Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 04, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | ALLIED MOTION TECHNOLOGIES INC | |
Entity Central Index Key | 46,129 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 9,396,469 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 10,362 | $ 21,278 |
Trade receivables, net of allowance for doubtful accounts of $783 and $611 at June 30, 2016 and December 31, 2015, respectively | 31,965 | 22,710 |
Inventories, net | 30,079 | 26,175 |
Prepaid expenses and other assets | 2,904 | 3,749 |
Total Current Assets | 75,310 | 73,912 |
Property, plant and equipment, net | 38,626 | 35,315 |
Deferred income taxes | 1,533 | 2,548 |
Intangible assets, net | 36,288 | 29,984 |
Goodwill | 28,095 | 17,757 |
Other long term assets | 3,902 | 2,631 |
Total Assets | 183,754 | 162,147 |
Current Liabilities: | ||
Debt obligations | 21,055 | 9,860 |
Accounts payable | 14,492 | 13,000 |
Accrued liabilities | 13,901 | 11,121 |
Total Current Liabilities | 49,448 | 33,981 |
Long-term debt | 52,555 | 57,518 |
Deferred income taxes | 2,875 | 630 |
Deferred compensation arrangements | 3,413 | 2,636 |
Pension and post-retirement obligations | 4,177 | 2,785 |
Total Liabilities | 112,468 | 97,550 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Common stock, no par value, authorized 50,000 shares; 9,396 and 9,276 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 29,078 | 27,824 |
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding | ||
Retained earnings | 51,244 | 46,650 |
Accumulated other comprehensive loss | (9,036) | (9,877) |
Total Stockholders' Equity | 71,286 | 64,597 |
Total Liabilities and Stockholders' Equity | $ 183,754 | $ 162,147 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, allowance for doubtful accounts (in dollars) | $ 783 | $ 611 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares | 50,000 | 50,000 |
Common stock, shares issued | 9,396 | 9,276 |
Common stock, shares outstanding | 9,396 | 9,276 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Revenues | $ 65,835 | $ 60,479 | $ 129,510 | $ 120,059 |
Cost of goods sold | 46,222 | 42,492 | 91,620 | 84,572 |
Gross margin | 19,613 | 17,987 | 37,890 | 35,487 |
Operating costs and expenses: | ||||
Selling | 2,635 | 2,063 | 5,059 | 4,271 |
General and administrative | 5,878 | 5,822 | 12,287 | 11,375 |
Engineering and development | 4,174 | 3,707 | 8,224 | 7,153 |
Business development | 135 | 218 | ||
Amortization of intangible assets | 828 | 660 | 1,607 | 1,322 |
Total operating costs and expenses | 13,650 | 12,252 | 27,395 | 24,121 |
Operating income | 5,963 | 5,735 | 10,495 | 11,366 |
Other expense (income): | ||||
Interest expense | 1,590 | 1,511 | 3,122 | 3,026 |
Other expense, net | (130) | (19) | (115) | (285) |
Total other expense, net | 1,460 | 1,492 | 3,007 | 2,741 |
Income before income taxes | 4,503 | 4,243 | 7,488 | 8,625 |
Provision for income taxes | (1,561) | (1,118) | (2,419) | (2,524) |
Net income | $ 2,942 | $ 3,125 | $ 5,069 | $ 6,101 |
Basic earnings per share: | ||||
Earnings per share (in dollars per share) | $ 0.31 | $ 0.34 | $ 0.54 | $ 0.66 |
Basic weighted average common shares (in shares) | 9,343 | 9,264 | 9,312 | 9,225 |
Diluted earnings per share: | ||||
Earnings per share (in dollars per share) | $ 0.31 | $ 0.34 | $ 0.54 | $ 0.66 |
Diluted weighted average common shares (in shares) | 9,343 | 9,264 | 9,312 | 9,225 |
Net income | $ 2,942 | $ 3,125 | $ 5,069 | $ 6,101 |
Foreign currency translation adjustment | (1,066) | 917 | 963 | (3,562) |
Change in accumulated (loss) income on derivatives | (17) | 41 | (122) | (59) |
Comprehensive income (loss) | $ 1,859 | $ 4,083 | $ 5,910 | $ 2,480 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows From Operating Activities: | ||
Net income | $ 5,069 | $ 6,101 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities (net of working capital acquired): | ||
Depreciation and amortization | 4,850 | 3,665 |
Deferred income taxes | 859 | 555 |
Stock compensation expense | 974 | 926 |
Other | (314) | 272 |
Changes in operating assets and liabilities: | ||
Trade receivables | (8,992) | (5,975) |
Inventories, net | 689 | (1,514) |
Prepaid expenses and other assets | 1,389 | (666) |
Accounts payable | (39) | 1,757 |
Accrued liabilities | (2,810) | (1,519) |
Net cash provided by operating activities | 1,675 | 3,602 |
Cash Flows From Investing Activities: | ||
Consideration paid for acquisition, net of cash acquired ($2,329) | (16,049) | |
Purchase of property and equipment | (2,382) | (2,708) |
Net cash used in investing activities | (18,431) | (2,708) |
Cash Flows From Financing Activities: | ||
Borrowings on lines-of-credit, net | 9,534 | 1,398 |
Principal payments of long-term debt | (3,750) | (3,000) |
Dividends paid to stockholders | (473) | (468) |
Stock transactions under employee benefit stock plans | 268 | 223 |
Net cash provided by (used in) by financing activities | 5,579 | (1,847) |
Effect of foreign exchange rate changes on cash | 261 | (824) |
Net decrease in cash and cash equivalents | (10,916) | (1,777) |
Cash and cash equivalents at beginning of period | 21,278 | 13,113 |
Cash and cash equivalents at end of period | $ 10,362 | $ 11,336 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Cash acquired from acquisition | $ 2,329 |
BASIS OF PREPARATION AND PRESEN
BASIS OF PREPARATION AND PRESENTATION | 6 Months Ended |
Jun. 30, 2016 | |
BASIS OF PREPARATION AND PRESENTATION | |
BASIS OF PREPARATION AND PRESENTATION | 1. BASIS OF PREPARATION AND PRESENTATION Allied Motion Technologies Inc. (Allied Motion or the Company) is engaged in the business of designing, manufacturing and selling motion control solutions, which include integrated system solutions as well as individual motion control products, to a broad spectrum of customers throughout the world primarily for the commercial motor, industrial motion, automotive control, medical, and aerospace and defense markets. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The assets and liabilities of the Company’s international subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of international subsidiaries that occur as a result of changes in exchange rates between international subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive income, a component of stockholders’ equity in the accompanying condensed consolidated balance sheets. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each Technology Unit (“TU”) are included in the results of operations as incurred. The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and include all adjustments which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures herein are adequate to make the information presented not misleading. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year. The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the Consolidated Financial Statements and related Notes to such statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 that was previously filed by the Company. Reclassifications Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2016 presentation. |
ACQUISITION
ACQUISITION | 6 Months Ended |
Jun. 30, 2016 | |
ACQUISITION | |
ACQUISITION | 2. ACQUISITION Acquisition of Heidrive In December 2015, the Company, through its wholly-owned subsidiary, Allied Motion Technologies B.V., entered into a Share Purchase Agreement (the “Purchase Agreement”) to purchase all of the outstanding equity interests of Heidrive GmbH, a German limited liability company (“Heidrive”) from palero fünf S.à r.l for $22,000 (approximately €20,000), which included certain management performance bonuses to be paid after closing. The adjusted purchase price as of January 12, 2016 is $18,378 (€16,924). At the end of the first quarter, the adjusted purchase price was $19,329 (€17,800). During the second quarter, the purchase price was reduced by $951 (€876) for a seller concession that was finalized. The purchase price was funded with cash of $7,519 ($8,470 less the Seller concession of $951, or €6,924) plus $10,859 (€10,000) of borrowings under the Company’s international revolving credit facility (Note 9). Heidrive is headquartered in Kelheim, Germany, and has manufacturing facilities located in the Germany and the Czech Republic. The Company incurred $467 of transaction costs in 2015 and $98 in 2016 related to the acquisition of Heidrive. Transaction costs are included in Business Development expenses on the consolidated statements of income and comprehensive income. The purchase price was allocated to the underlying net assets based on fair value as of the acquisition date, as follows (in thousands): January 12, 2016 Cash $ Other current assets Property, plant and equipment Amortizable intangible assets Goodwill Current liabilities ) Long-term liabilities ) Net purchase price $ The purchase price allocation has been revised to reflect an updated valuation of intangible assets and property, plant and equipment. The purchase price allocation may be subject to further adjustment to reflect, among other things, any adjustments to income taxes and the offsetting adjustments to goodwill . The intangible assets acquired consist of customer lists, tradename, and technology. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other Technology Units (“TUs”) that will occur as a result of the combined engineering knowledge, the ability of each of the TUs to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Heidrive’s management knowledge in providing complementary product offerings to the Company’s customers. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2016 | |
INVENTORIES | |
INVENTORIES | 3. INVENTORIES Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market, as follows (in thousands): June 30, 2016 December 31, 2015 Parts and raw materials $ $ Work-in-process Finished goods Less reserves ) ) Inventories, net $ $ |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is classified as follows (in thousands): June 30, 2016 December 31, 2015 Land $ $ Building and improvements Machinery, equipment, tools and dies Furniture, fixtures and other Less accumulated depreciation ) ) Property, plant and equipment, net $ $ Depreciation expense was approximately $1,752 and $1,198 for the quarters ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016 and 2015, depreciation expense was $3,243 and $2,343, respectively. |
GOODWILL
GOODWILL | 6 Months Ended |
Jun. 30, 2016 | |
GOODWILL | |
GOODWILL | 5. GOODWILL The change in the carrying amount of goodwill for the quarter ended June 30, 2016 and year ended December 31, 2015 is as follows (in thousands): June 30, December 31, 2016 2015 Beginning balance $ $ Goodwill acquired (Note 2) — Effect of foreign currency translation ) Ending balance $ $ |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2016 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS Intangible assets on the Company’s condensed consolidated balance sheets consist of the following (in thousands): June 30, 2016 December 31, 2015 Life Gross Amount Accumulated amortization Net Book Value Gross Amount Accumulated amortization Net Book Value Customer lists 8 - 15 years $ $ ) $ $ $ ) $ Trade name 10 - 17 years ) ) Design and technologies 8 - 15 years ) ) Patents ) ) Total $ $ ) $ $ $ ) $ Intangible assets acquired from the Heidrive acquisition were approximately $7,710 (Note 2). Amortization expense for intangible assets was $828 and $660 for the quarters ending June 30, 2016 and 2015, respectively; and $1,607 and $1,322 for the six months ended June 30, 2016 and 2015, respectively. Estimated future intangible asset amortization expense as of June 30, 2016 is as follows (in thousands): Estimated Amortization Expense Remainder of 2016 $ 2017 2018 2019 2020 Thereafter Total estimated amortization expense $ |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2016 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 7. STOCK-BASED COMPENSATION Stock Incentive Plans The Company’s Stock Incentive Plans provide for the granting of stock awards, including restricted stock, stock options and stock appreciation rights, to employees and non-employees, including directors of the Company. Restricted Stock For the six months ended June 30, 2016, 101,791 shares of unvested restricted stock were awarded at a weighted average market value of $20.02. Of the restricted shares granted, 58,813 shares have performance based vesting conditions. The value of the shares is amortized to compensation expense over the related service period, which is normally three years, or over the estimated performance period. Shares of unvested restricted stock are forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards. The following is a summary of restricted stock activity for the six months ended June 30, 2016: Number of shares Outstanding at beginning of period Awarded Vested ) Forfeited ) Outstanding at end of period Stock based compensation expense, net of forfeitures of $461 and $502 was recorded for the quarter ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016 and 2015, stock compensation expense, net of forfeitures, of $974 and $926 was recorded, respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2016 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 8. ACCRUED LIABILITIES Accrued liabilities consist of the following (in thousands): June 30, 2016 December 31, 2015 Compensation and fringe benefits $ $ Warranty reserve Other accrued expenses $ $ |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2016 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 9. DEBT OBLIGATIONS Debt obligations consisted of the following (in thousands): June 30, 2016 December 31, 2015 Current Borrowings Revolving Credit Facility $ $ — China Credit Facility (6.4% at June 30, 2016) Term Loan, current portion, (2.5% at June 30, 2016) ) Current borrowings $ $ Long-term Debt Term Loan, noncurrent (2.5% at June 30, 2016) ) $ $ Subordinated Notes (14.5%, 13% Cash, 1.5% PIK) Unamortized debt issuance costs ) ) Long-term debt $ $ (1) The effective rate of the Term Loan including the impact of the related hedges is 2.79%. Credit Agreement On January 8, 2016, the Company entered into a First Amendment and Consent (the “Amendment”) to the Credit Agreement with Bank of America, N.A., as administrative agent, and the lenders party thereto (as amended, the “Credit Agreement”). Pursuant to the Amendment, the administrative agent and lenders consented to the Company’s acquisition of Heidrive GmbH, and that such acquisition would not reduce the acquisition basket under the Credit Agreement. The Amendment also amends the Credit Agreement to increase the revolving credit facility from $15,000 to $30,000 and the international revolving sublimit from $10,000 to $25,000. The Credit Agreement provides for the $30,000 Revolving Credit Facility and a $50,000 Term Loan (collectively the “Senior Credit Facilities”) each with a five year term that matures in 2018. Borrowings under the Senior Credit Facilities are subject to terms defined in the Credit Agreement. Borrowings bear interest at either the Base Rate plus a margin of 0.25% to 2.00% (currently 1.50%) or the Eurocurrency Rate plus a margin of 1.25% to 3.00% (currently 2.00%), in each case depending on the Company’s ratio of total funded indebtedness to Consolidated EBITDA (the “Total Leverage Ratio”). Principal installments are payable on the Term Loan in varying percentages quarterly through September 30, 2018 with a balloon payment at maturity. The Senior Credit Facilities are secured by substantially all of the Company’s assets. The average outstanding borrowings for 2016 for the Senior Credit Facilities were $47,000. At June 30, 2016, there was approximately $20,200 available under the Senior Credit Facilities. These amounts reflect the face value of the borrowings without adjustment for unamortized debt issue costs. The Credit Agreement contains certain financial covenants related to maximum leverage and minimum fixed charge coverage. The Credit Agreement also includes other covenants and restrictions, including limits on the amount of certain types of capital expenditures. The Company was in compliance with all covenants at June 30, 2016. Senior Subordinated Notes Under the Company’s Note Agreement, the Company sold $30,000 of 14.50% Senior Subordinated Notes due October 18, 2019 (the “Notes”) to Prudential Capital Partners IV, L.P. and its affiliates in a private placement. The interest rate on the Notes is 14.50% with 13.00% payable in cash and 1.50% payable in-kind, quarterly in arrears and the outstanding principal amount of the Notes, together with any accrued and unpaid interest is due on October 18, 2019. The Company may prepay the Notes at any time after October 18, 2016, in whole or in part, at 100% of the principal amount. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries. On January 8, 2016, the Company entered into a Consent and Amendment No. 3 to the Note Agreement with Prudential Capital Partners IV, L.P. and its affiliates. Pursuant to the Note Amendment, the note holders consented to the Company’s acquisition of Heidrive GmbH and that such acquisition would not reduce the acquisition basket under the Note Agreement. Other The China Facility provides credit of approximately $1,810 (Chinese Renminbi (“RMB”) 12,000). The China Facility is used for working capital and capital equipment needs at the Company’s China operations, and will mature in November, 2017. The average balance for 2016 was $1,620 (RMB 10,600). At June 30, 2016, there was approximately $240 (RMB 1,570) available under the facility. Maturities of long-term debt are as follows: Total Remainder of 2016 $ 2017 2018 2019 Total $ |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 10. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During October 2013, the Company entered into two Interest Rate Swaps with a combined notional of $25,000 (representing 50% of the Term Loan balance at that time) that amortize quarterly to a notional of $6,673 at maturity. The notional amount changes over time as loan payments are made. As of June 30, 2016 the amount hedged was $16,688. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2016 and 2015, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. There was no hedge ineffectiveness recorded in the Company’s earnings during the quarters ended June 30, 2016 and 2015. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The Company estimates that an additional $95 will be reclassified as an increase to interest expense over the next year. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 (in thousands): Fair Value Derivative Instrument Balance Sheet Classification June 30, 2016 December 31, 2015 Interest Rate Swaps Other Liabilities $ $ The effect of the Company’s derivative financial instruments on the condensed consolidated statement of income and comprehensive income is as follows (in thousands): Net deferral in OCI of derivatives (effective portion) For the quarter ended June 30, For the six months ended June 30, Derivative Instruments 2016 2015 2016 2015 Interest Rate Swaps $ ) $ ) $ ) $ ) Net reclassification from AOCI into income (effective portion) For the quarter ended June 30, For the six months ended June 30, Statement of earnings classification 2016 2015 2016 2015 Interest expense $ ) $ ) $ ) $ ) |
FAIR VALUE
FAIR VALUE | 6 Months Ended |
Jun. 30, 2016 | |
FAIR VALUE | |
FAIR VALUE | 11 . FAIR VALUE Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments. The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, respectively, by level within the fair value hierarchy (in thousands): June 30, 2016 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — December 31, 2015 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and international tax holidays, settlements with taxing authorities and foreign currency fluctuations. The Company has net operating loss and tax credit carryforwards in certain international jurisdictions expiring through 2017. The Company evaluates the future realizability of the tax loss and credit carryforwards considering the anticipated future earnings and tax planning strategies in the international jurisdictions. The effective income tax rate as a percentage of income before income taxes was 34.7% and 26.3% for the second quarter 2016 and 2015, respectively and 32.3% and 29.3% for the six months ended June 30, 2016 and 2015, respectively. The effective tax rate for the second quarter 2016 contains a discrete tax provision of 0.1% ($7) and for the first six months of 2016 contains a discrete tax benefit of 2.0% ($153) related to the adoption of ASU 2016-09. The effective rate before discrete item for 2016 and 2015 varies from the statutory rate due to permanent differences, state taxes and the difference in US and international tax rates and the mix of international and domestic income. The Company adopted ASU No. ASU No. 2016-09 prospectively as of January 1, 2016 and ASU No. 2015-17 retrospectively in the second quarter 2016. These pronouncements impact the accounting and disclosure for income taxes (refer to Note 17). |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES Warranty The Company offers warranty coverage for its products. The length of the warranty period for its products varies significantly based on the product being sold. The Company estimates the costs of repairing products under warranty based on the historical average cost of the repairs. The assumptions used to estimate warranty accruals are reevaluated periodically in light of actual experience and, when appropriate, the accruals are adjusted. Estimated warranty costs are recorded at the time of sale of the related product, and are considered a cost of sale. Changes in the Company’s reserve for product warranty claims for the quarter ended June 30, 2016 and the year ended December 31, 2015 were as follows (in thousands): June 30, 2016 December 31, 2015 Warranty reserve at beginning of the year $ $ Warranty reserves acquired — Provision Warranty expenditures ) ) Effect of foreign currency translation ) Warranty reserve at end of the period $ $ Litigation The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company’s consolidated financial position or results of operations. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 6 Months Ended |
Jun. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | 14. ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated Other Comprehensive Income for the quarter ended June 30, 2016 and 2015 is comprised of the following (in thousands): Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At March 31, 2016 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation loss — — ) ) At June 30, 2016 $ ) $ ) $ ) $ ) Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At March 31, 2015 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation gain — — At June 30, 2015 $ ) $ ) $ ) $ ) Accumulated Other Comprehensive Income for the six months ended June 30, 2016 and 2015 is comprised of the following (in thousands): Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At December 31, 2015 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation gain — — At June 30, 2016 $ ) $ ) $ ) $ ) Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At December 31, 2014 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation loss — — ) ) At June 30, 2015 $ ) $ ) $ ) $ ) The realized (gain) loss relating to the Company’s interest rate swap hedges were reclassified from Accumulated Other Comprehensive Income and included in Interest Expense in the Condensed Consolidated Statements of Operations and Comprehensive Income. |
DIVIDENDS PER SHARE
DIVIDENDS PER SHARE | 6 Months Ended |
Jun. 30, 2016 | |
DIVIDENDS PER SHARE | |
DIVIDENDS PER SHARE | 15. DIVIDENDS PER SHARE The Company declared a quarterly dividend of $0.025 per share in each of the first and second quarters of 2016 and 2015. Total dividends declared in the first six months of 2016 and 2015 were $475 and $464, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2016 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 16. SEGMENT INFORMATION ASC Topic “Segment Reporting” requires disclosure of operating segments, which as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates in one segment for the manufacture and marketing of motion control products for original equipment manufacturers and end user applications. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying condensed consolidated financial statements and within this note. The Company’s wholly owned international subsidiaries, located in The Netherlands, Sweden, Germany, Portugal, China and Mexico are included in the accompanying condensed consolidated financial statements. Financial information related to the international subsidiaries is summarized below (in thousands): For the three months ended For the six months ended June 30, June 30, 2016 2015 2016 2015 Revenues derived from international subsidiaries $ $ $ $ Identifiable international assets were $79,715 and $56,444 as of June 30, 2016 and December 31, 2015, respectively. Revenues derived from international subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe. Sales to customers outside of the United States by all subsidiaries were $29,659 and $21,714 during the quarter ended June 30, 2016 and 2015, respectively; and $58,234 and $41,528 for the six months ended June 30, 2016 and 2015, respectively. For second quarter 2016 and 2015, one customer accounted for 19% and 23% of revenues, respectively; and for the year to date 2016 and 2015 for 19% and 23%, respectively. As of June 30, 2016 and December 31, 2015, this customer represented 16% of trade receivables. For second quarter 2015, another customer accounted for 10% of revenues; and as of June 30, 2016 and December 31, 2015, this customer represented 14% and 16% of trade receivables, respectively. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2016 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 17. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements Effective January 1, 2016, the Company adopted ASU 2016-09, “Compensation — Stock Compensation (Topic 718).” The FASB issued ASU 2016-09 in March 2016 as part of its simplification initiative and affects all entities that issue share-based payment awards to their employees. The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2016 using either prospective, retrospective or modified retrospective transition method, depending on the area covered in this update. As permitted within the amendment, the Company elected to early adopt and prospectively apply the provisions of this amendment as of January 1, 2016. As a result of the adoption, a tax benefit of $160 was recorded in the first quarter. Effective April 1, 2016, the Company adopted ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. The Update requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. We early adopted this ASU for the first quarter of 2016, and we applied it retrospectively to 2015 for comparability, which resulted in the reclassification of $3,318 and $2,551 of current deferred tax assets to noncurrent as of June 30, 2016 and December 31, 2015. Effective January 1, 2016 the Company adopted ASU No. 2015-16, “ Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments .” This standard requires that an entity recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The update requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 did not have a material impact on the Company’s condensed consolidated financial statements. Effective January 1, 2016, the Company adopted ASU 2015-03, “ Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ” on a retrospective basis. The updated accounting guidance requires debt issuance costs to be presented as a deduction from the corresponding debt liability instead of the historical presentation as an unamortized debt issuance asset. The impacts of adopting the new standard as of December 31, 2015, were a decrease in other assets and a decrease in long term debt of $1,388. Recently issued accounting pronouncements In February 2016, the FASB issued ASU 2016-02, which amends the FASB Accounting Standards Codification and creates Topic 842, “ Leases .” The new topic supersedes Topic 840, “ Leases ,” and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method. The Company is currently assessing the impact this guidance will have on its condensed consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “ Simplifying the Measurement of Inventory .” The standard applies to inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of the standard at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amendments in ASU 2015-11 more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The standard is effective for fiscal years beginning after December 15, 2016. ASU 2015-11 is not expected to have a material impact on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance will be effective for the Company beginning in the first quarter of fiscal year 2018 using one of two prescribed retrospective methods. Early adoption is not permitted. The Company has not yet selected a transition method, or determined the effect of the standard on its ongoing financial reporting. |
BASIS OF PREPARATION AND PRES24
BASIS OF PREPARATION AND PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
BASIS OF PREPARATION AND PRESENTATION | |
Reclassifications | Reclassifications Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2016 presentation. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
ACQUISITION | |
Schedule of purchase price allocation | The purchase price was allocated to the underlying net assets based on fair value as of the acquisition date, as follows (in thousands): January 12, 2016 Cash $ Other current assets Property, plant and equipment Amortizable intangible assets Goodwill Current liabilities ) Long-term liabilities ) Net purchase price $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
INVENTORIES | |
Schedule of inventories including costs of materials, direct labor and manufacturing overhead, and stated at the lower of cost (first-in, first-out basis) or market | Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or market, as follows (in thousands): June 30, 2016 December 31, 2015 Parts and raw materials $ $ Work-in-process Finished goods Less reserves ) ) Inventories, net $ $ |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of classification of property, plant and equipment | Property, plant and equipment is classified as follows (in thousands): June 30, 2016 December 31, 2015 Land $ $ Building and improvements Machinery, equipment, tools and dies Furniture, fixtures and other Less accumulated depreciation ) ) Property, plant and equipment, net $ $ |
GOODWILL (Tables)
GOODWILL (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
GOODWILL | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for the quarter ended June 30, 2016 and year ended December 31, 2015 is as follows (in thousands): June 30, December 31, 2016 2015 Beginning balance $ $ Goodwill acquired (Note 2) — Effect of foreign currency translation ) Ending balance $ $ |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Intangible assets on the Company’s condensed consolidated balance sheets consist of the following (in thousands): June 30, 2016 December 31, 2015 Life Gross Amount Accumulated amortization Net Book Value Gross Amount Accumulated amortization Net Book Value Customer lists 8 - 15 years $ $ ) $ $ $ ) $ Trade name 10 - 17 years ) ) Design and technologies 8 - 15 years ) ) Patents ) ) Total $ $ ) $ $ $ ) $ |
Schedule of estimated amortization expense for intangible assets | Estimated future intangible asset amortization expense as of June 30, 2016 is as follows (in thousands): Estimated Amortization Expense Remainder of 2016 $ 2017 2018 2019 2020 Thereafter Total estimated amortization expense $ |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
STOCK-BASED COMPENSATION | |
Summary of restricted stock activity | Number of shares Outstanding at beginning of period Awarded Vested ) Forfeited ) Outstanding at end of period |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): June 30, 2016 December 31, 2015 Compensation and fringe benefits $ $ Warranty reserve Other accrued expenses $ $ |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations | Debt obligations consisted of the following (in thousands): June 30, 2016 December 31, 2015 Current Borrowings Revolving Credit Facility $ $ — China Credit Facility (6.4% at June 30, 2016) Term Loan, current portion, (2.5% at June 30, 2016) ) Current borrowings $ $ Long-term Debt Term Loan, noncurrent (2.5% at June 30, 2016) ) $ $ Subordinated Notes (14.5%, 13% Cash, 1.5% PIK) Unamortized debt issuance costs ) ) Long-term debt $ $ (1) The effective rate of the Term Loan including the impact of the related hedges is 2.79%. |
Schedule of maturities of long-term debt | Total Remainder of 2016 $ 2017 2018 2019 Total $ |
DERIVATIVE FINANCIAL INSTRUME33
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets | The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 (in thousands): Fair Value Derivative Instrument Balance Sheet Classification June 30, 2016 December 31, 2015 Interest Rate Swaps Other Liabilities $ $ |
Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statement of income and comprehensive income | The effect of the Company’s derivative financial instruments on the condensed consolidated statement of income and comprehensive income is as follows (in thousands): Net deferral in OCI of derivatives (effective portion) For the quarter ended June 30, For the six months ended June 30, Derivative Instruments 2016 2015 2016 2015 Interest Rate Swaps $ ) $ ) $ ) $ ) Net reclassification from AOCI into income (effective portion) For the quarter ended June 30, For the six months ended June 30, Statement of earnings classification 2016 2015 2016 2015 Interest expense $ ) $ ) $ ) $ ) |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
FAIR VALUE | |
Schedule of financial assets accounted for at fair value on a recurring basis | The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, respectively, by level within the fair value hierarchy (in thousands): June 30, 2016 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — December 31, 2015 Level 1 Level 2 Level 3 Assets Pension Plan Assets $ $ — $ — Other long term assets — — Interest rate swaps — ) — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of changes in the reserve for product warranty claims | Changes in the Company’s reserve for product warranty claims for the quarter ended June 30, 2016 and the year ended December 31, 2015 were as follows (in thousands): June 30, 2016 December 31, 2015 Warranty reserve at beginning of the year $ $ Warranty reserves acquired — Provision Warranty expenditures ) ) Effect of foreign currency translation ) Warranty reserve at end of the period $ $ |
ACCUMULATED OTHER COMPREHENSI36
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
Schedule of accumulated other comprehensive income | Accumulated Other Comprehensive Income for the quarter ended June 30, 2016 and 2015 is comprised of the following (in thousands): Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At March 31, 2016 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation loss — — ) ) At June 30, 2016 $ ) $ ) $ ) $ ) Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At March 31, 2015 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation gain — — At June 30, 2015 $ ) $ ) $ ) $ ) Accumulated Other Comprehensive Income for the six months ended June 30, 2016 and 2015 is comprised of the following (in thousands): Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At December 31, 2015 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation gain — — At June 30, 2016 $ ) $ ) $ ) $ ) Defined Benefit Plan Liability Cash Flow Hedges Foreign Currency Translation Adjustment Total At December 31, 2014 $ ) $ ) $ ) $ ) Unrealized loss on cash flow hedges — ) — ) Amounts reclassified from AOCI — — Foreign currency translation loss — — ) ) At June 30, 2015 $ ) $ ) $ ) $ ) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
SEGMENT INFORMATION | |
Schedule of financial information related to the foreign subsidiaries | Financial information related to the international subsidiaries is summarized below (in thousands): For the three months ended For the six months ended June 30, June 30, 2016 2015 2016 2015 Revenues derived from international subsidiaries $ $ $ $ |
ACQUISITION (Details)
ACQUISITION (Details) € in Thousands, $ in Thousands | Jan. 12, 2016USD ($) | Jan. 12, 2016EUR (€) | Jun. 30, 2016USD ($) | Jun. 30, 2016EUR (€) | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2016EUR (€) | Jan. 12, 2016EUR (€) | Dec. 31, 2014USD ($) |
ACQUISITIONS | ||||||||||
Goodwill | $ 28,095 | $ 28,095 | $ 17,757 | $ 18,303 | ||||||
Heidrive | ||||||||||
ACQUISITIONS | ||||||||||
Acquisition cost | $ 22,000 | € 20,000 | ||||||||
Cash paid for acquisition, gross | 8,470 | |||||||||
Seller concession | $ (951) | € (876) | ||||||||
Cash paid for acquisition, net | 7,519 | € 6,924 | ||||||||
Borrowings used to fund acquisition | 10,859 | € 10,000 | ||||||||
Transaction costs related to acquisition | $ 98 | $ 467 | ||||||||
Cash | 2,329 | |||||||||
Other current assets | 5,652 | |||||||||
Property, plant and equipment | 4,002 | |||||||||
Amortizable intangible assets | 7,710 | |||||||||
Goodwill | 10,025 | |||||||||
Current liabilities | (7,696) | |||||||||
Long-term liabilities | (3,644) | |||||||||
Net purchase price | $ 18,378 | $ 19,329 | € 17,800 | € 16,924 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
INVENTORIES | ||
Parts and raw materials | $ 24,556 | $ 23,710 |
Work-in-process | 5,076 | 2,404 |
Finished goods | 5,296 | 3,730 |
Inventory, gross | 34,928 | 29,844 |
Less reserves | (4,849) | (3,669) |
Inventories, net | $ 30,079 | $ 26,175 |
PROPERTY, PLANT AND EQUIPMENT40
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 63,778 | $ 63,778 | $ 57,180 | ||
Less accumulated depreciation | (25,152) | (25,152) | (21,865) | ||
Property, plant and equipment, net | 38,626 | 38,626 | 35,315 | ||
Depreciation expense | 1,752 | $ 1,198 | 3,243 | $ 2,343 | |
Land | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 974 | 974 | 970 | ||
Building and improvements | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 9,875 | 9,875 | 9,771 | ||
Machinery, equipment, tools and dies | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | 42,943 | 42,943 | 37,782 | ||
Furniture, fixtures and other | |||||
Property, plant and equipment | |||||
Property, plant and equipment, gross | $ 9,986 | $ 9,986 | $ 8,657 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Change in goodwill | ||
Beginning balance | $ 17,757 | $ 18,303 |
Goodwill acquired (Note 2) | 10,025 | |
Effect of foreign currency translation | 313 | (546) |
Ending balance | $ 28,095 | $ 17,757 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jan. 12, 2016 | Dec. 31, 2015 | |
Intangible assets subject to amortization | ||||||
Gross Amount | $ 49,095 | $ 49,095 | $ 41,137 | |||
Accumulated amortization | (12,807) | (12,807) | (11,153) | |||
Total estimated amortization expense | 36,288 | 36,288 | 29,984 | |||
Amortization expense for intangible assets | 828 | $ 660 | 1,607 | $ 1,322 | ||
Estimated amortization expense | ||||||
Remainder of 2016 | 1,602 | 1,602 | ||||
2,017 | 3,204 | 3,204 | ||||
2,018 | 3,204 | 3,204 | ||||
2,019 | 3,204 | 3,204 | ||||
2,020 | 3,204 | 3,204 | ||||
Thereafter | 21,870 | 21,870 | ||||
Total estimated amortization expense | 36,288 | 36,288 | 29,984 | |||
Heidrive | ||||||
Intangible assets subject to amortization | ||||||
Intangible assets acquired from the acquisition | $ 7,710 | |||||
Customer lists | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 38,183 | 38,183 | 34,149 | |||
Accumulated amortization | (8,996) | (8,996) | (7,785) | |||
Total estimated amortization expense | 29,187 | 29,187 | 26,364 | |||
Estimated amortization expense | ||||||
Total estimated amortization expense | 29,187 | $ 29,187 | 26,364 | |||
Customer lists | Minimum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 8 years | |||||
Customer lists | Maximum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 15 years | |||||
Trade name | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 6,108 | $ 6,108 | 4,775 | |||
Accumulated amortization | (2,040) | (2,040) | (1,793) | |||
Total estimated amortization expense | 4,068 | 4,068 | 2,982 | |||
Estimated amortization expense | ||||||
Total estimated amortization expense | 4,068 | $ 4,068 | 2,982 | |||
Trade name | Minimum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 10 years | |||||
Trade name | Maximum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 17 years | |||||
Design and technologies | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 4,780 | $ 4,780 | 2,189 | |||
Accumulated amortization | (1,765) | (1,765) | (1,570) | |||
Total estimated amortization expense | 3,015 | 3,015 | 619 | |||
Estimated amortization expense | ||||||
Total estimated amortization expense | 3,015 | $ 3,015 | 619 | |||
Design and technologies | Minimum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 8 years | |||||
Design and technologies | Maximum | ||||||
Intangible assets subject to amortization | ||||||
Estimated Life | 15 years | |||||
Patents | ||||||
Intangible assets subject to amortization | ||||||
Gross Amount | 24 | $ 24 | 24 | |||
Accumulated amortization | (6) | (6) | (5) | |||
Total estimated amortization expense | 18 | 18 | 19 | |||
Estimated amortization expense | ||||||
Total estimated amortization expense | $ 18 | $ 18 | $ 19 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Additional disclosures | ||||
Compensation expense, net of forfeitures | $ 974 | $ 926 | ||
Restricted Stock | ||||
Stock-Based Compensation | ||||
Weighted average value (in dollars per share) | $ 20.02 | |||
Service period over which value of the shares is amortized to compensation expense | 3 years | |||
Number of Nonvested Restricted Shares | ||||
Outstanding at beginning of period (in shares) | 367,199 | |||
Awarded (in shares) | 101,791 | |||
Vested (in shares) | (105,950) | |||
Forfeited (in shares) | (6,445) | |||
Outstanding at end of period (in shares) | 356,595 | 356,595 | ||
Additional disclosures | ||||
Compensation expense, net of forfeitures | $ 461 | $ 502 | $ 974 | $ 926 |
Restricted Stock | Performance based vesting | ||||
Number of Nonvested Restricted Shares | ||||
Awarded (in shares) | 58,813 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
ACCRUED LIABILITIES | |||
Compensation and fringe benefits | $ 6,698 | $ 7,791 | |
Warranty reserve | 1,070 | 780 | $ 786 |
Other accrued expenses | 6,133 | 2,550 | |
Accrued liabilities | $ 13,901 | $ 11,121 |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) ¥ in Thousands, $ in Thousands | 6 Months Ended | |||||
Jun. 30, 2016CNY (¥) | Jun. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016 | Jan. 08, 2016USD ($) | Dec. 31, 2015USD ($) | |
Debt Obligations | ||||||
Current borrowings | $ 21,055 | $ 9,860 | ||||
Unamortized debt issuance costs | (1,164) | (1,388) | ||||
Long-term debt | 52,555 | 57,518 | ||||
Maturities of long-term debt | ||||||
Remainder of 2016 | 21,054 | |||||
2,017 | 10,374 | |||||
2,018 | 13,346 | |||||
2,019 | 30,000 | |||||
Total | 74,774 | |||||
Senior Credit Facilities | ||||||
Debt Obligations | ||||||
Average outstanding borrowings | $ 47,000 | |||||
Available borrowing capacity | 20,200 | |||||
Senior Credit Facilities | Base Rate | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 1.50% | 1.50% | ||||
Senior Credit Facilities | Base Rate | Minimum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 0.25% | 0.25% | ||||
Senior Credit Facilities | Base Rate | Maximum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 2.00% | 2.00% | ||||
Senior Credit Facilities | Eurocurrency Rate | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 2.00% | 2.00% | ||||
Senior Credit Facilities | Eurocurrency Rate | Minimum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 1.25% | 1.25% | ||||
Senior Credit Facilities | Eurocurrency Rate | Maximum | ||||||
Debt Obligations | ||||||
Applicable margin (as a percent) | 3.00% | 3.00% | ||||
Revolving Credit Facility | ||||||
Debt Obligations | ||||||
Current borrowings | 9,829 | |||||
Maximum borrowing capacity | 30,000 | $ 30,000 | ||||
Debt instrument term | 5 years | 5 years | ||||
Revolving Credit Facility | International | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity sublimit | 25,000 | |||||
Revolving Credit Facility | Amount before increase | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity | 15,000 | |||||
Revolving Credit Facility | Amount before increase | International | ||||||
Debt Obligations | ||||||
Maximum borrowing capacity sublimit | $ 10,000 | |||||
Term Loan | ||||||
Debt Obligations | ||||||
Current borrowings | $ 9,656 | 8,219 | ||||
Interest rate at period end (as a percent) | 2.50% | 2.50% | ||||
Long-term debt | $ 23,719 | 28,906 | ||||
Effective rate (as a percent) | 2.79% | 2.79% | ||||
Maximum borrowing capacity | $ 50,000 | |||||
Debt instrument term | 5 years | 5 years | ||||
China Credit Facility | ||||||
Debt Obligations | ||||||
Current borrowings | $ 1,570 | 1,641 | ||||
Interest rate at period end (as a percent) | 6.40% | 6.40% | ||||
Maximum borrowing capacity | ¥ 12,000 | $ 1,810 | ||||
Average outstanding borrowings | 10,600 | $ 1,620 | ||||
Available borrowing capacity | ¥ 1,570 | 240 | ||||
Subordinated Notes | ||||||
Debt Obligations | ||||||
Long-term debt | 30,000 | $ 30,000 | ||||
Interest rate (as a percent) | 14.50% | 14.50% | ||||
Interest rate payable in cash (as a percent) | 13.00% | 13.00% | ||||
Interest rate payable in-kind (as a percent) | 1.50% | 1.50% | ||||
Principal amount of debt borrowed | $ 30,000 | |||||
Percentage of principal amount of notes that may prepay | 100.00% | 100.00% |
DERIVATIVE FINANCIAL INSTRUME46
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - Interest Rate Swaps $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Oct. 31, 2013USD ($)derivative | |
Derivative financial instruments | ||||||
Number of derivative instruments | derivative | 2 | |||||
Notional amount of interest rate swap derivatives | $ 25,000 | |||||
Ratio of notional amount to term loan (as a percent) | 50.00% | |||||
Notional amount of interest rate swap derivatives at maturity | $ 6,673 | |||||
Amount hedged | $ 16,688 | $ 16,688 | ||||
Hedge ineffectiveness recorded in earnings | 0 | $ 0 | ||||
Estimated amount to be reclassified as an increase to interest expense | (95) | |||||
Effect of derivative financial instruments on the consolidated statement of income and comprehensive income | ||||||
Net deferral in OCI of derivatives (effective portion) | (48) | (9) | (184) | $ (160) | ||
Interest expense | ||||||
Effect of derivative financial instruments on the consolidated statement of income and comprehensive income | ||||||
Net reclassification from AOCI into income (effective portion) | (30) | $ (50) | (62) | $ (101) | ||
Other Liabilities | ||||||
Derivative financial instruments | ||||||
Interest rate swaps | $ 149 | $ 149 | $ 27 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Other long term assets | $ 3,902 | $ 2,631 |
Recurring basis | Level 1 | ||
Assets | ||
Pension Plan Assets | 4,916 | 4,986 |
Other long term assets | 3,408 | 2,631 |
Recurring basis | Level 2 | ||
Assets | ||
Interest rate swaps | $ (149) | $ (27) |
INCOME TAXES (Details)
INCOME TAXES (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015 | Jun. 30, 2016USD ($) | Jun. 30, 2015 | |
Effective income tax rate | ||||
Effective income tax rate (as a percent) | 34.70% | 26.30% | 32.30% | 29.30% |
Discrete tax (provision) benefit (as a percent) | (0.1) | 2 | ||
Discrete tax (provision) benefit | $ (7) | $ 153 |
COMMITMENTS AND CONTINGENCIES49
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Changes in the reserve for product warranty claims | ||
Warranty reserve at beginning of the year | $ 780 | $ 786 |
Warranty reserves acquired | 297 | |
Provision | 31 | 142 |
Warranty expenditures | (49) | (123) |
Effect of foreign currency translation | 11 | (25) |
Warranty reserve at end of year | $ 1,070 | $ 780 |
ACCUMULATED OTHER COMPREHENSI50
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Accumulated Other Comprehensive Income. | ||||
Balances | $ 64,597 | |||
Balances | $ 71,286 | 71,286 | ||
Total | ||||
Accumulated Other Comprehensive Income. | ||||
Balances | (7,952) | $ (10,262) | (9,877) | $ (5,683) |
Unrealized loss on cash flow hedges | (48) | (9) | (184) | (160) |
Amounts reclassified from AOCI | 30 | 50 | 62 | 101 |
Foreign currency translation gain (loss) | (1,066) | 917 | 963 | (3,562) |
Balances | (9,036) | (9,304) | (9,036) | (9,304) |
Defined Benefit Plan Liability | ||||
Accumulated Other Comprehensive Income. | ||||
Balances | (688) | (853) | (688) | (853) |
Balances | (688) | (853) | (688) | (853) |
Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income. | ||||
Balances | (131) | (102) | (27) | (2) |
Unrealized loss on cash flow hedges | (48) | (9) | (184) | (160) |
Amounts reclassified from AOCI | 30 | 50 | 62 | 101 |
Balances | (149) | (61) | (149) | (61) |
Foreign Currency Translation Adjustment | ||||
Accumulated Other Comprehensive Income. | ||||
Balances | (7,133) | (9,307) | (9,162) | (4,828) |
Foreign currency translation gain (loss) | (1,066) | 917 | 963 | (3,562) |
Balances | $ (8,199) | $ (8,390) | $ (8,199) | $ (8,390) |
DIVIDENDS PER SHARE (Details)
DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
DIVIDENDS PER SHARE | ||||
Dividends declared (in dollars per share) | $ 0.025 | $ 0.025 | $ 0.025 | $ 0.025 |
Total dividends declared | $ 475 | $ 464 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)segment | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment information | |||||
Number of operating segments | segment | 1 | ||||
Revenues | $ 65,835 | $ 60,479 | $ 129,510 | $ 120,059 | |
Identifiable assets | $ 183,754 | $ 183,754 | $ 162,147 | ||
Sales | Customer A | |||||
Segment information | |||||
Percentage of concentration risk | 19.00% | 23.00% | 19.00% | 23.00% | |
Sales | Customer B | |||||
Segment information | |||||
Percentage of concentration risk | 10.00% | ||||
Trade receivables. | Customer A | |||||
Segment information | |||||
Percentage of concentration risk | 16.00% | 16.00% | |||
Trade receivables. | Customer B | |||||
Segment information | |||||
Percentage of concentration risk | 14.00% | 16.00% | |||
Outside the United States | |||||
Segment information | |||||
Revenues | $ 29,659 | $ 21,714 | $ 58,234 | $ 41,528 | |
Wholly owned international subsidiaries | |||||
Segment information | |||||
Revenues | 26,313 | $ 20,791 | 51,920 | $ 38,218 | |
Identifiable assets | $ 79,715 | $ 79,715 | $ 56,444 |
RECENT ACCOUNTING PRONOUNCEME53
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Effect of early adoption of recently issued accounting pronouncements | ||||
Tax benefit | $ (7) | $ 153 | ||
Accounting Standards Update 2016-09 | New Accounting Pronouncement, Early Adoption, Effect | ||||
Effect of early adoption of recently issued accounting pronouncements | ||||
Tax benefit | $ 160 | |||
Accounting Standards Update 2015-17 | Retrospective Adjustment | ||||
Effect of early adoption of recently issued accounting pronouncements | ||||
Current deferred tax assets | $ (3,318) | $ (3,318) | $ (2,551) | |
Accounting Standard Update 2015 03 | Retrospective Adjustment | Other Assets | ||||
Effect of early adoption of recently issued accounting pronouncements | ||||
Debt issuance costs | (1,388) | |||
Accounting Standard Update 2015 03 | Retrospective Adjustment | Long-term Debt. | ||||
Effect of early adoption of recently issued accounting pronouncements | ||||
Debt issuance costs | $ (1,388) |