Ohio
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34-1598949
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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9400 East Market Street, Warren, Ohio
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44484
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(Address of principal executive offices)
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(Zip Code)
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(330) 856-2443
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Registrant’s telephone number, including area code
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Large accelerated filer o
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Accelerated filer x
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Non-accelerated filer o
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Smaller reporting company o
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(Do not check if a smaller reporting company)
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Page
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|||
PART I–FINANCIAL INFORMATION
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|||
Item 1.
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Financial Statements
|
||
Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2011 and December 31, 2010 (as adjusted)
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2
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||
Condensed Consolidated Statements of Operations (Unaudited) For the Three and Six Months Ended June 30, 2011 and 2010 (as adjusted)
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3
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||
Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2011 and 2010 (as adjusted)
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4
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||
Notes to Condensed Consolidated Financial Statements (Unaudited)
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5
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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19
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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31
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Item 4.
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Controls and Procedures
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31
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PART II–OTHER INFORMATION
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|||
Item 1.
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Legal Proceedings
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32
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Item 1A.
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Risk Factors
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32
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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32
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Item 3.
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Defaults Upon Senior Securities
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32
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Item 4.
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(Removed and Reserved)
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32
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Item 5.
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Other Information
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32
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Item 6.
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Exhibits
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32
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Signatures
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33
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Index to Exhibits
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34
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EX – 31.1
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|||
EX – 31.2
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|||
EX – 32.1
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EX – 32.2
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June 30,
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December 31,
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|||||||
(in thousands)
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2011
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2010
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||||||
As adjusted
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||||||||
ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 36,448 | $ | 71,974 | ||||
Accounts receivable, less reserves of $1,623 and $2,013, respectively
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126,039 | 102,600 | ||||||
Inventories, net
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73,322 | 54,959 | ||||||
Prepaid expenses and other current assets
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23,850 | 20,443 | ||||||
Total current assets
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259,659 | 249,976 | ||||||
Long-term assets:
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||||||||
Property, plant and equipment, net
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81,516 | 76,576 | ||||||
Investments and other long-term assets, net
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67,631 | 60,184 | ||||||
Total long-term assets
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149,147 | 136,760 | ||||||
Total assets
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$ | 408,806 | $ | 386,736 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
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||||||||
Current liabilities:
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||||||||
Accounts payable
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$ | 78,435 | $ | 68,341 | ||||
Accrued expenses and other current liabilities
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41,819 | 44,442 | ||||||
Total current liabilities
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120,254 | 112,783 | ||||||
Long-term liabilities:
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||||||||
Long-term debt
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169,238 | 167,903 | ||||||
Other long-term liabilities
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14,795 | 14,831 | ||||||
Total long-term liabilities
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184,033 | 182,734 | ||||||
Shareholders' equity
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||||||||
Preferred shares, without par value, authorized 5,000 shares, none issued
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- | - | ||||||
Common shares, without par value, authorized 60,000 shares, issued 26,451 and 25,994 shares and outstanding 25,577 and 25,393 shares, respectively, with no stated value
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- | - | ||||||
Additional paid-in capital
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164,311 | 161,587 | ||||||
Common shares held in treasury, 874 and 601 shares, respectively, at cost
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(1,862 | ) | (1,118 | ) | ||||
Accumulated deficit
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(71,367 | ) | (77,620 | ) | ||||
Accumulated other comprehensive income
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9,197 | 4,062 | ||||||
Total Stoneridge Inc. and subsidiaries shareholders' equity
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100,279 | 86,911 | ||||||
Noncontrolling interest
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4,240 | 4,308 | ||||||
Total shareholders' equity
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104,519 | 91,219 | ||||||
Total liabilities and shareholders' equity
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$ | 408,806 | $ | 386,736 |
Three months ended
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Six months ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
(in thousands, except per share data)
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2011
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2010
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2011
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2010
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||||||||||||
As adjusted
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As adjusted
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|||||||||||||||
Net sales
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$ | 190,417 | $ | 166,262 | $ | 383,461 | $ | 314,336 | ||||||||
Costs and expenses:
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||||||||||||||||
Cost of goods sold
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152,699 | 126,998 | 306,453 | 241,140 | ||||||||||||
Selling, general and administrative
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30,305 | 31,447 | 62,895 | 61,015 | ||||||||||||
Operating income
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7,413 | 7,817 | 14,113 | 12,181 | ||||||||||||
Interest expense, net
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4,289 | 5,630 | 8,555 | 11,236 | ||||||||||||
Equity in earnings of investees
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(1,808 | ) | (1,611 | ) | (3,724 | ) | (2,302 | ) | ||||||||
Other expense (income), net
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534 | (749 | ) | 1,533 | (1,699 | ) | ||||||||||
Income before income taxes
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4,398 | 4,547 | 7,749 | 4,946 | ||||||||||||
Provision (benefit) for income taxes
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1,158 | 731 | 1,835 | (758 | ) | |||||||||||
Net income
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3,240 | 3,816 | 5,914 | 5,704 | ||||||||||||
Net loss attributable to noncontrolling interest
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(124 | ) | (21 | ) | (339 | ) | (44 | ) | ||||||||
Net income attributable to Stoneridge, Inc. and subsidiaries
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$ | 3,364 | $ | 3,837 | $ | 6,253 | $ | 5,748 | ||||||||
Basic net income per share
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$ | 0.14 | $ | 0.16 | $ | 0.26 | $ | 0.24 | ||||||||
Basic weighted average shares outstanding
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24,162 | 23,965 | 24,090 | 23,922 | ||||||||||||
Diluted net income per share
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$ | 0.14 | $ | 0.16 | $ | 0.25 | $ | 0.24 | ||||||||
Diluted weighted average shares outstanding
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24,606 | 24,389 | 24,545 | 24,351 |
Six months ended June 30 (in thousands)
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2011
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2010
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||||||
As adjusted
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||||||||
OPERATING ACTIVITIES:
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||||||||
Net income
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$ | 5,914 | $ | 5,704 | ||||
Adjustments to reconcile net income to net cash used for operating activities
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||||||||
Depreciation
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9,924 | 9,623 | ||||||
Amortization, including accretion of debt discount
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549 | 577 | ||||||
Deferred income taxes
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323 | (1,710 | ) | |||||
Earnings of equity method investees
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(3,724 | ) | (2,302 | ) | ||||
Loss (gain) on sale of fixed assets
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11 | (8 | ) | |||||
Share-based compensation expense, net
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2,247 | 930 | ||||||
Changes in operating assets and liabilities -
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||||||||
Accounts receivable, net
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(21,410 | ) | (27,989 | ) | ||||
Inventories, net
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(17,559 | ) | (7,936 | ) | ||||
Prepaid expenses and other
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(2,459 | ) | (8,938 | ) | ||||
Accounts payable
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8,919 | 13,651 | ||||||
Accrued expenses and other
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(5,848 | ) | 10,965 | |||||
Net cash used for operating activities
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(23,113 | ) | (7,433 | ) | ||||
INVESTING ACTIVITIES:
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||||||||
Capital expenditures
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(14,117 | ) | (7,063 | ) | ||||
Proceeds from sale of fixed assets
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3 | 21 | ||||||
Capital contribution from noncontrolling interest
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271 | - | ||||||
Net cash used for investing activities
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(13,843 | ) | (7,042 | ) | ||||
FINANCING ACTIVITIES:
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||||||||
Repayments of debt
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(130 | ) | (141 | ) | ||||
Revolving credit facility borrowings
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893 | 4,271 | ||||||
Revolving credit facility payments
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(457 | ) | (3,794 | ) | ||||
Other financing costs
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(96 | ) | - | |||||
Repurchase of shares to satisfy employee tax withholding
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(744 | ) | - | |||||
Excess tax benefits from share-based compensation expense
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- | 294 | ||||||
Net cash (used for) provided by financing activities
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(534 | ) | 630 | |||||
Effect of exchange rate changes on cash and cash equivalents
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1,964 | (3,454 | ) | |||||
Net decrease in cash and cash equivalents
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(35,526 | ) | (17,299 | ) | ||||
Cash and cash equivalents at beginning of period
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71,974 | 91,907 | ||||||
Cash and cash equivalents at end of period
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$ | 36,448 | $ | 74,608 | ||||
Supplemental disclosure of non-cash financing activities:
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||||||||
Change in fair value of interest rate swap
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$ | 1,208 | $ | - |
Three months ended June 30
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2011
|
2010
|
||||||||||||||||||||||
Computed
|
Impact of
|
Reported
|
Impact of
|
|||||||||||||||||||||
under
|
change
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under
|
Originally
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change
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As
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|||||||||||||||||||
LIFO
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to FIFO
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FIFO
|
reported
|
to FIFO
|
adjusted
|
|||||||||||||||||||
Cost of goods sold
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$ | 152,810 | $ | (111 | ) | $ | 152,699 | $ | 126,642 | $ | 356 | $ | 126,998 | |||||||||||
Operating income (loss)
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$ | 7,302 | $ | 111 | $ | 7,413 | $ | 8,173 | $ | (356 | ) | $ | 7,817 | |||||||||||
Income (loss) before income taxes
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$ | 4,287 | $ | 111 | $ | 4,398 | $ | 4,903 | $ | (356 | ) | $ | 4,547 | |||||||||||
Net income (loss)
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$ | 3,129 | $ | 111 | $ | 3,240 | $ | 4,172 | $ | (356 | ) | $ | 3,816 | |||||||||||
Net income (loss) attributable to Stoneridge, Inc. and subsidiaries
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$ | 3,253 | $ | 111 | $ | 3,364 | $ | 4,193 | $ | (356 | ) | $ | 3,837 | |||||||||||
Basic net income (loss) per share
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$ | 0.14 | $ | 0.00 | $ | 0.14 | $ | 0.17 | $ | (0.01 | ) | $ | 0.16 | |||||||||||
Diluted net income (loss) per share
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$ | 0.14 | $ | 0.00 | $ | 0.14 | $ | 0.17 | $ | (0.01 | ) | $ | 0.16 | |||||||||||
Six months ended June 30
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2011 | 2010 | ||||||||||||||||||||||
Computed
|
Impact of
|
Reported
|
Impact of
|
|||||||||||||||||||||
under
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change
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under
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Originally
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change
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As
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|||||||||||||||||||
LIFO
|
to FIFO
|
FIFO
|
reported
|
to FIFO
|
adjusted
|
|||||||||||||||||||
Cost of goods sold
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$ | 308,180 | $ | (1,727 | ) | $ | 306,453 | $ | 241,189 | $ | (49 | ) | $ | 241,140 | ||||||||||
Operating income
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$ | 12,386 | $ | 1,727 | $ | 14,113 | $ | 12,132 | $ | 49 | $ | 12,181 | ||||||||||||
Income before income taxes
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$ | 6,022 | $ | 1,727 | $ | 7,749 | $ | 4,897 | $ | 49 | $ | 4,946 | ||||||||||||
Net income
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$ | 4,187 | $ | 1,727 | $ | 5,914 | $ | 5,655 | $ | 49 | $ | 5,704 | ||||||||||||
Net income attributable to Stoneridge, Inc. and subsidiaries
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$ | 4,526 | $ | 1,727 | $ | 6,253 | $ | 5,699 | $ | 49 | $ | 5,748 | ||||||||||||
Basic net income per share
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$ | 0.19 | $ | 0.07 | $ | 0.26 | $ | 0.24 | $ | 0.00 | $ | 0.24 | ||||||||||||
Diluted net income per share
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$ | 0.18 | $ | 0.07 | $ | 0.25 | $ | 0.23 | $ | 0.01 | $ | 0.24 | ||||||||||||
Condensed Consolidated Balance Sheets:
|
||||||||||||||||||||||||
June 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
Computed
|
Impact of
|
Reported
|
Impact of
|
|||||||||||||||||||||
under
|
change
|
under
|
Originally
|
change
|
As
|
|||||||||||||||||||
LIFO
|
to FIFO
|
FIFO
|
reported
|
to FIFO
|
adjusted
|
|||||||||||||||||||
Inventories, net
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$ | 68,464 | $ | 4,858 | $ | 73,322 | $ | 51,828 | $ | 3,131 | $ | 54,959 | ||||||||||||
Total current assets
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$ | 254,801 | $ | 4,858 | $ | 259,659 | $ | 246,845 | $ | 3,131 | $ | 249,976 | ||||||||||||
Total assets
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$ | 403,948 | $ | 4,858 | $ | 408,806 | $ | 383,605 | $ | 3,131 | $ | 386,736 | ||||||||||||
Accumulated deficit
|
$ | (76,225 | ) | $ | 4,858 | $ | (71,367 | ) | $ | (80,751 | ) | $ | 3,131 | $ | (77,620 | ) | ||||||||
Total Stoneridge, Inc. and subsidiaries shareholders' equity
|
$ | 95,421 | $ | 4,858 | $ | 100,279 | $ | 83,780 | $ | 3,131 | $ | 86,911 | ||||||||||||
Total shareholders' equity
|
$ | 99,661 | $ | 4,858 | $ | 104,519 | $ | 88,088 | $ | 3,131 | $ | 91,219 | ||||||||||||
Total liabilities and shareholders' equity
|
$ | 403,948 | $ | 4,858 | $ | 408,806 | $ | 383,605 | $ | 3,131 | $ | 386,736 |
Condensed Consolidated Statements of Cash Flows:
|
||||||||||||||||||||||||
Six months ended June 30
|
2011
|
2010
|
||||||||||||||||||||||
Computed
|
Impact of
|
Reported
|
Impact of
|
|||||||||||||||||||||
under
|
change
|
under
|
Originally
|
change
|
As
|
|||||||||||||||||||
LIFO
|
to FIFO
|
FIFO
|
reported
|
to FIFO
|
adjusted
|
|||||||||||||||||||
Net income
|
$ | 4,187 | $ | 1,727 | $ | 5,914 | $ | 5,655 | $ | 49 | $ | 5,704 | ||||||||||||
Change in inventories, net
|
$ | (15,832 | ) | $ | (1,727 | ) | $ | (17,559 | ) | $ | (7,887 | ) | $ | (49 | ) | $ | (7,936 | ) |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
As adjusted
|
||||||||
Raw materials
|
$ | 48,161 | $ | 35,793 | ||||
Work-in-progress
|
10,096 | 9,454 | ||||||
Finished goods
|
15,065 | 9,712 | ||||||
Total inventories, net
|
$ | 73,322 | $ | 54,959 |
Prepaid expenses
|
Other long-
|
|||||||||||||||||||||||
Notional amounts (A)
|
and other current assets
|
term liabilities
|
||||||||||||||||||||||
June 30,
|
December 31,
|
June 30,
|
December 31,
|
June 30,
|
December 31,
|
|||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
Derivatives designated as hedging instruments:
|
`
|
|||||||||||||||||||||||
Cash Flow Hedge:
|
||||||||||||||||||||||||
Fixed price commodity contracts
|
$ | 14,740 | $ | - | $ | 704 | $ | - | $ | - | $ | - | ||||||||||||
Fair Value Hedge:
|
||||||||||||||||||||||||
Interest rate swap contract
|
45,000 | 45,000 | - | - | 1,809 | 3,017 | ||||||||||||||||||
59,740 | 45,000 | 704 | - | 1,809 | 3,017 | |||||||||||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||||||||||||||
Forward currency contracts
|
28,803 | 26,917 | - | 108 | 12 | - | ||||||||||||||||||
Total derivatives
|
$ | 88,543 | $ | 71,917 | $ | 704 | $ | 108 | $ | 1,821 | $ | 3,017 |
Amount of gain
recorded
in other
comprehensive
income
|
Amount of loss
reclassified from
other comprehensive
income into net
income
|
Location of loss
reclassified from other
comprehensive income
into net income
|
|||||||
Derivatives designated as cash flow hedges:
|
|||||||||
Commodity contracts
|
$ | 560 | $ | 24 |
Cost of goods sold
|
Amount of gain
recorded in other
comprehensive
income
|
Amount of loss
reclassified from
other comprehensive
income into net
income
|
Location of loss
reclassified from other
comprehensive income
into net income
|
|||||||
Derivatives designated as cash flow hedges:
|
|||||||||
Commodity contracts
|
$ | 680 | $ | 24 |
Cost of goods sold
|
June 30,
|
December 31,
|
|||||||||||||||
2011
|
2010
|
|||||||||||||||
Fair value estimated using
|
||||||||||||||||
Fair value
|
Level 1 inputs (A)
|
Level 2 inputs (B)
|
Fair value
|
|||||||||||||
Financial assets carried at fair value:
|
||||||||||||||||
Forward currency contracts
|
$ | - | $ | - | $ | - | $ | 108 | ||||||||
Available for sale security
|
221 | 221 | - | 274 | ||||||||||||
Fixed price commodity contracts
|
704 | - | 704 | - | ||||||||||||
Total financial assets carried at fair value
|
$ | 925 | $ | 221 | $ | 704 | $ | 382 | ||||||||
Financial liabilities carried at fair value:
|
||||||||||||||||
Forward currency contracts
|
$ | 12 | $ | - | $ | 12 | $ | - | ||||||||
Interest rate swap contract
|
1,809 | - | 1,809 | 3,017 | ||||||||||||
Total financial liabilities carried at fair value
|
$ | 1,821 | $ | - | $ | 1,821 | $ | 3,017 |
(A)
|
Fair values estimated using Level 1 inputs, which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The available for sale security is an equity security that is publically traded.
|
(B)
|
Fair values estimated using Level 2 inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For fixed price commodity, forward currency and interest rate swap contracts, inputs include commodity indexes, foreign currency exchange rates and the six-month forward LIBOR, respectively.
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
As adjusted
|
As adjusted
|
|||||||||||||||
Net income
|
$ | 3,240 | $ | 3,816 | $ | 5,914 | $ | 5,704 | ||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Currency translation adjustments
|
2,159 | (913 | ) | 4,466 | (6,274 | ) | ||||||||||
Pension liability adjustments
|
- | - | - | 5,089 | ||||||||||||
Unrealized loss on marketable securities
|
(29 | ) | (1 | ) | (35 | ) | (4 | ) | ||||||||
Unrealized gain (loss) on derivatives
|
584 | (1,915 | ) | 704 | (86 | ) | ||||||||||
Other comprehensive income (loss)
|
2,714 | (2,829 | ) | 5,135 | (1,275 | ) | ||||||||||
Consolidated comprehensive income
|
5,954 | 987 | 11,049 | 4,429 | ||||||||||||
Comprehensive loss attributable to noncontrolling interest
|
124 | 21 | 339 | 44 | ||||||||||||
Comprehensive income attributable to Stoneridge, Inc. and subsidiaries
|
$ | 6,078 | $ | 1,008 | $ | 11,388 | $ | 4,473 |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Currency translation adjustments
|
$ | 8,544 | $ | 4,078 | ||||
Unrealized loss on marketable securities
|
(51 | ) | (16 | ) | ||||
Unrealized gain on derivatives
|
704 | - | ||||||
Accumulated other comprehensive income
|
$ | 9,197 | $ | 4,062 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Basic weighted-average shares outstanding
|
24,161,775 | 23,964,609 | 24,089,679 | 23,922,193 | ||||||||||||
Effect of dilutive securities
|
444,330 | 424,635 | 455,109 | 429,004 | ||||||||||||
Diluted weighted-average shares outstanding
|
24,606,105 | 24,389,244 | 24,544,788 | 24,351,197 |
Six months ended June 30
|
2011
|
2010
|
||||||
Product warranty and recall at beginning of period
|
$ | 3,831 | $ | 4,764 | ||||
Accruals for products shipped during period
|
915 | 1,140 | ||||||
Aggregate changes in pre-existing liabilities due to claim developments
|
(87 | ) | 668 | |||||
Settlements made during the period (in cash or in kind)
|
(1,300 | ) | (2,182 | ) | ||||
Product warranty and recall at end of period
|
$ | 3,359 | $ | 4,390 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
As adjusted
|
As adjusted
|
|||||||||||||||
Net Sales:
|
||||||||||||||||
Electronics
|
$ | 124,085 | $ | 104,927 | $ | 248,902 | $ | 196,565 | ||||||||
Inter-segment sales
|
6,382 | 3,353 | 12,848 | 6,464 | ||||||||||||
Electronics net sales
|
130,467 | 108,280 | 261,750 | 203,029 | ||||||||||||
Control Devices
|
66,332 | 61,335 | 134,559 | 117,771 | ||||||||||||
Inter-segment sales
|
961 | 936 | 1,934 | 1,784 | ||||||||||||
Control Devices net sales
|
67,293 | 62,271 | 136,493 | 119,555 | ||||||||||||
Eliminations
|
(7,343 | ) | (4,289 | ) | (14,782 | ) | (8,248 | ) | ||||||||
Total net sales
|
$ | 190,417 | $ | 166,262 | $ | 383,461 | $ | 314,336 | ||||||||
Income (Loss) Before Income Taxes:
|
||||||||||||||||
Electronics (A)
|
$ | 464 | $ | 4,404 | $ | 1,133 | $ | 38,753 | ||||||||
Control Devices (A)
|
6,018 | 5,144 | 11,701 | 8,651 | ||||||||||||
Other corporate activities (A)
|
1,746 | 247 | 2,587 | (32,049 | ) | |||||||||||
Corporate interest expense
|
(3,830 | ) | (5,248 | ) | (7,672 | ) | (10,409 | ) | ||||||||
Total income before income taxes
|
$ | 4,398 | $ | 4,547 | $ | 7,749 | $ | 4,946 | ||||||||
Depreciation and Amortization:
|
||||||||||||||||
Electronics
|
$ | 2,634 | $ | 2,283 | $ | 5,096 | $ | 4,525 | ||||||||
Control Devices
|
2,379 | 2,561 | 4,843 | 5,026 | ||||||||||||
Corporate
|
50 | 85 | 100 | 172 | ||||||||||||
Total depreciation and amortization (B)
|
$ | 5,063 | $ | 4,929 | $ | 10,039 | $ | 9,723 | ||||||||
Interest Expense, net:
|
||||||||||||||||
Electronics
|
$ | 433 | $ | 376 | $ | 836 | $ | 821 | ||||||||
Control Devices
|
26 | 6 | 47 | 6 | ||||||||||||
Corporate
|
3,830 | 5,248 | 7,672 | 10,409 | ||||||||||||
Total interest expense, net
|
$ | 4,289 | $ | 5,630 | $ | 8,555 | $ | 11,236 | ||||||||
Capital Expenditures:
|
||||||||||||||||
Electronics
|
$ | 7,447 | $ | 2,323 | $ | 9,844 | $ | 4,786 | ||||||||
Control Devices
|
2,297 | 1,040 | 4,240 | 2,324 | ||||||||||||
Corporate
|
31 | 81 | 33 | (47 | ) | |||||||||||
Total capital expenditures
|
$ | 9,775 | $ | 3,444 | $ | 14,117 | $ | 7,063 |
(A)
|
During the six months ended June 30, 2010, the Company placed SPL into administration. As a result of placing SPL into administration the Company recognized a gain within the Electronics reportable segment of $32,512 and losses within other corporate activities and within the Control Devices reportable segment of approximately $32,039 and $473, respectively. These results were primarily due to eliminating SPL’s intercompany debt and equity structure.
|
(B)
|
These amounts represent depreciation and amortization on fixed and certain intangible assets.
|
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
As adjusted
|
||||||||
Total Assets:
|
||||||||
Electronics
|
$ | 241,715 | $ | 191,698 | ||||
Control Devices
|
104,996 | 96,977 | ||||||
Corporate (C)
|
189,138 | 217,414 | ||||||
Eliminations
|
(127,043 | ) | (119,353 | ) | ||||
Total assets
|
$ | 408,806 | $ | 386,736 |
(C)
|
Assets located at Corporate consist primarily of cash and equity investments.
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net Sales:
|
||||||||||||||||
North America
|
$ | 147,608 | $ | 135,749 | $ | 300,379 | $ | 256,492 | ||||||||
Europe and Other
|
42,809 | 30,513 | 83,082 | 57,844 | ||||||||||||
Total net sales
|
$ | 190,417 | $ | 166,262 | $ | 383,461 | $ | 314,336 | ||||||||
June 30,
|
December 31,
|
|||||||||||||||
2011 | 2010 | |||||||||||||||
Non-Current Assets:
|
||||||||||||||||
North America
|
$ | 133,817 | $ | 124,851 | ||||||||||||
Europe and Other
|
15,330 | 11,909 | ||||||||||||||
Total non-current assets
|
$ | 149,147 | $ | 136,760 |
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net sales
|
$ | 62,696 | $ | 40,812 | $ | 115,934 | $ | 74,122 | ||||||||
Cost of goods sold
|
$ | 36,743 | $ | 21,552 | $ | 65,352 | $ | 39,166 | ||||||||
Total pre-tax income
|
$ | 3,968 | $ | 3,426 | $ | 7,900 | $ | 4,623 | ||||||||
The Company's share of pre-tax income
|
$ | 1,984 | $ | 1,713 | $ | 3,950 | $ | 2,312 |
Dollar
|
Percent
|
|||||||||||||||||||||||
Three months ended June 30
|
2011 | 2010 |
increase
|
increase
|
||||||||||||||||||||
Electronics
|
$ | 124,085 | 65.2 | % | $ | 104,927 | 63.1 | % | $ | 19,158 | 18.3 | % | ||||||||||||
Control Devices
|
66,332 | 34.8 | 61,335 | 36.9 | 4,997 | 8.1 | % | |||||||||||||||||
Total net sales
|
$ | 190,417 | 100.0 | % | $ | 166,262 | 100.0 | % | $ | 24,155 | 14.5 | % |
Dollar
|
Percent
|
|||||||||||||||||||||||
Three months ended June 30
|
2011 | 2010 |
increase
|
increase
|
||||||||||||||||||||
North America
|
$ | 147,608 | 77.5 | % | $ | 135,749 | 81.6 | % | $ | 11,859 | 8.7 | % | ||||||||||||
Europe and Other
|
42,809 | 22.5 | 30,513 | 18.4 | 12,296 | 40.3 | % | |||||||||||||||||
Total net sales
|
$ | 190,417 | 100.0 | % | $ | 166,262 | 100.0 | % | $ | 24,155 | 14.5 | % |
Dollar
|
||||||||||||||||||||
increase /
|
||||||||||||||||||||
Three months ended June 30
|
2011
|
2010
|
(decrease)
|
|||||||||||||||||
As adjusted
|
||||||||||||||||||||
Net Sales
|
$ | 190,417 | 100.0 | % | $ | 166,262 | 100.0 | % | $ | 24,155 | ||||||||||
Costs and Expenses:
|
||||||||||||||||||||
Cost of goods sold
|
152,699 | 80.2 | 126,998 | 76.4 | 25,701 | |||||||||||||||
Selling, general and administrative
|
30,305 | 15.9 | 31,447 | 18.9 | (1,142 | ) | ||||||||||||||
Operating Income
|
7,413 | 3.9 | 7,817 | 4.7 | (404 | ) | ||||||||||||||
Interest expense, net
|
4,289 | 2.2 | 5,630 | 3.4 | (1,341 | ) | ||||||||||||||
Equity in earnings of investees
|
(1,808 | ) | (0.9 | ) | (1,611 | ) | (1.0 | ) | (197 | ) | ||||||||||
Other expense (income), net
|
534 | 0.3 | (749 | ) | (0.5 | ) | 1,283 | |||||||||||||
Income before income taxes
|
4,398 | 2.3 | 4,547 | 2.8 | (149 | ) | ||||||||||||||
Provision for income taxes
|
1,158 | 0.6 | 731 | 0.4 | 427 | |||||||||||||||
Net income
|
3,240 | 1.7 | 3,816 | 2.4 | (576 | ) | ||||||||||||||
Net loss attributable to noncontrolling interest
|
(124 | ) | - | (21 | ) | - | (103 | ) | ||||||||||||
Net income attributable to Stoneridge, Inc. and subsidiaries
|
$ | 3,364 | 1.7 | % | $ | 3,837 | 2.4 | % | $ | (473 | ) |
Dollar
|
Percent
|
|||||||||||||||
increase /
|
increase /
|
|||||||||||||||
Three months ended June 30
|
2011
|
2010
|
(decrease)
|
(decrease)
|
||||||||||||
As adjusted
|
||||||||||||||||
Electronics
|
$ | 464 | $ | 4,404 | $ | (3,940 | ) | (89.5 | )% | |||||||
Control Devices
|
6,018 | 5,144 | 874 | 17.0 | % | |||||||||||
Other corporate activities
|
1,746 | 247 | 1,499 | 606.9 | % | |||||||||||
Corporate interest expense
|
(3,830 | ) | (5,248 | ) | 1,418 | 27.0 | % | |||||||||
Income before income taxes
|
$ | 4,398 | $ | 4,547 | $ | (149 | ) | (3.3 | )% |
Dollar
|
Percent
|
|||||||||||||||||||||||
Three months ended June 30
|
2011
|
2010
|
increase
|
increase
|
||||||||||||||||||||
As adjusted
|
||||||||||||||||||||||||
North America
|
$ | 2,110 | 48.0 | % | $ | 4,725 | 103.8 | % | $ | (2,615 | ) | 55.3 | % | |||||||||||
Europe and Other
|
2,288 | 52.0 | (178 | ) | (3.8 | ) | 2,466 | (1,385.0 | )% | |||||||||||||||
Income before income taxes
|
$ | 4,398 | 100.0 | % | $ | 4,547 | 100.0 | % | $ | (149 | ) | (3.3 | )% |
Dollar
|
Percent
|
|||||||||||||||||||||||
Six months ended June 30
|
2011
|
2010
|
increase
|
increase
|
||||||||||||||||||||
Electronics
|
$ | 248,902 | 64.9 | % | $ | 196,565 | 62.5 | % | $ | 52,337 | 26.6 | % | ||||||||||||
Control Devices
|
134,559 | 35.1 | 117,771 | 37.5 | 16,788 | 14.3 | % | |||||||||||||||||
Total net sales
|
$ | 383,461 | 100.0 | % | $ | 314,336 | 100.0 | % | $ | 69,125 | 22.0 | % |
Dollar
|
Percent
|
|||||||||||||||||||||||
Six months ended June 30
|
2011
|
2010
|
increase
|
increase
|
||||||||||||||||||||
North America
|
$ | 300,379 | 78.3 | % | $ | 256,492 | 81.6 | % | $ | 43,887 | 17.1 | % | ||||||||||||
Europe and other
|
83,082 | 21.7 | 57,844 | 18.4 | 25,238 | 43.6 | % | |||||||||||||||||
Total net sales
|
$ | 383,461 | 100.0 | % | $ | 314,336 | 100.0 | % | $ | 69,125 | 22.0 | % |
Dollar
|
||||||||||||||||||||
increase/
|
||||||||||||||||||||
Six months ended June 30
|
2011
|
2010
|
(decrease)
|
|||||||||||||||||
As adjusted
|
||||||||||||||||||||
Net sales
|
$ | 383,461 | 100.0 | % | $ | 314,336 | 100.0 | % | $ | 69,125 | ||||||||||
Costs and Expenses:
|
||||||||||||||||||||
Cost of goods sold
|
306,453 | 79.9 | 241,140 | 76.7 | 65,313 | |||||||||||||||
Selling, general and administrative
|
62,895 | 16.4 | 61,015 | 19.4 | 1,880 | |||||||||||||||
Operating income
|
14,113 | 3.7 | 12,181 | 3.9 | 1,932 | |||||||||||||||
Interest expense, net
|
8,555 | 2.2 | 11,236 | 3.6 | (2,681 | ) | ||||||||||||||
Equity in earnings of investees
|
(3,724 | ) | (1.0 | ) | (2,302 | ) | (0.7 | ) | (1,422 | ) | ||||||||||
Other expense (income), net
|
1,533 | 0.4 | (1,699 | ) | (0.5 | ) | 3,232 | |||||||||||||
Income before income taxes
|
7,749 | 2.1 | 4,946 | 1.5 | 2,803 | |||||||||||||||
Provision (benefit) for income taxes
|
1,835 | 0.5 | (758 | ) | (0.2 | ) | 2,593 | |||||||||||||
Net income
|
5,914 | 1.6 | 5,704 | 1.7 | 210 | |||||||||||||||
Net loss attributable to noncontrolling interest
|
(339 | ) | (0.0 | ) | (44 | ) | (0.0 | ) | (295 | ) | ||||||||||
Net income attributable to Stoneridge, Inc. and subsidiaries
|
$ | 6,253 | 1.6 | % | $ | 5,748 | 1.7 | % | $ | 505 |
Dollar
|
Percent
|
|||||||||||||||
increase /
|
increase /
|
|||||||||||||||
Six months ended June 30
|
2011
|
2010
|
(decrease)
|
(decrease)
|
||||||||||||
As adjusted
|
||||||||||||||||
Electronics (A)
|
$ | 1,133 | $ | 6,241 | $ | (5,108 | ) | (81.8 | )% | |||||||
Control Devices (A)
|
11,701 | 9,124 | 2,577 | 28.2 | % | |||||||||||
Other corporate activities (A)
|
2,587 | (10 | ) | 2,597 | 25,970.0 | % | ||||||||||
Corporate interest expense
|
(7,672 | ) | (10,409 | ) | 2,737 | 26.3 | % | |||||||||
Income before income taxes
|
$ | 7,749 | $ | 4,946 | $ | 2,803 | 56.7 | % |
(A)
|
Income before income taxes for the six months ended June 30, 2010 excludes the impact of placing SPL into administration. As a result of placing SPL into administration, we recognized a gain within the Electronics segment of $32,512 and a loss within the Control Devices segment and other corporate activities of $473 and $32,039, respectively. These gains and losses were primarily the result of eliminating SPL's intercompany debt and equity structure.
|
Dollar
|
Percent
|
|||||||||||||||||||||||
Six months ended June 30
|
2011
|
2010 |
increase
|
increase
|
||||||||||||||||||||
As adjusted
|
||||||||||||||||||||||||
North America (A)
|
$ | 2,987 | 38.5 | % | $ | 4,267 | 86.3 | % | $ | (1,281 | ) | 30.0 | % | |||||||||||
Europe and other (A)
|
4,762 | 61.5 | 679 | 13.7 | 4,084 | (601.5 | )% | |||||||||||||||||
Income before income taxes
|
$ | 7,749 | 100.0 | % | $ | 4,946 | 100.0 | % | $ | 2,803 | (56.7 | )% |
(A)
|
Income before income taxes for the six months ended June 30, 2010 excludes the impact of placing SPL into administration. As a result of placing SPL into administration, we recognized a gain within Europe and other and a loss within North America of $32,430. These gains and losses were primarily the result of eliminating SPL’s intercompany debt and equity structure.
|
Dollar
|
||||||||||||
increase /
|
||||||||||||
Six months ended June 30
|
2011
|
2010
|
(decrease)
|
|||||||||
Net cash provided by (used for):
|
||||||||||||
Operating activities
|
$ | (23,113 | ) | $ | (7,433 | ) | $ | (15,680 | ) | |||
Investing activities
|
(13,843 | ) | (7,042 | ) | (6,801 | ) | ||||||
Financing activities
|
(534 | ) | 630 | (1,164 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents
|
1,964 | (3,454 | ) | 5,418 | ||||||||
Net change in cash and cash equivalents
|
$ | (35,526 | ) | $ | (17,299 | ) | $ | (18,227 | ) |
|
·
|
the loss or bankruptcy of a major customer;
|
|
·
|
the costs and timing of facility closures, business realignment, or similar actions;
|
|
·
|
a significant change in commercial, automotive, agricultural or off-highway vehicle production;
|
|
·
|
our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions;
|
|
·
|
a significant change in general economic conditions in any of the various countries in which we operate;
|
|
·
|
labor disruptions at our facilities or at any of our significant customers or suppliers;
|
|
·
|
the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis;
|
|
·
|
the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our credit facility and the senior secured notes;
|
|
·
|
customer acceptance of new products;
|
|
·
|
capital availability or costs, including changes in interest rates or market perceptions;
|
|
·
|
the failure to achieve the successful integration of any acquired company or business;
|
|
·
|
the occurrence or non-occurrence of circumstances beyond our control; and
|
|
·
|
those items described in Part I, Item IA (“Risk Factors”) of the Company’s 2010 Form 10-K.
|
STONERIDGE, INC.
|
|
Date: August 3, 2011
|
/s/ John C. Corey
|
John C. Corey
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
Date: August 3, 2011
|
/s/ George E. Strickler
|
George E. Strickler
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer)
|
Exhibit
Number
|
Exhibit
|
|
31.1
|
Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
31.2
|
Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
32.1
|
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
32.2
|
|
Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
(1)
|
I have reviewed this Quarterly Report on Form 10-Q of Stoneridge, Inc. (the “Company”);
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
(4)
|
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the Company and we have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
(5)
|
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
/s/ John C. Corey
|
|
John C. Corey, President and Chief Executive Officer
|
|
August 3, 2011
|
(1)
|
I have reviewed this Quarterly Report on Form 10-Q of Stoneridge, Inc. (the “Company”);
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
(4)
|
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the Company and we have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
(5)
|
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
/s/ George E. Strickler
|
|
George E. Strickler, Executive Vice President, Chief Financial Officer and Treasurer
|
|
August 3, 2011
|
/s/ John C. Corey
|
|
John C. Corey, President and Chief Executive Officer
|
|
August 3, 2011
|
/s/ George E. Strickler
|
|
George E. Strickler, Executive Vice President, Chief Financial Officer and Treasurer
|
|
August 3, 2011
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)
In Thousands, except Per Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Accounts receivable, reserves | $ 1,623 | $ 2,013 |
Preferred shares, without par value | $ 0 | $ 0 |
Preferred shares, authorized | 5,000 | 5,000 |
Preferred shares, issued | 0 | 0 |
Common shares, without par value | $ 0 | $ 0 |
Common shares, authorized | 60,000 | 60,000 |
Common shares, issued | 26,451 | 25,994 |
Common shares, outstanding | 25,577 | 25,393 |
Common shares held in treasury, shares | 874 | 601 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Net sales | $ 190,417 | $ 166,262 | $ 383,461 | $ 314,336 |
Costs and expenses: | Â | Â | Â | Â |
Cost of goods sold | 152,699 | 126,998 | 306,453 | 241,140 |
Selling, general and administrative | 30,305 | 31,447 | 62,895 | 61,015 |
Operating income | 7,413 | 7,817 | 14,113 | 12,181 |
Interest expense, net | 4,289 | 5,630 | 8,555 | 11,236 |
Earnings of equity method investees | (1,808) | (1,611) | (3,724) | (2,302) |
Other expense (income), net | 534 | (749) | 1,533 | (1,699) |
Income before income taxes | 4,398 | 4,547 | 7,749 | 4,946 |
Provision (benefit) for income taxes | 1,158 | 731 | 1,835 | (758) |
Net income | 3,240 | 3,816 | 5,914 | 5,704 |
Net loss attributable to noncontrolling interest | (124) | (21) | (339) | (44) |
Net income attributable to Stoneridge, Inc. and subsidiaries | $ 3,364 | $ 3,837 | $ 6,253 | $ 5,748 |
Basic net income per share | $ 0.14 | $ 0.16 | $ 0.26 | $ 0.24 |
Basic weighted average shares outstanding | 24,162 | 23,965 | 24,090 | 23,922 |
Diluted net income per share | $ 0.14 | $ 0.16 | $ 0.25 | $ 0.24 |
Diluted weighted average shares outstanding | 24,606 | 24,389 | 24,545 | 24,351 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 22, 2011
|
|
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Trading Symbol | SRI | Â |
Entity Registrant Name | STONERIDGE INC | Â |
Entity Central Index Key | 0001043337 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Accelerated Filer | Â |
Entity Common Stock, Shares Outstanding | Â | 25,576,578 |
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Long-Term Debt
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Long-Term Debt |
(7) Long-Term Debt
Senior Secured Notes
On
October 4, 2010, the Company issued $175,000 of senior secured
notes. These senior notes bear interest at an annual
rate of 9.5% and mature on October 15, 2017. The senior
secured notes are redeemable, at the Company’s option,
beginning October 15, 2014 at 104.75%. Interest payments
commenced on April 15, 2011 and are payable on April 15 and October
15 of each year, thereafter. The senior secured notes
indenture limits the amount of the Company and its restricted
subsidiaries’ indebtedness, restricts certain payments and
includes various other non-financial restrictive
covenants. The senior secured notes are guaranteed by
all of the Company’s existing domestic restricted
subsidiaries. All other restricted subsidiaries that
guarantee any indebtedness of the Company or its guarantors will
also guarantee the senior secured notes.
On
September 20, 2010, the Company commenced a tender offer to
purchase for cash any and all of its $183,000 senior
notes. The consent payment deadline was October 1, 2010
and the tender offer expired on October 18, 2010. For
senior notes tendered before the consent payment deadline, the note
holders received $1,002.50 for each $1,000.00 of principal amount
of notes tendered. There was $109,733 of senior notes
tendered prior to the consent payment deadline and an additional
$154 tendered after the consent payment deadline but before the
tender offer deadline. Holders tendering senior notes
after the consent payment deadline were eligible to receive only
the tender offer consideration of $1,000.00 per $1,000.00 principal
amount of senior notes. On November 4, 2010 all senior
notes which were not tendered were redeemed by the Company at
par.
Credit Facilities
On
November 2, 2007, the Company entered into an asset-based credit
facility (the “credit facility”), which permits
borrowing up to a maximum level of $100,000. In
connection with the senior secured notes issuance, the Company
entered into an Amended and Restated Credit and Security Agreement
(the “Amended and Restated Agreement”) relating to the
credit facility on September 20, 2010 which became effective on
October 4, 2010. The Amended and Restated Agreement (i)
provided certain consents necessary for the issuance of the senior
secured notes, (ii) extended the expiration date of the credit
facility to November 1, 2012 and (iii) granted the facility agent,
for the benefit of the lenders, second priority liens and security
interests in the collateral subject to first priority liens and
security interests in favor of the collateral agent for the holders
of the senior secured notes. At June 30, 2011 and
December 31, 2010, there were no borrowings on this credit
facility. The available borrowing capacity on this
credit facility is based on eligible current assets, as
defined. At June 30, 2011 and December 31, 2010, the
Company had borrowing capacity of $78,467 and $61,251,
respectively, based on eligible current assets and outstanding
letters of credit as defined. The credit facility does
not contain financial performance covenants which would constrain
the Company’s borrowing capacity. However, restrictions do
include limits on capital expenditures, operating leases, dividends
and investment activities in a negative covenant which limits
investment activities to $15,000 minus certain guarantees and
obligations. The credit facility expires on November 1,
2012, and requires a commitment fee of 0.375% on the unused
balance. Interest is payable quarterly at either (i) the
higher of the prime rate or the Federal Funds rate plus 0.50%, plus
a margin of 0.00% to 0.25% or (ii) LIBOR plus a margin of 1.00% to
1.75%, depending upon the Company’s undrawn availability, as
defined. The Company was in compliance with all
covenants at June 30, 2011 and December 31, 2010.
On
October 13, 2009, the Company’s majority owned consolidated
subsidiary, Bolton Conductive Systems, LLC (“BCS”),
entered into a master revolving note (the “Revolver”),
which permits borrowing up to a maximum level of $3,000. On
September 29, 2010, BCS amended the Revolver to extend the maturity
date to September 29, 2011 and reduced the interest rate margin to
2.0%. The available borrowing capacity on the Revolver
is based on an advance formula, as defined. At June 30,
2011 and December 31, 2010, BCS had borrowing capacity of $1,480
and $1,089, respectively, based on the advance
formula. At June 30, 2011 and December 31,
2010, BCS had $1,178 and $742 in borrowings outstanding on the
Revolver, respectively, which are included on the condensed
consolidated balance sheets as a component of accrued expenses and
other current liabilities. Interest is payable monthly
at the prime referenced rate plus a 2.0% margin. At June
30, 2011, the interest rate on the Revolver was
5.25%. The Company is a guarantor of BCS as it relates
to the Revolver. The Revolver contains certain financial
restrictive covenants. BCS violated the fixed charge and
tangible net worth covenants related to the Revolver during the
first quarter of 2011 and during the fourth quarter of
2010. BCS received waivers for those covenant
violations. Subsequent to these violations, the fixed
charge and tangible net worth covenants have been eliminated from
the Revolver through its expiration.
Other Debt
BCS
has an installment note. Interest on the installment
note is the prime referenced rate plus a 2.25%
margin. At June 30, 2011 and December 31, 2010, the
interest rate on the installment note was 5.5%. The
installment note calls for monthly installment payments of
principal and interest and matures in September of
2012. At June 30, 2011 and December 31, 2010, the
principal amount due on the installment note was $234 and $322,
respectively.
On
August 20, 2010, the Company’s wholly-owned subsidiary
located in Suzhou, China entered into a term loan of 4,690 Chinese
yuan, which was $726 and $712 at June 30, 2011 and December 31,
2010, respectively, and is included on the condensed consolidated
balance sheets as a component of accrued expenses and other current
liabilities. The term loan matures on August 5,
2011. Interest is payable quarterly at the one-year
lending rate published by The People’s Bank of China
multiplied by 110.0%. At June 30, 2011, the interest
rate on the term loan was 6.94%.
|
Income Taxes
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Income Taxes |
(12) Income Taxes
The Company recognized a provision for income
taxes of $1,158, or 26.3% and $731, or 16.1% of pre-tax income for
federal, state and foreign income taxes for the three months ended
June 30, 2011 and 2010, respectively. The Company
recognized a provision for income taxes of $1,835, or 23.7% of
pre-tax income and a benefit from income taxes of $758, or (15.3%)
of pre-tax loss, for federal, state and foreign taxes for the six
months ended June 30, 2011 and 2010. At June 30, 2011
and December 31, 2010, the Company is in a cumulative loss position
and provides a valuation allowance offsetting federal, state and
certain foreign deferred tax assets. The increase in tax
expense for the three and six months ended June 30, 2011 compared
to those same periods for 2010 was attributable to the improved
financial performance of the European operations as well as the
improved financial performance of the Company’s PST
Eletrônica S.A. (“PST”)
joint venture. Additionally, as a result of placing SPL
into administration, as described in Note 13, the Company
recognized a one-time tax benefit of $1,170 during the six months
ended June 30, 2010 from the reversal of a deferred tax liability,
related to employee benefits, that were previously included as a
component of accumulated other comprehensive income within
shareholders’ equity.
During
the fourth quarter of 2010 the Company undertook a secondary
offering. As a result of the secondary offering a
substantial change in the Company’s ownership occurred and
the Company likely experienced an ownership change pursuant to
Section 382 of the Internal Revenue Code of 1986, as amended. The
Company is in the process with its advisors of evaluating the
secondary offering and the potential impact, if any, on our ability
to fully utilize net operating loss and research credit carry
forwards. If it is ultimately determined that the Company did
experience an ownership change, there would not be an impact to the
condensed consolidated balance sheets as of June 30, 2011 and
December 31, 2010 or the condensed consolidated statement of
operations for the three and six months ended June 30, 2011 due to
the Company being in a valuation allowance position.
|
Inventories
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Inventories |
(3) Inventories
Inventories
are valued at the lower of cost or market. As discussed
in Note 2, effective January 1, 2011, the Company elected to change
its costing method to the FIFO method for all
inventories. The Company adopted this change in
accounting principle by adjusting all prior periods presented
retrospectively. The Company adjusts its excess and obsolescence
reserve at least on a quarterly basis. Excess
inventories are quantities of items that exceed anticipated sales
or usage for a reasonable period. The Company has
guidelines for calculating provisions for excess inventories based
on the number of months of inventories on hand compared to
anticipated sales or usage. Management uses its judgment
to forecast sales or usage and to determine what constitutes a
reasonable period. Inventory cost includes material,
labor and overhead. Inventories consisted of the
following:
|
Restructuring
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Restructuring |
(9) Restructuring
On
October 29, 2007, the Company announced restructuring initiatives
to improve manufacturing efficiency and cost position by ceasing
manufacturing operations at its Sarasota, Florida and Mitcheldean,
United Kingdom locations. In response to the depressed
conditions in the North American and European commercial and
automotive vehicle markets in 2009, the Company also began
restructuring initiatives in its Electronics reportable
segment. During the first quarter of 2010, the Company
continued restructuring initiatives within the Electronics segment
which began in 2009 and recorded amounts related to its cancelled
lease in Mitcheldean, United Kingdom. In connection with
these initiatives, the Company recorded a restructuring charge of
$223 and $304 in the Company’s condensed consolidated
statements of operations as part of selling, general and
administrative for the three and six months ended June 30, 2010,
respectively. These restructuring initiatives are substantially
complete. At June 30, 2011 and December 31, 2010 the
only remaining restructuring related liability relates to the
cancelled lease in Mitcheldean, United Kingdom, which the Company
has accrued $1,149 and $1,117, respectively, on the condensed
consolidated balance sheets. There have been no
adjustments to the lease liability since December 31, 2010 other
than the impact of foreign exchange losses. There were
no restructuring activities related to the Control Devices
reportable segment during the three and six months ended June 30,
2011 and 2010.
|
Segment Reporting
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Jun. 30, 2011
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Segment Reporting |
(14) Segment Reporting
Operating
segments are defined as components of an enterprise that are
evaluated regularly by the Company’s chief operating decision
maker in deciding how to allocate resources and in assessing
performance. The Company’s chief operating
decision maker is the president and chief executive
officer.
The
Company has two reportable segments: Electronics and Control
Devices. The Company’s operating segments are
aggregated based on sharing similar economic
characteristics. Other aggregation factors include the
nature of the products offered and management and oversight
responsibilities. The Electronics reportable segment produces
electronic instrument clusters, electronic control units, driver
information systems and electrical distribution systems, primarily
wiring harnesses and connectors for electrical power and signal
distribution. The Control Devices reportable segment
produces electronic and electromechanical switches and control
actuation devices and sensors.
The
accounting policies of the Company’s reportable segments are
the same as those described in Note 2, “Summary of
Significant Accounting Policies” of the Company’s
December 31, 2010 Form 10-K. The Company’s
management evaluates the performance of its reportable segments
based primarily on net sales from external customers, capital
expenditures and income before income
taxes. Inter-segment sales are accounted for on terms
similar to those to third parties and are eliminated upon
consolidation.
As
discussed in Note 2, effective January 1, 2011, the Company elected
to change its method of valuing inventories for certain U.S.
businesses to the FIFO method, while in prior years, these
inventories were valued using LIFO. As a result of this
change, all inventories are valued using the FIFO
method. Segment information has been retrospectively
adjusted for prior periods to reflect the change in accounting
principle.
A
summary of financial information by reportable segment is as
follows:
The
following table presents net sales and non-current assets for each
of the geographic areas in which the Company operates:
|
Commitments and Contingencies
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Commitments and Contingencies |
(10) Commitments and Contingencies
In
the ordinary course of business, the Company is involved in various
legal proceedings, workers’ compensation and product
liability disputes. The Company is of the opinion that
the ultimate resolution of these matters will not have a material
adverse effect on the results of operations, cash flows or the
financial position of the Company.
On
October 13, 2009, the Company acquired 51% membership interest in
BCS. The purchase agreement provides that the Company
may be required to make additional payments to the previous owners
of BCS for the 51% membership interest the Company purchased based
on BCS achieving financial performance targets as defined by the
purchase agreement. The maximum amount of additional
payments to the prior owners of BCS is $3,200 per year in 2012 and
2013 and is contingent upon BCS achieving profitability targets
based on earnings before interest, income taxes, depreciation and
amortization in the years 2011 and 2012,
respectively. In addition, the Company may be required
to make additional payments to BCS of approximately $500 in 2012
based on BCS achieving annual revenue targets in
2011. The Company recorded a liability of $435; the fair
value of the estimated future additional payments to the prior
owners of BCS as of June 30, 2011 and December 31, 2010 on the
condensed consolidated balance sheets as a component of other
long-term liabilities. The purchase agreement provides
the Company with the option to purchase the remaining 49% interest
in BCS in 2013 at a price determined in accordance with the
purchase agreement. If the Company does not exercise
this option, the minority owners of BCS have the option in 2014 to
purchase the Company’s 51% interest in BCS at a price
determined in accordance with the purchase agreement or to jointly
market BCS for sale.
As
a result of an environmental phase one study performed on the
Company’s facility located in Sarasota, Florida, the Company
became aware of soil and groundwater contamination at the
facility. The Company engaged an environmental
engineering consultant that developed a remediation and monitoring
plan for the site and submitted this plan to the Florida Department
of Environmental Protection (“FL DEP”) in March 2011.
The soil remediation was completed in December
2010. Prior to beginning the groundwater remediation,
the FL DEP has requested that the Company perform additional
groundwater sampling. The Company anticipates completing this
sampling and receiving approval from the FL DEP during
2011. The Company did not incur environmental
remediation expenses during the six months ended June 30, 2011 and
2010. As of June 30, 2011 and December 31, 2010, the
Company has accrued $1,305 related to the remediation on the
condensed consolidated balance sheets.
Product Warranty and Recall
Amounts
accrued for product warranty and recall claims are established
based on the Company’s best estimate of the amounts necessary
to settle future and existing claims on products sold as of the
balance sheet dates. These accruals are based on several
factors including past experience, production changes, industry
developments and various other considerations. The
Company can provide no assurances that it will not experience
material claims in the future or that it will not incur significant
costs to defend or settle such claims beyond the amounts accrued or
beyond what the Company may recover from its
suppliers. Product warranty and recall is included as a
component of accrued expenses and other current liabilities on the
condensed consolidated balance sheets.
The
following provides a reconciliation of changes in product warranty
and recall liability:
|
Net Income Per Share
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Net Income Per Share |
(8) Net Income Per Share
Basic
net income per share was computed by dividing net income by the
weighted-average number of Common Shares outstanding for each
respective period. Diluted net income per share was
calculated by dividing net income by the weighted-average of all
potentially dilutive Common Shares that were outstanding during the
periods presented. Actual weighted-average Common Shares
outstanding used in calculating basic and diluted net income per
share were as follows:
Options not included in the computation of
diluted net income share to purchase 50,000 and 115,250 Common
Shares at an average price of $15.73 and $12.84, respectively, per
share were outstanding at June 30, 2011 and 2010,
respectively. These outstanding options were not
included in the computation of diluted net income per share because
their respective exercise prices were greater than the average
market price of Company Common Shares.
There
were 419,100 and 455,400 performance-based restricted Common Shares
outstanding at June 30, 2011 and 2010,
respectively. These shares were not included in the
computation of diluted net income per share because not all vesting
conditions were achieved as of June 30, 2011 and
2010. These shares may or may not become dilutive based
on the Company’s ability to meet or exceed future earnings
performance targets.
|
Basis of Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Basis of Presentation |
(1) Basis of Presentation
The
accompanying condensed consolidated financial statements have been
prepared by Stoneridge, Inc. (the “Company”) without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the “Commission” or
“SEC”). The information furnished in the
condensed consolidated financial statements includes normal
recurring adjustments and reflects all adjustments, which are, in
the opinion of management, necessary for a fair presentation of
such financial statements. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with U.S. generally accepted accounting
principles have been condensed or omitted pursuant to the
Commission’s rules and regulations. The results of
operations for the three and six months June 30, 2011 are not
necessarily indicative of the results to be expected for the full
year.
Although
the Company believes that the disclosures are adequate to make the
information presented not misleading, it is suggested that these
condensed consolidated financial statements be read in conjunction
with the audited consolidated financial statements and the notes
thereto included in the Company’s Form 10-K for the fiscal
year ended December 31, 2010.
|
Fair Value of Financial Instruments
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value of Financial Instruments |
(4) Fair Value of Financial Instruments
Financial Instruments
A
financial instrument is cash or a contract that imposes an
obligation to deliver, or conveys a right to receive cash or
another financial instrument. The carrying values of
cash and cash equivalents, accounts receivable and accounts payable
are considered to be representative of fair value because of the
short maturity of these instruments. The estimated fair
value of the Company’s senior secured notes at June 30, 2011
and December 31, 2010, per quoted market sources, was $189,767 and
$187,798, respectively. The face amount of this
financial instrument as of June 30, 2011 and December 31, 2010 was
$175,000.
Derivative Instruments and Hedging Activities
On
June 30, 2011, the Company had open foreign currency forward
contracts, fixed price commodity contracts and an interest rate
swap. These contracts are used strictly for hedging and
not for speculative purposes. Management believes that
its use of these instruments to reduce risk is in the
Company’s best interest. The counterparties to
these financial instruments are financial institutions with
investment grade credit ratings.
The
Company conducts business internationally and therefore is exposed
to foreign currency exchange rate risk. The Company uses
derivative financial instruments as cash flow and fair value hedges
to mitigate its exposure to fluctuations in foreign currency
exchange rates by reducing the effect of such fluctuations on
foreign currency denominated intercompany transactions and other
foreign currency exposures. The currencies currently
hedged by the Company include the euro and Swedish
krona. These contracts expire on September 30,
2011. These foreign currency forward contracts are
accounted for as fair value hedges, but do not qualify for hedge
accounting and are marked to market, with gains and losses
recognized in the Company’s condensed consolidated statements
of operations as a component of other expense (income),
net. For the six months ended June 30, 2011, the Company
recognized a $2,654 loss related to euro and Swedish krona
contracts. The Company’s foreign currency forward
contracts substantially offset gains and losses on the underlying
foreign currency denominated transactions. During the year ended
December 31, 2010, the Company held contracts intended to reduce
exposure to the Mexican peso. These contracts were
executed to hedge forecasted transactions, and therefore the
contracts were accounted for as cash flow hedges. The
Mexican peso-denominated foreign currency forward contracts expired
monthly throughout 2010.
To
mitigate the risk of future price volatility and, consequently,
fluctuations in gross margins, the Company entered into fixed price
commodity contracts with a financial institution to fix the cost of
a portion of the Company’s copper purchases. In
March 2011, the Company entered into fixed price commodity
contracts for 1,200 pounds of copper, which represents a portion of
the Company’s copper purchases in the period from April 2011
to December 2011. In May 2011, the Company entered into
two additional fixed price commodity contracts. The
first contract was for 938 pounds of copper which covers the period
from June 2011 to December 2011. The other commodity
contract was for 2,000 pounds of copper and covers the period from
January 2012 to December 2012. Both of these contracts
represent a portion of the Company’s copper
purchases. Because these contracts were executed to
hedge a portion of forecasted transactions, the contracts are
accounted for as cash flow hedges. The unrealized gain
or loss for the effective portion of the hedges is deferred and
reported in the Company’s condensed consolidated balance
sheets as a component of accumulated other comprehensive
income. Using regression analysis, the Company has
concluded that these cash flow hedges are highly effective. The
effectiveness of the transactions has been and will be measured on
an ongoing basis using regression analysis.
On
October 4, 2010, the Company entered into a fixed-to-floating
interest rate swap agreement (the “Swap”) with a
notional amount of $45,000 to hedge its exposure to fair value
fluctuations on a portion of its senior secured
notes. The Swap was designated as a fair value hedge of
the fixed interest rate obligation under the Company’s
$175,000 9.5% senior secured notes due October 15,
2017. Under the Swap, the Company pays a variable
interest rate equal to the six-month London Interbank Offered Rate
(“LIBOR”) plus 7.19% and it receives a fixed interest
rate of 9.5%. The Swap requires semi-annual settlements
on April 15 and October 15, beginning on April 15,
2011. The difference between amounts to be received and
paid under the Swap is recognized as a component of interest
expense, net on the condensed consolidated statements of
operations. The Swap reduced interest expense by $380
for the six months ended June 30, 2011. The critical
terms of the Swap are aligned with the terms of the senior secured
notes, including maturity of October 15, 2017, resulting in no
hedge ineffectiveness. The unrealized gain or loss for
the effective portion of the hedge is deferred and reported in the
Company’s condensed consolidated balance sheets as an asset
or liability, as applicable, with the offset to the carrying value
of the senior secured notes.
The
notional amounts and fair values of derivative instruments in the
condensed consolidated balance sheets are as follows:
(A) Notional
amounts represent the gross contract / notional amount of the
derivatives outstanding.
Amounts
recorded in other comprehensive income in shareholders’
equity and in net income for the three months ended June 30, 2011
were as follows:
Amounts
recorded in other comprehensive income in shareholder’s
equity and in net income for the six months ended June 30, 2011
were as follows:
These
derivatives will be reclassified from other comprehensive income to
the condensed consolidated statement of operations through December
of 2012. The Company has measured the ineffectiveness of
the commodity contracts and any amounts recognized in the condensed
consolidated financial statements were immaterial for the three and
six months ended June 30, 2011.
The
following table presents our assets and liabilities that are
measured at fair value on a recurring basis and are categorized
using the fair value hierarchy. The fair value hierarchy
has three levels based on the reliability of the inputs used to
determine fair value. The Company does not have any
assets or liabilities that have a fair value estimated using level
3 inputs.
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Share-Based Compensation
|
6 Months Ended |
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Jun. 30, 2011
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Share-Based Compensation |
(5) Share-Based Compensation
Total
compensation expense for share-based compensation arrangements
recognized in the condensed consolidated statements of operations
as a component of selling, general and administrative expenses was
$1,254 and $699 for the three months ended June 30, 2011 and 2010,
respectively. For the six months ended June 30, 2011 and
2010, total compensation expense recognized in the condensed
consolidated statements of operations for share-based compensation
arrangements was $2,247 and $1,224, respectively.
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SPL Administration
|
6 Months Ended |
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Jun. 30, 2011
|
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SPL Administration |
(13) SPL Administration
On
February 23, 2010, the Company placed its wholly owned subsidiary,
SPL into administration (a structured bankruptcy) in the United
Kingdom. The Company had previously ceased operations at
the facility as of December 2008 as part of the restructuring
initiatives announced on October 29, 2007, as described in Note
9. The remaining assets and customer contracts of SPL
were transferred to other subsidiaries of the Company subsequent to
SPL filing for administration. As a result of placing
SPL into administration the Company recognized a net gain of
approximately $3,423 during the six months ended June 30,
2010. This gain was primarily related to the reversal of
the cumulative translation adjustment account (“CTA”)
and deferred tax liabilities, which had previously been included as
a component of other comprehensive income within
shareholders’ equity. The net gain of
approximately $2,253, primarily due to reversing the CTA balance is
included as a component of other expense (income), net on the
condensed consolidated statement of operations. The
benefit from reversing the deferred tax liabilities, primarily
employee benefit related of approximately $1,170, is included as a
component of benefit from income taxes on the condensed
consolidated statement of operations, as described in Note
12.
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Comprehensive Income (Loss)
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Jun. 30, 2011
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Comprehensive Income (Loss) |
(6) Comprehensive
Income (Loss)
The
components of comprehensive income (loss), net of tax are as
follows:
Accumulated
other comprehensive income, net of tax is comprised of the
following:
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Change in Accounting Principle
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Jun. 30, 2011
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Change in Accounting Principle |
(2) Change in Accounting Principle
Effective
January 1, 2011, the Company elected to change the method of
valuing inventories for certain U.S. businesses to the first-in,
first-out (“FIFO”) method, while in prior years, these
inventories were valued using the last-in, first-out
(“LIFO”) method. As a result of this change
in accounting principle, all inventories are valued using the FIFO
method. The Company believes the change is preferable as
it conforms the Company’s inventory costing methods for all
inventories to a single method and improves comparability with
industry peers. The FIFO method also better reflects
current acquisition cost of those inventories on the condensed
consolidated balance sheets. The Company has applied
this change in method of inventory costing retrospectively to all
prior periods presented herein in accordance with accounting
principles relating to accounting changes. The effect of
retrospectively applying the change on the Company’s
inventory costing method increased the inventory balance and
reduced the accumulated deficit balance by $2,410 as of January 1,
2010. There were no tax effects for the adjustments for
any periods presented below due to the fact that the Company has a
full valuation allowance recorded against its U.S. deferred tax
assets.
Presented below are the effects of the change in accounting
principle for inventory costs on the condensed consolidated
financial statements for 2011 and 2010.
Condensed Consolidated Statements of Operations:
|
Employee Benefit Plans
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Employee Benefit Plans |
(11) Employee Benefit Plans
The
Company had a single defined benefit pension plan that covered
certain former employees in the United Kingdom. As a
result of placing Stoneridge Pollak Limited (“SPL”)
into administration during the six months ended June 30, 2010, as
described in Note 13, the Company settled the defined benefit
pension plan.
Long-Term Cash Incentive Plans
In
March 2009, the Company adopted the Stoneridge, Inc. Long-Term Cash
Incentive Plan (“LTCIP”) and granted awards to certain
officers and key employees. For 2009, the awards under
the LTCIP provide recipients with the right to receive cash three
years from the date of grant depending on the Company’s
actual earnings per share performance for a performance period
comprised of 2009, 2010 and 2011 fiscal years. The
Company will record an accrual for an award to be paid in the
period earned based on anticipated achievement of the performance
goal. If the participant voluntarily terminates
employment or is discharged for cause, as defined in the LTCIP, the
award will be forfeited. In May 2009, the LTCIP was
approved by the Company’s shareholders. The
Company has not recorded an accrual for these awards granted under
the LTCIP at June 30, 2011 or December 31, 2010 as the achievement
of the performance goal is not considered probable at this
time.
For
2010, the awards under the LTCIP provide recipients with the right
to receive an amount of cash equal to the fair market value of a
specified number of Common Shares, without par value, of the
Company (“Phantom Shares”) three years from the date of
grant depending on the Company’s actual earnings per share
performance for each fiscal year of 2010, 2011 and 2012 within the
performance period. The Company will record an accrual
based on the fair market value of the Phantom Shares for an award
to be paid in the period earned based on anticipated achievement of
the performance goals. If the participant voluntarily
terminates employment or is discharged for cause, as defined in the
LTCIP, the award will be forfeited. The Company
recorded an accrual of $345 and $184 for these awards granted under
the LTCIP at June 30, 2011 and December 31, 2010, respectively,
which is included on the condensed consolidated balance sheets as a
component of other long-term liabilities.
There
were no awards granted under the LTCIP during the six months ended
June 30, 2011.
|
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