Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 01, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | ALLIED MOTION TECHNOLOGIES INC | ||
Entity Central Index Key | 46,129 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 142,682,759 | ||
Entity Common Stock, Shares Outstanding | 9,276,241 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 21,278 | $ 13,113 |
Trade receivables, net of allowance for doubtful accounts of $611 and $367 at December 31, 2015 and 2014, respectively | 22,710 | 27,745 |
Inventories, net | 26,175 | 25,371 |
Deferred income taxes | 1,583 | 1,888 |
Prepaid expenses and other assets | 3,749 | 2,667 |
Total Current Assets | 75,495 | 70,784 |
Property, plant and equipment, net | 35,315 | 37,041 |
Deferred income taxes | 3,516 | 4,164 |
Intangible assets, net | 29,984 | 32,791 |
Goodwill | 17,757 | 18,303 |
Other long term assets | 4,019 | 3,998 |
Total Assets | 166,086 | 167,081 |
Current Liabilities: | ||
Debt obligations | 9,860 | 7,723 |
Accounts payable | 13,000 | 15,510 |
Accrued liabilities | 11,121 | 12,723 |
Total Current Liabilities | 33,981 | 35,956 |
Long-term debt | 58,906 | 67,125 |
Deferred income taxes | 3,181 | 2,740 |
Deferred compensation arrangements | 2,636 | 2,167 |
Pension and post-retirement obligations | 2,785 | 3,142 |
Total Liabilities | $ 101,489 | $ 111,130 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Common stock, no par value, authorized 50,000 shares; 9,276 and 9,213 shares issued and outstanding at December 31, 2015 and 2014, respectively | $ 27,824 | $ 25,129 |
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding | ||
Retained earnings | $ 46,650 | $ 36,505 |
Accumulated other comprehensive income (loss) | (9,877) | (5,683) |
Total Stockholders' Equity | 64,597 | 55,951 |
Total Liabilities and Stockholders' Equity | $ 166,086 | $ 167,081 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, allowance for doubtful accounts (in dollars) | $ 611 | $ 367 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares | 50,000 | 50,000 |
Common stock, shares issued | 9,276 | 9,213 |
Common stock, shares outstanding | 9,276 | 9,213 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Revenues | $ 232,434 | $ 249,682 | $ 125,502 | |
Cost of goods sold | 163,662 | 176,256 | 88,980 | |
Gross margin | 68,772 | 73,426 | 36,522 | |
Operating costs and expenses: | ||||
Selling | 8,149 | 8,709 | 5,513 | |
General and administrative | 22,251 | 23,972 | 13,282 | |
Engineering and development | 14,229 | 13,881 | 7,931 | |
Business development | 569 | 1,913 | ||
Amortization of intangible assets | 2,644 | 2,714 | 825 | |
Total operating costs and expenses | 47,842 | 49,276 | 29,464 | |
Operating income | 20,930 | 24,150 | 7,058 | |
Other expense (income): | ||||
Interest expense | 6,023 | 6,435 | 1,445 | |
Other expense (income), net | (514) | (908) | (168) | |
Total other expense (income), net | 5,509 | 5,527 | 1,277 | |
Income before income taxes | 15,421 | 18,623 | 5,781 | |
Provision for income taxes | (4,347) | (4,763) | (1,828) | |
Net income | $ 11,074 | $ 13,860 | $ 3,953 | |
Basic earnings per share: | ||||
Earnings per share (in dollars per share) | $ 1.20 | $ 1.52 | $ 0.45 | |
Basic weighted average common shares (in shares) | 9,228 | 9,145 | 8,833 | |
Diluted earnings per share: | ||||
Earnings per share (in dollars per share) | $ 1.20 | $ 1.51 | $ 0.45 | |
Diluted weighted average common shares (in shares) | 9,238 | 9,165 | 8,840 | |
Net income | $ 11,074 | $ 13,860 | $ 3,953 | |
Foreign currency translation adjustment | (4,334) | (5,601) | 652 | |
Change in accumulated income (loss) income on derivatives | (25) | (43) | 41 | |
Pension adjustments (1) | [1] | 165 | (663) | 854 |
Comprehensive income | $ 6,880 | $ 7,553 | $ 5,500 | |
[1] | Net of tax of $114, ($460) and $480 for the periods ending December 31, 2015, 2014 and 2013, respectively. |
CONSOLIDATED STATEMENTS OF INC5
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||
Tax portion on pension adjustments | $ 114 | $ (460) | $ 480 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Unamortized Cost of Equity Awards | Retained Earnings | Foreign Currency Translation Adjustment | Cash Flow Hedges | Defined Benefit Plan Liability | Total |
Balances at Dec. 31, 2012 | $ 23,474 | $ (927) | $ 20,528 | $ 121 | $ (1,044) | $ 42,152 | |
Balances (in shares) at Dec. 31, 2012 | 8,631 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 420 | 420 | |||||
Stock transactions under employee benefit stock plans (in shares) | 61 | ||||||
Issuance of restricted stock, net of forfeitures | $ 3,141 | (3,264) | (123) | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 399 | ||||||
Stock compensation expense | 927 | 927 | |||||
Comprehensive income (loss) | 652 | $ 41 | 1,334 | 2,027 | |||
Tax effect | (480) | (480) | |||||
Net income | 3,953 | 3,953 | |||||
Dividends to Stockholders | (873) | (873) | |||||
Balances at Dec. 31, 2013 | $ 27,035 | (3,264) | 23,608 | 773 | 41 | (190) | 48,003 |
Balances (in shares) at Dec. 31, 2013 | 9,091 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 344 | 344 | |||||
Stock transactions under employee benefit stock plans (in shares) | 30 | ||||||
Issuance of restricted stock, net of forfeitures | $ 1,074 | (1,601) | (527) | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 92 | ||||||
Stock compensation expense | 1,541 | 1,541 | |||||
Comprehensive income (loss) | (5,601) | (43) | (1,123) | (6,767) | |||
Tax effect | 460 | 460 | |||||
Net income | 13,860 | 13,860 | |||||
Dividends to Stockholders | (963) | (963) | |||||
Balances at Dec. 31, 2014 | $ 28,453 | (3,324) | 36,505 | (4,828) | (2) | (853) | $ 55,951 |
Balances (in shares) at Dec. 31, 2014 | 9,213 | 9,213 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 1,014 | $ 1,014 | |||||
Stock transactions under employee benefit stock plans (in shares) | 37 | ||||||
Issuance of restricted stock, net of forfeitures | $ 2,064 | (2,040) | 24 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 76 | ||||||
Stock compensation expense | $ (7) | 1,751 | 1,744 | ||||
Shares withheld for payment of employee payroll taxes | $ (1,559) | (1,559) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (50) | ||||||
Excess tax benefit from stock based compensation arrangement | $ 1,461 | 1,461 | |||||
Comprehensive income (loss) | (4,334) | (25) | 279 | (4,080) | |||
Tax effect | (114) | (114) | |||||
Net income | 11,074 | 11,074 | |||||
Dividends to Stockholders | 11 | (929) | (918) | ||||
Balances at Dec. 31, 2015 | $ 31,437 | $ (3,613) | $ 46,650 | $ (9,162) | $ (27) | $ (688) | $ 64,597 |
Balances (in shares) at Dec. 31, 2015 | 9,276 | 9,276 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows From Operating Activities: | |||
Net income | $ 11,074 | $ 13,860 | $ 3,953 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 7,466 | 7,267 | 2,913 |
Deferred income taxes | 1,417 | 1,208 | 90 |
Excess tax benefit from stock-based payment arrangements | (1,461) | ||
Provision for doubtful accounts | 333 | 473 | 158 |
Provision for excess and obsolete inventory | 432 | 753 | 105 |
Provision for warranty | 142 | 234 | 175 |
Restricted stock compensation | 1,744 | 1,541 | 927 |
Other | 216 | 429 | (385) |
Changes in operating assets and liabilities, excluding changes due to acquisition: | |||
(Increase) decrease in trade receivables, net | 3,655 | (2,504) | 196 |
(Increase) decrease in inventories | (2,262) | (2,864) | 1,763 |
(Increase) decrease in prepaid expenses and other | (1,394) | 194 | (561) |
Increase (decrease) in accounts payable | (1,874) | 752 | 558 |
Increase (decrease) in accrued liabilities and other | 585 | (1,157) | 903 |
Net cash provided by operating activities | 20,073 | 20,186 | 10,795 |
Cash Flows From Investing Activities: | |||
Proceeds from working capital adjustment and (consideration paid for acquisition, net of cash acquired) | 1,397 | (91,607) | |
Purchase of property and equipment | (4,730) | (4,046) | (3,087) |
Net cash used in investing activities | (4,730) | (2,649) | (94,694) |
Cash Flows From Financing Activities: | |||
Borrowings (repayments) on lines-of-credit, net | 383 | (7,541) | 8,475 |
Principal payments of long-term debt | (6,375) | (5,250) | (1,250) |
Proceeds from issuance of long-term debt | 80,000 | ||
Change in restricted cash obligations | 1,800 | (1,800) | |
Payment of debt issuance costs | (2,377) | ||
Dividends paid to stockholders | (923) | (853) | (889) |
Shares withheld for payment of employee payroll taxes | (1,559) | ||
Excess tax benefit from stock-based payment arrangements | 1,461 | ||
Stock transactions under employee benefit stock plans | 918 | 344 | 434 |
Net cash (used in) provided by financing activities | (6,095) | (11,500) | 82,593 |
Effect of foreign exchange rate changes on cash | (1,083) | (1,295) | (51) |
Net increase (decrease) in cash and cash equivalents | 8,165 | 4,742 | (1,357) |
Cash and cash equivalents at beginning of period | 13,113 | 8,371 | 9,728 |
Cash and cash equivalents at end of period | 21,278 | 13,113 | 8,371 |
Net cash paid during the period for: | |||
Interest | 5,575 | 6,014 | 1,326 |
Income taxes | $ 2,125 | $ 5,921 | $ 1,099 |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Allied Motion Technologies Inc. (Allied Motion or the Company) is engaged in the business of designing, manufacturing and selling motion control solutions, which include integrated system solutions as well as individual motion control products, to a broad spectrum of customers throughout the world primarily for the commercial motor, industrial motion, automotive control, medical, and aerospace and defense markets. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. For business combinations, we record net assets acquired and liabilities assumed at their fair values. The operating results for Globe Motors, Inc. (Note 2.) are included in the consolidated statements of income and comprehensive income for the year ended December 31, 2013 from October 18, 2013, the date of acquisition. Cash and Cash Equivalents Cash and cash equivalents include instruments which are readily convertible into cash (original maturities of three months or less) and which are not subject to significant risk of changes in interest rates. Cash flows from foreign currency transactions are translated using an average rate. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. Activity in the allowance for doubtful accounts for 2015, 2014 and 2013 was as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Beginning balance $ $ $ Allowance for doubtful accounts acquired — — Additional reserves Writeoffs ) ) Effect of foreign currency translation ) Ending balance $ $ $ Inventories Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market, as follows (in thousands): December 31, 2015 December 31, 2014 Parts and raw materials $ $ Work-in-process Finished goods Less reserves ) ) Inventories, net $ $ The Company recorded provisions for excess and obsolete inventories of approximately $432, $753 and $105 for 2015, 2014 and 2013, respectively. Property, Plant and Equipment Property, plant and equipment is classified as follows (in thousands): Useful lives December 31, 2015 December 31, 2014 Land $ $ Building and improvements 5 - 39 years Machinery, equipment, tools and dies 3 - 15 years Furniture, fixtures and other 3 - 10 years Less accumulated depreciation ) ) Property, plant and equipment, net $ $ Depreciation expense is provided using the straight-line method over the estimated useful lives of the assets. Amortization of building improvements is provided using the straight-line method over the life of the lease term or the life of the assets, whichever is shorter. Maintenance and repair costs are charged to operations as incurred. Major additions and improvements are capitalized. The cost and related accumulated depreciation of retired or sold property are removed from the accounts and the resulting gain or loss, if any, is reflected in earnings. Depreciation expense was approximately $4,822, $4,553 and $2,088 in 2015, 2014 and 2013, respectively. Intangible Assets Intangible assets, other than goodwill, are recorded at cost and are amortized over their estimated useful lives using the straight-line method. Impairment of Long-Lived Assets The Company reviews the carrying values of its long-lived assets, including property, plant and equipment and intangible assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Long-lived assets are carried at historical cost if the projected cash flows from their use will recover their carrying amounts on an undiscounted basis and without considering interest. If projected cash flows are less than their carrying value, the long-lived assets must be reduced to their estimated fair value. Considerable judgment is required to project such cash flows and, if required, estimate the fair value of the impaired long-lived asset. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is recorded at fair value and not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. The Company has defined one reporting unit that is the same as its operating segment. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than carrying amount, or if significant adverse changes in the Company’s future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, the Company can elect to forgo the qualitative assessment and perform the quantitative test. The first step of the quantitative test compares the fair value of the reporting unit to its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, there is a potential impairment and the second step must be performed. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, the excess is required to be recorded as an impairment charge. The implied fair value of goodwill is determined by assigning the fair value of the reporting unit to all the assets and liabilities of that unit (including any unrecognized intangible assets) as if it had been acquired in a business combination. The Company has elected to perform the annual impairment assessment for goodwill each year in the fourth quarter. At October 31, 2015, we performed our annual assessment of fair value and concluded that there was no impairment related to goodwill. The Company did not record any impairment charges for the twelve months ended December 31, 2015, 2014 or 2013. Other Long-term Assets Other long-term assets include securities that the Company has purchased with the intent of funding the deferred compensation arrangements for certain executives of the Company as well as deferred finance costs. These items are accounted for at fair value on a recurring basis. Any changes in value are included in Net Income in the Company’s consolidated statements of income and comprehensive income. Warranty The Company offers warranty coverage for its products. The length of the warranty period for its products varies significantly based on the product being sold. The Company estimates the costs of repairing products under warranty based on the historical average cost of the repairs. The assumptions used to estimate warranty accruals are reevaluated periodically in light of actual experience and, when appropriate, the accruals are adjusted. Estimated warranty costs are recorded at the time of sale of the related product, and are considered a cost of sale. Changes in the Company’s reserve for product warranty claims during 2015, 2014 and 2013 were as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Warranty reserve at beginning of the year $ $ $ Warranty reserves acquired — — Provision Warranty expenditures ) ) ) Effect of foreign currency translation ) ) Warranty reserve at end of year $ $ $ In 2012, $342 was recorded as part of the warranty provision to cover the expected costs of replacing certain products in the field due to an incorrect electronic component in a printed circuit board supplied by one of the Company’s sub-contract suppliers. In 2013, $44 of additional provision was recorded, and $367 of warranty expenditures were incurred related to this issue resulting in a reserve balance of $30 net of the effect of foreign currency translation. In 2014, the remaining material was scrapped and the reserve was reduced to $0. Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2015 December 31, 2014 Compensation and fringe benefits $ $ Warranty reserve Other accrued expenses $ $ Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in other comprehensive income, a component of stockholders’ equity in the accompanying consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the Technology Units (“TUs”) are included in the results of operations as incurred. Revenue Recognition The Company recognizes revenue when products are shipped or delivered (shipping terms may be either FOB shipping point or destination) and title has passed to the customer, persuasive evidence of an arrangement exists, the selling price is fixed or determinable, and collectability is reasonably assured. Engineering and Development Costs The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. Engineering and development costs are expensed as incurred. Basic and Diluted Income per Share Basic income per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding. Diluted income per share is determined by dividing the net income by the sum of (1) the weighted average number of common shares outstanding and (2) if not anti-dilutive, the effect of stock awards determined utilizing the treasury stock method. The dilutive effect of outstanding awards was 10,000, 20,000 and 7,000 shares for the years 2015, 2014 and 2013, respectively. No stock awards were excluded from the calculation of diluted income per share for years 2015, 2014 and 2013. Comprehensive Income Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by and distributions to stockholders. Fair Value Accounting Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments. The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of December 31, 2015 and 2014, respectively, by level within the fair value hierarchy (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — December 31, 2014 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — Derivative Financial Instruments Disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. Income Taxes The current provision for income taxes represents actual or estimated amounts payable or refundable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. A valuation allowance may be provided to the extent management deems it is more likely than not that deferred tax assets will not be realized. The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income, in the appropriate taxing jurisdictions, during the periods in which temporary differences, net operating losses and tax credits become realizable. Management believes that it is more likely than not that the Company will realize the benefits of these temporary differences and operating loss and tax credit carryforwards, net of valuation allowances. Realization of an uncertain income tax position must have a “more likely than not” probability of being sustained based on technical merits before it can be recognized in the financial statements, assuming a review by tax authorities having all relevant information and applying current conventions. The Company does not have significant unrecognized tax benefits and does not anticipate a significant increase or decrease in unrecognized tax benefits within the next twelve months. Income tax related interest and penalties recognized in 2015, 2014 and 2013 are de minimus. Pension and Postretirement Welfare Plans The Company reports gains or losses and prior service costs or credits that arise during the period, but not recognized as components of net periodic benefit cost, as a component of other comprehensive income, net of tax. Amounts recognized in accumulated other comprehensive income are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements. Concentration of Credit Risk Trade receivables subject the Company to the potential for credit risk. To reduce this risk, the Company performs evaluations of its customers’ financial condition and creditworthiness at the time of sale, and updates those evaluations when necessary. See Note 12 for additional information regarding customer concentration. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2015 presentation. Recently adopted accounting pronouncements Effective January 1, 2015, the Company adopted Accounting Standards Update (“ASU”) No. 2015-01, “ Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ” which eliminates from GAAP the concept of extraordinary items. However, the presentation and disclosure guidance for items that are unusual in nature or infrequent in occurrence was retained. The updated guidance was adopted prospectively. The adoption of this update concerns presentation and disclosure only as it relates to the Company’s condensed consolidated financial statements. Effective January 1, 2015, the Company adopted ASU No. 2014-08, “ Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements . To qualify as a discontinued operation the standard requires a disposal to represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The standard also expands the disclosures for discontinued operations and requires new disclosures related to individually material dispositions that do not qualify as discontinued operations. The standard is effective prospectively for fiscal years beginning after December 15, 2014. The significance of this guidance for the Company is dependent on any qualifying dispositions or disposals. Recently issued accounting pronouncements In February, 2016, the FASB issued ASU 2016-02, which amends the FASB Accounting Standards Codification and creates Topic 842, “ Leases .” The new topic supersedes Topic 840, “ Leases ,” and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method. The Company is currently assessing the impact this guidance will have on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. The Update requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for our financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Earlier application is permitted. ASU 2015-17 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In September 2015, the FASB issued ASU No. 2015-16, “ Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments .” This standard requires that an entity recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The update requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This standard is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. ASU 2015-16 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “ Simplifying the Measurement of Inventory .” The standard applies to inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of the standard at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amendments in ASU 2015-11 more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The standard is effective for fiscal years beginning after December 15, 2016. ASU 2015-11 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs .” The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance will be effective for the Company beginning in the first quarter of fiscal year 2018 using one of two prescribed retrospective methods. Early adoption is not permitted. The Company has not yet selected a transition method, or determined the effect of the standard on its ongoing financial reporting. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2015 | |
ACQUISITIONS | |
ACQUISITIONS | 2. ACQUISITIONS On August 22, 2013, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) to purchase all of the outstanding equity interests of Globe Motors, Inc., a Delaware corporation (“Globe Motors” or “Globe”) from Safran USA, Inc. (the “Seller”), for approximately $90,000 in cash. The acquisition closed on October 18, 2013. Globe Motors is headquartered in Dayton, Ohio, and has manufacturing facilities located in the U.S, Portugal and Mexico. The purchase price of $90,000 was comprised of $4,300 cash paid at closing, as well as funds acquired from the new Credit Agreement and Senior Subordinated Notes. The Company incurred $1,913 of transaction costs related to the acquisition of Globe Motors. Transaction costs are included in Business development expenses on the consolidated statements of income and comprehensive income. The Company accounted for the acquisition pursuant to ASC 805, “Business Combinations.” The final purchase price was allocated to the underlying net assets based on fair value as of the acquisition date, as follows (in thousands): October 18, 2013 Trade receivables, net $ Inventories, net Prepaid expenses and other assets Property, plant and equipment Amortizable intangible assets Goodwill Accounts payable ) Accrued liabilities ) Net purchase price $ The purchase price excluded any cash on hand and any debt of Globe Motors. The purchase price allocation has been revised to reflect final valuations of intangible assets, property plant and equipment, adjustments to income taxes and the offsetting adjustments to goodwill. During the first quarter of 2014, the Company received $1,434 from the Seller for a working capital adjustment, reducing the purchase price to $88,566. The intangible assets acquired consist of customer lists and a tradename, which are being amortized over 15 and 10 years, respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other TUs and Globe Motors that will occur as a result of the combined engineering knowledge, the ability of each of the TUs to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Globe’s management knowledge in providing complementary product offerings to the Company’s customers. Pro forma Condensed Combined Financial Information (Unaudited) The following presents the Company’s unaudited pro forma financial information for the year ended December 31, 2013 giving effect to the acquisition of Globe Motors as if it had occurred at January 1, 2013. Included in the pro forma information is: the additional depreciation and amortization resulting from the valuation of amortizable tangible and intangible assets; interest on borrowings made by the Company; amortization of deferred finance costs incurred to issue the borrowings; removal of acquisition related transaction costs; removal of certain costs for which Allied Motion would be indemnified by the seller and stock compensation expense related to shares issued to certain executives of Allied Motion as a result of the acquisition. For the year ended December 31, 2013 Revenues $ Net income $ Diluted net income per share $ The pro forma adjustments do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of this acquisition. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would actually have been had these transactions actually occurred on the dates presented or to project the combined company’s results of operations or financial position for any future period. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL | |
GOODWILL | 3. GOODWILL The change in the carrying amount of goodwill for 2015, 2014 and 2013 is as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Beginning balance $ $ $ Goodwill acquired — — Acquisition adjustments — ) — Effect of foreign currency translation ) ) Ending balance $ $ $ |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 4. INTANGIBLE ASSETS Intangible assets on the Company’s consolidated balance sheets consist of the following (in thousands): December 31, 2015 December 31, 2014 Life Gross Amount Accumulated amortization Net Book Value Gross Amount Accumulated amortization Net Book Value Customer lists 10 - 15 years $ $ ) $ $ $ ) $ Trade name 10 years ) ) Design and technologies 8 - 10 years ) ) Patents ) ) Total $ $ ) $ $ $ ) $ Total amortization expense for intangible assets for the years 2015, 2014 and 2013 was $2,644, $2,714 and $825, respectively. Estimated amortization expense for intangible assets is as follows: Year ending December 31, Total 2016 $ 2017 2018 2019 2020 Thereafter $ |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2015 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | 5. STOCK-BASED COMPENSATION PLANS Stock Incentive Plans The Company’s Stock Incentive Plans provide for the granting of stock awards, including stock options, stock appreciation rights and restricted stock, to employees and non-employees, including directors of the Company. As of December 31, 2015, the Company had 748,686 shares of Common Stock available for grant under stock incentive plans. Restricted Stock The following is a summary of restricted stock grants, fair value and performance based awards: For the year ended December 31, Unvested restricted stock awards Weighted average grant date fair value Awards with performance vesting requirements 2015 $ 2014 $ 2013 $ The value at the date of award is amortized to compensation expense over the related service period, which is generally three years (for time vested grants), or over the performance period. Shares of non-vested restricted stock are forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards. The following is a summary of restricted stock activity during years 2015, 2014 and 2013: Number of Nonvested Restricted Shares Balance, December 31, 2012 Awarded Forfeited ) Vested ) Balance, December 31, 2013 Awarded Forfeited ) Vested ) Balance, December 31, 2014 Awarded Forfeited ) Vested ) Balance, December 31, 2015 The following is a summary of performance based restricted stock activity during years 2015, 2014 and 2013: Total performance grants Outstanding, December 31, 2012 Awarded Performance criteria met ) Forfeited ) Outstanding, December 31, 2013 Awarded Performance criteria met ) Forfeited ) Outstanding, December 31, 2014 Awarded Performance criteria met ) Forfeited ) Outstanding, December 31, 2015 The performance criteria and forfeitures in the above table did not occur until the Board of Directors approved them during the February 2016, 2015 and 2014 meetings. Share-Based Compensation Expense Restricted Stock During 2015, 2014 and 2013, compensation expense net of forfeitures of $1,744, $1,541 and $927 was recorded, respectively. As of December 31, 2015, there was $3,384 of total unrecognized compensation expense related to restricted stock awards, of which approximately $1,563 is expected to be recognized in 2016. Employee Stock Ownership Plan The Company sponsors an Employee Stock Ownership Plan (“ESOP”) that covers all non-union U.S. employees who work over 1,000 hours per year. The terms of the ESOP require the Company to make an annual contribution equal to the greater of i) the Board established percentage of pretax income before the contribution (5% in 2015 and 2014) or ii) the annual interest payable on any loan outstanding to the Company. Company contributions to the Plan accrued for 2015, 2014 and 2013, respectively, were $812, $980 and $304. These amounts are included in General and Administrative costs in the consolidated statements of income and comprehensive income. Defined Contribution Plan The Company sponsors the Allied Motion 401(k) Tax Advantaged Investment Plan (“401(k)”) which covers substantially all of its U.S. based employees. The plan provides for the deferral of employee compensation under Section 401(k) and a discretionary Company match. In 2015, 2014 and 2013, this match was 100% per dollar of the first 3% of participant deferral and 50% per dollar of the next 2% contribution, up to 4% of a total 5% participant deferral. Net costs related to this defined contribution plan were $1,076, $1,036 and $506 in 2015, 2014 and 2013, respectively. Dividends For the years ended December 31, 2015, 2014 and 2013, a total of $0.10 per share on all outstanding shares was declared and paid. Total dividends paid for the years ended December 31, 2015, 2014 and 2013 were $923, $853 and $889, respectively. Based on the terms of the Company’s Credit Agreement, dividends paid to shareholders are acceptable, subject to the Company’s compliance with the covenants under the Credit Agreement. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2015 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 6. DEBT OBLIGATIONS Debt obligations consisted of the following (in thousands): December 31, 2015 December 31, 2014 Current Borrowings Revolving Credit Facility $ — $ — China Credit Facility (6.4% at December 31, 2015) Term Loan, current portion, (2.2% at December 31, 2015) (1) Current borrowings $ $ Long-term Debt Term Loan, noncurrent (2.2% at December 31, 2015) (1) $ $ Subordinated Notes (14.5%, 13% Cash, 1.5% PIK) Long-term debt $ $ (1) The effective rate of the Term Loan including the impact of the related hedges is 2.67%. Credit Agreement The Company’s Credit Agreement provides for a $15,000 five-year Revolving Credit Facility and a $50,000 five-year Term Loan (collectively the “Senior Credit Facilities”). Borrowings under the Senior Credit Facilities are subject to terms defined in the Credit Agreement. Borrowings bear interest at either the Base Rate plus a margin of 0.25% to 2.00% (currently 1.50%) or the Eurocurrency Rate plus a margin of 1.25% to 3.00% (currently 2.00%), in each case depending on the Company’s ratio of total funded indebtedness to Consolidated EBITDA (the “Total Leverage Ratio”). Principal installments are payable on the Term Loan in varying percentages quarterly through September 30, 2018 with a balloon payment at maturity. The Senior Credit Facilities are secured by substantially all of the Company’s assets. The average outstanding borrowings for 2015 for the Senior Credit Facilities were $41,000. At December 31, 2015, there was approximately $15,000 available under the Senior Credit Facilities. The Credit Agreement contains certain financial covenants related to maximum leverage and minimum fixed charge coverage. The Credit Agreement also includes other covenants and restrictions, including limits on the amount of certain types of capital expenditures. The Company was in compliance with all covenants at December 31, 2015. Senior Subordinated Notes Under the Company’s Note Agreement, the Company sold $30,000 of 14.50% Senior Subordinated Notes due October 18, 2019 (the “Notes”) to Prudential Capital Partners IV, L.P. and its affiliates in a private placement. The interest rate on the Notes is 14.50% with 13.00% payable in cash and 1.50% payable in-kind, quarterly in arrears and the outstanding principal amount of the Notes, together with any accrued and unpaid interest is due on October 18, 2019. The Company may prepay the Notes at any time after October 18, 2016, in whole or in part, at 100% of the principal amount. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries. Other The Company refinanced its China Facility during the fourth quarter of 2014. The China Facility was increased to provide credit of approximately $1,850 (Chinese Renminbi (“RMB”) 12,000) from the prior limit of $1,460 (Chinese Renminbi (“RMB”) 9,500). The China Facility is used for working capital and capital equipment needs at the Company’s China operations, and will mature in November, 2017. The average balance for 2015 was $1,680 (RMB 10,450). At December 31, 2015, there was approximately $210 (RMB 1,350) available under the facility. Maturities of long-term debt are as follows: Year ending December 31, Total 2016 $ 2017 2018 2019 Thereafter — Total $ Deferred Financing Fees In connection with Credit Agreement, the Company incurred $2,377 of deferred financing costs. These costs are included in other assets in the accompanying consolidated balance sheets. The costs are deferred and amortized over the terms of the components of the Credit Agreement ranging up to six years. Amortization of these costs is charged to interest expense in the accompanying consolidated statements of income and comprehensive income using the straight-line method. The amortization using the straight-line method is not materially different from amortization calculated using the effective interest method. Deferred Financing costs net of accumulated amortization were $1,388 as of December 31, 2015. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2015 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 7. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During October 2013, the Company entered into two Interest Rate Swaps with a combined notional of $25,000 (representing 50% of the Term Loan balance at that time) that amortize quarterly to a notional of $6,673 at maturity. The notional amount changes over time as loan payments are made. As of December 31, 2015 the amount hedged was $18,563. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2015, 2014 and 2013, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. There was no hedge ineffectiveness recorded in the Company’s earnings during the years ended December 31, 2015, 2014 and 2013. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The Company estimates that an additional $76 will be reclassified as an increase to interest expense over the next year. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of December 31, 2015 and 2014 (in thousands): Fair Value as of December 31, Derivative Instrument Balance Sheet Classification 2015 2014 Interest Rate Swaps Other Liabilities $ $ The effect of the Company’s derivative financial instruments on the condensed consolidated statement of income and comprehensive income is as follows (in thousands): Net deferral in OCI of derivatives (effective portion) For the year ended December 31, Derivative Instruments 2015 2014 Interest Rate Swaps $ $ Net reclassification from AOCI into income (effective portion) For the year ended December 31, Statement of earnings classification 2015 2014 2013 Interest expense $ $ $ — As of December 31, 2015 and 2014, the fair value of derivatives in a net Liability position, which excludes any adjustment for nonperformance risk, related to these agreements was $105 and $4, respectively. As of December 31, 2015, the Company has not posted any collateral related to these agreements. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | 8. INCOME TAXES The provision for income taxes is based on income before income taxes as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Domestic $ $ $ Foreign Income before income taxes $ $ $ Components of the total provision for income taxes are as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Current provision Domestic $ $ $ Foreign Total current provision Deferred provision Domestic ) Foreign ) Total deferred provision ) Provision for income taxes $ $ $ The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Tax provision, computed at statutory rate % % % State tax, net of federal impact % % % Change in valuation allowance )% )% % Effect of foreign tax rate differences )% )% )% Permanent items, other )% )% )% Other )% % % Provision for income taxes % % % The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands): December 31, 2015 December 31, 2014 Current deferred tax assets: Allowances and other $ $ Net operating loss and tax credit carryforwards Total current deferred tax assets Valuation allowance ) ) Net current deferred tax assets $ $ Noncurrent deferred tax assets: Employee benefit plans $ $ Goodwill and Intangibles Other Total noncurrent deferred tax assets $ $ Deferred tax liabilities: Depreciation and Amortization $ $ Other Total deferred tax liabilities $ $ The Company has foreign net operating loss carryforwards of approximately $4,200 expiring in 2017. These carryforwards and related valuation allowance were recorded in relation to the acquisition of Globe Motors, Inc. Additionally, the Company has foreign operating losses that relate to a foreign subsidiary acquired in 2010. At the time of the acquisition, the Company could not conclude, on a more likely than not basis, that it would ultimately realize tax benefits from these losses and credits, and therefore valued the deferred benefit at zero. The Company will continue to assess its ability to utilize any portion of the tax carryforward balance and whether it should adjust the amount of deferred tax asset related to this carryforward. Realization of the Company’s recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses and tax credit carryforwards. During 2015, the Company utilized a portion of its net operating loss and tax credit carryforwards and adjusted the value of its deferred tax asset related to the carryforwards due to enacted legislation in foreign jurisdictions affecting current and future periods. Also, the Company reduced the valuation allowance recorded due to the uncertainty related to the realization of certain deferred tax assets. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. Management believes that it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of valuation allowances as of December 31, 2015. In relation to the acquisition of Globe Motors, Inc., the Company filed a unilateral election under Section 338(g) of the Internal Revenue Code treating the acquisition as an asset purchase instead of a stock purchase. This election allows the Company to take a stepped-up basis at the fair market value purchase price and the transaction will be deemed, for purposes of the section, as an asset sale. The deemed sale resulted in a taxable gain for the Company. In general, it is the practice and intention of the Company to reinvest the earnings of its non-domestic subsidiaries in activities outside the United States. Generally, such amounts would become subject to domestic taxation upon the remittance of dividends to the United States and under certain other circumstances. Exceptions may be made on a year-by-year basis to repatriate current year earnings of certain foreign subsidiaries based on cash needs in the United States. During 2013, the Company’s foreign subsidiaries paid dividends of $3,400 to the Company’s domestic parent in relation to completing the acquisition of Globe Motors, Inc. and U.S. tax consequences of the payments have been included in the Company’s provision for income taxes. The Company does not intend to transfer or pay dividends of the remaining amounts and, therefore, has not recorded the domestic tax consequences of such payments. As of December 31, 2015, domestic income and foreign withholding taxes have not been provided for unremitted earnings of foreign subsidiaries. These earnings, which are considered to be indefinitely reinvested, would become subject to domestic income tax if they were remitted to the United States. The amount of unrecognized deferred income tax liability on the unremitted earnings has not been determined because the amount that would be payable is based on the timing and jurisdictions of any repatriated amounts. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Operating Leases At December 31, 2015, the Company maintains leases for certain facilities and equipment. The Company has entered into facility agreements, some of which contain provisions for future rent increases. The total amount of rental payments due over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to “Deferred rent obligation,” which is included in “Accrued liabilities” in the accompanying consolidated balance sheets. Minimum future rental commitments under all non-cancelable operating leases are as follows (in thousands): Year ending December 31, Total 2016 $ 2017 2018 2019 2020 Thereafter $ Rental expense was $1,946, $1,976 and $1,248 in 2015, 2014 and 2013, respectively. Severance Benefit Agreements As of December 31, 2015, the Company has annually renewable severance benefit agreements with key employees which, among other things, provide inducement to the employees to continue to work for the Company during and after any period of a potential change in control of the Company. The agreements provide the employees with specified benefits upon the subsequent severance of employment in the event of change in control of the Company and are effective for 24 months thereafter. In addition, severance benefits include, for some employees, a gross-up payment for excise taxes, if any. Litigation The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company’s consolidated financial position or results of operations. |
DEFERRED COMPENSATION ARRANGEME
DEFERRED COMPENSATION ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2015 | |
DEFERRED COMPENSATION ARRANGEMENTS | |
DEFERRED COMPENSATION ARRANGEMENTS | 10. DEFERRED COMPENSATION ARRANGEMENTS The Company has deferred compensation arrangements with certain key members of management. These arrangements provide the Board with the ability to make contributions based on the Company’s performance and discretionary contributions based on other factors as determined by the Board. It also allows for the participants to make certain deferrals into the plan. The amount of the liability is composed of liabilities from previous contributions as well as the performance contribution for the year ended December 31, 2015. Amounts accrued relating to previous contributions to the plan were $2,636 and $2,167 as of December 31, 2015 and December 31, 2014, respectively, and are included in noncurrent liabilities in the consolidated balance sheets. The amounts accrued as of December 31, 2015 and December 31, 2014, respectively, which relate to the performance contribution for 2015 and 2014 are $469, and $430, respectively, and are included in accrued liabilities on the consolidated balance sheets. In addition, the Company would contribute certain amounts to a Supplemental Executive Retirement Plan in the event of death, disability, or termination without cause, for certain key executives. As of December 31, 2015 this amount would be approximately $308. |
PENSION AND POSTRETIREMENT WELF
PENSION AND POSTRETIREMENT WELFARE PLANS | 12 Months Ended |
Dec. 31, 2015 | |
PENSION AND POSTRETIREMENT WELFARE PLANS | |
PENSION AND POSTRETIREMENT WELFARE PLANS | 11. PENSION AND POSTRETIREMENT WELFARE PLANS Pension Plan Motor Products - Owosso has a defined benefit pension plan covering substantially all of its hourly union employees hired prior to April 10, 2002. The benefits are based on years of service, the employee’s compensation during the last three years of employment, and accumulated employee contributions. The following tables provide a reconciliation of the change in benefit obligation, the change in plan assets and the net amount recognized in the consolidated balance sheets at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Change in projected benefit obligation: Projected benefit obligation at beginning of period $ $ Service cost Employee contributions Interest cost Actuarial (gain) loss ) Benefits paid ) ) Projected benefit obligation at end of period $ $ Change in plan assets: Fair value of plan assets at beginning of period $ $ Actual return on plan assets ) Employee contributions Employer contributions Benefits and expenses paid ) ) Fair value of plan assets at end of period $ $ The following table reconciles the accumulated other comprehensive income from the prior measurement date to the current measurement date: December 31, 2015 December 31, 2014 Excess of projected benefit obligation over fair value of plan assets $ $ Unrecognized loss ) ) Accrued pension cost prior to pension adjustments $ ) $ ) Accumulated Other Comprehensive Income at Current Measurement Date Accrued pension cost at end of period $ $ The accumulated benefit obligation for the pension plan was $6,473 at December 31, 2015 and $6,697 at December 31, 2014. The amount of accumulated other comprehensive income expected to be recognized as a plan expense in 2016 is $170, which all relates to the amortization of the actuarial loss. Benefits expected to be paid from the Plan during each of the next five fiscal years, and in aggregate for the five fiscal years thereafter are (in thousands): Year of payment Amount of Benefit Payment 2016 $ 2017 2018 2019 2020 2021-2025 Components of net periodic pension expense included in the consolidated statements of income and comprehensive income for years 2015 and 2014 are as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Service cost $ $ $ Interest cost Amortization of net loss Expected return on assets ) ) ) Net periodic pension expense $ $ $ Items subject to deferred recognition are amortized on a straight-line basis over the average remaining service period of active employees expected to receive benefits from the plan. Cumulative gains and losses, including the impact of any actuarial assumption changes, are amortized to the extent that their value exceeds 10% of the greater of the Market Related Value of Assets and the Projected Benefit Obligation. The weighted average assumptions used to determine the projected benefit obligation were as follows: December 31, 2015 December 31, 2014 December 31, 2013 Discount rate % % % Rate of compensation increases % % % The weighted average assumptions used to determine net periodic pension expense are as follows: December 31, 2015 December 31, 2014 December 31, 2013 Discount rate % % % Expected long-term rate of return on plan assets % % % Rate of compensation increases % % % The expected rate of return on plan assets assumption is based on the long-term expected returns for the investment mix of assets currently in the portfolio. Management uses historic return trends of the asset portfolio combined with anticipated future market conditions to estimate the rate of return. The performance of the financial markets and changes in interest rates impact the funding obligations under our pension plan. Significant changes in market interest rates and decreases in the fair value of plan assets may increase our funding obligations and adversely impact our results of operations and cash flows in future periods. The Company expects to contribute $0 to the pension plan during 2016. All plan assets are accounted for at fair value on a recurring basis. Fair values are determined using level one input, or quoted prices for identical assets in active markets on the measurement date, as discussed in Note 1. The pension plan asset allocation at December 31, 2015 and 2014 was as follows: December 31, 2015 December 31, 2014 Cash equivalents % % Equity securities % % Fixed income securities % % Total % % The pension assets are managed by an outside investment manager. The Company’s investment policy with respect to pension assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment diversification to assist in minimizing the risk of large losses. The pension assets are subject to the following ranges for asset allocation percentages based on the Plan’s Investment Policy Guidelines: Equity securities 55 - 75% Fixed income securities 25 - 45% Cash 0 - 20% Total Postretirement Welfare Plan Motor Products-Owosso provides postretirement medical insurance and life insurance benefits to current and former employees hired before January 1, 1994 who retire from Motor Products. Employees who retire after January 1, 2005 must have twenty or more years of continuous service in order to be eligible for retiree medical benefits. Partial contributions from retirees are required for the medical insurance benefits. The Company’s portion of the medical insurance premiums is funded from the general assets of the Company. The Company recognizes the expected cost of providing such post-retirement benefits during employees’ active service periods. The following tables provide a reconciliation of the change in the accumulated postretirement benefit obligation and the net amount recognized in the consolidated balance sheets at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Change in postretirement benefit obligation: Accumulated post retirement benefit obligation at beginning of period $ $ Service cost Interest cost Actuarial (gain) loss ) ) Benefits paid ) ) Participant contributions — Accumulated postretirement benefit obligation at end of period $ $ Net periodic postretirement benefit income included in the consolidated statements of income and comprehensive income for the years ended December 31, 2015 and 2014 was $24. Net periodic postretirement benefit expense included in the consolidated statements of income and comprehensive income for the year ended December 31, 2013 was $30. The amount of accumulated other comprehensive income expected to be recognized as income to the plan in 2016 is $127, of which $115 relates to the actuarial gain and $12 to the prior service credit. Postretirement medical liabilities can be extremely sensitive to changes in the assumed rate of future medical increases, and, therefore the healthcare cost trend rate assumption can have a significant effect on the amounts reported. However, the Company’s current contractual obligation requires a per capita fixed Company contribution amount through December 2016. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 4.25%, 4.00% and 4.75% as of December 31, 2015, 2014 and 2013 respectively. The weighted average discount rate used to determine the net periodic postretirement benefit cost was 4.25%, 4.75% and 4.00% for 2015, 2014 and 2013, respectively. Benefits expected to be paid from the Plan during each of the next five fiscal years, and in aggregate for the five fiscal years thereafter are (in thousands): Year of payment Amount of Benefit Payment 2016 $ 2017 2018 2019 2020 2021 - 2024 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 12. SEGMENT INFORMATION The Company operates in one segment for the manufacture and marketing of motion control products for original equipment manufacturers and end user applications. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements and within this note. The Company’s wholly owned foreign subsidiaries, Premotec (Dordrecht, The Netherlands), Allied Motion Stockholm (formerly known as Östergrens, located in Stockholm, Sweden), Allied Motion Asia (Hong Kong and Changzhou, China), Globe Motors Portugal (Porto, Portugal) and Globe Motors Mexico (Reynosa, Mexico) are included in the accompanying consolidated financial statements. Financial information related to the foreign subsidiaries is summarized below (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Revenues derived from foreign subsidiaries $ $ $ Identifiable assets were $56,444 and $53,479 as of December 31, 2015 and 2014, respectively. Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe. Sales to customers outside of the United States by all subsidiaries were $ 79,961, $85,152 and $53,989 during 2015, 2014 and 2013, respectively. For 2015 and 2014, one customer accounted for 24% and 23% of revenues, respectively, and as of December 31 2015 and 2014, for 12% and 23% of trade receivables, respectively. As of December 31, 2015 and 2014, another customer accounted for 15% of accounts receivable as of each year end. For the year ended and as of December 31, 2013, no single customer accounted for more than 10% of revenue or accounts receivable. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS Acquisition of Heidrive In January, 2016, the Company, through its wholly-owned subsidiary, Allied Motion Technologies B.V., entered into a Share Purchase Agreement (the “Purchase Agreement”) to purchase all of the outstanding equity interests of Heidrive GmbH, a German limited liability company (“Heidrive”) from palero fünf S.à r.l. On January 12, 2016, the Company completed the acquisition for €20,000 (approximately US $22,000), which includes certain management performance bonuses to be paid after closing. Credit and Note Agreement amendments On January 8, 2016, the Company entered into a First Amendment and Consent (the “Amendment”) to the Credit Agreement (as described in Note 6) with Bank of America, N.A., as administrative agent, and the lenders party thereto. Pursuant to the Amendment, the administrative agent and lenders consented to the Company’s acquisition of Heidrive GmbH, and that such acquisition would not reduce the acquisition basket under the Credit Agreement. The Amendment also amends the Credit Agreement to increase the revolving credit facility from $15,000 to $30,000 and the foreign revolving sublimit from $10,000 to $25,000. On January 8, 2016, the Company entered into a Consent and Amendment No. 3 (the “Note Amendment”) to the Note Agreement with Prudential Capital Partners IV, L.P. and its affiliates (as described in Note 6). Pursuant to the Note Amendment, the note holders consented to the Company’s acquisition of Heidrive GmbH and that such acquisition would not reduce the acquisition basket under the Note Agreement. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2015 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data for each of the four quarters in years 2015 and 2014 is as follows (in thousands, except per share data): Year 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ $ $ $ Gross margin Net income Basic earnings per share Diluted earnings per share Year 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ $ $ $ Gross margin Net income Basic earnings per share Diluted earnings per share |
BUSINESS AND SUMMARY OF SIGNI22
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. For business combinations, we record net assets acquired and liabilities assumed at their fair values. The operating results for Globe Motors, Inc. (Note 2.) are included in the consolidated statements of income and comprehensive income for the year ended December 31, 2013 from October 18, 2013, the date of acquisition. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include instruments which are readily convertible into cash (original maturities of three months or less) and which are not subject to significant risk of changes in interest rates. Cash flows from foreign currency transactions are translated using an average rate. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. Activity in the allowance for doubtful accounts for 2015, 2014 and 2013 was as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Beginning balance $ $ $ Allowance for doubtful accounts acquired — — Additional reserves Writeoffs ) ) Effect of foreign currency translation ) Ending balance $ $ $ |
Inventories | Inventories Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market, as follows (in thousands): December 31, 2015 December 31, 2014 Parts and raw materials $ $ Work-in-process Finished goods Less reserves ) ) Inventories, net $ $ The Company recorded provisions for excess and obsolete inventories of approximately $432, $753 and $105 for 2015, 2014 and 2013, respectively. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is classified as follows (in thousands): Useful lives December 31, 2015 December 31, 2014 Land $ $ Building and improvements 5 - 39 years Machinery, equipment, tools and dies 3 - 15 years Furniture, fixtures and other 3 - 10 years Less accumulated depreciation ) ) Property, plant and equipment, net $ $ Depreciation expense is provided using the straight-line method over the estimated useful lives of the assets. Amortization of building improvements is provided using the straight-line method over the life of the lease term or the life of the assets, whichever is shorter. Maintenance and repair costs are charged to operations as incurred. Major additions and improvements are capitalized. The cost and related accumulated depreciation of retired or sold property are removed from the accounts and the resulting gain or loss, if any, is reflected in earnings. Depreciation expense was approximately $4,822, $4,553 and $2,088 in 2015, 2014 and 2013, respectively. |
Intangible Assets | Intangible Assets Intangible assets, other than goodwill, are recorded at cost and are amortized over their estimated useful lives using the straight-line method. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews the carrying values of its long-lived assets, including property, plant and equipment and intangible assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Long-lived assets are carried at historical cost if the projected cash flows from their use will recover their carrying amounts on an undiscounted basis and without considering interest. If projected cash flows are less than their carrying value, the long-lived assets must be reduced to their estimated fair value. Considerable judgment is required to project such cash flows and, if required, estimate the fair value of the impaired long-lived asset. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is recorded at fair value and not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. The Company has defined one reporting unit that is the same as its operating segment. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than carrying amount, or if significant adverse changes in the Company’s future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, the Company can elect to forgo the qualitative assessment and perform the quantitative test. The first step of the quantitative test compares the fair value of the reporting unit to its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, there is a potential impairment and the second step must be performed. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, the excess is required to be recorded as an impairment charge. The implied fair value of goodwill is determined by assigning the fair value of the reporting unit to all the assets and liabilities of that unit (including any unrecognized intangible assets) as if it had been acquired in a business combination. The Company has elected to perform the annual impairment assessment for goodwill each year in the fourth quarter. At October 31, 2015, we performed our annual assessment of fair value and concluded that there was no impairment related to goodwill. The Company did not record any impairment charges for the twelve months ended December 31, 2015, 2014 or 2013. |
Other Long-term Assets | Other Long-term Assets Other long-term assets include securities that the Company has purchased with the intent of funding the deferred compensation arrangements for certain executives of the Company as well as deferred finance costs. These items are accounted for at fair value on a recurring basis. Any changes in value are included in Net Income in the Company’s consolidated statements of income and comprehensive income. |
Warranty | Warranty The Company offers warranty coverage for its products. The length of the warranty period for its products varies significantly based on the product being sold. The Company estimates the costs of repairing products under warranty based on the historical average cost of the repairs. The assumptions used to estimate warranty accruals are reevaluated periodically in light of actual experience and, when appropriate, the accruals are adjusted. Estimated warranty costs are recorded at the time of sale of the related product, and are considered a cost of sale. Changes in the Company’s reserve for product warranty claims during 2015, 2014 and 2013 were as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Warranty reserve at beginning of the year $ $ $ Warranty reserves acquired — — Provision Warranty expenditures ) ) ) Effect of foreign currency translation ) ) Warranty reserve at end of year $ $ $ In 2012, $342 was recorded as part of the warranty provision to cover the expected costs of replacing certain products in the field due to an incorrect electronic component in a printed circuit board supplied by one of the Company’s sub-contract suppliers. In 2013, $44 of additional provision was recorded, and $367 of warranty expenditures were incurred related to this issue resulting in a reserve balance of $30 net of the effect of foreign currency translation. In 2014, the remaining material was scrapped and the reserve was reduced to $0. |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2015 December 31, 2014 Compensation and fringe benefits $ $ Warranty reserve Other accrued expenses $ $ |
Foreign Currency Translation | Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in other comprehensive income, a component of stockholders’ equity in the accompanying consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the Technology Units (“TUs”) are included in the results of operations as incurred. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when products are shipped or delivered (shipping terms may be either FOB shipping point or destination) and title has passed to the customer, persuasive evidence of an arrangement exists, the selling price is fixed or determinable, and collectability is reasonably assured. |
Engineering and Development Costs | Engineering and Development Costs The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. Engineering and development costs are expensed as incurred. |
Basic and Diluted Income per Share | Basic and Diluted Income per Share Basic income per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding. Diluted income per share is determined by dividing the net income by the sum of (1) the weighted average number of common shares outstanding and (2) if not anti-dilutive, the effect of stock awards determined utilizing the treasury stock method. The dilutive effect of outstanding awards was 10,000, 20,000 and 7,000 shares for the years 2015, 2014 and 2013, respectively. No stock awards were excluded from the calculation of diluted income per share for years 2015, 2014 and 2013. |
Comprehensive Income | Comprehensive Income Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by and distributions to stockholders. |
Fair Value Accounting | Fair Value Accounting Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments. The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of December 31, 2015 and 2014, respectively, by level within the fair value hierarchy (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — December 31, 2014 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — |
Derivative Financial Instruments | Derivative Financial Instruments Disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. |
Income Taxes | Income Taxes The current provision for income taxes represents actual or estimated amounts payable or refundable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. A valuation allowance may be provided to the extent management deems it is more likely than not that deferred tax assets will not be realized. The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income, in the appropriate taxing jurisdictions, during the periods in which temporary differences, net operating losses and tax credits become realizable. Management believes that it is more likely than not that the Company will realize the benefits of these temporary differences and operating loss and tax credit carryforwards, net of valuation allowances. Realization of an uncertain income tax position must have a “more likely than not” probability of being sustained based on technical merits before it can be recognized in the financial statements, assuming a review by tax authorities having all relevant information and applying current conventions. The Company does not have significant unrecognized tax benefits and does not anticipate a significant increase or decrease in unrecognized tax benefits within the next twelve months. Income tax related interest and penalties recognized in 2015, 2014 and 2013 are de minimus. |
Pension and Postretirement Welfare Plans | Pension and Postretirement Welfare Plans The Company reports gains or losses and prior service costs or credits that arise during the period, but not recognized as components of net periodic benefit cost, as a component of other comprehensive income, net of tax. Amounts recognized in accumulated other comprehensive income are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements. |
Concentration of Credit Risk | Concentration of Credit Risk Trade receivables subject the Company to the potential for credit risk. To reduce this risk, the Company performs evaluations of its customers’ financial condition and creditworthiness at the time of sale, and updates those evaluations when necessary. See Note 12 for additional information regarding customer concentration. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2015 presentation. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements Effective January 1, 2015, the Company adopted Accounting Standards Update (“ASU”) No. 2015-01, “ Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ” which eliminates from GAAP the concept of extraordinary items. However, the presentation and disclosure guidance for items that are unusual in nature or infrequent in occurrence was retained. The updated guidance was adopted prospectively. The adoption of this update concerns presentation and disclosure only as it relates to the Company’s condensed consolidated financial statements. Effective January 1, 2015, the Company adopted ASU No. 2014-08, “ Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements . To qualify as a discontinued operation the standard requires a disposal to represent a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The standard also expands the disclosures for discontinued operations and requires new disclosures related to individually material dispositions that do not qualify as discontinued operations. The standard is effective prospectively for fiscal years beginning after December 15, 2014. The significance of this guidance for the Company is dependent on any qualifying dispositions or disposals. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In February, 2016, the FASB issued ASU 2016-02, which amends the FASB Accounting Standards Codification and creates Topic 842, “ Leases .” The new topic supersedes Topic 840, “ Leases ,” and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method. The Company is currently assessing the impact this guidance will have on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. The Update requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for our financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Earlier application is permitted. ASU 2015-17 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In September 2015, the FASB issued ASU No. 2015-16, “ Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments .” This standard requires that an entity recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The update requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. This standard is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. ASU 2015-16 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “ Simplifying the Measurement of Inventory .” The standard applies to inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of the standard at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amendments in ASU 2015-11 more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The standard is effective for fiscal years beginning after December 15, 2016. ASU 2015-11 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs .” The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance will be effective for the Company beginning in the first quarter of fiscal year 2018 using one of two prescribed retrospective methods. Early adoption is not permitted. The Company has not yet selected a transition method, or determined the effect of the standard on its ongoing financial reporting. |
BUSINESS AND SUMMARY OF SIGNI23
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of activity in the allowance for doubtful accounts | Activity in the allowance for doubtful accounts for 2015, 2014 and 2013 was as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Beginning balance $ $ $ Allowance for doubtful accounts acquired — — Additional reserves Writeoffs ) ) Effect of foreign currency translation ) Ending balance $ $ $ |
Schedule of inventories including costs of materials, direct labor and manufacturing overhead, and stated at the lower of cost (first-in, first-out basis) or market | Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market, as follows (in thousands): December 31, 2015 December 31, 2014 Parts and raw materials $ $ Work-in-process Finished goods Less reserves ) ) Inventories, net $ $ |
Schedule of classification of property, plant and equipment | Property, plant and equipment is classified as follows (in thousands): Useful lives December 31, 2015 December 31, 2014 Land $ $ Building and improvements 5 - 39 years Machinery, equipment, tools and dies 3 - 15 years Furniture, fixtures and other 3 - 10 years Less accumulated depreciation ) ) Property, plant and equipment, net $ $ |
Schedule of changes in the reserve for product warranty claims | Changes in the Company’s reserve for product warranty claims during 2015, 2014 and 2013 were as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Warranty reserve at beginning of the year $ $ $ Warranty reserves acquired — — Provision Warranty expenditures ) ) ) Effect of foreign currency translation ) ) Warranty reserve at end of year $ $ $ |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): December 31, 2015 December 31, 2014 Compensation and fringe benefits $ $ Warranty reserve Other accrued expenses $ $ |
Schedule of financial assets accounted for at fair value on a recurring basis | The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of December 31, 2015 and 2014, respectively, by level within the fair value hierarchy (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — December 31, 2014 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ACQUISITIONS | |
Schedule of purchase price allocation | The final purchase price was allocated to the underlying net assets based on fair value as of the acquisition date, as follows (in thousands): October 18, 2013 Trade receivables, net $ Inventories, net Prepaid expenses and other assets Property, plant and equipment Amortizable intangible assets Goodwill Accounts payable ) Accrued liabilities ) Net purchase price $ |
Schedule of unaudited pro forma financial information | For the year ended December 31, 2013 Revenues $ Net income $ Diluted net income per share $ |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for 2015, 2014 and 2013 is as follows (in thousands): December 31, 2015 December 31, 2014 December 31, 2013 Beginning balance $ $ $ Goodwill acquired — — Acquisition adjustments — ) — Effect of foreign currency translation ) ) Ending balance $ $ $ |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Intangible assets on the Company’s consolidated balance sheets consist of the following (in thousands): December 31, 2015 December 31, 2014 Life Gross Amount Accumulated amortization Net Book Value Gross Amount Accumulated amortization Net Book Value Customer lists 10 - 15 years $ $ ) $ $ $ ) $ Trade name 10 years ) ) Design and technologies 8 - 10 years ) ) Patents ) ) Total $ $ ) $ $ $ ) $ |
Schedule of estimated amortization expense for intangible assets | Year ending December 31, Total 2016 $ 2017 2018 2019 2020 Thereafter $ |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
STOCK-BASED COMPENSATION PLANS | |
Summary of restricted stock grants, fair value and performance based awards | For the year ended December 31, Unvested restricted stock awards Weighted average grant date fair value Awards with performance vesting requirements 2015 $ 2014 $ 2013 $ |
Summary of restricted stock activity | Number of Nonvested Restricted Shares Balance, December 31, 2012 Awarded Forfeited ) Vested ) Balance, December 31, 2013 Awarded Forfeited ) Vested ) Balance, December 31, 2014 Awarded Forfeited ) Vested ) Balance, December 31, 2015 |
Summary of performance based restricted stock activity | Total performance grants Outstanding, December 31, 2012 Awarded Performance criteria met ) Forfeited ) Outstanding, December 31, 2013 Awarded Performance criteria met ) Forfeited ) Outstanding, December 31, 2014 Awarded Performance criteria met ) Forfeited ) Outstanding, December 31, 2015 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations | Debt obligations consisted of the following (in thousands): December 31, 2015 December 31, 2014 Current Borrowings Revolving Credit Facility $ — $ — China Credit Facility (6.4% at December 31, 2015) Term Loan, current portion, (2.2% at December 31, 2015) (1) Current borrowings $ $ Long-term Debt Term Loan, noncurrent (2.2% at December 31, 2015) (1) $ $ Subordinated Notes (14.5%, 13% Cash, 1.5% PIK) Long-term debt $ $ (1) The effective rate of the Term Loan including the impact of the related hedges is 2.67%. |
Schedule of maturities of long-term debt | Year ending December 31, Total 2016 $ 2017 2018 2019 Thereafter — Total $ |
DERIVATIVE FINANCIAL INSTRUME29
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets | The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of December 31, 2015 and 2014 (in thousands): Fair Value as of December 31, Derivative Instrument Balance Sheet Classification 2015 2014 Interest Rate Swaps Other Liabilities $ $ |
Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statement of income and comprehensive income | The effect of the Company’s derivative financial instruments on the condensed consolidated statement of income and comprehensive income is as follows (in thousands): Net deferral in OCI of derivatives (effective portion) For the year ended December 31, Derivative Instruments 2015 2014 Interest Rate Swaps $ $ Net reclassification from AOCI into income (effective portion) For the year ended December 31, Statement of earnings classification 2015 2014 2013 Interest expense $ $ $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
Schedule of provision for income taxes based on income before income taxes | The provision for income taxes is based on income before income taxes as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Domestic $ $ $ Foreign Income before income taxes $ $ $ |
Schedule of components of the total provision for income taxes | Components of the total provision for income taxes are as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Current provision Domestic $ $ $ Foreign Total current provision Deferred provision Domestic ) Foreign ) Total deferred provision ) Provision for income taxes $ $ $ |
Schedule of differences in the provision for income taxes from the amount determined by applying the federal statutory rate | The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Tax provision, computed at statutory rate % % % State tax, net of federal impact % % % Change in valuation allowance )% )% % Effect of foreign tax rate differences )% )% )% Permanent items, other )% )% )% Other )% % % Provision for income taxes % % % |
Schedule of tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities | The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands): December 31, 2015 December 31, 2014 Current deferred tax assets: Allowances and other $ $ Net operating loss and tax credit carryforwards Total current deferred tax assets Valuation allowance ) ) Net current deferred tax assets $ $ Noncurrent deferred tax assets: Employee benefit plans $ $ Goodwill and Intangibles Other Total noncurrent deferred tax assets $ $ Deferred tax liabilities: Depreciation and Amortization $ $ Other Total deferred tax liabilities $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of estimated future operating lease expense | Minimum future rental commitments under all non-cancelable operating leases are as follows (in thousands): Year ending December 31, Total 2016 $ 2017 2018 2019 2020 Thereafter $ |
PENSION AND POSTRETIREMENT PLAN
PENSION AND POSTRETIREMENT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Pension Plan | |
Pension and Postretirement plan | |
Schedule of reconciliation of the change in benefit obligation, the change in plan assets and the net amount recognized in the consolidated balance sheet | The following tables provide a reconciliation of the change in benefit obligation, the change in plan assets and the net amount recognized in the consolidated balance sheets at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Change in projected benefit obligation: Projected benefit obligation at beginning of period $ $ Service cost Employee contributions Interest cost Actuarial (gain) loss ) Benefits paid ) ) Projected benefit obligation at end of period $ $ Change in plan assets: Fair value of plan assets at beginning of period $ $ Actual return on plan assets ) Employee contributions Employer contributions Benefits and expenses paid ) ) Fair value of plan assets at end of period $ $ |
Schedule of reconciliation of accumulated other comprehensive income from the prior measurement date to the current measurement date | December 31, 2015 December 31, 2014 Excess of projected benefit obligation over fair value of plan assets $ $ Unrecognized loss ) ) Accrued pension cost prior to pension adjustments $ ) $ ) Accumulated Other Comprehensive Income at Current Measurement Date Accrued pension cost at end of period $ $ |
Schedule of benefits expected to be paid | Benefits expected to be paid from the Plan during each of the next five fiscal years, and in aggregate for the five fiscal years thereafter are (in thousands): Year of payment Amount of Benefit Payment 2016 $ 2017 2018 2019 2020 2021-2025 |
Schedule of components of net periodic expense | Components of net periodic pension expense included in the consolidated statements of income and comprehensive income for years 2015 and 2014 are as follows (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Service cost $ $ $ Interest cost Amortization of net loss Expected return on assets ) ) ) Net periodic pension expense $ $ $ |
Schedule of weighted average assumptions used to determine the projected defined benefit obligation | December 31, 2015 December 31, 2014 December 31, 2013 Discount rate % % % Rate of compensation increases % % % |
Schedule of weighted average assumptions used to determine net periodic pension expense | December 31, 2015 December 31, 2014 December 31, 2013 Discount rate % % % Expected long-term rate of return on plan assets % % % Rate of compensation increases % % % |
Schedule of pension plan asset allocation | December 31, 2015 December 31, 2014 Cash equivalents % % Equity securities % % Fixed income securities % % Total % % |
Schedule of ranges for asset allocation percentages based on the Plan's Investment Policy Guidelines | Equity securities 55 - 75% Fixed income securities 25 - 45% Cash 0 - 20% Total |
Postretirement Welfare Plan | |
Pension and Postretirement plan | |
Schedule of reconciliation of the change in benefit obligation, the change in plan assets and the net amount recognized in the consolidated balance sheet | The following tables provide a reconciliation of the change in the accumulated postretirement benefit obligation and the net amount recognized in the consolidated balance sheets at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Change in postretirement benefit obligation: Accumulated post retirement benefit obligation at beginning of period $ $ Service cost Interest cost Actuarial (gain) loss ) ) Benefits paid ) ) Participant contributions — Accumulated postretirement benefit obligation at end of period $ $ |
Schedule of benefits expected to be paid | Benefits expected to be paid from the Plan during each of the next five fiscal years, and in aggregate for the five fiscal years thereafter are (in thousands): Year of payment Amount of Benefit Payment 2016 $ 2017 2018 2019 2020 2021 - 2024 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SEGMENT INFORMATION | |
Schedule of financial information related to the foreign subsidiaries | Financial information related to the foreign subsidiaries is summarized below (in thousands): For the year ended December 31, 2015 December 31, 2014 December 31, 2013 Revenues derived from foreign subsidiaries $ $ $ |
SELECTED QUARTERLY FINANCIAL 34
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Schedule of selected quarterly financial data | Selected quarterly financial data for each of the four quarters in years 2015 and 2014 is as follows (in thousands, except per share data): Year 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ $ $ $ Gross margin Net income Basic earnings per share Diluted earnings per share Year 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ $ $ $ Gross margin Net income Basic earnings per share Diluted earnings per share |
BUSINESS AND SUMMARY OF SIGNI35
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Activity in the allowance for doubtful accounts | |||
Beginning balance | $ 367 | $ 802 | $ 177 |
Allowance for doubtful accounts acquired | 460 | ||
Additional reserves | 333 | 473 | 158 |
Write-offs | (117) | (882) | |
Recoveries | 1 | ||
Effect of foreign currency translation | 28 | (26) | 6 |
Ending balance | 611 | 367 | 802 |
Inventories | |||
Parts and raw materials | 23,710 | 21,573 | |
Work-in-process | 2,404 | 2,924 | |
Finished goods | 3,730 | 4,403 | |
Inventory, gross | 29,844 | 28,900 | |
Less reserves | (3,669) | (3,529) | |
Inventories, net | 26,175 | 25,371 | |
Provision for excess and obsolete inventory | $ 432 | $ 753 | $ 105 |
BUSINESS AND SUMMARY OF SIGNI36
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 57,180 | $ 54,524 | |
Less accumulated depreciation | (21,865) | (17,483) | |
Property, plant and equipment, net | 35,315 | 37,041 | |
Depreciation expense | 4,822 | 4,553 | $ 2,088 |
Land | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | 970 | 996 | |
Building and improvements | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 9,771 | 9,324 | |
Building and improvements | Minimum | |||
Property, plant and equipment | |||
Useful lives | 5 years | ||
Building and improvements | Maximum | |||
Property, plant and equipment | |||
Useful lives | 39 years | ||
Machinery, equipment, tools and dies | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 37,782 | 37,426 | |
Machinery, equipment, tools and dies | Minimum | |||
Property, plant and equipment | |||
Useful lives | 3 years | ||
Machinery, equipment, tools and dies | Maximum | |||
Property, plant and equipment | |||
Useful lives | 15 years | ||
Furniture, fixtures and other | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 8,657 | $ 6,778 | |
Furniture, fixtures and other | Minimum | |||
Property, plant and equipment | |||
Useful lives | 3 years | ||
Furniture, fixtures and other | Maximum | |||
Property, plant and equipment | |||
Useful lives | 10 years |
BUSINESS AND SUMMARY OF SIGNI37
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Warranty, Accrued Liabilities, and Basic and Diluted Income per Share (Details) | Oct. 31, 2015USD ($) | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($)shares | Dec. 31, 2012USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Number of reporting units | item | 1 | |||||||
Goodwill impairment | $ 0 | |||||||
Changes in the reserve for product warranty claims | ||||||||
Warranty reserve at beginning of the year | $ 786,000 | $ 629,000 | $ 551,000 | |||||
Warranty reserves acquired | 429,000 | |||||||
Provision | 142,000 | 234,000 | 175,000 | |||||
Warranty expenditures | (123,000) | (40,000) | (529,000) | |||||
Effect of foreign currency translation | (25,000) | (37,000) | 3,000 | |||||
Warranty reserve at end of year | 780,000 | 786,000 | 629,000 | $ 551,000 | ||||
Expected costs of replacing certain products in the field due to an incorrect electronic component in a printed circuit board | $ 342,000 | |||||||
Number of Company's sub-contract suppliers who supplied an incorrect electronic component | item | 1 | |||||||
Additional provision recorded to replace certain products in the field due to an incorrect electronic component in a printed circuit board | 44,000 | |||||||
Warranty expenditures incurred related to replacing certain products in the field due to an incorrect electronic component in a printed circuit board | 367,000 | |||||||
Reserve, net of the effect of foreign currency translation related to replacing certain products in the field due to an incorrect electronic component in a printed circuit board | $ 0 | $ 30,000 | ||||||
Accrued Liabilities | ||||||||
Compensation and fringe benefits | $ 7,791,000 | 9,696,000 | ||||||
Warranty reserve | $ 786,000 | $ 629,000 | $ 551,000 | $ 551,000 | 780,000 | 786,000 | $ 629,000 | |
Other accrued expenses | 2,550,000 | 2,241,000 | ||||||
Accrued liabilities | $ 11,121,000 | $ 12,723,000 | ||||||
Basic and Diluted Income per Share from Continuing Operations | ||||||||
Dilutive effect of outstanding stock option awards (in shares) | shares | 10,000 | 20,000 | 7,000 | |||||
Stock awards excluded from the calculation of diluted income per share (in shares) | shares | 0 | 0 | 0 |
BUSINESS AND SUMMARY OF SIGNI38
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Accounting (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Other long term assets | $ 4,019 | $ 3,998 |
Recurring basis | Level 1 | ||
Assets | ||
Pension Plan Assets | 4,986 | 5,095 |
Other long term assets | 2,631 | 2,162 |
Recurring basis | Level 2 | ||
Assets | ||
Interest rate swaps | $ (27) | $ (2) |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 22, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Oct. 18, 2013 | Dec. 31, 2012 |
Purchase price allocation | |||||||
Goodwill | $ 20,233 | $ 17,757 | $ 18,303 | $ 5,782 | |||
Globe Motors | |||||||
ACQUISITIONS | |||||||
Cash consideration paid | $ 90,000 | $ 88,566 | |||||
Cash paid for acquisition | 4,300 | ||||||
Transaction costs related to acquisition | $ 1,913 | ||||||
Purchase price allocation | |||||||
Trade receivables, net | $ 16,567 | ||||||
Inventories, net | 11,142 | ||||||
Prepaid expenses and other assets | 2,860 | ||||||
Property, plant and equipment | 29,362 | ||||||
Amortizable intangible assets | 34,040 | ||||||
Goodwill | 12,986 | ||||||
Accounts payable | (10,622) | ||||||
Accrued liabilities | (7,769) | ||||||
Net purchase price | $ 88,566 | ||||||
Working capital adjustment | $ 1,434 | ||||||
Unaudited pro forma financial information | |||||||
Revenues | 220,692 | ||||||
Net income | $ 7,984 | ||||||
Diluted net income per share (in dollars per share) | $ 0.88 | ||||||
Globe Motors | Customer lists | |||||||
Purchase price allocation | |||||||
Amortization period of intangible assets | 15 years | ||||||
Globe Motors | Trade name | |||||||
Purchase price allocation | |||||||
Amortization period of intangible assets | 10 years |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Change in goodwill | |||
Beginning balance | $ 18,303 | $ 20,233 | $ 5,782 |
Goodwill acquired | 14,209 | ||
Acquisition adjustments | (1,223) | ||
Effect of foreign currency translation | (546) | (707) | 242 |
Ending balance | $ 17,757 | $ 18,303 | $ 20,233 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Intangible assets subject to amortization | |||
Gross Amount | $ 41,137 | $ 41,603 | |
Accumulated amortization | (11,153) | (8,812) | |
Net Book Value | 29,984 | 32,791 | |
Amortization expense for intangible assets | 2,644 | 2,714 | $ 825 |
Estimated amortization expense | |||
2,016 | 2,641 | ||
2,017 | 2,641 | ||
2,018 | 2,641 | ||
2,019 | 2,641 | ||
2,020 | 2,641 | ||
Thereafter | 16,779 | ||
Net Book Value | 29,984 | 32,791 | |
Customer lists | |||
Intangible assets subject to amortization | |||
Gross Amount | 34,149 | 34,379 | |
Accumulated amortization | (7,785) | (5,801) | |
Net Book Value | 26,364 | 28,578 | |
Estimated amortization expense | |||
Net Book Value | $ 26,364 | 28,578 | |
Customer lists | Minimum | |||
Intangible assets subject to amortization | |||
Estimated Life | 10 years | ||
Customer lists | Maximum | |||
Intangible assets subject to amortization | |||
Estimated Life | 15 years | ||
Trade name | |||
Intangible assets subject to amortization | |||
Gross Amount | $ 4,775 | 4,775 | |
Accumulated amortization | (1,793) | (1,409) | |
Net Book Value | $ 2,982 | 3,366 | |
Estimated Life | 10 years | ||
Estimated amortization expense | |||
Net Book Value | $ 2,982 | 3,366 | |
Design and technologies | |||
Intangible assets subject to amortization | |||
Gross Amount | 2,189 | 2,425 | |
Accumulated amortization | (1,570) | (1,598) | |
Net Book Value | 619 | 827 | |
Estimated amortization expense | |||
Net Book Value | $ 619 | 827 | |
Design and technologies | Minimum | |||
Intangible assets subject to amortization | |||
Estimated Life | 8 years | ||
Design and technologies | Maximum | |||
Intangible assets subject to amortization | |||
Estimated Life | 10 years | ||
Patents | |||
Intangible assets subject to amortization | |||
Gross Amount | $ 24 | 24 | |
Accumulated amortization | (5) | (4) | |
Net Book Value | 19 | 20 | |
Estimated amortization expense | |||
Net Book Value | $ 19 | $ 20 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Incentive Plans and Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
STOCK-BASED COMPENSATION PLANS | |||
Shares of common stock available for grant under stock incentive plans | 748,686 | ||
Restricted Stock | |||
Stock-Based Compensation | |||
Weighted average value (in dollars per share) | $ 27.37 | $ 11.26 | $ 7.73 |
Service period over which value of the shares is amortized to compensation expense | 3 years | ||
Number of Nonvested Restricted Shares | |||
Outstanding at beginning of period (in shares) | 487,678 | 520,195 | 243,124 |
Awarded (in shares) | 76,714 | 168,334 | 423,518 |
Forfeited (in shares) | (7,066) | (42,141) | (3,181) |
Vested (in shares) | (190,127) | (158,710) | (143,266) |
Outstanding at end of period (in shares) | 367,199 | 487,678 | 520,195 |
Additional disclosures | |||
Compensation expense, net of forfeitures | $ 1,744 | $ 1,541 | $ 927 |
Unrecognized compensation expense | 3,384 | ||
Unrecognized compensation expense, expected to be recognized in next fiscal year | $ 1,563 | ||
Restricted Stock | Performance based vesting | |||
Number of Nonvested Restricted Shares | |||
Outstanding at beginning of period (in shares) | 5,892 | 15,190 | 10,000 |
Awarded (in shares) | 41,792 | 88,566 | 307,214 |
Performance criteria met (in shares) | (14,200) | (92,583) | (267,080) |
Forfeited (in shares) | (4,296) | (5,281) | (34,944) |
Outstanding at end of period (in shares) | 29,188 | 5,892 | 15,190 |
STOCK-BASED COMPENSATION - Empl
STOCK-BASED COMPENSATION - Employee Stock Ownership Plan (Details) - ESOP $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)h / yr | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Employee Stock Ownership Plan | |||
Minimum hours of work per year for employees to be covered under Employee Stock Ownership Plan (ESOP) | h / yr | 1,000 | ||
Annual contribution by employer as a percentage of pretax income before the contribution | 5.00% | 5.00% | |
Company contributions | $ | $ 812 | $ 980 | $ 304 |
STOCK-BASED COMPENSATION - Defi
STOCK-BASED COMPENSATION - Defined Contribution Plan and Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Contribution Plan | |||
Matching percentage per dollar of the first 3% of participant deferral | 100.00% | 100.00% | 100.00% |
First specified percentage of participant deferral upon which employer matches 100% contribution per dollar | 3.00% | 3.00% | 3.00% |
Matching percentage per dollar of the next 2% contribution | 50.00% | 50.00% | 50.00% |
Next specified percentage of employee contribution upon which employer matches 50% contribution per dollar | 2.00% | 2.00% | 2.00% |
Participant deferral (as a percent) | 5.00% | 5.00% | 5.00% |
Net costs related to defined contribution plan | $ 1,076 | $ 1,036 | $ 506 |
Dividends | |||
Dividends paid (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 |
Total dividends paid | $ 923 | $ 853 | $ 889 |
Maximum | |||
Defined Contribution Plan | |||
Specified percentage of employee contribution upon which employer matches contribution | 4.00% | 4.00% | 4.00% |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014CNY (¥) | Dec. 31, 2014USD ($) | Sep. 30, 2014CNY (¥) | Sep. 30, 2014USD ($) | |
Debt Obligations | ||||||||
Current borrowings | $ 9,860 | $ 7,723 | ||||||
Long-term debt | 58,906 | 67,125 | ||||||
Deferred financing costs | $ 2,377 | |||||||
Maturities of long-term debt | ||||||||
2,016 | 9,860 | |||||||
2,017 | 10,374 | |||||||
2,018 | 18,532 | |||||||
2,019 | 30,000 | |||||||
Total | 68,766 | |||||||
Senior Credit Facilities | ||||||||
Debt Obligations | ||||||||
Average outstanding borrowings | $ 41,000 | |||||||
Available borrowing capacity | 15,000 | |||||||
Deferred financing costs | $ 2,377 | |||||||
Maturities of long-term debt | ||||||||
Deferred financing costs net of accumulated amortization | 1,388 | |||||||
Senior Credit Facilities | Maximum | ||||||||
Debt Obligations | ||||||||
Debt instrument term | 6 years | 6 years | ||||||
Senior Credit Facilities | Base Rate | ||||||||
Debt Obligations | ||||||||
Applicable margin (as a percent) | 1.50% | 1.50% | ||||||
Senior Credit Facilities | Base Rate | Minimum | ||||||||
Debt Obligations | ||||||||
Applicable margin (as a percent) | 0.25% | 0.25% | ||||||
Senior Credit Facilities | Base Rate | Maximum | ||||||||
Debt Obligations | ||||||||
Applicable margin (as a percent) | 2.00% | 2.00% | ||||||
Senior Credit Facilities | Eurocurrency Rate | ||||||||
Debt Obligations | ||||||||
Applicable margin (as a percent) | 2.00% | 2.00% | ||||||
Senior Credit Facilities | Eurocurrency Rate | Minimum | ||||||||
Debt Obligations | ||||||||
Applicable margin (as a percent) | 1.25% | 1.25% | ||||||
Senior Credit Facilities | Eurocurrency Rate | Maximum | ||||||||
Debt Obligations | ||||||||
Applicable margin (as a percent) | 3.00% | 3.00% | ||||||
Revolving Credit Facility | ||||||||
Debt Obligations | ||||||||
Maximum borrowing capacity | 15,000 | |||||||
Debt instrument term | 5 years | 5 years | ||||||
Term Loan | ||||||||
Debt Obligations | ||||||||
Current borrowings | $ 8,219 | 6,375 | ||||||
Interest rate at period end (as a percent) | 2.20% | 2.20% | ||||||
Long-term debt | $ 28,906 | 37,125 | ||||||
Effective rate (as a percent) | 2.67% | 2.67% | ||||||
Maximum borrowing capacity | $ 50,000 | |||||||
Debt instrument term | 5 years | 5 years | ||||||
China Credit Facility | ||||||||
Debt Obligations | ||||||||
Current borrowings | $ 1,641 | 1,348 | ||||||
Interest rate at period end (as a percent) | 6.40% | 6.40% | ||||||
Maximum borrowing capacity | ¥ 12,000 | 1,850 | ¥ 9,500 | $ 1,460 | ||||
Average outstanding borrowings | ¥ 10,450 | $ 1,680 | ||||||
Available borrowing capacity | ¥ 1,350 | $ 210 | ||||||
Subordinated Notes | ||||||||
Debt Obligations | ||||||||
Long-term debt | $ 30,000 | $ 30,000 | ||||||
Interest rate (as a percent) | 14.50% | 14.50% | 14.50% | 14.50% | ||||
Interest rate payable in cash (as a percent) | 13.00% | 13.00% | 13.00% | 13.00% | ||||
Interest rate payable in-kind (as a percent) | 1.50% | 1.50% | 1.50% | 1.50% | ||||
Principal amount of debt borrowed | $ 30,000 | |||||||
Percentage of principal amount of notes that may prepay | 100.00% | 100.00% |
DERIVATIVE FINANCIAL INSTRUME46
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - Interest Rate Swaps $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Oct. 31, 2013USD ($)instrument | |
Derivative financial instruments | ||||
Number of derivative instruments | instrument | 2 | |||
Notional amount of interest rate swap derivatives | $ 25,000 | |||
Ratio of notional amount to term loan (as a percent) | 50.00% | |||
Notional amount of interest rate swap derivatives at maturity | $ 6,673 | |||
Amount hedged | $ 18,563 | |||
Hedge ineffectiveness recorded in earnings | 0 | $ 0 | $ 0 | |
Estimated amount to be reclassified as an increase to interest expense | 76 | |||
Effect of derivative financial instruments on the consolidated statement of income and comprehensive income | ||||
Net deferral in OCI of derivatives (effective portion) | 219 | 272 | ||
Net reclassification from AOCI into income (effective portion) | 194 | 229 | ||
Fair value of derivative liability excludes any adjustment for nonperformance risk | 105 | 4 | ||
Other Liabilities | ||||
Derivative financial instruments | ||||
Fair value of derivative liability | $ 27 | $ 2 |
INCOME TAXES - Tax Effects (Det
INCOME TAXES - Tax Effects (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of components of income before income taxes | |||
Domestic | $ 7,676 | $ 9,484 | $ 1,406 |
Foreign | 7,745 | 9,139 | 4,375 |
Income before income taxes | 15,421 | 18,623 | 5,781 |
Current provision | |||
Domestic | 1,936 | 1,917 | 1,179 |
Foreign | 1,042 | 1,126 | 898 |
Total current provision | 2,978 | 3,043 | 2,077 |
Deferred provision | |||
Domestic | 1,217 | 1,297 | (197) |
Foreign | 152 | 423 | (52) |
Total deferred provision | 1,369 | 1,720 | (249) |
Provision for income taxes | $ 4,347 | $ 4,763 | $ 1,828 |
Differences in the provision for income taxes from the amount determined by applying the federal statutory rate | |||
Tax provision, computed at statutory rate (as a percent) | 34.00% | 34.00% | 34.00% |
State tax, net of federal impact (as a percent) | 4.80% | 0.60% | 3.70% |
Change in valuation allowance (as a percent) | (3.30%) | (4.70%) | |
Effect of foreign tax rate differences (as a percent) | (6.10%) | (4.50%) | (9.70%) |
Permanent items, other (as a percent) | (0.40%) | (1.20%) | (0.30%) |
Other (as a percent) | (0.80%) | 1.40% | 3.90% |
Provision for income taxes (as a percent) | 28.20% | 25.60% | 31.60% |
Current deferred tax assets: | |||
Allowances and other | $ 977 | $ 863 | |
Net operating loss and tax credit carryforwards | 1,045 | 2,189 | |
Total current deferred tax assets | 2,022 | 3,052 | |
Valuation allowance | (439) | (1,164) | |
Net current deferred tax assets | 1,583 | 1,888 | |
Noncurrent deferred tax assets: | |||
Employee benefit plans | 2,719 | 2,563 | |
Goodwill and Intangibles | 215 | 1,019 | |
Other | 582 | 582 | |
Total noncurrent deferred tax assets | 3,516 | 4,164 | |
Deferred tax liabilities: | |||
Depreciation and Amortization | 2,857 | 2,401 | |
Other | 324 | 339 | |
Total deferred tax liabilities | $ 3,181 | $ 2,740 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2010 | |
Income taxes | |||
Deferred tax benefit from acquired foreign operating losses and tax credit carryforwards | $ 0 | ||
Globe Motors | |||
Income taxes | |||
Dividends paid by foreign subsidiaries | $ 3,400 | ||
Foreign | Globe Motors | |||
Income taxes | |||
Net operating loss carryforwards expiring | $ 4,200 |
COMMITMENTS AND CONTINGENCIES49
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Estimated future operating lease expense | |||
2,016 | $ 1,840 | ||
2,017 | 1,338 | ||
2,018 | 1,062 | ||
2,019 | 719 | ||
2,020 | 480 | ||
Thereafter | 1,852 | ||
Total | 7,291 | ||
Rental expense | |||
Rental expense | $ 1,946 | $ 1,976 | $ 1,248 |
Severance Benefit Agreements | |||
Rental expense | |||
Period of specified benefits to key employees Upon the subsequent severance of employment | 24 months |
DEFERRED COMPENSATION ARRANGE50
DEFERRED COMPENSATION ARRANGEMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
DEFERRED COMPENSATION ARRANGEMENTS | ||
Amount accrued | $ 2,636 | $ 2,167 |
Deferred compensation arrangements | ||
Amount accrued included in accrued liabilities | 469 | $ 430 |
Supplemental Executive Retirement Plan | ||
Deferred compensation arrangements | ||
Amount that would be contributed to Supplemental Executive Retirement Plan in event of death, disability, or termination without cause for certain key executives | $ 308 |
PENSION AND POSTRETIREMENT WE51
PENSION AND POSTRETIREMENT WELFARE PLANS - Pension Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net amount recognized in the consolidated balance sheet | |||
Accrued pension cost at end of period | $ 2,785 | $ 3,142 | |
Pension Plan | |||
Pension plan | |||
Number of last years of employment in which the employee's compensation is considered for determining benefits | 3 years | ||
Change in projected benefit obligation: | |||
Accumulated post retirement benefit obligation at beginning of period | $ 6,950 | 5,738 | |
Service cost | 105 | 83 | $ 103 |
Employee contributions | 17 | 12 | |
Interest cost | 273 | 266 | 241 |
Actuarial (gain) loss | (391) | 1,131 | |
Benefits paid | (278) | (280) | |
Accumulated post retirement benefit obligation at end of period | 6,676 | 6,950 | 5,738 |
Change in plan assets: | |||
Fair value of plan assets at beginning of period | 5,095 | 4,847 | |
Actual return on plan assets | (52) | 273 | |
Employee contributions | 17 | 12 | |
Employer contributions | 204 | 243 | |
Benefits and expenses paid | (278) | (280) | |
Fair value of plan assets at end of period | 4,986 | 5,095 | $ 4,847 |
Net amount recognized in the consolidated balance sheet | |||
Excess of projected benefit obligation over fair value of plan assets | 1,690 | 1,855 | |
Unrecognized loss | (1,823) | (2,028) | |
Accrued pension cost prior to pension adjustments | (133) | (173) | |
Accumulated Other Comprehensive Income at Current Measurement Date | 1,823 | 2,028 | |
Accrued pension cost at end of period | 1,690 | 1,855 | |
Accumulated benefit obligation | 6,473 | $ 6,697 | |
Amount of accumulated other comprehensive income expected to be recognized as a plan expense in next fiscal year | $ 170 |
PENSION AND POSTRETIREMENT WE52
PENSION AND POSTRETIREMENT WELFARE PLANS - Pension Plan Benefits and Components (Details) - Pension Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Benefits expected to be paid | |||
2,016 | $ 314 | ||
2,017 | 324 | ||
2,018 | 327 | ||
2,019 | 344 | ||
2,020 | 360 | ||
2021-2025 | 2,099 | ||
Components of net periodic expense | |||
Service cost | 105 | $ 83 | $ 103 |
Interest cost | 273 | 266 | 241 |
Amortization of net loss | 195 | 43 | 172 |
Expected return on assets | (329) | (339) | (288) |
Net periodic pension expense | $ 244 | $ 53 | $ 228 |
Amortization of cumulative gains and losses, threshold, as a percentage of the greater of the Market Related Value of Assets and the Projected Benefit Obligation | 10.00% |
PENSION AND POSTRETIREMENT WE53
PENSION AND POSTRETIREMENT WELFARE PLANS - Weighted-Average Assumptions (Details) - Pension Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Weighted average assumptions used to determine the benefit obligation | |||
Discount rate (as a percent) | 4.25% | 4.00% | 4.75% |
Rate of compensation increases (as a percent) | 2.00% | 2.00% | 2.00% |
Weighted average assumptions used to determine net periodic expense | |||
Discount rate (as a percent) | 4.00% | 4.75% | 4.00% |
Expected long-term rate of return on plan assets (as a percent) | 6.50% | 7.00% | 7.00% |
Rate of compensation increases (as a percent) | 2.00% | 2.00% | 5.00% |
Expected contributions | |||
Expected contributions during next fiscal year | $ 0 | ||
Pension plans' actual percentage of plan assets and the target percentage of plan assets | |||
Actual percentage of plan assets | 100.00% | 100.00% | |
Total (as a percent) | 100.00% | ||
Cash equivalents | |||
Pension plans' actual percentage of plan assets and the target percentage of plan assets | |||
Actual percentage of plan assets | 7.00% | 5.00% | |
Equity securities | |||
Pension plans' actual percentage of plan assets and the target percentage of plan assets | |||
Actual percentage of plan assets | 62.00% | 64.00% | |
Minimum (as a percent) | 55.00% | ||
Maximum (as a percent) | 75.00% | ||
Fixed income securities | |||
Pension plans' actual percentage of plan assets and the target percentage of plan assets | |||
Actual percentage of plan assets | 31.00% | 31.00% | |
Minimum (as a percent) | 25.00% | ||
Maximum (as a percent) | 45.00% | ||
Cash | |||
Pension plans' actual percentage of plan assets and the target percentage of plan assets | |||
Minimum (as a percent) | 0.00% | ||
Maximum (as a percent) | 20.00% |
PENSION AND POSTRETIREMENT WE54
PENSION AND POSTRETIREMENT WELFARE PLANS - Postretirement Welfare Plan (Details) - Postretirement Welfare Plan - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Pension and Postretirement plan | ||
Requisite service period for employees who retire after January 1, 2005 in order to be eligible for retiree medical benefits | 20 years | |
Change in postretirement benefit obligation: | ||
Accumulated post retirement benefit obligation at beginning of period | $ 1,288 | $ 1,408 |
Service cost | 10 | 9 |
Interest cost | 50 | 57 |
Actuarial (gain) loss | (204) | (138) |
Benefits paid | (49) | (88) |
Participant contributions | 40 | |
Accumulated post retirement benefit obligation at end of period | $ 1,095 | $ 1,288 |
PENSION AND POSTRETIREMENT WE55
PENSION AND POSTRETIREMENT WELFARE PLANS - Additional Information (Details) - Postretirement Welfare Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Pension and Postretirement plan | |||
Net periodic postretirement benefit (income) expense | $ (24) | $ (24) | $ 30 |
Amount of accumulated other comprehensive income expected to be recognized as a plan expense in next fiscal year | |||
Amount of accumulated other comprehensive income expected to be recognized as a plan expense | 127 | ||
Actuarial gain | 115 | ||
Prior service credit | $ 12 | ||
Weighted average discount rate used in determining the accumulated postretirement benefit obligation | |||
Discount rate (as a percent) | 4.25% | 4.00% | 4.75% |
Weighted average discount rate used to determine the net periodic postretirement benefit cost | |||
Discount rate (as a percent) | 4.25% | 4.75% | 4.00% |
Benefits expected to be paid | |||
2,016 | $ 56 | ||
2,017 | 51 | ||
2,018 | 49 | ||
2,019 | 59 | ||
2,020 | 356 | ||
2021-2025 | $ 341 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)segmentcustomer | Dec. 31, 2014USD ($)customer | Dec. 31, 2013USD ($) | |
SEGMENT INFORMATION | |||||||||||
Number of operating segments | segment | 1 | ||||||||||
Segment information | |||||||||||
Revenues | $ 50,841 | $ 61,534 | $ 60,479 | $ 59,580 | $ 61,898 | $ 65,280 | $ 62,069 | $ 60,435 | $ 232,434 | $ 249,682 | $ 125,502 |
Identifiable assets | 166,086 | 167,081 | $ 166,086 | $ 167,081 | |||||||
Sales | Customer A | |||||||||||
Segment information | |||||||||||
Number of customers | customer | 1 | 1 | |||||||||
Percentage of concentration risk | 24.00% | 23.00% | |||||||||
Trade receivables. | Customer A | |||||||||||
Segment information | |||||||||||
Number of customers | customer | 1 | 1 | |||||||||
Percentage of concentration risk | 12.00% | 23.00% | |||||||||
Trade receivables. | Customer B | |||||||||||
Segment information | |||||||||||
Number of customers | customer | 1 | 1 | |||||||||
Percentage of concentration risk | 15.00% | 15.00% | |||||||||
Outside the United States | |||||||||||
Segment information | |||||||||||
Revenues | $ 79,961 | $ 85,152 | 53,989 | ||||||||
Wholly owned foreign subsidiaries | |||||||||||
Segment information | |||||||||||
Revenues | 77,023 | 82,544 | $ 50,053 | ||||||||
Identifiable assets | $ 56,444 | $ 53,479 | $ 56,444 | $ 53,479 |
SUBSEQUENT EVENTS (Detail)
SUBSEQUENT EVENTS (Detail) € in Thousands, $ in Thousands | Jan. 12, 2016EUR (€) | Jan. 12, 2016USD ($) | Jan. 08, 2016USD ($) | Dec. 31, 2015USD ($) |
Revolving Credit Facility | ||||
SUBSEQUENT EVENTS | ||||
Maximum borrowing capacity | $ 15,000 | |||
Subsequent event | Revolving Credit Facility | ||||
SUBSEQUENT EVENTS | ||||
Maximum borrowing capacity | $ 30,000 | |||
Subsequent event | Revolving Credit Facility | Foreign | ||||
SUBSEQUENT EVENTS | ||||
Maximum borrowing capacity sublimit | 25,000 | |||
Subsequent event | Revolving Credit Facility | Amount before increase | ||||
SUBSEQUENT EVENTS | ||||
Maximum borrowing capacity | 15,000 | |||
Subsequent event | Revolving Credit Facility | Amount before increase | Foreign | ||||
SUBSEQUENT EVENTS | ||||
Maximum borrowing capacity sublimit | $ 10,000 | |||
Subsequent event | Heidrive | ||||
SUBSEQUENT EVENTS | ||||
Acquisition cost, including certain management performance bonuses | € 20,000 | $ 22,000 |
SELECTED QUARTERLY FINANCIAL 58
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||
Revenues | $ 50,841 | $ 61,534 | $ 60,479 | $ 59,580 | $ 61,898 | $ 65,280 | $ 62,069 | $ 60,435 | $ 232,434 | $ 249,682 | $ 125,502 |
Gross margin | 14,346 | 18,939 | 17,987 | 17,500 | 18,154 | 19,612 | 18,568 | 17,092 | 68,772 | 73,426 | 36,522 |
Net income | $ 695 | $ 4,278 | $ 3,125 | $ 2,976 | $ 4,904 | $ 4,115 | $ 2,693 | $ 2,148 | $ 11,074 | $ 13,860 | $ 3,953 |
Basic earnings per share (in dollars per share) | $ 0.08 | $ 0.46 | $ 0.34 | $ 0.32 | $ 0.54 | $ 0.45 | $ 0.29 | $ 0.24 | $ 1.20 | $ 1.52 | $ 0.45 |
Diluted earnings per share (in dollars per share) | $ 0.07 | $ 0.46 | $ 0.34 | $ 0.32 | $ 0.53 | $ 0.45 | $ 0.29 | $ 0.24 | $ 1.20 | $ 1.51 | $ 0.45 |