operating income | 1,525 | 18,578 | ' | -3,647 | 39,518 |
Other expense (income): | ' | ' | ' | ' | ' |
Interest expense | 7,904 | 7,623 | ' | 23,447 | 19,686 |
Other (income)/expense, net | -55 | 306 | ' | -168 | -1,092 |
Total other expense, net | 7,849 | 7,929 | ' | 23,279 | 18,594 |
Income (loss) before provision for income taxes | -6,324 | 10,649 | ' | -26,926 | 20,924 |
Income tax expense | 1,510 | -208 | ' | 1,443 | 551 |
Net (loss) income | -7,834 | 10,857 | ' | -28,369 | 20,373 |
Previously reported | ' | ' | ' | ' | ' |
Net sales | ' | 73,238 | ' | ' | 201,396 |
Cost of sales | ' | 58,655 | ' | ' | 149,731 |
Gross profit | ' | 14,583 | ' | ' | 51,665 |
Operating expenses: | ' | ' | ' | ' | ' |
Selling and commissions | ' | 3,843 | ' | ' | 10,386 |
Research and development | ' | 1,710 | ' | ' | 4,009 |
General and administrative | ' | 3,886 | ' | ' | 10,848 |
Total selling and commissions, research and development, general and administrative | ' | 9,439 | ' | ' | 25,243 |
Certain transaction costs (Note 3) | ' | 461 | ' | ' | 877 |
Gain on effective settlement of contract | ' | -15,264 | ' | ' | -15,264 |
Restructuring cost (benefit) | ' | 631 | ' | ' | 631 |
Total operating expenses | ' | -4,733 | ' | ' | 11,487 |
Operating income | ' | 19,316 | ' | ' | 40,178 |
Other expense (income): | ' | ' | ' | ' | ' |
Interest expense | ' | 7,623 | ' | ' | 19,686 |
Other (income)/expense, net | ' | 746 | ' | ' | -385 |
Total other expense, net | ' | 8,369 | ' | ' | 19,301 |
Income (loss) before provision for income taxes | ' | 10,947 | ' | ' | 20,877 |
Income tax expense | ' | -198 | ' | ' | 504 |
Net (loss) income | ' | 11,145 | ' | ' | 20,373 |
Adjustments | ' | ' | ' | ' | ' |
Net sales | ' | -208 | ' | ' | -231 |
Cost of sales | ' | -168 | ' | ' | -89 |
Gross profit | ' | -40 | ' | ' | -142 |
Operating expenses: | ' | ' | ' | ' | ' |
Selling and commissions | ' | 221 | ' | ' | 12 |
Research and development | ' | 4 | ' | ' | 6 |
General and administrative | ' | 10 | ' | ' | -207 |
Total selling and commissions, research and development, general and administrative | ' | 235 | ' | ' | -189 |
Business development | ' | 463 | ' | ' | 707 |
Total operating expenses | ' | 698 | ' | ' | 518 |
Operating income | ' | -738 | ' | ' | -660 |
Other expense (income): | ' | ' | ' | ' | ' |
Other (income)/expense, net | ' | -440 | ' | ' | -707 |
Total other expense, net | ' | -440 | ' | ' | -707 |
Income (loss) before provision for income taxes | ' | -298 | ' | ' | 47 |
Income tax expense | ' | -10 | ' | ' | 47 |
Net (loss) income | ' | ($288) | ' | ' | ' |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Net (loss) income | ($7,834) | $10,857 | ($28,369) | $20,373 |
Foreign currency translation adjustment | ' | ' | ' | ' |
Foreign currency translation gains (losses) | -975 | 457 | -1,115 | -1,140 |
Pension and postretirement benefit liabilities: | ' | ' | ' | ' |
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | 43 | 126 | 126 | 376 |
Total | 42 | 126 | -1,425 | 376 |
Comprehensive (loss) income | -8,767 | 11,440 | -30,909 | 19,609 |
Previously reported | ' | ' | ' | ' |
Net (loss) income | ' | 11,145 | ' | 20,373 |
Foreign currency translation adjustment | ' | ' | ' | ' |
Foreign currency translation gains (losses) | ' | 465 | ' | -1,132 |
Pension and postretirement benefit liabilities: | ' | ' | ' | ' |
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss) | ' | 126 | ' | 376 |
Total | ' | 126 | ' | 376 |
Comprehensive (loss) income | ' | 11,736 | ' | 19,617 |
Adjustments | ' | ' | ' | ' |
Net (loss) income | ' | -288 | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' |
Foreign currency translation gains (losses) | ' | -8 | ' | -8 |
Pension and postretirement benefit liabilities: | ' | ' | ' | ' |
Comprehensive (loss) income | ' | ($296) | ' | ($8) |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Operating Activities | ' | ' | ' | ' |
Net (loss) income | ($7,834) | $10,857 | ($28,369) | $20,373 |
Adjustments to reconcile net income (loss) to net cash (used in)/provided by operating activities: | ' | ' | ' | ' |
Depreciation and amortization | 2,427 | 1,926 | 7,086 | 4,294 |
Amortization of financing fees | 577 | 575 | 1,788 | 1,403 |
Amortization of debt discount | 334 | 280 | 947 | 486 |
Deferred income taxes | ' | ' | 1,239 | -196 |
Gain on sale/disposals of fixed assets | ' | -15,264 | ' | -15,264 |
Other non-cash items | ' | ' | ' | 110 |
Changes in operating assets and liabilities, net of acquisitions: | ' | ' | ' | ' |
Accounts receivable | ' | ' | 7,464 | 2,954 |
Inventories | ' | ' | -10,034 | -17,514 |
Prepaid expenses and other current assets | ' | ' | 2,904 | -243 |
Accounts payable and accrued expenses | ' | ' | 7,812 | 16,014 |
Accrued pension and retirement liabilities | ' | ' | -214 | -877 |
Customer advances and deferred income | ' | ' | -3,732 | -726 |
Other | ' | ' | 2,462 | 531 |
Net cash (used in)/provided by operating activities | ' | ' | -10,745 | 11,345 |
Investing Activities | ' | ' | ' | ' |
Purchases of property and equipment | ' | ' | -1,710 | -6,615 |
Business acquisition, net of cash acquired and reinvested Merger consideration | ' | ' | ' | -59,488 |
Change in restricted cash | ' | ' | ' | -355 |
Net cash used in investing activities | ' | ' | -1,710 | -66,458 |
Financing Activities | ' | ' | ' | ' |
Debt issuance costs | ' | ' | -56 | -1,961 |
Term Loan Borrowings | ' | ' | ' | 47,742 |
Line of credit advances | ' | ' | 13,500 | -6 |
Capital lease obligation repayment | ' | ' | ' | -393 |
Proceeds from issuance of common units, net of reinvested consideration proceeds | ' | ' | ' | 5,000 |
Purchase of common units | ' | ' | ' | -14,000 |
Distributions paid to members | ' | ' | -683 | -2,557 |
Net cash provided by financing activities | ' | ' | 3,928 | 33,825 |
Effect of exchange rates on cash and cash equivalents | ' | ' | -104 | -478 |
Change in cash and cash equivalents | ' | ' | -8,631 | -21,766 |
Cash and cash equivalents, beginning of period | ' | ' | 12,594 | 42,373 |
Cash and cash equivalents, end of period | 3,963 | 20,607 | 3,963 | 20,607 |
Previously reported | ' | ' | ' | ' |
Operating Activities | ' | ' | ' | ' |
Net (loss) income | ' | 11,145 | ' | 20,373 |
Adjustments to reconcile net income (loss) to net cash (used in)/provided by operating activities: | ' | ' | ' | ' |
Depreciation and amortization | ' | ' | ' | 4,294 |
Amortization of financing fees | ' | ' | ' | 1,403 |
Amortization of debt discount | ' | ' | ' | 486 |
Deferred income taxes | ' | ' | ' | -195 |
Gain on sale/disposals of fixed assets | ' | -15,264 | ' | -15,264 |
Other non-cash items | ' | ' | ' | 110 |
Changes in operating assets and liabilities, net of acquisitions: | ' | ' | ' | ' |
Accounts receivable | ' | ' | ' | 2,713 |
Inventories | ' | ' | ' | -17,644 |
Prepaid expenses and other current assets | ' | ' | ' | 46 |
Accounts payable and accrued expenses | ' | ' | ' | 16,299 |
Accrued pension and retirement liabilities | ' | ' | ' | -1,089 |
Customer advances and deferred income | ' | ' | ' | -726 |
Other | ' | ' | ' | 531 |
Net cash (used in)/provided by operating activities | ' | ' | ' | 11,337 |
Investing Activities | ' | ' | ' | ' |
Purchases of property and equipment | ' | ' | ' | -6,615 |
Business acquisition, net of cash acquired and reinvested Merger consideration | ' | ' | ' | -63,488 |
Change in restricted cash | ' | ' | ' | -355 |
Net cash used in investing activities | ' | ' | ' | -70,458 |
Financing Activities | ' | ' | ' | ' |
Debt issuance costs | ' | ' | ' | -1,961 |
Term Loan Borrowings | ' | ' | ' | 47,742 |
Line of credit advances | ' | ' | ' | -6 |
Capital lease obligation repayment | ' | ' | ' | -393 |
Proceeds from issuance of common units, net of reinvested consideration proceeds | ' | ' | ' | 9,000 |
Purchase of common units | ' | ' | ' | -14,000 |
Distributions paid to members | ' | ' | ' | -2,557 |
Net cash provided by financing activities | ' | ' | ' | 37,825 |
Effect of exchange rates on cash and cash equivalents | ' | ' | ' | -470 |
Change in cash and cash equivalents | ' | ' | ' | -21,766 |
Cash and cash equivalents, beginning of period | ' | ' | ' | 42,373 |
Cash and cash equivalents, end of period | ' | 20,607 | ' | 20,607 |
Adjustments | ' | ' | ' | ' |
Operating Activities | ' | ' | ' | ' |
Net (loss) income | ' | -288 | ' | ' |
Adjustments to reconcile net income (loss) to net cash (used in)/provided by operating activities: | ' | ' | ' | ' |
Deferred income taxes | ' | ' | ' | -1 |
Changes in operating assets and liabilities, net of acquisitions: | ' | ' | ' | ' |
Accounts receivable | ' | ' | ' | 241 |
Inventories | ' | ' | ' | 130 |
Prepaid expenses and other current assets | ' | ' | ' | -289 |
Accounts payable and accrued expenses | ' | ' | ' | -285 |
Accrued pension and retirement liabilities | ' | ' | ' | 212 |
Net cash (used in)/provided by operating activities | ' | ' | ' | 8 |
Investing Activities | ' | ' | ' | ' |
Business acquisition, net of cash acquired and reinvested Merger consideration | ' | ' | ' | 4,000 |
Net cash used in investing activities | ' | ' | ' | 4,000 |
Financing Activities | ' | ' | ' | ' |
Proceeds from issuance of common units, net of reinvested consideration proceeds | ' | ' | ' | -4,000 |
Net cash provided by financing activities | ' | ' | ' | -4,000 |
Effect of exchange rates on cash and cash equivalents | ' | ' | ' | ($8) |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Jul. 12, 2013 | Sep. 28, 2014 |
In Thousands, unless otherwise specified | plan | Colt Canada | New Colt | Senior Notes | |
plan | |||||
Basis of Accounting and Consolidation | ' | ' | ' | ' | ' |
Interest payment due in next 12 months | $9,508 | $2,879 | ' | ' | $10,938 |
Ownership interest acquired (as a percent) | ' | ' | ' | 100.00% | ' |
Self Funded Medical Plan [Abstract] | ' | ' | ' | ' | ' |
Number of employee group medical plans | 2 | ' | 1 | ' | ' |
Number of plans relating to domestic operation | 1 | ' | ' | ' | ' |
Individual stop loss limit | 175 | ' | ' | ' | ' |
Aggregate stop loss limit | 14,547 | ' | ' | ' | ' |
Recorded estimated liability | 416 | 823 | ' | ' | ' |
Self Funded Workers Compensation [Abstract] | ' | ' | ' | ' | ' |
Individual stop loss limit | ' | 250 | ' | ' | ' |
Aggregate stop loss limit | ' | 2,000 | ' | ' | ' |
Liability for Workers Compensation | $958 | $214 | ' | ' | ' |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Details 6) | 9 Months Ended | |
Sep. 28, 2014 | Dec. 31, 2013 | |
item | item | |
Revenue | ' | ' |
Number of long-term contracts/programs | 2 | ' |
Number of claims recorded | 0 | 0 |
Acquisition_Details
Acquisition (Details) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||
In Thousands, unless otherwise specified | Sep. 29, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Sep. 29, 2013 | Sep. 29, 2013 | Jul. 12, 2013 | Sep. 29, 2013 | Sep. 29, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Sep. 29, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Dec. 31, 2013 | Sep. 29, 2013 |
Interest expense | Interest expense | Amortization of finite-lived intangible assets | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | New Colt | ||||
New Colt | New Colt | item | License agreements | License agreements | Developed technology | Developed technology | Backlog | Backlog | Amortization of finite-lived intangible assets | Common units | Senior secured term loans | Senior secured term loans | Trademarks | |||||||
Acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of manufacturers of Colt firearms to be consolidated | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Settlement gain on pre-existing relationship | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $15,264 |
Gross settlement gain | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 16,320 |
Prepaid license balance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,056 |
Aggregate purchase price | ' | ' | ' | ' | ' | ' | 82,543 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from senior secured term loan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' |
Aggregate consideration from issue and sale of common units | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,000 | ' | ' | ' |
Aggregate purchase price paid in cash | ' | ' | ' | ' | ' | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Merger consideration reinvested by certain investors | ' | ' | ' | ' | ' | ' | 4,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair values of the assets acquired, net of cash acquired, and the liabilities assumed at the Merger Date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | ' | ' | ' | ' | ' | 3,791 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts receivable | ' | ' | ' | ' | ' | ' | 3,318 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Inventories | ' | ' | ' | ' | ' | ' | 7,585 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' | ' | 5,182 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | ' | ' | ' | ' | ' | ' | 3,090 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets with finite lives | ' | ' | ' | ' | ' | ' | 9,340 | ' | ' | ' | 5,240 | ' | 2,970 | ' | 1,130 | ' | ' | ' | ' | ' |
Trademarks | ' | ' | ' | ' | ' | ' | 50,100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | ' | 50,749 | 51,225 | ' | ' | ' | 36,974 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets acquired | ' | ' | ' | ' | ' | ' | 119,380 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts payable and accrued expenses | ' | ' | ' | ' | ' | ' | 8,808 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Customer advances and deferred revenue | ' | ' | ' | ' | ' | ' | 1,832 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Capital lease obligations | ' | ' | ' | ' | ' | ' | 393 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pension and retirement liabilities | ' | ' | ' | ' | ' | ' | 9,357 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred tax liabilities | ' | ' | ' | ' | ' | ' | 16,447 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total liabilities assumed | ' | ' | ' | ' | ' | ' | 36,837 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net assets acquired | ' | ' | ' | ' | ' | ' | 82,543 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted-average useful lives of acquired assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | '6 years | ' | '20 years | ' | '3 years | ' | ' | ' | ' | ' | ' |
Unaudited pro forma operating results | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | 73,246 | 240,171 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | ' | ' | ' | $194 | $3,402 | $1,408 | ' | $8,647 | $19,189 | ' | ' | ' | ' | ' | ' | $80 | ' | ' | $50,000 | ' |
Restructuring_Costs_Details
Restructuring Costs (Details) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
item | |||||
Restructuring Costs | ' | ' | ' | ' | ' |
Net pre-tax restructuring costs | ' | ' | $1,118 | ' | ' |
Reimbursement from an escrow | -268 | ' | 336 | ' | ' |
Restructuring cost (benefit) | ' | 631 | 782 | -76 | 631 |
Number of salaried employees, reduction in workforce | ' | ' | 10 | ' | ' |
Summary of restructuring activity | ' | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | ' | 706 | ' |
Restructuring cost (benefit) (Note 4) | ' | -631 | ' | 76 | -631 |
Utilization | ' | ' | ' | -491 | ' |
Balance at the end of the period | 139 | ' | 706 | 139 | ' |
Reimbursement from an escrow | $268 | ' | ($336) | ' | ' |
Accounts_Receivable_Details
Accounts Receivable (Details) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts Receivable | ' | ' |
Allowance for doubtful accounts | $68 | $78 |
Inventories_Details
Inventories (Details) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventories | ' | ' |
Raw materials | $43,251 | $43,469 |
Work in process | 20,627 | 9,476 |
Finished products | 12,675 | 13,729 |
Inventories | $76,553 | $66,674 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 29, 2013 |
In Thousands, unless otherwise specified | Land | Land | Building | Building | Machinery and equipment | Machinery and equipment | Machinery and equipment | Machinery and equipment | Machinery and equipment | Furniture, fixtures and leasehold improvements | Furniture, fixtures and leasehold improvements | Furniture, fixtures and leasehold improvements | Furniture, fixtures and leasehold improvements | Furniture, fixtures and leasehold improvements | Construction in process | ||
Minimum | Maximum | Minimum | Maximum | ||||||||||||||
Property and equipment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of the property and equipment acquired | ' | ' | ' | ' | ' | ' | ' | ' | $4,420 | ' | ' | ' | ' | $30 | ' | ' | $732 |
Property and equipment, gross, excluding Construction in process | 62,207 | 57,548 | 322 | 338 | 2,528 | 2,653 | 51,812 | 47,476 | ' | ' | ' | 7,545 | 7,081 | ' | ' | ' | ' |
Less accumulated depreciation and amortization | -36,387 | -32,152 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment, net, excluding Construction in process | 25,820 | 25,396 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Construction in process | 1,934 | 5,337 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment, net | $27,754 | $30,733 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated Useful Life | ' | ' | ' | ' | '33 years | ' | ' | ' | ' | '7 years | '10 years | ' | ' | ' | '3 years | '5 years | ' |
Goodwill_Trademarks_and_Other_2
Goodwill, Trademarks and Other Intangible Assets (Details) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Jul. 12, 2013 | Sep. 28, 2014 | Jun. 29, 2014 | Sep. 28, 2014 |
item | ||||
Changes in the carrying amount of goodwill | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | $51,225 | $51,225 |
Effect of foreign currency translation | ' | ' | ' | -476 |
Balance at the end of the period | ' | 50,749 | ' | 50,749 |
Acquired indefinite-lived intangible for the Colt brand and related trademarks | 50,100 | ' | ' | ' |
Impairment charge | ' | ' | 0 | ' |
Number of reporting units | ' | 2 | ' | ' |
West Hartford facility | ' | ' | ' | ' |
Changes in the carrying amount of goodwill | ' | ' | ' | ' |
Balance at the end of the period | ' | 41,100 | ' | 41,100 |
Estimated fair value as a percentage of the carrying value | ' | 110.00% | ' | 110.00% |
Discount rate used to estimate the present value of future cash flows | ' | ' | ' | 18.00% |
Percentage increase in rate of discount resulting in reduction of fair value | ' | ' | ' | 175 |
Colt Canada | ' | ' | ' | ' |
Changes in the carrying amount of goodwill | ' | ' | ' | ' |
Balance at the end of the period | ' | $9,600 | ' | $9,600 |
Estimated fair value as a percentage of the carrying value | ' | 133.00% | ' | 133.00% |
Goodwill_Trademarks_and_Other_3
Goodwill, Trademarks and Other Intangible Assets (Details 2) (New Colt, USD $) | 0 Months Ended | |
In Thousands, unless otherwise specified | Jul. 12, 2013 | Jul. 12, 2013 |
Acquired finite-lived intangible assets: | ' | ' |
Acquired finite-lived intangible assets | ' | $9,340 |
License agreements | ' | ' |
Acquired finite-lived intangible assets: | ' | ' |
Acquired finite-lived intangible assets | ' | 5,240 |
Weighted-average useful lives of acquired assets | '6 years | ' |
Developed technology | ' | ' |
Acquired finite-lived intangible assets: | ' | ' |
Acquired finite-lived intangible assets | ' | 2,970 |
Weighted-average useful lives of acquired assets | '20 years | ' |
Backlog | ' | ' |
Acquired finite-lived intangible assets: | ' | ' |
Acquired finite-lived intangible assets | ' | $1,130 |
Weighted-average useful lives of acquired assets | '3 years | ' |
Goodwill_Trademarks_and_Other_4
Goodwill, Trademarks and Other Intangible Assets (Details 3) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Customer relationship Canadian Government | Customer relationship Canadian Government | Customer relationships other | Customer relationships other | License agreements | License agreements | Backlog | Backlog | Developed technology | Developed technology | Developed technology | Developed technology | Developed technology | Developed technology | ||
Minimum | Minimum | Maximum | Maximum | |||||||||||||
Net carrying value of intangible assets with finite lives | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross Carrying Amount | $21,640 | $22,071 | $2,257 | $2,369 | $5,869 | $6,160 | $5,240 | $5,240 | $1,694 | $1,722 | $6,580 | $6,580 | ' | ' | ' | ' |
Accumulated Amortization | -10,842 | -8,656 | -702 | -678 | -4,124 | -4,077 | -2,019 | -805 | -1,047 | -604 | -2,950 | -2,492 | ' | ' | ' | ' |
Net | 10,798 | 13,415 | 1,555 | 1,691 | 1,745 | 2,083 | 3,221 | 4,435 | 647 | 1,118 | 3,630 | 4,088 | ' | ' | ' | ' |
Estimated Useful Life | ' | ' | '30 years | '30 years | '20 years | '20 years | '6 years | '6 years | '3 years | '3 years | ' | ' | '15 years | '15 years | '20 years | '20 years |
Expected annual amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 | 3,251 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | 2,766 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | 1,910 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | 1,171 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2018 | $859 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liquidity_Details
Liquidity (Details) (USD $) | 9 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 9 Months Ended | ||||||||||||||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 30, 2014 | Nov. 20, 2014 | Nov. 17, 2014 | Nov. 20, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Sep. 28, 2014 |
United States | United States | Canada | Canada | Netherlands | Netherlands | Senior Notes | Credit Agreement | MS Term Loan and Credit Agreement | Term Loan | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Colt Canada | |||||
Senior Notes | Credit Agreement | MS Term Loan | MS Term Loan | Colt International | ||||||||||||||||
Face amount of term loan facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $70,000 | ' |
Interest payments | 14,031 | 11,503 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,318 | ' | 10,938 | ' | ' | ' | ' |
Additional liquidity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,101 | ' | ' |
Interest payment due in next 12 months | 9,508 | ' | 2,879 | ' | ' | ' | ' | ' | ' | ' | 10,938 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period following each fiscal year within which to provide audited financials per debt covenant | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '90 days | ' | ' | ' | ' | ' | ' | ' |
Amount available under credit agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,113 | ' | ' | ' | ' | 2,473 | ' | ' | ' |
Cash and cash equivalents | 3,963 | 20,607 | 12,594 | 42,373 | 2,029 | 8,363 | 1,911 | 4,213 | 23 | 18 | ' | ' | ' | ' | 8,233 | ' | ' | ' | ' | ' |
Deferred tax liability | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,369 |
Rate Required to Withhold Taxes on Dividends | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% |
Notes_Payable_and_LongTerm_Deb2
Notes Payable and Long-Term Debt (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 6 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | |||||||||||||||||||||||||||
Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Nov. 10, 2009 | Sep. 30, 2014 | Jul. 12, 2013 | Jun. 29, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Jul. 12, 2013 | Aug. 06, 2014 | Nov. 17, 2014 | Aug. 06, 2014 | Sep. 28, 2014 | Sep. 28, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Jun. 30, 2013 | Nov. 20, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2011 | Nov. 20, 2014 | Nov. 17, 2014 | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Nov. 20, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2011 | Nov. 10, 2009 | Sep. 28, 2014 | Dec. 31, 2013 | Nov. 10, 2009 | Nov. 17, 2014 | Jun. 29, 2014 | |
item | item | Colt Finance Corp | Colt Finance Corp | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | Term Loan | MS Term Loan | MS Term Loan | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Credit Agreement | Standby letters of credit | Standby letters of credit | Standby letters of credit | Standby letters of credit | Senior Notes | Senior Notes | Senior Notes | Senior Notes | Senior Notes | Senior Notes | ||||
Subsequent events | Subsequent events | Subsequent events | 3-month LIBOR | Base rate | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Canadian Banker's Acceptance Rate | Lender's prime rate | Minimum | Maximum | Subsequent events | Minimum | |||||||||||||||||||||||||||
item | |||||||||||||||||||||||||||||||||||||||||
Notes payable and long-term debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis spread on variable rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable interest rate base | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Canadian Banker's Acceptance Rate | 'lender's prime rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Alternative reference rate if greater than 3-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized discount | $3,517,000 | ' | $3,517,000 | ' | $3,932,000 | ' | ' | ' | ' | ' | ' | ' | $2,293,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,522,000 | ' | ' |
Financing fees incurred | ' | ' | ' | ' | ' | ' | ' | ' | 2,120,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of rolling quarters for which financial covenants were eliminated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of rolling quarters for which financial covenants were modified | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal installment payments not to be paid under option granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,875,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepayment premium (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | ' | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Extension term granted to deliver financial information to lenders | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '30 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amendment fee agreed to be paid | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 475,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of financial covenants | ' | ' | 4 | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum required EBITDA | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40,000,000 | 40,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Actual minimum EBITDA | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31,833,000 | 63,293,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Threshold limit for fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.9 | 0.9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Actual fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.75 | 1.21 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.77 | 1.54 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Threshold limit for secured coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.2 | 1.2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Actual secured coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.02 | 0.89 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum allowed capital expenditure | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12,000,000 | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Actual capital expenditure | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,693,000 | 8,598,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest payments | ' | ' | 14,031,000 | 11,503,000 | ' | ' | ' | 1,318,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,938,000 | ' |
Face amount of term loan facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 70,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of premium payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,318,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of accrual of interest in cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of accrual of interest in kind | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess availability, threshold limit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | 33,000,000 | ' | ' | ' | ' | ' | ' | ' | 20,000,000 | ' | ' | ' | ' | ' | ' |
Annual fee on unused available balance payable quarterly (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annual servicing fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess availability calculation, trade payables, number of days past due | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '60 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess availability threshold amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount available under credit agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,113,000 | ' | ' | 2,473,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit advance | 13,000,000 | ' | 13,000,000 | ' | 7,083,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 16,000,000 | 13,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Letters of credit outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,815,000 | 3,847,000 | 3,486,000 | ' | ' | ' | ' | ' | ' | ' |
Threshold minimum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | 7,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of ownership | 100.00% | ' | 100.00% | ' | ' | 100.00% | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000,000 | ' | ' | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.75% | ' | ' |
Principal repayments required until maturity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' |
Aggregate default indebtedness | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,000,000 |
Outstanding debt balances | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 307,458,000 | ' | 307,458,000 | ' | 301,900,000 | ' | ' | ' | ' | ' | ' | 46,833,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,000,000 | 7,083,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 248,319,000 | 247,984,000 | ' | ' | ' |
Less: current portion | -307,458,000 | ' | -307,458,000 | ' | -12,083,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt | ' | ' | ' | ' | 289,817,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding debt balances | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of discount | 334,000 | 280,000 | 947,000 | 486,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of deferred financing costs | 577,000 | 575,000 | 1,788,000 | 1,403,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Independent assets or operations | $0 | ' | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued_Expenses_Details
Accrued Expenses (Details) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued Expenses | ' | ' |
Accrued compensation and benefits | $4,243 | $7,154 |
Accrued contract obligation expense | 2,365 | 1,194 |
Accrued federal, excise and other taxes | 2,643 | 4,902 |
Accrued interest | 9,508 | 2,879 |
Accrued commissions | 1,932 | 929 |
Other accrued expenses | 5,387 | 5,100 |
Total accrued expenses | $26,078 | $22,158 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 9 Months Ended | 0 Months Ended | 9 Months Ended | |||||||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Apr. 16, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 |
item | New Colt | New Colt | Colt Canada | Colt International | Colt International | Colt International | Colt Defense LLC and CDTS | Colt Defense LLC and CDTS | Colt Defense and Colt Technical Services LLC | |
Colt Canada | Colt Canada | Colt Canada | Colt International | Colt International | Colt's Manufacturing | |||||
Income taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of units to which highest taxable income allocated | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership percentage | 100.00% | 100.00% | 100.00% | ' | 100.00% | 100.00% | ' | 100.00% | 100.00% | 100.00% |
Dividends paid | ' | ' | ' | $2 | ' | ' | ' | ' | ' | ' |
Rate to withhold taxes on dividends (as a percent) | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' |
Deferred tax liability | ' | ' | ' | ' | ' | ' | $1,369 | ' | ' | ' |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Components of income (loss) before provision for income taxes | ' | ' | ' | ' |
Current | $152 | $12 | $204 | $747 |
Deferred | 1,358 | -220 | 1,239 | -196 |
Total | $1,510 | ($208) | $1,443 | $551 |
Pension_and_Postretirement_Ben2
Pension and Postretirement Benefits (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | |
item | |||||
Pension plans | ' | ' | ' | ' | ' |
Pension and postretirement benefits | ' | ' | ' | ' | ' |
Number of noncontributory plans | ' | ' | ' | ' | 4 |
Additional benefits accrued since effective dates of the freezes of plan | $0 | ' | $0 | ' | ' |
Components of income and cost recognized in our consolidated statement of operations | ' | ' | ' | ' | ' |
Interest cost | 396,000 | 368,000 | 1,187,000 | 918,000 | ' |
Expected return on assets | -478,000 | -419,000 | -1,433,000 | -986,000 | ' |
Amortization of unrecognized loss | 47,000 | 107,000 | 140,000 | 321,000 | ' |
Net periodic cost (income) | -35,000 | 56,000 | -106,000 | 253,000 | ' |
Hourly Plan | ' | ' | ' | ' | ' |
Pension and postretirement benefits | ' | ' | ' | ' | ' |
Number of hourly defined benefit plans | ' | ' | 2 | ' | ' |
Salaried Plan | ' | ' | ' | ' | ' |
Pension and postretirement benefits | ' | ' | ' | ' | ' |
Number of salaried defined benefit plans | ' | ' | 2 | ' | ' |
Postretirement health cost coverage | ' | ' | ' | ' | ' |
Pension and postretirement benefits | ' | ' | ' | ' | ' |
Monthly maximum contribution to the cost of providing retiree health care benefits (in dollars per employee) | ' | ' | 250 | ' | ' |
Number of postretirement health care plans | ' | ' | 2 | ' | ' |
Curtailment of postretirement health care plan | ' | ' | 98,000 | ' | ' |
Components of income and cost recognized in our consolidated statement of operations | ' | ' | ' | ' | ' |
Service cost | 173,000 | 159,000 | 519,000 | 384,000 | ' |
Interest cost | 233,000 | 201,000 | 700,000 | 446,000 | ' |
Curtailment of postretirement health plan | ' | ' | -98,000 | ' | ' |
Amortization of unrecognized prior service costs | -38,000 | -43,000 | -113,000 | -129,000 | ' |
Amortization of unrecognized loss | 33,000 | 61,000 | 99,000 | 184,000 | ' |
Net periodic cost (income) | $401,000 | $378,000 | $1,107,000 | $885,000 | ' |
Accumulated_Deficit_Details
Accumulated Deficit (Details) | Sep. 28, 2014 | Dec. 31, 2013 |
Colt Defense LLC Accumulated Deficit | ' | ' |
Authorized preferred units (in shares) | 250,000 | ' |
Preferred units issued (in shares) | 0 | ' |
Common units | ' | ' |
Colt Defense LLC Accumulated Deficit | ' | ' |
Authorized common units (in shares) | 1,000,000 | ' |
Common units issued (in shares) | 132,174 | 132,174 |
Common units outstanding (in shares) | 132,174 | 132,174 |
Class B common units | ' | ' |
Colt Defense LLC Accumulated Deficit | ' | ' |
Authorized common units (in shares) | 18,878 | ' |
Common units issued (in shares) | 0 | ' |
Accumulated_Deficit_Details_2
Accumulated Deficit (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Sep. 29, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Sep. 29, 2013 | Dec. 31, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Jul. 12, 2013 | Mar. 22, 2013 |
New Colt | Common units | Common units | Common units | |||||||||
New Colt | Blackstone Funds | Blackstone Funds | ||||||||||
Colt defense LLC accumulated deficit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repurchase of common units (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31,165.59 |
Common membership units held by the Blackstone Funds (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% |
Aggregate purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $14,000 |
Common units issued and sold (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 31,165.59 | ' |
Aggregate consideration from issue and sale of common units | ' | ' | ' | ' | ' | ' | 5,000 | ' | ' | 9,000 | ' | ' |
Aggregate purchase price paid in cash | ' | ' | ' | ' | ' | ' | ' | ' | 5,000 | ' | ' | ' |
Merger consideration reinvested by certain investors | ' | ' | ' | ' | ' | ' | ' | ' | 4,000 | ' | ' | ' |
Tax distribution payments to members | 0 | 683 | 0 | 1,200 | 1,357 | 0 | ' | ' | ' | ' | ' | ' |
State of Connecticut members' withholding | ' | 530 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Distribution classified as a long term liability | $2,277 | ' | ' | ' | ' | ' | ' | $2,277 | ' | ' | ' | ' |
Common_Unit_Compensation_Detai
Common Unit Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Mar. 02, 2012 |
Common Unit Compensation | ' | ' | ' | ' | ' | ' |
Nonvoting Class B common units reserved for issuance in connection with awards under the Plan (in shares) | ' | ' | ' | ' | ' | 18,878 |
Term of each option from the grant date | ' | ' | 'P10Y | ' | ' | ' |
Options granted (in shares) | 3,000 | ' | ' | ' | 5,300 | ' |
Weighted-average exercise price (in dollars per share) | $288.78 | ' | ' | ' | $288.78 | ' |
Compensation expense | ' | ' | ' | ' | ' | ' |
Allocated share-based compensation expense in general and administrative expense | $13 | $0 | $95 | $0 | ' | ' |
Transactions_with_Related_Part2
Transactions with Related Parties (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | |||||||||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 29, 2013 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Jul. 31, 2013 | Jul. 31, 2007 | Jul. 31, 2013 |
New Colt | New Colt | West Hartford facility | West Hartford facility | West Hartford facility | West Hartford facility | Colt Defense LLC Profit Sharing Plan | Sciens Institutional and Sciens Management | Sciens Institutional and Sciens Management | Sciens Institutional and Sciens Management | Sciens Institutional and Sciens Management | Consulting Agreement | Consulting Agreement | Archive Services Agreement | |||||
Colt Defense Employee Plan Holding Corp. | Sciens | Sciens | Colt Archive | |||||||||||||||
Transactions with Certain Other Parties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate annual advisory fees | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $350 | ' |
Aggregate annual fees of agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 650 | ' | 241 |
Annual advisory fees | 250 | 220 | 750 | 436 | ' | ' | ' | ' | ' | ' | ' | 250 | 220 | 750 | 436 | ' | ' | ' |
Rent expense | ' | ' | ' | ' | ' | ' | 210 | 210 | 631 | 631 | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership percentage | 100.00% | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' |
Net sales to New Colt | ' | ' | ' | ' | 23,321 | 67,156 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchases from New Colt | ' | ' | ' | ' | 8 | 1,894 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Administration and services fees charged to New Colt | ' | ' | ' | ' | $442 | $1,325 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Jun. 29, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Jun. 29, 2014 | Sep. 29, 2013 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 |
item | item | sqft | M240 Program | M240 Program | M240 Program | M240 Program | M240 Program | M249 contract | Adjustments | Adjustments | Adjustments | Adjustments | M240 Program - contract modification and contract obligation expense | Capital expenditures for machinery and equipment | Capital expenditures for machinery and equipment | Standby letters of credit | Standby letters of credit | Standby letters of credit | Standby letters of credit | Standby letters of credit | Standby letters of credit | Industrial Cooperation Agreements | Industrial Cooperation Agreements | ||||
sqft | M240 Program | M249 contract | Adjustments | Secured by restricted cash | Secured by restricted cash | Secured by Credit Agreement | Secured by Credit Agreement | Established by a sales agent on behalf of Colt | Established by a sales agent on behalf of Colt | ||||||||||||||||||
Commitments and contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Standby letters of credit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,172 | $1,185 | $3,854 | $3,486 | $74 | $74 | ' | ' |
Unconditional purchase obligations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 629 | 892 | ' | ' | ' | ' | ' | ' | ' | ' |
Remaining gross offset purchase commitments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65,325 | 64,131 |
Remaining net offset purchase commitments, accrual amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,998 | 1,639 |
Contract obligation expense | 1,722 | ' | 7,199 | 6,812 | 7,199 | 3,381 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | 51,114 | ' | 73,030 | 150,827 | 201,165 | ' | 200 | ' | ' | ' | ' | ' | -208 | -231 | ' | ' | -6,820 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross profit | 10,597 | ' | 14,543 | 25,284 | 51,523 | ' | ' | ' | ' | ' | ' | ' | -40 | -142 | ' | ' | -10,201 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental contract obligation expense related to inventory reserves | ' | ' | ' | ' | ' | ' | 810 | 1,997 | 311 | 3,118 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental contract obligation expense excluding inventory reserves | ' | ' | ' | ' | ' | ' | 912 | 2,782 | ' | 3,694 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental contract obligation expense | ' | ' | ' | ' | ' | ' | 1,722 | 4,779 | 311 | 6,812 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Inventory reserves | ' | ' | ' | ' | ' | ' | 2,560 | ' | ' | 2,560 | 639 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued contract obligation expenses | 2,365 | ' | ' | 2,365 | ' | 1,194 | 2,365 | ' | ' | 2,365 | 1,194 | ' | ' | ' | ' | 2,090 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred income | 13,968 | ' | ' | 13,968 | ' | 19,467 | 5,244 | ' | ' | 5,244 | 6,820 | ' | ' | ' | 1,376 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other long-term liabilities | 5,949 | ' | ' | 5,949 | ' | 2,230 | 3,466 | ' | ' | 3,466 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
No-Cost Cancellation expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 480 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
No-Cost Cancellation expense related to inventory write-off | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 344 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
No-Cost Cancellation expense related to accruals for other liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 136 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of salaried employees | 33 | 33 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction of hourly employees | 64 | 64 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Severance expenses | 656 | ' | ' | 1,183 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Area of lease facility with Osceola County in Florida (in square feet) | 16,000 | ' | ' | 16,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contributed amount of funds to the County to assist with the cost of the renovations | ' | ' | ' | 250 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contributed amount of funds to County repaid | ' | ' | ' | 50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum capital investment | 2,500 | ' | ' | 2,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Capital investment in lease | ' | ' | ' | 181 | ' | 181 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease term | ' | ' | ' | '12 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease payments due for the initial five years | 0 | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease initial specific period | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease annual cost | ' | ' | ' | 108 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lease annual charge accounted under straight-line basis | ' | ' | ' | 78 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred lease expense | 95 | ' | ' | 95 | ' | 36 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued contractual penalty | $37 | ' | ' | $37 | ' | $50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment_Information_Details
Segment Information (Details) | 9 Months Ended | 12 Months Ended | 0 Months Ended |
Sep. 28, 2014 | Dec. 31, 2013 | Jul. 12, 2013 | |
item | item | New Colt | |
item | |||
Segment information | ' | ' | ' |
Number of manufacturers of Colt firearms to be consolidated | ' | ' | 2 |
Number of operating segments | 2 | 2 | ' |
Segment_Information_Details_2
Segment Information (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 |
Statement of Operations Data: | ' | ' | ' | ' | ' | ' |
Net income (loss) | ($7,834) | $10,857 | ' | ($28,369) | $20,373 | ' |
Income tax expense (benefit) | 1,510 | -208 | ' | 1,443 | 551 | ' |
Depreciation and amortization | 2,427 | 1,926 | ' | 7,086 | 4,294 | ' |
Interest expense, net | 7,904 | 7,623 | ' | 23,447 | 19,686 | ' |
Sciens fees and expenses | 250 | 220 | ' | 750 | 436 | ' |
Transaction costs | -12 | 461 | ' | -12 | 877 | ' |
Restructuring costs | ' | -631 | ' | 76 | -631 | ' |
Restructuring cost (benefit) | ' | 631 | 782 | -76 | 631 | ' |
Gain on effective settlement of contract | ' | -15,264 | ' | ' | -15,264 | ' |
Lease buyout expenses | ' | 287 | ' | ' | 287 | ' |
M240 Program contract obligation expense | 1,722 | 7,199 | ' | 6,812 | 7,199 | 3,381 |
Business development costs | ' | 463 | ' | 509 | 707 | ' |
Severance Costs | 656 | ' | ' | 1,183 | ' | ' |
Other (income)/expense, net | -55 | 215 | ' | -168 | -516 | ' |
Adjusted EBITDA | $6,568 | $14,410 | ' | $12,605 | $39,261 | ' |
Segment_Information_Details_3
Segment Information (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Product Information | ' | ' | ' | ' |
Net sales | $51,114 | $73,030 | $150,827 | $201,165 |
New Colt | ' | ' | ' | ' |
Product Information | ' | ' | ' | ' |
Net sales | 16,700 | ' | 53,100 | ' |
Long guns | ' | ' | ' | ' |
Product Information | ' | ' | ' | ' |
Net sales | 23,490 | 48,749 | 63,797 | 154,626 |
Handguns | ' | ' | ' | ' |
Product Information | ' | ' | ' | ' |
Net sales | 15,651 | 12,486 | 49,541 | 15,007 |
Spares and other | ' | ' | ' | ' |
Product Information | ' | ' | ' | ' |
Net sales | $11,973 | $11,795 | $37,489 | $31,532 |
Segment_Information_Details_4
Segment Information (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | $51,114 | $73,030 | $150,827 | $201,165 | ' |
Long-lived assets | 27,754 | ' | 27,754 | ' | 30,733 |
United States | ' | ' | ' | ' | ' |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | 30,419 | 46,075 | 103,639 | 120,842 | ' |
Long-lived assets | 23,269 | ' | 23,269 | ' | 25,745 |
Canada | ' | ' | ' | ' | ' |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | 2,745 | 5,253 | 11,062 | 20,206 | ' |
Long-lived assets | 4,485 | ' | 4,485 | ' | 4,988 |
Latin America/Caribbean | ' | ' | ' | ' | ' |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | 3,000 | 4,626 | 5,970 | 5,670 | ' |
Middle East/Africa | ' | ' | ' | ' | ' |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | 9,393 | 48 | 12,726 | 618 | ' |
Europe | ' | ' | ' | ' | ' |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | 5,199 | 1,521 | 10,932 | 6,124 | ' |
Asia/Pacific | ' | ' | ' | ' | ' |
Geographical Information | ' | ' | ' | ' | ' |
Net sales | $358 | $15,507 | $6,498 | $47,705 | ' |
Segment_Information_Details_5
Segment Information (Details 5) (Net sales, Customer concentration risk) | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 | |
Direct foreign customer | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Number of major customers | ' | 1 | 0 | ' |
Direct foreign customer | Maximum | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Percentage of net sales | ' | ' | 10.00% | ' |
Direct foreign customer, one | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Percentage of net sales | 16.00% | 21.00% | ' | ' |
Number of major customers | 1 | ' | ' | ' |
Direct foreign customer, two | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Percentage of net sales | ' | ' | ' | 11.00% |
Number of major customers | ' | ' | ' | 2 |
Colt's Manufacturing | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Percentage of net sales | ' | 0.00% | ' | 22.00% |
Domestic distributor | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Percentage of net sales | 11.00% | 24.00% | ' | ' |
Number of major customers | 1 | 1 | 0 | ' |
U.S. Government | ' | ' | ' | ' |
Major Customer Information | ' | ' | ' | ' |
Percentage of net sales | 5.00% | 7.10% | 6.00% | 11.00% |
Concentration_of_risk_Details
Concentration of risk (Details) | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 30, 2014 | Mar. 30, 2014 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Dec. 31, 2013 | Sep. 28, 2014 | Sep. 28, 2014 |
Colt's Manufacturing | Agreement with UAW Local 376 | Labor concentration risk | Labor concentration risk | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | U.S. workforce | |
item | Colt's Manufacturing | Agreement with UAW Local 376 | Agreement with UAW Local 376 | Concentration of credit risk | Concentration of credit risk | Concentration of credit risk | Concentration of credit risk | Concentration of credit risk | Concentration of credit risk | Concentration of credit risk | Labor concentration risk | |
Colt's Manufacturing | Colt's Manufacturing | item | item | Customer with largest individual trade balance | Customer with largest individual trade balance | Customer with second largest individual trade balance | Customer with second largest individual trade balance | Customer with third largest individual trade balance | ||||
item | ||||||||||||
Concentration of risks | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of largest individual trade receivable balances | ' | ' | ' | ' | 3 | 2 | ' | ' | ' | ' | ' | ' |
Concentration risk, percentage | ' | ' | ' | ' | ' | ' | 19.00% | 28.00% | 12.00% | 16.00% | 10.00% | 74.00% |
Term of contract | ' | '5 years | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of employee covered | 529 | ' | ' | 515 | ' | ' | ' | ' | ' | ' | ' | ' |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Details) (USD $) | Sep. 28, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value of Financial Instruments | ' | ' |
Carrying value of long-term debt | $294,458 | $5,000 |
Estimated fair value of long-term debt | $195,885 | $262,775 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 29, 2013 | Sep. 28, 2014 | Sep. 29, 2013 |
Components of accumulated other comprehensive loss | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | ($9,340) | ($13,841) |
Other comprehensive income before reclassifications | -1 | ' | -1,551 | ' |
Amounts reclassified from accumulated other comprehensive income | 43 | 126 | 126 | 376 |
Currency translation | -975 | 457 | -1,115 | -1,140 |
Net current period other comprehensive income | ' | ' | -2,540 | -764 |
Balance at the end of the period | -11,880 | -14,605 | -11,880 | -14,605 |
Unrecognized Prior Service Cost | ' | ' | ' | ' |
Components of accumulated other comprehensive loss | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | 653 | 825 |
Other comprehensive income before reclassifications | ' | ' | -98 | ' |
Amounts reclassified from accumulated other comprehensive income | ' | ' | -113 | -129 |
Net current period other comprehensive income | ' | ' | -211 | -129 |
Balance at the end of the period | 442 | 696 | 442 | 696 |
Unrecognized Loss | ' | ' | ' | ' |
Components of accumulated other comprehensive loss | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | -10,836 | -17,399 |
Other comprehensive income before reclassifications | ' | ' | -1,453 | ' |
Amounts reclassified from accumulated other comprehensive income | ' | ' | 239 | 505 |
Net current period other comprehensive income | ' | ' | -1,214 | 505 |
Balance at the end of the period | -12,050 | -16,894 | -12,050 | -16,894 |
Foreign Currency Translation | ' | ' | ' | ' |
Components of accumulated other comprehensive loss | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | 843 | 2,733 |
Currency translation | ' | ' | -1,115 | -1,140 |
Net current period other comprehensive income | ' | ' | -1,115 | -1,140 |
Balance at the end of the period | ($272) | $1,593 | ($272) | $1,593 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||
In Thousands, unless otherwise specified | Sep. 28, 2014 | Sep. 28, 2014 | Sep. 29, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 28, 2014 | Sep. 29, 2011 | Dec. 31, 2014 | Nov. 20, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Nov. 17, 2014 | Nov. 20, 2014 | Nov. 17, 2014 | Nov. 17, 2014 |
Term Loan | Credit Agreement | Credit Agreement | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | Subsequent events | ||||||
item | MS Term Loan | MS Term Loan | Term Loan | Term Loan | Credit Agreement | Credit Agreement | Senior Notes | ||||||||||
Subsequent Event | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Face amount of term loan facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $70,000 | ' | ' | ' | ' | ' |
Interest payments | ' | 14,031 | 11,503 | ' | ' | 1,318 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,938 |
Percentage of accrual of interest in cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' | ' | ' | ' | ' | ' |
Percentage of accrual of interest in kind | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' |
Amount of premium payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,318 | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | 33,000 | ' |
Threshold minimum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500 | 7,500 | ' |
Repayments of Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 52,966 | ' | ' | ' | ' |
Payment of fees and expenses | ' | 56 | 1,961 | ' | ' | ' | ' | ' | ' | ' | 1,995 | ' | ' | ' | ' | ' | ' |
Net proceeds remitted to the company for additional liquidity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,101 | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | 3,963 | 3,963 | 20,607 | 12,594 | 42,373 | ' | ' | ' | ' | 8,233 | ' | ' | ' | ' | ' | ' | ' |
Amount available under credit agreement | ' | ' | ' | ' | ' | ' | 2,113 | ' | ' | ' | ' | ' | ' | ' | 2,473 | ' | ' |
Number of employees discontinued employment | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' |
Severance Costs | $656 | $1,183 | ' | ' | ' | ' | ' | ' | $696 | ' | ' | ' | ' | ' | ' | ' | ' |