Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 09, 2022 | Jun. 30, 2021 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity File Number | 0-04041 | ||
Entity Registrant Name | ALLIED MOTION TECHNOLOGIES INC | ||
Entity Incorporation, State or Country Code | CO | ||
Entity Tax Identification Number | 84-0518115 | ||
Entity Address, Address Line One | 495 Commerce Drive | ||
Entity Address, City or Town | Amherst | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 14228 | ||
City Area Code | 716 | ||
Local Phone Number | 242-8634 | ||
Title of 12(b) Security | Common stock | ||
Trading Symbol | AMOT | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 15,462,184 | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Firm ID | 34 | ||
Auditor Location | Williamsville, New York | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000046129 | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 446,094,607 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 22,463 | $ 23,131 |
Trade receivables, net of provision for credit losses of $506 and $382 at December 31, 2021 and December 31, 2020, respectively | 51,239 | 47,377 |
Inventories | 89,733 | 62,978 |
Prepaid expenses and other assets | 12,522 | 8,728 |
Total current assets | 175,957 | 142,214 |
Property, plant and equipment, net | 56,983 | 55,428 |
Deferred income taxes | 5,321 | 330 |
Intangible assets, net | 103,786 | 65,859 |
Goodwill | 106,633 | 61,860 |
Right of use assets | 16,983 | 19,023 |
Other long-term assets | 5,122 | 4,483 |
Total Assets | 470,785 | 349,197 |
Current liabilities: | ||
Accounts payable | 36,714 | 27,668 |
Accrued liabilities | 41,656 | 24,862 |
Total current liabilities | 78,370 | 52,530 |
Long-term debt | 158,960 | 120,079 |
Deferred income taxes | 5,040 | 4,659 |
Pension and post-retirement obligations | 3,932 | 5,340 |
Right of use liabilities | 12,792 | 14,975 |
Other long-term liabilities | 23,929 | 8,558 |
Total liabilities | 283,023 | 206,141 |
Commitments and contingencies (Note 11) | ||
Stockholders' Equity: | ||
Common stock, no par value, authorized 50,000 shares; 15,361 and 14,632 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively | 68,097 | 41,278 |
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding | ||
Retained earnings | 127,757 | 105,065 |
Accumulated other comprehensive loss | (8,092) | (3,287) |
Total stockholders' equity | 187,762 | 143,056 |
Total Liabilities and Stockholders' Equity | $ 470,785 | $ 349,197 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, provision for credit losses | $ 506 | $ 382 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized shares | 50,000 | 50,000 |
Common stock, shares issued | 15,361 | 14,632 |
Common stock, shares outstanding | 15,361 | 14,632 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||
Revenues | $ 403,516 | $ 366,694 | $ 371,084 |
Cost of goods sold | 282,460 | 258,119 | 258,500 |
Gross profit | 121,056 | 108,575 | 112,584 |
Operating costs and expenses: | |||
Selling | 17,249 | 15,392 | 16,536 |
General and administrative | 42,419 | 38,301 | 37,688 |
Engineering and development | 27,818 | 25,487 | 23,086 |
Business development | 1,299 | 473 | 113 |
Amortization of intangible assets | 6,245 | 5,928 | 5,718 |
Total operating costs and expenses | 95,030 | 85,581 | 83,141 |
Operating income | 26,026 | 22,994 | 29,443 |
Other expense, net: | |||
Interest expense | 3,236 | 3,716 | 5,134 |
Other (income) expense, net | (323) | 502 | 468 |
Total other expense, net | 2,913 | 4,218 | 5,602 |
Income before income taxes | 23,113 | 18,776 | 23,841 |
Income tax benefit (provision) | 981 | (5,133) | (6,819) |
Net income | $ 24,094 | $ 13,643 | $ 17,022 |
Basic earnings per share: | |||
Earnings per share | $ 1.67 | $ 0.96 | $ 1.21 |
Basic weighted average common shares | 14,413 | 14,243 | 14,097 |
Diluted earnings per share: | |||
Earnings per share | $ 1.66 | $ 0.95 | $ 1.20 |
Diluted weighted average common shares | 14,517 | 14,333 | 14,192 |
Net income | $ 24,094 | $ 13,643 | $ 17,022 |
Other comprehensive income: | |||
Foreign currency translation adjustment | (7,193) | 8,410 | (680) |
Change in accumulated income (loss) on derivatives | 1,618 | (1,161) | (711) |
Pension adjustments | 770 | (5) | (622) |
Comprehensive income | $ 19,289 | $ 20,887 | $ 15,009 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Unamortized Cost of Equity Awards | Retained Earnings | Foreign Currency Translation Adjustments | Accumulated income (loss) on derivatives | Pension Adjustments | Total |
Balances at Dec. 31, 2018 | $ 36,779 | $ (3,166) | $ 76,718 | $ (7,946) | $ 434 | $ (1,006) | $ 101,813 |
Balances (in shares) at Dec. 31, 2018 | 14,228 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 1,089 | 1,089 | |||||
Stock transactions under employee benefit stock plans (in shares) | 40 | ||||||
Issuance of restricted stock, net of forfeitures | $ 4,520 | (4,191) | 329 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 161 | ||||||
Stock-based compensation expense | 2,851 | 2,851 | |||||
Shares withheld for payment of employee payroll taxes | $ (746) | (746) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (30) | ||||||
Comprehensive (loss) income | (680) | (929) | (808) | (2,417) | |||
Tax effect | 218 | 186 | 404 | ||||
Net income | 17,022 | 17,022 | |||||
Dividends to stockholders | (1,151) | (1,151) | |||||
Balances at Dec. 31, 2019 | $ 41,642 | (4,506) | 92,589 | (8,626) | (277) | (1,628) | 119,194 |
Balances (in shares) at Dec. 31, 2019 | 14,399 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 1,252 | 1,252 | |||||
Stock transactions under employee benefit stock plans (in shares) | 48 | ||||||
Issuance of restricted stock, net of forfeitures | $ 5,223 | (4,851) | 372 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 231 | ||||||
Stock-based compensation expense | 3,550 | 3,550 | |||||
Shares withheld for payment of employee payroll taxes | $ (1,032) | (1,032) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (46) | ||||||
Comprehensive (loss) income | 8,410 | (1,526) | (5) | 6,879 | |||
Tax effect | 365 | 365 | |||||
Net income | 13,643 | 13,643 | |||||
Dividends to stockholders | (1,167) | (1,167) | |||||
Balances at Dec. 31, 2020 | $ 47,085 | (5,807) | 105,065 | (216) | (1,438) | (1,633) | $ 143,056 |
Balances (in shares) at Dec. 31, 2020 | 14,632 | 14,632 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock transactions under employee benefit stock plans | $ 988 | $ 988 | |||||
Stock transactions under employee benefit stock plans (in shares) | 32 | ||||||
Issuance of restricted stock, net of forfeitures | $ 3,465 | (3,363) | 102 | ||||
Issuance of restricted stock, net of forfeitures (in shares) | 96 | ||||||
Stock-based compensation expense | 4,161 | 4,161 | |||||
Shares withheld for payment of employee payroll taxes | $ (1,928) | (1,928) | |||||
Shares withheld for payment of employee payroll taxes (in shares) | (52) | ||||||
Common stock issued in connection with acquisitions (Note 2) | $ 23,496 | 23,496 | |||||
Common stock issued in connection with acquisitions (Note 2) (in shares) | 653 | ||||||
Comprehensive (loss) income | (7,193) | 2,110 | 997 | (4,086) | |||
Tax effect | (492) | (227) | (719) | ||||
Net income | 24,094 | 24,094 | |||||
Dividends to stockholders | (1,402) | (1,402) | |||||
Balances at Dec. 31, 2021 | $ 73,106 | $ (5,009) | $ 127,757 | $ (7,409) | $ 180 | $ (863) | $ 187,762 |
Balances (in shares) at Dec. 31, 2021 | 15,361 | 15,361 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||
Dividends to stockholder (in dollars per share) | $ 0.095 | $ 0.08 | $ 0.08 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows From Operating Activities: | |||
Net income | $ 24,094 | $ 13,643 | $ 17,022 |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 18,107 | 15,985 | 14,857 |
Deferred income taxes | (6,135) | (519) | (112) |
Provision for excess and obsolete inventory | 534 | 1,106 | 408 |
Provision for warranty | 543 | 34 | 210 |
Debt issue cost amortization recorded in interest expense | 141 | 144 | 174 |
Stock-based compensation expense | 4,161 | 3,550 | 3,203 |
Other | (128) | (333) | 263 |
Changes in operating assets and liabilities, net of acquisitions: | |||
Trade receivables | (170) | 2,711 | (1,456) |
Inventories | (22,874) | (4,686) | 70 |
Prepaid expenses and other assets | (3,670) | (2,264) | (517) |
Accounts payable | 8,293 | (1,874) | (1,809) |
Accrued liabilities | 2,506 | (2,659) | 2,217 |
Net cash provided by operating activities | 25,402 | 24,838 | 34,530 |
Cash Flows From Investing Activities: | |||
Consideration paid for acquisitions, net of cash acquired | (47,254) | (14,728) | |
Purchase of property and equipment | (13,716) | (9,371) | (14,882) |
Net cash used in investing activities | (60,970) | (24,099) | (14,882) |
Cash Flows From Financing Activities: | |||
Principal payments of long-term debt | (12,248) | (16,897) | (22,500) |
Proceeds from issuance of long-term debt | 51,379 | 26,979 | 9,639 |
Payment of debt issuance costs | (401) | ||
Dividends paid to stockholders | (1,371) | (1,160) | (1,170) |
Tax withholdings related to net share settlements of restricted stock | (1,928) | (1,032) | (746) |
Net cash provided by (used in) financing activities | 35,832 | 7,489 | (14,777) |
Effect of foreign exchange rate changes on cash | (932) | 1,487 | (128) |
Net (decrease) increase in cash and cash equivalents | (668) | 9,715 | 4,743 |
Cash and cash equivalents at beginning of period | 23,131 | 13,416 | 8,673 |
Cash and cash equivalents at end of period | 22,463 | 23,131 | 13,416 |
Supplemental disclosure of cash flow information: | |||
Interest paid | 3,055 | 3,586 | 5,342 |
Income taxes paid | 3,869 | 8,563 | 2,051 |
Supplemental non-cash investing and financing activities: | |||
Accrued consideration for acquisitions | $ 24,364 | ||
Stock issued for acquisitions | 23,496 | ||
Contingent consideration for acquisition | $ 4,900 | ||
Property, plant and equipment purchases in accounts payable or accrued expenses | $ 835 | $ 596 | $ 378 |
BUSINESS AND SUMMARY OF SIGNIFI
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Allied Motion Technologies Inc. (“Allied Motion” or the “Company”) is engaged in the business of designing, manufacturing and selling precision and specialty controlled motion components and systems, which include integrated system solutions as well as individual controlled motion products, to a broad spectrum of customers throughout the world primarily for the vehicle, medical, aerospace and defense, and industrial markets. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. For business combinations, net assets acquired and liabilities assumed are recorded at their estimated fair values. Cash and Cash Equivalents Cash and cash equivalents include instruments which are readily convertible into cash (original maturities of three months or less) and which are not subject to significant risk of changes in interest rates. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The provision for credit losses is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional provisions in the future. Activity in the provision for credit losses for 2021 and 2020 was as follows (in thousands): December 31, December 31, 2021 2020 Beginning balance $ 382 $ 405 Additional reserves 174 91 Write-offs (44) (123) Effect of foreign currency translation (6) 9 Ending balance $ 506 $ 382 Inventories Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): December 31, December 31, 2021 2020 Parts and raw materials $ 65,223 $ 44,750 Work-in-process 9,529 6,186 Finished goods 14,981 12,042 $ 89,733 $ 62,978 Property, Plant and Equipment Property, plant and equipment is classified as follows (in thousands): December 31, December 31, Useful lives 2021 2020 Land $ 979 $ 999 Building and improvements 5 - 39 years 14,398 14,169 Machinery, equipment, tools and dies 3 - 15 years 82,898 79,738 Construction work in progress 9,582 6,821 Furniture, fixtures and other 3 - 10 years 21,794 16,313 129,651 118,040 Less accumulated depreciation (72,668) (62,612) Property, plant and equipment, net $ 56,983 $ 55,428 Depreciation expense is provided using the straight-line method over the estimated useful lives of the assets. Amortization of building improvements is provided using the straight-line method over the life of the lease term or the life of the asset, whichever is shorter. Maintenance and repair costs are charged to operations as incurred. Major additions and improvements are capitalized. The cost and related accumulated depreciation of retired or sold property are removed from the accounts and the resulting gain or loss, if any, is reflected in earnings. Depreciation expense was $11,862, $10,057 and $9,139 in 2021, 2020 and 2019, respectively. Intangible Assets Intangible assets, other than goodwill, are initially recorded at fair value and are amortized over their estimated useful lives using an accelerated or straight-line method which approximates the pattern of expected cash flows over the remaining useful lives of the intangible assets. Impairment of Long-Lived Assets The Company reviews the carrying values of its long-lived assets, including property, plant and equipment and intangible assets, on an annual basis and whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Long-lived assets are recorded at their carrying amounts if the projected cash flows from their use will recover their carrying amounts on an undiscounted basis and without considering interest. If projected cash flows are less than their carrying value, the long-lived assets must be reduced to their estimated fair value. Judgment is required to project such cash flows and, if required, estimate the fair value of the impaired long-lived assets. The Company did not record any impairment charges for the years ended December 31, 2021, 2020 or 2019. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. The Company has defined reporting unit that is the same as its operating segment. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than its carrying amount, or if significant adverse changes in the Company’s future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, the Company can elect to forgo the qualitative assessment and perform the quantitative test. If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill. At October 31, 2021, the Company performed its annual goodwill impairment test and determined, after performing a qualitative test of the reporting unit, that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. Accordingly, there was no indication of impairment and the quantitative impairment test was not performed. The Company did not record any impairment charges for the years ended December 31, 2021, 2020 or 2019. Other Long-Term Assets Other long-term assets include securities that the Company has purchased with the intent of funding the deferred compensation arrangements for certain executives of the Company. These items are accounted for at fair value on a recurring basis. Any changes in value are included in net income in the Company’s consolidated statements of income and comprehensive income. Warranty The Company offers warranty coverage for its products. The length of the warranty period for its products is generally three months to two years and varies based on the product sold. The Company estimates the costs of repairing products under warranty based on the historical average cost of the repairs. The assumptions used to estimate warranty accruals are re-evaluated periodically in light of actual experience and, when appropriate, the accruals are adjusted. Estimated warranty costs are recorded at the time of sale of the related product, and are considered a cost of goods sold. Changes in the Company’s reserve for product warranty claims during 2021, 2020 and 2019 were as follows (in thousands): December 31, December 31, December 31, 2021 2020 2019 Warranty reserve at beginning of the year $ 1,571 $ 1,075 $ 971 Warranty reserves acquired 15 465 — Provision 543 34 210 Warranty expenditures (204) (97) (101) Effect of foreign currency translation (56) 94 (5) Warranty reserve at end of year $ 1,869 $ 1,571 $ 1,075 Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, December 31, 2021 2020 Compensation and fringe benefits $ 14,666 $ 11,184 Accrued business acquisition consideration (Note 2) 12,388 — Right of use liabilities 4,532 4,666 Warranty reserve 1,869 1,571 Income taxes payable 970 1,459 Other accrued expenses 7,231 5,982 $ 41,656 $ 24,862 Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive loss, a component of stockholders’ equity in the accompanying consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the operating locations are included in the other (income) expense, net as incurred. Revenue Recognition Refer to Note 3, Revenue Recognition Engineering and Development Costs The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. Engineering and design as well as research and development costs are expensed as incurred. Basic and Diluted Earning per Share Basic earnings per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding. Diluted earnings per share is determined by dividing the net income by the sum of: (1) the weighted average number of common shares outstanding and (2) if not anti-dilutive, the effect of potential common shares determined utilizing the treasury stock method. Basic and diluted weighted-average shares outstanding are as follows (in thousands): Year ended December 31, 2021 2020 2019 Basic weighted average shares outstanding 14,413 14,243 14,097 Dilutive effect of potential common shares 104 90 95 Diluted weighted average shares outstanding 14,517 14,333 14,192 For 2021, 2020 and 2019, the anti-dilutive common shares excluded from the calculation of diluted income per share were immaterial. Comprehensive Income Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by and distributions to stockholders. Fair Value Accounting Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value, which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments. The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of December 31, 2021 and 2020, respectively, by level within the fair value hierarchy (in thousands): December 31, 2021 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,899 $ — $ — Deferred compensation plan assets 4,636 — — Foreign currency hedge contracts — 39 — Interest rate swaps, net — 220 — Contingent consideration (Note 2) — — (4,900) December 31, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,347 $ — $ — Deferred compensation plan assets 5,386 — — Interest rate swaps — (1,889) — The contingent consideration fair value measurement in connection with the acquisition of ALIO Industries (“ALIO”) is based on significant inputs not observable in the market and therefore constitute Level 3 inputs within the fair value hierarchy. The Company determines the initial fair value of contingent consideration liabilities using a Monte Carlo valuation model, which involves a simulation of future earnings generated during the earn out-period using management’s best estimates, or a probability-weighted discounted cash flow analysis. Derivative Financial Instruments Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") No. 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting. Income Taxes The current provision for income taxes represents actual or estimated amounts payable or refundable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. A valuation allowance may be provided to the extent management deems it is more likely than not that deferred tax assets will not be realized. The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income, in the appropriate taxing jurisdictions, during the periods in which temporary differences, net operating losses and tax credits become realizable. Management believes that it is more likely than not that the Company will realize the benefits of these temporary differences and operating loss and tax credit carryforwards, net of valuation allowances. It is the Company's policy to include interest and penalties related to income tax liabilities in income tax expense on the consolidated statements of income and comprehensive Income. In addition, the Company records uncertain tax positions in accordance with ASC 740, Income Taxes Pension and Postretirement Welfare Plans The Company records the service cost component of net benefit costs in cost of goods sold, selling, and general and administrative expenses. The interest cost component of net benefit costs is recorded in interest expense and the remaining components of net benefit costs, amortization of net losses and expected return on plan assets is recorded in other expense, net. Concentration of Credit Risk Trade receivables subject the Company to the potential for credit risk. To reduce this risk, the Company performs evaluations of its customers’ financial condition and creditworthiness at the time of sale, and updates those evaluations when necessary. See Note 13, Segment Information, Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Stock Split On March 10, 2021, the Board of Directors approved a 3 Twinsburg Consolidation In September 2021, the Company announced its plans to consolidate its manufacturing facility in Twinsburg, Ohio with its Watertown, New York and Reynosa, Mexico facilities in 2022. Costs of Recently adopted accounting pronouncements In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, and clarifies existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this ASU on January 1, 2021 on a prospective basis, as there were no relevant matters impacting the Company for which retrospective application was required, and the adoption did not have a material impact on its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Revenue from Contracts with Customers (Topic 606) |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2021 | |
ACQUISITIONS | |
ACQUISITIONS | 2. ACQUISITIONS 2021 Acquisitions Spectrum Controls On December 30, 2021, the Company acquired Spectrum Controls, Inc. (“Spectrum Controls”), a Washington headquartered innovator and manufacturer of industrial Input/Output (“I/O”) and universal communications gateway products. Spectrum Controls designs and manufactures a wide range of highly sophisticated I/O modules, marquee displays, and industrial gateways for broad industrial controls applications through partnerships with programmable logic controller (“PLC”) manufacturers and distributors. This acquisition provides the Company with the opportunity to enhance its position as a value-added solutions supplier to the industrial automation and industrial controls market. The purchase price was $68,711, consisting of $44,046 paid at closing, $26,076 in cash funded through borrowings under the Amended Revolving Facility and $17,970 in Company stock (502,512 shares at $35.76 closing stock price on December 29, 2021). The remaining is included in other long-term liabilities on the consolidated balance sheet. The purchase price allocation is subject to adjustments based on a determination of closing net working capital and certain tax matters. The Company incurred $93 of transaction costs related to the acquisition of Spectrum Controls in 2021, which are included in business development on the consolidated statements of income and comprehensive income. The preliminary allocation of the purchase price paid for Spectrum Controls is based on estimated fair values of the assets acquired and liabilities assumed of Spectrum Controls as of December 30, 2021 and is as follows (in thousands): Cash and cash equivalents $ 96 Trade receivables 3,612 Inventories 4,127 Other assets, net 560 Property, plant and equipment 278 Intangible assets 34,800 Goodwill 26,453 Current liabilities (1,215) Net purchase price $ 68,711 The intangible assets acquired consist of customer lists of $21,000, technology of $13,500, and a trade name of $300, which are being amortized over 18, 10 and 10 years , respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other operations and Spectrum Controls that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Spectrum Controls’ management knowledge in providing complementary product offerings to the Company’s customers. The operating results of this acquisition are included in the consolidated financial statements beginning on the date of the acquisition. Revenue and earnings related to Spectrum Controls included within the consolidated statement of income and comprehensive income for the year ended December 31, 2021 were inconsequential. The goodwill resulting from the Spectrum Controls acquisition is tax deductible. ORMEC & ALIO On November 2, 2021, the Company acquired 100% of the outstanding stock of ORMEC Systems Corp. (“ORMEC”), a New York headquartered developer and manufacturer of mission critical electro-mechanical automation solutions and motion control products including multi-axis controls, electronic drives and actuators for the automation and aerospace industries. In addition to its products, ORMEC designs and manufactures complete electro-mechanical and software solutions for custom automation applications. ORMEC strengthens the Company’s technical expertise and adds a higher level of precision motion control systems and solutions to its offerings. On November 4, 2021, the Company acquired 100% of ALIO Industries (“ALIO”), a Colorado headquartered innovator and manufacturer of advanced linear and rotary motion systems for nano-precision applications . ALIO designs, engineers, and manufactures nano technology motion systems for state-of-the-art applications in silicon photonics, micro assembly, digital pathology, genome sequencing, laser processing and microelectronics. ALIO is well recognized for their technology and expertise in nanometer level positioning. This expertise in high precision positioning and robotic technology solutions is expected to enhance the Company’s portfolio of motion solution offerings. The purchase price, collectively, for ORMEC and ALIO was $33,458, comprised of $23,333 in cash funded through borrowings under the Amended Revolving Credit Facility, $5,526 in Company stock (150,038 shares at a weighted average stock price of $36.83), and the fair value of contingent consideration of $4,900, offset by a $301 estimated working capital provision. These purchase price allocations are subject to adjustments based on a determination of closing net working capital and certain tax matters. The Company incurred $409 of transaction costs related to these acquisitions in 2021, which is included in business development on the consolidated statements of income and comprehensive income. The preliminary allocation of the purchase price paid is based on estimated fair values of the assets acquired and liabilities assumed as of November 2, 2021 for ORMEC and November 4, 2021 for ALIO and is, collectively, as follows (in thousands): Cash and cash equivalents $ 2,059 Trade receivables 1,416 Inventories 2,802 Other assets, net 50 Property, plant and equipment 699 Right of use assets 1,005 Intangible assets 10,200 Goodwill 19,978 Other current liabilities (1,028) Deferred revenue (2,063) Lease liabilities (1,005) Net deferred income tax liabilities (655) Net purchase price $ 33,458 The intangible assets acquired consist of technology of $5,700 , customer lists of $4,000 , and trade names of $500 , which are being amortized over weighted average useful lives of 11 , 6 and 10 years , respectively. Goodwill generated in these acquisitions is related to the assembled workforce, synergies with Allied Motion’s other operations that are expected to occur as a result of the combined engineering knowledge, the ability of the operations to integrate products into more fully integrated system solutions and Allied Motion’s ability to utilize ORMEC and ALIO’s management knowledge in providing complementary product offerings to the Company’s customers. The operating results of these acquisitions are included in the consolidated financial statements beginning on the date of the acquisition. Revenue included within the consolidated statement of income and comprehensive income for the year ended December 31, 2021, related to ORMEC and ALIO, collectively, was $2,063 and earnings were not material. As of December 31, 2021, the fair value of contingent consideration of $4,900 is included in other long-term liabilities on the consolidated balance sheet. The contingent consideration represents the estimated fair value of the Company’s obligations, under a purchase agreement, to make additional payments if certain earnings goals are met through 2024. There were no changes to the contingent consideration fair value during 2021. The goodwill resulting from the ORMEC acquisition is not tax deductible. The goodwill resulting from the ALIO acquisition is tax deductible. 2020 Acquisitions Dynamic Controls On March 7, 2020, the Company acquired 100% of the issued and outstanding share capital of the Dynamic Controls Group (“Dynamic Controls”), a wholly owned subsidiary of Invacare Corporation, a market-leading designer and manufacturer of equipment for the medical mobility and rehabilitation markets. The purchase price was funded using borrowings under the Amended Revolving Facility. The purchase price was subject to adjustments based on a determination of closing net working capital. Dynamic Controls brings strong leadership and a very experienced electronics and software engineering design team, providing market leading electronic control solutions and products that will further strengthen the Company’s medical market position, as well as enable it to further develop higher level solutions with embedded electronics across our other major served markets. The Company incurred $473 of transaction costs related to the acquisition of Dynamic Controls in 2020, which are included in business development on the consolidated statements of income and comprehensive income. The allocation of the purchase price paid for Dynamic Controls is based on fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 and is as follows (in thousands): Cash and cash equivalents $ 11,437 Trade receivables 4,129 Inventories 3,329 Other assets, net 769 Property, plant and equipment 1,185 Right of use assets 2,735 Intangible assets 7,800 Goodwill 6,629 Current liabilities (7,354) Lease liabilities (2,739) Net deferred income tax liabilities (1,755) Net purchase price $ 26,165 During the second quarter of 2020, measurement period adjustments primarily related to deferred income taxes and the true-up of closing net working capital were recognized, which resulted in a reduction of goodwill by $268 . During the third quarter of 2020, measurement period adjustments related primarily to tax liabilities were recognized, which resulted in an increase of goodwill by $77 . The allocation of the purchase price was finalized during the fourth quarter of 2020. The intangible assets acquired consist of customer lists of $4,400 , technology of $1,900 and a trade name of $1,500 , which are being amortized over 16 , 13 and 18 years , respectively. Goodwill generated in the acquisition is related to the assembled workforce, synergies between Allied Motion’s other operations and Dynamic Controls that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions and Allied Motion’s ability to utilize Dynamic Controls’ management knowledge in providing complementary product offerings to the Company’s customers. The operating results of this acquisition are included in the consolidated financial statements beginning on the date of the acquisition. Included within the consolidated statement of income and comprehensive income for the year ended December 31, 2020, revenues and earnings related to Dynamic Controls were $24,124 and $945, respectively. The goodwill resulting from the Dynamic Controls acquisition is not tax deductible. Pro Forma Financial Information Unaudited pro forma revenue is $443,010 and $415,577 for 2021 and 2020, respectively. Unaudited pro forma earnings for 2021 and 2020 is not materially different from reported earnings, primarily due to incremental amortization and interest expense. The unaudited pro forma financial information represents the combined results of operations if the Dynamic Controls acquisition had occurred as of January 1, 2019 and the ORMEC, ALIO and Spectrum Controls acquisitions had occurred as of January 1, 2020. The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts do not reflect adjustments for anticipated operating efficiencies that the Company expects to achieve as a result of these acquisitions. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would have been had these transactions actually occurred on the date presented or to project the combined company’s results of operations or financial position for any future period. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION Performance Obligations Performance Obligations Satisfied at a Point in Time The Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product. The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for generally monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Nature of Goods and Services The Company sells component and integrated controlled motion solutions to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brushed and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, and other controlled motion-related products. The Company’s target markets include Vehicle, Medical, Aerospace & Defense and Industrial. Determining the Transaction Price The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of December 31, 2021. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in Note 13, Segment Information The revenues by geography in the table below are revenues derived from the Company’s foreign subsidiaries as provided in Note 13. A reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions is provided in Note 13. Year ended December 31, Target Market 2021 2020 2019 Vehicle $ 129,835 $ 110,365 $ 126,811 Industrial 135,440 114,143 124,196 Medical 86,129 83,191 51,586 Aerospace & Defense 31,746 39,711 47,748 Other 20,366 19,284 20,743 Total $ 403,516 $ 366,694 $ 371,084 Year ended December 31, Geography 2021 2020 2019 United States $ 239,528 $ 214,203 $ 244,347 Europe 129,414 126,985 124,914 Asia-Pacific 34,574 25,506 1,823 Total $ 403,516 $ 366,694 $ 371,084 Contract Balances When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists. The opening and closing balances of the Company’s contract liability are as follows (in thousands): December 31, December 31, 2021 2020 Contract liabilities in accrued liabilities $ 2,425 $ 898 Contract liabilities in other long-term liabilities 242 262 $ 2,667 $ 1,160 The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment as well as balances assumed in acquisitions. Significant Payment Terms The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration. Returns, Refunds, and Warranties In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications. Practical Expedients Incremental costs of obtaining a contract Remaining performance obligations Time value of money |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL | |
GOODWILL | 4. GOODWILL The change in the carrying amount of goodwill for 2021 and 2020 is as follows (in thousands): 2021 2020 Beginning balance $ 61,860 $ 52,935 Goodwill acquired (Note 2) 46,431 6,629 Effect of foreign currency translation (1,658) 2,296 Ending balance $ 106,633 $ 61,860 The purchase price allocations for ORMEC, ALIO and Spectrum Controls are not final as of December 31, 2021. Adjustments to these allocations may result in changes to the amounts recorded for goodwill in future periods. The purchase price allocation was finalized for the Dynamic Controls acquisition during the fourth quarter of 2020. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS Intangible assets on the Company’s consolidated balance sheets consist of the following (in thousands): December 31, 2021 December 31, 2020 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 5 - 18 years $ 94,079 $ (27,639) $ 66,440 $ 69,833 $ (23,636) $ 46,197 Trade name 10 - 19 years 14,649 (5,927) 8,722 14,055 (5,061) 8,994 Design and technologies 10 - 15 years 34,241 (5,617) 28,624 15,555 (4,887) 10,668 Total $ 142,969 $ (39,183) $ 103,786 $ 99,443 $ (33,584) $ 65,859 Intangible assets resulting from the 2021 acquisitions of ORMEC, ALIO and Spectrum Controls were $45,000 (Note 2). The intangible assets acquired consist of customer lists, technology, and trade names. Total amortization expense for intangible assets for the years 2021, 2020 and 2019 was $6,245, $5,928 and $5,718, respectively. Estimated amortization expense for intangible assets is as follows (in thousands): Estimated Amortization Expense 2022 $ 9,848 2023 9,860 2024 9,532 2025 9,515 2026 9,417 Thereafter 55,614 Total estimated amortization expense $ 103,786 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2021 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | 6. STOCK-BASED COMPENSATION PLANS Stock Incentive Plans The Company’s Stock Incentive Plans provide for the granting of stock awards, including stock options, stock appreciation rights, and restricted stock, to employees and non-employees, including directors of the Company. As of December 31, 2021, the Company had 1,031,128 shares of common stock available for grant under stock incentive plans. Restricted Stock The following is a summary of restricted stock grants, fair value and performance based awards: Awards with Unvested Weighted average performance restricted stock grant date fair vesting For the year ended December 31, awards value requirements 2021 109,462 $ 32.06 63,432 2020 240,656 $ 22.34 150,605 2019 164,295 $ 27.97 115,316 The value at the date of award is amortized to compensation expense over the related service period, which is generally three years for time vested grants. Short-term performance based grants can be achieved over a period of one year, and long-term performance grants can be earned through December 31, 2022. Earned grants are then subject to either a 3 year or 5 year service period. Shares of non-vested restricted stock are forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards. For performance-based awards, the Company assesses the probability of the achievement of the awards during the year and recognizes expense accordingly. The following is a summary of restricted stock activity during years 2021, 2020 and 2019: Number of shares Balance, December 31, 2018 233,613 Awarded 164,295 Vested (113,106) Forfeited (4,749) Balance, December 31, 2019 280,053 Awarded 240,656 Vested (159,698) Forfeited (3,669) Balance, December 31, 2020 357,342 Awarded 109,462 Vested (162,419) Forfeited (10,808) Balance, December 31, 2021 293,577 The following is a summary of performance based restricted stock activity during years 2021, 2020 and 2019: Performance grants Outstanding, December 31, 2018 — Awarded 115,316 Performance criteria met (76,278) Forfeited (824) Outstanding, December 31, 2019 38,214 Awarded 150,605 Performance criteria met (96,576) Forfeited (3,233) Outstanding, December 31, 2020 89,010 Awarded 63,432 Performance criteria met (42,290) Forfeited (10,229) Outstanding, December 31, 2021 99,923 The performance criteria and forfeitures in the above table did not occur until the Board of Directors approved them during the March 2022, March 2021 and February 2020 meetings. Share-Based Compensation Expense During 2021, 2020 and 2019 compensation expense net of forfeitures of $4,161, $3,550 and $3,203 was recorded, respectively. As of December 31, 2021, there was $6,555 of total unrecognized compensation expense related to restricted stock awards, of which approximately $5,155 is expected to be recognized in 2022. Employee Stock Ownership Plan The Company sponsors an Employee Stock Ownership Plan (“ESOP”) that covers all non-union U.S. employees who work over 1,000 hours per year. The terms of the ESOP require the Company to make an annual contribution equal to the greater of: i) the Board established percentage of pretax income before the contribution (5% in 2021, 2020 and 2019) or ii) the annual interest payable on any loan outstanding to the Company from the ESOP. Company contributions to the Plan accrued for 2021, 2020 and 2019, were $1,206, $988 and $1,189, respectively. These amounts are included in general and administrative costs in the consolidated statements of income and comprehensive income. Defined Contribution Plan The Company sponsors the Allied Motion 401(k) Tax Advantaged Investment Plan (“401(k)”) which covers substantially all its U.S. based employees. The plan provides for the deferral of employee compensation under Section 401(k) and a discretionary Company match. In 2021, 2020 and 2019 this match was 100% per dollar of the first 3% of participant deferral and 50% per dollar of the next 2% contribution, up to 4% of a total 5% participant deferral. Net costs related to this defined contribution plan were $1,672, $1,774 and $1,362 in 2021, 2020 and 2019, respectively. Dividends For the years ended December 31, 2021, 2020 and 2019 a total of $0.095, $0.08 and $0.08 per share on all outstanding shares was declared and paid, respectively. Total dividends paid for the years ended December 31, 2021, 2020 and 2019 were $1,371, $1,160 and $1,170, respectively. Based on the terms of the Company’s Credit Agreement, dividends paid to shareholders are acceptable, subject to the Company’s compliance with the covenants under the Credit Agreement. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2021 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 7. DEBT OBLIGATIONS Debt obligations consisted of the following (in thousands): December 31, December 31, 2021 2020 Long-term Debt Revolving Credit Facility, long-term (1) $ 159,395 $ 120,656 Unamortized debt issuance costs (435) (577) Long-term debt $ 158,960 $ 120,079 (1) The effective rate of the Revolving Credit Facility is 2.41% at December 31, 2021 including the impact of the Company's interest rate swaps. Amended Revolving Credit Facility The First Amended and Restated Credit Agreement (the “Amended Credit Agreement”) includes a $225 million revolving credit facility (the “Amended Revolving Facility”). The Amended Credit Agreement includes: (i) a maximum principal amount of $225 million, (ii) a $75 million accordion amount, and (iii) a maturity date of February 2025. Borrowings under the Amended Revolving Facility bear interest at the LIBOR or EURIBOR Rate (as defined in the Amended Credit Agreement) plus a margin of 1.00% to 1.75% or the Prime Rate (as defined in the Amended Credit Agreement) plus a margin of 0% to 0.75 %, in each case depending on the Company’s ratio of total funded indebtedness (as defined in the Amended Credit Agreement) to consolidated trailing twelve-month EBITDA (the “Total Leverage Ratio”). At December 31, 2021, the applicable margin for LIBOR Rate borrowings was 1.375% and the applicable margin for Prime Rate borrowings was 0.375%. In addition, the Company is required to pay a commitment fee of between 0.10% and 0.225% quarterly (0.150 % at December 31, 2021) on the unused portion of the Amended Revolving Facility, also based on the Company’s Total Leverage Ratio. The Amended Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries. The Amended Credit Agreement contains certain financial covenants related to minimum interest coverage, Total Leverage Ratio, and non-material subsidiaries assets to consolidated total assets at the end of each quarter. The Amended Credit Agreement also includes other covenants and restrictions, including limits on the amount of additional indebtedness, and restrictions on the Company’s ability to merge or sell all, or substantially all, of its assets. Under the provisions of the Amended Credit Agreement, the Company may elect to increase its Leverage Ratio to a 4.0 to 1.0 ratio (a “Leverage Increase”) during the fiscal quarter in which a Material Acquisition (as defined in the Amended Credit Agreement) takes place, and for the next three fiscal quarters. If the Material Acquisition occurs within the last 45 days of any fiscal quarter, the Leverage Increase is applicable for the following four fiscal quarters. The Company qualified for, and elected, the Leverage Increase as a result of the Spectrum Controls acquisition. The Company was in compliance with all covenants at December 31, 2021. As of December 31, 2021, the unused Amended Revolving Facility was $65,605 . The amount available to borrow may be reduced based upon the Company’s debt and EBITDA levels, which impacts its covenant calculations. Other The China Credit Facility provides credit of $1,574 (Chinese Renminbi 10,000 ) (“the China Facility”). The China Facility is a demand revolving facility used for working capital and capital equipment needs at the Company’s China operations. The term is annual and may be cancelled at the bank’s discretion. The interest rate shall be agreed upon by the Lender and the Borrower before the Utilization Date (as defined in the China Facility) and shall be specified in the Utilization Request (as defined in the China Facility). Collateral for the facility is a guarantee issued by the Company. There were no borrowings under the China Facility during 2021 or 2020. Deferred Financing Fees Deferred financing costs net of accumulated amortization were $435 as of December 31, 2021. These costs will be amortized over the term of the Amended Credit Facility. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2021 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 8. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments. Beginning in the first quarter of 2021, the Company began entering into foreign currency contracts with 30-day other (income) expense, net in the consolidated statements of income and comprehensive income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $13,500 at December 31, 2021. The foreign currency contracts are recorded in the consolidated balance sheets at fair value and resulting gains or losses are recorded in other (income) expense, net in the consolidated statements of income and comprehensive income. During the year ended December 31, 2021, the Company had losses of $170 on foreign currency contracts which is included in other (income) expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other (income) expense, net. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In February 2017, the Company entered into three interest rate swaps with a combined notional of $40,000 that mature in February 2022. In March 2020, the Company entered into two additional interest rate swaps with a combined notional amount of $20,000 that increases to $60,000 in March 2022 and matures in December 2024. The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The Company estimates that an additional $342 will be reclassified as an increase to interest expense over the next twelve months. Additionally, the Company does not use derivatives for trading or speculative purposes. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2021 and 2020 (in thousands): Asset Derivatives Fair value as of: Derivatives designated as Balance Sheet December 31, hedging instruments Location 2021 2020 Foreign currency contracts Prepaid expenses and other assets $ 39 $ — Interest rate products Other long-term assets 340 — $ 379 $ — Liability Derivatives Fair value as of: Derivatives designated as Balance Sheet December 31, hedging instruments Location 2021 2020 Interest rate products Accrued liabilities $ 120 $ — Interest rate products Other long-term liabilities — 1,889 $ 120 $ 1,889 The table below presents the effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) for the years ended December 31, 2021, 2020 and 2019 (in thousands): Amount of pre-tax gain (loss) recognized in OCI on derivatives Derivatives in cash flow hedging relationships Year ended December 31, 2021 2020 Interest rate products $ 1,180 $ (2,163) Amount of pre-tax (loss) gain reclassified Location of (loss) gain reclassified from accumulated OCI into income from accumulated OCI into income Year ended December 31, 2021 2020 2019 Interest expense $ (929) $ (637) $ 113 The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of income and comprehensive income for the years ended December 31, 2021, 2020 and 2019 (in thousands): Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded Year ended December 31, Derivatives designated as hedging instruments Income Statement Location 2021 2020 2019 Interest rate products Interest Expense $ 3,236 $ 3,716 $ 5,134 The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2021 and 2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets (in thousands). Derivative assets : Net amounts Gross amounts of assets Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2021 assets balance sheets balance sheets instruments received Net amount Derivatives $ 387 $ 8 $ 379 $ — $ — $ 379 Derivative liabilities: Net amounts Gross amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2021 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 120 $ — $ 120 $ — $ — $ 120 Net amounts Gross amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2020 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 1,889 $ — $ 1,889 $ — $ — $ 1,889 The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES The provision for income taxes is based on income before income taxes as follows (in thousands): For the year ended December 31, December 31, December 31, 2021 2020 2019 Domestic $ 10,642 $ 8,478 $ 17,188 Foreign 12,471 10,298 6,653 Income before income taxes $ 23,113 $ 18,776 $ 23,841 Components of the total income tax (benefit) provision are as follows (in thousands): For the year ended December 31, December 31, December 31, 2021 2020 2019 Current provision Domestic $ 1,866 $ 2,167 $ 4,313 Foreign 3,288 3,485 2,618 Total current provision 5,154 5,652 6,931 Deferred (benefit) provision Domestic 649 288 199 Foreign (6,784) (807) (311) Total deferred (benefit) provision (6,135) (519) (112) Income tax (benefit) provision $ (981) $ 5,133 $ 6,819 The (benefit) provision for income taxes differs from the amount determined by applying the federal statutory rate as follows: For the year ended December 31, December 31, December 31, 2021 2020 2019 Tax provision, computed at statutory rate 21.0 % 21.0 % 21.0 % State tax, net of federal impact 2.2 % 4.2 % 4.5 % Change in valuation allowance 7.2 % 0.0 % 0.3 % Effect of foreign tax rate differences 3.9 % 4.3 % 1.5 % Permanent items, other 0.2 % (0.2) % 1.4 % Section 162(m) compensation 3.0 % 2.2 % 1.1 % R&D tax credits (2.8) % (3.6) % (2.5) % Effect of Tax Cuts and Jobs Act 1.2 % (1.3) % (0.4) % Subpart F income (1.0) % 1.3 % 0.0 % Tax examinations 0.0 % 0.0 % 1.8 % Investment tax credits (5.6) % 0.0 % 0.0 % Net operating loss carryforwards (37.2) % 0.0 % 0.0 % Unrecognized tax benefits 4.9 % 0.0 % 0.0 % Other (1.2) % (0.6) % (0.1) % Income tax (benefit) provision (4.2) % 27.3 % 28.6 % The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands): December 31, December 31, 2021 2020 Noncurrent deferred tax assets: Employee benefit plans $ 2,085 $ 2,500 Net operating loss and tax credit carryforwards 9,802 2,217 Accrued expenses and reserves 915 969 Other 218 697 Total noncurrent deferred tax assets 13,020 6,383 Valuation allowance (2,896) (1,176) Net noncurrent deferred tax assets: $ 10,124 $ 5,207 Net noncurrent deferred tax liabilities: Property and equipment $ 3,238 $ 3,448 Goodwill and intangibles 6,484 5,629 Other 121 459 Total noncurrent deferred tax liabilities $ 9,843 $ 9,536 Net deferred tax asset/(deferred tax liability) $ 281 $ (4,329) Presented as follows: Noncurrent deferred income tax assets $ 5,321 $ 330 Noncurrent deferred income tax liabilities (5,040) (4,659) Net deferred tax asset (liability) $ 281 $ (4,329) As of December 31, 2021, the Company has the following gross carryforwards available (in thousands): Amount Jurisdiction Tax Attribute (in thousands) Begin to expire U.S. State Net Operating Losses (1) $ 4,812 2025 International Net Operating Losses (1) $ 1,678 2025 International Net Operating Losses - Unlimited Carryforward (1) $ 22,886 No expiration U.S. Federal Foreign Tax Credits $ 1,003 2027 International R&D Tax Credits $ 513 2026 (1) Net operating losses (NOL’s) are presented as pre-tax amounts. Realization of the Company’s recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses and tax credit carryforwards. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company generated excess foreign tax credits in 2017 due to the one-time transition tax required by enactment of the Tax Cuts and Jobs Act in the amount of $910 and foreign tax credits were generated in the amount of $92 as a result of a dividend paid from Canada. The Company determined it is more likely than not that it will not realize a tax benefit from these credits. The Company has incurred net operating losses in certain states with a tax effected benefit of $201 that it is more likely than not will not be realized. Additionally, the Company has carryforwards of net operating losses and tax credits generated in foreign jurisdictions and has determined it is more likely than not it would not realize a tax benefit of $1,692. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. The Company believes that it is more likely than not that it will realize the benefits of its deferred tax assets, net of valuation allowances as of December 31, 2021. The Company files income tax returns in various U.S. and foreign taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before 2018. With few exceptions, the Company is no longer subject to tax examinations in the foreign jurisdictions for tax periods prior to 2016. Due to a New Zealand tax legislation change in 2021 allowing for the use of pre-acquisition net operating loss carryforwards to be utilized on the acquirer's future period tax returns, the Company recognized $8,328 of net operating loss carryforwards generated in pre-acquisition periods by the Dynamic Controls New Zealand entities. The net operating loss carryforwards are now available for use by the Company beginning with the New Zealand tax returns filed for the 2020 tax period. The Company evaluated the tax legislation and considered the tax periods open for adjustment by the tax authorities which include the 2016-2020 tax years and has determined it is more likely than not it will not realize a benefit on $1,125 of the net operating loss carryforwards. The Company reduced the unrecognized tax benefit in 2021 as a result of the seller filing its 2020 New Zealand tax return and utilizing $68 of the net operating loss carryforwards. The Company will adjust this unrecognized tax benefit in light of changing facts and circumstances and with the lapse of the statute of limitations. The lapse of the statute of limitations would be recorded as an adjustment to the provision for income taxes in the period of the statute closure. The summary of changes to the unrecognized tax benefit for the year ended December 31, 2021 is as follows (in thousands): December 31, 2021 (1) Beginning balance $ — Additions from tax legislation changes for net operating loss carryforwards 1,125 Reductions related to net operating loss usage on 2020 tax returns (68) Ending balance $ 1,057 ___________________________ (1) No other unrecognized tax benefits were recognized in periods prior to the year ended December 31, 2021 that, if recognized, would reduce the effective tax rate. It is the Company’s policy to include interest and penalties related to income tax liabilities in income tax expense in the consolidated statements of income and comprehensive income. In addition, the Company records uncertain tax positions in accordance with ASC 740. No interest or penalties related to income tax liabilities were recognized for the years ended December 31, 2021, 2020 and 2019. In general, it is the practice and intention of the Company to reinvest the earnings of its non-domestic subsidiaries in activities outside the United States. Exceptions may be made on a year-by-year basis to repatriate earnings of certain foreign subsidiaries based on cash needs in the United States. In 2021, the Company distributed a portion of these foreign earnings which have been previously taxed in the United States and remitted $236 of foreign withholding taxes. In 2021, the Company made distributions between its German subsidiaries and remitted $1,493 of foreign withholding taxes. No deferred tax liabilities have been recorded for these distributions as the foreign withholding taxes are refundable on the German income tax return anticipated to be filed in 2022. No further withholding taxes are anticipated to be paid in future years related to this distribution and it is not anticipated to be remitted to the United States. The Company does not intend to distribute the remaining previously taxed earnings resulting from the one-time transition tax under the Tax Cuts and Jobs Act or capital in foreign subsidiaries, and has not recorded any deferred taxes related to such amounts. The remaining excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries is permanently reinvested, and the determination of any deferred tax liability on this amount is not practicable. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
LEASES | |
LEASES | 10. LEASES The Company has operating leases for office space, manufacturing facilities and equipment, computer equipment and automobiles. The Company did not have any finance leases in 2021 or 2020. For the years ended December 31, 2021 and 2020, the components of operating lease expense were as follows (in thousands): December 31, December 31, 2021 2020 Fixed operating lease expense $ 5,105 $ 4,548 Variable operating lease expense $ 707 $ 547 Short-term lease expense $ 237 $ 234 Supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2021 and 2020 are as follows (in thousands): December 31, December 31, 2021 2020 Cash paid for amounts included in the measurement of operating leases $ 5,321 $ 4,601 Right of use ("ROU") assets obtained in exchange for operating lease obligations $ 2,482 $ 3,626 ROU assets obtained in acquisitions (Note 2) $ 1,005 $ 2,735 The following table presents weighted average remaining lease term and discount rates related to the Company’s operating leases as of December 31, 2021 and 2020: December 31, 2021 2020 Weighted average remaining lease term (in years) 6.41 6.83 Weighted average discount rate 2.28 % 2.25 % The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2021 (in thousands): 2022 $ 4,846 2023 3,537 2024 2,690 2025 2,149 2026 1,123 Thereafter 4,178 Total undiscounted cash flows $ 18,523 Less: present value discount (1,199) Total lease liabilities $ 17,324 As of December 31, 2021, the Company has entered into leases for building renewal and expansion, with future minimum lease payments of $13,700 that have not yet commenced. The Company leases certain facilities from companies for which a member of management is a part owner. In connection with such leases, the Company made payments to the lessor of $700 and $500 during the years ended December 31, 2021 and 2020, respectively. Future minimum lease payments under these leases as of December 31, 2021 are $8,200. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Severance Benefit Agreements As of December 31, 2021, the Company has annually renewable employment agreements with certain of its executive officers. Among other things, the agreements provide for payments and other benefits if the employee’s employment terminates under certain circumstances, including the employee’s death, disability, voluntary resignation with good reason and involuntary termination without cause, as well as voluntary resignation with good reason and involuntary termination without cause within 90 days prior to or 24 months following a change in control of the Company. Litigation The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company’s consolidated financial statements. |
DEFERRED COMPENSATION ARRANGEME
DEFERRED COMPENSATION ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2021 | |
DEFERRED COMPENSATION ARRANGEMENTS | |
DEFERRED COMPENSATION ARRANGEMENTS | 12. DEFERRED COMPENSATION ARRANGEMENTS The Company has a deferred compensation arrangement with its Chief Executive Officer. This arrangement provides the Board and its committees with another mechanism to provide pay for performance based incentive compensation. It also allows for the Chief Executive Officer to make certain deferrals into the plan. The amount of the liability is comprised of liabilities from previous contributions. Amounts accrued relating to previous periods are $4,636 and $5,386 as of December 31, 2021 and 2020, respectively, of which $4,636 and $4,329 are included in other long-term liabilities in the consolidated balance sheets at December 31, 2021 and 2020 and $1,057 is included within accrued liabilities as of December 31, 2020, relating to amounts that were paid in 2021. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 13. SEGMENT INFORMATION The Company operates in one segment for the manufacture and marketing of controlled motion products for OEM and end user applications. The Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. Financial information related to the foreign subsidiaries is summarized below (in thousands): For the year ended December 31, 2021 2020 2019 Revenues derived from foreign subsidiaries $ 163,988 $ 152,491 $ 126,737 Identifiable foreign fixed assets were $32,807 and $34,855 as of December 31, 2021 and 2020, respectively. Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe, China, Mexico and New Zealand. Sales to customers outside of the United States by all subsidiaries were $185,288, $171,847 and $159,365 during 2021, 2020 and 2019, respectively. For 2021, 2020 and 2019 one customer accounted for 15%, 15% and 16% of revenues, respectively, and as of December 31, 2021 and 2020 for 10% and 22% of trade receivables, respectively. |
BUSINESS AND SUMMARY OF SIGNI_2
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. For business combinations, net assets acquired and liabilities assumed are recorded at their estimated fair values. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include instruments which are readily convertible into cash (original maturities of three months or less) and which are not subject to significant risk of changes in interest rates. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The provision for credit losses is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional provisions in the future. Activity in the provision for credit losses for 2021 and 2020 was as follows (in thousands): December 31, December 31, 2021 2020 Beginning balance $ 382 $ 405 Additional reserves 174 91 Write-offs (44) (123) Effect of foreign currency translation (6) 9 Ending balance $ 506 $ 382 |
Inventories | Inventories Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): December 31, December 31, 2021 2020 Parts and raw materials $ 65,223 $ 44,750 Work-in-process 9,529 6,186 Finished goods 14,981 12,042 $ 89,733 $ 62,978 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is classified as follows (in thousands): December 31, December 31, Useful lives 2021 2020 Land $ 979 $ 999 Building and improvements 5 - 39 years 14,398 14,169 Machinery, equipment, tools and dies 3 - 15 years 82,898 79,738 Construction work in progress 9,582 6,821 Furniture, fixtures and other 3 - 10 years 21,794 16,313 129,651 118,040 Less accumulated depreciation (72,668) (62,612) Property, plant and equipment, net $ 56,983 $ 55,428 Depreciation expense is provided using the straight-line method over the estimated useful lives of the assets. Amortization of building improvements is provided using the straight-line method over the life of the lease term or the life of the asset, whichever is shorter. Maintenance and repair costs are charged to operations as incurred. Major additions and improvements are capitalized. The cost and related accumulated depreciation of retired or sold property are removed from the accounts and the resulting gain or loss, if any, is reflected in earnings. Depreciation expense was $11,862, $10,057 and $9,139 in 2021, 2020 and 2019, respectively. |
Intangible Assets | Intangible Assets Intangible assets, other than goodwill, are initially recorded at fair value and are amortized over their estimated useful lives using an accelerated or straight-line method which approximates the pattern of expected cash flows over the remaining useful lives of the intangible assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews the carrying values of its long-lived assets, including property, plant and equipment and intangible assets, on an annual basis and whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Long-lived assets are recorded at their carrying amounts if the projected cash flows from their use will recover their carrying amounts on an undiscounted basis and without considering interest. If projected cash flows are less than their carrying value, the long-lived assets must be reduced to their estimated fair value. Judgment is required to project such cash flows and, if required, estimate the fair value of the impaired long-lived assets. The Company did not record any impairment charges for the years ended December 31, 2021, 2020 or 2019. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is not amortized, but is reviewed for impairment at least annually or more frequently if impairment indicators arise. The Company has defined reporting unit that is the same as its operating segment. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than its carrying amount, or if significant adverse changes in the Company’s future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, the Company can elect to forgo the qualitative assessment and perform the quantitative test. If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill. At October 31, 2021, the Company performed its annual goodwill impairment test and determined, after performing a qualitative test of the reporting unit, that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. Accordingly, there was no indication of impairment and the quantitative impairment test was not performed. The Company did not record any impairment charges for the years ended December 31, 2021, 2020 or 2019. |
Other Long-Term Assets | Other Long-Term Assets Other long-term assets include securities that the Company has purchased with the intent of funding the deferred compensation arrangements for certain executives of the Company. These items are accounted for at fair value on a recurring basis. Any changes in value are included in net income in the Company’s consolidated statements of income and comprehensive income. |
Warranty | Warranty The Company offers warranty coverage for its products. The length of the warranty period for its products is generally three months to two years and varies based on the product sold. The Company estimates the costs of repairing products under warranty based on the historical average cost of the repairs. The assumptions used to estimate warranty accruals are re-evaluated periodically in light of actual experience and, when appropriate, the accruals are adjusted. Estimated warranty costs are recorded at the time of sale of the related product, and are considered a cost of goods sold. Changes in the Company’s reserve for product warranty claims during 2021, 2020 and 2019 were as follows (in thousands): December 31, December 31, December 31, 2021 2020 2019 Warranty reserve at beginning of the year $ 1,571 $ 1,075 $ 971 Warranty reserves acquired 15 465 — Provision 543 34 210 Warranty expenditures (204) (97) (101) Effect of foreign currency translation (56) 94 (5) Warranty reserve at end of year $ 1,869 $ 1,571 $ 1,075 |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, December 31, 2021 2020 Compensation and fringe benefits $ 14,666 $ 11,184 Accrued business acquisition consideration (Note 2) 12,388 — Right of use liabilities 4,532 4,666 Warranty reserve 1,869 1,571 Income taxes payable 970 1,459 Other accrued expenses 7,231 5,982 $ 41,656 $ 24,862 |
Foreign Currency Translation | Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive loss, a component of stockholders’ equity in the accompanying consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the operating locations are included in the other (income) expense, net as incurred. |
Revenue Recognition | Revenue Recognition Refer to Note 3, Revenue Recognition |
Engineering and Development Costs | Engineering and Development Costs The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. Engineering and design as well as research and development costs are expensed as incurred. |
Basic and Diluted Earning per Share | Basic and Diluted Earning per Share Basic earnings per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding. Diluted earnings per share is determined by dividing the net income by the sum of: (1) the weighted average number of common shares outstanding and (2) if not anti-dilutive, the effect of potential common shares determined utilizing the treasury stock method. Basic and diluted weighted-average shares outstanding are as follows (in thousands): Year ended December 31, 2021 2020 2019 Basic weighted average shares outstanding 14,413 14,243 14,097 Dilutive effect of potential common shares 104 90 95 Diluted weighted average shares outstanding 14,517 14,333 14,192 For 2021, 2020 and 2019, the anti-dilutive common shares excluded from the calculation of diluted income per share were immaterial. |
Comprehensive Income | Comprehensive Income Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by and distributions to stockholders. |
Fair Value Accounting | Fair Value Accounting Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a framework for measuring fair value, which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs. These two types of inputs create the following three-level fair value hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. Level 3: Significant inputs to the valuation model that are unobservable. The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments. The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of December 31, 2021 and 2020, respectively, by level within the fair value hierarchy (in thousands): December 31, 2021 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,899 $ — $ — Deferred compensation plan assets 4,636 — — Foreign currency hedge contracts — 39 — Interest rate swaps, net — 220 — Contingent consideration (Note 2) — — (4,900) December 31, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,347 $ — $ — Deferred compensation plan assets 5,386 — — Interest rate swaps — (1,889) — The contingent consideration fair value measurement in connection with the acquisition of ALIO Industries (“ALIO”) is based on significant inputs not observable in the market and therefore constitute Level 3 inputs within the fair value hierarchy. The Company determines the initial fair value of contingent consideration liabilities using a Monte Carlo valuation model, which involves a simulation of future earnings generated during the earn out-period using management’s best estimates, or a probability-weighted discounted cash flow analysis. |
Derivative Financial Instruments | Derivative Financial Instruments Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") No. 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting. |
Income Taxes | Income Taxes The current provision for income taxes represents actual or estimated amounts payable or refundable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. A valuation allowance may be provided to the extent management deems it is more likely than not that deferred tax assets will not be realized. The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income, in the appropriate taxing jurisdictions, during the periods in which temporary differences, net operating losses and tax credits become realizable. Management believes that it is more likely than not that the Company will realize the benefits of these temporary differences and operating loss and tax credit carryforwards, net of valuation allowances. It is the Company's policy to include interest and penalties related to income tax liabilities in income tax expense on the consolidated statements of income and comprehensive Income. In addition, the Company records uncertain tax positions in accordance with ASC 740, Income Taxes |
Pension and Postretirement Welfare Plans | Pension and Postretirement Welfare Plans The Company records the service cost component of net benefit costs in cost of goods sold, selling, and general and administrative expenses. The interest cost component of net benefit costs is recorded in interest expense and the remaining components of net benefit costs, amortization of net losses and expected return on plan assets is recorded in other expense, net. |
Concentration of Credit Risk | Concentration of Credit Risk Trade receivables subject the Company to the potential for credit risk. To reduce this risk, the Company performs evaluations of its customers’ financial condition and creditworthiness at the time of sale, and updates those evaluations when necessary. See Note 13, Segment Information, |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Stock Split | Stock Split On March 10, 2021, the Board of Directors approved a 3 |
Twinsburg Consolidation | Twinsburg Consolidation In September 2021, the Company announced its plans to consolidate its manufacturing facility in Twinsburg, Ohio with its Watertown, New York and Reynosa, Mexico facilities in 2022. Costs of |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, and clarifies existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this ASU on January 1, 2021 on a prospective basis, as there were no relevant matters impacting the Company for which retrospective application was required, and the adoption did not have a material impact on its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Revenue from Contracts with Customers (Topic 606) |
BUSINESS AND SUMMARY OF SIGNI_3
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of activity in the allowance for doubtful accounts | Activity in the provision for credit losses for 2021 and 2020 was as follows (in thousands): December 31, December 31, 2021 2020 Beginning balance $ 382 $ 405 Additional reserves 174 91 Write-offs (44) (123) Effect of foreign currency translation (6) 9 Ending balance $ 506 $ 382 |
Schedule of inventories including costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value | Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows (in thousands): December 31, December 31, 2021 2020 Parts and raw materials $ 65,223 $ 44,750 Work-in-process 9,529 6,186 Finished goods 14,981 12,042 $ 89,733 $ 62,978 |
Schedule of classification of property, plant and equipment | Property, plant and equipment is classified as follows (in thousands): December 31, December 31, Useful lives 2021 2020 Land $ 979 $ 999 Building and improvements 5 - 39 years 14,398 14,169 Machinery, equipment, tools and dies 3 - 15 years 82,898 79,738 Construction work in progress 9,582 6,821 Furniture, fixtures and other 3 - 10 years 21,794 16,313 129,651 118,040 Less accumulated depreciation (72,668) (62,612) Property, plant and equipment, net $ 56,983 $ 55,428 |
Schedule of changes in the reserve for product warranty claims | Changes in the Company’s reserve for product warranty claims during 2021, 2020 and 2019 were as follows (in thousands): December 31, December 31, December 31, 2021 2020 2019 Warranty reserve at beginning of the year $ 1,571 $ 1,075 $ 971 Warranty reserves acquired 15 465 — Provision 543 34 210 Warranty expenditures (204) (97) (101) Effect of foreign currency translation (56) 94 (5) Warranty reserve at end of year $ 1,869 $ 1,571 $ 1,075 |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): December 31, December 31, 2021 2020 Compensation and fringe benefits $ 14,666 $ 11,184 Accrued business acquisition consideration (Note 2) 12,388 — Right of use liabilities 4,532 4,666 Warranty reserve 1,869 1,571 Income taxes payable 970 1,459 Other accrued expenses 7,231 5,982 $ 41,656 $ 24,862 |
Schedule of basic and diluted weighted-average shares outstanding | Basic and diluted weighted-average shares outstanding are as follows (in thousands): Year ended December 31, 2021 2020 2019 Basic weighted average shares outstanding 14,413 14,243 14,097 Dilutive effect of potential common shares 104 90 95 Diluted weighted average shares outstanding 14,517 14,333 14,192 |
Schedule of financial assets that are accounted for at fair value on a recurring basis | The following table presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of December 31, 2021 and 2020, respectively, by level within the fair value hierarchy (in thousands): December 31, 2021 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,899 $ — $ — Deferred compensation plan assets 4,636 — — Foreign currency hedge contracts — 39 — Interest rate swaps, net — 220 — Contingent consideration (Note 2) — — (4,900) December 31, 2020 Level 1 Level 2 Level 3 Assets (liabilities) Pension plan assets $ 6,347 $ — $ — Deferred compensation plan assets 5,386 — — Interest rate swaps — (1,889) — |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Spectrum Controls | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The preliminary allocation of the purchase price paid for Spectrum Controls is based on estimated fair values of the assets acquired and liabilities assumed of Spectrum Controls as of December 30, 2021 and is as follows (in thousands): Cash and cash equivalents $ 96 Trade receivables 3,612 Inventories 4,127 Other assets, net 560 Property, plant and equipment 278 Intangible assets 34,800 Goodwill 26,453 Current liabilities (1,215) Net purchase price $ 68,711 |
ORMEC and ALIO | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The preliminary allocation of the purchase price paid is based on estimated fair values of the assets acquired and liabilities assumed as of November 2, 2021 for ORMEC and November 4, 2021 for ALIO and is, collectively, as follows (in thousands): Cash and cash equivalents $ 2,059 Trade receivables 1,416 Inventories 2,802 Other assets, net 50 Property, plant and equipment 699 Right of use assets 1,005 Intangible assets 10,200 Goodwill 19,978 Other current liabilities (1,028) Deferred revenue (2,063) Lease liabilities (1,005) Net deferred income tax liabilities (655) Net purchase price $ 33,458 |
Dynamic Controls | |
ACQUISITIONS | |
Schedule of purchase price allocation and estimated fair value of the assets acquired | The allocation of the purchase price paid for Dynamic Controls is based on fair values of the assets acquired and liabilities assumed of Dynamic Controls as of March 7, 2020 and is as follows (in thousands): Cash and cash equivalents $ 11,437 Trade receivables 4,129 Inventories 3,329 Other assets, net 769 Property, plant and equipment 1,185 Right of use assets 2,735 Intangible assets 7,800 Goodwill 6,629 Current liabilities (7,354) Lease liabilities (2,739) Net deferred income tax liabilities (1,755) Net purchase price $ 26,165 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE RECOGNITION | |
Schedule of reconciliation of disaggregated revenue by target market and geography | The Company’s disaggregated revenues are as follows (in thousands): Year ended December 31, Target Market 2021 2020 2019 Vehicle $ 129,835 $ 110,365 $ 126,811 Industrial 135,440 114,143 124,196 Medical 86,129 83,191 51,586 Aerospace & Defense 31,746 39,711 47,748 Other 20,366 19,284 20,743 Total $ 403,516 $ 366,694 $ 371,084 Year ended December 31, Geography 2021 2020 2019 United States $ 239,528 $ 214,203 $ 244,347 Europe 129,414 126,985 124,914 Asia-Pacific 34,574 25,506 1,823 Total $ 403,516 $ 366,694 $ 371,084 |
Schedule of opening and closing balances of the Company's receivables, contract asset, and contract liability | The opening and closing balances of the Company’s contract liability are as follows (in thousands): December 31, December 31, 2021 2020 Contract liabilities in accrued liabilities $ 2,425 $ 898 Contract liabilities in other long-term liabilities 242 262 $ 2,667 $ 1,160 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for 2021 and 2020 is as follows (in thousands): 2021 2020 Beginning balance $ 61,860 $ 52,935 Goodwill acquired (Note 2) 46,431 6,629 Effect of foreign currency translation (1,658) 2,296 Ending balance $ 106,633 $ 61,860 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Intangible assets on the Company’s consolidated balance sheets consist of the following (in thousands): December 31, 2021 December 31, 2020 Gross Accumulated Net Book Gross Accumulated Net Book Life Amount amortization Value Amount amortization Value Customer lists 5 - 18 years $ 94,079 $ (27,639) $ 66,440 $ 69,833 $ (23,636) $ 46,197 Trade name 10 - 19 years 14,649 (5,927) 8,722 14,055 (5,061) 8,994 Design and technologies 10 - 15 years 34,241 (5,617) 28,624 15,555 (4,887) 10,668 Total $ 142,969 $ (39,183) $ 103,786 $ 99,443 $ (33,584) $ 65,859 |
Schedule of estimated amortization expense for intangible assets | Estimated amortization expense for intangible assets is as follows (in thousands): Estimated Amortization Expense 2022 $ 9,848 2023 9,860 2024 9,532 2025 9,515 2026 9,417 Thereafter 55,614 Total estimated amortization expense $ 103,786 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
STOCK-BASED COMPENSATION PLANS | |
Summary of restricted stock grants, fair value and performance based awards | Awards with Unvested Weighted average performance restricted stock grant date fair vesting For the year ended December 31, awards value requirements 2021 109,462 $ 32.06 63,432 2020 240,656 $ 22.34 150,605 2019 164,295 $ 27.97 115,316 |
Summary of restricted stock activity | Number of shares Balance, December 31, 2018 233,613 Awarded 164,295 Vested (113,106) Forfeited (4,749) Balance, December 31, 2019 280,053 Awarded 240,656 Vested (159,698) Forfeited (3,669) Balance, December 31, 2020 357,342 Awarded 109,462 Vested (162,419) Forfeited (10,808) Balance, December 31, 2021 293,577 |
Summary of performance based restricted stock activity | Performance grants Outstanding, December 31, 2018 — Awarded 115,316 Performance criteria met (76,278) Forfeited (824) Outstanding, December 31, 2019 38,214 Awarded 150,605 Performance criteria met (96,576) Forfeited (3,233) Outstanding, December 31, 2020 89,010 Awarded 63,432 Performance criteria met (42,290) Forfeited (10,229) Outstanding, December 31, 2021 99,923 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
DEBT OBLIGATIONS | |
Schedule of debt obligations | Debt obligations consisted of the following (in thousands): December 31, December 31, 2021 2020 Long-term Debt Revolving Credit Facility, long-term (1) $ 159,395 $ 120,656 Unamortized debt issuance costs (435) (577) Long-term debt $ 158,960 $ 120,079 (1) The effective rate of the Revolving Credit Facility is 2.41% at December 31, 2021 including the impact of the Company's interest rate swaps. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of fair value of the Company's derivative financial instruments as well as classification on the condensed consolidated balance sheets | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2021 and 2020 (in thousands): Asset Derivatives Fair value as of: Derivatives designated as Balance Sheet December 31, hedging instruments Location 2021 2020 Foreign currency contracts Prepaid expenses and other assets $ 39 $ — Interest rate products Other long-term assets 340 — $ 379 $ — Liability Derivatives Fair value as of: Derivatives designated as Balance Sheet December 31, hedging instruments Location 2021 2020 Interest rate products Accrued liabilities $ 120 $ — Interest rate products Other long-term liabilities — 1,889 $ 120 $ 1,889 |
Schedule of effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) | The table below presents the effect of cash flow hedge accounting on other comprehensive income (loss) (OCI) for the years ended December 31, 2021, 2020 and 2019 (in thousands): Amount of pre-tax gain (loss) recognized in OCI on derivatives Derivatives in cash flow hedging relationships Year ended December 31, 2021 2020 Interest rate products $ 1,180 $ (2,163) Amount of pre-tax (loss) gain reclassified Location of (loss) gain reclassified from accumulated OCI into income from accumulated OCI into income Year ended December 31, 2021 2020 2019 Interest expense $ (929) $ (637) $ 113 |
Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statements of income and comprehensive income | The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of income and comprehensive income for the years ended December 31, 2021, 2020 and 2019 (in thousands): Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded Year ended December 31, Derivatives designated as hedging instruments Income Statement Location 2021 2020 2019 Interest rate products Interest Expense $ 3,236 $ 3,716 $ 5,134 |
Schedule of fair value provides the location that derivative assets and liabilities | Derivative assets : Net amounts Gross amounts of assets Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2021 assets balance sheets balance sheets instruments received Net amount Derivatives $ 387 $ 8 $ 379 $ — $ — $ 379 Derivative liabilities: Net amounts Gross amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2021 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 120 $ — $ 120 $ — $ — $ 120 Net amounts Gross amounts of liabilities Gross amounts not offset in the consolidated As of Gross amounts offset in the presented in the balance sheets December 31, of recognized consolidated consolidated Financial Cash collateral 2020 liabilities balance sheets balance sheets instruments received Net amount Derivatives $ 1,889 $ — $ 1,889 $ — $ — $ 1,889 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Schedule of provision for income taxes based on income before income taxes | The provision for income taxes is based on income before income taxes as follows (in thousands): For the year ended December 31, December 31, December 31, 2021 2020 2019 Domestic $ 10,642 $ 8,478 $ 17,188 Foreign 12,471 10,298 6,653 Income before income taxes $ 23,113 $ 18,776 $ 23,841 |
Schedule of components of the total provision for income taxes | Components of the total income tax (benefit) provision are as follows (in thousands): For the year ended December 31, December 31, December 31, 2021 2020 2019 Current provision Domestic $ 1,866 $ 2,167 $ 4,313 Foreign 3,288 3,485 2,618 Total current provision 5,154 5,652 6,931 Deferred (benefit) provision Domestic 649 288 199 Foreign (6,784) (807) (311) Total deferred (benefit) provision (6,135) (519) (112) Income tax (benefit) provision $ (981) $ 5,133 $ 6,819 |
Schedule of differences in the provision for income taxes from the amount determined by applying the federal statutory rate | For the year ended December 31, December 31, December 31, 2021 2020 2019 Tax provision, computed at statutory rate 21.0 % 21.0 % 21.0 % State tax, net of federal impact 2.2 % 4.2 % 4.5 % Change in valuation allowance 7.2 % 0.0 % 0.3 % Effect of foreign tax rate differences 3.9 % 4.3 % 1.5 % Permanent items, other 0.2 % (0.2) % 1.4 % Section 162(m) compensation 3.0 % 2.2 % 1.1 % R&D tax credits (2.8) % (3.6) % (2.5) % Effect of Tax Cuts and Jobs Act 1.2 % (1.3) % (0.4) % Subpart F income (1.0) % 1.3 % 0.0 % Tax examinations 0.0 % 0.0 % 1.8 % Investment tax credits (5.6) % 0.0 % 0.0 % Net operating loss carryforwards (37.2) % 0.0 % 0.0 % Unrecognized tax benefits 4.9 % 0.0 % 0.0 % Other (1.2) % (0.6) % (0.1) % Income tax (benefit) provision (4.2) % 27.3 % 28.6 % |
Schedule of tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities | The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands): December 31, December 31, 2021 2020 Noncurrent deferred tax assets: Employee benefit plans $ 2,085 $ 2,500 Net operating loss and tax credit carryforwards 9,802 2,217 Accrued expenses and reserves 915 969 Other 218 697 Total noncurrent deferred tax assets 13,020 6,383 Valuation allowance (2,896) (1,176) Net noncurrent deferred tax assets: $ 10,124 $ 5,207 Net noncurrent deferred tax liabilities: Property and equipment $ 3,238 $ 3,448 Goodwill and intangibles 6,484 5,629 Other 121 459 Total noncurrent deferred tax liabilities $ 9,843 $ 9,536 Net deferred tax asset/(deferred tax liability) $ 281 $ (4,329) Presented as follows: Noncurrent deferred income tax assets $ 5,321 $ 330 Noncurrent deferred income tax liabilities (5,040) (4,659) Net deferred tax asset (liability) $ 281 $ (4,329) |
Summary Of Operating Loss And Tax Credit Carryforwards [Table Text Block] | As of December 31, 2021, the Company has the following gross carryforwards available (in thousands): Amount Jurisdiction Tax Attribute (in thousands) Begin to expire U.S. State Net Operating Losses (1) $ 4,812 2025 International Net Operating Losses (1) $ 1,678 2025 International Net Operating Losses - Unlimited Carryforward (1) $ 22,886 No expiration U.S. Federal Foreign Tax Credits $ 1,003 2027 International R&D Tax Credits $ 513 2026 |
Schedule of changes to the unrecognized tax benefit | The summary of changes to the unrecognized tax benefit for the year ended December 31, 2021 is as follows (in thousands): December 31, 2021 (1) Beginning balance $ — Additions from tax legislation changes for net operating loss carryforwards 1,125 Reductions related to net operating loss usage on 2020 tax returns (68) Ending balance $ 1,057 ___________________________ (1) No other unrecognized tax benefits were recognized in periods prior to the year ended December 31, 2021 that, if recognized, would reduce the effective tax rate. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
LEASES | |
Schedule of components of operating lease expense | For the years ended December 31, 2021 and 2020, the components of operating lease expense were as follows (in thousands): December 31, December 31, 2021 2020 Fixed operating lease expense $ 5,105 $ 4,548 Variable operating lease expense $ 707 $ 547 Short-term lease expense $ 237 $ 234 |
Schedule of supplemental cash flow information related to the operating leases | Supplemental cash flow information related to the Company’s operating leases for the years ended December 31, 2021 and 2020 are as follows (in thousands): December 31, December 31, 2021 2020 Cash paid for amounts included in the measurement of operating leases $ 5,321 $ 4,601 Right of use ("ROU") assets obtained in exchange for operating lease obligations $ 2,482 $ 3,626 ROU assets obtained in acquisitions (Note 2) $ 1,005 $ 2,735 |
Schedule of Lease assets and liabilities and other quantitative information | The following table presents weighted average remaining lease term and discount rates related to the Company’s operating leases as of December 31, 2021 and 2020: December 31, 2021 2020 Weighted average remaining lease term (in years) 6.41 6.83 Weighted average discount rate 2.28 % 2.25 % |
Schedule of maturity of the operating lease liabilities | The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2021 (in thousands): 2022 $ 4,846 2023 3,537 2024 2,690 2025 2,149 2026 1,123 Thereafter 4,178 Total undiscounted cash flows $ 18,523 Less: present value discount (1,199) Total lease liabilities $ 17,324 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
SEGMENT INFORMATION | |
Schedule of revenue related to foreign subsidiaries | Financial information related to the foreign subsidiaries is summarized below (in thousands): For the year ended December 31, 2021 2020 2019 Revenues derived from foreign subsidiaries $ 163,988 $ 152,491 $ 126,737 |
BUSINESS AND SUMMARY OF SIGNI_4
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Activity in the allowance for doubtful accounts | ||
Beginning balance | $ 382 | $ 405 |
Additional reserves | 174 | 91 |
Writeoffs | (44) | (123) |
Effect of foreign currency translation | (6) | 9 |
Ending balance | 506 | 382 |
Inventories | ||
Parts and raw materials | 65,223 | 44,750 |
Work-in-process | 9,529 | 6,186 |
Finished goods | 14,981 | 12,042 |
Inventories | $ 89,733 | $ 62,978 |
BUSINESS AND SUMMARY OF SIGNI_5
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 129,651 | $ 118,040 | |
Less accumulated depreciation | (72,668) | (62,612) | |
Property, plant and equipment, net | 56,983 | 55,428 | |
Depreciation expense | 11,862 | 10,057 | $ 9,139 |
Land | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | 979 | 999 | |
Building and improvements | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 14,398 | $ 14,169 | |
Building and improvements | Minimum | |||
Property, plant and equipment | |||
Useful lives | 5 years | 5 years | |
Building and improvements | Maximum | |||
Property, plant and equipment | |||
Useful lives | 39 years | 39 years | |
Machinery, equipment, tools and dies | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 82,898 | $ 79,738 | |
Machinery, equipment, tools and dies | Minimum | |||
Property, plant and equipment | |||
Useful lives | 3 years | 3 years | |
Machinery, equipment, tools and dies | Maximum | |||
Property, plant and equipment | |||
Useful lives | 15 years | 15 years | |
Construction work in progress | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 9,582 | $ 6,821 | |
Furniture, fixtures and other | |||
Property, plant and equipment | |||
Property, plant and equipment, gross | $ 21,794 | $ 16,313 | |
Furniture, fixtures and other | Minimum | |||
Property, plant and equipment | |||
Useful lives | 3 years | 3 years | |
Furniture, fixtures and other | Maximum | |||
Property, plant and equipment | |||
Useful lives | 10 years | 10 years |
BUSINESS AND SUMMARY OF SIGNI_6
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Goodwill | |||
Number of reporting units | item | 1 | ||
Goodwill impairment | $ | $ 0 | $ 0 | $ 0 |
BUSINESS AND SUMMARY OF SIGNI_7
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Warranty, Accrued Liabilities, and Basic and Diluted Income per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Changes in the reserve for product warranty claims | |||
Warranty reserve at beginning of the year | $ 1,571 | $ 1,075 | $ 971 |
Warranty reserves acquired | 15 | 465 | |
Provision | 543 | 34 | 210 |
Warranty expenditures | (204) | (97) | (101) |
Effect of foreign currency translation | (56) | 94 | (5) |
Warranty reserve at end of year | 1,869 | 1,571 | 1,075 |
ACCRUED LIABILITIES | |||
Compensation and fringe benefits | 14,666 | 11,184 | |
Accrued business acquisition consideration (Note 2) | 12,388 | ||
Right of use liabilities | $ 4,532 | $ 4,666 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued liabilities | Accrued liabilities | |
Warranty reserve | $ 1,869 | $ 1,571 | $ 1,075 |
Income taxes payable | 970 | 1,459 | |
Other accrued expenses | 7,231 | 5,982 | |
Accrued liabilities | $ 41,656 | $ 24,862 | |
Basic and Diluted Income per Share | |||
Basic weighted average shares outstanding | 14,413 | 14,243 | 14,097 |
Dilutive effect of potential common shares | 104 | 90 | 95 |
Diluted weighted average shares outstanding | 14,517 | 14,333 | 14,192 |
Minimum | |||
Warranty | |||
Warranty period | 3 months | ||
Maximum | |||
Warranty | |||
Warranty period | 2 years |
BUSINESS AND SUMMARY OF SIGNI_8
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Accounting (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets (liabilities) | ||
Deferred compensation plan assets | $ 5,122 | $ 4,483 |
Recurring basis | Level 1 | ||
Assets (liabilities) | ||
Pension plan assets | 6,899 | 6,347 |
Deferred compensation plan assets | 4,636 | 5,386 |
Recurring basis | Level 2 | ||
Assets (liabilities) | ||
Foreign currency hedge contracts | 39 | |
Interest rate swaps, net/assets | 220 | |
Interest rate swaps/liabilities | $ (1,889) | |
Recurring basis | Level 3 | ||
Assets (liabilities) | ||
Contingent consideration (Note 2) | $ (4,900) |
BUSINESS AND SUMMARY OF SIGNI_9
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | Mar. 10, 2021 | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Basis of Presentation and Policies [Line Items] | ||||
Common stock split | 1.5 | |||
Business development | $ 1,299 | $ 473 | $ 113 | |
Manufacturing Facility in Twinsburg, Ohio | ||||
Basis of Presentation and Policies [Line Items] | ||||
Business development | $ 545 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ / shares in Units, $ in Thousands | Dec. 30, 2021USD ($)paymentinstallment$ / sharesshares | Nov. 04, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Nov. 02, 2021 | Mar. 07, 2020USD ($) |
ACQUISITIONS | |||||||||
Cash paid for acquisition | $ 47,254 | $ 14,728 | |||||||
Right of use assets | 1,005 | 2,735 | |||||||
Goodwill | 106,633 | 61,860 | $ 52,935 | ||||||
Revenues | 403,516 | 366,694 | $ 371,084 | ||||||
Pro forma Condensed Combined Financial Information | |||||||||
Revenues | 443,010 | 415,577 | |||||||
Spectrum Controls | |||||||||
ACQUISITIONS | |||||||||
Purchase price | $ 68,711 | ||||||||
Transaction costs related to acquisition | 93 | ||||||||
Cash paid for acquisition | 26,076 | ||||||||
Shares issued for acquisition | $ 17,970 | ||||||||
Number of share issued for consideration | shares | 502,512,000 | ||||||||
Stock price | $ / shares | $ 35.76 | ||||||||
Consideration remaining payable | $ 24,665 | ||||||||
Consideration in cash and stock at closing of business combination | $ 44,046 | ||||||||
Number of remaining payments | payment | 2 | ||||||||
Amount payable at each payment | $ 12,500 | ||||||||
Number of equal installments | installment | 2 | ||||||||
Percentage of remaining consideration in cash | 50.00% | ||||||||
Percentage of remaining consideration in stock | 50.00% | ||||||||
Cash and cash equivalents | $ 96 | ||||||||
Trade receivables | 3,612 | ||||||||
Inventories | 4,127 | ||||||||
Other assets, net | 560 | ||||||||
Property, plant and equipment | 278 | ||||||||
Intangible assets | 34,800 | ||||||||
Goodwill | 26,453 | ||||||||
Other current liabilities | (1,215) | ||||||||
Net purchase price | 68,711 | ||||||||
Spectrum Controls | Accrued liabilities. | |||||||||
ACQUISITIONS | |||||||||
Consideration remaining payable | 12,388 | ||||||||
Spectrum Controls | Other long-term liabilities | |||||||||
ACQUISITIONS | |||||||||
Consideration remaining payable | 12,277 | ||||||||
Spectrum Controls | Technology | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 13,500 | ||||||||
Amortization period (in years) | 10 years | ||||||||
Spectrum Controls | Customer lists | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 21,000 | ||||||||
Amortization period (in years) | 18 years | ||||||||
Spectrum Controls | Trade name | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 300 | ||||||||
Amortization period (in years) | 10 years | ||||||||
ORMEC | |||||||||
ACQUISITIONS | |||||||||
Business acquisition percentage of voting interests acquired | 100.00% | ||||||||
ALIO | |||||||||
ACQUISITIONS | |||||||||
Business acquisition percentage of voting interests acquired | 100.00% | ||||||||
ORMEC and ALIO | |||||||||
ACQUISITIONS | |||||||||
Purchase price | $ 33,458 | ||||||||
Transaction costs related to acquisition | 409 | ||||||||
Cash paid for acquisition | 23,333 | ||||||||
Shares issued for acquisition | $ 5,526 | ||||||||
Number of share issued for consideration | shares | 150,038 | ||||||||
Stock price | $ / shares | $ 36.83 | ||||||||
Fair value of contingent consideration | $ 4,900 | 0 | |||||||
Estimated working capital provision | 301 | ||||||||
Cash and cash equivalents | 2,059 | ||||||||
Trade receivables | 1,416 | ||||||||
Inventories | 2,802 | ||||||||
Other assets, net | 50 | ||||||||
Property, plant and equipment | 699 | ||||||||
Right of use assets | 1,005 | ||||||||
Intangible assets | 10,200 | ||||||||
Goodwill | 19,978 | ||||||||
Other current liabilities | (1,028) | ||||||||
Deferred revenue | (2,063) | ||||||||
Lease liabilities | (1,005) | ||||||||
Net deferred income tax liabilities | (655) | ||||||||
Net purchase price | 33,458 | ||||||||
Revenues | 2,063 | ||||||||
ORMEC and ALIO | Technology | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 4,000 | ||||||||
Amortization period (in years) | 6 years | ||||||||
ORMEC and ALIO | Customer lists | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 5,700 | ||||||||
Amortization period (in years) | 11 years | ||||||||
ORMEC and ALIO | Trade name | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 500 | ||||||||
Amortization period (in years) | 10 years | ||||||||
Dynamic Controls | |||||||||
ACQUISITIONS | |||||||||
Business acquisition percentage of voting interests acquired | 100.00% | ||||||||
Transaction costs related to acquisition | 473 | ||||||||
Cash and cash equivalents | $ 11,437 | ||||||||
Trade receivables | 4,129 | ||||||||
Inventories | 3,329 | ||||||||
Other assets, net | 769 | ||||||||
Property, plant and equipment | 1,185 | ||||||||
Right of use assets | 2,735 | ||||||||
Intangible assets | 7,800 | ||||||||
Goodwill | 6,629 | ||||||||
Other current liabilities | (7,354) | ||||||||
Lease liabilities | (2,739) | ||||||||
Net deferred income tax liabilities | (1,755) | ||||||||
Net purchase price | $ 26,165 | ||||||||
Increase (decrease) in goodwill owing to measurement period adjustments | $ 77 | $ (268) | |||||||
Revenues | 24,124 | ||||||||
Distributed Earnings | $ 945 | ||||||||
Dynamic Controls | Technology | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 1,900 | ||||||||
Amortization period (in years) | 13 years | ||||||||
Dynamic Controls | Customer lists | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 4,400 | ||||||||
Amortization period (in years) | 16 years | ||||||||
Dynamic Controls | Trade name | |||||||||
ACQUISITIONS | |||||||||
Intangible assets | $ 1,500 | ||||||||
Amortization period (in years) | 18 years |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Number of reportable segment | segment | 1 | ||
Revenues | $ 403,516 | $ 366,694 | $ 371,084 |
Vehicle | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 129,835 | 110,365 | 126,811 |
Industrial | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 135,440 | 114,143 | 124,196 |
Medical | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 86,129 | 83,191 | 51,586 |
Aerospace & Defense | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 31,746 | 39,711 | 47,748 |
Other | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 20,366 | 19,284 | 20,743 |
United States | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 239,528 | 214,203 | 244,347 |
Europe | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | 129,414 | 126,985 | 124,914 |
Asia-Pacific | |||
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions | |||
Revenues | $ 34,574 | $ 25,506 | $ 1,823 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
REVENUE RECOGNITION | ||
Contract liabilities in accrued liabilities | $ 2,425 | $ 898 |
Contract liabilities in other long-term liabilities | 242 | 262 |
Contract liabilities | $ 2,667 | $ 1,160 |
REVENUE RECOGNITION - Practical
REVENUE RECOGNITION - Practical Expedients (Details) | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE RECOGNITION | |
Incremental costs of obtaining a contract | true |
Remaining performance obligations | true |
The time value of money | true |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Change in goodwill | ||
Beginning balance | $ 61,860 | $ 52,935 |
Goodwill acquired (Note 2) | 46,431 | 6,629 |
Effect of foreign currency translation | (1,658) | 2,296 |
Ending balance | $ 106,633 | $ 61,860 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Intangible assets subject to amortization | |||
Gross Amount | $ 142,969 | $ 99,443 | |
Accumulated amortization | (39,183) | (33,584) | |
Net Book Value | 103,786 | 65,859 | |
Amortization expense for intangible assets | 6,245 | 5,928 | $ 5,718 |
Estimated amortization expense | |||
2022 | 9,848 | ||
2023 | 9,860 | ||
2024 | 9,532 | ||
2025 | 9,515 | ||
2026 | 9,417 | ||
Thereafter | 55,614 | ||
Total estimated amortization expense | 103,786 | ||
ORMEC Systems Corp, ALIO Industries and Spectrum Controls, Inc | |||
Intangible assets subject to amortization | |||
Intangible assets resulting from the acquisitions | 45,000 | ||
Customer lists | |||
Intangible assets subject to amortization | |||
Gross Amount | 94,079 | 69,833 | |
Accumulated amortization | (27,639) | (23,636) | |
Net Book Value | $ 66,440 | 46,197 | |
Customer lists | Minimum | |||
Intangible assets subject to amortization | |||
Estimated Life | 5 years | ||
Customer lists | Maximum | |||
Intangible assets subject to amortization | |||
Estimated Life | 18 years | ||
Trade name | |||
Intangible assets subject to amortization | |||
Gross Amount | $ 14,649 | 14,055 | |
Accumulated amortization | (5,927) | (5,061) | |
Net Book Value | $ 8,722 | 8,994 | |
Trade name | Minimum | |||
Intangible assets subject to amortization | |||
Estimated Life | 10 years | ||
Trade name | Maximum | |||
Intangible assets subject to amortization | |||
Estimated Life | 19 years | ||
Design and technologies | |||
Intangible assets subject to amortization | |||
Gross Amount | $ 34,241 | 15,555 | |
Accumulated amortization | (5,617) | (4,887) | |
Net Book Value | $ 28,624 | $ 10,668 | |
Design and technologies | Minimum | |||
Intangible assets subject to amortization | |||
Estimated Life | 10 years | ||
Design and technologies | Maximum | |||
Intangible assets subject to amortization | |||
Estimated Life | 15 years |
STOCK-BASED COMPENSATION PLAN_2
STOCK-BASED COMPENSATION PLANS - Stock Incentive Plans and Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
STOCK-BASED COMPENSATION | |||
Shares of common stock available for grant under stock incentive plans | 1,031,128 | ||
Additional disclosures | |||
Stock based compensation expense, net of forfeitures | $ 4,161 | $ 3,550 | $ 3,203 |
Restricted Stock | |||
STOCK-BASED COMPENSATION | |||
Weighted average grant date fair value (in dollars per share) | $ 32.06 | $ 22.34 | $ 27.97 |
Service period over which value of the shares is amortized to compensation expense | 3 years | ||
Number of Non-vested Restricted Shares | |||
Outstanding at beginning of period (in shares) | 357,342 | 280,053 | 233,613 |
Awarded (in shares) | 109,462 | 240,656 | 164,295 |
Vested (in shares) | (162,419) | (159,698) | (113,106) |
Forfeited (in shares) | (10,808) | (3,669) | (4,749) |
Outstanding at end of period (in shares) | 293,577 | 357,342 | 280,053 |
Additional disclosures | |||
Stock based compensation expense, net of forfeitures | $ 4,161 | $ 3,550 | $ 3,203 |
Unrecognized compensation expense | 6,555 | ||
Unrecognized compensation expense, expected to be recognized in next fiscal year | $ 5,155 | ||
Restricted Stock | Minimum | |||
STOCK-BASED COMPENSATION | |||
Service period of earned grants | 3 years | ||
Restricted Stock | Maximum | |||
STOCK-BASED COMPENSATION | |||
Service period of earned grants | 5 years | ||
Restricted Stock | Performance based vesting | |||
Number of Non-vested Restricted Shares | |||
Outstanding at beginning of period (in shares) | 89,010 | 38,214 | |
Awarded (in shares) | 63,432 | 150,605 | 115,316 |
Performance criteria met (in shares) | (42,290) | (96,576) | (76,278) |
Forfeited (in shares) | (10,229) | (3,233) | (824) |
Outstanding at end of period (in shares) | 99,923 | 89,010 | 38,214 |
STOCK-BASED COMPENSATION PLAN_3
STOCK-BASED COMPENSATION PLANS - Employee Stock Ownership Plan (Details) - ESOP $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)h / yr | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Employee Stock Ownership Plan | |||
Minimum hours of work per year for employees to be covered under Employee Stock Ownership Plan (ESOP) | h / yr | 1,000 | ||
Annual contribution by employer as a percentage of pretax income before the contribution | 5.00% | 5.00% | 5.00% |
Company contributions | $ | $ 1,206 | $ 988 | $ 1,189 |
STOCK-BASED COMPENSATION PLAN_4
STOCK-BASED COMPENSATION PLANS - Defined Contribution Plan and Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Defined Contribution Plan | |||
Matching percentage per dollar of the first 3% of participant deferral | 100.00% | 100.00% | 100.00% |
First specified percentage of participant deferral upon which employer matches 100% contribution per dollar | 3.00% | 3.00% | 3.00% |
Matching percentage per dollar of the next 2% contribution | 50.00% | 50.00% | 50.00% |
Next specified percentage of employee contribution upon which employer matches 50% contribution per dollar | 2.00% | 2.00% | 2.00% |
Participant deferral (as a percent) | 5.00% | 5.00% | 5.00% |
Net costs related to defined contribution plan | $ 1,672 | $ 1,774 | $ 1,362 |
Dividends | |||
Dividends paid (in dollars per share) | $ 0.095 | $ 0.08 | $ 0.08 |
Total dividends paid | $ 1,371 | $ 1,160 | $ 1,170 |
Maximum | |||
Defined Contribution Plan | |||
Specified percentage of employee contribution upon which employer matches contribution | 4.00% | 4.00% | 4.00% |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2021CNY (¥) | |
DEBT OBLIGATIONS | |||
Unamortized debt issuance costs | $ (435,000) | $ (577,000) | |
Long-term debt | 158,960,000 | 120,079,000 | |
Senior Credit Facilities | |||
DEBT OBLIGATIONS | |||
Deferred financing costs net of accumulated amortization | 435,000 | ||
Revolving Credit Facility | |||
DEBT OBLIGATIONS | |||
Revolving Credit Facility, long-term | $ 159,395,000 | 120,656,000 | |
Effective rate (as a percent) | 2.41% | 2.41% | |
Amended Revolving Facility | |||
DEBT OBLIGATIONS | |||
Maximum borrowing capacity | $ 225,000,000 | ||
Available borrowing capacity | $ 75,000,000 | ||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.15% | ||
Leverage ratio | 4.00% | ||
Unused amount of credit facility | $ 65,605 | ||
Amended Revolving Facility | Minimum | |||
DEBT OBLIGATIONS | |||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.10% | ||
Amended Revolving Facility | Maximum | |||
DEBT OBLIGATIONS | |||
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent) | 0.225% | ||
Amended Revolving Facility | LIBOR | |||
DEBT OBLIGATIONS | |||
Applicable margin (as a percent) | 1.375% | ||
Amended Revolving Facility | LIBOR | Minimum | |||
DEBT OBLIGATIONS | |||
Applicable margin (as a percent) | 1.00% | ||
Amended Revolving Facility | LIBOR | Maximum | |||
DEBT OBLIGATIONS | |||
Applicable margin (as a percent) | 1.75% | ||
Amended Revolving Facility | Prime Rate | |||
DEBT OBLIGATIONS | |||
Applicable margin (as a percent) | 0.375% | ||
Amended Revolving Facility | Prime Rate | Minimum | |||
DEBT OBLIGATIONS | |||
Applicable margin (as a percent) | 0.00% | ||
Amended Revolving Facility | Prime Rate | Maximum | |||
DEBT OBLIGATIONS | |||
Applicable margin (as a percent) | 0.75% | ||
China Credit Facility | |||
DEBT OBLIGATIONS | |||
Maximum borrowing capacity | $ 1,574,000 | ¥ 10,000 | |
Average outstanding borrowings | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2021 | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2020USD ($)derivative | Feb. 28, 2017USD ($)instrument | |
Derivative financial instruments | ||||||
Term of contract | 30 days | |||||
Other (income) expense | ||||||
Derivative financial instruments | ||||||
Gain (loss) on foreign currency contracts | $ 170 | |||||
Interest Rate Swaps | ||||||
Derivative financial instruments | ||||||
Number of derivative instruments | 2 | 3 | ||||
Notional amount of interest rate swap derivatives | $ 40,000 | |||||
Estimated amount to be reclassified as an increase to interest expense | 342 | |||||
Interest Rate Swaps | Minimum | ||||||
Derivative financial instruments | ||||||
Notional amount of interest rate swap derivatives | $ 20,000 | |||||
Interest Rate Swaps | Maximum | ||||||
Derivative financial instruments | ||||||
Notional amount of interest rate swap derivatives | $ 60,000 | |||||
Foreign currency contracts | ||||||
Derivative financial instruments | ||||||
Notional Amount | 13,500 | |||||
Derivatives in cash flow hedging relationships | Interest rate products | ||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | ||||||
Amount of pre-tax loss recognized in OCI on derivatives | 1,180 | $ (2,163) | ||||
Derivatives in cash flow hedging relationships | Interest rate products | Interest expense | ||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | ||||||
Amount of pre-tax (loss) gain reclassified from accumulated OCI into income | (929) | (637) | $ 113 | |||
Derivatives designated as hedging instruments | ||||||
Derivative financial instruments | ||||||
Fair value of derivative Asset | 379 | |||||
Fair value of derivative liability | 120 | 1,889 | ||||
Derivatives designated as hedging instruments | Interest rate products | Interest expense | ||||||
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income | ||||||
Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded | 3,236 | 3,716 | $ 5,134 | |||
Derivatives designated as hedging instruments | Interest rate products | Other long-term assets | ||||||
Derivative financial instruments | ||||||
Fair value of derivative Asset | 340 | |||||
Derivatives designated as hedging instruments | Interest rate products | Accrued liabilities. | ||||||
Derivative financial instruments | ||||||
Fair value of derivative liability | 120 | |||||
Derivatives designated as hedging instruments | Interest rate products | Other long-term liabilities | ||||||
Derivative financial instruments | ||||||
Fair value of derivative liability | $ 1,889 | |||||
Derivatives designated as hedging instruments | Foreign currency contracts | Prepaid expenses and other assets | ||||||
Derivative financial instruments | ||||||
Fair value of derivative Asset | $ 39 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effects of offsetting (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Derivative assets: | ||
Gross amounts of recognized assets | $ 387 | |
Gross amounts offset in the consolidated balance sheets | 8 | |
Net amounts of assets presented in the consolidated balance sheets | 379 | |
Gross amounts not offset in the consolidated balance sheets: Net amount | 379 | |
Derivative liabilities: | ||
Gross amounts of recognized liabilities | 120 | $ 1,889 |
Net amounts of liabilities presented in the consolidated balance sheets | 120 | 1,889 |
Gross amounts not offset in the consolidated balance sheets: Net amount | $ 120 | $ 1,889 |
INCOME TAXES - Tax Effects and
INCOME TAXES - Tax Effects and Tax Cuts and Jobs Act (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of components of income before income taxes | |||
Domestic | $ 10,642 | $ 8,478 | $ 17,188 |
Foreign | 12,471 | 10,298 | 6,653 |
Income before income taxes | 23,113 | 18,776 | 23,841 |
Current provision | |||
Domestic | 1,866 | 2,167 | 4,313 |
Foreign | 3,288 | 3,485 | 2,618 |
Total current provision | 5,154 | 5,652 | 6,931 |
Deferred (benefit) provision | |||
Domestic | 649 | 288 | 199 |
Foreign | (6,784) | (807) | (311) |
Total deferred (benefit) provision | (6,135) | (519) | (112) |
Income tax (benefit) provision | $ (981) | $ 5,133 | $ 6,819 |
Differences in the (benefit) provision for income taxes from the amount determined by applying the federal statutory rate | |||
Tax provision, computed at statutory rate (as a percent) | 21.00% | 21.00% | 21.00% |
State tax, net of federal impact (as a percent) | 2.20% | 4.20% | 4.50% |
Change in valuation allowance (as a percent) | 7.20% | 0.00% | 0.30% |
Effect of foreign tax rate differences (as a percent) | 3.90% | 4.30% | 1.50% |
Permanent items, other (as a percent) | 0.20% | (0.20%) | 1.40% |
Section 162(m) compensation | 3.00% | 2.20% | 1.10% |
R&D tax credits (as a percent) | (2.80%) | (3.60%) | (2.50%) |
Effect of Tax Cuts and Jobs Act (as a percent) | 1.20% | (1.30%) | (0.40%) |
Subpart F income (as a percent) | (1.00%) | 1.30% | 0.00% |
Tax examinations (as a percent) | 0.00% | 0.00% | 1.80% |
Investment tax credits (as a percent) | (5.60%) | (0.00%) | (0.00%) |
Net operating loss carryforwards (as a percent) | (37.20%) | (0.00%) | (0.00%) |
Unrecognized tax benefits (as a percent) | 4.90% | 0.00% | 0.00% |
Other (as a percent) | (1.20%) | (0.60%) | (0.10%) |
Income tax (benefit) provision (as a percent) | (4.20%) | 27.30% | 28.60% |
Noncurrent deferred tax assets: | |||
Employee benefit plans | $ 2,085 | $ 2,500 | |
Net operating loss and tax credit carryforwards | 9,802 | 2,217 | |
Accrued expenses and reserves | 915 | 969 | |
Other | 218 | 697 | |
Total noncurrent deferred tax assets | 13,020 | 6,383 | |
Valuation allowance | (2,896) | (1,176) | |
Net noncurrent deferred tax assets: | 10,124 | 5,207 | |
Net noncurrent deferred tax liabilities: | |||
Property and equipment | 3,238 | 3,448 | |
Goodwill and intangibles | 6,484 | 5,629 | |
Other | 121 | 459 | |
Total noncurrent deferred tax liabilities | 9,843 | 9,536 | |
Noncurrent deferred income tax assets | 5,321 | 330 | |
Noncurrent deferred income tax liabilities | (5,040) | (4,659) | |
Net deferred tax asset | 281 | ||
Net deferred tax asset/(deferred tax liability) | $ (4,329) | ||
Foreign Tax Credit [Member] | |||
Net noncurrent deferred tax liabilities: | |||
Tax Credit Carryforward, Amount | 92 | ||
Domestic Tax Authority [Member] | |||
Net noncurrent deferred tax liabilities: | |||
Operating Loss Carryforwards | 4,812 | ||
Domestic Tax Authority [Member] | Foreign Tax Credit [Member] | |||
Net noncurrent deferred tax liabilities: | |||
Tax Credit Carryforward, Amount | 1,003 | ||
Foreign | |||
Net noncurrent deferred tax liabilities: | |||
Operating Loss Carryforwards | 1,678 | ||
Operating Loss Carryforwards, Unlimited Carryforward | 22,886 | ||
Foreign | R&D Tax Credits | |||
Net noncurrent deferred tax liabilities: | |||
Tax Credit Carryforward, Amount | $ 513 |
INCOME TAXES - Summary of chang
INCOME TAXES - Summary of changes to unrecognized tax benefits (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Beginning Balance | $ 0 |
Additions from tax legislation changes for net operating loss carryforwards | 1,125 |
Reductions related to net operating loss usage on 2020 tax returns | (68) |
Ending Balance | $ 1,057 |
INCOME TAXES - Narratives (Deta
INCOME TAXES - Narratives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME TAXES | |||
Net operating loss and tax credit carryforwards | $ 9,802 | $ 2,217 | |
Income tax expense (benefit) | (981) | 5,133 | $ 6,819 |
Foreign tax credits | 910 | ||
Reduction in unrecognized tax benefit | 68 | ||
Other unrecognized tax benefits | 1,057 | 0 | |
Interest and penalties related to unrecognized tax positions | 0 | 0 | $ 0 |
Deferred tax liabilities | $ 4,329 | ||
Foreign Tax Credit [Member] | |||
INCOME TAXES | |||
Tax Credit Carryforward, Amount | 92 | ||
Domestic Tax Authority [Member] | |||
INCOME TAXES | |||
Operating Loss Carryforwards | 4,812 | ||
Domestic Tax Authority [Member] | Foreign Tax Credit [Member] | |||
INCOME TAXES | |||
Tax Credit Carryforward, Amount | 1,003 | ||
Foreign | |||
INCOME TAXES | |||
Operating Loss Carryforwards | 1,678 | ||
Foreign withholding taxes remitted | 236 | ||
Provision for income taxes | 1,692 | ||
Foreign | NEW ZEALAND | |||
INCOME TAXES | |||
Income tax expense (benefit) | (1,125) | ||
Operating Loss Carryforwards | 8,328 | ||
Reduction in unrecognized tax benefit | 68 | ||
Foreign | GERMANY | |||
INCOME TAXES | |||
Foreign withholding taxes remitted | 1,493 | ||
Deferred tax liabilities | 0 | ||
State and Local Jurisdiction [Member] | |||
INCOME TAXES | |||
Provision for income taxes | $ 201 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
LEASES | ||
Options to terminate the leases | true | |
Operating lease option to terminate Period | 30 days | |
Fixed operating lease expense | $ 5,105 | $ 4,548 |
Variable operating lease expense | 707 | 547 |
Short-term lease expense | 237 | 234 |
Future minimum lease payments of lease not yet commenced | 13,700 | |
Supplemental cash flow information related to the operating leases | ||
Cash paid for amounts included in the measurement of operating leases | 5,321 | 4,601 |
Right of use ("ROU") assets obtained in exchange for operating lease obligations | 2,482 | 3,626 |
ROU assets obtained in acquisitions (Note 2) | $ 1,005 | $ 2,735 |
Lease assets and liabilities | ||
Right of use liabilities, current, Classification | Accrued liabilities | Accrued liabilities |
Weighted average remaining lease term | 6 years 4 months 28 days | 6 years 9 months 29 days |
Weighted average discount rate | 2.28% | 2.25% |
Maturity of the operating lease liabilities | ||
2022 | $ 4,846 | |
2023 | 3,537 | |
2024 | 2,690 | |
2025 | 2,149 | |
2026 | 1,123 | |
Thereafter | 4,178 | |
Total undiscounted cash flows | 18,523 | |
Less: present value discount | (1,199) | |
Total lease liabilities | $ 17,324 |
LEASES - Related party (Details
LEASES - Related party (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Lease payments | $ 5,321 | $ 4,601 |
Total lease liabilities | 17,324 | |
Executive Officer | ||
Lessee, Lease, Description [Line Items] | ||
Lease payments | 700 | $ 500 |
Total lease liabilities | $ 8,200 |
DEFERRED COMPENSATION ARRANGE_2
DEFERRED COMPENSATION ARRANGEMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred compensation arrangements | ||
Amounts accrued | $ 4,636 | $ 5,386 |
Accrued liabilities. | ||
Deferred compensation arrangements | ||
Amount accrued included in accrued liabilities | 1,057 | |
Other Long Term Liabilities | ||
Deferred compensation arrangements | ||
Amount accrued included in other long-term liabilities | $ 4,636 | $ 4,329 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Segment information | |||
Number of operating segments | segment | 1 | ||
Identifiable assets | $ 470,785 | $ 349,197 | |
Revenues derived from foreign subsidiaries | $ 403,516 | $ 366,694 | $ 371,084 |
Total Revenue | Customer Concentration Risk | Customer One | |||
Segment information | |||
Percentage of concentration risk | 15.00% | 15.00% | 16.00% |
Trade receivables | Customer Concentration Risk | Customer One | |||
Segment information | |||
Percentage of concentration risk | 10.00% | 22.00% | |
Outside the United States | |||
Segment information | |||
Identifiable assets | $ 32,807 | $ 34,855 | |
Revenues derived from foreign subsidiaries | 185,288 | 171,847 | $ 159,365 |
Wholly owned foreign subsidiaries | |||
Segment information | |||
Revenues derived from foreign subsidiaries | $ 163,988 | $ 152,491 | $ 126,737 |