Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 29, 2018 | Jul. 27, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | KAMAN CORPORATION | |
Entity Central Index Key | 54,381 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 29, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 27,995,688 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 29, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 27,640 | $ 36,904 |
Accounts receivable, net | 250,293 | 313,451 |
Contract assets | 125,204 | 0 |
Contract costs, current portion | 3,487 | 0 |
Inventories | 291,058 | 367,437 |
Income tax refunds receivable | 3,692 | 2,889 |
Other current assets | 32,173 | 27,188 |
Total current assets | 733,547 | 747,869 |
Property, plant and equipment, net of accumulated depreciation of $264,224 and $252,611, respectively | 188,160 | 185,452 |
Goodwill | 348,487 | 351,717 |
Other intangible assets, net | 108,998 | 117,118 |
Deferred income taxes | 22,998 | 27,603 |
Contract costs, noncurrent portion | 12,847 | 0 |
Other assets | 27,157 | 25,693 |
Total assets | 1,442,194 | 1,455,452 |
Current liabilities: | ||
Current portion of long-term debt, net of debt issuance costs | 8,125 | 7,500 |
Accounts payable – trade | 136,140 | 127,591 |
Accrued salaries and wages | 45,491 | 48,352 |
Contract liabilities, current portion | 9,928 | 0 |
Advances on contracts | 0 | 8,527 |
Income taxes payable | 0 | 1,517 |
Other current liabilities | 54,462 | 52,812 |
Total current liabilities | 254,146 | 246,299 |
Long-term debt, excluding current portion, net of debt issuance costs | 316,168 | 391,651 |
Deferred income taxes | 7,738 | 8,024 |
Underfunded pension | 97,356 | 126,924 |
Contract liabilities, noncurrent portion | 76,330 | 0 |
Other long-term liabilities | 47,684 | 46,898 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity: | ||
Preferred stock, $1 par value, 200,000 shares authorized; none outstanding | 0 | 0 |
Common stock, $1 par value, 50,000,000 shares authorized; voting; 29,498,470 and 29,141,467 shares issued, respectively | 29,498 | 29,141 |
Additional paid-in capital | 195,749 | 185,332 |
Retained earnings | 596,270 | 587,877 |
Accumulated other comprehensive income (loss) | (117,349) | (115,814) |
Less 1,492,623 and 1,325,975 shares of common stock, respectively, held in treasury, at cost | (61,396) | (50,880) |
Total shareholders’ equity | 642,772 | 635,656 |
Total liabilities and shareholders’ equity | $ 1,442,194 | $ 1,455,452 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Jun. 29, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 264,224 | $ 252,611 |
Preferred stock, par value (in usd per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 29,498,470 | 29,141,467 |
Common stock held in treasury, at cost (in shares) | 1,492,623 | 1,325,975 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Net sales | $ 468,129 | $ 449,006 | $ 931,456 | $ 884,947 |
Cost of sales | 332,486 | 314,513 | 661,706 | 626,108 |
Gross profit | 135,643 | 134,493 | 269,750 | 258,839 |
Selling, general and administrative expenses | 114,339 | 107,952 | 226,092 | 218,829 |
Restructuring costs | 1,954 | 0 | 3,647 | 0 |
Net (gain) loss on sale of assets | (1,525) | 15 | (1,588) | (5) |
Operating income | 20,875 | 26,526 | 41,599 | 40,015 |
Interest expense, net | 5,002 | 6,122 | 10,354 | 10,282 |
Non-service pension and post retirement benefit cost (income) | (3,039) | (866) | (6,068) | (1,585) |
Other expense (income), net | 361 | (69) | 19 | (228) |
Earnings before income taxes | 18,551 | 21,339 | 37,294 | 31,546 |
Income tax expense | 3,457 | 7,881 | 8,134 | 11,797 |
Net earnings | $ 15,094 | $ 13,458 | $ 29,160 | $ 19,749 |
Earnings per share: | ||||
Basic earnings per share (in usd per share) | $ 0.54 | $ 0.49 | $ 1.04 | $ 0.72 |
Diluted earnings per share (in usd per share) | $ 0.53 | $ 0.48 | $ 1.03 | $ 0.70 |
Average shares outstanding: | ||||
Basic (in shares) | 27,971 | 27,557 | 27,911 | 27,351 |
Diluted (in shares) | 28,349 | 27,842 | 28,258 | 28,370 |
Dividends declared per share (in usd per share) | $ 0.20 | $ 0.20 | $ 0.40 | $ 0.40 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 15,094 | $ 13,458 | $ 29,160 | $ 19,749 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (11,969) | 13,777 | (5,956) | 16,374 |
Unrealized gain on derivative instruments, net of tax expense of $0 and $5 and $1 and $115, respectively | 0 | 7 | 1 | 191 |
Change in pension and post-retirement benefit plan liabilities, net of tax expense of $703 and $1,335 and $1,413 and $2,670, respectively | 2,203 | 2,159 | 4,420 | 4,368 |
Other comprehensive income (loss) | (9,766) | 15,943 | (1,535) | 20,933 |
Comprehensive income | $ 5,328 | $ 29,401 | $ 27,625 | $ 40,682 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Tax expense for unrealized gain on derivative instruments | $ 0 | $ 5 | $ 1 | $ 115 |
Tax expense for pension plan adjustments | $ 703 | $ 1,335 | $ 1,413 | $ 2,670 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 29, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net earnings | $ 29,160 | $ 19,749 |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 21,125 | 21,309 |
Amortization of debt issuance costs | 899 | 1,103 |
Accretion of convertible notes discount | 1,282 | 2,091 |
Provision for doubtful accounts | 445 | 511 |
Net (gain) loss on sale of assets | (1,588) | (5) |
Loss on Extinguishment of Debt | 0 | 137 |
Loss on Derivative Instruments, Pretax | 467 | |
Net loss (gain) on derivative instruments | (337) | |
Stock compensation expense | 3,817 | 3,707 |
Deferred income taxes | 7,297 | 6,131 |
Changes in assets and liabilities, excluding effects of acquisitions/divestitures: | ||
Accounts receivable | 32,836 | (34,666) |
Contract assets | (42,737) | 0 |
Contract costs | (5,480) | 0 |
Inventories | 1,782 | 3,987 |
Income tax refunds receivable | (803) | 1,031 |
Other current assets | (6,299) | (1,641) |
Accounts payable - trade | 7,455 | 1,774 |
Contract liabilities | 74,865 | 246 |
Advances on contracts | 0 | (8,042) |
Other current liabilities | (3,172) | (2,171) |
Income taxes payable | (3,049) | (414) |
Pension liabilities | (23,887) | (10,312) |
Other long-term liabilities | (673) | (4,362) |
Net cash provided by (used in) operating activities | 93,742 | (174) |
Cash flows from investing activities: | ||
Proceeds from sale of assets | 1,712 | 253 |
Expenditures for property, plant & equipment | (15,812) | (15,196) |
Payments to Acquire Businesses, Net of Cash Acquired | 0 | (1,365) |
Other, net | (635) | (763) |
Net cash used in investing activities | (14,735) | (17,071) |
Cash flows from financing activities: | ||
Net (repayments) borrowings under revolving credit agreements | (71,383) | (53,431) |
Debt repayment | (3,750) | (3,125) |
Proceeds from Convertible Debt | 0 | 200,000 |
Repayments of Convertible Debt | 0 | (163,654) |
Use of Debt Proceeds for the Purchase of Call Options Related to Convertible Note Offering | 0 | (20,500) |
Proceeds from bond hedge settlement convertible notes | 0 | 58,564 |
Net change in bank overdraft | 2,578 | 575 |
Proceeds from exercise of employee stock awards | 5,274 | 4,681 |
Purchase of treasury shares | (8,824) | (2,718) |
Dividends paid | (11,149) | (10,312) |
Payments of Debt Issuance Costs | 0 | (7,348) |
Other | (439) | (235) |
Net cash (used in) provided by financing activities | (87,693) | 2,497 |
Net decrease in cash and cash equivalents | (8,686) | (14,748) |
Effect of exchange rate changes on cash and cash equivalents | (578) | 1,309 |
Cash and cash equivalents at beginning of period | 36,904 | 41,205 |
Cash and cash equivalents at end of period | 27,640 | 27,766 |
Supplemental disclosure of noncash activities: | ||
Value of common shares issued for unwind of warrant transactions | $ 7,583 | $ 30,279 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 29, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The December 31, 2017 , Condensed Consolidated Balance Sheet amounts have been derived from the previously audited Consolidated Balance Sheet of Kaman Corporation and subsidiaries (collectively, the “Company”), but do not include all disclosures required by accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The results of operations for the interim periods presented are not necessarily indicative of trends or of results to be expected for the entire year. The Company has a calendar year-end; however, its first three fiscal quarters follow a 13-week convention, with each quarter ending on a Friday. The second quarters for 2018 and 2017 ended on June 29, 2018 , and June 30, 2017 , respectively. |
Recent Accounting Standards
Recent Accounting Standards | 6 Months Ended |
Jun. 29, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards | RECENT ACCOUNTING STANDARDS Recent Accounting Standards Adopted In May 2017, the FASB issued Accounting Standards Update ("ASU") 2017-09, "Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting". The objective of this standard update is to address the diversity in practice and reduce the cost and complexity of applying guidance for a change to the terms or conditions of a share-based payment award. This ASU provides guidance on when an entity should apply modification accounting for stock compensation. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update had no impact on the Company's consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Net Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”. The objective of this standard update is to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. This standard update requires employers to disaggregate the service cost component from the other components of net benefit cost. This ASU also provides guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization. The other components of net benefit cost, which are expected to more than offset the service cost component, are required to be presented in the income statement separately from the service cost component and outside of operating profit. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. This ASU was applied retrospectively for the presentation of the service cost component and the other components of net benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component and the other components of net benefit cost in assets. The standard update allows for a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company applied this practical expedient for prior period presentation. The Company currently estimates that the service cost component to be included in operating profit will be approximately $4.9 million and the other components of net benefit cost presented below operating income will be approximately $12.7 million of income in 2018. See Note 12, Pension Plans , for the service cost component and other components of net benefit in the current period and Note 3, Significant Accounting Policies Update , for the impact to prior period results. In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)". The objective of this standard update is to clarify the scope of asset derecognition guidance and to provide new guidance for partial sales of nonfinancial assets. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted; however, an entity was required to apply the amendments in this ASU in the same period that it applies the amendments for ASU 2014-09. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Adopted - continued In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash". The objective of this standard update is to address the diversity in classification and presentation of changes in restricted cash on the statement of cash flows. Under this ASU, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update had no impact on the Company's consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory". Under this ASU, income tax consequences of an intra-entity transfer of an asset other than inventory is recognized when the transfer occurs. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments". This standard update was issued to address diversity in practice in how certain cash receipts and cash payments are presented and classified. The provisions of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities”. The objective of this standard update is to remove inconsistent practices with regards to the accounting for financial instruments between US GAAP and International Financial Reporting Standards (“IFRS”). The standard update intends to improve the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The provisions of this standard update are effective for interim and annual periods beginning after December 15, 2017. The adoption of this standard update had no impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"). The objective of this standard update is to remove inconsistent practices with regard to revenue recognition between US GAAP and IFRS. The standard intends to improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The provisions of ASU No. 2014-09 are effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. As a result, the Company applied ASC 606 only to contracts that were not completed as of January 1, 2018. The adoption of ASC 606 resulted in a net reduction to opening retained earnings of approximately $9.6 million , net of tax, on January 1, 2018. Subsequent to the issuance of ASU 2014-09, the FASB issued the following updates: ASU 2015-14, "Revenue from Contracts with Customers (Topic 606) - "Deferral of the Effective Date"; ASU 2016-08, “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; ASU 2016-10, "Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing"; ASU 2016-12, "Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients"; and ASU 2016-20, "Technical Corrections and Improvements to Topic 606". The amendments in these updates affect the guidance contained within ASU 2014-09 and were similarly adopted on January 1, 2018. See Note 3, Significant Accounting Policies Update , for further information on the impacts of these standard updates. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Yet to be Adopted In February 2018, the FASB issued ASU 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". The objective of this standard is to address the concern that tax effects of items within accumulated other comprehensive income do not appropriately reflect the tax rate because the Tax Cut and Jobs Act of 2017 ("Tax Reform") required the adjustment of deferred taxes be recorded to income. This ASU provides an entity the election to reclassify stranded tax effects resulting from Tax Reform to retained earnings from accumulated other comprehensive income. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the potential impact this standard update could have on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities". The objective of this standard update is to improve the financial reporting of hedging relationships to better reflect the economic results of an entity's risk management activities in its financial statements. This ASU expands hedge accounting for both nonfinancial and financial risk components and refines the measurement of hedge results to better reflect an entity's hedging strategies. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The objective of this standard update is to simplify the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit. The standard update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The impact of the adoption of this standard update is dependent on the Company's goodwill impairment assessment. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. Under this ASU as amended, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged under this ASU as amended. This standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company has developed a project plan that includes a three-phase approach to implementing this standard update. Phase one, the assessment phase, was completed in the third quarter of 2017. The Company began the second phase in the fourth quarter of 2017, which includes implementing new lease administration software, establishing policies and understanding the initial financial impact this standard update will have on the Company's consolidated financial statements. Phase three, which the Company anticipates beginning in the second half of 2018, will include integrating the standard update into financial reporting processes and systems and developing a more robust understanding of the financial impact of this standard update. The Company anticipates the ASU will have a material impact on its assets and liabilities due to the addition of right-of-use assets and lease liabilities to the balance sheet; however, it does not expect the ASU to have a material impact on the Company's cash flows or results of operations. |
Significant Accounting Policies
Significant Accounting Policies Update | 6 Months Ended |
Jun. 29, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies Update | SIGNIFICANT ACCOUNTING POLICIES UPDATE The Company's significant accounting policies are detailed in "Note 1 - Summary of Significant Accounting Policies" of its Annual Report on Form 10-K for the year-ended December 31, 2017. Significant changes to the Company's accounting policies as a result of adopting new accounting standards are discussed below: Revenue Recognition Under ASC 606, the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied. A contract is accounted for when there has been approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Performance obligations under a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. In certain instances, the Company has concluded distinct goods or services should be accounted for as a single performance obligation when they are a series of distinct goods or services that have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer (the goods or services are distinct) and if the promise to transfer the goods or services to the customer is separately identifiable from other promises in the contract (the goods or services are distinct in the context of the contract). If these criteria are not met, the promised services are accounted for as a single performance obligation. The transaction price is determined based on the consideration that the Company will be entitled to in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price, generally utilizing the expected value method. Determining the transaction price requires significant judgment. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. Standalone selling price is determined by the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Performance obligations are satisfied either over time or at a point in time as discussed in further detail below. In addition, the Company's contracts with customers generally do not include significant financing components or non-cash consideration. In certain instances, the Company has accounted for contracts using the portfolio approach, a practical expedient permissible under the standard. The determination of when the use of the portfolio approach is appropriate requires judgment from management based on consideration of all the facts and circumstances. The Company uses the portfolio approach when the effect of accounting for a group of contracts or a group of performance obligations would not differ materially from considering each contract or performance obligation separately. This determination requires the use of estimates and assumptions that reflect the size and composition of the portfolio. The Company primarily uses the portfolio approach within its over time revenue streams throughout the Distribution segment as well as for its commercial and defense bearings and structures businesses in the Aerospace segment. The Company's primary criteria considered when using the portfolio approach is the commonality of economic factors, which generally follow the product type based on consistent production costs and standard pricing for the products. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued Distribution segment The Distribution segment has historically recognized the majority of its revenue when the sales price was fixed, collectability was reasonably assured and the product's title and risk of loss had transferred to the customer. This method of revenue recognition remains substantially the same as revenue will be recognized at the point in time when title transfers to the customer, as this is when the performance obligations are generally controlled by the customer. A small percentage of revenue within the Distribution segment, specifically certain contracts for value-add services, engineering services and repairs, are accounted for over time under ASC 606. For the over time contracts within the Distribution segment, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the cost-to-cost measure of progress for its contracts because it best depicts the transfer of assets to the customer which occurs as cost is incurred under the contracts. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company performs detailed quarterly reviews of the progress and execution of its performance obligations under certain larger contracts. As part of this process, management reviews information, primarily its estimated costs at completion and costs incurred to date by its vendors as a majority of production costs at the segment are incurred by third party vendors. These estimated costs are included in the calculation of the measures of progress towards completion. Additionally, the Company includes freight costs charged to customers in net sales and the correlating expense as a cost of sales. Sales tax collected from customers is excluded from net sales in the Company's Condensed Consolidated Statements of Operations. Aerospace segment The majority of long-term contracts in the Aerospace segment were historically accounted for under the percentage-of-completion method using units-of-delivery as a measurement basis. Many of these contracts moved to an over time revenue model under ASC 606. For example, revenue for the Company's Joint Programmable Fuze ("JPF") program with the U.S. Government ("USG") moved from percentage-of-completion using units-of-delivery as the measurement basis to the over time revenue recognition model using input costs as the basis for recognizing progress to completion. Conversely, revenue for the K-MAX® program moved from cost-to-cost revenue recognition under percentage-of-completion accounting to the point-in-time method, with revenue on these aircraft being recognized upon delivery to the end customer. For certain programs, early-contract unit costs in excess of the average expected cost over the life of the contract and general and administrative costs were previously capitalized and amortized over the period of performance of the contract. With the adoption of this standard update, $32.5 million of previously capitalized deferred costs in excess of the contract average and previously contractually recoverable general and administrative costs were adjusted within the cumulative effect to retained earnings and will not be amortized into earnings after January 1, 2018. To determine the appropriate revenue recognition model for the Aerospace segment's long-term contracts, the Company evaluates whether a contract exists, considering whether multiple contracts should be combined as one single contract and then whether the contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, as these decisions could change the amount of revenue and profit recorded in a given period. For certain programs, the Company may promise to provide distinct goods or services within a contract, in which case these are separated into more than one performance obligation. For certain programs in the Aerospace segment, the Company recognizes revenue over time because of continuous transfer of control to the customer. For USG contracts, this continuous transfer of control to the customer is supported by clauses in the contract that provide lien rights to the customer over the work in progress, thereby control transfers as costs are incurred. For non-USG contracts, the customer typically controls the work in progress because the Company is producing products that do not have an alternative use to the Company and where contractual termination clauses provide the Company rights to payment for work performed to date plus a reasonable profit. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued Aerospace segment - continued Revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the cost-to-cost measure of progress for its contracts because it best depicts the transfer of assets to the customer which occurs as cost is incurred under the contracts. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Total estimated contract costs generally include labor, materials and subcontractors’ costs, other direct costs and related overhead costs. These estimates also include the estimated cost of satisfying offset obligations, as required under certain contracts. The complexity of certain programs as well as technical risks and uncertainty as to the future availability of materials and labor resources could affect the Company’s ability to accurately estimate future contract costs. For contracts that recognize revenue over time, the Company performs detailed quarterly reviews of the progress and execution of its performance obligations under these contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management's judgment about the ability and cost to achieve the schedule (e.g. the number and type of milestone events), technical requirements (e.g., a newly-developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g. to estimate increases in wages and prices for materials and related support cost allocations), execution by subcontractors, the availability and timing of funding from customers and overhead cost rates, among other variables. Based upon these reviews, the Company will record the effects of adjustments in profit estimates each period. If at any time management determines that in the case of a particular contract total costs will exceed total contract revenue, a provision for the entire anticipated contract loss is recorded at that time. The amount of revenue recognized in the three-month and six-month fiscal periods ended June 29, 2018 from performance obligations satisfied (or partially satisfied) in previous periods was $1.4 million and $3.0 million , respectively. These amounts were primarily related to changes in the estimates of the stage of completion of Aerospace contracts, more specifically the JPF contract with the USG, the AH-1Z contract and the SH-2G contract with Peru. For the three-month and six-month fiscal periods ended June 30, 2017 , there were net increases in the Company's operating income attributable to changes in contract estimates of $1.1 million and $2.1 million , respectively. These increases were primarily a result of improved performance on the JPF USG Program, the AH-1Z program and the SH-2G program with Peru. These improvements were partially offset by cost growth on the K-MAX® and A-10 programs. Due to the nature of the work required to be performed on many of the Company's performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. From time-to-time the Company enters into long-term contracts with the USG that contain award fees, incentive fees or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company's anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company does not include financing components as variable consideration if less than one year. At June 29, 2018 , the Company did not have any significant financing components. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued Aerospace segment - continued Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new or makes changes to the existing enforceable rights and obligations. Contract modifications for goods or services that are not distinct from the existing contract are accounted for as if they were part of that existing contract. In these cases, the effect of the contract modification on the transaction price and the measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis, except when such modifications relate to a performance obligation that is a series of substantially the same distinct goods or services. If the modification relates to a performance obligation for a series of substantially the same distinct goods or services, the modification is treated prospectively. Contract modifications for goods or services that are considered distinct from the existing contract are accounted for as separate contracts. The Company applied the practical expedient for any contracts that were modified prior to January 1, 2018; therefore, the contracts were not restated retrospectively for those modifications. For other contracts within the Aerospace segment, excluding the long-term contracts discussed above, the method of revenue recognition will remain substantially the same under ASC 606. For these contracts, revenue will be primarily recognized at the point in time when the title transfers to the customer, as this is when the performance obligation is controlled by the customer. Additionally, a small percentage of revenue related to certain contracts for repairs and overhauls within the Aerospace segment is accounted for over time under ASC 606. Under these contracts, revenue is generally recognized as work is performed in proportion to the actual costs incurred as compared to total estimated contract costs. The cumulative effect of the changes made to the Company's Consolidated Balance Sheets as of January 1, 2018 as a result of the adoption of ASC 606 was as follows: Balance at Balance at in thousands December 31, 2017 Adjustments due to ASC 606 January 1, Assets Accounts receivable, net $ 313,451 $ (29,242 ) $ 284,209 Contract assets — 82,699 82,699 Contract costs, current portion — 3,022 3,022 Inventories 367,437 (73,674 ) 293,763 Other current assets 27,188 33 27,221 Deferred income taxes 27,603 4,170 31,773 Contract costs, noncurrent portion — 7,852 7,852 Liabilities Accounts payable - trade $ 127,591 $ 1,068 $ 128,659 Contract liabilities, current portion — 10,705 10,705 Advances on contracts 8,527 (8,527 ) — Other current liabilities 52,812 (1,016 ) 51,796 Income taxes payable 1,517 1,525 3,042 Contract liabilities, noncurrent portion — 689 689 Equity Retained earnings $ 587,877 $ (9,584 ) $ 578,293 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued The reduction to retained earnings of $9.6 million in the cumulative effect adjustment on January 1, 2018 primarily reflects the reduction of $32.5 million in costs previously capitalized in inventory, which included deferred unit costs in excess of the contract average and previously capitalized general and administrative costs, partially offset by the acceleration of net sales of $62.3 million and associated gross profit of $20.2 million for deliveries that would have occurred in 2018, but are now recognized over time as costs are incurred. The following tables summarize the impacts of ASC 606 on the Company's condensed consolidated financial statements. June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Assets Accounts receivable, net $ 250,293 $ 19,355 $ 269,648 Contract assets 125,204 (125,204 ) — Contract costs, current portion 3,487 (3,487 ) — Inventories 291,058 121,351 412,409 Income tax refunds receivable 3,692 4,722 8,414 Other current assets 32,173 (183 ) 31,990 Deferred income taxes 22,998 (4,254 ) 18,744 Contract costs, noncurrent portion 12,847 (12,847 ) — Liabilities Accounts payable - trade $ 136,140 $ (980 ) $ 135,160 Contract liabilities, current portion 9,928 (9,928 ) — Advances on contracts, current portion — 9,919 9,919 Other current liabilities 54,462 572 55,034 Deferred income taxes 7,738 (3 ) 7,735 Contract liabilities, noncurrent portion 76,330 (76,330 ) — Advances on contracts, noncurrent portion — 76,330 76,330 Equity Retained earnings $ 596,270 $ (127 ) $ 596,143 For the six-month fiscal period ended June 29, 2018 , the Company realized changes of asset and liability accounts as described above, with no impact to the Company's cash flows from operating activities. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued For the Three Months Ended June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Net sales $ 468,129 $ (18,473 ) $ 449,656 Cost of sales 332,486 (13,370 ) 319,116 Gross profit 135,643 (5,103 ) 130,540 Selling, general and administrative expenses 114,339 (1,944 ) 112,395 Restructuring costs 1,954 — 1,954 Net gain on sale of assets (1,525 ) — (1,525 ) Operating income 20,875 (3,159 ) 17,716 Interest expense, net 5,002 — 5,002 Non-service pension and post retirement benefit cost (income) (3,039 ) — (3,039 ) Other expense (income), net 361 — 361 Earnings before income taxes 18,551 (3,159 ) 15,392 Income tax expense 3,457 (813 ) 2,644 Net earnings $ 15,094 $ (2,346 ) $ 12,748 For the Six Months Ended June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Net sales $ 931,456 $ (61,974 ) $ 869,482 Cost of sales 661,706 (46,628 ) 615,078 Gross profit 269,750 (15,346 ) 254,404 Selling, general and administrative expenses 226,092 (2,521 ) 223,571 Restructuring costs 3,647 — 3,647 Net gain on sale of assets (1,588 ) — (1,588 ) Operating income 41,599 (12,825 ) 28,774 Interest expense, net 10,354 — 10,354 Non-service pension and post retirement benefit cost (income) (6,068 ) — (6,068 ) Other expense (income), net 19 — 19 Earnings before income taxes 37,294 (12,825 ) 24,469 Income tax expense 8,134 (3,114 ) 5,020 Net earnings $ 29,160 $ (9,711 ) $ 19,449 For the three-month and six-month fiscal periods ended June 29, 2018 , the only adjustments to comprehensive income when comparing the balances with ASC 606 and the balances without ASC 606 included the adjustments to net earnings presented above. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Accounts Receivable The Company's receivables, net, consist of amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts, which reflects management’s best estimate of probable losses inherent in the trade accounts receivable and billed contracts balance. Management determines the allowance based on known troubled accounts, historical experience and other currently available evidence. Contract Assets The Company's contract assets include unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is applied and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts do not exceed their net realizable value. Contract assets are generally classified as current as such amounts are billable and collectible within twelve months. Contract Costs Contract costs consist of costs to obtain and fulfill a contract. Costs to fulfill a contract primarily consist of nonrecurring engineering costs incurred at the start of a new program for which such costs are expected to be recovered under existing and future contracts. Such costs are amortized over the estimated revenue amount of the contract. Costs to obtain a contract consist of commissions and agent fees paid in connection with the award of a contract. If these costs are determined to have an amortization period of less than one year, the Company applies the practical expedient and the related costs are expensed as incurred. If the amortization period is determined to be greater than a year and the incremental costs to obtaining the contract qualify as an asset, then the contract costs are recorded and amortized over the estimated contract revenue. At June 29, 2018 , costs to fulfill a contract and costs to obtain a contract were $9.5 million and $6.8 million , respectively. These amounts are included in contract costs, current portion and contract costs, noncurrent portion on the Company's Condensed Consolidated Balance Sheets at June 29, 2018 . Contract Liabilities The Company's contract liabilities consist of advance payments and billings in excess of revenue recognized and deferred revenue. Advance payments and billings in excess of revenue recognized are classified as current or noncurrent based on the timing of when recognition of revenue is expected. At June 29, 2018 , the noncurrent portion of contract liabilities was $76.3 million , which is included in contract liabilities, noncurrent portion in the Company's Condensed Consolidated Balance Sheets. Unfulfilled Performance Obligations Unfulfilled performance obligations ("backlog") represents the transaction price of firm orders for which work has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts. As of June 29, 2018 , the aggregate amount of the transaction price allocated to backlog was $969.0 million . The Company expects to recognize revenue on approximately $585.6 million of this amount over the next 12 months, with the remaining amount to be recognized thereafter. Pension The Company accounts for its defined benefit pension plan by recognizing the overfunded or underfunded status of the plan, calculated as the difference between the plan assets and the projected benefit obligation, as an asset or liability on the balance sheet, with changes in the funded status recognized in comprehensive income in the year in which they occur. Expenses and liabilities associated with the plan are determined based upon actuarial valuations. Integral to the actuarial valuations are a variety of assumptions including expected return on plan assets and discount rate. The Company regularly reviews the assumptions, which are updated at the measurement date, December 31 st . The impact of differences between actual results and the assumptions are accumulated and generally amortized over future periods, which will affect expense recognized in future periods. The service cost component of net benefit cost is recorded in cost of sales and selling, general and administrative expenses separately from the other components of net benefit cost, which are recorded to non-service pension and postretirement benefit cost (income). See Note 12, Pension Plans , for further information. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Pension - continued The following tables summarize the impacts of the adoption of ASU 2017-07 on the Company's Condensed Statement of Operations and segment operating income. For the Three Months Ended June 30, 2017 As previously reported Adjustments As adjusted In thousands Cost of sales $ 314,043 $ 470 $ 314,513 Gross profit 134,963 (470 ) 134,493 Selling, general and administrative expenses 107,556 396 107,952 Operating income 27,392 (866 ) 26,526 Non-service pension and post retirement benefit cost (income) — (866 ) (866 ) Segment operating income Distribution $ 15,934 $ (277 ) $ 15,657 Aerospace 26,270 (558 ) 25,712 Corporate expenses (14,797 ) (31 ) (14,828 ) For the Six Months Ended June 30, 2017 As previously reported Adjustments As adjusted In thousands Cost of sales $ 625,168 $ 940 $ 626,108 Gross profit 259,779 (940 ) 258,839 Selling, general and administrative expenses 218,184 645 218,829 Operating income 41,600 (1,585 ) 40,015 Non-service pension and post retirement benefit cost (income) — (1,585 ) (1,585 ) Segment operating income Distribution $ 27,628 $ (555 ) $ 27,073 Aerospace 42,859 (1,117 ) 41,742 Corporate expenses (28,892 ) 87 (28,805 ) |
Restructuring Costs
Restructuring Costs | 6 Months Ended |
Jun. 29, 2018 | |
Restructuring Costs [Abstract] | |
Restructuring Costs | RESTRUCTURING COSTS During the third quarter of 2017, the Company initiated restructuring activities at its Aerospace segment to support the ongoing effort of improving capacity utilization and operating efficiency to better position the Company for increased profitability and growth. Such actions include workforce reductions and the consolidation of operations, beginning in the third quarter of 2017 through the planned completion of restructuring activities in the fourth quarter of 2018. The Company currently expects these actions to result in approximately $7.0 million to $8.5 million in pre-tax restructuring and transition charges and, beginning in 2019, will result in total cost savings of approximately $4.0 million annually. 4. RESTRUCTURING COSTS (CONTINUED) The following table summarizes the accrual balances by cost type for the restructuring actions: Severance Other (1) Total In thousands Restructuring accrual balance at December 31, 2017 $ 1,172 $ 179 $ 1,351 Provision 1,019 1,245 2,264 Cash payments (1,268 ) (1,223 ) (2,491 ) Changes in foreign currency exchange rates (6 ) (8 ) (14 ) Restructuring accrual balance at June 29, 2018 $ 917 $ 193 $ 1,110 (1) Includes costs associated with consolidation of facilities. The above accrual balance was included in other current liabilities on the Company's Consolidated Balance Sheets. For the three-month and six-month fiscal periods, the Aerospace segment incurred $1.5 million and $2.3 million in costs, respectively, associated with the restructuring activities described above. Since the announcement of these restructuring activities, restructuring expense as of June 29, 2018 was $4.9 million . Included in this expense is approximately $1.0 million of cost that primarily relates to the write-off of inventory for various small order programs that the Company will no longer continue to manufacture as a result of the consolidation of operations Other Matters In addition to the restructuring above, for the three-month and six-month fiscal periods ended June 29, 2018 , the Aerospace segment incurred $0.3 million and $1.2 million in costs, respectively, associated with the termination of certain distributor agreements and separation costs for certain employees not covered by the restructuring activities noted above. The Distribution segment incurred $0.1 million in separation costs for certain employees in the three-month fiscal period ended June 29, 2018 . T hese amounts are not included in the table above. |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 29, 2018 | |
Accounts Receivable, Net [Abstract] | |
Accounts Receivable, Net | ACCOUNTS RECEIVABLE, NET Accounts receivable, net consists of the following: June 29, December 31, In thousands Trade receivables $ 165,835 $ 152,078 U.S. Government contracts: Billed 19,355 26,093 Cost and accrued profit - not billed 1,230 862 Commercial and other government contracts Billed 67,025 107,962 Cost and accrued profit - not billed 911 30,590 Less allowance for doubtful accounts (4,063 ) (4,134 ) Accounts receivable, net $ 250,293 $ 313,451 The decrease in commercial and other government contracts cost and accrued profit - not billed was primarily attributable to the adoption of ASC 606. 5. ACCOUNTS RECEIVABLE, NET (CONTINUED) Accounts receivable, net includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: June 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 900 $ 900 |
Contract Assets, Contract Costs
Contract Assets, Contract Costs and Contract Liabilities | 6 Months Ended |
Jun. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Contract Assets, Contract Costs and Contract Liabilities | CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES Contract assets consist of unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract costs consist of costs to obtain and fulfill a contract. Costs to fulfill a contract primarily consist of nonrecurring engineering costs incurred at the start of a new program for which such costs are expected to be recovered under existing and future contracts. Such costs are amortized over the estimated revenue amount of the contract. Costs to obtain a contract consist of commissions and agent fees paid in connection with the award of a contract. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue. Reconciliation of Contract Balances Activity related to contract assets, contract costs and contract liabilities is as follows: June 29, January 1, 2018 (1) $ Change % Change In thousands Contract assets $ 125,204 $ 82,699 $ 42,505 51.4 % Contract costs, current portion $ 3,487 $ 3,022 $ 465 15.4 % Contract costs, noncurrent portion $ 12,847 $ 7,852 $ 4,995 63.6 % Contract liabilities, current portion $ 9,928 $ 10,705 $ (777 ) (7.3 )% Contract liabilities, noncurrent portion $ 76,330 $ 689 $ 75,641 10,978.4 % (1) These amounts include the impact of the cumulative effect adjustment resulting from the adoption of ASC 606. Contract Assets The increase in contract assets was primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the six-month fiscal period ended June 29, 2018 . This increase is primarily related to work performed and not yet billed on the JPF program with the USG, legacy fuze programs and the SH-2G program with Peru in the Aerospace segment and the automation, control and energy product line at the Distribution segment. There were no significant impairment losses related to the Company's contract assets during the six-month fiscal period ended June 29, 2018 . Contract assets includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: June 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 3,423 $ — On January 1, 2018, $4.3 million in claims previously included in inventory were reclassified to contract assets as part of the cumulative effect adjustment resulting from the adoption of ASC 606. This amount was partially offset by the settlement of a claim in the six-month fiscal period ended June 29, 2018 . 6. CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES (CONTINUED) Contract Costs The increase in contract costs, current portion was primarily related to costs to fulfill certain metallic structures programs, partially offset by amortization of contract costs. For the three-month and six-month fiscal periods ended June 29, 2018 , amortization of contract costs was $1.0 million and $1.7 million , respectively. The increase in contract costs, noncurrent portion was primarily related to costs to obtain a JPF DCS contract . Contract Liabilities The decrease in contract liabilities, current portion was primarily due to revenue recognized in excess of payments received on these performance obligations, primarily associated with deliveries under a JPF DCS contract and the K-MAX® program, partially offset by an advance payment received for a JPF DCS contract. For the three-month and six-month fiscal periods ended June 29, 2018 , revenue recognized related to contract liabilities, current portion at January 1, 2018 was $1.4 million and $6.4 million . The increase in contract liabilities, noncurrent portion was due to an advance payment received for a JPF DCS contract. For the three-month and six-month fiscal periods ended June 29, 2018 , the Company did not recognize revenue against contract liabilities, noncurrent portion. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following table presents the carrying value and fair value of financial instruments that are not carried at fair value: June 29, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value In thousands Debt (1) $ 330,264 $ 382,945 $ 405,602 $ 428,432 (1) These amounts are classified within Level 2. The above fair values were computed based on quoted market prices and discounted future cash flows (observable inputs), as applicable. Differences from carrying values are attributable to interest rate changes subsequent to when the transactions occurred. The fair values of cash and cash equivalents, accounts receivable, net and accounts payable - trade approximate their carrying amounts due to the short-term maturities of these instruments. 7. FAIR VALUE MEASUREMENTS (CONTINUED) Recurring Fair Value Measurements The Company holds derivative instruments for foreign exchange contracts that are measured at fair value using observable market inputs such as forward rates and its counterparties’ credit risks. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At June 29, 2018 , the derivative instruments have been included in other current liabilities on the Condensed Consolidated Balance Sheets. At December 31, 2017 , the derivative instruments were included in other current assets and other assets on the Condensed Consolidated Balance Sheets. Based on the Company's continued ability to trade and enter into forward contracts and interest rate swaps, the Company considers the markets for its fair value instruments to be active. The Company evaluated the credit risk associated with the counterparties to these derivative instruments and determined that as of June 29, 2018 , such credit risks have not had an adverse impact on the fair value of these instruments. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 29, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks relating to its ongoing business operations, including market risks relating to fluctuations in foreign currency exchange rates and interest rates. Derivative financial instruments are recognized on the Condensed Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair values of derivatives are recorded each period in earnings or accumulated other comprehensive income, depending on whether a derivative is effective as part of a hedged transaction. Gains and losses on derivative instruments reported in accumulated other comprehensive income are subsequently included in earnings in the periods in which earnings are affected by the hedged item. The Company does not use derivative instruments for speculative purposes. Forward Exchange Contracts The Company holds forward exchange contracts designed to hedge forecasted transactions denominated in foreign currencies and to minimize the impact of foreign currency fluctuations on the Company’s earnings and cash flows. Some of these contracts are designated as cash flow hedges. The Company will include in earnings amounts currently included in accumulated other comprehensive income upon recognition of cost of sales related to the underlying transaction. These contracts were not material to the Company's Condensed Consolidated Balance Sheets as of June 29, 2018 and December 31, 2017 . The activity related to these contracts was not material to the Company's Condensed Consolidated Financial Statements for the three-month and six-month fiscal periods ended June 29, 2018 and June 30, 2017 . |
Inventories
Inventories | 6 Months Ended |
Jun. 29, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES Inventories consist of the following: June 29, December 31, In thousands Merchandise for resale $ 151,372 $ 151,520 Raw materials 15,313 18,871 Contracts and other work in process (including certain general stock materials) 105,620 171,403 Finished goods 18,753 25,643 Total $ 291,058 $ 367,437 The decrease in contracts and other work in process (including certain general stock materials) was primarily attributable to the adoption of ASC 606. 9. INVENTORIES (CONTINUED) Inventories include amounts associated with matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: June 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 64 $ 4,375 As a result of the adoption of ASC 606, $4.3 million of claims in inventory at December 31, 2017 were reclassified to contract assets as part of the cumulative effect adjustment on January 1, 2018. At June 29, 2018 , and December 31, 2017 , $42.0 million and $25.5 million , respectively, of K-MAX® inventory, including inventory associated with the new build aircraft, was included in contracts and other work in process inventory and finished goods on the Company's Condensed Consolidated Balance Sheets. Management believes that approximately $13.7 million of the K-MAX® inventory will be sold after June 29, 2019, based upon the anticipation of additional aircraft manufacturing and supporting the fleet for the foreseeable future. At June 29, 2018 , and December 31, 2017 , $5.4 million and $6.2 million , respectively, of SH-2G(I) inventory was included in contracts and other work in process inventory on the Company's Condensed Consolidated Balance Sheets. Management believes that approximately $5.1 million of the SH-2G(I) inventory will be sold after June 29, 2019. This balance represents spares requirements and inventory to be used on SH-2G programs. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, Net | 6 Months Ended |
Jun. 29, 2018 | |
Intangible Assets, Net (Including Goodwill) [Abstract] | |
Goodwill and Other Intangible Assets, Net | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company: Distribution Aerospace Total In thousands Gross balance at December 31, 2017 $ 149,204 $ 218,765 $ 367,969 Accumulated impairment — (16,252 ) (16,252 ) Net balance at December 31, 2017 149,204 202,513 351,717 Additions — — — Impairments — — — Foreign currency translation — (3,230 ) (3,230 ) Ending balance at June 29, 2018 $ 149,204 $ 199,283 $ 348,487 10. GOODWILL AND OTHER INTANGIBLE ASSETS, NET (CONTINUED) Other Intangibles Other intangible assets consisted of: At June 29, At December 31, 2018 2017 Amortization Period Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization In thousands Customer lists / relationships 6-26 years $ 158,412 $ (70,756 ) $ 159,592 $ (65,036 ) Developed technologies 10-20 years 19,899 (3,394 ) 20,148 (2,790 ) Trademarks / trade names 3-15 years 8,847 (4,115 ) 8,995 (3,905 ) Non-compete agreements and other 1-9 years 8,287 (8,265 ) 8,345 (8,319 ) Patents 17 years 523 (440 ) 523 (435 ) Total $ 195,968 $ (86,970 ) $ 197,603 $ (80,485 ) The changes in other intangible assets were due to changes in foreign currency exchange rates. In accordance with ASC 360 - Property, Plant, and Equipment ("ASC 360"), the Company is required to evaluate long-lived intangible assets for possible impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The Company is continuing to monitor the ongoing operating performance of the U.K. and Engineering Services businesses, including an ongoing assessment for potential triggering events that would require further evaluation. The total amount of intangible assets at the U.K. and Engineering Services businesses at June 29, 2018 was $10.5 million and $1.0 million , respectively. |
Debt
Debt | 6 Months Ended |
Jun. 29, 2018 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Convertible Notes During 2017, the Company settled the Convertible Notes due 2017 ("2017 Notes"), the associated bond hedge transactions and a portion of the associated warrant transactions. A portion of the existing warrant transactions associated with the 2017 Notes remained outstanding as of December 31, 2017. During the first half of 2018, the remaining warrant transactions were settled with 114,778 shares of the Company's common stock. |
Pension Plans
Pension Plans | 6 Months Ended |
Jun. 29, 2018 | |
Defined Benefit Plan [Abstract] | |
Pension Plans | PENSION PLANS Components of net pension cost for the Qualified Pension Plan and Supplemental Employees’ Retirement Plan ("SERP") are as follows: For the Three Months Ended Qualified Pension Plan SERP June 29, June 30, June 29, June 30, In thousands Service cost $ 1,224 $ 1,199 $ — $ — Interest cost on projected benefit obligation 5,951 6,090 63 62 Expected return on plan assets (11,960 ) (10,512 ) — — Amortization of net loss 2,843 3,486 64 8 Net pension (income) cost $ (1,942 ) $ 263 $ 127 $ 70 12. PENSION PLANS (CONTINUED) For the Six Months Ended Qualified Pension Plan SERP June 29, June 30, June 29, June 30, In thousands Service cost $ 2,448 $ 2,397 $ — $ — Interest cost on projected benefit obligation 11,902 12,179 117 123 Expected return on plan assets (23,920 ) (21,024 ) — — Amortization of net loss 5,686 6,972 147 66 Additional amount recognized due to curtailment/settlement — — — 99 Net pension (income) cost $ (3,884 ) $ 524 $ 264 $ 288 During the six-month fiscal period ended June 29, 2018 , the Company has contributed $20.0 million to the qualified pension plan. The Company is evaluating whether it will make further contributions to the qualified pension plan during 2018 . During the six-month fiscal period ended June 29, 2018 , the Company contributed $0.3 million to the SERP. The Company plans to contribute an additional $0.6 million to the SERP in 2018 . For the 2017 plan year, the Company contributed $10.0 million to the qualified pension plan and $3.1 million to the SERP. Other In accordance with ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Net Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost", the Company disaggregated the service cost component from the other components of net benefit cost, which were presented in the income statement separately from the service cost component outside of operating profit. This ASU was applied retrospectively. See Note 3, Significant Accounting Policies Update , for further information. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 29, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Pension Freeze Effective December 31, 2015, the Company's qualified pension plan was frozen with respect to future benefit accruals. Under USG Cost Accounting Standard (“CAS”) 413 the Company must determine the USG’s share of any pension curtailment adjustment calculated in accordance with CAS. Such adjustments can result in an amount due to the USG for pension plans that are in a surplus position or an amount due to the contractor for plans that are in a deficit position. During the fourth quarter of 2016, the Company accrued a $0.3 million liability representing its estimate of the amount due to the USG based on the Company's pension curtailment adjustment calculation, which was submitted to the USG for review in December 2016. The Company has maintained its accrual at $0.3 million as of June 29, 2018 . There can be no assurance that the ultimate resolution of this matter will not have a material adverse effect on the Company's results of operations, financial position and cash flows. New Hartford Property In connection with the sale of the Company’s Music segment in 2007, the Company assumed responsibility for meeting certain requirements of the Connecticut Transfer Act (the “Transfer Act”) that applied to the transfer of the New Hartford, Connecticut, facility leased by that segment for guitar manufacturing purposes (“Ovation”). Under the Transfer Act, those responsibilities essentially consist of assessing the site's environmental conditions and remediating environmental impairments, if any, caused by Ovation's operations prior to the sale. The site is a multi-tenant industrial park, in which Ovation and other unrelated entities lease space. The environmental assessment process, which began in 2008, has been completed and site remediation is in process. 13. COMMITMENTS AND CONTINGENCIES (CONTINUED) New Hartford Property - continued The Company's estimate of its portion of the cost to assess the environmental conditions and remediate this site is $2.3 million , all of which has been accrued. The total amount paid to date in connection with these environmental remediation activities is $1.6 million . At June 29, 2018 , the Company had $0.7 million accrued for these environmental remediation activities. A portion ( $0.1 million ) of the accrual related to this property is included in other current liabilities and the balance is included in other long-term liabilities. The remaining balance of the accrual reflects the total anticipated cost of completing these environmental remediation activities. Although it is reasonably possible that additional costs will be paid in connection with the resolution of this matter, the Company is unable to estimate the amount of such additional costs, if any, at this time. Bloomfield Property In connection with the Company’s 2008 purchase of the portion of the Bloomfield campus that Kaman Aerospace Corporation had leased from NAVAIR, the Company assumed responsibility for environmental remediation at the facility as may be required under the Transfer Act and is currently remediating the property under the guidance of the Connecticut Department of Environmental Protection ("CTDEP"). The assumed environmental liability of $10.3 million was determined by taking the undiscounted estimated remediation liability of $20.8 million and discounting it at a rate of 8% . This remediation process will take many years to complete. The total amount paid to date in connection with these environmental remediation activities is $13.5 million . At June 29, 2018 , the Company had $2.2 million accrued for these environmental remediation activities. A portion ( $0.4 million ) of the accrual related to this property is included in other current liabilities, and the balance is included in other long-term liabilities. Although it is reasonably possible that additional costs will be paid in connection with the resolution of this matter, the Company is unable to estimate the amount of such additional costs, if any, at this time. Rimpar Property In connection with the Company's purchase of GRW, the Company assumed responsibility for the environmental remediation at the Rimpar, Germany facility. In 2016, the Company completed an assessment which determined the estimated remediation liability was $0.5 million . The total amount paid to date in connection with these environmental remediation activities is $0.2 million . The balance ( $0.3 million ) of the accrual related to this property is included in other current liabilities. Although it is reasonably possible that additional costs will be paid in connection with the resolution of this matter, the Company is unable to estimate the amount of such additional costs, if any, at this time. Aerospace Claim Matter On June 29, 2016, the Company received notification from a customer of their intent to file a claim for recovery of costs and expenses related to rework on certain aerostructure components previously delivered by the Company to the customer. The original notification did not indicate the extent of the rework undertaken by the customer, the cost or expenses incurred by the customer or the time frame in which the customer anticipated filing its formal claim. On October 17, 2017, the Company received a letter from the customer seeking to recover $12.4 million associated with the rework of these components and related costs incurred by the customer. The Company estimates the cost to rework the aerostructure components delivered to the customer over the time period in question is approximately $0.2 million . In the first half of 2018, the parties continued to exchange correspondence and supporting documentation to support their respective positions. The parties continue to seek resolution of this claim through further discussions and negotiations. The Company does not believe the claim has merit and will continue to vigorously defend against the claim, and will pursue appropriate legal remedies necessary to protect its position. Based on this analysis, the Company has accrued $0.2 million , the estimated cost to rework the aerostructure components, as of June 29, 2018 ; however, there can be no assurance that the ultimate resolution of this matter will not have a material adverse effect on the Company's results of operations, financial position and cash flows. 13. COMMITMENTS AND CONTINGENCIES (CONTINUED) Offset Agreement During January 2018, the Company entered into an offset agreement as a condition to obtaining orders from a foreign customer for the Company's JPF product. At June 29, 2018 , the offset agreement had an outstanding notional value of approximately $194.0 million ; however, the ultimate value is subject to the nature of the Company's satisfaction of these requirements. This agreement is designed to return economic value to the foreign country by requiring the Company to engage in activities supporting local defense or commercial industries, promoting a balance of trade, developing in-country technology capabilities or addressing other local development priorities. The offset agreement may be satisfied through activities that do not require a direct cash payment, including transferring technology, providing manufacturing, training and other consulting support to in-country projects and the purchase by third parties of supplies from in-country vendors. This agreement may also be satisfied through the Company's use of cash for activities, such as subcontracting with local partners, purchasing supplies from in-country vendors, providing financial support for in-country projects and making investments in local ventures. The amount ultimately applied against the offset agreement is based on negotiations with the customer and may require cash outlays that represent only a fraction of the notional value in the offset agreement. The offset program extends for several years and provides for potential penalties up to $16.5 million payable to the customer in the event the offset requirements of the contract are not met. The Company is currently in the process of developing a plan to satisfy the offset requirements. |
Computation of Earnings Per Sha
Computation of Earnings Per Share | 6 Months Ended |
Jun. 29, 2018 | |
Earnings Per Share Reconciliation [Abstract] | |
Computation of Earnings Per Share | COMPUTATION OF EARNINGS PER SHARE The computation of basic earnings per share is based on net earnings divided by the weighted average number of shares of common stock outstanding for each period. The computation of diluted earnings per share reflects the common stock equivalency of dilutive options granted to employees under the Company's stock incentive plan, shares issuable on redemption of its convertible notes and shares issuable upon redemption of outstanding warrants. For the Three Months Ended For the Six Months Ended June 29, June 30, June 29, June 30, In thousands, except per share amounts Net earnings $ 15,094 $ 13,458 $ 29,160 $ 19,749 Basic: Weighted average number of shares outstanding 27,971 27,557 27,911 27,351 Basic earnings per share $ 0.54 $ 0.49 $ 1.04 $ 0.72 Diluted: Weighted average number of shares outstanding 27,971 27,557 27,911 27,351 Weighted average shares issuable on exercise of dilutive stock options 237 141 228 154 Weighted average shares issuable on redemption of convertible notes 108 108 54 628 Weighted average shares issuable on redemption of warrants related to the 2017 Notes 33 36 65 237 Total 28,349 27,842 28,258 28,370 Diluted earnings per share $ 0.53 $ 0.48 $ 1.03 $ 0.70 Equity awards For the three-month and six-month fiscal periods ended June 29, 2018 , respectively, 182,040 and 190,775 shares issuable under equity awards granted to employees were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period. For the three-month and six-month fiscal periods ended June 30, 2017 , respectively, 350,649 and 286,343 shares issuable under equity awards granted to employees were excluded from the calculation of diluted earnings per share as they were anti-dilutive based on the average stock price during the period. 14. COMPUTATION OF EARNINGS PER SHARE (CONTINUED) 2017 Convertible Notes For the three-month and six-month fiscal periods ended June 30, 2017 , shares issuable under the 2017 Notes that were dilutive during the period were included in the calculation of earnings per share as the conversion price for the 2017 Notes was less than the average share price of the Company's stock. 2024 Convertible Notes For the three-month and six-month fiscal periods ended June 29, 2018 , shares issuable under the Convertible Notes due 2024 were included in the diluted earnings per share calculation because the conversion price was less than the average market price of the Company's stock during the periods. For the three-month and six-month fiscal periods ended June 30, 2017 , shares issuable under the Convertible Notes due 2024 were excluded from the diluted earnings per share calculation because the conversion price was greater than the average market price of the Company's stock during the periods. Warrants For the fiscal periods ended June 29, 2018 and June 30, 2017 , shares issuable under the warrants issued in connection with the Company's 2017 Notes were included in the calculation for diluted earnings per share as the strike price of the warrants was less than the average price of the Company's stock. |
Share-based Arrangements
Share-based Arrangements | 6 Months Ended |
Jun. 29, 2018 | |
Share-based Compensation [Abstract] | |
Share-based Arrangements | SHARE-BASED ARRANGEMENTS General The Company accounts for stock options, restricted stock awards, restricted stock units and performance shares as equity awards and measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the statement of operations. The Company also has an employee stock purchase plan which is accounted for as a liability award. Compensation expense for stock options, restricted stock awards and restricted stock units is recognized on a straight-line basis over the vesting period of the awards. Share-based compensation expense recorded for the three-month and six-month fiscal periods ended June 29, 2018 , was $2.3 million and $3.8 million , respectively. Share-based compensation expense recorded for the three-month and six-month fiscal periods ended June 30, 2017 , was $2.3 million and $3.7 million , respectively. From time-to-time, the Company has issued stock awards with market and performance based conditions. Currently, there are three awards with these conditions that have not been settled. The number of shares earned under an award granted in 2014 has been determined at a 139.9% achievement level, representing 1,506 shares to be delivered in 2019. The number of shares earned under an award granted in 2015 has been determined at a 142.3% achievement level, representing 1,573 shares to be delivered in 2019. The remaining shares for the award granted in 2016 has not yet been determined; however, assuming a 100% achievement level, the number of shares would be 1,060 . The Company measures the cost of these awards based on their grant date fair value to the extent of the probable number of shares to be earned upon vesting. Amortization of this cost is recorded on a straight-line basis over the requisite service period. Throughout the course of the requisite service period, the Company monitors the level of achievement compared to the target and adjusts the number of shares expected to be earned, and the related compensation expense recorded thereafter, to reflect the updated most probable outcome. Compensation expense for these awards for the three-month and six-month fiscal periods ended June 29, 2018 , and June 30, 2017 , was not material. 15. SHARE-BASED ARRANGEMENTS (CONTINUED) Stock option activity was as follows: For the Three Months Ended For the Six Months Ended June 29, 2018 June 29, 2018 Options Weighted - average exercise price Options Weighted - average exercise price Options outstanding at beginning of period 1,042,136 $ 44.90 925,385 $ 40.43 Granted — $ — 199,510 $ 62.46 Exercised (76,701 ) $ 34.55 (147,276 ) $ 35.43 Forfeited or expired — $ — (12,184 ) $ 42.13 Options outstanding at June 29, 2018 965,435 $ 45.73 965,435 $ 45.73 The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The following table indicates the weighted-average assumptions used in estimating fair value: For the Six Months Ended June 29, June 30, Expected option term (years) 4.9 5.0 Expected volatility 18.1 % 19.9 % Risk-free interest rate 2.6 % 1.9 % Expected dividend yield 1.5 % 1.6 % Per share fair value of options granted $10.65 $8.61 Restricted stock award and restricted stock unit activity was as follows: For the Three Months Ended For the Six Months Ended June 29, 2018 June 29, 2018 Restricted Stock Weighted- average grant date fair value Restricted Stock Weighted- average grant date fair value Restricted Stock outstanding at beginning of period 153,269 $ 49.98 154,882 $ 44.50 Granted 17,757 $ 63.37 60,247 $ 62.73 Vested (19,105 ) $ 62.32 (61,466 ) $ 48.76 Forfeited or expired (695 ) $ 55.75 (2,437 ) $ 48.36 Restricted Stock outstanding at June 29, 2018 151,226 $ 49.96 151,226 $ 49.96 Plan Amendments On April 18, 2018, the shareholders of the Company approved the amendment and restatement of the 2013 Management Incentive Plan (“the 2013 Plan”). The amendment increased the number of authorized shares by 2,250,000 shares. As of June 29, 2018 , 2,464,780 shares were available for grant under the plan. Also on April 18, 2018, the shareholders of the Company approved the amendment and restatement of the Kaman Corporation Employee Stock Purchase Plan (“ESPP”). The amendment increased the number of shares of common stock available under the ESPP by 500,000 shares. As of June 29, 2018 , 641,466 shares were available for purchase under the plan. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 29, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION The Company is organized based upon the nature of its products and services, and is composed of two operating segments each overseen by a segment manager. These segments are reflective of how the Company’s Chief Executive Officer, who is its Chief Operating Decision Maker (“CODM”), reviews operating results for the purposes of allocating resources and assessing performance. The Company has not aggregated operating segments for purposes of identifying reportable segments. The Distribution segment is a leading power transmission, motion control and fluid power industrial distributor with operations throughout the United States. The segment provides electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components, along with engineered integrated solutions to its customers' most challenging applications serving a broad spectrum of industrial markets, including both maintenance, repair and overhaul ("MRO") and original equipment manufacturer ("OEM") customers. The Aerospace segment produces and markets aerospace solutions consisting of military and defense, missile and bomb fuze and commercial aerospace products. These solutions include proprietary aircraft bearings and components; super precision, miniature ball bearings for the medical, industrial and aerospace markets; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; and safe and arming solutions for missile and bomb systems for the U.S. and allied militaries. The segment also markets the design and supply of aftermarket parts to businesses performing MRO in aerospace markets; performs helicopter subcontract work; restores, modifies and supports the Company's SH-2G Super Seasprite maritime helicopters; manufactures and supports the Company's K-MAX® manned and unmanned medium-to-heavy lift helicopters; and provides engineering design, analysis and certification services. Summarized financial information by business segment is as follows: For the Three Months Ended For the Six Months Ended In thousands June 29, June 30, June 29, June 30, Net sales: Distribution $ 289,523 $ 278,706 $ 573,455 $ 550,324 Aerospace 178,606 170,300 358,001 334,623 Net sales $ 468,129 $ 449,006 $ 931,456 $ 884,947 Operating income: Distribution (1) $ 13,546 $ 15,657 $ 25,380 $ 27,073 Aerospace (1) 22,741 25,712 45,403 41,742 Net gain (loss) on sale of assets 1,525 (15 ) 1,588 5 Corporate expense (1) (16,937 ) (14,828 ) (30,772 ) (28,805 ) Operating income (1) 20,875 26,526 41,599 40,015 Interest expense, net 5,002 6,122 10,354 10,282 Non-service pension and post retirement benefit cost (income) (1) (3,039 ) (866 ) (6,068 ) (1,585 ) Other expense (income), net 361 (69 ) 19 (228 ) Earnings before income taxes 18,551 21,339 37,294 31,546 Income tax expense 3,457 7,881 8,134 11,797 Net earnings $ 15,094 $ 13,458 $ 29,160 $ 19,749 (1) The prior year amounts were adjusted to reflect the impact of the adjustments resulting from the adoption of ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Net Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost". 16. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED) Disaggregation of Revenue The following table disaggregates total revenue by major product line. For the Three Months Ended For the Six Months Ended June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017 In thousands Distribution Bearings and Power Transmission $ 143,802 $ 137,776 $ 287,187 $ 272,698 Automation, Control and Energy 85,976 84,753 171,137 166,835 Fluid Power 59,745 56,177 115,131 110,791 Total Distribution Sales $ 289,523 $ 278,706 $ 573,455 $ 550,324 Aerospace Military and Defense, excluding fuzes $ 51,743 $ 50,675 $ 99,499 $ 97,656 Missile and Bomb Fuzes 41,601 36,165 94,586 71,379 Commercial Aerospace and Other 85,262 83,460 163,916 165,588 Total Aerospace Sales $ 178,606 $ 170,300 $ 358,001 $ 334,623 Total Sales (1) $ 468,129 $ 449,006 $ 931,456 $ 884,947 (1) Service revenue was not material for the three-month and six-month fiscal periods ended June 29, 2018 and June 30, 2017. The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized for performance obligations satisfied at a point in time for the Aerospace segment: For the Three Months Ended For the Six Months Ended In thousands June 29, 2018 June 29, 2018 Revenue recognized for performance obligations satisfied: Over time 48 % 50 % Point-in-time 52 % 50 % Total revenue (1) 100 % 100 % (1) The disaggregation of revenue recognized for performance satisfied over time versus point-in-time has not been included for the Distribution segment, as the majority of its revenue is recognized on a point-in-time basis with only approximately 2% of revenue recognized for performance obligations over time. The majority of the Distribution's segment revenue is recognized at the point in time when title transfers to the customer, as this is when the performance obligations are generally controlled by the customer. A small percentage of revenue within the Distribution segment, specifically certain contracts for value-add services, engineering services and repairs, are accounted for over time. The majority of the Distribution segment's revenue is short cycle in nature with shipments occurring within one year from order. Payment terms generally range from 30 to 90 days from delivery. 16. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED) Disaggregation of Revenue - continued For the Aerospace segment, the timing related to the satisfaction of performance obligations and the typical timing of payment could vary between military, fuzing and commercial contracts. For the Aerospace segment's military and fuzing contracts with the USG, payment terms typically include progress payments, and the satisfaction of these performance obligations does not vary significantly from timing of payment. For firm-fixed price military and fuzing contracts with foreign militaries, the satisfaction of performance obligations could occur at a point in time or over time, depending on the nature of the performance obligations and the right to payment terms in the contracts. Generally, payment terms for these types of contracts range from 30 to 180 days from delivery; however, at times, the Company may negotiate advance payments to cover a portion of the initial costs. Payment terms for firm-fixed price commercial contracts generally range from 30 to 90 days from delivery. The satisfaction of these performance obligations could occur at a point in time or over time, depending on the nature of the performance obligations and the right to payment terms in the contracts. For certain commercial contracts, the Company may negotiate advance payments for long-lead materials. |
Shareholders' Equity and Accumu
Shareholders' Equity and Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 29, 2018 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity and Accumulated Other Comprehensive Income | SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME Changes in shareholders’ equity for the six-month fiscal periods ended June 29, 2018 , and June 30, 2017 , were as follows: For the Six Months Ended June 29, 2018 June 30, 2017 In thousands Beginning balance $ 635,656 $ 565,787 Comprehensive income 27,625 40,682 Dividends declared (11,184 ) (11,011 ) Employee stock plans and related tax benefit 5,274 4,681 Purchase of treasury shares (8,824 ) (2,718 ) Share-based compensation expense 3,817 3,707 Amounts reclassified to temporary equity — 1,729 Changes due to convertible notes transactions (8 ) (2,511 ) Impact of change in revenue accounting standard (9,584 ) — Ending balance $ 642,772 $ 600,346 17. SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (CONTINUED) The components of accumulated other comprehensive income (loss) are shown below: For the Three Months Ended June 29, 2018 June 30, 2017 In thousands Foreign currency translation: Beginning balance $ (1,043 ) $ (32,299 ) Net (loss) gain on foreign currency translation (11,969 ) 13,777 Other comprehensive (loss) income, net of tax (11,969 ) 13,777 Ending balance $ (13,012 ) $ (18,522 ) Pension and other post-retirement benefits (1) : Beginning balance $ (106,543 ) $ (119,239 ) Reclassifications to net income: Amortization of net loss, net of tax expense of $703 and $1,335, respectively 2,203 2,159 Other comprehensive income, net of tax 2,203 2,159 Ending balance $ (104,340 ) $ (117,080 ) Derivative instruments (2) : Beginning balance $ 3 $ 135 Net loss on derivative instruments, net of tax expense of $0 and $5, respectively — 8 Reclassification to net income, net of tax expense of $0 and $0, respectively — (1 ) Other comprehensive income, net of tax — 7 Ending balance $ 3 $ 142 Total accumulated other comprehensive loss $ (117,349 ) $ (135,460 ) (1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, Pension Plans for additional information.) (2) See Note 8, Derivative Financial Instruments , for additional information regarding the Company's derivative instruments. 17. SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (CONTINUED) For the Six Months Ended June 29, 2018 June 30, 2017 In thousands Foreign currency translation: Beginning balance $ (7,056 ) $ (34,896 ) Net (loss) gain on foreign currency translation (5,956 ) 16,374 Other comprehensive (loss) income, net of tax (5,956 ) 16,374 Ending balance $ (13,012 ) $ (18,522 ) Pension and other post-retirement benefits (1) : Beginning balance $ (108,760 ) $ (121,448 ) Reclassifications to net income: Amortization of net loss, net of tax expense of $1,413 and $2,670, respectively 4,420 4,368 Other comprehensive income, net of tax 4,420 4,368 Ending balance $ (104,340 ) $ (117,080 ) Derivative instruments (2) : Beginning balance $ 2 $ (49 ) Net loss on derivative instruments, net of tax expense of $0 and $78, respectively — 129 Reclassification to net income, net of tax expense of $1 and $37, respectively 1 62 Other comprehensive income, net of tax 1 191 Ending balance $ 3 $ 142 Total accumulated other comprehensive loss $ (117,349 ) $ (135,460 ) (1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, Pension Plans for additional information.) (2) See Note 8, Derivative Financial Instruments , for additional information regarding the Company's derivative instruments. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the Three Months Ended For the Six Months Ended June 29, June 30, June 29, June 30, Effective Income Tax Rate 18.6 % 36.9 % 21.8 % 37.4 % 18. INCOME TAXES (CONTINUED) During the fourth quarter of 2017, Tax Reform was enacted by the federal government. The SEC issued Staff Accounting Bulletin 118 ("SAB 118") in December 2017, which provides guidance on accounting for the tax effects of Tax Reform. SAB 118 provides a measurement period in which to finalize the accounting under Accounting Standards Codification 740, Income Taxes ("ASC 740") as it relates to Tax Reform. This measurement period should not extend beyond one year from the Tax Reform enactment date. In accordance with SAB 118, the Company is required to reflect the income tax effects of those aspects of the legislation for which the accounting under ASC 740 is complete. To the extent that the Company's accounting for certain of the income tax effects is incomplete, but the Company is capable of reasonably estimating the effects, the Company must record a provisional amount in the Company's Consolidated Financial Statements based on this estimate. To the extent the Company could not reasonably estimate the provisional impacts of Tax Reform, the Company is required to apply ASC 740 on the basis of tax law in place immediately prior to the enactment. In accordance with SAB 118, the revaluation of U.S. net deferred tax assets, the U.S. income tax attributable to Tax Reform's deemed repatriation provision (currently estimated to be zero) and the tax consequences relating to states with current conformity to the Internal Revenue Code are provisional amounts due to the enactment date and the complexities of Tax Reform. The new tax legislation provides for significant changes in corporate taxation, including a reduction in the applicable corporate tax rate from 35% to 21%, effective January 1, 2018. As a result of this rate reduction, the Company's U.S. net deferred tax assets were required to be revalued as of December 31, 2017. This resulted in a one-time charge to tax expense of $9.7 million in the fourth quarter of 2017. Other Tax Reform provisions that will impact the Company include the elimination of the deduction for manufacturing activities, changes to the deductibility of executive compensation and various international tax law changes. There were no changes to the provisional amounts in the three-month and six-month fiscal periods ended June 29, 2018 . One of the international tax law changes provided for with Tax Reform relates to the taxation of a corporation's global intangible low-taxed income ("GILTI") for tax years beginning after December 31, 2017. The Company has evaluated this provision of Tax Reform and the application of ASC 740, and does not believe that GILTI will have a significant impact. The effective income tax rate represents the combined federal, state and foreign tax effects attributable to pretax earnings for the period. The decrease in the effective tax rate for the three-month and six-month fiscal periods ended June 29, 2018 , compared to the corresponding rate in the prior year, was primarily due to the aforementioned rate reduction resulting from Tax Reform, as well as certain discrete items relating to the 2017 provision to return adjustments and benefits from stock-based compensation. In addition, the effective tax rate for the three-month and six-month fiscal periods ended June 30, 2017 was negatively impacted by a foreign loss for which no tax benefit has been provided. A valuation allowance for deferred tax assets, including those associated with net operating loss carryforwards, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, the Company uses estimates and judgment regarding future taxable income, and considers the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include current financial position, results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies, as well as the current and forecasted business economics. The Company has assessed both positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize operating loss carryforwards associated with certain foreign operations that will permit the Company to use $3.2 million of deferred tax assets associated with these losses as of June 29, 2018 . Through the end of the second quarter of 2018, the Company believes it is more likely than not that only $0.5 million of these deferred tax assets will be realized and, as such, has recorded a valuation allowance of $2.7 million . Going forward, management will continue to assess the available positive and negative evidence to determine whether it is likely sufficient future taxable income will be generated to permit the use of these deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income are reduced or increased, or if additional weight is given to subjective evidence such as future expected growth because objective negative evidence in the form of cumulative losses is no longer present. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 29, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS The Company has evaluated subsequent events through the issuance date of these financial statements. No material subsequent events were identified that require disclosure. |
Significant Accounting Polici27
Significant Accounting Policies Update (Policies) | 6 Months Ended |
Jun. 29, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The December 31, 2017 , Condensed Consolidated Balance Sheet amounts have been derived from the previously audited Consolidated Balance Sheet of Kaman Corporation and subsidiaries (collectively, the “Company”), but do not include all disclosures required by accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management, the condensed consolidated financial information reflects all adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this report. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation. The statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The results of operations for the interim periods presented are not necessarily indicative of trends or of results to be expected for the entire year. The Company has a calendar year-end; however, its first three fiscal quarters follow a 13-week convention, with each quarter ending on a Friday. The second quarters for 2018 and 2017 ended on June 29, 2018 , and June 30, 2017 , respectively. |
Recent Accounting Standards | RECENT ACCOUNTING STANDARDS Recent Accounting Standards Adopted In May 2017, the FASB issued Accounting Standards Update ("ASU") 2017-09, "Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting". The objective of this standard update is to address the diversity in practice and reduce the cost and complexity of applying guidance for a change to the terms or conditions of a share-based payment award. This ASU provides guidance on when an entity should apply modification accounting for stock compensation. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update had no impact on the Company's consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715) - Improving the Net Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”. The objective of this standard update is to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. This standard update requires employers to disaggregate the service cost component from the other components of net benefit cost. This ASU also provides guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization. The other components of net benefit cost, which are expected to more than offset the service cost component, are required to be presented in the income statement separately from the service cost component and outside of operating profit. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. This ASU was applied retrospectively for the presentation of the service cost component and the other components of net benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component and the other components of net benefit cost in assets. The standard update allows for a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company applied this practical expedient for prior period presentation. The Company currently estimates that the service cost component to be included in operating profit will be approximately $4.9 million and the other components of net benefit cost presented below operating income will be approximately $12.7 million of income in 2018. See Note 12, Pension Plans , for the service cost component and other components of net benefit in the current period and Note 3, Significant Accounting Policies Update , for the impact to prior period results. In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)". The objective of this standard update is to clarify the scope of asset derecognition guidance and to provide new guidance for partial sales of nonfinancial assets. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted; however, an entity was required to apply the amendments in this ASU in the same period that it applies the amendments for ASU 2014-09. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Adopted - continued In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash". The objective of this standard update is to address the diversity in classification and presentation of changes in restricted cash on the statement of cash flows. Under this ASU, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update had no impact on the Company's consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory". Under this ASU, income tax consequences of an intra-entity transfer of an asset other than inventory is recognized when the transfer occurs. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments". This standard update was issued to address diversity in practice in how certain cash receipts and cash payments are presented and classified. The provisions of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Early adoption was permitted. The adoption of this standard update did not have a material impact on the Company's consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities”. The objective of this standard update is to remove inconsistent practices with regards to the accounting for financial instruments between US GAAP and International Financial Reporting Standards (“IFRS”). The standard update intends to improve the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The provisions of this standard update are effective for interim and annual periods beginning after December 15, 2017. The adoption of this standard update had no impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"). The objective of this standard update is to remove inconsistent practices with regard to revenue recognition between US GAAP and IFRS. The standard intends to improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The provisions of ASU No. 2014-09 are effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. As a result, the Company applied ASC 606 only to contracts that were not completed as of January 1, 2018. The adoption of ASC 606 resulted in a net reduction to opening retained earnings of approximately $9.6 million , net of tax, on January 1, 2018. Subsequent to the issuance of ASU 2014-09, the FASB issued the following updates: ASU 2015-14, "Revenue from Contracts with Customers (Topic 606) - "Deferral of the Effective Date"; ASU 2016-08, “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; ASU 2016-10, "Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing"; ASU 2016-12, "Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients"; and ASU 2016-20, "Technical Corrections and Improvements to Topic 606". The amendments in these updates affect the guidance contained within ASU 2014-09 and were similarly adopted on January 1, 2018. See Note 3, Significant Accounting Policies Update , for further information on the impacts of these standard updates. 2. RECENT ACCOUNTING STANDARDS (CONTINUED) Recent Accounting Standards Yet to be Adopted In February 2018, the FASB issued ASU 2018-02 "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". The objective of this standard is to address the concern that tax effects of items within accumulated other comprehensive income do not appropriately reflect the tax rate because the Tax Cut and Jobs Act of 2017 ("Tax Reform") required the adjustment of deferred taxes be recorded to income. This ASU provides an entity the election to reclassify stranded tax effects resulting from Tax Reform to retained earnings from accumulated other comprehensive income. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the potential impact this standard update could have on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities". The objective of this standard update is to improve the financial reporting of hedging relationships to better reflect the economic results of an entity's risk management activities in its financial statements. This ASU expands hedge accounting for both nonfinancial and financial risk components and refines the measurement of hedge results to better reflect an entity's hedging strategies. The standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The objective of this standard update is to simplify the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test. Under this ASU, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit. The standard update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The impact of the adoption of this standard update is dependent on the Company's goodwill impairment assessment. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. Under this ASU as amended, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged under this ASU as amended. This standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company has developed a project plan that includes a three-phase approach to implementing this standard update. Phase one, the assessment phase, was completed in the third quarter of 2017. The Company began the second phase in the fourth quarter of 2017, which includes implementing new lease administration software, establishing policies and understanding the initial financial impact this standard update will have on the Company's consolidated financial statements. Phase three, which the Company anticipates beginning in the second half of 2018, will include integrating the standard update into financial reporting processes and systems and developing a more robust understanding of the financial impact of this standard update. The Company anticipates the ASU will have a material impact on its assets and liabilities due to the addition of right-of-use assets and lease liabilities to the balance sheet; however, it does not expect the ASU to have a material impact on the Company's cash flows or results of operations. |
Revenue Recognition | Revenue Recognition Under ASC 606, the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied. A contract is accounted for when there has been approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Performance obligations under a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. In certain instances, the Company has concluded distinct goods or services should be accounted for as a single performance obligation when they are a series of distinct goods or services that have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer (the goods or services are distinct) and if the promise to transfer the goods or services to the customer is separately identifiable from other promises in the contract (the goods or services are distinct in the context of the contract). If these criteria are not met, the promised services are accounted for as a single performance obligation. The transaction price is determined based on the consideration that the Company will be entitled to in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price, generally utilizing the expected value method. Determining the transaction price requires significant judgment. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. Standalone selling price is determined by the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Performance obligations are satisfied either over time or at a point in time as discussed in further detail below. In addition, the Company's contracts with customers generally do not include significant financing components or non-cash consideration. In certain instances, the Company has accounted for contracts using the portfolio approach, a practical expedient permissible under the standard. The determination of when the use of the portfolio approach is appropriate requires judgment from management based on consideration of all the facts and circumstances. The Company uses the portfolio approach when the effect of accounting for a group of contracts or a group of performance obligations would not differ materially from considering each contract or performance obligation separately. This determination requires the use of estimates and assumptions that reflect the size and composition of the portfolio. The Company primarily uses the portfolio approach within its over time revenue streams throughout the Distribution segment as well as for its commercial and defense bearings and structures businesses in the Aerospace segment. The Company's primary criteria considered when using the portfolio approach is the commonality of economic factors, which generally follow the product type based on consistent production costs and standard pricing for the products. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued Distribution segment The Distribution segment has historically recognized the majority of its revenue when the sales price was fixed, collectability was reasonably assured and the product's title and risk of loss had transferred to the customer. This method of revenue recognition remains substantially the same as revenue will be recognized at the point in time when title transfers to the customer, as this is when the performance obligations are generally controlled by the customer. A small percentage of revenue within the Distribution segment, specifically certain contracts for value-add services, engineering services and repairs, are accounted for over time under ASC 606. For the over time contracts within the Distribution segment, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the cost-to-cost measure of progress for its contracts because it best depicts the transfer of assets to the customer which occurs as cost is incurred under the contracts. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company performs detailed quarterly reviews of the progress and execution of its performance obligations under certain larger contracts. As part of this process, management reviews information, primarily its estimated costs at completion and costs incurred to date by its vendors as a majority of production costs at the segment are incurred by third party vendors. These estimated costs are included in the calculation of the measures of progress towards completion. Additionally, the Company includes freight costs charged to customers in net sales and the correlating expense as a cost of sales. Sales tax collected from customers is excluded from net sales in the Company's Condensed Consolidated Statements of Operations. Aerospace segment The majority of long-term contracts in the Aerospace segment were historically accounted for under the percentage-of-completion method using units-of-delivery as a measurement basis. Many of these contracts moved to an over time revenue model under ASC 606. For example, revenue for the Company's Joint Programmable Fuze ("JPF") program with the U.S. Government ("USG") moved from percentage-of-completion using units-of-delivery as the measurement basis to the over time revenue recognition model using input costs as the basis for recognizing progress to completion. Conversely, revenue for the K-MAX® program moved from cost-to-cost revenue recognition under percentage-of-completion accounting to the point-in-time method, with revenue on these aircraft being recognized upon delivery to the end customer. For certain programs, early-contract unit costs in excess of the average expected cost over the life of the contract and general and administrative costs were previously capitalized and amortized over the period of performance of the contract. With the adoption of this standard update, $32.5 million of previously capitalized deferred costs in excess of the contract average and previously contractually recoverable general and administrative costs were adjusted within the cumulative effect to retained earnings and will not be amortized into earnings after January 1, 2018. To determine the appropriate revenue recognition model for the Aerospace segment's long-term contracts, the Company evaluates whether a contract exists, considering whether multiple contracts should be combined as one single contract and then whether the contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, as these decisions could change the amount of revenue and profit recorded in a given period. For certain programs, the Company may promise to provide distinct goods or services within a contract, in which case these are separated into more than one performance obligation. For certain programs in the Aerospace segment, the Company recognizes revenue over time because of continuous transfer of control to the customer. For USG contracts, this continuous transfer of control to the customer is supported by clauses in the contract that provide lien rights to the customer over the work in progress, thereby control transfers as costs are incurred. For non-USG contracts, the customer typically controls the work in progress because the Company is producing products that do not have an alternative use to the Company and where contractual termination clauses provide the Company rights to payment for work performed to date plus a reasonable profit. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued Aerospace segment - continued Revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the cost-to-cost measure of progress for its contracts because it best depicts the transfer of assets to the customer which occurs as cost is incurred under the contracts. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Total estimated contract costs generally include labor, materials and subcontractors’ costs, other direct costs and related overhead costs. These estimates also include the estimated cost of satisfying offset obligations, as required under certain contracts. The complexity of certain programs as well as technical risks and uncertainty as to the future availability of materials and labor resources could affect the Company’s ability to accurately estimate future contract costs. For contracts that recognize revenue over time, the Company performs detailed quarterly reviews of the progress and execution of its performance obligations under these contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management's judgment about the ability and cost to achieve the schedule (e.g. the number and type of milestone events), technical requirements (e.g., a newly-developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g. to estimate increases in wages and prices for materials and related support cost allocations), execution by subcontractors, the availability and timing of funding from customers and overhead cost rates, among other variables. Based upon these reviews, the Company will record the effects of adjustments in profit estimates each period. If at any time management determines that in the case of a particular contract total costs will exceed total contract revenue, a provision for the entire anticipated contract loss is recorded at that time. The amount of revenue recognized in the three-month and six-month fiscal periods ended June 29, 2018 from performance obligations satisfied (or partially satisfied) in previous periods was $1.4 million and $3.0 million , respectively. These amounts were primarily related to changes in the estimates of the stage of completion of Aerospace contracts, more specifically the JPF contract with the USG, the AH-1Z contract and the SH-2G contract with Peru. For the three-month and six-month fiscal periods ended June 30, 2017 , there were net increases in the Company's operating income attributable to changes in contract estimates of $1.1 million and $2.1 million , respectively. These increases were primarily a result of improved performance on the JPF USG Program, the AH-1Z program and the SH-2G program with Peru. These improvements were partially offset by cost growth on the K-MAX® and A-10 programs. Due to the nature of the work required to be performed on many of the Company's performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. From time-to-time the Company enters into long-term contracts with the USG that contain award fees, incentive fees or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company's anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company does not include financing components as variable consideration if less than one year. At June 29, 2018 , the Company did not have any significant financing components. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued Aerospace segment - continued Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new or makes changes to the existing enforceable rights and obligations. Contract modifications for goods or services that are not distinct from the existing contract are accounted for as if they were part of that existing contract. In these cases, the effect of the contract modification on the transaction price and the measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis, except when such modifications relate to a performance obligation that is a series of substantially the same distinct goods or services. If the modification relates to a performance obligation for a series of substantially the same distinct goods or services, the modification is treated prospectively. Contract modifications for goods or services that are considered distinct from the existing contract are accounted for as separate contracts. The Company applied the practical expedient for any contracts that were modified prior to January 1, 2018; therefore, the contracts were not restated retrospectively for those modifications. For other contracts within the Aerospace segment, excluding the long-term contracts discussed above, the method of revenue recognition will remain substantially the same under ASC 606. For these contracts, revenue will be primarily recognized at the point in time when the title transfers to the customer, as this is when the performance obligation is controlled by the customer. Additionally, a small percentage of revenue related to certain contracts for repairs and overhauls within the Aerospace segment is accounted for over time under ASC 606. Under these contracts, revenue is generally recognized as work is performed in proportion to the actual costs incurred as compared to total estimated contract costs. The cumulative effect of the changes made to the Company's Consolidated Balance Sheets as of January 1, 2018 as a result of the adoption of ASC 606 was as follows: Balance at Balance at in thousands December 31, 2017 Adjustments due to ASC 606 January 1, Assets Accounts receivable, net $ 313,451 $ (29,242 ) $ 284,209 Contract assets — 82,699 82,699 Contract costs, current portion — 3,022 3,022 Inventories 367,437 (73,674 ) 293,763 Other current assets 27,188 33 27,221 Deferred income taxes 27,603 4,170 31,773 Contract costs, noncurrent portion — 7,852 7,852 Liabilities Accounts payable - trade $ 127,591 $ 1,068 $ 128,659 Contract liabilities, current portion — 10,705 10,705 Advances on contracts 8,527 (8,527 ) — Other current liabilities 52,812 (1,016 ) 51,796 Income taxes payable 1,517 1,525 3,042 Contract liabilities, noncurrent portion — 689 689 Equity Retained earnings $ 587,877 $ (9,584 ) $ 578,293 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued The reduction to retained earnings of $9.6 million in the cumulative effect adjustment on January 1, 2018 primarily reflects the reduction of $32.5 million in costs previously capitalized in inventory, which included deferred unit costs in excess of the contract average and previously capitalized general and administrative costs, partially offset by the acceleration of net sales of $62.3 million and associated gross profit of $20.2 million for deliveries that would have occurred in 2018, but are now recognized over time as costs are incurred. The following tables summarize the impacts of ASC 606 on the Company's condensed consolidated financial statements. June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Assets Accounts receivable, net $ 250,293 $ 19,355 $ 269,648 Contract assets 125,204 (125,204 ) — Contract costs, current portion 3,487 (3,487 ) — Inventories 291,058 121,351 412,409 Income tax refunds receivable 3,692 4,722 8,414 Other current assets 32,173 (183 ) 31,990 Deferred income taxes 22,998 (4,254 ) 18,744 Contract costs, noncurrent portion 12,847 (12,847 ) — Liabilities Accounts payable - trade $ 136,140 $ (980 ) $ 135,160 Contract liabilities, current portion 9,928 (9,928 ) — Advances on contracts, current portion — 9,919 9,919 Other current liabilities 54,462 572 55,034 Deferred income taxes 7,738 (3 ) 7,735 Contract liabilities, noncurrent portion 76,330 (76,330 ) — Advances on contracts, noncurrent portion — 76,330 76,330 Equity Retained earnings $ 596,270 $ (127 ) $ 596,143 For the six-month fiscal period ended June 29, 2018 , the Company realized changes of asset and liability accounts as described above, with no impact to the Company's cash flows from operating activities. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued For the Three Months Ended June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Net sales $ 468,129 $ (18,473 ) $ 449,656 Cost of sales 332,486 (13,370 ) 319,116 Gross profit 135,643 (5,103 ) 130,540 Selling, general and administrative expenses 114,339 (1,944 ) 112,395 Restructuring costs 1,954 — 1,954 Net gain on sale of assets (1,525 ) — (1,525 ) Operating income 20,875 (3,159 ) 17,716 Interest expense, net 5,002 — 5,002 Non-service pension and post retirement benefit cost (income) (3,039 ) — (3,039 ) Other expense (income), net 361 — 361 Earnings before income taxes 18,551 (3,159 ) 15,392 Income tax expense 3,457 (813 ) 2,644 Net earnings $ 15,094 $ (2,346 ) $ 12,748 For the Six Months Ended June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Net sales $ 931,456 $ (61,974 ) $ 869,482 Cost of sales 661,706 (46,628 ) 615,078 Gross profit 269,750 (15,346 ) 254,404 Selling, general and administrative expenses 226,092 (2,521 ) 223,571 Restructuring costs 3,647 — 3,647 Net gain on sale of assets (1,588 ) — (1,588 ) Operating income 41,599 (12,825 ) 28,774 Interest expense, net 10,354 — 10,354 Non-service pension and post retirement benefit cost (income) (6,068 ) — (6,068 ) Other expense (income), net 19 — 19 Earnings before income taxes 37,294 (12,825 ) 24,469 Income tax expense 8,134 (3,114 ) 5,020 Net earnings $ 29,160 $ (9,711 ) $ 19,449 For the three-month and six-month fiscal periods ended June 29, 2018 , the only adjustments to comprehensive income when comparing the balances with ASC 606 and the balances without ASC 606 included the adjustments to net earnings presented above. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Accounts Receivable The Company's receivables, net, consist of amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts, which reflects management’s best estimate of probable losses inherent in the trade accounts receivable and billed contracts balance. Management determines the allowance based on known troubled accounts, historical experience and other currently available evidence. Contract Assets The Company's contract assets include unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is applied and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts do not exceed their net realizable value. Contract assets are generally classified as current as such amounts are billable and collectible within twelve months. Contract Costs Contract costs consist of costs to obtain and fulfill a contract. Costs to fulfill a contract primarily consist of nonrecurring engineering costs incurred at the start of a new program for which such costs are expected to be recovered under existing and future contracts. Such costs are amortized over the estimated revenue amount of the contract. Costs to obtain a contract consist of commissions and agent fees paid in connection with the award of a contract. If these costs are determined to have an amortization period of less than one year, the Company applies the practical expedient and the related costs are expensed as incurred. If the amortization period is determined to be greater than a year and the incremental costs to obtaining the contract qualify as an asset, then the contract costs are recorded and amortized over the estimated contract revenue. At June 29, 2018 , costs to fulfill a contract and costs to obtain a contract were $9.5 million and $6.8 million , respectively. These amounts are included in contract costs, current portion and contract costs, noncurrent portion on the Company's Condensed Consolidated Balance Sheets at June 29, 2018 . Contract Liabilities The Company's contract liabilities consist of advance payments and billings in excess of revenue recognized and deferred revenue. Advance payments and billings in excess of revenue recognized are classified as current or noncurrent based on the timing of when recognition of revenue is expected. At June 29, 2018 , the noncurrent portion of contract liabilities was $76.3 million , which is included in contract liabilities, noncurrent portion in the Company's Condensed Consolidated Balance Sheets. Unfulfilled Performance Obligations Unfulfilled performance obligations ("backlog") represents the transaction price of firm orders for which work has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts. |
Pension | Pension The Company accounts for its defined benefit pension plan by recognizing the overfunded or underfunded status of the plan, calculated as the difference between the plan assets and the projected benefit obligation, as an asset or liability on the balance sheet, with changes in the funded status recognized in comprehensive income in the year in which they occur. Expenses and liabilities associated with the plan are determined based upon actuarial valuations. Integral to the actuarial valuations are a variety of assumptions including expected return on plan assets and discount rate. The Company regularly reviews the assumptions, which are updated at the measurement date, December 31 st . The impact of differences between actual results and the assumptions are accumulated and generally amortized over future periods, which will affect expense recognized in future periods. The service cost component of net benefit cost is recorded in cost of sales and selling, general and administrative expenses separately from the other components of net benefit cost, which are recorded to non-service pension and postretirement benefit cost (income). See Note 12, Pension Plans , for further information. |
Significant Accounting Polici28
Significant Accounting Policies Update (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Accounting Policies [Abstract] | |
Effects and Impacts of New Accounting Pronouncements | The following tables summarize the impacts of the adoption of ASU 2017-07 on the Company's Condensed Statement of Operations and segment operating income. For the Three Months Ended June 30, 2017 As previously reported Adjustments As adjusted In thousands Cost of sales $ 314,043 $ 470 $ 314,513 Gross profit 134,963 (470 ) 134,493 Selling, general and administrative expenses 107,556 396 107,952 Operating income 27,392 (866 ) 26,526 Non-service pension and post retirement benefit cost (income) — (866 ) (866 ) Segment operating income Distribution $ 15,934 $ (277 ) $ 15,657 Aerospace 26,270 (558 ) 25,712 Corporate expenses (14,797 ) (31 ) (14,828 ) For the Six Months Ended June 30, 2017 As previously reported Adjustments As adjusted In thousands Cost of sales $ 625,168 $ 940 $ 626,108 Gross profit 259,779 (940 ) 258,839 Selling, general and administrative expenses 218,184 645 218,829 Operating income 41,600 (1,585 ) 40,015 Non-service pension and post retirement benefit cost (income) — (1,585 ) (1,585 ) Segment operating income Distribution $ 27,628 $ (555 ) $ 27,073 Aerospace 42,859 (1,117 ) 41,742 Corporate expenses (28,892 ) 87 (28,805 ) The cumulative effect of the changes made to the Company's Consolidated Balance Sheets as of January 1, 2018 as a result of the adoption of ASC 606 was as follows: Balance at Balance at in thousands December 31, 2017 Adjustments due to ASC 606 January 1, Assets Accounts receivable, net $ 313,451 $ (29,242 ) $ 284,209 Contract assets — 82,699 82,699 Contract costs, current portion — 3,022 3,022 Inventories 367,437 (73,674 ) 293,763 Other current assets 27,188 33 27,221 Deferred income taxes 27,603 4,170 31,773 Contract costs, noncurrent portion — 7,852 7,852 Liabilities Accounts payable - trade $ 127,591 $ 1,068 $ 128,659 Contract liabilities, current portion — 10,705 10,705 Advances on contracts 8,527 (8,527 ) — Other current liabilities 52,812 (1,016 ) 51,796 Income taxes payable 1,517 1,525 3,042 Contract liabilities, noncurrent portion — 689 689 Equity Retained earnings $ 587,877 $ (9,584 ) $ 578,293 The following tables summarize the impacts of ASC 606 on the Company's condensed consolidated financial statements. June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Assets Accounts receivable, net $ 250,293 $ 19,355 $ 269,648 Contract assets 125,204 (125,204 ) — Contract costs, current portion 3,487 (3,487 ) — Inventories 291,058 121,351 412,409 Income tax refunds receivable 3,692 4,722 8,414 Other current assets 32,173 (183 ) 31,990 Deferred income taxes 22,998 (4,254 ) 18,744 Contract costs, noncurrent portion 12,847 (12,847 ) — Liabilities Accounts payable - trade $ 136,140 $ (980 ) $ 135,160 Contract liabilities, current portion 9,928 (9,928 ) — Advances on contracts, current portion — 9,919 9,919 Other current liabilities 54,462 572 55,034 Deferred income taxes 7,738 (3 ) 7,735 Contract liabilities, noncurrent portion 76,330 (76,330 ) — Advances on contracts, noncurrent portion — 76,330 76,330 Equity Retained earnings $ 596,270 $ (127 ) $ 596,143 For the six-month fiscal period ended June 29, 2018 , the Company realized changes of asset and liability accounts as described above, with no impact to the Company's cash flows from operating activities. 3. SIGNIFICANT ACCOUNTING POLICIES UPDATE (CONTINUED) Revenue Recognition - continued For the Three Months Ended June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Net sales $ 468,129 $ (18,473 ) $ 449,656 Cost of sales 332,486 (13,370 ) 319,116 Gross profit 135,643 (5,103 ) 130,540 Selling, general and administrative expenses 114,339 (1,944 ) 112,395 Restructuring costs 1,954 — 1,954 Net gain on sale of assets (1,525 ) — (1,525 ) Operating income 20,875 (3,159 ) 17,716 Interest expense, net 5,002 — 5,002 Non-service pension and post retirement benefit cost (income) (3,039 ) — (3,039 ) Other expense (income), net 361 — 361 Earnings before income taxes 18,551 (3,159 ) 15,392 Income tax expense 3,457 (813 ) 2,644 Net earnings $ 15,094 $ (2,346 ) $ 12,748 For the Six Months Ended June 29, 2018 As reported Adjustments Balances without adoption of ASC 606 In thousands Net sales $ 931,456 $ (61,974 ) $ 869,482 Cost of sales 661,706 (46,628 ) 615,078 Gross profit 269,750 (15,346 ) 254,404 Selling, general and administrative expenses 226,092 (2,521 ) 223,571 Restructuring costs 3,647 — 3,647 Net gain on sale of assets (1,588 ) — (1,588 ) Operating income 41,599 (12,825 ) 28,774 Interest expense, net 10,354 — 10,354 Non-service pension and post retirement benefit cost (income) (6,068 ) — (6,068 ) Other expense (income), net 19 — 19 Earnings before income taxes 37,294 (12,825 ) 24,469 Income tax expense 8,134 (3,114 ) 5,020 Net earnings $ 29,160 $ (9,711 ) $ 19,449 For the three-month and six-month fiscal periods ended June 29, 2018 , the only adjustments to comprehensive income when comparing the balances with ASC 606 and the balances without ASC 606 included the adjustments to net earnings presented above. |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Restructuring Costs [Abstract] | |
Summary of Accrual Balances by Cost Type | The following table summarizes the accrual balances by cost type for the restructuring actions: Severance Other (1) Total In thousands Restructuring accrual balance at December 31, 2017 $ 1,172 $ 179 $ 1,351 Provision 1,019 1,245 2,264 Cash payments (1,268 ) (1,223 ) (2,491 ) Changes in foreign currency exchange rates (6 ) (8 ) (14 ) Restructuring accrual balance at June 29, 2018 $ 917 $ 193 $ 1,110 (1) Includes costs associated with consolidation of facilities. |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net consists of the following: June 29, December 31, In thousands Trade receivables $ 165,835 $ 152,078 U.S. Government contracts: Billed 19,355 26,093 Cost and accrued profit - not billed 1,230 862 Commercial and other government contracts Billed 67,025 107,962 Cost and accrued profit - not billed 911 30,590 Less allowance for doubtful accounts (4,063 ) (4,134 ) Accounts receivable, net $ 250,293 $ 313,451 |
Accounts Receivable Due to Contract Changes, Negotiated Settlements and Claims for Unanticipated Cost | Accounts receivable, net includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: June 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 900 $ 900 |
Contract Assets, Contract Cos31
Contract Assets, Contract Costs and Contract Liabilities (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Activity Related to Contract Assets, Contract Costs, and Contract Liabilities | Contract assets includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: June 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 3,423 $ — Activity related to contract assets, contract costs and contract liabilities is as follows: June 29, January 1, 2018 (1) $ Change % Change In thousands Contract assets $ 125,204 $ 82,699 $ 42,505 51.4 % Contract costs, current portion $ 3,487 $ 3,022 $ 465 15.4 % Contract costs, noncurrent portion $ 12,847 $ 7,852 $ 4,995 63.6 % Contract liabilities, current portion $ 9,928 $ 10,705 $ (777 ) (7.3 )% Contract liabilities, noncurrent portion $ 76,330 $ 689 $ 75,641 10,978.4 % (1) These amounts include the impact of the cumulative effect adjustment resulting from the adoption of ASC 606. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Financial Instruments That Are Not Carried At Fair Value | The following table presents the carrying value and fair value of financial instruments that are not carried at fair value: June 29, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value In thousands Debt (1) $ 330,264 $ 382,945 $ 405,602 $ 428,432 (1) These amounts are classified within Level 2. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consist of the following: June 29, December 31, In thousands Merchandise for resale $ 151,372 $ 151,520 Raw materials 15,313 18,871 Contracts and other work in process (including certain general stock materials) 105,620 171,403 Finished goods 18,753 25,643 Total $ 291,058 $ 367,437 |
Inventory Due to Contract Changes, Negotiated Settlements and Claims for Unanticipated Contract Costs | Inventories include amounts associated with matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows: June 29, December 31, In thousands Contract changes, negotiated settlements and claims for unanticipated contract costs $ 64 $ 4,375 |
Goodwill and Other Intangible34
Goodwill and Other Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Intangible Assets, Net (Including Goodwill) [Abstract] | |
Schedule of Goodwill | The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company: Distribution Aerospace Total In thousands Gross balance at December 31, 2017 $ 149,204 $ 218,765 $ 367,969 Accumulated impairment — (16,252 ) (16,252 ) Net balance at December 31, 2017 149,204 202,513 351,717 Additions — — — Impairments — — — Foreign currency translation — (3,230 ) (3,230 ) Ending balance at June 29, 2018 $ 149,204 $ 199,283 $ 348,487 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | Other intangible assets consisted of: At June 29, At December 31, 2018 2017 Amortization Period Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization In thousands Customer lists / relationships 6-26 years $ 158,412 $ (70,756 ) $ 159,592 $ (65,036 ) Developed technologies 10-20 years 19,899 (3,394 ) 20,148 (2,790 ) Trademarks / trade names 3-15 years 8,847 (4,115 ) 8,995 (3,905 ) Non-compete agreements and other 1-9 years 8,287 (8,265 ) 8,345 (8,319 ) Patents 17 years 523 (440 ) 523 (435 ) Total $ 195,968 $ (86,970 ) $ 197,603 $ (80,485 ) |
Pension Plans (Tables)
Pension Plans (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Defined Benefit Plan [Abstract] | |
Schedule of Net Benefit Costs | Components of net pension cost for the Qualified Pension Plan and Supplemental Employees’ Retirement Plan ("SERP") are as follows: For the Three Months Ended Qualified Pension Plan SERP June 29, June 30, June 29, June 30, In thousands Service cost $ 1,224 $ 1,199 $ — $ — Interest cost on projected benefit obligation 5,951 6,090 63 62 Expected return on plan assets (11,960 ) (10,512 ) — — Amortization of net loss 2,843 3,486 64 8 Net pension (income) cost $ (1,942 ) $ 263 $ 127 $ 70 12. PENSION PLANS (CONTINUED) For the Six Months Ended Qualified Pension Plan SERP June 29, June 30, June 29, June 30, In thousands Service cost $ 2,448 $ 2,397 $ — $ — Interest cost on projected benefit obligation 11,902 12,179 117 123 Expected return on plan assets (23,920 ) (21,024 ) — — Amortization of net loss 5,686 6,972 147 66 Additional amount recognized due to curtailment/settlement — — — 99 Net pension (income) cost $ (3,884 ) $ 524 $ 264 $ 288 |
Computation of Earnings Per S36
Computation of Earnings Per Share (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Earnings Per Share Reconciliation [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For the Three Months Ended For the Six Months Ended June 29, June 30, June 29, June 30, In thousands, except per share amounts Net earnings $ 15,094 $ 13,458 $ 29,160 $ 19,749 Basic: Weighted average number of shares outstanding 27,971 27,557 27,911 27,351 Basic earnings per share $ 0.54 $ 0.49 $ 1.04 $ 0.72 Diluted: Weighted average number of shares outstanding 27,971 27,557 27,911 27,351 Weighted average shares issuable on exercise of dilutive stock options 237 141 228 154 Weighted average shares issuable on redemption of convertible notes 108 108 54 628 Weighted average shares issuable on redemption of warrants related to the 2017 Notes 33 36 65 237 Total 28,349 27,842 28,258 28,370 Diluted earnings per share $ 0.53 $ 0.48 $ 1.03 $ 0.70 |
Share-based Arrangements (Table
Share-based Arrangements (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Share-based Compensation [Abstract] | |
Stock Option Activity | Stock option activity was as follows: For the Three Months Ended For the Six Months Ended June 29, 2018 June 29, 2018 Options Weighted - average exercise price Options Weighted - average exercise price Options outstanding at beginning of period 1,042,136 $ 44.90 925,385 $ 40.43 Granted — $ — 199,510 $ 62.46 Exercised (76,701 ) $ 34.55 (147,276 ) $ 35.43 Forfeited or expired — $ — (12,184 ) $ 42.13 Options outstanding at June 29, 2018 965,435 $ 45.73 965,435 $ 45.73 |
Fair Value Assumptions | The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The following table indicates the weighted-average assumptions used in estimating fair value: For the Six Months Ended June 29, June 30, Expected option term (years) 4.9 5.0 Expected volatility 18.1 % 19.9 % Risk-free interest rate 2.6 % 1.9 % Expected dividend yield 1.5 % 1.6 % Per share fair value of options granted $10.65 $8.61 |
Restricted Stock Award and Restricted Stock Unit Activity | Restricted stock award and restricted stock unit activity was as follows: For the Three Months Ended For the Six Months Ended June 29, 2018 June 29, 2018 Restricted Stock Weighted- average grant date fair value Restricted Stock Weighted- average grant date fair value Restricted Stock outstanding at beginning of period 153,269 $ 49.98 154,882 $ 44.50 Granted 17,757 $ 63.37 60,247 $ 62.73 Vested (19,105 ) $ 62.32 (61,466 ) $ 48.76 Forfeited or expired (695 ) $ 55.75 (2,437 ) $ 48.36 Restricted Stock outstanding at June 29, 2018 151,226 $ 49.96 151,226 $ 49.96 |
Segment and Geographic Inform38
Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Segment Reporting [Abstract] | |
Summarized Financial Information by Business Segment | Summarized financial information by business segment is as follows: For the Three Months Ended For the Six Months Ended In thousands June 29, June 30, June 29, June 30, Net sales: Distribution $ 289,523 $ 278,706 $ 573,455 $ 550,324 Aerospace 178,606 170,300 358,001 334,623 Net sales $ 468,129 $ 449,006 $ 931,456 $ 884,947 Operating income: Distribution (1) $ 13,546 $ 15,657 $ 25,380 $ 27,073 Aerospace (1) 22,741 25,712 45,403 41,742 Net gain (loss) on sale of assets 1,525 (15 ) 1,588 5 Corporate expense (1) (16,937 ) (14,828 ) (30,772 ) (28,805 ) Operating income (1) 20,875 26,526 41,599 40,015 Interest expense, net 5,002 6,122 10,354 10,282 Non-service pension and post retirement benefit cost (income) (1) (3,039 ) (866 ) (6,068 ) (1,585 ) Other expense (income), net 361 (69 ) 19 (228 ) Earnings before income taxes 18,551 21,339 37,294 31,546 Income tax expense 3,457 7,881 8,134 11,797 Net earnings $ 15,094 $ 13,458 $ 29,160 $ 19,749 (1) The prior year amounts were adjusted to reflect the impact of the adjustments resulting from the adoption of ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Net Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost". |
Disaggregation of Revenue | The following table disaggregates total revenue by major product line. For the Three Months Ended For the Six Months Ended June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017 In thousands Distribution Bearings and Power Transmission $ 143,802 $ 137,776 $ 287,187 $ 272,698 Automation, Control and Energy 85,976 84,753 171,137 166,835 Fluid Power 59,745 56,177 115,131 110,791 Total Distribution Sales $ 289,523 $ 278,706 $ 573,455 $ 550,324 Aerospace Military and Defense, excluding fuzes $ 51,743 $ 50,675 $ 99,499 $ 97,656 Missile and Bomb Fuzes 41,601 36,165 94,586 71,379 Commercial Aerospace and Other 85,262 83,460 163,916 165,588 Total Aerospace Sales $ 178,606 $ 170,300 $ 358,001 $ 334,623 Total Sales (1) $ 468,129 $ 449,006 $ 931,456 $ 884,947 (1) Service revenue was not material for the three-month and six-month fiscal periods ended June 29, 2018 and June 30, 2017. The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized for performance obligations satisfied at a point in time for the Aerospace segment: For the Three Months Ended For the Six Months Ended In thousands June 29, 2018 June 29, 2018 Revenue recognized for performance obligations satisfied: Over time 48 % 50 % Point-in-time 52 % 50 % Total revenue (1) 100 % 100 % (1) The disaggregation of revenue recognized for performance satisfied over time versus point-in-time has not been included for the Distribution segment, as the majority of its revenue is recognized on a point-in-time basis with only approximately 2% of revenue recognized for performance obligations over time. |
Shareholders' Equity and Accu39
Shareholders' Equity and Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | Changes in shareholders’ equity for the six-month fiscal periods ended June 29, 2018 , and June 30, 2017 , were as follows: For the Six Months Ended June 29, 2018 June 30, 2017 In thousands Beginning balance $ 635,656 $ 565,787 Comprehensive income 27,625 40,682 Dividends declared (11,184 ) (11,011 ) Employee stock plans and related tax benefit 5,274 4,681 Purchase of treasury shares (8,824 ) (2,718 ) Share-based compensation expense 3,817 3,707 Amounts reclassified to temporary equity — 1,729 Changes due to convertible notes transactions (8 ) (2,511 ) Impact of change in revenue accounting standard (9,584 ) — Ending balance $ 642,772 $ 600,346 |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) are shown below: For the Three Months Ended June 29, 2018 June 30, 2017 In thousands Foreign currency translation: Beginning balance $ (1,043 ) $ (32,299 ) Net (loss) gain on foreign currency translation (11,969 ) 13,777 Other comprehensive (loss) income, net of tax (11,969 ) 13,777 Ending balance $ (13,012 ) $ (18,522 ) Pension and other post-retirement benefits (1) : Beginning balance $ (106,543 ) $ (119,239 ) Reclassifications to net income: Amortization of net loss, net of tax expense of $703 and $1,335, respectively 2,203 2,159 Other comprehensive income, net of tax 2,203 2,159 Ending balance $ (104,340 ) $ (117,080 ) Derivative instruments (2) : Beginning balance $ 3 $ 135 Net loss on derivative instruments, net of tax expense of $0 and $5, respectively — 8 Reclassification to net income, net of tax expense of $0 and $0, respectively — (1 ) Other comprehensive income, net of tax — 7 Ending balance $ 3 $ 142 Total accumulated other comprehensive loss $ (117,349 ) $ (135,460 ) (1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, Pension Plans for additional information.) (2) See Note 8, Derivative Financial Instruments , for additional information regarding the Company's derivative instruments. 17. SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (CONTINUED) For the Six Months Ended June 29, 2018 June 30, 2017 In thousands Foreign currency translation: Beginning balance $ (7,056 ) $ (34,896 ) Net (loss) gain on foreign currency translation (5,956 ) 16,374 Other comprehensive (loss) income, net of tax (5,956 ) 16,374 Ending balance $ (13,012 ) $ (18,522 ) Pension and other post-retirement benefits (1) : Beginning balance $ (108,760 ) $ (121,448 ) Reclassifications to net income: Amortization of net loss, net of tax expense of $1,413 and $2,670, respectively 4,420 4,368 Other comprehensive income, net of tax 4,420 4,368 Ending balance $ (104,340 ) $ (117,080 ) Derivative instruments (2) : Beginning balance $ 2 $ (49 ) Net loss on derivative instruments, net of tax expense of $0 and $78, respectively — 129 Reclassification to net income, net of tax expense of $1 and $37, respectively 1 62 Other comprehensive income, net of tax 1 191 Ending balance $ 3 $ 142 Total accumulated other comprehensive loss $ (117,349 ) $ (135,460 ) (1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 12, Pension Plans for additional information.) (2) See Note 8, Derivative Financial Instruments , for additional information regarding the Company's derivative instruments. |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 29, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rates | For the Three Months Ended For the Six Months Ended June 29, June 30, June 29, June 30, Effective Income Tax Rate 18.6 % 36.9 % 21.8 % 37.4 % |
Recent Accounting Standards (De
Recent Accounting Standards (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 29, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 596,270 | $ 578,293 | $ 587,877 |
Accounting Standard Update 2017-07 | Operating income | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Effect of adoption | 4,900 | ||
Accounting Standard Update 2017-07 | Other nonoperating income | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Effect of adoption | 12,700 | ||
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ (127) | $ (9,584) |
Significant Accounting Polici42
Significant Accounting Policies Update (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Retained earnings | $ (578,293) | $ (596,270) | $ (596,270) | $ (587,877) | ||
Net sales | 468,129 | $ 449,006 | 931,456 | $ 884,947 | ||
Gross profit | 135,643 | 134,493 | 269,750 | 258,839 | ||
Contract liabilities, noncurrent portion | 689 | 76,330 | 76,330 | $ 0 | ||
Cost to Fulfill Contract | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Capitalized contract cost | 9,500 | 9,500 | ||||
Costs to Obtain Contract | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Capitalized contract cost | 6,800 | 6,800 | ||||
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Retained earnings | 9,584 | 127 | 127 | |||
Net sales | (18,473) | (61,974) | ||||
Gross profit | (5,103) | (15,346) | ||||
Contract liabilities, noncurrent portion | 689 | (76,330) | (76,330) | |||
Aerospace | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net sales | 178,606 | 170,300 | 358,001 | 334,623 | ||
Increase to operating income from the quarterly impact of revisions in long term contracts | $ 1,100 | $ 2,100 | ||||
Aerospace | Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Retained earnings | 32,500 | |||||
Write-off of inventory | 32,500 | |||||
Net sales | 62,300 | |||||
Gross profit | $ 20,200 | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-06-29 | ||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||||
Expected revenue from backlog | 585,600 | 585,600 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | ||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||||
Expected revenue from backlog | 969,000 | 969,000 | ||||
Performance obligations satisfied in previous periods [Member] | Aerospace | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net sales | $ 1,400 | $ 3,000 |
Significant Accounting Polici43
Significant Accounting Policies Update - Effects of Changes (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Assets | ||||||
Accounts receivable, net | $ 284,209 | $ 250,293 | $ 250,293 | $ 313,451 | ||
Contract assets | 82,699 | 125,204 | 125,204 | 0 | ||
Contract costs, current portion | 3,022 | 3,487 | 3,487 | 0 | ||
Inventories | 293,763 | 291,058 | 291,058 | 367,437 | ||
Income tax refunds receivable | 3,692 | 3,692 | 2,889 | |||
Other current assets | 27,221 | 32,173 | 32,173 | 27,188 | ||
Deferred income taxes | 31,773 | 22,998 | 22,998 | 27,603 | ||
Contract costs, noncurrent portion | 7,852 | 12,847 | 12,847 | 0 | ||
Liabilities | ||||||
Accounts payable – trade | 128,659 | 136,140 | 136,140 | 127,591 | ||
Contract liabilities, current portion | 10,705 | 9,928 | 9,928 | 0 | ||
Advances on contracts, current portion | 0 | 0 | 0 | 8,527 | ||
Other current liabilities | 51,796 | 54,462 | 54,462 | 52,812 | ||
Deferred income taxes | 7,738 | 7,738 | 8,024 | |||
Income taxes payable | 3,042 | 0 | 0 | 1,517 | ||
Contract liabilities, noncurrent portion | 689 | 76,330 | 76,330 | 0 | ||
Advances on contracts, noncurrent portion | 0 | 0 | ||||
Equity | ||||||
Retained earnings | 578,293 | 596,270 | 596,270 | 587,877 | ||
Net sales | 468,129 | $ 449,006 | 931,456 | $ 884,947 | ||
Cost of sales | 332,486 | 314,513 | 661,706 | 626,108 | ||
Gross profit | 135,643 | 134,493 | 269,750 | 258,839 | ||
Selling, general and administrative expenses | 114,339 | 107,952 | 226,092 | 218,829 | ||
Restructuring costs | 1,954 | 0 | 3,647 | 0 | ||
Net (gain) loss on sale of assets | (1,525) | 15 | (1,588) | (5) | ||
Operating income | 20,875 | 26,526 | 41,599 | 40,015 | ||
Interest expense, net | 5,002 | 6,122 | 10,354 | 10,282 | ||
Other expense (income), net | 361 | (69) | 19 | (228) | ||
Non-service pension and post retirement benefit cost (income) | (3,039) | (866) | (6,068) | (1,585) | ||
Earnings before income taxes | 18,551 | 21,339 | 37,294 | 31,546 | ||
Income tax expense | 3,457 | 7,881 | 8,134 | 11,797 | ||
Net earnings | 15,094 | 13,458 | 29,160 | 19,749 | ||
Corporate | ||||||
Equity | ||||||
Operating income | (16,937) | (14,828) | (30,772) | (28,805) | ||
Distribution | ||||||
Equity | ||||||
Net sales | 289,523 | 278,706 | 573,455 | 550,324 | ||
Distribution | Operating segments | ||||||
Equity | ||||||
Net sales | 289,523 | 278,706 | 573,455 | 550,324 | ||
Operating income | 13,546 | 15,657 | 25,380 | 27,073 | ||
Aerospace | ||||||
Equity | ||||||
Net sales | 178,606 | 170,300 | 358,001 | 334,623 | ||
Aerospace | Operating segments | ||||||
Equity | ||||||
Net sales | 178,606 | 170,300 | 358,001 | 334,623 | ||
Operating income | 22,741 | 25,712 | 45,403 | 41,742 | ||
Scenario, Previously Reported [Member] | ||||||
Equity | ||||||
Cost of sales | 314,043 | 625,168 | ||||
Gross profit | 134,963 | 259,779 | ||||
Selling, general and administrative expenses | 107,556 | 218,184 | ||||
Operating income | 27,392 | 41,600 | ||||
Non-service pension and post retirement benefit cost (income) | 0 | 0 | ||||
Scenario, Previously Reported [Member] | Corporate | ||||||
Equity | ||||||
Operating income | (14,797) | (28,892) | ||||
Scenario, Previously Reported [Member] | Distribution | Operating segments | ||||||
Equity | ||||||
Operating income | 15,934 | 27,628 | ||||
Scenario, Previously Reported [Member] | Aerospace | Operating segments | ||||||
Equity | ||||||
Operating income | 26,270 | 42,859 | ||||
Accounting Standard Update 2017-07 | Restatement Adjustment [Member] | ||||||
Equity | ||||||
Cost of sales | 470 | 940 | ||||
Gross profit | (470) | (940) | ||||
Selling, general and administrative expenses | 396 | 645 | ||||
Operating income | (866) | (1,585) | ||||
Non-service pension and post retirement benefit cost (income) | (866) | (1,585) | ||||
Accounting Standard Update 2017-07 | Restatement Adjustment [Member] | Corporate | ||||||
Equity | ||||||
Operating income | (31) | 87 | ||||
Accounting Standard Update 2017-07 | Restatement Adjustment [Member] | Distribution | Operating segments | ||||||
Equity | ||||||
Operating income | (277) | (555) | ||||
Accounting Standard Update 2017-07 | Restatement Adjustment [Member] | Aerospace | Operating segments | ||||||
Equity | ||||||
Operating income | $ (558) | $ (1,117) | ||||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Assets | ||||||
Accounts receivable, net | 269,648 | 269,648 | 313,451 | |||
Contract assets | 0 | 0 | 0 | |||
Contract costs, current portion | 0 | 0 | 0 | |||
Inventories | 412,409 | 412,409 | 367,437 | |||
Income tax refunds receivable | 8,414 | 8,414 | ||||
Other current assets | 31,990 | 31,990 | 27,188 | |||
Deferred income taxes | 18,744 | 18,744 | 27,603 | |||
Contract costs, noncurrent portion | 0 | 0 | 0 | |||
Liabilities | ||||||
Accounts payable – trade | 135,160 | 135,160 | 127,591 | |||
Contract liabilities, current portion | 0 | 0 | 0 | |||
Advances on contracts, current portion | 9,919 | 9,919 | 8,527 | |||
Other current liabilities | 55,034 | 55,034 | 52,812 | |||
Deferred income taxes | 7,735 | 7,735 | ||||
Income taxes payable | 1,517 | |||||
Contract liabilities, noncurrent portion | 0 | 0 | 0 | |||
Advances on contracts, noncurrent portion | 76,330 | 76,330 | ||||
Equity | ||||||
Retained earnings | 596,143 | 596,143 | $ 587,877 | |||
Net sales | 449,656 | 869,482 | ||||
Cost of sales | 319,116 | 615,078 | ||||
Gross profit | 130,540 | 254,404 | ||||
Selling, general and administrative expenses | 112,395 | 223,571 | ||||
Restructuring costs | 1,954 | 3,647 | ||||
Net (gain) loss on sale of assets | (1,525) | (1,588) | ||||
Operating income | 17,716 | 28,774 | ||||
Interest expense, net | 5,002 | 10,354 | ||||
Other expense (income), net | 361 | 19 | ||||
Non-service pension and post retirement benefit cost (income) | (3,039) | (6,068) | ||||
Earnings before income taxes | 15,392 | 24,469 | ||||
Income tax expense | 2,644 | 5,020 | ||||
Net earnings | 12,748 | 19,449 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||
Assets | ||||||
Accounts receivable, net | (29,242) | 19,355 | 19,355 | |||
Contract assets | 82,699 | (125,204) | (125,204) | |||
Contract costs, current portion | 3,022 | (3,487) | (3,487) | |||
Inventories | (73,674) | 121,351 | 121,351 | |||
Income tax refunds receivable | 4,722 | 4,722 | ||||
Other current assets | 33 | (183) | (183) | |||
Deferred income taxes | 4,170 | (4,254) | (4,254) | |||
Contract costs, noncurrent portion | 7,852 | (12,847) | (12,847) | |||
Liabilities | ||||||
Accounts payable – trade | 1,068 | (980) | (980) | |||
Contract liabilities, current portion | 10,705 | (9,928) | (9,928) | |||
Advances on contracts, current portion | (8,527) | 9,919 | 9,919 | |||
Other current liabilities | (1,016) | 572 | 572 | |||
Deferred income taxes | (3) | (3) | ||||
Income taxes payable | 1,525 | |||||
Contract liabilities, noncurrent portion | 689 | (76,330) | (76,330) | |||
Advances on contracts, noncurrent portion | 76,330 | 76,330 | ||||
Equity | ||||||
Retained earnings | (9,584) | (127) | (127) | |||
Net sales | (18,473) | (61,974) | ||||
Cost of sales | (13,370) | (46,628) | ||||
Gross profit | (5,103) | (15,346) | ||||
Selling, general and administrative expenses | (1,944) | (2,521) | ||||
Restructuring costs | 0 | 0 | ||||
Net (gain) loss on sale of assets | 0 | 0 | ||||
Operating income | (3,159) | (12,825) | ||||
Interest expense, net | 0 | 0 | ||||
Other expense (income), net | 0 | 0 | ||||
Non-service pension and post retirement benefit cost (income) | 0 | 0 | ||||
Earnings before income taxes | (3,159) | (12,825) | ||||
Income tax expense | (813) | (3,114) | ||||
Net earnings | $ (2,346) | $ (9,711) | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Aerospace | ||||||
Equity | ||||||
Retained earnings | (32,500) | |||||
Net sales | 62,300 | |||||
Gross profit | $ 20,200 |
Restructuring Costs (Details)
Restructuring Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 10 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | |
Restructuring Reserve [Roll Forward] | |||||
Restructuring costs | $ 1,954 | $ 0 | $ 3,647 | $ 0 | |
Aerospace | |||||
Restructuring Reserve [Roll Forward] | |||||
Severance costs | 300 | 1,200 | |||
Distribution | |||||
Restructuring Reserve [Roll Forward] | |||||
Severance costs | 100 | ||||
2017 Announced Restructuring Plan [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total cost savings | 4,000 | ||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accrual balance, beginning of period | 1,351 | ||||
Provision | 2,264 | ||||
Cash payments | (2,491) | ||||
Changes in foreign currency exchange rates | (14) | ||||
Restructuring accrual balance, end of period | 1,110 | 1,110 | $ 1,110 | ||
Restructuring costs | 4,900 | ||||
2017 Announced Restructuring Plan [Member] | Aerospace | |||||
Restructuring Reserve [Roll Forward] | |||||
Provision | 1,500 | 2,300 | |||
2017 Announced Restructuring Plan [Member] | Severance | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accrual balance, beginning of period | 1,172 | ||||
Provision | 1,019 | ||||
Cash payments | (1,268) | ||||
Changes in foreign currency exchange rates | (6) | ||||
Restructuring accrual balance, end of period | 917 | 917 | 917 | ||
2017 Announced Restructuring Plan [Member] | Other | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accrual balance, beginning of period | 179 | ||||
Provision | 1,245 | ||||
Cash payments | (1,223) | ||||
Changes in foreign currency exchange rates | (8) | ||||
Restructuring accrual balance, end of period | 193 | 193 | 193 | ||
Write-off of inventory | 1,000 | ||||
2017 Announced Restructuring Plan [Member] | Minimum | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected restructuring costs | 7,000 | 7,000 | 7,000 | ||
2017 Announced Restructuring Plan [Member] | Maximum | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected restructuring costs | $ 8,500 | $ 8,500 | $ 8,500 |
Accounts Receivable, Net - Sch
Accounts Receivable, Net - Schedule of Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Jun. 29, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Less allowance for doubtful accounts | $ (4,063) | $ (4,134) | |
Accounts receivable, net | 250,293 | $ 284,209 | 313,451 |
Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable | 165,835 | 152,078 | |
U.S. Government contracts | Billed | Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable | 19,355 | 26,093 | |
U.S. Government contracts | Not billed | Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable | 1,230 | 862 | |
Commercial and other government contracts | Billed | Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable | 67,025 | 107,962 | |
Commercial and other government contracts | Not billed | Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable | $ 911 | $ 30,590 |
Accounts Receivable, Net - Acco
Accounts Receivable, Net - Accounts Receivable due to contract changes, negotiated settlements and claims for unanticipated cost (Details) - USD ($) $ in Thousands | Jun. 29, 2018 | Dec. 31, 2017 |
Accounts Receivable, Net [Abstract] | ||
Contract changes, negotiated settlements and claims for unanticipated contract costs | $ 900 | $ 900 |
Contract Assets, Contract Cos47
Contract Assets, Contract Costs and Contract Liabilities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 29, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Contract assets | $ 125,204,000 | $ 125,204,000 | $ 82,699,000 | $ 0 |
Contract assets, change | $ 42,505,000 | |||
Contract assets, change (as percent) | 51.40% | |||
Contract costs, current portion | 3,487,000 | $ 3,487,000 | 3,022,000 | 0 |
Capitalized costs, current portion, change | $ 465,000 | |||
Capitalized costs, current portion, change (as percent) | 15.40% | |||
Contract costs, noncurrent portion | 12,847,000 | $ 12,847,000 | 7,852,000 | 0 |
Capitalized costs, noncurrent portion, change | $ 4,995,000 | |||
Capitalized costs, noncurrent portion, change (as percent) | 63.60% | |||
Contract liabilities, current portion | 9,928,000 | $ 9,928,000 | 10,705,000 | 0 |
Contract liabilities, current portion, change | $ (777,000) | |||
Contract liabilities, current portion, change (as percent) | (7.30%) | |||
Contract liabilities, noncurrent portion | 76,330,000 | $ 76,330,000 | 689,000 | 0 |
Contract liabilities, noncurrent portion, change | $ 75,641,000 | |||
Contract liabilities, noncurrent portion, change (as percent) | 10978.40% | |||
Impairment loss | $ 0 | |||
Capitalized contract cost, amortization | 1,000,000 | 1,700,000 | ||
Revenue recognized related to contract liabilities | 1,400,000 | 6,400,000 | ||
Claims [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract with Customer, Asset, Net | 4,300,000 | |||
Contract changes, negotiated settlements and claims for unanticipated contract costs | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | 3,423,000 | 3,423,000 | $ 0 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | (125,204,000) | (125,204,000) | 82,699,000 | |
Contract costs, current portion | (3,487,000) | (3,487,000) | 3,022,000 | |
Contract costs, noncurrent portion | (12,847,000) | (12,847,000) | 7,852,000 | |
Contract liabilities, current portion | (9,928,000) | (9,928,000) | 10,705,000 | |
Contract liabilities, noncurrent portion | $ (76,330,000) | $ (76,330,000) | $ 689,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Instruments not carried at Fair Value (Details) - Level 2 - USD ($) $ in Thousands | Jun. 29, 2018 | Dec. 31, 2017 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | $ 330,264 | $ 405,602 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | $ 382,945 | $ 428,432 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands | Jun. 29, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | |||
Merchandise for resale | $ 151,372 | $ 151,520 | |
Raw materials | 15,313 | 18,871 | |
Contracts and other work in process (including certain general stock materials) | 105,620 | 171,403 | |
Finished goods | 18,753 | 25,643 | |
Total | $ 291,058 | $ 293,763 | $ 367,437 |
Inventories - Inventory Due to
Inventories - Inventory Due to Contract Changes, Negotiated Settlements and Claims for Unanticipated Contract Costs (Details) - USD ($) $ in Thousands | Jun. 29, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Contract changes, negotiated settlements and claims for unanticipated contract costs | $ 64 | $ 4,375 |
Inventories - Other Inventory I
Inventories - Other Inventory Information (Details) - USD ($) $ in Thousands | Jun. 29, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Schedule of Inventory [Line Items] | |||
Inventories | $ 291,058 | $ 293,763 | $ 367,437 |
K-MAX® | |||
Schedule of Inventory [Line Items] | |||
Inventory, gross | 42,000 | 25,500 | |
Inventory noncurrent | 13,700 | ||
SH 2GA Super Seasprite Program | |||
Schedule of Inventory [Line Items] | |||
Inventory, gross | 5,400 | 6,200 | |
Inventory noncurrent | $ 5,100 | ||
Claims [Member] | |||
Schedule of Inventory [Line Items] | |||
Inventories | $ 4,300 |
Goodwill and Other Intangible52
Goodwill and Other Intangible Assets, Net - Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 29, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | ||
Gross balance at beginning of period | $ 367,969 | |
Accumulated impairment | (16,252) | |
Net balance at beginning of period | $ 351,717 | |
Additions | 0 | |
Impairments | 0 | |
Foreign currency translation | (3,230) | |
Net balance at end of period | 348,487 | |
Distribution | ||
Goodwill [Roll Forward] | ||
Gross balance at beginning of period | 149,204 | |
Accumulated impairment | 0 | |
Net balance at beginning of period | 149,204 | |
Additions | 0 | |
Impairments | 0 | |
Foreign currency translation | 0 | |
Net balance at end of period | 149,204 | |
Aerospace | ||
Goodwill [Roll Forward] | ||
Gross balance at beginning of period | 218,765 | |
Accumulated impairment | $ (16,252) | |
Net balance at beginning of period | 202,513 | |
Additions | 0 | |
Impairments | 0 | |
Foreign currency translation | (3,230) | |
Net balance at end of period | $ 199,283 |
Goodwill and Other Intangible53
Goodwill and Other Intangible Assets, Net - Other Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 29, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 195,968 | $ 197,603 |
Accumulated Amortization | (86,970) | (80,485) |
Customer lists / relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 158,412 | 159,592 |
Accumulated Amortization | (70,756) | (65,036) |
Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 19,899 | 20,148 |
Accumulated Amortization | (3,394) | (2,790) |
Trademarks / trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 8,847 | 8,995 |
Accumulated Amortization | (4,115) | (3,905) |
Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 8,287 | 8,345 |
Accumulated Amortization | $ (8,265) | (8,319) |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 17 years | |
Gross Amount | $ 523 | 523 |
Accumulated Amortization | $ (440) | $ (435) |
Minimum | Customer lists / relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 6 years | |
Minimum | Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 10 years | |
Minimum | Trademarks / trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 3 years | |
Minimum | Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 1 year | |
Maximum | Customer lists / relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 26 years | |
Maximum | Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 20 years | |
Maximum | Trademarks / trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 15 years | |
Maximum | Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Period | 9 years |
Goodwill and Other Intangible54
Goodwill and Other Intangible Assets, Net - Narrative (Details) $ in Millions | Jun. 29, 2018USD ($) |
U.K. Composites | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, net | $ 10.5 |
Engineering Services | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, net | $ 1 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 6 Months Ended |
Jun. 29, 2018shares | |
2017 Notes | |
Debt Instrument [Line Items] | |
Shares issued upon settlement of warrants | 114,778 |
Pension Plans - Pension plan ne
Pension Plans - Pension plan net periodic benefit costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Qualified Pension Plan | ||||
Defined Benefit Plan Disclosure | ||||
Service cost | $ 1,224 | $ 1,199 | $ 2,448 | $ 2,397 |
Interest cost on projected benefit obligation | 5,951 | 6,090 | 11,902 | 12,179 |
Expected return on plan assets | (11,960) | (10,512) | (23,920) | (21,024) |
Amortization of net loss | 2,843 | 3,486 | 5,686 | 6,972 |
Defined Benefit Plan, Benefit Obligation, (Increase) Decrease for Curtailment | 0 | 0 | ||
Net pension (income) cost | (1,942) | 263 | (3,884) | 524 |
SERP | ||||
Defined Benefit Plan Disclosure | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost on projected benefit obligation | 63 | 62 | 117 | 123 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of net loss | 64 | 8 | 147 | 66 |
Defined Benefit Plan, Benefit Obligation, (Increase) Decrease for Curtailment | 0 | 99 | ||
Net pension (income) cost | $ 127 | $ 70 | $ 264 | $ 288 |
Pension Plans - Contributions (
Pension Plans - Contributions (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 29, 2018 | Dec. 31, 2017 | |
Qualified Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Contributions paid-to-date | $ 20 | $ 10 |
SERP | ||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Contributions paid-to-date | 0.3 | $ 3.1 |
Expected future contributions | $ 0.6 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 29, 2018 | Oct. 28, 2016 | |
Loss Contingencies [Line Items] | ||
Unasserted claim | $ 12.4 | |
Offset Agreement | ||
Loss Contingencies [Line Items] | ||
Notional amount | 194 | |
Estimate of possible loss | 16.5 | |
Accruals and payables and other long-term liabilties | Rimpar | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | $ 0.5 | |
New Hartford | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | 2.3 | |
Payments for environmental remediation | 1.6 | |
New Hartford | Other accruals and payables | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | 0.1 | |
New Hartford | Accruals and payables and other long-term liabilties | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | 0.7 | |
Bloomfield | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | 2.2 | |
Payments for environmental remediation | 13.5 | |
Environmental liability | 10.3 | |
Estimated remediation liability | $ 20.8 | |
Discount rate (as a percent) | 8.00% | |
Bloomfield | Other accruals and payables | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | $ 0.4 | |
Rimpar | ||
Loss Contingencies [Line Items] | ||
Payments for environmental remediation | 0.2 | |
Rimpar | Accruals and payables and other long-term liabilties | ||
Loss Contingencies [Line Items] | ||
Estimate of environmental remediation cost | 0.3 | |
Pension Costs | ||
Loss Contingencies [Line Items] | ||
Accrual for claims | 0.3 | |
Unasserted Claim | ||
Loss Contingencies [Line Items] | ||
Accrual for claims | $ 0.2 |
Computation of Earnings Per S59
Computation of Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Earnings Per Share Reconciliation [Abstract] | ||||
Net earnings | $ 15,094 | $ 13,458 | $ 29,160 | $ 19,749 |
Basic: | ||||
Weighted average number of shares outstanding (in shares) | 27,971 | 27,557 | 27,911 | 27,351 |
Basic earnings per share (in usd per share) | $ 0.54 | $ 0.49 | $ 1.04 | $ 0.72 |
Diluted: | ||||
Weighted average shares issuable on exercise of dilutive stock options (in shares) | 237 | 141 | 228 | 154 |
Weighted average shares issuable on redemption of 2017 Notes (in shares) | 108 | 108 | 54 | 628 |
Weighted average shares issuable on redemption of warrants related to the 2017 Notes (in shares) | 33 | 36 | 65 | 237 |
Diluted (in shares) | 28,349 | 27,842 | 28,258 | 28,370 |
Diluted earnings per share (in usd per share) | $ 0.53 | $ 0.48 | $ 1.03 | $ 0.70 |
Computation of Earnings Per S60
Computation of Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Stock Compensation Plan | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive securities excluded from EPS | 182,040 | 350,649 | 190,775 | 286,343 |
Share-based Arrangements - Comp
Share-based Arrangements - Compensation Arrangements by Share-based Payment Award (Details) - USD ($) $ in Thousands | Apr. 18, 2018 | Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Stock compensation expense | $ 2,300 | $ 2,300 | $ 3,817 | $ 3,707 | |
2013 Management Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Number of additional shares authorized (in shares) | 2,250,000 | ||||
Number of shares available for grant (in shares) | 2,464,780 | 2,464,780 | |||
ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Number of additional shares authorized (in shares) | 500,000 | ||||
Number of shares available for grant (in shares) | 641,466 | 641,466 | |||
Awards Granted 2014 | Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Assumed achievement level (as percent) | 139.90% | 139.90% | |||
Number of shares issued (in shares) | 1,506 | ||||
Awards Granted 2015 [Member] | Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Assumed achievement level (as percent) | 142.30% | 142.30% | |||
Number of shares issued (in shares) | 1,573 | ||||
Awards Granted 2016 [Member] | Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Assumed achievement level (as percent) | 100.00% | 100.00% | |||
Number of shares issued (in shares) | 1,060 |
Share-based Arrangements - Stoc
Share-based Arrangements - Stock Options Activity (Details) - Stock Options - $ / shares | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2018 | Jun. 29, 2018 | Jun. 30, 2017 | Mar. 30, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||||
Outstanding at beginning of the period (in shares) | 1,042,136 | 925,385 | |||
Granted (in shares) | 0 | 199,510 | |||
Exercised (in shares) | (76,701) | (147,276) | |||
Forfeited or expired (in shares) | 0 | (12,184) | |||
Outstanding at end of period (in shares) | 965,435 | 965,435 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||||
Options outstanding at beginning of period, Weighted-average exercise price (in usd per share) | $ 45.73 | $ 45.73 | $ 44.90 | $ 40.43 | |
Granted, Weighted-average exercise price (in usd per share) | 0 | 62.46 | |||
Exercised, Weighted-average exercise price (in usd per share) | 34.55 | 35.43 | |||
Forfeited or expired, Weighted average exercise price (in usd per share) | 0 | 42.13 | |||
Options outstanding end of period, Weighted-average exercise price (in usd per share) | $ 45.73 | $ 45.73 | $ 44.90 | $ 40.43 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||||
Expected option term | 4 years 11 months | 5 years | |||
Expected volatility | 18.10% | 19.90% | |||
Risk-free interest rate | 2.60% | 1.90% | |||
Expected dividend yield | 1.50% | 1.60% | |||
Per share fair value of options granted (in usd per share) | $ 10.65 | $ 8.61 |
Share-based Arrangements - Rest
Share-based Arrangements - Restricted Stock Activity (Details) - Restricted Stock Awards - $ / shares | 3 Months Ended | 6 Months Ended |
Jun. 29, 2018 | Jun. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Restricted Stock outstanding at beginning of the period (in shares) | 153,269 | 154,882 |
Granted (in shares) | 17,757 | 60,247 |
Vested (in shares) | (19,105) | (61,466) |
Forfeited or expired (in shares) | (695) | (2,437) |
Restricted Stock outstanding at end of period (in shares) | 151,226 | 151,226 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Restricted Stock outstanding at beginning of period, Weighted-average grant date fair value (usd per share) | $ 49.98 | $ 44.50 |
Granted, Weighted Average Grant Date Fair Value (usd per share) | 63.37 | 62.73 |
Vested, Weighted Average Grant Date Fair Value (usd per share) | 62.32 | 48.76 |
Forfeited or expired, Weighted Average Grant Date Fair Value (usd per share) | 55.75 | 48.36 |
Restricted Stock outstanding at end of period Weighted-average grant date fair value (usd per share) | $ 49.96 | $ 49.96 |
Segment and Geographic Inform64
Segment and Geographic Information - Summarized Financial Information by Business Segment (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 29, 2018USD ($)segment | Jun. 30, 2017USD ($) | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Number of operating segments | segment | 2 | |||
Net sales | $ 468,129 | $ 449,006 | $ 931,456 | $ 884,947 |
Net gain (loss) on sale of assets | 1,525 | (15) | 1,588 | 5 |
Operating income | 20,875 | 26,526 | 41,599 | 40,015 |
Interest expense, net | 5,002 | 6,122 | 10,354 | 10,282 |
Non-service pension and post retirement benefit cost (income) | (3,039) | (866) | (6,068) | (1,585) |
Other expense (income), net | 361 | (69) | 19 | (228) |
Earnings before income taxes | 18,551 | 21,339 | 37,294 | 31,546 |
Income tax expense | 3,457 | 7,881 | 8,134 | 11,797 |
Net earnings | 15,094 | 13,458 | 29,160 | 19,749 |
Distribution | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 289,523 | 278,706 | 573,455 | 550,324 |
Aerospace | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 178,606 | 170,300 | 358,001 | 334,623 |
Operating segments | Distribution | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 289,523 | 278,706 | 573,455 | 550,324 |
Operating income | 13,546 | 15,657 | 25,380 | 27,073 |
Operating segments | Aerospace | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | 178,606 | 170,300 | 358,001 | 334,623 |
Operating income | 22,741 | 25,712 | 45,403 | 41,742 |
Reconciling item | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net gain (loss) on sale of assets | 1,525 | (15) | 1,588 | 5 |
Corporate | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Operating income | $ (16,937) | $ (14,828) | $ (30,772) | $ (28,805) |
Segment and Geographic Inform65
Segment and Geographic Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 468,129 | $ 449,006 | $ 931,456 | $ 884,947 |
Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 289,523 | 278,706 | $ 573,455 | 550,324 |
Distribution | Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment terms | 30 days | |||
Distribution | Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment terms | 90 days | |||
Distribution | Over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net, Percentage | 2.00% | 2.00% | ||
Distribution | Bearings and Power Transmission | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 143,802 | 137,776 | $ 287,187 | 272,698 |
Distribution | Automation, Control and Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 85,976 | 84,753 | 171,137 | 166,835 |
Distribution | Fluid Power | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 59,745 | 56,177 | 115,131 | 110,791 |
Aerospace | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 178,606 | 170,300 | $ 358,001 | 334,623 |
Revenue, Net, Percentage | 100.00% | 100.00% | ||
Aerospace | Time-and-materials Contract | Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment terms | 30 days | |||
Aerospace | Time-and-materials Contract | Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment terms | 180 days | |||
Aerospace | Fixed-price Contract | Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment terms | 30 days | |||
Aerospace | Fixed-price Contract | Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment terms | 90 days | |||
Aerospace | Over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net, Percentage | 48.00% | 50.00% | ||
Aerospace | Transferred at Point in Time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net, Percentage | 52.00% | 50.00% | ||
Aerospace | Military and Defense, excluding fuzes | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 51,743 | 50,675 | $ 99,499 | 97,656 |
Aerospace | Missile and Bomb Fuzes | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 41,601 | 36,165 | 94,586 | 71,379 |
Aerospace | Commercial Aerospace and Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 85,262 | $ 83,460 | $ 163,916 | $ 165,588 |
Shareholders' Equity and Accu66
Shareholders' Equity and Accumulated Other Comprehensive Income - Changes in Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 635,656 | $ 565,787 | ||
Comprehensive income | $ 5,328 | $ 29,401 | 27,625 | 40,682 |
Dividends declared | (11,184) | (11,011) | ||
Employee stock plans and related tax benefit | 5,274 | 4,681 | ||
Purchase of treasury shares | (8,824) | (2,718) | ||
Share-based compensation expense | 2,300 | 2,300 | 3,817 | 3,707 |
Amounts reclassified to temporary equity | 0 | 1,729 | ||
Changes due to convertible notes transactions | (8) | (2,511) | ||
Impact of change in revenue accounting standard | (9,584) | 0 | ||
Ending balance | $ 642,772 | $ 600,346 | $ 642,772 | $ 600,346 |
Shareholders' Equity and Accu67
Shareholders' Equity and Accumulated Other Comprehensive Income - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Foreign currency translation adjustments | $ (11,969) | $ 13,777 | $ (5,956) | $ 16,374 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 635,656 | 565,787 | ||
Other comprehensive income (loss) | (9,766) | 15,943 | (1,535) | 20,933 |
Ending balance | 642,772 | 600,346 | 642,772 | 600,346 |
Other Comprehensive Income (Loss) before Reclassifications, Tax | 0 | 78 | ||
Reclassification to net income, tax expense | 1 | 37 | ||
Total accumulated other comprehensive loss | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Ending balance | (117,349) | (135,460) | (117,349) | (135,460) |
Foreign currency translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (1,043) | (32,299) | (7,056) | (34,896) |
OCI, before Reclassifications | 13,777 | |||
Other comprehensive income (loss) | (11,969) | 13,777 | (5,956) | 16,374 |
Ending balance | (13,012) | (18,522) | (13,012) | (18,522) |
Pension and other post-retirement benefits | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (106,543) | (119,239) | (108,760) | (121,448) |
Reclassifications to net income: | 2,203 | 2,159 | 4,420 | 4,368 |
Other comprehensive income (loss) | 2,203 | 2,159 | 4,420 | 4,368 |
Ending balance | (104,340) | (117,080) | (104,340) | (117,080) |
Amortization of net loss, net of tax expense | 703 | 1,335 | 1,413 | 2,670 |
Derivative Instruments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 3 | 135 | 2 | (49) |
OCI, before Reclassifications | 0 | 8 | 0 | 129 |
Reclassifications to net income: | 0 | (1) | 1 | 62 |
Other comprehensive income (loss) | 0 | 7 | 1 | 191 |
Ending balance | 3 | 142 | $ 3 | $ 142 |
Other Comprehensive Income (Loss) before Reclassifications, Tax | 0 | 5 | ||
Reclassification to net income, tax expense | $ 0 | $ 0 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 29, 2018 | Jun. 30, 2017 | Jun. 29, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective Income Tax Rate | 18.60% | 36.90% | 21.80% | 37.40% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Dec. 31, 2017 | Jun. 29, 2018 | |
Income Tax Disclosure [Abstract] | ||
One-time charge to tax expense | $ 9,700,000 | |
Provisional changes to provisional tax amount | $ 0 | |
Operating loss carryforwards | 3,200,000 | |
Deferred tax assets to be realized | 500,000 | |
Deferred tax assets, valuation allowance | $ 2,700,000 |