Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 10, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity File Number | 0-04041 | ||
Entity Registrant Name | ALLIED MOTION TECHNOLOGIES INC | ||
Entity Incorporation, State or Country Code | CO | ||
Entity Tax Identification Number | 84-0518115 | ||
Entity Address, Address Line One | 495 Commerce Drive | ||
Entity Address, City or Town | Amherst | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 14228 | ||
City Area Code | 716 | ||
Local Phone Number | 242-8634 | ||
Title of 12(b) Security | Common stock | ||
Trading Symbol | AMOT | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 9,772,519 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000046129 | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 270,603,764 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 23,131 | $ 13,416 |
Trade receivables, net of provision for credit losses of $382 and allowance for doubtful accounts of $405 at December 31, 2020 and December 31, 2019, respectively | 47,377 | 44,429 |
Inventories | 62,978 | 53,385 |
Prepaid expenses and other assets | 8,728 | 4,413 |
Total current assets | 142,214 | 115,643 |
Property, plant and equipment, net | 55,428 | 53,008 |
Deferred income taxes | 330 | 490 |
Intangible assets, net | 65,859 | 62,497 |
Goodwill | 61,860 | 52,935 |
Right of use assets | 19,023 | 16,420 |
Other long-term assets | 4,483 | 4,835 |
Total Assets | 349,197 | 305,828 |
Current liabilities: | ||
Accounts payable | 27,668 | 23,640 |
Accrued liabilities | 24,862 | 23,001 |
Total current liabilities | 52,530 | 46,641 |
Long-term debt | 120,079 | 109,765 |
Deferred income taxes | 4,659 | 3,399 |
Pension and post-retirement obligations | 5,340 | 5,139 |
Right of use liabilities | 14,975 | 13,715 |
Other long-term liabilities | 8,558 | 7,975 |
Total liabilities | 206,141 | 186,634 |
Commitments and contingencies (Note 11) | ||
Stockholders' Equity: | ||
Common stock, no par value, authorized 50,000 shares; 9,754 and 9,599 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 41,278 | 37,136 |
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding | ||
Retained earnings | 105,065 | 92,589 |
Accumulated other comprehensive loss | (3,287) | (10,531) |
Total stockholders' equity | 143,056 | 119,194 |
Total Liabilities and Stockholders' Equity | $ 349,197 | $ 305,828 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, allowance for doubtful accounts (in dollars) | $ 382 | $ 405 |
Trade receivables, provision for credit losses | $ 382 | |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares | 50,000 | 50,000 |
Common stock, shares issued | 9,754 | 9,599 |
Common stock, shares outstanding | 9,754 | 9,599 |
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, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||
Revenues | $ 366,694 | $ 371,084 | $ 310,611 |
Cost of goods sold | 258,119 | 258,500 | 219,208 |
Gross profit | 108,575 | 112,584 | 91,403 |
Operating costs and expenses: | |||
Selling | 15,392 | 16,536 | 11,807 |
General and administrative | 38,301 | 37,688 | 32,037 |
Engineering and development | 25,487 | 23,086 | 19,913 |
Business development | 473 | 113 | 762 |
Amortization of intangible assets | 5,928 | 5,718 | 3,655 |
Total operating costs and expenses | 85,581 | 83,141 | 68,174 |
Operating income | 22,994 | 29,443 | 23,229 |
Other expense, net: | |||
Interest expense | 3,716 | 5,134 | 2,701 |
Other expense (income), net | 502 | 468 | (153) |
Total other expense, net | 4,218 | 5,602 | 2,548 |
Income before income taxes | 18,776 | 23,841 | 20,681 |
Provision for income taxes | (5,133) | (6,819) | (4,756) |
Net income | $ 13,643 | $ 17,022 | $ 15,925 |
Basic earnings per share: | |||
Earnings per share | $ 1.44 | $ 1.81 | $ 1.72 |
Basic weighted average common shares | 9,495 | 9,398 | 9,265 |
Diluted earnings per share: | |||
Earnings per share | $ 1.43 | $ 1.80 | $ 1.70 |
Diluted weighted average common shares | 9,555 | 9,461 | 9,370 |
Net income | $ 13,643 | $ 17,022 | $ 15,925 |
Other comprehensive income: | |||
Foreign currency translation adjustment | 8,410 | (680) | (3,109) |
Change in accumulated income (loss) on derivatives | (1,161) | (711) | 238 |
Pension adjustments | (5) | (622) | (61) |
Comprehensive income | $ 20,887 | $ 15,009 | $ 12,993 |
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 | Accumulated income (loss) on derivatives | Defined Benefit Plan Liability | Total |
Balances at Dec. 31, 2017 | $ 34,473 | $ (3,422) | $ 61,882 | $ (4,837) | $ 196 | $ (945) | $ 87,347 |
Balances (in shares) at Dec. 31, 2017 | 9,427 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 852 | 852 | |||||
Stock transactions under employee benefit stock plans (in shares) | 26 | ||||||
Issuance of restricted stock, net of forfeitures | $ 3,033 | (1,859) | 1,174 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 92 | ||||||
Stock compensation expense | 2,115 | 2,115 | |||||
Shares withheld for payment of employee payroll taxes | $ (1,579) | (1,579) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (60) | ||||||
Comprehensive income (loss) | (3,109) | 370 | (63) | (2,802) | |||
Tax effect | (132) | 2 | (130) | ||||
Net income | 15,925 | 15,925 | |||||
Dividends to stockholders | (1,089) | (1,089) | |||||
Balances at Dec. 31, 2018 | $ 36,779 | (3,166) | 76,718 | (7,946) | 434 | (1,006) | 101,813 |
Balances (in shares) at Dec. 31, 2018 | 9,485 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 1,089 | 1,089 | |||||
Stock transactions under employee benefit stock plans (in shares) | 27 | ||||||
Issuance of restricted stock, net of forfeitures | $ 4,520 | (4,191) | 329 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 107 | ||||||
Stock compensation expense | 2,851 | 2,851 | |||||
Shares withheld for payment of employee payroll taxes | $ (746) | (746) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (20) | ||||||
Comprehensive income (loss) | (680) | (929) | (808) | (2,417) | |||
Tax effect | 218 | 186 | 404 | ||||
Net income | 17,022 | 17,022 | |||||
Dividends to stockholders | (1,151) | (1,151) | |||||
Balances at Dec. 31, 2019 | $ 41,642 | (4,506) | 92,589 | (8,626) | (277) | (1,628) | $ 119,194 |
Balances (in shares) at Dec. 31, 2019 | 9,599 | 9,599 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 1,252 | $ 1,252 | |||||
Stock transactions under employee benefit stock plans (in shares) | 32 | ||||||
Issuance of restricted stock, net of forfeitures | $ 5,223 | (4,851) | 372 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 154 | ||||||
Stock compensation expense | 3,550 | 3,550 | |||||
Shares withheld for payment of employee payroll taxes | $ (1,032) | (1,032) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (31) | ||||||
Comprehensive income (loss) | 8,410 | (1,526) | (5) | 6,879 | |||
Tax effect | 365 | 365 | |||||
Net income | 13,643 | 13,643 | |||||
Dividends to stockholders | (1,167) | (1,167) | |||||
Balances at Dec. 31, 2020 | $ 47,085 | $ (5,807) | $ 105,065 | $ (216) | $ (1,438) | $ (1,633) | $ 143,056 |
Balances (in shares) at Dec. 31, 2020 | 9,754 | 9,754 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||
Dividends to stockholder (in dollars per share) | $ 0.12 | $ 0.12 | $ 0.115 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows From Operating Activities: | |||
Net income | $ 13,643 | $ 17,022 | $ 15,925 |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 15,985 | 14,857 | 11,576 |
Deferred income taxes | (519) | (112) | (76) |
Loss on sale of assets | 97 | 247 | 19 |
Provision for doubtful accounts | 91 | (5) | 192 |
Provision for excess and obsolete inventory | 1,106 | 408 | 682 |
Provision for warranty | 34 | 210 | (13) |
Debt issue cost amortization recorded in interest expense | 144 | 174 | 148 |
Restricted stock compensation | 3,550 | 3,203 | 2,643 |
Other | (521) | 21 | 57 |
Changes in operating assets and liabilities, net of acquisition: | |||
Trade receivables | 2,711 | (1,456) | (4,110) |
Inventories | (4,686) | 70 | (17,327) |
Prepaid expenses and other assets | (2,264) | (517) | (835) |
Accounts payable | (1,874) | (1,809) | 6,533 |
Accrued liabilities | (2,659) | 2,217 | 2,038 |
Net cash provided by operating activities | 24,838 | 34,530 | 17,452 |
Cash Flows From Investing Activities: | |||
Consideration paid for acquisitions, net of cash acquired | (14,728) | (77,413) | |
Purchase of property and equipment | (9,371) | (14,882) | (14,333) |
Net cash used in investing activities | (24,099) | (14,882) | (91,746) |
Cash Flows From Financing Activities: | |||
Repayments on lines of credit | (454) | ||
Principal payments of long-term debt | (16,897) | (22,500) | (13,278) |
Proceeds from issuance of long-term debt | 26,979 | 9,639 | 83,163 |
Payment of debt issuance costs | (401) | (72) | |
Sale of restricted stock | 1,076 | ||
Dividends paid to stockholders | (1,160) | (1,170) | (1,079) |
Tax withholdings related to net share settlements of restricted stock | (1,032) | (746) | (1,579) |
Net cash provided by (used in) financing activities | 7,489 | (14,777) | 67,777 |
Effect of foreign exchange rate changes on cash | 1,487 | (128) | (400) |
Net increase (decrease) in cash and cash equivalents | 9,715 | 4,743 | (6,917) |
Cash and cash equivalents at beginning of period | 13,416 | 8,673 | 15,590 |
Cash and cash equivalents at end of period | 23,131 | 13,416 | 8,673 |
Supplemental disclosure of cash flow information: | |||
Interest paid | 3,586 | 5,342 | 2,272 |
Income taxes paid | 8,563 | 2,051 | 7,014 |
Property, plant and equipment purchases in accounts payable or accrued expenses | $ 596 | $ 378 | $ 599 |
BASIS OF PREPARATION AND PRESEN
BASIS OF PREPARATION AND PRESENTATION | 12 Months Ended |
Dec. 31, 2020 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PREPARATION AND PRESENTATION | 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 precision and specialty controlled motion components and systems, which include integrated system solutions as well as individual controlled motion products, to a broad spectrum of customers throughout the world primarily for the vehicle, medical, aerospace and defense, and industrial markets. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. For business combinations, we record net assets acquired and liabilities assumed at their estimated fair values. 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. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The provision for credit losses 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 provisions in the future. Activity in the provision for credit losses for 2020 and 2019 was as follows (in thousands): December 31, 2020 December 31, 2019 Beginning balance $ 405 $ 530 Additional reserves 91 (5) Write-offs (123) (132) Effect of foreign currency translation 9 12 Ending balance $ 382 $ 405 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 net realizable value, as follows (in thousands): December 31, 2020 December 31, 2019 Parts and raw materials $ 44,750 $ 35,849 Work-in-process 6,186 6,951 Finished goods 12,042 10,585 $ 62,978 $ 53,385 Property, Plant and Equipment Property, plant and equipment is classified as follows (in thousands): December 31, December 31, Useful lives 2020 2019 Land $ 999 $ 977 Building and improvements 5 - 39 years 14,169 13,366 Machinery, equipment, tools and dies 3 - 15 years 79,738 58,358 Construction work in progress 6,821 15,536 Furniture, fixtures and other 3 - 10 years 16,313 15,797 118,040 104,034 Less accumulated depreciation (62,612) (51,026) Property, plant and equipment, net $ 55,428 $ 53,008 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 asset, 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 $10,057, $9,139 and $7,921 in 2020, 2019 and 2018, respectively. Intangible Assets Intangible assets, other than goodwill, are recorded at cost and are amortized over their estimated useful lives using an accelerated or straight-line method which approximates the pattern of expected cash flows over the remaining useful lives of the intangible 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, on an annual basis and 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 assets. The Company did not record any impairment charges for the years ended December 31, 2020, 2019 and 2018. 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 not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. The Company has defined 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. If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill. At October 31, 2020, we performed our annual goodwill impairment test and determined, after performing a qualitative test of the reporting unit, that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. Accordingly, there was no indication of impairment and the quantitative impairment test was not performed. The Company did not record any impairment charges for the years ended December 31, 2020, 2019 or 2018. 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. 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 is generally three months to two years and varies significantly based on the product 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 re-evaluated 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 goods sold. Changes in the Company’s reserve for product warranty claims during 2020, 2019 and 2018 were as follows (in thousands): December 31, December 31, December 31, 2020 2019 2018 Warranty reserve at beginning of the year $ 1,075 $ 971 $ 922 Warranty reserves acquired 465 — 117 Provision 34 210 (13) Warranty expenditures (97) (101) (34) Effect of foreign currency translation 94 (5) (21) Warranty reserve at end of year $ 1,571 $ 1,075 $ 971 Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, December 31, 2020 2019 Compensation and fringe benefits $ 11,184 $ 12,967 Warranty reserve 1,571 1,075 Income taxes payable 1,459 2,231 Right of use liabilities 4,666 3,203 Other accrued expenses 5,982 3,525 $ 24,862 $ 23,001 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 accumulated other comprehensive loss, 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 operating locations are included in the results of operations as incurred. Revenue Recognition Refer to Note 3, Revenue Recognition 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 design as well as research 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. Basic and diluted weighted-average shares outstanding are as follows (in thousands): Year ended December 31, 2020 2019 2018 Basic weighted average shares outstanding 9,495 9,398 9,265 Dilutive effect of equity awards 60 63 105 Diluted weighted average shares outstanding 9,555 9,461 9,370 For 2020, 2019 and 2018, the anti-dilutive common shares excluded from the calculation of diluted income per share were immaterial. 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, 2020 and 2019, respectively, by level within the fair value hierarchy (in thousands): December 31, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,347 $ — $ — Deferred compensation plan assets 5,386 — — Interest rate swaps — (1,889) — December 31, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,099 $ — $ — Deferred compensation plan assets 4,690 — — Interest rate swaps — (363) — Derivative Financial Instruments Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") No. 815, Derivatives and Hedging ("ASC 815"), provides the 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. As required by ASC 815, 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 risk, 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. It is the Company's policy to include interest and penalties related to income tax liabilities in income tax expense on the consolidated statements of income and comprehensive Income. In addition, the Company records uncertain tax positions in accordance with ASC 740, Income Taxes Pension and Postretirement Welfare Plans The Company records the service cost component of net benefit costs in Cost of goods sold, Selling, and General and administrative expenses. The interest cost component of net benefit costs is recorded in Interest expense and the remaining components of net benefit costs, amortization of net losses and expected return on plan assets is recorded in Other expense, net. 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 13, Segment Information, 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. Recently adopted accounting pronouncements In June 2016, FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This guidance provides relief for impacted areas as it relates to impending reference rate reform and contains optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other areas or transactions, subject to meeting certain criteria, that are impacted by reference rate reform. This ASU is effective upon issuance for all entities and elections of certain optional expedients are required to apply the provisions of the guidance. The Company adopted this ASU effective January 1, 2020 on a prospective basis, and the Company has elected the expedients related to the probability of hedged interest payments, regardless of any expected future modification in terms related to reference rate reform, as well as the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Should the Company elect further optional expedients as it relates to reference rate reform, disclosure of those elections will be done in the fiscal period in which the elections are made. The adoption did not have a material impact on its consolidated financial statement |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | 2. ACQUISITIONS Dynamic Controls On March 7, 2020, the Company acquired 100% of the issued and outstanding share capital of the Dynamic Controls Group (“Dynamic Controls”), a wholly owned subsidiary of Invacare Corporation, a market-leading designer and manufacturer of equipment for the medical mobility and rehabilitation markets. The purchase price was funded using borrowings under the Amended Revolving Facility (Note 7). The purchase price was subject to adjustments based on a determination of closing net working capital. Dynamic Controls brings strong leadership and a very experienced electronics and software engineering design team, providing market leading electronic control solutions and products that will further strengthen the Company’s medical market position, as well as enable it to further develop higher level solutions with embedded electronics across our other major served markets. The Company incurred $473 of transaction costs related to the acquisition of Dynamic Controls in 2020, which are included in business development expenses on the consolidated statements of income and comprehensive income. The Company accounted for the acquisition pursuant to FASB ASC 805, Business Combinations . The allocation of the purchase price paid for Dynamic Controls is based on estimated fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 and is as follows (in thousands): Cash and cash equivalents $ 11,437 Accounts receivable 4,129 Inventory 3,329 Other assets, net 769 Property, plant and equipment 1,185 Right of use assets 2,735 Intangible assets 7,800 Goodwill 6,629 Current liabilities (7,354) Lease liabilities (2,739) Net deferred income tax liabilities (1,755) Net purchase price $ 26,165 During the second quarter of 2020, measurement period adjustments primarily related to deferred income taxes and the true-up of closing net working capital were recognized, which resulted in a reduction of goodwill by $268 . During the third quarter of 2020, measurement period adjustments related primarily to tax liabilities were recognized, which resulted in an increase of goodwill by $77 . The allocation of the purchase price was finalized during the fourth quarter of 2020. The intangible assets acquired consist of customer lists of $4,400 , technology of $1,900 and a trade name of $1,500 , which are being amortized over 16 , 13 and 18 years , respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other operations and Dynamic Controls that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Dynamic Controls’ management knowledge in providing complementary product offerings to the Company’s customers. The operating results of this acquisition are included in our consolidated financial statements beginning on the date of the acquisition. Included within the consolidated statement of income and comprehensive income for the year ended December 31, 2020, revenues and earnings related to Dynamic Controls were $24,124 and $945, respectively. The following unaudited pro forma financial information presents the combined results of operations if the Dynamic Controls acquisition had occurred as of January 1, 2019 (in thousands): For the year ended December 31, 2020 2019 Revenues $ 371,856 $ 401,345 Net income $ 14,255 $ 17,779 Earnings per share - basic $ 1.50 $ 1.89 Earnings per share - diluted $ 1.49 $ 1.88 The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts 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 have been had these transactions actually occurred on the date presented or to project the combined company’s results of operations or financial position for any future period. The goodwill resulting from the Dynamic Controls acquisition is not tax deductible. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2020 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION Performance Obligations Performance Obligations Satisfied at a Point in Time The Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product. The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for generally monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Nature of Goods and Services The Company sells component and integrated controlled motion solutions to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brushed and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, and other controlled motion-related products. The Company’s target markets include Vehicle, Medical, Aerospace & Defense and Industrial. Determining the Transaction Price The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of December 31, 2020. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in Note 13, Segment Information reportable segment. The revenues by geography in the table below are revenues derived from the Company’s foreign subsidiaries as provided in Note 13. A reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions is provided in Note 13. Year ended December 31, Target Market 2020 2019 Vehicle $ 110,365 $ 126,811 Industrial 114,143 124,196 Medical 83,191 51,586 Aerospace & Defense 39,711 47,748 Other 19,284 20,743 Total $ 366,694 $ 371,084 Year ended December 31, Geography 2020 2019 United States $ 214,203 $ 244,347 Europe 126,985 124,914 Asia-Pacific 25,506 1,823 Total $ 366,694 $ 371,084 Contract Balances When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists. The opening and closing balances of the Company’s contract liability are as follows (in thousands): December 31, December 31, 2020 2019 Contract liabilities in accrued liabilities $ 898 $ 454 Contract liabilities in other long-term liabilities 262 - $ 1,160 $ 454 The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. Significant Payment Terms The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration. Returns, Refunds, and Warranties In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications. Practical Expedients Incremental costs of obtaining a contract one year or less Remaining performance obligations one year or less Time value of money one year or less |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2020 | |
GOODWILL | |
GOODWILL | 4. GOODWILL The change in the carrying amount of goodwill for 2020 and 2019 is as follows (in thousands): 2020 2019 Beginning balance $ 52,935 $ 52,639 Goodwill acquired (Note 2) 6,629 614 Effect of foreign currency translation 2,296 (318) Ending balance $ 61,860 $ 52,935 The purchase price allocation was finalized for the Dynamic Controls acquisition during the fourth quarter of 2020. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS Intangible assets on the Company’s consolidated balance sheets consist of the following (in thousands): December 31, 2020 December 31, 2019 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 8 - 17 years $ 69,833 $ (23,636) $ 46,197 $ 64,314 $ (19,311) $ 45,003 Trade name 10 - 19 years 14,055 (5,061) 8,994 12,222 (4,114) 8,108 Design and technologies 10 - 15 years 15,531 (4,874) 10,657 12,927 (3,554) 9,373 Patents 17 years 24 (13) 11 24 (11) 13 Total $ 99,443 $ (33,584) $ 65,859 $ 89,487 $ (26,990) $ 62,497 Intangible assets resulting from the acquisition of Dynamic Controls were approximately $7,800 (Note 2). The intangible assets acquired consist of customer lists, technology, and a trade name. Total amortization expense for intangible assets for the years 2020, 2019 and 2018 was $5,928, $5,718 and $3,655, respectively. Estimated amortization expense for intangible assets is as follows (in thousands): Estimated Amortization Expense 2021 $ 6,059 2022 6,110 2023 6,127 2024 5,798 2025 5,780 Thereafter 35,985 Total estimated amortization expense $ 65,859 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2020 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION PLANS | 6. 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, 2020, the Company had 753,187 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: Awards with Unvested Weighted average performance restricted stock grant date fair vesting For the year ended December 31, awards value requirements 2020 160,437 $ 33.51 100,403 2019 109,530 $ 41.95 76,877 2018 64,656 $ 35.89 30,603 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. Short-term performance based grants can be achieved over a period of one year, and long-term performance grants can be earned through December 31, 2022. Earned grants are then subject to either a 3 year or 5 year service 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. For performance-based awards, the Company assesses the probability of the achievement of the awards during the year and recognizes expense accordingly. The following is a summary of restricted stock activity during years 2020, 2019 and 2018: Number of shares Balance, December 31, 2017 221,968 Awarded 64,656 Forfeited (18,867) Vested (112,015) Balance, December 31, 2018 155,742 Awarded 109,530 Forfeited (3,166) Vested (75,404) Balance, December 31, 2019 186,702 Awarded 160,437 Forfeited (2,446) Vested (106,465) Balance, December 31, 2020 238,228 The following is a summary of performance based restricted stock activity during years 2020, 2019 and 2018: Total performance grants Outstanding, December 31, 2017 37,782 Awarded 30,603 Performance criteria met (66,525) Forfeited (1,860) Outstanding, December 31, 2018 — Awarded 76,877 Performance criteria met (50,852) Forfeited (549) Outstanding, December 31, 2019 25,476 Awarded 100,403 Performance criteria met (64,384) Forfeited (2,155) Outstanding, December 31, 2020 59,340 The performance criteria and forfeitures in the above table did not occur until the Board of Directors approved them during the March 2021, and February 2020 and 2019 meetings. Share-Based Compensation Expense Restricted Stock During 2020, 2019 and 2018 compensation expense net of forfeitures of $3,550, $3,203 and $2,643 was recorded, respectively. As of December 31, 2020, there was $4,100 of total unrecognized compensation expense related to restricted stock awards, of which approximately $2,236 is expected to be recognized in 2021. 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 2020, 2019 and 2018) or ii) the annual interest payable on any loan outstanding to the Company from the ESOP. Company contributions to the Plan accrued for 2020, 2019 and 2018, were $988, $1,189 and $1,090, respectively. 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 its U.S. based employees. The plan provides for the deferral of employee compensation under Section 401(k) and a discretionary Company match. In 2020, 2019 and 2018 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 $1,774, $1,362 and $1,182 in 2020, 2019 and 2018, respectively. Dividends For each of the years ended December 31, 2020 and 2019 a total of $0.12 per share on all outstanding shares was declared and paid, respectively. For the year ended December 31, 2018 a total of $0.115 per share on all outstanding shares was declared and paid. Total dividends paid for the years ended December 31, 2020, 2019 and 2018 were $1,160, $1,170 and $1,079, 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, 2020 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 7. DEBT OBLIGATIONS Debt obligations consisted of the following (in thousands): December 31, December 31, 2020 2019 Long-term Debt Revolving Credit Facility, long-term (1) $ 120,656 $ 110,085 Unamortized debt issuance costs (577) (320) Long-term debt $ 120,079 $ 109,765 (1) The effective rate of the Revolving Credit Facility is 2.5% at December 31, 2020 including the impact of the Company's interest rate swaps. Amended Revolving Credit Facility On February 12, 2020, the Company entered into a First Amended and Restated Credit Agreement (the “Amended Credit Agreement”) for a $225 million revolving credit facility (the “Amended Revolving Facility”). The significant changes made to the Company’s prior credit facility by the Amended Credit Agreement include (i) increasing the maximum principal amount from $175 million to $225 million, (ii) providing for a $75 million accordion amount, (iii) decreasing certain interest-rate margins and fees, and (iv) extending the term to February 2025 from the original term of October 2021. HSBC Bank USA, National Association is the administrative agent, and HSBC Securities (USA) Inc., KeyBank N.A, Wells Fargo Bank, N.A and Citizens Bank, N.A. are joint lead arrangers. Borrowings under the Amended Revolving Facility bear interest at the LIBOR Rate (as defined in the Amended Credit Agreement) plus a margin of 1.00% to 1.75% or the Prime Rate (as defined in the Amended Credit Agreement) plus a margin of 0% to 0.75 %, in each case depending on the Company’s ratio of total funded indebtedness (as defined in the Amended Credit Agreement) to Consolidated trailing twelve-month EBITDA (the “Total Leverage Ratio”). At December 31, 2020, the applicable margin for LIBOR Rate borrowings was 1.625% and the applicable margin for Prime Rate borrowings was 0.625%. In addition, the Company is required to pay a commitment fee of between 0.10% and 0.225% quarterly (0.20 % at December 31, 2020) on the unused portion of the Amended Revolving Facility, also based on the Company’s Total Leverage Ratio. The Amended Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries. The Amended Credit Agreement contains certain financial covenants related to minimum interest coverage and total leverage ratio at the end of each quarter. The Amended Credit Agreement also includes other covenants and restrictions, including limits on the amount of additional indebtedness, and restrictions on the Company’s ability to merge or sell all, or substantially all, of its assets. The Company was in compliance with all covenants at December 31, 2020. As of December 31, 2020, the unused Amended Revolving Facility was $104,344 . The amount available to borrow may be reduced based upon our debt and EBITDA levels, which impacts our covenant calculations. Other The China Credit Facility provides credit of $1,467 (Chinese Renminbi 10,000 ) (“the China Facility”). The China Facility is a demand revolving facility used for working capital and capital equipment needs at the Company’s China operations. The term is annual and may be cancelled at the bank’s discretion. The interest rate shall be agreed upon by the Lender and the Borrower before the Utilization Date (as defined in the China Facility) and shall be specified in the Utilization Request (as defined in the China Facility). Collateral for the facility is a guarantee issued by the Company. There were no borrowings under the China Facility during 2020 or 2019. Deferred Financing Fees Deferred financing costs net of accumulated amortization were $577 as of December 31, 2020. These costs will be amortized over the term of the Amended Credit Facility. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 8. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks 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, and foreign exchange risk primarily through 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 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 payments principally related to the Company’s 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. In February 2017, the Company entered into three interest rate swaps with a combined notional of $40,000 that mature in February 2022. In March 2020, the Company entered into two additional interest rate swaps with a combined notional amount of $20,000 that increases to $60,000 in March 2022 and matures in December 2024. The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The Company estimates that an additional $904 will be reclassified as an increase to interest expense over the next twelve months. 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 table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2020, and 2019 (in thousands): Liability Derivatives Fair value as of: Derivatives designated as Balance Sheet December 31, hedging instruments Location 2020 2019 Interest rate products Other long-term liabilities $ 1,889 $ 363 The table below presents the effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) for the years ended December 31, 2020, 2019 and 2018 (in thousands): Amount of pre-tax loss recognized in OCI on derivatives Derivatives in cash flow hedging relationships Year ended December 31, 2020 2019 Interest rate products $ (2,163) $ (816) Location of (loss) gain reclassified Amount of pre-tax (loss) gain reclassified from accumulated OCI into income from accumulated OCI into income Year ended December 31, 2020 2019 2018 Interest expense $ (637) $ 113 $ 6 The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of income and comprehensive income for the years ended December 31, 2020, 2019 and 2018 (in thousands): Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded Year ended December 31, Derivatives designated as hedging instruments Income Statement Location 2020 2019 2018 Interest rate products Interest Expense $ 3,716 $ 5,134 $ 2,701 The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2020 and 2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets (in thousands). Gross amounts Net amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2020 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 1,889 $ — $ 1,889 $ — $ — $ 1,889 Gross amounts Net amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2019 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 363 $ — $ 363 $ — $ — $ 363 The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES The provision for income taxes is based on income before income taxes as follows (in thousands): For the year ended December 31, December 31, December 31, 2020 2019 2018 Domestic $ 8,478 $ 17,188 $ 10,894 Foreign 10,298 6,653 9,787 Income before income taxes $ 18,776 $ 23,841 $ 20,681 Components of the total provision for income taxes are as follows (in thousands): For the year ended December 31, December 31, December 31, 2020 2019 2018 Current provision Domestic $ 2,167 $ 4,313 $ 1,663 Foreign 3,485 2,618 3,169 Total current provision 5,652 6,931 4,832 Deferred provision Domestic 288 199 675 Foreign (807) (311) (751) Total deferred provision (519) (112) (76) Provision for income taxes $ 5,133 $ 6,819 $ 4,756 The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows: For the year ended December 31, December 31, December 31, 2020 2019 2018 Tax provision, computed at statutory rate 21.0 % 21.0 % 21.0 % State tax, net of federal impact 4.2 % 4.5 % 3.0 % Change in valuation allowance 0.0 % 0.3 % 2.8 % Effect of foreign tax rate differences 4.3 % 1.5 % 3.4 % Permanent items, other (0.2) % 1.4 % 0.8 % Section 162(m) compensation 2.2 % 1.1 % 0.1 % R&D Credit (3.6) % (2.5) % (0.8) % Restricted stock awards 0.6 % (0.1) % (2.3) % Effect of Tax Cuts and Jobs Act (1.3) % (0.4) % (5.1) % Subpart F income 1.3 % 0.0 % 0.0 % Tax examinations 0.0 % 1.8 % 0.0 % Other (1.2) % 0.0 % 0.1 % Provision for income taxes 27.3 % 28.6 % 23.0 % 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, December 31, 2020 2019 Noncurrent deferred tax assets: Employee benefit plans $ 2,500 $ 2,440 Net operating loss and tax credit carryforwards 2,217 1,675 Accrued expenses and reserves 969 795 Other 697 428 Total noncurrent deferred tax assets 6,383 5,338 Valuation allowance (1,176) (1,077) Net noncurrent deferred tax assets: $ 5,207 $ 4,261 Net noncurrent deferred tax liabilities: Property and equipment $ 3,448 $ 3,901 Goodwill and intangibles 5,629 2,885 Other 459 384 Total noncurrent deferred tax liabilities $ 9,536 $ 7,170 Net deferred tax asset/(deferred tax liability) $ (4,329) $ (2,909) Presented as follows: Noncurrent deferred income tax assets $ 330 $ 490 Noncurrent deferred income tax liabilities (4,659) (3,399) Net deferred tax liability $ (4,329) $ (2,909) As of December 31, 2020, the Company has the following gross carryforwards available: Amount Jurisdiction Tax Attribute (in thousands) Begin to expire U.S. State Net Operating Losses (1) $ 4,139 2024 International Net Operating Losses (1) $ 1,519 2025 International Net Operating Losses - Unlimited Carryforward (1) $ 718 No expiration U.S. Federal Foreign Tax Credits $ 1,003 2027 International R&D Tax Credits $ 574 2025 (1) Net operating losses (NOL’s) are presented as pre-tax amounts. 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. The Company generated excess foreign tax credits in 2017 due to the one-time transition tax required by enactment of the Tax Cuts and Jobs Act in the amount of $0.9 million. The Company determined it is more likely than not that it will not realize a tax benefit from these credits. Additionally, the Company has incurred net operating losses in certain states that it is more likely than not will not be realized. The tax effect of these losses is $0.2 million. Therefore, the Company recognized a full valuation allowance related to these foreign tax credits and state net operating losses. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. The Company believes that it is more likely than not that it will realize the benefits of its deferred tax assets, net of valuation allowances as of December 31, 2020. The Company files income tax returns in various U.S. and foreign taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before 2017. With few exceptions, the Company is no longer subject to tax examinations in the foreign jurisdictions for periods prior to 2017. The Company completed an IRS tax audit for tax year 2017 with no adjustments made to taxable income. 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. Exceptions may be made on a year-by-year basis to repatriate earnings of certain foreign subsidiaries based on cash needs in the United States. The Company intends to distribute a portion of these foreign earnings which have been previously taxed in the United States. As of December 31, 2020, foreign withholding taxes of $275 have been provided for unremitted earnings of foreign subsidiaries based on the amounts of anticipated distributions. The Company does not intend to distribute the remaining previously taxed earnings resulting from the one-time transition tax under the Tax Cuts and Jobs Act, and has not recorded any deferred taxes related to such amounts. The remaining excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries is permanently reinvested, and the determination of any deferred tax liability on this amount is not practicable. It is the Company’s policy to include interest and penalties related to income tax liabilities in income tax expense on the consolidated statements of income and comprehensive income. In addition, the Company records uncertain tax positions in accordance with ASC 740. ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. The were no uncertain tax benefits for the years ended December 31, 2020, 2019 and 2018 and no amounts were recorded for interest and penalties related to unrecognized tax positions for the years ended December 31, 2020, 2019, and 2018. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
LEASES | 10. LEASES The Company has operating leases for office space, manufacturing equipment, computer equipment and automobiles. The Company did not have any finance leases in 2020 or 2019. options to terminate the leases For the years ended December 31, 2020 and 2019, the components of operating lease expense were as follows (in thousands): December 31, December 31, 2020 2019 Fixed operating lease expense $ 4,548 $ 4,018 Variable operating lease expense $ 547 $ 499 Short-term lease expense $ 234 $ 234 Supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2020 and 2019 are as follows (in thousands): December 31, December 31, 2020 2019 Cash paid for amounts included in the measurement of operating leases $ 4,601 $ 4,886 Right of use ("ROU") assets obtained in exchange for operating lease obligations $ 3,626 $ 373 ROU assets recorded upon adoption of ASC 842, Leases $ — $ 20,344 ROU assets obtained in acquisitions (Note 2) $ 2,735 $ — The following table presents weighted average remaining lease term and discount rates related to the Company’s operating leases as of December 31, 2020 and 2019: December 31, 2020 2019 Weighted average remaining lease term (in years) 6.83 8.27 Weighted average discount rate 2.25 % 2.91 % The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2020 (in thousands): 2021 $ 5,043 2022 4,013 2023 2,935 2024 2,282 2025 2,096 Thereafter 4,606 Total undiscounted cash flows $ 20,975 Less: present value discount (1,334) Total lease liabilities $ 19,641 As of December 31, 2020, the Company had no additional significant operating or finance leases that had not yet commenced. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Severance Benefit Agreements As of December 31, 2020, 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. 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 statements. |
DEFERRED COMPENSATION ARRANGEME
DEFERRED COMPENSATION ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2020 | |
DEFERRED COMPENSATION ARRANGEMENTS | |
DEFERRED COMPENSATION ARRANGEMENTS | 12. DEFERRED COMPENSATION ARRANGEMENTS The Company has deferred compensation arrangements with certain key members of management. These arrangements provide the Board and its committees with another mechanism to provide pay for performance based incentive compensation to certain executive participants. It also allows for the participants to make certain deferrals into the plan. The amount of the liability is comprised of liabilities from previous contributions. Amounts accrued relating to previous periods are $5,386 and $4,695 as of December 31, 2020 and 2019, respectively, of which $4,329 and $4,695 are included in other long-term liabilities in the consolidated balance sheets at December 31, 2020 and 2019 and $1,057 is included within accrued liabilities as of December 31, 2020, relating to the amounts to be paid in 2021. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 13. SEGMENT INFORMATION The Company operates in one segment for the manufacture and marketing of controlled motion products for OEM and end user applications. 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. Financial information related to the foreign subsidiaries is summarized below (in thousands): For the year ended December 31, 2020 2019 2018 Revenues derived from foreign subsidiaries $ 152,491 $ 126,737 $ 126,104 Identifiable assets outside of the United States are $133,466 and $95,777 as of December 31, 2020 and 2019, respectively. Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe, China and New Zealand. Sales to customers outside of the United States by all subsidiaries were $171,847, $159,365 and $146,835 during 2020, 2019 and 2018, respectively. For 2020, 2019 and 2018 one customer accounted for 15%, 16% and 19% of revenues, respectively, and as of December 31, 2020 and 2019 for 22% and 17% of trade receivables, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENT On March 10, 2021, the Board of Directors approved a 3 |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2020 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data for each of the four quarters in years 2020 and 2019 is as follows (in thousands, except per share data): First Second Third Fourth Year 2020 Quarter Quarter Quarter Quarter Revenues $ 92,382 $ 86,661 $ 94,653 $ 92,998 Gross profit 28,042 26,460 28,140 25,933 Net income 4,035 2,896 4,013 2,699 Basic earnings per share 0.43 0.30 0.42 0.28 Diluted earnings per share 0.42 0.30 0.42 0.28 First Second Third Fourth Year 2019 Quarter Quarter Quarter Quarter Revenues $ 93,896 $ 92,630 $ 96,633 $ 87,925 Gross profit 27,662 28,422 30,030 26,470 Net income 4,470 4,445 4,618 3,489 Basic earnings per share 0.48 0.47 0.49 0.37 Diluted earnings per share 0.48 0.47 0.49 0.37 Note: The sum of the quarterly net income per share (basic and diluted) may differ from the annual net income per share (basic and diluted) because of differences in the weighted average number of common shares outstanding and the common shares used in the quarterly and annual computations as well as differences in rounding. |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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 intercompany accounts and transactions are eliminated in consolidation. For business combinations, we record net assets acquired and liabilities assumed at their estimated fair values. |
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. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The provision for credit losses 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 provisions in the future. Activity in the provision for credit losses for 2020 and 2019 was as follows (in thousands): December 31, 2020 December 31, 2019 Beginning balance $ 405 $ 530 Additional reserves 91 (5) Write-offs (123) (132) Effect of foreign currency translation 9 12 Ending balance $ 382 $ 405 |
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 net realizable value, as follows (in thousands): December 31, 2020 December 31, 2019 Parts and raw materials $ 44,750 $ 35,849 Work-in-process 6,186 6,951 Finished goods 12,042 10,585 $ 62,978 $ 53,385 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is classified as follows (in thousands): December 31, December 31, Useful lives 2020 2019 Land $ 999 $ 977 Building and improvements 5 - 39 years 14,169 13,366 Machinery, equipment, tools and dies 3 - 15 years 79,738 58,358 Construction work in progress 6,821 15,536 Furniture, fixtures and other 3 - 10 years 16,313 15,797 118,040 104,034 Less accumulated depreciation (62,612) (51,026) Property, plant and equipment, net $ 55,428 $ 53,008 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 asset, 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 $10,057, $9,139 and $7,921 in 2020, 2019 and 2018, respectively. |
Intangible Assets | Intangible Assets Intangible assets, other than goodwill, are recorded at cost and are amortized over their estimated useful lives using an accelerated or straight-line method which approximates the pattern of expected cash flows over the remaining useful lives of the intangible assets. |
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, on an annual basis and 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 assets. The Company did not record any impairment charges for the years ended December 31, 2020, 2019 and 2018. |
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 not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. The Company has defined 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. If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill. At October 31, 2020, we performed our annual goodwill impairment test and determined, after performing a qualitative test of the reporting unit, that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. Accordingly, there was no indication of impairment and the quantitative impairment test was not performed. The Company did not record any impairment charges for the years ended December 31, 2020, 2019 or 2018. |
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. 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 is generally three months to two years and varies significantly based on the product 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 re-evaluated 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 goods sold. Changes in the Company’s reserve for product warranty claims during 2020, 2019 and 2018 were as follows (in thousands): December 31, December 31, December 31, 2020 2019 2018 Warranty reserve at beginning of the year $ 1,075 $ 971 $ 922 Warranty reserves acquired 465 — 117 Provision 34 210 (13) Warranty expenditures (97) (101) (34) Effect of foreign currency translation 94 (5) (21) Warranty reserve at end of year $ 1,571 $ 1,075 $ 971 |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, December 31, 2020 2019 Compensation and fringe benefits $ 11,184 $ 12,967 Warranty reserve 1,571 1,075 Income taxes payable 1,459 2,231 Right of use liabilities 4,666 3,203 Other accrued expenses 5,982 3,525 $ 24,862 $ 23,001 |
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 accumulated other comprehensive loss, 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 operating locations are included in the results of operations as incurred. |
Revenue Recognition | Revenue Recognition Refer to Note 3, Revenue Recognition |
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 design as well as research 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. Basic and diluted weighted-average shares outstanding are as follows (in thousands): Year ended December 31, 2020 2019 2018 Basic weighted average shares outstanding 9,495 9,398 9,265 Dilutive effect of equity awards 60 63 105 Diluted weighted average shares outstanding 9,555 9,461 9,370 For 2020, 2019 and 2018, the anti-dilutive common shares excluded from the calculation of diluted income per share were immaterial. |
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, 2020 and 2019, respectively, by level within the fair value hierarchy (in thousands): December 31, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,347 $ — $ — Deferred compensation plan assets 5,386 — — Interest rate swaps — (1,889) — December 31, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,099 $ — $ — Deferred compensation plan assets 4,690 — — Interest rate swaps — (363) — |
Derivative Financial Instruments | Derivative Financial Instruments Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") No. 815, Derivatives and Hedging ("ASC 815"), provides the 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. As required by ASC 815, 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 risk, 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. It is the Company's policy to include interest and penalties related to income tax liabilities in income tax expense on the consolidated statements of income and comprehensive Income. In addition, the Company records uncertain tax positions in accordance with ASC 740, Income Taxes |
Pension and Postretirement Welfare Plans | Pension and Postretirement Welfare Plans The Company records the service cost component of net benefit costs in Cost of goods sold, Selling, and General and administrative expenses. The interest cost component of net benefit costs is recorded in Interest expense and the remaining components of net benefit costs, amortization of net losses and expected return on plan assets is recorded in Other expense, net. |
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 13, Segment Information, |
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. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In June 2016, FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This guidance provides relief for impacted areas as it relates to impending reference rate reform and contains optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other areas or transactions, subject to meeting certain criteria, that are impacted by reference rate reform. This ASU is effective upon issuance for all entities and elections of certain optional expedients are required to apply the provisions of the guidance. The Company adopted this ASU effective January 1, 2020 on a prospective basis, and the Company has elected the expedients related to the probability of hedged interest payments, regardless of any expected future modification in terms related to reference rate reform, as well as the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Should the Company elect further optional expedients as it relates to reference rate reform, disclosure of those elections will be done in the fiscal period in which the elections are made. The adoption did not have a material impact on its consolidated financial statement |
BUSINESS AND SUMMARY OF SIGNI_2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of activity in the allowance for doubtful accounts | December 31, 2020 December 31, 2019 Beginning balance $ 405 $ 530 Additional reserves 91 (5) Write-offs (123) (132) Effect of foreign currency translation 9 12 Ending balance $ 382 $ 405 |
Schedule of inventories including costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value | Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): December 31, 2020 December 31, 2019 Parts and raw materials $ 44,750 $ 35,849 Work-in-process 6,186 6,951 Finished goods 12,042 10,585 $ 62,978 $ 53,385 |
Schedule of classification of property, plant and equipment | Property, plant and equipment is classified as follows (in thousands): December 31, December 31, Useful lives 2020 2019 Land $ 999 $ 977 Building and improvements 5 - 39 years 14,169 13,366 Machinery, equipment, tools and dies 3 - 15 years 79,738 58,358 Construction work in progress 6,821 15,536 Furniture, fixtures and other 3 - 10 years 16,313 15,797 118,040 104,034 Less accumulated depreciation (62,612) (51,026) Property, plant and equipment, net $ 55,428 $ 53,008 |
Schedule of changes in the reserve for product warranty claims | Changes in the Company’s reserve for product warranty claims during 2020, 2019 and 2018 were as follows (in thousands): December 31, December 31, December 31, 2020 2019 2018 Warranty reserve at beginning of the year $ 1,075 $ 971 $ 922 Warranty reserves acquired 465 — 117 Provision 34 210 (13) Warranty expenditures (97) (101) (34) Effect of foreign currency translation 94 (5) (21) Warranty reserve at end of year $ 1,571 $ 1,075 $ 971 |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): December 31, December 31, 2020 2019 Compensation and fringe benefits $ 11,184 $ 12,967 Warranty reserve 1,571 1,075 Income taxes payable 1,459 2,231 Right of use liabilities 4,666 3,203 Other accrued expenses 5,982 3,525 $ 24,862 $ 23,001 |
Schedule of basic and diluted weighted-average shares outstanding | Basic and diluted weighted-average shares outstanding are as follows (in thousands): Year ended December 31, 2020 2019 2018 Basic weighted average shares outstanding 9,495 9,398 9,265 Dilutive effect of equity awards 60 63 105 Diluted weighted average shares outstanding 9,555 9,461 9,370 |
Schedule of financial assets that are 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, 2020 and 2019, respectively, by level within the fair value hierarchy (in thousands): December 31, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,347 $ — $ — Deferred compensation plan assets 5,386 — — Interest rate swaps — (1,889) — December 31, 2019 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,099 $ — $ — Deferred compensation plan assets 4,690 — — Interest rate swaps — (363) — |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
Schedule of unaudited pro forma financial information | The following unaudited pro forma financial information presents the combined results of operations if the Dynamic Controls acquisition had occurred as of January 1, 2019 (in thousands): For the year ended December 31, 2020 2019 Revenues $ 371,856 $ 401,345 Net income $ 14,255 $ 17,779 Earnings per share - basic $ 1.50 $ 1.89 Earnings per share - diluted $ 1.49 $ 1.88 |
Dynamic Controls | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The allocation of the purchase price paid for Dynamic Controls is based on estimated fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 and is as follows (in thousands): Cash and cash equivalents $ 11,437 Accounts receivable 4,129 Inventory 3,329 Other assets, net 769 Property, plant and equipment 1,185 Right of use assets 2,735 Intangible assets 7,800 Goodwill 6,629 Current liabilities (7,354) Lease liabilities (2,739) Net deferred income tax liabilities (1,755) Net purchase price $ 26,165 |
Schedule of unaudited pro forma financial information | For the year ended December 31, 2020 2019 Revenues $ 371,856 $ 401,345 Net income $ 14,255 $ 17,779 Earnings per share - basic $ 1.50 $ 1.89 Earnings per share - diluted $ 1.49 $ 1.88 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
REVENUE RECOGNITION | |
Schedule of reconciliation of disaggregated revenue by target market and geography | Year ended December 31, Target Market 2020 2019 Vehicle $ 110,365 $ 126,811 Industrial 114,143 124,196 Medical 83,191 51,586 Aerospace & Defense 39,711 47,748 Other 19,284 20,743 Total $ 366,694 $ 371,084 Year ended December 31, Geography 2020 2019 United States $ 214,203 $ 244,347 Europe 126,985 124,914 Asia-Pacific 25,506 1,823 Total $ 366,694 $ 371,084 |
Schedule of opening and closing balances of the Company's receivables, contract asset, and contract liability | The opening and closing balances of the Company’s contract liability are as follows (in thousands): December 31, December 31, 2020 2019 Contract liabilities in accrued liabilities $ 898 $ 454 Contract liabilities in other long-term liabilities 262 - $ 1,160 $ 454 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
GOODWILL | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for 2020 and 2019 is as follows (in thousands): 2020 2019 Beginning balance $ 52,935 $ 52,639 Goodwill acquired (Note 2) 6,629 614 Effect of foreign currency translation 2,296 (318) Ending balance $ 61,860 $ 52,935 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Intangible assets on the Company’s consolidated balance sheets consist of the following (in thousands): December 31, 2020 December 31, 2019 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 8 - 17 years $ 69,833 $ (23,636) $ 46,197 $ 64,314 $ (19,311) $ 45,003 Trade name 10 - 19 years 14,055 (5,061) 8,994 12,222 (4,114) 8,108 Design and technologies 10 - 15 years 15,531 (4,874) 10,657 12,927 (3,554) 9,373 Patents 17 years 24 (13) 11 24 (11) 13 Total $ 99,443 $ (33,584) $ 65,859 $ 89,487 $ (26,990) $ 62,497 |
Schedule of estimated amortization expense for intangible assets | Estimated amortization expense for intangible assets is as follows (in thousands): Estimated Amortization Expense 2021 $ 6,059 2022 6,110 2023 6,127 2024 5,798 2025 5,780 Thereafter 35,985 Total estimated amortization expense $ 65,859 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
STOCK-BASED COMPENSATION | |
Summary of restricted stock grants, fair value and performance based awards | Awards with Unvested Weighted average performance restricted stock grant date fair vesting For the year ended December 31, awards value requirements 2020 160,437 $ 33.51 100,403 2019 109,530 $ 41.95 76,877 2018 64,656 $ 35.89 30,603 |
Summary of restricted stock activity | Number of shares Balance, December 31, 2017 221,968 Awarded 64,656 Forfeited (18,867) Vested (112,015) Balance, December 31, 2018 155,742 Awarded 109,530 Forfeited (3,166) Vested (75,404) Balance, December 31, 2019 186,702 Awarded 160,437 Forfeited (2,446) Vested (106,465) Balance, December 31, 2020 238,228 |
Summary of performance based restricted stock activity | Total performance grants Outstanding, December 31, 2017 37,782 Awarded 30,603 Performance criteria met (66,525) Forfeited (1,860) Outstanding, December 31, 2018 — Awarded 76,877 Performance criteria met (50,852) Forfeited (549) Outstanding, December 31, 2019 25,476 Awarded 100,403 Performance criteria met (64,384) Forfeited (2,155) Outstanding, December 31, 2020 59,340 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations | Debt obligations consisted of the following (in thousands): December 31, December 31, 2020 2019 Long-term Debt Revolving Credit Facility, long-term (1) $ 120,656 $ 110,085 Unamortized debt issuance costs (577) (320) Long-term debt $ 120,079 $ 109,765 (1) The effective rate of the Revolving Credit Facility is 2.5% at December 31, 2020 including the impact of the Company's interest rate swaps. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair value of the Company's derivative financial instruments as well as classification on the condensed consolidated balance sheets | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2020, and 2019 (in thousands): Liability Derivatives Fair value as of: Derivatives designated as Balance Sheet December 31, hedging instruments Location 2020 2019 Interest rate products Other long-term liabilities $ 1,889 $ 363 |
Schedule of effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) | The table below presents the effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) for the years ended December 31, 2020, 2019 and 2018 (in thousands): Amount of pre-tax loss recognized in OCI on derivatives Derivatives in cash flow hedging relationships Year ended December 31, 2020 2019 Interest rate products $ (2,163) $ (816) Location of (loss) gain reclassified Amount of pre-tax (loss) gain reclassified from accumulated OCI into income from accumulated OCI into income Year ended December 31, 2020 2019 2018 Interest expense $ (637) $ 113 $ 6 |
Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statements of income and comprehensive income | The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of income and comprehensive income for the years ended December 31, 2020, 2019 and 2018 (in thousands): Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded Year ended December 31, Derivatives designated as hedging instruments Income Statement Location 2020 2019 2018 Interest rate products Interest Expense $ 3,716 $ 5,134 $ 2,701 |
Schedule of fair value provides the location that derivative assets and liabilities | Gross amounts Net amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2020 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 1,889 $ — $ 1,889 $ — $ — $ 1,889 Gross amounts Net amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2019 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 363 $ — $ 363 $ — $ — $ 363 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, December 31, December 31, 2020 2019 2018 Domestic $ 8,478 $ 17,188 $ 10,894 Foreign 10,298 6,653 9,787 Income before income taxes $ 18,776 $ 23,841 $ 20,681 |
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, December 31, December 31, 2020 2019 2018 Current provision Domestic $ 2,167 $ 4,313 $ 1,663 Foreign 3,485 2,618 3,169 Total current provision 5,652 6,931 4,832 Deferred provision Domestic 288 199 675 Foreign (807) (311) (751) Total deferred provision (519) (112) (76) Provision for income taxes $ 5,133 $ 6,819 $ 4,756 |
Schedule of differences in the provision for income taxes from the amount determined by applying the federal statutory rate | For the year ended December 31, December 31, December 31, 2020 2019 2018 Tax provision, computed at statutory rate 21.0 % 21.0 % 21.0 % State tax, net of federal impact 4.2 % 4.5 % 3.0 % Change in valuation allowance 0.0 % 0.3 % 2.8 % Effect of foreign tax rate differences 4.3 % 1.5 % 3.4 % Permanent items, other (0.2) % 1.4 % 0.8 % Section 162(m) compensation 2.2 % 1.1 % 0.1 % R&D Credit (3.6) % (2.5) % (0.8) % Restricted stock awards 0.6 % (0.1) % (2.3) % Effect of Tax Cuts and Jobs Act (1.3) % (0.4) % (5.1) % Subpart F income 1.3 % 0.0 % 0.0 % Tax examinations 0.0 % 1.8 % 0.0 % Other (1.2) % 0.0 % 0.1 % Provision for income taxes 27.3 % 28.6 % 23.0 % |
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, December 31, 2020 2019 Noncurrent deferred tax assets: Employee benefit plans $ 2,500 $ 2,440 Net operating loss and tax credit carryforwards 2,217 1,675 Accrued expenses and reserves 969 795 Other 697 428 Total noncurrent deferred tax assets 6,383 5,338 Valuation allowance (1,176) (1,077) Net noncurrent deferred tax assets: $ 5,207 $ 4,261 Net noncurrent deferred tax liabilities: Property and equipment $ 3,448 $ 3,901 Goodwill and intangibles 5,629 2,885 Other 459 384 Total noncurrent deferred tax liabilities $ 9,536 $ 7,170 Net deferred tax asset/(deferred tax liability) $ (4,329) $ (2,909) Presented as follows: Noncurrent deferred income tax assets $ 330 $ 490 Noncurrent deferred income tax liabilities (4,659) (3,399) Net deferred tax liability $ (4,329) $ (2,909) |
Summary Of Operating Loss And Tax Credit Carryforwards [Table Text Block] | As of December 31, 2020, the Company has the following gross carryforwards available: Amount Jurisdiction Tax Attribute (in thousands) Begin to expire U.S. State Net Operating Losses (1) $ 4,139 2024 International Net Operating Losses (1) $ 1,519 2025 International Net Operating Losses - Unlimited Carryforward (1) $ 718 No expiration U.S. Federal Foreign Tax Credits $ 1,003 2027 International R&D Tax Credits $ 574 2025 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
Schedule of components of operating lease expense | For the years ended December 31, 2020 and 2019, the components of operating lease expense were as follows (in thousands): December 31, December 31, 2020 2019 Fixed operating lease expense $ 4,548 $ 4,018 Variable operating lease expense $ 547 $ 499 Short-term lease expense $ 234 $ 234 |
Schedule of supplemental cash flow information related to the operating leases | Supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2020 and 2019 are as follows (in thousands): December 31, December 31, 2020 2019 Cash paid for amounts included in the measurement of operating leases $ 4,601 $ 4,886 Right of use ("ROU") assets obtained in exchange for operating lease obligations $ 3,626 $ 373 ROU assets recorded upon adoption of ASC 842, Leases $ — $ 20,344 ROU assets obtained in acquisitions (Note 2) $ 2,735 $ — |
Schedule of Lease assets and liabilities and other quantitative information | The following table presents weighted average remaining lease term and discount rates related to the Company’s operating leases as of December 31, 2020 and 2019: December 31, 2020 2019 Weighted average remaining lease term (in years) 6.83 8.27 Weighted average discount rate 2.25 % 2.91 % |
Schedule of maturity of the operating lease liabilities | The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2020 (in thousands): 2021 $ 5,043 2022 4,013 2023 2,935 2024 2,282 2025 2,096 Thereafter 4,606 Total undiscounted cash flows $ 20,975 Less: present value discount (1,334) Total lease liabilities $ 19,641 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT INFORMATION | |
Schedule of revenue related to foreign subsidiaries | Financial information related to the foreign subsidiaries is summarized below (in thousands): For the year ended December 31, 2020 2019 2018 Revenues derived from foreign subsidiaries $ 152,491 $ 126,737 $ 126,104 |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Schedule of selected quarterly financial data | Selected quarterly financial data for each of the four quarters in years 2020 and 2019 is as follows (in thousands, except per share data): First Second Third Fourth Year 2020 Quarter Quarter Quarter Quarter Revenues $ 92,382 $ 86,661 $ 94,653 $ 92,998 Gross profit 28,042 26,460 28,140 25,933 Net income 4,035 2,896 4,013 2,699 Basic earnings per share 0.43 0.30 0.42 0.28 Diluted earnings per share 0.42 0.30 0.42 0.28 First Second Third Fourth Year 2019 Quarter Quarter Quarter Quarter Revenues $ 93,896 $ 92,630 $ 96,633 $ 87,925 Gross profit 27,662 28,422 30,030 26,470 Net income 4,470 4,445 4,618 3,489 Basic earnings per share 0.48 0.47 0.49 0.37 Diluted earnings per share 0.48 0.47 0.49 0.37 |
BUSINESS AND SUMMARY OF SIGNI_3
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Activity in the allowance for doubtful accounts | |||
Beginning balance | $ 405 | $ 530 | |
Additional reserves | 91 | (5) | $ 192 |
Writeoffs | (123) | (132) | |
Effect of foreign currency translation | 9 | 12 | |
Ending balance | 382 | 405 | $ 530 |
Inventories | |||
Parts and raw materials | 44,750 | 35,849 | |
Work-in-process | 6,186 | 6,951 | |
Finished goods | 12,042 | 10,585 | |
Inventories | $ 62,978 | $ 53,385 |
BUSINESS AND SUMMARY OF SIGNI_4
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 118,040 | $ 104,034 | |
Less accumulated depreciation | (62,612) | (51,026) | |
Property, plant and equipment, net | 55,428 | 53,008 | |
Depreciation expense | 10,057 | 9,139 | $ 7,921 |
Land | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | 999 | 977 | |
Building and improvements | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 14,169 | 13,366 | |
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 | $ 79,738 | 58,358 | |
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 | ||
Construction work in progress | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 6,821 | 15,536 | |
Furniture, fixtures and other | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 16,313 | $ 15,797 | |
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 SIGNI_5
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Goodwill | |||
Number of reporting units | item | 1 | ||
Goodwill impairment | $ | $ 0 | $ 0 | $ 0 |
BUSINESS AND SUMMARY OF SIGNI_6
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Warranty, Accrued Liabilities, and Basic and Diluted Income per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | |
Changes in the reserve for product warranty claims | |||||
Warranty reserve at beginning of the year | $ 1,075 | $ 971 | $ 922 | ||
Warranty reserves acquired | 465 | 117 | |||
Provision | 34 | 210 | (13) | ||
Warranty expenditures | (97) | (101) | (34) | ||
Effect of foreign currency translation | 94 | (5) | (21) | ||
Warranty reserve at end of year | 1,571 | 1,075 | 971 | ||
ACCRUED LIABILITIES | |||||
Compensation and fringe benefits | $ 11,184 | $ 12,967 | |||
Warranty reserve | $ 1,075 | $ 1,075 | $ 971 | 1,571 | 1,075 |
Income taxes payable | 1,459 | 2,231 | |||
Right of use liabilities | 4,666 | 3,203 | |||
Other accrued expenses | $ 5,982 | $ 3,525 | |||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued liabilities | Accrued liabilities | |||
Accrued liabilities | $ 24,862 | $ 23,001 | |||
Basic and Diluted Income per Share | |||||
Basic weighted average shares outstanding | 9,495 | 9,398 | 9,265 | ||
Dilutive effect of equity awards | 60 | 63 | 105 | ||
Diluted weighted average shares outstanding | 9,555 | 9,461 | 9,370 | ||
Minimum | |||||
Warranty | |||||
Warranty period | 3 months | ||||
Maximum | |||||
Warranty | |||||
Warranty period | 2 years |
BUSINESS AND SUMMARY OF SIGNI_7
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Accounting (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Assets (liabilities) | ||
Other long-term assets | $ 4,483 | $ 4,835 |
Recurring basis | Level 1 | ||
Assets (liabilities) | ||
Pension plan assets | 6,347 | 6,099 |
Other long-term assets | 5,386 | 4,690 |
Recurring basis | Level 2 | ||
Assets (liabilities) | ||
Interest rate swaps/liabilities | $ (1,889) | $ (363) |
BUSINESS AND SUMMARY OF SIGNI_8
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Uncertain tax benefits | $ 0 | $ 0 | $ 0 |
Interest and penalties related to unrecognized tax positions | $ 0 | $ 0 | $ 0 |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 07, 2020 | |
ACQUISITIONS | ||||||||||||
ROU assets obtained in acquisitions (Note 2) | $ 2,735 | $ 2,735 | ||||||||||
Goodwill | 61,860 | $ 52,935 | 61,860 | $ 52,935 | $ 52,639 | |||||||
Revenues | 92,998 | $ 94,653 | $ 86,661 | $ 92,382 | $ 87,925 | $ 96,633 | $ 92,630 | $ 93,896 | 366,694 | 371,084 | $ 310,611 | |
Pro forma Condensed Combined Financial Information | ||||||||||||
Revenues | 371,856 | 401,345 | ||||||||||
Net income | $ 14,255 | $ 17,779 | ||||||||||
Earnings per share - basic | $ 1.50 | $ 1.89 | ||||||||||
Earnings per share - diluted | $ 1.49 | $ 1.88 | ||||||||||
Dynamic Controls | ||||||||||||
ACQUISITIONS | ||||||||||||
Business acquisition percentage of voting interests acquired | 100.00% | |||||||||||
Transaction costs related to acquisition | $ 473 | |||||||||||
Cash and cash equivalents | $ 11,437 | |||||||||||
Accounts receivable | 4,129 | |||||||||||
Inventory | 3,329 | |||||||||||
Other assets, net | 769 | |||||||||||
Property, plant and equipment | 1,185 | |||||||||||
ROU assets obtained in acquisitions (Note 2) | 2,735 | |||||||||||
Intangible assets | 7,800 | 7,800 | 7,800 | |||||||||
Goodwill | 6,629 | |||||||||||
Current liabilities | (7,354) | |||||||||||
Lease liabilities | (2,739) | |||||||||||
Net deferred income tax liabilities | (1,755) | |||||||||||
Net purchase price | $ 26,165 | |||||||||||
Reduction of Goodwill owing to measurement period adjustments | $ 77 | $ 268 | ||||||||||
Revenues | 24,124 | |||||||||||
Distributed Earnings | 945 | |||||||||||
Dynamic Controls | Customer lists | ||||||||||||
ACQUISITIONS | ||||||||||||
Intangible assets | 4,400 | $ 4,400 | ||||||||||
Amortization period (in years) | 16 years | |||||||||||
Dynamic Controls | Technology | ||||||||||||
ACQUISITIONS | ||||||||||||
Intangible assets | 1,900 | $ 1,900 | ||||||||||
Amortization period (in years) | 13 years | |||||||||||
Dynamic Controls | Trade name | ||||||||||||
ACQUISITIONS | ||||||||||||
Intangible assets | $ 1,500 | $ 1,500 | ||||||||||
Amortization period (in years) | 18 years |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Number of reportable segment | segment | 1 | ||||||||||
Revenues | $ 92,998 | $ 94,653 | $ 86,661 | $ 92,382 | $ 87,925 | $ 96,633 | $ 92,630 | $ 93,896 | $ 366,694 | $ 371,084 | $ 310,611 |
United States | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 214,203 | 244,347 | |||||||||
Europe | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 126,985 | 124,914 | |||||||||
Asia-Pacific | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 25,506 | 1,823 | |||||||||
Vehicle | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 110,365 | 126,811 | |||||||||
Industrial | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 114,143 | 124,196 | |||||||||
Medical | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 83,191 | 51,586 | |||||||||
Aerospace & Defense | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | 39,711 | 47,748 | |||||||||
Other | |||||||||||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||||||||||
Revenues | $ 19,284 | $ 20,743 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
REVENUE RECOGNITION | ||
Contract liabilities in accrued liabilities | $ 898 | $ 454 |
Contract liabilities in other long-term liabilities | 262 | |
Contract liabilities | $ 1,160 | $ 454 |
REVENUE RECOGNITION - Practical
REVENUE RECOGNITION - Practical Expedients (Details) | 12 Months Ended |
Dec. 31, 2020 | |
REVENUE RECOGNITION | |
Incremental costs of obtaining a contract | true |
Remaining performance obligations | true |
The time value of money | true |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Change in goodwill | ||
Beginning balance | $ 52,935 | $ 52,639 |
Goodwill acquired (Note 2) | 6,629 | 614 |
Effect of foreign currency translation | 2,296 | (318) |
Ending balance | $ 61,860 | $ 52,935 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 07, 2020 | |
Intangible assets subject to amortization | ||||
Gross Amount | $ 99,443 | $ 89,487 | ||
Accumulated amortization | (33,584) | (26,990) | ||
Net Book Value | 65,859 | 62,497 | ||
Amortization expense for intangible assets | 5,928 | 5,718 | $ 3,655 | |
Estimated amortization expense | ||||
2021 | 6,059 | |||
2022 | 6,110 | |||
2023 | 6,127 | |||
2024 | 5,798 | |||
2025 | 5,780 | |||
Thereafter | 35,985 | |||
Total estimated amortization expense | 65,859 | |||
Dynamic Controls | ||||
Intangible assets subject to amortization | ||||
Intangible assets | 7,800 | $ 7,800 | ||
Customer lists | ||||
Intangible assets subject to amortization | ||||
Gross Amount | 69,833 | 64,314 | ||
Accumulated amortization | (23,636) | (19,311) | ||
Net Book Value | $ 46,197 | 45,003 | ||
Customer lists | Dynamic Controls | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 16 years | |||
Intangible assets | $ 4,400 | |||
Customer lists | Minimum | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 8 years | |||
Customer lists | Maximum | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 17 years | |||
Trade name | ||||
Intangible assets subject to amortization | ||||
Gross Amount | $ 14,055 | 12,222 | ||
Accumulated amortization | (5,061) | (4,114) | ||
Net Book Value | $ 8,994 | 8,108 | ||
Trade name | Dynamic Controls | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 18 years | |||
Intangible assets | $ 1,500 | |||
Trade name | Minimum | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 10 years | |||
Trade name | Maximum | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 19 years | |||
Design and technologies | ||||
Intangible assets subject to amortization | ||||
Gross Amount | $ 15,531 | 12,927 | ||
Accumulated amortization | (4,874) | (3,554) | ||
Net Book Value | $ 10,657 | 9,373 | ||
Design and technologies | Minimum | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 10 years | |||
Design and technologies | Maximum | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 15 years | |||
Patents | ||||
Intangible assets subject to amortization | ||||
Estimated Life | 17 years | |||
Gross Amount | $ 24 | 24 | ||
Accumulated amortization | (13) | (11) | ||
Net Book Value | $ 11 | $ 13 |
STOCK-BASED COMPENSATION PLAN_2
STOCK-BASED COMPENSATION PLANS - Stock Incentive Plans and Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
STOCK-BASED COMPENSATION | |||
Shares of common stock available for grant under stock incentive plans | 753,187 | ||
Restricted Stock | |||
STOCK-BASED COMPENSATION | |||
Weighted average grant date fair value (in dollars per share) | $ 33.51 | $ 41.95 | $ 35.89 |
Service period over which value of the shares is amortized to compensation expense | 3 years | ||
Number of Non-vested Restricted Shares | |||
Outstanding at beginning of period (in shares) | 186,702 | 155,742 | 221,968 |
Awarded (in shares) | 160,437 | 109,530 | 64,656 |
Forfeited (in shares) | (2,446) | (3,166) | (18,867) |
Vested (in shares) | (106,465) | (75,404) | (112,015) |
Outstanding at end of period (in shares) | 238,228 | 186,702 | 155,742 |
Additional disclosures | |||
Stock based compensation expense, net of forfeitures | $ 3,550 | $ 3,203 | $ 2,643 |
Unrecognized compensation expense | 4,100 | ||
Unrecognized compensation expense, expected to be recognized in next fiscal year | $ 2,236 | ||
Restricted Stock | Minimum | |||
STOCK-BASED COMPENSATION | |||
Service period of earned grants | 3 years | ||
Restricted Stock | Maximum | |||
STOCK-BASED COMPENSATION | |||
Service period of earned grants | 5 years | ||
Restricted Stock | Performance based vesting | |||
Number of Non-vested Restricted Shares | |||
Outstanding at beginning of period (in shares) | 25,476 | 37,782 | |
Awarded (in shares) | 100,403 | 76,877 | 30,603 |
Performance criteria met (in shares) | (64,384) | (50,852) | (66,525) |
Forfeited (in shares) | (2,155) | (549) | (1,860) |
Outstanding at end of period (in shares) | 59,340 | 25,476 |
STOCK-BASED COMPENSATION PLAN_3
STOCK-BASED COMPENSATION PLANS - Employee Stock Ownership Plan (Details) - ESOP $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)h / yr | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
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% | 5.00% |
Company contributions | $ | $ 988 | $ 1,189 | $ 1,090 |
STOCK-BASED COMPENSATION PLAN_4
STOCK-BASED COMPENSATION PLANS - Defined Contribution Plan and Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
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 | $ 1,774 | $ 1,362 | $ 1,182 |
Dividends | |||
Dividends paid (in dollars per share) | $ 0.12 | $ 0.12 | $ 0.115 |
Total dividends paid | $ 1,160 | $ 1,170 | $ 1,079 |
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 | 12 Months Ended | ||||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020CNY (¥) | Feb. 12, 2020USD ($) | Feb. 11, 2020USD ($) | |
DEBT OBLIGATIONS | |||||
Long-term debt | $ 120,079,000 | $ 109,765,000 | |||
Unamortized debt issuance costs | (577,000) | (320,000) | |||
Senior Credit Facilities | |||||
DEBT OBLIGATIONS | |||||
Deferred financing costs net of accumulated amortization | 577,000 | ||||
Revolving Credit Facility | |||||
DEBT OBLIGATIONS | |||||
Long-term debt | $ 120,656,000 | 110,085,000 | |||
Effective rate (as a percent) | 2.50% | 2.50% | |||
Amended Revolving Facility | |||||
DEBT OBLIGATIONS | |||||
Maximum borrowing capacity | $ 225,000,000 | ||||
Available borrowing capacity | $ 75,000,000 | ||||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.20% | ||||
Unused amount of credit facility | $ 104,344 | ||||
Amended Revolving Facility | Minimum | |||||
DEBT OBLIGATIONS | |||||
Maximum borrowing capacity | $ 175,000,000 | ||||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.10% | ||||
Amended Revolving Facility | Maximum | |||||
DEBT OBLIGATIONS | |||||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.225% | ||||
Amended Revolving Facility | LIBOR | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 1.625% | ||||
Amended Revolving Facility | LIBOR | Minimum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 1.00% | ||||
Amended Revolving Facility | LIBOR | Maximum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 1.75% | ||||
Amended Revolving Facility | Prime Rate | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 0.625% | ||||
Amended Revolving Facility | Prime Rate | Minimum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 0.00% | ||||
Amended Revolving Facility | Prime Rate | Maximum | |||||
DEBT OBLIGATIONS | |||||
Applicable margin (as a percent) | 0.75% | ||||
China Credit Facility | |||||
DEBT OBLIGATIONS | |||||
Maximum borrowing capacity | $ 1,467,000 | ¥ 10,000 | |||
Average outstanding borrowings | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Mar. 31, 2020USD ($)derivative | Feb. 28, 2017USD ($)instrument | |
Interest Rate Swaps | |||||
Derivative financial instruments | |||||
Number of derivative instruments | 2 | 3 | |||
Notional amount of interest rate swap derivatives | $ 60,000 | ||||
Notional amount of interest rate swap derivatives | $ 40,000 | ||||
Estimated amount to be reclassified as an increase to interest expense | $ 904 | ||||
Interest Rate Swaps | Minimum | |||||
Derivative financial instruments | |||||
Notional amount of interest rate swap derivatives | $ 20,000 | ||||
Interest rate products | Derivatives in cash flow hedging relationships | |||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | |||||
Amount of pre-tax loss recognized in OCI on derivatives | (2,163) | $ (816) | |||
Interest rate products | Other Liabilities [Member] | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Fair value of derivative liability | 1,889 | 363 | |||
Interest rate products | Interest income (expense) | Derivatives designated as hedging instruments | |||||
Derivative financial instruments | |||||
Hedge ineffectiveness recorded in earnings | 3,716 | 5,134 | $ 2,701 | ||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | |||||
Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded | 3,716 | 5,134 | 2,701 | ||
Interest rate products | Interest income (expense) | Derivatives in cash flow hedging relationships | |||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | |||||
Amount of pre-tax (loss) gain reclassified from accumulated OCI into income | $ (637) | $ 113 | $ 6 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effects of offsetting (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Gross amounts offset in the consolidated balance sheets | ||
Gross amounts of recognized assets or Gross amounts offset in the condensed consolidated balance sheets | $ 1,889 | $ 363 |
Net amounts of assets/liabilities presented in the consolidated balance sheets | 1,889 | 363 |
Gross amounts not offset in the consolidated balance sheets | ||
Net amount | $ 1,889 | |
Gross amounts not offset in the consolidated balance sheets | ||
Net amount | $ 363 |
INCOME TAXES - Tax Effects and
INCOME TAXES - Tax Effects and Tax Cuts and Jobs Act (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of components of income before income taxes | |||
Domestic | $ 8,478 | $ 17,188 | $ 10,894 |
Foreign | 10,298 | 6,653 | 9,787 |
Income before income taxes | 18,776 | 23,841 | 20,681 |
Current provision | |||
Domestic | 2,167 | 4,313 | 1,663 |
Foreign | 3,485 | 2,618 | 3,169 |
Total current provision | 5,652 | 6,931 | 4,832 |
Deferred provision | |||
Domestic | 288 | 199 | 675 |
Foreign | (807) | (311) | (751) |
Total deferred provision | (519) | (112) | (76) |
Provision for income taxes | $ 5,133 | $ 6,819 | $ 4,756 |
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) | 21.00% | 21.00% | 21.00% |
State tax, net of federal impact (as a percent) | 4.20% | 4.50% | 3.00% |
Change in valuation allowance (as a percent) | 0.00% | 0.30% | 2.80% |
Effect of foreign tax rate differences (as a percent) | 4.30% | 1.50% | 3.40% |
Permanent items, other (as a percent) | (0.20%) | 1.40% | 0.80% |
Section 162(m) compensation | 2.20% | 1.10% | 0.10% |
R&D Credit (as a percent) | (3.60%) | (2.50%) | (0.80%) |
Restricted stock awards (as a percent) | 0.60% | (0.10%) | (2.30%) |
Effect of Tax Cuts and Jobs Act (as a percent) | (1.30%) | (0.40%) | (5.10%) |
Subpart F income (as a percent) | 1.30% | 0.00% | 0.00% |
Tax examinations (as a percent) | 0.00% | 1.80% | 0.00% |
Other (as a percent) | (1.20%) | 0.00% | 0.10% |
Provision for income taxes (as a percent) | 27.30% | 28.60% | 23.00% |
US federal corporate tax rate (as a percent) | 21.00% | 21.00% | 21.00% |
Noncurrent deferred tax assets: | |||
Employee benefit plans | $ 2,500 | $ 2,440 | |
Net operating loss and tax credit carryforwards | 2,217 | 1,675 | |
Accrued expenses and reserves | 969 | 795 | |
Other | 697 | 428 | |
Total noncurrent deferred tax assets | 6,383 | 5,338 | |
Valuation allowance | (1,176) | (1,077) | |
Net noncurrent deferred tax assets: | 5,207 | 4,261 | |
Net noncurrent deferred tax liabilities: | |||
Property and equipment | 3,448 | 3,901 | |
Goodwill and intangibles | 5,629 | 2,885 | |
Other | 459 | 384 | |
Total deferred tax liabilities | 9,536 | 7,170 | |
Foreign tax credits | 900 | ||
Tax effect on net operating losses | 200 | ||
Noncurrent deferred income tax assets | 330 | 490 | |
Noncurrent deferred income tax assets | (4,659) | (3,399) | |
Net deferred tax asset/(deferred tax liability) | (4,329) | (2,909) | |
Deferred Tax Liability Not Recognized, Amount of Unrecognized Deferred Tax Liability, Undistributed Earnings of Foreign Subsidiaries | 275 | ||
Unrecognized Tax Benefits | 0 | 0 | $ 0 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | 0 | $ 0 | $ 0 |
Domestic Tax Authority [Member] | |||
Net noncurrent deferred tax liabilities: | |||
Operating Loss Carryforwards | 4,139 | ||
Domestic Tax Authority [Member] | Foreign Tax Credit [Member] | |||
Net noncurrent deferred tax liabilities: | |||
Tax Credit Carryforward, Amount | 1,003 | ||
Foreign | |||
Net noncurrent deferred tax liabilities: | |||
Operating Loss Carryforwards | 1,519 | ||
Operating Loss Carryforwards, Unlimited Carryforward | 718 | ||
Foreign | R&D Tax Credits | |||
Net noncurrent deferred tax liabilities: | |||
Tax Credit Carryforward, Amount | $ 574 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Mar. 07, 2020 | |
LEASES | |||
Options to terminate the leases | true | ||
Operating lease option to terminate Period | 30 days | ||
Fixed operating lease expense | $ 4,548 | $ 4,018 | |
Variable operating lease expense | 547 | 499 | |
Short-term lease expense | 234 | 234 | |
Supplemental cash flow information related to the operating leases | |||
Cash paid for amounts included in the measurement of operating leases | 4,601 | 4,886 | |
Right of use ("ROU") assets obtained in exchange for operating lease obligations | 3,626 | 373 | |
ROU assets recorded upon adoption of ASC 842, Leases | $ 20,344 | ||
ROU assets obtained in acquisitions (Note 2) | $ 2,735 | ||
Lease assets and liabilities | |||
Right of use liabilities, current, Classification | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent | |
Weighted average remaining lease term | 6 years 9 months 29 days | 8 years 3 months 7 days | |
Weighted average discount rate | 2.25% | 2.91% | |
Maturity of the operating lease liabilities | |||
2021 | $ 5,043 | ||
2022 | 4,013 | ||
2023 | 2,935 | ||
2024 | 2,282 | ||
2025 | 2,096 | ||
Thereafter | 4,606 | ||
Total undiscounted cash flows | 20,975 | ||
Less: present value discount | (1,334) | ||
Total lease liabilities | $ 19,641 | ||
Dynamic Controls | |||
Supplemental cash flow information related to the operating leases | |||
ROU assets obtained in acquisitions (Note 2) | $ 2,735 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Severance Benefit Agreements | |
Severance benefit agreements | |
Period of specified benefits to key employees Upon the subsequent severance of employment | 24 months |
DEFERRED COMPENSATION ARRANGE_2
DEFERRED COMPENSATION ARRANGEMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred compensation arrangements | ||
Amounts accrued | $ 5,386 | $ 4,695 |
Accrued liabilities. | ||
Deferred compensation arrangements | ||
Amount accrued included in accrued liabilities | 1,057 | |
Other Long Term Liabilities | ||
Deferred compensation arrangements | ||
Amount accrued included in other long-term liabilities | $ 4,329 | $ 4,695 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment information | |||||||||||
Number of operating segments | segment | 1 | ||||||||||
Identifiable assets | $ 349,197 | $ 305,828 | $ 349,197 | $ 305,828 | |||||||
Revenues derived from foreign subsidiaries | 92,998 | $ 94,653 | $ 86,661 | $ 92,382 | 87,925 | $ 96,633 | $ 92,630 | $ 93,896 | $ 366,694 | $ 371,084 | $ 310,611 |
Total Revenue | |||||||||||
Segment information | |||||||||||
Percentage of concentration risk | 15.00% | 16.00% | 19.00% | ||||||||
Trade receivables | |||||||||||
Segment information | |||||||||||
Percentage of concentration risk | 22.00% | 17.00% | |||||||||
Outside the United States | |||||||||||
Segment information | |||||||||||
Identifiable assets | $ 133,466 | $ 95,777 | $ 133,466 | $ 95,777 | |||||||
Revenues derived from foreign subsidiaries | 171,847 | 159,365 | $ 146,835 | ||||||||
Wholly owned foreign subsidiaries | |||||||||||
Segment information | |||||||||||
Revenues derived from foreign subsidiaries | $ 152,491 | $ 126,737 | $ 126,104 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Mar. 10, 2021 |
Subsequent Event | |
Common stock split | 1.5 |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||
Revenues | $ 92,998 | $ 94,653 | $ 86,661 | $ 92,382 | $ 87,925 | $ 96,633 | $ 92,630 | $ 93,896 | $ 366,694 | $ 371,084 | $ 310,611 |
Gross profit | 25,933 | 28,140 | 26,460 | 28,042 | 26,470 | 30,030 | 28,422 | 27,662 | 108,575 | 112,584 | 91,403 |
Net income | $ 2,699 | $ 4,013 | $ 2,896 | $ 4,035 | $ 3,489 | $ 4,618 | $ 4,445 | $ 4,470 | $ 13,643 | $ 17,022 | $ 15,925 |
Basic earnings per share | $ 0.28 | $ 0.42 | $ 0.30 | $ 0.43 | $ 0.37 | $ 0.49 | $ 0.47 | $ 0.48 | $ 1.44 | $ 1.81 | $ 1.72 |
Diluted earnings per share | $ 0.28 | $ 0.42 | $ 0.30 | $ 0.42 | $ 0.37 | $ 0.49 | $ 0.47 | $ 0.48 | $ 1.43 | $ 1.80 | $ 1.70 |