Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 29, 2019 | Apr. 26, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | KAMAN CORPORATION | |
Entity Central Index Key | 0000054381 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 29, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 27,941,217 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 28,356 | $ 27,711 |
Accounts receivable, net | 260,461 | 301,094 |
Contract assets | 121,621 | 108,861 |
Contract costs, current portion | 6,158 | 5,993 |
Inventories | 313,894 | 294,912 |
Income tax refunds receivable | 2,145 | 1,752 |
Other current assets | 36,332 | 32,782 |
Total current assets | 768,967 | 773,105 |
Property, plant and equipment, net of accumulated depreciation of $268,261 and $262,306, respectively | 183,930 | 184,224 |
Operating Lease, Right-of-Use Asset | 87,825 | 0 |
Goodwill | 343,988 | 345,365 |
Other intangible assets, net | 87,737 | 91,007 |
Deferred income taxes | 22,960 | 24,437 |
Contract costs, noncurrent portion | 9,503 | 10,666 |
Other assets | 31,058 | 31,509 |
Total assets | 1,535,968 | 1,460,313 |
Current liabilities: | ||
Current portion of long-term debt, net of debt issuance costs | 10,000 | 9,375 |
Accounts payable – trade | 149,084 | 158,627 |
Accrued salaries and wages | 40,497 | 46,634 |
Contract liabilities, current portion | 34,283 | 28,865 |
Operating Lease, Liability, Current | 24,345 | 0 |
Income taxes payable | 1,935 | 139 |
Other current liabilities | 58,244 | 54,836 |
Total current liabilities | 318,388 | 298,476 |
Long-term debt, excluding current portion, net of debt issuance costs | 274,176 | 284,256 |
Deferred income taxes | 7,486 | 7,027 |
Underfunded pension | 102,228 | 104,988 |
Contract liabilities, noncurrent portion | 72,081 | 78,562 |
Operating Lease, Liability, Noncurrent | 64,643 | 0 |
Other long-term liabilities | 54,799 | 53,847 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity: | ||
Preferred stock, $1 par value, 200,000 shares authorized; none outstanding | 0 | 0 |
Common stock, $1 par value, 50,000,000 shares authorized; voting; 29,639,122 and 29,544,714 shares issued, respectively | 29,639 | 29,545 |
Additional paid-in capital | 203,922 | 200,474 |
Retained earnings | 641,741 | 610,103 |
Accumulated other comprehensive income (loss) | (157,973) | (134,898) |
Less 1,725,972 and 1,672,917 shares of common stock, respectively, held in treasury, at cost | (75,162) | (72,067) |
Total shareholders’ equity | 642,167 | 633,157 |
Total liabilities and shareholders’ equity | $ 1,535,968 | $ 1,460,313 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 268,261 | $ 262,306 |
Preferred stock, par value (in usd per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 29,639,122 | 29,544,714 |
Common stock held in treasury, at cost (in shares) | 1,725,972 | 1,672,917 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 457,388 | $ 463,327 |
Cost of sales | 320,603 | 329,220 |
Gross profit | 136,785 | 134,107 |
Selling, general and administrative expenses | 113,216 | 111,753 |
Restructuring costs | 266 | 1,693 |
Net gain on sale of assets | (61) | (63) |
Operating income | 23,364 | 20,724 |
Interest expense, net | 5,313 | 5,352 |
Non-service pension and post retirement benefit cost (income) | (99) | (3,029) |
Other income, net | (91) | (342) |
Earnings before income taxes | 18,241 | 18,743 |
Income tax expense | 4,116 | 4,677 |
Net earnings | $ 14,125 | $ 14,066 |
Earnings per share: | ||
Basic earnings per share (in usd per share) | $ 0.51 | $ 0.51 |
Diluted earnings per share (in usd per share) | $ 0.50 | $ 0.50 |
Average shares outstanding: | ||
Basic (in shares) | 27,908 | 27,851 |
Diluted (in shares) | 28,070 | 28,168 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 14,125 | $ 14,066 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | (2,918) | 6,013 |
Unrealized gain on derivative instruments, net of tax expense of $0 and $1, respectively | 1 | 1 |
Change in pension and post-retirement benefit plan liabilities, net of tax expense of $940 and $709, respectively | 2,936 | 2,217 |
Other comprehensive income | 19 | 8,231 |
Comprehensive income | $ 14,144 | $ 22,297 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Tax expense for unrealized gain on derivative instruments | $ 0 | $ 1 |
Tax expense for pension plan adjustments | $ 940 | $ 709 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Statement of Cash Flows [Abstract] | ||
Net earnings | $ 14,125 | $ 14,066 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 10,014 | 10,661 |
Amortization of debt issuance costs | 461 | 449 |
Accretion of convertible notes discount | 669 | 637 |
Provision for doubtful accounts | 44 | 295 |
Net gain on sale of assets | (61) | (63) |
Net loss (gain) on derivative instruments | 247 | (391) |
Stock compensation expense | 1,880 | 1,455 |
Deferred income taxes | 1,150 | 2,232 |
Changes in assets and liabilities, excluding effects of acquisitions/divestitures: | ||
Accounts receivable | 40,518 | (6,014) |
Contract assets | (12,635) | (25,130) |
Contract costs | 1,015 | (4,990) |
Inventories | (19,475) | (1,947) |
Income tax refunds receivable | (394) | 2,893 |
Operating Right-of-Use Assets | 3,603 | 0 |
Other assets | (4,160) | (5,615) |
Accounts payable - trade | (9,594) | 10,187 |
Contract liabilities | (1,063) | 75,986 |
Operating Lease Liabilities | (3,458) | 0 |
Other current liabilities | (6,980) | (8,209) |
Income taxes payable | 1,783 | (1,817) |
Pension liabilities | 1,043 | (11,938) |
Other long-term liabilities | 3,904 | 4,166 |
Net cash provided by operating activities | 22,636 | 56,913 |
Cash flows from investing activities: | ||
Proceeds from sale of assets | 65 | 103 |
Expenditures for property, plant & equipment | (7,425) | (6,422) |
Other, net | (732) | (293) |
Net cash used in investing activities | (8,092) | (6,612) |
Cash flows from financing activities: | ||
Net repayments under revolving credit agreements | (8,500) | (50,708) |
Debt repayment | (1,875) | (1,875) |
Net change in bank overdraft | 4,058 | 2,598 |
Proceeds from exercise of employee stock awards | 1,519 | 2,687 |
Purchase of treasury shares | (2,951) | (4,600) |
Dividends paid | (5,578) | (5,569) |
Other | (382) | (271) |
Net cash used in financing activities | (13,709) | (57,738) |
Net increase (decrease) in cash and cash equivalents | 835 | (7,437) |
Effect of exchange rate changes on cash and cash equivalents | (190) | 583 |
Cash and cash equivalents at beginning of period | 27,711 | |
Cash and cash equivalents at end of period | 28,356 | 30,050 |
Supplemental disclosure of noncash activities: | ||
Value of common shares issued for unwind of warrant transactions | $ 0 | $ 2,281 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 29, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The December 31, 2018 Condensed Consolidated Balance Sheet amounts have been derived from the previously audited Consolidated Balance Sheet of Kaman Corporation and subsidiaries (collectively, the “Company”), but do not include all disclosures required by accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . The results of operations for the interim periods presented are not necessarily indicative of trends or of results to be expected for the entire year. The Company has a calendar year-end; however, its first three fiscal quarters follow a 13-week convention, with each quarter ending on a Friday. The first quarters for 2019 and 2018 ended on March 29, 2019 , and March 30, 2018 , respectively. |
Recent Accounting Standards
Recent Accounting Standards | 3 Months Ended |
Mar. 29, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards | RECENT ACCOUNTING STANDARDS Recent Accounting Standards Adopted In February 2018, the FASB issued ASU 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". The objective of this standard is to address the concern that tax effects of items within accumulated other comprehensive income do not appropriately reflect the tax rate because the Tax Cut and Jobs Act of 2017 ("Tax Reform") required the adjustment of deferred taxes be recorded to income. This ASU provides an entity the election to reclassify stranded tax effects resulting from Tax Reform to retained earnings from accumulated other comprehensive income. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The adoption of ASU 2018-02 resulted in an increase to retained earnings of $23.1 million , primarily related to the stranded tax effects resulting from Tax Reform for pension and other post-retirement benefits. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities". The objective of this standard update is to improve the financial reporting of hedging relationships to better reflect the economic results of an entity's risk management activities in its financial statements. This ASU expands hedge accounting for both nonfinancial and financial risk components and refines the measurement of hedge results to better reflect an entity's hedging strategies. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. Under this ASU as amended, lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged under this ASU as amended. This standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition method allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result, the Company applied ASC 842 only to leases that existed as of January 1, 2019 and did not restate prior periods. The adoption of ASC 842 resulted in a net increase of approximately $90.0 million to its assets and liabilities as of January 1, 2019 due to the addition of right-of-use assets and lease liabilities for operating leases on the balance sheet; however, it did not have a material impact on the Company's cash flows, results of operations or debt covenant compliance. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Adopted (continued) The Company has elected the following practical expedients (which must be elected as a package and applied consistently to all leases): an entity need not reassess whether any expired or existing contracts are or contain leases, an entity need not reassess the lease classification for any expired or existing leases and an entity need not reassess initial direct costs for any existing leases. Additionally, the Company has elected the practical expedient to not separate nonlease components from the associated lease component and account for those components as a single component for real estate leases. Nonlease components for the Company's vehicle and other equipment leases are not material. The Company has elected not to apply the recognition requirements to short-term leases, and will recognize the lease payments in profit or loss on a straight-line basis over the lease term and variable payments in the period in which the obligation for those payments is incurred. Subsequent to the issuance of ASU 2016-02, the FASB has issued the following updates: ASU 2018-10, "Codification Improvements to Topic 842, Leases", ASU 2018-11, "Leases (Topic 842): Targeted Improvements - Transition - Comparative Reporting at Adoption" and ASU 2019-01, "Leases (Topic 842): Codification Improvements". The amendments in these updates affect the guidance contained within ASU 2016-02 and were similarly adopted on January 1, 2019. See Note 3, Significant Accounting Policies Update , for further information on the impact of these standard updates. Recent Accounting Standards Yet to be Adopted In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract". The objective of the standard update is to provide additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract to address the diversity in practice. The ASU requires an entity in a hosting arrangement that is a service arrangement to determine which costs to capitalize as an asset related to a service contract and which costs to expense, and to determine which project stage implementation activities relate to. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and postimplementation stages are expensed as the activities are performed. Capitalized implementation costs of a hosting arrangement are expensed over the term of the hosting arrangement in the same line item in the statement of operations as the fees associated with the hosting element of the arrangement. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Disclosure Framework - Changes to Disclosure Requirements for Defined Benefit Plans". The objective of the standard update is to improve the effectiveness of disclosure requirements for defined benefit pension and other postretirement plans. This standard update removes disclosures that are no longer considered cost beneficial, clarifies specific requirements of disclosures and adds new disclosure requirements identified as relevant. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to Disclosure Requirements for Fair Value Measurement". The objective of this standard update is to improve the effectiveness of disclosures for recurring and nonrecurring fair value measurements. This standard update removes certain disclosure requirements that are no longer considered cost beneficial, modifies existing disclosure requirements and adds new disclosure requirements identified as relevant. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of the ASU and delay adoption of the additional disclosures until the effective date. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Yet to be Adopted (continued) In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The objective of this standard update is to simplify the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit. The standard update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The impact of the adoption of this standard update is dependent on the Company's goodwill impairment assessment. |
Significant Accounting Policies
Significant Accounting Policies Update | 3 Months Ended |
Mar. 29, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies Update | SIGNIFICANT ACCOUNTING POLICIES UPDATE The Company's significant accounting policies are detailed in Note 1, Summary of Significant Accounting Policies of its Annual Report on Form 10-K for the year-ended December 31, 2018. Significant changes to our accounting policies as a result of adopting new accounting standards are discussed below: Leasing Under Accounting Standards Codification ("ASC") 842, the Company determines if a contract contains a lease at the inception date of the contract. To determine if the contract contains a lease, the Company evaluates if there is an identified asset in the contract and if the Company has control over the use of the identified asset. There is an identified asset in the contract if the asset is explicitly or implicitly specified in the contract, the asset is physically distinct or the Company has the right to receive substantially all of the asset's capacity, and if the supplier does not have substantive substitution rights. The Company has control over the use of the identified asset if the Company obtains substantially all economic benefits from the use of the asset and can direct the use of the asset. The Company applied the practical expedient for any contracts that existed prior to January 1, 2019; therefore, the contracts were not reassessed to determine if they contain leases. The Company must classify each lease as a finance lease or operating lease. A lease is classified as a finance lease if the Company will own the asset by the end of the lease term, the Company is reasonably certain to exercise the purchase option, the lease term covers a major part of the asset's economic life, the sum of the present value of the lease payments and the present value of the residual value guarantee not included in the lease payments equal or exceed substantially all of the fair value of the underlying asset at lease commencement or if the lessor has no alternative use for the asset. If any of these criteria are not met, the lease is classified as an operating lease. The Company applied the practical expedient for any leases that existed prior to January 1, 2019; therefore, the lease classifications of existing leases were not reassessed (all existing leases classified as operating leases under ASC 840 were classified as operating leases under ASC 842 on January 1, 2019 and all existing leases classified as capital leases under ASC 840 were classified as finance leases under ASC 842 on January 1, 2019). The Company's operating leases consist of rent commitments under various leases for office space, warehouses, land and buildings at varying dates from January 2019 to June 2028. The terms of most of these leases are in the range of 3 to 10 years. Some of the Company's leases have fixed amount rent escalations, rent holidays or contingent rent that are recognized on a straight-line basis over the entire lease term. Material leasehold improvements and other landlord incentives are amortized over the shorter of their economic lives or the lease term, including renewal periods, if reasonably assured. Certain annual rentals are subject to renegotiation, with certain leases renewable for varying periods and certain leases including options to terminate the leases. While some of the Company's leases include options allowing early termination of the lease, the Company historically has not terminated its lease agreements early unless there is an economic, financial or business reason to do so. Substantially all real estate taxes, insurance and maintenance expenses associated with leased facilities are obligations of the Company. It is expected that in the normal course of business leases that expire will be renewed or replaced by leases on other similar property. The terms for most machinery and equipment leases range from 3 to 5 years. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Leasing - continued The majority of the Company's finance leases consist of assets purchased under the Company's master leasing agreement with PNC Equipment Finance ("PNC"), and are included in machinery, office furniture and equipment and construction in process. At March 29, 2019 , the Company's master leasing agreement with PNC had a maximum capacity of $20.0 million . The terms of these leases are 5 years. Amortization of these assets is included in depreciation and amortization expense. At the commencement date, the right-of-use asset and lease liability are recorded to the Company's Condensed Consolidated Balance Sheets when the Company obtains control of the use of the asset. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make payments upon entering into a lease agreement. The initial measurement of the lease liability is equal to the present value of the unpaid lease payments. Subsequent to the initial measurement, the lease liability continues to be measured at the present value of unpaid lease payments throughout the lease term. The lease liability is remeasured if the lease is modified and the modification is not accounted for as a separate contract, there is a change in the assessment of the lease term, the assessment of a purchase option exercise or the amount probable of being owed under a residual value guarantee, or a contingency is resolved resulting in some or all of the variable lease payments becoming fixed payments. The initial measurement of the right-of-use asset is equal to the total of the initial measurement of the lease liability, incremental costs to obtain the lease and prepaid lease payments, less any lease incentives received. Subsequent to the initial measurement, the right-of-use asset for a finance lease is equivalent to the initial measurement less accumulated amortization and any accumulated impairment losses. Generally, amortization of finance leases is recorded to cost of sales on a straight-line basis over the lease term. Subsequent to initial measurement, the right-of-use asset for an operating lease is equivalent to initial measurement less accumulated amortization (the difference between the straight-line lease cost for the period and the accretion of the lease liability using the effective interest method). The Company has elected not to apply the recognition requirements of ASC 842 to short-term leases (leases that, at the commencement date, have a lease term of twelve months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise) as permissible under the standard. For short-term leases, the Company recognizes lease payments on a straight-line basis and variable payments in the period in which the obligation for those payments is incurred. Leasing contracts can be separated into lease components, non-lease components and items that are not components of the contract (items that do not transfer a good or service to the Company). Two or more contracts may be combined if at least one of which is or contains a lease entered into or near the same time with the same counterparty and consider the contracts as a single transaction if the contracts are negotiated as a package with the same objective, the amount of consideration to be paid in one contract depends on the price of performance of the other contract or the rights to use the underlying assets conveyed in the contracts are a single lease component. Lease components are considered separate if the Company can benefit from the right to use either on its own or together with other resources readily available to the Company and the right to use is not highly dependent or highly interrelated with the other rights to use the underlying assets in the contract. Consideration in the contract is allocated only to lease and non-lease components of a contract. The Company has elected the practical expedient allowing the Company to combine lease and non-lease components by class as a single lease component for its real estate leases. Nonlease components for the Company's vehicles and other equipment leases are not material. The lease term is the noncancellable period for which a lessee has the right to use an underlying asset, including periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. For renewal options, the Company performs an assessment at commencement if it is reasonably likely to exercise the option. The assessment is based on the Company's intentions, past practices, estimates and factors that create an economic incentive for the Company. Generally, the Company is not reasonably certain to exercise the renewal option in a lease contract as it performs an assessment for most real estate leases within six months prior to termination comparing the renewal rents under the option with the fair market returns for equivalent property under similar terms and conditions. Although the Company does not historically change locations often, it is not reasonably certain the Company will exercise the renewal option; therefore, the periods covered by the renewal option are not typically included in the lease term at commencement. While some of the Company's leases include options allowing early termination of the lease, the Company historically has not terminated its lease agreements early unless there is an economic, financial or business reason to do so; therefore, the Company does not typically consider the termination option in its lease term at commencement. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Leasing - continued Consideration in the contract is the sum of lease payments relating to the use of the underlying asset, fixed payments and other in-substance fixed payments, less any incentives received. Remeasurement of variable lease payments based on an index is only required if remeasurement is required for another reason, such as a change in lease term or change in estimates of probable payments under residual value guarantees. If remeasured, the remeasurement date becomes the new date for updating the payments based on the index. The Company uses the discount rate implicit in a lease contract, if available. As most of the Company's leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. For any leases that existed prior to the adoption of the standard, the Company used the incremental borrowing rate as of January 1, 2019 based on the type of asset and term of the lease. The Company separated its real estate leases by classes of lease terms and used the incremental borrowing rate consistent with its lease term class to determine the present value of lease payments. As most of the Company's vehicles have a four-year lease term, the Company used the incremental borrowing rate consistent with a four-year lease term for all vehicles. For all other equipment leases, the Company used the incremental borrowing rate consistent with a five-year lease term as the majority of the Company's leases for other equipment have a five-year lease term. |
Restructuring Costs
Restructuring Costs | 3 Months Ended |
Mar. 29, 2019 | |
Restructuring Costs [Abstract] | |
Restructuring Costs | RESTRUCTURING COSTS During the third quarter of 2017, the Company initiated restructuring activities at its Aerospace segment to support the ongoing effort of improving capacity utilization and operating efficiency to better position the Company for increased profitability and growth. Such actions include workforce reductions and the consolidation of operations, beginning in the third quarter of 2017 through the planned completion of restructuring activities in the first half of 2019. The Company currently expects these actions to result in approximately $9.5 million in pre-tax restructuring and transition charges and, beginning in 2019, will result in total cost savings of approximately $4.0 million annually. The following table summarizes the accrual balances by cost type for the restructuring actions: Severance Other (1) Total In thousands Restructuring accrual balance at December 31, 2018 $ 1,022 $ 558 $ 1,580 Provision 28 149 177 Cash payments (606 ) (282 ) (888 ) Changes in foreign currency exchange rates (8 ) (4 ) (12 ) Restructuring accrual balance at March 29, 2019 $ 436 $ 421 $ 857 (1) Includes costs associated with consolidation of facilities. The above accrual balance was included in other current liabilities on the Company's Consolidated Balance Sheets. Since the announcement of these restructuring activities, restructuring expense as of March 29, 2019 was $8.9 million . For the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , the Aerospace segment incurred $0.3 million and $0.8 million in costs, respectively, associated with the restructuring activities described above. Included in the expense for the three-month fiscal period ended March 29, 2019 is $0.1 million of cost that relates the write-off of inventory for various small order programs that the Company will no longer continue to manufacture as a result of the consolidation of operations. Other Matters In addition to the restructuring above, the Aerospace segment incurred $0.9 million in costs associated with the termination of certain distributor agreements in the three-month fiscal period ended March 30, 2018 . |
Accounts Receivable, Net
Accounts Receivable, Net | 3 Months Ended |
Mar. 29, 2019 | |
Accounts Receivable, Net [Abstract] | |
Accounts Receivable, Net | ACCOUNTS RECEIVABLE, NET Accounts receivable, net consists of the following: March 29, December 31, In thousands Trade receivables $ 181,210 $ 164,752 U.S. Government contracts: Billed 13,587 38,173 Cost and accrued profit - not billed 653 780 Commercial and other government contracts Billed 67,518 100,603 Cost and accrued profit - not billed 926 900 Less allowance for doubtful accounts (3,433 ) (4,114 ) Accounts receivable, net $ 260,461 $ 301,094 The decrease in commercial and other government contracts - billed was primarily due to the receipts of payments related to the K-MAX® program, a JPF direct commercial sales ("DCS") contract and the Company's bearings products. The decrease in U.S. Government contracts - billed was primarily due to the receipt of payments under the Company's JPF program with the USG. These decreases were partially offset by an increase in trade receivables in the bearings and power transmission product line at the Distribution segment. Accounts receivable, net includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: March 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 900 $ 900 |
Contract Assets, Contract Costs
Contract Assets, Contract Costs and Contract Liabilities | 3 Months Ended |
Mar. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract Assets, Contract Costs and Contract Liabilities | CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES Contract assets consist of unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract costs consist of costs to obtain and fulfill a contract. Costs to fulfill a contract primarily consist of nonrecurring engineering costs incurred at the start of a new program for which such costs are expected to be recovered under existing and future contracts. Such costs are amortized over the estimated revenue amount of the contract. Costs to obtain a contract consist of commissions and agent fees paid in connection with the award of a contract. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue. 6. CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES (CONTINUED) Reconciliation of Contract Balances Activity related to contract assets, contract costs and contract liabilities is as follows: March 29, December 31, 2018 $ Change % Change In thousands Contract assets $ 121,621 $ 108,861 $ 12,760 11.7 % Contract costs, current portion $ 6,158 $ 5,993 $ 165 2.8 % Contract costs, noncurrent portion $ 9,503 $ 10,666 $ (1,163 ) (10.9 )% Contract liabilities, current portion $ 34,283 $ 28,865 $ 5,418 18.8 % Contract liabilities, noncurrent portion $ 72,081 $ 78,562 $ (6,481 ) (8.2 )% Contract Assets The increase in contract assets was primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the three-month fiscal period ended March 29, 2019 . This increase was primarily related to work performed and not yet billed on the JPF program with the USG, the AH-1Z program, the Sikorsky S70 program and the Sikorsky BLACK HAWK helicopter program, partially offset by amounts billed on the SH-2G program with Peru. There were no significant impairment losses related to the Company's contract assets during the three-month fiscal periods ended March 29, 2019 and March 30, 2018 . Contract assets includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: March 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 3,631 $ 2,909 Contract Costs At March 29, 2019 , costs to fulfill a contract and costs to obtain a contract were $8.5 million and $7.2 million , respectively. At December 31, 2018 , costs to fulfill a contract and costs to obtain a contract were $8.9 million and $7.8 million , respectively. These amounts are included in contract costs, current portion and contract costs, noncurrent portion on the Company's Condensed Consolidated Balance Sheets at March 29, 2019 and December 31, 2018 . Contract costs, current portion remained relatively flat for the three-month fiscal period ended March 29, 2019 when compared to contract costs, current portion at December 31, 2018 . This was a result of the reclassification of a portion of costs to obtain a JPF DCS contract and costs to fulfill certain metallic structures programs from contract costs, noncurrent portion, partially offset by amortization of contract costs. For the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , amortization of contract costs was $1.0 million and $0.7 million , respectively. The decrease in contract costs, noncurrent portion was due to the reclassification of a portion of costs to obtain a JPF DCS contract and costs to fulfill certain metallic structures programs to contract costs, current portion. 6. CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES (CONTINUED) Contract Liabilities The increase in contract liabilities, current portion was primarily due to the reclassification of a portion of the advance payments received for a JPF DCS contract from contract liabilities, noncurrent portion. For the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , revenue recognized related to contract liabilities, current portion was $8.0 million and $5.0 million , respectively. The decrease in contract liabilities, noncurrent portion was due to the reclassification of a portion of the advance payments received for a JPF DCS contract to contract liabilities, current portion. For the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , the Company did not recognize revenue against contract liabilities, noncurrent portion. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 29, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following table presents the carrying value and fair value of financial instruments that are not carried at fair value: March 29, 2019 December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value In thousands Debt (1) $ 289,418 $ 325,210 $ 299,124 $ 325,251 (1) These amounts are classified within Level 2. The above fair values were computed based on quoted market prices and discounted future cash flows (observable inputs), as applicable. Differences from carrying values are attributable to interest rate changes subsequent to when the transactions occurred. The fair values of cash and cash equivalents, accounts receivable, net and accounts payable - trade approximate their carrying amounts due to the short-term maturities of these instruments. Recurring Fair Value Measurements The Company holds derivative instruments for foreign exchange contracts that are measured at fair value using observable market inputs such as forward rates and its counterparties’ credit risks. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At March 29, 2019 and December 31, 2018 , the derivative instruments were included in other current liabilities on the Consolidated Balance Sheets. Based on the Company's continued ability to trade and enter into forward contracts and interest rate swaps, the Company considers the markets for its fair value instruments to be active. The Company evaluated the credit risk associated with the counterparties to these derivative instruments and determined that as of March 29, 2019 , such credit risks have not had an adverse impact on the fair value of these instruments. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 29, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks relating to its ongoing business operations, including market risks relating to fluctuations in foreign currency exchange rates and interest rates. Derivative financial instruments are recognized on the Condensed Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair values of derivatives are recorded each period in earnings or accumulated other comprehensive income, depending on whether a derivative is effective as part of a hedged transaction. Gains and losses on derivative instruments reported in accumulated other comprehensive income are subsequently included in earnings in the periods in which earnings are affected by the hedged item. The Company does not use derivative instruments for speculative purposes. Forward Exchange Contracts The Company holds forward exchange contracts designed to hedge forecasted transactions denominated in foreign currencies and to minimize the impact of foreign currency fluctuations on the Company’s earnings and cash flows. Some of these contracts are designated as cash flow hedges. The Company will include in earnings amounts currently included in accumulated other comprehensive income upon recognition of cost of sales related to the underlying transaction. These contracts were not material to the Company's Condensed Consolidated Balance Sheets as of March 29, 2019 and December 31, 2018 . The activity related to these contracts was not material to the Company's Condensed Consolidated Financial Statements for the three-month fiscal periods ended March 29, 2019 and March 30, 2018 . |
Inventories
Inventories | 3 Months Ended |
Mar. 29, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Inventories consist of the following: March 29, December 31, In thousands Merchandise for resale $ 163,330 $ 162,985 Raw materials 15,438 15,939 Contracts and other work in process (including certain general stock materials) 112,477 97,025 Finished goods 22,649 18,963 Total $ 313,894 $ 294,912 The increase in contracts and other work in process (including certain general stock materials) for the three-month fiscal period ended March 29, 2019 was primarily attributable to work performed on the JPF DCS program, K-MAX® program and bearings products in the Aerospace segment. Inventories include amounts associated with matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: March 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 514 $ 508 At March 29, 2019 , and December 31, 2018 , $40.4 million and $34.7 million , respectively, of K-MAX® inventory, including inventory associated with the new build aircraft, was included in contracts and other work in process inventory and finished goods on the Company's Condensed Consolidated Balance Sheets. Management believes that approximately $21.0 million of the K-MAX® inventory will be sold after March 29, 2020, based upon the anticipation of additional aircraft manufacturing and supporting the fleet for the foreseeable future. At March 29, 2019 , and December 31, 2018 , $5.4 million of SH-2G(I) inventory was included in contracts and other work in process inventory in both periods on the Company's Condensed Consolidated Balance Sheets. Management believes that approximately $5.2 million of the SH-2G(I) inventory will be sold after March 29, 2020. This balance represents spares requirements and inventory to be used on SH-2G programs. |
Unfulfilled Performance Obligat
Unfulfilled Performance Obligations (Notes) | 3 Months Ended |
Mar. 29, 2019 | |
Unfulfilled Performance Obligations [Abstract] | |
Unfulfilled Performance Obligations [Text Block] | 10. UNFULFILLED PERFORMANCE OBLIGATIONS Unfulfilled performance obligations ("backlog") represents the transaction price of firm orders for which work has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts. As of March 29, 2019 , the aggregate amount of the transaction price allocated to backlog was $949.3 million . The Company expects to recognize revenue on approximately $699.7 million of this amount over the next 12 months, with the remaining amount to be recognized thereafter. At December 31, 2018 , the aggregate amount of the transaction price allocated to backlog was $986.1 million . |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, Net | 3 Months Ended |
Mar. 29, 2019 | |
Intangible Assets, Net (Including Goodwill) [Abstract] | |
Goodwill and Other Intangible Assets, Net | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company: Distribution Aerospace Total In thousands Gross balance at December 31, 2018 $ 149,204 $ 212,413 $ 361,617 Accumulated impairment — (16,252 ) (16,252 ) Net balance at December 31, 2018 149,204 196,161 345,365 Additions — — — Impairments — — — Foreign currency translation — (1,377 ) (1,377 ) Ending balance at March 29, 2019 $ 149,204 $ 194,784 $ 343,988 Other Intangibles Other intangible assets consisted of: At March 29, At December 31, 2019 2018 Amortization Period Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization In thousands Customer lists / relationships 6-26 years $ 132,177 $ (64,166 ) $ 132,661 $ (61,968 ) Developed technologies 10-20 years 19,548 (4,271 ) 19,729 (3,998 ) Trademarks / trade names 3-15 years 8,640 (4,411 ) 8,747 (4,322 ) Non-compete agreements and other 1-9 years 7,650 (7,506 ) 7,607 (7,527 ) Patents 17 years 523 (447 ) 523 (445 ) Total $ 168,538 $ (80,801 ) $ 169,267 $ (78,260 ) |
Pension Plans
Pension Plans | 3 Months Ended |
Mar. 29, 2019 | |
Defined Benefit Plan [Abstract] | |
Pension Plans | PENSION PLANS Components of net pension cost for the Qualified Pension Plan and Supplemental Employees’ Retirement Plan ("SERP") are as follows: For the Three Months Ended Qualified Pension Plan SERP March 29, March 30, March 29, March 30, In thousands Service cost $ 1,275 $ 1,224 $ — $ — Interest cost on projected benefit obligation 6,606 5,951 59 54 Expected return on plan assets (10,640 ) (11,960 ) — — Amortization of net loss 3,815 2,843 61 83 Net pension cost (income) $ 1,056 $ (1,942 ) $ 120 $ 137 During the three-month fiscal period ended March 29, 2019 , the Company contributed $0.1 million to the SERP and plans to contribute an additional $0.4 million to the SERP in 2019 . The Company does not anticipate making any contributions to the qualified pension plan in 2019. For the 2018 plan year, the Company contributed $30.0 million to the qualified pension plan and $0.9 million to the SERP. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Pension Freeze Effective December 31, 2015, the Company's qualified pension plan was frozen with respect to future benefit accruals. Under USG Cost Accounting Standard (“CAS”) 413 the Company must determine the USG’s share of any pension curtailment adjustment calculated in accordance with CAS. Such adjustments can result in an amount due to the USG for pension plans that are in a surplus position or an amount due to the contractor for plans that are in a deficit position. During the fourth quarter of 2016, the Company accrued a $0.3 million liability representing its estimate of the amount due to the USG based on the Company's pension curtailment adjustment calculation, which was submitted to the USG for review in December 2016. The Company has maintained its accrual at $0.3 million as of March 29, 2019 . There can be no assurance that the ultimate resolution of this matter will not have a material adverse effect on the Company's results of operations, financial position and cash flows. New Hartford Property In connection with the sale of the Company’s Music segment in 2007, the Company assumed responsibility for meeting certain requirements of the Connecticut Transfer Act (the “Transfer Act”) that applied to the transfer of the New Hartford, Connecticut, facility leased by that segment for guitar manufacturing purposes (“Ovation”). Under the Transfer Act, those responsibilities essentially consist of assessing the site's environmental conditions and remediating environmental impairments, if any, caused by Ovation's operations prior to the sale. The site is a multi-tenant industrial park, in which Ovation and other unrelated entities lease space. The environmental assessment process, which began in 2008, has been completed and site remediation is in process. The Company's estimate of its portion of the cost to assess the environmental conditions and remediate this site is $2.3 million , all of which has been accrued. The total amount paid to date in connection with these environmental remediation activities is $1.6 million . At March 29, 2019 , the Company had $0.7 million accrued for these environmental remediation activities. A portion ( $0.1 million ) of the accrual related to this property is included in other current liabilities and the balance is included in other long-term liabilities. The remaining balance of the accrual reflects the total anticipated cost of completing these environmental remediation activities. Although it is reasonably possible that additional costs will be paid in connection with the resolution of this matter, the Company is unable to estimate the amount of such additional costs, if any, at this time. 13. COMMITMENTS AND CONTINGENCIES (CONTINUED) Bloomfield Property In connection with the Company’s 2008 purchase of the portion of the Bloomfield campus that Kaman Aerospace Corporation had leased from NAVAIR, the Company assumed responsibility for environmental remediation at the facility as may be required under the Transfer Act and is currently remediating the property under the guidance of the Connecticut Department of Environmental Protection ("CTDEP"). The assumed environmental liability of $10.3 million was determined by taking the undiscounted estimated remediation liability of $20.8 million and discounting it at a rate of 8% . This remediation process will take many years to complete. The total amount paid to date in connection with these environmental remediation activities is $13.9 million . At March 29, 2019 , the Company had $2.1 million accrued for these environmental remediation activities. A portion ( $0.5 million ) of the accrual related to this property is included in other current liabilities, and the balance is included in other long-term liabilities. Although it is reasonably possible that additional costs will be paid in connection with the resolution of this matter, the Company is unable to estimate the amount of such additional costs, if any, at this time. Rimpar Property In connection with the Company's purchase of GRW, the Company assumed responsibility for the environmental remediation at the Rimpar, Germany facility. In 2016, the Company completed an assessment which determined the estimated remediation liability was $0.5 million . The total amount paid to date in connection with these environmental remediation activities is $0.2 million . The balance ( $0.3 million ) of the accrual related to this property is included in other current liabilities. Although it is reasonably possible that additional costs will be paid in connection with the resolution of this matter, the Company is unable to estimate the amount of such additional costs, if any, at this time. Aerospace Claim Matter In October 2017, the Company received a letter from its customer seeking to recover $12.4 million associated with the rework of certain aerostructures components previously delivered by the Company and related costs incurred by the customer; however, the Company estimated the cost to rework these aerostructure components was $0.2 million . During April 2019, the Company and the customer reached an agreement to settle the matter for $0.2 million , which was fully accrued for as of March 29, 2019 . Offset Agreement During January 2018, the Company entered into an offset agreement as a condition to obtaining orders from a foreign customer for the Company's JPF product. This agreement is designed to return economic value to the foreign country by requiring the Company to engage in activities supporting local defense or commercial industries, promoting a balance of trade, developing in-country technology capabilities or addressing other local development priorities. The offset agreement may be satisfied through activities that do not require a direct cash payment, including transferring technology, providing manufacturing, training and other consulting support to in-country projects and the purchase by third parties of supplies from in-country vendors. This agreement may also be satisfied through the Company's use of cash for activities, such as subcontracting with local partners, purchasing supplies from in-country vendors, providing financial support for in-country projects and making investments in local ventures. At March 29, 2019 , the offset agreement had an outstanding notional value of approximately $194.0 million , which is equal to sixty percent of the contract value of $324.0 million as defined by the agreement between the customer and the Company. The amount ultimately applied against the offset agreement is based on negotiations with the customer and may require cash outlays that represent only a fraction of the notional value in the offset agreement. The Company is currently in the process of developing a proposal to satisfy the offset requirements that will be submitted to the customer within the first half of 2019. The Company expects approval of the proposal by the end of 2019. The satisfaction of the offset requirements will be determined by the customer and is expected to occur over a seven-year period. In the event the offset requirements of the contract are not met, the Company could be liable for potential penalties up to $16.5 million payable to the customer. The Company has not recognized any revenue associated with this contract and has considered the potential penalties of $16.5 million as a reduction to the transaction price in its determination of the value of the remaining performance obligations within this contract. 13. COMMITMENTS AND CONTINGENCIES (CONTINUED) Employee-Related Tax Matter During 2018, the Company identified certain individuals at one of its foreign subsidiaries who were potentially misclassified as self-employed persons performing services for the subsidiary, as opposed to being classified as employees of the subsidiary. The Company investigated the misclassification of these individuals and the potential liability for any associated social contributions, interest and fines and/or penalties as a result of the misclassification. Following the internal investigation, the foreign subsidiary made a voluntary disclosure of the matter to the appropriate legal and regulatory authorities. The Company has accrued $2.5 million , which represents the Company's best estimate of potentially unpaid social security contributions, related interest and possible penalties. There can be no assurance that the ultimate resolution of this matter will not have a material adverse effect on the Company's results of operations, financial position and cash flows. |
Leases (Notes)
Leases (Notes) | 3 Months Ended |
Mar. 29, 2019 | |
Leases [Abstract] | |
Leases [Text Block] | 14. LEASES The Company's operating leases consist of rent commitments under various leases for office space, warehouses, land and buildings at varying dates from January 2019 to June 2028. The terms of most of these leases are in the range of 3 to 10 years. Some the Company's lease obligations have rent escalations, rent holidays or contingent rent that are recognized on a straight-line basis over the entire lease term. Material leasehold improvements and other landlord incentives are amortized over the shorter of their economic lives or the lease term, including renewal periods, if reasonably assured. Certain annual rentals are subject to renegotiation, with certain leases renewable for varying periods. The terms for most machinery and equipment leases range from 3 to 5 years. Substantially all real estate taxes, insurance and maintenance expenses associated with leased facilities are obligations of the Company. It is expected that in the normal course of business leases that expire will be renewed or replaced by leases on other similar property. The majority of the Company's finance leases consist of assets purchased under the Company's master leasing agreement with PNC, including machinery, office furniture and equipment and construction in process. At March 29, 2019 , the Company's master leasing agreement with PNC had a total capacity to $20.0 million . The terms of these leases are 5 years. Amortization of these assets is included in depreciation and amortization expense. At March 29, 2019 , $8.2 million of assets included in property, plant and equipment, net of accumulated depreciation, were accounted for as finance leases, with the majority of these assets being purchased under the Company's master leasing agreement with PNC. At March 29, 2019 , the Company had accumulated depreciation of $1.8 million associated with these assets. Additionally, $3.3 million of assets purchased under the Company's master leasing agreement were included in construction in process in property, plant and equipment, net of accumulated depreciation. At December 31, 2018 , $11.4 million of assets purchased under the Company's master leasing agreement and accounted for as capital leases were included in property, plant and equipment, net of accumulated depreciation, with accumulated depreciation of $1.5 million . At the commencement date of a contract containing a lease, a right-of-use asset and lease liability are recorded to the Company's Condensed Balance Sheets when the Company obtains control of the use of the asset. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make payments upon entering into a lease agreement. Right-of-use assets, net consists of the following: Classification March 29, 2019 (1) In thousands Assets Operating lease right of use assets Operating lease right-of-use assets, net $ 87,825 Finance lease right of use assets Property, plant and equipment, net of accumulated depreciation 6,413 Total leased assets $ 94,238 (1) The Company elected the modified retrospective transition method that applies ASC 842 as of January 1, 2019. Refer to Note 3, Significant Accounting Policies Update , for further information on the adoption of ASC 842. 14. LEASES (CONTINUED) The lease liability and future rental payments are required under leases that have initial or remaining non-cancellable lease terms in excess of one year as of March 29, 2019. Lease liabilities consist of the following: Classification March 29, December 31, In thousands Liabilities Current Operating lease liability, current portion Operating lease liabilities, current portion $ 24,345 $ — Finance lease liability, current portion Other current liabilities 2,103 1,989 Noncurrent Operating lease liability, noncurrent portion Operating lease liabilities, noncurrent portion 64,643 — Finance lease liability, noncurrent portion Other long-term liabilities 6,624 6,579 Total lease liabilities $ 97,715 $ 8,568 Future rental payments consist of the following: March 29, In thousands Operating leases 2019 (1) $ 21,123 2020 24,633 2021 19,715 2022 13,457 2023 8,860 Thereafter 10,493 Total future operating lease payments $ 98,281 Interest (9,293 ) Present value of future operating lease payments $ 88,988 Finance leases 2019 (1) $ 1,750 2020 2,250 2021 2,070 2022 1,685 2023 1,165 Thereafter 222 Total future finance lease payments $ 9,142 Interest (415 ) Present value of future finance lease payments $ 8,727 Present value of total future lease payments $ 97,715 (1) Payments for 2019 include payments for the remaining nine months of the year ended December 31, 2019. 14. LEASES (CONTINUED) Prior to the adoption of ASC 842, operating lease payments on an undiscounted basis were approximately $101.8 million and were payable as follows: $27.5 million in 2019, $23.6 million in 2020, $18.8 million in 2021, $12.8 million in 2022, $8.7 million in 2023 and $10.4 million thereafter. Prior to the adoption of ASC 842, finance lease payments (capital lease payments under ASC 840) on an undiscounted basis were approximately $8.6 million and were payable as follows: $2.0 million in 2019, $2.0 million in 2020, $1.8 million in 2021, $1.5 million in 2022, $1.0 million in 2023 and $0.2 million thereafter. The following table illustrates the components of lease expense for the Company's leases. March 29, In thousands Finance lease cost Amortization of right-of-use assets $ 230 Interest on lease liabilities 49 Operating lease cost 7,219 Short-term lease cost 25 Variable lease cost 19 Total lease expense $ 7,542 The following table segregates cash paid for the Company's leases. March 29, In thousands Operating cash flows from operating leases $ (5,027 ) Operating cash flows from finance leases (49 ) Financing cash flows from finance leases (372 ) Total cash flows from leasing activities $ (5,448 ) During the three-month fiscal period ended March 29, 2019 , $2.8 million in right-of-use assets were obtained in exchange for new operating lease liabilities. Right-of-use assets obtained in exchange for new finance lease liabilities were not material. Other information related to leases is as follows: March 29, Weighted-average remaining lease term Operating leases 4.49 Finance leases 3.68 Weighted-average discount rate Operating leases 4.33 % Finance leases 3.96 % |
Computation of Earnings Per Sha
Computation of Earnings Per Share | 3 Months Ended |
Mar. 29, 2019 | |
Earnings Per Share Reconciliation [Abstract] | |
Computation of Earnings Per Share | COMPUTATION OF EARNINGS PER SHARE The computation of basic earnings per share is based on net earnings divided by the weighted average number of shares of common stock outstanding for each period. The computation of diluted earnings per share reflects the common stock equivalency of dilutive options granted to employees under the Company's stock incentive plan, shares issuable on redemption of its convertible notes and shares issuable upon redemption of outstanding warrants. 15. COMPUTATION OF EARNINGS PER SHARE (CONTINUED) For the Three Months Ended March 29, March 30, In thousands, except per share amounts Net earnings $ 14,125 $ 14,066 Basic: Weighted average number of shares outstanding 27,908 27,851 Basic earnings per share $ 0.51 $ 0.51 Diluted: Weighted average number of shares outstanding 27,908 27,851 Weighted average shares issuable on exercise of dilutive stock options 162 220 Weighted average shares issuable on redemption of warrants related to the 2017 Notes — 97 Total 28,070 28,168 Diluted earnings per share $ 0.50 $ 0.50 Equity awards For the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , respectively, 385,232 and 199,510 shares issuable under equity awards granted to employees were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period. 2024 Convertible Notes For the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , shares issuable under the Convertible Notes due 2024 were excluded from the diluted earnings per share calculation because the conversion price was more than the average market price of the Company's stock during the periods. Warrants For the three-month fiscal period ended March 30, 2018 , shares issuable under the warrants issued in connection with the Company's 2017 Notes were included in the calculation for diluted earnings per share as the strike price of the warrants was less than the average price of the Company's stock. |
Share-based Arrangements
Share-based Arrangements | 3 Months Ended |
Mar. 29, 2019 | |
Share-based Compensation [Abstract] | |
Share-based Arrangements | SHARE-BASED ARRANGEMENTS The Company accounts for stock options, restricted stock awards, restricted stock units and performance shares as equity awards and measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the statement of operations. The Company also has an employee stock purchase plan which is accounted for as a liability award. Compensation expense for stock options, restricted stock awards and restricted stock units is recognized on a straight-line basis over the vesting period of the awards. Share-based compensation expense recorded for the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , was $1.9 million and $1.5 million , respectively. 16. SHARE-BASED ARRANGEMENTS (CONTINUED) From time-to-time, the Company has issued stock awards with market and performance based conditions. Currently, there is one award with these conditions that has not been settled. The shares for the award granted in 2016 has not yet been determined; however, assuming a 100% achievement level, the number of shares would be 1,060 . The Company measures the cost of this award based on its grant date fair value to the extent of the probable number of shares to be earned upon vesting. Amortization of this cost is recorded on a straight-line basis over the requisite service period. Throughout the course of the requisite service period, the Company monitors the level of achievement compared to the target and adjusts the number of shares expected to be earned, and the related compensation expense recorded thereafter, to reflect the updated most probable outcome. Compensation expense for these awards for the three-month fiscal periods ended March 29, 2019 , and March 30, 2018 , was not material. Stock option activity was as follows: For the Three Months Ended March 29, 2019 Options Weighted - average exercise price Options outstanding at beginning of period 935,252 $ 45.91 Granted 194,470 $ 61.02 Exercised (29,722 ) $ 27.70 Forfeited or expired (2,913 ) $ 61.68 Options outstanding at March 29, 2019 1,097,087 $ 49.04 The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The following table indicates the weighted-average assumptions used in estimating fair value: For the Three Months Ended March 29, March 30, Expected option term (years) 4.9 4.9 Expected volatility 19.4 % 18.1 % Risk-free interest rate 2.5 % 2.6 % Expected dividend yield 1.3 % 1.5 % Per share fair value of options granted $11.18 $10.65 Restricted stock award and restricted stock unit activity was as follows: For the Three Months Ended March 29, 2019 Restricted Stock Weighted- average grant date fair value Restricted Stock outstanding at beginning of period 143,697 $ 49.97 Granted 44,775 $ 61.02 Vested (45,737 ) $ 47.40 Forfeited or expired (734 ) $ 57.46 Restricted Stock outstanding at March 29, 2019 142,001 $ 54.25 |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 29, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION The Company is organized based upon the nature of its products and services, and is composed of two operating segments each overseen by a segment manager. These segments are reflective of how the Company’s Chief Executive Officer, who is its Chief Operating Decision Maker (“CODM”), reviews operating results for the purposes of allocating resources and assessing performance. The Company has not aggregated operating segments for purposes of identifying reportable segments. The Distribution segment is a leading power transmission, automation and fluid power industrial distributor with operations throughout the United States. The segment provides electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components, along with engineered integrated solutions for its customers' most challenging applications serving a broad spectrum of industrial markets, including both maintenance, repair and overhaul ("MRO") and original equipment manufacturer ("OEM") customers. The Aerospace segment produces and markets proprietary aircraft bearings and components; super precision, miniature ball bearings for the medical, industrial and aerospace markets; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; and safe and arming solutions for missile and bomb systems for the U.S. and allied militaries. The segment also markets the design and supply of aftermarket parts to businesses performing MRO in aerospace markets; performs helicopter subcontract work; restores, modifies and supports the Company's SH-2G Super Seasprite maritime helicopters; and manufactures and supports the Company's K-MAX® manned and unmanned medium-to-heavy lift helicopters. Summarized financial information by business segment is as follows: For the Three Months Ended In thousands March 29, March 30, Net sales: Distribution $ 290,954 $ 283,932 Aerospace 166,434 179,395 Net sales $ 457,388 $ 463,327 Operating income: Distribution $ 12,697 $ 11,834 Aerospace 26,612 22,662 Net gain on sale of assets 61 63 Corporate expense (16,006 ) (13,835 ) Operating income 23,364 20,724 Interest expense, net 5,313 5,352 Non-service pension and post retirement benefit cost (income) (99 ) (3,029 ) Other income, net (91 ) (342 ) Earnings before income taxes 18,241 18,743 Income tax expense 4,116 4,677 Net earnings $ 14,125 $ 14,066 17. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED) Disaggregation of Revenue The following table disaggregates total revenue by major product line. For the Three Months Ended March 29, 2019 March 30, 2018 In thousands Distribution Bearings and Power Transmission $ 145,967 $ 143,385 Automation, Control and Energy 89,292 85,161 Fluid Power 55,695 55,386 Total Distribution Sales $ 290,954 $ 283,932 Aerospace Military and Defense, excluding fuzes $ 35,642 $ 47,756 Missile and Bomb Fuzes 57,594 52,985 Commercial Aerospace and Other 73,198 78,654 Total Aerospace Sales $ 166,434 $ 179,395 Total Sales (1) $ 457,388 $ 463,327 (1) Service revenue was not material for the three-month fiscal periods ended March 29, 2019 and March 30, 2018. The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized for performance obligations satisfied at a point in time for the Aerospace segment: For the Three Months Ended In thousands March 29, March 30, Revenue recognized for performance obligations satisfied: Over time 43 % 47 % Point-in-time 57 % 53 % Total revenue (1) 100 % 100 % (1) The disaggregation of revenue recognized for performance satisfied over time versus point-in-time has not been included for the Distribution segment, as the majority of its revenue is recognized on a point-in-time basis with only approximately 3.5% and 2.0% of revenue recognized for performance obligations over time for the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , respectively. 17. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED) Disaggregation of Revenue - continued For contracts that recognize revenue over time, the Company performs detailed quarterly reviews of the progress and execution of its performance obligations under these contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management's judgment about the ability and cost to achieve the schedule (e.g. the number and type of milestone events), technical requirements (e.g., a newly-developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g. to estimate increases in wages and prices for materials and related support cost allocations), execution by subcontractors, the availability and timing of funding from customers and overhead cost rates, among other variables. Based upon these reviews, the Company will record the effects of adjustments in profit estimates each period. If at any time management determines that in the case of a particular contract total costs will exceed total contract revenue, a provision for the entire anticipated contract loss is recorded at that time. The Company recognized a reduction in revenue of $0.8 million in the three-month fiscal period ended March 29, 2019 . This amount was primarily related to cost growth on the SH-2G program, partially offset by favorable cost performance on certain Aerospace contracts, more specifically the FMU-139 fuzing contract. The amount of revenue recognized in the three-month fiscal period ended March 30, 2018 from performance obligations satisfied (or partially satisfied) in previous periods was $1.6 million . These amounts were primarily related to changes in the estimates of the stage of completion of Aerospace contracts, more specifically the JPF contract with the USG and the AH-1Z contract. |
Shareholders' Equity and Accumu
Shareholders' Equity and Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 29, 2019 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity and Accumulated Other Comprehensive Income | SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME Changes in shareholders’ equity for the three-month fiscal periods ended March 29, 2019 , and March 30, 2018 , were as follows: For the Three Months Ended March 29, 2019 March 30, 2018 In thousands Beginning balance $ 633,157 $ 635,656 Comprehensive income 14,144 22,297 Dividends declared (per share of common stock, $0.20 and $0.20, respectively) (5,582 ) (5,580 ) Employee stock plans and related tax benefit 1,519 2,687 Purchase of treasury shares (2,951 ) (4,600 ) Share-based compensation expense 1,880 1,455 Changes due to convertible notes transactions — (2 ) Impact of change in revenue accounting standard (1) — (9,584 ) Ending balance $ 642,167 $ 642,329 (1) For further information on the impact of the change in the revenue accounting standard for the three-month fiscal period ended March 30, 2018 , refer to Note 2, Accounting Changes , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . 18. SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (CONTINUED) The components of accumulated other comprehensive income (loss) are shown below: For the Three Months Ended March 29, 2019 March 30, 2018 In thousands Foreign currency translation: Beginning balance $ (14,583 ) $ (7,056 ) Net (loss) gain on foreign currency translation (2,918 ) 6,013 Other comprehensive (loss) income, net of tax (2,918 ) 6,013 Ending balance $ (17,501 ) $ (1,043 ) Pension and other post-retirement benefits (1) : Beginning balance $ (120,319 ) $ (108,760 ) Amortization of net loss, net of tax expense of $940 and $709, respectively 2,936 2,217 Other comprehensive income, net of tax 2,936 2,217 Reclassification of stranded tax effects resulting from Tax Reform to retained earnings (3) (23,094 ) — Ending balance $ (140,477 ) $ (106,543 ) Derivative instruments (2) : Beginning balance $ 4 $ 2 Reclassification to net income, net of tax expense of $0 and $1, respectively 1 1 Other comprehensive income, net of tax 1 1 Ending balance $ 5 $ 3 Total accumulated other comprehensive loss $ (157,973 ) $ (107,583 ) (1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, Pension Plans for additional information.) (2) See Note 8, Derivative Financial Instruments , for additional information regarding the Company's derivative instruments. (3) See Note 2, Recent Accounting Standards , for additional information regarding the reclassification of stranded tax effects resulting from Tax Reform to retained earnings. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the Three Months Ended March 29, March 30, Effective Income Tax Rate 22.6 % 25.0 % The effective income tax rate represents the combined federal, state and foreign tax effects attributable to pretax earnings for the period. The decrease in the effective tax rate for the three-month fiscal period ended March 29, 2019 , compared to the corresponding rate in the prior year was primarily due to an increased benefit from export sales due to the foreign-derived intangible income provision and a reduction in the amount of foreign losses without benefit. These decreases were partially offset by additional limitations on the deductibility of executive compensation. 19. INCOME TAXES (CONTINUED) A valuation allowance for deferred tax assets, including those associated with net operating loss carryforwards, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, the Company uses estimates and judgment regarding future taxable income, and considers the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include current financial position, results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies, as well as the current and forecasted business economics. The Company has assessed both positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize the $32.8 million of deferred tax assets recorded as of March 29, 2019 . Through the end of the first quarter of 2019, the Company believes it is more likely than not that only $23.0 million of these deferred tax assets will be realized and, as such, has recorded a valuation allowance of $9.8 million . Going forward, management will continue to assess the available positive and negative evidence to determine whether it is likely sufficient future taxable income will be generated to permit the use of these deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income are reduced or increased, or if additional weight is given to subjective evidence such as future expected growth because objective negative evidence in the form of cumulative losses is no longer present. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 29, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS The Company has evaluated subsequent events through the issuance date of these financial statements. No material subsequent events were identified that require disclosure. |
Significant Accounting Polici_2
Significant Accounting Policies Update (Policies) | 3 Months Ended |
Mar. 29, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The December 31, 2018 Condensed Consolidated Balance Sheet amounts have been derived from the previously audited Consolidated Balance Sheet of Kaman Corporation and subsidiaries (collectively, the “Company”), but do not include all disclosures required by accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . The results of operations for the interim periods presented are not necessarily indicative of trends or of results to be expected for the entire year. The Company has a calendar year-end; however, its first three fiscal quarters follow a 13-week convention, with each quarter ending on a Friday. The first quarters for 2019 and 2018 ended on March 29, 2019 , and March 30, 2018 , respectively. |
Recent Accounting Standards | RECENT ACCOUNTING STANDARDS Recent Accounting Standards Adopted In February 2018, the FASB issued ASU 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". The objective of this standard is to address the concern that tax effects of items within accumulated other comprehensive income do not appropriately reflect the tax rate because the Tax Cut and Jobs Act of 2017 ("Tax Reform") required the adjustment of deferred taxes be recorded to income. This ASU provides an entity the election to reclassify stranded tax effects resulting from Tax Reform to retained earnings from accumulated other comprehensive income. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The adoption of ASU 2018-02 resulted in an increase to retained earnings of $23.1 million , primarily related to the stranded tax effects resulting from Tax Reform for pension and other post-retirement benefits. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities". The objective of this standard update is to improve the financial reporting of hedging relationships to better reflect the economic results of an entity's risk management activities in its financial statements. This ASU expands hedge accounting for both nonfinancial and financial risk components and refines the measurement of hedge results to better reflect an entity's hedging strategies. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. Under this ASU as amended, lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged under this ASU as amended. This standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition method allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result, the Company applied ASC 842 only to leases that existed as of January 1, 2019 and did not restate prior periods. The adoption of ASC 842 resulted in a net increase of approximately $90.0 million to its assets and liabilities as of January 1, 2019 due to the addition of right-of-use assets and lease liabilities for operating leases on the balance sheet; however, it did not have a material impact on the Company's cash flows, results of operations or debt covenant compliance. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Adopted (continued) The Company has elected the following practical expedients (which must be elected as a package and applied consistently to all leases): an entity need not reassess whether any expired or existing contracts are or contain leases, an entity need not reassess the lease classification for any expired or existing leases and an entity need not reassess initial direct costs for any existing leases. Additionally, the Company has elected the practical expedient to not separate nonlease components from the associated lease component and account for those components as a single component for real estate leases. Nonlease components for the Company's vehicle and other equipment leases are not material. The Company has elected not to apply the recognition requirements to short-term leases, and will recognize the lease payments in profit or loss on a straight-line basis over the lease term and variable payments in the period in which the obligation for those payments is incurred. Subsequent to the issuance of ASU 2016-02, the FASB has issued the following updates: ASU 2018-10, "Codification Improvements to Topic 842, Leases", ASU 2018-11, "Leases (Topic 842): Targeted Improvements - Transition - Comparative Reporting at Adoption" and ASU 2019-01, "Leases (Topic 842): Codification Improvements". The amendments in these updates affect the guidance contained within ASU 2016-02 and were similarly adopted on January 1, 2019. See Note 3, Significant Accounting Policies Update , for further information on the impact of these standard updates. Recent Accounting Standards Yet to be Adopted In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract". The objective of the standard update is to provide additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract to address the diversity in practice. The ASU requires an entity in a hosting arrangement that is a service arrangement to determine which costs to capitalize as an asset related to a service contract and which costs to expense, and to determine which project stage implementation activities relate to. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and postimplementation stages are expensed as the activities are performed. Capitalized implementation costs of a hosting arrangement are expensed over the term of the hosting arrangement in the same line item in the statement of operations as the fees associated with the hosting element of the arrangement. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Disclosure Framework - Changes to Disclosure Requirements for Defined Benefit Plans". The objective of the standard update is to improve the effectiveness of disclosure requirements for defined benefit pension and other postretirement plans. This standard update removes disclosures that are no longer considered cost beneficial, clarifies specific requirements of disclosures and adds new disclosure requirements identified as relevant. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to Disclosure Requirements for Fair Value Measurement". The objective of this standard update is to improve the effectiveness of disclosures for recurring and nonrecurring fair value measurements. This standard update removes certain disclosure requirements that are no longer considered cost beneficial, modifies existing disclosure requirements and adds new disclosure requirements identified as relevant. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of the ASU and delay adoption of the additional disclosures until the effective date. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Yet to be Adopted (continued) In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The objective of this standard update is to simplify the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit. The standard update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The impact of the adoption of this standard update is dependent on the Company's goodwill impairment assessment. |
Lessee, Leases [Policy Text Block] | 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE The Company's significant accounting policies are detailed in Note 1, Summary of Significant Accounting Policies of its Annual Report on Form 10-K for the year-ended December 31, 2018. Significant changes to our accounting policies as a result of adopting new accounting standards are discussed below: Leasing Under Accounting Standards Codification ("ASC") 842, the Company determines if a contract contains a lease at the inception date of the contract. To determine if the contract contains a lease, the Company evaluates if there is an identified asset in the contract and if the Company has control over the use of the identified asset. There is an identified asset in the contract if the asset is explicitly or implicitly specified in the contract, the asset is physically distinct or the Company has the right to receive substantially all of the asset's capacity, and if the supplier does not have substantive substitution rights. The Company has control over the use of the identified asset if the Company obtains substantially all economic benefits from the use of the asset and can direct the use of the asset. The Company applied the practical expedient for any contracts that existed prior to January 1, 2019; therefore, the contracts were not reassessed to determine if they contain leases. The Company must classify each lease as a finance lease or operating lease. A lease is classified as a finance lease if the Company will own the asset by the end of the lease term, the Company is reasonably certain to exercise the purchase option, the lease term covers a major part of the asset's economic life, the sum of the present value of the lease payments and the present value of the residual value guarantee not included in the lease payments equal or exceed substantially all of the fair value of the underlying asset at lease commencement or if the lessor has no alternative use for the asset. If any of these criteria are not met, the lease is classified as an operating lease. The Company applied the practical expedient for any leases that existed prior to January 1, 2019; therefore, the lease classifications of existing leases were not reassessed (all existing leases classified as operating leases under ASC 840 were classified as operating leases under ASC 842 on January 1, 2019 and all existing leases classified as capital leases under ASC 840 were classified as finance leases under ASC 842 on January 1, 2019). The Company's operating leases consist of rent commitments under various leases for office space, warehouses, land and buildings at varying dates from January 2019 to June 2028. The terms of most of these leases are in the range of 3 to 10 years. Some of the Company's leases have fixed amount rent escalations, rent holidays or contingent rent that are recognized on a straight-line basis over the entire lease term. Material leasehold improvements and other landlord incentives are amortized over the shorter of their economic lives or the lease term, including renewal periods, if reasonably assured. Certain annual rentals are subject to renegotiation, with certain leases renewable for varying periods and certain leases including options to terminate the leases. While some of the Company's leases include options allowing early termination of the lease, the Company historically has not terminated its lease agreements early unless there is an economic, financial or business reason to do so. Substantially all real estate taxes, insurance and maintenance expenses associated with leased facilities are obligations of the Company. It is expected that in the normal course of business leases that expire will be renewed or replaced by leases on other similar property. The terms for most machinery and equipment leases range from 3 to 5 years. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Leasing - continued The majority of the Company's finance leases consist of assets purchased under the Company's master leasing agreement with PNC Equipment Finance ("PNC"), and are included in machinery, office furniture and equipment and construction in process. At March 29, 2019 , the Company's master leasing agreement with PNC had a maximum capacity of $20.0 million . The terms of these leases are 5 years. Amortization of these assets is included in depreciation and amortization expense. At the commencement date, the right-of-use asset and lease liability are recorded to the Company's Condensed Consolidated Balance Sheets when the Company obtains control of the use of the asset. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make payments upon entering into a lease agreement. The initial measurement of the lease liability is equal to the present value of the unpaid lease payments. Subsequent to the initial measurement, the lease liability continues to be measured at the present value of unpaid lease payments throughout the lease term. The lease liability is remeasured if the lease is modified and the modification is not accounted for as a separate contract, there is a change in the assessment of the lease term, the assessment of a purchase option exercise or the amount probable of being owed under a residual value guarantee, or a contingency is resolved resulting in some or all of the variable lease payments becoming fixed payments. The initial measurement of the right-of-use asset is equal to the total of the initial measurement of the lease liability, incremental costs to obtain the lease and prepaid lease payments, less any lease incentives received. Subsequent to the initial measurement, the right-of-use asset for a finance lease is equivalent to the initial measurement less accumulated amortization and any accumulated impairment losses. Generally, amortization of finance leases is recorded to cost of sales on a straight-line basis over the lease term. Subsequent to initial measurement, the right-of-use asset for an operating lease is equivalent to initial measurement less accumulated amortization (the difference between the straight-line lease cost for the period and the accretion of the lease liability using the effective interest method). The Company has elected not to apply the recognition requirements of ASC 842 to short-term leases (leases that, at the commencement date, have a lease term of twelve months or less and do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise) as permissible under the standard. For short-term leases, the Company recognizes lease payments on a straight-line basis and variable payments in the period in which the obligation for those payments is incurred. Leasing contracts can be separated into lease components, non-lease components and items that are not components of the contract (items that do not transfer a good or service to the Company). Two or more contracts may be combined if at least one of which is or contains a lease entered into or near the same time with the same counterparty and consider the contracts as a single transaction if the contracts are negotiated as a package with the same objective, the amount of consideration to be paid in one contract depends on the price of performance of the other contract or the rights to use the underlying assets conveyed in the contracts are a single lease component. Lease components are considered separate if the Company can benefit from the right to use either on its own or together with other resources readily available to the Company and the right to use is not highly dependent or highly interrelated with the other rights to use the underlying assets in the contract. Consideration in the contract is allocated only to lease and non-lease components of a contract. The Company has elected the practical expedient allowing the Company to combine lease and non-lease components by class as a single lease component for its real estate leases. Nonlease components for the Company's vehicles and other equipment leases are not material. The lease term is the noncancellable period for which a lessee has the right to use an underlying asset, including periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. For renewal options, the Company performs an assessment at commencement if it is reasonably likely to exercise the option. The assessment is based on the Company's intentions, past practices, estimates and factors that create an economic incentive for the Company. Generally, the Company is not reasonably certain to exercise the renewal option in a lease contract as it performs an assessment for most real estate leases within six months prior to termination comparing the renewal rents under the option with the fair market returns for equivalent property under similar terms and conditions. Although the Company does not historically change locations often, it is not reasonably certain the Company will exercise the renewal option; therefore, the periods covered by the renewal option are not typically included in the lease term at commencement. While some of the Company's leases include options allowing early termination of the lease, the Company historically has not terminated its lease agreements early unless there is an economic, financial or business reason to do so; therefore, the Company does not typically consider the termination option in its lease term at commencement. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Leasing - continued Consideration in the contract is the sum of lease payments relating to the use of the underlying asset, fixed payments and other in-substance fixed payments, less any incentives received. Remeasurement of variable lease payments based on an index is only required if remeasurement is required for another reason, such as a change in lease term or change in estimates of probable payments under residual value guarantees. If remeasured, the remeasurement date becomes the new date for updating the payments based on the index. The Company uses the discount rate implicit in a lease contract, if available. As most of the Company's leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. For any leases that existed prior to the adoption of the standard, the Company used the incremental borrowing rate as of January 1, 2019 based on the type of asset and term of the lease. The Company separated its real estate leases by classes of lease terms and used the incremental borrowing rate consistent with its lease term class to determine the present value of lease payments. As most of the Company's vehicles have a four-year lease term, the Company used the incremental borrowing rate consistent with a four-year lease term for all vehicles. For all other equipment leases, the Company used the incremental borrowing rate consistent with a five-year lease term as the majority of the Company's leases for other equipment have a five-year lease term. |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Restructuring Costs [Abstract] | |
Summary of Accrual Balances by Cost Type | The following table summarizes the accrual balances by cost type for the restructuring actions: Severance Other (1) Total In thousands Restructuring accrual balance at December 31, 2018 $ 1,022 $ 558 $ 1,580 Provision 28 149 177 Cash payments (606 ) (282 ) (888 ) Changes in foreign currency exchange rates (8 ) (4 ) (12 ) Restructuring accrual balance at March 29, 2019 $ 436 $ 421 $ 857 (1) Includes costs associated with consolidation of facilities. |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net consists of the following: March 29, December 31, In thousands Trade receivables $ 181,210 $ 164,752 U.S. Government contracts: Billed 13,587 38,173 Cost and accrued profit - not billed 653 780 Commercial and other government contracts Billed 67,518 100,603 Cost and accrued profit - not billed 926 900 Less allowance for doubtful accounts (3,433 ) (4,114 ) Accounts receivable, net $ 260,461 $ 301,094 |
Accounts Receivable Due to Contract Changes, Negotiated Settlements and Claims for Unanticipated Cost | Accounts receivable, net includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: March 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 900 $ 900 |
Contract Assets, Contract Cos_2
Contract Assets, Contract Costs and Contract Liabilities (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Activity Related to Contract Assets, Contract Costs, and Contract Liabilities | Contract assets includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: March 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 3,631 $ 2,909 Activity related to contract assets, contract costs and contract liabilities is as follows: March 29, December 31, 2018 $ Change % Change In thousands Contract assets $ 121,621 $ 108,861 $ 12,760 11.7 % Contract costs, current portion $ 6,158 $ 5,993 $ 165 2.8 % Contract costs, noncurrent portion $ 9,503 $ 10,666 $ (1,163 ) (10.9 )% Contract liabilities, current portion $ 34,283 $ 28,865 $ 5,418 18.8 % Contract liabilities, noncurrent portion $ 72,081 $ 78,562 $ (6,481 ) (8.2 )% |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Financial Instruments That Are Not Carried At Fair Value | The following table presents the carrying value and fair value of financial instruments that are not carried at fair value: March 29, 2019 December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value In thousands Debt (1) $ 289,418 $ 325,210 $ 299,124 $ 325,251 (1) These amounts are classified within Level 2. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consist of the following: March 29, December 31, In thousands Merchandise for resale $ 163,330 $ 162,985 Raw materials 15,438 15,939 Contracts and other work in process (including certain general stock materials) 112,477 97,025 Finished goods 22,649 18,963 Total $ 313,894 $ 294,912 |
Inventory Due to Contract Changes, Negotiated Settlements and Claims for Unanticipated Contract Costs | Inventories include amounts associated with matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: March 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 514 $ 508 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Intangible Assets, Net (Including Goodwill) [Abstract] | |
Schedule of Goodwill | The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company: Distribution Aerospace Total In thousands Gross balance at December 31, 2018 $ 149,204 $ 212,413 $ 361,617 Accumulated impairment — (16,252 ) (16,252 ) Net balance at December 31, 2018 149,204 196,161 345,365 Additions — — — Impairments — — — Foreign currency translation — (1,377 ) (1,377 ) Ending balance at March 29, 2019 $ 149,204 $ 194,784 $ 343,988 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | Other intangible assets consisted of: At March 29, At December 31, 2019 2018 Amortization Period Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization In thousands Customer lists / relationships 6-26 years $ 132,177 $ (64,166 ) $ 132,661 $ (61,968 ) Developed technologies 10-20 years 19,548 (4,271 ) 19,729 (3,998 ) Trademarks / trade names 3-15 years 8,640 (4,411 ) 8,747 (4,322 ) Non-compete agreements and other 1-9 years 7,650 (7,506 ) 7,607 (7,527 ) Patents 17 years 523 (447 ) 523 (445 ) Total $ 168,538 $ (80,801 ) $ 169,267 $ (78,260 ) |
Pension Plans (Tables)
Pension Plans (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Defined Benefit Plan [Abstract] | |
Schedule of Net Benefit Costs | Components of net pension cost for the Qualified Pension Plan and Supplemental Employees’ Retirement Plan ("SERP") are as follows: For the Three Months Ended Qualified Pension Plan SERP March 29, March 30, March 29, March 30, In thousands Service cost $ 1,275 $ 1,224 $ — $ — Interest cost on projected benefit obligation 6,606 5,951 59 54 Expected return on plan assets (10,640 ) (11,960 ) — — Amortization of net loss 3,815 2,843 61 83 Net pension cost (income) $ 1,056 $ (1,942 ) $ 120 $ 137 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Leases [Abstract] | |
Schedule of Right of Use Assets [Table Text Block] | Right-of-use assets, net consists of the following: Classification March 29, 2019 (1) In thousands Assets Operating lease right of use assets Operating lease right-of-use assets, net $ 87,825 Finance lease right of use assets Property, plant and equipment, net of accumulated depreciation 6,413 Total leased assets $ 94,238 (1) The Company elected the modified retrospective transition method that applies ASC 842 as of January 1, 2019. Refer to Note 3, Significant Accounting Policies Update , for further information on the adoption of ASC 842. |
Schedule of Lease Liabilities [Table Text Block] | Lease liabilities consist of the following: Classification March 29, December 31, In thousands Liabilities Current Operating lease liability, current portion Operating lease liabilities, current portion $ 24,345 $ — Finance lease liability, current portion Other current liabilities 2,103 1,989 Noncurrent Operating lease liability, noncurrent portion Operating lease liabilities, noncurrent portion 64,643 — Finance lease liability, noncurrent portion Other long-term liabilities 6,624 6,579 Total lease liabilities $ 97,715 $ 8,568 |
Lessee, Lease Liabilities, Maturity [Table Text Block] | Future rental payments consist of the following: March 29, In thousands Operating leases 2019 (1) $ 21,123 2020 24,633 2021 19,715 2022 13,457 2023 8,860 Thereafter 10,493 Total future operating lease payments $ 98,281 Interest (9,293 ) Present value of future operating lease payments $ 88,988 Finance leases 2019 (1) $ 1,750 2020 2,250 2021 2,070 2022 1,685 2023 1,165 Thereafter 222 Total future finance lease payments $ 9,142 Interest (415 ) Present value of future finance lease payments $ 8,727 Present value of total future lease payments $ 97,715 (1) Payments for 2019 include payments for the remaining nine months of the year ended December 31, 2019. |
Lease, Cost [Table Text Block] | The following table illustrates the components of lease expense for the Company's leases. March 29, In thousands Finance lease cost Amortization of right-of-use assets $ 230 Interest on lease liabilities 49 Operating lease cost 7,219 Short-term lease cost 25 Variable lease cost 19 Total lease expense $ 7,542 |
Cash Flows from Leasing Activities [Table Text Block] | The following table segregates cash paid for the Company's leases. March 29, In thousands Operating cash flows from operating leases $ (5,027 ) Operating cash flows from finance leases (49 ) Financing cash flows from finance leases (372 ) Total cash flows from leasing activities $ (5,448 ) |
Additional Lease Information [Table Text Block] | Other information related to leases is as follows: March 29, Weighted-average remaining lease term Operating leases 4.49 Finance leases 3.68 Weighted-average discount rate Operating leases 4.33 % Finance leases 3.96 % |
Computation of Earnings Per S_2
Computation of Earnings Per Share (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Earnings Per Share Reconciliation [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For the Three Months Ended March 29, March 30, In thousands, except per share amounts Net earnings $ 14,125 $ 14,066 Basic: Weighted average number of shares outstanding 27,908 27,851 Basic earnings per share $ 0.51 $ 0.51 Diluted: Weighted average number of shares outstanding 27,908 27,851 Weighted average shares issuable on exercise of dilutive stock options 162 220 Weighted average shares issuable on redemption of warrants related to the 2017 Notes — 97 Total 28,070 28,168 Diluted earnings per share $ 0.50 $ 0.50 |
Share-based Arrangements (Table
Share-based Arrangements (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Share-based Compensation [Abstract] | |
Stock Option Activity | Stock option activity was as follows: For the Three Months Ended March 29, 2019 Options Weighted - average exercise price Options outstanding at beginning of period 935,252 $ 45.91 Granted 194,470 $ 61.02 Exercised (29,722 ) $ 27.70 Forfeited or expired (2,913 ) $ 61.68 Options outstanding at March 29, 2019 1,097,087 $ 49.04 |
Fair Value Assumptions | The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The following table indicates the weighted-average assumptions used in estimating fair value: For the Three Months Ended March 29, March 30, Expected option term (years) 4.9 4.9 Expected volatility 19.4 % 18.1 % Risk-free interest rate 2.5 % 2.6 % Expected dividend yield 1.3 % 1.5 % Per share fair value of options granted $11.18 $10.65 |
Restricted Stock Award and Restricted Stock Unit Activity | Restricted stock award and restricted stock unit activity was as follows: For the Three Months Ended March 29, 2019 Restricted Stock Weighted- average grant date fair value Restricted Stock outstanding at beginning of period 143,697 $ 49.97 Granted 44,775 $ 61.02 Vested (45,737 ) $ 47.40 Forfeited or expired (734 ) $ 57.46 Restricted Stock outstanding at March 29, 2019 142,001 $ 54.25 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Segment Reporting [Abstract] | |
Summarized Financial Information by Business Segment | Summarized financial information by business segment is as follows: For the Three Months Ended In thousands March 29, March 30, Net sales: Distribution $ 290,954 $ 283,932 Aerospace 166,434 179,395 Net sales $ 457,388 $ 463,327 Operating income: Distribution $ 12,697 $ 11,834 Aerospace 26,612 22,662 Net gain on sale of assets 61 63 Corporate expense (16,006 ) (13,835 ) Operating income 23,364 20,724 Interest expense, net 5,313 5,352 Non-service pension and post retirement benefit cost (income) (99 ) (3,029 ) Other income, net (91 ) (342 ) Earnings before income taxes 18,241 18,743 Income tax expense 4,116 4,677 Net earnings $ 14,125 $ 14,066 |
Disaggregation of Revenue | The following table disaggregates total revenue by major product line. For the Three Months Ended March 29, 2019 March 30, 2018 In thousands Distribution Bearings and Power Transmission $ 145,967 $ 143,385 Automation, Control and Energy 89,292 85,161 Fluid Power 55,695 55,386 Total Distribution Sales $ 290,954 $ 283,932 Aerospace Military and Defense, excluding fuzes $ 35,642 $ 47,756 Missile and Bomb Fuzes 57,594 52,985 Commercial Aerospace and Other 73,198 78,654 Total Aerospace Sales $ 166,434 $ 179,395 Total Sales (1) $ 457,388 $ 463,327 (1) Service revenue was not material for the three-month fiscal periods ended March 29, 2019 and March 30, 2018. The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized for performance obligations satisfied at a point in time for the Aerospace segment: For the Three Months Ended In thousands March 29, March 30, Revenue recognized for performance obligations satisfied: Over time 43 % 47 % Point-in-time 57 % 53 % Total revenue (1) 100 % 100 % (1) The disaggregation of revenue recognized for performance satisfied over time versus point-in-time has not been included for the Distribution segment, as the majority of its revenue is recognized on a point-in-time basis with only approximately 3.5% and 2.0% of revenue recognized for performance obligations over time for the three-month fiscal periods ended March 29, 2019 and March 30, 2018 , respectively. |
Shareholders' Equity and Accu_2
Shareholders' Equity and Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | Changes in shareholders’ equity for the three-month fiscal periods ended March 29, 2019 , and March 30, 2018 , were as follows: For the Three Months Ended March 29, 2019 March 30, 2018 In thousands Beginning balance $ 633,157 $ 635,656 Comprehensive income 14,144 22,297 Dividends declared (per share of common stock, $0.20 and $0.20, respectively) (5,582 ) (5,580 ) Employee stock plans and related tax benefit 1,519 2,687 Purchase of treasury shares (2,951 ) (4,600 ) Share-based compensation expense 1,880 1,455 Changes due to convertible notes transactions — (2 ) Impact of change in revenue accounting standard (1) — (9,584 ) Ending balance $ 642,167 $ 642,329 (1) For further information on the impact of the change in the revenue accounting standard for the three-month fiscal period ended March 30, 2018 , refer to Note 2, Accounting Changes , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) are shown below: For the Three Months Ended March 29, 2019 March 30, 2018 In thousands Foreign currency translation: Beginning balance $ (14,583 ) $ (7,056 ) Net (loss) gain on foreign currency translation (2,918 ) 6,013 Other comprehensive (loss) income, net of tax (2,918 ) 6,013 Ending balance $ (17,501 ) $ (1,043 ) Pension and other post-retirement benefits (1) : Beginning balance $ (120,319 ) $ (108,760 ) Amortization of net loss, net of tax expense of $940 and $709, respectively 2,936 2,217 Other comprehensive income, net of tax 2,936 2,217 Reclassification of stranded tax effects resulting from Tax Reform to retained earnings (3) (23,094 ) — Ending balance $ (140,477 ) $ (106,543 ) Derivative instruments (2) : Beginning balance $ 4 $ 2 Reclassification to net income, net of tax expense of $0 and $1, respectively 1 1 Other comprehensive income, net of tax 1 1 Ending balance $ 5 $ 3 Total accumulated other comprehensive loss $ (157,973 ) $ (107,583 ) (1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, Pension Plans for additional information.) (2) See Note 8, Derivative Financial Instruments , for additional information regarding the Company's derivative instruments. (3) See Note 2, Recent Accounting Standards , for additional information regarding the reclassification of stranded tax effects resulting from Tax Reform to retained earnings. |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rates | For the Three Months Ended March 29, March 30, Effective Income Tax Rate 22.6 % 25.0 % |
Recent Accounting Standards (De
Recent Accounting Standards (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Dec. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Retained earnings | $ 641,741 | $ 610,103 |
Accounting Standards Update 2016-02 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of adoption | 90,000 | |
Retained Earnings [Member] | Accounting Standards Update 2018-02 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of adoption | $ 23,100 |
Significant Accounting Polici_3
Significant Accounting Policies Update (Details) $ in Millions | Mar. 29, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |
Total capacity under master lease agreement | $ 20 |
Real Estate [Member] | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 3 years |
Real Estate [Member] | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 10 years |
Machinery and Equipment [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Finance Lease, Term of Contract | 5 years |
Machinery and Equipment [Member] | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 3 years |
Machinery and Equipment [Member] | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 5 years |
Restructuring Costs (Details)
Restructuring Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 19 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | Mar. 29, 2019 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring costs | $ 266 | $ 1,693 | |
Aerospace | |||
Restructuring Reserve [Roll Forward] | |||
Severance costs | 900 | ||
2017 Announced Restructuring Plan [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring costs | 9,500 | $ 9,500 | |
Total cost savings | 4,000 | ||
Restructuring Reserve [Roll Forward] | |||
Restructuring accrual balance, beginning of period | 1,580 | ||
Provision | 177 | ||
Cash payments | (888) | ||
Changes in foreign currency exchange rates | (12) | ||
Restructuring accrual balance, end of period | 857 | 857 | |
Restructuring costs | 8,900 | ||
2017 Announced Restructuring Plan [Member] | Aerospace | |||
Restructuring Reserve [Roll Forward] | |||
Provision | 300 | $ 800 | |
2017 Announced Restructuring Plan [Member] | Severance | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring accrual balance, beginning of period | 1,022 | ||
Provision | 28 | ||
Cash payments | (606) | ||
Changes in foreign currency exchange rates | (8) | ||
Restructuring accrual balance, end of period | 436 | 436 | |
2017 Announced Restructuring Plan [Member] | Other | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring accrual balance, beginning of period | 558 | ||
Provision | 149 | ||
Cash payments | (282) | ||
Changes in foreign currency exchange rates | (4) | ||
Restructuring accrual balance, end of period | 421 | $ 421 | |
Write-off of inventory | $ 100 |
Accounts Receivable, Net - Sch
Accounts Receivable, Net - Schedule of Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Less allowance for doubtful accounts | $ (3,433) | $ (4,114) |
Accounts receivable, net | 260,461 | 301,094 |
Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 181,210 | 164,752 |
U.S. Government contracts | Billed | Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 13,587 | 38,173 |
U.S. Government contracts | Not billed | Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 653 | 780 |
Commercial and other government contracts | Billed | Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 67,518 | 100,603 |
Commercial and other government contracts | Not billed | Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 926 | $ 900 |
Accounts Receivable, Net - Acco
Accounts Receivable, Net - Accounts Receivable due to contract changes, negotiated settlements and claims for unanticipated cost (Details) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Accounts Receivable, Net [Abstract] | ||
Contract changes, negotiated settlements and claims for unanticipated contract costs | $ 900 | $ 900 |
Contract Assets, Contract Cos_3
Contract Assets, Contract Costs and Contract Liabilities (Details) - USD ($) | 3 Months Ended | ||
Mar. 29, 2019 | Mar. 30, 2018 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Contract assets | $ 121,621,000 | $ 108,861,000 | |
Contract assets, change | $ 12,760,000 | ||
Contract assets, change (as percent) | 11.70% | ||
Contract costs, current portion | $ 6,158,000 | 5,993,000 | |
Capitalized costs, current portion, change | $ 165,000 | ||
Capitalized costs, current portion, change (as percent) | 2.80% | ||
Contract costs, noncurrent portion | $ 9,503,000 | 10,666,000 | |
Capitalized costs, noncurrent portion, change | $ (1,163,000) | ||
Capitalized costs, noncurrent portion, change (as percent) | (10.90%) | ||
Contract liabilities, current portion | $ 34,283,000 | 28,865,000 | |
Contract liabilities, current portion, change | $ 5,418,000 | ||
Contract liabilities, current portion, change (as percent) | 18.80% | ||
Contract liabilities, noncurrent portion | $ 72,081,000 | 78,562,000 | |
Contract liabilities, noncurrent portion, change | $ (6,481,000) | ||
Contract liabilities, noncurrent portion, change (as percent) | (8.20%) | ||
Impairment loss | $ 0 | $ 0 | |
Capitalized contract cost, amortization | 1,000,000 | 700,000 | |
Revenue recognized related to contract liabilities | 8,000,000 | $ 5,000,000 | |
Contract changes, negotiated settlements and claims for unanticipated contract costs | |||
Disaggregation of Revenue [Line Items] | |||
Contract assets | 3,631,000 | 2,909,000 | |
Costs to Fulfill [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized Contract Cost, Net | 8,500,000 | 8,900,000 | |
Costs to Obtain [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized Contract Cost, Net | $ 7,200,000 | $ 7,800,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Instruments not carried at Fair Value (Details) - Level 2 - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | $ 289,418 | $ 299,124 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | $ 325,210 | $ 325,251 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Merchandise for resale | $ 163,330 | $ 162,985 |
Raw materials | 15,438 | 15,939 |
Contracts and other work in process (including certain general stock materials) | 112,477 | 97,025 |
Finished goods | 22,649 | 18,963 |
Total | $ 313,894 | $ 294,912 |
Inventories - Inventory Due to
Inventories - Inventory Due to Contract Changes, Negotiated Settlements and Claims for Unanticipated Contract Costs (Details) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Contract changes, negotiated settlements and claims for unanticipated contract costs | $ 514 | $ 508 |
Inventories - Other Inventory I
Inventories - Other Inventory Information (Details) - USD ($) $ in Thousands | Mar. 29, 2019 | Dec. 31, 2018 |
Schedule of Inventory [Line Items] | ||
Inventories | $ 313,894 | $ 294,912 |
K-MAX® | ||
Schedule of Inventory [Line Items] | ||
Inventory, gross | 40,400 | 34,700 |
Inventory noncurrent | 21,000 | |
SH 2GA Super Seasprite Program | ||
Schedule of Inventory [Line Items] | ||
Inventory, gross | 5,400 | $ 5,400 |
Inventory noncurrent | $ 5,200 |
Unfulfilled Performance Oblig_2
Unfulfilled Performance Obligations (Details) - USD ($) $ in Millions | Mar. 29, 2019 | Dec. 31, 2018 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, Remaining Performance Obligation, Amount | $ 949.3 | $ 986.1 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-29 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, Remaining Performance Obligation, Amount | $ 699.7 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, Net - Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 29, 2019 | Mar. 29, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | |||
Gross balance at beginning of period | $ 361,617 | ||
Accumulated impairment | (16,252) | ||
Net balance at beginning of period | $ 345,365 | ||
Additions | 0 | ||
Impairments | 0 | ||
Foreign currency translation | (1,377) | ||
Net balance at end of period | 345,365 | $ 343,988 | 345,365 |
Distribution | |||
Goodwill [Roll Forward] | |||
Gross balance at beginning of period | 149,204 | ||
Accumulated impairment | 0 | ||
Net balance at beginning of period | 149,204 | ||
Additions | 0 | ||
Impairments | 0 | ||
Foreign currency translation | 0 | ||
Net balance at end of period | 149,204 | 149,204 | 149,204 |
Aerospace | |||
Goodwill [Roll Forward] | |||
Gross balance at beginning of period | 212,413 | ||
Accumulated impairment | (16,252) | ||
Net balance at beginning of period | 196,161 | ||
Additions | 0 | ||
Impairments | 0 | ||
Foreign currency translation | (1,377) | ||
Net balance at end of period | $ 196,161 | $ 194,784 | $ 196,161 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, Net - Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 168,538 | $ 169,267 |
Accumulated Amortization | (80,801) | (78,260) |
Customer lists / relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 132,177 | 132,661 |
Accumulated Amortization | (64,166) | (61,968) |
Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 19,548 | 19,729 |
Accumulated Amortization | (4,271) | (3,998) |
Trademarks / trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 8,640 | 8,747 |
Accumulated Amortization | (4,411) | (4,322) |
Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 7,650 | 7,607 |
Accumulated Amortization | $ (7,506) | (7,527) |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 17 years | |
Gross Amount | $ 523 | 523 |
Accumulated Amortization | $ (447) | $ (445) |
Minimum | Customer lists / relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 6 years | |
Minimum | Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 10 years | |
Minimum | Trademarks / trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 3 years | |
Minimum | Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 1 year | |
Maximum | Customer lists / relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 26 years | |
Maximum | Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 20 years | |
Maximum | Trademarks / trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 15 years | |
Maximum | Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 9 years |
Pension Plans - Pension plan ne
Pension Plans - Pension plan net periodic benefit costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Qualified Pension Plan | ||
Defined Benefit Plan Disclosure | ||
Service cost | $ 1,275 | $ 1,224 |
Interest cost on projected benefit obligation | 6,606 | 5,951 |
Expected return on plan assets | (10,640) | (11,960) |
Amortization of net loss | 3,815 | 2,843 |
Net pension cost (income) | 1,056 | (1,942) |
SERP | ||
Defined Benefit Plan Disclosure | ||
Service cost | 0 | 0 |
Interest cost on projected benefit obligation | 59 | 54 |
Expected return on plan assets | 0 | 0 |
Amortization of net loss | 61 | 83 |
Net pension cost (income) | $ 120 | $ 137 |
Pension Plans - Contributions (
Pension Plans - Contributions (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 29, 2019 | Dec. 31, 2018 | |
Qualified Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Contributions paid-to-date | $ 30 | |
SERP | ||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Contributions paid-to-date | $ 0.1 | $ 0.9 |
Expected future contributions | $ 0.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 29, 2019 | Jan. 15, 2018 | Oct. 28, 2016 | |
Loss Contingencies [Line Items] | |||
Unasserted claim | $ 12.4 | ||
Offset Agreement | |||
Loss Contingencies [Line Items] | |||
Notional amount | 194 | ||
Notional Value of Contract, Percent | 60.00% | ||
Contractual Obligation | $ 324 | ||
Estimate of possible loss | 16.5 | ||
Employee-Related Tax Matter [Member] | |||
Loss Contingencies [Line Items] | |||
Estimate of possible loss | 2.5 | ||
Accruals and payables and other long-term liabilties | Rimpar | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | $ 0.5 | ||
New Hartford | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | 2.3 | ||
Payments for environmental remediation | 1.6 | ||
New Hartford | Other accruals and payables | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | 0.1 | ||
New Hartford | Accruals and payables and other long-term liabilties | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | 0.7 | ||
Bloomfield | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | 2.1 | ||
Payments for environmental remediation | 13.9 | ||
Environmental liability | 10.3 | ||
Estimated remediation liability | $ 20.8 | ||
Discount rate (as a percent) | 8.00% | ||
Bloomfield | Other accruals and payables | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | $ 0.5 | ||
Rimpar | |||
Loss Contingencies [Line Items] | |||
Payments for environmental remediation | 0.2 | ||
Rimpar | Accruals and payables and other long-term liabilties | |||
Loss Contingencies [Line Items] | |||
Estimate of environmental remediation cost | 0.3 | ||
Pension Costs | |||
Loss Contingencies [Line Items] | |||
Accrual for claims | 0.3 | ||
Unasserted Claim | |||
Loss Contingencies [Line Items] | |||
Accrual for claims | $ 0.2 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | ||
Total capacity under master lease agreement | $ 20,000 | |
Finance Lease, Right-of-use Asset, Gross | 8,200 | |
Accumulated Amortization of Finance Leases | 1,800 | |
Capital Leased Assets, Gross | $ 11,400 | |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | 1,500 | |
Operating Lease, Right-of-Use Asset | 87,825 | 0 |
Finance Lease, Right-of-Use Asset | 6,413 | |
Right-of-use assets, Total | 94,238 | |
Operating Lease, Liability, Current | 24,345 | 0 |
Finance Lease, Liability, Current | 2,103 | 1,989 |
Operating Lease, Liability, Noncurrent | 64,643 | 0 |
Finance Lease, Liability, Noncurrent | 6,624 | 6,579 |
Lease liabilities, Total | 97,715 | 8,568 |
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year | 21,123 | |
Lessee, Operating Lease, Liability, Payments, Due Next Twelve Months | 27,500 | |
Lessee, Operating Lease, Liability, Payments, Due Year Two | 24,633 | 23,600 |
Lessee, Operating Lease, Liability, Payments, Due Year Three | 19,715 | 18,800 |
Lessee, Operating Lease, Liability, Payments, Due Year Four | 13,457 | 12,800 |
Lessee, Operating Lease, Liability, Payments, Due Year Five | 8,860 | 8,700 |
Lessee, Operating Lease, Liability, Payments, Due after Year Five | 10,493 | 10,400 |
Lessee, Operating Lease, Liability, Payments, Due | 98,281 | 101,800 |
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (9,293) | |
Operating Lease, Liability | 88,988 | |
Finance Lease, Liability, Payments, Due Remainder of Fiscal Year | 1,750 | |
Finance Lease, Liability, Payments, Due Next Twelve Months | 2,000 | |
Finance Lease, Liability, Payments, Due Year Two | 2,250 | 2,000 |
Finance Lease, Liability, Payments, Due Year Three | 2,070 | 1,800 |
Finance Lease, Liability, Payments, Due Year Four | 1,685 | 1,500 |
Finance Lease, Liability, Payments, Due Year Five | 1,165 | 1,000 |
Finance Lease, Liability, Payments, Due after Year Five | 222 | 200 |
Finance Lease, Liability, Payments, Due | 9,142 | $ 8,600 |
Finance Lease, Liability, Undiscounted Excess Amount | (415) | |
Finance Lease, Liability | 8,727 | |
Finance Lease, Right-of-Use Asset, Amortization | 230 | |
Finance Lease, Interest Expense | 49 | |
Operating Lease, Cost | 7,219 | |
Short-term Lease, Cost | 25 | |
Variable Lease, Cost | 19 | |
Lease, Cost | 7,542 | |
Operating Lease, Payments | (5,027) | |
Finance Lease, Interest Payment on Liability | (49) | |
Finance Lease, Principal Payments | (372) | |
Lease Payments, Total | 5,448 | |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 2,800 | |
Operating Lease, Weighted Average Remaining Lease Term | 4 years 5 months 25 days | |
Finance Lease, Weighted Average Remaining Lease Term | 3 years 8 months 6 days | |
Operating Lease, Weighted Average Discount Rate, Percent | 4.33% | |
Finance Lease, Weighted Average Discount Rate, Percent | 3.96% | |
Machinery and Equipment [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Finance Lease, Term of Contract | 5 years | |
Maximum | Real Estate [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Operating Lease, Term of Contract | 10 years | |
Maximum | Machinery and Equipment [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Operating Lease, Term of Contract | 5 years | |
Minimum | Real Estate [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Operating Lease, Term of Contract | 3 years | |
Minimum | Machinery and Equipment [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, Operating Lease, Term of Contract | 3 years | |
Finance Lease [Member] | Asset under Construction [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Property, Plant and Equipment, Gross | $ 3,300 |
Computation of Earnings Per S_3
Computation of Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Earnings Per Share Reconciliation [Abstract] | ||
Net earnings | $ 14,125 | $ 14,066 |
Basic: | ||
Weighted average number of shares outstanding (in shares) | 27,908 | 27,851 |
Basic earnings per share (in usd per share) | $ 0.51 | $ 0.51 |
Diluted: | ||
Weighted average shares issuable on exercise of dilutive stock options (in shares) | 162 | 220 |
Weighted average shares issuable on redemption of warrants related to the 2017 Notes (in shares) | 0 | 97 |
Diluted (in shares) | 28,070 | 28,168 |
Diluted earnings per share (in usd per share) | $ 0.50 | $ 0.50 |
Computation of Earnings Per S_4
Computation of Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Stock Compensation Plan | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive securities excluded from EPS | 385,232 | 199,510 |
Share-based Arrangements - Comp
Share-based Arrangements - Compensation Arrangements by Share-based Payment Award (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock compensation expense | $ 1,880 | $ 1,455 |
Awards Granted 2016 [Member] | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Assumed achievement level (as percent) | 100.00% | |
Number of shares issued (in shares) | 1,060 |
Share-based Arrangements - Stoc
Share-based Arrangements - Stock Options Activity (Details) - Stock Options - $ / shares | 3 Months Ended | ||
Mar. 29, 2019 | Mar. 30, 2018 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at beginning of the period (in shares) | 935,252 | ||
Granted (in shares) | 194,470 | ||
Exercised (in shares) | (29,722) | ||
Forfeited or expired (in shares) | (2,913) | ||
Outstanding at end of period (in shares) | 1,097,087 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Options outstanding at beginning of period, Weighted-average exercise price (in usd per share) | $ 49.04 | $ 45.91 | |
Granted, Weighted-average exercise price (in usd per share) | 61.02 | ||
Exercised, Weighted-average exercise price (in usd per share) | 27.70 | ||
Forfeited or expired, Weighted average exercise price (in usd per share) | 61.68 | ||
Options outstanding end of period, Weighted-average exercise price (in usd per share) | $ 49.04 | $ 45.91 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Expected option term | 4 years 11 months | 4 years 11 months | |
Expected volatility | 19.40% | 18.10% | |
Risk-free interest rate | 2.50% | 2.60% | |
Expected dividend yield | 1.30% | 1.50% | |
Per share fair value of options granted (in usd per share) | $ 11.18 | $ 10.65 |
Share-based Arrangements - Rest
Share-based Arrangements - Restricted Stock Activity (Details) - Restricted Stock Awards | 3 Months Ended |
Mar. 29, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Restricted Stock outstanding at beginning of the period (in shares) | shares | 143,697 |
Granted (in shares) | shares | 44,775 |
Vested (in shares) | shares | (45,737) |
Forfeited or expired (in shares) | shares | (734) |
Restricted Stock outstanding at end of period (in shares) | shares | 142,001 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Restricted Stock outstanding at beginning of period, Weighted-average grant date fair value (usd per share) | $ / shares | $ 49.97 |
Granted, Weighted Average Grant Date Fair Value (usd per share) | $ / shares | 61.02 |
Vested, Weighted Average Grant Date Fair Value (usd per share) | $ / shares | 47.40 |
Forfeited or expired, Weighted Average Grant Date Fair Value (usd per share) | $ / shares | 57.46 |
Restricted Stock outstanding at end of period Weighted-average grant date fair value (usd per share) | $ / shares | $ 54.25 |
Segment and Geographic Inform_3
Segment and Geographic Information - Summarized Financial Information by Business Segment (Details) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019USD ($)segment | Mar. 30, 2018USD ($) | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Number of operating segments | segment | 2 | |
Net sales | $ 457,388 | $ 463,327 |
Net gain on sale of assets | 61 | 63 |
Operating income | 23,364 | 20,724 |
Interest expense, net | 5,313 | 5,352 |
Non-service pension and post retirement benefit cost (income) | (99) | (3,029) |
Other income, net | (91) | (342) |
Earnings before income taxes | 18,241 | 18,743 |
Income tax expense | 4,116 | 4,677 |
Net earnings | 14,125 | 14,066 |
Distribution | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | 290,954 | 283,932 |
Aerospace | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | 166,434 | 179,395 |
Operating segments | Distribution | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | 290,954 | 283,932 |
Operating income | 12,697 | 11,834 |
Operating segments | Aerospace | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | 166,434 | 179,395 |
Operating income | 26,612 | 22,662 |
Reconciling item | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net gain on sale of assets | 61 | 63 |
Corporate | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Operating income | $ (16,006) | $ (13,835) |
Segment and Geographic Inform_4
Segment and Geographic Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 457,388 | $ 463,327 |
Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 290,954 | $ 283,932 |
Distribution | Over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, Net, Percentage | 3.50% | 2.00% |
Aerospace | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 166,434 | $ 179,395 |
Revenue, Net, Percentage | 100.00% | 100.00% |
Aerospace | Over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, Net, Percentage | 43.00% | 47.00% |
Aerospace | Transferred at Point in Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, Net, Percentage | 57.00% | 53.00% |
Bearings and Power Transmission [Member] | Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 145,967 | $ 143,385 |
Automation, Control and Energy [Member] | Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 89,292 | 85,161 |
Fluid Power [Member] | Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 55,695 | 55,386 |
Military and Defense, other than fuzes [Member] | Aerospace | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 35,642 | 47,756 |
Missile and Bomb Fuzes [Member] | Aerospace | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 57,594 | 52,985 |
Commercial Aerospace and Other [Member] | Aerospace | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 73,198 | 78,654 |
Performance obligations satisfied in previous periods [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ (800) | $ 1,600 |
Shareholders' Equity and Accu_3
Shareholders' Equity and Accumulated Other Comprehensive Income - Changes in Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | $ 633,157 | $ 635,656 |
Comprehensive income | 14,144 | 22,297 |
Dividends declared (per share of common stock, $0.20 and $0.20, respectively) | (5,582) | (5,580) |
Employee stock plans and related tax benefit | 1,519 | 2,687 |
Purchase of treasury shares | (2,951) | (4,600) |
Share-based compensation expense | 1,880 | 1,455 |
Changes due to convertible notes transactions | 0 | (2) |
Impact of change in revenue accounting standard(1) | 0 | (9,584) |
Ending balance | $ 642,167 | $ 642,329 |
Shareholders' Equity and Accu_4
Shareholders' Equity and Accumulated Other Comprehensive Income - Accumulated Other Comprehensive Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Foreign currency translation adjustments | $ (2,918) | $ 6,013 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 633,157 | 635,656 |
Other comprehensive income | 19 | 8,231 |
Ending balance | $ 642,167 | $ 642,329 |
Common Stock, Dividends, Per Share, Declared | $ 200 | $ 200 |
Total accumulated other comprehensive loss | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Ending balance | $ (157,973) | $ (107,583) |
Foreign currency translation | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (14,583) | (7,056) |
OCI, before Reclassifications | 6,013 | |
Other comprehensive income | (2,918) | 6,013 |
Ending balance | (17,501) | (1,043) |
Pension and other post-retirement benefits | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Reclassification from AOCI, Current Period, Net of Tax, Attributable to Parent | (2,936) | (2,217) |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (120,319) | (108,760) |
Other comprehensive income | 2,936 | 2,217 |
Ending balance | (140,477) | (106,543) |
Amortization of net loss, net of tax expense | 940 | 709 |
Derivative Instruments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Reclassification from AOCI, Current Period, Net of Tax, Attributable to Parent | (1) | (1) |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 4 | 2 |
Other comprehensive income | 1 | 1 |
Ending balance | 5 | 3 |
Reclassification to net income, tax expense | 0 | 1 |
Accounting Standards Update 2018-02 [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Cumulative Effect on Retained Earnings, Tax | $ 0 | |
Accounting Standards Update 2018-02 [Member] | Pension and other post-retirement benefits | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Cumulative Effect on Retained Earnings, Tax | $ (23,094) |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate (Details) | 3 Months Ended | |
Mar. 29, 2019 | Mar. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate | 22.60% | 25.00% |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | Mar. 29, 2019USD ($) |
Income Tax Disclosure [Abstract] | |
Deferred Tax Assets, Gross | $ 32.8 |
Deferred tax assets to be realized | 23 |
Deferred tax assets, valuation allowance | $ 9.8 |